As filed with the Securities and Exchange Commission on May 10, 2000.
Registration No. 333-30116
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
AMENDMENT NO. 1 TO FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------
CAPITA RESEARCH GROUP, INC.
(Exact name of registrant as specified in its charter)
----------
Nevada 7372 88-0072350
------ ---- ----------
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification Number)
organization)
591 Skippack Pike
Blue Bell, Pennsylvania 19422
(215) 619-7777
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------
David B. Hunter
Chief Executive Officer
Capita Research Group, Inc.
591 Skippack Pike
Blue Bell, Pennsylvania 19422
(215) 619-7777
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Andrew J. Beck, Esq.
Torys
237 Park Avenue
New York, New York 10017
(212) 880-6000
Approximate date of commencement of proposed
sale to the public: As soon as practicable after
this Registration Statement becomes effective.
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. |_|
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================== ===================== ===================== ===================== =================
Title of Each Class of Amount To Be Proposed Maximum Proposed Maximum Amount of
Securities To Be Registered Registered Offering Price Aggregate Offering Registration Fee
Per Share(1) Price(1)
- ------------------------------------------ --------------------- --------------------- --------------------- -----------------
<S> <C> <C> <C> <C>
Common Stock
($.001 par value)..................... 5,380,000 $.92 $4,949,600.00 $1309.36
========================================== ===================== ===================== ===================== =================
</TABLE>
(1)......Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) promulgated under the Securities Act of 1933, as
amended.
-----------
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 which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
<PAGE>
Subject to Completion
Preliminary Prospectus dated May 10, 2000
PROSPECTUS
- ----------
CAPITA RESEARCH GROUP, INC.
5,380,000 Shares of Common Stock
- --------------------------------------------------------------------------------
This prospectus:
o Covers the resale of certain shares of our common
stock.
o May be used by the selling security holders or by a
broker-dealer who may participate in sales of the
common stock covered in this prospectus.
The securities covered include:
o 1,600,000 shares of our common stock issuable upon
the conversion of a convertible promissory note.
o 1,260,000 shares of our common stock issued to
selling security holders in private placements in
January 2000.
o 2,520,000 shares of common stock underlying
warrants issued to selling security holders in the
private placements.
The securities to be resold:
o Represent approximately 19.58 percent of our
currently outstanding common stock (assuming the
conversion of the convertible promissory note and
exercise of all the warrants).
o Are being offered on a continuous basis pursuant to
Rule 415 under the Securities Act of 1933, as
amended.
o Will be sold at prevailing market prices or at
prices negotiated by the selling security holder
and buyer.
Our securities are traded on the OTC Bulletin Board under the
trading symbol "CEEG." The last reported sale price of our common stock on May
5, 2000 on the OTC Bulletin Board was $0.88 per share.
The resale of the securities:
o Involves no underwriting discounts, commissions or
expenses.
We will pay any expenses of registering the securities, which
we estimate to be approximately $30,000.
See "Risk Factors" beginning at page 3 to read about certain
factors you should consider before buying common stock.
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 May 10, 2000.
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in
this prospectus. This summary is not complete and may not contain all of the
information that investors should consider before investing in our common stock.
Investors should read the entire prospectus carefully.
Capita Research Group, Inc.
Capita Research Group, Inc. was created as the result of an
exchange transaction between Royal American Mining Properties, Ltd. and NextGen
Systems, Inc., a Pennsylvania corporation (our predecessor) on January 30, 1998.
We have the exclusive license with the National Aeronautics and Space
Administration for the CREW software which measures a test respondent's EEG, or
brain wave impulse, when subjected to sound or pictures. This software then
converts the raw brain wave data into an index, which indicates the respondent's
level of interest, or lack of interest, also called "engagement", with the
stimuli. We believe that we have the only commercial operating system of this
nature and are using it for testing services in the media, advertising and
entertainment industries, as well as in pharmaceutical market research. Our goal
is to become the leading commercial provider of customized, high performance
technology systems and services, including analysis and technical support, for
the real-time, objective measurement of engagement for use in multiple markets.
Our principal executive offices are located at 591 Skippack
Pike, Blue Bell, Pennsylvania 19422, and our telephone number is (215) 619-7777.
Our Web site is located at http//:www.capitaresearch.com. Any information that
is included on or linked to our Web site is not a part of this prospectus.
Summary Consolidated Financial Data
(in thousands, except per share data)
The following table sets forth our summary consolidated
financial data. When you read this summary consolidated financial data, it is
important that you also read the historical financial statements and related
notes included in this prospectus, as well as the section of this prospectus
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations Data: Years ended December 31,
1999 1998 1997 1996
(Consolidated) (Consolidated) (Combined) (Combined)
<S> <C> <C> <C> <C>
Net revenues.................. $ 64,500 $ 85,500 $ 81,894 $ 360,654
Cost of sales................. 129,154 125,826 96,100 253,175
---------- ---------- --------- ---------
Gross profit (loss) .......... (64,654) (40,326) (14,206) 107,479
========== ========== ========= =========
Operating expenses.......... 1,119,269 1,090,374 655,622 504,741
---------- ---------- --------- ---------
Loss from operations........ 1,183,923 1,130,700 669,828 397,262
Non-operating income
(expenses) ............. (19,796) (29,982) (19,452) (1,713)
---------- ---------- --------- ---------
Provision for taxes........... -- -- -- --
Net loss...................... $(1,203,719) $(1,160,682) $(689,280) $ (398,975)
========== ========== ========= =========
Net income (loss) per
common share............ (0.07) (0.10) (0.40) (0.39)
========== ========== ========= =========
Shares used in net income
(loss) per common share
computation............. 17,307,956 11,380,306 1,736,458 1,034,658
========== ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
As of December As of December
31, 1999 31, 1998
-------- --------
Consolidated Balance Sheet Data:
<S> <C> <C>
Total assets............................. $ 304,773 $ 141,414
Current liabilities...................... 809,925 300,333
Long-term debt........................... 23,386 9,614
Total stockholders' equity (deficiency).. (528,538) (168,533)
</TABLE>
2
<PAGE>
RISK FACTORS
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. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations.
If any of the following risks actually occur, our business,
results of operations and financial condition could be materially and adversely
affected, the value of our stock could decline and you may lose all or part of
your investment.
We have a limited operating history and are subject to the risks of new
enterprises.
We are a development stage company and have a limited
operating history. Our limited operating history and the uncertain and emerging
nature of our technology and services make it difficult to assess our prospects
or predict our future operating results. Our prospects must be considered in
light of the numerous risks and uncertainties frequently encountered with new
businesses.
We have a history of losses and expect losses will continue.
We have never been profitable, and we anticipate that we will
continue to incur net losses in future periods. For the fiscal years ended
December 31, 1999 and December 31, 1998, we had net losses of $1,203,719 and
$1,160,682, respectively. There can be no assurance that we will successfully
implement our business strategy in the future or that we will achieve
profitability. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
We face substantial competition from established companies in our industry.
We face substantial competition from other providers of
advertising testing services. Our principal competition consists of companies
within the opinion research industry which provide third party testing services
either to advertising agencies or directly to advertising clients. While we
believe that our technology and testing methodology are not comparable to those
services currently offered by competitors in our industry, we face uncertainty
regarding our ability to compete effectively with established opinion research
companies. Many of our competitors and potential competitors are much larger and
have greater development, marketing and financial resources, making it more
difficult for us to establish name recognition in the marketplace and compete
effectively. See "Business - Competition."
Changes in technology may render our equipment and services obsolete.
We rely on advanced technology and software in the provision
of our advertising testing services. Our success will depend on our ability to
adapt to technological advances. To remain competitive, we must respond quickly
to technological advances in EEG monitoring hardware and software. This could
require us to make substantial investments in new equipment or software that has
made our existing equipment or software obsolete. In addition, other
technologies developed by competitors may significantly reduce demand for our
services or render our services obsolete.
3
<PAGE>
We may be unable to meet our future cash requirements.
We require substantial capital to fund the continued
development and operation of our business. From January 1, 1998 through May 1,
2000, we have received net proceeds from offerings of our common stock and
warrants of $2,223,833 and from offerings of our debt of $500,000. As of May 1,
2000, we had approximate working capital of $100,000. We anticipate, based on
current plans and assumptions relating to our operations, that the proceeds from
recent sales of our common stock, together with projected cash flow from
operations, will be sufficient to satisfy our contemplated cash requirements for
at least the next three months. If, however, we have underestimated our cash
requirements, we will require additional debt or equity financing. Our ability
to obtain the necessary financing, and its cost to us, are uncertain.
Accordingly, we may be forced to curtail our planned business development and
may also be unable to fund our ongoing operations. To the extent we raise
additional capital by issuing securities, dilution may result to the investors
in this offering.
Our technology and services may never be accepted for use in advertising
testing.
The use of EEG technology in advertising testing is a
relatively new alternative to traditional advertising testing. Potential clients
may be unwilling to accept our services as an appropriate or effective method to
measure individual responses to advertising. The extent to which the use of EEG
technology in advertising testing is accepted will materially affect our
business, financial condition and results of operations.
We do not pay, and do not anticipate paying, dividends on our common stock.
We have never paid a cash dividend on our common stock.
Whether we pay cash dividends in the future will depend on our earnings,
financial condition and capital needs and on other factors deemed pertinent by
our board of directors. We currently intend to retain any future earnings to
finance our operations. See "Dividend Policy."
We may fail to attract or retain key management personnel, which will adversely
affect our business.
We are highly dependent on the services of current management
such as David Hunter, our president, and Tomas Stenstrom, our chief technology
officer, and Anthony Baratta, our treasurer. The loss of key management
personnel or an inability to attract, retain and motivate sufficiently
experienced management could have a material adverse effect on our businesses,
financial condition or results of operations.
4
<PAGE>
Possible infringement of intellectual property rights could harm our business.
We are in the process of applying for a number of patents
pertaining to our technology. We have a number of trademarks and servicemarks on
trade names used in our operations and marketing. We cannot be certain that the
steps we have taken to protect our intellectual property rights will be adequate
or that third parties will not infringe or misappropriate our proprietary
rights, nor can we be sure that competitors will not independently develop
technologies that are substantially equivalent or superior to the proprietary
technologies employed in our services. In addition, we cannot be certain that
our business activities will not infringe on the proprietary rights of others,
or that other parties will not assert infringement claims against us. Any claim
of infringement of proprietary rights of others, even if ultimately decided in
our favor, could result in substantial costs and diversion of resources. If a
claim is asserted that we infringed the intellectual property of a third party,
we may be required to seek licenses to such third-party technology. We cannot be
sure that licenses to third-party technology will be available to us at a
reasonable cost, if at all. If we were unable to obtain such a license on
reasonable terms, we could be forced to cease using the third-party technology.
See "Business--Intellectual Property."
The exercise of outstanding options and warrants and the conversion of an
outstanding convertible promissory note may adversely affect the price of our
securities.
We have granted 1,529,100 options, each to purchase one share
of our common stock for purchase prices ranging from $.90 to $1.37 per share, to
key employees, officers and directors and other designees under our stock option
plan. To date, options to purchase 50,000 shares have been exercised for an
aggregate purchase price of $44,500. We have also granted warrants to purchase
3,593,227 shares of our common stock, and have issued a convertible promissory
note convertible into 1,600,000 shares of our common stock. These outstanding
options and warrants and the convertible promissory note could have a
significant adverse effect on the trading price of our common stock, especially
if the note were converted or a significant volume of the options or warrants
were exercised and the stock issued was immediately sold into the public market.
There are significant consequences associated with our stock trading on the NASD
OTC Bulletin Board rather than a national exchange.
We do not currently meet the requirements for trading in the
Nasdaq SmallCap Market or other national exchanges. We can give you no assurance
that we will achieve the quantitative criteria required by the Nasdaq SmallCap
Market or any other national exchange or that, even if we do, our listing
application would be approved by any such exchange. The effects of not being
able to list our securities on a national exchange include limited release of
the market prices of our securities, limited news coverage of our company,
limited interest by investors in our securities, increased difficulty in selling
our securities in certain states due to "blue sky" restrictions, and limited
ability to issue additional securities or to secure additional financing.
We are subject to the application of the Penny Stock Rules.
Because our common stock is not trading in the Nasdaq SmallCap
Market or some other national exchange, and the trading price of the common
stock is less than $5 per share, we are subject to the Penny Stock Rules under
the Securities Enforcement and Penny Stock Reform Act of 1990. In addition to
the risk of volatility of stock prices, low price stocks are subject to the
risks of additional federal and state regulatory requirements and the potential
loss of effective trading markets. In particular, broker-dealers trading in our
5
<PAGE>
common stock are subject to Rule 15g-9 under the Securities Exchange Act of
1934, as amended. Rule 15g-9, among other things, requires that broker-dealers
satisfy special sales practice requirements, including making individualized
written suitability determinations and receiving any purchaser's written consent
prior to any transaction. Broker-dealers handling trades in our securities are
required to make additional disclosure in connection with those trades,
including the delivery of a disclosure schedule explaining the nature and risks
of the penny stock market. Such requirements could severely limit the liquidity
of our securities and your ability to sell your securities in the secondary
market, which could have an adverse impact on the price of our common stock.
SELLING SECURITY HOLDERS
The selling security holders consist of the SoundShore
Investors and the Additional Investors, as defined below and James R. Salim. The
registration statement of which this prospectus is a part is being filed, and
the shares offered in this prospectus are included herein, pursuant to various
registration rights granted by us to the selling security holders. We are unable
to determine the exact amount of securities that will actually be sold pursuant
to this prospectus due to the ability of the selling security holders to
determine individually when and whether they will sell any securities under this
prospectus and uncertainty as to how many of the warrants will be exercised.
The SoundShore Investors
SoundShore Holdings Ltd., SoundShore Opportunity Holding Fund
Ltd. and SoundShore Strategic Holding Fund Ltd. (collectively referred to herein
as the "SoundShore Investors") acquired in a private placement transaction
pursuant to a securities purchase agreement dated as of January 6, 2000 an
aggregate of 1,000,000 units, each unit consisting of one share of our common
stock and two warrants. Each warrant is exercisable for the purchase of one
share of our common stock until January 1, 2005. In each unit, one warrant is
exercisable for $.50 per share and the other warrant is exercisable for $1.00
per share.
The Additional Investors
Andrew Gitlin, John Lepore, Edward Okine, Philip Platek,
Howard Fischer and Michael Hamblett (collectively referred to herein as the
"Additional Investors") acquired in a private placement transaction pursuant to
a securities purchase agreement dated as of January 21, 2000 an aggregate of
260,000 units. These units are identical to the units acquired by the SoundShore
Investors. Each warrant is exercisable for the purchase of one share of our
common stock until January 1, 2005. In each unit, one warrant is exercisable for
$.50 per share and the other warrant is exercisable for $1.00 per share.
James R. Salim
We issued a $400,000 convertible promissory note dated August
5, 1999 to James R. Salim. The note is being converted into 1,600,000 shares of
our common stock.
6
<PAGE>
The following table and accompanying footnotes identify each
selling security holder with respect to the shares beneficially held or
acquirable by, as the case may be, each selling security holder. No selling
security holder has had any position, office or other material relationship with
us or any of our predecessors or affiliates within the past three years.
<TABLE>
<CAPTION>
Total
Common Stock
Number of Shares of Beneficially Number of
Number of Shares Common Stock Owned Shares to
Name of Investor of Common Stock Underlying Warrants Prior to Offering be Offered
---------------- ------------ ------------------- ----------------- ----------
<S> <C> <C> <C> <C>
James R. Salim(1) 1,600,000(2) 300,000 1,900,000 1,600,000
SoundShore Holdings
Ltd. 666,750 1,333,500 2,000,250 2,000,250
SoundShore
Opportunity Holding
Fund Ltd. 214,500 429,000 643,500 643,500
SoundShore Strategic
Holding Fund Ltd. 118,750 237,500 356,250 356,250
Andrew Gitlin 30,000 60,000 90,000 90,000
John Lepore 20,000 40,000 60,000 60,000
Edward Okine 10,000 20,000 30,000 30,000
Philip Platek 20,000 40,000 60,000 60,000
Howard Fischer 107,778 187,778 295,556(3) 240,000
Michael Hamblett 120,000 200,000 320,000 300,000
</TABLE>
(1) Mr. Salim is not offering the 300,000 shares of common stock issuable
upon the exercise of his warrants. Mr. Salim's 300,000 shares which he
will hold after the offering represent 1.20% of the outstanding shares.
(2) Common stock issuable upon conversion of Mr. Salim's convertible
promissory note.
(3) Mr. Fischer is not offering 27,778 shares of common stock and 27,778
shares of common stock underlying warrants issued to him in April 2000.
PLAN OF DISTRIBUTION
The registration statement of which this prospectus forms a
part has been filed pursuant to certain registration rights agreements. To our
knowledge, as of the date hereof, no selling security holder has entered into
any agreement, arrangement or understanding with any particular broker or market
maker with respect to the shares offered hereby, nor do we know the identity of
the brokers or market makers which will participate in the offering.
7
<PAGE>
The shares covered hereby may be offered and sold from time to
time by the selling security holders. The selling security holders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. Each such sale may be made on the OTC Bulletin Board or
otherwise, at prices and on terms then prevailing or at prices related to the
then market price, or in negotiated transactions. The shares may be sold by one
or more of the following methods:
(a) a block trade in which the broker-dealer engaged by the
selling security holder will attempt to sell the shares as
agent but may position and resell a portion of the block
as principal to facilitate the transaction;
(b) purchases by the broker-dealer as principal and resale by
such broker-dealer for its account pursuant to this
prospectus;
(c) ordinary brokerage transactions and transactions in which
the broker-dealer solicits purchasers;
(d) privately negotiated transactions at negotiated prices;
and
(e) directly to market makers acting as principals.
To our knowledge, the selling security holders have not, as of
the date hereof, entered into any arrangement with a broker-dealer for the sale
of shares through a block trade, special offering, or secondary distribution or
a purchase by a broker-dealer. In effecting sales, broker-dealers engaged by the
selling security holders may arrange for other broker-dealers to participate.
Broker-dealers may receive commissions or discounts from the selling security
holders in amounts to be negotiated.
In offering the shares, the selling security holders and any
broker-dealers who execute sales for the selling security holders may be deemed
to be "underwriters" within the meaning of the Securities Act of 1933, as
amended, in connection with such sales, and any profits realized by the selling
security holders and the compensation of such broker-dealers may be deemed to be
underwriting discounts and commissions. In addition, any shares covered by this
prospectus that qualify for sale pursuant to Rule 144 may be sold under Rule 144
rather than pursuant to this prospectus.
Regulation M under the Securities Exchange Act of 1934, as
amended, prohibits participants in a distribution from bidding for or purchasing
for an account in which the participant has a beneficial interest, any of the
securities that are the subject of the distribution. Rule 104 of Regulation M
governs bids and purchases made to stabilize the price of a security in
connection with a distribution of the security.
This offering will terminate as to each selling security
holder on the earlier of (a) the date on which all such selling security holders
shares may be resold pursuant to Rule 144 under the Securities Act; or (b) the
date on which all shares offered hereby have been sold by the selling security
holder. There can be no assurance that any of the selling security holders will
sell any or all of the shares offered hereby.
8
<PAGE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock commenced trading on the OTC Bulletin Board
on August 3, 1998 under the symbol "CEEG". To date, there has been only sporadic
trading in our common stock. As of December 31, 1999, we had 1,013 holders of
record of our common stock and 15 listed market-makers.
The following table sets forth the high and low bid
information for our common stock for the periods indicated. The quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission,
and may not necessarily represent actual transactions.
High Low
---- ---
Fiscal Year Ending December 31, 2000
Quarter ended March 31, 2000 $ 2.4375 $.5625
Quarter ended June 30, 2000 $ 1.375 $.6875
(through May 5, 2000)
Fiscal Year Ending December 31, 1999
Quarter ended March 31, 1999 $ .375 $.125
Quarter ended June 30, 1999 $ .375 $.0625
Quarter ended September 30, 1999 $ 2.1875 $.0625
Quarter ended December 31, 1999 $ 1.9375 $.875
Fiscal Year Ending December 31, 1998
Quarter ended September 30, 1998 $ .03125 $.01
(from August 5, 1998)
Quarter ended December 31, 1998 $ .375 $.03125
DIVIDEND POLICY
We have never paid a cash dividend on our common stock.
Whether we pay cash dividends in the future will depend on the our earnings,
financial condition and capital needs and on other factors deemed pertinent by
the our board of directors. We currently intend to retain any future earnings to
finance our operations.
CAPITALIZATION
The following table sets forth our capitalization as of
December 31, 1999:
o on an actual basis; and
o as adjusted to give effect to:
9
<PAGE>
o issuance of 50,578 shares of common stock in April 2000 in
exchange for $47,417 of services;
o the exercise of options to purchase 50,000 shares of common
stock in April 2000 in exchange for $44,5000 of services;
o the sale of 1,883,227 shares of common stock in January,
March and April 2000 private placements for $1,130,900;
o the exercise of all outstanding warrants for 3,593,227
shares of common stock with an aggregate exercise price of
$2,828,853; and
o and the conversion of the $400,000 convertible promissory
note into 1,600,000 shares of common stock.
This table should be read in conjunction with our financial
statements and related notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
December 31, 1999
Actual As Adjusted
------------- ------------
<S> <C> <C>
Cash and cash equivalents.............................. $ 4,840 $ 3,964,593
============= ============
Accounts payables and accrued expenses................. $ 369,918 $ 325,182
============= ============
Short-term debt ....................................... $ 420,000 $ 20,000
============= ============
Long-term debt (including capital lease obligations) .. $23,386 $ 23,386
============= ============
Stockholders' deficit:
Common Stock, $.001 par value per share,
100,000,000 shares authorized;
20,295,946 shares issued and outstanding
actual; 27,472,972 shares issued and
, outstanding as adjusted.......................... 20,296 27,473
Capital in excess of par value................... 3,855,663 8,300,156
Stock Subscription Receivable.................... (837,568) (837,568)
Accumulated deficit.............................. (3,566,929) (3,614,110)
------------- ------------
Total stockholders' equity (deficit)........... $ (528,538) $ 3,875,951
============= ============
</TABLE>
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with
the consolidated financial statements and the notes thereto included elsewhere
in this prospectus. The following discussion contains forward-looking statements
which reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in these forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited
to, those discussed below and elsewhere in this prospectus, particularly in
"Risk Factors."
General
The discussion and analysis set forth below is for the
following periods:
o the twelve months ended December 31, 1999, and December
31, 1998.
10
<PAGE>
RESULTS OF OPERATIONS
Results Of Operations: Year Ended December 31, 1999, Compared With Year Ended
December 31, 1998
We have been a development stage company since our inception.
As a development stage company, we have had limited marketing activity with
sales of $64,500 and $85,500 for the twelve-months ended December 31, 1999 and
1998, respectively. The sales in both periods were to "early adopters" of our
technology to measure the effectiveness of advertising materials. These "early
adopters" received our product at an aggressive price, in return for the
competitive advantage of being the first to use the product. The gross profit
(loss) on these sales increased to a $64,700 loss in 1999 from a $40,300 loss in
1998. This was due to lower sales and the addition of certain fixed costs
included in cost of sales, primarily due to an increase in the depreciation of
testing equipment that was acquired since 1998.
The operating costs of $1,119,300 in 1999 were greater by
$28,900 than the operating costs incurred for the twelve months ended December
31, 1998. The increase was attributable to research and development expense of
$133,600 due to the introduction of the Capita ETS(TM) operating system during
1999, which operates in a networked environment, offering the ability to test
multiple respondents during one simultaneous session. Research and development
for the twelve months ended December 31, 1999 was $236,100, as compared to
$102,500 for the comparable period of 1998. Operating costs also increased due
to investor relations, financing fees, and depreciation expense, which were
partially offset by several expenditures incurred in 1998, which did not reoccur
in 1999. These expenses included: approximately $105,000 of 1998 expense which
was attributable to legal, accounting and other costs relating to the reverse
acquisition into Royal American and the filing of the Form 10-SB/A with the SEC.
Results Of Operations: Year Ended December 31, 1998, Compared With Year Ended
December 31, 1997
As disclosed in our Form 10-SB/A filed in July 1998, Media
Solutions International (MSII) (a predecessor of Capita) licensed the rights
from Media Solutions Inc. (also a predecessor of Capita) to continue the
development and selling of MediaLink. MediaLink is a software system used by
marketers to manage direct response television advertising campaigns. The
MediaLink product line was sold to Columbine/JDS Systems, Inc. ("Columbine") in
July 1997, for a contract which would pay out potential future profits to us
from the sale of products and services marketed with the MediaLink software that
Columbine acquired. To date, no revenues have been paid to us by Columbine,
which claims that MediaLink has not been profitable for it.
During the first half of 1997, MSII was actively engaged in
marketing its product and providing technical support to its clients. As also
disclosed in the Form 10-SB/A, during 1998, having previously sold the MediaLink
line of business, and having obtained the rights to commercialize the NASA
software, Media Solutions was engaged in developing and launching a new line of
business directed towards advertising and media copy testing. In addition to
validating its testing system for commercial use, this involved substantial
ongoing technical development, creation of corporate infrastructure, and
initiation of a sale solicitation program among prospective media and
advertising company prospects.
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For these reasons, substantially all of the material changes
from period to period in the respective Consolidated Statements of Operations
for the year ended December 31, 1998, reflect a basic change of business
operations and not a change in comparable operating results. Accordingly, in the
period ended December 31, 1997 Media Solutions and MSII generated revenue of
$81,894 from sales of its MediaLink software product. Total expenses of $751,722
(exclusive of interest) were incurred largely in connection with system sales
and support activities. In the year ended December 31, 1998 we had sales of
$85,500 of our copy testing service. This accounts for the entire
period-to-period change in revenue. The gross margin for the year ended December
31, 1998 was a negative ($40,236). Improvements in gross margin are expected
with anticipated sales increases and further technical and operational
improvements to the testing process. Our expenses of $1,216,200 (exclusive of
interest) reflect the technical development of the product, development of an
infrastructure, and the start-up of testing operations. General and
administrative expenses include costs of approximately $104,490 which are
attributable to legal, accounting, and other costs related to the reverse
acquisition into Royal American and the filing of the Form 10-SB/A with the
Securities and Exchange Commission.
LIQUIDITY AND CAPITAL RESOURCES AT DECEMBER 31, 1999
With losses expected to continue in the near future, our
ability to sustain operations is dependent on our ability to raise added
investment capital. We have taken the following steps during the twelve months
ended December 31, 1999, to improve our liquidity and capital resources:
1. During the twelve months ended December 31, 1999 we
received cash proceeds of $417,858 from the sale of common
stock.
2. We converted $100,000 of notes payable and $31,384 of
other payables into our common stock.
3. The Company issued $297,488 of common stock in
consideration of services rendered, including rent and
equipment purchases.
4. In March 1999, we entered into a one year agreement with
Quaker Capital Markets Group, Inc. ("Quaker") in our
attempt to raise a then currently estimated $7,500,000. In
connection therewith, we paid Quaker $10,000 in cash,
$15,000 in common stock and agreed to pay them a
percentage of capital raised. We decided not to renew the
agreement with Quaker in light of the unsolicited funds
received in January. We are currently in talks with a
number of investment banking firms for a possible equity
funding or joint venture arrangement.
5. In August 1999, we entered into an agreement with an
investor for $400,000 in short-term notes, which can be
converted to common stock. This loan was obtained to meet
our working capital needs as we seek out additional equity
financing. On January 27, 2000, the same investor
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indicated that he intends to convert his convertible
promissory note into 1,600,000 shares of common stock at a
purchase price of $0.25 per share. On March 10, 2000, the
investor also indicated his intent to exercise his 300,000
stock warrants for common stock for an aggregate purchase
price of $75,000.
At December 31, 1999, our financial condition remained
impaired with the working capital shortfall being met primarily from the
proceeds of the issuance of common stock and a short-term working capital loan.
The above transactions net of the operating loss had the effect of increasing
the total stockholders' deficiency by $360,005 to a deficiency of $528,538 at
December 31, 1999.
Year 2000 Compliance Disclosure
On January 1, 2000, we did not incur any impact on our
products, equipment, computer systems and applications as a result of the Year
2000 issue. We attribute this to our Year 2000 readiness efforts. Although we
did not experience any problems related to the Year 2000 issue, there can be no
assurance that problems relating to the Year 2000 issue will not manifest
themselves in the future.
BUSINESS
Capita Research Group, Inc. is a Nevada corporation, which was
created as the result of an exchange transaction between Royal American Mining
Properties, Ltd. and NextGen Systems, Inc., a Pennsylvania corporation (Capita's
Predecessor), on January 30, 1998. We have the exclusive license with the
National Aeronautics and Space Administration for software, which measures a
test respondent's EEG, or brain wave impulse, when subjected to sound or
pictures. This software then converts the raw brain wave data into an index,
which indicates the respondent's level of interest, or lack of interest, also
called "engagement," with the stimuli. We believe that we have the only
commercial operating system of this nature and are using it for testing services
in the media, advertising and entertainment industries, as well as in
pharmaceutical market research.
On January 27, 1998 Royal entered into an Exchange Agreement
under the terms of which on January 30, 1998 Royal acquired all the issued and
outstanding shares of NextGen in exchange for shares of Royal's common stock.
Royal issued 8,622,000 shares (90%) of its common stock to an exchange agent for
the shareholders of NextGen and in return received all the issued and
outstanding shares of NextGen. Under the terms of the Exchange Agreement,
Royal's management and majority shareholders then effected a two for one forward
split of Royal's remaining common stock. Accordingly, Royal's shareholders were
entitled to two shares of our common stock for every one share they owned. Our
name was also changed to Capita Research Group, Inc.
As of May 1, 2000, 22,279,751 shares of our common stock were
issued and outstanding.
To management's knowledge, we have not been subject to
bankruptcy, receivership or any similar proceedings.
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Forward-Looking Statements
This prospectus contains forward-looking statements (within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended),
representing our current expectations and beliefs concerning future events. When
used in this prospectus, the words "believes," "estimates," "plans," "expects,"
"intends," "anticipates," and similar expressions as they relate to us or our
management are intended to identify forward-looking statements. Our actual
results could differ materially from those indicated by the forward-looking
statements because of various risks and uncertainties discussed below and
elsewhere in this prospectus, particularly under "Risk Factors." These risks and
uncertainties are beyond the ability of us to control, in many cases, and we
cannot predict the risks and uncertainties that could cause actual results to
differ materially from those indicated by the forward-looking statements.
Business
We are a technology company that designs and markets systems
and services that are used in research to measure communication effectiveness.
We do this by measuring the psycho-physiological engagement of an individual to
various forms of communication. The basic technology is licensed under an
exclusive agreement from NASA to measure electrical activity using an
electroencephalogram (EEG) in the human brain and processing the results through
the computer using an algorithm developed by NASA. Our mission is to become the
leading commercial provider of customized, high performance technology systems
and services, including analysis and technical support, for the real-time,
objective measurement of engagement for use in multiple markets.
We are in the development stage. We are in the process of
obtaining patents for our hardware and software technology. Using this
technology in communications research, we are developing systems to evaluate
individual engagement while watching television and plan to develop systems to
test and measure individual engagement with print media advertising, package
design, and Internet web sites. We will market this technology as a testing
service with particular focus on the television advertising industry. We will
provide our client's test results, which determine whether the test subjects are
mentally engaged by the media being viewed.
This type of testing is referred to as "copy testing" or
"advertising testing" research. In addition to general interviews about consumer
preferences, at present there are two principal methods of conducting such
tests. The first is the use of a meter, or dial, by which the test subject
indicates his positive (or negative) reaction associated with the test material.
The second method of testing is performed by companies specializing in focus
group measurement, whereby a group of demographically selected test subjects
views a program and is then asked a series of questions to determine interest or
lack of interest. A substantial volume of advertising research activity is
conducted with what is referred to as "syndicated research", whereby the
creatives of various advertisers are pooled in common projects, creating
multiple testing slots inside of a single project. Syndicated research is
principally conducted through distributed testing in the home, over unused cable
TV channels or by mailing video cassettes to panel respondents which erase
themselves automatically after a single playing, followed by the administration
of questionnaires delivered to the respondent, or by simultaneous or next day
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interview of the respondent by telephone. Some syndicated research is conducted
in central facilities. By doing syndicated research, the cost of a research
project is spread across a number of clients, making the research work more
economical to each client company, and more profitable to the research company.
These forms of testing constitute a well-established industry, although there is
much debate within the media industry about the reliability of these tests due
to the subjective nature of measuring viewer response and due to the tendency of
some test subjects to follow strong and vocal leaders.
Our method of using brain wave measurement technology differs
from standard industry methods in that it monitors brain activity objectively
during respondents' testing and converts the measured activity into what we call
the Engagement Index(TM). Testing allows an advertiser to evaluate consumer
engagement to its commercials on a second-by-second basis.
Based on early marketing results, we believe that we can
stimulate significant demand for our objective and passive form of test subject
measurement. Although other means of psycho-physiological measurement have been
used to test advertising material, management believes that no method comparable
to our EEG measurement exists in the marketplace.
We have been developing line extensions of the technology into
additional industries during the past year. There has been a version of the
Capita ETS(TM) print media system developed for the conducting of pharmaceutical
market research of doctor detail creatives. We are also completing a new system
to manage custom and syndicated research of Internet web creatives, such as web
pages, banners, and other web objects.
We introduced a version of the Capita ETS(TM) in the fall of
1999 which operates in a networked environment, offering the ability to test
multiple respondents during one simultaneous session. This innovation has
greatly improved the economics of the technology from our standpoint, in terms
of utilization of staff time, facilities and working capital.
We intend to offer line extensions of the foundation operating
system, so that the Capita ETS(TM) can function on a variety of computer
operating system platforms. We are also developing an inventory of data modeling
systems and project management methodologies to more closely tailor the
technology to the specific needs of clients.
Over time, we intend to offer additional analyses to the
Engagement Index(TM), to give a more complete view of the findings of a project.
With the introduction of the Capita ETS(TM) networked operating system in the
fall of 1999, which offers the ability to test multiple respondents
simultaneously, the utility and marketability of the technology has improved
significantly.
Marketing
We are primarily marketing our testing services to
o the established research industry, as a complement to that
industry's existing research methods;
o advertising agencies, as a tool to help refine creative
content and strategy;
o advertising clients, principally consumer products
companies and pharmaceutical companies;
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o media companies, such as television networks, cable
networks, Internet media companies, and print media
companies; and
o commercial, industrial and professional clients who wish
to measure engagement in certain business settings or
situations.
We reach prospects through initial phone or mail contact,
referrals, networking, industry publications, public relations, and the hiring
of outside media and marketing consultants, nearly all of which are followed by
presentations directly in client offices, or by visits to the company's
headquarters by clients or prospects. In addition, our personnel regularly
attend industry trade shows to develop a network of prospects and generate
broader exposure. We also receive some inquiries from our newly deployed web
site, as well as a flow of RFP's (requests for proposals) from prospective
clients on a regular basis.
During the past two years, we have established a base of
customers in the following categories: beverage companies, principally beer;
pharmaceutical companies; television networks; advertising agencies; small to
mid-sized research companies; media research organizations which operate as
subsidiaries of agencies; Internet advertising agencies and web development
companies; print media companies; and direct response television agencies and
advertisers. There has been relatively little repeat business to date, which we
believe is due to lack of marketing, research and technology infrastructure, as
well as because of the highly advanced nature of our technology as it is being
introduced into a traditionally slow-to-change industry. Most of our projects to
date have been conducted with clients who are characterized as innovators in
their respective companies and industries. It is expected that this will
continue for the foreseeable future.
We have had incidental revenues during the year and a half
that the product has been offered in the market. Many projects conducted for
clients in the early stages were performed without compensation, with us paying
for all costs, in order to get the technology into distribution. During the past
year, more projects have been revenue producing than not. We have gradually been
upgrading the scope of our product and service offerings, as technical
innovations and client feedback have become available. We expect to increase the
ratio of revenue producing projects to total projects conducted over time,
although there is no assurance that this can be achieved. Due to our unique
position in the research industry, we expect to continue conducting non-revenue
producing projects on an ongoing basis, either for R&D purposes, for marketing
promotion to launch the technology into additional fields, or to make available
pro bono engagement research for publication by leading marketing, Internet or
research trade organizations in new fields of use. It is the position of
management that these ongoing non-paid projects help promote the market
penetration of the technology over time.
The limited progress in producing meaningful revenues to date
is generally due to the lack of adequate capital to fund expansion of
operations, marketing and staffing in a highly complex line of business.
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We have conducted virtually no advertising to date, other than
limited direct mail, e-mail campaigns and our web site, due to the lack of
available funding. We have recently hired a local agency specializing in
multimedia creative development and distribution to upgrade our presentation
materials, and for placement of trade advertising. We have also recently hired a
public relations firm to increase exposure in trade publications as well as in
mass media outlets. We have an ongoing relationship with a leading web
development company to create and maintain our web site, and to develop new web
sites for targeted marketing. While only limited funds are available for this
purpose at present, we are optimistic that these new initiatives will increase
the awareness of our technology in the research marketplace, although there is
no assurance that this will occur.
Competition
We face well-established and well-funded competition. Our
principal competition consists of entities within the opinion research industry
which provide a third party testing service either to advertising agencies or
directly to the advertising client. Often, agencies own their own dedicated
research company. According to Advertising Age, in 1998, combined revenue from
research companies exceeded $4.5 billion in the US and $8.0 billion worldwide.
The top five companies in this group are:
1998 Revenue (Millions)
-----------------------
Company US Worldwide
------- -- ---------
IMS Health $412.3 $1,084.0
Nielsen Media Research 401.9 401.9
Information Resources Inc. 397.0 511.3
AC Nielsen Corp. 390.4 1,425.4
VNU Marketing Information Services 343.0 428.0
We intend to compete against these established research
entities on the basis of technology differentiation, test reliability and
pricing. As mentioned above, management believes that our technology and testing
methodology are incomparable as to the nature and composition of our test
results. Management further believes that measurements of engagement, developed
with scientific objectivity, will provide a competitive advantage in an industry
seeking more in-depth analysis beyond subjective results.
In addition to established competition, we also face
uncertainty regarding acceptance of, and demand for, our method of advertising
and market research testing. Our method represents a new development in an
established industry. Advertising researchers may be slow to accept our method
of testing, or may reject it.
Research and Development
We are in the development stage. Research and development of
our products and services can be divided into several categories:
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o development of the Capita ETS(TM)operating system;
o data modeling and data interpretation of data produced by
the technology;
o research project methodology development; and
o development of software and databases to support the Capita
ETS(TM).
The Capita ETS(TM) operating system is a series of hardware
and software components, methods and procedures which produce the Engagement
Index(SM) and other measures synchronized with marketing and communications
media being tested. This operating system requires ongoing research and
development for ways to enhance, debug, miniaturize, and increase ease of use.
We retain a roster of engineers, scientists, and consulting firms to make such
improvements and modifications, and regularly implement updates to our
technology.
Recently, we embarked on a major effort to substantially
improve the data modeling of information produced by our technology. There is no
assurance that these expenditures will result in increased market penetration or
acceptance of the technology.
NASA License
We were granted two successive modifications to the original
license agreement granted to us on August 4, 1997. The first modification in
1998 expanded the field of use to include all forms of advertising, media and
entertainment. The second modification, granted in the fall of 1999, expanded
the field of use to include "all fields." In addition, the second modification
increased the expiration date of the license from five years from the date of
the license, extending it to the greater of the life of the patent (20 years
from the date of the patent application, which was in 1996), or in the event
that the patent does not issue, the life of the software copyright, which in the
case of the NASA technology, is 75 years from the filing date of 1996.
We are obligated to pay an annual licensing fee of $15,000 to
NASA upon each annual renewal of the CREW license in July of each year. We are
also required to pay 50% of any consideration received from any sublicensees in
consideration for any sublicense granted for the licensed product. We have filed
all annual reports and paid all licensing fees to date on a timely basis, and
are in compliance with all contractual provisions under the license.
Production and Manufacturing
We require specialized hardware for our operations. Our
employees and contractors manufacture such hardware. Systems and technology are
built and assembled by our personnel as needed.
Intellectual Property
We are in the process of applying for a number of patents
pertaining to our technology. We have a number of trademarks and servicemarks on
trade names used in our operations and marketing. All such trademarks and
servicemarks are under US Trademark filings applied for. All computer software
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code used by us is under software source code copyrights filed with the US
Trademark and Copyright office. Although we believe that such patents,
trademarks, servicemarks and copyrights will be adequate to protect our
business, there can be no assurance that they will do so.
We have a number of patents on technology under development,
and additional intellectual property exceeding patents filed to date. We
maintain a policy of applying for patents, trademarks, and intellectual property
copyrights prior to offering any product or service for sale, in order to retain
worldwide ownership rights. This is necessary because virtually all of our asset
value is in our intellectual property rights and technical know-how. There is no
assurance that these policies will adequately protect our intellectual property.
See also "NASA License," above.
Personnel
We employ 12 full time employees in our Blue Bell,
Pennsylvania headquarters. We also do business with several independent
contractors who perform services on an "as needed" basis.
Insurance
We maintain errors and omissions insurance, as well as general
liability insurance, to cover our risk involving general business operations. We
also maintain directors and officers liability insurance to cover risk of
shareholder and other litigation. We have been advised by counsel that coverage
of and claims arising from any current or future litigation involving Michael
Kline (see "Legal Proceedings" below) are excluded under our D&O policy,
inasmuch as this dispute has been classified as a pre-existing condition at the
time of the policy application. At present we do not have any key man insurance
contemplated, applied for or in force for any of our officers or other
personnel.
Investment Banking Relationships
In March 1999, we entered into an agreement with Quaker
Capital Markets Group, Inc. to solicit equity funding on our behalf on a best
efforts basis. Since that time, Quaker has been successful in obtaining bridge
loan financing during the fall of 1999 in an amount totaling $400,000 from a
private investor, as disclosed below. The agreement with Quaker had a term of
one year expiring on March 12, 2000. We decided not to renew the agreement with
Quaker in light of the unsolicited funds received in January. On April 18, 2000,
we entered into a one-year agreement with Charterbridge Financial Group, Inc. to
solicit equity funding and joint venture arrangements. There can be no assurance
that we will be successful in obtaining any such equity funding or joint venture
arrangements.
Recent Investment Developments
We were approached on an unsolicited basis by AIG SoundShore
Funds in late December 1999 regarding an interim equity financing. This
initiative resulted in the closing of a private placement of units for an
initial cash investment of $500,000 on January 6, 2000. The units consisted of
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1,000,000 shares of common stock at $.50 per share, 1,000,000 class "A" warrants
to purchase shares of common stock at $.50 per share for five years, and
1,000,000 class "B" warrants to purchase shares of common stock at $1.00 per
share for five years. In addition, we closed a second private placement of
260,000 units for an initial cash investment of $130,000 by certain additional
investors on January 21, 2000. The second private placement also consisted of
260,000 class "A" warrants to purchase shares of common stock at $.50 per share
for five years, and 260,000 class "B" warrants to purchase shares of common
stock at $1.00 per share for five years. We were required under these private
placements to file a registration statement to register the common stock and the
common stock underlying the warrants. We also completed two additional private
placements of 150,000 units for initial cash investments of $75,000 by certain
additional investors in March 2000. The units consisted of 150,000 shares of
common stock at $.50 per share, 150,000 class "A" warrants to purchase shares of
common stock at $.50 per share for five years, and 150,000 class "B" warrants to
purchase shares of common stock at $1.00 per share for five years. The investors
in the March 2000 private placements received "piggyback" registration rights
with respect to the common stock and the common stock underlying the warrants.
In April 2000, we completed three private placements of
473,227 units for initial cash investments totaling $425,900 by certain
additional investors. The units consisted of 473,227 shares of common stock at
$.90 per share and 473,227 warrants to purchase shares of common stock at $1.35
per share for five years. The investors in the April 2000 private placements
received "piggyback" registration rights with respect to the common stock and
the common stock underlying the warrants.
All securities sold during January, March and April 2000
private placements were issued in transactions not involving any "public
offering" within the meaning of Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"), in reliance on Rule 506 under the Securities
Act. We obtained representations from all investors to the effect that they are
"accredited investors" as defined in Rule 501(a) under the Securities Act.
Because of piggyback rights granted to a private investor
under the bridge loan secured by Quaker, an additional 1,600,000 shares of
common stock were included under this registration statement. The private
investor, James R. Salim, has advised us that he intends to convert his bridge
loan into common stock and exercise his registration rights. The same investor
also indicated that he intends to exercise his 300,000 stock warrants for common
stock.
Description of Property
Listed below are our principal offices. These properties are
leased under a non-cancellable operating lease providing for minimum future
annual rental payments of $92,712 and $96,745 for 2000 and 2001, respectively.
Location Square Feet Lease Expiration
- -------- ----------- ----------------
591 Skippack Pike, Suite 300 4,939 December 2001
593 Skippack Pike, Suite 100
Blue Bell, Pennsylvania
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We believe our facilities are well maintained and are of
adequate size for our present needs and planned expansion in the near future.
Legal Proceedings
Michael Kline, one of our former officers and directors, has
brought an action against us, our subsidiary, Capita Systems, Inc., and David
Hunter, alleging that he was not paid wages which he was due and that he was not
reimbursed for expenses which he incurred in connection with his service to the
Company. Mr. Kline is seeking approximately $90,000 plus interest, fees and
costs. We believe that we have meritorious defenses to this action, and we
intend to vigorously defend against these claims. We have also asserted a
counterclaim against Mr. Kline seeking in excess of $100,000.
MANAGEMENT
Directors and Officers
The following sets forth certain information regarding our
executive officers and directors:
Name Age Position(s) Held with Company
- ---- --- -----------------------------
David B. Hunter 45 President, Chief Executive
Officer and Director
Tomas J. Stenstrom 27 Executive Vice President,
Chief Technology Officer and Director
Anthony J. Baratta 36 Vice President and Treasurer
Steven A. Plisinski 27 Chief Financial Officer
Millard E. Tydings II 41 Secretary and Director
Ralph Anglin 74 Director
The following is a brief summary of the business experience of
each of our directors and officers:
David B. Hunter, age 45, has been President and Chief Executive Officer since
January 1998 and a Director since June 1995. Mr. Hunter has been responsible for
designing, deploying, financing and marketing the Capita Engagement Testing
System(TM)since its inception, and originated, negotiated and closed the
licensing agreement with NASA in 1997. From 1989 to 1995 Mr. Hunter was an
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independent money manager. From 1980 to 1989 he was a Vice President
successively with regional investment firms Tucker Anthony & RL Day, Inc., Piper
Jaffray & Hopwood, Inc. and W.H. Newbolds Son & Co., Inc. Prior to that, Mr.
Hunter was a consulting actuary and actuarial software specialist with a major
pension actuarial firm for two years. Mr. Hunter earned a B.S. degree in
Accounting from Temple University in 1980.
Tomas J. Stenstrom, age 27, Executive Vice President, Chief Technology Officer,
and Director, has been associated with us since August 1997. From 1992 to 1998
he owned and operated a computer consulting firm providing hardware support,
applications training, and software programming and development. From 1997 to
1998 he was employed by Prescient Systems as an Oracle Database Administrator
and a Graphic User Interface (GUI) developer. From 1994 to 1997 he worked for
IntelliPro Inc. as an Applications Engineer developing educational multimedia
software for both the desktop PC and the Internet. He received a B.S. in
Mechanical - Aerospace Engineering from Rutgers University in 1994.
Anthony J. Baratta, age 36, has been Treasurer since November 1998 and with us
since November 1997, and was promoted to Vice President in January 2000. From
1990 to 1997 he was employed by Pennsylvania Hospital as a cash manager. From
1985 to 1990 he was associated with Merrill Lynch and Co., Inc. and Delaware
Group of Investments in operations. Mr. Baratta received a B.S. in business
administration with a concentration in finance and accounting from Temple
University in 1988.
Steven A. Plisinski, age 27, Chief Financial Officer, began his career with us
in September 1999, and was previously associated with Genesis Health Ventures,
Inc., a NYSE-listed company. At Genesis, he was most recently Supervising Senior
Accountant, in charge of a staff of division level accountants, responsible for
overseeing the accounting functions of 24 divisions and the coordination of
internal and external audits. He spent four years with Genesis, and was promoted
several times during his tenure. Mr. Plisinski, who passed his CPA exam in
Pennsylvania, graduated cum laude with a BS in accounting from West Chester
University. He was named Chief Financial Officer in January 2000.
Millard E. Tydings II, age 41, has been a Director since September 1996.
Currently an independent financial consultant and mergers and acquisitions
specialist, Mr. Tydings was formerly a marketing representative with the United
States Chamber of Commerce from 1992 to 1994. He received a B.A. from Johns
Hopkins University in 1992.
Ralph Anglin, age 74, Director, has been a Director since November 1998.
Currently Mr. Anglin is an active consultant with PRA Development and Management
Corporation. From 1980 to 1985 he was the President of Robb Cape Inc. Mr. Anglin
is a graduate of the Massachusetts Institute of Technology with a B.S. in civil
engineering in 1953.
All directors hold office until the next annual stockholders'
meeting or until death, resignation, retirement, removal, disqualification or
until their successors have been elected and qualified. Vacancies in the
existing board may be filled by majority vote of the remaining directors.
Officers serve at the will of the board of directors. There are no written
employment contracts outstanding.
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Executive Compensation
The following sets forth the salary and bonus compensation
paid during the fiscal years ended December 31, 1999, 1998 and 1997 to the
President and Chief Executive Officer. No officer or employee received calendar
1999 salary and bonus compensation which exceeded $100,000. Officers currently
do not receive any bonuses. Directors do not receive any type of compensation
for attending the board meetings.
<TABLE>
<CAPTION>
Summary Compensation Table
Name and Fiscal Long Term
Principal Position Year Annual Compensation Compensation
------------------ ---- ------------------- ------------
Other Annual Restricted Securities All Other
Salary($) Bonus($) Compensation ($) Stock Award(s) Underlying Compensation ($)
($) Options (#)
<S> <C> <C> <C> <C> <C> <C> <C>
David B. Hunter....... 1999 $61,731 -- -- -- -- --
President and
Chief Executive
Officer
1998 $55,385 -- -- -- -- --
1997 $24,000 -- -- -- -- --
</TABLE>
There are no employment agreements with officers or directors
at the present time.
No options to purchase common stock were granted to Mr. Hunter
during the fiscal year ended December 31, 1999 or held by Mr. Hunter as of
December 31, 1999.
The following table sets forth certain information regarding
options to purchase common stock granted to named executive officers and
directors in February 2000. All options were granted at or above fair market
value as of the date of grant.
Number of Securities
Name Underlying Options Granted
---- --------------------------
David B. Hunter 500,000
Ralph Anglin 350,000
Tomas Stenstrom 250,000
Millard Tydings 20,000
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1999 Stock Option Plan
Effective July 27, 1999, our board of directors and the
shareholders adopted the Capita Research Group, Inc. 1999 Stock Option Plan to
retain and attract key personnel. The following discussion of the material
features of the stock option plan is qualified by reference to the text of the
stock option plan filed as an exhibit to the registration statement of which
this prospectus forms a part.
Share Reserve and Eligibility. Under the stock option plan,
options to purchase up to an aggregate of 2,500,000 shares of common stock may
be granted to our key employees as well as those of our affiliates or other
designees, and to our officers and directors. As of the date of this prospectus,
we have granted options to purchase 1,529,100 shares under the stock option
plan, of which options to purchase 50,000 shares have been exercised. The
maximum number of shares covered by options which may be granted to any person
under the stock option plan during any fiscal year is 1,000,000.
Administration. The compensation committee of the board of
directors or a subcommittee of the compensation committee appointed by the
compensation committee (the committee or subcommittee administering the plan is
hereinafter referred to as the "committee") administers the stock option plan
and determines the persons who are to receive options and the number of shares
to be subject to each option. In selecting individuals for options and
determining the terms thereof, the committee may consider any factors it deems
relevant including present and potential contributions to the success of our
business. Options granted under the stock option plan must be exercised within a
period fixed by the committee, which may not exceed ten years from the date of
the option or, in the case of incentive stock options granted to any holder on
the date of grant of more than ten percent of the total combined voting power of
all classes of our stock, five years from the date of grant of the option.
Options may be made exercisable in whole or in installments, as determined by
the committee.
Plan Features. Options generally may not be transferred other
than by will or the laws of descent and distribution and during the lifetime of
an optionee may be exercised only by the optionee. However, the committee may,
in its discretion, provide that during the lifetime of an optionee, the optionee
may transfer his options to or for the benefit of a member of his immediate
family or to a charitable organization exempt from income tax under Section
501(c)(3) of Internal Revenue Code of 1986, as amended. The exercise price may
not be less than the market value of the common stock on the date of grant of
the option. In the case of incentive stock options granted to any holders on the
date of grant of more than ten percent of the total combined voting power of all
classes of our stock or of any of our affiliates, the exercise price may not be
less than 110% of the market value per share of the common stock on the date of
grant. Unless designated as "incentive stock options" intended to qualify under
Section 422 of the Internal Revenue Code, options which are granted under the
stock option plan are intended to be "nonstatutory stock options." The exercise
price may be paid in cash, shares of common stock owned by the optionee, or in a
combination of cash and shares.
Change in Common Stock. The Stock Option Plan provides that,
in the event of changes in our corporate structure or certain events affecting
our common stock, the committee may, in its discretion, make adjustments with
respect to the numbers or kind of shares which may be issued under the Stock
Option Plan or which are covered by outstanding options, or in the option price
per share, or both.
24
<PAGE>
Change in Control. The committee may in its discretion provide
that, in connection with any merger or consolidation or any sale or transfer by
us of all or a majority of our assets or any tender offer or exchange offer for
or the acquisition, directly or indirectly, by any person or group of all or a
majority of our then-outstanding voting securities, outstanding options under
the stock option plan will become exercisable in full or in part,
notwithstanding any other provision of the stock option plan or of any
outstanding options granted thereunder, on and after (i) 15 days prior to the
effective date of such merger, consolidation, sale, transfer or acquisition or
(ii) the date of commencement of such tender offer or exchange offer, as the
case may be.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October of 1996, Media Solutions, a predecessor of the
Company, entered into a $100,000 bridge loan agreement with Margaret W. Long,
one of its shareholders. Under the terms of the agreement, the company utilized
borrowed funds to satisfy near term working capital obligations. Management
believed that repayment would come both from anticipated system sales and from
proceeds of an offering of equity securities to outside investors. This loan was
converted by mutual agreement into common stock, including all accrued interest,
in July 1999, at the rate of $.25 per share, retiring the loan to Ms. Long in
its entirety.
During 1999, we issued 191,340 shares of common stock at $.25
per share to William Hummel, a former Director, as rent and in return for office
equipment.
In January 1999, we issued 84,000 shares of common stock at
$.25 per share to Ralph Anglin, a Director, in return for various office
furniture and fixtures at a fair market value of $21,000. In December 1999, Mr.
Anglin loaned us $24,167 to cover temporary working capital needs. This loan was
repaid in January 2000.
In June 1999, we issued 3,350,273 shares of common stock to
officers and directors in exchange for non-recourse notes receivable totaling
$837,568, at the rate of $.25 per share.
In August 1999, we issued a bridge loan note totaling $400,000
to James R. Salim, convertible into 1,600,000 shares of our common stock at the
rate of $.25 per share, and 300,000 warrants exercisable for the purchase of
300,000 shares of common stock at an exercise price of $.25 per share. Mr. Salim
has advised us of his intention to convert his note into 1,600,000 shares of
common stock, and to exercise his warrants to purchase 300,000 shares of common
stock for an aggregate purchase price of $75,000.
DESCRIPTION OF SECURITIES
General
Our authorized capital stock consists of 100,000,000 shares of
common stock, par value $.001 per share, of which 26,399,751 shares will be
issued and outstanding (assuming the full exercise of the warrants held by the
SoundShore Investors and the Additional Investors and the conversion of the
convertible promissory note held by James R. Salim) as of the closing of this
offering.
25
<PAGE>
Common Stock
The holders of shares of common stock are entitled to one vote
per share in the election of our directors and on all other matters to be voted
on by stockholders. The holders of common stock are entitled to receive ratably
such dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available therefor. See "Dividend Policy." In the
event of liquidation, dissolution or winding up of the Company, the holders of
common stock are entitled to share ratably in all assets remaining after payment
of liabilities then outstanding. The common stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the common stock. All outstanding shares
of common stock are fully paid and nonassessable.
Warrants
Warrants exercisable for 300,000 shares of common stock at an
exercise price of $.25 per share were issued in August 1999 in connection with a
$400,000 convertible bridge note financing. The holder of the warrants has
advised us that he intends to exercise his warrants to purchase 300,000 shares
of common stock for an aggregate purchase price of $75,000.
Warrants for the purchase of 2,520,000 shares of our common
stock were issued to certain of the selling security holders in connection with
two private placements covering an aggregate of 1,260,000 units (hereinafter
referred to as the "A Units"), each A Unit consisting of one share of common
stock and two warrants. Warrants for the purchase of 300,000 shares of our
common stock were issued in connection with the sale of 150,000 A Units to two
additional investors. Each warrant issued in connection with the A Units is
exercisable for the purchase of one share of common stock for a period of five
years ending January 1, 2005. In each A Unit, one warrant is exercisable for
$.50 per share and one warrant is exercisable for $1.00 per share.
Warrants for the purchase of 433,227 shares of common stock
were issued to certain investors in connection with three private placements
covering an aggregate of 433,227 units (hereinafter referred to as the "B
Units"), each B Unit consisting of one share of common stock and one warrant.
Each warrant issued in connection with the B Unit is exercisable for the
purchase of one share of common stock for a period of five years ending in April
2005. In each B Unit, the warrant is exercisable for $1.35 per share.
Stock Transfer Agent and Registrar
The stock transfer agent and registrar for the common stock is
Nevada Agency and Trust Company, Reno, Nevada.
26
<PAGE>
Stockholder Reports
We furnish our stockholders with annual reports containing
audited financial statements and may furnish our stockholders quarterly or
semi-annual reports containing unaudited financial information.
27
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of
shares of our common stock owned of record and beneficially by each person or
entity owning more than 5% of such shares, each director, our Chief Executive
Officer and all our executive officers and directors, as a group at April 28,
2000. Under the rules of the Commission, a person is deemed to be a beneficial
owner of a security if such person has or shares the power to dispose of or to
direct the disposition of, or to vote or to direct the voting of, such security.
In general, a person is also deemed to be a beneficial owner of any securities
of which that person has the right to acquire beneficial ownership within 60
days.
- --------------------------------------------------------------------------------
Number of
Name and Address Shares Percent of
Of Beneficial Owner Owned Class
- --------------------------------------------------------------------------------
David B. Hunter (1) 2,994,727 13.44%
591 Skippack Pike, Suite 300
Blue Bell, PA 19422
- --------------------------------------------------------------------------------
Ralph Anglin (2) (3) 2,785,686 12.50%
111 S. Independence Mall E., Suite 100
Philadelphia, PA 19106
- --------------------------------------------------------------------------------
James R. Salim (4) 1,900,000 7.86%
3510 Turtle Creek Boulevard, #2D
Dallas, TX 75219
- --------------------------------------------------------------------------------
Michael Kline (5) 1,295,432 5.81%
P.O. Box 314
Sharon, CT 06069
- --------------------------------------------------------------------------------
Tomas J. Stenstrom (1) 800,000 3.59%
275 Camp Hill Road
Fort Washington, PA 19034
- --------------------------------------------------------------------------------
Millard E. Tydings, II (1) 100,000 0.45%
2705 Pocock Road
Monkton, MD 21111
- --------------------------------------------------------------------------------
SoundShore Holdings Ltd. (6) 2,000,250 8.47%
c/o AIG International Management
Company, Inc.
1281 East Main Street
Stamford, Connecticut 06902
- --------------------------------------------------------------------------------
All Executive Officers and 7,000,413 31.42%
Directors as a Group
- --------------------------------------------------------------------------------
(1) Officer and Director.
(2) Director only.
(3) Included in Mr. Anglin's shareholdings are 76,010 shares owned by his
profit-sharing plan and 902,000 shares owned by his personal IRA.
(4) Included in Mr. Salim's shareholdings are 1,600,000 shares issuable
upon the conversion of his convertible promissory note and 300,000
shares issuable upon the exercise of his warrants.
(5) The number of shares owned is as of January 24, 2000.
(6) Included in SoundShore Holdings Ltd.'s shareholdings are 1,333,500
shares issuable upon the exercise of its warrants.
28
<PAGE>
LEGAL MATTERS
The validity of the shares of common stock offered hereby will
be passed upon for us by Torys, 237 Park Avenue, New York, New York 10017. Torys
owns 250,000 shares of our common stock.
EXPERTS
Our financial statements for each of the years in the
three-year period ended December 31, 1999 included in this prospectus have been
so included in reliance on the report of Rudolph, Palitz LLC, our independent
accountants for such periods, given on the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a
registration statement on Form SB-2 under the Securities Act of 1933 with
respect to the shares of common stock being offered in this prospectus. This
prospectus, which forms a part of the registration statement, does not contain
all of the information set forth in the registration statement and the exhibits
and schedules thereto. For further information about us and the common stock
being offered by this prospectus, you should read the registration statement and
its exhibits and schedules, which you may read without charge at the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at Northwestern Atrium Center, Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661-2511 or Seven World Trade Center, New York, New
York 10048. You can also obtain copies of these materials at prescribed rates
from the Public Reference Section of the Commission in Washington, D.C. 20549.
Any statements contained in the prospectus as to the contents of any contract or
other document referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or document filed as an exhibit
to the registration statement, each such statement being qualified in all
respects by such reference. We also file annual, quarterly and other reports and
other information with the Commission. These materials may be obtained at any of
the places mentioned above or at the Commission's Web site. The address of such
site is http://www.sec.gov.
FINANCIAL STATEMENTS
The Company's financial statements for the years ended December 31,
1999, 1998 and 1997 are attached to this report commencing with page F-1.
29
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
TABLE OF CONTENTS
PAGE(s)
-------
INDEPENDENT AUDITORS' REPORT F-1
CONSOLIDATED BALANCE SHEETS F-2
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS F-3
CONSOLIDATED AND COMBINED STATEMENTS OF CHANGES IN
STOCKHOLDER'S DEFICIENCY
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS F-5
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
F-6 - F-21
<PAGE>
INDEPENDENT AUDITORS' REPORT
Directors and Shareholders
Capita Research Group, Inc.
(A Development Stage Company)
Blue Bell, Pennsylvania
We have audited the accompanying consolidated balance sheets of Capita
Research Group, Inc. and Subsidiary (Formerly NextGen Systems, Inc. and
Subsidiary and Affiliate) (a development stage company) as of December 31, 1999
and 1998 and the related consolidated statements of operations, changes in
stockholders' deficiency, and cash flows for each of the two years then ended,
and the combined statements of operations, changes in stockholders' deficiency
and cash flows for NextGen Systems, Inc. and Subsidiary and Media Solutions
International, Inc. (an affiliate) (development stage companies) for the year
ended December 31, 1997. These consolidated and combined financial statements
are the responsibility of the Companies' management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated and combined financial statements
referred to above present fairly, in all material respects, the financial
position of Capita Research Group, Inc. and Subsidiary (a development stage
company), as of December 31, 1999 and 1998 and the results of their operations,
and their cash flows for each of the three years in the period ended December
31, 1997, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 9 to the
financial statements, the Company is a development stage company with no
significant operating results to date and has suffered recurring losses which
raise substantial doubt about their ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 9. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
By:/s/Rudolph, Palitz LLC
-------------------------
RUDOLPH, PALITZ LLC
February 25, 2000
Blue Bell, Pennsylvania
F-1
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 4,840 $ 19,301
Prepaid expenses 20,424 9,508
Accounts and other receivables 28,094 1,000
----------- -----------
Total current assets 53,358 29,809
----------- -----------
PROPERTY AND EQUIPMENT, NET 209,687 92,511
----------- -----------
OTHER ASSETS
Due from stockholder 40,235 15,534
Deposits 1,493 3,560
----------- -----------
Total other assets 41,728 19,094
----------- -----------
$ 304,773 $ 141,414
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 369,918 $ 186,052
Current portion of obligations under capital leases 20,007 14,281
Due to stockholders 420,000 100,000
----------- -----------
Total current liabilities 809,925 300,333
----------- -----------
LONG-TERM OBLIGATIONS UNDER CAPITAL LEASES,
NET OF CURRENT PORTION 23,386 9,614
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY
Common stock, Capita Research Group, Inc.
$.001 par value, 100,000,000 shares authorized;
20,295,946, and 13,562,900 issued and outstanding
at December 31, 1999 and 1998, respectively 20,296 13,563
Additional paid-in capital 3,855,663 2,181,114
Deficit accumulated during development stage (3,566,929) (2,363,210)
----------- -----------
309,030 (168,533)
Stock subscription receivable (837,568) --
----------- -----------
Total stockholders' deficiency (528,538) (168,533)
----------- -----------
$ 304,773 $ 141,414
=========== ===========
</TABLE>
See Notes to Consolidated and Combined Financial Statements.
F-2
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,1999,1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
(Consolidated) (Consolidated) (Combined)
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES $ 64,500 $ 85,500 $ 81,894
COST OF REVENUES 129,154 125,826 96,100
------------ ------------ ------------
GROSS LOSS (64,654) (40,326) (14,206)
OPERATING EXPENSES
Selling 88,616 47,425 31,947
Technical 135,345 195,189 81,725
Production 55,357 -- --
Administrative and general 204,982 405,129 154,365
Other 634,969 442,631 387,585
------------ ------------ ------------
Total operating expenses 1,119,269 1,090,374 655,622
------------ ------------ ------------
LOSS FROM OPERATIONS (1,183,923) (1,130,700) (669,828)
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest income 29,263 -- --
Interest expense (49,059) (29,982) (19,452)
------------ ------------ ------------
Total other income (expense) (19,796) (29,982) (19,452)
------------ ------------ ------------
LOSS BEFORE INCOME TAXES (1,203,719) (1,160,682) (689,280)
INCOME TAXES -- -- --
------------ ------------ ------------
NET LOSS $ (1,203,719) $ (1,160,682) $ (689,280)
============ ============ ============
NET LOSS PER SHARE, BASIC AND DILUTED $ (0.07) $ (0.10) $ (0.40)
============ ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 17,307,956 11,380,306 1,736,458
============ ============ ============
</TABLE>
See Notes to Consolidated and Combined Financial Statements.
F-3
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED AND COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
YEARS ENDED DECEMBER 31,1999,1998 AND 1997
<TABLE>
<CAPTION>
MEDIA SOLUTIONS CAPITA RESEARCH
NEXTGENSYSTEMS,INC. INTERNATIONAL,INC. GROUP,INC.
NUMBER OF DOLLAR NUMBER OF DOLLAR NUMBER OF DOLLAR
. SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance,
January 1,1997 500 $ 500 1,926,750 $ 19,268 -- $ --
Issuance of stock 337,350 337,350 -- -- -- --
Issuance of stock -- -- 38,850 388 -- --
Stock redemption
and retirement -- -- (705,500) (7,055) -- --
Stock redemption
and retirement (415) (415) -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net loss
Balance,
December 3l, 1997 337,435 337,435 1,260,100 12,601 -- --
Exchange and reorganization:
issuance of common stock
in exchange for
debt obligations (Note 1) 218,485 218,485 10,000 100 -- --
Issuance of common stock
in exchange for
shares of M Sll in
connection wth the
merger of January
12, 1998 (Note 1) 1,099,250 1,099,250 (219,850) (2,199) -- --
Redemption of shares
in NextGen and
MSII for no consideration
(Note l) (85) (85) (1,050,250) (10,502) -- --
Issuance of stock 72,000 72,000 -- -- -- --
Issuance of shares in Royal
in exchange for
shares of NextGen in
connection with the
merger of January
29,1998 (Note 1) (1,727,085) (1,727,085) -- -- 9,580,000 9,580
Issuance of stock -- -- -- -- 3,982,900 3,983
---------- ---------- ---------- ---------- ---------- ----------
Net loss
Balance,
December 3l , 1998 -- -- -- -- 13,562,900 13,563
Issuance of common
stock in exchange for
debt obligations (Note 1) -- -- -- -- 525,537 525
Issuance of stock -- -- -- -- 6,207,509 6,208
Issuance of warrants (Note 10) -- -- -- -- -- --
Common stock subscribed -- -- -- -- -- --
Net loss -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Balance,
December 31,1999 -- $ -- -- $ -- 20,295,946 $ 20,296
========== ========== ========== ========== =========== =========
</TABLE>
F-3A
<PAGE>
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
ADDITIONAL STOCK DURING
PAID-IN SUBSCRIPTION DEVELOPMENT
CAPITAL RECEIVABLE STAGE PERIOD TOTAL
------- ---------- ------------ -----
<S> <C> <C> <C> <C>
Balance,
January 1,1997 $ 331,161 $ -- $ (513,248) $ (162,319)
Issuance of stock -- -- -- 337,350
Issuance of stock 193,902 -- -- 194,290
Stock redemption
and retirement 7,055 -- -- --
Stock redemption
and retirement 415 -- -- --
Net loss -- -- (689,280) (689,280)
Balance,
December 3l, 1997 532,533 -- (1,202,528) (319,959)
Exchange and reorganization:
issuance of common stock
in exchange for
debt obligations (Note 1) 24,900 -- -- 243,485
Issuance of common stock
in exchange for
shares of M Sll in
connection wth the
merger of January
12, 1998 (Note 1 2,199 -- -- 1,099,250
Redemption of shares
in NextGen and
MSII for no consideration
(Note l) 10,587 -- -- --
Issuance of stock -- -- -- 72,000
Issuance of shares in Royal
in exchange for
shares of NextGen in
connection with the
merger of January
29,1998 (Note 1) 618,155 -- -- (1,099,350)
Issuance of stock 992,740 -- -- 996,723
Net loss -- -- (1,160,682) (1,160,682)
- -------- -- -- ----------- -----------
Balance,
December 3l , 1998 2,181,114 -- (2,363,210) (168,533)
Issuance of common
stock in exchange for
debt obligations (Note 1) 130,859 -- -- 131,384
Issuance of stock 1,517,690 -- -- 1,523,898
Issuance of warrants (Note 10) 26,000 -- -- 26,000
Common stock subscribed -- (837,568) -- (837,568)
Net loss -- -- (1,203,719) (1,203,719)
- -------- -- -- ----------- ----------
Balance,
December 31,1999 $ 3,855,663 $ (837,568) $(3,566,929) $ (528,538)
======= =========== =========== =========== ===========
</TABLE>
F-4
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
(Consolidated) (Consolidated) (Combined)
------------ ------------ -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $(1,203,719) $(1,160,682) $ (689,280)
Adjustments to reconcile net loss to
net cash used in operating activities:
Stock and warrants issued for salaries and services 297,488 460,208 --
Depreciation 73,999 33,816 28,007
Amortization 14,980 27,449 14,370
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts and other receivables (27,093) 1,000 26,201
Other assets 2,067 1,369 (1,126)
Prepaid expenses (10,916) (9,508) --
Increase (decrease) in:
Accounts payable and accrued expenses 212,233 25,044 100,057
----------- ----------- -----------
Net cash used in operating activities (640,961) (621,304) (521,771)
----------- ----------- -----------
INVESTING ACTIVITIES
Purchase of equipment (169,449) (16,255) (34,977)
Advances to stockholder (24,701) (15,534 --
----------- ----------- -----------
Net cash used in investing activities (194,150) (31,789) (34,977)
----------- ----------- -----------
FINANCING ACTIVITIES
Proceeds from issuance of stock 417,858 675,075 531,640
Proceeds from note payable -- -- 60,000
Proceeds from (repayment of) stockholder loans, net 420,000 (8,966) --
Repayment of capital lease obligations (17,208) (8,905) --
Repayment of loans -- -- (20,341)
----------- ----------- -----------
Net cash provided by financing activities 820,650 657,204 571,299
----------- ----------- -----------
NET (DECREASE) INCREASEIN CASH (14,461) 4,111 14,551
CASH, BEGINNING 19,301 15,190 639
----------- ----------- -----------
CASH, ENDING $ 4,840 $ 19,301 $ 15,190
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Capital lease obligations incurred related to the
acquisition of equipment $ 36,706 $ 32,800 $ --
=========== =========== ===========
Conversion of notes payable to
common stock $ 131,384 $ 176,825 $ --
=========== =========== ===========
3,350,273 shares of common stock were sold
to Officers and Directors in exchange for
subscription notes receivable $ 837,568 $ -- $ --
=========== =========== ===========
</TABLE>
See Notes to Consolidated and Combined Financial Statements.
F-5
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 1. HISTORY AND NATURE OF THE BUSINESSES AND BUSINESS COMBINATIONS
Capita Research Group Inc. and Subsidiary (the
"Company" or "Capita") (formerly NextGen Systems, Inc., and
Subsidiary and Affiliate ("NextGen")) is in the development
stage of operations.
Capita's predecessor, NextGen (formerly Media
Solutions, Inc., ("Media Solutions" or "MSI")), was
incorporated in Pennsylvania on June 6, 1994, for the purpose
of developing and selling MediaLink, a client/server software
system used by the direct-response advertising industry. From
January 1, 1996 through December 31, 1999, the Company, its
subsidiary Capita Systems, Inc., and their predecessors have
been principally devoted to research and development,
organizational activities, and raising capital. For the years
ended December 31, 1999, 1998 and 1997, the Company had
$64,500, $85,500 and $81,894 of net revenues, respectively.
The ultimate recovery of the Company's investments and costs
is dependent on future profitable operations and continued
funding, which presently cannot be determined.
In September of 1995, Media Solutions initiated
discussions with the National Aeronautics and Space
Administration ("NASA") in Langley, Virginia about licensing
NASA's software technology known as the "CREW software." This
software measures a test respondent's EEG, or brain wave
impulse, when subjected to aural or visual stimuli. The CREW
software then converts the raw brain wave data into an index,
which indicates the respondent's level of interest in, or
boredom ("engagement"), with the stimuli. In January of 1996,
Media Solutions filed an application with NASA for a license
for the commercial application of the CREW software with the
intention to use it as a testing service in the media and
advertising industries.
In June of 1996, the principal stockholders of
NextGen, along with additional investors formed Media
Solutions International, Inc. ("MSII"), which was incorporated
in Pennsylvania. MSII licensed the rights from Media Solutions
to continue the development and selling of MediaLink.
F-6
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 1. HISTORY AND NATURE OF THE BUSINESSES AND BUSINESS COMBINATIONS
(CONTINUED)
In May of 1997, NASA approved Media Solutions'
application for the CREW software license and issued a license
agreement in the name of "NextGen Systems, Inc.", a fictitious
name registered by Media Solutions in the Commonwealth of
Pennsylvania in September 1995. Under its license agreement
with NASA, the Company, by means of its predecessor, NextGen,
obtained an exclusive five-year license commencing August 4,
1997. The agreement provides that prior to the expiration of
the five-year period, the Licensee (NextGen) may request this
agreement to be modified to extend the term. NASA has agreed
that such requests will not be unreasonably denied if NextGen
has met all milestones as specified in the contract. The NASA
license agreement permits the Company to offer testing
services for all direct response advertising applications,
including television and print media and the Internet, and
package design. NASA has agreed that the Company may use the
CREW software for all media and advertising applications and
that such use will not be considered an infringement of NASA's
intellectual property rights in the CREW software. The license
agreement requires the Company to pay NASA: a royalty equal to
10% of revenues, payable annually, with a minimum guaranteed
annual royalty of fifteen thousand dollars ($15,000); and 50%
of any consideration received from any sublicensees in
consideration for any sublicense granted for the licensed
product.
In June of 1997, Media Solutions formed Capita
Systems, Inc., a Delaware corporation and a wholly owned
subsidiary of Media Solutions, for the purpose of
commercializing and marketing its advertising testing service.
On July 31, 1997, NextGen and MSII agreed to sell the
MediaLink asset and related business to Columbine JDS Systems,
Inc., an unrelated party, for a future payment of $350,000
contingent upon defined levels of profitability. The
transaction was completed in October 1997. Through December
31, 1999, the Company has not received any payments. In
connection with the agreement, and for no consideration,
NextGen's founder relinquished his officer's position and
stock ownership in NextGen and became an employee in Columbine
JDS Systems, Inc.
Since commencing operations in June 1997, Capita
Systems, Inc. has been engaged in significant additional
software research and development. Beginning in August 1997,
the Company initiated development projects to extensively
modify and enhance the original NASA software to tailor its
use to the more specific demands of media and advertising
clients. This included the integration of video technology
into the application. In addition, the Company has continued
to develop proprietary hardware, specifically the EEG
measurement headset, to facilitate high volume and convenience
in the testing process. The Company has developed a completely
"dry and noninvasive" headset and has applied for a US patent
on this hardware and related components.
F-7
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 1. HISTORY AND NATURE OF THE BUSINESSES AND BUSINESS COMBINATIONS
(CONTINUED)
The Company performed its first test of the headset
in October 1997, and is in various stages of negotiation with
numerous prospects, including major U.S. marketing companies,
pharmaceutical companies, internet advertising agencies, and
advertising agencies.
On December 30, 1997, MSI changed its legal name to
NextGen Systems, Inc. and increased the number of authorized
common shares to 3,000,000.
The following transactions relate to the mergers,
stock issuance and redemptions occurring within the Companies
during January 1998:
On January 3, 1998, $25,000 of notes payable were
converted into 10,000 shares of MSII's common stock.
On January 8, 1998, 1,050,250 shares of MSII were
redeemed for no consideration.
On January 9, 1998, 85 shares of NextGen were
redeemed for no consideration.
On January 12, 1998, NextGen acquired MSII in
exchange for stock, whereby NextGen was the surviving
corporation. As a result of the merger, each share of MSII
common stock was converted into five shares of NextGen.
On January 13, 1998, $116,825 due to a stockholder
was converted into 183,385 shares of NextGen common stock.
On January 15, 1998, NextGen issued 37,000 shares of
common stock for total consideration of $37,000.
F-8
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 1. HISTORY AND NATURE OF THE BUSINESSES AND BUSINESS COMBINATIONS
(CONTINUED)
On January 27, 1998, prior to the transaction
described below, $35,000 of notes payable were converted into
35,000 shares of NextGen. In addition, the Board of Directors
of the Company approved a transaction with Royal American
Mining Company ("Royal"), a Nevada corporation, whose only
activity had been filing fee expenses during its fiscal year.
Royal has had no significant revenues for the last three
fiscal years. On January 29, 1998, the Exchange was completed
as the Company obtained approval from 100% of its
stockholders. On January 30, 1998, the Royal stockholders
approved the transaction between NextGen and Royal, whereby
the stockholders of NextGen exchanged 100% of the outstanding
common stock of NextGen for 90% of the outstanding common
stock of Royal (the "Exchange"). The Exchange was accounted
for as a reverse acquisition whereby NextGen, in substance,
acquired Royal, allocating the fair value of Royal shares
exchanged over the assets and liabilities of NextGen prior to
the merger; therefore, no goodwill was recognized.
Accordingly, the historical financial statements are those of
the accounting acquirer, NextGen and not the financial
statements of the legal acquirer, Royal. No value was ascribed
to Royal's net operating loss carryforwards as a result of
potential decrease and/or limitations in these carryforwards
due to the change in control.
In connection with the Exchange, Royal changed its
name to Capita Research Group, Inc. In addition, the Board of
Directors approved a 2 for 1 stock split whereby the present
stockholders of Royal were entitled to two shares for each
share owned by them in Royal.
In July 1998, the Company filed Form 10-SB with the
Securities and Exchange Commission to register all of its
100,000,000 shares of common stock with a par value of One
Mill ($0.001) per share.
The Company currently employs twelve professionals
and several independent contractors who provide services on an
"as needed" basis. The Company maintains offices in Blue Bell,
Pennsylvania. The Company owns or leases all of its equipment
and software, and has under development, numerous software and
hardware applications to enhance its capabilities in
advertising and media testing. The Company intends to obtain
patents and software copyrights, as products are developed, to
protect its intellectual property.
F-9
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 1. HISTORY AND NATURE OF THE BUSINESSES AND BUSINESS COMBINATIONS
(CONTINUED)
On March 10, 1999, the Company entered into an
agreement with Quaker Capital Markets Group, Inc. ("Quaker"),
to render advisory services to the Company in its attempt to
raise equity capital. In connection therewith, the Company
agreed to pay Quaker $10,000 in cash, $15,000 in common stock
and a percentage of any equity capital raised. As of the year
ended December 31, 1999, Quaker raised approximately $400,000
in equity capital. In connection therewith the Company paid a
commission in the amount of $28,000.
On August 12, 1999 a note payable, including accrued
interest, due to a Stockholder, was converted into 525,537
shares of common stock.
On September 28, 1999, the Company was granted a
modification to the original license agreement granted by NASA
on August 4, 1997. The modification expanded the field of use
to include "all fields." In addition, the modification
increased the expiration date of the license from five years
from the date of the license, to the greater of the life of
the patent (20 years from the date of the patent application,
which was in 1996), or in the event that the patent is not
issued, the life of the software copyright, which in the case
of the NASA technology, is 75 years from the filing date of
1996.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Combination
For the years ended December 31, 1999 and 1998, the
consolidated financial statements include the wholly owned
subsidiary, Capita Systems, Inc. For the year ended December
31, 1997, the combined financial statements include the
accounts of two entities, which were under common control and
management, MSI and MSII. The consolidated financial
statements of NextGen included the accounts of its wholly
owned subsidiary, Capita Systems, Inc. All significant
intercompany transactions have been eliminated in all years
presented.
F-10
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Production
During 1999 the Company started a new division to
plan and conduct primary market and advertising research on
behalf of clients to process and analyze data, and to write
and present reports to clients. This division works with other
Company divisions to develop pricing proposals and in the
implementation of research tools. Costs associated with
Production are included under operating expenses in the
Statement of Operations.
Stock-Based Compensation
Capita adopted the disclosure-only provisions of SFAS
No. 123 "Accounting for Stock-Based Compensation," but elected
to continue to utilize the "intrinsic value" method of
accounting for recording stock-based compensation expense for
employees, as provided for in Accounting Principles Board No.
25, "Accounting for Stock Issued to Employees."
Fair Value of Financial Instruments
The Company's financial instruments consist primarily
of cash, accounts receivable, accrued expenses and debt
instruments. The recorded values of cash, accounts receivable,
accounts payable and accrued expenses are considered to be
representative of their fair values. Based upon the terms of
the Company's debt instruments that are outstanding as of
December 31, 1999 and 1998, the carrying values are considered
to approximate their respective fair values.
Equipment
Equipment, including assets under capital leases, are
stated at cost. Major improvements are capitalized; minor
replacements, maintenance and repairs are charged to current
operations. Depreciation is computed by applying the
straight-line method over the estimated useful lives of the
related assets for financial reporting purposes and an
accelerated method for income tax purposes.
Organization Costs
Expenses were incurred in connection with the
formation of NextGen and MSII, which were capitalized and were
being amortized over a period of five years using the
straight-line method. During the year ended December 31, 1998,
the remaining costs of $19,638 were charged to operations.
F-11
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Long-Lived Assets
The Company reviews for the impairment of long-lived
assets and certain identifiable intangibles whenever events or
changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. An impairment loss would be
recognized when estimated future cash flows expected to result
from the use of the asset and its eventual disposition are
less than its carrying amount. The Company has not identified
any such impairment losses.
Software Development Costs
Development costs incurred in the research and
development of new software products are expensed as incurred
until technological feasibility has been established. Software
development expenses incurred for product enhancements after
the product has reached technological feasibility have not
been material and, accordingly, also have been charged to
operations as incurred. As of December 31, 1999 and 1998 no
software development costs have been capitalized.
Advertising and Promotion Costs
Advertising and promotion costs are charged to
current operations when incurred. Advertising and promotion
costs for 1999, 1998 and 1997 were $29,872, $9,824 and $9,916,
respectively.
Income Taxes
The Company accounts for income taxes in accordance
with Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes," which requires the use of
an asset and liability approach for financial accounting and
reporting for income taxes. Under this method, deferred tax
assets and liabilities are recognized based on the expected
future tax consequences of temporary differences between the
financial statement carrying amounts and tax bases of assets
and liabilities as measured by the enacted tax rates that are
expected to be in effect when taxes are paid or recovered.
F-12
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Research and Development
Expenditures for research, development, and
engineering of products and manufacturing processes are
expensed as incurred. Cost reimbursements under collaborative
research agreements are recorded as offsets to research and
development expenses. Since the Company is in the development
stage, all the work performed by its non-administrative
personnel is considered research and development. The cost of
servicing customers who contract for the Company's services
are applied to research and development which are costs borne
directly by the customer. During 1999, significant research
and development is included in selling, technical, and
research costs. It is estimated that half of the Company's
effort or the equivalent of three man-years has been expensed
on research and development. Research and development costs
for 1999, 1998 and 1997 were $236,093, $102,534 and $118,241,
respectively.
Earnings Per Common Share
In 1997, the Financial Accounting Standards Board
issued SFAS No. 128, "Earnings Per Share." SFAS No. 128
replaced the previously reported primary and fully diluted
earnings (loss) per share with basic and diluted earnings
(loss) per share, respectively. Basic earnings (loss) per
common share is computed by dividing net income (loss) by the
weighted average number of common shares. Diluted earnings
(loss) per share considers common stock equivalents such as
options, warrants, etc. The exercise of existing options
and/or warrants has not been considered in the determination
of diluted earnings (loss) per share, since such exercise
would be anti-dilutive.
Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and
expenses, and disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
Reclassifications
Certain items in the 1998 and 1997 financial
statements were reclassified to conform with the 1999
presentation.
F-13
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 3. STOCKHOLDER LOANS
The Company is indebted to its stockholders as
follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Loan payable, Stockholder, due on
demand, interest rate of Prime + 2%
(9.75% at December 31, 1998). This debt
was converted into common stock of the
Company in August 1999 (Note 1) $ - $100,000
Loan payable due Stockholder, payable on
demand. This debt was satisfied in
January 2000 (Note 12). 20,000 -
Loan payable, Stockholder. Due in installments
of $100,000 in August 2000, $200,000 in September
2000 and $100,000 in October 2000. 300,000
warrants were granted in connection with the loan
(Note 10). Interest is payable at prime (8.5% at
December 31, 1999). The loan is convertible at
$.25 per share of common stock, exercisable into
1,600,000 shares of common stock (Note 12). 400,000 -
-------- --------
$420,000 $100,000
======== ========
</TABLE>
Interest expense on stockholder loans for 1999 and
1998 was $19,044 and $23,612 respectively. Accrued interest on
stockholder loans at December 31, 1999 and 1998 was $11,272
and $23,612.
NOTE 4. PROPERTY AND EQUIPMENT
1999 1998
---- ----
Equipment $221,738 $197,014
-------- --------
Furniture and fixtures 31,589 12,034
-------- --------
Leasehold improvements 24,565 --
-------- --------
277,892 209,048
-------- --------
Less - accumulated depreciation
and amortization (68,205) (116,537)
-------- --------
$209,687 $92,511
======== =======
F-14
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 5. CONCENTRATION OF CREDIT RISK
The Company maintains cash balances at several
financial institutions. The accounts are insured by the
Federal Deposit Insurance Corporation up to $100,000. The
Company performs periodic evaluations of the relative credit
standing of the financial institutions with which it deals.
The Company has not experienced any losses in such accounts
and believes it is not exposed to any significant credit risk
on cash balances.
NOTE 6. INCOME TAXES
A reconciliation of the differences between the
Company's effective tax rates and the statutory Federal income
tax rate of 34% in 1999, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
(Consolidated) (Consolidated) (Combined)
-------------- -------------- ----------
<S> <C> <C> <C>
Income tax benefit at statutory rate ($409,264) ($394,632) ($234,355)
Permanent differences 435 1,210 4,625
State income tax benefit, net of
Federal effect (79,445) (76,605) (44,709)
Reduction in income tax benefit
due to valuation allowance 488,274 470,027 274,439
---------- ----------- ---------
$ - $ - $ -
========== =========== =========
</TABLE>
The Company, its predecessors and its affiliates have
experienced significant losses since inception. As a result of
the business combinations during 1998, certain of the
accumulated net operating loss carryforwards generated by
these losses, which total approximately $2.5 million, may be
lost and/or substantially limited. Notwithstanding such
effect, any deferred tax asset recorded as a result of
potential net operating loss carryforwards which would be
available to offset future taxable income, would be offset by
an equivalent valuation allowance, since Management believes
that it is more likely than not that such deferred tax asset
will not be realized.
The deferred tax asset at December 31, 1999 and 1998
of approximately $1,003,000 and $527,000, respectively has
been offset by valuation allowances of equal amounts.
F-15
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 7. COMMITMENTS
Capital Leases
During 1999 and 1998, the Company leased, under
various capital lease arrangements expiring through August
2002, certain computer equipment with a total cost of $69,506.
The assets and liabilities under the capital lease are
recorded at the lower of the present value of the minimum
lease payments or the fair value of the asset. The assets are
depreciated over the shorter of the related lease term or the
estimated productive lives. Amortization of $14,980 and $7,811
related to the assets under capital lease was incurred for the
years ended December 31, 1999 and 1998, respectively. Interest
expense related to the capital lease was $4,868 and $3,651 for
the years ended December 31, 1999 and 1998.
Minimum future obligations under capital leases are:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31, AMOUNT
------------ ------
<S> <C>
2000 $25,907
2001 15,349
2002 13,411
------
Total minimum lease payments 54,667
Less - amounts representing interest 11,274
------
Present value of future minimum lease payments 43,393
Less - current portion 20,007
------
Long-term portion $23,386
=======
</TABLE>
Operating Leases
Effective November 1, 1997, the Company entered into
an operating lease for its corporate office located in King of
Prussia, Pennsylvania. The lease agreement was for a term of
six months, thereafter renewable on a monthly basis. Effective
January 1, 1999 the Company entered into an operating lease
for its corporate office located in Blue Bell, Pennsylvania.
The lease agreement was for a term of three years, expiring
December 2001. In October 1999, the Company entered into a
lease agreement for additional space; the lease will run
concurrent with the existing lease at Blue Bell. Rent expense
for 1999 and 1998 amounted to approximately $79,800 and
$22,000, respectively.
F-16
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 7. COMMITMENTS (CONTINUED)
Operating Leases (Continued)
Minimum future rental payments under noncancellable
operating leases through December 2001 and in the aggregate
are:
YEARS ENDING
DECEMBER 31, AMOUNT
------------ ------
2000 $92,712
2001 96,745
--------
Total minimum future
rental payments $189,457
========
Litigation
The Company is a party to litigation with a
Stockholder/former Director/Officer of the Company. The
lawsuit seeks back wages of approximately $90,000 plus fees
and costs from the Company. The Company has filed a
counterclaim for amounts in excess of $100,000. The Company
believes that it has meritorious defenses to this action and
intends to vigorously defend these claims. Management does not
believe that the outcome of this litigation will have a
material adverse effect on its financial condition.
NOTE 8. DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE
The deficit accumulated during the development stage
was $3,566,929, which includes a loss of $513,248 from the
inception of the Company through December 31, 1996. There were
no transactions, which occurred from the inception of the
Company and its predecessors through December 31, 1996 which
were qualitatively or quantitatively material to the 1999,
1998 or 1997 consolidated and combined financial statements.
F-17
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 9. GOING CONCERN
The Company's financial statements are prepared using
generally accepted accounting principles applicable to a going
concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business.
However, the Company does not have significant cash or other
material assets nor does it have an established source of
revenues sufficient to cover its operating costs and to allow
it to continue as a going concern. It is the intent of the
Company to generate revenue through the sales of its software
and hardware products. The Company continues to focus its
energies on raising capital to begin the manufacturing and
marketing of its products. Toward these ends, the Company
engaged a public relations firm to aid in the raising of
capital and to present seminars on its technology. Management
believes, with successful completion of a financial package,
that delivered sales of the Company's products will occur. In
the opinion of management, sales of the Company's products,
together with the proceeds from the sale of its common stock,
will be sufficient for it to continue as a going concern.
NOTE 10. STOCKHOLDERS' EQUITY
Warrants
At December 31, 1999, the Company had 300,000
detachable stock warrants outstanding, which were issued in
connection with a loan of $400,000 borrowed from a Stockholder
(Note 3). These warrants have an exercise price of $0.25 per
share of common stock, and are exercisable into 300,000 shares
of common stock. These warrants expire on August 5, 2002 (Note
12). In connection with the issuance of the warrants, the
Company recorded interest expense of $26,000 in 1999,
representing additional interest expense attributable to the
$400,000 loan borrowed from the Stockholder at a below market
rate of interest.
Stock Option Plan
Capita has stock-based incentive compensation plans,
approved by its stockholders in 1999, the terms of which
provide that up to 2,500,000 shares may be granted to
directors, officers, key employees, consultants and other
individuals who perform services for the Company. The plans
provide for certain options granted to qualify as Incentive
Stock Options under the Internal Revenue Code and other
options to be considered "non-statutory stock options." Awards
under the plans were made to six employees and/or consultants
in 1999. All stock options granted through December 31, 1999
have an exercise price equal to 100 percent of the market
value of the common stock at the date of grant.
F-18
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 10. STOCKHOLDERS' EQUITY (CONTINUED)
Stock Option Plan (Continued)
The following table presents stock option activity
during 1999:
<TABLE>
<CAPTION>
Price at which Number of Options Vesting
Exercisable Outstanding Term Period
----------- ----------- ---- ------
<S> <C> <C> <C> <C>
Granted to employees $1.38 54,500 10 years 3 Years
===== ====== ======== =======
Granted to Consultants $1.38 10,400 10 years 1 Year
===== ====== ======== ======
</TABLE>
No options were exercised or cancelled in 1999.
With respect to stock options granted to employees,
the Company has adopted the disclosure only provisions of SFAS
No. 123, "Accounting for Stock-based compensation," but
applies APB Opinion No. 25 ("Accounting for Stock Issued to
Employees") in accounting for its stock compensation plan.
Accordingly, no compensation cost has been recognized with
respect to stock options granted to employees in 1999.
Compensation cost that would have been recognized in
accordance with the basis of fair value pursuant to SFAS No.
123, if the Company had so elected, would have increased the
Company's net loss for 1999 by approximately $4,000 (with an
immaterial effect on loss per share). The method of
determining proforma compensation cost for 1999 was based on
certain assumptions, including the past trading ranges of the
Company's stock, a risk free interest rate of 6.5%, expected
life of options of 3 years and no expected payments of
dividends.
With respect to stock options granted to
non-employees, the Company records the appropriate expense as
required by SFAS 123. Consulting expense recorded by the
Company in 1999, relating to options granted to consultants,
was calculated using similar assumptions to those disclosed
above. Such expense was approximately $2,000 and had an
immaterial effect on loss per common share.
F-19
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 10. STOCKHOLDERS' EQUITY (CONTINUED)
Stock Subscription receivable
On June 21, 1999 the Company approved the issuance of
approximately 3,350,000 shares of the Company's common stock
at a purchase price of $0.25 per share to five directors
and/or officers of the Company. In exchange for the stock in
the Company, the individuals issued non-recourse notes to the
Company at an interest rate of 5.75%. Accrued interest on the
stock subscription receivable at December 31, 1999 was
$28,093. The stock subscription receivable is shown as a
reduction in Stockholders' equity as of December 31, 1999.
NOTE 11. OTHER RELATED PARTY TRANSACTIONS
In January 1999, a Director was issued 84,000 shares
of common stock at $0.25 per share in return for various
office furniture and fixtures at a fair value of $21,000.
During 1999, a Director was issued a total of 191,340
shares of common stock at $0.25 per share as rent and in
return for office equipment.
NOTE 12. SUBSEQUENT EVENTS
On January 6, 2000, the Company completed a private
placement. In exchange for $500,000 in equity capital, the
Company issued 1,000,000 shares of common stock, 1,000,000 of
the Company's class "A" common stock warrants providing for
purchase of the Company's common stock at a purchase price of
$0.50 per share and 1,000,000 of the Company's class "B"
common stock warrants providing for purchase of the Company's
common stock at a purchase price of $1.00 per share. Each
warrant is exercisable until January 1, 2005.
On January 6, 2000, the Company granted 170,000 stock
options, at $0.89 per common share to certain consultants of
the Company. These options have a term of ten years. The
majority of the options vest immediately while the remainder
of the options vest after certain services have been performed
for the Company.
On January 10, 2000, the Company repaid a note
payable to a Stockholder in the amount of $20,000 plus other
reimbursable expenses in the amount of $4,167.
F-20
<PAGE>
CAPITA RESEARCH GROUP, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTE 12. SUBSEQUENT EVENTS (CONTINUED)
On January 21, 2000, the Company completed a private
placement. In exchange for $130,000 in equity capital, the
Company issued 260,000 shares of common stock, 260,000 of the
Company's class "A" common stock warrants providing for
purchase of the Company's common stock at a purchase price of
$0.50 per share and 260,000 of the Company's class "B" common
stock warrants providing for purchase of the Company's common
stock at a purchase price of $1.00 per share. Each warrant is
exercisable until January 1, 2005.
On January 27, 2000, a Stockholder indicated his
intent to convert his convertible promissory note into
1,600,000 shares of common stock at a purchase price of $.25
per share. On March 10, 2000, the Stockholder indicated his
intent to exercise his 300,000 stock warrants into common
stock for an aggregate purchase price of $75,000 (Note 10).
On February 11, 2000, the Company granted 1,225,000
incentive stock options and nonqualified stock options, at
$.98 per common share to seven directors and/or officers of
the Company. These options have a term of ten years. The
options will vest over a three year period.
F-21
<PAGE>
No dealers, salesperson or other person is authorized
to give any information or to represent anything not
contained in this prospectus. You must not rely on any
unauthorized information or representations. This
prospectus is an offer to sell only the shares offered
hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The
information contained in this prospectus is current
only as of its date. 5,380,000 Shares
--------------- CAPITA
RESEARCH GROUP, INC.
TABLE OF CONTENTS
Page Common Stock
---- ------------
Prospectus Summary...................................1
Risk Factors.........................................3
Selling Security Holders.............................6
Plan of Distribution.................................7
Market for Common Equity and
Related Stockholder Matters..........................9
Dividend Policy......................................9
Capitalization.......................................9
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................................10
Business............................................13
Management..........................................21
Certain Relationships and Related Transactions......25
Description of Securities...........................25
Security Ownership of Certain Beneficial Owners and
Management........................................28
Legal Matters.......................................29
Experts.............................................29
Where You Can Find Additional Information...........29
Index to Financial Statements..................... F-1
31
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 78.751 of the Nevada General Corporation Law allows the
Company to indemnify any person who was or is threatened to be made a party to
any threatened, or completed action, suit or proceeding by reason of the fact
that he or she is or was a director, officer, employee or agent of the Company
or is or was serving at the request of the Company as a director, officer,
employee or agent of any corporation, partnership, joint venture, trust or other
enterprise. The Company may advance expenses in connection with defending any
such proceeding, provided the indemnitee undertakes to pay any such amounts if
it is later determined that such person was not entitled to be indemnified by
the Company.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the Company's costs and expenses
expected to be incurred in connection with the distribution of the securities
being registered. Except for the SEC Registration Fee, the amounts listed below
are estimates.
SEC Registration Fee........................ $ 1,309.36
Accounting Fees and Expenses................ 8,000.00
Legal Fees and Expenses..................... 18,000.00
Miscellaneous Expenses...................... 2,500.00
Total............................... $29,809.36
==========
The Company shall bear all expenses shown above.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Unless otherwise noted, the following sales of securities of the
Registrant were not registered under the Securities Act of 1933 in reliance on
Section 4(2) thereof. Purchase prices were paid in cash, cash equivalents or
services of equivalent value.
<PAGE>
On March 31, 1998, the Registrant sold shares of Common Stock to the
persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Ralph Anglin 130,000 $32,500
Karen Astrella 12,000 $3,000
Anthony Baratta 40,000 $10,000
Debra D. Berthold 20,000 $5,000
Samuel A. Brattini 10,000 $2,500
Samuel V. Brattini 10,000 $2,500
Richard M. Brueggeman 280,000 $70,000
Matthew Carrafiello 20,000 $5,000
Leonard A. Ciccotello 20,000 $5,000
Sandra Dietrich 40,000 $15,000
Kenneth P. Fratto 520,000 $13,000
Harry Gricevics 60,000 $15,000
David Grimes 20,000 $5,000
Harlan I. Gustafson Jr. 100,000 $25,000
Harvey E. Keim 20,000 $5,000
Kenneth McCarraher 20,000 $5,000
Robb Cape Inc. PSP 140,000 $35,000
Peter Stenstrom 20,000 $5,000
Thomas J. & Stenstrom 30,000 $7,500
Ronald B. Seltmann Jr. 40,000 $10,000
On April 30, 1998, the Registrant sold shares of Common Stock to the
persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
William C. Davis 20,000 $5,000
Frank F. Huppe 40,000 $10,000
Eduardo Jimenez III 4,000 $1,000
Kostrub Industries Inc. 12,000 $3,000
Harvey E. Keim 56,000 $14,000
Krisztina Farago 5,000 $1,250
James Millard D.O. 40,000 $10,000
Gary Plisinski 108,000 $27,000
Gary & Jerome Plisinski 48,000 $12,000
On May 6, 1998, the Registrant sold 12,000 shares of Common Stock to
Howard K. Stalker for a purchase price of $3,000.
On May 6, 1998, the Registrant sold 12,000 shares of Common Stock to
Michael J. Welsh for a purchase price of $3,000.
On May 18, 1998, the Registrant sold 20,000 shares of Common Stock
to Frank Dibella for a purchase price of $5,000.
<PAGE>
On May 19, 1998, the Registrant sold 60,000 shares of Common
Stock to Ralph Anglin for a purchase price of $15,000.
On May 29, 1998, the Registrant sold 15,000 shares of Common
Stock to Anthony and Michele Baratta for a purchase price of $3,750.
On May 29, 1998, the Registrant sold 2,000 shares of Common
Stock to Eduardo Jimenez, III for a purchase price of
$500.
On May 29, 1998 the Registrant sold 50,000 shares of Common
Stock to Jerome and Teresa J. Plisinski for a purchase price of $12,500.
On June 4, 1998, the Registrant sold shares of Common Stock to
the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Haythe & Curley 50,000 $12,500
Donald R. Peterson 100,000 $25,000
Kamilla Stenstrom 20,000 $5,000
Peter Stenstrom 10,000 $2,500
Jennifer Wichterman 8,000 $2,000
Charles Jobs 30,000 $7,500
On June 5, 1998, the Registrant sold 20,000 shares of Common
Stock to Ted W. Baxter for the purchase price of $5,000.
On June 5, 1998, the Registrant sold 120,000 shares of Common
Stock to Richard M. and Judy Brueggman for the purchase price of $30,000.
On June 5, 1998, the Registrant sold 20,000 shares of Common
Stock to Dominic Cafece for the purchase price of $5,000.
On June 9, 1998, the Registrant sold shares of Common Stock to
the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Leonard J. Ciccotello 20,000 $5,000
Joseph M. Kwiatkowski, Jr. 50,000 $12,500
Charles & Mary Cooper 10,000 $2,500
Thomas J. & Cindy Stenstrom 10,000 $2,500
<PAGE>
On June 10, 1998, the Registrant sold 20,000 shares of Common
Stock to Randolph C. and Nancy Lindel for the purchase price of $5,000.
On June 17, 1998, the Registrant sold 10,000 shares of Common
Stock to Robert D. and Judith Mlkvy for the purchase price of $2,500.
On June 17, 1998, the Registrant sold 12,000 shares of Common
Stock to Richard Wellbrook for the purchase price of $3,000.
On July 16, 1998, the Registrant sold 80,000 shares of Common
Stock to Ralph Anglin for the purchase price of $20,000.
On July 28, 1998, the Registrant sold 8,000 shares of Common
Stock to Kostrub Industries Inc., for the purchase price of $2,000.
On July 31, 1998, the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Anthony Baratta, II 17,500 $4,375
Krisztina Farago 45,000 $11,250
Henry and Lorraine Gricevics 40,000 $10,000
Tomas J. & Cindy Stenstrom 10,000 $2,500
Richard A. Wescott 10,000 $2,500
On August 10, 1998 the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Bradley Billhimer 8,000 $2,000
Joseph Bruno 12,000 $3,000
Gregory C. Cala 8,000 $2,000
Madeleine Franco 32,000 $8,000
Harlan I. Gustafson Jr. 2,400 $600
Robert E. Hayden 3,000 $750
Charles Jobs 3,000 $750
Brian D. & Heather Moyer 25,000 $6,250
David M. Nagle 12,000 $3,000
Joy E. O'Bryon 20,000 $8,000
Raymond K. Ward 10,000 $2,500
Robert B. Warren 8,000 $2,000
Gary J. & Jerome Plisinski 40,000 $10,000
Philip Rosenburg 20,000 $5,000
Aaron R. Schiele 40,000 $10,000
On August 24, 1998, the Registrant sold 400,000 shares of
Common Stock to Ralph Anglin for the purchase price of $100,000.
On August 25, 1998, the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Thomas Aquilante 10,000 $2,500
Harry & Lorraine Gricevics 20,000 $5,000
Hightech Vac Inc. 20,000 $5,000
Kris A. Keim 20,000 $2,000
Jan T. Stenstrom 10,000 $2,500
Richard D'Avanzo 20,000 $5,000
On August 31, 1998, the Registrant sold 20,000 shares of
Common Stock to Eugene F. Zuecca for the purchase price of $5,000.
On August 31, 1998, the Registrant sold 8,000 shares of Common
Stock to Harvey E. Keim for the purchase price of $2,000.
On September 3, 1998, the Registrant sold 65,000 shares of
Common Stock to William T. Hummel for the purchase price of $16,250.
On September 10, 1998, the Registrant sold 10,000 shares of
Common Stock to Thomas and Renee Piermatto for the purchase price of $2,500.
On September 25, 1998, the Registrant sold shares of Common
Stock to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Richard Astrella 28,000 $7,000
Michael J. & Jessica Doyle 8,000 $2,000
William T. Hummel 35,000 $8,750
<PAGE>
On September 29, 1998, the Registrant sold 10,000 shares of
Common Stock to Barry Rhoads for the purchase price of $2,500.
On October 28, 1998, the Registrant sold 60,000 shares of
Common Stock to Haythe & Curley for the purchase price of $15,000.
On October 28, 1998, the Registrant sold 16,000 shares of
Common Stock to Thomas W. Hummel, Jr., for the purchase price of $4,000.
On December 15, 1998, the Registrant sold 40,000 shares of
Common Stock to William Hummel for the purchase price of $10,000.
On December 15, 1998, the Registrant sold 20,000 shares of
Common Stock to Thomas Acqulante for the purchase price of $5,000.
On December 31, 1998, the Registrant sold 48,000 shares of
Common Stock to William Hummel for the purchase price of $12,000.
On January 6, 1999, the Registrant sold 10,000 shares of
Common Stock to Steven Plisinski for the purchase price of $2,500.
On January 6, 1999, the Registrant sold 12,000 shares of
Common Stock to Jerome Plisinski for the purchase price of $3,000.
On January 6, 1999, the Registrant sold 60,000 shares of
Common Stock to Gary and Jeanette Plisinski for the purchase price of $15,000.
On January 11, 1999, the Registrant sold shares of Common
Stock to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
William Hummell 80,000 $20,000
Ralph Anglin 84,000 $21,000
Madeleine Franco 68,000 $17,000
Harry Gricevics 12,000 $3,000
On February 9, 1999, the Registrant sold 20,000 shares of
Common Stock to Richard D'Avanzo for a purchase price of $5,000.
On February 9, 1999, the Registrant sold 100,000 shares of
Common Stock to Thomas Mirabile for a purchase price of $25,000.
On February 9, 1999, the Registrant sold 880 shares of Common
Stock to Dale Allen for a purchase price of $220.
On February 17, 1999, the Registrant sold shares of Common
Stock to the persons, in the amounts and for the purchase price set forth below:
<PAGE>
Number Purchase
Name of Shares Price
---- --------- -----
Paul Wolfson 8,000 $2,000
Elizabeth Zeleski 4,000 $1,000
Gary Osting 4,000 $1,000
Karen Longa 20,000 $5,000
John Kovas 20,000 $5,000
Michelle Perry 10,000 $2,500
On March 9, 1999, the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Gerald & Ann Leinenbach 50,000 $12,500
Haythe & Curley 50,000 $12,500
Jerome & Teresa Plisinski 50,000 $5,000
Neil Eklund 20,000 $5,000
On March 23, 1999, the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Charles Freeman 10,000 $2,500
Davis-Trachtenberg 15,000 3,750
Robb Cape, Inc. 12,020 $3,005
Quaker Capital 60,000 $15,000
NABOB Co. 74,000 $18,500
(Ralph Anglin IRA)
On March 30, 1999, the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
NABOB Co. 8,000 $2,000
(Ralph Anglin IRA)
Steffen Hauser 8,164 $2,041
<PAGE>
On April 8, 1999, the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Michael Von Gonton 4,000 $1,000
William Hummel 62,736 $15,684
NABOB Co. 120,000 $30,000
(Ralph Anglin IRA)
On April 26, 1999, the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Harvey Keim 20,000 $5,000
John Robbins 100,000 $25,000
On May 4, 1999, the Registrant sold shares of Common Stock to
the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Steven Plisinksi 10,000 $2,500
Jerome Plisinski 6,000 $1,500
Donald D. Cooley 10,000 $2,500
Suzanne F. Seeley 10,000 $2,500
Deborah J. Steer 10,000 $2,500
On May 18, 1999, the Registrant sold shares of Common Stock to
the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
NABOB Co. 80,000 $20,000
(Ralph Anglin IRA)
Michael Werner 10,800 $2,700
Todd Veeck 14,000 $3,500
Richard Veeck 4,000 $1,000
Andrew Depativo 30,000 $7,500
Nick Centofante 8,000 $2,000
Samuel Cortina 20,000 $5,000
John Ricketti 80,000 $20,000
Joan Rubin 8,000 $2,000
<PAGE>
On May 28, 1999, the Registrant sold shares of Common Stock to
the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Harry & Lorraine Gricevics 3,000 $750
Jerry Valentini 20,000 $5,000
Denise Hall 40,000 $10,000
On June 3, 1999, the Registrant sold shares of Common Stock to
the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Michael Von Gonton 10,000 $2,500
Raymond and Donna Wuest 40,000 $10,000
William Hummel 48,604 $12,151
On June 8, 1999, the Registrant sold shares of Common Stock to
the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
John Pravel 5,000 $1,250
Bryan Brahm 5,000 $1,250
Harry Roach 20,000 $5,000
On June 11, 1999, the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Kenneth Yeutter 10,000 $2,500
Robert Rozdzielski 20,000 $5,000
<PAGE>
On June 28, 1999, the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
David Hunter 1,500,000 $375,000
Tomas Stenstrom 750,000 $187,500
Ralph Anglin 500,000 $125,000
William Hummel 100,000 $25,000
NABOB Co.
(Ralph Anglin IRA) 100,000 $25,000
Anthony Baratta 200,097 $50,024.25
Millard Tydings 50,176 $12,544
Haythe & Curley 50,000 $12,500
Joseph Kwiatkowski 50,000 $12,500
Donald Peterson 250,000 $62,500
John Fare 10,000 $2,500
On July 8, 1999, the Registrant sold shares of Common Stock to
the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Harlan Gustafson 10,000 $2,500
Thomas Acquilante 1,168 $292
Gary & Jerome Plisinski 14,000 $3,500
Myron Bloom 40,000 $10,000
John Robbins 80,000 $20,000
Richard Astrella 12,000 $3,000
Harry Gricevics 40,000 $10,000
Brothers Plisinski 24,972 $6,243
Donald Hopper 44,000 $11,000
Michael Zaenglien 2,000 $5,000
Chad Neboer 3,000 $750
Chris Hopper 10,000 $2,500
Haythe & Curley 50,000 $12,500
Erwin Ephron 76,666 $19,166.50
On July 20, 1999, the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
John Robbins 120,000 $30,000
John Williams 40,000 $10,000
Thomas Piermatteo 8,000 $2,000
On July 26, 1999, the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Nevada Agency & Trust Co. 27,426 $6,856.50
William Helmig 8,000 $2,000
Madeleine Franco 50,000 $12,500
<PAGE>
On August 2, 1999, the Registrant sold 200,000 shares of
Common Stock to Kenneth Fratto for a purchase price of $50,000.
On August 3, 1999, the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Steffen Hausner 2,800 $700
Michael Von Gonten 14,000 $3,500
On August 12, 1999, the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Margaret Long 525,537 $131,384.25
Matthew Carrafiello 20,000 $5,000
On August 19, 1999, the Registrant sold shares of Common Stock
to the persons, in the amounts and for the purchase price set forth below:
Number Purchase
Name of Shares Price
---- --------- -----
Donald Hopper 2,000 $500
Kathleen Smith 10,000 $2,500
On September 28, 1999, the Registrant sold 120,000 shares of
Common Stock to NABOB Co. (Ralph Anglin IRA) for a purchase price of $30,000.
On January 6, 2000, the Registrant sold a total of 1,000,000
units (the "A Units"), each A Unit consisting of (i) one share of the
Registrant's Common Stock, (ii) one of the Registrant's A Common Stock Purchase
Warrants to purchase one share of the Registrant's Common Stock exercisable at a
purchase price of $.50 per share of Common Stock, and (iii) one of the
Registrant's B Common Stock Purchase Warrants to purchase one share of the
Registrant's Common Stock exercisable at a purchase price of $1.00 per share of
Common Stock, to the parties, in the amounts and at the purchase prices as set
forth below. These securities were not registered under the Securities Act in
reliance on Rule 506 of Regulation D promulgated thereunder.
Number Purchase
Name of A Units Price
---- ---------- -----
SoundShore Holdings Ltd. 666,750 $333,375
SoundShore Opportunity Holding Fund Ltd. 214,500 $107,250
SoundShore Strategic Holding Fund Ltd. 118,750 $59,375
On January 21, 2000, the Registrant sold a total of 260,000 A
Units to the parties, in the amounts and at the purchase prices as set forth
below. These securities were not registered under the Securities Act in reliance
on Rule 506 of Regulation D promulgated thereunder.
Number Purchase
Name of A Units Price
---- ---------- -----
Michael Hamblett 100,000 $50,000
Howard Fischer 80,000 $40,000
Andrew Gitlin 30,000 $15,000
John Lepore 20,000 $10,000
Philip Platek 20,000 $10,000
Edward Okine 10,000 $5,000
On March 6, 2000, the Registrant sold 100,000 A Units to David
Sandelovsky for a purchase price of $50,000. On March 9, 2000, the Registrant
sold 50,000 A Units to Dwight Nelson for a purchase price of $25,000. The
securities were not registered under the Securities Act in reliance on Rule 506
of Regulation D promulgated thereunder.
On April 19, 2000, the Registrant sold 394,447 units (the "B
Units"), each B Unit consisting of (i) one share of the Registrant's Common
Stock, and (ii) one of the Registrant's Warrants to purchase one share of the
Registrant's Common Stock, exercisable at a purchase price of $1.35 per share of
Common Stock, to the parties, in the amounts and at the purchase prices as set
forth below. These securities were not registered under the Securities Act in
reliance on Rule 506 of Regulation D promulgated thereunder.
<PAGE>
Name Number of B Units Purchase Price
---- ----------------- --------------
Page Chapman, III 27,778 $25,000
Larry Dinkin 27,778 $25,000
Howard Fischer 27,778 $25,000
Rich Greenstein 33,333 $30,000
Michael Levy 27,778 $25,000
Eric Pai 27,778 $25,000
Rob Reiner 27,778 $25,000
Greg Silvershein 27,778 $25,000
David Sandelovsky 27,778 $25,000
William Tai 55,556 $50,000
Mark Van Fossan 55,556 $50,000
Cyril Visovsky 27,778 $25,000
On April 20, 2000, in connection with the exercise of options
to purchase 50,000 shares of Common Stock, the Registrant issued 50,000 shares
of Common Stock to Torys in consideration for $44,500 of services.
On April 26, 2000, the Registrant issued 49,418 shares of
Common Stock to Prose & Pictures, Inc. in consideration for $46,329 of services
and 1,160 shares of Common Stock to Scott Touchton in consideration for $1,088
of services.
On April 28, 2000, the Registrant sold a total of 78,780 B
Units to the parties, in the amounts and at the purchase prices set forth below.
These securities were not registered under the Securities Act in reliance on
Rule 506 of Regulation D promulgated thereunder.
Name Number of B Units Purchase Price
---- ----------------- --------------
William Brown 5,556 $ 5,000
Susan Gress 556 $ 500
Michael Lauria 6,000 $ 5,400
Michael Loia 10,000 $ 9,000
Laura Smith 5,556 $ 5,000
Anthony Spatacco, Jr. 5,556 $ 5,000
Anthony Spatacco, Sr. 5,556 $ 5,000
Richard D'Avanzo 40,000 $36,000
ITEM 27. EXHIBIT INDEX
3 (i) Articles of Incorporation (Incorporated by reference to Exhibit
3(i) to the Company's Registration Statement on Form 10-SB)
3(ii) By-laws of the Company (Incorporated by reference to Exhibit
3(ii) to the Company's Registration Statement on Form 10-SB)
4(a)* Capita Research Group, Inc. 1999 Stock Option Plan
4(b)* Warrants dated August 5, 1999 granted to Jim Salim
4(c)* Form of A Warrant
4(d)* Form of B Warrant
<PAGE>
4(e) Form of Warrants granted to investors in April 2000 private
placements
5 Opinion of Torys
10(a) NASA License Agreement (Incorporated by reference to Exhibit
10(c) to the Company's Registration Statement on Form 10-SB)
10(b)* Modification No. 1 to NASA License Agreement
10(c)* Modification No. 2 to NASA License Agreement
10(d) Exchange Agreement dated January 27, 1998 between David B.
Hunter, Exchange Agent for the stockholders of NextGen Systems,
Inc., and Royal American Mining Properties, Ltd. (Incorporated
by reference to Exhibit 10(b) to the Company's Registration
Statement on Form 10-SB)
10(e)* Loan Agreement dated as of August 5, 1999 between the Company
and Jim Salim
10(f)* Securities Purchase Agreement dated as of January 6, 2000 by and
among the Company, SoundShore Holdings Ltd., SoundShore
Opportunity Holding Fund Ltd. and SoundShore Strategic Holding
Fund Ltd.
10(g)* Securities Purchase Agreement dated as of January 21, 2000 by
and among the Company, Andrew Gitlin, John Lepore, Edward Okine,
Philip Platek, Howard Fischer and Michael Hamblett
10(h) Securities Purchase Agreement dated as of March 6, 2000 between
the Company and David G. Sandelovsky
10(i) Securities Purchase Agreement dated as of March 9, 2000 between
the Company and Dwight Nelson
10(j) Securities Purchase Agreement dated as of April 19, 2000 by and
among the Company, Page Chapman, III, Larry Dinkin, Howard
Fischer, Rich Greenstein, Michael Levy, Eric Pai, Rob Reiner,
David Sandelovsky, Greg Silvershein, William Tai, Mark Van
Fossan and Cyril Visovsky
10(k) Securities Purchase Agreement dated as of April 28, 2000 by and
among the Company, William Brown, Susan Gress, Michael Lauria,
Michael Loia, Laura Smith, Anthony Spatacco, Jr. and Anthony
Spatacco, Sr.
10(l) Securities Purchase Agreement dated as of April 28, 2000 between
the Company and Richard D'Avanzo
10(m)* Registration Rights Agreement dated August 5, 1999 between the
Company and Jim Salim
10(n)* Registration Rights Agreement dated as of January 6, 2000 by and
among the Company, SoundShore Holdings Ltd., SoundShore
Opportunity Holding Fund Ltd. and SoundShore Strategic Holding
Fund Ltd.
10(o)* Registration Rights Agreement dated as of January 21, 2000 by
and among the Company, Andrew Gitlin, John Lepore, Edward Okine,
Philip Platek, Howard Fischer and Michael Hamblett
10(p) Registration Rights Agreement dated as of March 6, 2000 between
the Company and David G. Sandelovsky
10(q) Registration Rights Agreement dated as of March 9, 2000 between
the Company and Dwight Nelson
10(r) Registration Rights Agreement dated as of April 19, 2000 by and
among the Company, Page Chapman, III, Larry Dinkin, Howard
Fischer, Rich Greenstein, Michael Levy, Eric Pai, Rob Reiner,
David Sandelovsky, Greg Silvershein, William Tai, Mark Van
Fossan and Cyril Visovsky
<PAGE>
10(s) Registration Rights Agreement dated as of April 28, 2000 by and
among the Company, William Brown, Susan Gress, Michael Lauria,
Michael Loia, Laura Smith, Anthony Spatacco, Jr. and Anthony
Spatacco, Sr.
10(t) Registration Rights Agreement dated as of April 28, 2000 between
the Company and Richard D'Avanzo
10(u) Agreement for Financial Public Support / Retail Support dated as
of April 18, 2000 between the
Company and Charterbridge Financial Group, Inc.
10(v) Investment Banking Rider dated as of April 18, 2000 between the
Company and Charterbridge Financial Group, Inc.
23(a) Consent of Torys (contained in Exhibit 5)
23(b) Consent of Rudolph, Palitz LLP.
24* Power of Attorney
* Previously filed by the Registrant with the Commission.
ITEM 28. UNDERTAKINGS
(a) 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 to:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) 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. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) include any additional or changed 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 paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) or the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
(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.
(b) 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 foregoing provisions, 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 it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
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 of filing on Form SB-2, and authorized this Amendment
No. 1 to Registration Statement to be signed on its behalf by the undersigned,
in the City of Blue Bell, Commonwealth of Pennsylvania, on the 10th day of May,
2000.
CAPITA RESEARCH GROUP, INC.
By: /s/ David B. Hunter
-----------------------
David B. Hunter
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 1 to Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ David B. Hunter President, Chief Executive May 10, 2000
- ------------------- Officer and Director
(David B. Hunter) (principal executiveofficer)
/s/ Tomas J. Stenstrom* Director May 10, 2000
- ----------------------- -------- -----------
(Tomas J. Stenstrom)
/s/ Steven A. Plisinski* Chief Financial Officer May 10, 2000
- ------------------------ (principal financial and -----------
(Steven A. Plisinski) accounting officer)
/s/ Millard E. Tydings II* Director May 10, 2000
- -------------------------- -------- -----------
(Millard E. Tydings II)
/s/ Ralph Anglin* Director May 10, 2000
- ----------------- -------- -----------
(Ralph Anglin)
*By:/s/ David B. Hunter
----------------------
David B. Hunter
(Attorney in Fact)
</TABLE>
Exhibit 4(e)
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE COMMON STOCK ISSUABLE UPON
EXERCISE OF SUCH WARRANTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT.
W[ ] WARRANT CERTIFICATE
[ ] Warrants to Purchase
Common Stock
Void After April [ ], 2005
CAPITA RESEARCH GROUP, INC.
(Incorporated under the laws of the State of Nevada)
This is to certify that, for value received, [name] is the
owner (the "Owner") of the number of Warrants set forth above, each of which is
nontransferable and entitles the Owner to purchase from CAPITA RESEARCH GROUP,
INC. (herein called the "Corporation"), at any time (except as hereinafter
provided) before 5 P.M. (New York time) on April [ ], 2005, one Stock Unit (as
hereinafter defined) at a purchase price of $1.35 (herein called the "Warrant
Price"). For purposes of this Warrant Certificate, a Stock Unit shall consist of
one fully paid and non-assessable share of common stock, $.001 par value (herein
called the "Common Stock"), of the Corporation, as such stock is constituted on
April [ ], 2000, subject to adjustment as hereinafter set forth.
Subject to the provisions hereof, the Warrants represented by
this Warrant Certificate may be exercised by the Owner in whole or in part by
surrender of this Warrant Certificate at the principal executive offices of the
Corporation with the form of election to subscribe attached hereto duly executed
and with payment in full to the Corporation of the Warrant Price for each of the
Stock Units so purchased. Payment of such Warrant Price shall be made in cash or
by certified or official bank check. Thereupon, the Warrants shall be deemed to
have been exercised and the Owner shall become a holder of record of the shares
of Common Stock comprising the Stock Units so purchased (or of the other
securities or property to which the Owner is entitled upon such exercise) for
all purposes, and certificates for such shares of Common Stock so purchased
shall be delivered to the Owner within a reasonable time after the Warrants
shall have been exercised as set forth hereinabove. If only a portion of the
Warrants shall be exercised, the Owner shall be entitled to receive a similar
warrant certificate of like tenor and date covering the number of Warrants which
shall not have been exercised, unless such Warrants shall have expired.
The Corporation covenants and agrees that all shares of Common
Stock which may be issued upon the exercise of the rights represented by this
Warrant Certificate will, upon issuance, be validly issued, fully paid and
non-assessable and free from all taxes, liens and charges with respect to the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue). The Corporation further covenants and agrees
that, during the period within which the Warrants represented by this Warrant
1
<PAGE>
Certificate may be exercised, the Corporation will at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise of the Warrants represented by this Warrant Certificate, and will at
its expense expeditiously upon each such reservation of shares of Common Stock
use its best efforts to procure the listing thereof (subject to issuance or
notice of issuance) on all stock exchanges on which the Common Stock is then
listed. The rights of the Owner shall be subject to the following further terms
and conditions:
1.1. (a) The number of shares of Common Stock comprising a
Stock Unit shall be subject to adjustment from time to time as follows:
(i) If the number of shares of Common Stock
outstanding at any time after the date hereof is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up of Common
Stock, then, immediately following the record date fixed for the determination
of holders of Common Stock entitled to receive such stock dividend, subdivision
or split-up, the number of shares of Common Stock comprising a Stock Unit shall
be appropriately increased so that the number of shares of Common Stock issuable
on exercise of each Warrant shall be increased in proportion to such increase of
outstanding shares.
(ii) If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, then, immediately following the record
date for such combination, the number of shares of Common Stock comprising a
Stock Unit shall be appropriately decreased so that the number of shares of
Common Stock issuable on exercise of each Warrant shall be decreased in
proportion to such decrease in outstanding shares.
(iii) In case the Corporation shall declare a cash
dividend upon the Common Stock payable otherwise than out of earnings or earned
surplus legally available therefor under the laws of the State of Delaware or
shall distribute to holders of Common Stock shares of its capital stock (other
than Common Stock), stock or other securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding cash
dividends) or options or rights (excluding options to purchase and rights to
subscribe for Common Stock or other securities of the Corporation convertible
into or exchangeable for Common Stock), then, in each such case, immediately
following the record date fixed for the determination of the holders of Common
Stock entitled to receive such dividend or distribution, the number of shares of
Common Stock comprising a Stock Unit thereafter shall be adjusted by multiplying
such number by a fraction of which the denominator shall be an amount equal to
the remainder of (x) the aggregate Current Market Price of all outstanding
shares of Common Stock less (y) the aggregate amount of such cash dividend or
the aggregate fair market value (as determined by the Board of Directors, whose
2
<PAGE>
determination shall be conclusive) of the stock, securities, evidences of
indebtedness, assets, options or rights so distributed, as the case may be, and
of which the numerator shall be the aggregate Current Market Price of all
outstanding shares of Common Stock. Such adjustment shall be made on the date
such dividend or distribution is made, and shall become effective at the opening
of business on the business day next following the record date for the
determination of stockholders entitled to such dividend or distribution.
(iv) In case, at any time after the date hereof, of
any capital reorganization, or any reclassification of the stock of the
Corporation (other than a change in par value or from par value to no par value
or from no par value to par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), or the consolidation or merger
of the Corporation with or into another person (other than a consolidation or
merger in which the Corporation is the continuing corporation and which does not
result in any change in the Common Stock) or of the sale or other disposition of
all or substantially all the properties and assets of the Corporation as an
entirety to any other person, each Warrant shall after such reorganization,
reclassification, consolidation, merger, sale or other disposition be
exercisable for the kind and number of shares of stock or other securities or
property of the Corporation or of the corporation resulting from such
consolidation or surviving such merger or to which such properties and assets
shall have been sold or otherwise disposed to which the Owner would have been
entitled if immediately prior to such reorganization, reclassification,
consolidation, merger, sale or other disposition he had exercised such Warrant
for Common Stock. The provisions of this Section 1.1 shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers, sales or
other dispositions.
(v) All calculations under this paragraph (a)shall
be made to the nearest cent or to the nearest one hundredth (1/100) of a share,
as the case may be.
(vi) For the purpose of any computation pursuant to
this paragraph (a) or Section 1.2, the Current Market Price at any date of one
share of Common Stock shall be deemed to be the average of the daily closing
prices for Common Stock for the 30 consecutive business days ending no more than
15 business days before the day in question (as adjusted for any stock dividend,
split, combination or reclassification that took effect during such 30
business-day period). The closing price for each day shall be the last reported
sale price regular way or, in case no such reported sales take place on such
day, the average of the last reported bid and asked prices regular way, in
either case on the principal national securities exchange on which the Common
Stock is listed or admitted to trading or as quoted on the Nasdaq National
Market System or Nasdaq SmallCap Market, or if not listed or admitted to trading
on any national securities exchange or so quoted, the average of the highest
reported bid and lowest reported asked prices as furnished by The National
Quotation Bureau Incorporated, all as adjusted; provided, however, that if the
Common Stock is not traded in such manner that the quotations referred to in
this clause (vi) are available for the period required hereunder, Current Market
Price shall be deemed to be the Share Net Asset Value (as used herein the term
"Share Net Asset Value" shall mean the aggregate net asset value of the
Corporation as shown on its most recent available balance sheet divided by the
outstanding number of shares of Common Stock, each determined on the assumption
that the Warrants have been exercised).
3
<PAGE>
(vii) In any case in which the provisions of this
paragraph (a) shall require that an adjustment shall become effective
immediately after a record date for an event, the Corporation may defer until
the occurrence of such event (x) issuing to the Owner with respect to any
Warrant exercised after such record date and before the occurrence of such
event, the additional shares of Common Stock issuable upon such exercise by
reason of the adjustment required by such event over and above the shares of
Common Stock issuable upon such exercise before giving effect to such adjustment
and (y) paying to the Owner any amount in cash in lieu of a fractional share of
Common Stock pursuant to Section 1.2; provided, however, that the Corporation
shall deliver to the Owner a due bill or other appropriate instrument evidencing
the Owner's right to receive such additional shares, and such cash, upon the
occurrence of the event requiring such adjustment.
(b) In the event the Corporation shall propose to take
any action of the types described in clauses (i), (ii), (iii) or (iv) of
paragraph (a) of this Section 1.1, the Corporation shall give notice to the
Owner in the manner set forth in Section 1.3, which notice shall specify the
record date, if any, with respect to any such action and the date on which such
action is to take place. Such notice shall also set forth such facts with
respect thereto as shall be reasonably necessary to indicate the effect of such
action (to the extent such effect may be known at the date of such notice) on
the number of shares of Common Stock comprising a Stock Unit and the number,
kind or class of shares or other securities or property which shall be
deliverable or purchasable upon the occurrence of such action or deliverable
upon exercise of Warrants. In the case of any action which would require the
fixing of a record date, such notice shall be given at least 20 days prior to
the date so fixed, and in case of all other action, such notice shall be given
at least 30 days prior to the taking of such proposed action. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
any such action.
(c) In the event that at any time as a result of an
adjustment made pursuant to paragraph (a) of this Section 1.1 the Owner shall
become entitled with respect to any Warrants thereafter surrendered for exercise
to receive any shares of the Corporation or another corporation other than
shares of Common Stock, the provisions of this Section 1.1 and Section 1.2 with
respect to the Common Stock shall apply on like terms to any such other shares.
1.2. No fractional share of Common Stock shall be issued
upon the exercise of Warrants, but in lieu thereof the Corporation shall pay,
upon exercise in full of the Warrants represented by this Warrant Certificate,
out of funds legally available therefor, a cash adjustment in respect of such
fractional share in an amount equal to the same fraction of the then Current
Market Price.
1.3. The Corporation will, within 120 days after the end
of each of its fiscal years, mail to the Owner, at the address of such holder
shown on the books of the Corporation, a certificate of the independent public
accountants for the Corporation (i) specifying the Share Price in effect as of
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<PAGE>
the end of such fiscal year and the number of shares of Common Stock, or the
kind and amount of any securities or property other than shares of Common Stock,
comprising a Stock Unit and (ii) setting forth in reasonable detail the facts
requiring any adjustments made during such fiscal year.
2.1. The issue of any stock or other certificate upon the
exercise of the Warrants shall be made without charge to the Owner for any
transfer or issuance tax in respect of the issue thereof. The Corporation shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the Owner, and the Corporation shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue thereof shall have paid to the Corporation the amount of such tax or
shall have established to the satisfaction of the Corporation that such tax has
been paid.
2.2. This Warrant Certificate and the rights hereunder are
not transferable. In addition, the Warrants evidenced hereby may not be
exercised, and any shares of Common Stock issued upon any exercise thereof may
not be transferred, unless, in the opinion of counsel, who shall be counsel
reasonably acceptable to the Corporation, such exercise or transfer, as the case
may be, would not result in a violation of the provisions of the Securities Act
of 1933. The Owner and any holder of any shares of Common Stock issued upon
exercise of any such Warrants, by taking or holding the same, consents to and
agrees to be bound by the provisions of this Section 2.2.
2.3. If this Warrant Certificate shall be lost, stolen,
mutilated or destroyed, the Corporation shall on such terms as to indemnify or
otherwise protect the Corporation as the Corporation may in its discretion
impose, issue a new warrant certificate of like denomination, tenor and date as
the Warrant Certificate so lost, stolen, mutilated or destroyed. Any such new
warrant certificate shall constitute an original contractual obligation of the
Corporation, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant Certificate shall be at any time enforceable by anyone.
2.4. The Corporation may deem and treat the Owner as the
absolute owner of this Warrant Certificate for all purposes and shall not be
affected by any notice to the contrary.
2.5. This Warrant Certificate and the Warrants evidenced
hereby shall not entitle the Owner to any rights of a stockholder of the
Corporation either at law or in equity, including, without limitation, the right
to vote, to receive dividends or other distributions, to exercise any
pre-emptive rights or to receive any notice of meetings of stockholders or of
any other proceedings of the Corporation.
2.6. This Warrant Certificate, in all events, shall be wholly
void and have no effect after 5 P.M. (New York time) on April [ ], 2005.
2.7. In the event that one or more of the provisions of this
Warrant Certificate shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Warrant Certificate, but this
Warrant Certificate shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
5
<PAGE>
2.8. This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be entirely performed within such State, except to the
extent of the mandatory rules of the State of Nevada with respect to the formal
requisites for authorization of a security and rights and duties with respect to
register of transfer.
Dated: April [ ], 2000
CAPITA RESEARCH GROUP, INC.
By______________________________
Exhibit 5
May 3, 2000
Capita Research Group, Inc.
591 Skippack Pike
Blue Bell, Pennsylvania 19422
Dear Sirs:
We have acted as counsel for Capita Research Group, Inc., a
Nevada corporation (the "Company"), in connection with the registration
statement on Form SB-2 (the "Registration Statement"), filed by the Company on
this date under the Securities Act of 1933, as amended, with respect to
5,380,000 shares (the "Shares") of common stock, $.001 par value per share, of
the Company held by the Selling Security Holders named in the Registration
Statement.
In connection with the Registration Statement, we have
examined such records and documents and such questions of law as we have deemed
necessary or appropriate for the purposes of this opinion. On the basis of such
examination, we advise you that in our opinion the Shares have been duly and
validly authorized and issued and are fully paid and non-assessable (or, when
issued in accordance with the warrants and note referenced in the Registration
Statement, will be duly and validly issued and fully paid and non-assessable).
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to us under the caption
"Legal Matters" in the prospectus constituting a part of the Registration
Statement.
Very truly yours,
/s/Torys
--------
Torys
Exhibit 10(h)
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of
March 6, 2000, by and between Capita Research Group, Inc., a Nevada corporation,
with headquarters located at 591 Skippack Pike, Suite 300, Blue Bell,
Pennsylvania 19422 (the "Company"), and David G. Sandelovsky (the "Buyer").
WHEREAS:
A. The Company and the Buyer is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
B. The Company has authorized the issuance of up to 100,000 of
the Company's units (the "Units"), each unit consisting of (i) one share of the
Company's common stock, $.001 par value per share (the "Common Stock"), (ii) one
of the Company's A Common Stock Purchase Warrants to purchase one share of the
Company's Common Stock exercisable at a purchase price of $.50 per share of
Common Stock (the "A Warrants"), in the form attached hereto as Exhibit A, and
(iii) one of the Company's B Common Stock Purchase Warrants to purchase one
share of the Company's Common Stock exercisable at a purchase price of $1.00 per
share of Common Stock, in the form attached hereto as Exhibit B (the "B
Warrants", and together with the A Warrants, the "Warrants") (such shares of
Common Stock issued upon exercise of the Warrants are hereinafter referred to as
the "Warrant Shares", and together with the Units, Common Stock and Warrants,
the "Securities");
C. The Buyer wishes to purchase, upon the terms and conditions
stated in this Agreement, an aggregate of $50,000 of Units; and
D. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement in the form attached hereto as Exhibit C (the "Registration Rights
Agreement") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
NOW, THEREFORE, the Company and the Buyer hereby agree as
follows:
1. PURCHASE AND SALE OF UNITS
--------------------------
a. Purchase of Units.Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall
issue and sell to the Buyer and the Buyer shall purchase from the Company an
aggregate of 100,000 Units at the Closing (the "Closing"). The per unit purchase
price (the "Purchase Price") of the Units shall be $.50 or an aggregate purchase
price of $50,000. On the Closing Date (as defined below), the Company shall
issue and deliver to the Buyer (i) a stock certificate(s) representing such
number of the shares of Common Stock and (ii) certificates representing such
number of A Warrants and B Warrants, which the Buyer is then purchasing, duly
executed on behalf of the Company and registered in the name of the Buyer or his
designee (the "Stock Certificates").
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<PAGE>
b. Closing Date. The date and time of the Closing
(the "Closing Date") shall be 1:00 p.m. Eastern Standard Time on March 6, 2000,
subject to notification of satisfaction (or waiver) of the conditions to the
Closing set forth in Sections 6 and 7 below (or such later date as is mutually
agreed to by the Company and the Buyer). The Closing shall occur on the Closing
Date at the offices of Torys, 237 Park Avenue, New York, New York 10017.
c. Form of Payment. On the Closing Date, the Buyer
shall pay the Purchase Price to the Company for the Units to be issued and sold
to the Buyer at the Closing, by wire transfer of immediately available funds in
accordance with the Company's written wire instructions provided in writing to
the Buyer prior to the Closing Date.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
--------------------------------------
The Buyer represents and warrants that:
a. Investment Purpose. The Buyer (i) is purchasing
the Units consisting of Common Stock and Warrants and (ii) upon exercise of the
Warrants, will acquire the Warrant Shares, then issuable for his own account for
investment only and not with a present view towards or for resale in connection
with, the public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, that by making the
representations herein, the Buyer does not agree to hold any Securities for any
minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act.
b. Accredited Investor Status. The Buyer is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D.
c. Reliance on Exemptions. The Buyer understands
that the Units are being offered and sold to him in reliance on specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying in part upon the truth and
accuracy of, and the Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Buyer set forth herein in
order to determine the availability of such exemptions and the eligibility of
the Buyer to acquire the Units.
d. Information. The Buyer and his advisors, if any,
have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Units which have been requested by the Buyer. The Buyer and his advisors, if
any, have been afforded the opportunity to ask questions of the Company. Neither
such inquiries nor any other due diligence investigations conducted by the Buyer
or his advisors, if any, or his representatives shall modify, amend or affect
the Buyer's right to rely on the Company's representations and warranties
contained in Section 3 below.
2
<PAGE>
e. No Governmental Review. The Buyer understands
that no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement of
the Units or the fairness or suitability of the investment in the Securities nor
have such authorities passed upon or endorsed the merits of the offering of the
Units.
f. Transfer or Resale. The Buyer understands that
except as provided in the Registration Rights Agreement: (i) the Securities have
not been and are not being registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) the Buyer shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, to the effect
that such Securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration, or (C) such
securities can be sold, assigned or transferred pursuant to Rule 144 promulgated
under the 1933 Act (or a successor rule thereto) ("Rule 144"); (ii) any sale of
such securities made in reliance on Rule 144 may be made only in accordance with
the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of
such securities under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the 1933 Act) may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register
such securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
g. Legends. The Buyer understands that the
certificates or other instruments representing the Warrants and, until such time
as the sale of the Common Stock or Warrant Shares have been registered under the
1933 Act as contemplated by the Registration Rights Agreement, the stock
certificates or other documents representing the Common Stock and Warrant Shares
except as set forth below, shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Securities upon which it is
stamped, if (i) any such Securities are registered for sale under the 1933 Act,
(ii) in connection with a sale transaction, such holder provides the Company
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<PAGE>
with an opinion of counsel, in a generally acceptable form, to the effect that a
public sale, assignment or transfer of any of the Securities may be made without
registration under the 1933 Act, or (iii) any of the Securities can be sold
pursuant to Rule 144 without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold. The Buyer
acknowledges, covenants and agrees to sell any of the Securities represented by
a certificate(s) from which the legend has been removed, only pursuant to (i) a
registration statement effective under the 1933 Act, or (ii) advice of counsel
that such sale is exempt from registration required by Section 5 of the 1933
Act. In the event the above legend is removed from any of the Securities, the
Company may, upon reasonable advance notice to the holder, require that the
above legend be placed on any of the Securities that cannot then be sold
pursuant to an effective registration statement or Rule 144(k) under the 1933
Act (or any successor rule thereto).
h. Authorization; Enforcement. This Agreement has
been duly and validly authorized, executed and delivered on behalf of the Buyer
and is a valid and binding agreement of the Buyer enforceable in accordance with
its terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
i. Residency. The Buyer is a resident of the United
States.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
----------------------------------------------
The Company represents and warrants to the Buyer
that:
a. Organization and Qualification. The Company and
its subsidiaries are corporations duly incorporated and validly existing in good
standing under the laws of the jurisdiction in which they are incorporated, and
have the requisite corporate power to own their properties and to carry on their
business as now being conducted. Each of the Company and its subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect.
"Material Adverse Effect" means any material adverse effect on (i) the business,
properties, operations, condition (financial or otherwise), or results of
operations of the Company and its subsidiaries, taken as a whole, (ii) on the
ability of the Company to perform its obligations hereunder, under the
Registration Rights Agreement or under the other agreements or instruments to be
entered into or filed in connection herewith or therewith, or (iii) the
Securities.
b. Authorization; Enforcement; Compliance with Other
Instruments. (i) The Company has the requisite corporate power and authority to
enter into and perform its obligations under this Agreement, the Warrants and
the Registration Rights Agreement, (collectively, the "Closing Agreements") to
issue, sell and perform its obligations with respect to the Units and Warrant
Shares in accordance with the terms hereof and the Warrants and to issue the
Warrant Shares upon exercise of the Warrants, in accordance with the terms and
conditions of the Warrants, (ii) the execution and delivery of the Closing
Agreements by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
4
<PAGE>
the Common Stock and the Warrants and the reservation for issuance and the
issuance of the Warrant Shares upon exercise of the Warrants have been duly
authorized by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
shareholders, (iii) the Closing Agreements have been duly executed and delivered
by the Company, and (iv) the Closing Agreements constitute the legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
c. Capitalization and Indebtedness. As of the date
hereof, the authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, of which as of the date hereof, 21,555,946 shares are
issued and outstanding and no shares of Preferred Stock. All of such outstanding
shares have been validly issued and are fully paid and nonassessable. No shares
of Common Stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company. Except as
disclosed in Schedule 3(c), as of the date hereof, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities, notes, credit agreements, or other agreements, documents or
instruments evidencing indebtedness of the Company or any of its subsidiaries or
by which the Company or any of its subsidiaries is or may become bound and (iii)
there are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement). There are no securities
or instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of any of the Securities as described in this
Agreement. The Company has furnished to the Buyer true and correct copies of the
Company's Certificate of Incorporation as amended and as in effect on the date
hereof (the "Certificate of Incorporation"), and the Company's By-laws, as in
effect on the date hereof (the "By-laws"), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.
d. Issuance of Securities. The Securities are duly
authorized and, upon issuance in accordance with the terms hereof shall be (i)
validly issued, fully paid and non-assessable, (ii) free from all taxes, liens
and charges with respect to the issue thereof and are not and shall not be
subject to preemptive rights or other similar rights of stockholders of the
Company. Two hundred thousand (200,000) shares of Common Stock have been duly
authorized and reserved for issuance in connection with the Units.
5
<PAGE>
e. No Conflicts. The execution, delivery and
performance of the Closing Agreements by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Securities) will not (i) result in a violation
of the Certificate of Incorporation or By-laws or (ii) except as disclosed in
Schedule 3(e), violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the principal market or exchange on which the Common Stock is
traded or listed) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries is bound
or affected. Neither the Company nor its subsidiaries are in violation of any
term of or in default under its Certificate of Incorporation or By-laws or their
organizational charter or by-laws, respectively, or in violation of any term of
or in default under any contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or regulation
applicable to the Company or its subsidiaries, except for violations or defaults
which would not, individually or in the aggregate, have a Material Adverse
Effect. The business of the Company and its subsidiaries is not being conducted
in violation of any law, ordinance or regulation of any governmental entity,
which violations, individually or in the aggregate, would have a Material
Adverse Effect. Except as specifically contemplated by this Agreement and as
required under the 1933 Act, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental or regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement, the Registration Rights Agreement or the Warrants in accordance with
the terms hereof or thereof. Except as disclosed in Schedule 3(e), all consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. The Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.
f. Acknowledgment Regarding Buyer's Purchase of the
Securities. The Company acknowledges and agrees that the Buyer is acting solely
in the capacity of arm's length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that the
Buyer is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer or any of his
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to the Buyer's purchase of the
Securities. The Company further represents to the Buyer that the Company's
decision to enter into this Agreement has been based solely on the independent
evaluation by the Company and its representatives.
g. No General Solicitation. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning
of Regulation D under the 1933 Act) in connection with the offer or sale of any
of the Securities offered hereby.
6
<PAGE>
h. No Integrated Offering. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of any of the Securities under the 1933 Act or cause the offering
of any of the Securities to be integrated with prior offerings by the Company
for purposes of the 1933 Act or any applicable shareholder approval provisions.
i. Disclosure. To the Company's knowledge, all
information relating to or concerning the Company or any of its subsidiaries set
forth in this Agreement and provided to the Buyer pursuant to Section 2(d)
hereof and otherwise in connection with the transactions contemplated hereby is
true and correct in all material respects and the Company has not omitted to
state any material fact necessary in order to make the statements made herein or
therein, in light of the circumstances under which they were made, not
misleading. No event or circumstance has occurred or information exists with
respect to the Company or any of its subsidiaries or its or their business,
properties, operations or financial condition, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed (assuming for this purpose
that the Company's reports filed under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), are being incorporated into an effective registration
statement filed by the Company under the 1933 Act). The Company has not provided
the Buyer with any material non-public information nor any projections or
assurance regarding the future financial performance of the Company.
4. COVENANTS AND AGREEMENTS.
------------------------
a. Best Efforts. Each party shall use its best
efforts timely to satisfy each of the conditions to be satisfied by it as
provided in Sections 6 and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to the Buyer promptly after such filing. The Company shall, on or before
the Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for, or obtain exemption for the Securities
for, sale to the Buyer at the Closing pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the Buyer on or prior to
the Closing Date.
c. Reporting Status. Until the earlier of (i) six
months after the date as of which the Investors (as that term is defined in the
Registration Rights Agreement) may sell all of the Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto) or (ii) the date which is six months after the date on which none of
the Securities are outstanding (the "Registration Period"), the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
d. Use of Proceeds. The Company will use the
proceeds from the sale of the Securities for working capital and general
corporate purposes and shall not otherwise, directly or indirectly, use such
proceeds for any loan to or investment in any other corporation, partnership,
enterprise or other person (except in connection with its direct or indirect
subsidiaries) or for the repurchase, redemption or retirement of any capital
stock of the Company.
7
<PAGE>
e. Financial Information. The Company agrees to file
all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of the 1934 Act.
The financial statements of the Company will be prepared in accordance with
generally accepted accounting principles, consistently applied (except for any
required changes in such principles), and will fairly present in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries and results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). The Company agrees to send the following to each Investor (as that
term is defined in the Registration Rights Agreement) during the Registration
Period: (i) within five (5) days after the filing thereof with the SEC, a copy
of its Annual Reports on Form 10-K or Form 10-KSB, as applicable, its Quarterly
Reports on Form 10-Q or Form 10-QSB, as applicable, any Current Reports on Form
8-K and any registration statements or amendments filed pursuant to the 1933
Act; (ii) within one (1) day after release thereof, copies of all press releases
issued by the Company or any of its subsidiaries; and (iii) copies of any
notices and other information made available or given to the shareholders of the
Company generally, contemporaneously with the making available or giving thereof
to the shareholders.
f. Reservation of Shares. The Company shall take all
action necessary to at all times have authorized, and reserved for the purpose
of issuance, no less than 200,000 shares of Common Stock to provide for the
issuance of the Warrant Shares upon exercise of the Warrants in accordance with
the terms of this Agreement and the Warrants.
g. Disclosure. From and after the date hereof, the
Company will not provide to the Buyer any material non-public information which,
according to applicable law, rule or regulation should be disclosed publicly by
the Company but which has not been so disclosed.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
The obligation of the Company hereunder to issue and sell the
Units to the Buyer at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
a. The Buyer shall have executed this Agreement and
the Registration Rights Agreement and delivered the same to the Company.
b. The Buyer shall have delivered to the Company the
Purchase Price for the Units being purchased by the Buyer at the Closing by wire
transfer of immediately available funds pursuant to the wire instructions
provided by the Company.
c. The representations and warranties of the Buyer
shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the Closing Date.
8
<PAGE>
d. The transactions contemplated hereby shall not
violate any law, regulation or order then in effect and applicable to the Buyer
or the Company.
6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
------------------------------------------------
The obligation of the Buyer hereunder to purchase the Units is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Buyer's sole
benefit and may be waived by the Buyer at any time in its sole discretion:
a. The Company shall have executed this Agreement,
the Warrants and the Registration Rights Agreement, and delivered the same to
the Buyer.
b. Trading in the Common Stock or Warrant Shares
issuable upon the conversion of the Warrants shall not have been suspended by
the SEC.
c. The representations and warranties of the Company
shall be true and correct in all material respects (except to the extent that
any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case such representations and
warranties shall be true and correct without further qualification) as of the
date when made and as of the Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date. The Buyer shall have received a certificate, executed by the Chief
Executive Officer of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by the Buyer
including, without limitation, an update as of the Closing Date regarding the
representation contained in Section 3(c) above.
d. The Company shall have executed and delivered to
the Buyer the Stock Certificates for the Common Stock being purchased by the
Buyer at the Closing.
e. The Company shall have executed and delivered to
the Buyer the Warrants being purchased by the Buyer at the Closing.
f. As of the Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for the purpose
of effecting the exercise of the Warrants, 200,000 shares of Common Stock.
g. The transactions contemplated hereby shall not
violate any law, regulation or order then in effect and applicable to the Buyer
or the Company.
9
<PAGE>
7. GOVERNING LAW; MISCELLANEOUS.
----------------------------
a. Governing Law. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of New York without
regard to the principles of conflict of laws.
b. Counterparts. This Agreement may be executed in
two or more identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part
of, or affect the interpretation of, this Agreement.
d. Severability. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement
supersedes all other prior oral or written agreements between the Buyer, the
Company, their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement and the instruments and documents
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
f. Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement shall be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S. certified mail, return receipt requested;
(iii) three (3) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
10
<PAGE>
if to the Company:
Capita Research Group, Inc.
591 Skippack Pike
Suite 300
Blue Bell, Pennsylvania 19422
Telephone: 215-619-7777
Facsimile: 215-619-0775
Attention: Chief Financial Officer
with a copy to:
Andrew J. Beck, Esq.
Torys
237 Park Avenue
New York, New York 10017
Facsimile: 212-682-0200
if to the Buyer:
Mr. David G. Sandelovsky
34 Deer Creek Drive
Basking Ridge, New Jersey 07920
Telephone: 908-647-4201
Facsimile: 908-647-4201
Each party shall provide five (5) days' prior written notice
to the other party of any change in address or facsimile number.
g. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Units. The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Buyer. The Buyer may assign some or all of his
rights hereunder without the consent of the Company, provided, however, that (i)
any such assignment shall not release the Buyer from his obligations hereunder
unless such obligations are assumed by such assignee and the Company has
consented to such assignment and assumption, and (ii) the Buyer may not assign
his rights hereunder in a manner that would cause the offering of Securities
hereunder to be required to be registered under the 1933 Act.
h. No Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
i. Survival. The representations and warranties of
the Company and the Buyer contained in Sections 3 and 2, respectively, shall
survive the Closing until eighteen months after the Closing Date. The agreements
and covenants set forth in Sections 4, 5 and 7 shall survive the Closing.
11
<PAGE>
j. Publicity. The Company and the Buyer shall have
the right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of the
Buyer, to make any press release or other public disclosure with respect to such
transactions as is required by applicable law and regulations (although the
Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be provided
with a copy thereof), but only to the extent required by such law or regulation.
k. Further Assurances. Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
l. No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
m. Equitable Relief. The Company recognizes that in
the event that it fails to perform, observe, or discharge any or all of its
obligations under this Agreement, any remedy at law may prove to be inadequate
relief to the Buyer. The Company therefore agrees that the Buyer shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.
n. Consent to Jurisdiction. The parties hereto
expressly submit themselves to the exclusive jurisdiction of the state and
federal courts of New York in any action or proceeding relating to this
Agreement or any of the other documents contemplated hereby or any of the
transactions contemplated hereby or thereby. Each party hereby irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of venue of any such action, suit or proceeding
brought in such a court and any claim that any such action, suit or proceeding
brought in such a court has been brought in an inconvenient forum. The parties
hereto irrevocably and unconditionally consent to the service of process of any
of the aforementioned courts in any such action, suit or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, at
their respective addresses set forth or provided for herein, such service to
become effective 10 days after such mailing. Nothing herein shall affect the
right of any party to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against the other parties in any
other jurisdiction.
* * *
12
<PAGE>
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY:
--------
CAPITA RESEARCH GROUP, INC.
By: /s/ David B. Hunter
-----------------------
Name: David B. Hunter
Its: President
13
<PAGE>
THE BUYER:
----------
/s/ David G. Sandelovsky
------------------------
David G. Sandelovsky
14
Exhibit 10(i)
2.
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of
March 9, 2000, by and between Capita Research Group, Inc., a Nevada corporation,
with headquarters located at 591 Skippack Pike, Suite 300, Blue Bell,
Pennsylvania 19422 (the "Company"), and Dwight Nelson (the "Buyer").
WHEREAS:
A. The Company and the Buyer is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
B. The Company has authorized the issuance of up to 50,000 of
the Company's units (the "Units"), each unit consisting of (i) one share of the
Company's common stock, $.001 par value per share (the "Common Stock"), (ii) one
of the Company's A Common Stock Purchase Warrants to purchase one share of the
Company's Common Stock exercisable at a purchase price of $.50 per share of
Common Stock (the "A Warrants"), in the form attached hereto as Exhibit A, and
(iii) one of the Company's B Common Stock Purchase Warrants to purchase one
share of the Company's Common Stock exercisable at a purchase price of $1.00 per
share of Common Stock, in the form attached hereto as Exhibit B (the "B
Warrants", and together with the A Warrants, the "Warrants") (such shares of
Common Stock issued upon exercise of the Warrants are hereinafter referred to as
the "Warrant Shares", and together with the Units, Common Stock and Warrants,
the "Securities");
C. The Buyer wishes to purchase, upon the terms and conditions
stated in this Agreement, an aggregate of $25,000 of Units; and
D. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement in the form attached hereto as Exhibit C (the "Registration Rights
Agreement") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
NOW, THEREFORE, the Company and the Buyer hereby agree as
follows:
1. PURCHASE AND SALE OF UNITS
--------------------------
a. Purchase of Units. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below,
the Company shall issue and sell to the Buyer and the Buyer shall purchase from
the Company an aggregate of 50,000 Units at the Closing (the "Closing"). The per
unit purchase price (the "Purchase Price") of the Units shall be $.50 or an
aggregate purchase price of $25,000. On the Closing Date (as defined below), the
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<PAGE>
Company shall issue and deliver to the Buyer (i) a stock certificate(s)
representing such number of the shares of Common Stock and (ii) certificates
representing such number of A Warrants and B Warrants, which the Buyer is then
purchasing, duly executed on behalf of the Company and registered in the name of
the Buyer or his designee (the "Stock Certificates").
b. Closing Date. The date and time of the
Closing (the "Closing Date") shall be 1:00 p.m. Eastern Standard Time on March
9, 2000, subject to notification of satisfaction (or waiver) of the conditions
to the Closing set forth in Sections 6 and 7 below (or such later date as is
mutually agreed to by the Company and the Buyer). The Closing shall occur on the
Closing Date at the offices of Torys, 237 Park Avenue, New York, New York 10017.
c. Form of Payment. On the Closing Date, the
Buyer shall pay the Purchase Price to the Company for the Units to be issued and
sold to the Buyer at the Closing, by wire transfer of immediately available
funds in accordance with the Company's written wire instructions provided in
writing to the Buyer prior to the Closing Date.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
--------------------------------------
The Buyer represents and warrants that:
a. Investment Purpose. The Buyer (i) is
purchasing the Units consisting of Common Stock and Warrants and (ii) upon
exercise of the Warrants, will acquire the Warrant Shares, then issuable for his
own account for investment only and not with a present view towards or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided, however,
that by making the representations herein, the Buyer does not agree to hold any
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status. The Buyer is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D.
c. Reliance on Exemptions. The Buyer
understands that the Units are being offered and sold to him in reliance on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon the truth
and accuracy of, and the Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Buyer to acquire the Units.
d. Information. The Buyer and his advisors, if
any, have been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and sale of
the Units which have been requested by the Buyer. The Buyer and his advisors, if
any, have been afforded the opportunity to ask questions of the Company. Neither
such inquiries nor any other due diligence investigations conducted by the Buyer
or his advisors, if any, or his representatives shall modify, amend or affect
the Buyer's right to rely on the Company's representations and warranties
contained in Section 3 below.
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<PAGE>
e. No Governmental Review. The Buyer
understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or
endorsement of the Units or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the
offering of the Units.
f. Transfer or Resale. The Buyer understands
that except as provided in the Registration Rights Agreement: (i) the Securities
have not been and are not being registered under the 1933 Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, (B) the Buyer shall have
delivered to the Company an opinion of counsel, in a generally acceptable form,
to the effect that such Securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration,
or (C) such securities can be sold, assigned or transferred pursuant to Rule 144
promulgated under the 1933 Act (or a successor rule thereto) ("Rule 144"); (ii)
any sale of such securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of such securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder.
g. Legends. The Buyer understands that the
certificates or other instruments representing the Warrants and, until such time
as the sale of the Common Stock or Warrant Shares have been registered under the
1933 Act as contemplated by the Registration Rights Agreement, the stock
certificates or other documents representing the Common Stock and Warrant Shares
except as set forth below, shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Securities upon which it is
stamped, if (i) any such Securities are registered for sale under the 1933 Act,
(ii) in connection with a sale transaction, such holder provides the Company
3
<PAGE>
with an opinion of counsel, in a generally acceptable form, to the effect that a
public sale, assignment or transfer of any of the Securities may be made without
registration under the 1933 Act, or (iii) any of the Securities can be sold
pursuant to Rule 144 without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold. The Buyer
acknowledges, covenants and agrees to sell any of the Securities represented by
a certificate(s) from which the legend has been removed, only pursuant to (i) a
registration statement effective under the 1933 Act, or (ii) advice of counsel
that such sale is exempt from registration required by Section 5 of the 1933
Act. In the event the above legend is removed from any of the Securities, the
Company may, upon reasonable advance notice to the holder, require that the
above legend be placed on any of the Securities that cannot then be sold
pursuant to an effective registration statement or Rule 144(k) under the 1933
Act (or any successor rule thereto).
h. Authorization; Enforcement. This Agreement
has been duly and validly authorized, executed and delivered on behalf of the
Buyer and is a valid and binding agreement of the Buyer enforceable in
accordance with its terms, subject as to enforceability to general principles of
equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.
i. Residency. The Buyer is a resident of the
United States.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
---------------------------------------------
The Company represents and warrants to the Buyer
that:
a. Organization and Qualification. The Company
and its subsidiaries are corporations duly incorporated and validly existing in
good standing under the laws of the jurisdiction in which they are incorporated,
and have the requisite corporate power to own their properties and to carry on
their business as now being conducted. Each of the Company and its subsidiaries
is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business conducted by
it makes such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a Material Adverse Effect.
"Material Adverse Effect" means any material adverse effect on (i) the business,
properties, operations, condition (financial or otherwise), or results of
operations of the Company and its subsidiaries, taken as a whole, (ii) on the
ability of the Company to perform its obligations hereunder, under the
Registration Rights Agreement or under the other agreements or instruments to be
entered into or filed in connection herewith or therewith, or (iii) the
Securities.
b. Authorization; Enforcement; Compliance with
Other Instruments. (i) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement, the
Warrants and the Registration Rights Agreement, (collectively, the "Closing
Agreements") to issue, sell and perform its obligations with respect to the
Units and Warrant Shares in accordance with the terms hereof and the Warrants
and to issue the Warrant Shares upon exercise of the Warrants, in accordance
with the terms and conditions of the Warrants, (ii) the execution and delivery
of the Closing Agreements by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including, without limitation, the
4
<PAGE>
issuance of the Common Stock and the Warrants and the reservation for issuance
and the issuance of the Warrant Shares upon exercise of the Warrants have been
duly authorized by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
shareholders, (iii) the Closing Agreements have been duly executed and delivered
by the Company, and (iv) the Closing Agreements constitute the legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
c. Capitalization and Indebtedness. As of the
date hereof, the authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, of which as of the date hereof, 21,655,946 shares are
issued and outstanding and no shares of Preferred Stock. All of such outstanding
shares have been validly issued and are fully paid and nonassessable. No shares
of Common Stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company. Except as
disclosed in Schedule 3(c), as of the date hereof, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities, notes, credit agreements, or other agreements, documents or
instruments evidencing indebtedness of the Company or any of its subsidiaries or
by which the Company or any of its subsidiaries is or may become bound and (iii)
there are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement). There are no securities
or instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of any of the Securities as described in this
Agreement. The Company has furnished to the Buyer true and correct copies of the
Company's Certificate of Incorporation as amended and as in effect on the date
hereof (the "Certificate of Incorporation"), and the Company's By-laws, as in
effect on the date hereof (the "By-laws"), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.
d. Issuance of Securities. The Securities are
duly authorized and, upon issuance in accordance with the terms hereof shall be
(i) validly issued, fully paid and non-assessable, (ii) free from all taxes,
liens and charges with respect to the issue thereof and are not and shall not be
subject to preemptive rights or other similar rights of stockholders of the
Company. One hundred thousand (100,000) shares of Common Stock have been duly
authorized and reserved for issuance in connection with the Units.
5
<PAGE>
e. No Conflicts. The execution, delivery and
performance of the Closing Agreements by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Securities) will not (i) result in a violation
of the Certificate of Incorporation or By-laws or (ii) except as disclosed in
Schedule 3(e), violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the principal market or exchange on which the Common Stock is
traded or listed) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries is bound
or affected. Neither the Company nor its subsidiaries are in violation of any
term of or in default under its Certificate of Incorporation or By-laws or their
organizational charter or by-laws, respectively, or in violation of any term of
or in default under any contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or regulation
applicable to the Company or its subsidiaries, except for violations or defaults
which would not, individually or in the aggregate, have a Material Adverse
Effect. The business of the Company and its subsidiaries is not being conducted
in violation of any law, ordinance or regulation of any governmental entity,
which violations, individually or in the aggregate, would have a Material
Adverse Effect. Except as specifically contemplated by this Agreement and as
required under the 1933 Act, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental or regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement, the Registration Rights Agreement or the Warrants in accordance with
the terms hereof or thereof. Except as disclosed in Schedule 3(e), all consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. The Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.
f. Acknowledgment Regarding Buyer's Purchase of
the Securities. The Company acknowledges and agrees that the Buyer is acting
solely in the capacity of arm's length purchaser with respect to this Agreement
and the transactions contemplated hereby. The Company further acknowledges that
the Buyer is not acting as a financial advisor or fiduciary of the Company (or
in any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer or any of his
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to the Buyer's purchase of the
Securities. The Company further represents to the Buyer that the Company's
decision to enter into this Agreement has been based solely on the independent
evaluation by the Company and its representatives.
g. No General Solicitation. Neither the
Company, nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the 1933 Act) in connection with the
offer or sale of any of the Securities offered hereby.
6
<PAGE>
h. No Integrated Offering. Neither the Company,
nor any of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of any of the Securities under the 1933 Act or cause the offering
of any of the Securities to be integrated with prior offerings by the Company
for purposes of the 1933 Act or any applicable shareholder approval provisions.
i. Disclosure. To the Company's knowledge, all
information relating to or concerning the Company or any of its subsidiaries set
forth in this Agreement and provided to the Buyer pursuant to Section 2(d)
hereof and otherwise in connection with the transactions contemplated hereby is
true and correct in all material respects and the Company has not omitted to
state any material fact necessary in order to make the statements made herein or
therein, in light of the circumstances under which they were made, not
misleading. No event or circumstance has occurred or information exists with
respect to the Company or any of its subsidiaries or its or their business,
properties, operations or financial condition, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed (assuming for this purpose
that the Company's reports filed under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), are being incorporated into an effective registration
statement filed by the Company under the 1933 Act). The Company has not provided
the Buyer with any material non-public information nor any projections or
assurance regarding the future financial performance of the Company.
4. COVENANTS AND AGREEMENTS.
------------------------
a. Best Efforts. Each party shall use its best
efforts timely to satisfy each of the conditions to be satisfied by it as
provided in Sections 6 and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof to the Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for, or obtain exemption for
the Securities for, sale to the Buyer at the Closing pursuant to this Agreement
under applicable securities or "Blue Sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to the Buyer on
or prior to the Closing Date.
c. Reporting Status. Until the earlier of (i)
six months after the date as of which the Investors (as that term is defined in
the Registration Rights Agreement) may sell all of the Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto) or (ii) the date which is six months after the date on which none of
the Securities are outstanding (the "Registration Period"), the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
d. Use of Proceeds. The Company will use the
proceeds from the sale of the Securities for working capital and general
corporate purposes and shall not otherwise, directly or indirectly, use such
proceeds for any loan to or investment in any other corporation, partnership,
enterprise or other person (except in connection with its direct or indirect
subsidiaries) or for the repurchase, redemption or retirement of any capital
stock of the Company.
7
<PAGE>
e. Financial Information. The Company agrees to
file all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting requirements of the 1934
Act. The financial statements of the Company will be prepared in accordance with
generally accepted accounting principles, consistently applied (except for any
required changes in such principles), and will fairly present in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries and results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). The Company agrees to send the following to each Investor (as that
term is defined in the Registration Rights Agreement) during the Registration
Period: (i) within five (5) days after the filing thereof with the SEC, a copy
of its Annual Reports on Form 10-K or Form 10-KSB, as applicable, its Quarterly
Reports on Form 10-Q or Form 10-QSB, as applicable, any Current Reports on Form
8-K and any registration statements or amendments filed pursuant to the 1933
Act; (ii) within one (1) day after release thereof, copies of all press releases
issued by the Company or any of its subsidiaries; and (iii) copies of any
notices and other information made available or given to the shareholders of the
Company generally, contemporaneously with the making available or giving thereof
to the shareholders.
f. Reservation of Shares. The Company shall
take all action necessary to at all times have authorized, and reserved for the
purpose of issuance, no less than 100,000 shares of Common Stock to provide for
the issuance of the Warrant Shares upon exercise of the Warrants in accordance
with the terms of this Agreement and the Warrants.
g. Disclosure. From and after the date hereof,
the Company will not provide to the Buyer any material non-public information
which, according to applicable law, rule or regulation should be disclosed
publicly by the Company but which has not been so disclosed.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
The obligation of the Company hereunder to issue and sell the
Units to the Buyer at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
a. The Buyer shall have executed this Agreement
and the Registration Rights Agreement and delivered the same to the Company.
b. The Buyer shall have delivered to the
Company the Purchase Price for the Units being purchased by the Buyer at the
Closing by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
8
<PAGE>
c. The representations and warranties of the
Buyer shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and the Buyer
shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Buyer at or prior to the Closing Date.
d. The transactions contemplated hereby shall
not violate any law, regulation or order then in effect and applicable to the
Buyer or the Company.
6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
------------------------------------------------
The obligation of the Buyer hereunder to purchase the Units is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Buyer's sole
benefit and may be waived by the Buyer at any time in its sole discretion:
a. The Company shall have executed this
Agreement, the Warrants and the Registration Rights Agreement, and delivered the
same to the Buyer.
b. Trading in the Common Stock or Warrant
Shares issuable upon the conversion of the Warrants shall not have been
suspended by the SEC.
c. The representations and warranties of the
Company shall be true and correct in all material respects (except to the extent
that any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case such representations and
warranties shall be true and correct without further qualification) as of the
date when made and as of the Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date. The Buyer shall have received a certificate, executed by the Chief
Executive Officer of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by the Buyer
including, without limitation, an update as of the Closing Date regarding the
representation contained in Section 3(c) above.
d. The Company shall have executed and
delivered to the Buyer the Stock Certificates for the Common Stock being
purchased by the Buyer at the Closing.
e. The Company shall have executed and
delivered to the Buyer the Warrants being purchased by the Buyer at the Closing.
f. As of the Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the exercise of the Warrants, 100,000 shares of Common
Stock.
g. The transactions contemplated hereby shall
not violate any law, regulation or order then in effect and applicable to the
Buyer or the Company.
9
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7. GOVERNING LAW; MISCELLANEOUS.
----------------------------
a. Governing Law. This Agreement shall be
governed by and interpreted in accordance with the laws of the State of New York
without regard to the principles of conflict of laws.
b. Counterparts. This Agreement may be executed
in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party. In
the event any signature page is delivered by facsimile transmission, the party
using such means of delivery shall cause four (4) additional original executed
signature pages to be physically delivered to the other party within five (5)
days of the execution and delivery hereof.
c. Headings. The headings of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement
supersedes all other prior oral or written agreements between the Buyer, the
Company, their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement and the instruments and documents
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
f. Notices. Any notices, consents, waivers or
other communications required or permitted to be given under the terms of this
Agreement shall be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S. certified mail, return receipt requested;
(iii) three (3) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
if to the Company:
Capita Research Group, Inc.
591 Skippack Pike
Suite 300
Blue Bell, Pennsylvania 19422
Telephone: 215-619-7777
Facsimile: 215-619-0775
Attention: Chief Financial Officer
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with a copy to:
Andrew J. Beck, Esq.
Torys
237 Park Avenue
New York, New York 10017
Facsimile: 212-682-0200
if to the Buyer:
Mr. Dwight Nelson
57 Strawberry Hill
Norwalk, Connecticut 06855
Facsimile: 203-861-4989
Telephone: 203-324-8425
Each party shall provide five (5) days' prior written notice
to the other party of any change in address or facsimile number.
g. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Units. The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Buyer. The Buyer may assign some or all of his
rights hereunder without the consent of the Company, provided, however, that (i)
any such assignment shall not release the Buyer from his obligations hereunder
unless such obligations are assumed by such assignee and the Company has
consented to such assignment and assumption, and (ii) the Buyer may not assign
his rights hereunder in a manner that would cause the offering of Securities
hereunder to be required to be registered under the 1933 Act.
h. No Third Party Beneficiaries. This Agreement
is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
i. Survival. The representations and warranties
of the Company and the Buyer contained in Sections 3 and 2, respectively, shall
survive the Closing until eighteen months after the Closing Date. The agreements
and covenants set forth in Sections 4, 5 and 7 shall survive the Closing.
j. Publicity. The Company and the Buyer shall
have the right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of the
Buyer, to make any press release or other public disclosure with respect to such
transactions as is required by applicable law and regulations (although the
Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be provided
with a copy thereof), but only to the extent required by such law or regulation.
11
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k. Further Assurances. Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
l. No Strict Construction. The language used in
this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied
against any party.
m. Equitable Relief. The Company recognizes
that in the event that it fails to perform, observe, or discharge any or all of
its obligations under this Agreement, any remedy at law may prove to be
inadequate relief to the Buyer. The Company therefore agrees that the Buyer
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
n. Consent to Jurisdiction. The parties hereto
expressly submit themselves to the exclusive jurisdiction of the state and
federal courts of New York in any action or proceeding relating to this
Agreement or any of the other documents contemplated hereby or any of the
transactions contemplated hereby or thereby. Each party hereby irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of venue of any such action, suit or proceeding
brought in such a court and any claim that any such action, suit or proceeding
brought in such a court has been brought in an inconvenient forum. The parties
hereto irrevocably and unconditionally consent to the service of process of any
of the aforementioned courts in any such action, suit or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, at
their respective addresses set forth or provided for herein, such service to
become effective 10 days after such mailing. Nothing herein shall affect the
right of any party to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against the other parties in any
other jurisdiction.
* * *
12
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IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY:
--------
CAPITA RESEARCH GROUP, INC.
By: /s/ David B. Hunter
-----------------------
Name: David B. Hunter
Its: President
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THE BUYER:
/s/ Dwight Nelson
-----------------
Dwight Nelson
14
Exhibit 10(j)
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of
April 19, 2000, by and among Capita Research Group, Inc., a Nevada corporation,
with headquarters located at 591 Skippack Pike, Suite 300, Blue Bell,
Pennsylvania 19422 (the "Company"), and the investors listed on the Schedule of
Buyers attached hereto (individually, a "Buyer" and collectively, the "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 of Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act");
B. The Company has authorized the issuance of up to 394,447 of
the Company's units (the "Units"), each unit consisting of (i) one share of the
Company's common stock, $.001 par value per share (the "Common Stock"), and (ii)
one of the Company's Common Stock Purchase Warrants to purchase one share of the
Company's Common Stock exercisable at a purchase price of $1.35 per share of
Common Stock (the "Warrants") (such shares of Common Stock issued upon exercise
of the Warrants are hereinafter referred to as the "Warrant Shares", and
together with the Units, Common Stock and Warrants, the "Securities");
C. The Buyers wish to purchase, upon the terms and conditions
stated in this Agreement, an aggregate of up to $355,000 of Units in the
respective amounts set forth opposite each Buyer's name on the Schedule of
Buyers; and
D. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement dated as of the date hereof (the "Registration Rights Agreement")
pursuant to which the Company has agreed to provide certain registration rights
under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws.
NOW, THEREFORE, the Company and the Buyers hereby agree as
follows:
1. PURCHASE AND SALE OF UNITS
--------------------------
a. Purchase of Units. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 5 and 6 below,
the Company shall issue and sell to the Buyers and the Buyers shall purchase
from the Company an aggregate of up to 394,447 Units in the respective amounts
set forth opposite each Buyer's name on the Schedule of Buyers at the Closing
(the "Closing"). The per unit purchase price (the "Purchase Price") of the Units
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shall be $.90 or an aggregate purchase price of up to $355,000. On the Closing
Date (as defined below), the Company shall issue and deliver to each Buyer (i) a
stock certificate(s) representing such number of the shares of Common Stock and
(ii) certificates representing such number of Warrants, which such Buyer is then
purchasing (as indicated opposite such Buyer's name on the Schedule of Buyers),
duly executed on behalf of the Company and registered in the name of such Buyer
or his designee (the "Stock Certificates").
b. Closing Date. The date and time of the
Closing (the "Closing Date") shall be 5:00 p.m., Eastern Standard Time on April
19, 2000, subject to notification of satisfaction (or waiver) of the conditions
to the Closing set forth in Sections 5 and 6 below (or such later date as is
mutually agreed to by the Company and the Buyers). The Closing shall occur on
the Closing Date at the offices of Torys, 237 Park Avenue, New York, New York
10017.
c. Form of Payment. On or before the Closing
Date, each Buyer shall pay the Purchase Price to the Company for the Units to be
issued and sold to such Buyer at the Closing, by check or by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions provided to the Buyers prior to the Closing Date.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
--------------------------------------
Each Buyer represents and warrants with respect to only itself
that:
a. Investment Purpose. Such Buyer (i) is
purchasing the Units consisting of Common Stock and Warrants and (ii) upon
exercise of the Warrants, will acquire the Warrant Shares, then issuable for his
own account for investment only and not with a present view towards or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided, however,
that by making the representations herein, such Buyer does not agree to hold any
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status. Such Buyer is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D.
c. Reliance on Exemptions. Such Buyer
understands that the Units are being offered and sold to him in reliance on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon the truth
and accuracy of, and such Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Buyer set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Buyer to acquire the Units.
d. Information. Such Buyer and his advisors, if
any, have been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and sale of
the Units which have been requested by such Buyer. Such Buyer and his advisors,
if any, have been afforded the opportunity to ask questions of the Company.
Neither such inquiries nor any other due diligence investigations conducted by
such Buyer or his advisors, if any, or his representatives shall modify, amend
or affect such Buyer's right to rely on the Company's representations and
warranties contained in Section 3 below.
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e. No Governmental Review. Such Buyer
understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or
endorsement of the Units or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the
offering of the Units.
f. Transfer or Resale. Such Buyer understands
that except as provided in the Registration Rights Agreement: (i) the Securities
have not been and are not being registered under the 1933 Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, (B) such Buyer shall have
delivered to the Company an opinion of counsel, in a generally acceptable form,
to the effect that such Securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration,
or (C) such securities can be sold, assigned or transferred pursuant to Rule 144
promulgated under the 1933 Act (or a successor rule thereto) ("Rule 144"); (ii)
any sale of such securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of such securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder.
g. Legends. Such Buyer understands that the
certificates or other instruments representing the Warrants and, until such time
as the sale of the Common Stock or Warrant Shares have been registered under the
1933 Act as contemplated by the Registration Rights Agreement, the stock
certificates or other documents representing the Common Stock and Warrant Shares
except as set forth below, shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
certificates):
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE COMMON STOCK
ISSUABLE UPON EXERCISE OF SUCH WARRANTS HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Securities upon which it is
stamped, if (i) any such Securities are registered for sale under the 1933 Act,
(ii) in connection with a sale transaction, such holder provides the Company
with an opinion of counsel, in a generally acceptable form, to the effect that a
public sale, assignment or transfer of any of the Securities may be made without
registration under the 1933 Act, or (iii) any of the Securities can be sold
pursuant to Rule 144 without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold. Each Buyer
acknowledges, covenants and agrees to sell any of the Securities represented by
a certificate(s) from which the legend has been removed, only pursuant to (i) a
registration statement effective under the 1933 Act, or (ii) advice of counsel
that such sale is exempt from registration required by Section 5 of the 1933
Act. In the event the above legend is removed from any of the Securities, the
Company may, upon reasonable advance notice to the holder, require that the
above legend be placed on any of the Securities that cannot then be sold
pursuant to an effective registration statement or Rule 144(k) under the 1933
Act (or any successor rule thereto).
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h. Authorization; Enforcement. This Agreement
has been duly and validly authorized, executed and delivered on behalf of such
Buyer and is a valid and binding agreement of such Buyer enforceable in
accordance with its terms, subject as to enforceability to general principles of
equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.
i. Residency. Such Buyer is a resident of the
state specified opposite his name in the Schedule of
Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
---------------------------------------------
The Company represents and warrants to each of the
Buyers that:
a. Organization and Qualification. The Company
and its subsidiaries are corporations duly incorporated and validly existing in
good standing under the laws of the jurisdiction in which they are incorporated,
and have the requisite corporate power to own their properties and to carry on
their business as now being conducted. Each of the Company and its subsidiaries
is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business conducted by
it makes such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a Material Adverse Effect.
"Material Adverse Effect" means any material adverse effect on (i) the business,
properties, operations, condition (financial or otherwise), or results of
operations of the Company and its subsidiaries, taken as a whole, (ii) on the
ability of the Company to perform its obligations hereunder, under the
Registration Rights Agreement or under the other agreements or instruments to be
entered into or filed in connection herewith or therewith, or (iii) the
Securities.
b. Authorization; Enforcement; Compliance with
Other Instruments. (i) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement, the
Warrants and the Registration Rights Agreement, (collectively, the "Closing
Agreements") to issue, sell and perform its obligations with respect to the
Units and Warrant Shares in accordance with the terms hereof and the Warrants
and to issue the Warrant Shares upon exercise of the Warrants, in accordance
with the terms and conditions of the Warrants, (ii) the execution and delivery
of the Closing Agreements by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the Common Stock and the Warrants and the reservation for issuance
and the issuance of the Warrant Shares upon exercise of the Warrants have been
duly authorized by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
shareholders, (iii) the Closing Agreements have been duly executed and delivered
by the Company, and (iv) the Closing Agreements constitute the legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
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<PAGE>
c. Capitalization and Indebtedness. As of the
date hereof, the authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, of which as of the date hereof, 21,705,946 shares are
issued and outstanding and no shares of Preferred Stock. All of such outstanding
shares have been validly issued and are fully paid and nonassessable. No shares
of Common Stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company. Except as
disclosed in Schedule 3(c), as of the date hereof, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities, notes, credit agreements, or other agreements, documents or
instruments evidencing indebtedness of the Company or any of its subsidiaries or
by which the Company or any of its subsidiaries is or may become bound and (iii)
there are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement).
d. Issuance of Securities. The Securities are
duly authorized and, upon issuance in accordance with the terms hereof shall be
(i) validly issued, fully paid and non-assessable, (ii) free from all taxes,
liens and charges with respect to the issue thereof and are not and shall not be
subject to preemptive rights or other similar rights of stockholders of the
Company. Three hundred ninety-four thousand four hundred forty-seven (394,447)
shares of Common Stock have been duly authorized and reserved for issuance in
connection with the Units.
e. No Conflicts. The execution, delivery and
performance of the Closing Agreements by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Securities) will not (i) result in a violation
of the Articles of Incorporation or By-laws of the Company as in effect as of
the date hereof or (ii) except as disclosed in Schedule 3(e), violate or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or instrument
to which the Company or any of its subsidiaries is a party, or result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and regulations
of the principal market or exchange on which the Common Stock is traded or
listed) applicable to the Company or any of its subsidiaries or by which any
property or asset of the Company or any of its subsidiaries is bound or
affected. Neither the Company nor its subsidiaries are in violation of any term
of or in default under the Articles of Incorporation or By-laws of the Company
or their organizational charter or by-laws as in effect as of the date hereof,
respectively, or in violation of any term of or in default under any contract,
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agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the Company or its
subsidiaries, except for violations or defaults which would not, individually or
in the aggregate, have a Material Adverse Effect. The business of the Company
and its subsidiaries is not being conducted in violation of any law, ordinance
or regulation of any governmental entity, which violations, individually or in
the aggregate, would have a Material Adverse Effect. Except as specifically
contemplated by this Agreement and as required under the 1933 Act or state
securities or "Blue Sky" laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental or regulatory or self-regulatory agency in order for it to
execute, deliver or perform any of its obligations under or contemplated by this
Agreement, the Registration Rights Agreement or the Warrants in accordance with
the terms hereof or thereof. Except as disclosed in Schedule 3(e), all consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. The Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.
f. Acknowledgment Regarding Buyers' Purchase of
the Securities. The Company acknowledges and agrees that each of the Buyers is
acting solely in the capacity of arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that each Buyer is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to this Agreement and
the transactions contemplated hereby and any advice given by any of the Buyers
or any of their respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely incidental to such
Buyer's purchase of the Securities. The Company further represents to each Buyer
that the Company's decision to enter into this Agreement has been based solely
on the independent evaluation by the Company and its representatives.
g. No General Solicitation. Neither the
Company, nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the 1933 Act) in connection with the
offer or sale of any of the Securities offered hereby.
h. No Integrated Offering. Neither the Company,
nor any of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of any of the Securities under the 1933 Act or cause the offering
of any of the Securities to be integrated with prior offerings by the Company
for purposes of the 1933 Act or any applicable shareholder approval provisions.
i. Disclosure. All information relating to or
concerning the Company or any of its subsidiaries set forth in this Agreement
and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in
connection with the transactions contemplated hereby is true and correct in all
material respects and the Company has not omitted to state any material fact
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necessary in order to make the statements made herein or therein, in light of
the circumstances under which they were made, not misleading. No event or
circumstance has occurred or information exists with respect to the Company or
any of its subsidiaries or its or their business, properties, operations or
financial condition, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed (assuming for this purpose that the Company's
reports filed under the Securities Exchange Act of 1934, as amended (the "1934
Act") are being incorporated into an effective registration statement filed by
the Company under the 1933 Act). The Company has not provided any Buyer with any
material non-public information nor any projections or assurance regarding the
future financial performance of the Company.
4. COVENANTS AND AGREEMENTS.
------------------------
a. Best Efforts. Each party shall use its best
efforts timely to satisfy each of the conditions to be satisfied by it as
provided in Sections 5 and 6 of this Agreement.
b. Form D. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D. The Company
shall, on or before the Closing Date, take such action as the Company shall
reasonably determine is necessary to qualify the Securities for, or obtain
exemption for the Securities for, sale to the Buyers at the Closing pursuant to
this Agreement under applicable securities or "Blue Sky" laws of the states of
the United States.
c. Reporting Status. Until the earlier of (i)
six months after the date as of which the Investors (as that term is defined in
the Registration Rights Agreement) may sell all of the Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto) or (ii) the date which is six months after the date on which none of
the Securities are outstanding (the "Registration Period"), the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
d. Use of Proceeds. The Company will use the
proceeds from the sale of the Securities for working capital and general
corporate purposes and shall not otherwise, directly or indirectly, use such
proceeds for any loan to or investment in any other corporation, partnership,
enterprise or other person (except in connection with its direct or indirect
subsidiaries) or for the repurchase, redemption or retirement of any capital
stock of the Company.
e. Financial Information. The Company agrees to
file all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting requirements of the 1934
Act. The financial statements of the Company will be prepared in accordance with
generally accepted accounting principles, consistently applied (except for any
required changes in such principles), and will fairly present in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries and results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
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f. Reservation of Shares. The Company shall
take all action necessary to at all times have authorized, and reserved for the
purpose of issuance, no less than 394,447 shares of Common Stock to provide for
the issuance of the Warrant Shares upon exercise of the Warrants in accordance
with the terms of this Agreement and the Warrants.
g. Disclosure. From and after the date hereof,
the Company will not provide to any Buyer any material non-public information
which, according to applicable law, rule or regulation should be disclosed
publicly by the Company but which has not been so disclosed.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
The obligation of the Company hereunder to issue and sell the
Units to each Buyer at the Closing is subject to the satisfaction, with respect
to each Buyer, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:
a. Such Buyer shall have executed this
Agreement and the Registration Rights Agreement and delivered the same to the
Company.
b. Such Buyer shall have delivered to the
Company the Purchase Price for the Units being purchased by such Buyer at the
Closing by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
c. The representations and warranties of such
Buyer shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and such Buyer
shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Buyer at or prior to the Closing Date.
d. The transactions contemplated hereby shall
not violate any law, regulation or order then in effect and applicable to such
Buyer or the Company.
6. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
-------------------------------------------------
The obligation of each Buyer hereunder to purchase the Units
is subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for each Buyer's sole
benefit and may be waived by such Buyer at any time in its sole discretion:
a. The Company shall have executed this
Agreement, the Warrants and the Registration Rights Agreement, and delivered the
same to such Buyer.
b. Trading in the Common Stock or Warrant
Shares issuable upon the conversion of the Warrants shall not have been
suspended by the SEC.
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c. The representations and warranties of the
Company shall be true and correct in all material respects (except to the extent
that any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case such representations and
warranties shall be true and correct without further qualification) as of the
date when made and as of the Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date.
d. The Company shall have executed and
delivered to such Buyer the Stock Certificates for the Common Stock being
purchased by such Buyer at the Closing.
e. The Company shall have executed and
delivered to each Buyer the Warrants being purchased by such Buyer at the
Closing.
f. As of the Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the exercise of the Warrants, 394,447 shares of Common
Stock.
g. The transactions contemplated hereby shall
not violate any law, regulation or order then in effect and applicable to Buyers
or the Company.
7. GOVERNING LAW; MISCELLANEOUS.
----------------------------
a. Governing Law. This Agreement shall be
governed by and interpreted in accordance with the laws of
the State of New York without regard to the principles of conflict of laws.
b. Counterparts. This Agreement may be executed
in two or more identical counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party. In the event any signature page
is delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
c. Headings. The headings of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement
supersedes all other prior oral or written agreements between the Buyers, the
Company, their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement and the instruments and documents
referenced herein contain the entire understanding of the parties with respect
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to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
f. Notices. Any notices, consents, waivers or
other communications required or permitted to be given under the terms of this
Agreement shall be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S. certified mail, return receipt requested;
(iii) three (3) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
if to the Company:
Capita Research Group, Inc.
591 Skippack Pike
Suite 300
Blue Bell, Pennsylvania 19422
Telephone: 215-619-7777
Facsimile: 215-619-0775
Attention: Chief Financial Officer
with a copy to:
Andrew J. Beck, Esq.
Torys
237 Park Avenue
New York, New York 10017
Facsimile: 212-682-0200
If to a Buyer, to its address on the Schedule of Buyers, with
copies to such Buyer's counsel. Each party shall provide five (5) days' prior
written notice to the other party of any change in address or facsimile number.
g. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Units. The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Buyers. A Buyer may assign some or all of its
rights hereunder without the consent of the Company, provided, however, that (i)
any such assignment shall not release such Buyer from its obligations hereunder
unless such obligations are assumed by such assignee and the Company has
consented to such assignment and assumption, and (ii) no Buyer may assign its
rights hereunder in a manner that would cause the offering of Securities
hereunder to be required to be registered under the 1933 Act.
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h. No Third Party Beneficiaries. This Agreement
is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other person.
i. Survival. The representations and warranties
of the Company and the Buyers contained in Sections 3 and 2, respectively, shall
survive the Closing until eighteen months after the Closing Date. The agreements
and covenants set forth in Sections 4, 5 and 6, shall survive the Closing. Each
Buyer shall be responsible only for his own representations, warranties,
agreements and covenants hereunder.
j. Publicity. The Company and each Buyer shall
have the right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of any
Buyer, to make any press release or other public disclosure with respect to such
transactions as is required by applicable law and regulations (although each
Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be provided
with a copy thereof), but only to the extent required by such law or regulation.
k. Further Assurances. Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
l. No Strict Construction. The language used in
this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied
against any party.
m. Equitable Relief. The Company recognizes
that in the event that it fails to perform, observe, or discharge any or all of
its obligations under this Agreement, any remedy at law may prove to be
inadequate relief to the Buyers. The Company therefore agrees that the Buyers
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
n. Consent to Jurisdiction. The parties hereto
expressly submit themselves to the exclusive jurisdiction of the state and
federal courts of New York in any action or proceeding relating to this
Agreement or any of the other documents contemplated hereby or any of the
transactions contemplated hereby or thereby. Each party hereby irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of venue of any such action, suit or proceeding
brought in such a court and any claim that any such action, suit or proceeding
brought in such a court has been brought in an inconvenient forum. The parties
hereto irrevocably and unconditionally consent to the service of process of any
of the aforementioned courts in any such action, suit or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, at
their respective addresses set forth or provided for herein, such service to
become effective 10 days after such mailing. Nothing herein shall affect the
right of any party to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against the other parties in any
other jurisdiction.
11
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o. Construction. References in this Agreement
to any gender shall include references to all genders. Unless the context
otherwise requires, references in the singular include references in the plural
and vice versa.
* * *
12
<PAGE>
IN WITNESS WHEREOF, each of the Buyers and the Company have
caused this Securities Purchase Agreement to be duly executed as of the date
first written above.
COMPANY:
CAPITA RESEARCH GROUP, INC.
By:/s/ David B. Hunter
----------------------
Name: David B. Hunter
Its: President
BUYERS:
/s/ Page Chapman, III
---------------------
Page Chapman, III
/s/ Larry Dinkin
----------------
Larry Dinkin
/s/ Howard Fischer
------------------
Howard Fischer
/s/ Rich Greenstein
-------------------
Rich Greenstein
/s/ Michael Levy
----------------
Michael Levy
/s/ Eric Pai
------------
Eric Pai
/s/ David G. Sandeloysky
------------------------
David G. Sandeloysky
/s/ Greg Silverstein
--------------------
Greg Silverstein
/s/ William Tai
---------------
William Tai
13
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/s/ Mark Van Fossan
-------------------
Mark Van Fossan
/s/ Cyril Visovsky
------------------
Cyril Visovsky
14
<PAGE>
SCHEDULE OF BUYERS
Number of State of
Investor Name and Address Units Residence
- ------------------------- ----- ---------
Page Chapman, III 27,778 New Jersey
P.O. Box 296
New Vernon, New Jersey 07976
Larry Dinkin
c/o Mike Destafano 27,778 New York
Ferrara, Destafano and Caporusso
900 Wheeler Rd
Suite 290
Happague, New York 11788
Howard Fischer 27,778 New York
36 Wampus Lake Dr.
Armonk, New York 10504
Rich Greenstein 33,333 New York
c/o Mike Destafano
Ferrara, Destafano and Caporusso
900 Wheeler Rd
Suite 290
Happague, New York 11788
Michael Levy 27,778 New York
Deutsche Bank
130 Liberty Street
35th Floor
New York, New York 10006
Eric Pai 27,778 New York
Deutsche Bank
130 Liberty Street
35th Floor
New York, New York 10006
Rob Reiner 27,778 New York
Deutsche Bank
130 Liberty Street
35th Floor
New York, New York 10006
Greg Silvershein 27,778 New Jersey
67 Summit Avenue
Summit, New Jersey 07901
15
<PAGE>
SCHEDULE OF BUYERS
Number of State of
Investor Name and Address Units Residence
- ------------------------- ----- ---------
David G. Sandelovsky 27,778 New Jersey
34 Deer Creek Drive
Basking Ridge, New Jersey 07920
William Tai 55,556 New York
2086 2nd Avenue
Apt. 13a
New York, New York 10029-4161
Mark Van Fossan 55,556 New Jersey
67 Summit Avenue
Summit, New Jersey 07901
Cyril Visovsky 27,778 New York
43 Brundidge Drive
Goldens Bridge, New York 10526
16
Exhibit 10(k)
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of
April 28, 2000, by and among Capita Research Group, Inc., a Nevada corporation,
with headquarters located at 591 Skippack Pike, Suite 300, Blue Bell,
Pennsylvania 19422 (the "Company"), and the investors listed on the Schedule of
Buyers attached hereto (individually, a "Buyer" and collectively, the "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 of Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act");
B. The Company has authorized the issuance of up to 38,780 of
the Company's units (the "Units"), each unit consisting of (i) one share of the
Company's common stock, $.001 par value per share (the "Common Stock"), and (ii)
one of the Company's Common Stock Purchase Warrants to purchase one share of the
Company's Common Stock exercisable at a purchase price of $1.35 per share of
Common Stock (the "Warrants") (such shares of Common Stock issued upon exercise
of the Warrants are hereinafter referred to as the "Warrant Shares", and
together with the Units, Common Stock and Warrants, the "Securities");
C. The Buyers wish to purchase, upon the terms and conditions
stated in this Agreement, an aggregate of up to $34,900 of Units in the
respective amounts set forth opposite each Buyer's name on the Schedule of
Buyers; and
D. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement dated as of the date hereof (the "Registration Rights Agreement")
pursuant to which the Company has agreed to provide certain registration rights
under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws.
NOW, THEREFORE, the Company and the Buyers hereby agree as
follows:
1. PURCHASE AND SALE OF UNITS
a. Purchase of Units. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 5 and 6 below,
the Company shall issue and sell to the Buyers and the Buyers shall purchase
from the Company an aggregate of up to 38,780 Units in the respective amounts
set forth opposite each Buyer's name on the Schedule of Buyers at the Closing
(the "Closing"). The per unit purchase price (the "Purchase Price") of the Units
shall be $.90 or an aggregate purchase price of up to $34,900. On the Closing
Date (as defined below), the Company shall issue to each Buyer (i) a stock
certificate(s) representing such number of the shares of Common Stock and (ii)
certificates representing such number of Warrants, which such Buyer is then
purchasing (as indicated opposite such Buyer's name on the Schedule of Buyers),
duly executed on behalf of the Company and registered in the name of such Buyer
or his designee (the "Stock Certificates").
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b. Closing Date. The date and time of the
Closing (the "Closing Date") shall be 5:00 p.m., Eastern Standard Time on April
28, 2000, subject to notification of satisfaction (or waiver) of the conditions
to the Closing set forth in Sections 5 and 6 below (or such later date as is
mutually agreed to by the Company and the Buyers). The Closing shall occur on
the Closing Date at the offices of Torys, 237 Park Avenue, New York, New York
10017.
c. Form of Payment. On or before the Closing
Date, each Buyer shall pay the Purchase Price to the Company for the Units to be
issued and sold to such Buyer at the Closing, by check or by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions provided to the Buyers prior to the Closing Date.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
--------------------------------------
Each Buyer represents and warrants with respect to only itself
that:
a. Investment Purpose. Such Buyer (i) is
purchasing the Units consisting of Common Stock and Warrants and (ii) upon
exercise of the Warrants, will acquire the Warrant Shares, then issuable for his
own account for investment only and not with a present view towards or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided, however,
that by making the representations herein, such Buyer does not agree to hold any
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status. Such Buyer is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D.
c. Reliance on Exemptions. Such Buyer
understands that the Units are being offered and sold to him in reliance on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon the truth
and accuracy of, and such Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Buyer set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Buyer to acquire the Units.
d. Information. Such Buyer and his advisors, if
any, have been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and sale of
the Units which have been requested by such Buyer. Such Buyer and his advisors,
if any, have been afforded the opportunity to ask questions of the Company.
Neither such inquiries nor any other due diligence investigations conducted by
such Buyer or his advisors, if any, or his representatives shall modify, amend
or affect such Buyer's right to rely on the Company's representations and
warranties contained in Section 3 below.
2
<PAGE>
e. No Governmental Review. Such Buyer
understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or
endorsement of the Units or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the
offering of the Units.
f. Transfer or Resale. Such Buyer understands
that except as provided in the Registration Rights Agreement: (i) the Securities
have not been and are not being registered under the 1933 Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, (B) such Buyer shall have
delivered to the Company an opinion of counsel, in a generally acceptable form,
to the effect that such Securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration,
or (C) such securities can be sold, assigned or transferred pursuant to Rule 144
promulgated under the 1933 Act (or a successor rule thereto) ("Rule 144"); (ii)
any sale of such securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of such securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder.
g. Legends. Such Buyer understands that the
certificates or other instruments representing the Warrants and, until such time
as the sale of the Common Stock or Warrant Shares have been registered under the
1933 Act as contemplated by the Registration Rights Agreement, the stock
certificates or other documents representing the Common Stock and Warrant Shares
except as set forth below, shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
certificates):
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE COMMON STOCK
ISSUABLE UPON EXERCISE OF SUCH WARRANTS HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Securities upon which it is
stamped, if (i) any such Securities are registered for sale under the 1933 Act,
(ii) in connection with a sale transaction, such holder provides the Company
with an opinion of counsel, in a generally acceptable form, to the effect that a
public sale, assignment or transfer of any of the Securities may be made without
registration under the 1933 Act, or (iii) any of the Securities can be sold
pursuant to Rule 144 without any restriction as to the number of securities
3
<PAGE>
acquired as of a particular date that can then be immediately sold. Each Buyer
acknowledges, covenants and agrees to sell any of the Securities represented by
a certificate(s) from which the legend has been removed, only pursuant to (i) a
registration statement effective under the 1933 Act, or (ii) advice of counsel
that such sale is exempt from registration required by Section 5 of the 1933
Act. In the event the above legend is removed from any of the Securities, the
Company may, upon reasonable advance notice to the holder, require that the
above legend be placed on any of the Securities that cannot then be sold
pursuant to an effective registration statement or Rule 144(k) under the 1933
Act (or any successor rule thereto).
h. Authorization; Enforcement. This Agreement
has been duly and validly authorized, executed and delivered on behalf of such
Buyer and is a valid and binding agreement of such Buyer enforceable in
accordance with its terms, subject as to enforceability to general principles of
equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.
i. Residency. Such Buyer is a resident of the
state specified opposite his name in the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
---------------------------------------------
The Company represents and warrants to each of the
Buyers that:
a. Organization and Qualification. The Company
and its subsidiaries are corporations duly incorporated and validly existing in
good standing under the laws of the jurisdiction in which they are incorporated,
and have the requisite corporate power to own their properties and to carry on
their business as now being conducted. Each of the Company and its subsidiaries
is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business conducted by
it makes such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a Material Adverse Effect.
"Material Adverse Effect" means any material adverse effect on (i) the business,
properties, operations, condition (financial or otherwise), or results of
operations of the Company and its subsidiaries, taken as a whole, (ii) on the
ability of the Company to perform its obligations hereunder, under the
Registration Rights Agreement or under the other agreements or instruments to be
entered into or filed in connection herewith or therewith, or (iii) the
Securities.
b. Authorization; Enforcement; Compliance with
Other Instruments. (i) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement, the
Warrants and the Registration Rights Agreement, (collectively, the "Closing
Agreements") to issue, sell and perform its obligations with respect to the
Units and Warrant Shares in accordance with the terms hereof and the Warrants
and to issue the Warrant Shares upon exercise of the Warrants, in accordance
with the terms and conditions of the Warrants, (ii) the execution and delivery
of the Closing Agreements by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the Common Stock and the Warrants and the reservation for issuance
and the issuance of the Warrant Shares upon exercise of the Warrants have been
4
<PAGE>
duly authorized by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
shareholders, (iii) the Closing Agreements have been duly executed and delivered
by the Company, and (iv) the Closing Agreements constitute the legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
c. Capitalization and Indebtedness. As of the
date hereof, the authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, of which as of the date hereof, 22,100,393 shares are
issued and outstanding and no shares of Preferred Stock. All of such outstanding
shares have been validly issued and are fully paid and nonassessable. No shares
of Common Stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company. Except as
disclosed in Schedule 3(c), as of the date hereof, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities, notes, credit agreements, or other agreements, documents or
instruments evidencing indebtedness of the Company or any of its subsidiaries or
by which the Company or any of its subsidiaries is or may become bound and (iii)
there are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement).
d. Issuance of Securities. The Securities are
duly authorized and, upon issuance in accordance with the terms hereof shall be
(i) validly issued, fully paid and non-assessable, (ii) free from all taxes,
liens and charges with respect to the issue thereof and are not and shall not be
subject to preemptive rights or other similar rights of stockholders of the
Company. Thirty-eight thousand seven hundred eighty (38,780) shares of Common
Stock have been duly authorized and reserved for issuance in connection with the
Units.
e. No Conflicts. The execution, delivery and
performance of the Closing Agreements by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Securities) will not (i) result in a violation
of the Articles of Incorporation or By-laws of the Company as in effect as of
the date hereof or (ii) except as disclosed in Schedule 3(e), violate or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or instrument
to which the Company or any of its subsidiaries is a party, or result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and regulations
of the principal market or exchange on which the Common Stock is traded or
listed) applicable to the Company or any of its subsidiaries or by which any
property or asset of the Company or any of its subsidiaries is bound or
affected. Neither the Company nor its subsidiaries are in violation of any term
of or in default under the Articles of Incorporation or By-laws of the Company
or their organizational charter or by-laws as in effect as of the date hereof,
respectively, or in violation of any term of or in default under any contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or
5
<PAGE>
order or any statute, rule or regulation applicable to the Company or its
subsidiaries, except for violations or defaults which would not, individually or
in the aggregate, have a Material Adverse Effect. The business of the Company
and its subsidiaries is not being conducted in violation of any law, ordinance
or regulation of any governmental entity, which violations, individually or in
the aggregate, would have a Material Adverse Effect. Except as specifically
contemplated by this Agreement and as required under the 1933 Act or state
securities or "Blue Sky" laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental or regulatory or self-regulatory agency in order for it to
execute, deliver or perform any of its obligations under or contemplated by this
Agreement, the Registration Rights Agreement or the Warrants in accordance with
the terms hereof or thereof. Except as disclosed in Schedule 3(e), all consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. The Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.
f. Acknowledgment Regarding Buyers' Purchase of
the Securities. The Company acknowledges and agrees that each of the Buyers is
acting solely in the capacity of arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that each Buyer is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to this Agreement and
the transactions contemplated hereby and any advice given by any of the Buyers
or any of their respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely incidental to such
Buyer's purchase of the Securities. The Company further represents to each Buyer
that the Company's decision to enter into this Agreement has been based solely
on the independent evaluation by the Company and its representatives.
g. No General Solicitation. Neither the
Company, nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the 1933 Act) in connection with the
offer or sale of any of the Securities offered hereby.
h. No Integrated Offering. Neither the Company,
nor any of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of any of the Securities under the 1933 Act or cause the offering
of any of the Securities to be integrated with prior offerings by the Company
for purposes of the 1933 Act or any applicable shareholder approval provisions.
6
<PAGE>
i. Disclosure. All information relating to or
concerning the Company or any of its subsidiaries set forth in this Agreement
and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in
connection with the transactions contemplated hereby is true and correct in all
material respects and the Company has not omitted to state any material fact
necessary in order to make the statements made herein or therein, in light of
the circumstances under which they were made, not misleading. No event or
circumstance has occurred or information exists with respect to the Company or
any of its subsidiaries or its or their business, properties, operations or
financial condition, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed (assuming for this purpose that the Company's
reports filed under the Securities Exchange Act of 1934, as amended (the "1934
Act") are being incorporated into an effective registration statement filed by
the Company under the 1933 Act). The Company has not provided any Buyer with any
material non-public information nor any projections or assurance regarding the
future financial performance of the Company.
4. COVENANTS AND AGREEMENTS.
------------------------
a. Best Efforts. Each party shall use its best
efforts timely to satisfy each of the conditions to be satisfied by it as
provided in Sections 5 and 6 of this Agreement.
b. Form D. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D. The Company
shall, on or before the Closing Date, take such action as the Company shall
reasonably determine is necessary to qualify the Securities for, or obtain
exemption for the Securities for, sale to the Buyers at the Closing pursuant to
this Agreement under applicable securities or "Blue Sky" laws of the states of
the United States.
c. Reporting Status. Until the earlier of (i)
six months after the date as of which the Investors (as that term is defined in
the Registration Rights Agreement) may sell all of the Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto) or (ii) the date which is six months after the date on which none of
the Securities are outstanding (the "Registration Period"), the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
d. Use of Proceeds. The Company will use the
proceeds from the sale of the Securities for working capital and general
corporate purposes and shall not otherwise, directly or indirectly, use such
proceeds for any loan to or investment in any other corporation, partnership,
enterprise or other person (except in connection with its direct or indirect
subsidiaries) or for the repurchase, redemption or retirement of any capital
stock of the Company.
e. Financial Information. The Company agrees to
file all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting requirements of the 1934
Act. The financial statements of the Company will be prepared in accordance with
generally accepted accounting principles, consistently applied (except for any
required changes in such principles), and will fairly present in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries and results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
7
<PAGE>
f. Reservation of Shares. The Company shall
take all action necessary to at all times have
authorized, and reserved for the purpose of issuance, no less than 38,780 shares
of Common Stock to provide for the issuance of the Warrant Shares upon exercise
of the Warrants in accordance with the terms of this Agreement and the Warrants.
g. Disclosure. From and after the date hereof,
the Company will not provide to any Buyer any material non-public information
which, according to applicable law, rule or regulation should be disclosed
publicly by the Company but which has not been so disclosed.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
The obligation of the Company hereunder to issue and sell the
Units to each Buyer at the Closing is subject to the satisfaction, with respect
to each Buyer, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:
a. Such Buyer shall have executed this
Agreement and the Registration Rights Agreement and delivered the same to the
Company.
b. Such Buyer shall have delivered to the
Company the Purchase Price for the Units being purchased by such Buyer at the
Closing by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
c. The representations and warranties of such
Buyer shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and such Buyer
shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Buyer at or prior to the Closing Date.
d. The transactions contemplated hereby shall
not violate any law, regulation or order then in effect and applicable to such
Buyer or the Company.
6. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
-------------------------------------------------
The obligation of each Buyer hereunder to purchase the Units
is subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for each Buyer's sole
benefit and may be waived by such Buyer at any time in its sole discretion:
a. The Company shall have executed this
Agreement, the Warrants and the Registration Rights Agreement, and delivered the
same to such Buyer.
b. Trading in the Common Stock or Warrant
Shares issuable upon the conversion of the Warrants shall not have been
suspended by the SEC.
8
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c.
The representations and warranties of the
Company shall be true and correct in all material respects (except to the extent
that any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case such representations and
warranties shall be true and correct without further qualification) as of the
date when made and as of the Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date.
d. The Company shall have executed and
delivered to such Buyer the Stock Certificates for the Common Stock being
purchased by such Buyer at the Closing.
e. The Company shall have executed and
delivered to each Buyer the Warrants being purchased by such Buyer at the
Closing.
f. As of the Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the exercise of the Warrants, 38,780 shares of Common
Stock.
g. The transactions contemplated hereby shall
not violate any law, regulation or order then in effect and applicable to Buyers
or the Company.
7. GOVERNING LAW; MISCELLANEOUS.
----------------------------
a. Governing Law. This Agreement shall be
governed by and interpreted in accordance with the laws of the State of New York
without regard to the principles of conflict of laws.
b. Counterparts. This Agreement may be executed
in two or more identical counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party. In the event any signature page
is delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
c. Headings. The headings of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
9
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e. Entire Agreement; Amendments. This Agreement
supersedes all other prior oral or written agreements between the Buyers, the
Company, their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement and the instruments and documents
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
f. Notices. Any notices, consents, waivers or
other communications required or permitted to be given under the terms of this
Agreement shall be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S. certified mail, return receipt requested;
(iii) three (3) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
if to the Company:
Capita Research Group, Inc.
591 Skippack Pike
Suite 300
Blue Bell, Pennsylvania 19422
Telephone: 215-619-7777
Facsimile: 215-619-0775
Attention: Chief Financial Officer
with a copy to:
Andrew J. Beck, Esq.
Torys
237 Park Avenue
New York, New York 10017
Facsimile: 212-682-0200
If to a Buyer, to its address on the Schedule of Buyers, with
copies to such Buyer's counsel. Each party shall provide five (5) days' prior
written notice to the other party of any change in address or facsimile number.
g. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Units. The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Buyers. A Buyer may assign some or all of its
rights hereunder without the consent of the Company, provided, however, that (i)
any such assignment shall not release such Buyer from its obligations hereunder
unless such obligations are assumed by such assignee and the Company has
consented to such assignment and assumption, and (ii) no Buyer may assign its
rights hereunder in a manner that would cause the offering of Securities
hereunder to be required to be registered under the 1933 Act.
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<PAGE>
h. No Third Party Beneficiaries. This Agreement
is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
i. Survival. The representations and warranties
of the Company and the Buyers contained in Sections 3 and 2, respectively, shall
survive the Closing until eighteen months after the Closing Date. The agreements
and covenants set forth in Sections 4, 5 and 6, shall survive the Closing. Each
Buyer shall be responsible only for his own representations, warranties,
agreements and covenants hereunder.
j. Publicity. The Company and each Buyer shall
have the right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of any
Buyer, to make any press release or other public disclosure with respect to such
transactions as is required by applicable law and regulations (although each
Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be provided
with a copy thereof), but only to the extent required by such law or regulation.
k. Further Assurances. Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
l. No Strict Construction. The language used in
this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied
against any party.
m. Equitable Relief. The Company recognizes
that in the event that it fails to perform, observe, or discharge any or all of
its obligations under this Agreement, any remedy at law may prove to be
inadequate relief to the Buyers. The Company therefore agrees that the Buyers
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
n. Consent to Jurisdiction. The parties hereto
expressly submit themselves to the exclusive jurisdiction of the state and
federal courts of New York in any action or proceeding relating to this
Agreement or any of the other documents contemplated hereby or any of the
transactions contemplated hereby or thereby. Each party hereby irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of venue of any such action, suit or proceeding
brought in such a court and any claim that any such action, suit or proceeding
brought in such a court has been brought in an inconvenient forum. The parties
hereto irrevocably and unconditionally consent to the service of process of any
of the aforementioned courts in any such action, suit or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, at
their respective addresses set forth or provided for herein, such service to
become effective 10 days after such mailing. Nothing herein shall affect the
right of any party to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against the other parties in any
other jurisdiction.
11
<PAGE>
o. Construction. References in this Agreement
to any gender shall include references to all genders. Unless the context
otherwise requires, references in the singular include references in the plural
and vice versa.
* * *
12
<PAGE>
IN WITNESS WHEREOF, each of the Buyers and the Company have
caused this Securities Purchase Agreement to be duly executed as of the date
first written above.
COMPANY:
CAPITA RESEARCH GROUP, INC.
By: /s/ David B. Hunter
-----------------------
Name: David B. Hunter
Its: President
BUYERS:
/s/ William Brown
-----------------
William Brown
/s/ Susan Gress
---------------
Susan Gress
/s/ Michael Lauria
------------------
Michael Lauria
/s/ Michael Loia
----------------
Michael Loia
s/ Laura Smith
--------------
Laura Smith
/s/ Anthony Spatacco, Jr.
-------------------------
Anthony Spatacco, Jr.
/s/ Anthony Spatacco, Sr.
-------------------------
Anthony Spatacco, Sr.
13
<PAGE>
SCHEDULE OF BUYERS
Number of State of
Investor Name and Address Units Residence
------------------------- ----- ---------
William Brown 5,556 New Jersey
825 Mountain Avenue
Westfield, New Jersey 07090
556 Pennsylvania
Susan Gress
1092 Edgehill Road
Abington, Pennsylvania 19001-4412
Michael Lauria 6,000 Pennsylvania
104 Diane Drive
Broomall, Pennsylvania 19008
Michael Loia 10,000 Pennsylvania
1272 Farm Road
Berwyn, Pennsylvania 19312
Laura Smith 5,556 Pennsylvania
1900 Rittenhouse Square
Philadelphia, Pennsylvania 19103
Anthony Spatacco, Jr. 5,556 Pennsylvania
Times Building, 2nd Floor
Ardmore, Pennsylvania 19003
Anthony Spatacco, Sr. 5,556 Pennsylvania
111 Academy Lane
Broomall, Pennsylvania 19008
14
Exhibit 10(l)
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of
April 28, 2000, by and between Capita Research Group, Inc., a Nevada
corporation, with headquarters located at 591 Skippack Pike, Suite 300, Blue
Bell, Pennsylvania 19422 (the "Company"), and Richard D'Avanzo (the "Buyer").
WHEREAS:
A. The Company and the Buyer is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
B. The Company has authorized the issuance of up to 40,000 of
the Company's units (the "Units"), each unit consisting of (i) one share of the
Company's common stock, $.001 par value per share (the "Common Stock"), and (ii)
one of the Company's Common Stock Purchase Warrants to purchase one share of the
Company's Common Stock exercisable at a purchase price of $1.35 per share of
Common Stock (the "Warrants") (such shares of Common Stock issued upon exercise
of the Warrants are hereinafter referred to as the "Warrant Shares," and
together with the Units, Common Stock and Warrants, the "Securities");
C. The Buyer wishes to purchase, upon the terms and conditions
stated in this Agreement, an aggregate of $36,000 of Units; and
D. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement (the "Registration Rights Agreement") pursuant to which the Company
has agreed to provide certain registration rights under the 1933 Act and the
rules and regulations promulgated thereunder, and applicable state securities
laws.
NOW, THEREFORE, the Company and the Buyer hereby agree as
follows:
1. PURCHASE AND SALE OF UNITS
a. Purchase of Units. Subject to the satisfaction(or
waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall
issue and sell to the Buyer and the Buyer shall purchase from the Company an
aggregate of [ ] Units at the Closing (the "Closing"). The per unit purchase
price (the "Purchase Price") of the Units shall be $.90 or an aggregate purchase
price of $36,000. On the Closing Date (as defined below), the Company shall
issue and deliver to the Buyer (i) a stock certificate(s) representing such
number of the shares of Common Stock and (ii) certificates representing such
number of Warrants which the Buyer is then purchasing, duly executed on behalf
of the Company and registered in the name of the Buyer or his designee (the
"Stock Certificates").
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<PAGE>
b. Closing Date. The date and time of the Closing
(the "Closing Date") shall be 1:00 p.m. Eastern Standard Time on April 18, 2000,
subject to notification of satisfaction (or waiver) of the conditions to the
Closing set forth in Sections 6 and 7 below (or such later date as is mutually
agreed to by the Company and the Buyer). The Closing shall occur on the Closing
Date at the offices of Torys, 237 Park Avenue, New York, New York 10017.
c. Form of Payment. On or before the Closing Date,
the Buyer shall pay the Purchase Price to the Company for the Units to be issued
and sold to the Buyer at the Closing, by check or by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions provided to the Buyer prior to the Closing Date.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
--------------------------------------
The Buyer represents and warrants that:
a. Investment Purpose. The Buyer (i) is purchasing
the Units consisting of Common Stock and Warrants and (ii) upon exercise of the
Warrants, will acquire the Warrant Shares, then issuable for his own account for
investment only and not with a present view towards or for resale in connection
with, the public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, that by making the
representations herein, the Buyer does not agree to hold any Securities for any
minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act.
b. Accredited Investor Status. The Buyer is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D.
c. Reliance on Exemptions.The Buyer understands that
the Units are being offered and sold to him in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
the Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Units.
d. Information. The Buyer and his advisors, if any,
have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Units which have been requested by the Buyer. The Buyer and his advisors, if
any, have been afforded the opportunity to ask questions of the Company. Neither
such inquiries nor any other due diligence investigations conducted by the Buyer
or his advisors, if any, or his representatives shall modify, amend or affect
the Buyer's right to rely on the Company's representations and warranties
contained in Section 3 below.
2
<PAGE>
e. No Governmental Review.The Buyer understands that
no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Units or
the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the Units.
f. Transfer or Resale. The Buyer understands that
except as provided in the Registration Rights Agreement: (i) the Securities have
not been and are not being registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) the Buyer shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, to the effect
that such Securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration, or (C) such
securities can be sold, assigned or transferred pursuant to Rule 144 promulgated
under the 1933 Act (or a successor rule thereto) ("Rule 144"); (ii) any sale of
such securities made in reliance on Rule 144 may be made only in accordance with
the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of
such securities under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the 1933 Act) may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register
such securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
g. Legends. The Buyer understands that the
certificates or other instruments representing the Warrants and, until such time
as the sale of the Common Stock or Warrant Shares have been registered under the
1933 Act as contemplated by the Registration Rights Agreement, the stock
certificates or other documents representing the Common Stock and Warrant Shares
except as set forth below, shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
certificates):
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE COMMON STOCK
ISSUABLE UPON EXERCISE OF SUCH WARRANTS HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Securities upon which it is
stamped, if (i) any such Securities are registered for sale under the 1933 Act,
(ii) in connection with a sale transaction, such holder provides the Company
with an opinion of counsel, in a generally acceptable form, to the effect that a
public sale, assignment or transfer of any of the Securities may be made without
registration under the 1933 Act, or (iii) any of the Securities can be sold
pursuant to Rule 144 without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold. The Buyer
acknowledges, covenants and agrees to sell any of the Securities represented by
a certificate(s) from which the legend has been removed, only pursuant to (i) a
registration statement effective under the 1933 Act, or (ii) advice of counsel
that such sale is exempt from registration required by Section 5 of the 1933
Act. In the event the above legend is removed from any of the Securities, the
Company may, upon reasonable advance notice to the holder, require that the
above legend be placed on any of the Securities that cannot then be sold
pursuant to an effective registration statement or Rule 144(k) under the 1933
Act (or any successor rule thereto).
3
<PAGE>
h. Authorization; Enforcement. This Agreement has
been duly and validly authorized, executed and delivered on behalf of the Buyer
and is a valid and binding agreement of the Buyer enforceable in accordance with
its terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
i. Residency.The Buyer is a resident of the state of
New Jersey.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
---------------------------------------------
The Company represents and warrants to the Buyer
that:
a. Organization and Qualification. The Company and
its subsidiaries are corporations duly incorporated and validly existing in good
standing under the laws of the jurisdiction in which they are incorporated, and
have the requisite corporate power to own their properties and to carry on their
business as now being conducted. Each of the Company and its subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect.
"Material Adverse Effect" means any material adverse effect on (i) the business,
properties, operations, condition (financial or otherwise), or results of
operations of the Company and its subsidiaries, taken as a whole, (ii) on the
ability of the Company to perform its obligations hereunder, under the
Registration Rights Agreement or under the other agreements or instruments to be
entered into or filed in connection herewith or therewith, or (iii) the
Securities.
b. Authorization; Enforcement; Compliance with Other
Instruments. (i) The Company has the requisite corporate power and authority to
enter into and perform its obligations under this Agreement, the Warrants and
the Registration Rights Agreement, (collectively, the "Closing Agreements") to
issue, sell and perform its obligations with respect to the Units and Warrant
Shares in accordance with the terms hereof and the Warrants and to issue the
Warrant Shares upon exercise of the Warrants, in accordance with the terms and
conditions of the Warrants, (ii) the execution and delivery of the Closing
Agreements by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Common Stock and the Warrants and the reservation for issuance and the
issuance of the Warrant Shares upon exercise of the Warrants have been duly
authorized by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
shareholders, (iii) the Closing Agreements have been duly executed and delivered
by the Company, and (iv) the Closing Agreements constitute the legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
4
<PAGE>
c. Capitalization and Indebtedness. As of the date
hereof, the authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, of which as of the date hereof, 21,705,946 shares are
issued and outstanding and no shares of Preferred Stock. All of such outstanding
shares have been validly issued and are fully paid and nonassessable. No shares
of Common Stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company. Except as
disclosed in Schedule 3(c), as of the date hereof, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities, notes, credit agreements, or other agreements, documents or
instruments evidencing indebtedness of the Company or any of its subsidiaries or
by which the Company or any of its subsidiaries is or may become bound and (iii)
there are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement).
d. Issuance of Securities. The Securities are duly
authorized and, upon issuance in accordance with the terms hereof shall be (i)
validly issued, fully paid and non-assessable, (ii) free from all taxes, liens
and charges with respect to the issue thereof and are not and shall not be
subject to preemptive rights or other similar rights of stockholders of the
Company. Forty thousand (40,000) shares of Common Stock have been duly
authorized and reserved for issuance in connection with the Units.
e. No Conflicts. The execution, delivery and
performance of the Closing Agreements by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Securities) will not (i) result in a violation
of the Articles of Incorporation or By-laws of the Company as in effect on the
date hereof, or (ii) except as disclosed in Schedule 3(e), violate or conflict
with, or result in a breach of any provision of, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the
Company or any of its subsidiaries is a party, or result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and the rules and regulations of the principal
market or exchange on which the Common Stock is traded or listed) applicable to
the Company or any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected. Neither the Company nor
its subsidiaries are in violation of any term of or in default under the
Articles of Incorporation or By-laws of the Company or their organizational
charter or by-laws as in effect on the date hereof, respectively, or in
violation of any term of or in default under any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its subsidiaries, except for
violations or defaults which would not, individually or in the aggregate, have a
Material Adverse Effect. The business of the Company and its subsidiaries is not
being conducted in violation of any law, ordinance or regulation of any
5
<PAGE>
governmental entity, which violations, individually or in the aggregate, would
have a Material Adverse Effect. Except as specifically contemplated by this
Agreement and as required under the 1933 Act or applicable state securities or
"Blue Sky" laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental or regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement, the Registration Rights Agreement or the Warrants in accordance with
the terms hereof or thereof. Except as disclosed in Schedule 3(e), all consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. The Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.
f. Acknowledgment Regarding Buyer's Purchase of the
Securities. The Company acknowledges and agrees that the Buyer is acting solely
in the capacity of arm's length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that the
Buyer is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer or any of his
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to the Buyer's purchase of the
Securities. The Company further represents to the Buyer that the Company's
decision to enter into this Agreement has been based solely on the independent
evaluation by the Company and its representatives.
g. No General Solicitation. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning
of Regulation D under the 1933 Act) in connection with the offer or sale of any
of the Securities offered hereby.
h. No Integrated Offering. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of any of the Securities under the 1933 Act or cause the offering
of any of the Securities to be integrated with prior offerings by the Company
for purposes of the 1933 Act or any applicable shareholder approval provisions.
i. Disclosure. To the Company's knowledge, all
information relating to or concerning the Company or any of its subsidiaries set
forth in this Agreement and provided to the Buyer pursuant to Section 2(d)
hereof and otherwise in connection with the transactions contemplated hereby is
true and correct in all material respects and the Company has not omitted to
state any material fact necessary in order to make the statements made herein or
therein, in light of the circumstances under which they were made, not
misleading. No event or circumstance has occurred or information exists with
respect to the Company or any of its subsidiaries or its or their business,
properties, operations or financial condition, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed (assuming for this purpose
that the Company's reports filed under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), are being incorporated into an effective registration
statement filed by the Company under the 1933 Act). The Company has not provided
the Buyer with any material non-public information nor any projections or
assurance regarding the future financial performance of the Company.
6
<PAGE>
4. COVENANTS AND AGREEMENTS.
------------------------
a. Best Efforts. Each party shall use its best
efforts timely to satisfy each of the conditions to be satisfied by it as
provided in Sections 6 and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D. The Company shall, on
or before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for, or obtain exemption for
the Securities for, sale to the Buyer at the Closing pursuant to this Agreement
under applicable securities or "Blue Sky" laws of the states of the United
States.
c. Reporting Status. Until the earlier of (i) six
months after the date as of which the Investors (as that term is defined in the
Registration Rights Agreement) may sell all of the Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto) or (ii) the date which is six months after the date on which none of
the Securities are outstanding (the "Registration Period"), the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
d. Use of Proceeds.The Company will use the proceeds
from the sale of the Securities for working capital and general corporate
purposes and shall not otherwise, directly or indirectly, use such proceeds for
any loan to or investment in any other corporation, partnership, enterprise or
other person (except in connection with its direct or indirect subsidiaries) or
for the repurchase, redemption or retirement of any capital stock of the
Company.
e. Financial Information. The Company agrees to file
all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of the 1934 Act.
The financial statements of the Company will be prepared in accordance with
generally accepted accounting principles, consistently applied (except for any
required changes in such principles), and will fairly present in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries and results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
f. Reservation of Shares. The Company shall take all
action necessary to at all times have authorized, and reserved for the purpose
of issuance, no less than 40,000 shares of Common Stock to provide for the
issuance of the Warrant Shares upon exercise of the Warrants in accordance with
the terms of this Agreement and the Warrants.
7
<PAGE>
g. Disclosure. From and after the date hereof, the
Company will not provide to the Buyer any material non-public information which,
according to applicable law, rule or regulation should be disclosed publicly by
the Company but which has not been so disclosed.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
The obligation of the Company hereunder to issue and sell the
Units to the Buyer at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
a. The Buyer shall have executed this Agreement and
the Registration Rights Agreement and delivered the same to the Company.
b. The Buyer shall have delivered to the Company the
Purchase Price for the Units being purchased by the Buyer at the Closing by wire
transfer of immediately available funds pursuant to the wire instructions
provided by the Company.
c. The representations and warranties of the Buyer
shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the Closing Date.
d. The transactions contemplated hereby shall not
violate any law, regulation or order then in effect and applicable to the Buyer
or the Company.
6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
------------------------------------------------
The obligation of the Buyer hereunder to purchase the Units is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Buyer's sole
benefit and may be waived by the Buyer at any time in its sole discretion:
a. The Company shall have executed this Agreement,
the Warrants and the Registration Rights Agreement, and delivered the same to
the Buyer.
b. Trading in the Common Stock or Warrant Shares
issuable upon the conversion of the Warrants shall not have been suspended by
the SEC.
c. The representations and warranties of the Company
shall be true and correct in all material respects (except to the extent that
any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case such representations and
warranties shall be true and correct without further qualification) as of the
date when made and as of the Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date.
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d. The Company shall have executed and delivered to
the Buyer the Stock Certificates for the Common Stock being purchased by the
Buyer at the Closing.
e. The Company shall have executed and delivered to
the Buyer the Warrants being purchased by the Buyer at the Closing.
f. As of the Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for the purpose
of effecting the exercise of the Warrants, 40,000 shares of Common Stock.
g. The transactions contemplated hereby shall not
violate any law, regulation or order then in effect and applicable to the Buyer
or the Company.
7. GOVERNING LAW; MISCELLANEOUS.
----------------------------
a. Governing Law.This Agreement shall be governed by
and interpreted in accordance with the laws of the State of New York without
regard to the principles of conflict of laws.
b. Counterparts. This Agreement may be executed in
two or more identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement
supersedes all other prior oral or written agreements between the Buyer, the
Company, their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement and the instruments and documents
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
9
<PAGE>
f. Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement shall be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S. certified mail, return receipt requested;
(iii) three (3) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
if to the Company:
Capita Research Group, Inc.
591 Skippack Pike
Suite 300
Blue Bell, Pennsylvania 19422
Telephone: 215-619-7777
Facsimile: 215-619-0775
Attention: Chief Financial Officer
with a copy to:
Andrew J. Beck, Esq.
Torys
237 Park Avenue
New York, New York 10017
Facsimile: 212-682-0200
if to the Buyer:
Richard D'Avanzo
30 Sleepy Hollow Lane
Belle Meade, New Jersey 08502-4513
Each party shall provide five (5) days' prior written notice
to the other party of any change in address or facsimile number.
g. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Units. The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Buyer. The Buyer may assign some or all of his
rights hereunder without the consent of the Company, provided, however, that (i)
any such assignment shall not release the Buyer from his obligations hereunder
unless such obligations are assumed by such assignee and the Company has
consented to such assignment and assumption, and (ii) the Buyer may not assign
his rights hereunder in a manner that would cause the offering of Securities
hereunder to be required to be registered under the 1933 Act.
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h. No Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
i. Survival. The representations and warranties of
the Company and the Buyer contained in Sections 3 and 2, respectively, shall
survive the Closing until eighteen months after the Closing Date. The agreements
and covenants set forth in Sections 4, 5 and 7 shall survive the Closing.
j. Publicity. The Company and the Buyer shall have
the right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of the
Buyer, to make any press release or other public disclosure with respect to such
transactions as is required by applicable law and regulations (although the
Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be provided
with a copy thereof), but only to the extent required by such law or regulation.
k. Further Assurances. Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
l. No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
m. Equitable Relief. The Company recognizes that in
the event that it fails to perform, observe, or discharge any or all of its
obligations under this Agreement, any remedy at law may prove to be inadequate
relief to the Buyer. The Company therefore agrees that the Buyer shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.
n. Consent to Jurisdiction. The parties hereto
expressly submit themselves to the exclusive jurisdiction of the state and
federal courts of New York in any action or proceeding relating to this
Agreement or any of the other documents contemplated hereby or any of the
transactions contemplated hereby or thereby. Each party hereby irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of venue of any such action, suit or proceeding
brought in such a court and any claim that any such action, suit or proceeding
11
<PAGE>
brought in such a court has been brought in an inconvenient forum. The parties
hereto irrevocably and unconditionally consent to the service of process of any
of the aforementioned courts in any such action, suit or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, at
their respective addresses set forth or provided for herein, such service to
become effective 10 days after such mailing. Nothing herein shall affect the
right of any party to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against the other parties in any
other jurisdiction.
* * *
12
<PAGE>
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY:
CAPITA RESEARCH GROUP, INC.
By: /s/ David B. Hunter
-----------------------
Name: David B. Hunter
Its: President
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THE BUYER:
/s/ Richard D'Avanzo
--------------------
Richard D'Avanzo
14
Exhibit 10(p)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of March 6, 2000 (this
"Agreement") between Capita Research Group, Inc., a Nevada corporation (the
"Company"), and David G. Sandelovsky (the "Stockholder").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
between the Company and the Stockholder and dated of even date herewith (the
"Securities Purchase Agreement"), the Company has agreed, upon the terms and
subject to the conditions of the Securities Purchase Agreement, to issue and
sell to the Stockholder 100,000 of the Company's units (the "Units"), each unit
consisting of (i) one share of the Company's common stock, $.001 par value per
share (the "Common Stock"), (ii) one of the Company's A Common Stock Purchase
Warrants to purchase one share of the Company's Common Stock exercisable at a
purchase price of $.50 per share of Common Stock (the "A Warrant") and (iii) one
of the Company's B Common Stock Purchase Warrants to purchase one share of the
Company's Common Stock exercisable at a purchase price of $1.00 per share of
Common Stock (the "B Warrant," and together with the A Warrant, the "Warrants")
(such shares of Common Stock issued upon exercise of the Warrants are
hereinafter referred to as the "Warrant Shares," and together with the Units,
Common Stock and the Warrants, the "Securities"); and
B. To induce the Stockholder to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the conditions and promises herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Registration of Common Stock. (a) In the event that, at any
time, the Company proposes to register the sale of any shares of its Common
Stock, to be issued by the Company or sold by any holder of shares of Common
Stock (the "Registration Shares") under the Securities Act, other than pursuant
to a registration statement on Forms S-4 or S-8, or any successor to such Forms,
for the purpose of the issuance, sale or other transfer of the Registration
Shares by the Company or such holder, the Company shall mail or deliver to the
Stockholder at least 25 days prior to the filing of the registration statement
covering such Registration Shares, a written notice (a "Registration Notice") of
its intention so to register the Registration Shares, and specifying the date by
which the Supplemental Notice referred to in Section 1(b) below must be returned
to the Company.
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<PAGE>
(b) In the event that a Registration Notice shall have been so
mailed or delivered, the Stockholder, at such person's election, may mail or
deliver to the Company a written notice (a "Supplemental Notice") (i) specifying
the number of shares of Common Stock ("Supplemental Registration Shares") held
by the Stockholder or issued or issuable upon the exercise of Warrants proposed
to be sold or otherwise transferred by the Stockholder, (ii) describing the
proposed manner of sale or other transfer thereof and (iii) requesting the
registration thereof under the Securities Act; provided, however, that such
Supplemental Notice shall be so mailed or delivered by the Stockholder not more
than 15 days after the date of the Registration Notice.
(c) From and after receipt of a Supplemental Notice, the
Company shall, subject to the prior sale or other transfer of some or all of
such Registration Shares, use its reasonable best efforts to cause the
Supplemental Registration Shares specified in such Supplemental Notice to be
registered under the Securities Act and to effect and to comply with all such
regulatory qualifications and requirements as may be necessary to permit the
sale or other transfer of such Supplemental Registration Shares in the manner
described in such Supplemental Notice, including, without limitation,
qualifications under applicable blue sky or other state securities laws
(provided that the Company shall not be required in connection therewith to
qualify as a foreign corporation or to execute a general consent to service of
process in any jurisdiction); provided, however, that (i) if in the case of an
underwritten public offering of the Registration Shares the managing underwriter
shall advise the Company that the inclusion of some or all of such Supplemental
Registration Shares would, in such managing underwriter's judgment, materially
interfere with the proposed distribution of the Registration Shares, then the
Company may, upon written notice to the Stockholder, reduce or eliminate the
Supplemental Registration Shares otherwise to be included in the registration
statement (if and to the extent such reduction or elimination is indicated by
such managing underwriter as necessary to eliminate such interference), (ii) if
any firm of counsel representing the Company in connection with such
registration or representing the Stockholder that is reasonably satisfactory to
the Company shall advise the Company and the Stockholder in writing that in its
opinion the registration under the Securities Act contemplated hereby is not
necessary to permit the sale of the Supplemental Registration Shares in the
intended method of disposition by the Stockholder, then the Company shall not be
required to take any action with respect to such registration or other steps
contemplated hereby, (iii) the Company shall have the right to delay or abandon
such registration at any time in the event that the Board of Directors of the
Company determines in good faith that such delay or abandonment is in the best
interest of the Company, and (iv) in the case of an underwritten public
offering, the right of the Stockholder to registration pursuant to this Section
1 shall be conditioned upon the Stockholder's participation in the applicable
underwriting arrangements and execution of the applicable underwriting
agreement.
2
<PAGE>
(d) If and whenever the Company is required by the provisions
of this Section 1 to use its reasonable best efforts to effect the registration
under the Securities Act of any securities requested to be so registered by the
Stockholder, the Company will, as promptly as practicable:
(i) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with
respect to such securities and use its reasonable best efforts
to cause such registration statement to become effective;
3
<PAGE>
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a
period from the date of the effectiveness thereof through the
earlier of (1) the date which is nine (9) months after the
date of effectiveness thereof and (2) the date on which all
Supplemental Registration Shares included in such registration
statement shall have been sold or otherwise disposed of by the
Stockholder pursuant to such registration statement, and to
comply with the provisions of the Securities Act with respect
to the sale or other disposition of all shares of Common Stock
covered by such registration statement whenever the
Stockholder shall desire to sell or otherwise dispose of the
same within such period;
(iii) furnish to the Stockholder such number of
copies of a prospectus, including a preliminary prospectus and
final prospectus, in conformity with the requirements of the
Securities Act, and such other documents as may reasonably be
requested thereby in order to facilitate the public sale or
other disposition of such shares of Common Stock owned
thereby;
(iv) notify the Stockholder promptly of any request
by the Commission for the amendment or supplement of such
registration statement or prospectus or for additional
information, and notify the Stockholder promptly of the filing
of each amendment or supplement to such registration statement
or prospectus;
(v) advise the Stockholder, promptly after it shall
receive notice, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding
for that purpose and promptly use its reasonable best efforts
to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued; and
(vi) notify the Stockholder, in writing, at any time
when a prospectus relating to such shares of Common Stock is
required to be delivered under the Securities Act within the
appropriate period mentioned in clause (ii) immediately
preceding, of the happening of any event as a result of which
the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing,
and promptly prepare (and file with the Commission) and
furnish to the Stockholder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers
of such shares of Common Stock, such prospectus shall not
include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances then existing.
4
<PAGE>
(e) The Stockholder agrees to furnish the Company such
information regarding itself and the proposed distribution of Supplemental
Registration Shares by the Stockholder as the Company may from time to time
reasonably request in writing in order to prepare a registration statement and
prospectus or any supplement or amendment thereto pursuant to the Securities Act
and the rules and regulations promulgated thereunder.
(f) The Stockholder agrees that, upon receipt of a written
notice from the Company of the happening of any event of the kind described in
clause (vi) of Section 1(d) above, it will forthwith discontinue its disposition
of Supplemental Registration Shares pursuant to the registration statement
relating to such Supplemental Registration Shares until its receipt of the
copies of the supplemented or amended prospectus contemplated by clause (vi) of
Section 1(d) above and, if so requested by the Company in writing, will deliver
to the Company (at the Company's expense) all copies then in its possession,
other than permanent file copies, of the prospectus relating to such
Supplemental Registration Shares; provided, however, that in the event that the
Stockholder discontinues its disposition of Supplemental Registration Shares
pursuant to the foregoing provisions, the nine month period for the
effectiveness of the registration statement shall be extended by the period
during which the Stockholder discontinued its disposition.
(g) The Company shall pay all expenses (the "Registration
Expenses") necessary to effect under the Securities Act any registration
statements, amendments or supplements filed pursuant to this Section 1 (other
than any underwriters' discounts and commissions and any brokerage commissions
and fees payable with respect to shares of Common Stock sold by the Stockholder
and legal fees and expenses of counsel to the Stockholder), including, without
limitation, printing expenses, fees of the Commission and the National
Association of Securities Dealers, Inc., expenses of compliance with blue sky
and other state securities laws, and accounting and legal fees and expenses of
counsel to the Company.
(h) The Stockholder agrees that, in the event the Company
files a registration statement under the Securities Act with respect to an
underwritten public offering of any securities of the Company for cash,
primarily for the account of the Company, in which the Stockholder was permitted
to participate (whether or not the Stockholder does in fact participate), if
required by an underwriter, the Stockholder will not effect any public sale or
distribution, including any sale pursuant to Rule 144 promulgated under the
Securities Act, of any equity securities of the Company or any securities
convertible into or exchangeable or exercisable for any equity security of the
Company (other than as part of such underwritten public offering) during the
seven days prior to, and such period after (not to exceed in any event 180
days), the effectiveness of such registration statement as may be required by
such underwriter.
5
<PAGE>
(i) In the event of any registration pursuant to this Section
1 covering shares of Common Stock beneficially owned by the Stockholder, the
Company will indemnify and hold harmless the Stockholder, and each person or
entity, if any, who controls the Stockholder within the meaning of the
Securities Act (collectively, the "Indemnitees") against any losses, claims,
damages, costs, expenses (including reasonable attorneys' fees), or liabilities
(or actions in respect thereof) to which the Stockholder or controlling person
or entity becomes subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages, costs, expenses or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the related registration
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made; provided, however, that the
Company will not be liable in any such case to an Indemnitee to the extent that
any such loss, claim, damage, cost, expense or liability arises out of or is
primarily based upon (x) an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, preliminary
prospectus, prospectus or amendment or supplement in reliance upon and in
conformity with written information furnished by any Indemnitee, specifically
for use in the preparation thereof or (y) such Indemnitee's failure to deliver a
copy of the prospectus or any amendments or supplements thereto (if required by
applicable law) to the person asserting any loss, claim, damage or liability
after the Company has furnished such Indemnitee with the same. The Company also
agrees to reimburse each Indemnitee for any legal or other expenses reasonably
incurred by such Indemnitee in connection with investigating or defending any
such loss, claim, damage, liability or action.
(j) In the event of any registration pursuant to this Section
1 covering shares of Common Stock beneficially owned by the Stockholder, the
Stockholder shall indemnify and hold harmless the Company, each of its directors
and officers who has signed any registration statement, and each person or
entity, if any, who controls the Company within the meaning of the Securities
Act, against any losses, claims, damages, costs, expenses (including reasonable
attorneys' fees) or liabilities (or actions in respect thereof) to which the
Company or any such director, officer, or controlling person becomes subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages,
costs, expenses or liabilities (or actions in respect thereof) primarily arise
out of or are based upon any untrue or alleged untrue statement of any material
fact contained in the related registration statement, and any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or primarily arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made, in each case to the extent, but only to
the extent, that such loss, claim, damage, cost, expense or liability primarily
arises out of or is based upon (x) an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
preliminary prospectus, prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished by the Stockholder specifically
for use in the preparation thereof or (y) the Stockholder's failure to deliver a
copy of the prospectus or any amendments or supplements thereto (if required by
applicable law) to the person asserting any loss, claim, damage or liability
after the Company has furnished the Stockholder with the same. The Stockholder
shall reimburse any legal or other expenses reasonably incurred by the Company
or any such director, officer, or controlling person or entity in connection
with investigating or defending any such loss, claim, damage, liability or
action. The liability of the Stockholder pursuant to this Section 1(j) shall be
limited to the total proceeds from the offering (net of sales commissions)
received by the Stockholder.
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(k) Promptly after receipt by an indemnified party under this
Section 1 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 1, notify the indemnifying party of the commencement
thereof; provided, however, that failure to so notify the indemnifying party
shall not affect an indemnifying party's obligations hereunder, except to the
extent that the indemnifying party is materially prejudiced by such failure. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. It is understood,
however, that the indemnifying party shall, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time.
(l) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
(m) With respect to any underwritten offering, the Stockholder
(if shares of Common Stock of the Stockholder are included in the subject
registration statement) and the Company shall, in addition to the foregoing,
provide the underwriter of such offering with customary representations and
warranties, and indemnification and contribution, in each instance as shall be
reasonably requested by the underwriter, provided, however, that any such
agreement to indemnify an underwriter with respect to any preliminary prospectus
shall not inure to the benefit of any such underwriter to the extent that any
loss, claim, damage, cost, expense or liability of any such underwriter results
solely from an untrue statement of material fact contained in, or the omission
7
<PAGE>
of a material fact from, such preliminary prospectus which untrue statement or
omission was corrected in the final prospectus, if such underwriter failed to
send or give a copy of the final prospectus to the person asserting such loss,
claim, damage, cost, expense or liability at or prior to the written
confirmation of the sale of such securities to such person, and provided further
that any such agreement by the Stockholder to indemnify an underwriter shall be
on a several (and not joint) basis in proportion to the number of securities
sold by the Stockholder in such underwritten offering and shall be limited in
amount to the net proceeds received by the Stockholder in such underwritten
offering.
(n) If the indemnification provided for in this Section 1 is
unavailable to any indemnified party with respect to any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, will contribute to the
amount paid or payable by such indemnified party, as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnified party
on the one hand, and the indemnifying party on the other hand, from the offering
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnified party on the one hand, and of the indemnifying party on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative benefits received by the
indemnified party on the one hand, and the indemnifying party on the other hand,
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of sales commissions) received by the indemnified party relative
to such proceeds received by the indemnifying party. The relative fault of the
indemnified party on the one hand, and the indemnifying party on the other hand,
will be determined with reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnified party or the
indemnifying party, and its relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
payable by a party as a result of the losses, claims, damages, liabilities or
expenses referred to above will be deemed to include, subject to the limitations
set forth in Section 1(o) below, any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
(o) The indemnified party and the indemnifying party agree
that it would not be just and equitable if contribution pursuant to this Section
1 were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to in
Section 1(n). No person committing fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution or indemnification from any person not committing such fraudulent
misrepresentation.
2. Legend and Compliance with Securities Laws. (a) The stock
certificates evidencing the shares of Common Stock of the Stockholder subject to
this Agreement shall bear a legend reading substantially as follows:
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<PAGE>
"The Shares represented by this Certificate have not
been registered under the Securities Act of 1933, as amended
(the "Act"), but have been issued pursuant to an exemption
from such registration. Neither such Shares nor any interest
therein may be sold, transferred, pledged, hypothecated or
otherwise disposed of until either (i) the holder thereof
shall have received an opinion from counsel reasonably
satisfactory to the Company that registration thereof under
the Act is not required or (ii) a registration statement under
the Act covering such Shares or such interest and the
disposition thereof shall have become effective under the
Act."
(b) In the event that a registration statement covering the
shares of Common Stock of the Company owned by the Stockholder which are subject
to this Agreement shall become effective under the Securities Act and under any
applicable state securities laws or in the event that the Company shall receive
an opinion of counsel to the holder of such shares of Common Stock in form and
substance reasonably satisfactory to the Company that, in the opinion of such
counsel, the above stated legend is not, or is no longer, necessary or required
under applicable law (including, without limitation, because of the availability
of the exemption afforded by Rule 144(k) promulgated under the Securities Act),
the Company shall, or shall instruct its transfer agents and registrars to,
remove the above stated legend from the stock certificates evidencing such
shares of Common Stock or issue new certificates without such legend in lieu
thereof.
(c) The Stockholder consents to the Company making a notation
on its records and giving instructions to any transfer agent for the Common
Stock in order to implement the restrictions on transfer established in this
Section 2.
3. Reorganization, Etc.The provisions of this Agreement shall
apply mutatis mutandi to any shares of capital stock resulting from any stock
split or reverse split, stock dividend, reclassification of the capital stock of
the Company, consolidation, merger or reorganization of the Company, and any
shares or other securities of the Company or of any successor company which may
be received by the Stockholder (and/or its successors, permitted assigns, legal
representatives and heirs) by virtue of its ownership of Common Stock or other
capital stock of the Company.
4. Notices. Any notice or other communication under this
Agreement shall be in writing and sufficient if delivered personally, by
telecopy or sent by registered or certified mail, postage prepaid, addressed as
follows:
If to the Company:
Capita Research Group, Inc.
591 Shippack Pike, Suite 300
Blue Bell, Pennsylvania 19422
Attention: President
Telecopy: (215) 619-0775
Telephone: (215) 619-7777
9
<PAGE>
If to the Stockholder:
Mr. David G. Sandelovsky
34 Deer Creek Drive
Basking Ridge, New Jersey 07920
Telephone: (908) 647-4201
Facsimile: (908) 647-4201
All such notices and communications shall be deemed to have been duly given at
the time delivered by hand, if personally delivered, upon receipt, if sent by
telecopy, or three (3) business days after being deposited in the mail, if sent
by registered or certified mail. Any party may, upon written notice to the other
parties hereto, change the address to which notices or other communications to
such party are to be delivered or mailed.
5. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
6. Entire Agreement. This Agreement contains the entire
agreement among the parties hereto with respect to the subject matter hereof.
This Agreement may be amended or modified or any provision hereof may be waived
by a written agreement between the Stockholder and the Company. This Agreement
supersedes all prior understandings, negotiations and agreements relating to the
subject matter hereof.
7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to any conflict of laws principles of such State which would apply the laws of
any other jurisdiction.
8. Jurisdiction; Waiver of Trial by Jury. THE PARTIES HERETO
HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY PENNSYLVANIA STATE OR
UNITED STATES FEDERAL COURT SITTING IN THE CITY OF PHILADELPHIA OVER ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH PENNSYLVANIA STATE OR FEDERAL COURT. THE PARTIES
AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. THE PARTIES FURTHER WAIVE TRIAL BY JURY, ANY
OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO ANY ACTION OR PROCEEDING
IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. THE PARTIES FURTHER AGREE
THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL
BE BROUGHT ONLY IN A PENNSYLVANIA STATE OR UNITED STATES FEDERAL COURT SITTING
IN THE CITY OF PHILADELPHIA.
10
<PAGE>
9. Headings. The headings in this Agreement are solely for
convenience of reference and shall not affect the interpretation of any of the
provisions hereof.
10. Severability. If any provision herein contained shall be
held to be illegal or unenforceable, such holding shall not affect the validity
or enforceability of the other provisions of this Agreement.
11. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company, the Stockholder, each of their respective
successors, permitted assigns, executors, administrators, legal representatives
and heirs, as applicable.
12. Construction. The parties hereto agree that this Agreement
is the product of negotiations between sophisticated parties and individuals,
all of whom were represented by counsel, and each of whom had an opportunity to
participate in, and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentum.
* * *
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed
this Registration Rights Agreement on the date first above written.
CAPITA RESEARCH GROUP, INC.
By: /s/ David B. Hunter
-------------------
Name: David B. Hunter
Title: President
/s/ David G. Sandelovsky
------------------------
David G. Sandelovsky
Exhibit 10(q)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of March 9, 2000 (this
"Agreement") between Capita Research Group, Inc., a Nevada corporation (the
"Company"), and Dwight Nelson (the "Stockholder").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
between the Company and the Stockholder and dated of even date herewith (the
"Securities Purchase Agreement"), the Company has agreed, upon the terms and
subject to the conditions of the Securities Purchase Agreement, to issue and
sell to the Stockholder 50,000 of the Company's units (the "Units"), each unit
consisting of (i) one share of the Company's common stock, $.001 par value per
share (the "Common Stock"), (ii) one of the Company's A Common Stock Purchase
Warrants to purchase one share of the Company's Common Stock exercisable at a
purchase price of $.50 per share of Common Stock (the "A Warrant") and (iii) one
of the Company's B Common Stock Purchase Warrants to purchase one share of the
Company's Common Stock exercisable at a purchase price of $1.00 per share of
Common Stock (the "B Warrant," and together with the A Warrant, the "Warrants")
(such shares of Common Stock issued upon exercise of the Warrants are
hereinafter referred to as the "Warrant Shares", and together with the Units,
Common Stock and the Warrants, the "Securities"); and
B. To induce the Stockholder to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the conditions and promises herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Registration of Common Stock. (a) In the event that, at any
time, the Company proposes to register the sale of any shares of its Common
Stock, to be issued by the Company or sold by any holder of shares of Common
Stock (the "Registration Shares") under the Securities Act, other than pursuant
to a registration statement on Forms S-4 or S-8, or any successor to such Forms,
for the purpose of the issuance, sale or other transfer of the Registration
Shares by the Company or such holder, the Company shall mail or deliver to the
Stockholder at least 25 days prior to the filing of the registration statement
covering such Registration Shares, a written notice (a "Registration Notice") of
its intention so to register the Registration Shares, and specifying the date by
which the Supplemental Notice referred to in Section 1(b) below must be returned
to the Company.
<PAGE>
(b) In the event that a Registration Notice shall have been so
mailed or delivered, the Stockholder, at such person's election, may mail or
deliver to the Company a written notice (a "Supplemental Notice") (i) specifying
the number of shares of Common Stock ("Supplemental Registration Shares") held
by the Stockholder or issued or issuable upon the exercise of Warrants proposed
to be sold or otherwise transferred by the Stockholder, (ii) describing the
proposed manner of sale or other transfer thereof and (iii) requesting the
registration thereof under the Securities Act; provided, however, that such
Supplemental Notice shall be so mailed or delivered by the Stockholder not more
than 15 days after the date of the Registration Notice.
(c) From and after receipt of a Supplemental Notice, the
Company shall, subject to the prior sale or other transfer of some or all of
such Registration Shares, use its reasonable best efforts to cause the
Supplemental Registration Shares specified in such Supplemental Notice to be
registered under the Securities Act and to effect and to comply with all such
regulatory qualifications and requirements as may be necessary to permit the
sale or other transfer of such Supplemental Registration Shares in the manner
described in such Supplemental Notice, including, without limitation,
qualifications under applicable blue sky or other state securities laws
(provided that the Company shall not be required in connection therewith to
qualify as a foreign corporation or to execute a general consent to service of
process in any jurisdiction); provided, however, that (i) if in the case of an
underwritten public offering of the Registration Shares the managing underwriter
shall advise the Company that the inclusion of some or all of such Supplemental
Registration Shares would, in such managing underwriter's judgment, materially
interfere with the proposed distribution of the Registration Shares, then the
Company may, upon written notice to the Stockholder, reduce or eliminate the
Supplemental Registration Shares otherwise to be included in the registration
statement (if and to the extent such reduction or elimination is indicated by
such managing underwriter as necessary to eliminate such interference), (ii) if
any firm of counsel representing the Company in connection with such
registration or representing the Stockholder that is reasonably satisfactory to
the Company shall advise the Company and the Stockholder in writing that in its
opinion the registration under the Securities Act contemplated hereby is not
necessary to permit the sale of the Supplemental Registration Shares in the
intended method of disposition by the Stockholder, then the Company shall not be
required to take any action with respect to such registration or other steps
contemplated hereby, (iii) the Company shall have the right to delay or abandon
such registration at any time in the event that the Board of Directors of the
Company determines in good faith that such delay or abandonment is in the best
interest of the Company, and (iv) in the case of an underwritten public
offering, the right of the Stockholder to registration pursuant to this Section
1 shall be conditioned upon the Stockholder's participation in the applicable
underwriting arrangements and execution of the applicable underwriting
agreement.
(d) If and whenever the Company is required by the provisions
of this Section 1 to use its reasonable best efforts to effect the registration
under the Securities Act of any securities requested to be so registered by the
Stockholder, the Company will, as promptly as practicable:
<PAGE>
(i) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with
respect to such securities and use its reasonable best efforts
to cause such registration statement to become effective;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a
period from the date of the effectiveness thereof through the
earlier of (1) the date which is nine (9) months after the
date of effectiveness thereof and (2) the date on which all
Supplemental Registration Shares included in such registration
statement shall have been sold or otherwise disposed of by the
Stockholder pursuant to such registration statement, and to
comply with the provisions of the Securities Act with respect
to the sale or other disposition of all shares of Common Stock
covered by such registration statement whenever the
Stockholder shall desire to sell or otherwise dispose of the
same within such period;
(iii) furnish to the Stockholder such number of
copies of a prospectus, including a preliminary prospectus and
final prospectus, in conformity with the requirements of the
Securities Act, and such other documents as may reasonably be
requested thereby in order to facilitate the public sale or
other disposition of such shares of Common Stock owned
thereby;
(iv) notify the Stockholder promptly of any request
by the Commission for the amendment or supplement of such
registration statement or prospectus or for additional
information, and notify the Stockholder promptly of the filing
of each amendment or supplement to such registration statement
or prospectus;
(v) advise the Stockholder, promptly after it shall
receive notice, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding
for that purpose and promptly use its reasonable best efforts
to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued; and
(vi) notify the Stockholder, in writing, at any time
when a prospectus relating to such shares of Common Stock is
required to be delivered under the Securities Act within the
appropriate period mentioned in clause (ii) immediately
preceding, of the happening of any event as a result of which
the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing,
and promptly prepare (and file with the Commission) and
furnish to the Stockholder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers
of such shares of Common Stock, such prospectus shall not
include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances then existing.
<PAGE>
(e) The Stockholder agrees to furnish the Company such
information regarding itself and the proposed distribution of Supplemental
Registration Shares by the Stockholder as the Company may from time to time
reasonably request in writing in order to prepare a registration statement and
prospectus or any supplement or amendment thereto pursuant to the Securities Act
and the rules and regulations promulgated thereunder.
(f) The Stockholder agrees that, upon receipt of a written
notice from the Company of the happening of any event of the kind described in
clause (vi) of Section 1(d) above, it will forthwith discontinue its disposition
of Supplemental Registration Shares pursuant to the registration statement
relating to such Supplemental Registration Shares until its receipt of the
copies of the supplemented or amended prospectus contemplated by clause (vi) of
Section 1(d) above and, if so requested by the Company in writing, will deliver
to the Company (at the Company's expense) all copies then in its possession,
other than permanent file copies, of the prospectus relating to such
Supplemental Registration Shares; provided, however, that in the event that the
Stockholder discontinues its disposition of Supplemental Registration Shares
pursuant to the foregoing provisions, the nine month period for the
effectiveness of the registration statement shall be extended by the period
during which the Stockholder discontinued its disposition.
(g) The Company shall pay all expenses (the "Registration
Expenses") necessary to effect under the Securities Act any registration
statements, amendments or supplements filed pursuant to this Section 1 (other
than any underwriters' discounts and commissions and any brokerage commissions
and fees payable with respect to shares of Common Stock sold by the Stockholder
and legal fees and expenses of counsel to the Stockholder), including, without
limitation, printing expenses, fees of the Commission and the National
Association of Securities Dealers, Inc., expenses of compliance with blue sky
and other state securities laws, and accounting and legal fees and expenses of
counsel to the Company.
(h) The Stockholder agrees that, in the event the Company
files a registration statement under the Securities Act with respect to an
underwritten public offering of any securities of the Company for cash,
primarily for the account of the Company, in which the Stockholder was permitted
to participate (whether or not the Stockholder does in fact participate), if
required by an underwriter, the Stockholder will not effect any public sale or
distribution, including any sale pursuant to Rule 144 promulgated under the
Securities Act, of any equity securities of the Company or any securities
convertible into or exchangeable or exercisable for any equity security of the
Company (other than as part of such underwritten public offering) during the
seven days prior to, and such period after (not to exceed in any event 180
days), the effectiveness of such registration statement as may be required by
such underwriter.
<PAGE>
(i) In the event of any registration pursuant to this Section
1 covering shares of Common Stock beneficially owned by the Stockholder, the
Company will indemnify and hold harmless the Stockholder, and each person or
entity, if any, who controls the Stockholder within the meaning of the
Securities Act (collectively, the "Indemnitees") against any losses, claims,
damages, costs, expenses (including reasonable attorneys' fees), or liabilities
(or actions in respect thereof) to which the Stockholder or controlling person
or entity becomes subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages, costs, expenses or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the related registration
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made; provided, however, that the
Company will not be liable in any such case to an Indemnitee to the extent that
any such loss, claim, damage, cost, expense or liability arises out of or is
primarily based upon (x) an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, preliminary
prospectus, prospectus or amendment or supplement in reliance upon and in
conformity with written information furnished by any Indemnitee, specifically
for use in the preparation thereof or (y) such Indemnitee's failure to deliver a
copy of the prospectus or any amendments or supplements thereto (if required by
applicable law) to the person asserting any loss, claim, damage or liability
after the Company has furnished such Indemnitee with the same. The Company also
agrees to reimburse each Indemnitee for any legal or other expenses reasonably
incurred by such Indemnitee in connection with investigating or defending any
such loss, claim, damage, liability or action.
(j) In the event of any registration pursuant to this Section
1 covering shares of Common Stock beneficially owned by the Stockholder, the
Stockholder shall indemnify and hold harmless the Company, each of its directors
and officers who has signed any registration statement, and each person or
entity, if any, who controls the Company within the meaning of the Securities
Act, against any losses, claims, damages, costs, expenses (including reasonable
attorneys' fees) or liabilities (or actions in respect thereof) to which the
Company or any such director, officer, or controlling person becomes subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages,
costs, expenses or liabilities (or actions in respect thereof) primarily arise
out of or are based upon any untrue or alleged untrue statement of any material
fact contained in the related registration statement, and any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or primarily arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made, in each case to the extent, but only to
the extent, that such loss, claim, damage, cost, expense or liability primarily
arises out of or is based upon (x) an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
preliminary prospectus, prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished by the Stockholder specifically
for use in the preparation thereof or (y) the Stockholder's failure to deliver a
copy of the prospectus or any amendments or supplements thereto (if required by
applicable law) to the person asserting any loss, claim, damage or liability
after the Company has furnished the Stockholder with the same. The Stockholder
shall reimburse any legal or other expenses reasonably incurred by the Company
or any such director, officer, or controlling person or entity in connection
with investigating or defending any such loss, claim, damage, liability or
action. The liability of the Stockholder pursuant to this Section 1(j) shall be
limited to the total proceeds from the offering (net of sales commissions)
received by the Stockholder.
<PAGE>
(k) Promptly after receipt by an indemnified party under this
Section 1 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 1, notify the indemnifying party of the commencement
thereof; provided, however, that failure to so notify the indemnifying party
shall not affect an indemnifying party's obligations hereunder, except to the
extent that the indemnifying party is materially prejudiced by such failure. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. It is understood,
however, that the indemnifying party shall, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time.
(l) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
(m) With respect to any underwritten offering, the Stockholder
(if shares of Common Stock of the Stockholder are included in the subject
registration statement) and the Company shall, in addition to the foregoing,
provide the underwriter of such offering with customary representations and
warranties, and indemnification and contribution, in each instance as shall be
reasonably requested by the underwriter, provided, however, that any such
agreement to indemnify an underwriter with respect to any preliminary prospectus
shall not inure to the benefit of any such underwriter to the extent that any
loss, claim, damage, cost, expense or liability of any such underwriter results
<PAGE>
solely from an untrue statement of material fact contained in, or the omission
of a material fact from, such preliminary prospectus which untrue statement or
omission was corrected in the final prospectus, if such underwriter failed to
send or give a copy of the final prospectus to the person asserting such loss,
claim, damage, cost, expense or liability at or prior to the written
confirmation of the sale of such securities to such person, and provided further
that any such agreement by the Stockholder to indemnify an underwriter shall be
on a several (and not joint) basis in proportion to the number of securities
sold by the Stockholder in such underwritten offering and shall be limited in
amount to the net proceeds received by the Stockholder in such underwritten
offering.
(n) If the indemnification provided for in this Section 1 is
unavailable to any indemnified party with respect to any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, will contribute to the
amount paid or payable by such indemnified party, as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnified party
on the one hand, and the indemnifying party on the other hand, from the offering
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnified party on the one hand, and of the indemnifying party on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative benefits received by the
indemnified party on the one hand, and the indemnifying party on the other hand,
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of sales commissions) received by the indemnified party relative
to such proceeds received by the indemnifying party. The relative fault of the
indemnified party on the one hand, and the indemnifying party on the other hand,
will be determined with reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnified party or the
indemnifying party, and its relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
payable by a party as a result of the losses, claims, damages, liabilities or
expenses referred to above will be deemed to include, subject to the limitations
set forth in Section 1(o) below, any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
(o) The indemnified party and the indemnifying party agree
that it would not be just and equitable if contribution pursuant to this Section
1 were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to in
Section 1(n). No person committing fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution or indemnification from any person not committing such fraudulent
misrepresentation.
<PAGE>
2. Legend and Compliance with Securities Laws. (a) The
stock certificates evidencing the shares of Common Stock of the Stockholder
subject to this Agreement shall bear a legend reading substantially as follows:
"The Shares represented by this Certificate have not
been registered under the Securities Act of 1933, as amended
(the "Act"), but have been issued pursuant to an exemption
from such registration. Neither such Shares nor any interest
therein may be sold, transferred, pledged, hypothecated or
otherwise disposed of until either (i) the holder thereof
shall have received an opinion from counsel reasonably
satisfactory to the Company that registration thereof under
the Act is not required or (ii) a registration statement under
the Act covering such Shares or such interest and the
disposition thereof shall have become effective under the
Act."
(b) In the event that a registration statement covering the
shares of Common Stock of the Company owned by the Stockholder which are subject
to this Agreement shall become effective under the Securities Act and under any
applicable state securities laws or in the event that the Company shall receive
an opinion of counsel to the holder of such shares of Common Stock in form and
substance reasonably satisfactory to the Company that, in the opinion of such
counsel, the above stated legend is not, or is no longer, necessary or required
under applicable law (including, without limitation, because of the availability
of the exemption afforded by Rule 144(k) promulgated under the Securities Act),
the Company shall, or shall instruct its transfer agents and registrars to,
remove the above stated legend from the stock certificates evidencing such
shares of Common Stock or issue new certificates without such legend in lieu
thereof.
(c) The Stockholder consents to the Company making a notation
on its records and giving instructions to any transfer agent for the Common
Stock in order to implement the restrictions on transfer established in this
Section 2.
3. Reorganization, Etc. The provisions of this Agreement shall
apply mutatis mutandi to any shares of capital stock resulting from any stock
split or reverse split, stock dividend, reclassification of the capital stock of
the Company, consolidation, merger or reorganization of the Company, and any
shares or other securities of the Company or of any successor company which may
be received by the Stockholder (and/or its successors, permitted assigns, legal
representatives and heirs) by virtue of its ownership of Common Stock or other
capital stock of the Company.
4. Notices. Any notice or other communication under this
Agreement shall be in writing and sufficient if elivered personally, by telecopy
or sent by registered or certified mail, postage prepaid, addressed as follows:
If to the Company:
Capita Research Group, Inc.
591 Shippack Pike, Suite 300
Blue Bell, Pennsylvania 19422
Attention: President
Telecopy: (215) 619-0775
Telephone: (215) 619-7777
If to the Stockholder:
Mr. Dwight Nelson
57 Strawberry Hill
Norwalk, Connecticut 06855
Facsimile: (203) 861-4989
Telephone: (203) 324-8425
<PAGE>
All such notices and communications shall be deemed to have been duly given at
the time delivered by hand, if personally delivered, upon receipt, if sent by
telecopy, or three (3) business days after being deposited in the mail, if sent
by registered or certified mail. Any party may, upon written notice to the other
parties hereto, change the address to which notices or other communications to
such party are to be delivered or mailed.
5. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
6. Entire Agreement. This Agreement contains the entire
agreement among the parties hereto with respect to the subject matter hereof.
This Agreement may be amended or modified or any provision hereof may be waived
by a written agreement between the Stockholder and the Company. This Agreement
supersedes all prior understandings, negotiations and agreements relating to the
subject matter hereof.
7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to any conflict of laws principles of such State which would apply the laws of
any other jurisdiction.
8. Jurisdiction; Waiver of Trial by Jury. THE PARTIES HERETO
HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY PENNSYLVANIA STATE OR
UNITED STATES FEDERAL COURT SITTING IN THE CITY OF PHILADELPHIA OVER ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH PENNSYLVANIA STATE OR FEDERAL COURT. THE PARTIES
AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. THE PARTIES FURTHER WAIVE TRIAL BY JURY, ANY
OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO ANY ACTION OR PROCEEDING
IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. THE PARTIES FURTHER AGREE
THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL
BE BROUGHT ONLY IN A PENNSYLVANIA STATE OR UNITED STATES FEDERAL COURT SITTING
IN THE CITY OF PHILADELPHIA.
<PAGE>
9. Headings. The headings in this Agreement are solely for
convenience of reference and shall not affect the interpretation of any of the
provisions hereof.
10. Severability. If any provision herein contained shall be
held to be illegal or unenforceable, such holding shall not affect the validity
or enforceability of the other provisions of this Agreement.
11. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company, the Stockholder, each of their respective
successors, permitted assigns, executors, administrators, legal representatives
and heirs, as applicable.
12. Construction. The parties hereto agree that this Agreement
is the product of negotiations between sophisticated parties and individuals,
all of whom were represented by counsel, and each of whom had an opportunity to
participate in, and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentum.
* * *
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed
this Registration Rights Agreement on the date first above written.
CAPITA RESEARCH GROUP, INC.
By: /s/ David B. Hunter
-------------------
Name: David B. Hunter
Title: President
/s/ Dwight Nelson
-----------------
Dwight Nelson
Exhibit 10(r)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of April 19, 2000 (this
"Agreement") between Capita Research Group, Inc., a Nevada corporation (the
"Company"), and the undersigned stockholders (each, a "Stockholder" and
collectively, the "Stockholders").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
between the Company and the Stockholders and dated of even date herewith (the
"Securities Purchase Agreement"), the Company has agreed, upon the terms and
subject to the conditions of the Securities Purchase Agreement, to issue and
sell to the Stockholders up to 394,447 of the Company's units (the "Units"),
each unit consisting of (i) one share of the Company's common stock, $.001 par
value per share (the "Common Stock"), and (ii) one of the Company's Common Stock
Purchase Warrants to purchase one share of the Company's Common Stock
exercisable at a purchase price of $1.35 per share of Common Stock (the
"Warrants"); and
B. To induce the Stockholders to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the conditions and promises herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Registration of Common Stock. (a) In the event that, at any
time, the Company proposes to register the sale of any shares of its Common
Stock, to be issued by the Company or sold by any holder of shares of Common
Stock (the "Registration Shares") under the Securities Act, other than pursuant
to a registration statement on Forms S-4 or S-8, or any successor to such Forms,
for the purpose of the issuance, sale or other transfer of the Registration
Shares by the Company or such holder, the Company shall mail or deliver to each
Stockholder at least 25 days prior to the filing of the registration statement
covering such Registration Shares, a written notice (a "Registration Notice") of
its intention so to register the Registration Shares, and specifying the date by
which the Supplemental Notice referred to in Section 1(b) below must be returned
to the Company.
<PAGE>
(b) In the event that a Registration Notice shall have been so
mailed or delivered, each Stockholder, at such person's election, may mail or
deliver to the Company a written notice (a "Supplemental Notice") (i) specifying
the number of shares of Common Stock ("Supplemental Registration Shares") held
by such Stockholder or issued or issuable upon the exercise of Warrants proposed
to be sold or otherwise transferred by such Stockholder, (ii) describing the
proposed manner of sale or other transfer thereof and (iii) requesting the
registration thereof under the Securities Act; provided, however, that such
Supplemental Notice shall be so mailed or delivered by such Stockholder not more
than 15 days after the date of the Registration Notice.
(c) From and after receipt of a Supplemental Notice, the
Company shall, subject to the prior sale or other transfer of some or all of
such Registration Shares, use its reasonable best efforts to cause the
Supplemental Registration Shares specified in such Supplemental Notice to be
registered under the Securities Act and to effect and to comply with all such
regulatory qualifications and requirements as may be necessary to permit the
sale or other transfer of such Supplemental Registration Shares in the manner
described in such Supplemental Notice, including, without limitation,
qualifications under applicable blue sky or other state securities laws
(provided that the Company shall not be required in connection therewith to
qualify as a foreign corporation or to execute a general consent to service of
process in any jurisdiction); provided, however, that (i) if in the case of an
underwritten public offering of the Registration Shares the managing underwriter
shall advise the Company that the inclusion of some or all of such Supplemental
Registration Shares would, in such managing underwriter's judgment, materially
interfere with the proposed distribution of the Registration Shares, then the
Company may, upon written notice to such Stockholder, reduce or eliminate the
Supplemental Registration Shares otherwise to be included in the registration
statement (if and to the extent such reduction or elimination is indicated by
such managing underwriter as necessary to eliminate such interference), (ii) if
any firm of counsel representing the Company in connection with such
registration or representing such Stockholder that is reasonably satisfactory to
the Company shall advise the Company and such Stockholder in writing that in its
opinion the registration under the Securities Act contemplated hereby is not
necessary to permit the sale of the Supplemental Registration Shares in the
intended method of disposition by such Stockholder, then the Company shall not
be required to take any action with respect to such registration or other steps
contemplated hereby, (iii) the Company shall have the right to delay or abandon
such registration at any time in the event that the Board of Directors of the
Company determines in good faith that such delay or abandonment is in the best
interest of the Company, and (iv) in the case of an underwritten public
offering, the right of such Stockholder to registration pursuant to this Section
1 shall be conditioned upon such Stockholder's participation in the applicable
underwriting arrangements and execution of the applicable underwriting
agreement.
(d) If and whenever the Company is required by the provisions
of this Section 1 to use its reasonable best efforts to effect the registration
under the Securities Act of any securities requested to be so registered by a
Stockholder, the Company will, as promptly as practicable:
(i) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with
respect to such securities and use its reasonable best efforts
to cause such registration statement to become effective;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a
period from the date of the effectiveness thereof through the
earlier of (1) the date which is nine (9) months after the
date of effectiveness thereof and (2) the date on which all
Supplemental Registration Shares included in such registration
statement shall have been sold or otherwise disposed of by
such Stockholder pursuant to such registration statement, and
to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all shares of
Common Stock covered by such registration statement whenever
such Stockholder shall desire to sell or otherwise dispose of
the same within such period;
<PAGE>
(iii) furnish to such Stockholder such number of
copies of a prospectus, including a preliminary prospectus and
final prospectus, in conformity with the requirements of the
Securities Act, and such other documents as may reasonably be
requested thereby in order to facilitate the public sale or
other disposition of such shares of Common Stock owned
thereby;
(iv) notify such Stockholder promptly of any request
by the Commission for the amendment or supplement of such
registration statement or prospectus or for additional
information, and notify such Stockholder promptly of the
filing of each amendment or supplement to such registration
statement or prospectus;
(v) advise such Stockholder, promptly after it shall
receive notice, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding
for that purpose and promptly use its reasonable best efforts
to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued; and
(vi) notify such Stockholder, in writing, at any time
when a prospectus relating to such shares of Common Stock is
required to be delivered under the Securities Act within the
appropriate period mentioned in clause (ii) immediately
preceding, of the happening of any event as a result of which
the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing,
and promptly prepare (and file with the Commission) and
furnish to such Stockholder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers
of such shares of Common Stock, such prospectus shall not
include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances then existing.
(e) Each Stockholder agrees to furnish the Company such
information regarding itself and the proposed distribution of Supplemental
Registration Shares by such Stockholder as the Company may from time to time
reasonably request in writing in order to prepare a registration statement and
prospectus or any supplement or amendment thereto pursuant to the Securities Act
and the rules and regulations promulgated thereunder.
<PAGE>
(f) Each Stockholder agrees that, upon receipt of a written
notice from the Company of the happening of any event of the kind described in
clause (vi) of Section 1(d) above, it will forthwith discontinue its disposition
of Supplemental Registration Shares pursuant to the registration statement
relating to such Supplemental Registration Shares until its receipt of the
copies of the supplemented or amended prospectus contemplated by clause (vi) of
Section 1(d) above and, if so requested by the Company in writing, will deliver
to the Company (at the Company's expense) all copies then in its possession,
other than permanent file copies, of the prospectus relating to such
Supplemental Registration Shares; provided, however, that in the event that such
Stockholder discontinues its disposition of Supplemental Registration Shares
pursuant to the foregoing provisions, the nine month period for the
effectiveness of the registration statement shall be extended by the period
during which such Stockholder discontinued its disposition.
(g) The Company shall pay all expenses (the "Registration
Expenses") necessary to effect under the Securities Act any registration
statements, amendments or supplements filed pursuant to this Section 1 (other
than any underwriters' discounts and commissions and any brokerage commissions
and fees payable with respect to shares of Common Stock sold by the Stockholders
and legal fees and expenses of counsel to the Stockholders), including, without
limitation, printing expenses, fees of the Commission and the National
Association of Securities Dealers, Inc., expenses of compliance with blue sky
and other state securities laws, and accounting and legal fees and expenses of
counsel to the Company.
(h) Each Stockholder agrees that, in the event the Company
files a registration statement under the Securities Act with respect to an
underwritten public offering of any securities of the Company for cash,
primarily for the account of the Company, in which such Stockholder was
permitted to participate (whether or not such Stockholder does in fact
participate), if required by an underwriter, such Stockholder will not effect
any public sale or distribution, including any sale pursuant to Rule 144
promulgated under the Securities Act, of any equity securities of the Company or
any securities convertible into or exchangeable or exercisable for any equity
security of the Company (other than as part of such underwritten public
offering) during the seven days prior to, and such period after (not to exceed
in any event 180 days), the effectiveness of such registration statement as may
be required by such underwriter.
(i) In the event of any registration pursuant to this Section
1 covering shares of Common Stock beneficially owned by a Stockholder, the
Company will indemnify and hold harmless such Stockholders, and each person or
entity, if any, who controls such Stockholder within the meaning of the
Securities Act (collectively, the "Indemnitees") against any losses, claims,
damages, costs, expenses (including reasonable attorneys' fees), or liabilities
(or actions in respect thereof) to which such Stockholder or controlling person
or entity becomes subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages, costs, expenses or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the related registration
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made; provided, however, that the
Company will not be liable in any such case to an Indemnitee to the extent that
any such loss, claim, damage, cost, expense or liability arises out of or is
primarily based upon (x) an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, preliminary
prospectus, prospectus or amendment or supplement in reliance upon and in
conformity with written information furnished by any Indemnitee, specifically
for use in the preparation thereof or (y) such Indemnitee's failure to deliver a
copy of the prospectus or any amendments or supplements thereto (if required by
applicable law) to the person asserting any loss, claim, damage or liability
after the Company has furnished such Indemnitee with the same. The Company also
agrees to reimburse each Indemnitee for any legal or other expenses reasonably
incurred by such Indemnitee in connection with investigating or defending any
such loss, claim, damage, liability or action.
<PAGE>
(j) In the event of any registration pursuant to this Section
1 covering shares of Common Stock beneficially owned by a Stockholder, such
Stockholder shall indemnify and hold harmless the Company, each of its directors
and officers who has signed any registration statement, and each person or
entity, if any, who controls the Company within the meaning of the Securities
Act, against any losses, claims, damages, costs, expenses (including reasonable
attorneys' fees) or liabilities (or actions in respect thereof) to which the
Company or any such director, officer, or controlling person becomes subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages,
costs, expenses or liabilities (or actions in respect thereof) primarily arise
out of or are based upon any untrue or alleged untrue statement of any material
fact contained in the related registration statement, and any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or primarily arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made, in each case to the extent, but only to
the extent, that such loss, claim, damage, cost, expense or liability primarily
arises out of or is based upon (x) an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
preliminary prospectus, prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished by such Stockholder
specifically for use in the preparation thereof or (y) such Stockholder's
failure to deliver a copy of the prospectus or any amendments or supplements
thereto (if required by applicable law) to the person asserting any loss, claim,
damage or liability after the Company has furnished such Stockholders with the
same. The Stockholders shall reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, or controlling person or
entity in connection with investigating or defending any such loss, claim,
damage, liability or action. The liability of a Stockholder pursuant to this
Section 1(j) shall be limited to the total proceeds from the offering (net of
sales commissions) received by such Stockholder.
(k) Promptly after receipt by an indemnified party under this
Section 1 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 1, notify the indemnifying party of the commencement
thereof; provided, however, that failure to so notify the indemnifying party
shall not affect an indemnifying party's obligations hereunder, except to the
extent that the indemnifying party is materially prejudiced by such failure. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
<PAGE>
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. It is understood,
however, that the indemnifying party shall, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time.
(l) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
(m) With respect to any underwritten offering, each
Stockholder (if shares of Common Stock of such Stockholder are included in the
subject registration statement) and the Company shall, in addition to the
foregoing, provide the underwriter of such offering with customary
representations and warranties, and indemnification and contribution, in each
instance as shall be reasonably requested by the underwriter, provided, however,
that any such agreement to indemnify an underwriter with respect to any
preliminary prospectus shall not inure to the benefit of any such underwriter to
the extent that any loss, claim, damage, cost, expense or liability of any such
underwriter results solely from an untrue statement of material fact contained
in, or the omission of a material fact from, such preliminary prospectus which
untrue statement or omission was corrected in the final prospectus, if such
underwriter failed to send or give a copy of the final prospectus to the person
asserting such loss, claim, damage, cost, expense or liability at or prior to
the written confirmation of the sale of such securities to such person, and
provided further that any such agreement by such Stockholder to indemnify an
underwriter shall be on a several (and not joint) basis in proportion to the
number of securities sold by such Stockholder in such underwritten offering and
shall be limited in amount to the net proceeds received by such Stockholder in
such underwritten offering.
(n) If the indemnification provided for in this Section 1 is
unavailable to any indemnified party with respect to any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, will contribute to the
amount paid or payable by such indemnified party, as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnified party
on the one hand, and the indemnifying party on the other hand, from the offering
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
<PAGE>
relative benefits referred to in clause (i) above but also the relative fault of
the indemnified party on the one hand, and of the indemnifying party on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative benefits received by the
indemnified party on the one hand, and the indemnifying party on the other hand,
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of sales commissions) received by the indemnified party relative
to such proceeds received by the indemnifying party. The relative fault of the
indemnified party on the one hand, and the indemnifying party on the other hand,
will be determined with reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnified party or the
indemnifying party, and its relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
payable by a party as a result of the losses, claims, damages, liabilities or
expenses referred to above will be deemed to include, subject to the limitations
set forth in Section 1(o) below, any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
(o) The indemnified party and the indemnifying party agree
that it would not be just and equitable if contribution pursuant to this Section
1 were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to in
Section 1(n). No person committing fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution or indemnification from any person not committing such fraudulent
misrepresentation.
2. Legend and Compliance with Securities Laws. (a) The stock
certificates evidencing the shares of Common Stock of the Stockholders subject
to this Agreement shall bear a legend reading substantially as follows:
"The Shares represented by this Certificate have not
been registered under the Securities Act of 1933, as amended
(the "Act"), but have been issued pursuant to an exemption
from such registration. Neither such Shares nor any interest
therein may be sold, transferred, pledged, hypothecated or
otherwise disposed of until either (i) the holder thereof
shall have received an opinion from counsel reasonably
satisfactory to the Company that registration thereof under
the Act is not required or (ii) a registration statement under
the Act covering such Shares or such interest and the
disposition thereof shall have become effective under the
Act."
(b) In the event that a registration statement covering the
shares of Common Stock of the Company owned by a Stockholder which are subject
to this Agreement shall become effective under the Securities Act and under any
applicable state securities laws or in the event that the Company shall receive
an opinion of counsel to the holder of such shares of Common Stock in form and
substance reasonably satisfactory to the Company that, in the opinion of such
counsel, the above stated legend is not, or is no longer, necessary or required
under applicable law (including, without limitation, because of the availability
of the exemption afforded by Rule 144(k) promulgated under the Securities Act),
the Company shall, or shall instruct its transfer agents and registrars to,
remove the above stated legend from the stock certificates evidencing such
shares of Common Stock or issue new certificates without such legend in lieu
thereof.
<PAGE>
(c) Each Stockholder consents to the Company making a notation
on its records and giving instructions to any transfer agent for the Common
Stock in order to implement the restrictions on transfer established in this
Section 2.
3. Reorganization, Etc. The provisions of this Agreement shall
apply mutatis mutandi to any shares of capital stock resulting from any stock
split or reverse split, stock dividend, reclassification of the capital stock of
the Company, consolidation, merger or reorganization of the Company, and any
shares or other securities of the Company or of any successor company which may
be received by a Stockholder (and/or its successors, permitted assigns, legal
representatives and heirs) by virtue of its ownership of Common Stock or other
capital stock of the Company.
4. Notices. Any notice or other communication under this
Agreement shall be in writing and sufficient if delivered personally, by
telecopy or sent by registered or certified mail, postage prepaid, addressed as
follows:
If to the Company:
Capita Research Group, Inc.
591 Shippack Pike, Suite 300
Blue Bell, Pennsylvania 19422
Attention: President
Telecopy: (215) 619-0775
Telephone: (215) 619-7777
If to a Stockholder, to its address on the Schedule of
Stockholders attached hereto, with copies to such Stockholder's counsel.
All such notices and communications shall be deemed to have been duly given at
the time delivered by hand, if personally delivered, upon receipt, if sent by
telecopy, or three (3) business days after being deposited in the mail, if sent
by registered or certified mail. Any party may, upon written notice to the other
parties hereto, change the address to which notices or other communications to
such party are to be delivered or mailed.
5. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
6. Entire Agreement. This Agreement contains the entire
agreement among the parties hereto with respect to the subject matter hereof.
This Agreement may be amended or modified or any provision hereof may be waived
by a written agreement between the Stockholders and the Company. This Agreement
supersedes all prior understandings, negotiations and agreements relating to the
subject matter hereof.
<PAGE>
7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to any conflict of laws principles of such State which would apply the laws of
any other jurisdiction.
8. Jurisdiction; Waiver of Trial by Jury. THE PARTIES HERETO
HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY PENNSYLVANIA STATE OR
UNITED STATES FEDERAL COURT SITTING IN THE CITY OF PHILADELPHIA OVER ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH PENNSYLVANIA STATE OR FEDERAL COURT. THE PARTIES
AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. THE PARTIES FURTHER WAIVE TRIAL BY JURY, ANY
OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO ANY ACTION OR PROCEEDING
IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. THE PARTIES FURTHER AGREE
THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL
BE BROUGHT ONLY IN A PENNSYLVANIA STATE OR UNITED STATES FEDERAL COURT SITTING
IN THE CITY OF PHILADELPHIA.
9. Headings. The headings in this Agreement are solely for
convenience of reference and shall not affect the interpretation of any of the
provisions hereof.
10. Severability. If any provision herein contained shall be
held to be illegal or unenforceable, such holding hall not affect the validity
or enforceability of the other provisions of this Agreement.
11. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company, the Stockholders, each of their respective
successors, permitted assigns, executors, administrators, legal representatives
and heirs, as applicable.
12. Construction. The parties hereto agree that this Agreement
is the product of negotiations between sophisticated parties and individuals,
all of whom were represented by counsel, and each of whom had an opportunity to
participate in, and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentum.
* * *
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed
this Registration Rights Agreement on the date first above written.
CAPITA RESEARCH GROUP, INC.
By: /s/ David B. Hunter
-------------------
Name: David B. Hunter
Title: President
STOCKHOLDERS:
/s/ Page Chapman, III
----------------------
Page Chapman, III
/s/ Larry Dinkin
-------------------
Larry Dinkin
/s/ Howard Fischer
-------------------
Howard Fischer
/s/ Rich Greenstein
-------------------
Rich Greenstein
/s/ Michael Levy
-------------------
Michael Levy
/s/ Eric Pai
-------------------
Eric Pai
/s/ David G. Sandeloysky
-------------------
David G. Sandeloysky
/s/ Greg Silverstein
-------------------
Greg Silverstein
/s/ William Tai
-------------------
William Tai
S-1
<PAGE>
/s/ Mark Van Fossan
-------------------
Mark Van Fossan
/s/ Cyril Visovsky
-------------------
Cyril Visovsky
S-2
<PAGE>
SCHEDULE OF BUYERS
Number of
Investor Name and Address Units
------------------------- ---------
Page Chapman, III 27,778
P.O. Box 296
New Vernon, New Jersey 07976
Larry Dinkin 27,778
c/o Mike Destafano
Ferrara, Destafano and Caporusso
900 Wheeler Rd
Suite 290
Happague, New York 11788
Howard Fischer 27,778
36 Wampus Lake Dr.
Armonk, New York 10504
Rich Greenstein 33,333
c/o Mike Destafano
Ferrara, Destafano and Caporusso
900 Wheeler Rd
Suite 290
Happague, New York 11788
Michael Levy 27,778
Deutsche Bank
130 Liberty Street
35th Floor
New York, New York 10006
Eric Pai 27,778
Deutsche Bank
130 Liberty Street
35th Floor
New York, New York 10006
Rob Reiner 27,778
Deutsche Bank
130 Liberty Street
35th Floor
New York, New York 10006
Greg Silvershein 27,778
67 Summit Avenue
Summit, New Jersey 07901
David G. Sandelovsky 27,778
34 Deer Creek Drive
Basking Ridge, New Jersey 07920
<PAGE>
William Tai 55,556
2086 2nd Avenue
Apt. 13a
New York, New York 10029-4161
Mark Van Fossan 55,556
67 Summit Avenue
Summit, New Jersey 07901
Cyril Visovsky 27,778
43 Brundidge Drive
Goldens Bridge, New York 10526
Exhibit 10(s)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of April 28, 2000 (this
"Agreement") between Capita Research Group, Inc., a Nevada corporation (the
"Company"), and the undersigned stockholders (each, a "Stockholder" and
collectively, the "Stockholders").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
between the Company and the Stockholders and dated of even date herewith (the
"Securities Purchase Agreement"), the Company has agreed, upon the terms and
subject to the conditions of the Securities Purchase Agreement, to issue and
sell to the Stockholders up to 38,780 of the Company's units (the "Units"), each
unit consisting of (i) one share of the Company's common stock, $.001 par value
per share (the "Common Stock"), and (ii) one of the Company's Common Stock
Purchase Warrants to purchase one share of the Company's Common Stock
exercisable at a purchase price of $1.35 per share of Common Stock (the
"Warrants"); and
B. To induce the Stockholders to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the conditions and promises herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Registration of Common Stock. (a) In the event that, at any
time, the Company proposes to register the sale of any shares of its Common
Stock, to be issued by the Company or sold by any holder of shares of Common
Stock (the "Registration Shares") under the Securities Act, other than pursuant
to a registration statement on Forms S-4 or S-8, or any successor to such Forms,
for the purpose of the issuance, sale or other transfer of the Registration
Shares by the Company or such holder, the Company shall mail or deliver to each
Stockholder at least 25 days prior to the filing of the registration statement
covering such Registration Shares, a written notice (a "Registration Notice") of
its intention so to register the Registration Shares, and specifying the date by
which the Supplemental Notice referred to in Section 1(b) below must be returned
to the Company.
(b) In the event that a Registration Notice shall have been so
mailed or delivered, each Stockholder, at such person's election, may mail or
deliver to the Company a written notice (a "Supplemental Notice") (i) specifying
the number of shares of Common Stock ("Supplemental Registration Shares") held
by such Stockholder or issued or issuable upon the exercise of Warrants proposed
to be sold or otherwise transferred by such Stockholder, (ii) describing the
proposed manner of sale or other transfer thereof and (iii) requesting the
registration thereof under the Securities Act; provided, however, that such
Supplemental Notice shall be so mailed or delivered by such Stockholder not more
than 15 days after the date of the Registration Notice.
<PAGE>
(c) From and after receipt of a Supplemental Notice, the
Company shall, subject to the prior sale or other transfer of some or all of
such Registration Shares, use its reasonable best efforts to cause the
Supplemental Registration Shares specified in such Supplemental Notice to be
registered under the Securities Act and to effect and to comply with all such
regulatory qualifications and requirements as may be necessary to permit the
sale or other transfer of such Supplemental Registration Shares in the manner
described in such Supplemental Notice, including, without limitation,
qualifications under applicable blue sky or other state securities laws
(provided that the Company shall not be required in connection therewith to
qualify as a foreign corporation or to execute a general consent to service of
process in any jurisdiction); provided, however, that (i) if in the case of an
underwritten public offering of the Registration Shares the managing underwriter
shall advise the Company that the inclusion of some or all of such Supplemental
Registration Shares would, in such managing underwriter's judgment, materially
interfere with the proposed distribution of the Registration Shares, then the
Company may, upon written notice to such Stockholder, reduce or eliminate the
Supplemental Registration Shares otherwise to be included in the registration
statement (if and to the extent such reduction or elimination is indicated by
such managing underwriter as necessary to eliminate such interference), (ii) if
any firm of counsel representing the Company in connection with such
registration or representing such Stockholder that is reasonably satisfactory to
the Company shall advise the Company and such Stockholder in writing that in its
opinion the registration under the Securities Act contemplated hereby is not
necessary to permit the sale of the Supplemental Registration Shares in the
intended method of disposition by such Stockholder, then the Company shall not
be required to take any action with respect to such registration or other steps
contemplated hereby, (iii) the Company shall have the right to delay or abandon
such registration at any time in the event that the Board of Directors of the
Company determines in good faith that such delay or abandonment is in the best
interest of the Company, and (iv) in the case of an underwritten public
offering, the right of such Stockholder to registration pursuant to this Section
1 shall be conditioned upon such Stockholder's participation in the applicable
underwriting arrangements and execution of the applicable underwriting
agreement.
(d) If and whenever the Company is required by the provisions
of this Section 1 to use its reasonable best efforts to effect the registration
under the Securities Act of any securities requested to be so registered by a
Stockholder, the Company will, as promptly as practicable:
(i) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with
respect to such securities and use its reasonable best efforts
to cause such registration statement to become effective;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a
period from the date of the effectiveness thereof through the
earlier of (1) the date which is nine (9) months after the
date of effectiveness thereof and (2) the date on which all
Supplemental Registration Shares included in such registration
statement shall have been sold or otherwise disposed of by
such Stockholder pursuant to such registration statement, and
to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all shares of
Common Stock covered by such registration statement whenever
such Stockholder shall desire to sell or otherwise dispose of
the same within such period;
<PAGE>
(iii) furnish to such Stockholder such number of
copies of a prospectus, including a preliminary prospectus and
final prospectus, in conformity with the requirements of the
Securities Act, and such other documents as may reasonably be
requested thereby in order to facilitate the public sale or
other disposition of such shares of Common Stock owned
thereby;
(iv) notify such Stockholder promptly of any request
by the Commission for the amendment or supplement of such
registration statement or prospectus or for additional
information, and notify such Stockholder promptly of the
filing of each amendment or supplement to such registration
statement or prospectus;
(v) advise such Stockholder, promptly after it shall
receive notice, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding
for that purpose and promptly use its reasonable best efforts
to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued; and
(vi) notify such Stockholder, in writing, at any time
when a prospectus relating to such shares of Common Stock is
required to be delivered under the Securities Act within the
appropriate period mentioned in clause (ii) immediately
preceding, of the happening of any event as a result of which
the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing,
and promptly prepare (and file with the Commission) and
furnish to such Stockholder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers
of such shares of Common Stock, such prospectus shall not
include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances then existing.
(e) Each Stockholder agrees to furnish the Company such
information regarding itself and the proposed distribution of Supplemental
Registration Shares by such Stockholder as the Company may from time to time
reasonably request in writing in order to prepare a registration statement and
prospectus or any supplement or amendment thereto pursuant to the Securities Act
and the rules and regulations promulgated thereunder.
<PAGE>
(f) Each Stockholder agrees that, upon receipt of a written
notice from the Company of the happening of any event of the kind described in
clause (vi) of Section 1(d) above, it will forthwith discontinue its disposition
of Supplemental Registration Shares pursuant to the registration statement
relating to such Supplemental Registration Shares until its receipt of the
copies of the supplemented or amended prospectus contemplated by clause (vi) of
Section 1(d) above and, if so requested by the Company in writing, will deliver
to the Company (at the Company's expense) all copies then in its possession,
other than permanent file copies, of the prospectus relating to such
Supplemental Registration Shares; provided, however, that in the event that such
Stockholder discontinues its disposition of Supplemental Registration Shares
pursuant to the foregoing provisions, the nine month period for the
effectiveness of the registration statement shall be extended by the period
during which such Stockholder discontinued its disposition.
(g) The Company shall pay all expenses (the "Registration
Expenses") necessary to effect under the Securities Act any registration
statements, amendments or supplements filed pursuant to this Section 1 (other
than any underwriters' discounts and commissions and any brokerage commissions
and fees payable with respect to shares of Common Stock sold by the Stockholders
and legal fees and expenses of counsel to the Stockholders), including, without
limitation, printing expenses, fees of the Commission and the National
Association of Securities Dealers, Inc., expenses of compliance with blue sky
and other state securities laws, and accounting and legal fees and expenses of
counsel to the Company.
(h) Each Stockholder agrees that, in the event the Company
files a registration statement under the Securities Act with respect to an
underwritten public offering of any securities of the Company for cash,
primarily for the account of the Company, in which such Stockholder was
permitted to participate (whether or not such Stockholder does in fact
participate), if required by an underwriter, such Stockholder will not effect
any public sale or distribution, including any sale pursuant to Rule 144
promulgated under the Securities Act, of any equity securities of the Company or
any securities convertible into or exchangeable or exercisable for any equity
security of the Company (other than as part of such underwritten public
offering) during the seven days prior to, and such period after (not to exceed
in any event 180 days), the effectiveness of such registration statement as may
be required by such underwriter.
(i) In the event of any registration pursuant to this Section
1 covering shares of Common Stock beneficially owned by a Stockholder, the
Company will indemnify and hold harmless such Stockholders, and each person or
entity, if any, who controls such Stockholder within the meaning of the
Securities Act (collectively, the "Indemnitees") against any losses, claims,
damages, costs, expenses (including reasonable attorneys' fees), or liabilities
(or actions in respect thereof) to which such Stockholder or controlling person
or entity becomes subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages, costs, expenses or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the related registration
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made; provided, however, that the
Company will not be liable in any such case to an Indemnitee to the extent that
any such loss, claim, damage, cost, expense or liability arises out of or is
primarily based upon (x) an untrue statement or alleged untrue statement or
<PAGE>
omission or alleged omission made in such registration statement, preliminary
prospectus, prospectus or amendment or supplement in reliance upon and in
conformity with written information furnished by any Indemnitee, specifically
for use in the preparation thereof or (y) such Indemnitee's failure to deliver a
copy of the prospectus or any amendments or supplements thereto (if required by
applicable law) to the person asserting any loss, claim, damage or liability
after the Company has furnished such Indemnitee with the same. The Company also
agrees to reimburse each Indemnitee for any legal or other expenses reasonably
incurred by such Indemnitee in connection with investigating or defending any
such loss, claim, damage, liability or action.
(j) In the event of any registration pursuant to this Section
1 covering shares of Common Stock beneficially owned by a Stockholder, such
Stockholder shall indemnify and hold harmless the Company, each of its directors
and officers who has signed any registration statement, and each person or
entity, if any, who controls the Company within the meaning of the Securities
Act, against any losses, claims, damages, costs, expenses (including reasonable
attorneys' fees) or liabilities (or actions in respect thereof) to which the
Company or any such director, officer, or controlling person becomes subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages,
costs, expenses or liabilities (or actions in respect thereof) primarily arise
out of or are based upon any untrue or alleged untrue statement of any material
fact contained in the related registration statement, and any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or primarily arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made, in each case to the extent, but only to
the extent, that such loss, claim, damage, cost, expense or liability primarily
arises out of or is based upon (x) an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
preliminary prospectus, prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished by such Stockholder
specifically for use in the preparation thereof or (y) such Stockholder's
failure to deliver a copy of the prospectus or any amendments or supplements
thereto (if required by applicable law) to the person asserting any loss, claim,
damage or liability after the Company has furnished such Stockholders with the
same. The Stockholders shall reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, or controlling person or
entity in connection with investigating or defending any such loss, claim,
damage, liability or action. The liability of a Stockholder pursuant to this
Section 1(j) shall be limited to the total proceeds from the offering (net of
sales commissions) received by such Stockholder.
(k) Promptly after receipt by an indemnified party under this
Section 1 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 1, notify the indemnifying party of the commencement
thereof; provided, however, that failure to so notify the indemnifying party
shall not affect an indemnifying party's obligations hereunder, except to the
extent that the indemnifying party is materially prejudiced by such failure. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
<PAGE>
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. It is understood,
however, that the indemnifying party shall, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time.
(l) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
(m) With respect to any underwritten offering, each
Stockholder (if shares of Common Stock of such Stockholder are included in the
subject registration statement) and the Company shall, in addition to the
foregoing, provide the underwriter of such offering with customary
representations and warranties, and indemnification and contribution, in each
instance as shall be reasonably requested by the underwriter, provided, however,
that any such agreement to indemnify an underwriter with respect to any
preliminary prospectus shall not inure to the benefit of any such underwriter to
the extent that any loss, claim, damage, cost, expense or liability of any such
underwriter results solely from an untrue statement of material fact contained
in, or the omission of a material fact from, such preliminary prospectus which
untrue statement or omission was corrected in the final prospectus, if such
underwriter failed to send or give a copy of the final prospectus to the person
asserting such loss, claim, damage, cost, expense or liability at or prior to
the written confirmation of the sale of such securities to such person, and
provided further that any such agreement by such Stockholder to indemnify an
underwriter shall be on a several (and not joint) basis in proportion to the
number of securities sold by such Stockholder in such underwritten offering and
shall be limited in amount to the net proceeds received by such Stockholder in
such underwritten offering.
(n) If the indemnification provided for in this Section 1 is
unavailable to any indemnified party with respect to any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, will contribute to the
amount paid or payable by such indemnified party, as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnified party
on the one hand, and the indemnifying party on the other hand, from the offering
<PAGE>
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnified party on the one hand, and of the indemnifying party on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative benefits received by the
indemnified party on the one hand, and the indemnifying party on the other hand,
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of sales commissions) received by the indemnified party relative
to such proceeds received by the indemnifying party. The relative fault of the
indemnified party on the one hand, and the indemnifying party on the other hand,
will be determined with reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnified party or the
indemnifying party, and its relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
payable by a party as a result of the losses, claims, damages, liabilities or
expenses referred to above will be deemed to include, subject to the limitations
set forth in Section 1(o) below, any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
(o) The indemnified party and the indemnifying party agree
that it would not be just and equitable if contribution pursuant to this Section
1 were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to in
Section 1(n). No person committing fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution or indemnification from any person not committing such fraudulent
misrepresentation.
2. Legend and Compliance with Securities Laws. (a) The
stock certificates evidencing the shares of Common Stock of the Stockholders
subject to this Agreement shall bear a legend reading substantially as follows:
"The Shares represented by this Certificate have not
been registered under the Securities Act of 1933, as amended
(the "Act"), but have been issued pursuant to an exemption
from such registration. Neither such Shares nor any interest
therein may be sold, transferred, pledged, hypothecated or
otherwise disposed of until either (i) the holder thereof
shall have received an opinion from counsel reasonably
satisfactory to the Company that registration thereof under
the Act is not required or (ii) a registration statement under
the Act covering such Shares or such interest and the
disposition thereof shall have become effective under the
Act."
(b) In the event that a registration statement covering the
shares of Common Stock of the Company owned by a Stockholder which are subject
to this Agreement shall become effective under the Securities Act and under any
applicable state securities laws or in the event that the Company shall receive
an opinion of counsel to the holder of such shares of Common Stock in form and
substance reasonably satisfactory to the Company that, in the opinion of such
counsel, the above stated legend is not, or is no longer, necessary or required
under applicable law (including, without limitation, because of the availability
of the exemption afforded by Rule 144(k) promulgated under the Securities Act),
the Company shall, or shall instruct its transfer agents and registrars to,
remove the above stated legend from the stock certificates evidencing such
shares of Common Stock or issue new certificates without such legend in lieu
thereof.
<PAGE>
(c)Each Stockholder consents to the Company making a notation
on its records and giving instructions to any transfer agent for the Common
Stock in order to implement the restrictions on transfer established in this
Section 2.
3. Reorganization, Etc. The provisions of this Agreement shall
apply mutatis mutandi to any shares of capital stock resulting from any stock
split or reverse split, stock dividend, reclassification of the capital stock of
the Company, consolidation, merger or reorganization of the Company, and any
shares or other securities of the Company or of any successor company which may
be received by a Stockholder (and/or its successors, permitted assigns, legal
representatives and heirs) by virtue of its ownership of Common Stock or other
capital stock of the Company.
4. Notices. Any notice or other communication under this
Agreement shall be in writing and sufficient if delivered personally, by
telecopy or sent by registered or certified mail, postage prepaid, addressed as
follows:
If to the Company:
Capita Research Group, Inc.
591 Shippack Pike, Suite 300
Blue Bell, Pennsylvania 19422
Attention: President
Telecopy: (215) 619-0775
Telephone: (215) 619-7777
If to a Stockholder, to its address on the Schedule of
Stockholders attached hereto, with copies to such Stockholder's counsel.
All such notices and communications shall be deemed to have been duly given at
the time delivered by hand, if personally delivered, upon receipt, if sent by
telecopy, or three (3) business days after being deposited in the mail, if sent
by registered or certified mail. Any party may, upon written notice to the other
parties hereto, change the address to which notices or other communications to
such party are to be delivered or mailed.
5. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
6. Entire Agreement. This Agreement contains the entire
agreement among the parties hereto with respect to the subject matter hereof.
This Agreement may be amended or modified or any provision hereof may be waived
by a written agreement between the Stockholders and the Company. This Agreement
supersedes all prior understandings, negotiations and agreements relating to the
subject matter hereof.
<PAGE>
7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to any conflict of laws principles of such State which would apply the laws of
any other jurisdiction.
8. Jurisdiction; Waiver of Trial by Jury. THE PARTIES HERETO
HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY PENNSYLVANIA STATE OR
UNITED STATES FEDERAL COURT SITTING IN THE CITY OF PHILADELPHIA OVER ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH PENNSYLVANIA STATE OR FEDERAL COURT. THE PARTIES
AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. THE PARTIES FURTHER WAIVE TRIAL BY JURY, ANY
OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO ANY ACTION OR PROCEEDING
IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. THE PARTIES FURTHER AGREE
THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL
BE BROUGHT ONLY IN A PENNSYLVANIA STATE OR UNITED STATES FEDERAL COURT SITTING
IN THE CITY OF PHILADELPHIA.
9. Headings. The headings in this Agreement are solely
for convenience of reference and shall not affect the interpretation of any of
the provisions hereof.
10. Severability. If any provision herein contained shall
be held to be illegal or unenforceable, such holding shall not affect the
validity or enforceability of the other provisions of this Agreement.
11. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the Company, the Stockholders, each of their
respective successors, permitted assigns, executors, administrators, legal
representatives and heirs, as applicable.
12.
Construction. The parties hereto agree that this
Agreement is the product of negotiations between sophisticated parties and
individuals, all of whom were represented by counsel, and each of whom had an
opportunity to participate in, and did participate in, the drafting of each
provision hereof. Accordingly, ambiguities in this Agreement, if any, shall not
be construed strictly or in favor of or against any party hereto but rather
shall be given a fair and reasonable construction without regard to the rule of
contra proferentum.
* * *
<PAGE>
S-1
359151.8
22795-0999
IN WITNESS WHEREOF, each of the parties hereto has executed
this Registration Rights Agreement on the date first above written.
CAPITA RESEARCH GROUP, INC.
By: /s/David B. Hunter
------------------
Name: David B. Hunter
Title: President
STOCKHOLDERS:
-------------
/s/ William Brown
------------------
William Brown
/s/ Susan Gress
------------------
Susan Gress
/s/ Michael Lauria
------------------
Michael Lauria
/s/ Michael Loia
------------------
Michael Loia
/s/ Laura Smith
------------------
Laura Smith
/s/ Anthony Spatacco, Jr.
-------------------------
Anthony Spatacco, Jr.
/s/ Anthony Spatacco, Sr.
-------------------------
Anthony Spatacco, Sr.
S-1
<PAGE>
359151.8
22795-0999
SCHEDULE OF BUYERS
Number of
Investor Name and Address Units
------------------------- ----------
William Brown 5,556
825 Mountain Avenue
Westfield, New Jersey 07090
Susan Gress 556
1092 Edgehill Road
Abington, Pennsylvania 19001-4412
Michael Lauria 6,000
104 Diane Drive
Broomall, Pennsylvania 19008
Michael Loia 10,000
1272 Farm Road
Berwyn, Pennsylvania 19312
Laura Smith 5,556
1900 Rittenhouse Square
Philadelphia, Pennsylvania 19103
Anthony Spatacco, Jr. 5,556
Times Building, 2nd Floor
Ardmore, Pennsylvania 19003
Anthony Spatacco, Sr. 5,556
111 Academy Lane
Broomall, Pennsylvania 19008
Exhibit 10(t)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of April 28, 2000 (this
"Agreement") between Capita Research Group, Inc., a Nevada corporation (the
"Company"), and Richard D'Avanzo (the "Stockholder").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
between the Company and the Stockholder and dated of even date herewith (the
"Securities Purchase Agreement"), the Company has agreed, upon the terms and
subject to the conditions of the Securities Purchase Agreement, to issue and
sell to the Stockholder 40,000 of the Company's units (the "Units"), each unit
consisting of (i) one share of the Company's common stock, $.001 par value per
share (the "Common Stock"), and (ii) one of the Company's Common Stock Purchase
Warrants to purchase one share of the Company's Common Stock exercisable at a
purchase price of $1.35 per share of Common Stock (the "Warrants") (such shares
of Common Stock issued upon exercise of the Warrants are hereinafter referred to
as the "Warrant Shares", and together with the Units, Common Stock and the
Warrants, the "Securities"); and
B. To induce the Stockholder to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the conditions and promises herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Registration of Common Stock. (a) In the event that, at any
time, the Company proposes to register the sale of any shares of its Common
Stock, to be issued by the Company or sold by any holder of shares of Common
Stock (the "Registration Shares") under the Securities Act, other than pursuant
to a registration statement on Forms S-4 or S-8, or any successor to such Forms,
for the purpose of the issuance, sale or other transfer of the Registration
Shares by the Company or such holder, the Company shall mail or deliver to the
Stockholder at least 25 days prior to the filing of the registration statement
covering such Registration Shares, a written notice (a "Registration Notice") of
its intention so to register the Registration Shares, and specifying the date by
which the Supplemental Notice referred to in Section 1(b) below must be returned
to the Company.
(b) In the event that a Registration Notice shall have been so
mailed or delivered, the Stockholder, at such person's election, may mail or
deliver to the Company a written notice (a "Supplemental Notice") (i) specifying
the number of shares of Common Stock ("Supplemental Registration Shares") held
by the Stockholder or issued or issuable upon the exercise of Warrants proposed
to be sold or otherwise transferred by the Stockholder, (ii) describing the
proposed manner of sale or other transfer thereof and (iii) requesting the
registration thereof under the Securities Act; provided, however, that such
Supplemental Notice shall be so mailed or delivered by the Stockholder not more
than 15 days after the date of the Registration Notice.
<PAGE>
(c) From and after receipt of a Supplemental Notice, the
Company shall, subject to the prior sale or other transfer of some or all of
such Registration Shares, use its reasonable best efforts to cause the
Supplemental Registration Shares specified in such Supplemental Notice to be
registered under the Securities Act and to effect and to comply with all such
regulatory qualifications and requirements as may be necessary to permit the
sale or other transfer of such Supplemental Registration Shares in the manner
described in such Supplemental Notice, including, without limitation,
qualifications under applicable blue sky or other state securities laws
(provided that the Company shall not be required in connection therewith to
qualify as a foreign corporation or to execute a general consent to service of
process in any jurisdiction); provided, however, that (i) if in the case of an
underwritten public offering of the Registration Shares the managing underwriter
shall advise the Company that the inclusion of some or all of such Supplemental
Registration Shares would, in such managing underwriter's judgment, materially
interfere with the proposed distribution of the Registration Shares, then the
Company may, upon written notice to the Stockholder, reduce or eliminate the
Supplemental Registration Shares otherwise to be included in the registration
statement (if and to the extent such reduction or elimination is indicated by
such managing underwriter as necessary to eliminate such interference), (ii) if
any firm of counsel representing the Company in connection with such
registration or representing the Stockholder that is reasonably satisfactory to
the Company shall advise the Company and the Stockholder in writing that in its
opinion the registration under the Securities Act contemplated hereby is not
necessary to permit the sale of the Supplemental Registration Shares in the
intended method of disposition by the Stockholder, then the Company shall not be
required to take any action with respect to such registration or other steps
contemplated hereby, (iii) the Company shall have the right to delay or abandon
such registration at any time in the event that the Board of Directors of the
Company determines in good faith that such delay or abandonment is in the best
interest of the Company, and (iv) in the case of an underwritten public
offering, the right of the Stockholder to registration pursuant to this Section
1 shall be conditioned upon the Stockholder's participation in the applicable
underwriting arrangements and execution of the applicable underwriting
agreement.
(d) If and whenever the Company is required by the provisions
of this Section 1 to use its reasonable best efforts to effect the registration
under the Securities Act of any securities requested to be so registered by the
Stockholder, the Company will, as promptly as practicable:
(i) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with
respect to such securities and use its reasonable best efforts
to cause such registration statement to become effective;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a
period from the date of the effectiveness thereof through the
earlier of (1) the date which is nine (9) months after the
date of effectiveness thereof and (2) the date on which all
Supplemental Registration Shares included in such registration
statement shall have been sold or otherwise disposed of by the
Stockholder pursuant to such registration statement, and to
comply with the provisions of the Securities Act with respect
to the sale or other disposition of all shares of Common Stock
covered by such registration statement whenever the
Stockholder shall desire to sell or otherwise dispose of the
same within such period;
<PAGE>
(iii) furnish to the Stockholder such number of
copies of a prospectus, including a preliminary prospectus and
final prospectus, in conformity with the requirements of the
Securities Act, and such other documents as may reasonably be
requested thereby in order to facilitate the public sale or
other disposition of such shares of Common Stock owned
thereby;
(iv) notify the Stockholder promptly of any request
by the Commission for the amendment or supplement of such
registration statement or prospectus or for additional
information, and notify the Stockholder promptly of the filing
of each amendment or supplement to such registration statement
or prospectus;
(v) advise the Stockholder, promptly after it shall
receive notice, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding
for that purpose and promptly use its reasonable best efforts
to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued; and
(vi) notify the Stockholder, in writing, at any time
when a prospectus relating to such shares of Common Stock is
required to be delivered under the Securities Act within the
appropriate period mentioned in clause (ii) immediately
preceding, of the happening of any event as a result of which
the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing,
and promptly prepare (and file with the Commission) and
furnish to the Stockholder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers
of such shares of Common Stock, such prospectus shall not
include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances then existing.
(e) The Stockholder agrees to furnish the Company such
information regarding itself and the proposed distribution of Supplemental
Registration Shares by the Stockholder as the Company may from time to time
reasonably request in writing in order to prepare a registration statement and
prospectus or any supplement or amendment thereto pursuant to the Securities Act
and the rules and regulations promulgated thereunder.
<PAGE>
(f) The Stockholder agrees that, upon receipt of a written
notice from the Company of the happening of any event of the kind described in
clause (vi) of Section 1(d) above, it will forthwith discontinue its disposition
of Supplemental Registration Shares pursuant to the registration statement
relating to such Supplemental Registration Shares until its receipt of the
copies of the supplemented or amended prospectus contemplated by clause (vi) of
Section 1(d) above and, if so requested by the Company in writing, will deliver
to the Company (at the Company's expense) all copies then in its possession,
other than permanent file copies, of the prospectus relating to such
Supplemental Registration Shares; provided, however, that in the event that the
Stockholder discontinues its disposition of Supplemental Registration Shares
pursuant to the foregoing provisions, the nine month period for the
effectiveness of the registration statement shall be extended by the period
during which the Stockholder discontinued its disposition.
(g) The Company shall pay all expenses (the "Registration
Expenses") necessary to effect under the Securities Act any registration
statements, amendments or supplements filed pursuant to this Section 1 (other
than any underwriters' discounts and commissions and any brokerage commissions
and fees payable with respect to shares of Common Stock sold by the Stockholder
and legal fees and expenses of counsel to the Stockholder), including, without
limitation, printing expenses, fees of the Commission and the National
Association of Securities Dealers, Inc., expenses of compliance with blue sky
and other state securities laws, and accounting and legal fees and expenses of
counsel to the Company.
(h) The Stockholder agrees that, in the event the Company
files a registration statement under the Securities Act with respect to an
underwritten public offering of any securities of the Company for cash,
primarily for the account of the Company, in which the Stockholder was permitted
to participate (whether or not the Stockholder does in fact participate), if
required by an underwriter, the Stockholder will not effect any public sale or
distribution, including any sale pursuant to Rule 144 promulgated under the
Securities Act, of any equity securities of the Company or any securities
convertible into or exchangeable or exercisable for any equity security of the
Company (other than as part of such underwritten public offering) during the
seven days prior to, and such period after (not to exceed in any event 180
days), the effectiveness of such registration statement as may be required by
such underwriter.
(i) In the event of any registration pursuant to this Section
1 covering shares of Common Stock beneficially owned by the Stockholder, the
Company will indemnify and hold harmless the Stockholder, and each person or
entity, if any, who controls the Stockholder within the meaning of the
Securities Act (collectively, the "Indemnitees") against any losses, claims,
damages, costs, expenses (including reasonable attorneys' fees), or liabilities
(or actions in respect thereof) to which the Stockholder or controlling person
or entity becomes subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages, costs, expenses or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the related registration
<PAGE>
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made; provided, however, that the
Company will not be liable in any such case to an Indemnitee to the extent that
any such loss, claim, damage, cost, expense or liability arises out of or is
primarily based upon (x) an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, preliminary
prospectus, prospectus or amendment or supplement in reliance upon and in
conformity with written information furnished by any Indemnitee, specifically
for use in the preparation thereof or (y) such Indemnitee's failure to deliver a
copy of the prospectus or any amendments or supplements thereto (if required by
applicable law) to the person asserting any loss, claim, damage or liability
after the Company has furnished such Indemnitee with the same. The Company also
agrees to reimburse each Indemnitee for any legal or other expenses reasonably
incurred by such Indemnitee in connection with investigating or defending any
such loss, claim, damage, liability or action.
(j) In the event of any registration pursuant to this Section
1 covering shares of Common Stock beneficially owned by the Stockholder, the
Stockholder shall indemnify and hold harmless the Company, each of its directors
and officers who has signed any registration statement, and each person or
entity, if any, who controls the Company within the meaning of the Securities
Act, against any losses, claims, damages, costs, expenses (including reasonable
attorneys' fees) or liabilities (or actions in respect thereof) to which the
Company or any such director, officer, or controlling person becomes subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages,
costs, expenses or liabilities (or actions in respect thereof) primarily arise
out of or are based upon any untrue or alleged untrue statement of any material
fact contained in the related registration statement, and any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or primarily arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made, in each case to the extent, but only to
the extent, that such loss, claim, damage, cost, expense or liability primarily
arises out of or is based upon (x) an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
preliminary prospectus, prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished by the Stockholder specifically
for use in the preparation thereof or (y) the Stockholder's failure to deliver a
copy of the prospectus or any amendments or supplements thereto (if required by
applicable law) to the person asserting any loss, claim, damage or liability
after the Company has furnished the Stockholder with the same. The Stockholder
shall reimburse any legal or other expenses reasonably incurred by the Company
or any such director, officer, or controlling person or entity in connection
with investigating or defending any such loss, claim, damage, liability or
action. The liability of the Stockholder pursuant to this Section 1(j) shall be
limited to the total proceeds from the offering (net of sales commissions)
received by the Stockholder.
(k) Promptly after receipt by an indemnified party under this
Section 1 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 1, notify the indemnifying party of the commencement
thereof; provided, however, that failure to so notify the indemnifying party
shall not affect an indemnifying party's obligations hereunder, except to the
extent that the indemnifying party is materially prejudiced by such failure. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
<PAGE>
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. It is understood,
however, that the indemnifying party shall, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time.
(l) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
(m) With respect to any underwritten offering, the Stockholder
(if shares of Common Stock of the Stockholder are included in the subject
registration statement) and the Company shall, in addition to the foregoing,
provide the underwriter of such offering with customary representations and
warranties, and indemnification and contribution, in each instance as shall be
reasonably requested by the underwriter, provided, however, that any such
agreement to indemnify an underwriter with respect to any preliminary prospectus
shall not inure to the benefit of any such underwriter to the extent that any
loss, claim, damage, cost, expense or liability of any such underwriter results
solely from an untrue statement of material fact contained in, or the omission
of a material fact from, such preliminary prospectus which untrue statement or
omission was corrected in the final prospectus, if such underwriter failed to
send or give a copy of the final prospectus to the person asserting such loss,
claim, damage, cost, expense or liability at or prior to the written
confirmation of the sale of such securities to such person, and provided further
that any such agreement by the Stockholder to indemnify an underwriter shall be
on a several (and not joint) basis in proportion to the number of securities
sold by the Stockholder in such underwritten offering and shall be limited in
amount to the net proceeds received by the Stockholder in such underwritten
offering.
<PAGE>
(n) If the indemnification provided for in this Section 1 is
unavailable to any indemnified party with respect to any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, will contribute to the
amount paid or payable by such indemnified party, as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnified party
on the one hand, and the indemnifying party on the other hand, from the offering
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnified party on the one hand, and of the indemnifying party on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative benefits received by the
indemnified party on the one hand, and the indemnifying party on the other hand,
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of sales commissions) received by the indemnified party relative
to such proceeds received by the indemnifying party. The relative fault of the
indemnified party on the one hand, and the indemnifying party on the other hand,
will be determined with reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnified party or the
indemnifying party, and its relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
payable by a party as a result of the losses, claims, damages, liabilities or
expenses referred to above will be deemed to include, subject to the limitations
set forth in Section 1(o) below, any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
(o) The indemnified party and the indemnifying party agree
that it would not be just and equitable if contribution pursuant to this Section
1 were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to in
Section 1(n). No person committing fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution or indemnification from any person not committing such fraudulent
misrepresentation.
2. Legend and Compliance with Securities Laws. (a) The stock
certificates evidencing the shares of Common Stock of the Stockholder subject to
this Agreement shall bear a legend reading substantially as follows:
"The Shares represented by this Certificate have not
been registered under the Securities Act of 1933, as amended
(the "Act"), but have been issued pursuant to an exemption
from such registration. Neither such Shares nor any interest
therein may be sold, transferred, pledged, hypothecated or
otherwise disposed of until either (i) the holder thereof
shall have received an opinion from counsel reasonably
satisfactory to the Company that registration thereof under
the Act is not required or (ii) a registration statement under
the Act covering such Shares or such interest and the
disposition thereof shall have become effective under the
Act."
(b) In the event that a registration statement covering the
shares of Common Stock of the Company owned by the Stockholder which are subject
to this Agreement shall become effective under the Securities Act and under any
applicable state securities laws or in the event that the Company shall receive
an opinion of counsel to the holder of such shares of Common Stock in form and
substance reasonably satisfactory to the Company that, in the opinion of such
counsel, the above stated legend is not, or is no longer, necessary or required
under applicable law (including, without limitation, because of the availability
of the exemption afforded by Rule 144(k) promulgated under the Securities Act),
the Company shall, or shall instruct its transfer agents and registrars to,
remove the above stated legend from the stock certificates evidencing such
shares of Common Stock or issue new certificates without such legend in lieu
thereof.
<PAGE>
(c) The Stockholder consents to the Company making a notation
on its records and giving instructions to any transfer agent for the Common
Stock in order to implement the restrictions on transfer established in this
Section 2.
3. Reorganization, Etc. The provisions of this Agreement
shall apply mutatis mutandi to any shares of capital stock resulting from any
stock split or reverse split, stock dividend, reclassification of the capital
stock of the Company, consolidation, merger or reorganization of the Company,
and any shares or other securities of the Company or of any successor company
which may be received by the Stockholder (and/or its successors, permitted
assigns, legal representatives and heirs) by virtue of its ownership of Common
Stock or other capital stock of the Company.
4. Notices. Any notice or other communication under this
Agreement shall be in writing and sufficient if delivered personally, by
telecopy or sent by registered or certified mail, postage prepaid, addressed as
follows:
If to the Company:
Capita Research Group, Inc.
591 Shippack Pike, Suite 300
Blue Bell, Pennsylvania 19422
Attention: President
Telecopy: (215) 619-0775
Telephone: (215) 619-7777
If to the Stockholder:
Mr. Richard D'Avanzo
30 Sleepy Hollow Lane
Belle Mead, New Jersey 08502-4513
All such notices and communications shall be deemed to have been duly given at
the time delivered by hand, if personally delivered, upon receipt, if sent by
telecopy, or three (3) business days after being deposited in the mail, if sent
by registered or certified mail. Any party may, upon written notice to the other
parties hereto, change the address to which notices or other communications to
such party are to be delivered or mailed.
<PAGE>
5. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
6. Entire Agreement. This Agreement contains the entire
agreement among the parties hereto with respect to the subject matter hereof.
This Agreement may be amended or modified or any provision hereof may be waived
by a written agreement between the Stockholder and the Company. This Agreement
supersedes all prior understandings, negotiations and agreements relating to the
subject matter hereof.
7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to any conflict of laws principles of such State which would apply the laws of
any other jurisdiction.
8. Jurisdiction; Waiver of Trial by Jury. THE PARTIES HERETO
HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY PENNSYLVANIA STATE OR
UNITED STATES FEDERAL COURT SITTING IN THE CITY OF PHILADELPHIA OVER ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH PENNSYLVANIA STATE OR FEDERAL COURT. THE PARTIES
AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. THE PARTIES FURTHER WAIVE TRIAL BY JURY, ANY
OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO ANY ACTION OR PROCEEDING
IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. THE PARTIES FURTHER AGREE
THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL
BE BROUGHT ONLY IN A PENNSYLVANIA STATE OR UNITED STATES FEDERAL COURT SITTING
IN THE CITY OF PHILADELPHIA.
9. Headings. The headings in this Agreement are solely for
convenience of reference and shall not affect the interpretation of any of the
provisions hereof.
10. Severability. If any provision herein contained shall be
held to be illegal or unenforceable, such holding shall not affect the validity
or enforceability of the other provisions of this Agreement.
11. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company, the Stockholder, each of their respective
successors, permitted assigns, executors, administrators, legal representatives
and heirs, as applicable.
12. Construction. The parties hereto agree that this Agreement
is the product of negotiations between sophisticated parties and individuals,
all of whom were represented by counsel, and each of whom had an opportunity to
participate in, and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentum.
* * *
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed
this Registration Rights Agreement on the date first above written.
CAPITA RESEARCH GROUP, INC.
By: /s/ David B. Hunter
-------------------
Name: David B. Hunter
Title: President
/s/ Richard D'Avanzo
--------------------
Richard D'Avanzo
<PAGE>
AGREEMENT FOR FINANCIAL PUBLIC SUPPORT / RETAIL SUPPORT
This INVESTOR RELATIONS SERVICES Agreement (Hereinafter "Agreement") is made
effective as of April 18, 2000, by and between "CAPITA RESEARCH GROUP, INC.," ET
AL, and CHARTERBRIDGE FINANCIAL GROUP, INC. In this Agreement, the party who is
contracting to receive the services shall be referred to as "CEEG" or "CLIENT",
the party who will be providing the services shall be referred to as "CFG". CFG
and "CEEG" shall be cumulatively referred to as "the parties" hereinafter.
1. DESCRIPTION OF SERVICES. Beginning on April 18, 2000, CFG will provide
the following services (collectively "Services"):
A. Produce (Concept, Research, Writing, Printing) a CLIENT
Shareholder Communications/Investor Relations piece which
shall be distributed Bi-monthly (Every Other Month). This
Investor Relations (hereinafter "IR Piece") includes relevant
milestone updates, contract news, earnings/revenue growth
updates, and financing news about CLIENT;
B. Monitor OTC Internet Message Boards regarding CLIENT;
C. Add CLIENT information to Interactive CFG portfolio page
website;
D. Participate in CLIENT due diligence presentation(s) to market
makers;
E. Schedule live radio interview(s) featuring CLIENT (to be
scheduled pursuant to availability);
F. Assist in drafting press releases as appropriate and in
concert with CLIENT's milestones and newsworthy events;
G. Distribute press releases to CLIENT shareholders;
H. *Distribute CLIENT news and relevant information to market
makers, financial media, selected Internet stock pages/threads
and OTC analyst community;
I. Present CLIENT to various media, periodical sources, when
appropriate;
J. Provide general financial public relations support to CLIENT;
and
K. **Feature Company in Quarterly "Live-Chat" Internet Broadcasts
* CLIENT agrees to complete and return signed PR Newswire
membership application for distribution of press releases or
provide PR Newswire account number to CFG.
** Additional charge of $1,800 per live chat plus production
and internet/broadcast fees.
<PAGE>
2. PAYMENT FOR "IR" PRODUCTION SERVICES. CEEG will pay annually for
services described herein. The fees shall be payable as follows:
A] INITIAL PAYMENT DUE UPON EXECUTION OF CLIENT FOR INVESTOR RELATION
SERVICES: $10,000 + 59,500 UNREGISTERED CEEG SHARES
B] MONTHLY PAYMENTS OF: $4,500. Payments under this section shall be
due and payable upon the first business day of each month following the
date of execution of this agreement until this Agreement is terminated
pursuant to Section 4.
*NOTE -MONTHLY FEES RECEIVED AFTER THE FIRST MAILING DAY AFTER THE 5TH DAY PAST
THE DUE DATE SHALL BE SUBJECT TO A FEE OF 1%.
C] DUE ON AUGUST 1, 2000 = 59,500 UNREGISTERED CEEG SHARES
D] DUE IN NOVEMBER 1, 2000 = 59,500 UNREGISTERED CEEG SHARES
E] DUE IN FEBRUARY 1, 2001 = 59,500 UNREGISTERED CEEG SHARES
CEEG shall have no obligation to make the payments listed in Section 2(C), (D),
and (E) if this Agreement is terminated prior to the dates such payments become
due. CEEG understands that such amounts shall become due on such dates as long
as this Agreement has not been terminated, and CEEG will continue to be
responsible for such amounts after termination of this Agreement until such
amounts are paid.
NOTE: CFG SHALL HAVE NO OBLIGATION TO PERFORM ANY DUTIES PROVIDED FOR HEREIN IF
PAYMENT [CASH AND/OR STOCK] IS NOT RECEIVED BY CFG WITHIN 7 DAYS OF MUTUAL
EXECUTION OF THIS AGREEMENT BY THE PARTIES. IN ADDITION, CFG'S OBLIGATIONS UNDER
THIS AGREEMENT SHALL BE SUSPENDED IF ANY PAYMENT OWING HEREUNDER IS MORE THAN
FIFTEEN (15) DAYS DELINQUENT. FURTHERMORE, THE RECEIPT OF ANY FEES [CASH AND
STOCK] DUE TO CFG UPON EXECUTION OF THIS AGREEMENT ARE NOT CONTINGENT UPON ANY
PRIOR PERFORMANCE OF ANY DUTIES WHATSOEVER DESCRIBED WITHIN THIS AGREEMENT.
3. REGISTRATION OF SHARES. CFG shall have 'piggy-back' registration rights
for all shares issued in accordance with this agreement. Appropriate
registration shall be delivered to CFG within 3 business days of
filing.
4. TERM/TERMINATION. This Agreement is a quarterly agreement for the term
of one (1) year and shall terminate automatically on April 17, 2001.
However, the CLIENT or CFG shall have the right to terminate the
balance of this agreement at any time after the 75th day following the
mutual execution of this Agreement by the parties, providing written
notice is given to the other party at least fifteen (15) days prior to
the expiration of the current quarter of the Agreement. Quarterly
payments of cash and/or stock shall become immediately due and payable
upon termination.
<PAGE>
5. NON CIRCUMVENTION. In and for valuable consideration, CLIENT hereby
agrees that CFG may introduce (whether by written, oral, data, or other
form of communication) CLIENT to one or more opportunities, including,
without limitation, existing or potential investors, lenders,
borrowers, trusts, natural persons, corporations, limited liability
companies, partnerships, unincorporated businesses, sole
proprietorships and similar entities (hereinafter an "Opportunity" or
"Opportunities"). CLIENT further acknowledges and agrees that the
identity of the subject Opportunities, and all other information
concerning an Opportunity (including without limitation, all mailing
information, phone and fax numbers, email addresses and other contact
information) introduced hereunder are the property of CFG, and shall be
treated as confidential and proprietary information by CLIENT, its
affiliates, officers, directors, shareholders, employees, agents,
representatives, successors and assigns. CLIENT shall not use such
information, except in the context of any arrangement with CFG in which
CFG is directly and actively involved, and never without CFG's prior
written approval. CLIENT further agrees that neither it nor its
employees, affiliates or assigns, shall enter into, or otherwise
arrange (either for it/him/herself, or any other person or entity) any
business relationship, contact any person regarding such Opportunity,
either directly or indirectly, or any of its affiliates, or accept any
compensation or advantage in relation to such Opportunity except as
directly though CFG, without the prior written approval of CFG. CFG is
relying on CLIENT's assent to these terms and their intent to be bound
by the terms by evidence of their signature. Without CLIENT's signed
assent to these terms, CFG would not introduce any Opportunity or
disclose any confidential information to CLIENT as herein described.
6. CONFIDENTIALITY. CFG will not at any time or in any manner, either
directly or indirectly, use for the personal benefit of CFG, or
divulge, disclose, or communicate to any third party any information
that is proprietary to CEEG without CEEG's express consent. CFG will
protect such information and treat it as strictly confidential. This
provision shall continue to be effective after the termination of this
Agreement. Upon termination of this Agreement, CFG will return to CEEG
all records, notes, documentation and other items that were used,
created, or controlled by CFG during the term of this Agreement.
7. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties, and there are no other promises or conditions in any other
agreement, whether oral or written.
8. SEVERABILITY. If any provision of this Agreement shall be held to be
invalid or unenforceable for any reason, the remaining provisions shall
continue to be valid and enforceable. If a court finds that any
provision of this Agreement is invalid or unenforceable, but that by
limiting such provision it would become valid and enforceable, then
such provision shall be deemed to be written, construed, and enforced
as so limited.
9. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
<PAGE>
10. CHOICE OF LAW; VENUE. This Agreement shall be governed by, and shall be
construed in accordance with, the laws of the State of California, any
legal proceedings which arising from this agreement shall be venued in
San Diego, County, California.
11. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration
administered by the American Arbitration Association in accordance with
its applicable rules, and judgment upon an award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
Either this Agreement or the Investment Banking rider may be cancelled, pursuant
to the applicable termination provision without affecting the validity and
effectiveness of the other document.
Party contracting services:
COMPANY
Print Name: David B Hunter
Sign Name: /s/ David B. Hunter
-------------------
Title: President & CEO
Date: 4/24/00
Address: 591 Skippack Pike, Ste. 300
Blue Bell, PA 19422
Contact Person: Steven Plisinski
Service Provider:
CHARTERBRIDGE FINANCIAL GROUP, INC.
Print Name: Richard H. Walker
Sign Name: /s/ Richard H. Walker
---------------------
Title: President & CEO
Date: 4/24/00
Address: 350 W. Ash Street, Suite 1002
San Diego, CA 92101
Contact Person: Stuart Smith
Exhibit 10(v)
INVESTMENT BANKING RIDER
This Agreement (the "Agreement") is dated April 18, 2000 and is entered into by
and between CAPITA RESEARCH GROUP, INC. (hereinafter "CEEG" or "CLIENT") and THE
CHARTERBRIDGE FINANCIAL GROUP, INC. (hereinafter "CFG"), and is a rider to the
Agreement for Financial Public Support/Retail Support of same date entered into
between the parties.
1. CONDITIONS. This Agreement will not take effect, and CFG will have no
obligation to provide any service whatsoever, unless and until CLIENT returns a
signed copy of this Agreement to CFG (either by mail or facsimile copy). In
addition, CLIENT shall be truthful with CFG in regard to any relevant or
material information provided by CLIENT, verbally or otherwise which refers,
relates, or otherwise pertains to the CLIENT's business, this Agreement or any
other relevant transaction. Breach of either of these conditions shall be
considered a material breach and will automatically grant CFG the right to
terminate this Agreement and all monies paid or owing as of the date of
termination by CFG shall be forfeited without further notice.
Agreed, CLIENT'S INITIALS: DBH
---
Upon execution of this Agreement, CLIENT agrees to fully cooperate with CFG in
carrying out the purposes of this Agreement, keep CFG informed of any
developments of importance pertaining to CLIENT's business and abide by this
Agreement in its entirety.
2. SCOPE AND DUTIES. During the term of this Agreement, CFG will perform
the following services for CLIENT:
2.1 Advice and Counsel. CFG will provide advice and counsel
regarding CLIENT's strategic business and financial plans,
strategy and negotiations with potential lenders/investors,
joint venture, corporate partners and others involving
financial and financially-related transactions.
2.2 Mergers and Acquisitions. CFG will provide assistance to
CLIENT, as mutually agreed, in identifying merger and / or
acquisition candidates, assisting in any due diligence
process, recommending transaction terms and providing advice
and assistance during negotiations, as needed.
2.3. Introductions to the Investment Community. CFG has a
familiarity or association with numerous broker/dealers and
investment professionals across the country and will enable
contact between CLIENT and/or CLIENT's affiliate to facilitate
business transactions among them. CFG shall use its contacts
in the brokerage community to assist CLIENT in establishing
relationships with private equity capital sources (venture
capital, etc.) and securities dealers while providing the most
recent information about CLIENT to interested securities
dealers on a regular and continuous basis. CFG understands
that this is in keeping with CLIENT's business objectives and
plan to market CLIENT's business or project to the investment
community.
<PAGE>
2.4 CLIENT and/or CLIENT's Affiliate Transaction Due Diligence.
CFG will participate and assist CLIENT in the due diligence
process, as needed, on all proposed financial transactions
affecting CLIENT of which CFG is notified in writing in
advance, including conducting investigation of and providing
advice on the financial, valuation and stock price
implications of the proposed transaction(s).
2.5 Ancillary Document Services. If necessary, CFG will assist and
cooperate with CLIENT in the development, editing and
production of such documents as are reasonably necessary to
procure the agreed upon capital. These documents may include
an investment marketing memorandum, or other documents as
necessary. However, this Agreement will not include the
preparation or procuring of legal documents or those documents
normally prepared by an attorney.
2.6 Additional Duties. CLIENT and CFG shall mutually agree, in
writing, for any additional duties that CFG may provide to
CLIENT for compensation paid or payable by CLIENT under this
Agreement. Although there is no requirement to do so, such
additional agreement(s) may be attached hereto and made a part
hereof by written amendments to be listed as "Exhibits"
beginning with "Exhibit A" and initialed by both parties.
2.7 Standard of Performance. CFG shall devote such time and
efforts to the affairs of the CLIENT as is reasonably
necessary to render the services contemplated by this
Agreement. Any work or task of CFG provided for herein which
requires CLIENT to provide certain information to assist CFG
in completion of the work shall be excused (without effect
upon any obligation of CLIENT) until such time as CLIENT has
fully provided all information and cooperation necessary for
CFG to complete the work. The services of CFG shall not
include the rendering of any legal opinions or the performance
of any work that is in the ordinary purview of a certified
public accountant, or other licensed professional. CFG cannot
guarantee results on behalf of CLIENT, but shall use
commercially reasonable efforts in providing the services
listed above. If an interest is communicated to CFG regarding
satisfying all or part of CLIENT's financial needs, CFG shall
notify CLIENT and advise it as to the source of such interest
and any terms and conditions of such interest. CFG's duty is
to "introduce and market" CLIENT's funding request to
appropriate funding sources. CFG will in no way act as a
"broker-dealer" under state or federal securities laws.
Because all final decisions pertaining to any particular
investment are to be made by CLIENT, CLIENT may be required to
communicate directly with potential funding sources.
<PAGE>
2.8 Non-Guarantee. CFG MAKES NO GUARANTEE THAT CFG WILL BE ABLE TO
SUCCESSFULLY MARKET AND IN TURN SECURE A LOAN OR INVESTMENT
FINANCING FOR CLIENT, OR TO SUCCESSFULLY PROCURE SUCH LOAN OR
INVESTMENT WITHIN CLIENT'S DESIRED TIMEFRAME OR TO GUARANTEE
THAT IT WILL SECURE ANY LOAN OR INVESTMENT FINANCING WITH A
SPECIFIC OR MINIMUM RETURN, INTEREST RATE OR OTHER TERMS.
NEITHER ANYTHING IN THIS AGREEMENT TO THE CONTRARY NOR THE
PAYMENT OF DEPOSITS TO CFG BY CLIENT PURSUANT TO FEE
AGREEMENTS FOR SERVICES NOT CONTEMPLATED HEREIN SHALL BE
CONSTRUED AS ANY SUCH GUARANTEE. ANY COMMENTS MADE REGARDING
POTENTIAL TIME FRAMES OR ANYTHING THAT PERTAINS TO THE OUTCOME
OF CLIENT'S FUNDING REQUESTS ARE EXPRESSIONS OF OPINION ONLY,
AND FOR PURPOSES OF THIS AGREEMENT ARE SPECIFICALLY DISAVOWED.
CLIENT ACKNOWLEDGES AND AGREES IT IS NOT REQUIRED TO MAKE
EXCLUSIVE USE OF CFG FOR ANY SERVICES OR DOCUMENTATION DEEMED
NECESSARY FOR THE PURPOSE OF SECURING INVESTMENTS. CFG HAS
MADE NO SUCH DEMANDS IN ORDER FOR CLIENT'S PROJECT TO BE
MARKETED UNDER THE TERMS OF THIS AGREEMENT. CFG HOLDS NO
EXCLUSIVE RIGHTS TO THE MARKETING OF CLIENT'S PROJECT.
Agreed, CLIENT INITIALS: DBH
---
3. Compensation to CFG.
3.1 CEEG will pay for services described herein. The fees shown below (which
summarize those outlined in 3.2, 3.3 and 3.4 below) shall be payable as
follows:
A] INITIAL PAYMENT DUE UPON ACCEPTANCE OF THIS INVESTMENT BANKING RIDER
AGREEMENT:
= 40,000 UNREGISTERED CEEG SHARES
B] 5% Commission on successful Capital Formation (DIRECT INVESTMENT) AND MERGERS
/ACQUISITIONS
1] In addition, in the event of a successful merger or acquisition
transaction, CFG shall receive 3% of the value of any combined, merged, or
surviving entity (whichever is larger) in the form of the surviving entity's
free trading stock.
C] DUE ON AUGUST 1, 2000 = 40,000 UNREGISTERED CEEG SHARES
D] DUE IN NOVEMBER 1, 2000 = 40,000 UNREGISTERED CEEG SHARES
E] DUE IN FEBRUARY 1, 2001 = 40,000 UNREGISTERED CEEG SHARES
<PAGE>
CEEG shall have no obligation to make the payments listed in Section 3.1(C),
(D), and (E) if this Agreement is terminated prior to the dates such payments
become due. CEEG understands that such amounts shall become due on such dates as
long as this Agreement has not been terminated, and CEEG will continue to be
responsible for such amounts after termination of this Agreement until such
amounts are paid.
NOTE: CFG SHALL HAVE NO OBLIGATION TO PERFORM ANY DUTIES PROVIDED FOR HEREIN IF
PAYMENT [CASH AND/OR STOCK] IS NOT RECEIVED BY CFG WITHIN 7 DAYS OF MUTUAL
EXECUTION OF THIS AGREEMENT BY THE PARTIES. IN ADDITION, CFG'S OBLIGATIONS UNDER
THIS AGREEMENT SHALL BE SUSPENDED IF ANY PAYMENT OWING HEREUNDER IS MORE THAN
FIFTEEN (15) DAYS DELINQUENT. FURTHERMORE, THE RECEIPT OF ANY FEES [CASH AND
STOCK] DUE TO CFG UPON EXECUTION OF THIS AGREEMENT ARE NOT CONTINGENT UPON ANY
PRIOR PERFORMANCE OF ANY DUTIES WHATSOEVER DESCRIBED WITHIN THIS AGREEMENT.
3.2 REGISTRATION OF SHARES. CFG shall have `piggy-back' registration rights
for all shares issued in accordance with this agreement. Appropriate
registration shall be delivered to CFG within 3 business days of filing.
3.3 Fees for Direct Investment, Merger/Acquisition. In the event that CFG, on a
non-exclusive basis, introduces CLIENT or a CLIENT affiliate to any third party
funding source(s), underwriter(s), merger partner(s) or joint venture(s) who
then enters into a funding, underwriting, merger, joint venture or similar
agreement with CLIENT or CLIENT's affiliate, CLIENT hereby agrees to pay CFG
advisory fees pursuant to the following schedule which are based on the
aggregate amount of such funding, underwriting, merger, joint venture or similar
agreement with CLIENT or CLIENT's affiliate. Advisory fees are deemed earned and
shall be due and payable at the first close of the transaction, however, in
certain circumstances when payment of advisory fees at closing is not possible,
within 24 hours after CLIENT has received the proceeds of such investment. This
provision shall survive this Agreement for a period of one year after
termination or expiration of this Agreement. In other words, the advisory fee
shall be deemed earned and due and payable for any funding, underwriting,
merger, joint venture or similar transaction which first closes within a year of
the termination or expiration of this Agreement as a result of an introduction
as set forth above. CFG shall also be entitled to 50.0% of the investment
marketing fee outlined in paragraph 3.3 A or B below in connection with any and
all investment offers from CLIENT or any other source (not including those
introduced by CFG) when CFG is invited to participate or assist in negotiations.
Agreed, CLIENT INITIALS: ________________
A. Direct Investment. For a direct investment made in
CLIENT by a third party investor either introduced to
CLIENT by CFG or which contacted CLIENT directly as a
result of CFG's efforts, CLIENT shall pay CFG a
finder' s fee of 5.0 % of total investment amount
received by CLIENT from the third party investor.
<PAGE>
B. Merger/Acquisition. For a merger/acquisition entered
into by CLIENT as a result of the efforts of, or an
introduction by CFG during the term of this
Agreement, Client shall pay CFG 5.0% of the total
value of the transaction. The 5.0% shall be paid in
cash upon the date of the closing of the
merger/acquisition. Additionally, (i) if stock is
used as part or all of the consideration in the
transaction, CFG shall receive freely trading stock
equivalent to 10% of the stock (used for the
transaction) upon close of transaction, and (ii) upon
close of a successful merger or acquisition, CFG
shall receive 3% of the value of the combined, merged
or surviving entity (whichever is larger) in the form
of the surviving entity's free trading stock.
THE FEES PROVIDED FOR IN SECTIONS 3.2 AND 3.3 ARE NOT
INTENDED TO AND WILL NOT APPLY CUMULATIVELY TO THE
SAME FUNDING; HOWEVER, EACH MAY APPLY TO DIFFERENT
PORTIONS OF A TRANSACTION COMPRISING DIFFERENT
FUNDING SOURCES.
3.4 Expenses. If CLIENT accepts any investment provided under this
Agreement, CLIENT shall reimburse CFG for reasonable expenses
incurred in performing its duties pursuant to this Agreement
(including printing, postage, express mail, photo
reproduction, travel, lodging, and long distance telephone and
facsimile charges); provided, however, that CFG must receive
prior written approval from CLIENT for any expenses over $500.
Such reimbursement shall be payable within 24 hours after
CLIENT's receipt of CFG invoice for same.
3.5 Additional Fees. CLIENT and CFG shall mutually agree upon any
additional fees that CLIENT may pay in the future for services
rendered by CFG under this Agreement. Such additional
agreement(s) may, although there is no requirement to do so,
be attached hereto and made a part hereof as Exhibits
beginning with Exhibit A.
3.6 Interest on Funds Due. CLIENT shall pay interest on all
payments in arrears due CFG, at the rate of one percent (1.0%)
per each thirty (30) days after payment is first due.
3.7 Investment Source(s) Disclosure. It is fully understood that
in some cases CFG's investment/lending sources are sources
that may be public sources which may independently approach
CLIENT without the assistance of CFG. CFG makes no claims to
have special relationships with sources and is not to be
considered as having any capabilities of expediting or
`pushing' CLIENT's case through any approval channels outside
the norm of any request of this type. The sources in the CFG
database are sources compiled by CFG from created
relationships as well as lists purchased or requested for the
purpose of building a comprehensive lender/investor marketing
service.
Agreed, CLIENT INITIALS: DBH
---
<PAGE>
4. Indemnification. The CLIENT agrees to indemnify and hold harmless CFG,
each of its officers, directors, employees and shareholders against any
and all liability, loss and costs, expenses or damages, including but
not limited to, any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced
or threatened, or any claim whatsoever or howsoever caused by reason of
any injury (whether to body, property, personal or business character
or reputation) sustained by any person or to any person or property,
arising out of any act, failure to act, neglect, any untrue or alleged
untrue statement of a material fact or failure to state a material fact
which thereby makes a statement false or misleading, or any breach of
any material representation, warranty or covenant by CLIENT or any of
its agents, employees, or other representatives. Nothing herein is
intended to nor shall it relieve either party from liability for its
own willful act, omission or negligence. All remedies provided by law,
or in equity shall be cumulative and not in the alternative.
CFG agrees to indemnify and hold harmless CLIENT, each of its officers,
directors, employees and shareholders against any and all liability,
loss and costs, expenses or damages, including but not limited to, any
and all expenses whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened,
or any claim whatsoever or howsoever caused by reason of any injury
(whether to body, property, personal or business character or
reputation) sustained by any person or to any person or property,
arising out of any act, failure to act, neglect, any untrue or alleged
untrue statement of a material fact or failure to state a material fact
which thereby makes a statement false or misleading, or any breach of
any material representation, warranty or covenant by CFG or any of its
agents, employees, or other representatives. Nothing herein is intended
to nor shall it relieve either party from liability for its own willful
act, omission or negligence. All remedies provided by law, or in equity
shall be cumulative and not in the alternative
5. CLIENT Representations. CLIENT hereby represents, covenants and
warrants to CFG as follows:
5.1 Authorization. CLIENT and its signatories herein have full
power and authority to enter into this Agreement and to carry
out the transactions contemplated hereby.
5.2 No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions
contemplated hereby will violate any provision of the charter
or by-laws of CLIENT, or violate any terms of provision of any
other material agreement to which CLIENT is a party or any
applicable statute or law.
5.3 Contracts in Full Force and Effect. All contracts, agreements,
plans, leases, policies and licenses to which CLIENT is a
party are valid and in full force and effect.
5.4 Litigation. Except as set in Schedule 1 attached hereto (if
necessary), there is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental or other
regulatory or administrative agency or commission pending or,
to the best knowledge of CLIENT, threatened against or
invoking CLIENT, or which questions or challenges the validity
of this Agreement or its subject matter and CLIENT does not
know or have any reason to know of any valid basis for any
such action, proceeding or investigation.
<PAGE>
5.5 Consents. No consent of any person, other than the signatories
hereto, is necessary to the consummation of the transactions
contemplated hereby, including, without limitation, consents
from parties to loans, contracts, lease or other agreements
and consents from governmental agencies, whether federal,
state, or local.
5.6 CFG Reliance. CFG has and will rely upon the documents,
instruments, their contents and any other written information
furnished to CFG by CLIENT, its officers or designated
employees.
5.7 CLIENT's Material. All representations and statements provided
herein about CLIENT are true and complete and accurate. CLIENT
agrees to indemnify, hold harmless, and defend CFG, its
officers, directors, agents and employees, at CLIENT's expense
for any proceeding or suit which may raise out of any
inaccuracy or incompleteness of any such material or written
information supplied to CFG per Section 4 herein.
5.8 CLIENT'S Affiliates and Other Material. To the best of
CLIENT's knowledge, CLIENT warrants and affirms that all
representations and warranties provided herein regarding
CLIENT are true, complete and accurate with respect to and if
applied to CLIENT's affiliates as well.
6. CFG Representations. CFG hereby represents, covenants and warrants to
CLIENT as follows:
6.1 Authorization. CFG and its signatories herein have full power
and authority to enter into this Agreement and to carry out
the transactions contemplated hereby.
6.2 No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions
contemplated hereby will violate any provision of the charter
or by-laws of CFG, or violate any terms of provision of any
other material agreement to which CFG is a party or any
applicable statute or law.
6.3 Contracts in Full Force and Effect. All contracts, agreements,
plans, leases, policies and licenses to which CFG is a party
are valid and in full force and effect.
6.4 Litigation. Except as set in Schedule 2 attached hereto (if
necessary), there is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental or other
regulatory or administrative agency or commission pending or,
to the best knowledge of CFG, threatened against or invoking
CFG, or which questions or challenges the validity of this
Agreement or its subject matter and CFG does not know or have
any reason to know of any valid basis for any such action,
proceeding or investigation.
<PAGE>
6.5 Consents. No consent of any person, other than the signatories
hereto, is necessary to the consummation of the transactions
contemplated hereby, including, without limitation, consents
from parties to loans, contracts, lease or other agreements
and consents from governmental agencies, whether federal,
state, or local.
6.6 CLIENT Reliance. CLIENT has and will rely upon the documents,
instruments, their contents and any other written information
furnished to CLIENT by the CFG, its officers or designated
employees.
6.7 CFG's Material. All representations and statements provided
herein about CFG are true and complete and accurate. CFG
agrees to indemnify, hold harmless, and defend CLIENT, its
officers, directors, agents and employees, at CFG's expense
for any proceeding or suit which may raise out of any
inaccuracy or incompleteness of any such material or written
information supplied to CLIENT per Section 4 herein.
6.8 CFG's Affiliates and Other Material. To the best of CFG's
knowledge, CFG warrants and affirms that all representations
and warranties provided herein regarding CFG are true,
complete and accurate with respect to and if applied to CFG's
affiliates as well.
7. Services Not Expressed or Implied.
7.1. CFG is not and will not be a market-maker (but may act as a
placement agent by other "Selling Agreement" from
time-to-time) in CLIENT's securities or in any securities or
securities in which CLIENT or CLIENT's affiliates has an
interest; and,
7.2. Any payments made herein to CFG are not, and shall not be
construed as, compensation to CFG for the purpose of making a
market, to cover CFG's out-of-pocket expenses for making a
market, or for the submission by CFG of an application to make
a market in any securities; and,
7.3. No payments made herein to CFG are for the purpose of
affecting the price of any security or influencing any
market-making functions, including but not limited to, bid/ask
quotations, initiation and termination of quotations, retail
securities activities, or for the submission of any
application to make a market.
8. Confidentiality.
8.1 CFG and CLIENT each agree to keep confidential and provide
reasonable security measures to keep confidential information
where release may be detrimental to their respective business
interests. CFG and CLIENT shall each require their employees,
agents, affiliates, other licensees, and others who will have
access to the information through CFG and CLIENT respectively,
to first enter appropriate non-disclosure Agreements requiring
the confidentiality contemplated by this Agreement in
perpetuity.
<PAGE>
8.2 CFG will not, either during its engagement by the CLIENT
pursuant to this Agreement or at any time thereafter,
disclose, use or make known for its or another's benefit any
confidential information, knowledge, or data of the CLIENT or
any of its affiliates in any way acquired or used by CFG
during its engagement by the CLIENT. Confidential information,
knowledge or data of the CLIENT and its affiliates shall not
include any information that is, or becomes generally
available to the public other than as a result of a disclosure
by CFG or its representatives.
9. Miscellaneous Provisions.
9.1 Amendment and Modification. This Agreement may be amended,
modified and supplemented only by written agreement of CFG and
CLIENT.
9.2 Waiver of Compliance. Any failure of either party hereto to
comply with any obligation, agreement, or condition herein may
be expressly waived in writing, but such waiver or failure to
insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
9.3 Expenses, Taxes, Etc. Other than as expressly set forth in
this Agreement, the parties shall bear their own costs and
expenses, including any applicable taxes, in carrying out the
provisions of this Agreement.
9.4 Compliance with Regulatory Agencies. Each party agrees that
all actions, direct or indirect, taken by it and its
respective agents, employees and affiliates in connection with
this Agreement and any financing or underwriting hereunder
shall conform to all applicable Federal and State securities
laws.
9.5 Notices. Any notices to be given hereunder by either party to
the other may be effected either by personal delivery in
writing, by a reputable, national overnight delivery service,
by facsimile transmission or by mail, registered or certified,
postage prepaid with return receipt requested. Notices shall
be addressed to the "Contact Person" at the addresses
appearing on the signature page of this Agreement, but any
party may change his address or Contact Person by written
notice in accordance with this subsection. Notices delivered
personally shall be deemed delivered as of actual receipt,
notices sent by facsimile shall be deemed delivered one (1)
day after electronic confirmation of receipt, notices sent by
overnight delivery service shall be deemed delivered one (1)
day after delivery to the service, mailed notices shall be
deemed delivered as of five (5) days after mailing.
<PAGE>
9.6 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
The obligations of either party hereunder cannot be assigned
without the express written consent of the other party.
9.7 Publicity. Neither CFG nor CLIENT shall make or issue, or
cause to be made or issued, any announcement or written
statement concerning this Agreement or the transactions
contemplated hereby for dissemination to the general public
without the prior written consent of the other party. This
provision shall not apply, however, to any announcement or
written statement required to be made by law or the
regulations of any Federal or State governmental agency,
except that the party required to disclose shall consult with
and make reasonable efforts to accommodate changes to the
required disclosure and the timing of such announcement
suggested by the other party.
9.8 Governing Law; Venue. This Agreement and the legal relations
among the parties hereto shall be governed by and construed in
accordance with the laws of the State of California, without
regard to its conflict of law doctrine. CLIENT and CFG agree
that if any action is instituted to enforce or interpret any
provision of this Agreement, the jurisdiction and venue shall
be San Diego County, California.
9.9 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
9.10 Headings. The heading of the sections of this Agreement are
inserted for convenience only and shall not constitute a part
hereto or affect in any way the meaning or interpretation of
this Agreement.
9.11 Entire Agreement. This Agreement including any Exhibits
hereto, and the other documents and certificates delivered
pursuant to the terms hereto, set forth the entire agreement
and understanding of the parties hereto in respect of the
subject matter contained herein, and supersedes all prior
agreements, promise, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officers employee or representative of any party hereto.
9.12 Third Parties. Except as specifically set forth or referred to
herein, nothing herein express or implied is intended or shall
be construed to confer upon or give to any person or entity
other than the parties hereto and their successors or assigns,
any rights or remedies under or by reason of this Agreement.
9.13 Attorneys' Fees and Costs. If any action is necessary to
enforce and collect upon the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys'
fees and costs, in addition to any other relief to which that
party may be entitled. This provision shall be construed as
applicable to the entire Agreement.
<PAGE>
9.14 Survivability. If any part of this Agreement is found, or
deemed by a court of competent jurisdiction, to be invalid or
unenforceable, that part shall be severable from the remainder
of the Agreement.
9.15 Further Assurances. Each of the parties agrees that it shall
from time-to-time take such actions and execute such
additional instruments as may be reasonably necessary or
convenient to implement and carry out the intent and purposes
of this Agreement.
9.16 Relationship of the Parties. Nothing contained in this
Agreement shall be deemed to constitute either party becoming
the partner of the other, the agent or legal representative of
the other, nor create any fiduciary relationship between them,
except as otherwise expressly provided herein. It is not the
intention of the parties to create nor shall this Agreement be
construed to create any commercial relationship or other
partnership. Neither party shall have any authority to act for
or to assume any obligation or responsibility on behalf of the
other party, except as otherwise expressly provided herein.
The rights, duties, obligations and liabilities of the parties
shall be separate, not joint or collective. Each party shall
be responsible only for its obligations as herein set out and
shall be liable only for its share of the costs and expenses
as provided herein.
9.17 No Authority to Obligate the CLIENT. Without the consent of
the Board of Directors of CLIENT, CFG shall have no authority
to take, nor shall it take, any action committing or
obligating CLIENT in any manner, and it shall not represent
itself to others as having such authority.
10. Arbitration. ALL DISPUTES, CONTROVERSIES, OR DIFFERENCES BETWEEN CLIENT, CFG
OR ANY OF THEIR OFFICERS, DIRECTORS, LEGAL REPRESENTATIVES, ATTORNEYS,
ACCOUNTANTS, AGENTS OR EMPLOYEES, OR ANY CUSTOMER OR OTHER PERSON OR ENTITY,
ARISING OUT OF, IN CONNECTION WITH OR AS A RESULT OF THIS AGREEMENT, SHALL BE
RESOLVED THROUGH ARBITRATION RATHER THAN THROUGH LITIGATION. WITH RESPECT TO THE
ARBITRATION OF ANY DISPUTE, THE UNDERSIGNED HEREBY ACKNOWLEDGE AND AGREE THAT:
A. ARBITRATION IS FINAL AND BINDING ON THE PARTIES;
B. THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDY IN
COURT, INCLUDING THEIR RIGHT TO JURY TRIAL;
C. PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED
AND DIFFERENT FROM COURT PROCEEDING;
<PAGE>
D. THE ARBITRATOR'S AWARD IS NOT REQUIRED TO INCLUDE
FACTUAL FINDINGS OR LEGAL REASONING AND ANY PARTY'S
RIGHT OF APPEAL OR TO SEEK MODIFICATION OF RULING BY
THE ARBITRATORS IS STRICTLY LIMITED;
E. THIS ARBITRATION PROVISION IS SPECIFICALLY INTENDED
TO INCLUDE ANY AND ALL STATUTORY CLAIMS WHICH MIGHT
BE ASSERTED BY ANY PARTY;
F. EACH PARTY HEREBY AGREES TO SUBMIT THE DISPUTE FOR
RESOLUTION TO THE AMERICAN ARBITRATION ASSOCIATION,
IN SAN DIEGO, CALIFORNIA WITHIN FIVE (5) DAYS AFTER
RECEIVING A WRITTEN REQUEST TO DO SO FROM THE OTHER
PARTY;
G. IF EITHER PARTY FAILS TO SUBMIT THE DISPUTE TO
ARBITRATION ON REQUEST, THEN THE REQUESTING PARTY MAY
COMMENCE AN ARBITRATION PROCEEDING, BUT IS UNDER NO
OBLIGATION TO DO SO;
H. ANY HEARING SCHEDULED AFTER AN ARBITRATION IS
INITIATED SHALL TAKE PLACE IN SAN DIEGO COUNTY,
CALIFORNIA;
I. IF EITHER PARTY SHALL INSTITUTE ANY COURT PROCEEDING
IN AN EFFORT TO RESIST ARBITRATION AND BE
UNSUCCESSFUL IN RESISTING ARBITRATION OR SHALL
UNSUCCESSFULLY CONTEST THE JURISDICTION OF ANY
ARBITRATION FORUM LOCATED IN SAN DIEGO COUNTY,
CALIFORNIA, OVER ANY MATTER WHICH IS THE SUBJECT OF
THIS AGREEMENT, THE PREVAILING PARTY SHALL BE
ENTITLED TO RECOVER FROM THE LOSING PARTY ITS LEGAL
FEES AND ANY OUT-OF-POCKET EXPENSES INCURRED IN
CONNECTION WITH THE DEFENSE OF SUCH LEGAL PROCEEDING
OR ITS EFFORTS TO ENFORCE ITS RIGHTS TO ARBITRATION
AS PROVIDED FOR HEREIN;
J. THE PARTIES SHALL ACCEPT THE DECISION OF ANY AWARD AS
BEING FINAL AND CONCLUSIVE AND AGREE TO ABIDE
THEREBY;
K. ANY DECISION MAY BE FILED WITH ANY COURT AS A BASIS
FOR JUDGMENT AND EXECUTION FOR COLLECTION;
11. Term/Termination. This Agreement is a quarterly agreement for the term
of one (1) year and shall terminate automatically on April 17, 2001. However,
CLIENT or CFG shall have the right to terminate the balance of this Agreement at
any time seventy (70) days after the date hereof, provided written notice is
given to the other party at least fifteen (15) days prior to the expiration of
the current quarter of the Agreement.
10. Registration Of Shares. CFG shall have standard piggyback registration
rights of all shares issued in accordance with this agreement.
12. Non Circumvention. In and for valuable consideration, CLIENT hereby agrees
that CFG may introduce (whether by written, oral, data, or other form of
communication) CLIENT to one or more opportunities, including, without
limitation, existing or potential investors, lenders, borrowers, trusts, natural
persons, corporations, limited liability companies, partnerships, unincorporated
businesses, sole proprietorships and similar entities (hereinafter an
"Opportunity" or ""Opportunities""). CLIENT further acknowledges and agrees that
the identity of the subject Opportunities, and all other information concerning
an Opportunity (including without limitation, all mailing information, phone and
fax numbers, email addresses and other contact information) introduced hereunder
are the property of CFG, and shall be treated as confidential and proprietary
information by CLIENT, it affiliates, officers, directors, shareholders,
employees, agents, representatives, successors and assigns. CLIENT shall not use
such information, except in the context of any arrangement with CFG in which CFG
is directly and actively involved, and never without CFG's prior written
approval. CLIENT further agrees that neither it nor its employees, affiliates or
assigns, shall enter into, or otherwise arrange (either for it/him/herself, or
any other person or entity) any business relationship, contact any person
regarding such Opportunity, either directly or indirectly, or any of its
affiliates, or accept any compensation or advantage in relation to such
Opportunity except as directly though CFG, without the prior written approval of
CFG. CFG is relying on CLIENT's assent to these terms and their intent to be
bound by the terms by evidence of their signature.
<PAGE>
Without CLIENT's signed assent to these terms, CFG would not introduce any
Opportunity or disclose any confidential information to CLIENT as herein
described.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, all as of the day and year first above written.
CLIENT:
CAPITA RESEARCH GROUP, INC.
Print Name: David B. Hunter
Sign Name: /s/ David B. Hunter
-------------------
Title: President & CEO
Date: 4/24/00
---------
Address: 591 Skippack Pike, Suite 300
------------------------------
Blue Bell, PA 19422
Contact Person: Steven Plisinski, CFO
CFG:
THE CHARTERBRIDGE FINANCIAL GROUP, INC.
Print Name: Richard H. Walker
Sign Name: /s/ Richard H. Walker
----------------------
Title: President & CEO
Date: 4/24/00
---------
Address: 350 W. Ash St. Ste. 1002
--------------------------
San Diego, CA 92101
Contact Person: Stuart Smith
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Capita Research Group, Inc.
Blue Bell, Pennsylvania
We consent to the inclusion of our report, dated February 25, 2000, on the
consolidated financial statements of Capita Research Group, Inc. and Subsidiary,
and to the reference to our Firm under the heading "Experts," in the
Registration Statement on Form SB-2, relating to registration of 5,380,000
shares of the Company's common stock
By: /s/ Rudolph, Palitz LLC
---------------------------
RUDOLPH, PALITZ LLC
Blue Bell, Pennsylvania
May 9, 2000
