U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended: December 31, 1998
Commission File No. 0-23780
MEDIAX CORPORATION
(Exact Name of Small Business Issuer as Specified in its Charter)
Nevada
(State or Other Jurisdiction of Incorporation or Organization)
84-1107138
(I.R.S. Employer Identification Number)
8522 National Boulevard, Suite 110, Culver City, California 90232
(Address of Principal Executive Offices, Including Zip Code)
(310) 815-8002
Issuer's Telephone Number
Securities Registered Pursuant to Section 12(b) of the Act: None.
Securities Registered Pursuant to Section 12(g) of the Act:
SHARES OF COMMON STOCK,$.0001 PAR VALUE
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
The Issuer's revenues for its most recent fiscal year were $ 162,021
The aggregate market value of the Issuer's Common Stock,$.0001 Par Value, held
by non-affiliates of the Issuer, based on the closing sale price of the Common
Stock on March 31, 1999 as reported on the OTC Bulletin Board, was approximately
$12,200,000.
As of March 31, 1999 there were 4,075,375 shares of the Issuer's Common
Stock,$.0001 Par Value, outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
MediaX Corporation (the "Registrant" or the "Company") was incorporated
under the laws of the State of Colorado on August 15, 1986 under the name Fata
Morgana, Inc. On September 15, 1988, the Company changed its name to Edinburgh
Capital, Inc. On May 13, 1994, the Company merged into Edinburgh Capital, Inc.
(a Nevada corporation) in order to change its state of domicile to Nevada.
The Company was originally formed for the primary purpose of seeking
out acquisitions of properties, businesses, or merger candidates, without
limitation as to the nature of the business operations or geographic area of the
acquisition candidate. From inception through the date of completion of its
initial public offering of securities, the Company's activities were directed
toward the acquisition of operating capital.
The Company completed its initial public offering in October, 1989,
receiving net proceeds of approximately $245,000 from the sale of 30,000 Units
(each Unit consisting of 1,000 shares of the Company's no par value common
stock, and 100 common stock purchaser warrants exercisable at $.02) at $10 per
unit. The warrants expired in 1992.
During April 1994, the Company effected a 1 for 300 reverse stock split
and on February 23, 1996, the Company effected a 3.13 for 1 forward stock split.
On February 23, 1996, the name of the Company was changed to Zeitgeist
Werks, Inc. On February 24, 1996, the Company acquired all of the issued and
outstanding shares of Zeitgeist, Inc., a Nevada corporation, in exchange for
1,250,000 shares of its common stock.
On June 27, 1996, MediaX, a California corporation, was merged into
Zeitgeist, Inc., and the Company issued 203,750 shares of its common stock to
the former shareholders of MediaX. On August 16, 1996 the Company changed its
name to MediaX Corporation.
During November 1998, the Company effected a 1 for 10 reverse stock
split. All financial information and share data in the remainder of this Report
gives retroactive effect to the reverse stock split (including the two
aforementioned stock splits).
DESCRIPTION OF BUSINESS
As a result of the Company's acquisition of all of the issued and
outstanding shares of Zeitgeist, Inc. and MediaX, Inc., the Company has now a
new management and a new business plan. The Company will operate primarily in
e-commerce, multimedia services and product development. It has obtained rights
to intellectual properties, produces and publishes multimedia software and
content mainly for the Internet and for Satellite broadcasting channels. The
Company intends to maintain strict control of both quality and costs and to
retain profit margins that are traditionally dispersed across many small
companies, by taking a comprehensive approach to production and electronic
distribution of its products.
Management believes that due to the varied and extensive expertise of
it President, Executive Vice President and outside director in the areas of :
artist and record company management, film production, software development and
distribution and proprietary technology development, the Company will bridge the
entertainment and technology markets and enter into the Internet e-commence
market.
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PRINCIPAL PRODUCTS AND SERVICES
New Products and Services The Company designs and hosts high-value
celebrity web sites such as rodstewartlive.com and divinemusik.com and others.
The web site entertainment content includes live-chats, on-line shopping for
artist specific merchandise and the production of Internet events such as live
concerts that are globally broadcast on the Internet. The Company has
established affiliate relationships with companies like Broadcast.com, AOL,
Yahoo! and others for this purpose. In February 1999, The Company initiated
amuZnet.com, an e-commerce site offering more than 260,000 entertainment titles
on CDs, DVDs and Videos by major record labels and studios and over 4,000
independent music labels for purchase on-line. The Company purposely directs the
high-traffic generated by the celebrity web sites through amuZnet.com with a
simple link. This site is constantly updated and developed into a "destination
site" serving increasing revenue streams through its e-commerce model.
The Company plans to provide the same services on an interactive
satellite channel, which will be launched late summer 1999. Contracts are signed
with EchoStar, one of the largest satellite providers, to implement this model
for interactive satellite distribution.
Historical Products and Services
The Company has developed, produced and marketed software products for
the information entertainment and development tool sector of the software
industry in the form of software distributed on floppy disks and CD-ROM's. Three
released CD-ROM products are "On the Road with BB King, "Queensryche's Promised
Land" and "Peter Norton - PC Guru" distributed by MCA, EMI Records and the
Company, respectively.
The Company was selected by Apple Computer to produce the Welcome
Experience for their limited edition Twentieth Anniversary Macintosh which was
introduced on March 19, 1997. The multimedia presentation featured leading-edge
animation, digital video, interactive 3D graphics, original soundtrack and
theater quality audio which highlighted Macintosh's extreme multimedia
capabilities.
In December 1997, the Company released and distributed "Peter Norton -
PC Guru." During the fourth quarter of 1998, it was determined that this product
would not gain significant additional sales beyond 1998, therefore, the Company
has ceased distribution of the product.
The "Big Brother" project, based on George Orwell's novel "1984", is
currently in the final stages of production. The Company obtained production and
exclusive publishing rights during December, 1996 from Newspeak Media, Inc. The
Company is in discussions with several leading publishers for product licensing
and hopes to conclude an agreement within the following year.
PATENTS, TRADEMARKS AND LICENSES
As a developer, the Company intends to develop mainly its own
proprietary titles, which will result in the development of innovative
technology solutions with broad applications in other growing markets,
especially in the on-line environment. The Company owns several Internet domain
names. The Company either has filed or in the process of filing the appropriate
applications for patents, trademarks or licenses for it's products.
COMPETITION
The Company is a minor participant among companies which engage in
multimedia and Internet content development. Many of these companies have
significantly greater capitalization and experience in this industry.
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EMPLOYEES
The Company presently has 20 employees and subcontractors.
YEAR 2000
The Year 2000 issue could result in system failures or
miscalculations causing disruptions of operations, including, among others, a
temporary inability to process transactions, send invoices or engage in similar
normal business activities which may materially adversely affect the Company. To
date, the Company has experienced very few problems related to Year 2000
problems and the Company does not believe that it has material exposure to the
Year 2000 issue with respect to the Company's information systems as these
systems correctly defined the Year 2000.
The Company is currently conducting an analysis to determine the extent
to which the systems of third parties raise Year 2000 issues may affect the
Company. However, we cannot assure that the providers the Company uses to fill
orders for direct-to-consumer products, will, in fact be year 2000 compliant on
a timely basis. Generally, the Company is unable to predict the extent to which
the Year 2000 issue will effect it's suppliers, or the extent to which the
Company would be vulnerable to it's suppliers' failure to remediate any Year
2000 issues on a timely basis. The failure of a major supplier subject to the
Year 2000 issue to convert its systems on a timely basis or a conversion that is
incompatible with the Company's systems could have a material adverse effect on
the Company, which is not currently quantifiable. In addition, most of the
purchases from the Company's on-line web site are made with credit cards, and
the Company's operations may be materially adversely affected to the extent the
Company's customers are unable to use their credit cards due to Year 2000 issues
that are not rectified by credit card providers.
ITEM 2. DESCRIPTION OF PROPERTY
The Company maintains its corporate office at 8522 National Boulevard,
Suite 110, Culver City, California 90232. The Company renewed its lease on a
month-to-month basis and pays approximately $3,200 per month for rent. The
Company maintains its software development office at 303 Potrero St., #42-302,
Santa Cruz, California 95060. The Company pays approximately $3,146 per month
for rent pursuant to a lease which expires in June 2000.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings, and the Company is not aware of
any threatened legal proceedings to which it is a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended December 31, 1998, other than as
follows:
On December 31, 1998, three shareholders of the Company holding a
majority of the voting power, acting pursuant to Nevada law and in lieu of an
annual meeting, elected Nancy Poertner, Rainer Poertner and Matthew MacLaurin to
serve as directors for the ensuing year and ratified the appointment of Davis &
Co. CPA's P.C. as the Company's independent accountants for the year ended
December 31, 1998. Notice of the proposed written consent in lieu of an annual
meeting was filed with the SEC on Schedule 14C and mailed to all shareholders of
record on November 12, 1998.
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) MARKET INFORMATION. The Company's Common Stock is traded on the
over-the-counter market. The following table sets forth the high and low bid
price for the Company's Common Stock for the periods indicated as reported by
the NASD's Electronic Bulletin Board. These prices are believed to be
inter-dealer quotations and do not include retail mark-ups, mark-downs, or other
fees or commissions, and may not necessarily represent actual transactions.
Quarter Ended High Bid Low Bid
- ------------------ -------- -----------
March 31, 1998 $13.31 $3.80
June 30, 1998 $ 5.00 $1.30
September 30, 1998 $ 3.50 $1.50
December 31, 1998 $ 3.00 $ .60
March 31, 1999 $ 4.88 $2.00
(b) HOLDERS. As of March 31, 1999, the Company had approximately 900
shareholders of record. This does not include shareholders who hold stock in
their accounts at broker/dealers.
(c) DIVIDENDS. The Company has never paid a cash dividend on its common
stock and does not expect to pay a cash dividend in the foreseeable future.
(d) RECENT SALES OF UNREGISTERED SECURITIES.
Stock sales
During April to December 1998, the Company sold 468,313 shares
to an accredited unrelated investor for proceeds of $500,000 pursuant to an
agreement which grants to this investor and several other accredited unrelated
investors non-dilutable and dilutable warrants to purchase up to 3,180,130
shares of common stock at varying prices tied to the average market bid ten days
prior to being exercised. The warrants expire from April 28 to September 7,
2001. 200,000 of these warrants were exercised during December of 1998,
resulting in the issuance of 200,000 shares for proceeds of $20,000.
Another accredited unrelated investor purchased 124,000 shares
during February 1998 for proceeds of $200,000. These purchases included warrants
to purchase up to 30,000 additional shares at $15.00 per share. These warrants
expire in February 2001.
Convertible Securities
On March 1, 1998, the Company replaced certain outstanding
debentures with a new convertible debenture for $850,000 which pays interest at
the same rate as the replaced debentures and is due on September 1, 1999. The
principal sum of the new debenture and any accrued interest may be converted
into common shares at any time prior to the due date at $1.75 per share. Accrued
interest at December 31, 1998 was $73,754. On March 1, 1999 the investor
converted $350,000 of principal into 200,000 shares of common stock.
Other Securities
The following options were granted to unrelated parties during
1998. In July a public relations consultant was granted options to purchase up
to 25,000 shares of the Company's common stock at $4.00. During December two
investment advisors were granted options to purchase up to 100,000 shares of the
Company's common stock at $.50 each. Two business transition specialists
assisting with E-commerce were granted options to purchase of up to 105,000
shares, 75,000 at $.98 per share and 30,000 at the bid value on the date of
exercise.
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Exemption from registration under the Securities Act of 1933,
as amended (the "Act"), is claimed for the sale of all the securities set forth
above in reliance upon the exemption afforded by Section 4(2) of the Act.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following information should be read in conjunction with the
financial statements and the notes thereto. The analysis set forth below is
provided pursuant to applicable Securities and Exchange Commission regulations
and is not intended to serve as a basis for projections of future events.
FORWARD-LOOKING STATEMENTS
EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
DISCUSSED IN THIS FORM 10-KSB ARE FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE SET FORTH IN SUCH FORWARD LOOKING STATEMENTS. SUCH RISKS
AND UNCERTAINTIES INCLUDE, WITHOUT LIMITATION, THE COMPANY'S DEPENDENCE ON THE
TIMELY DEVELOPMENT, INTRODUCTION AND CUSTOMER ACCEPTANCE OF PRODUCTS, THE IMPACT
OF COMPETITION AND DOWNWARD PRICING PRESSURES, THE ABILITY OF THE COMPANY TO
REDUCE ITS OPERATING EXPENSES AND RAISE ANY NEEDED CAPITAL, THE EFFECT OF
CHANGING ECONOMIC CONDITIONS, AND RISKS IN TECHNOLOGY DEVELOPMENT.
GOING CONCERN
The Company has experienced recurring net losses and has limited liquid
resources. Management's intent is to increase the Company's sales and continue
searching for additional sources of capital. In the interim, the Company will
continue operating with minimal overhead and administrative functions will be
provided by key employees and consultants, some of whom are compensated
primarily in the form of the Company's common stock. The Company may need to
utilize its common stock to fund its operations through fiscal 1999.
Accordingly, the accompanying consolidated financial statements have been
presented under the assumption the Company will continue as a going concern.
NEW BUSINESS PLAN
The Company designs and hosts high-value celebrity web sites such as
rodstewartlive.com and divinemusik.com and others. The web site entertainment
content includes live-chats, on-line shopping for artist specific merchandise
and the production of Internet events such as live concerts that are globally
broadcast on the Internet. The Company has established affiliate relationships
with companies like Broadcast.com, AOL, Yahoo! and others for this purpose. In
February 1999, The Company initiated amuZnet.com, an e-commerce site offering
more than 260,000 entertainment titles on CDs, DVDs and Videos by major record
labels and studios and over 4,000 independent music labels for purchase on-line.
The Company purposely directs the high-traffic generated by the celebrity web
sites through amuZnet.com with a simple link. This site is constantly updated
and developed into a "destination site" serving increasing revenue streams
through its e-commerce model.
Due to the new business plan and change in products and services
offered, the Company incurred a one time software write off of $255,000 during
the current year. During the fourth quarter of 1998, it was determined that this
product would not gain significant additional sales beyond 1998, therefore, the
Company has ceased distribution of the product through standard retail channels.
There was no such write off during the previous year.
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RESULTS OF OPERATIONS
Twelve Months Ended December 31, 1998 Compared to Twelve
Months Ended December 31, 1997
The Company's net sales for the twelve months ended December
31, 1998 was $162,021 as compared to $228,511 for the comparable period last
year, resulting in a decrease of $66,490 or 29%. The decrease is primarily
attributable to a change in sales mix and the lower than expected sales of the
Company's product, "Peter Norton - PC Guru."
The Company's cost of sales for the twelve months ended
December 31, 1998 was $135,988 as compared to $268,258 for the comparable period
last year, resulting in a decrease of $132,270 or 49%. The decrease is primarily
attributable to a change in sales mix and to the low sales of the Company's
newest product, "Peter Norton - PC Guru."
The Company's advertising expenses for the twelve months ended
December 31, 1998, were $531,672 as compared to none for the comparable period
last year. The increase is directly related to the utilization of prepaid
advertising for "Peter Norton - PC Guru" and the continued marketing of the
Company as an international software developer and e-commerce company.
The Company's total amortization and depreciation for the
twelve months ended December 31, 1998 was $103,003 as compared to $58,533 for
the comparable period last year. The increase is attributable to additions of
depreciable assets over the comparable period last year partially offset by the
amortization of software development costs for three quarters of the year.
The Company's professional, legal and accounting services for
the twelve months ended December 31, 1998, was $334,052 as compared to $481,237
for the comparable period last year. The decrease is primarily attributable to a
decrease of $166,865 in professional services provided by consultants under
professional advisory and management agreements over the same period last year,
partially offset by an increase of $19,680 in accounting and legal services
provided during the current year.
The Company's publicity and promotion expenses for the twelve
months ended December 31, 1998, was $163,864 as compared to $40,074 for the
comparable period last year. The increase is directly related to the promoting
of the Company's products, and continued marketing of the Company as an
international software developer and new e-commerce company.
The Company's rent, utilities, telephone and communications
and for the twelve months ended December 31, 1998, was $115,505 as compared to
$87,943 for the comparable period last year. The increase is attributable to
rent increases from the renewed leases of the Company's premises, increase in
equipment rental cost and telephone usage affecting the current year over last
year.
The Company's research and development expenses for the twelve
months ended December 31, 1998, was $275,839 as compared to none for the
comparable period last year. The increase is attributable to the software
development costs of "Big Brother" and e-commerce Internet web sites.
The Company's salaries, employee benefits, insurance and
payroll taxes for the twelve months ended December 31, 1998, increased to
$670,897 a compared to $447,565 for the comparable period last year. The
increase is attributable to increases in insurance premiums, additional
employees and salary increases which includes provisional increases in the
Company's agreements with its executive officers. However, the Company has not
and the officers' have not elected to exercise their right to the salary
increase for the final year term.
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The Company incurred a one time software development cost
write off of $255,000 for the current year. During the fourth quarter of 1998,
it was determined that this product would not gain significant additional sales
beyond 1998, therefore, the Company has ceased distribution of the product
through standard retail channels. There was no such write off during the
previous year.
The Company's travel and meetings expenses for the the twelve
months ended December 31, 1998, was $77,760 as compared to $29,460 for the
comparable period last year. The increase is directly related to promoting the
Company's products and continued marketing of the Company as an international
software developer and new e-commerce company.
The Company's other general and administrative expenses for
the twelve months ended December 31, 1998, was $115,666 as compared to $115,473
for the comparable period last year. There was no significant change in the
Company's overall operations.
The Company's other income and expenses for the twelve months
ended December 31, 1998, were $133,411 of other expenses as compared to $30,309
for comparable period year. The increase is directly related to the increase in
interest expense of $74,876 caused by an increase in principal borrowings of
convertible debt in the amount of $654,680 during the current year.
The Company's net loss for the twelve months ended December
31, 1998 was $2,762,066 as compared to $1,330,341 for the comparable period last
year. The increase in net loss of $1,431,725 is primarily attributable to: (i)
an increase in advertising expenses of $531,672 for the utilization of prepaid
advertising costs for the Company's product "Peter Norton - PC Guru"; (ii)
increase in research and development of $275,839 associated with the production
of "Big Brother" and e-commerce Internet web sites; (iii) a one time write off
of software development costs of $255,000; (iv) increase in interest expense of
$74,876; (v) increase in salaries, insurance and employee benefits of $223,332
and; (vi) partially offset by a decrease of $166,866 in professional, legal and
accounting services.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1998, the Company had negative working capital
of $1,773,728, as compared to positive working capital of $134,046 at December
31, 1997. The increase in negative working capital is attributable to the
Company utilizing it's prepaid advertising, payment of current liabilities and
for on-going operations during the year ended December 31, 1998.
The Company's success and ongoing financial viability is
contingent upon the success of its new e-commerce model, the alliance with
Echostar interactive satellite distribution, the licensing of "Big Brother" and
the generation of related cash flows.
The Company evaluates its liquidity and capital needs on a
continuous basis and based on the Company's requirements and capital market
conditions may, from time to time, raise working capital through additional debt
or equity financing. There is no assurance that such financing will be available
in the future to meet additional capital needs of the Company, or as to the
terms or conditions of any such financing that is available. Should there be any
significant delays in the release of new products, or lack of acceptance in the
marketplace for such products if released, or the Company's working capital
needs otherwise exceed its resources, the adverse consequences would be severe.
The generation of the Company's current growth and the expansion of the
Company's current business involve significant financial risk and require
significant capital investment.
As of the date of this Report, the Company had no material
commitments for capital expenditures.
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The Company plans to raise up to an additional $1.5 million
through private placements of it's common stock to provide working capital for
the Company's planned business activities. The first stage of a private
placement of $1.5 million in aggregate has been agreed upon with a Letter of
Intent of $250,000 being funded as of the date of this Report. The success, or
lack thereof, of this additional funding may have a material impact on the
future of the Company. Similarly, the lack of sufficient sales of the Company's
products will have a material impact on the future of the Company.
ITEM 7. FINANCIAL STATEMENTS
Please see pages F-1 through F-18.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The directors and executive officers of the Company, their
ages, positions held in the Company, and duration as such, are as follows:
NAME AGE POSITION HELD AND TENURE
- ------------------- --- --------------------------------------------------
Nancy Poertner 43 President, Secretary and Director since February
23, 1996
Rainer Poertner 51 Director since February 23, 1996
Matthew MacLaurin 32 Director, Executive V.P. since June 27, 1996
Jacqueline Cabellon 37 Controller since November 16, 1998
BUSINESS EXPERIENCE
The following is a brief account of the education and business
experience during at least the past five years of the Company's directors,
executive officers, and key employees, indicating the principal occupation and
employment during that period, and the name and principal business of the
organization in which such occupation and employment were carried out.
NANCY POERTNER, PRESIDENT, SECRETARY AND DIRECTOR. Ms.
Poertner has been involved in the entertainment industry since 1979. From 1981
to December 1995, she was Vice President for a major artist management company
based in Los Angeles, where she was responsible for all aspects of artist
management - domestic and international touring, marketing, promotion and album
recordings. In addition, from 1991 to December 1995, she led the international
department of a major record label distributed through MCA, resulting in sales
generating five international gold records, five top fifteen singles and two
number one positions. Several of the entertainers she has worked with include
Matthew Broderick, Rod Stewart, Toni Braxton, Suzanne Hoffs (Bangles) and
recording artist Morrissey. As a result of her years in the business, Ms.
Poertner has extensive personal relationships throughout the domestic and
international film and recording industries. Ms. Poertner was educated overseas,
graduated with a Bachelor of Arts in Education and taught in Afghanistan and
Turkey through the Peace Corps.
RAINER POERTNER, DIRECTOR. Mr. Poertner has served as a
Director of the Company since February 23, 1996. Mr. Poertner has a twelve-year
track record of bringing new and innovative computer hardware and software
technology to the international market place. He has served as President and a
Director of Syncronys Softcorp since May 8, 1995, and as Chief Executive Officer
since July 1, 1995. He left the company to fully concentrate on MediaX in July
1998. He co-founded Seamless Software Corporation ("Seamless") and served as
Director and as President of Seamless from its inception in May 1993 until its
merger with Syncronys Softcorp on May 8, 1995. After having held several
positions in the European and U.S. entertainment industries, he founded Hybrid
Arts, Inc., in 1986 by arranging $3 million of venture financing for ADAP - the
first Direct-to-Disk Digital Recording System. After arranging Hybrid Art's sale
in 1991, Mr. Poertner became CEO of Hydra Systems, Inc., which developed and
marketed ANDOR - a fully functional Macintosh CPU on a PC peripheral card. Hydra
Systems subsequently sold the technology and the inherent rights to a company in
Seoul, South Korea in 1992. Mr. Poertner received degrees in economics from the
University of Frankfurt in 1975 and the Klinger Business School in 1973.
Rainer Poertner and Nancy Poertner are husband and wife.
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MATTHEW MACLAURIN, EXECUTIVE VICE PRESIDENT. Mr. MacLaurin's
experience stretches back to the early days of PCS when, 17 years ago, he
developed games for the Commodore Pet 2001. Later, Mr. MacLaurin joined Sapiens
Software to create tools for artificial intelligence engineering on the IBM PC
XT platform. He was the key engineer for the development and implementation of
Common Lisp, a computer language for the 640K DOS platform. At Apple Computer he
secured funding for, designed and led the development of the patented GATE
system, a leading-edge artificial intelligence testing system. In Apples
Advanced Product Group, he led the development of a revolutionary pen-based
computer called Bauhaus, which incorporated handwriting recognition and an
advanced artificial intelligence memory system. In 1994, Mr. MacLaurin joined
forces with Gaben Chancellor to found the original MediaX, Inc..
JACQUELINE CABELLON, CPA. Ms. Cabellon has been controller of
the Company since November 16, 1998. Prior to that, Ms. Cabellon practiced as a
certified public accountant assisting companies with consulting and accounting
projects since January, 1993. Prior to that time, she was an accountant with
local accounting firms since December, 1996
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
No persons who were either a Director, Officer or beneficial
owner of more than 10% of the Company's Common Stock, failed to file on a timely
basis reports required by Section 16(a) of the Exchange Act during the most
recent fiscal year.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth information regarding the
executive compensation for the Company's President and Executive V.P. for the
years ended December 31, 1998, 1997 and 1996 from the Company and its
subsidiaries. No other executive officer received compensation in excess of
$100,000 during these periods. Directors serve with out compensation.
Summary Compensation Table
------------------------------------
Name and Principal Fiscal Salary Other Annual Options
Position Year ($) Compensation ($) Granted (#)
- --------------------- ---- ------- ---------------- -----------
Nancy Poertner
President, Secretary, 1998 185,000 3,500 N/A
Director 1997 158,458 6,720 N/A
1996 114,583 7,200 N/A
Matthew MacLaurin
Executive VP, 1998 125,000 N/A N/A
Director 1997 114,000 N/A N/A
1996 23,665 N/A N/A
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EMPLOYMENT AGREEMENTS
On January 1, 1996, the Company entered into an employment
agreement with Nancy Poertner, the Company's President. The agreement expires
October 31, 1999, but is automatically renewable for additional two year terms
unless either party elects to terminate the agreement. The agreement provides
for a monthly salary of $10,417 during the period from January 1, 1996 through
September 30, 1996, and an annual base salary of $155,000 during the period from
October 1, 1996, through September 30, 1997. The salary level increases by
$30,000 for each year thereafter. The agreement also provides that Nancy
Poertner will be paid a bonus within 30 days after the end of each quarter in
amounts to be determined by the Board of Directors. Nancy Poertner can terminate
the agreement at any time.
On June 26, 1996, the Company entered into an employment
agreement with Matthew MacLaurin, the Company's Executive Vice President. The
agreement expires June 30, 1999, but is automatically renewable for additional
two year terms unless either party elects to terminate the agreement. The
agreement provides for an annual base salary of $100,000 during the period from
July 1, 1996 through June 30, 1997, and an annual base salary of $125,000 during
the period from July 1, 1997 through June 30, 1998. The salary level increases
by $30,000 for each year thereafter. The agreement also provides that Matthew
MacLaurin will be paid a bonus within 30 days after the end of each quarter in
amounts to be determined by the Board of Directors. Matthew MacLaurin can
terminate the agreement at any time.
No bonuses have been declared or paid since inception of the
Company nor have the officers have elected to exercise their right to the salary
increase for the final terms of their respective agreements
OTHER AGREEMENT
Beginning August 1, 1998, the Company's chairman, Rainer
Poertner, provides full-time services to the Company pursuant to a month to
month consulting agreement requiring $10,000 for each month worked. As such, the
Company expensed and paid Mr. Poertner $50,000 and $6,000, respectively, during
the year ended December 31, 1998, and owed Mr. Poertner $44,000 as of December
31, 1998.
STOCK OPTION PLAN
During April 1996, the Board of Directors adopted a Stock
Option Plan (the "Plan"), and on July 3, 1996, the Corporation's shareholders
approved the Plan. The Plan authorized the issuance of options to purchase up to
100,000 shares of the Company's Common Stock. During December 1998, the Company
amended the Plan to increase the available amount of shares to purchase under
the plan to 500,000 shares of the Company's common stock. All options granted
must have an exercise price no less than the stock's fair market value on the
date of grant.
The Plan allows the Board to grant stock options from time to
time to employees, officers, directors and consultants of the Company. The Board
has the power to determine at the time that the option is granted whether the
option will be an Incentive Stock Option (an option which qualifies under
Section 422 of the Internal Revenue Code of 1986) or an option which is not an
Incentive Stock Option. Vesting provisions are determined by the Board at the
time options are granted. The option price for any option will be no less than
the fair market value of the Common Stock on the date the option is granted.
Since all options granted under the Plan must have an exercise
price no less than the fair market value on the date of grant, the Company will
not record any expense upon the grant of options, regardless of whether or not
they are incentive stock options. Generally, there will be no federal income tax
consequences to the Company in connection with Incentive Stock Options granted
under the Plan. With regard to options that are not Incentive Stock Options, the
Company will ordinarily be entitled to deductions for income tax purposes of the
amount that option holders report as ordinary income upon the exercise of such
options, in the year such income is reported.
[MEDIAX\10-KSB:123198.KSB]-12
11
<PAGE>
Options to purchase a total 67,816 shares at an exercise price
of $22.50 per share were granted during April 1996. There were no options
granted to officers or directors of the Company during fiscal 1998 and 1997.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1999, the
stock ownership of each person known by the Company to be the beneficial owner
of five percent or more of the Company's Common Stock, each Officer and Director
individually, and all Officers and Directors as a group. Each person has sole
voting and investment power over the shares except as noted.
Amount and Nature
Name and Address of Beneficial Interest Percent of
of Officers and Directors of Common Stock Class
- -------------------------------- ---------------------- ----------
Nancy Poertner 809,375 (1) 18%
8522 National Blvd., Suite
110 Culver City, CA 90232
Rainer Poertner 809,375 (1) 18%
3958 Ince Boulevard
Culver City, CA 90232
Assisi Limited Partnership 809,375 (1) 18%
10866 Wilshire Blvd., 15th Floor
Los Angeles, CA 90024
Matthew MacLaurin 95,625 2%
325A River Street
Santa Cruz, CA 95060
All Directors and Officers 905,000 (1) 21%
as a group (3 persons)
(1) Assisi Limited Partnership is a Nevada Limited Partnership of
which Nancy Poertner is a General Partner and owns a 100%
interest. Rainer Poertner may be deemed to be a beneficial
owner of the shares owned by Assisi Limited Partnership by
virtue of his spousal relationship to Nancy Poertner. Mr.
Poertner disclaims any beneficial interest in such shares.
The Company knows of no arrangement or understanding, the
operation of which may at a subsequent date result in a change of control of the
Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ACQUISITION OF ZEITGEIST, INC.
On February 24, 1996, the Company acquired all of the
outstanding stock of Zeitgeist, Inc. ("Zeitgeist"). The Company issued a total
of 1,250,000 shares (approximately 95%) of its common stock to the shareholders
of Zeitgeist.
[MEDIAX\10-KSB:123198.KSB]-12
12
<PAGE>
The stock issuances were made pursuant to an Agreement (the
"Agreement") among the Company, Zeitgeist and the Zeitgeist shareholders. The
terms of the Agreement were the result of negotiations between the managements
of the Company and Zeitgeist. However, Mark R. Moldenhauer, the Company's
President and a Director prior to the acquisition, held a 5.6% interest in
Zeitgeist and received 70,000 shares of common stock in the transaction.
Further, the Board of Directors did not obtain any independent "fairness"
opinion or other evaluation regarding the terms of the Agreement due to the cost
of obtaining such opinions or evaluations.
The 1,250,000 shares issued to acquire Zeitgeist were issued
to the following shareholders of Zeitgeist in the amounts set forth:
NAME NUMBER OF SHARES
- -------------------------- -----------------
Assisi Limited Partnership 947,500
Cabana Holdings Ltd. 116,250
Mizzentop Holdings Ltd. 116,250
Mark R. Moldenhauer 70,000
-----------------
Total 1,250,000
ACQUISITION OF MEDIAX
On June 27, 1996, the Company completed a transaction in which
MediaX, Inc. a California corporation, was merged with and into the Company's
wholly-owned subsidiary, Zeitgeist. The Company issued a total of 203,750 shares
of its Common Stock to the shareholders of MediaX, Inc. at the Closing, and
Assisi Limited Partnership surrendered for cancellation 203,750 of its shares of
common stock.
The stock issuances were made pursuant to an Agreement and
Plan of Reorganization ("Agreement") among the Company, Zeitgeist, MediaX, Inc.
and MediaX, Inc.'s shareholders. The terms of the Agreement were the result of
negotiations between the managements of the Company and MediaX Inc. However, the
Board of Directors did not obtain any independent "fairness" opinion or other
evaluation regarding the terms of the Agreement, due to the cost of obtaining
such opinions or evaluations.
The 203,750 shares issued to acquire MediaX, Inc. were issued
to the following shareholders of MediaX, Inc. in the amounts set forth:
NAME NUMBER OF SHARES
----------------- -----------------
Matthew MacLaurin 95,625
Gaben Chancellor 95,625
David Traub 12,500
-----------------
Total 203,750
TRANSACTIONS INVOLVING THE COMPANY
On December 6, 1995, Zeitgeist, Inc. loaned Nancy Poertner,
the Company's President, $50,000 pursuant to an unsecured note bearing interest
at 4% and with a due date of January 1, 2000. On February 25, 1996, an
additional $50,000 was loaned to Ms. Poertner on the same terms.
[MEDIAX\10-KSB:123198.KSB]-12
13
<PAGE>
On February 20, 1997, the Company entered into a Disengagement
Agreement with Gaben Chancellor ("Chancellor"), a Vice President of the Company,
pursuant to which Chancellor agreed to resign as an officer of the Company and
to transfer 65,625 of his shares of the Company's common stock to Assisi Limited
Partnership. In addition, Chancellor agreed to enter into a Consulting Agreement
with the Company to act as project manager for the "Apple Project" and to
receive a monthly consulting fee of $6,000 until the completion of the project.
(The project was completed during March 1997.) The Company also agreed to pay
Chancellor a one-time cash compensation of $32,500 for his past contributions to
the Company.
[MEDIAX\10-KSB:123198.KSB]-12
14
<PAGE>
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) 3. EXHIBITS.
<TABLE>
<CAPTION>
# DESCRIPTION LOCATION
--- ------------------------------------------------- ------------------------------------------------
<S> <C> <C>
3.1 Certificate of Incorporation Incorporated by reference to Exhibit 3.1 to
the Company's Registration Statement on
Form S-18 (No. 33-28258)
3.1 (Articles of Amendment to the Articles of Incorporated by reference to Exhibit 3.1(a) to
Incorporation dated February 23, 1996, for the name the Company's Form 10-KSB for the year
change to Zeitgeist Werks, Inc. ended December 31, 1995
3.1 (Articles of Amendment to the Articles of Incorporated by reference to Exhibit 3.1(b) to
Incorporation dated August 15, 1996, for the the Company's Form 10-KSB for the year
name change to MediaX Corporation ended December 31, 1996
3.1 (Certificate of Amendment Reverse Split Incorporated by reference to Exhibit 3.1(c) to
the Company's Schedule 14C
3.2 Bylaws Incorporated by reference to Exhibit 3.2 to
the Company's Registration Statement of
Form S-18 (No. 33-28258)
10.1 Disengagement Agreement dated February 20, 1997, Incorporated by reference to Exhibit 10.1 to
with Gaben Chancellor the Company's Form 10-KSB for the year
ended December 31, 1996
10.2 Employment Agreement dated January 1, 1996 with Incorporated by reference to Exhibit 10.2 to
Nancy Poertner the Company's Form 10-KSB for the year
ended December 31, 1996.
10.3 Employment Agreement dated June 26, 1996 with Incorporated by reference to Exhibit 10.3 to
Matthew MacLaurin the Company's Form 10-KSB for the year
ended December 31, 1996.
10.4 Consulting Agreement with Ted Ralston Filed herewith electronically
10.5 Consulting Agreement with The Globus Group, Inc Filed herewith electronically
10.6 Consulting Agreement with Winchester Investment Filed herewith electronically
Securities, Inc.
10.7 Consulting Agreement with Arnold Stiefel Filed herewith electronically
10.8 Consulting Agreement with Anne Challis Filed herewith electronically
10.9 Consulting Agreement with Liviakis Financial Filed herewith electronically
Communications, Inc.
10.10 Consulting Agreement with Richard O. Weed Incorporated by reference to Exhibit 10.A to
the Company's registration statement on
Form S-8 (No. 33-28258)
</TABLE>
[MEDIAX\10-KSB:123198.KSB]-12
15
<PAGE>
<TABLE>
<CAPTION>
# DESCRIPTION LOCATION
--- ------------------------------------------------- ------------------------------------------------
<S> <C> <C>
10.11 Consulting Agreement with Steven H. Dong Incorporated by reference to Exhibit 10.B to
the Company's registration statement on
Form S-8 (No. 33-28258)
10.12 1996 Stock Option Plan and Amendment Incorporated by reference to Exhibit 10.C to
the Company's registration statement on
Form S-8 (No. 33-28258)
10.13 Consulting Agreement with CSK Securities Filed herewith electronically
Research
10.14 Consulting Agreement with Robert J. Adsit Filed herewith electronically
10.15 Consulting Agreement with John H. Shaw Filed herewith electronically
10.16 Consulting Agreement with Retail OEM Filed herewith electronically
International Inc.
10.17 Consulting Agreement with SME Financial Filed herewith electronically
Communications
10.18 Consulting Agreement with Business News Filed herewith electronically
Network Inc.
10.19 Consulting Agreement with Willow Run Filed herewith electronically
10.20 Consulting Agreement with Tim Werry Filed herewith electronically
10.21 Agreement with Business News Network Inc. Filed herewith electronically
27 Financial Data Schedule Filed herewith electronically
</TABLE>
(b) REPORTS ON FORM 8-K. No Reports on Form 8-K were filed during the
fourth quarter of the Company's fiscal year ended December 31, 1998.
[MEDIAX\10-KSB:123198.KSB]-12
16
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Date: April 13, 1999 MEDIAX CORPORATION
By: /s/ Nancy Poertner
----------------------------------
Nancy Poertner, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following person on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- ----------------------------- -------------------- --------------
/s/ Nancy Poertner President, Secretary April 13, 1999
- ----------------------------- and Director
Nancy Poertner
/s/ Rainer Poertner Director April 13, 1999
- -----------------------------
Rainer Poertner
/s/ Matthew MacLaurin Executive V.P. and April 13, 1999
- ----------------------------- Director
Matthew MacLaurin
/s/ Jackie Cabellon Controller (Principal April 13, 1999
- ----------------------------- Accounting Officer)
Jackie Cabellon
[MEDIAX\10-KSB:123198.KSB]-12
17
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
MediaX Corporation
(A Development Stage Company)
We have audited the accompanying balance sheet of MediaX Corporation at
December 31, 1998 and the related statements of changes in stockholders' equity,
operations and cash flows for each of the two years ended December 31, 1998 and
1997 and for the period from inception (March 30, 1995) to December 31, 1998.
These financial statements are the responsibility of the Company's 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 financial statements referred to above present
fairly, in all material respects, the financial position of MediaX Corporation
at December 31, 1998 and the results of its operations and its cash flows for
each of the two years ended December 31, 1998 and 1997 for the period from
inception (March 30, 1995) to December 31, 1998 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 2, the
Company has minimal capital resources presently available to meet obligations
which normally can be expected to be incurred by similar companies, and has an
accumulated deficit of ($5,041,262) at December 31, 1998. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Davis & Co., CPAs, P.C.
---------------------------------------
Davis & Co., CPAs, P.C.
Certified Public Accountants
Englewood, Colorado
March 26, 1999
[MEDIAX\10-KSB:123198.KSB]-12
F-18
<PAGE>
<TABLE>
<CAPTION>
MEDIAX CORPORATION
(A Development Stage Company)
Balance Sheet As Of December 31, 1998
ASSETS
<S> <C>
Current assets
Cash and cash equivalents $ 19,975
Accounts receivable 76,808
Inventories 92,763
Prepaid advertising costs 100,000
Other prepaid expenses 30,325
--------------
319,871
Property and equipment
Computers and peripheral equipment 204,111
Software 162,272
Furniture and fixtures 19,859
Office equipment 19,253
--------------
405,495
Less: accumulated depreciation (229,611)
175,884
Other assets
Note and interest receivable - officer 111,830
Deferred software development costs 105,238
License agreement and trademark 102,287
Organization costs, net 1,341
Deposits and other assets 10,564
--------------
331,260
$ 827,015
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Convertible debentures payable $ 1,454,092
Notes payable, other 18,179
Subscriptions payable 320,000
Accounts payable - trade 292,852
Payroll accruals 8,476
--------------
2,093,599
Commitments, contingency and subsequent events (Notes 5, 6, and 9)
Stockholders' equity (deficit)
Preferred stock, $.0001 par value per share; -
10,000,000 shares authorized and no shares issued
Common stock, $.0001 par value per share;
7,500,000 shares authorized; 2,380,375 shares issued
and outstanding 238
Additional paid-in capital 3,774,440
Deficit accumulated during the development stage (5,041,262)
(1,266,584)
$ 827,015
</TABLE>
The accompanying notes are an integral part of this statement.
[MEDIAX\123198.FS]-12
F-19
<PAGE>
<TABLE>
<CAPTION>
MEDIAX CORPORATION
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Period From Inception (March 30, 1995) to December 31, 1998
COMMON STOCK
-----------------------------
SHARES ADDITIONAL
(As Restated) AMOUNT PAID-IN CAPITAL
------------- --------- ------------------
<S> <C> <C> <C>
Shares issued in March 1995
for cash of $.000008 per
share to an officer and 12,500,000 $ 1,250 $ (1,150)
director
Net loss for the period from
inception (March 30, 1995) to
December 31, 1995
Balance at December 31, 1995 12,500,000 1,250 (1,150)
Adjustment for shares of
Zeitgeist Werks, Inc.
outstanding immediately
prior to reorganization on
February 23, 1996, valued at 658,039 66 249,757
net monetary asset amount
Exchange of 154,000 shares
during March 1996 for notes 154,000 15 307,985
and interest payable of
$308,000
Issuance of 125,000 shares to 125,000 13 124,987
consultant on April 20, 1996
in exchange for services
Cancellation of 2,037,500 shares (2,037,500) (204)
by majority shareholder on
June 27, 1996
Issuance of 2,037,500 shares on 2,037,500 204
June 27, 1996 in exchange for
all of the stock of MediaX,
Inc. 25,100 2 52,198
Sale of 25,100 shares to
unrelated parties during June
and July 1996 at $2 per share 350,000 35 349,965
Sale of 350,000 shares to
unrelated parties during Nov. -- -- --
--------- ------------ ---------------
and Dec. 1996 at $1 per share
Net (loss) for year ended
December 31, 1996
Balance at December 31, 1996 13,812,139 $ l,381 $ 1,083,742
</TABLE>
(Continued)
The accompanying notes are an integral part of this statement.
[MEDIAX\123198.FS]-12
F-20
<PAGE>
<TABLE>
<CAPTION>
MEDIAX CORPORATION
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Period From Inception (March 30, 1995) to December 31, 1998
(Page 2)
COMMON STOCK
------------------------------
SHARES ADDITIONAL
(As Restated) AMOUNT PAID-IN CAPITAL
-------------- ----------- ---------------
<S> <C> <C> <C>
Sale of 350,000 shares to various
unrelated parties during
January and February 1997 at
$1 per share 350,000 $ 35 $ 349,965
Sale of 100,000 shares and
warrants to unrelated party
during May 1997 at $.70 per
unit 100,000 10 69,990
Sale of 542,308 shares and
warrants to various unrelated
parties during August and
September 1997 at $1.04 per
share 542,308 54 563,946
Sale of 200,000 shares to
unrelated party during August
1997 at $.74 per share 200,000 20 147,980
Conversion of note and interest
payable to Westridge Capital
(unrelated party) into 400,000
shares of common stock at
$.794 per share in August 1997 400,000 40 317,507
Issuance of 400,000 shares at
$1.50 per share to unrelated
party in exchange for prepaid
advertising during November of
1997
Commissions paid to unrelated
party for private placement
sales of stock -- -- (80,000)
Issuance of 76,000 shares at par
value to unrelated parties pursuant
to other agreements during 1997 76,000 8 --
Net (loss) for year ended
December 31, 1997 --
---------- ------------- --------------------
Balance at December 31, 1997 15,880,447 $ 1,588 $ 3,053,090
</TABLE>
(Continued)
The accompanying notes are an integral part of this statement.
[MEDIAX\123198.FS]-12
F-21
<PAGE>
<TABLE>
<CAPTION>
MEDIAX CORPORATION
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Period From Inception (March 30, 1995) to December 31, 1998
(Page 3)
COMMON STOCK
------------------------------
SHARES ADDITIONAL
(As Restated) AMOUNT PAID-IN CAPITAL
------------- ----------- ----------------
<S> <C> <C> <C>
Sale of 1,241,000 shares to
unrelated investor during 1,240,000 $ 124 $ 199,876
February and May 1998
Sale of 3,013,133 shares to
unrelated investor from April
28 through October 27, 1998 3,013,133 301 419,699
10 for 1 reverse stock split on
November 17, 1998 (18,120,205) (1,812) 1,812
Warrant exercise during
December 1998 by unrelated
investor 200,000 20 19,980
Sale of 167,000 shares to
unrelated investor during 167,000 17 79,983
December 1998
Net (loss) for year ended
December 31, 1998 -- -- --
---------- ------------ -----------------
Balance at December 31, 1998 2,380,375 $ 238 $ 3,774,440
========== ============ =================
</TABLE>
(Continued)
The accompanying notes are an integral part of this statement.
[MEDIAX\123198.FS]-12
F-22
<PAGE>
<TABLE>
<CAPTION>
MEDIAX CORPORATION
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Period From Inception (March 30, 1995) to December 31, 1998
(Page 4)
DEFICIT
ACCUMULATED TOTAL
DURING THE STOCKHOLDERS
DEVELOPMENT EQUITY
STAGE (DEFICIT)
---------------- --------------------
<S> <C> <C>
Shares issued in March 1995
for cash of $.000008 per share
to an officer and director $ -- $ 100
Net loss for the period from
inception (March 30, 1995) to
December 31, 1995 (37,238) (37,238)
-------------- ------------------
Balance at December 31, 1995 (37,238) (37,138)
Adjustment for shares of Zeitgeist
Werks, Inc. outstanding
immediately prior to reorganization
on February 23, 1996, valued at net (268,064) (18,241)
monetary asset amount
Exchange of 154,000 shares
during March 1996 for notes and -- 308,000
interest payable of $308,000
Issuance of 125,000 shares to
consultant on April 20, 1995 in -- 125,000
exchange for services
Cancellation of 2,037,500 shares -- (204)
by majority shareholder on June 27,
1996
Issuance of 2,037,500 shares on -- 204
June 27, 1996 in exchange for all of
the stock of MediaX, Inc.
Sale of 25,100 shares to unrelated -- 52,200
parties during June and July 1996 at
$2 per share
Sale of 350,000 shares to unrelated -- 350,000
parties during Nov. and Dec. 1996
at $1 per share (643,554) (643,554)
--------------- -----------------
Net (loss) for year ended
December 31, 1996
Balance at December 31, 1996 $ (948,855) $ 136,268
</TABLE>
(Continued)
The accompanying notes are an integral part of this statement.
[MEDIAX\123198.FS]-12
F-23
<PAGE>
<TABLE>
<CAPTION>
MEDIAX CORPORATION
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Period From Inception (March 30, 1995) to December 31, 1998
(Page 5)
DEFICIT
ACCUMULATED TOTAL
DURING THE STOCKHOLDERS
DEVELOPMENT EQUITY
STAGE (DEFICIT)
--------------- --------------------
<S> <C> <C>
Sale of 350,000 shares to various
unrelated parties during January
and February 1997 at $1 per share $ - $ 350,000
Sale of 100,000 shares and warrants
to unrelated party during May
1997 at $.70 per unit -- 70,000
Sale of 542,308 shares to various
unrelated parties during August
and September 1997 at $1.04 per -- 564,000
share
Sale of 200,000 shares to unrelated
party during August 1997 at $.74 -- 148,000
per share
Conversion of note and interest
payable to Westridge Capital
(unrelated party) into 400,000 -- 317,547
shares of common stock at $.794
per share in August 1997
Issuance of 400,000 shares at $1.50
per share to unrelated party in -- 600,000
exchange for prepaid advertising
during November of 1997 -- (80,000)
Commissions paid to unrelated party
for private placement sales of
stock -- 8
Issuance of 76,000 shares at par
value to unrelated parties (1,330,341) (1,330,341)
pursuant to other agreements -------------- -------------------
during 1997
Net (loss) for year ended
December 31, 1997
Balance at December 31, 1997 $ (2,279,196) $ 775,482
</TABLE>
(Continued)
The accompanying notes are an integral part of this statement.
[MEDIAX\123198.FS]-12
F-24
<PAGE>
<TABLE>
<CAPTION>
MEDIAX CORPORATION
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Period From Inception (March 30, 1995) to December 31, 1998
(Page 6)
DEFICIT
ACCUMULATED TOTAL
DURING THE STOCKHOLDERS
DEVELOPMENT EQUITY
STAGE (DEFICIT)
----------------- --------------------
<S> <C> <C>
Sale of 1,241,000 shares to
unrelated investor during February
and May 1998 $ - $ 250,000
Sale of 3,013,133 shares to
unrelated investor from April 28 -- 420,000
through October 27, 1998
10 for 1 reverse stock split on -- --
November 17, 1998
Warrant exercise during December -- 20,000
1998 by unrelated investor
Sale of 167,000 shares to unrelated -- 80,000
investor during December 1998
Net (loss) for year ended (2,762,066) (2,762,066)
---------------- ------------------
December 31, 1998
Balance at December 31, 1998 $ (5,041,262) $ (1,266,584)
================= ===================
</TABLE>
The accompanying notes are an integral part of this statement.
[MEDIAX\123198.FS]-12
F-25
<PAGE>
<TABLE>
<CAPTION>
MEDIAX CORPORATION
(A Development Stage Company)
Statements of Operations
FOR THE
PERIOD FROM
INCEPTION
FOR THE YEAR ENDED (March 30, 1995)
DECEMBER 31, TO DECEMBER 31,
------------------------------------------ ---------------------
1998 1997 1998
------------------ ------------------ ---------------------
<S> <C> <C> <C>
SALES/COST OF SALES
Sales $ 162,021 $ 228,511 $ 782,657
Cost of sales 135,988 268,258 546,890
------------------ ------------------ ---------------------
Gross profit (loss) 26,033 (39,747) 235,767
OPERATING EXPENSES
Advertising 531,672 -- 531,672
Amortization 45,944 944 82,827
Bad debts 11,400 -- 11,400
Depreciation 57,059 57,589 143,477
Employee benefits 26,741 11,709 37,351
Insurance 46,329 32,689 112,194
Legal and accounting 101,442 81,762 230,970
Professional and outside 232,610 399,475 912,878
services 163,864 40,074 231,057
Publicity and promotion 88,083 69,731 179,068
Rent and utilities 275,839 -- 275,839
Research and development 564,750 377,901 1,288,388
Salaries 255,000 -- 255,000
Software development costs 33,077 25,266 74,660
written off 27,422 18,212 57,321
Taxes - payroll 77,760 29,460 124,641
Telephone and communications 115,666
Travel and meetings 2,654,658 115,473 297,917
------------------ ------------------ ---------------------
Other general and 1,260,285 4,842,095
administrative
OTHER INCOME (EXPENSES)
Interest income 6,926 17,182 29,512
Interest expense (138,274) (63,398) (211,790)
Gain (loss) on sale of asset (2,093) -- (1,093)
Other income -- 15,907 16,501
------------------ ------------------ ---------------------
(133,441) (30,309) (166,870)
------------------ ------------------ ---------------------
Net (loss) $ (2,762,066) $ (1,330,341) $ (4,773,198)
================== ================== =====================
Weighted average number of
common shares 1,858,048 1,461,846 1,495,288
================== ================== =====================
Net (loss) per common share$ (1.49) $ (.91) $ (3.19)
(primary) ================== ================== =====================
</TABLE>
The accompanying notes are an integral part of this statement.
[MEDIAX\123198.FS]-12
F-26
<PAGE>
<TABLE>
<CAPTION>
MEDIAX CORPORATION
(A Development Stage Company)
Statements of Cash Flows
FOR THE
PERIOD FROM
INCEPTION
FOR THE YEAR ENDED (March 30, 1995)
DECEMBER 31, TO DECEMBER 31,
------------------------------------------- ---------------------
1998 1997 1998
------------------ ------------------ ---------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income (loss) $(2,762,066) $(1,330,341) (4,773,198)
Adjustments to reconcile to net cash
provided by operating activities
Stock issued for services and at par value -- 8 725,008
Amortization 45,944 944 82,827
Depreciation 57,059 57,589 143,577
Software development costs written off 255,000 -- 255,000
Changes in assets and liabilities
Decrease (increase) in accounts receivable (66,465) 89,992 (76,808)
Decrease in accounts receivable - officer -- 19,043 --
(Increase) decrease in prepaid expense 7,064 (21,804) (30,325)
(Increase) in inventories (40,946) (51,817) (92,763)
Decrease (increase) in prepaid advertising costs 500,000 -- (100,000)
(Increase) in deposits and other assets (1,225) (8,412) (10,564)
(Increase) in note and interest receivable -
officer (4,000) (4,000) (111,830)
Increase (decrease) in accounts payable - trade 214,144 (11,721) 292,852
(Decrease) in accounts payable - related parties (24,455) (14,793) --
Increase in payroll accruals 8,476 -- 8,476
------------------ ------------------ ---------------------
Net cash (used) by operating activities (1,811,470) (1,275,312) (3,687,747)
Cash Flows from Investing Activities
Acquisition of license agreement and (81,135) -- (102,287)
trademark (105,238) (200,000) (405,238)
Deferred software development costs (32,106) (135,944) (239,265)
Purchase of fixed assets -- 1,222 2,822
Proceeds from sale of fixed assets ------------------ ------------------ ---------------------
Net cash (used) by investing activities (218,486) (334,722) (743,968)
Cash Flow from Financing Activities
Principal payments on capital lease (5,146) (7,978) (27,567)
Stock subscriptions payable 320,000 320,000
Net proceeds from sale of stock to investors 720,000 1,052,000 2,195,452
Retirement of notes payable (32,276) (117,843) (155,269)
Proceeds received from issuance of notes
payable and convertible debentures 654,680 852,197 2,119,074
------------------ ---------------------
Net cash provided by financing activities 1,657,258 1,778,376 4,451,690
------------------ ------------------ ---------------------
</TABLE>
The accompanying notes are an integral part of this statement.
[MEDIAX\123198.FS]-12
F-27
<PAGE>
<TABLE>
<CAPTION>
MEDIAX CORPORATION
(A Development Stage Company)
Statements of Cash Flows
(Page 2)
FOR THE
PERIOD FROM
INCEPTION
FOR THE YEAR ENDED (March 30, 1995)
DECEMBER 31, TO DECEMBER 31,
------------------------------------------- ---------------------
1998 1997 1998
------------------ ------------------ ---------------------
<S> <C> <C> <C>
(Decrease) increase in cash and cash $ (372,698) $ 168,342 $ 19,975
equivalents
Cash and cash equivalents, beginning of 392,673 224,331 --
period ------------------ ------------------ ---------------------
Cash and cash equivalents, end of period $ 19,975 $ 392,673 $ 19,975
================== ================== =====================
Supplemental Disclosures of Cash Flow Information Cash paid during year
for:
Interest expense $ 150,151 $ 55,851 $ 223,667
================== ================== =====================
Cash received during the year for:
Interest income $ 6,926 $ 13,182 $ 29,512
================== ================== =====================
Cash paid during the year for:
Income taxes $ 800 $ 800 $ 2,400
================== ================== =====================
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
On June 27, 1996, the Company acquired all of the issued and
outstanding shares of MediaX, Inc. (a California S- corporation) in exchange for
a $350,000 note payable to the former MediaX, Inc. shareholders and 203,750
shares of the Company's common stock. The non-cash portion of this acquisition
included $152,517 of net property and equipment, primarily specialized computers
and software used in developing, publishing and distributing interactive CD-Rom
and Internet content for the multi-media market. In addition, the Company
received $24,479 of other non-cash assets, $10,188 of cash and assumed $89,561
of the liabilities of MediaX, Inc. that existed at June 27, 1996.
In August of 1997, the Company's note and accrued interest payable
in the amount of $317,547 to Westridge Capital was converted into 40,000 shares
of common stock with a basis of $7.94 per share. In November of 1997 the Company
exchanged 40,000 shares of common stock for $600,000 of prepaid advertising.
The accompanying notes are an integral part of this statement.
[MEDIAX\123198.FS]-12
F-28
<PAGE>
MEDIAX CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
Note 1: SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies are as follows:
a. ORGANIZATION AND MERGER
MediaX Corporation ("the Company") (formerly Zeitgeist Werks, Inc.
and Edinburgh Capital, Inc.) was incorporated as Fata Morgana, Inc. under the
laws of the State of Colorado on August 15, 1986. On September 15, 1988, the
Company amended its Articles of Incorporation to change its name to Edinburgh
Capital, Inc. The Company was in the development stage as more fully defined in
Statement No. 7 of the Financial Accounting Standards Board. Planned principal
operations of the Company had not yet commenced, and activities to February 22,
1996 had been limited to its formation, obtaining initial capitalization, the
completion of a public offering of its common stock, and limited investments and
loans.
On February 23, 1996, the Company merged with Zeitgeist, Inc. which
was also in the development stage and whose principal operations had not yet
commenced. Zeitgeist's activities up to this time were limited to its formation,
obtaining initial capitalization, and limited investments and loans.
The acquisition was accomplished through an exchange of 12,500,000
newly-issued shares of the Company's common stock in exchange for all of the
outstanding common stock of Zeitgeist, Inc. Upon completing this transaction,
the stockholders of Zeitgeist, Inc. controlled approximately 95% of the
outstanding common shares of the combined company.
Because the Zeitgeist shareholders obtained a majority of the voting
rights in the Company as a result of this transaction, for financial reporting
purposes, the merger was accounted for as a recapitalization of Zeitgeist and an
acquisition by Zeitgeist, Inc. of the Company. Accordingly, the accompanying
financial statements reflect transactions from March 30, 1995, the inception
date of Zeitgeist, Inc. Zeitgeist Inc., as the acquiror, continued its business
operations under the Company's name which was changed to Zeitgeist Werks, Inc.
effective February 23, 1996.The Company's name was later changed to MediaX
Corporation effective with the acquisition of MediaX, Inc. on June 27, 1996(see
Note 6b., herein).
MediaX, Inc. began as a real-time 3D game development company but
recently has begun to establish a unique network of celebrity web sites and a
central e-commerce site, providing a unique entertainment and on-line shopping
experience on the Internet. This includes live chats, on-line shopping for
artist specific merchandise and the production of Internet events such as live
concerts that are globally broadcast on the Internet. The Company has designed
and is hosting high-value celebrity web sites such as www.rodstewartlive.com,
providing entertainment content to its customer and threading the high traffic
generated by those sites through to its central e-commerce site www.amuZnet.com.
In addition to artist specific merchandise, www.amuZnet.com also offers
approximately 260,000 CDs, DVDs and Videos from all major record labels and
studios and over 4,000 independent music labels for purchase on-line.
MediaX Corporation is still considered to be in the development
stage because although its principal business activities have commenced, they
represented a major shift in the business plan and had not yet generated
significant revenues from these activities.
[MEDIAX\123198.FS]-12
F-29
<PAGE>
MEDIAX CORPORATION
(A Development Stage Company)
Notes to Financial Statements
b. BASIS OF PRESENTATION
The accompanying financial statements include the activities of
Zeitgeist, Inc. from its inception (March 30, 1995) to December 31, 1995 and for
the year ended December 31, 1996; and the activities of the Company from
February 23, 1996, the effective date of the Zeitgeist, Inc. merger to December
31, 1998. The activities of MediaX, Inc. have been included from the effective
date of the MediaX, Inc. acquisition (which was accounted for using the purchase
method of accounting), June 27, 1996, through December 31, 1998.
c. CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, cash and cash
equivalents consist of demand deposits in banks. Cash equivalents are carried at
cost which approximates market.
d. INVENTORIES
Inventory at December 31, 1998 consists primarily of packaging
materials and the two compact discs that comprise the Company's unsold units of
"Peter Norton, PC Guru" and "B.B. King, On the Road Again". The Company
also maintains an inventory of artist specific merchandise sold over the
Internet. Inventory is recorded at the lower of cost or market using
the first-in first-out method.
e. PROPERTY AND EQUIPMENT
Expenditures for property and equipment are capitalized at cost.
Expenditures for maintenance, repairs and other renewals of items are charged to
expense. The provision for depreciation is calculated using the straight-line
method based upon estimated useful lives as follows:
Computer equipment - 5 years
Software - 3 years
Furniture and fixtures - 7 years
f. DEFERRED SOFTWARE DEVELOPMENT COSTS
Certain development costs for CD-rom masters are capitalized in
accordance with SFAS No. 86 "Accounting for the Costs of Computer Software to be
Sold, Leased or Otherwise Marketed" and are reported at the lower of unamortized
cost or net realizable value. Amortization will be taken commencing with the
sales activity of the related product using the straight-line method and asset
lives approximating the retail sales life of the final product, generally three
to five years.
g. NET INCOME (LOSS) PER COMMON SHARE
The net income (loss) per common share is computed by dividing the
net loss for the period by the weighted average number of shares outstanding.
h. ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
[MEDIAX\123198.FS]-12
F-30
<PAGE>
MEDIAX CORPORATION
(A Development Stage Company)
Notes to Financial Statements
i. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of cash and cash equivalents, accounts receivable,
short-term debt and accounts payable approximate cost because of the immediate
or short-term maturity of these financial instruments. The fair value of the
Company's long-term note and interest receivable from officers does not
significantly differ from cost at December 31, 1998.
j. INCOME TAXES
Under SFAS 109, "Accounting for Income Taxes", deferred tax assets
and liabilities are generally determined based on the difference between the
financial statements and the tax bases of assets and liabilities using enacted
tax rates in effect for the years in which the differences are expected to
reverse. Recognition of a deferred tax asset is allowed if future realization is
more-likely-than-not. The Company has provided a full valuation allowance for
its deferred tax asset (relative to net operating loss carryforwards) because
its realization is not considered more-likely than-not.
As of December 31, 1998, the Company has a net operating loss
carryforward of approximately $4,479,000 available for income tax purposes. This
carry-forward expires in 2013.
The Company's prior net operating losses totaling $268,000 expire in
years 2003 to 2010. Usage of the earlier net operating losses is limited based
on IRS Code Sec. 382. This code section limits the use of pre-change losses
whenever a stock ownership change of more than 50% occurs within the "testing
period", which is generally a three-year period.
Note 2: GOING CONCERN
The Company has minimal capital resources presently available to
meet obligations which normally can be expected to be incurred by similar
companies, and to carry out its planned operations and has an accumulated
deficit of ($5,041,262) at December 31, 1998. These factors raise substantial
doubt about the Company's ability to continue as a going concern.
Management believes that its cash flow requirements in the next year
can be met from its anticipated cash flows from sales of music media and artist
specific merchandise over amuZnet.com and that the Company can also obtain
additional equity or debt financing. There is no assurance that the Company will
be able to obtain such financing. The financial statements, herein, do not
include any adjustments that might result from the outcome of this uncertainty.
Note 3: NOTE RECEIVABLE - OFFICER
On December 6, 1995, $50,000 was loaned to the Company's President.
The uncollateralized note bears interest at 4% per annum and is due in full,
along with interest, on January 1, 2000. Pursuant to the terms of the note, an
additional $50,000 was loaned on February 25, 1996 under the same terms. Accrued
interest at December 31, 1998 was $11,830.
Note 4: CONVERTIBLE SUBORDINATED DEBENTURES AND NOTES PAYABLE
a. An uncollateralized note payable to an unrelated party for $297,000
dated November 15, 1995 had interest at the bank's prime rate and was due the
earlier of November 15, 1997 or when the Company raised $500,000 or more in a
private placement of its common stock. See Note 6c., herein, regarding the
conversion of this note and accrued interest of $20,547 into 40,000 shares of
the Company's common stock on May 9, 1997.
b. Also recorded in "Notes payable-other" is a $18,179 short-term
uncollateralized loan from a vendor with interest at 9.88% per annum.
[MEDIAX\123198.FS]-12
F-31
<PAGE>
MEDIAX CORPORATION
(A Development Stage Company)
Notes to Financial Statements
c. On March 25, 1997, the Company sold to an accredited unrelated
investor for $450,000 a convertible debenture which pays interest at 2% per
annum over the prime rate of the Bank of America, calculated monthly on the
principal portion of $350,000 from February 11, 1997 and on the principal
portion of $100,000 from March 25, 1997. The debenture was due on February 28,
1998.
On August 1, 1997, the Company sold a convertible debenture to the
same investor for $320,000, which pays interest on the principal of $320,000 at
2% per annum over the prime rate of the Bank of America, calculated monthly from
August 1, 1997. The debenture was due on July 31, 1998.
On March 1, 1998, the Company replaced both debentures with a new
convertible debenture for $850,000 which pays interest at the same rate as the
replaced debentures above and is due on September 1, 1999. The principal sum of
the new debenture and any accrued interest may be converted into common shares
at any time prior to the due date at $1.75 per share. Accrued interest at
December 31, 1998 was $73,754. On March 1, 1999 the investor converted $350,000
of principal into 200,000 shares of common stock (see Note 9, Subsequent Events)
d. On May 26, and August 20, 1998, the Company sold to an accredited
unrelated investor $300,000 and $195,000 convertible debentures, respectively,
which both pay interest at the greater of 4% over the prime rate of the Bank of
America or 14%. The debentures are due on September 30, 1999 and March 30, 1999,
respectively, and had accrued interest at December 31, 1998 of $25,315 and
$10,022, respectively.
Note 5: COMMITMENTS AND CONTINGENCIES
a. LEASE COMMITMENTS
The Company leases its corporate offices in Culver City, CA on
a month-to-month basis for approximately $3,200 per month.
The Company leases space for its research and production studio
in Santa Cruz, California from an unrelated party under an operating lease
agreement which expires June 30, 2000. The minimum lease payments required to
the end of the lease are as follows:
YEAR AMOUNT
------- --------------
1999 $ 37,752
2000 18,876
-------------
$ 56,628
Rental expense for 1998 and 1997 for the Company's Santa Cruz
studio and corporate offices in Culver City, California were $70,869 and
$57,410, respectively.
[MEDIAX\123198.FS]-12
F-32
<PAGE>
MEDIAX CORPORATION
(A Development Stage Company)
Notes to Financial Statements
b. SALES TAX CONTINGENCY
Prior to 1997, the Company did not pay or charge sales taxes to
certain of its customers. The state of California has indicated that it believes
state sales taxes are applicable to the Company's sales. The Company's position
is that it does not believe sales taxes are applicable to the Company's sales
and therefore it has not collected any sales taxes from its customers. The
ultimate outcome of this matter cannot be predicted. No amounts have been
accrued in the financial statements, herein, for any sales taxes which might
ultimately be determined to be owed. If sales taxes were to be owed on all of
the Company's California sales to date, approximately $134,000 of such sales
taxes would be due, plus any applicable interest and penalties.
d. OTHER COMMITMENTS
During the normal course of its business, the Company enters
into professional services contracts requiring future payments. As of December
31, 1998, the Company had committed to pay $30,000 remaining on a promotional
services contract.
Note 6: COMMON STOCK AND STOCK OPTIONS
a. REORGANIZATION
On February 24, 1996, the Company acquired all of the issued
and outstanding shares of Zeitgeist, Inc. (a Nevada corporation) in exchange for
1,250,000 shares of its common stock. The effect of this reorganization has been
retroactively restated to the March 30, 1995 inception date of Zeitgeist, Inc.
b. ACQUISITION OF MEDIAX, INC. BY ZEITGEIST, INC.
On June 27, 1996, the Company issued 203,750 shares of its
common stock for all of the issued and outstanding shares of MediaX, Inc., a
California S-corporation engaged in the business of developing, publishing and
distributing interactive CD-rom and Internet content. Pursuant to the merger
agreement, the Company's largest shareholder Assisi Limited Partnership
("Assisi") (owned 100% by the Company's President) surrendered for cancellation
203,750 shares of common stock.
c. CONVERSION OF NOTE PAYABLE
On March 21, 1996, the Company converted $300,000 of notes
payable and $8,000 of accrued interest due to an unrelated party into 15,400
shares of common stock at $20 per share. On May 9, 1997 the Company converted
$297,000 of notes payable and $20,547 of accrued interest due to another
unrelated party into 40,000 shares of common stock at $7.94 per share (see Note
4a.).
d. PRIVATE SALES / OPTIONS / WARRANTS
During June and July 1996, 2,510 shares were sold to unrelated
private investors for cash proceeds of $52,200. During November and December
1996, 35,000 shares were sold to unrelated private investors for cash proceeds
of $350,000.
During 1997, 119,231 shares were sold to unrelated private
investors for net proceeds of $1,052,000. 19,231 of theses shares each included
an option to purchase a share of common stock at an exercise price of $15.00 per
share. 35,000 of these shares each included as warrant to purchase one share of
common stock at an exercises price of $13.00 per share. 10,000 of theses shares
each included a warrant to purchase one share of common stock at an exercise
price of $12.00 per shares. All options are exercisable for up to five years
from the date of sale.
During April to December 1998, the Company sold 468,313 shares
to an accredited unrelated investor for proceeds of $500,000 pursuant to an
agreement which grants to this investor and several other accredited unrelated
investors non-dilutable and dilutable warrants to purchase up to 3,180,130
shares of common stock at varying prices tied to the average market bid ten days
prior to being exercised. The warrants expire from April 28 to September 7,
2001. 200,000 of these warrants were exercised during December of 1998,
resulting in the issuance of 200,000 shares for proceeds of $20,000
[MEDIAX\123198.FS]-12
F-33
<PAGE>
MEDIAX CORPORATION
(A Development Stage Company)
Notes to Financial Statements
Another accredited unrelated investor purchased 124,000 shares
during February 1998 for proceeds of $200,000. These purchases included warrants
to purchase up to 30,000 additional shares at $15.00 per share. These warrants
expire in February 2001.
e. STOCK ISSUED FOR CONSULTING AND PROFESSIONAL SERVICES
On April 20, 1996, the Company issued 12,500 shares of
common stock to an unrelated third party
consultant in exchange for services rendered. The Company granted options to
purchase up to 25,000 shares of the Company's common stock at $20.00 per share.
These options expire on April 20, 1999.
On April 20, 1997, the Company issued 7,500 shares of common
stock to an unrelated financial public relations consultant. The Company granted
options to purchase a total of 45,000 shares of the Company's common stock in
three blocks of 15,000 shares at $2.50, $5.00 and $7.50 per share,
respectively..
On July 21, 1997, the Company engaged a firm to act as sales
representative for the Company's software. The Company granted the principals of
the firm options to purchase 25,000 shares of the Company's common stock at
$11.25 per share.
On August 12, 1997, the Company engaged a firm to provide
investor and public relations services for the Company for a term of one year.
The Company granted the firm options to purchase 45,000 shares of the Company's
common stock at $13.80 per share.
On November 4, 1997, the Company issued 40,000 shares of common
stock to an unrelated third party in exchange for $600,000 of prepaid
advertising costs. During 1997 three other consultant were granted options to
purchase up to 11,000 shares of common stock at $8.00 to $8.75 per share.
The following options were granted during 1998. In July a
public relations consultant was granted options to purchase up to 25,000 shares
of the Company's common stock at $4.00 per share. During December two investment
advisors were granted options to purchase up to 100,000 shares of the Company's
common stock at $.50 each. Two business transition specialists assisting with
e-commerce business were granted options to purchase up to 105,000 shares,
75,000 at $.98 per share and 30,000 at the bid value on the date of exercise.
f. STOCK OPTION PLAN
In December 1998 the Company amended the incentive stock option
plan originally adopted in April 1996. The plan now authorizes the issuance of
options to purchase up to 500,000 shares of the Company's common stock. All
options granted must have an exercise price no less than the stock's fair market
value on the date of grant. The options expire on December 10, 2008.
[MEDIAX\123198.FS]-12
F-34
<PAGE>
MEDIAX CORPORATION
(A Development Stage Company)
Notes to Financial Statements
g. REVERSE STOCK SPLIT
Effective November 18, 1998, the Company's stockholders
approved a 1 for 10 reverse stock split. Information included in the statements
herein has been adjusted to reflect this reverse spit.
Note 7: RELATED PARTY TRANSACTIONS
a. LOANS TO OFFICER
See Note 3, herein, regarding loans made to the Company's
President.
b. COMMITMENT - EMPLOYMENT AGREEMENTS
Effective January 1, 1996, the Company entered into a four-year
employment agreement with its President under which the Company is obligated at
December 31, 1998 to pay $179,167 of base salary from January 1 to October 31,
1999.
Unless terminated by either party upon 60 days written notice,
this agreement will automatically renew for additional two-year terms after the
initial four-year term expires.
Effective June 26, 1996, the Company entered into a three-year
employment agreement with its Executive Vice-President by which the Company is
obligated at December 31, 1998 to pay $77,500 of base salary from January 1 to
June 30,1999.
Both of these agreements also provide for a bonus at the end of
each fiscal quarter as determined by the Company's Board of Directors. No
bonuses have been declared or paid since inception. Both the President and
Executive Vice-President may voluntarily terminate their employment at any time.
c CONSULTING FEES TO OFFICER/DIRECTOR
Beginning August 1, 1998, the Company's chairman provides
full-time services to the Company pursuant to a month to month consulting
agreement requiring $10,000 for each month worked. As such, the Company expensed
and paid Mr. Poertner $50,000 and $6,000, respectively, during the year ended
December 31, 1998, and owed Mr. Poertner $44,000 as of December 31, 1998.
Note 8: WRITE-OFF OF SOFTWARE DEVELOPMENT COSTS
"Peter Norton - PC Guru" was the Company's primary product
introduction on CD rom prior to a major shift in the Company's business plan
occurring during the second half of 1998 (see Note 1a). During 1996 and 1997,
the Company capitalized $300,000 of software development costs incurred in
producing the production master. These costs were to be amortized over the shelf
life of the product. During the fourth quarter of 1998, it was determined that
this product would not gain significant additional sales beyond 1998, therefore,
the remaining unamortized costs of $255,000 were written-off in the Statements
of Operations, herein.
Note 9: SUBSEQUENT EVENTS
On March 1, 1999 the investor holding the convertible
subordinated debenture referred to in Note 4c, herein, elected to convert
$350,000 of note principal into 200,000 shares of the Company's common stock and
the debenture holder exercised an option to purchase 20,000 shares at $1.00
each.
In February of 1999, a financial and a legal compliance
specialist were each given 10,000 shares of stock in exchange for services
rendered and two investment advisors were given 190,000 shares for services
rendered.
Since December 31, 1998, the Company has sold 210,000 shares to
accredited unrelated investors for proceeds of $291,500 and issued 1,055,000
shares of stock pursuant to warrant conversions (by the investors mentioned in
Note 6d) for proceeds of $237,250.
[MEDIAX\123198.FS]-12
F-35
<PAGE>
MEDIAX CORPORATION
(A Development Stage Company)
Notes to Financial Statements
As of March 26, 1999, there are 4,075,375 shres of the
Company's common stock issued and outstanding and options exist to convert an
additional 2,600,361 shares at prices ranging from $.50 to $20 per share.
During March 1998, the Company entered into an agreement with a
media service provider to acquire 1 million dollars of advertising credit in
exchange for 200,000 restricted shares of the Company's common stock. As of the
date this Report, the Company has not utilized any of the media credits and no
stock has been issued.
Note 10: 401(K) RETIREMENT PLAN
On January 1, 1998, the Company adopted a Section 401 (k) tax
sheltered annuity program in which each full time employee with at least three
months of service may contribute up to 15% of his/her gross salary ( up to a
maximum of $9,500 adjusted annually for inflation) annually on a tax-deferred
basis. This company is not required at this time to make any employer
contributions to the plan
[MEDIAX\123198.FS]-12
F-36
<PAGE>
EXHIBIT 10.4
FINANCE AND CONSULTING AGREEMENT
April 8, 1998
The intent of this agreement is to bring financing and consulting
services to MediaX. Under the terms set forth in this agreement Ted Ralston will
supply financing of up to $500,000 and necessary consulting services over a
6-month period from the date of this agreement.
Funding
- The first $100,000 on execution of this agreement at .25 cents per share
of MediaX common stock with a warant attached, that can be exercised at .40
cents. Shares and warrants are to be registered within 90 days from the
date of this agreement. Should the shares not be registered on or before
this date, a 10% monthly penalty amount is due to be paid by MediaX in
shares. MediaX is obligated to keep the registration current for a period
of at least 12 months.
- The second $100,000 are to be invested within 20 days of the first
investment. The shares are going to priced at .25 cents with a
corresponding warrant at .40 cents, both to carry immediate registration
rights according to paragraph one.
- The third, fourth and fifth investments are to be at a 20% discount to
the bid over a moving 10 day average prior to the investment with a
corresponding warrant at 200% of the share price. All shares and warrants
have demand registration rights after a 90-day period.
MediaX has the right to cancel this agreement any time after the second
investment for no cause. If any of the stages of the financing are not completed
within the agreed upon time frame, unless so caused by MediaX, a fifty percent
(50%) forfeiture of warrants granted under this agreement may be applied.
The consultant confirms that he is familiar with MediaX's business and has all
the necessary information to enter into this agreement.
/s/ Ted Ralston
- -----------------------------
Ted Ralston
/s/ Nancy Poertner
- -----------------------------
Nancy Poertner, MediaX
[MEDIAX\123198.FS]-12
37
<PAGE>
EXHIBIT 10.5
CONSULTING AGREEMENT
2. Parties: This agreement, which constitutes a legally-binding contract
with venue in the State of Florida, is hereby voluntarily entered into by
and between The Globus Group, Inc., a Nevada corporation, hereinafter
referred to as "GG", and MEDIA X, Inc., a publicly traded US. Company
trading under the current ticker symbol of MXMXD, on the NASDAQ OTC-BB
stock exchange hereinafter referred to as "the client."
3. Purpose: The purpose of this contract is to define the terms,
conditions, and compensation required for the client to retain GG as a
marketing consultant/promoter of company. Herein are the sole explicit
terms and conditions of this agreement, which upon execution become
irrevocable for a period of 90 days.
4. Term & Conditions: For its part, GG shall use it's proprietary resources
and contacts to promote and disseminate factual information, press
releases, company announcements, and/or third-party endorsements (where
applicable) in accordance with all applicable federal and state laws. This
information shall be pre-approved by the client. Said promotion shall be
conducted on a best efforts basis, and no guarantees are made nor implied.
GG also agrees to research and identify other potential new business
opportunities for the client especially those capable of generating new
revenue streams, merger candidates, as well as new financial/funding
resources. GG shall provide the client with a report summarizes these
opportunities with a proposed action plan.
3.1 The volume of said promotion shall be accordance and at the rate approved by
the client in advance as per the letter of agreement (Attached Exhibit "A"), and
be conducted immediately upon receipt of cleared expense funds equivalent to
$65,000 and upon execution of this contract.
2.2 The client shall review, initial, and date all proofs of material to be
disseminated by GG promptly upon receipt and returned to GG within 48 hours
of receipt so as not to delay the promotion process. Failure to return said
material provided by Globus within 48 hours negates any and all deadlines
set forth herein that bears upon GG's performance.
2.3 It is agreed that all relative expenses shall be prepaid by the client
in advance, specifically $65,000 US dollars. The client acknowledges that
said promotion will generate significant telecommunications costs, which
are the sole responsibility of the client and said costs will not exceed
$40,000, and total expenses shall not exceed $65,000 without the express
written consent of the client. Payment of these expense funds shall be
$15,000 upon execution of this contract, $20,000 before December 20th, and
the balance of $30,000 paid to GG no later than January 15th, 1999.
2.4 GG at its discretion shall target the most influential parties as
recipients of the client's promotional material which may include market
makers, stockbrokers, accredited investors, financial news services, etc.
and commence dissemination of same upon receipt of cleared expense moneys
and promotional material, and continue until said funds are expended or
until the client other wise directs.
2.5 Although the client reserves the right to review GG's contact database
at Globus offices, said database is the sole proprietary property of GG,
and client is not entitled to copies of same for any purpose.
2.6 During the 90 day effective period of this contract, the client
irrevocably agrees to fully refrain from authorizing any and all Regulation
S offerings, reverse splits, or any dilution of the shares that are
currently issued and outstanding in excess of 15%, including the shares
issued to GG. Furthermore the client will secure voluntary 90 day lock-ups
of all insider shares for the next 90 consecutive days. Violation of this
clause automatically entitles GG to full payment and immediate disbursement
of all compensation specified herein.
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2.7 The client agrees to furnish GG with any and all company information
requested and required for promotional material and due diligence within 48
hours of written request. Information provided must be accurate and
complete. GG irrevocably agrees to keep said information strictly
confidential and not disclose any of said information without prior
approval of client. If client fails to produce said information within 48
hours; all deadlines specified herein that bear upon GGs performance are
automatically negated. The client is further obligated to provide GG copies
of DTC sheets every 15 days and for day immediately prior to commencement
of promotion and a copy of the company's shareholder list. Failure to
provide these documents will result in the automatic suspension of
promotion/services by GG until such time as said documents are delivered.
2.8 GG hereby irrevocably agrees to fully refrain from any direct
fundraising activities on behalf of the client.
3 Compensation: For its services rendered, it is agreed that GG shall be
compensated with fees totaling 180,000 common shares of MXMXD @ $ .50 US$
per share), 90,000 shares of which are to be free trading and the other
90,000 shares are to be restricted for one year. All of said restricted
shares are to be issued immediately upon execution of this contract to GG.
GG irrevocably agrees not to sell off any of the free trading shares for a
minimum period of 90 days. Should GG identify and secure merger/acquisition
candidates approved by the board, not previously introduced to the client,
and or any other contact that directly or indirectly results in generating
a new source of revenue for the client, GG shall be paid a bonus of
$100,000 US$ or the equivalent in free trading common stock for each new
revenue stream valued at more than $500,000 per annum generated and paid in
full on the first generation of said new revenues. GG shall also be paid a
10% commission (gross) on any and all new wholesale or retail sales order
accounts GG introduces to the client directly or indirectly. In addition,
200,000 2-year warrants with a strike price of $.50 will also be paid to GG
by the client. Said free- trading shares and all but 100,000 of said
warrant shall be escrowed for a thirty day trial period and released to GG
only if client satisfied with work product after 30 days.
3.1 Should the client breach any of the terms herein, any and all
compensation escrowed will be immediately released to GG.
5. Indemnification: Both parties herein hereby irrevocably agree to fully hold
harmless and indemnify the other party for any unrelated cause, action, or
litigation. Each party is solely responsible and liable for it's own actions,
omissions, and negligence/oversight, and any and all damages resulting from
same. Nothing in this agreement shall render either party a general partner or
employee of the other.
6. Termination: GG may at its discretion, terminate this agreement at any time
the client's fails to comply with the terms and conditions herein, or those
specified in Exhibit A, or for any of the following reasons.
a.) Late or non-payment of expense moneys and/or stock, and/or warrants
b.) Failure of the client to provide GG with current DTC sheets every
15 days.
c.) The client dilutes shareholders more than ten percent during the
period of time that said promotion is in effect.
d.) The client fails to disclose or misrepresents any pertinent facts
or data.
e.) Insider short-selling or sell offs occur.
f.) The client is named as a defendant in a criminal matter.
g.) The client allows a Regulation S transaction to take place during
the period of promotion.
h.) Failure of the client to provide weekly news releases to GG.
In the event of termination by GG for any of the above reasons, GG shall be
released from all further obligations and all fees and expense money paid
through the date of termination date will not be refunded.
[MEDIAX\123198.FS]-12
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The client may terminate this contract if after thirty days (30) they are not
for any reason, satisfied with the work of GG, in which case, both the client
and GG shall be released from all further obligations, and all fees and expense
moneys paid to date will not be refunded, but any fees escrowed shall be
reclaimed by the client in full. The client may extend the term of this
promotion in accordance with Exhibit A attached by giving written notice with
additional payment to GG within the next 60 days of this date.
9. Disclosure: Both parties hereby irrevocably agree to strict
non-disclosure of our mutual relationship, GG's proprietary methods and
strategies, and client's confidential information to any third party (ies)
unless so ordered by an official court of law, legal counsels excepted.
Copies of this agreement are prohibited as well as its distribution or
disclosure of terms/conditions or review by any third parties, legal
counsels excepted.
10. Venue: Legal venue is, and shall forever remain the State of Florida.
11. Recourse: Should this contract be breached, both parties reserve their
rights to legal recourse and remedy under the Florida civil codes, and
should an official court of law find cause to allow a civil action, the
party offended as determined by an official court of law shall be entitled
to related damages allowed, as well as any and all related legal fees and
court costs incurred pertinent to that action. In the event of a dispute,
binding arbitration may be utilized if both parties hereto consent.
12. Acknowledgement: The consultant hereby acknowledges that engaging in
market transactions in the client's company stock while in possession of
such information or revealing such material non-public information to any
other person engaging in market transactions in the client's common stock
would be a violation of US. Securities laws possibly subject GG and the
client to civil and criminal sanctions. GG hereby irrevocably agrees to
refrain from such transactions. Both parties further acknowledge and affirm
that no compensation is being paid based upon the performance of any stock
trade activity as prohibited by law.
13. Affirmation: Both parties hereby declare and warrant that they enter
into this agreement voluntarily, in good faith, and with honorable
intentions to fully comply with all the terms and conditions specified
herein. Both parties further acknowledge and affirm that this agreement
constitute the entire agreement by which their actions will be directed,
governed, and guided accordingly, and this agreement may only be amended by
the mutual written consent of both parties contained in a superseding
agreement.
14. Warranty: Client hereby warrants that all free trading, preferred
convertible and restricted shares with their respective holders are
identified on the attached exhibit B shares and no other shares are
unaccounted for. Client further warrants that it is not the defendant in
any lawsuit, nor is the subject of an NASDR/SEC or other government
investigation known to the client. Failure to accurately disclose any and
all of said shares on attached Exhibit B shall be grounds for GG's
immediate suspension of service/promotion and GG's fees shall be deemed due
and payable in full.
Hereby irrevocably and voluntarily agreed in good faith this 10th day of
December, 1998, here in Dade County, Florida, by and between:
/s/ Anthony DiMarco
- -----------------------------
Anthony DiMarco, for GG
/s/ Rainer Poertner
- -----------------------------
Rainer Poertner, The Client
[MEDIAX\123198.FS]-12
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EXHIBIT 10.6
CONSULTING AGREEMENT
This Consulting agreement (the "Agreement") is made as of this 16th day of
December, 1998 by and between Winchester Investment Securities, 40 Exchange
Place, Suite 401, New York, NY 1005 (the "Consultants") and MediaX Corporation
(the "Client"), a Nevada corporation whose principal place of business is 2588
National Boulevard, Culver City, California 90232.
WHEREAS:
1. Consultant is willing and capable of providing on a "best efforts" basis
various consulting services for potential business development opportunities and
for the raising of funds for and on behalf of Client.
2. Client desires to retain the Consultant as an independent consultant and
Consultant desires to be retained in that capacity upon the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual promises and agreements
hereinafter set forth, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
15. Consulting Services. Client hereby retains the Consultant as an
independent consultant to the Client and the Consultant hereby accepts and
agrees to such retainer. Consultant shall render to Client such services of
an advisory or consultative nature in order to identify and generate
potential business development opportunities and to raise funds for Client.
16. Time, Place and Manner of Performance. Consultant shall be available
for advice and counsel to the officers and directors of Client at such
reasonable and convenient times and places as may be mutually agreed upon.
17. Term. The term of this Agreement shall commence as of the date hereof
and continue until December 1999 and then renew itself automatically for
additional one-year terms, if not terminated by either party.
18. Compensation. Consultant shall receive compensation as set out in
Appendix "A" of this agreement.
19. Termination. This agreement may be terminated at any point after
September 1999, by Consultant or Client upon thirty-(30) days prior written
notice.
20. Disclosure of Information. Consultant recognizes and acknowledges that
he has and may have access to certain confidential information of Client
and its affiliates that are valuable, special and unique assets and
property of Client and such affiliates. Consultant will not, during or
after the term of this Agreement, disclose, without the prior written
consent or authorization of Client, any of such information to any person,
except to representatives of Consultant, for any reason or purpose
whatsoever. In this regard, Client agrees that such authorization or
consent to disclosure may be conditioned upon the disclosure being made
pursuant to a secrecy agreement, protective order, provision of statute,
rule, regulation or procedure under which the confidentiality of the
information is maintained in the hands of the person to whom the
information is to be disclosed or in compliance with the terms of a
judicial order or administrative process.
21. Nature of Relationship. It is understood and acknowledged by the
parties that Client is retaining Consultant in an independent capacity and
that in this connection, Consultant hereby agrees, not to enter into any
agreement or incur any obligation on behalf of Client without the written
consent of Client.
[MEDIAX\123198.FS]-12
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22. Conflict of Interest. Consultant shall be free to perform services for
other persons provided that it shall obtain Client's prior written approval
if it intends to provide consulting services for any other person which may
conflict with its obligations hereunder.
23. Indemnification by Client. Client agrees to indemnify and hold harmless
Consultant against any losses, claims, damages, liabilities and/or expenses
(including any legal or other expenses reasonably incurred in investigating
or defending any action or claim in respect thereof) to which the
Consultant may become subject to arising from this Agreement or the actions
of Client or any of its directors, officers or affiliates. Client will
comply with all of the applicable laws of the Securities Act of 1933 and
the Securities Exchange Act of 1934, as amended.
24. Indemnification by Consultant. Consultant agrees to indemnify and hold
harmless Consultant against any losses, claims, damages, liabilities and/or
expenses (including any legal or other expenses reasonably incurred in
investigating or defending any action or claim in respect thereof) to which
the Consultant may become subject to arising from this Agreement or the
actions of Consultant or any of its directors, officers or affiliates.
Consultant will comply with all of the applicable laws of the Securities
Act of 1933 and the Securities Exchange Act of 1934, as amended.
25. Waiver of Breach. Any waiver by either party of a breach of any
provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the other party.
26. Assignment. This Agreement and the rights and obligations of the
parties hereunder shall not be assigned without the prior written approval
of the other and shall inure to the benefit of and shall be binding upon
their successors and assigns.
27. Arbitration. Any controversy or claim between the parties arising out
of or relating to this Consulting Agreement or any alleged breach thereof
shall be resolved by arbitration conducted in greater Los Angeles,
California in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect, and judgment upon the
award rendered by the arbitrator in any such arbitration may be entered in
any federal or state court having jurisdiction thereof. Either party may
submit such controversy or claim for arbitration by giving written notice.
The decision of the arbitrator shall be final and binding upon the parties.
The prevailing party in any such arbitration shall be entitled to recover
from the non prevailing party in addition to all other relief, all
reasonable costs and expenses, including, without limitation, attorneys
fees, expert witness fees and travel expenses actually incurred by such
party in connection with such arbitration. Each of the parties
unconditionally submits to the jurisdiction of the courts of the State of
California and of the United States with respect to the enforcement of this
provision or any arbitration award hereunder and agrees to accept service
of process in California.
28. Severability. All agreements and covenants contained herein are
severable, and in the event any of them shall be held to be invalid by any
competent court, the Agreement shall be interpreted as if such invalid
agreements or covenants were not contained herein.
29. Entire Agreement. This Agreement constitutes and embodies the entire
understanding and agreement of the parties and supersedes and replaces all
prior understandings, agreements and negotiations between the parties.
30. Waiver and Modification. Any waiver, alteration or modification of any
of the provisions of this Agreement shall be valid only if made in writing
and signed by the parties hereto. Each party hereto, from time to time, may
waive any of its rights hereunder without effecting a waiver with respect
to any subsequent occurrences or transactions hereof.
31. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but both of which taken together shall
constitute but one and the same document.
[MEDIAX\123198.FS]-12
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the day and year first above written.
Winchester Investments Securities Inc. MediaX Corporation
Per: Nancy Poertner, CEO & President
APPROVED BY ALL DISINTERESTED MEMBERS OF THE BOARD OF DIRECTORS
Per: Chairman
Per: Director
Per: Director
APPENDIX "A"
Compensation
1. Winchester shall receive 10% commission in cash and an additional 10% in
restricted common shares based on the total amount of funding raised by
Winchester for MediaX.
2. Calculation for the number of shares is based on the offering share
price of _____, divided into the amount paid as cash compensation on the
total amount of finds raised., i.e. :
Amount raised $250,000.-
Share Price $1.00
Cash Commission $25,000.-
Options 25,000 units
[MEDIAX\123198.FS]-12
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EXHIBIT 10.7
CONSULTING AGREEMENT
This Consulting agreement (the "Agreement") is made as of this 21st day of
November, 1998 by and between Arnold Stiefel, 2335 Bowmont Drive, Beverly Hills,
CA 90210 (the "Consultant") and MediaX Corporation (the "Client"), a Nevada
corporation whose principal place of business is 2588 National Boulevard, Culver
City, California 90232.
WHEREAS:
1. Consultant is willing and capable of providing on a "best efforts" basis
various consulting services for potential business development opportunities for
and on behalf of Client.
2. Client desires to retain the Consultant as an independent consultant and
Consultant desires to be retained in that capacity upon the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual promises and agreements
hereinafter set forth, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
3. Consulting Services. Client hereby retains the Consultant as an
independent and non-exclusive consultant to the Client and the Consultant
hereby accepts and agrees to such retainer. Consultant shall render to
Client such services of an advisory or consultative nature in order to
identify and generate potential business development opportunities for
Client, specifically resulting in contracts with credible entertainment
entities or personalities as per appendix "A" for the design and
maintenance of their web site on the Internet and the rights to sell the
entity's or personality's merchandise on-line exclusively. Consultant will
from time to time issue verbal or written reports to inform Client on
Consultant's activities.
4. Time, Place and Manner of Performance. Consultant shall be available for
advice and counsel to the officers and directors of Client at such
reasonable and convenient times and places as may be mutually agreed upon.
5. Term. The term of this Agreement shall commence as of the date hereof
and continue until the later of (a) November 2000 and then renew itself
automatically for additional one-year terms. Entering into contracts with
entities proposed by the Consultant is at the Company's discretion.
6. Compensation. In consideration of these services client shall, upon
execution of this agreement grant options to convert 50,000 shares of the
common stock of the company at a strike price of $0.98 as a general
consulting fee. In addition, consultant will receive 20,000 stock options
to convert into shares of the common stock of MediaX Corporation at the
fair market value at the time of signing of a contract for additional
entertainment entities or personalities, as described in paragraph 1 above,
which will be signed based on the efforts of the consultant.
7. Expenses. All expenses inccurred by the Consultant in connection with
the services will be born by the Consultant .
8. Termination. This agreement may be terminated at any point after
November 2000, by Consultant or Client upon thirty (30) days prior written
notice.
9. Disclosure of Information. Consultant recognizes and acknowledges that
he has and may have access to certain confidential information of Client
and its affiliates that are valuable, special and unique assets and
property of Client and such affiliates. Consultant will not, during or
after the term of this Agreement, disclose, without the prior written
consent or authorization of Client, any of such information to any person,
except to representatives of Consultant, for any reason or purpose
whatsoever. In this regard, Client agrees that such authorization or
consent to disclosure may be conditioned upon the disclosure being made
pursuant to a secrecy agreement, protective order, provision of statute,
[MEDIAX\123198.FS]-12
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<PAGE>
rule, regulation or procedure under which the confidentiality of the
information is maintained in the hands of the person to whom the
information is to be disclosed or in compliance with the terms of a
judicial order or administrative process.
10. Nature of Relationship. It is understood and acknowledged by the
parties that Client is retaining Consultant in an independent capacity and
that in this connection, Consultant hereby agrees, not to enter into any
agreement or incur any obligation on behalf of Client without the written
consent of Client.
11. Conflict of Interest. Consultant shall be free to perform services for
other persons provided that it shall obtain Client's prior written approval
if it intends to provide consulting services for any other entities who are
in direct competition with the Client.
12. Indemnification by Client. Client agrees to indemnify and hold harmless
Consultant against any losses, claims, damages, liabilities and/or expenses
(including any legal or other expenses reasonably incurred in investigating
or defending any action or claim in respect thereof) to which the
Consultant may become subject to arising from this Agreement or the actions
of Client or any of its directors, officers or affiliates. Client will
comply with all of the applicable laws of the Securities Act of 1933 and
the Securities Exchange Act of 1934, as amended.
13. Indemnification by Consultant. Consultant agrees to indemnify and hold
harmless Client against any losses, claims, damages, liabilities and/or
expenses (including any legal or other expenses reasonably incurred in
investigating or defending any action or claim in respect thereof) to which
the Consultant or Client may become subject to arising from this Agreement
or the actions of Consultant or any of its directors, officers or
affiliates, based on gross negligence. Consultant will comply with all of
the applicable laws of the Securities Act of 1933 and the Securities
Exchange Act of 1934, as amended.
14. Waiver of Breach. Any waiver by either party of a breach of any
provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the other party.
15. Assignment. This Agreement and the rights and obligations of the
parties hereunder shall not be assigned without the prior written approval
of the other and shall inure to the benefit of and shall be binding upon
their successors and assigns.
16. Arbitration. Any controversy or claim between the parties arising out
of or relating to this Consulting Agreement or any alleged breach thereof
shall be resolved by arbitration conducted in greater Los Angeles,
California in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect, and judgment upon the
award rendered by the arbitrator in any such arbitration may be entered in
any federal or state court having jurisdiction thereof. Either party may
submit such controversy or claim for arbitration by giving written notice.
The decision of the arbitrator shall be final and binding upon the parties.
The prevailing party in any such arbitration shall be entitled to recover
from the non prevailing party in addition to all other relief, all
reasonable costs and expenses, including, without limitation, attorneys
fees, expert witness fees and travel expenses actually incurred by such
party in connection with such arbitration. Each of the parties
unconditionally submits to the jurisdiction of the courts of the State of
California and of the United States with respect to the enforcement of this
provision or any arbitration award hereunder and agrees to accept service
of process in California.
17. Severability. All agreements and covenants contained herein are
severable, and in the event any of them shall be held to be invalid by any
competent court, the Agreement shall be interpreted as if such invalid
agreements or covenants were not contained herein.
18. Entire Agreement. This Agreement constitutes and embodies the entire
understanding and agreement of the parties and supersedes and replaces all
prior understandings, agreements and negotiations between the parties.
[MEDIAX\123198.FS]-12
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<PAGE>
19. Waiver and Modification. Any waiver, alteration or modification of any
of the provisions of this Agreement shall be valid only if made in writing
and signed by the parties hereto. Each party hereto, from time to time, may
waive any of its rights hereunder without effecting a waiver with respect
to any subsequent occurrences or transactions hereof.
20. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but both of which taken together shall
constitute but one and the same document.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the day and year first above written.
Arnold Stiefel MediaX Corporation
Per: Nancy Poertner, CEO & President
APPROVED BY ALL DISINTERESTED MEMBERS OF THE BOARD OF DIRECTORS
Per: Chairman
Per: Director
Per: Director
[MEDIAX\123198.FS]-12
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EXHIBIT 10.8
CONSULTING AGREEMENT
This Consulting agreement (the "Agreement") is made as of this 21st day of
November, 1998 by and between Annie Challis, 1723 San Ysidro Drive, Beverly
Hills, CA 90210 (the "Consultant") and MediaX Corporation (the "Client"), a
Nevada corporation whose principal place of business is 2588 National Boulevard,
Culver City, California 90232.
WHEREAS:
1. Consultant is willing and capable of providing on a "best efforts" basis
various consulting services for potential business development opportunities for
and on behalf of Client.
2. Client desires to retain the Consultant as an independent consultant and
Consultant desires to be retained in that capacity upon the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual promises and agreements
hereinafter set forth, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
21. Consulting Services. Client hereby retains the Consultant as an
independent consultant to the Client and the Consultant hereby accepts and
agrees to such retainer. Consultant shall render to Client such services of
an advisory or consultative nature in order to identify and generate
potential business development opportunities for Client, specifically
resulting in contracts with credible entertainment entities or
personalities as per appendix "A" for the design and maintenance of their
web site on the Internet and the rights to sell the entity's or
personality's merchandise on-line exclusively. Consultant will from time to
time issue verbal or written reports to inform Client on Consultant's
activities.
22. Time, Place and Manner of Performance. Consultant shall be available
for advice and counsel to the officers and directors of Client at such
reasonable and convenient times and places as may be mutually agreed upon.
23. Term. The term of this Agreement shall commence as of the date hereof
and continue until November 2000 and then renew itself automatically for
additional one-year terms. Entering into contracts with entities proposed
by the Consultant is at the Company's discretion.
24. Compensation. In consideration of these services client shall grant
options to convert 25,000 shares of the common stock of the company at a
strike price of $0.98 as a general consulting fee. In addition, consultant
will receive 10,000 stock options to convert into shares of the common
stock of MediaX Corporation at the fair market value, at the time of
signing of a contract, for additional entertainment entities or
personalities, as described in paragraph 1 above, which will be signed
based on the efforts of the consultant..
25. Expenses. All expenses occurred by the Consultant in connection with
the services will be born by the Consultant.
26. Termination. This agreement may be terminated at any point after
November 2000, by Consultant or Client upon thirty- (30) days prior written
notice.
27. Disclosure of Information. Consultant recognizes and acknowledges that
he has and may have access to certain confidential information of Client
and its affiliates that are valuable, special and unique assets and
property of Client and such affiliates. Consultant will not, during or
after the term of this Agreement, disclose, without the prior written
consent or authorization of Client, any of such information to any person,
except to representatives of Consultant, for any reason or purpose
whatsoever. In this regard, Client agrees that such authorization or
consent to disclosure may be conditioned upon the disclosure being made
pursuant to a secrecy agreement, protective order, provision of statute,
[MEDIAX\123198.FS]-12
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<PAGE>
rule, regulation or procedure under which the confidentiality of the
information is maintained in the hands of the person to whom the
information is to be disclosed or in compliance with the terms of a
judicial order or administrative process.
28. Nature of Relationship. It is understood and acknowledged by the
parties that Client is retaining Consultant in an independent capacity and
that in this connection, Consultant hereby agrees, not to enter into any
agreement or incur any obligation on behalf of Client without the written
consent of Client.
29. Conflict of Interest. Consultant shall be free to perform services for
other persons provided that it shall obtain Client's prior written approval
if it intends to provide consulting services for any other person which may
conflict with its obligations hereunder.
30. Indemnification by Client. Client agrees to indemnify and hold harmless
Consultant against any losses, claims, damages, liabilities and/or expenses
(including any legal or other expenses reasonably incurred in investigating
or defending any action or claim in respect thereof) to which the
Consultant may become subject to arising from this Agreement or the actions
of Client or any of its directors, officers or affiliates. Client will
comply with all of the applicable laws of the Securities Act of 1933 and
the Securities Exchange Act of 1934, as amended.
31. Indemnification by Consultant. Consultant agrees to indemnify and hold
harmless Client against any losses, claims, damages, liabilities and/or
expenses (including any legal or other expenses reasonably incurred in
investigating or defending any action or claim in respect thereof) to which
the Consultant or Client may become subject to arising from this Agreement
or the actions of Consultant or any of its directors, officers or
affiliates, based on gross negligence. Consultant will comply with all of
the applicable laws of the Securities Act of 1933 and the Securities
Exchange Act of 1934, as amended.
32. Waiver of Breach. Any waiver by either party of a breach of any
provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the other party.
33. Assignment. This Agreement and the rights and obligations of the
parties hereunder shall not be assigned without the prior written approval
of the other and shall inure to the benefit of and shall be binding upon
their successors and assigns.
34. Arbitration. Any controversy or claim between the parties arising out
of or relating to this Consulting Agreement or any alleged breach thereof
shall be resolved by arbitration conducted in greater Los Angeles,
California in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect, and judgment upon the
award rendered by the arbitrator in any such arbitration may be entered in
any federal or state court having jurisdiction thereof. Either party may
submit such controversy or claim for arbitration by giving written notice.
The decision of the arbitrator shall be final and binding upon the parties.
The prevailing party in any such arbitration shall be entitled to recover
from the non prevailing party in addition to all other relief, all
reasonable costs and expenses, including, without limitation, attorneys
fees, expert witness fees and travel expenses actually incurred by such
party in connection with such arbitration. Each of the parties
unconditionally submits to the jurisdiction of the courts of the State of
California and of the United States with respect to the enforcement of this
provision or any arbitration award hereunder and agrees to accept service
of process in California.
35. Severability. All agreements and covenants contained herein are
severable, and in the event any of them shall be held to be invalid by any
competent court, the Agreement shall be interpreted as if such invalid
agreements or covenants were not contained herein.
36. Entire Agreement. This Agreement constitutes and embodies the entire
understanding and agreement of the parties and supersedes and replaces all
prior understandings, agreements and negotiations between the parties.
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37. Waiver and Modification. Any waiver, alteration or modification of any
of the provisions of this Agreement shall be valid only if made in writing
and signed by the parties hereto. Each party hereto, from time to time, may
waive any of its rights hereunder without effecting a waiver with respect
to any subsequent occurrences or transactions hereof.
38. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but both of which taken together shall
constitute but one and the same document.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the day and year first above written.
Annie Challis MediaX Corporation
Per: Nancy Poertner, CEO & President
APPROVED BY ALL DISINTERESTED MEMBERS OF THE BOARD OF DIRECTORS
Per: Chairman
Per: Director
Per: Director
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EXHIBIT 10.9
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement"), effective as of March 22, 1999 is
entered into by and between MediaX Corporation, a Culver City corporation
(herein referred to as the "Company") and LIVIAKIS FINANCIAL COMMUNICATIONS,
INC., a California corporation (herein referred to as the "Consultant").
RECITALS
WHEREAS, Company is a publicly held corporation with its common stock
traded on the OTC Bulletin Board; and
WHEREAS, Consultant has experience in the area of corporate finance,
investor communications and financial and investor public relations; and
WHEREAS, Company desires to engage the services of Consultant to assist
and consult with the Company in matters concerning corporate finance and to
represent the company in investors' communications and public relations with
existing shareholders, brokers, dealers and other investment professionals as to
the Company's current and proposed activities;
NOW THEREFORE, in consideration of the promises and the mutual
covenants and agreements hereinafter set forth, the parties hereto covenant and
agree as follows:
39. Term of Consultancy. Company hereby agrees to retain the Consultant to
act in a consulting capacity to the Company, and the Consultant hereby
agrees to provide services to the Company commencing immediately and ending
on March 21, 2000.
40 Duties of Consultant. The Consultant agrees that it will generally
provide the following specified consulting services through its officers
and employees during the term specified in Section1:
a. Advise and assist the Company in developing and implementing appropriate
plans and materials for presenting the Company and its business plans,
strategy and personnel to the financial community, establishing an image
for the Company in the financial community, and creating the foundation for
subsequent financial public relations efforts;
b. Introduce the Company to the financial community;
c. With the cooperation of the Company, maintain an awareness during the
term of this Agreement of the Company's plans, strategy and personnel, as
they may evolve during such period, and advise and assist the Company in
communication appropriate information regarding such plans, strategy and
personnel to the financial community;
d. Assist and advise the Company with respect to its
(i) stockholder and investor relations,
(ii) relations with brokers, dealers, analysts and other investment
professionals, and
(iii) financial public relations generally;
e. Perform the functions generally assigned to investor/stockholder
relations and public relations departments in major corporations, including
responding to telephone and written inquiries (which may be referred to the
Consultant by the Company); preparing press releases for the Company with
the Company's involvement and approval or reviewing press releases, reports
and other communications with or to shareholders, the investment community
and the general public; advising with respect to the timing, form,
distribution and other matters related to such releases, reports and
communications; and consulting with respect to corporate symbols, logos,
names, the presentation of such symbols, logos and names, and other matters
relating to corporate image;
f. Upon the Company's approval, disseminate information regarding the
Company to shareholders, brokers, dealers, other investment community
professionals and the general investing public;
g. Upon the Company's approval, conduct meetings, in person or by
telephone, with brokers, dealers, analysts an other investment
professionals to advise them of the Company's plans, goals and activities,
and assist the Company in preparing for press conferences and other forums
involving the media, investment professionals and the general investment
public;
h. At the Company's request, review business plans, strategies, mission
statements, budgets, proposed transactions and other plans for the purpose
of advising the Company of the investment community implications thereof;
and,
i. Otherwise perform as the Company's financial relations and public
relations consultant.
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10. Allocation of Time and Energies. The Consultant hereby promises to
perform and discharge well and faithfully the responsibilities which may be
assigned to the Consultant from time to time by the officers and duly
authorized representatives of the Company in connection with the conduct of
its financial and investor public relations and communications activities,
so long as such activities are in compliance with applicable securities
laws and regulations. Consultant and staff shall diligently and thoroughly
provide the consulting services required hereunder. Although no specific
hours-per-day requirement will be required, Consultant and the Company
agree that Consultant will perform the duties set forth herein above in a
diligent and professional manner. The parties acknowledge and agree that a
disproportionately large amount of the effort to be expended and the costs
to be incurred by the Consultant and the benefits to be received by the
Company are expected to occur upon and shortly after, and in any event,
within two months of the effectiveness of this Agreement. It is explicitly
understood that consultant's performance of its duties hereunder will in no
way be measured by the price of the Company's common stock, nor the trading
volume of the Company's common stock. It is also understood that the
Company is entering into this Agreement with Liviakis Financial
Communications, Inc. ("LFC"), a corporation and not any individual member
of LFC, and with such, Consultant will not be deemed to have breached this
Agreement if any member, officer or director of LFC leaves the firm or dies
or becomes physically unable to perform any meaningful activities during
the term of the Agreement, provided the Consultant otherwise performs its
obligations under this Agreement.
11. Remuneration. As full and complete compensation for services described
in this Agreement, the Company shall compensate LFC ( herein referred to as
"Consultants") as follows:
3.1 For undertaking this engagement and for other good and valuable
consideration, the Company agrees to issue and deliver to the Consultants a
"Commencement Bonus" payable in the form of 790,000 shares of the Company's
Common Stock ("Common Stock"). This Commencement Bonus shall be issued to
the Consultants immediately following execution of this Agreement and
shall, when issued and delivered to Consultants, be fully paid and
non-assessable. The Company understands and agrees that Consultants have
foregone significant opportunities to accept this engagement and that the
Company derives substantial benefit from the execution of this Agreement
and the ability to announce its relationship with Consultants. The 790,000
shares of Common Stock issued as Commencement Bonus, therefore, constitute
payment for consultants' agreement to consult to the Company and are a
nonrefundable, non-apportionable, and non-ratable retainer; such shares of
common stock are not a prepayment for future services. If the Company
decides to terminate this Agreement prior to March 21, 2000 for any reason
whatsoever, it is agreed and understood that Consultants will not be
requested or demanded by the Company to return any of the shares of Common
Stock paid to it hereunder. The shares of Common Stock issue pursuant to
this Agreement shall be issued in the name of Liviakis financial
Communications, Inc.
3.2 Consultants acknowledge that the shares of Common Stock to be issued
pursuant to this Agreement (collectively, the "shares") have not been
registered under the Securities Act of 2933, and accordingly are
"restricted securities" within the meaning of Rule 144 of the Act. As such,
the Shares may not be resold or transferred unless the Company has received
an opinion of counsel reasonably satisfactory to the Company that such
resale or transfer is exempt from the registration requirements of that
Act.
3.3 In connection with the acquisition of Shares hereunder, the Consultants
represent and warrant to the Company as follows:
a. Consultants acknowledge that the Consultants have been afforded the
opportunity to ask questions of and receive answers from duly
authorized officers or other representatives of the Company concerning
an investment in the Shares, and any additional information, which the
Consultants have requested. b. Consultant's investment in restricted
securities is reasonable I relation to the Consultants' net worth,
which is in excess of ten (10) times the Consultants' cost basis in
the Shares. Consultants have had experience in investments in
restricted and publicly traded securities, and consultants have had
experience in investment s in speculative securities and other
investments, which involve the risk of loss of investment. Consultants
acknowledge that an investment in the Shares is speculative and
involves the risk of loss. Consultants have the requisite knowledge to
assess the relative merits and risks of this investment without the
necessity of relying upon other advisors, and Consultants are (I)
accredited investors, as that term is defined in Regulation D
promulgated under the Securities Act of 1933, and (ii) a purchaser
described in Section 25102 (f) (2) of the California Corporate
Securities Law of 1968, as amended. c. Consultants are acquiring the
Shares for the consultants' own account for long-term investment and
not with a view toward resale or distribution thereof, except in
accordance with applicable securities laws.
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4. Financing "Finder's Fee." It is understood that in the event Consultant
introduces Company or its nominees, to a lender or equity purchaser, not
already having a preexisting relationship with the Company, with whom
Company, or its nominees, ultimately finances or causes the completion of
such financing, Company agrees to compensate Consultant for such services
with a "finder's fee" in the amount of 2.5% of total gross funding provided
by such lender or equity purchaser, such fee to be payable in cash. This
will be in addition to any fees payable by Company to any other
intermediary, if any, which shall be per separate agreements negotiated
between Company and such other intermediary. It is specifically understood
that Consultant is not nor does it hold itself out be a Broker/Dealer, but
is rather merely a "Finder" in reference to the Company procuring financing
sources and acquisition candidates. (Total fee for Liviakis and other
commission not to exceed ten (10) percent).
4.1 It is further understood that Company, and not Consultant, is
responsible to perform any and all due diligence on such lender, equity
purchaser or acquisition candidate introduced to it by Consultant under
this Agreement, prior to Company receiving funds or closing on any
acquisition. However, Consultant will not introduce any parties to Company
about which Consultant has any prior knowledge of questionable, unethical
or illicit activities.
4.2 Company agrees that said compensation to Consultant shall be paid in
full at the time said financing or acquisition is closed and consideration
has been received by the Company. Moreover, said compensation, will be a
condition precedent to the closing of such financing or acquisition and
Company shall execute any and all documents necessary to effect said
compensation.
4.3 As further consideration to Consultant, Company, or its nominees,
agrees to pay with respect to any financing or acquisition candidate
provided directly or indirectly to the Company by any lender or equity
purchaser covered by this Section 5, during the period of one year from the
date of this Agreement, a fee to Consultant equal to that outlined in
Section "5" herein.
Consideration is not in addition to consideration agreed upon in paragraph
5 (Finder Fee).
4.4 Consultant will notify Company of introductions it makes for potential
sources of financing or acquisitions in a timely manner (within
approximately 3 days of introduction) via facsimile memo. If Company has a
preexisting relationship with such nominee and believes such party should
be excluded from this Agreement, then Company will notify Consultant
immediately of such circumstance via facsimile memo.
6. Expenses. Consultant agrees to pay for all its expenses (phone, mailing,
labor, etc.), other than extraordinary items (travel required by/or
specifically requested by the Company, luncheons or dinners to large groups
of investment professionals, mass faxing to a sizable percentage of the
Company's constituents, investor conference calls, print advertisements in
publications, etc.) approved by the Company prior to its incurring an
obligation for reimbursement.
7. Indemnification. The Company warrants and represents that all oral
communications, written documents or materials furnished to Consultant by
the Company with respect to financial affairs, operations, profitability
and strategic planning of the Company are accurate and Consultant may rely
upon the accuracy thereof without independent investigation. The Company
will protect, indemnify and hold harmless Consultant against any claims or
litigation including any damages, liability, cost and reasonable attorney's
fees as incurred with respect thereto resulting from Consultant's
communication or dissemination of any said information, documents or
materials not designated by the Company to the Consultant as "confidential"
or "Company private', excluding any such claims or litigation resulting
from Consultant's communication or dissemination of information not
provided or authorized by the Company.
8. Representations. Consultant represents that it is not required to
maintain any licenses and registrations under federal or any state
regulations necessary to perform the services set forth herein. Consultant
acknowledges that, to the best of its knowledge, the performance of the
services set forth under this Agreement will not violate any rule or
provision of any regulatory agency having jurisdiction over Consultant.
Consultant acknowledges that, to the best of its knowledge, Consultant and
its officers and directors are not the subject of any investigation, claim,
decree, or judgment involving any violation of the SEC or securities laws.
Consultant further acknowledges that it is not a securities Broker Dealer
or a registered investment advisor. Company acknowledges that, to the best
of its knowledge, that it has not violated any rule or provision of any
regulatory agency having jurisdiction over the Company. Company
acknowledges that, to the best of its knowledge, Company is not subject of
any investigation, claim, decree, or judgment involving any violation of
the SEC or securities laws.
9. Legal Representation. The Company acknowledges that it has been
represented by independent legal counsel in the preparation of this
Agreement. Consultant represents that they have consulted with independent
legal counsel and/or tax, financial and business advisors, to the extent
the Consultant deemed necessary.
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10. Status as Independent Contractor. Consultant's engagement pursuant to
this Agreement shall be as independent contractor, and not as an employee,
officer or other agent of the Company. Neither party to this Agreement
shall represent or hold itself out to be the employer or employee of the
other. Consultant further acknowledges the consideration provided
hereinabove is a gross amount of consideration and that the Company will
not withhold from such consideration any amounts as to income taxes, social
security payments or any other payroll taxes. All such income taxes and
other such payment shall be made or provided for by Consultant and the
Company shall have no responsibility or duties regarding such matters.
Neither the Company nor the Consultant possesses the authority to bind each
other in any agreements without the express written consent of the entity
to be bound.
11. Attorney's Fee. If any legal action or any arbitration or other
proceeding is brought for the enforcement or interpretation of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with or related to this Agreement, the
successful or prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs in connection with that action of
proceeding, in addition to any other relief to which it or they may be
entitled.
12. Waiver. The waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach by such other party.
13. Notices. All notices, requests, and other communications hereunder
shall be deemed to be duly given if sent by US mail, postage prepaid,
addressed to the other party at the address as set forth herein below:
To the Company: MediaX Corporation
Rainer Poertner
8522 National Blvd., Suite 110
Culver City, CA 90232
To the Consultant: Liviakis Financial Communications, Inc.
John M. Liviakis, President
2420 "K" Street, Suite 220
Sacramento, CA 95816
It is understood that either party may change the address to which notices
for it shall be addressed by providing notice of such change to the other
party in the manner set forth in this paragraph.
14. Choice of Law, Jurisdiction and Venue. This Agreement shall be governed
by, construed, and enforced in accordance with the laws of the State of
California. The parties agree that Sacramento County, CA will be the venue
of any dispute and will have jurisdiction over all parties.
15. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the alleged breach thereof, or relating to Consultant's
activities or remuneration under this Agreement, shall be settled by
binding arbitration in California, in accordance with the applicable rules
of the American Arbitration Association, and judgment on the award rendered
by the arbitrator (s) shall be binding on the parties and may be entered in
any court having jurisdiction thereof. The provisions of Title 9 of Part 3
of the California Code of Civil Procedure, including section 1283.05, and
successor statutes, permitting expanded discovery proceedings shall be
applicable to all disputes that are arbitrated under this paragraph.
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16. Complete Agreement. This Agreement contains the entire agreement of the
parties relating to the subject matter hereof. This Agreement and its terms
may not be changed orally but only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification,
extension, or discharge is sought.
AGREED TO:
"Company" MEDIA-X CORPORATION
Date: 3/22/99 By: /s/ Rainer Poertner
----------------------------------
Rainer Poertner, Chairman
"Consultant" LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
Date: 3/18/99 By: /s/ John Liviakis
----------------------------------
John M. Liviakis, President
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EXHIBIT 10.13
CONSULTING AGREEMENT WITH CSK SECURITIES RESEARCH
CSK SECURITIES RESEARCH
Registered Investment Adviser
April 17, 1997
Rainer E. Poertner
MediaX Corp.
3958 Ince Boulevard
Culver City, CA 90232
Re: MediaX Corp. - Stock Research Report
Engagement of CSK Securities Research
Dear Rainer:
In confirmation of our discussions regarding the preparation of an
initial stock research report (the "Report") and periodic up-dated reports
("Update Reports") covering MediaX Corp. (the "Company"), our agreement is as
follows:
1. The Company hereby engages CSK Securities Research ("CSK") to
prepare the Report and up to three (3) Update Reports (the "Engagement"). The
term of the Engagement shall be for one year commencing May 1, 1997 and ending
April 30, 1998. The Report shall consist of a brief factual description of the
Company, future strategy, investment opinion and earnings projections. The
Update Reports shall be prepared and released as requested by the Company and as
mutually agreed upon by CSK in connection with the Company's earnings
announcements or significant new developments effecting the Company. The Update
Reports shall consists of a brief factual description of the Company, an update
of the new developments concerning the Company, future strategy, investment
opinion and revised earnings projections. The Report and Update Reports shall be
under the name of CSK Securities Research.
Upon approval of the Report and each Update Report, the Company shall
be responsible for the printing and shipping expenses of the Report and Update
Reports. CSK will obtain estimates of printing and shipping expenses for the
Company's prior approval. Such estimated printing and shipping expenses shall be
payable prior to submission of the reports to the printer. In addition, in the
event the Company requests CSK to travel on behalf of the Company, the Company
agrees to reimburse CSK for such travel expenses.
2. As compensation for the Engagement, the Company shall issue to
Christina S. Kohlhaas options ("Options") to purchase twenty thousand (20,000)
shares of the Company's Common Stock at an exercise price of $0.80 (Eighty
Cents). The Options shall expire not less than three (3) years from the date of
issuance.
CSK Securities Research
25 Woodview Lane o Novato, California 94945-2726
(415) 899-9437 o Fax (415) 892-6537
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Mr. Rainer E. Poertner
MediaX Corp.
April 17, 1997
Page 2
Such 20,000 Options shall be issued as of May 1, 1997, and shall vest
and become exercisable as follows: 10,000 Options shall vest and become
exercisable on November 1, 1997; 5,000 Options shall vest and become exercisable
on February 1, 1998; and 5,000 Options shall vest and become exercisable May 1,
1998. The Company's Common Stock issued upon the exercise of such Options shall
be fully authorized, publicly traded and free of restrictions at the time of
exercise.
3. The Company agrees to use its best efforts to determine that all
information furnished to CSK by the Company shall be complete and correct in all
material respects when furnished and shall not contain any untrue statements of
a material fact or omit to state a material fact necessary in order to make the
statement therein not misleading in the light of the circumstances under which
such statement was made. In performing its services hereunder, the principals of
CSK shall familiarize themselves with and consider, among other things, the
history and nature of the business of the Company, the conditions and prospects
of the Company's industry, the operations, financial results, conditions,
properties and prospects of the Company, and such other facts as CSK deems
relevant. CSK shall be entitled to rely entirely, without independent
investigation, on publicly available information and the Company information
supplied by the Company regarding its business, competitors, and position in its
markets. The Company agrees that it will use its best efforts to determine that
the factual information furnished by it and contained in the Report and Update
Reports is correct and accurate. It is understood that any investment opinion,
opinions regarding the future prospects of the Company, and future earnings
projections are the opinion of CSK Securities Research and not the Company's
opinion.
4. Prior to the mutually planned release of the Report and Update
Reports to the public, the Company, its officers, employees, representatives,
agents and consultants agree not to deliver drafts of the Report and Update
Reports and/or preliminary earnings models or discuss the Report and Update
Reports with outside persons not directly involved in the review of the Report
and Update Reports on behalf of the Company (it being understood that such
Company- affiliated persons shall be informed by the Company of the
confidentiality of the preliminary information in the draft Report and Update
Reports and the need for the orderly dissemination of the Report and Update
Reports to the public). No copies of the Report and Update Reports shall be
mailed, faxed or delivered to any non-affiliated or outside persons not involved
in reviewing the Report on behalf of the Company until the Report has been
approved by the Company and shipped from the printer.
CSK Securities Research
25 Woodview Lane o Novato, California 94945-2726
(415) 899-9437 o Fax (415) 892-6537
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Mr. Rainer E. Poertner
MediaX Corp.
April 17, 1997
Page 3
5. After the completion of the Report and Update Reports, we shall not
submit the Report or Update Reports to the printer until the Company has
approved the final draft of the Report or Update Reports for printing and we
have received the approved printing and shipping expenses. We shall then
coordinate with you and your investor relations firm regarding distribution.
Please indicate your agreement to the above engagement by signing below
and returning a copy of this letter.
Sincerely,
CSK SECURITIES RESEARCH
/s/ Christina S. Kohlhaas
---------------------------------------
Christina S. Kohlhaas
Registered Investment Adviser
MediaX Corp. agrees to the
above terms of engagement of
CSK Securities Research:
MediaX Corp.
By: /s/ Rainer E. Poertner
------------------------
Rainer E. Poertner
Chairman
Date:
CSK Securities Research
25 Woodview Lane o Novato, California 94945-2726
(415) 899-9437 o Fax (415) 892-6537
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EXHIBIT 10.14
CONSULTING AGREEMENT WITH ROBERT J. ADSIT
M E D I A X
C O R P O R A T I O N
8522 National Boulevard
Suite 110
Culver City, CA 90232
fax: 310-815-8096
[email protected] 310 - 815 - 8002
June 26, 1998
Robert Adsit
Shareholders Solutions
7860 E. Berry Place, Suite 140
Englewood, Colorado, 80111
Dear Robert
The following terms pertaining to compensation supersedes our two previous
consulting agreements:
1 50,000 free trading shares
2 150,000 Options at $.25
3 150,000 Options at $..50
4 150,000 Options at $.75
All of the above will be registered on the current S-8 filing
Sincerely,
/s/ Nancy Poertner
- -----------------------------
Nancy Poertner
President
M E D I A X
s t u d i o s
Rainer Poertner 4 0 8 - 4 5 7 - 2 7 8
Chairman 325A River Street fax: 408 - 457 - 29
Santa Cruz, CA 95060
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CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is made and entered into this 20th
day of April 1997 by and between Robert J. Adsit (the "Consultant"), whose
principal place of business is 7860 East Berry Place, Suite 140, Englewood,
Colorado 80111 and MediaX Corporation, a Nevada corporation (the "Client"),
whose principal place of business is 8522 National Boulevard, Suite 110, Culver
City, California 90232.
WHEREAS
1. The Consultant is willing and capable of providing on a "best efforts" basis
various consulting and financial public relations services for and on behalf of
the Client in connection with the Client's interactions with broker-dealers,
shareholders and members of the general public.
2. The Client desires to retain the Consultant as an independent consultant and
the Consultant desires to be retained in that capacity upon the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual promises and agreements
hereinafter set forth, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Consulting Services. The Client hereby retains the Consultant as an
independent consultant to the Client and the Consultant hereby accepts and
agrees to such retention. The Consultant shall render to the Client such
services of an advisory or consultative nature in order to inform the
brokerage community, the Client's shareholders and the general public
concerning financial public relations and promotional matters relating to
them and its business. It is the intention of the parties that the
Consultant will gather all publicly-available information relating to the
Client and confer with officers and directors of the Client in an effort to
consolidate the information obtained into summary form for dissemination to
interested parties. It is intended that the Consultant will then distribute
such information concerning the Client to registered representatives of
broker- dealers and other person(s) who the Consultant determines, in its
sole discretion, are capable of effectively disseminating such information
to the general public. The Consultant will not provide any investment
advice or recommendations regarding the Client to anyone; rather, the
Consultant will focus on contacting persons, generally via telephonic
communications and person-to-person meetings, in order to familiarize them
with information concerning the Client which the Consultant has collected
and is otherwise available to the general public.
Not later than the third business day of each calendar month, Consultant
will submit to Client a monthly "progress report" detailing the previous
month's activities, results, pertinent observations, and planned activities
for the upcoming month. Client will submit to Consultant a detailed list of
planned activities for the upcoming month detailing news releases,
acquisitions, new products, private placements, and progress reports of
ongoing projects and any other pertinent data to the promotion of the
Company. This report will be submitted not later than the 25th day of the
preceding month.
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2. Time, Place, and Manner of Performance. The Consultant shall be available
for advice and counsel to the officers and directors of the Client at such
reasonable and convenient times and places as may be mutually agreed upon.
Except as aforesaid, the time, place and manner of performance of the
services hereunder, including the amount of time to be allocated by the
Consultant to any specific service, shall be determined in the sole
discretion of the Consultant.
3. Term of Agreement. The term of this Agreement shall be twelve months,
commencing April 20, 1997 and terminating April 19, 1998 subject, however,
to prior termination as hereinafter provided.
4. Compensation.
a) Upon execution of this Agreement, the Client agrees to issue to the
Consultant or in lieu thereof or in addition thereto, any person(s)
whose names are furnished to the Client on or prior to (15) days after
this Agreement, 75,000 shares of the Client's $.001 par value common
stock, said shares to be "restricted securities" as that term is
defined in Rule 144 under the Securities Act of 1933, as amended. The
securities issued pursuant to this subparagraph shall be issued free
and clear of any liens and encumbrances and for investment only and
not with a view to distributions. Said shares will have piggyback
registration rights and will be part of the first registration
conducted by the Company.
b) Client agrees to provide 250,000 options on its stock in two separate
blocks of 125,000 each. The first 125,000 options are to be priced at
$1.25 for the underlying stock and the second block of 125,000 options
priced at $2.50 for the underlying stock, such options being valid for
a period of thirty six (36) months and said options being subject to
"piggyback registration rights". The Client will use its best efforts
to include the shares underlying the stock options in this contract
and all previous contracts in any registration statement filed by the
Company before December 31, 1997. In the event the stock options
remain unregistered by December 31, 1997, the Consultant will have one
demand registration right of all the options due Consultant
exercisable at any time after $1 million dollars has been raised in
the form of any outside funding. By exercising its demand registration
right the Consultant may demand the Client use its best efforts to act
promptly and expeditiously register the stock at the Client's expense.
The Client may also choose to use any other applicable provision or
form that may from time to time be available for such registration. In
the event the Client fails to promptly and expeditiously register the
stock underlying the options the options will be registered under S-8
provisions of the employee stock option plan immediately, if such
provision applies. All such options vest with Consultant in monthly
increments of one-twelfth or 8.333%, of the total shares and options
per month from the April 20, 1997 date of commencement.
5. Expenses. The Client shall reimburse the Consultant on demand for all
expenses and other disbursements, including but not limited to travel,
entertainment, mailing, printing and postage, incurred by the Consultant on
behalf of the Client in connection with the performance of the consulting
services pursuant to this Agreement. A detailed invoice of such verifiable
out of pocket expenses for each calendar month will be submitted to the
Client not later than 10 days following each calendar month. Client agrees
to reimburse Consultant for such expenses within 21 days of receipt of the
invoice. All single expenses in excess of $200.00 must be approved by the
Client in advance.
6. Termination. Notwithstanding any provision contained in this Agreement on
the contrary, this Agreement may be terminated by either party without
cause upon thirty (30) days' prior written notice.
7. Work Product. It is agreed that prior to public distribution, all
information and materials produced for the Client shall be the property of
the Consultant, free and clear of all claims thereto by the Client, and the
Client shall retain no claim of authorship therein. Client shall be free to
reproduce the same.
[MEDIAX\123198.FS]-12
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<PAGE>
8. Disclosure of Information. The Consultant recognizes and acknowledges that
it has and will have access to certain confidential information of the
Client and its affiliates that are valuable, special and unique assets and
property of the Client and such affiliates. The Consultant will not, during
or after the term of this Agreement, disclose, without the prior written
consent or authorization of the Client, any of such information to any
person, except to authorized representatives of the Consultant or its
affiliates, for any reason or purpose whatsoever. In this regard, the
Client agrees that such authorization or consent to disclosure may be
conditioned upon the disclosure being made pursuant to a secrecy agreement,
protective order, provision of statute, rule, regulation or procedure under
which the confidentiality of the information is maintained in the hands of
the person to whom the information is to be disclosed or in compliance with
the terms of a judicial order or administrative process.
9. Nature of Relationship. It is understood and acknowledged by the parties
that the Consultant is being retained by the Client in an independent
capacity and that in this connection, the Consultant hereby agrees, except
as provided in paragraph 4, herein above or unless the Client shall have
otherwise consented in writing, not to enter into any agreement or incur
any obligation on behalf of the Client.
10. Conflict of Interest. The Consultant shall be free to perform services for
other persons/corporations provided that it shall obtain the Client's
written approval if it intends to provide consulting services for any other
person/corporation which may conflict with its obligations hereunder.
11. Indemnification for Securities Law Violations. The Client and Consultant
agree to indemnify and hold harmless one another, including and not limited
to each officer, director and controlling person against any losses,
claims, damages, liabilities and/or expenses (including any legal or other
expenses reasonably incurred in investigating or defending any action or
claim in respect thereof) to which the Consultant or Client or such
officer, director or controlling person may become subject under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, because of inappropriate actions of the Client, the Consultant
or their respective agent(s). Consultant and Client will comply with all
the applicable laws of the Securities Act of 1933.
12. Notices. Any notices required or permitted to be given under this Agreement
shall be sufficient if in writing and delivered or sent by registered or
certified mail to the principal office of each party.
13. Waiver of Breach. Any waiver by either party of a breach of any provision
of this Agreement by the other party shall not operate or be construed as a
waiver of any subsequent breach by the other party.
[MEDIAX\123198.FS]-12
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<PAGE>
14. Assignment. This Agreement and the rights and obligations of the parties
hereunder shall not be assigned without the prior written approval of the
other and shall inure to the benefit of and shall be binding upon their
successors and assigns. Notwithstanding the foregoing the Consultant may
assign any of the stock options to any of its officers, directors or
employees.
15. Applicable Law. It is the intention of the parties hereto that this
Agreement and the performance hereunder and all suits and special
proceedings hereunder be construed in accordance with and under and
pursuant to the laws of the State of Colorado and that in any action,
special proceedings or other proceedings that may be brought arising out
of, in connection with or by reason of this Agreement, the laws of the
State of Colorado shall be applicable and shall govern to the exclusion of
the law of any other forum, without regard to the jurisdiction in which any
action or special proceeding may be instituted.
16. Severability. All agreements and covenants contained herein are severable,
and in the event any of them shall be held to be invalid by any competent
court, this Agreement shall be interpreted as if such invalid agreements or
covenants were not contained herein.
17. Entire Agreement. This Agreement constitutes and embodies the entire
understanding and agreement of the parties and supersedes and replaces all
prior understandings, agreements and negotiations between the parties.
18. Waiver and Modification. Any waiver, alteration or modification of any of
the provisions of this Agreement shall be valid only if made in writing and
signed by the parties hereto. Each party hereto, from time to time, may
waive any of its rights hereunder without effecting a waiver with respect
to any subsequent occurrences or transactions hereof.
19. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but both of which taken together shall
constitute but one and the same document.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the day and year first above written.
CONSULTANT: CLIENT:
MediaX Corporation
/s/ Robert J. Adsit By: /s/ Nancy Poertner, President
- ----------------------------- ----------------------------------
Robert J. Adsit Nancy Poertner
[MEDIAX\123198.FS]-12
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EXHIBIT 10.15
CONSULTING AGREEMENT WITH JOHN H. SHAW
John H. Shaw
Investor and Public Relations
P.O. Box 491591
Los Angeles, CA 90049
(310) 289-3269
January 17, 1997
Nancy Poertner, CEO
MediaX Corporation
Dear Nancy:
This letter will confirm our agreement that MediaX will retain my (John Shaw)
services to consult on external communications policy and activities as outlined
in my letter to Mr. Rainer Poertner dated January 16, 1997 which is incorporated
herein by reference. Essentially, it is my understanding that MediaX retains my
services as financial public relations counsel in any independent consultant
capacity.
MUTUAL ASSURANCES:
In this relationship, I agree to comply fully with all regulations, guidelines
and applicable laws, and to maintain the confidentiality of all information not
cleared for public release. MediaX agrees to provide me access to material facts
related to the Company's past and present performance, financial position,
business plans and all other pertinent information relative to the professional
execution of my responsibilities.
All materials will be submitted to MediaX only; any publication and distribution
is the sole responsibility and liability of MediaX. MediaX agrees to indemnify
and hold me harmless from and against any and all losses, claims, damages,
expenses or liabilities resulting from MediaX's publication/distribution of the
submitted materials.
FINANCIAL ARRANGEMENTS Professional Fees:
I agree to be continually on call and available to MediaX in keeping within the
scope of my assignments and commensurate with my pre-existing commitments.
In exchange for services rendered in 1997, MediaX will grant to me a total of
65,000 options to purchase one share each of the Company's common stock, in lieu
of cash. The first 10,000 options will vest on the last day of January 1997,
with the remaining options to vest in monthly increments of 5,000 per month
beginning on the last business day of February 1997, followed by 5,000 per month
on the last business day of each month through and including December 1997. The
option exercise price will be fixed for the full year at yesterday's closing bid
of $0.875.
These options will be issued under the Company's 1996 Stock Option Plan and
accordingly will be registered (and the shares underlying such options) under
that existing plan.
[MEDIAX\123198.FS]-12
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<PAGE>
Page 2
MediaX
Consulting Agreement
Out of Pocket Expenses:
In order to facilitate the conduct of the program, I agree to extend my own
funds on behalf of MediaX to cover out-of-pocket expenses, as they occur - such
as pager, voice mail, telephone, telecopier, travel, printing, mailing, to the
extent that they are not available at MediaX. Presently such expenses are
expected to be minimal and will be covered at a flat $150 per month as outlined
in the Jan. 16,1997 letter, invoiced at the start of the month, beginning with
March. To the extent unusual expenses are incurred, they will be pre-approved
and invoiced monthly for reimbursement. I also agree not to incur any single
expense of more than $50 without obtaining prior approval from MediaX.
This Agreement is cancelable by either party with 30 days written notice.
Agreed to:
/s/ John H. Shaw
- -----------------------------
John H. Shaw, Consultant date
For MediaX:
/s/ Nancy Poertner
- -----------------------------
Nancy Poertner, CEO date
[MEDIAX\123198.FS]-12
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<PAGE>
EXHIBIT 10.16
CONSULTING AGREEMENT WITH RETAIL OEM INTERNATIONAL INC.
This agreement is made on the 21st day of July, 1997
SOFTWARE REPRESENTATION AGREEMENT
AMONG: Retail OEM International, Inc., a California corporation,
having its office at 359 San Miguel, Suite 110, Newport Beach, California
92660 ("ROI");
AND: MediaX Corporation, a California corporation having its office at
8522 National Boulevard, Culver City, California, 90232 ("MediaX")
WHEREAS the parties wish that ROI act as MediaX's sales representative in
respect of software published by MediaX in the territory;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises
and the mutual agreements and covenants herein contained and the payment of $1
made by each party to the other (the receipt and adequacy of such
consideration is hereby mutually acknowledged by each party), the parties
hereby covenant and agree as follows:
1. INTERPRETATION
1.1 Interpretation - For the purposes of this agreement, except as otherwise
expressly provided herein:
(a) "this Agreement" means this Agreement as it may from time to time be
supplemented or amended and in effect;
(b) all references in this Agreement to a designation "Section",
"paragraph", "subparagraph", or other subdivision, is to the
designated Section, paragraph, subparagraph or other subdivision of
this Agreement unless otherwise specifically stated;
(c) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Section, paragraph, subparagraph or other subdivision;
(d) the singular of any term includes the plural and vice versa and the
use of any term is equally applicable to any gender and where
applicable a body corporate;
(e) the word "or" is not exclusive and the word "including" is not
limiting (whether or not non-limiting language such as
"without-limitation" or "but not limited to" or other words of similar
import is used with reference thereto);
(f) the headings to the paragraphs and subparagraphs of this Agreement are
inserted for convenience only and do not form a part of this Agreement
and are not intended to interpret, define or limit the scope, extent
or intent of this Agreement or any provision hereof;
(g) any reference to a corporate entity includes and is also a reference
to any corporate entity that is a successor to such entity; and
(h) the language in all parts of this Agreement shall in all cases be
construed as a whole and neither strictly for nor against either of
the parties.
[MEDIAX\123198.FS]-12
<PAGE>
2. APPOINTMENT
2.1 Sales Representative. MediaX hereby appoints ROI as its exclusive sales
representative for the sale of Big Brother, the Peter Norton PC Guru series and
all other software products as MediaX may publish or distribute ("Products") to
accounts in the Territory (as set forth in paragraph 2.2 hereto) and ROI hereby
accepts such appointment, on the terms and conditions provided herein.
2.2 Territory. The territory shall be as defined on Schedule "A".
2.3 Efforts. ROI shall use its best efforts and skill to solicit sales of the
Products, which shall represent its principal business activity. ROI, may, upon
written notice to MediaX, represent other software products from other parties
provided such products and parties are not competitive with the Products or
MediaX ad such representation does not in any way compromise or diminish its
duties and obligations hereunder. MediaX acknowledges and accepts ROI's current
representation of Syncronys Softcorp, Memorex Software, and Globalink, as
non-competitive products and parties.
2.4 Term. The appointment of ROI hereunder shall commence as of the date hereof
and shall terminate on July 31st, 1999, unless terminated earlier in accordance
with the provisions of this Agreement. Furthermore, this Agreement shall
automatically renew in two-year increments unless terminated in accordance with
the provisions of this Agreement.
2.5 MediaX Expenses. MediaX shall, at its expense, provide ROI (and its
customers) with a reasonable supply of sales literature, samples of the Products
and other sales and marketing materials. As well, from time to time, where
reasonable, MediaX shall accompany ROI on key sales meetings, particularly in
pursuit of new account engagements and product releases.
26 ROI Expenses. ROI shall be exclusively responsible for all of its business
communication, travel, entertainment and other expenses incurred in connection
with the solicitation of sales of the Products and carrying out its duties and
obligations hereunder. As well, ROI shall, at its expense, meet with MediaX at
its headquarters in Culver City at least one per month to develop and coordinate
sales and marketing strategies. Reasonable travel and entertainment expenses
incurred by ROI in respect of Special Meetings (those considered over and above
that normally required for sales solicitation) shall be reimbursable by MediaX
with its prior written approval. The following Special Meetings have MediaX
prior approval: managers' shows, Comdex, CeBit, E-3 and Retail Vision. Should
ROI represent additional clients at said Special Meetings, then in such instance
all applicable expenses shall be pro-rated among the number of clients
represented at such meeting(s).
3. PURCHASE ORDERS AND INVOICING
3.1 Purchase Orders. All purchase orders solicited by ROI on behalf of MediaX
shall be made with MediaX and shall be subject to terms and conditions,
including prices, discounts and delivery dates as approved in advance by MediaX.
Purchase orders may be sent to ROI, for direct forwarding to MediaX immediately
thereafter.
3.2 Invoices. MediaX shall directly invoice all accounts in respect of all
purchase orders solicited by ROI and shall directly process payment therefrom.
MediaX shall make copies of all such invoices available to ROI.
4. COMPENSATION
4.1 Monthly Retainer. Commencing September 1, 1997, MediaX shall pay ROI a
retainer of Three Thousand Dollars ($3,000) per month. Retainer payments shall
be due and payable on or before the 15th of each month; any partial month shall
be pro-rated. The monthly retained shall be credited to commissions earned by
ROI for that particular month only. No commissions will be paid unless the
monthly retainer amount is exceeded in monthly commissions earned by ROI subject
to section 4.2 of this Agreement and subject to Schedule "A" of this Agreement.
For example, if monthly commissions equal $25,000 and MediaX has paid the
retainer of $3,000, then an additional payment of $22,000 is due ROI.
Conversely, if monthly commissions equal $2,000 and MediaX has paid the retainer
of $3,000, then no additional payment is due ROI, nor shall any refund be due
MediaX for that particular month.
4.2 Commissions. MediaX shall pay ROI a commission as stipulated in Schedule
"A", exclusive of all taxes, duties, shipping charges (i.e. the cost of
Products) that may be included in the total invoice amount due MediaX from its
customers, and net of all returns of the Products and any associated charges.
Promotional allowances such as sales SPIFFS, advertising funds, rebates, and the
like shall not reduce commissions due to ROI even if such allowances are
deducted from invoices. Special price reductions on Products, however, shall
decrease commissions due to ROI.
[MEDIAX\123198.FS]-12
<PAGE>
4.3 Payment & Accounting of Commissions. MediaX shall pay commissions to ROI on
the earlier of (a) actual receipt of payment of an invoice by MediaX or (b) 60
days from the date of invoice. There shall be a quarterly accounting and
reconciliation of commissions and of any expenses in respect of Special Meetings
as any be reasonably determined by time to time by the parties.
4.4 Options. MediaX agrees to grant each ROI principal, Tammy Gibbons and Robert
Keilch, a Common Stock Option, in the form and on the terms attached hereto as
Schedule "B", to purchase Two Hundred Fifty Thousand (250,000) shares of MediaX'
common stock at a fair market value price per share as further defined in
Schedule "B". Any unvested options shall terminate in the event that the
Agreement is terminated by either MediaX or ROI under Section 6.2 hereunder by
ROI (but not by MediaX) under Section 6.3 hereunder.
5. RELATIONSHIP OF PARTIES
5.1 Independent Contractor. The relationship created by this Agreement is that
of principal and selling agent. ROI is an independent contractor and not an
employee of MediaX. Save and except for the solicitation of purchase orders, ROI
and its staff or agents, shall not, without prior written consent of MediaX,
have any right or authority to create or assume any obligation of any kind
whatsoever or make any warranty or representation on behalf of MediaX, or
otherwise obligate or render MediaX liable in any manner whatsoever.
5.2 ROI Indemnity. ROI agrees to indemnify and hold MediaX and its employees and
agents harmless and to pay all losses, costs, damages and expenses, whatsoever,
including reasonable attorney fees, which they, or any of them, may sustain or
incur on account of or arising from the acts, omissions, and representations of
ROI and its employees and agents.
5.3 MediaX Indemnity. MediaX agrees to indemnify and hold ROI and its employees
and agents, harmless and to pay all losses, costs, damages and expenses,
whatsoever, including reasonable attorney fees, which they, or any of them, may
sustain or incur on account of infringement or alleged infringement or patent,
trademarks, or trade names, resulting from the sale of the Products or arising
on account of warranty claims or products liability matters.
6. GENERAL
6.1 Notices. All notices relating to this Agreement shall be in writing and
delivered via courier addressed to the appropriate party at the address of such
party as set out on the first page of this Agreement, or to such other addresses
as may be specified by one party to the other parties by notice in writing. Such
notices shall be deemed to have been received by the party to whom it was given
on the third business day following the sending thereof by courier.
6.2 Termination With Cause. Either MediaX or ROI party may terminate this
Agreement immediately by written notice in the event that the other becomes
insolvent, files for bankruptcy or remains in material breach of this Agreement
after the noted cure period. Upon written notification of a material breach, the
breaching party shall have sixty (60) days to cure said breach.
6.3 Termination Without Cause. Either MediaX or ROI may without cause terminate
this Agreement on 180 days written notice.
6.4 Confidentiality. The parties shall maintain strict confidentiality of the
other's business, financial, technical and marketing information and affairs.
6.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
6.6 Arbitration. Any controversy of claim arising out of or relating to this
Agreement shall be resolved by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect, and
judgment upon the award rendered by the arbitrators in any such arbitration,
including, without limitation, specific performance of this Agreement, may be
entered in any federal or state court having jurisdiction thereof. The
prevailing party in any such arbitration shall be entitled to recover from the
other party in addition to all other relief, all reasonable costs and expenses
actually incurred in connection with such arbitration.
[MEDIAX\123198.FS]-12
<PAGE>
6.7 Severability. If any one or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
6.8 Further Assurances. The parties hereto shall with reasonable diligence do
all such things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated hereby, and each party hereto shall
provide such further documents or instruments required by the other party as may
be reasonably necessary or desirable to effect the purpose of this Agreement.
6.9 Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto and supersedes all prior agreements, whether written or oral,
made between the parties hereto, and there do not exist any representations,
warranties, terms or conditions, expressed or implied, statutory or otherwise,
and no agreements collateral hereto, other than as expressly set forth or
referred to in this Agreement.
6.10 Enurement. This Agreement and each of the terms and provisions hereof shall
enure to the benefit of and be binding upon the parties hereto and their
respective heirs, executors, administrators, personal representatives,
successors and permitted assigns; provided, however, that ROI shall not be
entitled to assign or delegate any of its rights or obligations hereunder
without the prior written consent of MediaX.
6.11 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have hereunto duly executed this Agreement
as of the day and year first above written.
MediaX Corporation Retail OEM International, Inc.
By: By:
(print name, title) (print name, title)
Date: Date:
[MEDIAX\123198.FS]-12
<PAGE>
SCHEDULE "A"
COMMISSION RATE and TERRITORY
Commission Rate. MediaX shall pay ROI, Inc., a commission equal to Five Percent
(5.0%) of all invoices, net of returns, for sales within the territory,
exclusive of any taxes, duties, shipping charges, and cost of goods that may
appear on MediaX invoices to its customers.
Territory.
The territory shall consist of all distribution, dealer, reseller (including
Value Added Resellers, and catalogers), OEM (Original Equipment Manufacturer),
and ISP (Internet Service Provider) accounts in the United States and Canada on
an exclusive basis, and the rest of the world on a non-exclusive basis.
[MEDIAX\123198.FS]-12
<PAGE>
SCHEDULE "B"
MediaX Corporation
8522 National Boulevard, Culver City, CA 90232
July 21, 1997
The option price granted to each ROI Principal, Tammy Gibbons and Robert Keilch,
to purchase Two Hundred Fifty Thousand (250,000) shares of the $.01 par value
common stock of MediaX at a fair market value option price that shall be equal
to the closing price of the stock on the first day of this Agreement. The
closing price of the common stock on July 21, 1997 was $1-1/8 per share, which
shall be the fair market value option price. Said shares shall be fully tradable
and are not subject to any restrictions whatsoever.
This Common Stock Option shall vest as follows:
Robert Keilch/Tammy Gibbons
25,000 shares on September 30, 1997 "+"
Thereafter:
# shares Vested Upon
25,000 50,000th unit ships "+"
25,000 100,000th unit ships "+"
25,000 150,000th unit ships "+"
25,000 250,000th unit ships "+"
25,000 300,000th unit ships "+"
25,000 350,000th unit ships "+"
25,000 400,000th unit ships "+"
25,000 450,000th unit ships "+"
25,000 500,000th unit ships "+"
25,000 550,000th unit ships "+"
25,000 600,000th unit ships "+"
25,000 650,000th unit ships "+"
25,000 700,000th unit ships "+"
25,000 750,000th unit ships "+"
25,000 800,000th unit ships "+"
25,000 850,000th unit ships "+"
25,000 900,000th unit ships "+"
25,000 950,000th unit ships "+"
250,000 Total Shares
In the event that the Software Representation Agreement dated July 21, 1997 (the
"Agreement"), among ROI, Inc., is rightfully terminated by either MediaX or ROI
under Section 6.2 of the Agreement or by ROI under Section 6.3 of the Agreement,
then this Common Stock Option shall terminate with respect to the number of
shares which have not vested as of the effective date of termination. In the
event that the Agreement is terminated by MediaX under Section 6.3 of the
Agreement, then all unvested options shall fully vest one day prior to the
effective termination date.
[MEDIAX\123198.FS]-12
<PAGE>
EXHIBIT 10.17
- S - M - E -
o Financial Communications
August 12, 1997
Ms. Nancy Poertner
President and Chief Executive Officer
MediaX Corporation
8522 National Boulevard, Suite 110
Culver City, CA 90232
Dear Nancy:
This will confirm our agreement that SME Financial Communications has been
retained to provide investor relations/public relations counsel for MediaX
Corporation, in accordance with the following:
1. MediaX Corporation has retained SME Financial Communications as investor
relations counsel for a 12-month period commencing August 13, 1997. The
scope of such counsel to conform with the SME Financial
Communications-submitted proposal dated August 8, 1997 and hereby accepted
by MediaX Corporation.
2. SME Financial Communications will be paid a retainer of $3,000 per month,
payable at the beginning of each month, plus 45,000 options to purchase one
share of MediaX common stock each at today's price of $1.38 per share; such
options vesting at a rate of 3,750 options per month, each month.
3. SME Financial Communications further agrees to advance funds on behalf of
MediaX Corporation for out-of-pocket expenses, which SME Financial
Communications will bill to MediaX Corporation on a monthly basis. These
expenses are expected to run between $300-$400 per month and will include
telephone, copying, general mailing, messenger services, news services and
other tracking services, subscriptions to trade publications and other
reference materials. Expenses that will be excluded from the above charges
include PR Newswire and Business Wire, and vendors providing conference
call services. Additional excluded expenses which will be authorized by
MediaX Corporation prior to being incurred include travel and other costs
incurred in conjunction with meetings with the financial community or
MediaX, production charges related to the development of promotional
materials, and special mailing charges related to direct mail campaigns.
Any single expense of more than $100 must be approved by MediaX Corporation
in writing, in advance.
[MEDIAX\123198.FS]-12
<PAGE>
4. MediaX Corporation will indemnify and hold harmless SME Financial
Communications its controlling persons, officers, directors, employees and
agents from and against any and all losses, claims, damages, liabilities,
costs and expenses (including, but not limited to reasonable attorney's
fees) which SME Financial Communications or any of the foregoing persons
may be subject to or incur in connection with the services to be rendered
by SME Financial Communications to MediaX Corporation (including, but not
limited to, its or their reliance upon or use of any information,
documents, representations, reports or data furnished by or prepared MediaX
Corporation). This paragraph shall not apply to any action or inaction
which has been judicially determined to be willful misconduct or gross
negligence on the part of SME Financial Communications. SME Financial
Communications agrees to indemnify and hold MediaX Corporation harmless
from and against any and all claims, demands, liabilities, actions,
judgments, and expenses, including attorney's fees and expenses reasonably
incurred by, against or of MediaX Corporation, arising out of any breach of
any obligation or representation by SME contained in this Agreement, or out
of any action brought by a third party involving any communication by SME
Financial Communications outside the scope of this Agreement or otherwise
unauthorized by MediaX Corporation.
5. SME Financial Communication's engagement is for a period of not less than
three months, beyond which it may be terminated by either party upon
30-days written notification, it being understood that the provision hereof
relating to the payment of unpaid fees and accrued expenses and
indemnification will survive any such termination.
6. SME Financial Communications will maintain the confidentiality of all such
material information and any other information about MediaX Corporation,
its operations, strategies, technology and employees, regardless of source,
that may be deemed proprietary, confidential or sensitive, unless and until
both parties agree upon an appropriate means of dissemination. SME
Financial Communications will observe all applicable SEC, NASD and all
other rules and regulations that pertain to the performance of its duties
under this Agreement.
7. MediaX Corporation has the right of refusal to SME Financial Communications
being engaged on an ongoing or project basis by any company that is
reasonably deemed to be a direct competitor to MediaX Corporation.
If this conforms to your understanding of our agreement, please sign the
attached copy and return it to me for our files.
Sincerely,
Agreed: SME Financial Communications Agreed: MediaX Corporation
By: /s/ Tom J. Eckman By: /s/ Nancy Poertner
------------------------ ----------------------------------
Tom J. Eckman Nancy Poertner
Date: Date:
72
<PAGE>
EXHIBIT 10.18
CONSULTING AGREEMENT WITH BUSINESS NEWS NETWORK INC.
[MEDIAX\123198.FS]-12
5025 Centennial Boulevard o Colorado Springs, CO 80919
Fax: 719-528-1438 o Tel: 719-528-7040
BNN BUSINESS
NEWS
NETWORK, INC.
- ------------------
October 31, 1997
MediaX Corporation
8522 National Boulevard
Suite 110
Culver City, CA 90232
Ladies and Gentlemen:
In connection with our proposed purchase of 400,000 shares of Common
Stock (the "Shares") of MediaX Corporation, a Nevada corporation (the
"Company"), we confirm that:
1. We agree not to resell, pledge or otherwise transfer the Shares
except in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and all applicable state securities laws.
2. We understand that the offer and sale of the Shares have not been
registered under the Securities Act or pursuant to any state securities laws,
and that the Shares may not be offered or sold within the United States to, or
for the account or benefit of, U.S. persons, within two years after the original
issuance date thereof, except pursuant to an exemption from registration under
the Securities Act and state securities laws or pursuant to an effective
registration statement under the Securities Act, and we further agree to provide
to any person purchasing any of the Shares from us a notice advising such
purchaser that any resale of the Shares is restricted as stated herein.
3. We understand that, on any proposed resale of any Shares, we will be
required to furnish to the Company such certification, written legal opinions
and other information as the Company may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We further understand
that the Shares purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D promulgated under the Securities Act)
and have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the Shares,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or their investment, as the case may be.
5. We are acquiring the Shares purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
You and your respective counsel are entitled to rely upon this letter
and are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
[MEDIAX\123198.FS]-12
5025 Centennial Boulevard o Colorado Springs, CO 80919
Fax: 719-528-1438 o Tel: 719-528-7040
73
<PAGE>
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK.
Very truly yours,
By:
Name:
Title:
Address:
[MEDIAX\123198.FS]-12
5025 Centennial Boulevard o Colorado Springs, CO 80919
Fax: 719-528-1438 o Tel: 719-528-7040
<PAGE>
BNN BUSINESS
NEWS
NETWORK, INC.
- ------------------
October 31, 1997
Rainer Poertner
Chairman
MediaX Corporation
8522 National Boulevard, #110
Culver City, CA 90232
Re: Agreement for Purchase of Advertising Time
Dear Sir:
This letter will set forth our agreement, effective as of the date
first written above, with respect to the purchase by MediaX Corporation
("Corporation") of advertising time on the broadcast of the Business News
Network (the "Network"). Business New Network, Inc. ("BNN") will provide
Corporation with a six hundred thousand dollar ($600,000) credit towards the
purchase of advertising on the Network's broadcast (the "Credit"). In exchange
for the Credit, Corporation will issue to BNN four hundred thousand (400,000)
shares of its common stock. A certificate evidencing BNN's ownership of such
shares shall be delivered to BNN within five business days of the date first
written above.
The Corporation may utilize the Credit for advertising time to be
broadcast any time prior to 12:00 a.m. EST on the third anniversary of this
Agreement, subject to availability; provided that to the extent at least one
third of the Credit is not utilized by the second anniversary of this Agreement,
that portion of the Credit will expire and further provided that BNN may refuse
to provide advertising time representing a conversion of more than one tenth of
the original Credit in a single calendar month. The conversion of the Credit to
advertising time shall be made based on BNN's MediaX Rate Card. A copy of BNN's
current MediaX Rate Card is appended to this letter. In the event BNN's MediaX
Rate Card changes, Corporation shall be entitled to purchase advertising time
according to the replaced MediaX Rate Card for a period of 120 days subsequent
to BNN's notice to Corporation of such change.
Corporation's rights under this Agreement may not be assigned without
the written consent of BNN. This Agreement represents the entire understanding
of the parties and may be modified only by a writing signed by the parties.
The signature made in closing below shall evidence BNN's acceptance of
and intent to be bound by the foregoing, with the further intent that all others
may rely thereupon. Please have Corporation execute this Agreement in the space
provided. In addition, please deliver a copy of the resolution of Corporation's
Board of Directors to issue the Corporation Shares together with a Secretary's
Certificate authenticating such resolution. Once executed by all parties and
delivery of the foregoing corporate documents having been made, the Agreement
shall be deemed effective as of the date first written above.
[MEDIAX\123198.FS]-12
5025 Centennial Boulevard o Colorado Springs, CO 80919
Fax: 719-528-1438 o Tel: 719-528-7040
<PAGE>
We at BNN are pleased to provide you with this asset and anticipate
providing you with even greater value upon its conversion to an advertising
campaign.
Very truly yours,
/s/ Robert E. Long
---------------------------------------
Robert E. Long
Agreed to and accepted on this day of , 1997, with the intent to be bound by the
foregoing and with the further intent that all others may rely thereupon.
CORPORATION
By: Corporate Seal:
Its:
[MEDIAX\123198.FS]-12
5025 Centennial Boulevard o Colorado Springs, CO 80919
Fax: 719-528-1438 o Tel: 719-528-7040
[MEDIAX\123198.FS]-12
<PAGE>
EXHIBIT 10.19
CONSULTING AGREEMENT WITH WILLOWRUN
This Agreement is made as of the 24th day of December, 1997
AMONG: Willowrun Software Marketing, Inc., David Brow, a Canadian
corporation, having its office at 1052 Kings Avenue, West Vancouver, BC,
("Willowrun");
AND: MediaX Corporation, a Nevada corporation having its office at 8522
National Boulevard, Culver City, California 90232 ("MediaX")
WHEREAS the parties wish that WILLOWRUN act as MediaX' sales representative in
respect of software published by MediaX in the territory.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
the mutual agreements and covenants herein contained and the payment of $1 made
by each party to the other (the receipt and adequacy of such consideration is
hereby mutually acknowledged by each party), the parties hereby covenant and
agree as follows:
1. INTERPRETATION
1.1 Interpretation - For the purposes of this agreement, except as otherwise
expressly provided herein:
(a) "this Agreement" means this Agreement as it may from time to time be
supplemented or amended and in effect;
(b) all references in this Agreement to a designation "Section",
"paragraph", "subparagraph", or other subdivision, is to the
designated Section, paragraph, subparagraph or other subdivision of
this Agreement unless otherwise specifically stated;
(c) the words "herein", "hereof" and "hereunder" and other words of
similar import to refer to this Agreement as a whole and not to any
particular Section, paragraph, subparagraph or other subdivision;
(d) the singular of any term includes the plural and vice versa and the
use of any term is equally applicable to any gender and where
applicable a body corporate;
(e) the word "or" is not exclusive and the word "including" is not
limiting (whether or not non-limiting language such as
"without-limitation" or "but not limited to" or other words of similar
import is used with reference thereto)
(F) the headings to the paragraphs and subparagraphs of this Agreement are
inserted for convenience only and do not form a part of this Agreement
and are not intended to interpret, define or limit the scope, extent
or intent of this Agreement or any provision hereof;
(g) any reference to a corporate entity includes and is also a reference
to any corporate entity that is a successor to such entity; and
(h) the language in all parts of this Agreement shall in all cases be
construed as a whole and neither strictly for nor against either of
the parties.
[MEDIAX\123198.FS]-12
<PAGE>
2. APPOINTMENT
2.1 Sales Representative. MediaX hereby appoints WILLOWRUN as its exclusive sale
representative for the sale of Peter Norton PC Guru series as MediaX may publish
or distribute this product ("Products") to accounts in the Territory (as set
forth in paragraph 2.2 hereto) and WILLOWRUN hereby accepts such appointment, on
the terms and conditions provided herein.
2.2 Territory. The territory shall be as defined on Schedule "A".
2.3 Efforts. WILLOWRUN shall use its best efforts and skill to solicit sales of
the Products, which shall represent its principal business activity. WILLOWRUN
may, upon written notice to MediaX represent other software products from other
parties provided such products and parties are not competitive with the Products
or MediaX and such representation does not in any way compromise or diminish its
duties and obligations hereunder. MediaX acknowledges and accepts WILLOWRUN's
current representation of Syncronys Softcorp, Powerquest Corporation, as
non-competitive products and parties.
2.4 Term. The appointment of WILLOWRUN hereunder shall commence as of the date
hereof and shall terminate on December 24th, 1999, unless terminated earlier in
accordance with the provisions of this Agreement. Furthermore, this Agreement
shall automatically renew in two-year increments unless terminated in accordance
with the provisions of this Agreement.
2.5 MediaX Expenses. MediaX shall, at its expense, provide WILLOWRUN (and its
customers) with a reasonable supply of sales literature, samples of the Products
and other sales and marketing materials. As well, from time to time, where
reasonable, MediaX shall accompany WILLOWRUN on key sales meetings, particularly
in pursuit of new account engagements and product releases.
2.6 WILLOWRUN Expenses. WILLOWRUN shall be exclusively responsible for all of
its business communication, travel, entertainment and other expenses incurred in
connection with the solicitation of sales of the Products and carrying out of
its duties and obligations hereunder. As well, WILLOWRUN shall, at its expense,
meet with MediaX at its headquarters in Culver City at least once every three
months to develop and coordinate sales and marketing strategies. Reasonable
travel and entertainment expenses incurred by WILLOWRUN in respect of Special
Meetings (those considered over and above that normally required for sales
solicitation) shall be reimbursable by MediaX with its prior written approval.
The following Special Meetings have MediaX's prior approval: managers' shows,
Comdex, CES. E-3 and Retail Vision. Should WILLOWRUN represent additional
clients at said Special Meetings, then in such instance all applicable expenses
shall be pro-rated among the number of clients represented at such meeting(s).
3. PURCHASE ORDERS & INVOICING
3.1 Purchase Orders. All purchase orders solicited by WILLOWRUN on behalf of
MediaX shall be made with MediaX and shall be subject to terms and conditions,
including prices, discounts and delivery dates as approved in advance by MediaX.
Purchase orders may be sent to WILLOWRUN, for direct forwarding to MediaX
immediately thereafter.
3.2 Invoices. MediaX shall directly invoice all accounts in respect of all
purchase orders solicited by WILLOWRUN and shall directly process payment
therefrom. MediaX shall allow WILLOWRUN to review invoices at MediaX's offices.
4. COMPENSATION
4.1 Compensation. MediaX shall pay WILLOWRUN a commission equal to 4.5% of Gross
Revenues received by MediaX for retail sales generated by WILLOWRUN. In the
event that WILLOWRUN collects payments in less than 60 days from the date of
invoice, an additional 1% commission shall be paid to WILLOWRUN. Gross Revenues
shall mean the actual amount received by MediaX less all taxes, duties, shipping
charges, returns and all associated charges, cash discounts, special price
reductions including price protections and a 30% reserve for returns.
Promotional allowances such as sales SPIFFS, advertising funds, rebates, and the
like shall not reduce commissions due to WILLOWRUN even if such allowances are
deducted from invoices.
[MEDIAX\123198.FS]-12
<PAGE>
4.2 Sign Up Payment. MediaX shall pay WILLOWRUN a one-time payment of $1,500 no
later than 10 days after signing of contract.
4.3a Payment & Accounting of Commissions. Commissions shall be paid by MediaX to
WILLOWRUN on the earlier of (a) actual receipt of payment of an invoice by
MediaX or (b) 90 days from the date of invoice. There shall be quarterly
accounting and reconciliation of commissions and of any expenses in respect of
Special Meetings as may be reasonably determined by time to time by the parties.
4.3b Options. MediaX agrees to grant WILLOWRUN a Common Stock Option, in the
form and on the terms attached hereto as Schedule "B", to purchase 25,000
(twenty-five thousand) options under the MediaX non-qualifying stock option plan
for shares of MediaX' common stock at a fair market value price per share and at
a vesting schedule as further defined in Schedule "B". Any unvested options
shall terminate in the event that the Agreement is terminated by either MediaX
or WILLOWRUN under Section 6.2 hereunder by WILLOWRUN (but not by MediaX) under
Section 6.3 hereunder.
5. RELATIONSHIP OF PARTIES
5.1 Independent Contractor. The relationship created by this Agreement is that
of principal and selling agent. WILLOWRUN is an independent contractor and not
an employee of MediaX. Save and except for the solicitation of purchase orders,
WILLOWRUN and its staff or agents, shall not, without the prior written consent
of MediaX, have any right or authority to create or assume any obligation of any
kind whatsoever or make any warranty or representation on behalf of MediaX, or
otherwise obligate or render MediaX liable in any manner whatsoever.
5.2 WILLOWRUN Indemnity. WILLOWRUN agrees to indemnify and hold MediaX and its
employees and agents, harmless and to pay all losses, costs, damages and
expenses, whatsoever, including reasonable attorney fees, which they, or any of
hem, may sustain or incur on account of or arising from the acts, omissions and
representations of WILLOWRUN and its employees and agents.
5.3 Media Indemnity. Media agrees to indemnify and hold WILLOWRUN and its
employees and agents, harmless and to pay all losses, costs, damages and
expenses, whatsoever, including reasonable attorney fees, which they, or any of
them, may sustain or incur on account of infringement or alleged infringement of
patent, trademarks, or trade names, resulting from the sale of the Products or
arising on account of warrant claims or products liability matters.
6. GENERAL
6.1 Notices. All notices relating to this Agreement shall be in writing and
delivered via courier addressed to the appropriate party at the address of such
party as set out on the first page of this Agreement, or to such other addresses
as may be specified by one party to the other parties by notice in writing. Such
notices shall be deemed to have been received by the party to whom it was given
on the third business day following the sending thereof by courier.
6.2 Termination With Cause. Either MediaX or WILLOWRUN party may terminate this
Agreement immediately by written notice in the event that the other becomes
insolvent, files for bankruptcy or remains in material breach of this Agreement
after the noted cure period. Upon written notification of a material breach, the
breaching party shall have sixty (60) days to cure said breach.
6.3 Termination Without Cause. Either MediaX or WILLOWRUN may without cause
terminate this Agreement on 90 days written notice.
6.4 Confidentiality. The parties shall maintain strict confidentiality of the
other's business, financial, technical and marketing information and affairs.
6.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
[MEDIAX\123198.FS]-12
<PAGE>
6.6 Arbitration. Any controversy or claim arising out of or relating to this
Agreement shall be resolved by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect, and
judgment upon the award rendered by the arbitrators in any such arbitration,
including, without limitation, specific performance of this Agreement, may be
entered in any federal or state court having jurisdiction thereof. The
prevailing party in any such arbitration shall be entitled to recover from the
other party in addition to all other relief, all reasonable costs and expenses
actually incurred in connection with such arbitration.
6.7 Severability. If any one or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
6.8 Further Assurances. The parties hereto shall with reasonable diligence do
all such things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated hereby, and each party hereto shall
provide such further documents or instruments required by the other party as may
be reasonably necessary or desirable to effect the purpose of this Agreement.
6.9 Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto and supersedes all prior agreements, whether written or oral,
made between the parties hereto, and there do no exist any representations,
warranties, terms or conditions, expressed or implied, statutory or otherwise,
and no agreements collateral hereto, other than as expressly set forth or
referred to in this Agreement.
6.10 Enurement. This Agreement and each of the terms and provisions hereof shall
enure to the benefit of and be binding upon the parties hereto and their
respective heirs, executors, administrators, personal representatives,
successors and permitted assigns; provided, however, that WILLOWRUN shall not be
entitled to assign or delegate any of its rights or obligations hereunder
without the prior written consent of MediaX.
6.11 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one an the same instrument
IN WITNESS WHEREOF the parties hereto have hereunto duly executed this Agreement
as of the day and year first above written.
MediaX Corporation Willowrun
BY: /s/ Nancy Poertner By: /s/ J. David Brow
------------------------ ----------------------------------
Nancy Poertner, J. David Brow,
President President
January 7, 1998 January 2,1998
[MEDIAX\123198.FS]-12
<PAGE>
SCHEDULE "A"
COMMISSION RATE and TERRITORY
Commission Rate. MediaX shall pay WILLOWRUN, Inc., a commission equal to four
and a half percent (4.5%) of all revenues received, net of returns, for sales
within the territory, exclusive of any taxes, duties, shipping charges, and cost
of goods that may appear on MediaX invoices to its customers.
Territory. The territory shall consist of all distribution, dealer, reseller
(including Value Added Resellers, and catalogers), OEM (Original Equipment
Manufacturer), and ISP (Internet Service Provider) accounts in Canada on an
exclusive basis.
[MEDIAX\123198.FS]-12
<PAGE>
SCHEDULE "B"
MediaX Corporation
8522 National Boulevard, Culver City, CA 90232
December 15, 1997
The option price granted to WILLOWRUN, to purchase twenty five thousand (25,000)
shares of the $.01 par value common stock of MediaX at a fair market value
option price that shall be equal to the closing price of the stock on the first
day of this Agreement. The closing price of the common stock on December 1, 1997
was $0.87 per share, which shall be the fair market value option price. Said
shares shall be fully tradable and are not subject to any restrictions
whatsoever.
This Common Stock Option shall vest as follows:
5,000 shares on March 31, 1998 and as to 2,500 shares on each of July 1, 1998,
October 1,1998, January 1, 1999, April 1, 1999, July 1, 1999, October 1, 1999,
January 1, 2000 and April 1, 2000.
In the event that the Software Representation Agreement dated December 24, 1997
(the "Agreement"), among WILLOWRUN Inc., is rightfully terminated by either
MediaX or WILLOWRUN under Section 6.2 of the Agreement or by WILLOWRUN under
Section 6.3 of the Agreement, then this Common Stock Option shall terminate with
respect to the number of shares which have not vested as of the effective date
of termination. In the event that the Agreement is terminated by MediaX under
Section 6.3 of the Agreement, then all unvested options shall fully vest one day
prior to the effective termination date.
[MEDIAX\123198.FS]-12
<PAGE>
EXHIBIT 10.20
CONSULTING AGREEMENT WITH TIM WERRY
This Consulting agreement (the "Agreement") is made and entered into this 20th
day of July 19, 1998, by and between Silhouette Investments Ltd., a British
Columbia corporation, Tim Werry (the "Consultant"), whose principal place of
business is 4352 Bedford Rd., Kelowna, B.C., Canada, V1W 3C5 and MediaX
Corporation (the "Client"), whose principal place of business is 8522 National
Boulevard, Culver City, California 90232.
WHEREAS:
1. The Consultant is willing and capable of providing on a "best efforts" basis
various consulting and financial public relations services for and on behalf of
the client in connection with the Client's interactions with broker-dealers,
shareholders and members of the general public.
2. The Client desires to retain the Consultant as an independent consultant and
the Consultant desires to be retained in that capacity upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises and agreements
hereinafter set forth, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Consulting Services. The Client hereby retains the Consultant as an
independent consultant to the client and the Consultant hereby accepts and
agrees to such retention. The Consultant shall render to the Client such
services of an advisory or consultative nature in order to inform the brokerage
community, the Client's shareholders and the general public concerning financial
public relations and promotional matters relating to the client and its
business. It is the intention of the parties that the Consultant will gather all
publicly-available information relating to the Client and confer with officers
and directors of the Client in an effort to consolidate the information obtained
into summary form for dissemination to interested parties. It is intended that
the Consultant will then distribute such information concerning the Client to
registered representatives of broker-dealers and other person(s) who the
Consultant determines, in its sole discretion, are capable of effectively
disseminating such information to the general public. The Consultant will not
provide any investment advice or recommendations regarding the Client to anyone;
rather, the Consultant will focus on contacting persons, generally via
telephonic communications and person-to-person meetings, in order to familiarize
them with information concerning the Client which the Consultant has collected
and is otherwise available to the general public. Performance of the consulting
services described herein shall be accomplished exclusively by the Consultant.
2. Time, Place and Manner of Performance. The Consultant shall be available for
advice and counsel to the officers and directors of the Client at such
reasonable and convenient times and places as may be mutually agreed upon.
Except as aforesaid, the time, place and manner of performance of the services
hereunder, including the amount of time to be allocated by the Consultant to any
specific service, shall be determined in the sole discretion of the Consultant.
3. Term of Agreement. The term of this Agreement shall be, commencing July 21,
1998, and terminating July 31, 2000 subject, however, to prior termination as
herein provided, and to a client initiated suspension of activities for up to
six months. During any such suspension, payments under paragraph 4a and 4b below
would also be suspended. All other dates in paragraph 4 would remain the same.
4. Compensation. In consideration of the services to be provided for the Client
by the Consultant, the Client hereby agrees to compensate the consultant as
follows:
<PAGE>
a. The Client agrees to issue the Consultant a registered stock option to
purchase a total shares of one million of the Client's par value common stock as
per exhibit "A" pursuant to the terms and conditions of a stock option
agreement, a copy of which is attached hereto and incorporated herein by
reference as exhibit "B".
b. The Client agrees that for a period of one year after the date of this
Agreement, it will cooperate, at its cost and expense, with the then holder(s)
of the shares of common stock received by the Consultant and/or other person(s)
pursuant to sub-paragraphs "c" "d" and "e" herein above, in preparing and
signing, not more than once, any registration statement, offering circular,
post-effective amendment or notification required in order to sell or transfer
the aforesaid shares and will supply all information required therefor.
5. Expenses. The Client shall reimburse the Consultant on demand for all
expenses and other disbursements, including but not limited to travel,
entertainment, mailing, printing and postage, incurred by the Consultant on
behalf of the Client in connection with the performance of the consulting
services pursuant to this Agreement. Expenses and disbursements in excess of
$200.00 shall have the Client's prior approval.
6. Termination. Notwithstanding any provision contained in this Agreement on the
contrary, this Agreement may be terminated not prior to October 31, 1998 (three
months after the date of this Agreement) by either party without cause upon
thirty (30) days' prior written notice.
7. Work Product. It is agreed that, prior to public distribution, all
information and materials produced for the Client shall be the property of the
Consultant, free and clear of all claims thereto by the Client, and the Client
shall retain no claim of authorship therein.
8. Disclosure of Information. The Consultant recognizes and acknowledges that it
has and will have access to certain confidential information of the client and
its affiliates that are valuable, special and unique assets and property of the
Client and such affiliates. The Consultant will not, during or after the term of
this Agreement, disclose, without the prior written consent or authorization of
the Client, any of such information to any person, except to authorized
representatives of the Consultant or its affiliates, for any reason or purpose
whatsoever. In this regard, the Client agrees that such authorization or consent
to disclosure may be conditioned upon the disclosure being made pursuant to a
secrecy agreement, protective order, provision of statute, rule, regulation or
procedure under which the confidentiality of the information is maintained in
the hands of the person to whom the information is to be disclosed or in
compliance with the terms of a judicial order or administrative process.
9. Nature of Relationship. It is understood and acknowledged by the parties that
the Consultant is being retained by the Client in an independent capacity and
that in this connection, the Consultant hereby agrees, except as provided in
paragraph 4, herein above or unless the Client shall have otherwise consented in
writing, not to enter into any agreement or incur any obligation on behalf of
the Client.
<PAGE>
10. Conflict of Interest. The Consultant shall be free to perform services for
other persons. The Consultant will notify the client of its performance of
consulting services for any other person which could conflict with its
obligations under this Agreement. Upon receiving such notice, the Client may
terminate this Agreement or consent to the Consultant's outside consulting
activities; failure to terminate this Agreement shall constitute the Client's
ongoing consent to the Consultant's outside consulting activities.
11. Indemnification for Securities Law Violations. The Client agrees to
indemnify and hold harmless the consultant and each officer, director and
controlling person of the Consultant against any losses, claims, damages,
liabilities and/or expenses (including any legal or other expenses reasonably
incurred in investigating or defending any action or claim in respect thereof)
to which the Consultant or such officer, director or controlling person may
become subject under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, because of actions of the Client or its
agent(s).
12. Notices. Any notices required or permitted to be given under this Agreement
shall be sufficient if in writing and delivered or sent by registered or
certified mail to the principal office of each party.
13. Waiver of Breach. An waiver by the Consultant of a breach of any provision
of this Agreement by the Client shall not operate or be construed as a waiver of
any subsequent breach by the Client.
14. Assignment. This Agreement and the rights and obligations of the parties
hereunder shall inure to the benefit of and shall be binding upon their
successors and assigns.
15. Applicable Law. It is the intention of the parties hereto that this
Agreement and the performance hereunder and all suits and special proceedings
hereunder be construed in accordance with and under and pursuant to the laws of
the State of Colorado and that in any action, special proceeding or other
proceeding that may be brought arising out of, in connection with or by reason
of this Agreement, the laws of the State of Colorado shall be applicable and
shall govern to the exclusion of the law of any other forum, without regard to
the jurisdiction in which any action or special proceeding may be instituted.
16. Severability. All agreements and covenants contained herein are severable,
and in the event any of them shall be held to be invalid by any competent court,
the Agreement shall be interpreted as if such invalid agreements or covenants
were not contained herein.
17. Entire Agreement. This Agreement constitutes and embodies the entire
understanding and agreement of the parties and supersedes and replaces all prior
understandings, agreements and negotiations between the parties.
18. Waiver and Modification. Any waiver, alteration or modification of any of
the provisions of this Agreement shall be valid only if made in writing and
signed by the parties hereto. Each party hereto, from time to time, may waive
any of its rights hereunder without effecting a waiver with respect to any
subsequent occurrences or transactions hereof.
19. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original but both of which taken together shall constitute
but one and the same document.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
agreement as of the day and year first above written.
CONSULTANT: CLIENT:
Silhouette Investments Ltd.
/s/ Tim Werry /s/ MediaX Corporation
- ----------------------------- ---------------------------------------
Tim Werry, President MediaX Corporation
<PAGE>
Exhibit "A"
Grant to purchase the following stock options as per the contract above:
500K options @ $0.25 Option expires October 31, 1998
250K options @ $0.30 Option expires January 31, 1999
250K options @ $0.40 Option expires April 31, 1999
<PAGE>
EXHIBIT 10.21
AGREEMENT WITH BUSINESS NEWS NETWORK, INC.
VIA FACSIMILE: Monday, March 22, 1999
Rainer Poertner
Chairman
MediaX Corporation
8522 National Boulevard, #110
Culver City, California 90232
Re: Agreement for Purchase of Advertising Time
Dear Mr. Poertner:
This letter will serve as certification and evidence of the transfer to
MediaX Corporation ("Corporation") by Intram Investment Co. and Granite
Securities Corp. of an advertising credit (the "Credit") in the aggregate amount
of one million dollars ($1,000,000), effective as of the date first written
above and intended for the purchase of advertising time on the broadcast of the
Business News Network (the "Network"). The Credit may only be used to purchase
advertising time on the Network and can not be converted into cash or utilized
other than for the purchase of advertising time on the Network. In consideration
of the transfer to Corporation of the Credit, Corporation will issue to Intram
Investment Co. (Tax ID# 13-1333178) and Granite Securities Corp. (Tax ID#
13-2617857) an aggregate of two hundred thousand (200,000) shares of its common
stock by issuing to each a certificate for one hundred thousand (100,000)
shares. The certificates evidencing ownership of such shares shall be delivered
to Intram Investment Co. and Granite Securities Corp. prior to the commencement
of any advertising activities under this agreement and no later than ten
business days following the date first written above.
As additional consideration for the Credit, Corporation shall grant
Intram Investment Co. and Granite Securities Corp. each an option to purchase
fifty thousand (50,000) shares of the Corporation's common stock (an aggregate
of one hundred thousand (100,000) shares), at an exercise price of $6.50 per
share prepaid in cash at the time of exercise. The Option shall vest at the same
rate pro rata as the Credit utilized by Corporation, but no sooner than the
first anniversary of this agreement and any unused portion of the Option shall
expire one year from the last date the Credit was fully utilized by Corporation,
but no later than two years from the anniversary of this agreement.
The Corporation may utilize the Credit for advertising time to be
broadcast any time prior to 12:00 a.m. EST on the third anniversary of this
agreement, subject to availability of the desired advertising spots and subject
to BNN's right to sell any spot for cash; and provided, that, to the extent at
least one third of the Credit is not utilized by the second anniversary of this
agreement, that portion of the Credit will expire and further, provided, that
BNN may refuse to provide advertising time representing a conversion of more
than one tenth of the original Credit in a single calendar month. The conversion
of the Credit to advertising time shall be made based on a per spot conversion
price of four hundred dollars ($400) where a "spot" shall mean one minute of
advertising time. BNN may in its good faith discretion refuse to broadcast any
advertising content of Corporation's if such content is deemed to be offensive
or otherwise inappropriate for broadcast by BNN.
Corporation's rights under this agreement may not be assigned without
the written consent of BNN. This Agreement represents the entire understanding
of the parties and may be modified by a writing signed by the parties.
10 FAWN LANE, HAVERFORD, PA 19041
TELEPHONE (610) 526-9347 * FACSIMILE (610) 526-9345
<PAGE>
MediaX Corporation March 22, 1999
Page 2
Upon execution this agreement shall supercede all prior terms of
agreement regarding this advertising credit transfer, including the
Corporation's letter of agreement dated February 17, 1999.
The signature made in closing below shall evidence BNN's acceptance of
and intent to be bound by the foregoing, with the further intent that all others
may rely thereupon. Please have Corporation execute this Agreement in the space
provided.
We at BNN are pleased to provide you with this asset and anticipate
providing you with even greater value upon its conversion to an advertising
campaign.
Very truly yours,
/s/ Michael B. Pisani
---------------------------------------
Michael B. Pisani
Agreed to and accepted on this 22nd day of March, 1999,
with the Intent to be bound by the foregoing and with
the further Intent that all others may rely thereupon
CORPORATION:
MediaX Corporation
By /s/ Rainer Poertner
------------------------
Rainer Poertner
Its Chairman
<PAGE>
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted from the balance
sheets and statement of operations found on pages F-2 and F-5 of the Company's
Form 10-KSB for the fiscal year ended December 31, 1997, and is qualified in its
entirety by reference to such financial statements.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 19,975
<SECURITIES> 0
<RECEIVABLES> 76,808
<ALLOWANCES> 0
<INVENTORY> 92,763
<CURRENT-ASSETS> 319,871
<PP&E> 405,495
<DEPRECIATION> 229,611
<TOTAL-ASSETS> 827,015
<CURRENT-LIABILITIES> 2,093,599
<BONDS> 0
0
0
<COMMON> 2,380
<OTHER-SE> (1,268,964)
<TOTAL-LIABILITY-AND-EQUITY> 827,015
<SALES> 162,021
<TOTAL-REVENUES> 162,021
<CGS> 135,988
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,654,658
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 138,441
<INCOME-PRETAX> (2,762,066)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,762,066)
<EPS-PRIMARY> (1.49)
<EPS-DILUTED> (1.49)
</TABLE>
