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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 8, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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MESSAGEMEDIA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 7389 33-0612860
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE) IDENTIFICATION NUMBER)
ORGANIZATION)
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6060 SPINE ROAD
BOULDER, COLORADO 80301
(303) 440-7550
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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A. LAURENCE JONES
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MESSAGEMEDIA, INC.
6060 SPINE ROAD
BOULDER, COLORADO 80301
(303) 440-7550
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
JAMES H. CARROLL, ESQ.
KEVIN M. GALLIGAN, ESQ.
COOLEY GODWARD LLP
2595 CANYON BLVD., SUITE 250
BOULDER, CO 80302-6737
(303) 546-4000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE (1) OFFERING PRICE(1) REGISTRATION FEE
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Common Stock, par value $.001........... 5,323,914 $12.375 $65,883,436 $18,316
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based
upon the average of the high and low prices of Registrant's Common Stock on
September 2, 1999 as reported on The Nasdaq National Market.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED SEPTEMBER 8, 1999
PROSPECTUS
5,323,914 SHARES
MESSAGEMEDIA, INC.
COMMON STOCK
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The Selling Securityholders identified in this Prospectus are selling
5,325,154 shares of our common stock. These shares may be offered from time to
time by the Selling Securityholders through public or private transactions, on
or off the Nasdaq National Market, at prevailing market prices or at privately
negotiated prices. The Selling Securityholders will receive all of the proceeds
from the sale of the shares and will pay all underwriting discounts and selling
commissions, if any, applicable to the sale of the shares. We will pay the
expenses of registration of the sale of the shares.
Our common stock is currently traded on The Nasdaq National Market
under the symbol "MESG." On September 7, 1999, the last reported sales price of
a share of MessageMedia common stock on The Nasdaq National Market was $13
per share.
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INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 OF THIS PROSPECTUS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is September 8, 1999.
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THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT WE FILED WITH THE
SEC. YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU
WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN
ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON
THE FRONT OF THE DOCUMENT.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy the documents we file at
the SEC's public reference room in Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and the SEC's regional offices located at Seven
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You can request
copies of these documents by writing to the SEC and paying a fee for the copying
cost. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available to the public at no
cost from the SEC's website at http://www.sec.gov.
The SEC allows us to "incorporate by reference" information that we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities and Exchange Act of 1934 (the "Exchange Act"):
1. Annual Report on Form 10-K for the fiscal year ended December
31, 1998;
2. Quarterly Report on Form 10-Q for the quarter ended March 31,
1999;
3. Quarterly Report on Form 10-Q for the quarter ended June 30,
1999;
4. Current Reports on Form 8-K filed with the SEC on December 23,
1998 (as amended on February 19, 1999), April 5, 1999 and
August 24, 1999;
5. The description of our common stock set forth in our
Registration Statement on Form 8-A, dated November 19, 1996;
and
6. Definitive Proxy Statement dated April 28, 1999 for the 1999
annual meeting of stockholders held on May 28,1999.
On December 16, 1998 we changed our name from First Virtual Holdings
Incorporated to MessageMedia, Inc. All filings made with the SEC prior to
December 23, 1998 may be located using either "First Virtual Holding
Incorporated" or "First Virtual Holdings Incorporated" as our company name.
You may request a copy of these filings at no cost by writing or
calling us, or you may view a copy by visiting our website, each at the
following address:
MessageMedia, Inc.
6060 Spine Road
Boulder, Colorado 80301
Attn: Investor Relations
(303) 440-7550
http://www.messagemedia.com
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THE COMPANY
MessageMedia, Inc. provides a seamless outsource solution for
relationship-based, transactive communications using Internet e-mail. Termed
"e-messaging," this personalized sales, marketing and service channel creates
new revenue and servicing opportunities, while cutting the cost of interacting
with a large number of customers. The suite of messaging services allows clients
to easily control each step in the messaging process and provides a flexible
range of messaging options to suit every communications need. E-messages can be
personalized and carefully targeted to segments of selected recipients based on
multiple criteria. The result is a richer relationship between company and
consumer. In addition, the enhanced customer loyalty leads to retention and
repetition of contact with the customer leading to lower operating costs,
improved service levels and higher revenue generation per client.
MessageMedia consists of five e-mail related companies, First Virtual
Holdings Inc., Email Publishing Inc. ("EPub"), Distributed Bits, L.L.C.
("DBits"), Revnet Systems, Inc. and Decisive Technology Corporation,
consolidated into a single, combined company that offers a comprehensive suite
of outsource e-messaging services and capabilities. The combined company is a
member of the family of companies funded and supported by SOFTBANK Holdings Inc.
and its affiliates. Our singular focus is on e-messaging and we employ advanced
technology, tools and applications to help corporations fully utilize this new
channel for building and enhancing customer relationships online.
MessageMedia, DecisionSource, EnterpriseView, ResponseNow, Revnet,
UnityMail and our logo are among the trademarks or service marks owned by us,
and First Virtual(R) and MailKing(R) are among the registered marks owned by us.
This prospectus also makes reference to trademarks of other companies which are
the property of their respective owners.
Our principal executive offices are located at 6060 Spine Road,
Boulder, Colorado 80301 and our telephone number is (303) 440-7550. Our Web site
address is "www.messagemedia.com." Information contained on our Web site does
not constitute part of this prospectus.
RISK FACTORS
Except for the historical information contained or incorporated by
reference herein, this Prospectus (and the information incorporated herein by
reference) contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those discussed
here or incorporated by reference. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in the
following section, as well as those discussed elsewhere in this Prospectus and
in any other documents incorporated herein by reference.
You should carefully consider the risks described below before making
an investment decision. The risks and uncertainties described below are not the
only ones we face. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially and adversely
affected. In that case, the trading price of our common stock could decline, and
you may lose all or part of your investment.
WE HAVE A HISTORY OF OPERATING LOSSES AND FUTURE LOSSES ARE LIKELY.
We have incurred net losses applicable to common shares of
approximately $43.7 million from our inception in March 1994 through December
31, 1998, approximately $13.8 million for the year ended December 31, 1998 and
approximately $13.2 million for the six month period ended June 30, 1999. As of
June 30, 1999, our accumulated deficit was approximately $56.9 million. We have
not achieved profitability and expect to continue to incur operating losses at
least into 2001. We intend to continue to invest heavily in acquisitions,
infrastructure development and marketing. Accordingly, we expect to continue to
incur significant operating and capital expenditures and, as a result, we will
need to generate significant revenue to achieve and maintain profitability.
Although our revenue has grown in recent quarters, we cannot assure you that we
will achieve sufficient revenue for profitability. Even if we do achieve
profitability, we cannot assure you that we can sustain or increase
profitability on a quarterly or annual basis in the future. If revenue grows
slower than we anticipate, or if operating expenses
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exceed our expectations or cannot be adjusted accordingly, our business, results
of operations and financial condition will be materially and adversely affected.
OUR BUSINESS IS DIFFICULT TO EVALUATE BECAUSE WE HAVE A LIMITED OPERATING
HISTORY AND RECENTLY HAVE CHANGED OUR BUSINESS MODEL.
We were incorporated in March 1994 for the purpose of developing an
Internet payment system. In 1998 we changed our business model to focus
exclusively on providing e-messaging solutions and acquired two e-messaging
companies, Epub and Dbits. In August 1999, we acquired two additional
e-messaging companies, Revnet Systems and Decisive Technology. An investor in
our common stock must consider the risks and difficulties frequently encountered
by early stage companies in new and rapidly evolving markets, including the
Internet e-messaging market. These risks include our:
o ability to sustain historical revenue growth rates;
o need to manage our expanding operations;
o need to successfully integrate our recent and any future
acquisitions;
o competition;
o ability to attract, retain and motivate qualified personnel;
o ability to maintain our current, and develop new, strategic
relationships;
o ability to anticipate and adapt to the changing Internet market;
and
o ability to attract and retain a large number of customers from a
variety of industries.
We also depend on the growing use of the Internet for marketing,
advertising, commerce and communication. We cannot assure you that our business
strategy will be successful or that we will successfully address these risks.
OUR MARKETS ARE RELATIVELY NEW AND UNPROVEN AND OUR SUCCESS DEPENDS ON MARKET
ACCEPTANCE AND THE EFFECTIVENESS OF OUR E-MESSAGING SERVICES.
Demand and market acceptance for Internet e-messaging solutions is
uncertain. Our future success is highly dependent on an increase in the use of
the Internet as a marketing, advertising and communications medium. The adoption
of Internet e-messaging, particularly by those entities that historically have
relied upon traditional media for marketing and advertising, requires the
acceptance of a new way of conducting business, exchanging information and
marketing products and services. Many of our current or potential e-messaging
customers have little or no experience using the Internet for marketing and
advertising purposes and they have allocated only a limited portion of their
budgets to Internet e-messaging. Moreover, our customers may find Internet
e-messaging to be less effective for promoting their products and services
relative to traditional marketing and advertising media. If the messaging
platform fails to meet customers' demands, the use of our e-messaging services
may decline over time and our business would suffer.
WE ADOPTED OUR CURRENT BUSINESS MODEL IN THE FOURTH QUARTER OF 1998 AND ITS
PROFIT POTENTIAL IS UNCERTAIN.
The profit potential for our business model, which is to generate
revenue solely by providing Internet e-messaging solutions to our customers, is
unproven. To be successful, both Internet marketing and our future and current
service offerings, including information distribution, e-mail marketing,
e-customer care, e-commerce messaging and e-surveys, will need to achieve broad
market acceptance. Our ability to generate significant revenue will depend, in
part, on our ability to contract with a sufficient number of customers. The
intense competition among Internet e-messaging companies has led to the creation
of a number of pricing alternatives for Internet e-messaging solutions. These
alternatives make it difficult for us to project future levels of revenue and
applicable gross profit that can be sustained by us or the Internet e-messaging
industry in general.
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WE MAY NOT BE ABLE TO SUCCESSFULLY INTEGRATE EPUB, DBITS, REVNET SYSTEMS AND
DECISIVE TECHNOLOGY OR FUTURE ACQUISITIONS.
In December 1998, we acquired Epub and Dbits and in August 1999 we
acquired Revnet Systems and Decisive Technology. As a result, companies that had
previously operated independently and with distinct business models must now
work together. The integration will require significant effort from our
personnel and the personnel of the acquired companies who are now our employees.
We may not be able to profitably consolidate these businesses.
The following risks are common to the integration of different
companies, and may be associated with recent or future acquisitions, including
the recent acquisitions of Revnet Systems and Decisive Technology:
o the difficulty of incorporating new operations, technology and
personnel into one company;
o the potential effects on operating results from increases in
goodwill amortization, acquired in-process technology, stock
compensation expense and increased compensation expense resulting
from newly hired employees;
o the diversion of management attention from other aspects of our
business;
o the potential disruption of our ongoing business;
o the potential reduction of the value of our e-messaging solutions
or reputation if an acquired company turns out to be a poor
performer;
o the maintenance of uniform standards, controls, procedures and
policies;
o the potential of disputes with the sellers of one or more acquired
entities;
o the possible failure to retain key acquired personnel;
o the assumption of most or all of the liabilities of the acquired
companies, some of which may be hidden, significant or not
reflected in the final acquisition price; and
o the impairment of relationships with employees and customers.
As part of our business strategy, we intend to focus on acquiring, or
making significant investments in, additional companies, products and
technologies that complement our business. The successful implementation of this
strategy depends on our ability to identify suitable acquisition candidates,
acquire those companies on acceptable terms and integrate their operations
successfully with our business. If we make additional acquisitions, we could
have difficulty in assimilating the acquired products, services or technologies
into our operations. These difficulties could disrupt our ongoing business,
distract our management and employees, increase our expenses and adversely
affect our results of operations. Furthermore, we may incur debt or issue equity
securities to pay for any future acquisitions. The issuance of equity securities
could be dilutive to our existing stockholders.
OUR FAILURE TO ENHANCE OUR EXISTING PRODUCTS AND INTRODUCE NEW PRODUCTS ON A
TIMELY BASIS COULD CAUSE OUR REVENUE TO FALL.
We are continually developing significant enhancements for our
e-messaging services and products. Any delay or difficulty associated with the
introduction of these enhancements could significantly harm our business,
results of operations and financial condition. We also may not be able to
develop the underlying core technologies necessary to create new products or
enhancements, or to license those products from third parties.
WE NEED TO ATTRACT AND RETAIN QUALIFIED PERSONNEL AND MAY NOT BE ABLE TO DO SO.
Our success depends on the continued service of our key senior
management personnel, in particular, A. Laurence Jones, our Chief Executive
Officer. The loss of any member of our senior management team could have a
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material adverse effect on our future operating results. Our future success also
depends on our continuing to attract, retain and motivate highly skilled
employees. We face significant competition for individuals with the skills and
experience required to perform in required roles and may not be able to attract
or retain such individuals in the future. Our management team is new and may not
be able to function effectively.
OUR MANAGEMENT TEAM HAS ONLY WORKED TOGETHER FOR A SHORT PERIOD OF TIME AND MAY
NOT WORK WELL TOGETHER.
Virtually all of our executive officers, including our Chief Executive
Officer, Vice President of Sales and Marketing and Vice President of Mergers and
Acquisitions, have joined our company in 1999. Due to the fact that many of our
executive officers are new to our company and never have worked together, our
management may not be able to function effectively, individually or as a team.
WE ANTICIPATE FLUCTUATIONS IN OUR FUTURE OPERATING RESULTS.
We expect that our future operating results will fluctuate
significantly. These fluctuations may be due to a number of factors, many of
which are beyond our control. Some of the factors that may cause fluctuations
include the following:
o Market response to our e-messaging services;
o Difficulties in the development or deployment of new messaging
products or services;
o The timing and rate at which we increase our expenses to support
projected growth;
o Fluctuating market demand for our products and services;
o The degree of acceptance of the Internet as a medium for
communicating with customers;
o Product introductions and service offerings by our competitors;
o The mix of the products and services provided by us; and
o The cost of compliance with applicable government regulations,
including anti-SPAM legislation.
Our revenue for the foreseeable future will remain dependent on
e-messaging activity, the fees that we charge for our services and license fees
for software products. These future revenues are difficult to forecast. In
addition, we plan to significantly increase our operating expenses to increase
our sales and marketing operations, to upgrade and enhance our e-messaging
solutions and to market and support our solutions. We may be unable to adjust
spending quickly enough to offset any unexpected revenue shortfall. If we have a
shortfall in revenue in relation to our expenses, or if our expenses precede
increased revenue, then our business, results of operations and financial
condition would be materially and adversely affected. This would likely affect
the market price of our common stock in a manner which may be unrelated to our
long-term operating performance.
We believe that marketing and advertising sales in traditional media,
such as television and radio, generally are lower in the first calendar quarter
of each year. Seasonal or cyclical patterns may develop in our industry if our
market makes the transition from an emerging to a more developed medium. Our
revenue may also be affected by seasonal and cyclical patterns in Internet
e-messaging spending if they emerge.
We believe that period-to-period comparisons of our operating results
are not meaningful and should not be relied upon as an indication of our future
performance. Due to the factors we have listed above and other factors, it is
likely that our future operating results will at times not meet the expectations
of market analysts or investors. If our operating results fail to meet
expectations, the price of our common stock could fall.
WE NEED TO EFFECTIVELY MANAGE OUR GROWTH.
An effective planning and management process is required to
successfully implement our business plan in the rapidly evolving market for
Internet e-messaging. We continue to increase the scope of our operations, and
we
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have grown our workforce substantially. As of January 1, 1995, we had 5
employees and, as of August 17, 1999, we had 208 employees. In addition, we plan
to continue to expand our sales and marketing and service offerings. This growth
has placed, and our anticipated future growth in our operations will continue to
place, a significant strain on our management systems and resources. We expect
that we will need to continue to improve our financial and managerial controls
and reporting systems and procedures, and will need to continue to expand, train
and manage our workforce. Our future performance also may depend on the
effective integration of acquired businesses. Such integration, even if
successful, may take a significant period of time and expense, and may place a
significant strain on our resources. We recently relocated a computer processing
center from San Diego, California to a facility in Colorado. Our business,
results of operations and financial condition will be materially and adversely
affected if we are unable to effectively manage our expanding operations or the
relocation of our computer processing center.
WE DEPEND ON THIRD-PARTY PROVIDERS OVER WHOM WE HAVE NO CONTROL TO OPERATE OUR
MESSAGING PLATFORM.
We depend heavily on several third-party providers of Internet and
related telecommunication services, including hosting and co-location companies,
in operating our messaging platform. These companies may not continue to provide
services to us without disruptions in service, at the current cost, or at all.
Although we believe that we could obtain these services from other sources if
need be, the costs associated with any transition to a new service provider
would be substantial, requiring us to reengineer our computer systems and
telecommunications infrastructure to accommodate a new service provider. This
process would be both expensive and time-consuming.
In addition, failure of our Internet and related telecommunications
providers to provide the data communications capacity in the time frame required
by us could cause interruptions in the services we provide. Despite precautions
taken by us, unanticipated problems affecting our computer and
telecommunications systems in the future could cause interruptions in the
delivery of our e-messaging services, causing a loss of revenue and potential
loss of customers.
WE RELY ON A FEW CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR REVENUE.
A significant portion of our revenues are generated by a limited number
of customers. We expect that we will continue to depend on large contracts with
a small number of significant customers. This situation can cause our revenue
and earnings to fluctuate between quarters based on the timing of contracts.
None of our customers has any obligation to purchase additional products or
services from us. Consequently, if we fail to develop relationships with
significant new customers, our business and financial condition will suffer.
COMPETITION IN OUR INDUSTRY IS INTENSE.
We know of no competitor that offers the full range of solutions
provided by us. However, the market for our products and services is intensely
competitive. There are no substantial barriers to entry into our business, and
we expect that established and new entities will enter the market for
e-messaging services and interactive Internet communications in the near future.
Our principal competitors in the e-messaging services arena include
24x7, Inc., Axciom, Inc., Cyber Data Systems, Inc., DoubleClick, Inc., eGain
Communications Corporation, EmailChannel, Inc., Exactis.com, Inc., Experian,
Inc., Kana Communications, Inc., MarketHome, Inc., MatchLogic, Inc., Mustang
Software, Inc., NetCreations, Inc., PostX Corporation and ReplyNet, Inc. We also
compete with BroadVision, Inc., Digital Impact, E-Care Group and Mypoints.com,
Inc. for one-to-one marketing.
We may experience additional competition from Internet service
providers, or ISPs, and other large established businesses that enter the market
for e-messaging services. Companies such as ADVO Inc., America Online, Inc.,
AT&T, IBM Corporation, Harte-Hanks, Inc., Hewlett-Packard Company, Integrion
Financial Network LLC, The Interpublic Group of Companies, Inc., Microsoft
Corporation, Netscape Communications and Foote Cone & Belding, some of whom are
current clients of ours, which possess large, existing customer bases,
substantial financial resources and established distribution channels could
develop, market or resell a number of messaging services.
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The Internet, in general, and our e-messaging solutions, in particular,
also must compete for a share of advertisers' total advertising budgets with
traditional advertising media such as television, radio, cable and print.
Consequently, we compete with advertising and direct marketing agencies. To the
extent that e-messaging is perceived to be a limited or ineffective advertising
medium, companies may be reluctant to devote a significant portion of their
advertising budget to our e-messaging solutions, which could limit the growth of
e-messaging and would negatively effect our business.
We also expect that competition may increase as a result of industry
consolidation. Potential competitors may choose to enter the market for
e-messaging services by acquiring one or more of our existing competitors or by
forming strategic alliances with such competitors. In addition, current and
potential competitors have established or may establish cooperative
relationships among themselves or with third parties to increase the ability of
their products or services to address the needs of our potential e-messaging
customers. Accordingly, it is possible that new competitors or alliances may
emerge and rapidly acquire significant market share. Increased competition is
likely to result in price reductions, reduced gross margins and loss of market
share, any of which would have a material adverse effect on our business,
results of operations and financial condition. We also may experience
competition from internal information systems and development groups of our
current and prospective clients that have better access to senior management.
Many of our current and potential competitors have longer operating
histories, greater name recognition, larger customer bases, more diversified
lines of products and services and significantly greater resources than we do.
These competitors may be able to undertake more extensive marketing campaigns,
adopt more aggressive pricing policies and make more attractive offers to
potential customers. In addition, many of our current or potential competitors
have broad distribution channels that may be used to bundle competing products
or services directly to end-users or purchasers. If these competitors bundle
competing products or services for their customers, the demand for our products
and services could substantially decline. As a result of the above factors, we
cannot assure you that we will compete effectively with current or future
competitors or that competitive pressures will not have a material adverse
effect on our business, financial condition and results of operations.
THE MARKETS FOR OUR PRODUCTS ARE UNDEVELOPED AND RAPIDLY CHANGING, WHICH MAKES
AN INVESTMENT IN OUR COMPANY RISKY.
The Internet and Internet e-messaging markets are characterized by
rapidly changing technologies, evolving industry standards, frequent new product
and service introductions, changing customer demands and increasing numbers of
services providers. Our products and services are designed around current
technical standards and our revenue depends on continued industry acceptance of
these standards. While we intend to provide compatibility with the most popular
industry standards, widespread adoption of a proprietary or closed standard
could prevent us from doing so. The standards on which our products and services
are or will be based may not be accepted by the industry.
New market entrants have introduced or are developing products and
services for use on the Internet and the World Wide Web that compete with our
products. The products, services or technologies developed by others may render
our products and services noncompetitive or obsolete. Accordingly, our future
success will depend on our ability to adapt to rapidly changing technologies and
to enhance existing solutions and develop and introduce a variety of new
solutions to address new industry standards and our customers' changing demands.
We may experience difficulties that could delay or prevent the successful
design, development, introduction or marketing of our solutions. In addition,
our new solutions or enhancements must meet the requirements of our current and
prospective customers and must achieve significant market acceptance. Material
delays in introducing new solutions and enhancements may cause customers to
forego purchases of our solutions and purchase those of our competitors.
The degree to which our messaging platform is accepted and used in the
marketplace will depend on continued growth in the use of e-mail as a primary
means of communications by businesses and consumers. An increase in the use of
e-messaging also will depend on market acceptance of e-mail as a method for
targeted marketing of products and services. Our ability to successfully
differentiate our services from random mass e-mailing products and services
which have encountered substantial resistance from consumers will also be
important. Businesses that already have invested substantial resources in
traditional or other methods of conducting business may be reluctant to adopt
new commercial methods or strategies that may limit or compete with their
existing
7
<PAGE> 10
businesses. Individuals with established patterns of purchasing goods and
services may be reluctant to alter those patterns.
WE FACE RISKS OF DEFECTS AND DEVELOPMENT DELAYS IN OUR PRODUCTS AND SERVICES.
Products and services based on sophisticated software and computing
systems often encounter development delays. Our underlying software may contain
hidden errors and failures when introduced or when usage increases. It is
possible that we may experience delays in the development of the software and
computing systems underlying our services. Despite testing that our clients and
we conduct, we may not locate errors if they occur. Also, we may experience
development delays. These occurrences could harm our reputation and revenue
growth.
IF CURRENT GROWTH RATES CONTINUE, THE CAPACITY OF OUR SOFTWARE OR HARDWARE COULD
BE STRAINED, LEADING TO SLOWER RESPONSE TIMES OR SYSTEM FAILURES.
If the volume of messages that our systems process significantly
increases, the capacity of our software or hardware could be strained. This
could lead to slower response time or system failures. We have made and intend
to continue to make substantial investments to increase our server capacity by
adding new servers and upgrading our software as necessary. However, our
products and services may not be able to meet the growing demand as the number
of World Wide Web and Internet users increases. We also depend, as do our
customers, on Web browsers, e-mail clients and Internet and online service
providers for access to our services. Some users of our services have
experienced difficulties due to system failures unrelated to our system,
products or services. If we cannot effectively address these capacity
constraints, our business and financial condition could be materially and
adversely affected.
THE SUCCESS OF OUR MESSAGING PLATFORM DEPENDS ON INCREASED USAGE AND THE
STABILITY OF THE INTERNET.
Our success will depend, in large part, upon the maintenance of the
Internet infrastructure, such as a reliable network backbone with the necessary
speed, data capacity and security, and timely development of enabling products
such as high speed modems, for providing reliable Internet access and services
and improved content. We cannot assure you that the Internet infrastructure will
continue to effectively support the demands placed on it as the Internet
continues to experience increased numbers of users, frequency of use or
increased bandwidth requirements of users. Even if the necessary infrastructure
or technologies are developed, we may have to spend considerable amounts to
adapt our solutions accordingly. Furthermore, the Internet has experienced a
variety of outages and other delays due to damage to portions of its
infrastructure. Any future outages or delays could impact the Internet sites of
customers using our solutions.
We believe that the future of the Internet as a center for commerce
will depend in significant part on the following factors:
o Continued rapid growth in the number of households and commercial,
educational and government institutions with access to the
Internet;
o The level of usage by individuals;
o The number and quality of products and services designed for use on
the Internet; and
o Expansion of the Internet infrastructure.
The degree to which e-mail will become a common method of communication
depends on the extent that users increasingly prefer e-mail over traditional
means of communication. The growth of e-mail also depends on widespread access
to reliable and affordable e-mail services by individuals, businesses and other
organizations. Because usage of the Internet as a medium for on-line exchange of
information, advertising, merchandising and entertainment is a recent
phenomenon, it is difficult to predict whether the number of users drawn to the
Internet will continue to increase and whether any significant market for our
e-messaging platform, or any substantial commercial use of the Internet, will
develop. We cannot assure you that Internet usage patterns, and reliance on
e-mail communication in particular, will continue to grow and will not decline
as the newness of this method of communication wears off. It also is uncertain
whether the cost of Internet access will decrease. If either the Internet
8
<PAGE> 11
or e-mail communication fails to achieve increased acceptance and does not
become accessible to a broad audience at moderate costs, the market for our
products and services will be jeopardized. The success of our business also
depends on a significant expansion of the Internet infrastructure to provide
adequate Internet access and proper management of Internet traffic.
ANY SYSTEM FAILURE MAY HARM OUR BUSINESS OR REPUTATION.
The continuing and uninterrupted performance of our computer systems
and our customers' computer systems is critical to our ability to provide
outsourced services. Sustained or repeated system failures would reduce the
attractiveness of our solutions to our customers and could harm our business
reputation. Slower response time or system failures may also result from
straining the capacity of our deployed software or hardware due to an increase
in the volume of e-messaging delivered through our servers. To the extent that
we do not effectively address any capacity constraints or system failures, our
business, results of operations and financial condition would be materially and
adversely affected.
Our operations are dependent on our ability to protect our computer
systems against damage from fire, power loss, water damage, telecommunications
failures, vandalism, infection by computer viruses, other malicious acts and
similar unexpected adverse events. In addition, interruptions in our solutions
could result from the failure of our Internet and related telecommunications
providers to provide the necessary data communications capacity in the time
frame we require. Despite precautions we have taken, unanticipated problems
affecting our systems have from time to time in the past caused, and in the
future could cause, interruptions in the delivery of our solutions. Most of our
back-end systems for disaster recovery presently are redundant and we expect all
of our back-end systems to be fully redundant by December 1, 1999. Our business,
results of operations and financial condition could be materially and adversely
affected by any damage or failure that interrupts or delays our operations.
WE FACE SECURITY RISKS AND POTENTIAL LIABILITY ASSOCIATED WITH MISAPPROPRIATION
OF CONFIDENTIAL INFORMATION.
We currently retain highly confidential customer information in a
secure database server. We cannot assure you, however, that we will be able to
prevent unauthorized individuals from gaining access to this database server.
Any unauthorized access to our servers could result in the theft of confidential
customer information such as e-mail addresses. It also is possible that one of
our employees could attempt to misuse confidential customer information,
exposing us to liability. We use disclaimers and limitation of warranty
provisions in our client agreements in an attempt to limit our liability to
clients, including liability arising out of systems failure. However, such
provisions may not be enforceable or effective in limiting our exposure to
damage claims.
OUR INSURANCE COVERAGE MAY NOT BE ADEQUATE TO COMPENSATE US FOR ALL POTENTIAL
LOSSES.
Although we carry insurance, which we believe to be adequate, the
coverage it provides may not be adequate to compensate us for all losses that
may occur. We are in the process of taking precautions to protect both our
company and our customers from events that could interrupt delivery of our
products and services or that could result in a loss of transaction or customer
data. However, these measures will not eliminate a significant risk to our
operations from a natural disaster or systems failure. We cannot guarantee that
these measures would protect the company from an organized effort to inundate
our servers with massive quantities of e-mail or other Internet message traffic
which could overload our systems and result in a significant interruption of
service. Our business interruption insurance would not fully compensate us for
lost revenue, income, additional costs or increased costs that we would
experience during the occurrence of any disruption of our computer systems. We
cannot guarantee that we will be able to obtain sufficient coverage on
reasonable terms or at all in the future.
OUR MEANS OF PROTECTING OUR PROPRIETARY RIGHTS MAY BE INADEQUATE AND OUR
COMPETITORS MAY DEVELOP SIMILAR TECHNOLOGY.
We rely on a combination of trade secret, copyright and trademark laws,
nondisclosure agreements, and other contractual provisions and technical
measures to protect our proprietary rights. We believe that, due to the rapid
pace of technological innovation for Internet products, our ability to establish
and maintain a position of technology leadership in the industry depends more on
the skills of our development personnel than upon the legal protections afforded
our existing technology. Trade secret, copyright and trademark protections may
not be
9
<PAGE> 12
adequate to safeguard the proprietary software underlying our products and
services. We may not have adequate remedies for any breach and our trade secrets
may otherwise become known. Competitors may be able to develop functionally
equivalent e-messaging technologies without infringing any of our intellectual
property rights. Despite our efforts to protect our proprietary rights,
unauthorized parties may attempt to copy or otherwise obtain and use products or
technology that we consider proprietary, and third parties may attempt to
develop similar technology independently. In addition, effective protection of
intellectual property rights may be unavailable or limited in certain countries.
Accordingly, our means of protecting our proprietary rights may not be adequate
and our competitors may independently develop similar technology.
We generally enter into confidentiality or license agreements with our
employees, consultants and corporate partners, and generally control access to
and distribution of our technologies, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
our solutions or technologies. We cannot assure you that the steps we have taken
will prevent misappropriation of our solutions or technologies, particularly in
foreign countries where laws or law enforcement practices may not protect our
proprietary rights as fully as in the United States.
We have licensed, and we may license in the future, elements of our
trademarks, trade dress and similar proprietary rights to third parties. While
we attempt to ensure that the quality of our brand is maintained by these
business partners, such partners may take actions that could materially and
adversely affect the value of our proprietary rights or our reputation. In
addition, we currently license certain software and communication systems from
third parties. Our failure to maintain these licenses, or to find replacements
for such technology in a timely and cost-effective manner, could have a material
adverse effect on our business, results of operations and financial condition.
WE HAVE IN THE PAST, AND MAY IN THE FUTURE, BECOME INVOLVED IN PATENT
INFRINGEMENT CLAIMS WHICH RESULT IN A SIGNIFICANT DRAIN ON OUR RESOURCES AND
PREVENT OUR MANAGEMENT TEAM FROM FOCUSING ON MORE PROFITABLE TASKS.
As the volume of Internet commerce increases, and the number of
products and service providers that support Internet commerce increases, we
believe that Internet commerce technology providers may become increasingly
subject to infringement claims. We have been subject to claims of alleged
infringement of intellectual property rights in the past, and may become
involved in additional claims in the future. For example, on October 19, 1998,
Exactis.com, Inc. filed a complaint against our subsidiary Epub in the Federal
District Court of Colorado. The complaint alleges infringement of a patent held
by Exactis.com, Inc. The complaint seeks injunctive relief and unspecified
damages. Any such claims, with or without merit, could be time consuming, result
in costly litigation, disrupt or delay the enhancement or shipment of our
products and services or require us to enter into royalty or licensing
agreements. Such royalty or licensing agreements, if required, may not be
available on terms acceptable or favorable to us, which could have a material
adverse effect on our business, financial condition and results of operations.
In addition, we may initiate claims or litigation against third parties
for infringement of our proprietary rights or to establish the validity of our
proprietary rights. On October 29, 1998, we filed a complaint in the U.S.
District Court for the Southern District of California against Exactis.com, Inc.
The complaint alleges infringement of a patent held by us and seeks injunctive
relief and unspecified damages. Litigation to determine the validity of any
claims could result in significant expense to us and divert the efforts of our
technical and management personnel from productive tasks, whether or not such
litigation is determined in our favor. In addition, patent litigation such as
the Exactis.com, Inc. lawsuit often gives rise to counterclaims by the
defendants, which could include challenges to the validity of patents held by
us. In the event of an adverse ruling in any such litigation, we may be required
to pay substantial damages, discontinue the use and sale of infringing products,
expend significant resources to develop non-infringing technology or obtain
licenses to infringing technology. Our failure to develop or license a
substitute technology could have a material adverse effect on our business.
IN THE FUTURE, WE MAY BE SUBJECT TO INCREASED GOVERNMENT REGULATION.
Laws and regulations directly applicable to Internet communications,
commerce and advertising are becoming more prevalent. We believe that we are not
currently subject to direct regulation by any government agency in the United
States, other than regulations that are generally applicable to all businesses
and newly enacted
10
<PAGE> 13
laws prohibiting unsolicited commercial e-mail, or spam, or laws intended to
protect minors. A number of legislative and regulatory proposals are under
consideration by federal and state lawmakers and regulatory bodies and may be
adopted with respect to the Internet. Some of the issues that such laws or
regulations may cover include user privacy, obscenity, fraud, pricing and
characteristics and quality of products and services. The adoption of any such
laws or regulations may decrease the growth of the Internet, which could in turn
decrease the projected demand for our products and services or increase our cost
of doing business. Moreover, the applicability to the Internet of existing U.S.
and international laws governing issues such as property ownership, copyright,
trade secret, libel, taxation and personal privacy is uncertain and developing.
Any new legislation or regulation, or application or interpretation of existing
laws, could have a material adverse effect on our business.
OUR STOCK PRICE HAS BEEN VOLATILE IN THE PAST AND MAY BE VOLATILE IN THE FUTURE,
REGARDLESS OF OUR ACTUAL OPERATING PERFORMANCE.
The stock market in general, and Internet companies in particular,
including our company, have experienced extreme price and volume fluctuations
that often have been unrelated or disproportionate to operating performance. The
trading prices of many Internet companies' stocks are at or near historical
highs and these trading prices and price to earnings multiples are substantially
above historical levels. These trading prices and multiples may not be
sustained. Broad market and industry factors may reduce our stock price,
regardless of our actual operating performance. In addition, the trading price
of our common stock could fluctuate in response to factors such as:
o quarterly fluctuations in our revenue and financial results both in
absolute terms and relative to analyst and investor expectations;
o changes in recommendations of securities analysts;
o announcements of technological innovations or new services or
products;
o publicity regarding actual or potential results with respect to
technologies, services or products under development;
o disputes or other developments concerning proprietary rights,
including copyright and litigation matters; and
o other events or factors, many of which are beyond our control.
In the past, companies that have experienced volatility in the market
price of their stock have been the object of securities class action litigation.
If we were the object of securities class action litigation, it could result in
substantial costs and a diversion of management's attention and resources.
POTENTIAL YEAR 2000 PROBLEMS WITH OUR INTERNAL OPERATING SYSTEMS COULD HARM OUR
BUSINESS.
Many computer systems and software products are coded to accept only
two-digit entries in date code fields. Beginning in the year 2000, these date
code fields will need to accept four-digit entries to distinguish 21st century
dates from 20th century dates. As a result, in less than one year, computer
systems and/or software used by many companies may need to be upgraded to comply
with "year 2000" requirements. Since we just recently developed the software for
our messaging platform and are adding new enhancements and functionality
regularly, we believe that our messaging platform is year 2000 compliant. Coding
errors or other defects may be discovered in the future as more testing is
completed or new functionality added.
We rely on a number of software and communications systems provided by
third parties to operate our messaging platform. Any of these could contain
coding which is not year 2000 compliant. These systems include server software
used to operate the network servers, software controlling routers, switches and
other components of the data network, disk management software used to control
the data disk arrays, firewall, security, monitoring and back-up software used
by us, as well as desktop PC applications software. In each case, we employ
widely available software applications from leading third party vendors, and
expect that such vendors will provide any required upgrades or modifications in
a timely fashion. However, if any third party software or communication systems
11
<PAGE> 14
suppliers fail to provide year 2000 compliant versions of the software or system
components we rely upon, our operations, including our messaging platform, could
be disrupted. We have contacted and monitor each of our key suppliers to
validate their efforts to ensure that their software products and communication
systems are year 2000 compliant and will continue to do so throughout the course
of this process.
Year 2000 compliance problems also could undermine the general
infrastructure necessary to support our operations. For instance, we depend on
third-party ISPs to provide connections to the Internet and to customer
information systems. Any interruption of service from ISPs could result in a
temporary interruption of our e-messaging and other services. We have attempted
to address this risk by obtaining the same service capacity from multiple ISPs.
In addition, we rely on two third-party data centers to house some servers and
communications systems. Any interruption in the security, access, monitoring or
power systems at the third-party data centers could result in an interruption of
services. Moreover, it is difficult to predict what effects year 2000 compliance
problems will have on the integrity and stability of the Internet. If businesses
and consumers are not able to reliably access the Internet, or if the ISPs on
which we rely fail to provide us with uninterrupted service, our reputation
could be harmed and the demand for our services could decline, resulting in an
adverse impact to our business, financial condition and results of operations.
With respect to any particular customer, our ability to provide
services to that customer could be adversely affected if that customer fails to
ensure that its software systems are year 2000 compliant. Disruptions in the
information systems of significant customers could temporarily prevent such
customers from accessing or using the messaging platform, which could materially
affect our operating results. The messaging platform is designed to interface
with customer databases and communications systems to retrieve relevant
information from customers' electronic commerce systems or customer databases
and to allow customers to independently control certain features of the service,
including the content of transmitted messages. We cannot assess or control the
degree of year 2000 compliance in our customers' information systems. To address
the risk of disruptions in customer information systems, we designed our
messaging platform to include redundant manual control features which can be
used by such customers. Nevertheless, certain customers may elect to discontinue
use of the e-messaging services until their internal information technology
problems have been alleviated, which would adversely affect our business,
financial condition and results of operations. The spending patterns of current
or potential customers may be affected by year 2000 issues as companies expend
significant resources to correct or update their systems for year 2000
compliance. Because of these expenditures, our customers may have less money
available to pay for services, which could have a material adverse affect on our
business, financial condition and results of operations.
SUBSTANTIAL SALES OF OUR COMMON STOCK BY OUR LARGE STOCKHOLDERS COULD CAUSE OUR
STOCK PRICE TO FALL.
We have a limited number of stockholders that hold a large portion of
our common stock. To the extent our large stockholders sell substantial amounts
of our common stock in the public market, the market price of our common stock
could fall. Additionally, beginning in December 1999, after the expiration of
lock-up agreements entered into by certain of our stockholders, approximately an
additional 6,000,000 shares of our common stock will become freely tradable in
the public market.
PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD PREVENT OR DELAY A
CHANGE IN CONTROL OF OUR COMPANY AND MAY REDUCE THE MARKET PRICE OF OUR COMMON
STOCK.
Provisions in our charter documents may delay, defer or prevent a
change in control of our company that a stockholder may consider favorable, may
discourage bids for our common stock at a premium over the market price of our
common stock and may adversely affect the market price of our common stock and
the voting and other rights of the holders of our common stock. These provisions
include:
o authorizing the issuance of preferred stock without stockholder
approval;
o providing for a classified board of directors with staggered,
three-year terms;
o prohibiting cumulative voting in the election of directors;
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<PAGE> 15
o requiring super-majority voting to effect certain amendments to our
certificate of incorporation and bylaws;
o limiting the persons who may call special meetings of stockholders;
and
o prohibiting stockholder actions by written consent.
Other provisions of Delaware law also may discourage, delay or prevent
someone from acquiring or merging with us.
OUR OFFICERS AND DIRECTORS AND THEIR AFFILIATES EXERCISE SIGNIFICANT CONTROL
OVER OUR COMPANY.
Our directors and executive officers, and certain of their affiliates,
individually and as a group, will be able to effectively control us and direct
our affairs and business, including any determination with respect to the
acquisition or disposition of assets by us, future issuances of common stock or
other securities by us, declaration of dividends on our common stock and the
election of directors. This concentration of ownership may also have the effect
of delaying, deferring or preventing a change in control of our company.
YOU SHOULD NOT RELY ON FORWARD-LOOKING STATEMENTS BECAUSE THEY ARE INHERENTLY
UNCERTAIN.
This prospectus contains certain forward-looking statements that
involve risks and uncertainties. We use words such as "anticipate", "believe",
"expect", "future", "intend", "plan" and similar expressions to identify
forward-looking statements. These statements are only predictions. Although we
believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. You should not place undue reliance on these forward-looking
statements, which apply only as of the date of this prospectus. Our actual
results could differ materially from those anticipated in these forward-looking
statements for many reasons, including the risks faced by us and described on
the preceding pages and elsewhere in this prospectus.
We believe it is important to communicate our expectations to our
investors. However, there may be events in the future that we are not able to
predict accurately or over which we have no control. The risk factors listed
above, as well as any cautionary language in this prospectus, provide examples
of risks, uncertainties and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
Before you invest in our common stock, you should be aware that the occurrence
of the events described in these risk factors and elsewhere in this prospectus
could have a material adverse effect on our business, operating results,
financial condition and stock price.
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<PAGE> 16
SELLING SECURITYHOLDERS
We are registering for resale certain shares of MessageMedia common
stock, including shares of MessageMedia common stock issuable upon exercise of
certain warrants. The following table sets forth (i) the name of the Selling
Securityholders; (ii) the number and percent of shares of MessageMedia common
stock that the Selling Securityholders beneficially owned prior to the offering
for resale of any of the shares of MessageMedia common stock being registered
hereby; (iii) the number of shares of MessageMedia common stock that may be
offered for resale for the account of the Selling Securityholders pursuant to
this Prospectus (the "Resale Shares"); and (iv) the number and percent of shares
of MessageMedia common stock to be held by the Selling Securityholders after the
offering of the Resale Shares (assuming all of the Resale Shares are sold by the
Selling Securityholders). The term "Selling Securityholder" includes the
securityholders listed below.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING NUMBER OF AFTER OFFERING (2)
------------------------- SHARES BEING --------------------------
SELLING SECURITYHOLDERS (1) NUMBER PERCENT (3) OFFERED NUMBER PERCENT (3)
- --------------------------- --------- ----------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C>
Airhart, Ottis 2,150 * 2,150 - -
Bachmeyer, Randall C. (4) 75,334 * 32,326 43,008 *
Balch, James V. 25,805 * 25,805 - -
Bearden, Cheryl 345 * 345 - -
Brower, Kim 1,727 * 1,727 - -
Brown, David 7,168 * 7,168 - -
Buss, Chris 3,455 * 3,455 - -
Campbell, Gary & Simone 17,203 * 17,203 - -
Campbell, Simone 5,182 * 5,182 - -
Chaffin, Lana G. 4,301 * 4,301 - -
Clark, Jon & Judi 3,441 * 3,441 - -
Clark, Jon (5) 30,980 * 9,476 21,504 *
Claussen, Thomas V. 43,009 * 43,009 - -
Clayton, Gregory 14,623 * 14,623 - -
Clayton, James L. 1,508,296 3.0 1,508,296 - -
Cline, John W. 38,708 * 38,708 - -
Cohen Partnership 8,602 * 8,602 - -
Cohen, Gilbert & Patti 8,602 * 8,602 - -
Crabtree, Snellgrove & Rowe 1,491 * 1,491 - -
Croom, David & Chandara 5,735 * 5,735 - -
Croom, David 8,272 * 8,272 - -
Curtis, Richard A. & Kerri L. 8,602 * 8,602 - -
Davis, James 14,336 * 14,336 - -
Dewane, Edward 21,504 * 21,504 - -
DuMont, Jeanie 345 * 345 - -
Fletcher, June/June-Collier 34,407 * 34,407 - -
Foster, Daniel 691 * 691 - -
Harley, Rick 149,383 * 149,383 - -
Hoffman, Steve 5,873 * 5,873 - -
Holton, Thomas J. 17,203 * 17,203 - -
Hubbard, John (IRA) 17,203 * 17,203 - -
Jemison Investments 121,859 * 121,859 - -
JHF Holdings, Inc. 17,203 * 17,203 - -
Johnson, Stan 14,630 * 14,630 - -
Kimery, Kevin D. 18,637 * 18,637 - -
Lee, Michael T. 11,608 * 11,608 - -
Legacy Capital 64,151 * 64,151 - -
Little, Jim 10,892 * 10,892 - -
Lossett, James K. 106,661 * 106,661 - -
</TABLE>
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<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C> <C>
Maurice, Desiree K. 3,708 * 3,708 - -
Mavar, Geoffrey P. 21,504 * 21,504 - -
McSorely, Joseph T. 8,602 * 8,602 - -
Mead, Marcus 23,421 * 23,421 - -
Mead, Matt 19,354 * 19,354 - -
Mead, Melia M. 19,353 * 19,353 - -
Momentum LLC 50,176 * 50,176 - -
Morgan, Mike 1,727 * 1,727 - -
Mountain Shade Devel. 8,602 * 8,602 - -
Obermann, David/Stacy 4,301 * 4,301 - -
Obermann, David 4,301 * 4,301 - -
Obermann, Stuart (6) 201,609 * 158,601 43,008 *
Outland, James K. 8,602 * 8,602 - -
Pizitz, Merritt 8,602 * 8,602 - -
Pizitz, Michael 8,602 * 8,602 - -
Pizitz, Richard 8,602 * 8,602 - -
Portrush Group LLC 43,009 * 43,009 - -
Reddick Family Trust 17,203 * 17,203 - -
Reddick, Troy 5,297 * 5,297 - -
Reed, James W. 8,602 * 8,602 - -
Renteria, Kristene 1,727 * 1,727 - -
Richgood Corp. 36,116 * 36,116 - -
Riggle, Robert 3,596 * 3,596 - -
Ritchie, Alan 25,805 * 25,805 - -
RNR Ventures LLC 52,686 * 52,686 - -
Rollow, Brad 17,203 * 17,203 - -
Sansom, Steven 18,637 * 18,637 - -
Sayler Jr., John "Jack" M. 8,602 * 8,602 - -
Spencer III, William 28,673 * 28,673 - -
Stein, Larry 86,017 * 86,017 - -
Straw, John 2,150 * 2,150 - -
Styslinger III, Lee 34,407 * 34,407 - -
Thames, Walter 20,263 * 20,263 - -
Thornton, Derek 27,956 * 27,956 - -
Thornton, Steve 55,911 * 55,911 - -
Vestal, Gib 6,451 * 6,451 - -
White, Sidney R. 3,211 * 3,211 - -
White, Sidney R. & Judith 8,602 * 8,602 - -
White, Sidney III 2,150 * 2,150 - -
White, Sidney Jr. 4,301 * 4,301 - -
White, William G. 2,150 * 2,150 - -
Wilkinson, Brent 5,527 * 5,527 - -
*
*
Almanori Limited 5,530 * 5,530 - -
Bering, Charles A. 1,231 * 1,231 - -
Berkowitz, Robert 1,726 * 1,726 - -
Bonham, Mark (7) 26,839 * 22,911 3,928 *
Bravo-Trudell, Christie 78 * 78 - -
Brizendine, Linda K. 1,167 * 1,167 - -
Bromm, Tom 67 * 67 - -
Cai, Julia 344 * 344 - -
Chang, Candice 196 * 196 - -
Chisholm, John 185,740 * 185,740 - -
Chisholm, John D. and Elda D. as JT 1,378 * 1,378 - -
TEN
</TABLE>
15
<PAGE> 18
<TABLE>
<S> <C> <C> <C> <C> <C>
Chisholm, John, Sr. & John Dana as 2,107 * 2,107 - -
JT TEN
Conte, Francine R. 778 * 778 - -
Convergence Entrepreneurs Fund I, 16,590 * 16,590 - -
L.P.
Convergence Ventures I, L.P. 417,102 * 417,102 - -
Cooper, Alan 186 * 186 - -
Cusson, Carol A. 778 * 778 - -
David William Hanna Trust (8) 35,291 * 32,010 3,281 *
Duncan, David 4,375 * 4,375 - -
Ebesu, Dean 473 * 473 - -
Forman, Ed 254 * 254 - -
Geneva Group International 4,355 * 4,355 - -
Gnau, Geoffrey 157 * 157 - -
Goldstein, Steven H. 389 * 389 - -
Goodrich, Robert 778 * 778 - -
Hall Revocable Trust 27,650 * 27,650 - -
Hanna, John D. 1,944 * 1,944 - -
Hanna, Laurie 1,944 * 1,944 - -
Hanna, Molly K. 1,944 * 1,944 - -
Hanna, William J. 1,944 * 1,944 - -
Helix (PEI) Inc. 552,743 1.1 552,743 - -
Henry, George 12,501 * 12,501 - -
Higgins, Roger 2,559 * 2,559 - -
Hill, Christy 78 * 78 - -
Kallet, Michael 395 * 395 - -
K-H Investors (1996-A), L.P. 44,949 * 44,949 - -
K-H Investors (1997-A), L.P. 62,489 * 62,489 - -
La Rocca, Joseph T. 3,675 * 3,675 - -
Lyons, Mike 710 * 710 - -
McDonald, Robert J. 1,570 * 1,570 - -
Medearis, Mark A. 221 * 221 - -
Minnesota Private Equity Fund, L.P. 11,060 * 11,060 - -
Moran, Patricia 160 * 160 - -
Multinvest Limited 2,765 * 2,765 - -
Ngo, Martha 343 * 343 - -
Ornest, James 290 * 290 - -
Partech Europe Partners III C.V. 33,180 * 33,180 - -
Partech U.S. Partners III C.V. 179,726 * 179,726 - -
Parvest U.S. Partners II C.V. 55,300 * 55,300 - -
Peranich, David 853 * 853 - -
Perkins, Jack B. 1,214 * 1,214 - -
Robinson's Bay Partners 22,120 * 22,120 - -
Ruehle, Roger 389 * 389 - -
Russell, Robert A. 1,214 * 1,214 - -
Schroeder, Leslie 1,836 * 1,836 - -
Sison, John 338 * 338 - -
SOFTBANK Ventures, Inc. (9) 22,285,074 44.7 254,036 22,031,038 44.2%
T'ang Advisory Services Limited 7,863 * 7,863 - -
VLG Investments 1997 885 * 885 - -
Williams, Scott 518 * 518 - -
Wilmot, Robert W. 3,565 * 3,565 - -
Yap, Harvey 10,702 * 10,702 - -
William Blair & Company LLC 48,126 * 48,126 - -
------------
Total 5,323,914
</TABLE>
- ----------
* less than 1%
16
<PAGE> 19
(1) This table is based upon information supplied to us by the Selling
Securityholders.
(2) Assumes the sale of all of the Resale Shares.
(3) Applicable percentage of ownership is based on 49,916,098 shares of
MessageMedia common stock issued and outstanding on September 1,
1999, adjusted as required by rules promulgated by the SEC.
(4) Includes options to purchase 43,008 shares of MessageMedia common
stock that are exerciseable within sixty days.
(5) Includes options to purchase 21,504 shares of MessageMedia common
stock that are exerciseable within sixty days.
(6) Mr. Obermann is Vice President of Commercial Software Products of
MessageMedia. Includes options to purchase 43,008 shares of
MessageMedia common stock that are exerciseable within sixty days.
(7) Includes options to purchase 3,928 shares of MessageMedia common
stock that are exerciseable within sixty days.
(8) Includes options to purchase 3,281 shares of MessageMedia common
stock that are exerciseable within sixty days.
(9) SOFTBANK Ventures, Inc. is a wholly owned subsidiary of SOFTBANK
Corp. Includes 10,575,775 shares held of record by SOFTBANK America
Inc., a wholly owned subsidiary of SOFTBANK Holdings, Inc., which in
turn is a wholly-owned subsidiary of SOFTBANK Corp., 10,376,950
shares held of record by SOFTBANK Technology Ventures IV LP, an
affiliate of SOFTBANK Corp., 879,488 shares held of record by
Softven No. 2 Investment Enterprise Partnership, an affiliate of
SOFTBANK Corp., 254,036 shares held by SOFTBANK Ventures, Inc.,
which is wholly owned by SOFTBANK Corp., and 198,825 shares held of
record by SOFTBANK Technology Advisors Fund LP, an affiliate of
SOFTBANK Corp. SOFTBANK Ventures, Inc. is a wholly owned subsidiary
of SOFTBANK Corp. The shares do not include 487,975 shares owned
by Bradly Feld including options to purchase 6,667 shares of
MessageMedia common stock that are exerciseable within sixty days,
options to purchase 6,667 shares of MessageMedia common stock
that are exerciseable within sixty days and are held by Gary
Rieschel or options to purchase 6,667 shares of MessageMedia
common stock that are exerciseable within sixty days and are held by
Ronald Fisher. Messrs. Feld Rieschel and Fisher are three of
MessageMedia's Directors who are deemed to be affiliates of SOFTBANK
Corp. and its affiliates. Messrs. Feld Rieschel and Fisher disclaim
the beneficial ownership of the shares of MessageMedia common stock
that are held by SOFTBANK Corp. and its affiliates.
17
<PAGE> 20
PLAN OF DISTRIBUTION
The Resale Shares may be sold from time to time by the Selling
Securityholders in one or more transactions at fixed prices, at market prices at
the time of sale, at varying prices determined at the time of sale or at
negotiated prices. The Selling Securityholders may offer their Resale Shares in
one or more of the following transactions:
o On any national securities exchange or quotation service on
which the MessageMedia common stock may be listed or quoted at
the time of sale, including The Nasdaq National Market;
o In the over-the-counter market;
o In private transactions;
o Through options;
o By pledge to secure debts or other obligations; or
o A combination of any of the above transactions.
The Selling Securityholders may effect such transactions by selling to
or through one or more broker-dealers, and such broker-dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Securityholders. The Selling Securityholders and any
broker-dealers that participate in the distribution may, under certain
circumstances, be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions received by such broker-dealers and any
profits realized on any resale of the Resale Shares by them might be deemed to
be underwriting discounts and commissions under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the Resale Shares may not simultaneously
engage in market making activities with respect to MessageMedia's common stock
for a period of two business days prior to the commencement of such
distribution. In addition and without limiting the foregoing, the Selling
Securityholders and any other person participating in a distribution will be
subject to applicable provisions of the Securities Exchange Act and the rules
and regulations thereunder, including without limitation, Regulation M under the
Exchange Act, which may limit the timing of purchases and sales of shares of
MessageMedia common stock by the Selling Securityholders or any such other
person.
We will make copies of this Prospectus available to the Selling
Securityholders and have informed the Selling Securityholders of the need for
delivery of a copy of this Prospectus to each purchaser of the Resale Shares
prior to or at the time of any sale of the Resale Shares.
The Selling Securityholders will pay all underwriting discounts,
commissions, transfer taxes and other expenses associated with the sale of the
Resale Shares by them. We will pay all costs and expenses associated with the
registration of the Resale Shares. We estimate that our expenses in connection
with this offering will be approximately $33,316.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of any of the
Resale Shares by the Selling Securityholders. All proceeds from the sale of the
Resale Shares will be for the accounts of the Selling Securityholders.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Cooley Godward LLP, Boulder, Colorado.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 1998, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our
18
<PAGE> 21
financial statements and schedule are incorporated by reference in reliance on
Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
The audited historical financial statements of Email Publishing, Inc.
incorporated in this prospectus by reference to MessageMedia, Inc.'s Form 8-K/A
dated February 19, 1999 have been so incorporated in this prospectus in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
19
<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses payable by the Registrant in
connection with the sale of the common stock being registered. All the amounts
shown are estimates except for the registration fee.
<TABLE>
<S> <C>
Registration Fee............................. $ 18,316
Legal fees and expenses...................... $ 10,000
Accounting fees and expenses................. $ 5,000
------------
Total........................................ $ 33,316
============
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145(a) of the Delaware General Corporation Law (the "DGCL")
provides in relevant part that "[a] corporation may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful." With
respect to derivative actions, Section 145(b) of the DGCL provides in relevant
part that "[a] corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor...
[by reason of his service in one of the capacities specified in the preceding
sentence] against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expense
which the Court of Chancery and such other court shall deem proper."
Article X of the Company's Certificate of Incorporation states that to
the fullest extent permitted by DGCL, no director of the Registrant shall be
personally liable to the Registrant or its stockholders for monetary damages for
breach of fiduciary duty as a director.
Article V of the Registrant's Bylaws provides that the Company may
indemnify each person who is or was a director of the Company to the full extent
permitted by the DGCL. Such Article also provides that the Registrant may, but
is not required to, indemnify its employees and agents (other than directors and
officers) to the extent and in the manner permitted by the DGCL.
The Registrant has entered into an indemnification agreement with each
of its directors and officers and intends to maintain insurance for the benefit
of its directors and officers insuring such persons against certain liabilities,
including liabilities under the securities laws.
II-1
<PAGE> 23
ITEM 16. EXHIBITS
a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
*3.1 Registrant's Amended and Restated Certificate of Incorporation.
*3.2 Registrant's Bylaws.
**3.3 Registrant's Certificate of Amendment of Amended and Restated
Certificate of Incorporation.
5.1 Opinion of Cooley Godward LLP.
10.1 Sublease Agreement dated as of June 1, 1999 between the Company
and Sievers Instruments, Inc.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4.
</TABLE>
- ------------
* Filed as an exhibit to Registrant's Registration Statement on Form S-1
(No. 333-14573) and incorporated herein by reference, as amended
through the date hereof.
** Filed as an exhibit to Registrant's Current Report on Form 8-K, filed
on December 23, 1998, and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 15 or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by Registrant is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that clauses (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by these
clauses is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement;
II-2
<PAGE> 24
(2) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boulder, State of Colorado, on the 7th day of
September, 1999.
MESSAGEMEDIA, INC.
By: /s/ A. Laurence Jones
-------------------------------------
A. Laurence Jones
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints A. Laurence Jones and Mary Beth
Loesch, his or her true and lawful attorneys-in-fact each acting alone, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead in any and all capacities to sign any or all amendments
(including post-effective amendments) to this registration statement, and any
registration statement filed pursuant to Rule 462(b) under the Securities Act of
1933 in connection with the registration under the Securities Act of 1933 of
equity securities of MessageMedia, Inc. and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact, or their substitutes, each acting
alone, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of the
Registrant in the capacities on this 7th day of September 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
Co-Chairman of the Board of Directors
- --------------------------------
Bradley A. Feld
/s/ Gerald A. Poch Co-Chairman of the Board of Directors
- --------------------------------
Gerald A. Poch
/s/ A. Laurence Jones President, Chief Executive Officer and
- -------------------------------- Director (Principal Executive,
A. Laurence Jones Financial and Accounting Officer)
/s/ Dennis J. Cagan Director
- --------------------------------
Dennis J. Cagan
/s/ Terry Duryea Director
- --------------------------------
Terry Duryea
Director
- --------------------------------
Ronald D. Fisher
/s/ Pamela H. Patsley Director
- --------------------------------
Pamela H. Patsley
/s/ Gary E. Rieschel Director
- --------------------------------
Gary E. Rieschel
</TABLE>
<PAGE> 26
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
*3.1 Registrant's Amended and Restated Certificate of Incorporation.
*3.2 Registrant's Bylaws.
**3.3 Registrant's Certificate of Amendment of Amended and Restated Certificate of
Incorporation.
5.1 Opinion of Cooley Godward LLP.
10.1 Sublease Agreement dated as of June 1, 1999 between the Company and
Sievers Instruments, Inc.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4.
</TABLE>
- ------------
* Filed as an exhibit to Registrant's Registration Statement on Form S-1
(No. 333-14573) and incorporated herein by reference, as amended
through the date hereof.
** Filed as an exhibit to Registrant's Current Report on Form 8-K, filed
on December 23, 1998, and incorporated herein by reference.
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
September 7, 1999
MessageMedia, Inc.
6060 Spine Road
Boulder, CO 80301
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by MessageMedia, Inc., a Delaware corporation (the "Company"),
of a Registration Statement on Form S-3 (the "Registration Statement") including
a related prospectus filed with the Registration Statement (the "Prospectus"),
covering the registration of up to 5,323,914 shares of the Common Stock, $.001
par value, of the Company (the "Securities") on behalf of certain selling
stockholders.
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, the Company's Amended and Restated Certificate of
Incorporation and Bylaws, as amended, and such other records, documents,
certificates, memoranda and other instruments as we deem necessary as a basis
for this opinion. We have assumed the genuineness and authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies thereof and the due execution and delivery
of all documents where due execution and delivery are a prerequisite to the
effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares are validly issued, fully paid and nonassessable.
We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
Cooley Godward LLP
/s/ Michael L. Platt
Michael L. Platt
<PAGE> 1
EXHIBIT 10.1
SUBLEASE AND CONSENT AGREEMENT
THIS SUBLEASE AND CONSENT AGREEMENT (the "Sublease") dated June 1,
1999, is among 6060 Partnership, LLP ("Lessor"), Sievers Instruments, Inc.
("Sublessor"), and MessageMedia, Inc. ("Sublessee").
RECITALS
A. Sublessor is or will be a Tenant in the Premises, located at 6060
Spine Road, Boulder, Colorado (the "Premises"), pursuant to that certain Lease
Agreement, Office and Industrial Space between Lessor and Sublessor, dated
October 21, 1997 attached hereto as Exhibit D and incorporated herein by
reference (the "Lease"). All capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Lease. The Base
Term of the Lease commences May 1, 1998 and extends through May 1, 2005.
B. Sublessee desires to sublease from Sublessor a portion of the
Premises as described on the attached Exhibit A (the "Subpremises"), and
Sublessor desires to sublease the Subpremises to Sublessee on the terms and
conditions set forth below.
C. Lessor is willing to accept and consent to such sublease as set
forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the payment of rent and the
performance of the covenants and agreements by the parties as hereinafter set
forth the parties agree as follows:
1. SUBLESSEE AND TENANT IMPROVEMENTS. Sublessor and Landlord hereby approve and
agree to Sublessee's Tenant improvements as outlined in Exhibit B All Tenant
improvements to be completed shall be at the sole expense of the Sublessee. All
work shall be completed by a licensed contractor, licensed to do work in the
State of Colorado. All work shall be completed in a "good workmanlike"
condition, meeting all applicable City of Boulder rules and regulations. Any
additional Tenant improvements not outlined in Exhibit B shall be subject to
Paragraph 9.
2. SUBLEASE OF THE SUBPREMISES. Pursuant to the terms hereof, Sublessor
hereby agrees to sublease to Sublessee, and Sublessee agrees to sublease from
Sublessor, the Subpremises.
3. TERM. The term of this Sublease ("Sublease Term") shall be 18
months, commencing at 12:01 a.m. on or before June 1, 1999 (the "Commencement
Date"), and terminating at 11:59 p.m. on November 30, 2000 (the "Expiration
Date").
Sublessor and Sublessee hereby agree all parties are relying on the
current Sublessee, Centrobe, vacating the subject space on or before May 31,
1999 as outlined in the Centrobe letter dated April 27, 1999, attached hereto
and made a part of.
1.
<PAGE> 2
4. RENT. Rent for the Subpremises (as defined below) shall be paid on
the first day of each month, and shall be delivered to Sublessor at the address
set forth below. Rent shall be payable without notice, demand, setoff, or
deduction. Rent shall also be comprised of Sublessee's pro rata share of
expenses as outlined below.
<TABLE>
<CAPTION>
BASE RENT NNN TOTAL
------------------- ------------------------- ----------
<S> <C> <C> <C>
Months 1-6 $16,820.00* $8,274.00 $25,094.00
Months 7-12 $21,031.00 $8,274.00 $29,305.00
Months 13-18 $21,031.00 plus CPI $8,274.00 plus CPI for TBD
utilities & NNN increases
</TABLE>
*Months 1-6 are at a reduced rate since Office Area B is leased at a reduced
rate of $3.00 per square foot plus NNN charges.
NNN Charges are defined, but not limited to the following:
<TABLE>
<S> <C>
$1.24 psf Current Real Estate Taxes
$ .10 psf Insurance
$ .70 psf Common Area Maintenance (CAM)
$1.60 psf Utilities (excluding telephone & janitorial services)
---------
$3.64 psf Total Current NNN charges
</TABLE>
On the anniversary of this Lease (including any options to renew and
extensions thereof) the Lease rental rate shall increase according to the
Consumer Price Index (CPI) with a minimum increase of 2.5% and a maximum of 6%
per annum.
5. SECURITY DEPOSIT. Simultaneously with the execution of this
Sublease, Sublessee shall pay to Sublessor the sum of Twenty-Five Thousand
Dollars ($25,000.00), to be held by Sublessor as a security deposit to secure
Sublessee's faithful performance of all terms, conditions and covenants of this
Sublease, including without limitation, the payment of all Rent and Additional
Rent due hereunder. If at any time during the term of this Sublease, the
Sublessee shall be in default in the performance of any provision of this
Sublease, the Sublessor may (but shall not be required to) use the security
deposit, or as much thereof as necessary, in payment of any Rent, Additional
Rent or other sums due under this Sublease in default, in reimbursement of any
expense incurred by Sublessor or in payment of the damages incurred by Sublessor
by reason of default. In such event, Sublessee shall, on written demand of
Sublessor, forthwith remit to Sublessor a sufficient amount in cash to restore
such deposit to its original amount. If such deposit has not been utilized by
Sublessor, such deposit, or as much thereof as has not been used for such
purposes, shall be refunded to Sublessee, without interest, upon full
performance of this Sublease by Sublessee. Sublessor shall have the right to
comingle such deposit with other funds of Sublessor. If the claims of Sublessor
exceed the deposit provided for herein Sublessee shall remain liable for the
balance of such claims.
2.
<PAGE> 3
6. ASSUMPTION AND ACCEPTANCE OF THE PREMISES. Sublessee assumes and
agrees to perform each and every obligation of the Sublessor under the Lease
with respect to the Subpremises that arise during the term hereof; provided,
however, that Sublessee's fulfillment of its obligations under Section 4 shall
replace and be in lieu of any obligations with respect to Rent, Taxes,
Utilities, Common Area Maintenance and other like expenses under the Lease.
Sublessee will accept the Subpremises in its condition as of the Commencement
Date and acknowledges that it shall have no claim against Lessor for any matters
arising prior to the Commencement Date.
7. SUBLESSOR'S RESPONSIBILITY FOR PAYMENT OF RENT AND OTHER CHARGES. In
connection with the sublease of the Subpremises to Sublessee, and
notwithstanding any agreement between Sublessor and Sublessee, Sublessor agrees
to remain responsible to make all payments to Lessor for the rent and all other
charges, and Sublessor shall be responsible to collect any of the same required
hereunder from Sublessee.
8. SUBSEQUENT AMENDMENT. This Sublease may not be subsequently amended
or modified by Lessor, Sublessor, and/or Sublessee without the express written
consent of all parties.
9. TENANT IMPROVEMENTS. Sublessee shall not make any alterations or
Tenant improvements to the Subpremises without obtaining a prior written
approval of Lessor and Sublessor pursuant to the Lease, and Sublessee shall be
solely responsible for the cost of any such modifications to the Subpremises.
10. SECURITY SYSTEM/PHONE SWITCH. During the term of this Sublease,
Sublessor shall have access to the security system for use thereof within the
Premises (with the exception of the Subpremises); provided that Sublessor shall
be responsible for its costs and expenses associated with its use of the
security system. Existing phone lines and data lines in the Premises will remain
during the term of this Sublease and shall be used by both Sublessee and
Sublessor in their respective portions of the Premises. Sublessee shall be
responsible for providing its own phone switch and shall not have the use of
Sublessor's phone switch.
11. RULES AND REGULATIONS. Sublessee shall obey the rules and
regulations promulgated by Lessor and Sublessor from time to time, including but
not limited to, rules requiring that the Premises be a smoke-free facility.
12. COMMON AREA USE. Once during the Sublease Term, upon 30 days prior
notice to Sublessee, Sublessor shall have the right to three consecutive days of
exclusive use of the Cafeteria shown in Exhibit A; provided, however, that
Sublessee's employees shall have access to the vending machines in the
Cafeteria. In addition, once per month, Sublessor shall, upon 15 days notice to
Sublessee, have the right to exclusive use of the Cafeteria from Noon to 1:00
p.m.
13. SUBLESSOR'S RESPONSIBILITY FOR OBLIGATIONS UNDER THE LEASE.
Notwithstanding Sublessee's assumption of Sublessor's obligations under the
Lease with respect to the Subpremises, Sublessor shall remain fully liable to
Lessor for the performance of each and every obligation under the Lease, and
such assumption shall in no way release Sublessor from said obligations.
3.
<PAGE> 4
14. SIGNAGE. Sublessor will occupy major sign locations in front of and
on building. Sublessee may have secondary signs as approved by Sublessor, and
Lessor, in accordance with all City of Boulder sign code regulations.
15. ENFORCEABILITY BY LESSOR. The provisions of this Sublease inure to
the benefit of Lessor and shall be enforceable by Lessor.
16. LESSOR'S CONSENT TO SUBLEASE. Lessor consents to this Sublease of
the Subpremises; provided that such consent will not be deemed to be a consent
to any subsequent assignment or subleasing, but, rather, any subsequent
assignment or subleasing will require the consent of Lessor pursuant to the
Lease.
17. ENTIRE AGREEMENT. This Sublease, together with the Lease embody the
entire agreement of Lessor, Sublessor, and Sublessee with respect to the subject
matter contained herein, and supersede any prior agreement, whether written or
oral, with respect to the subject matter contained herein. This Sublease may be
modified only by written instrument duly executed by Lessor, Sublessor, and
Sublessee.
18. NOTICES. All notices required to be given or desired to be given
hereunder shall be in writing and shall be deemed duly served for all purposes
by delivery in person or by mailing a copy thereof, postage prepaid, addressed
to:
Lessor: With copy to:
6060 Partnership, LLP The W.W. Reynolds Companies, Inc.
4875 Pearl East Circle, #300 4875 Pearl East Circle, #300
Boulder, CO 80301 Boulder, CO 80301
Sublessor: With copy to:
Sievers Instruments, Inc. Patrick K. Perrin
6060 Spine Road Holme Roberts & Owen, LLP
Boulder, CO 80301 1401 Pearl Street, Suite 400
Boulder, CO 80302
Sublessee: With copy to:
MessageMedia, Inc. Creative Project Solutions, LLC
6060 Spine Road 10080 Lee Street
Boulder CO 80301 Westminster, CO 80021
Attn: Kevin C. Smith
Or at such address as such party shall subsequently designate in writing.
4.
<PAGE> 5
19. TERMS OF LEASE APPLY TO THIS SUBLEASE. The parties hereto
acknowledge and agree that all of the terms of the Lease shall be incorporated
herein by reference as if Sublessor were the Landlord and Sublessee were the
Tenant thereunder
20. OPTION TO RENEW. Sublessor hereby grants Sublessee two (2)
consecutive Options to Renew the sublease for an additional six (6) month period
each. Base rent plus NNN for the Option periods shall increase on an annual
basis as outlined in Paragraph 4. Sublessee shall give SubLandlord written
notice of Sublessee's Option to Renew, a minimum of sixty (60) days prior to the
expiration of the then-current term.
21. QUIET ENJOYMENT. Sublessor hereby covenants and agrees that if
Sublessee pays its Rent and other charges and performs all of the covenants and
agreements set forth in the Sublease, Sublessee shall have the quiet and
peaceable enjoyment and possession of the Subpremises, to the extent given by
the Landlord in the primary Lease (attached hereto and made a part of), during
the term of the Sublease and any extensions thereof.
22. DEFAULT NOTICES TO SUBLESSEE. Sublessor hereby agrees to provide
Sublessee with copies of any notice of default of Sublessor that Lessor gives to
Sublessor pursuant to the terms of the Lease, within five (5) days of receipt of
notice by Sublessor.
5.
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Sublease on the day
and year first above written.
LESSOR:
6060 PARTNERSHIP, LLP
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SUBLESSOR:
SIEVERS INSTRUMENTS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SUBLESSEE:
MESSAGEMEDIA, INC.
a Delaware corporation
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
6.
<PAGE> 7
EXHIBIT A
(SUBPREMISES)
ADDRESS: 6060 Spine Road
Boulder, Colorado
DEMISED SPACE:
<TABLE>
<S> <C> <C>
13,888 sq. ft. Office Area A West Office
7,408 sq. ft. Office Area B North Office
2,000 sq. ft. Computer Room Interior Space
</TABLE>
<TABLE>
<CAPTION>
APPROXIMATELY 23,296 SQUARE FEET USEABLE TOTAL SQUARE FEET
<S> <C> <C> <C>
Common Area: 1,765 50% Cafeteria 3,530
371 50% Front Lobby 742
674 50% Hallway A 1,348
678 50% Hallway B 1,356
500 Two Restrooms See Diagram
3,988
</TABLE>
Total Rentable Square Feet: 27,284
See attached Exhibit B
<PAGE> 8
EXHIBIT B
[FLOOR PLAN]
<PAGE> 9
EXHIBIT D
LEASE AGREEMENT
OFFICE AND INDUSTRIAL SPACE
THIS LEASE AGREEMENT is made and entered into as of the 21st day of
October, 1997, by and between 6060 PARTNERSHIP, LLP ("Landlord"), whose address
is 4875 Pearl East Cr., #300, Boulder, CO 80301, and SIEVERS INSTRUMENTS, INC.
("Tenant"), whose address is 6060 Spine Rd., Boulder, CO 80301.
In consideration of the convenants, terms, conditions, agreements and
payments as herein set forth, the Landlord and Tenant hereby enter into the
following Lease:
1. DEFINITIONS. Whenever the following words or phrases are used in
this Lease, said words or phrases shall have the following meaning:
A. "AREA" shall mean the parcel of land depicted on Exhibit A
attached hereto and commonly known and referred to as 6060 Spine Rd., Boulder,
Colorado. The Area includes the Leased Premises. The Area may include Common
Areas.
B. "BUILDING" shall mean the 6060 Spine Road Building.
C. "COMMON AREAS" shall mean all entrances, exits, driveways, curbs,
walkways, parking areas, landscaped areas, loading and service areas.
D. "LEASED PREMISES" shall mean the premises herein leased to the
Tenant by the Landlord.
E. "TENANT'S PRO RATA SHARE" as to the Building in which the Leased
Premises are located shall mean an amount (expressed as a percentage) equal to
the number of square feet included in the Leased Premises divided by the total
number of leasable square feet included in said Building. The Tenant's Pro Rata
Share as to Common areas shall mean an amount (expressed in percentage) equal to
the number of square feet included in the Leased Premises divided by the total
number of leasable square feet included in all Buildings located in the Area.
The Pro Rata Share at the signing of this lease is 100% for both the Building
and the Common Areas.
2. LEASED PREMISES. The Landlord hereby leases unto the Tenant, and the
Tenant hereby leases from the Landlord, the following described premises:
Space 6060 in Building
consisting of 74,119 square feet, all as
depicted on Exhibit B attached hereto
3. BASE TERM. The term of this Lease shall commence at 12:00 noon on
May 1, 1998, and, unless sooner terminated as herein provided for, shall end at
12:00 noon on May 1,
1.
<PAGE> 10
2005 ("Lease Term"). Except as specifically provided to the contrary herein, the
Leased Premises shall, upon the termination of this Lease, by virtue of the
expiration of the Lease Term or otherwise, be returned to the Landlord by the
Tenant in as good or better condition than when entered upon by the Tenant,
ordinary wear and tear excepted.
4. RENT. Tenant shall pay the following rent for the Leased Premises:
A. BASE MONTHLY RENT. Tenant shall pay to Landlord, without notice
and without setoff, at the address of Landlord as herein set forth, the
following Base Monthly Rent ("Base Monthly Rent"), said Base Monthly Rent to be
paid in advance of the first day of each month during the term hereof. in the
event that this Lease commences on a date other than the first day of a month,
the Base Monthly Rent for the first month of the Lease Term shall be prorated
for said partial month. Below is a schedule of Base Monthly Rental payments as
agreed upon:
DURING LEASE TERM
<TABLE>
<CAPTION>
FOR PERIOD TO PERIOD A BASE MONTHLY
STARTING ENDING RENT OF
<S> <C> <C>
May 1, 1998 May 1, 1999 $44,780.00
May 1, 1999 May 1, 2005 $44,780.00 plus any cost of
living adjustments Per
Paragraph 4C below
</TABLE>
B. LEASE TERM ADJUSTMENT. If, for any reason, other than delays
caused by the Tenant, the Leased Premises are not ready for Tenant's occupancy
on May 1, 1998, the Tenant's rental obligation and other monetary expenses (i.e.
taxes, utilities, etc.) shall be abated in direct proportion to the number of
days of delay. It is hereby agreed that the premises shall be deemed ready for
occupancy on the day the Landlord receives a T.C.O. or C.O. from the appropriate
authority, or on the day the Landlord gives Tenant the keys to the Leased
Premises if a building permit has not been applied for and/or is not required by
the appropriate authority.
C. COST OF LIVING ADJUSTMENT. The Base Monthly Rental specified in
paragraph 4A above shall be recalculated for each Lease Year as defined
hereinafter following the first Lease Year of this Lease Agreement. The
recalculated Base Monthly Rental shall be hereinafter referred to as the
"Adjusted Monthly Rental". The Adjusted Monthly Rental for each Lease Year after
the first Lease Year shall be the greater of: (i) the amount of the previous
year's Adjusted Monthly Rental, (or the Base Monthly Rental if calculating the
Adjusted Monthly Rental for the second Lease Year), or (ii) an amount calculated
by the rent adjustment formula set forth below. In applying the rent adjustment
formula, the following definitions shall apply:
(1) "LEASE YEAR" shall mean a period of twelve (12) consecutive full
calendar months with the first Lease Year commencing on the date of the
commencement of the term of this Lease and each succeeding Lease Year commencing
upon the anniversary date of the first Lease Year; however, if this Lease does
not commence on the first day of a month, then, the first Lease Year and each
succeeding Lease Year shall commence on the first day of the first month
following each anniversary date of this Lease.
2.
<PAGE> 11
(2) "BUREAU" shall mean the Bureau of Labor Statistics of the United
States Department of Labor or any successor agency that shall issue the Price
Index referred to in this Lease Agreement.
(3) "PRICE INDEX" shall mean the "Consumer Price Index-All Urban
Consumers-All Items (CPI-U) U.S. City Average (1982-84=100)" issued from time to
time by the Bureau. In the event the Price Index shall hereafter be converted to
a different standard reference base or otherwise revise, the determination of
the increase in the Price Index shall be made with the use of such conversion
factor, formula or table as may be published by Prentice-Hall, Inc. or failing
such publication, by another nationally recognized publisher of similar
statistical information. In the event the Price Index shall cease to be
published, then, for the purposes of this paragraph 4C there shall be
substituted for the Price Index such other index as the Landlord and the Tenant
shall agree upon, and if they are unable to agree within sixty (60) days after
the Price Index ceases to be published, such matter shall be determined by
arbitration in accordance with the Rules of the American Arbitration
Association.
(4) "BASE PRICE INDEX" shall mean the Price Index released to the
public during the second calendar month preceding the commencement of this Lease
Agreement.
(5) "REVISED PRICE INDEX" shall mean the Price Index released to the
public during the second calendar month preceding the Lease Year for which the
Base Annual Rental is to be adjusted.
(6) "BASIC MONTHLY RENTAL" shall mean the Basic Monthly Rental set
forth in subparagraph 4A above. The rent adjustment formula used to calculate
the Adjusted Monthly Rental is as follows:
Adjusted Monthly = Revised Price Index X Base Monthly Rental
Rental -----------------------------------------
Base Price Index
Not withstanding the above formula, the Adjusted Monthly Rental shall
not be less than 102.5% or greater than 106% of the previous year's Adjusted
Monthly Rental, or the Basic Monthly Rental if such adjustment is for the Second
Lease Year. The Adjusted Monthly Rental as herein above provided shall continue
to be payable monthly as required in paragraph 4A above without necessity of any
further notice by the Landlord to the Tenant.
D. NET LEASE. The Tenant understands and agrees that this Lease is a
net lease (a "net, net, net lease"), whereby the Tenant has the obligation to
reimburse the Landlord for a share of all costs and expenses, taxes,
assessments, other charges, Insurance, HVAC repairs and maintenance, incurred by
the Landlord as a result of the Landlord's ownership and operation of the
Building and Area. Tenant shall be responsible for all costs associated with the
Common Area, except for HVAC repairs and maintenance (See Paragraph 16).
5. SECURITY DEPOSIT. Landlord acknowledges receipt (from the Tenant of
the sum of Twenty-Thousand dollars and no/100 Dollars ($20,000.00) to be
retained by Landlord without responsibility for payment of Interest thereon, as
security for performance of all the terms and conditions of this Lease Agreement
to be performed by Tenant, including payment of all rent due
3.
<PAGE> 12
under the terms hereof. Deductions may be made by Landlord from the amount so
retained for the reasonable cost of repairs to the Leased Premises (ordinary
wear and tear excepted), for any rent delinquent under the terms hereof and/or
for any sum used in any manner to cure any default of Tenant under the terms of
this Lease. In the event deductions are so made, the Tenant shall, upon notice
from the Landlord, redeposit with the Landlord such amounts so expended so as to
maintain the deposit in the amount as herein provided for, and failure to so
redeposit shall be deemed a failure to pay rent under the terms hereof. Nothing
herein contained shall limit the liability of Tenant as to any damage to the
Leased Premises, and Tenant shall be responsible for the total amount of any
damage and/or loss occasioned by actions of Tenant. Landlord may deliver the
funds deposited hereunder by Tenant to any purchaser of Landlord's Interest in
the Leased Premises in the event such interest shall be sold, and thereupon
Landlord shall be discharged from any further liability with respect to such
deposit.
6. USE OF PREMISES. Tenant shall use the Leased Premises only for
offices, warehouse, training, repair, research and development, and
manufacturing and for no other purpose whatsoever except with the written
consent of Landlord. Tenant shall not allow any accumulation of trash or debris
on the Leased Premises or within any portion of the Area. All receiving and
delivery of goods and merchandise and all removal of garbage and refuse shall be
made only by way of the rear and/or other service door provided therefore. In
the event the Leased Premises shall have no such door, then these matters shall
be handled in a manner satisfactory to Landlord. No storage of any material
outside of the Leased Premises shall be allowed unless first approved by
Landlord in writing, and then in only such areas as are designated by Landlord.
Tenant shall not commit or suffer any waste on the Leased Premises nor shall
Tenant permit any nuisance to be maintained on the Leased Premises or permit any
disorderly conduct or other activity having a tendency to annoy or disturb any
occupants of any part of the Area and/or any adjoining property.
7. LAWS AND REGULATIONS - TENANT RESPONSIBILITY. The Tenant shall, at
its sole cost and expense, comply with all laws and regulations of any
governmental entity, board, commission or agency having jurisdiction over the
Leased Premises. Tenant agrees not to install any electrical equipment that
overloads any electrical paneling, circuitry or wiring and further agrees to
comply with the requirements of the Insurance underwriter or any governmental
authorities having jurisdiction thereof.
8. LANDLORD'S RULES AND REGULATIONS. Landlord reserves the right to
adopt and promulgate reasonable rules and regulations applicable to the Leased
Premises and from time to time amend or supplement said rules or regulations.
Notice of such rules and regulations and amendments and supplements thereto
shall be given to Tenant, and Tenant agrees to comply with and observe such
rules and regulations and amendments and supplements thereto.
9. PARKING. If the Landlord provides off-street parking for the common
use of Tenants, employees and customers of the Area, the Tenant shall park all
vehicles of whatever type used by Tenant and and/or Tenant's employees only in
such areas thereof as are designated by Landlord for this purpose, and Tenant
accepts the responsibility of seeing that Tenant's employees park only in the
areas so designated. Tenant shall, upon the request of the Landlord, provide to
the Landlord license numbers of the Tenant's vehicles and vehicles of Tenant's
employees.
4.
<PAGE> 13
10. CONTROL OF COMMON AREAS - EXCLUSIVE CONTROL OF THE LANDLORD. All
Common Areas shall at all times be subject to the exclusive control and
management of Landlord, notwithstanding that Tenant and/or Tenant's employees
and/or customers may have a nonexclusive right to the use thereof. Landlord
shall have the right from time to time to establish, modify and enforce
reasonable rules and regulations with respect to the use of said facilities and
Common Areas.
11. TAXES.
A. REAL PROPERTY TAXES AND ASSESSMENTS. The Tenant shall pay the
Landlord on the first day of each month, additional rent, the Tenant's Pro Rata
Share of all real estate taxes and special assessments levied and assessed
against the Building in which the Leased Premises are located and the Common
Areas. If the first and last years of the Lease Term are not calendar years, the
obligations of the Tenant hereunder shall be prorated for the number of days
during the calendar year that this Lease is in effect. The monthly payments for
such taxes and assessments shall be $5,991.00 until the Landlord receives the
first tax statement for the referred to properties. Thereafter, the monthly
payments shall be based upon 1/12th of the prior year's taxes and assessments.
Once each year the Landlord shall determine the actual Tenant's Pro Rata Share
of taxes and assessments for the prior year and if the Tenant has paid less than
the Tenant's Pro Rata Share for the prior year the Tenant shall pay the
deficiency to the Landlord with the next payment of Base Monthly Rent, or, if
the Tenant has paid in excess of Tenant's Pro Rata Share for the prior year the
Landlord shall forthwith refund said excess to the Tenant.
B. PERSONAL PROPERTY TAXES. Tenant shall be responsible for, and
shall pay promptly when due, any and all taxes and/or assessments levied and/or
assessed against any furniture, fixtures, equipment and items of a similar
nature installed and/or located in or about the Leased Premises by Tenant.
C. RENT TAX. If a special tax, charge or assessment is imposed or
levied upon the rents paid or payable hereunder or upon the right of the
Landlord to receive rents hereunder (other than to the extent that such rents
are included as a part of the Landlord's income for the purpose of an income
tax), the Tenant shall reimburse the Landlord for the amount of such tax within
fifteen (15) days after demand therefore is made upon the Tenant by the
Landlord.
D. OTHER TAXES, FEES AND CHARGES. Tenant shall pay to Landlord, on
the first day of each month, as additional rent, Tenant's Pro Rata Share of any
"Other Charges" (as hereinafter defined) levied, assessed, charged or imposed
against the Area, as a whole. Unless paid directly by Tenant to the authority
levying, assessing, charging or imposing same, Tenant shall also pay to
Landlord, on the first day of the month following payment of same by Landlord,
the entire costs of any such "Other Charges" levied, assessed, charged or
imposed against the Leased Premises, Tenant's use of same, or Tenant's conduct
of business thereon. For purposes of this provision, "Other Charges" shall mean
and refer to any and all taxes, assessments, impositions, user fees, impact
fees, utility fees, transportation fees, infrastructure fees, system fees,
license fees, and any other charge or assessment imposed by any governmental
authority or applicable subdivision on the Area, the Leased Premises or the
ownership or use of the Area or Leased Premises, or the business conducted
thereon, whether or not formally denominated as a
5.
<PAGE> 14
tax, assessment, charge of other nominal description, whether now in effect or
hereafter enacted or imposed (excluding, however, Landlord's income taxes).
E. Should Landlord protest and win a reduction in the real estate
taxes for the Building and Area, Tenant shall be obligated to pay its Pro Rata
Share of the cost of such protest, if the protest is handled by a party other
than the Landlord. The maximum cost to Tenant shall not exceed the annual
savings achieved.
12. INSURANCE.
A. LANDLORD'S INSURANCE. The Landlord shall procure and maintain
such fire and casualty, loss of rents and liability Insurance as it, from time
to time, deems proper and appropriate in reference to the Building in which the
Leased Premises are located and the Common Areas. Such Insurance shall not be
required to cover any of the Tenant's property and the Tenant shall have no
interest in any of the proceeds of such Insurance.
B. TENANT'S INSURANCE. Tenant shall, at its sole cost and expense,
insure on a full replacement cost basis, Tenant's inventory, fixtures, leasehold
improvements and betterments located on the Leased Premises against loss
resulting from fire or other casualty. Tenant shall procure, pay for and
maintain, comprehensive public liability Insurance providing coverage from and
against any loss or damage occasioned by an accident or casualty on, about or
adjacent to the Leased Premises. Said liability policy shall be written on an
"occurrence basis" with limits of not less than $1,000,000 combined single limit
coverage. Certificates for such Insurance shall be delivered to Landlord and
shall provide that said Insurance shall not be changed, modified, reduced or
canceled without thirty (30) days prior written notice thereof being given to
Landlord.
C. TENANT'S HIGH PRESSURE STEAM BOILER INSURANCE. If Tenant makes
use of any kind of steam or other high pressure boiler or other apparatus which
presents a risk of damage to the Leased Premises or to the Building or other
improvements of which the Leased Premises are part or to the life or limb of
persons within such premises, Tenant shall secure and maintain appropriate
boiler Insurance in an amount satisfactory to Landlord. The Landlord shall be
named as an additional insured in any such policy or policies. Certificates for
such Insurance shall be delivered to Landlord and shall provide that said
Insurance shall not be changed, modified, reduced or canceled without thirty
(30) days prior written notice thereof being given to Landlord.
D. TENANT'S SHARE OF LANDLORD INSURANCE. Tenant shall pay the
Landlord as additional rent Tenant's Pro Rata Share of the Insurance premiums
for the Insurance secured by the Landlord pursuant to 12A above. Payment shall
be made on the first day of each month as additional rent. The monthly payments
for such Insurance shall be $617.66 until changed by Landlord as a result of an
increase in the cost of such Insurance.
E. MUTUAL SUBROGATION WAIVER. Landlord and Tenant hereby grant to
each other, on behalf of any insurer providing fire and extended coverage to
either of them covering the Leased Premises, Buildings or other improvements
thereon or contents thereof, a waiver of any right of subrogation that any such
insurer or that one party may acquire against the other or
6.
<PAGE> 15
as against the Landlord or Tenant by virtue of payments of any loss under such
Insurance. Such a waiver shall be effective so long as the Landlord and Tenant
are empowered to grant such waiver under the terms of their respective Insurance
policy or policies and such waiver shall stand mutually terminated as of the
date either Landlord or Tenant gives notice to the other that the power to grant
such waiver has been so terminated.
13. UTILITIES.
A. Tenant shall be solely responsible for and promptly pay all
charges for heat, water, gas, electric, sewer service and any other utility
service used or consumed on the Leased Premises. For all utility services used
or consumed on the Leased Premises which are included in utility services to an
area larger than the Leased Premises, Tenant shall pay monthly, commencing with
the first month of the Lease Term, as additional rent due under the terms
hereof, a sum equal to Tenant's Pro Rata Share of the estimated costs for said
twelve (12) month period, divided by 12. The estimated initial monthly costs are
$n/a for water and $n/a for Public Service. Once each year the Landlord shall
determine the actual costs of the foregoing expenses for the prior year and if
the actual costs are greater than the estimated costs, the Tenant shall pay its
Tenant's Pro Rata Share of the difference between the estimated costs and the
actual costs to the Landlord with the next payment of Base Monthly Rent, or, if
the actual costs are less than the estimated costs, the Landlord shall forthwith
refund the amount of the Tenant's excess payment to the Tenant. For all utility
services used or consumed on the Leased Premises in which the utility service is
used solely on the Leased Premises, the Tenant shall forthwith upon taking
occupancy of the Leased Premises make arrangements with the Public Service
Company, U.S. West or other appropriate utility company to pay the utilities
used on the Leased Premises and to have the same billed to the Tenant at the
address designated by the Tenant. Should there be a time where the Landlord
remains responsible for utilities supplied to the Leased Premises, the Landlord
shall bill the Tenant therefore and the Tenant shall promptly reimburse the
Landlord therefore. In no event shall Landlord be liable for any interruption or
failure in the supply of any such utility to the Leased Premises, unless caused
by the negligence or intentional acts of the Landlord.
In the event the utility company supplying water and/or sewer to
the Leased Premises determines that an additional service fee, impact fee,
and/or assessment, or any other type of payment or penalty is necessary due to
Tenant's use and occupancy of the Building, nature of operation and/or
consumption of utilities, said expense shall be borne solely by the Tenant. Said
expense shall be paid promptly and any repairs requested by the utility company
shall be performed by Tenant immediately and without any delay.
B. LANDLORD CONTROL'S SELECTION. Landlord had advised Tenant that
presently Public Service Company of Colorado ("Utility Service Provider") is the
utility company selected by Landlord to provide electricity and gas service for
the Building. Notwithstanding the foregoing, if permitted by Law, Landlord shall
have the right at any time and from time to time during the Lease Term to either
contract for service from a different company or companies providing electricity
and/or gas service (each such company shall hereinafter be referred to as an
("Alternative Service Provider") or continue to contract for service from the
Electric Service Provider, provided that such election does not result in
greater utility bills for the Tenant.
7.
<PAGE> 16
C. TENANT SHALL GIVE LANDLORD ACCESS. Tenant shall cooperate with
Landlord, Utility Service Provider, and any Alternative Service Provider at all
times and, as reasonably necessary, shall allow Landlord, Utility Service
Provider, and any Alternative Service Provider reasonable access to the
Building's electric lines, feeders, risers, wiring, gas lines, and any other
machinery within the Premises.
D. LANDLORD NOT RESPONSIBLE FOR INTERRUPTION OF SERVICE. Landlord
shall in no way be liable or responsible for any loss, damage, or expense that
Tenant may sustain or incur by reason of any change, failure, interference,
disruption, or defect in the supply or character of the electrical and/or gas
energy furnished to the Premises or if the quantity or character of the electric
and/or gas energy supplied by the Utility Service Provider or any Alternate
Service Provider is no longer available or suitable for Tenant's requirements,
and no such change, failure, defect, unavailability, or unsuitability shall
constitute an actual or constructive eviction, in whole or in part, or entitle
Tenant to any abatement or diminution of rent, or relieve Tenant from any of its
obligations under the Lease.
14. MAINTENANCE OBLIGATIONS OF LANDLORD. Except as herein otherwise
specifically provided for, Landlord shall keep and maintain the roof, structural
components and exterior of the Building of which the Leased Premises are a part
in good repair and condition and compliant with all laws and regulations. Tenant
shall repair and pay for any damage to roof, foundation and external walls
caused by Tenant's action, negligence or fault. Landlord shall be responsible
for all HVAC costs that are not part of normal repairs and maintenance. By way
of clarification normal repair and maintenance of the HVAC shall include such
items as normal preventative maintenance, filter replacement, replacement of
belts, replacement of motor bearings, freon (or other similar fluids)
replacement. Normal repairs and maintenance shall not include compressor
replacement, heat exchanger replacement or replacement of fan and compressor
motors.
15. MAINTENANCE OBLIGATIONS OF THE TENANT. Subject only to the
maintenance obligations of the Landlord as herein provided for, the Tenant
shall, during the entire Lease Term, including all extensions thereof, at the
Tenant's sole cost and expense, keep and maintain the Leased Premises in good
condition and repair, ordinary wear and tear excluded, including specifically
the following:
A. ELECTRICAL SYSTEMS. Tenant agrees to maintain in good working
order and to make all required repairs and replacements to the electrical
systems for the Leased Premises. Tenant upon signing this Lease acknowledges
that Tenant has inspected the existing electrical systems and all such systems
are in good repair and working order.
B. PLUMBING SYSTEMS. Tenant agrees to maintain in good working
order and to make all required repairs or replacements to the plumbing systems
for the Leased Premises. Tenant upon signing this Lease acknowledges that Tenant
has inspected the existing plumbing systems and all such systems are in good
repair and working order
C. INSPECTIONS AND SERVICE. Upon termination of Lease Agreement,
Tenant agrees, before vacating premises, to employ at Tenant's sole cost and
expense, a licensed contractor to inspect, service and write a written report on
the systems referred to in A and B of this Paragraph. Landlord shall have the
right to order such an inspection if Tenant fails to
8.
<PAGE> 17
provide evidence of such inspection, and, to follow the recommendations of such
reports and to charge the expense thereof to the Tenant.
D. TENANT'S RESPONSIBILITY FOR BUILDING AND AREA REPAIRS. Tenant
shall be responsible for any repairs required for any part of the Building or
Area of which the Leased Premises are a part if such repairs are necessitated by
the actions or (or if the responsibly of the Tenant hereunder) inactions of
Tenant.
E. CUTTING ROOF. Tenant must obtain in writing the Landlord's
approval prior to making any roof penetrations. Failure by Tenant to obtain
written permission to penetrate a roof shall relieve Landlord of any roof repair
obligations as set forth in Paragraph 14 hereof to the extent related to
Tenant's unauthorized roof penetration. Tenant further agrees to repair, at its
sole cost and expense, all roof penetrations made by the Tenant and to use, if
so requested by Landlord, a licensed contractor selected by the Landlord to make
such penetrations and repairs.
F. GLASS AND DOORS. The repair and replacement of all glass and
doors on the Leased Premises shall be the responsibly of the Tenant. Any such
replacements or repairs shall be promptly completed at the expense of the
Tenant.
G. LIABILITY FOR OVERLOAD. Tenant shall be responsible for the
repair or replacement of any damage to the Leased Premises, the Building or the
Area which result from the Tenant's movement of heavy articles therein or
thereon. Tenant shall not overload the floors of any part of the Leased
Premises.
H. LIABILITY FOR OVERUSE AND OVERLOAD OF OPERATING SYSTEMS. Tenant
shall be responsible for the repair, upgrade, modification, and/or replacement
of any operating systems servicing the Leased Premises and/or all or part of the
Building which is necessitated by Tenant's change or increase in use of or
non-disclosed use of all or a part of the Leased Premises. Operating systems
include, but are not limited to, electrical systems, plumbing systems (both
water and natural gas), heating, ventilating, and air conditioning systems,
telecommunications systems, computer and network systems, lighting systems, fire
sprinkler systems, security systems, and building control systems, if any.
I. INSPECTION OF LEASED PREMISES - "AS IS" CONDITIONS. Tenant has
inspected the Leased Premises and accepts the Leased Premises in the condition
that they exist as of the date of this Lease, including, but not limited to, all
mechanical, plumbing and electrical systems and the conditions of the interior
except: see Exhibit C for Landlord and Tenant Construction Obligations.
J. FAILURE OF TENANT TO MAINTAIN PREMISES. Should Tenant neglect to
keep and maintain the Leased Premises as required herein, the Landlord shall,
after providing Tenant 10 days prior written notice, have the right, but not the
obligation, to have the work done and any reasonable costs plus a ten percent
(10%) overhead charge therefore shall be charged to Tenant as additional rental
and shall become payable by Tenant with the payment of the rental next due.
16. COMMON AREA MAINTENANCE. Tenant shall be responsible for the total
costs incurred and contracting for the operation, maintenance and repair of the
Common Areas,
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including, but not limited to, the costs and expenses incurred for the
operation, maintenance and repair of parking areas (including restriping and
repaving), removal of snow, utilities for common lighting and signs, trash
removal, security to protect and secure the Area, water to maintain landscaping,
replanting in order to maintain a smart appearance of landscape areas, supplies,
the cost of personnel to implement such services. Landlord shall be responsible
to contract for and maintain the HVAC units. All cost associated with normal
repairs and maintenance (see Paragraph 14 for explanation of "normal repairs and
maintenance") shall be billed back to the Tenant for payment.
17. INSPECTION OF AND RIGHT OF ENTRY TO LEASED PREMISES - REGULAR,
EMERGENCY, RELETTING. Landlord and/or Landlord's agents and employees, shall
have the right to enter the Leased Premises at all times during regular business
hours, provided reasonable notice has been given, and, at all times during
emergencies, to examine the Leased Premises, to make such repairs, alterations,
improvements or additions as Landlord deems necessary, and Landlord shall be
allowed to take all materials into and upon said Leased Premises that may be
required therefore without the same constituting an eviction of Tenant in whole
or in part, and the rent reserved shall in no way abate while such repairs,
alterations, improvements or additions are being made, by reason of loss or
interruption of business of Tenant or otherwise; provided that Landlord shall
cooperate with Tenant to insure that any such activities are performed in a
manner that does not unreasonably interfere with Tenant's use of the Leased
Premises. During the six months prior to the expiration of the term of this
Lease or any renewal thereof, Landlord may exhibit the Leased Premises to
prospective tenants and/or purchasers and may place upon the Leased Premises the
usual notices indicating that the Leased Premises are for lease and/or sale.
18. ALTERATION - CHANGES AND ADDITIONS - RESPONSIBILITY. Unless the
Landlord's approval is first secured in writing, the Tenant shall not install or
erect inside partitions, add to existing electric power service, add telephone
outlets, add light fixtures, install additional heating and/or air conditioning
or make any other changes or alterations to the interior or exterior of the
Leased Premises. Any such changes or alterations shall be made at the sole cost
and expense of the Tenant. At the end of this Lease, all such fixtures,
equipment, additions, changes and/or alterations (except trade fixtures
installed by Tenant) shall be and remain the property of Landlord; provided,
however, Landlord shall have the option to be expressed in writing in
conjunction with initial approval to require Tenant to remove any or all such
fixtures, equipment, additions and/or alterations and restore the Leased
Premises to the condition existing immediately prior to such change and/or
installation, normal wear and tear excepted, all at Tenant's cost and expense.
All such work shall be done in a good and workmanlike manner and shall consist
of new materials unless agreed to otherwise by Landlord. Any and all repairs,
changes and/or modifications thereto shall be the responsibility of, and at the
cost of, Tenant. Landlord may require adequate security from Tenant assuring no
mechanics' liens on account of work done on the Leased Premises by Tenant and
may post the Leased Premises, or take such other action as is then permitted by
law, to protect the Landlord and the Leased Premises against mechanics' liens.
Landlord may also require adequate security to assure Landlord that the Leased
Premises will be restored to their original condition upon termination of this
Lease.
19. SIGN APPROVAL. Except for signs which are located inside of the
Leased Premises and which are not attached to any part of the Leased Premises,
the Landlord must approve in
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writing, such consent not to be unreasonably withheld, any sign to be placed in
or on the interior or exterior of the Leased Premises, regardless of size or
value. Specifically, signs attached to windows of the Leased Premises must be so
approved by the Landlord. As a condition to the granting of such approval,
Landlord shall have the right o require Tenant to furnish a bond or other
security acceptable to Landlord sufficient to insure completion of and payment
for any such sign work to be so performed. Tenant shall, during the entire lease
Term, maintain Tenant's signs in good condition and repair at Tenant's sole cost
and expense. Tenant shall, remove all signs at the termination of this Lease, at
Tenant's sole risk and expense and shall in a workmanlike manner properly repair
any damage and close any holes caused by the installation and/or removal of
Tenant's signs. Tenant shall give Landlord prior notice of such removal so that
a representative of Landlord shall have the opportunity of being present when
the signage is removed, or shall pre-approve the manner and materials used to
repair damage and close the holes caused by removal.
20. RIGHT OF LANDLORD TO MAKE CHANGES AND ADDITIONS. Landlord reserves
the right at any time to make alterations or additions to the Building or Area
of which the Leased Premises are a part. Landlord also reserves the right to
construct other buildings and/or improvements in the Area and to make
alterations or additions thereto, all as Landlord shall determine. Easements for
light and air are not included in the leasing of the Leased Premises to Tenant.
Landlord further reserves the exclusive right to the roof of the Building of
which the Leased Premises are a part. Landlord also reserves the right at any
time to relocate, vary and adjust the size of any of the Improvements or Common
Areas located in the Area, provided, however, that all such changes shall be in
compliance with the requirements of governmental authorities having jurisdiction
over the Area. All rights of Landlord reserved in this Section 20 are subject to
the requirement that the exercise of such rights, as to either time, manner or
otherwise, does not unreasonably interfere with Tenant's use or occupancy of the
Leased Premises.
21. DAMAGE OR DESTRUCTION OF LEASED PREMISES. In the event the Leased
Premises and/or the Building of which the Leased Premises are a part shall be
totally destroyed by fire or other casualty or so badly damage that, in the
opinion of Landlord, it is not feasible to repair or rebuild same, Landlord
shall have the right to terminate this Lease upon written notice to Tenant. If
the Leased Premises are partially damaged by fire or other casualty, except of
caused by Tenant's negligence and not covered by Insurance, and said Leased
Premises are not rendered untenantable thereby, as determined by Landlord, an
appropriate reduction of the rent shall be allowed for the unoccupied portion of
the Leased Premises until repair thereof shall be substantially completed. If
the Landlord elects to exercise the right herein vested in it to terminate this
lease as a result of damage to or destruction of the Leased Premises or the
Building in which the Leased Premises are located, said election shall be made
by giving notice thereof to the Tenant within thirty (30) days after the date of
said damage or destruction.
22. GOVERNMENTAL ACQUISITION OF PROPERTY. The parties agree that
Landlord shall have complete freedom of negotiation and settlement of all
matters pertaining to the acquisition of the Leased Premises, the Building, the
Area, or any part thereof, by any governmental body or other person or entity
via the exercise of the power of eminent domain, it being understood and agreed
that any financial settlement made or compensation paid respecting said land or
improvements to be so taken, whether resulting from negotiation and agreement or
legal
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proceedings, shall be the exclusive property of Landlord, there being no sharing
whatsoever between Landlord and Tenant of any sum so paid. In the event of any
such taking, Landlord shall have the right to terminate this Lease on the date
possession is delivered to the condemning person or authority. Such taking of
the property shall not be a breach of this Lease by Landlord nor give rise to
any claims in Tenant for damages or compensation from Landlord. Nothing herein
contained shall be construed as depriving the Tenant of the right to retain as
its sole property any compensation paid for any tangible personal property owned
by the Tenant which is taken in any such condemnation proceeding.
23. ASSIGNMENT OR SUBLETTING. Tenant may not assign this Lease without
the written consent of Landlord, such consent not to be unreasonably withheld.
Tenant shall have the right to sublet all or any portion of the Leased Premises,
subject to Landlord's reasonable review and acceptance of any such sublet,
provided that Tenant shall remain liable under the terms of this Lease
Agreement. No such assignment or subletting if approved by the Landlord shall
relieve Tenant of any of its obligations hereunder, and, the performance or
nonperformance of any of the covenants herein contained by subtenants shall be
considered as the performance or the nonperformance by the Tenant.
24. WARRANTY OF TITLE. Subject to the provisions of the following three
(3) paragraphs hereof, Landlord covenants it has good right to lease the Leased
Premises in the manner described herein and that Tenant shall peaceably and
quietly have, hold, occupy and enjoy the Leased Premises during the term of the
Lease.
25. ACCESS. Landlord shall provide Tenant exclusive access to the
Leased Premises through and across land and/or other improvements owned by
Landlord.
26. SUBORDINATION. Tenant agrees that this Lease shall be subordinate
to any mortgages, trust deeds or ground leases that may now exist or which may
hereafter be placed upon said Leased Premises and to any and all advances to be
made thereunder, and to the interest thereon, and all renewals, replacements and
extensions thereof. Tenant shall execute and deliver whatever instruments may be
required for the above purposes, and failing to do so within ten (10) days after
demand in writing, does hereby make, constitute and irrevocably appoint Landlord
as its attorney-in-fact and in its name, place and stead so to do. Tenant shall
in the event of the sale or assignment of Landlord's interest in the Area or in
the Building of which the Leased Premises form a part, or in the event of any
proceedings brought for the foreclosure of or the of exercise of the power of
sale under any mortgage made by Landlord covering the Leased Premises, attorn to
the purchaser and recognize such purchaser as Landlord under this Lease.
27. EASEMENTS. The Landlord shall have the right to grant any easement
on, over, under and above the Area for such purposes as Landlord determines,
provided that such easements do not materially interfere with Tenant's occupancy
and use of the Leased Premises.
28. INDEMNIFICATION AND WAIVER. Each party (an "Indemnifying Party")
shall indemnify, defend and hold harmless the other party (the "Other Party")
for any loss, cost or expense (including reasonable attorney's fees), claims,
suits, actions or damages in connection with damage to tangible property or
bodily injury (a "Loss") arising from the Indemnifying Party's ownership, use,
control or occupancy of any portion of the Leased Premises, including
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the Building and Common Areas, unless such Loss results from or is caused by the
negligent acts or omissions of the Other Party or its agents, servants,
employees, contractors or invitees or a breach of the Other Party's obligations
under this Lease.
Neither party will be liable for any incidental, special, exemplary,
punitive or consequential damages (including lost profits) suffered by the Other
Party even if such party has been advised previously of the possibility of such
damages, whether arising out of contract, tort, indemnity or otherwise.
29. ACTS OR OMISSION OF OTHERS. The Landlord, or its employees or
agents, or any of them, shall not be reasonable or liable to the Tenant or to
the Tenant's guests, invitees, employees, agents or any other person or entity,
for any loss or damage that may be caused by the acts or omissions of other
tenants, their guests or invitees, occupying any other party of the Area or by
persons who are trespassers on or in the Area, or for any loss or damage caused
or resulting from the bursting, stoppage, backing up or leaking of water, gas,
electricity or sewers or caused in any other manner whatsoever, unless such loss
or damage is caused by or results from the negligent acts or omissions of the
Landlord, its agents or contractors.
30. INTEREST ON PAST DUE OBLIGATIONS. Any amount due to Landlord not
paid when due shall bear interest at 14% per annum from due date until paid.
Payment of such interest shall not excuse or cure any default by Tenant under
this Lease.
31. HOLDING OVER - DOUBLE LAST MONTH'S RENT. If Tenant shall remain in
possession of the Leased Premises after the termination of this Lease, whether
by expiration of the Lease Term or otherwise, without a written agreement as to
such possession, then Tenant shall be deemed a month-to-month Tenant. The rent
rate during such holdover tenancy shall be equivalent to double the monthly rent
paid for the last full month of tenancy under this Lease, excluding any free
rent concessions which may have been made for the last full month of the Lease.
No holding over by Tenant shall operate to renew or extend this Lease without
the written consent of Landlord to such renewal or extension having been first
obtained. Tenant shall indemnify Landlord against loss or liability resulting
from the delay by Tenant in surrendering possession of the Leased Premises
including, without limitation, any claims made with regard to any succeeding
occupancy bounded by such holdover period.
32. MODIFICATION OR EXTENSIONS. No modification or extension or this
Lease shall be binding upon the parties hereto unless in writing and unless
signed by the parties hereto.
33. NOTICE PROCEDURE. All notices, demands and requests which may be or
are required to be given by either party to the other shall be in writing and
such that are to be given to Tenant shall be deemed to have been properly give
if served on Tenant or an employee of Tenant with a copy mailed to Guarantor as
provide below, or sent to Tenant by United States registered or certified mail,
return receipt requested, properly sealed, stamped and addressed to Tenant at
6060 Spine Rd., Boulder, CO 80301 with a copy to Ionics, Inc. ("Guarantor") at
65 Grove Street, Watertown, MA 02172 Attn: General Counsel or at such other
place as Tenant may from time to time designate in a written notice to Landlord,
and, such as are to be given to Landlord shall be deemed to have been properly
given if personally served on Landlord or if sent to Landlord, United States
registered or certified mail, return receipt requested, properly sealed,
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stamped and addressed to Landlord at 4875 Pearl East Cr., #300, Boulder, CO
80301 or at such other place as Landlord may from time to time designate in a
written notice to Tenant. Any notice given by mailing shall be effective as of
the date of three (30 business days after mailing.
34. MEMORANDUM OF LEASE--NOTICE TO MORTGAGEE. The Landlord and Tenant
agree not to place this Lease of record, but upon the request of either party to
execute and acknowledge so the same may be recorded a short form lease
indicating the names and respective addresses of the Landlord and Tenant, the
Leased Premises , the Lease Term, the dates of the commencement and termination
of the Lease Term and options for renewal, if any, but omitting rent and other
terms of this Lease. Tenant agrees to an assignment by Landlord of rents and of
the Landlord's interest in this Lease to a mortgagee, if the same be made by
Landlord. Tenant further agrees if requested to do so by the Landlord that it
will give to said mortgagee a copy of any request for performance by Landlord or
notice of default by Landlord; and in the event Landlord fails to cure such
default, the Tenant will give said mortgagee a sixty (60) day period in which to
cure the same. Said period shall begin with the last day on which Landlord could
cure such default before Tenant has the right to exercise any remedy by reason
of such default. All notices to the mortgagee shall be sent by United States
registered or certified mail, postage prepaid, return receipt requested.
35. CONTROLLING LAW. The Lease, and all terms hereunder shall be
construed consistent with the laws of the State of Colorado. Any dispute
resulting in litigation hereunder shall be resolved in court proceedings
instituted in Boulder county and in not other jurisdiction.
36. LANDLORD NOT A PARTNER WITH THE TENANT. Nothing contained in this
Lease shall be deemed, held or construed as creating Landlord as a partner,
agent, associate of or in joint venture with Tenant in the conduct of Tenant's
business, it being expressly understood and agreed that the relationship between
the parties hereto is and shall at all times remain that of Landlord and Tenant.
37. PARTIAL INVALIDITY. If any term, covenant or condition of this
Lease or the application thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Lease or the
application of such term, covenant or condition to persons and circumstances
other than those to which it has been held invalid or unenforceable, shall not
be affected thereby, and each term, covenant and condition of this Lease shall
be valid and shall be enforced to the fullest extent permitted by law.
38. DEFAULT--REMEDIES OF LANDLORD.
A. If Tenant shall default in the payment of rent or in the keeping
of any of the terms, covenants or conditions of this lease to be kept and/or
performed by Tenant, Landlord may upon the expiration of any applicable cure
periods hereunder, or at any time thereafter, reenter the Leased Premises,
remove all persons and property therefrom, without being liable to indictment,
prosecution for damage therefore, or for forcible entry and detainer and
repossess and enjoy the Leased Premises, together with all additions thereto or
alterations and improvements thereof. Landlord may, at its option, at any time
and from time to time thereafter, relet the Leased Premises or any part thereof
for the account of Tenant or otherwise, and receive and collect the rents
therefore and apply the same first to the payment of such expenses as
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Landlord may have incurred in recovering possession and for putting the same in
good order and condition for rerental, and expense, commissions and charges paid
by Landlord in reletting the Leased Premises. Any such reletting may be for the
remainder of the term of this Lease or for a longer or shorter period. In lieu
of reletting such Leased Premises, Landlord may occupy the same or cause the
same to be occupied by others. Whether or not the Leased Premises or any part
thereof be relet, Tenant shall pay the Landlord the rent and all other charges
required to be paid by Tenant up to the time of the expiration of this Lease or
such recovered possession, as the case may be and thereafter, Tenant, if
required by Landlord, shall pay to Landlord until the end of the term of this
Lease, the equivalent of the amount of all rent reserved herein and all other
charges required to be paid by Tenant, less the net amount received by Landlord
for such reletting, if any, unless waived by written notice from Landlord to
Tenant. No action by Landlord to obtain possession of the Leased Premises and/or
to recover any amount due to Landlord hereunder shall be taken as a waiver of
Landlord's right to require full and complete performance by Tenant of all terms
hereof, including payment of all amounts due hereunder or as an election on the
part of Landlord to terminate this Lease Agreement. If the Leased Premises shall
be reoccupied by Landlord, then, from and after the date of repossession, Tenant
shall be discharged of any obligations to Landlord under the provisions hereof
for the payment of rent. If the Leased Premises are reoccupied by the Landlord
pursuant hereto, and regardless of whether the Leased Premises shall be relet or
possessed by Landlord, all fixtures, improvements and additions, then on the
Leased Premises may be retained by Landlord. In the event Tenant is in default
under the terms hereof and has abandoned the Leased Premises, Landlord shall
have the right to remove all the Tenant's property from the Leased Premises and
dispose of said property in such a manner as determined by Landlord, at the sole
cost and expense of Tenant.
B. In the event an assignment of Tenant's business or property
shall be made for the benefit of creditors, or, if the Tenant's leasehold
interest under the terms of this Lease Agreement shall be levied upon by
execution or seized by virtue of any writ of any court of law, or, if
application be made for the appointment of a receiver for the business or
property of Tenant, or, if a petition in bankruptcy shall be filed by or against
Tenant, and shall remain undismissed for a period in excess of 60 days, then and
in any such case, at Landlord's option, with or without notice, Landlord may
terminate this Lease and immediately retake possession of the Leased Premises
without the same working any forfeiture of the obligations of Tenant hereunder.
C. Tenant hereby grants to the Landlord a security interest in and
to any and all of Tenant's property located in, on or adjacent to the Leased
Premises as security for Tenant's full and complete performance of the terms and
conditions of this Lease, which security interest is enforceable by Landlord as
provided by the laws of the State of Colorado.
D. In addition to remedy granted to Landlord by the terms hereof,
Landlord shall have available any and all rights and remedies available under
the statutes of the State of Colorado. No remedy herein or otherwise conferred
upon or reserved to Landlord shall be considered exclusive of any other remedy
but shall be cumulative and shall be in addition to every other remedy give
hereunder or now or hereafter existing at law or in equity or by statute.
Further, all powers and remedies given by this Lease to Landlord may be
exercised, from time to time, and as often as occasion may arise or as may be
deemed expedient. No delay or omission of Landlord to exercise any right or
power arising from any default shall impair any such right or
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power or shall be considered to be a waiver of any such default or acquiescence
thereof. The acceptance of rent by Landlord shall not be deemed to be a waiver
of any breach of any of the covenants herein contained or of any of the rights
of Landlord to any remedies herein given.
E. If Tenant shall, for any reason, vacate the Leased Premises
before the current expiration date, Landlord shall have the right to accelerate
rental payments and any and all future rent payments due during the course of
the Lease Term shall become immediately payable in full to the Landlord.
F. Notwithstanding anything contained herein that may be
interpreted to the contrary, in the event of a default under the terms of this
Lease Agreement, Landlord shall give Tenant and Guarantor notice as provided in
Section 33, and Tenant and/or Guarantor shall have the right to cure such
default as follows: (a) if Tenant's default is in the payment of rent or any
other sums required to be paid by Tenant under this Lease, Tenant and/or
Guarantor shall have five (5) days after the effective date of the notice to
cure such default, and (b) if Tenant's default is in the performance or
compliance with any other terms or conditions contained in this Lease Agreement,
Tenant and/or Guarantor shall have thirty (30) days to cure such default, unless
such default, because of its nature, cannot be cured within such 30 day period,
then such default shall be deemed remedied if the correction thereof shall have
been commenced within such 30 day period and shall when commenced, be diligently
prosecuted to completion.
39. LEGAL PROCEEDINGS--RESPONSIBILITIES. In the event of proceeding at
law or in equity by either party hereto, the defaulting party shall pay all
costs and expenses, including all reasonable attorney's fees incurred by the
non-defaulting party in pursuing such remedy, if such non-defaulting party is
awarded substantially the relief requested.
40. ADMINISTRATIVE CHARGES. In the event any check, bank draft or
negotiable instrument given for any money payment hereunder shall be dishonored
at any time and from time to time, for any reason whatsoever not attributable to
Landlord, Landlord shall be entitled, in addition to any other remedy that may
be available, (1) to make an administrative charge of $100.00 or three times the
face value of the check, bank draft or negotiable instrument, whichever is
smaller, and (2) at Landlord's sole option, to require Tenant to make all future
rental payments in cash or by cashiers or certified check.
41. HAZARDOUS MATERIALS AND ENVIRONMENTAL CONSIDERATIONS.
A. Tenant covenants and agrees that Tenant and its agents,
employees, contractors and invitees shall comply with all Hazardous Materials
Laws (as hereinafter defined). Without limiting the foregoing, Tenant covenants
and agrees that it will not use, generate, store or dispose of, nor permit the
use, generation, storage or disposal of Hazardous Materials (as hereinafter
defined) on, under or about the Leased Premises, nor will it transport or permit
the transportation of Hazardous Materials to or from the Leased Premises, except
in full compliance with any applicable Hazardous Materials Laws. Any Hazardous
Materials located on the Leased Premises shall be handled in an appropriately
controlled environment which shall include the use of such equipment (at
Tenant's expense) as is necessary to meet or exceed standards imposed by any
Hazardous Materials Laws and in such a way as not to interfere with any other
tenant's use of its premises. Upon breach of any covenant contained herein,
Tenant shall, at Tenant's sole
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expense, cure such breach by taking all action prescribed by any applicable
Hazardous Materials Laws or by any governmental authority with jurisdiction over
such matters.
B. Tenant shall inform Landlord at any time of (i) any Hazardous
Materials it intends to use, generate, handle, store or dispose of, on or about
or transport from, the Leased Premises except in ordinary commercial types and
quantities and (ii) of Tenant's discovery of any event or condition which
constitutes a violation of any applicable Hazardous Materials Laws. Tenant shall
provide to Landlord copies of all communications to or from any governmental
authority or any other party relating to Hazardous Materials affecting the
Leased Premises.
C. Tenant shall indemnify and hold Landlord harmless from any and
all claims, judgments, damages, penalties, fines, costs, liabilities, expenses
or losses (including, without limitation, diminution on value of the Leased
Premises, damages for loss or restriction on use of all or part of the Leased
Premises, sums paid in settlement of claims, investigation of site conditions,
or any cleanup, removal or restoration work required by any federal, state or
local governmental agency, attorney's fees, consultant fees, and expert fees)
which arise as a result of or in connection with any breach of the foregoing
covenants or any other violation of any Hazardous Materials Laws by Tenant. The
indemnification contained herein shall also accrue to the benefit of the
employees, agents, officers, directors and/or partners of Landlord.
D. Landlord shall indemnify and hold Tenant harmless from any and
all claims, judgments, damages, penalties, fines, costs, liabilities, expenses
or losses (including, without limitation, sums paid in settlement of claims,
investigation of site conditions or any cleanup, removal or restoration work
required by any federal, state or local governmental agency, attorneys' fees,
consultant fees and expert fees) which arise as a result of or in connection
with any Hazardous Materials on the Leased Premises prior to the effective date
of this Lease or on the Leased Premises as a result of the activities of
Landlord or Landlord's agents or contractors. The indemnification contained
herein shall also accrue to the benefit of the employees, agents, officers,
directors and/or partners of Tenant.
E. "Hazardous Materials" shall mean (a) any chemical, material,
substance or pollutant which poses a hazard to the Leased Premises or to persons
on or about the Leased Premises or would cause a violation of or is regulated by
any Hazardous Materials Laws, and (b) any chemical, material or substance
defined as or included in the definitions of "hazardous substances", "hazardous
wastes", "extremely hazardous waste", "restricted hazardous waste", "toxic
substances", "regulated substance", or words of similar import under any
applicable federal, state or local law or under the regulations adopted or
publications promulgated pursuant thereto, including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Sec. 9601, et seq.; the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. Sec. 1801, et seq.; the Resource conservation and
Recovery Act as amended, 42 U.S.C. Sec 6901, et seq.; the Solid Waste Disposal
Act, 42 U.S.C. Sec. 6991 et seq.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Sec. 1251, et seq.; and Sections 25-15-101, et seq.,
25-16-101, et seq., 25-7-101, et seq., and 25-8-101, et seq., of the Colorado
Revised Statutes. "Hazardous Materials Laws" shall mean any federal state or
local laws, ordinances, rules, regulations, or policies (including, but not
limited to, those laws specified above) relating to the environment, health and
safety or
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the use, handling, transportation, production, disposal, discharge or storage of
Hazardous Materials, or to industrial hygiene or the environmental conditions
on, under or about the Leased Premises. Said term shall be deemed to include all
such laws as are now in effect or as hereafter amended and all other such laws
as may hereafter be enacted or adopted during the term of this Lease.
F. The indemnification obligations of Tenant and Landlord under
this Section 41 shall survive and continue after the expiration of this lease or
its earlier termination for any reason.
G. Tenant further covenants and agrees that it shall not install
any storage tank (whether above or below the ground) on the Leased Premises
without obtaining the prior written consent of the Landlord, which consent may
be conditioned upon further requirements imposed by Landlord with respect to,
among other things, compliance by Tenant with any applicable laws, rules,
regulations or ordinances and safety measures or financial responsibly
requirements.
H. Should any local governmental entity having jurisdiction over
the Leased Premises require any type of environmental audit or report prior to
or during the occupancy of the Leased Premises by the Tenant, such cost of the
audit or report shall be the sole responsibly of the Tenant unless such audit or
report relates to Hazardous Materials or activities on the Leased Premises prior
to the commencement of this Lease Agreement.
42. ENTIRE AGREEMENT. It is expressly understood and agree by and
between the parties hereto that this Lease sets forth all the promises,
agreements, conditions, and understandings between Landlord and/or its agents
and Tenant relative to the Leased Premises and that there are no promises,
agreements, conditions, or understandings either oral or written, between them
other than as herein set forth.
43. GUARANTEE AND FINANCIAL STATEMENTS. This lease and Tenant's
performance hereunder, shall be personally guaranteed by _____, by the execution
of the Guarantee Agreement set forth herein. A current financial statement of
Tenant and of any parties so guaranteeing this Lease shall be provided to
Landlord upon execution hereof and annually thereafter, if so requested by
Landlord.
44. ESTOPPEL CERTIFICATES. Within no more than 5 days after receipt of
written request, the Tenant shall furnish to the owner a certificate, duly
acknowledged, certifying, to the extent true:
A. That this Lease is in full force and effect.
B. That the Tenant knows of no default hereunder on the
part of the owner, or if it has reason to believe
that such a default exists, the nature thereof in
reasonable detail.
C. The amount of the rent being paid and the last date
to which rent has been paid.
D. That this lease has not been modified, or if it has
been modified, the terms and dates of such
modifications.
18.
<PAGE> 27
E. That the term of this Lease has commenced. F. The
commencement and expiration dates.
G. Whether all work to be performed by the owner has
been completed.
H. Whether the renewal term option has been exercised if
applicable.
I. Whether there exist any claims or deductions from, or
defenses to, the payment of rent.
J. Such other matters as may be reasonably requested by
owner.
If the Tenant fails to execute and deliver to the owner a completed certificate
as required under this section, the Tenant hereby appoints the owner as its
Attorney-In-Fact to execute and deliver such certificate for and on behalf of
the Tenant.
45. FINANCIAL STATEMENTS. As requested by the Landlord, Tenant shall
provide copies of its most recent financial statements and shall also provide
Landlord with up to three (3) prior years of financial statements, if so
requested.
46. BROKERS. Tenant represents and warrants that it has dealt only with
Colorado Group (the "Broker") in the negotiation of this Lease. Landlord shall
make payment of the commission according to the terms of a separate agreement
with the Broker. Tenant hereby agrees to indemnify and hold Landlord harmless of
and from any and all loss, costs, damages or expenses (including, without
limitation, all attorney's fees and disbursements) by reason of any claim of, or
liability to, any other broker or person claiming through Tenant and arising out
of this Lease. Additionally, Tenant acknowledges and agrees that Landlord shall
have no obligation for payment of any brokerage fee or similar compensation to
any person with whom Tenant has dealt or may deal with in the future with
respect to leasing of any additional or expansion space in the Building or any
renewals or extensions of this Lease unless specifically provided for by
separate written agreement with Landlord. In the event any claim shall be made
against Landlord by any other broker who shall claim to have negotiated this
Lease on behalf of Tenant or to have introduced Tenant to the Building or to
Landlord, Tenant hereby indemnifies Landlord, and Tenant shall be liable for the
payment of all reasonable attorney's fees, costs, and expenses incurred by
Landlord in defending against the same, and in the event such broker shall be
successful in any such action, Tenant shall, upon demand, make payment to such
broker.
47. LEASE EXHIBITS ATTACHED. This Lease includes the following Lease
Exhibits which are incorporated herein and made a part of this Lease Agreement:
Exhibit A - Option to Extend
Exhibit B - Interior Space Plan
Exhibit C - Landlord and Tenant's Construction Obligations
Exhibit D - Sign Code Obligations
Exhibit E - Additional Terms and Conditions
Exhibit F - Corporate Guarantee by Ionic's
48. MISCELLANEOUS. All marginal notations and paragraph headings are
for purposes of reference and shall not affect the true meaning and intent of
the terms hereof. Throughout this Lease, wherever the words "Landlord" and
"Tenant" are used they shall include and imply to the singular, plural, persons
both male and female, companies, partnerships and corporations, and in
19.
<PAGE> 28
reading said Lease, the necessary grammatical changes required to make the
provisions hereof mean and apply as aforesaid shall be made in the same manner
as though originally included in said Lease.
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
hereof.
LANDLORD:
6060 PARTNERSHIP, LLP
By:
-----------------------------
TENANT:
SIEVERS INSTRUMENTS, INC.
By:
-----------------------------
20.
<PAGE> 29
EXHIBIT A
OPTION TO EXTEND
FIRST OPTION TO EXTEND
Tenant shall have the option to extend the Lease Agreement (as Amended
above) from 12:00 noon on May 1, 2005 to 12:00 noon on May 1, 2010. In the event
the Tenant desires to exercise said option, Tenant shall give written notice of
such exercise to Landlord not later than May 1, 2004. See below for Option Term
Rent. In the event of such exercise, the Lease Agreement, including all
amendments, shall be automatically extended for the additional term.
Notwithstanding the foregoing, this option shall be void and of no force or
effect if the Tenant is in default hereunder either as of the date of the
Tenant's exercise of said option or as of the date of the commencement of the
option or additional term.
Option Term Rent: The rental rate during the Option Term shall be the
continuation of the Cost of Living adjustment as described in paragraph 4.C. of
this Lease Agreement.
SECOND OPTION TO EXTEND
Tenant shall have the option to extend the Lease Agreement (as Amended
above) from 12:00 noon on May 1, 2010 to 12:00 noon on May 1, 2015. In the event
the Tenant desires to exercise said option, Tenant shall give written notice of
such exercise to Landlord not later than May 1, 2009. See below for Option Term
Rent. In the event of such exercise, the Lease Agreement, including all
amendments, shall be automatically extended for the additional term.
Notwithstanding the foregoing, this option shall be void and of no force or
effect if the Tenant is default hereunder either as of the date of the Tenant's
exercise of said option or as of the date of the commencement of the option or
additional term.
Option Term Rent: The rental rate during the Option Term shall be the
continuation of the Cost of Living adjustment as described in paragraph 4.C. of
this Lease Agreement.
<PAGE> 30
EXHIBIT B
INTERIOR SPACE PLAN
<PAGE> 31
EXHIBIT C
LANDLORD AND TENANT CONSTRUCTION OBLIGATIONS
Landlord to perform, at Landlord's sole cost and expense, the following
work per the attached Tenant Finish Plan. Such work shall be completed on or
before the commencement of the Lease Term as defined in this Lease Agreement:
1. Remove hallway in warehouse area (item marked (1) on plan).
2. Remove wall as indicated in MFG Support area (item marked (2) on plan).
Wall to be either totally removed or a header put in place high enough
to allow for forklifts and other equipment to be able to move through
the opening.
3. Drywall and paint the warehouse side of the wall in Marketing and Sales
area (item marked (3) on plan).
4. Tile the floor of the QC/Test area and manufacturing/stock area of the
warehouse (item marked (4) on plan). Tile to be normal vct tile with
color to be chosen by Tenant. Actual amount of area to be tiled shall
be determined by Tenant prior to commencement of work.
5. Remove the northwestern most room in the cafeteria (item marked (5) on
plan). The smaller room shall remain due to electrical and other phone
infrastructure located in this room.
6. Remove the four marked offices in Doc Control area (item marked (6) on
plan). Landlord and Tenant agree to work on a cost effective solution
for replacement of the carpet in the specific area where the offices
are removed.
7. Parking lot overlay and striping will be completed prior to Tenant
taking possession of the Leased Premises.
8. Landlord shall ensure that all light fixtures are working upon
occupancy and that any damaged or missing ceiling tiles are replaced
prior to occupancy.
9. Change the lighting in what is now the warehouse area (this area is now
bisected by a hallway that is to be removed (see above)) as follows:
a. Remove 34 existing light fixtures from current location
(mounted at full ceiling height) and relocated to extend 11
existing rows of light fixtures (mounted at 6'6").
b. Remove approximately 11 existing eight foot strip lights.
(These will conflict with the extension of the exiting eleven
rows).
c. Install 54 new eight foot industrial light fixtures with
reflectors. (These will match existing light fixtures;
Lithonia PV 2 96 277).
<PAGE> 32
d. All light rows will be seventy-two feet long, spaced ten feed
apart, hanging at 8'6" above floor. Seventeen rows will exist
after the work is complete lighting an area approximately
170'x80'.
e. Landlord to paint the ceiling white in this area.
10. Landlord shall have the carpets in the Leased Premises professionally
cleaned.
11. Landlord shall repair any molding and outside entry tile that is
damaged prior to Tenant's occupancy.
Tenant shall be responsible for all other construction on the Leased Premises.
<PAGE> 33
EXHIBIT C
LANDLORD AND TENANT CONSTRUCTION OBLIGATIONS
TENANT FINISH PLAN
<PAGE> 34
EXHIBIT E
ADDITIONAL TERMS AND CONDITIONS
1. This Lease is expressly conditioned upon its execution by Tenant and
subsequent return to Landlord on or before October 21, 1997. If Tenant
fails to perform either obligation, this Lease shall be null and void
and of no effect.
2. RIGHT OF FIRST REFUSAL. If at any time during the initial term hereof
(but not any extension or renewal term), Landlord receives a bona fide
offer to purchase the Leased Premises, which offer it desires to
accept, Landlord shall deliver written notice of same to Tenant, which
notice shall set forth the specific terms and provisions of the offer
received by Landlord, or shall have attached to it a true and accurate
copy of such offer, and shall offer the Leased Premises for sale to
Tenant on the same terms and conditions as set forth in such notice or
in such offer.
Provided that Tenant is not then in default under any of its
obligations under the Lease, Tenant shall have five (5) business days
following receipt of such notice in which to accept the offer of
Landlord. Acceptance shall be made, if at all, by Tenant giving written
notice to Landlord within said five (5) business days period, of the
acceptance by Tenant of the offer of Landlord, which notice of
acceptance shall be accompanied by cash or certified or cashier's check
payable to Landlord in the amount of the earnest money deposit required
by the terms of the offer first received by Landlord.
Upon such acceptance by Tenant within the time and in the manner herein
prescribed, the parties shall proceed to close the purchase and sale of
the Leased Premises, at the same price and on the same terms as stated
in the original notice from Landlord to Tenant. Such closing shall
occur within sixty (60) days following the date of acceptance by
Tenant, at a time and place designated by Landlord (or at the date of
closing provided in the initial offer, if later).
Failure by Tenant to close following exercise of such right of first
refusal shall constitute a default under the Agreement of Purchase and
Sale, allowing Landlord to exercise any and all remedies set forth in
the Agreement of Purchase and Sale which constitutes the offer; and
shall also constitute a default under this Lease, allowing Landlord to
exercise any and all remedies for default as provided in this Lease.
Failure by Tenant to accept the offer of Landlord within said five (5)
business day period shall constitute a relinquishment and waiver by
Tenant of all further rights under this provision; and Landlord may
proceed to sell the Leased Premises on the terms contained in the
proposed offer; provided, however, that such sale shall be consummated
upon the same terms and at the same price as were stated in the notice
to Tenant, and provided furthermore that should Landlord desire to sell
the Leased Premises for a price or on terms materially different from
those stated in the notice to Tenant, Landlord shall again give notice
to Tenant and offer the Leased Premises for sale to Tenant at such
revised price or on such revised terms, all in accordance with the
foregoing procedures. Furthermore, Landlord and such third party may
extend closing for a period of up to
<PAGE> 35
thirty (30) days without again offering the Leased Premises for sale to
Tenant. Furthermore, should the transaction contemplated by the third
party offer not be consummated within one year after the date on which
notice of the third party offer was given to Tenant, the right of first
refusal herein granted shall be reinstated and shall again apply to any
subsequent offer to purchase the property, all in accordance with the
foregoing procedures.
The foregoing right of first refusal shall not apply to any sale,
transfer or conveyance (i) by Landlord to any of its partners or to any
entity in which any one (1) or more of Landlord's partners holds a
controlling equity interest; or (ii) by any partner or partners of
Landlord or his, her or its partnership interest in Landlord.
Any sale of Leased Premises made pursuant to a third party offer
following Tenant's relinquishment and waiver of its rights under this
provision shall nevertheless be made expressly subject to this Lease.
<PAGE> 36
EXHIBIT F
CORPORATE GUARANTY
BY IONICS, INC.
GUARANTY OF LEASE AGREEMENT
THIS GUARANTY is given as of this 21st day of October, 1997, by IONICS,
INC. ("Guarantor"), the address of which, for purposes of this Guaranty, is 65
Grove Street, Watertown, MA 02172, to and for the benefit of 6060 PARTNERSHIP
LLP ("6060"), the address of which, for purposes of this Guaranty, is 4875 Pearl
East Circle, Suite 300, Boulder, CO 80301.
WHEREAS, 6060 is the Landlord under a proposed Lease Agreement dated ___________
(the "Lease"), in which Sievers Instruments, Inc. is the proposed Tenant
("Tenant"), regarding the Leased Premises commonly known as 6060 Spine Road,
Boulder, Colorado, and
WHEREAS, Tenant is a wholly-owned subsidiary of Guarantor; and
WHEREAS, Landlord is unwilling to enter into the Lease with Tenant
unless the performance and observance of all covenants and conditions of Tenant
thereunder are unconditionally and directly guaranteed by Guarantor.
NOW THEREFORE, in consideration of the matters recited above and to
induce 6060 to enter into the Lease with Tenant, Guarantor undertakes and
agrees as follows:
1. Guarantor absolutely, unconditionally and irrevocably
guarantees to 6060, its successors and assigns, the prompt
full payment of all rent and all other payments to be made by
Tenant under the Lease and the full and punctual performance
and observance by Tenant of all other terms, covenants,
conditions and agreements provided in the Lease to be
performed and observed by Tenant. Without limiting the
foregoing, Guarantor agrees that in the event of default by
Tenant under the Lease, and not timely cured under provisions
of the Lease Agreement, 6060 may proceed directly against
Guarantor, before, after or simultaneously with proceeding
against Tenant.
Guarantor further covenants and agrees that (i) it shall be bound by
all the provisions, terms, conditions, restrictions and limitations contained in
the Lease which are to be observed or performed by Tenant thereunder, the same
as if the undersigned were named therein as Tenant; and (ii) this Guaranty shall
be absolute and unconditional and shall be in full force and effect with respect
to any amendment, addition, assignment, sublease, transfer or other modification
of the Lease, whether or not the Guarantor shall have knowledge or have been
notified of or agreed or consented thereto.
2. Guarantor hereby waives any notices of nonpayment,
nonperformance or nonobservance, except as provided for in the
Lease. Any act of 6060, or its successors or assigns,
consisting of a waiver of any of the terms or conditions of
the Lease, or the giving of any consent to any matter related
to or thing relating to
<PAGE> 37
the Lease, or the granting of any indulgences or extensions of
time to Tenant, may be done without notice to Guarantor and
without affecting the obligations of Guarantor under this
Guaranty..
3. The obligations of Guarantor under this Guaranty will not be
released by 6060's receipt, application, or release of
security given for the performance of Tenant's obligations
under the Lease, nor by any modification or extension of the
Lease. In case of any such modification or extension, the
liability of Guarantor shall be deemed modified or extended in
accordance with the terms of such modification or extension.
The obligations of Guarantor hereunder shall not be
terminated, affected or impaired in any manner by reason of
(i) the assertion by 6060 against Tenant of any of the rights
or remedies reserved to 6060 pursuant to the provisions of the
Lease; (ii) the commencement of summary or other proceedings
against Tenant; (iii) the failure of 6060 to enforce any of
its rights against Tenant, unless such failure constitutes a
waiver by Landlord; or (iv) the granting by 6060 of any
extensions of time to Tenant.
4. The liability of Guarantor under this Guaranty will not be
affected by (i) the release or discharge of Tenant from its
obligations under the Lease in any creditors, receivership,
bankruptcy, or other proceedings, or the commencement or
pendency of any such proceedings; (ii) the impairment,
limitation, or modification of the liability of Tenant or the
estate of the Tenant in bankruptcy, or of any remedy for the
enforcement of Tenant's liability under the Lease, resulting
from the operation of any present or future bankruptcy code or
other statute, or from the decision in any court; (iii) the
rejection or disaffirmance of the Lease in any such
proceedings; (iv) the assignment or transfer of the Lease by
Tenant to another affiliate of Guarantor.
5. Satisfaction by Guarantor of any liability hereunder incident
to a particular default, if additional defaults shall occur,
shall not discharge Guarantor except for the default
satisfied, it being the intent hereof that this Guaranty and
the obligations of Guarantor hereunder shall be continuing and
irrevocable.
6. Until all of Tenant's obligations under the Lease are fully
performed, Guarantor (i) waives any right of subrogation
against Tenant by reason of any payments or acts of
performance by Guarantor pursuant to the obligations of
Guarantor under this Guaranty; (ii) waives any other right
which Guarantor may have against Tenant by reason of any one
or more payments or acts in compliance with the obligations of
Guarantor under this Guaranty.
7. Guarantor hereby authorizes 6060, without notice to Guarantor,
to apply all payments and credits received from any source
(including but not limited to pursuant to this Guaranty) to
payment or satisfaction of any of the obligations of Tenant
under the Lease or as reimbursement for any advances made or
other expenses incurred by 6060 in connection therewith, in
such manner and in such priority as 6060, in its sole judgment
shall deem appropriate.
<PAGE> 38
8. This Guaranty will apply to the Lease, any extension or
renewal of the Lease, and any holdover term following the term
thereof, or any such extension or renewal.
9. This Guaranty may not be changed, modified, discharged, or
terminated orally or in any manner other than by an agreement
in writing signed by Guarantor and 6060, or its successors and
assigns.
10. This Guaranty shall be governed by and construed in accordance
with the laws of the State of Colorado.
11. Guarantor will pay on demand the reasonable attorneys' fees
and costs incurred by 6060, or its successor and assigns, in
connection with the enforcement of this Guaranty or the Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Guaranty as
of the day and year first above written.
IONICS, INC.
By:
--------------------------------
"Guarantor"
6060 PARTNERSHIP LLP
By:
--------------------------------
"6060"
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of MessageMedia, Inc.
for the registration of 5,323,914 shares of its common stock and to the
incorporation by reference therein of our report dated February 2, 1999 except
for Note 12, for which the date is March 26, 1999, with respect to the
consolidated financial statements and schedule of MessageMedia, Inc. included
in its Annual Report (Form 10-K) for the year December 31, 1998, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
------------------------------
ERNST & YOUNG LLP
Denver, Colorado
September 2, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated August 13, 1998, relating to the
financial statements of Email Publishing, Inc., which appears in the Current
Report on the MessageMedia, Inc. Form 8K/A dated February 19, 1999. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.
/s/ PricewaterhouseCoopers LLP
- --------------------------------------
PricewaterhouseCoopers LLP
Broomfield, Colorado
September 7, 1999
