SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: January 15, 1997
(Date of earliest event reported)
ADVANCED MEDIA, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-25112 11-2899603
(State of Incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
80 Orville Drive, Bohemia, New York 11716
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code (516) 244-1616
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(Former name or former address, if changed since last report.)
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
99.1 Form of Subscription Agreement dated January 15, 1997 between
Viking Fund Ltd. and Advanced Media, Inc.
99.2 Form of Subscription Agreement dated January 28, 1997 between
Wanas Investment Ltd. and Advanced Media, Inc.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
On January 28, 1997, the Registrant sold to an offshore investor 2,000,000
shares of its Common Stock, par value $.0001 per share ("Common Stock") for
$.05 per share or an aggregate of $100,000, in a transaction pursuant to
Regulation S under the Securities Act of 1933 ("Regulation S").
On January 15, 1997, the Registrant sold to an offshore investor,
2,000,000 shares of its Common Stock for $.04 per share or an aggregate of
$80,000, in a transaction pursuant to Regulation S.
During calendar 1996, the Registrant sold an aggregate 22,683 shares of
Common Stock to its 401(k) Plan for the benefit of plan participants at an
average price of $.157 per share or an aggregate $3,555. Registrant relied on
the exemption provided under Section 4(2) of the Securities Act of 1933, as
amended, ("Section 4(2)") with respect to this transaction.
In December 1996, the Registrant issued 100,000 and 250,000 shares of
Common Stock valued at $.1075 per share or an aggregate $10,750 and $.095 per
share or an aggregate $23,750, respectively, in exchange for public relations
services. Registrant relied on the exemption provided under Section 4(2) with
respect to these transactions.
In September 1996, the Registrant issued 36,785 shares of Common Stock to
an investor at a price of $.2583 per share or $9,500 in the aggregate, less a
commission of $200 and 10,000 shares of Common Stock. The Registrant also issued
72,798 shares of Common Stock to an investor at a price of $.3076 per share or
$22,395 in the aggregate, less a commission of $2,240 and 5,600 shares of Common
Stock. Registrant relied on the exemption provided under Section 4(2) with
respect to these transactions.
In August 1996, the Registrant issued 25,000 shares of Common Stock to an
investor at a price of $.13 per share or $3,250 in the aggregate, less a
commission of 7,500 shares of Common Stock, 60,416 shares of Common Stock to two
investors at a price of $.24 per share or $14,500 in the aggregate, less
commissions of $500 and 27,139 shares of Common Stock. Registrant relied on the
exemption provided under Section 4(2) with respect to these transactions.
As a condition of certain agreements entered into by the Registrant in 1995
pursuant to which 7,250,000 shares of Common Stock were issued for $1,450,000 in
gross proceeds, as described below, the Registrant was required to issue an
additional 2,175,000 shares of Common Stock. According to the agreements, if as
of January 1, 1996 the Registrant did not have any effective registration
statement covering the initial 7,250,000 shares, then the Registrant would be
required to make monthly payments, in shares of Common Stock, to each purchaser
equal to 2.5% of the purchase price, valued at $.20 per share, until such
registration is declared effective. The Registrant has satisfied such obligation
through December 1996 by issuing these additional shares of Common Stock.
Registrant relied on the exemption provided under Section 4(2) with respect to
these transactions.
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In August 1996, the Registrant issued 1,000,000 shares of Common Stock and
250,000 warrants in exchange for a $100,000 commission due an offshore
broker. The warrants are exercisable through December 31, 1997 in $.10 per
share of Common Stock. Registrant relied on the exemption provided by Regulation
S with respect to these transactions.
In August 1996, the Registrant received an aggregate $600,000 from five
offshore investors for an aggregate 600,000 shares of its Series A Convertible
Preferred Stock (Class A Preferred). The Class A Preferred is convertible to
Common Stock of the Registrant after a designated holding period beginning 60
days and ending 150 days after issuance. The Class A Preferred convert at 55% of
the lesser of the average closing bid price of the Common Stock on the five
trading days immediately prior to (a) the date of issuance of the Class A
Preferred to be converted or, (b) the conversion date. In connection with the
aforementioned funding, the offshore broker for this transaction was paid a
commission in the form of warrants for the purchase of Common Stock equivalent
to 100% of the Common Stock issuable upon conversion of $150,000 liquidation
preference of the Class A Preferred (2,346,677 shares of Common Stock). The
warrants are exercisable through December 31, 1997 and will convert at the same
price as that of the converted Class A Preferred. Registrant relied on the
exemption provided by Regulation S with respect to these transactions.
In August 1996, the Registrant granted options to purchase 100,000 shares
of Common Stock valued at $7,500 to its corporate counsel for legal services
under its long term incentive plan. Registrant relied on the exemption provided
under Section 4(2) with respect to this transaction.
In July 1996, the Registrant issued 30,000 shares of Common Stock to an
investor at a price of $.168 per share or $5,040 in the aggregate, less a
commission of $504 and 1,575 shares of Common Stock. In July 1996, the
Registrant issued an aggregate 43,073 shares of Common Stock to two investors
for a price of approximately $.10 per share or an aggregate $4,310, 500,000
shares of Common Stock to an investor for a price of $.10 per share or an
aggregate $50,000, less a commission of $5,000 and 25,000 shares of Common
Stock, 298,000 shares of Common Stock to three investors for an approximate
price of $.10 per share or an aggregate $298,186, less aggregate commissions of
$3,000 and 19,940 shares of Common Stock, 118,846 shares of Common Stock to an
investor for a price of $.168 per share or an aggregate $20,000, 23,077 shares
of Common Stock to an investor for a price of $.129 per share or an aggregate
$3,000, less an aggregate commission in respect of both transactions of 58,992
shares of Common Stock and 70,525 shares of Common Stock to two investors for a
price of $.10 per share or an aggregate $7,055, less an aggregate commission in
respect of both transactions of $1,134 and 5,680 shares of Common Stock.
Registrant relied on the exemption provided under Section 4(2) with respect to
these transactions.
In June 1996, the Registrant issued an aggregate 220,035 shares of Common
Stock to two investors at an approximate price of $.15 per share or $33,000 in
the aggregate. Registrant relied on the exemption provided under Section 4(2)
with respect to these transactions.
In May 1996, the Registrant issued 138,888 shares of Common Stock to an
investor at a price of $.18 per share or $25,000 in the aggregate, less a
commission of $4,167. Registrant relied on the exemption provided under Section
4(2) with respect to this transaction.
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In April, July, October and December 1996, the Registrant issued 20,000
shares of Common Stock for a price of $.25, $.18, $.23 and $.07625 per share or
an aggregate $5,000, $3,600, $4,600 and $1,525, respectively, in partial payment
of its rental expense. Registrant relied on the exemption provided under Section
4(2) with respect to these transactions.
In February 1996, the Registrant issued 7,500 shares of Common Stock to an
investor at a price of $.40 per share or $3,000 in the aggregate, less
commissions of an aggregate $750, 100,000 shares of Common Stock at a price of
$.20 per share or $20,000, less commissions of an aggregate $2,000. Registrant
relied on the exemption provided under Section 4(2) with respect to these
transactions.
In January 1996, the Registrant issued an aggregate 35,000 shares of Common
Stock to three investors at a price of $.40 per share, or $14,000 in the
aggregate, less commissions of an aggregate $3,500. Registrant relied on the
exemption provided under Section 4(2) with respect to these transactions.
During 1995, the Registrant sold an aggregate 6,391 shares of Common Stock
to its 401(k) Plan for the benefit of plan participants at an average price of
$.497 per share or an aggregate $3,175. Registrant relied on the exemption
provided under Section 4(2) with respect to these transactions.
In December 1995, the Registrant sold 1,000 shares of Common Stock to a
private investor for $500, or $.50 per share. Registrant relied on the exemption
provided under Section 4(2) with respect to this transaction.
In October 1995, the Registrant sold 1,000 shares of Common Stock to a
private investor for $500, or $.50 per share. Registrant relied on the exemption
provided under Section 4(2) with respect to this transaction.
In July 1995, Registrant agreed to issue an aggregate of 7,250,000 shares
of Common Stock to twelve investors at a price of $.20 per share or $1,450,000
in the aggregate. Registrant relied on the exemption provided under Section 4(2)
with respect to this transaction.
In June and July 1995, the Registrant issued promissory notes to Suan
Investments Corp. ("Suan") for $1,000,000. The Registrant issued 500,000 shares
of restricted Common Stock, valued at $100,000, as a commission for the
aforementioned loans. In March 1996, the Registrant reached agreement with Suan
and an assignee thereof to convert their $1,000,000 principal amount of notes
into 6,000,000 shares of Common Stock of Registrant, at a conversion price of
$.1667 per share. Registrant relied on the exemption provided under Section 4(2)
with respect to these transactions.
In June 1995, Registrant sold 2,000,000 shares of Common Stock to a private
investment partnership, which shares had been contributed to the Company by its
Chairman and CEO, for a purchase price of $200,000 or $.10 per share, 33,333
shares of Common Stock to a private investor for a purchase price of $5,000 or
$.15 per share, 143,335 shares of Common Stock for an aggregate purchase price
of $43,000 or $.30 per share (in connection with which 17,668 shares of Common
Stock were issued for payment for services rendered), and 140,000 shares of
Common Stock for an aggregate purchase price of $140,000 or $1.00 per share, in
connection with which an additional 10,000 shares of Common Stock were issued
for payment of services rendered. Registrant relied on the exemption provided
under Section 4(2) with respect to these transactions.
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In June 1995, the Registrant sold 140,000 shares of Common Stock to six
private investors for $140,000, or $1.00 per share. 14,000 shares were issued
and $10,000 was paid as a commission on these transactions. Registrant relied on
the exemption provided under Section 4(2) with respect to these transactions.
In May 1995, Registrant sold 100,000 shares of Common Stock to a private
investor for a purchase price of $20,000 or $.20 per share. Registrant relied on
the exemption provided under Section 4(2) with respect to these transactions.
In March 1995, the Registrant entered into a loan agreement pursuant to
which two individuals (the "Lenders") loaned the Registrant $500,000. Pursuant
to the terms of the loan agreement, the Registrant issued 300,000 shares of
Common Stock and 300,000 options to purchase Common Stock to the Lenders. The
options are exercisable for a five year period at an exercise price of $.41 per
share. Registrant relied on the exemption provided under Section 4(2) with
respect to these transactions.
In February 1995, the Registrant sold 50,000 shares of Common Stock to a
private investor for $10,000 or $.20 per share. Registrant relied on the
exemption provided under Section 4(2) with respect to this transaction.
In January 1995, Registrant sold 65,250 shares of Common Stock to six
private investors for an aggregate purchase price of $13,050 or $.20 per share
and 200,000 shares of Common Stock to another investor for a purchase price of
$50,000 or $.25 per share. Also in January 1995, Registrant issued 10,000 shares
of Common Stock to a consultant, with a value of $4,063 or approximately $.41
per share. Registrant relied on the exemption provided under Section 4(2) with
respect to these transactions.
During 1994, the Registrant sold an aggregate 4,752 shares of Common Stock
to its 401(k) Plan for the benefit of plan participants at an average price of
$.735 per share or an aggregate $3,493. Registrant relied on the exemption
provided under Section 4(2) with respect to these transactions.
In October 1994, the Registrant sold 500,000 shares of Common Stock for
$122,000, or $.244 per share, to a private investor. Registrant relied on the
exemption provided under Section 4(2) with respect to these transactions.
In August 1994, the Registrant acquired substantially all of the assets and
certain liabilities of Computer Niche, Inc., a computer-aided design systems
integrator and software dealer located in Schenectady, New York for 150,000
shares of Common Stock valued at $150,000. Registrant relied on the exemption
provided under Section 4(2) with respect to this transaction.
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In June 1994, the Registrant acquired all of the outstanding capital stock
of Pyros Computer Corporation, a computer aided design systems integrator and
hardware and software dealer located in Newport Beach, California, for 180,000
shares of common stock valued at $360,000. Registrant relied on the exemption
provided under Section 4(2) with respect to this transaction.
In June 1994, the Registrant entered into an agreement with Hollywood
Trenz, Inc. ("Trenz") pursuant to which the Registrant had agreed to sell to
Trenz on a discounted basis, subject to a volume purchase agreement to be
negotiated, certain customized computer software and hardware. In conjunction
with the agreement, the Registrant exchanged 1,000,000 unregistered shares of
its Common Stock for 1,500,000 unregistered shares of Trenz common stock (after
giving effect to a one-for-ten reverse stock split effective October 1994).
Registrant relied on the exemption provided under Section 4(2) with respect to
these transactions. On November 29, 1995, the parties to the original agreement
entered into a reciprocal stock exchange which in effect rescinded the original
agreement. Pursuant to the reciprocal stock exchange agreement, the shares
originally exchanged were returned, and all obligations under the original
agreement were revoked.
In May 1994, the Registrant sold 100 shares of Common Stock for $100, or $1
per share. Registrant relied on the exemption provided under Section 4(2) with
respect to these transactions.
In February 1994, Registrant issued a total of 10,100 shares, valued at
$12,625, to relatives of the former principals of Vision Imaging, Inc. in
settlement of loans valued at $12,289. None of the principals of the acquired
entities or corporations from which assets were purchased were affiliated or
associated with Registrant or its officers and directors. Since these
transactions were effected in connection with acquisitions of the businesses of
Computer Niche, Inc., Pyros Computer Corporation and Vision Imaging, Inc.,
pursuant to applicable accounting guidelines Registrant valued these shares as
the amounts equal to the guaranteed purchase price in connection with such
transactions, which was a function of the acquisition negotiations; provided,
that the shares issued on connection with the Computer Niche transaction were
valued based on the market price per share on the OTC Electronic Bulletin Board.
Registrant relied on the exemption provided under Section 4(2) with respect to
these transactions.
During the period November 1993 through May 1994, Registrant sold 435,000
shares of Common Stock to a sophisticated investor at $1.00 per share. In July
1994, Registrant privately sold an additional 7,692 shares to another investor
for $5,000 or $.65 per share. Registrant relied on the exemption provided under
Section 4(2) with respect to these transactions.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunder duly authorized.
ADVANCED MEDIA, INC.
By: /s/ Hans J. Kaemmlein
Hans J. Kaemmlein
Chairman of the Board
Dated: January 28, 1997
THE SECURITIES TO BE PURCHASED AND SOLD PURSUANT TO THIS SUBSCRIPTION AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS
(OTHER THAN DISTRIBUTORS), AS SUCH TERMS ARE DEFINED IN REGULATIONS PROMULGATED
BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE ACT, UNLESS THE SECURITIES
ARE REGISTERED UNDER THE ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENT
OF THE ACT IS AVAILABLE.
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement") dated as of the 15th day of
January, 1997, by and between Viking Fund Ltd., a Bahamian company (the
"Purchaser") and Advanced Media, Inc. (the "Company").
WHEREAS, subject to the terms and conditions herein contained, Purchaser
desires to purchase shares of Common Stock, par value $.0001 per share ("Common
Stock") of the Company and the Company desires to sell shares of Common Stock to
the Purchaser.
NOW, THEREFORE, in consideration of the premises and the terms, conditions
and covenants herein contained, the parties hereto do hereby agree as follows:
1. Subscription. Purchaser hereby subscribes for 2,000,000 shares of Common
Stock (the "Shares") at a purchase price equal to $.04 per share. The total
consideration for the Shares shall be $80,000. Purchaser shall pay the purchase
price by delivering good funds in United States Dollars by wire transfer to the
Company for closing by delivery of securities versus payment, the time and place
to be mutually agreed.
2. Representations of Purchaser. In order to induce the Company to accept
this subscription and sell to the Purchaser the Shares, the Purchaser does
hereby represent, warrant and covenant to and agree with the Company, which
representations, warranties, covenants and agreements shall be deemed to be
continuing and shall survive the execution of this Agreement by the Company and
the consummation of the transactions herein contained, as follows:
(a) Receipt of Disclosure Documents; Availability of Documents;
Independent Investigation. The Purchase has been furnished with the Company's
press releases, Annual Report on Form 10-K for the year ended December 31, 1995,
Quarterly Report on Form 10-Q for the periods ended March 31, 1996, June 30,
1996 and September 30, 1996 and most recent proxy statement (the "Disclosure
Documents"). The Purchaser acknowledges that the Company has offered to provide
copies of any documents identified in the Disclosure Documents requested by the
Purchaser. In addition, prior to the sale of the Shares, all documents, records
and books pertaining to an investment in the Company have been made available to
the Purchaser and the Purchaser's advisers for inspection during reasonable
business hours at the office of the Company. In making the decision to purchase
the Shares, the Purchaser has relied upon independent investigations made by
Purchaser and Purchaser's representatives, if any.
<PAGE>
(b) Opportunity to Talk With Management. The Purchaser has been given
the opportunity and has been encouraged to discuss with management of the
Company the present and contemplated business, operations and financial
condition of the Company and the estimated expenses of this transaction and the
contemplated use of the net proceeds from this transaction.
(c) Accredited Investor; Knowledge and Experience. The Purchaser is
an "accredited investor" as that term is defined in Regulation D under the
Securities Act of 1933, as amended (the "Securities Act"), and has such
knowledge or experience in financial and business matters that the Purchaser is
capable, either alone or together with the Purchaser's purchaser representative
(if any) of evaluating the merits and risks of investing in the Company.
(d) No U.S. Person. The Purchaser is not a U.S. Person as that term
is defined in Rule 902(o) of Regulation S.
(e) Offshore Transaction. The offer and sale of the Shares is not
taking place in the United States but rather in an offshore transaction. The
Purchaser was outside the United States at the time his buy order originated and
is outside the United States as of the date of the execution and delivery of
this Agreement.
(f) Offering Restrictions. All offers and sales of the Shares prior
to the expiration of a period commencing on the date of this Agreement and
ending 90 days thereafter shall only be made with the consent of the Company in
its sole discretion, provided, that in no event shall any such sale be made
other than in compliance with the safe harbor contained in Regulation S,
pursuant to registration of the Shares under the Securities Act, or pursuant to
an exemption from the registration requirements of the Securities Act. All
offers and sales after the expiration of the 90-day period, or such shorter
period not to be less than 40 days in its sole discretion as is agreed to by the
Company, in the United States or to U.S. Persons shall be made only pursuant to
such a registration or to such exemption from registration.
(g) Statements Concerning Offering Provisions. All offering materials
and documents received by Purchaser include statements to the effect that the
Shares have not been registered under the Securities Act and may not be offered
or sold in the United States or to U.S. Persons prior to the expiration of a
period commencing on the date of this transaction and ending 40 days thereafter
unless the Shares are registered under the Securities Act or an exemption from
the registration requirements of the Securities Act is available.
(h) Risk of Purchase. The Purchaser understands that the purchase of
the Shares is speculative and involves a high degree of risk, and the Purchaser
is able to bear the economic risk of the purchase of the Shares.
(i) Purchase For Own Account. The Purchaser is purchasing the
Shares for its own account and not on behalf of any U.S. Person, and the sale
has not been prearranged with a purchaser in the United States.
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(j) U.S. Accounts. During the 40-day safe harbor period of
Regulation S referred to in paragraph (f) above, the Shares may not be held
in the United States unless held by a dealer or other professional
fiduciary organized, incorporated or (if an individual) resident in the
United States pursuant to a discretionary account or similar account (other
than estate or trust) held for the benefit or account of the Purchaser.
(k) Beneficiaries. If the certificate(s) for the Shares is
requested to be issued in the name of a nominee during the 40-day safe harbor
period referred to in paragraph (f) above, each and every beneficiary for which
said certificate(s) is held by the nominee will be a non-U.S. Person.
(l) Reliance by Company on Representations. The Purchaser understands
that the Shares are being offered and sold to Purchaser in reliance on specific
exemptions from the registration requirements of federal and applicable state
securities laws and that the Company is relying upon the truth and accuracy of
the representations, warranties, covenants, agreements and acknowledgments of
Purchaser set forth herein in order to determine the applicability of such
exemptions and the suitability of the Purchaser to acquire the Shares.
(m) Compliance With Regulation S. The Purchaser has no reason to
believe, and does not believe, that the sale of the Shares does not comply with
the requirements of Regulation S.
(n) Compliance By Distributors. Each Distributor (as that term is
defined in Regulation S) participating in the offering of the Shares, if any,
has agreed that all offers and sales of the Shares prior to the expiration
of a period commencing on the date of the closing of the offering of the Shares
and ending 40 days thereafter shall only be made in compliance with the safe
harbor provisions contained in Regulation S, or pursuant to registration of the
Shares under the Securities Act or pursuant to an applicable exemption from
registration under the Act. No Distributor of the Shares of any affiliate
thereof has engaged in any "Directed Selling Efforts" (as defined in Rule 902(b)
of Regulation S).
(o) No Affiliation With Company. The Purchaser is not an officer,
director or "affiliate" (as that term is defined in Rule 405 under the
Securities Act) of the Company.
(p) No Regulatory Endorsement of Approval. The Purchaser understands
that no United States federal or stare agency has made any finding or
determination regarding the fairness of the offering of the Shares for
investment, or any recommendation or endorsement of the offering of the Shares.
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(q) No Scheme to Avoid Registration. The Purchaser understands that
in the view of the Securities and Exchange Commission, the statutory basis for
the exemption claimed for the transaction would not be present if the offering
of Shares, although in technical compliance with Regulation S, is part of a plan
or scheme to evade the registration provisions of the Securities Act. The
Purchaser hereby confirms that its purchase is not part of any such plan or
scheme.
(r) No Other Representations to Purchasers. The Purchaser
understands and acknowledges that no other person has made any representations
or warranties as to the accuracy or completeness of the information contained
in the Company reports and filings provided to Purchaser or this Agreement.
(s) Compliance With Applicable Foreign Law. The purchase of the
Shares by the Purchaser is not in violation of any securities law of the
country or territory in which Purchaser is located.
(t) No Short Selling During the 40-Day Period. Purchaser has not sold
short any shares of the Company's Common Stock during the past thirty (30) days
and until the expiration of the 40-day period referred to in paragraph (f)
above, will not sell short or engage in any other hedging transaction with
respect to any shares of the Common Stock of the Company.
3. Representations of the Company. In order to induce the Purchaser to
purchase the Shares, the Company does hereby represent, warrant and
covenant to and agree with the Purchaser, which representations, warranties,
covenants and agreements shall be deemed to be continuing and shall survive the
execution of this Agreement by the Purchaser and the consummation of the
transactions herein contained as follows:
(a) Reporting Company Status. The Company has a class of
securities registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and has filed all the material
required to be filed pursuant to Section 13(a) or 15(d) of the Exchange Act for
a period of at least twelve (12) months immediately preceding the date of this
Agreement and the date on which the Purchaser was offered an opportunity to
purchase the Shares.
(b) Offshore Transaction. The Company has not knowingly
offered shares of Common Stock or the Shares in this transaction to any persons
in the United States or to any U.S. Persons.
(c) No Directed Selling Efforts. The Company has not conducted
any Directed Selling Efforts as that term is defined in Rule 902(b) of
Regulation S.
(d) Corporate Authority; Validity of the Shares. The Company
has all corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The Shares, when issued pursuant to the
terms of this Agreement, will be validly issued, fully paid and non-assessable.
(e) No Pre-Arrangement with U.S. Persons. The Company
believes that the purchase of the Shares has not been pre-arranged with a
purchaser in the United States.
(f) One Distributor. The Company believes that Eric
Wachmeister is the only distributor (as such term is defined in Rule 902(c) of
Regulation S) of the Shares.
(g) Litigation. Except as disclosed in the Disclosure Documents,
there is no pending or, to the best knowledge of the Company, threatened action,
suit, proceeding or investigation before any court, governmental agency or body,
<PAGE>
or arbitrator having jurisdiction over the Company, or any of its affiliates,
that would materially affect the execution by the Company of the performance by
the Company of its obligation under this Agreement.
(h) Additional Issuances. There are no outstanding agreements or
preemptive or similar rights affecting the Company's common stock and no
outstanding rights, warrants or options to acquire, or instruments convertible
into or exchangeable for, or agreements or understandings with respect to the
sale or issuance of, any shares of Common Stock or equity of the Company or
other equity interest in any of the subsidiaries of the Company, except as
described in the Disclosure Documents.
4. Indemnification. The Purchaser does hereby agree to indemnify and
hold harmless the Company and its officers, directors, stockholders, employees,
agents and affiliates from and against any and all loss, damage, liability, cost
and expense (including reasonable attorneys' fees) arising out of or relating to
a breach by the Purchaser of any of the representations, warranties or covenants
herein contained. The Company does hereby agree to indemnify and hold harmless
the Purchaser from and against any and all loss, damage, liability, cost and
expense (including reasonable attorneys' fees) arising out of or relating to a
breach by the Company of any of the representations, warranties or covenants
herein contained.
5. Validity and Binding Nature of Agreement. This Agreement and the
subscription herein contained shall not be binding upon the Company until
accepted by the Company by execution of this Agreement by the Company. This
Agreement and the subscription herein contained shall be valid and binding upon
and irrevocable as to the Purchaser during the period commending on the date
hereof and terminating upon the acceptance or rejection of this subscription by
the Company.
6. Transferability. Neither this Agreement, nor the rights, benefits,
duties or obligations of the Purchaser hereunder can be transferred, sold,
assigned or conveyed by the Purchaser without the express written consent of the
Company in each instance, which consent may be given or withheld in the sole and
absolute discretion of the Company.
7. Closing. The date of the issuance and sale of the Shares shall
be within five (5) business days after the acceptance of this executed
Agreement by the Company. The exact date and place of the closing shall be
determined by the mutual agreement of the parties hereto.
8. Miscellaneous Terms. This Agreement sets forth the entire
agreement between the parties hereto with respect to the subject matter herein
contained and shall be governed and construed in accordance with the laws of the
State of New York applicable to contracts made and to be fully performed
therein, without regard to conflicts of laws, cannot be altered, amended,
modified, terminated, or rescinded except by a writing executed by the Purchaser
and the Company, or as herein otherwise provided; and shall inure to the benefit
of and be binding upon the parties hereto and their respective successors,
transferees, heirs, assigns and beneficiaries. There are no third party
beneficiaries of this Agreement except as expressly provided herein.
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IN WITNESS WHEREOF, the Purchaser has executed this Subscription
Agreement as of this 15th day of January, 1997.
VIKING FUND LTD.
By:
Tony Inder Rieden
President
Address:
Charlotte House
Charlotte Street
Nassau, Bahamas
Accepted this 15th day of January, 1997
ADVANCED MEDIA, INC.
By: Name: Hans J. Kaemmlein
Title: Chairman of the Board
THE SECURITIES TO BE PURCHASED AND SOLD PURSUANT TO THIS SUBSCRIPTION AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS
(OTHER THAN DISTRIBUTORS), AS SUCH TERMS ARE DEFINED IN REGULATIONS PROMULGATED
BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE ACT, UNLESS THE SECURITIES
ARE REGISTERED UNDER THE ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENT
OF THE ACT IS AVAILABLE.
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement") dated as of the 28th day of
January, 1997, by and between Wanas Investment Ltd., a Bahamian company (the
"Purchaser") and Advanced Media, Inc. (the "Company").
WHEREAS, subject to the terms and conditions herein contained, Purchaser
desires to purchase shares of Common Stock, par value $.0001 per share ("Common
Stock") of the Company and the Company desires to sell shares of Common Stock to
the Purchaser.
NOW, THEREFORE, in consideration of the premises and the terms, conditions
and covenants herein contained, the parties hereto do hereby agree as follows:
1. Subscription. Purchaser hereby subscribes for 2,000,000 shares of Common
Stock (the "Shares") at a purchase price equal to $.05 per share. The total
consideration for the Shares shall be $100,000. Purchaser shall pay the purchase
price by delivering good funds in United States Dollars by wire transfer to the
Company for closing by delivery of securities versus payment, the time and place
to be mutually agreed.
2. Representations of Purchaser. In order to induce the Company to accept
this subscription and sell to the Purchaser the Shares, the Purchaser does
hereby represent, warrant and covenant to and agree with the Company, which
representations, warranties, covenants and agreements shall be deemed to be
continuing and shall survive the execution of this Agreement by the Company and
the consummation of the transactions herein contained, as follows:
(a) Receipt of Disclosure Documents; Availability of Documents;
Independent Investigation. The Purchase has been furnished with the Company's
press releases, Annual Report on Form 10-K for the year ended December 31, 1995,
Quarterly Report on Form 10-Q for the periods ended March 31, 1996, June 30,
1996 and September 30, 1996 and most recent proxy statement (the "Disclosure
Documents"). The Purchaser acknowledges that the Company has offered to provide
copies of any documents identified in the Disclosure Documents requested by the
Purchaser. In addition, prior to the sale of the Shares, all documents, records
and books pertaining to an investment in the Company have been made available to
the Purchaser and the Purchaser's advisers for inspection during reasonable
business hours at the office of the Company. In making the decision to purchase
the Shares, the Purchaser has relied upon independent investigations made by
Purchaser and Purchaser's representatives, if any.
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(b) Opportunity to Talk With Management. The Purchaser has been given
the opportunity and has been encouraged to discuss with management of the
Company the present and contemplated business, operations and financial
condition of the Company and the estimated expenses of this transaction and the
contemplated use of the net proceeds from this transaction.
(c) Accredited Investor; Knowledge and Experience. The Purchaser is
an "accredited investor" as that term is defined in Regulation D under the
Securities Act of 1933, as amended (the "Securities Act"), and has such
knowledge or experience in financial and business matters that the Purchaser is
capable, either alone or together with the Purchaser's purchaser representative
(if any) of evaluating the merits and risks of investing in the Company.
(d) No U.S. Person. The Purchaser is not a U.S. Person as that term
is defined in Rule 902(o) of Regulation S.
(e) Offshore Transaction. The offer and sale of the Shares is not
taking place in the United States but rather in an offshore transaction. The
Purchaser was outside the United States at the time his buy order originated and
is outside the United States as of the date of the execution and delivery of
this Agreement.
(f) Offering Restrictions. All offers and sales of the Shares prior
to the expiration of a period commencing on the date of this Agreement and
ending 120 days thereafter shall only be made with the consent of the Company in
its sole discretion, provided, that in no event shall any such sale be made
other than in compliance with the safe harbor contained in Regulation S,
pursuant to registration of the Shares under the Securities Act, or pursuant to
an exemption from the registration requirements of the Securities Act. All
offers and sales after the expiration of the 120-day period, or such shorter
period not to be less than 40 days in its sole discretion as is agreed to by the
Company, in the United States or to U.S. Persons shall be made only pursuant to
such a registration or to such exemption from registration.
(g) Statements Concerning Offering Provisions. All offering materials
and documents received by Purchaser include statements to the effect that the
Shares have not been registered under the Securities Act and may not be offered
or sold in the United States or to U.S. Persons prior to the expiration of a
period commencing on the date of this transaction and ending 40 days thereafter
unless the Shares are registered under the Securities Act or an exemption from
the registration requirements of the Securities Act is available.
(h) Risk of Purchase. The Purchaser understands that the purchase of
the Shares is speculative and involves a high degree of risk, and the Purchaser
is able to bear the economic risk of the purchase of the Shares.
(i) Purchase For Own Account. The Purchaser is purchasing the
Shares for its own account and not on behalf of any U.S. Person, and the sale
has not been prearranged with a purchaser in the United States.
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(j) U.S. Accounts. During the 40-day safe harbor period of
Regulation S referred to in paragraph (f) above, the Shares may not be held
in the United States unless held by a dealer or other professional
fiduciary organized, incorporated or (if an individual) resident in the
United States pursuant to a discretionary account or similar account (other
than estate or trust) held for the benefit or account of the Purchaser.
(k) Beneficiaries. If the certificate(s) for the Shares is
requested to be issued in the name of a nominee during the 40-day safe harbor
period referred to in paragraph (f) above, each and every beneficiary for which
said certificate(s) is held by the nominee will be a non-U.S. Person.
(l) Reliance by Company on Representations. The Purchaser understands
that the Shares are being offered and sold to Purchaser in reliance on specific
exemptions from the registration requirements of federal and applicable state
securities laws and that the Company is relying upon the truth and accuracy of
the representations, warranties, covenants, agreements and acknowledgments of
Purchaser set forth herein in order to determine the applicability of such
exemptions and the suitability of the Purchaser to acquire the Shares.
(m) Compliance With Regulation S. The Purchaser has no reason to
believe, and does not believe, that the sale of the Shares does not comply with
the requirements of Regulation S.
(n) Compliance By Distributors. Each Distributor (as that term is
defined in Regulation S) participating in the offering of the Shares, if any,
has agreed that all offers and sales of the Shares prior to the expiration
of a period commencing on the date of the closing of the offering of the
Shares and ending 40 days thereafter shall only be made in compliance with
the safe harbor provisions contained in Regulation S, or pursuant to
registration of the Shares under the Securities Act or pursuant to an
applicable exemption from registration under the Act. No Distributor of
the Shares of any affiliate thereof has engaged in any "Directed Selling
Efforts" (as defined in Rule 902(b) of Regulation S).
(o) No Affiliation With Company. The Purchaser is not an officer,
director or "affiliate" (as that term is defined in Rule 405 under the
Securities Act) of the Company.
(p) No Regulatory Endorsement of Approval. The Purchaser understands
that no United States federal or stare agency has made any finding or
determination regarding the fairness of the offering of the Shares for
investment, or any recommendation or endorsement of the offering of the Shares.
(q) No Scheme to Avoid Registration. The Purchaser understands that
in the view of the Securities and Exchange Commission, the statutory basis for
the exemption claimed for the transaction would not be present if the offering
of Shares, although in technical compliance with Regulation S, is part of a plan
or scheme to evade the registration provisions of the Securities Act. The
Purchaser hereby confirms that its purchase is not part of any such plan or
scheme.
(r) No Other Representations to Purchasers. The Purchaser
understands and acknowledges that no other person has made any
representations or warranties as to the accuracy or completeness of the
information contained in the Company reports and filings provided to Purchaser
or this Agreement.
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(s) Compliance With Applicable Foreign Law. The purchase of the
Shares by the Purchaser is not in violation of any securities law of the
country or territory in which Purchaser is located.
(t) No Short Selling During the 40-Day Period. Purchaser has not sold
short any shares of the Company's Common Stock during the past thirty (30) days
and until the expiration of the 40-day period referred to in paragraph (f)
above, will not sell short or engage in any other hedging transaction with
respect to any shares of the Common Stock of the Company.
3. Representations of the Company. In order to induce the Purchaser to purchase
the Shares, the Company does hereby represent, warrant and covenant to and agree
with the Purchaser, which representations, warranties, covenants and agreements
shall be deemed to be continuing and shall survive the execution of this
Agreement by the Purchaser and the consummation of the transactions herein
contained as follows:
(a) Reporting Company Status. The Company has a class of
securities registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and has filed all the material
required to be filed pursuant to Section 13(a) or 15(d) of the Exchange Act for
a period of at least twelve (12) months immediately preceding the date of this
Agreement and the date on which the Purchaser was offered an opportunity to
purchase the Shares.
(b) Offshore Transaction. The Company has not knowingly offered
shares of Common Stock or the Shares in this transaction to any persons in
the United States or to any U.S. Persons.
(c) No Directed Selling Efforts. The Company has not conducted
any Directed Selling Efforts as that term is defined in Rule 902(b) of
Regulation S.
(d) Corporate Authority; Validity of the Shares. The Company
has all corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The Shares, when issued pursuant to the terms
of this Agreement, will be validly issued, fully paid and non-assessable.
(e) No Pre-Arrangement with U.S. Persons. The Company
believes that the purchase of the Shares has not been pre-arranged with a
purchaser in the United States.
(f) One Distributor. The Company believes that Wanas Investment
Ltd. is the only distributor (as such term is defined in Rule 902(c) of
Regulation S) of the Shares.
(g) Litigation. Except as disclosed in the Disclosure Documents,
there is no pending or, to the best knowledge of the Company, threatened action,
suit, proceeding or investigation before any court, governmental agency or body,
or arbitrator having jurisdiction over the Company, or any of its affiliates,
that would materially affect the execution by the Company of the performance by
the Company of its obligation under this Agreement.
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(h) Additional Issuances. There are no outstanding agreements or
preemptive or similar rights affecting the Company's common stock and no
outstanding rights, warrants or options to acquire, or instruments convertible
into or exchangeable for, or agreements or understandings with respect to the
sale or issuance of, any shares of Common Stock or equity of the Company or
other equity interest in any of the subsidiaries of the Company, except as
described in the Disclosure Documents.
4. Indemnification. The Purchaser does hereby agree to indemnify and
hold harmless the Company and its officers, directors, stockholders, employees,
agents and affiliates from and against any and all loss, damage, liability, cost
and expense (including reasonable attorneys' fees) arising out of or relating to
a breach by the Purchaser of any of the representations, warranties or covenants
herein contained. The Company does hereby agree to indemnify and hold harmless
the Purchaser from and against any and all loss, damage, liability, cost and
expense (including reasonable attorneys' fees) arising out of or relating to a
breach by the Company of any of the representations, warranties or covenants
herein contained.
5. Validity and Binding Nature of Agreement. This Agreement and the
subscription herein contained shall not be binding upon the Company until
accepted by the Company by execution of this Agreement by the Company. This
Agreement and the subscription herein contained shall be valid and binding upon
and irrevocable as to the Purchaser during the period commending on the date
hereof and terminating upon the acceptance or rejection of this subscription by
the Company.
6. Transferability. Neither this Agreement, nor the rights, benefits,
duties or obligations of the Purchaser hereunder can be transferred, sold,
assigned or conveyed by the Purchaser without the express written consent of the
Company in each instance, which consent may be given or withheld in the sole and
absolute discretion of the Company.
7. Closing. The date of the issuance and sale of the Shares shall be
within five (5) business days after the acceptance of this executed
Agreement by the Company. The exact date and place of the closing shall be
determined by the mutual agreement of the parties hereto.
8. Miscellaneous Terms. This Agreement sets forth the entire
agreement between the parties hereto with respect to the subject matter herein
contained and shall be governed and construed in accordance with the laws of the
State of New York applicable to contracts made and to be fully performed
therein, without regard to conflicts of laws, cannot be altered, amended,
modified, terminated, or rescinded except by a writing executed by the Purchaser
and the Company, or as herein otherwise provided; and shall inure to the benefit
of and be binding upon the parties hereto and their respective successors,
transferees, heirs, assigns and beneficiaries. There are no third party
beneficiaries of this Agreement except as expressly provided herein.
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IN WITNESS WHEREOF, the Purchaser has executed this Subscription
Agreement as of this 28th day of January, 1997.
WANAS INVESTMENT LTD.
By:
John Metzger
President
Address:
Charlotte House
Charlotte Street
Nassau, Bahamas
Accepted this 28th day of January, 1997
ADVANCED MEDIA, INC.
By:
Name: Hans J. Kaemmlein
Title: Chairman of the Board
