Placement Agent Agreement - JAG Media Holdings Inc., Westrock Advisors Inc. and Cornell Capital Partners LP
JAG MEDIA HOLDINGS, INC.
PLACEMENT AGENT AGREEMENT
Dated as of: April 9, 2002
Westrock Advisors, Inc.
230 Park Avenue, Floor 9
New York, New York 10169
Ladies and Gentlemen:
The undersigned, JAG MEDIA HOLDINGS, INC., a Nevada corporation (the
"Company"), hereby agrees with WESTROCK ADVISORS, INC., a New York corporation
("Westrock"). and CORNELL CAPITAL PARTNERS, LP, a Delaware limited partnership
("Investor"), as follows:
1. Offering. The Company hereby engages Westrock to act as its
exclusive placement agent in connection with the Equity Line Purchase Agreement
dated the date hereof, (the "Equity Line Purchase Agreement") pursuant to which
the Company shall issue and sell to the Investor named therein, from time to
time, and the Investor shall purchase from the Company (the "Offering") up to
Ten Million Dollars ($10,000,000) (the "Commitment Amount") of the Company's
Class A common stock, par value $.00001 per share (the "Common Stock"), at a
price per share equal to the Purchase Price, as that term is defined in the
Equity Line Purchase Agreement.
All capitalized terms used herein and not otherwise defined shall have
the same meaning ascribed to them as in the Equity Line Purchase Agreement. The
Investor will be granted certain registration rights with respect to the Common
Stock as more fully set forth in the Registration Rights Agreement between the
Company and the Investor dated the date hereof (the "Registration Rights
Agreement"). The documents to be executed and delivered in connection with the
Offering, including, but not limited, to this Agreement, the Equity Line
Purchase Agreement, and the Registration Rights Agreement, are referred to
sometimes hereinafter collectively as the "Offering Materials." The Company's
Common Stock is sometimes referred to hereinafter as the "Securities." Westrock
shall not be obligated to sell any Securities and this Offering by Westrock
shall be solely on a "best efforts basis."
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2. Compensation.
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A. Within three (3) Business Days following the
Effective Date, the Company shall issue a stock certificate, for 10,000
shares of JAG Media Holdings, Inc. Class A common stock, in the name of
Westrock or its designee, as the case may be (the "Placement Agent Fee
Shares").
B. The Placement Agent Fee Shares shall be deemed fully
earned upon execution of this Agreement. If (i) the Registration
Statement registering the resale by the Westrock of the Placement Agent
Shares is not declared effective by the Commission within 180 calendar
days following the date of this Agreement or (ii) the Company
terminates the Equity Line Purchase Agreement pursuant to Section
2.3(c) thereof prior to the issuance of a stock certificate for the
Placement Agent Fee Shares, then the Company shall immediately issue
and deliver to Westrock a stock certificate for the Placement Agent Fee
Shares which bears the following restrictive legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
STATE SECURITIES LAWS, AND NO TRANSFER OF THESE SECURITIES MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT OR (B) PURSUANT TO AN EXEMPTION THEREFROM WITH RESPECT TO WHICH THE
COMPANY MAY REQUIRE AN OPINION OF COUNSEL FOR THE HOLDER THAT SUCH
TRANSFER IS EXEMPT FROM THE REQUIREMENTS OF THE ACT."
C. Westrock shall be entitled to "piggy-back"
registration rights with respect to the Placement Agent Fee Shares
pursuant to the Registration Rights Agreement dated the date hereof.
3. Representations, Warranties and Covenants of Westrock.
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A. Westrock represents, warrants and covenants as
follows:
(i) Westrock has the necessary power to enter
into this Agreement and to consummate the transactions
contemplated hereby.
(ii) The execution and delivery by Westrock of
this Agreement and the consummation of the transactions
contemplated herein will not result in any violation of, or be
in conflict with, or constitute a default under, any agreement
or instrument to which Westrock is a party or by which
Westrock or its properties are bound, or any judgment, decree,
order or, to Westrock's knowledge, any statute, rule or
regulation applicable to Westrock. This Agreement when
executed and delivered by Westrock, will constitute the legal,
valid and binding obligations of Westrock, enforceable in
accordance with their respective terms, except to the extent
that (a) the enforceability hereof or thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect and affecting the
rights of creditors generally, (b) the enforceability hereof
or thereof is subject to general principles of equity, or (c)
the indemnification provisions hereof or thereof may be held
to be in violation of public policy.
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(iii) Upon receipt and execution of this Agreement
Westrock will promptly forward copies of this Agreement to the
Company or its counsel.
(iv) Westrock will not intentionally take any
action that it reasonably believes would cause the Offering to
violate the provisions of the Act, the Exchange Act, the
respective rules and regulations promulgated there under (the
"Rules and Regulations") or applicable "Blue Sky" laws of any
state or jurisdiction.
(v) Westrock has used all reasonable efforts to
determine (a) whether the Investor is an Accredited Investor
and (b) that any information furnished by the Investor is true
and accurate. Westrock shall have no obligation to insure that
(x) any check, note, draft or other means of payment for the
Common Stock will be honored, paid or enforceable against the
Investor in accordance with its terms, or (y) subject to the
performance of Westrock's obligations and the accuracy of
Westrock's representations and warranties hereunder, (1) the
Offering is exempt from the registration requirements of the
Act or any applicable state "Blue Sky" law or (2) the Investor
is an Accredited Investor.
(vi) Westrock is a member of the National
Association of Securities Dealers, Inc., and is a
broker-dealer registered as such under the Exchange Act and
under the securities laws of the states in which the
Securities will be offered or sold by Westrock, unless an
exemption for such state registration is available to
Westrock. Westrock is in compliance with all material rules
and regulations applicable to Westrock generally and
applicable to Westrock's participation in the Offering.
4. Representations and Warranties of the Company.
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A. The Company represents and warrants as follows:
(i) The execution, delivery and performance of
each of this Agreement, the Equity Line Purchase Agreement,
and the Registration Rights Agreement has been or will be duly
and validly authorized by the Company and is, or with respect
to this Agreement, the Equity Line Purchase Agreement, and the
Registration Rights Agreement will be, a valid and binding
agreement of the Company, enforceable in accordance with its
respective terms, except to the extent that (a) the
enforceability hereof or thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws from
time to time in effect and affecting the rights of creditors
generally, (b) the enforceability hereof or thereof is subject
to general principles of equity or (c) the indemnification
provisions hereof or thereof may be held to be in violation of
public policy. The Securities to be issued pursuant to the
transactions contemplated by this Agreement and the Equity
Line Purchase Agreement have been duly authorized and, when
issued and paid for in accordance with (x) this Agreement, the
Equity Line Purchase Agreement and the
certificates/instruments representing such Securities, (y)
will be valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except
to the extent that (1) the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws from time to time in effect and affecting the
rights of creditors generally, and (2) the enforceability
thereof is subject to general principles of equity. All
corporate action required to be taken for the authorization,
issuance and sale of the Securities has been duly and validly
taken by the Company.
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(ii) The Company has a duly authorized, issued
and outstanding capitalization as set forth herein and in the
Equity Line Purchase Agreement. The Company is not a party to
or bound by any instrument, agreement or other arrangement
providing for it to issue any capital stock, rights, warrants,
options or other securities, except for this Agreement, the
agreements described herein and as described in the Equity
Line Purchase Agreement. All issued and outstanding securities
of the Company, have been duly authorized and validly issued
and are fully paid and non-assessable; the holders thereof
have no rights of rescission or preemptive rights with respect
thereto and are not subject to personal liability solely by
reason of being security holders; and none of such securities
were issued in violation of the preemptive rights of any
holders of any security of the Company. As of April 9, 2002,
the Company has 200,000,000 shares of all classes of stock
authorized, including 155,000,000 shares of Class A common
stock, 30,000,000 shares of Series 1 Class B common stock and
15,000,000 shares of preferred stock. As of the Effective Date
there will be approximately 27,352,953 shares of Class A
common stock and approximately 2,735,292 shares of Series 1
Class B common stock issued and outstanding.
(iii) The Common Stock to be issued in accordance
with this Agreement and the Equity Line Purchase Agreement has
been duly authorized and when issued and paid for in
accordance with the this Agreement, the Equity Line Purchase
Agreement and the certificates/instruments representing such
Common Stock, will be validly issued, fully-paid and
non-assessable; the holders thereof will not be subject to
personal liability solely by reason of being such holders;
such Securities are not and will not be subject to the
preemptive rights of any holder of any security of the
Company.
(iv) The Company has good and marketable title
to, or valid and enforceable leasehold estates in, all items
of real and personal property necessary to conduct its
business (including, without limitation, any real or personal
property stated in the Offering Materials to be owned or
leased by the Company), free and clear of all liens,
encumbrances, claims, security interests and defects of any
material nature whatsoever, other than those set forth in the
Offering Materials and liens for taxes not yet due and
payable.
(v) There is no litigation or governmental
proceeding pending or, to the best of the Company's knowledge,
threatened against, or involving the properties or business of
the Company, except as set forth in the Offering Materials.
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(vi) The Company has been duly organized and is
validly existing as a corporation in good standing under the
laws of the State of Nevada. Except as set forth in the
Offering Materials, the Company does not own or control,
directly or indirectly, an interest in any other corporation,
partnership, trust, joint venture or other business entity.
The Company is duly qualified or licensed and in good standing
as a foreign corporation in each jurisdiction in which the
character of its operations requires such qualification or
licensing and where failure to so qualify would have a
material adverse effect on the Company. The Company has all
requisite corporate power and authority, and all material and
necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all governmental
regulatory officials and bodies (domestic and foreign) to
conduct its businesses (and proposed business) as described in
the Offering Materials. Any disclosures in the Offering
Materials concerning the effects of foreign, federal, state
and local regulation on the Company's businesses as currently
conducted and as contemplated are correct in all material
respects and do not omit to state a material fact. The Company
has all corporate power and authority to enter into this
Agreement, the Equity Line Purchase Agreement, and the
Registration Rights Agreement, to carry out the provisions and
conditions hereof and thereof, and all consents,
authorizations, approvals and orders required in connection
herewith and therewith have been obtained. No consent,
authorization or order of, and no filing with, any court,
government agency or other body is required by the Company for
the issuance of the Securities or execution and delivery of
the Offering Materials except for applicable federal and state
securities laws. The Company, since its inception, has not
incurred any liability arising under or as a result of the
application of any of the provisions of the Act, the Exchange
Act or the Rules and Regulations.
(vii) There has been no material adverse change in
the condition or prospects of the Company, financial or
otherwise, from the latest dates as of which such condition or
prospects, respectively, are set forth in the Offering
Materials, and the outstanding debt, the property and the
business of the Company conform in all material respects to
the descriptions thereof contained in the Offering Materials.
(viii) Except as set forth in the Offering
Materials, the Company is not in breach of, or in default
under, any term or provision of any material indenture,
mortgage, deed of trust, lease, note, loan or Equity Line
Purchase Agreement or any other material agreement or
instrument evidencing an obligation for borrowed money, or any
other material agreement or instrument to which it is a party
or by which it or any of its properties may be bound or
affected. The Company is not in violation of any provision of
its charter or by-laws or in violation of any franchise,
license, permit, judgment, decree or order, or in violation of
any material statute, rule or regulation. Neither the
execution and delivery of the Offering Materials nor the
issuance and sale or delivery of the Securities, nor the
consummation of any of the transactions contemplated in the
Offering Materials nor the compliance by the Company with the
terms and provisions hereof or thereof, has conflicted with or
will conflict with, or has resulted in or will result in a
breach of, any of the terms and provisions of, or has
constituted or will constitute a default under, or has
resulted in or will result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of
the Company or pursuant to the terms of any indenture,
mortgage, deed of trust, note, loan or any other agreement or
instrument evidencing an obligation for borrowed money, or any
other agreement or instrument to which the Company may be
bound or to which any of the property or assets of the Company
is subject except (a) where such default, lien, charge or
encumbrance would not have a material adverse effect on the
Company and (b) as described in the Offering Materials; nor
will such action result in any violation of the provisions of
the charter or the by-laws of the Company or, assuming the due
performance by Westrock of its obligations hereunder, any
material statute or any material order, rule or regulation
applicable to the Company of any court or of any foreign,
federal, state or other regulatory authority or other
government body having jurisdiction over the Company.
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(ix) Subsequent to the dates as of which
information is given in the Offering Materials, and except as
may otherwise be indicated or contemplated herein or therein
the Company has not (a) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed
money, or (b) entered into any transaction other than in the
ordinary course of business, or (c) declared or paid any
dividend or made any other distribution on or in respect of
its capital stock. Except as described in the Offering
Materials, the Company has no outstanding obligations to any
officer or director of the Company.
(x) There are no claims for services in the
nature of a finder's or origination fee with respect to the
sale of the Common Stock or any other arrangements, agreements
or understandings that may affect Westrock's compensation, as
determined by the National Association of Securities Dealers,
Inc.
(xi) The Company owns or possesses, free and
clear of all liens or encumbrances and rights thereto or
therein by third parties, the requisite licenses or other
rights to use all trademarks, service marks, copyrights,
service names, trade names, patents, patent applications and
licenses necessary to conduct its business (including, without
limitation, any such licenses or rights described in the
Offering Materials as being owned or possessed by the Company)
and, except as set forth in the Offering Materials, there is
no claim or action by any person pertaining to, or proceeding,
pending or threatened, which challenges the exclusive rights
of the Company with respect to any trademarks, service marks,
copyrights, service names, trade names, patents, patent
applications and licenses used in the conduct of the Company's
businesses (including, without limitation, any such licenses
or rights described in the Offering Materials as being owned
or possessed by the Company) except any claim or action that
would not have a material adverse effect on the Company; the
Company's current products, services or processes do not
infringe or will not infringe on the patents currently held by
any third party.
(xii) Except as described in the Offering
Materials, the Company is not under any obligation to pay
royalties or fees of any kind whatsoever to any third party
with respect to any trademarks, service marks, copyrights,
service names, trade names, patents, patent applications,
licenses or technology it has developed, uses, employs or
intends to use or employ, other than to their respective
licensors.
(xiii) Subject to the performance by Westrock of
its obligations hereunder and the offer and sale of the
Securities comply, and will continue to comply in all material
respects with the requirements of Rule 506 of Regulation D
promulgated by the SEC pursuant to the Act and any other
applicable federal and state laws, rules, regulations and
executive orders. Neither the Offering Materials nor any
amendment or supplement thereto nor any documents prepared by
the Company in connection with the Offering will contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading. All statements of
material facts in the Offering Materials are true and correct
as of the date of the Offering Materials.
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(xiv) All material taxes which are due and payable
from the Company have been paid in full or adequate provision
has been made for such taxes on the books of the Company
except for those taxes disputed in good faith the Company does
not have any tax deficiency or claim outstanding assessed or
proposed against it.
(xv) None of the Company nor any of its officers,
directors, employees or agents, nor any other person acting on
behalf of the Company, has, directly or indirectly, given or
agreed to give any money, gift or similar benefit (other than
legal price concessions to customers in the ordinary course of
business) to any customer, supplier, employee or agent of a
customer or supplier, or official or employee of any
governmental agency or instrumentality of any government
(domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who is or may be
in a position to help or hinder the business of the Company
(or assist it in connection with any actual or proposed
transaction) which (A) might subject the Company to any damage
or penalty in any civil, criminal or governmental litigation
or proceeding, or (B) if not given in the past, might have had
a materially adverse effect on the assets, business or
operations of the Company as reflected in any of the financial
statements contained in the Offering Materials, or (C) if not
continued in the future, might adversely affect the assets,
business, operations or prospects of the Company in the
future.
5. Representations, Warranties and Covenants of the Investor.
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A. The Investor represents, warrants and covenants as
follows:
(i) The Investor has the necessary power to
enter into this Agreement and to consummate the transactions
contemplated hereby.
(ii) The execution and delivery by the Investor
of this Agreement and the consummation of the transactions
contemplated herein will not result in any violation of, or be
in conflict with, or constitute a default under, any agreement
or instrument to which the Investor is a party or by which the
Investor or its properties are bound, or any judgment, decree,
order or, to the Investor's knowledge, any statute, rule or
regulation applicable to the Investor. This Agreement when
executed and delivered by the Investor, will constitute the
legal, valid and binding obligations of the Investor,
enforceable in accordance with their respective terms, except
to the extent that (a) the enforceability hereof or thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time in effect and
affecting the rights of creditors generally, (b) the
enforceability hereof or thereof is subject to general
principles of equity, or (c) the indemnification provisions
hereof or thereof may be held to be in violation of public
policy.
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(iii) The Investor will promptly forward copies of
any and all due diligence questionnaires compiled by the
Investor to Westrock.
6. Certain Covenants and Agreements of the Company.
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The Company covenants and agrees at its expense and without any expense
to Westrock as follows:
A. To advise Westrock of any material adverse change in
the Company's financial condition, prospects or business or of any
development materially affecting the Company or rendering untrue or
misleading any material statement in the Offering Materials occurring
at any time as soon as the Company is either informed or becomes aware
thereof.
B. To use its commercially reasonable efforts to cause
the Common Stock issuable in connection with the Equity Line Purchase
Agreement to be qualified or registered for sale on terms consistent
with those stated in the Registration Rights Agreement and under the
securities laws of such jurisdictions as Westrock and the Investor
shall reasonably request, provided that such states and jurisdictions
do not require the Company to qualify as a foreign corporation.
Qualification, registration and exemption charges and fees shall be at
the sole cost and expense of the Company.
C. Upon written request, to provide and continue to
provide Westrock and the Investor copies of all quarterly financial
statements and audited annual financial statements prepared by or on
behalf of the Company, other reports prepared by or on behalf of the
Company for public disclosure and all documents delivered to the
Company's stockholders.
D. To deliver, during the registration period of the
Equity Line Purchase Agreement, to Westrock, upon Westrock's request,
within forty five (45) days, a statement of its income for each such
quarterly period, and its balance sheet and a statement of changes in
stockholders' equity as of the end of such quarterly period, all in
reasonable detail, certified by its principal financial or accounting
officer; (ii) within ninety (90) days after the close of each fiscal
year, its balance sheet as of the close of such fiscal year, together
with a statement of income, a statement of changes in stockholders'
equity and a statement of cash flow for such fiscal year, such balance
sheet, statement of income, statement of changes in stockholders'
equity and statement of cash flow to be in reasonable detail and
accompanied by a copy of the certificate or report thereon of
independent auditors if audited financial statements are prepared; and
(iii) a copy of all documents, reports and information furnished to its
stockholders at the time that such documents, reports and information
are furnished to its stockholders.
E. To comply with the terms of the Offering Materials.
F. To ensure that any transactions between or among the
Company, or any of its officers, directors and affiliates be on terms
and conditions that are no less favorable to the Company, than the
terms and conditions that would be available in an "arm's length"
transaction with an independent third party.
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7. Indemnification.
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A. The Company hereby agrees that it will indemnify and
hold Westrock and each officer, director, shareholder, employee or
representative of Westrock, and each person controlling, controlled by
or under common control with Westrock within the meaning of Section 15
of the Act or Section 20 of the Exchange Act or the Rules and
Regulations promulgated there under, harmless from and against any and
all loss, claim, damage, liability, cost or expense whatsoever
(including, but not limited to, any and all reasonable legal fees and
other expenses and disbursements incurred in connection with
investigating, preparing to defend or defending any action, suit or
proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever or in appearing or preparing for
appearance as a witness in any action, suit or proceeding, including
any inquiry, investigation or pretrial proceeding such as a deposition)
to which Westrock or such indemnified person of Westrock may become
subject under the Act, the Exchange Act, the Rules and Regulations, or
any other federal or state law or regulation, common law or otherwise,
arising out of or based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in (a) Section 4 of this
Agreement, (b) the Offering Materials (except those written statements
relating to Westrock given by an indemnified person for inclusion
therein), (c) any application or other document or written
communication executed by the Company or based upon written information
furnished by the Company filed in any jurisdiction in order to qualify
the Common Stock under the securities laws thereof, or any state
securities commission or agency; (ii) the omission or alleged omission
from documents described in clauses (a), (b) or (c) above of a material
fact required to be stated therein or necessary to make the statements
therein not misleading; or (iii) the breach of any representation,
warranty, covenant or agreement made by the Company in this Agreement.
The Company further agrees that upon demand by an indemnified person,
at any time or from time to time, it will promptly reimburse such
indemnified person for any loss, claim, damage, liability, cost or
expense actually and reasonably paid by the indemnified person as to
which the Company has indemnified such person pursuant hereto.
Notwithstanding the foregoing provisions of this Paragraph 6(A), any
such payment or reimbursement by the Company of fees, expenses or
disbursements incurred by an indemnified person in any proceeding in
which a final judgment by a court of competent jurisdiction (after all
appeals or the expiration of time to appeal) is entered against
Westrock or such indemnified person as a direct result of Westrock or
such person's gross negligence or willful misfeasance will be promptly
repaid to the Company.
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B. Westrock hereby agrees that it will indemnify and
hold the Company and each officer, director, shareholder, employee or
representative of the Company, and each person controlling, controlled
by or under common control with the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act or the Rules
and Regulations, harmless from and against any and all loss, claim,
damage, liability, cost or expense whatsoever (including, but not
limited to, any and all reasonable legal fees and other expenses and
disbursements incurred in connection with investigating, preparing to
defend or defending any action, suit or proceeding, including any
inquiry or investigation, commenced or threatened, or any claim
whatsoever or in appearing or preparing for appearance as a witness in
any action, suit or proceeding, including any inquiry, investigation or
pretrial proceeding such as a deposition) to which the Company or such
indemnified person of the Company may become subject under the Act, the
Exchange Act, the Rules and Regulations, or any other federal or state
law or regulation, common law or otherwise, arising out of or based
upon (i) the conduct of Westrock or its officers, employees or
representatives in its acting as Placement Agent for the Offering or
(ii) the breach of any representation, warranty, covenant or agreement
made by Westrock in this Agreement (iii) any false or misleading
information provided to the Company by one of the Westrock indemnified
persons.
C. The Investor hereby agrees that it will indemnify and
hold Westrock and each officer, director, shareholder, employee or
representative of Westrock, and each person controlling, controlled by
or under common control with Westrock within the meaning of Section 15
of the Act or Section 20 of the Exchange Act or the Rules and
Regulations, harmless from and against any and all loss, claim, damage,
liability, cost or expense whatsoever (including, but not limited to,
any and all reasonable legal fees and other expenses and disbursements
incurred in connection with investigating, preparing to defend or
defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or any claim whatsoever or in
appearing or preparing for appearance as a witness in any action, suit
or proceeding, including any inquiry, investigation or pretrial
proceeding such as a deposition) to which Westrock or such indemnified
person of Westrock may become subject under the Act, the Exchange Act,
the Rules and Regulations, or any other federal or state law or
regulation, common law or otherwise, arising out of or based upon (i)
the conduct of the Investor or its officers, employees or
representatives in its acting as the Investor for the Offering or (ii)
the material breach of any representation, warranty, covenant or
agreement made by the Investor in the Offering Materials (iii) any
false or misleading information provided to Westrock by one of the
Investor's indemnified persons.
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D. Westrock hereby agrees that it will indemnify and
hold the Investor and each officer, director, shareholder, employee or
representative of the Investor, and each person controlling, controlled
by or under common control with the Investor within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act or the Rules
and Regulations, harmless from and against any and all loss, claim,
damage, liability, cost or expense whatsoever (including, but not
limited to, any and all reasonable legal fees and other expenses and
disbursements incurred in connection with investigating, preparing to
defend or defending any action, suit or proceeding, including any
inquiry or investigation, commenced or threatened, or any claim
whatsoever or in appearing or preparing for appearance as a witness in
any action, suit or proceeding, including any inquiry, investigation or
pretrial proceeding such as a deposition) to which the Investor or such
indemnified person of the Investor may become subject under the Act,
the Exchange Act, the Rules and Regulations, or any other federal or
state law or regulation, common law or otherwise, arising out of or
based upon (i) the conduct of Westrock or its officers, employees or
representatives in its acting as Westrock for the Offering or (ii) the
material breach of any representation, warranty, covenant or agreement
made by Westrock in this Agreement (iii) any false or misleading
information provided to the Investor by one of Westrock's indemnified
persons.
E. Promptly after receipt by an indemnified party of
notice of commencement of any action covered by Sections 7(A), (B), (C)
or (D), the party to be indemnified shall, within five (5) business
days, notify the indemnifying party of the commencement thereof; the
omission by one (1) indemnified party to so notify the indemnifying
party shall not relieve the indemnifying party of its obligation to
indemnify any other indemnified party that has given such notice and
shall not relieve the indemnifying party of any liability outside of
this indemnification if not materially prejudiced thereby. In the event
that any action is brought against the indemnified party, the
indemnifying party will be entitled to participate therein and, to the
extent it may desire, to assume and control the defense thereof with
counsel chosen by it which is reasonably acceptable to the indemnified
party. After notice from the indemnifying party to such indemnified
party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under
such Sections 7(A), (B), (C) or (D) for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof, but the indemnified party may, at its own expense,
participate in such defense by counsel chosen by it, without, however,
impairing the indemnifying party's control of the defense. Subject to
the proviso of this sentence and notwithstanding any other statement to
the contrary contained herein, the indemnified party or parties shall
have the right to choose its or their own counsel and control the
defense of any action, all at the expense of the indemnifying party if,
(i) the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of
such action at the expense of the indemnifying party, or (ii) the
indemnifying party shall not have employed counsel reasonably
satisfactory to such indemnified party to have charge of the defense of
such action within a reasonable time after notice of commencement of
the action, or (iii) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all
of the indemnifying parties (in which case the indemnifying parties
shall not have the right to direct the defense of such action on behalf
of the indemnified party or parties), in any of which events such fees
and expenses of one additional counsel shall be borne by the
indemnifying party; provided, however, that the indemnifying party
shall not, in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstance, be liable
for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for all such indemnified parties. No settlement
of any action or proceeding against an indemnified party shall be made
without the consent of the indemnifying party.
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F. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for
in Sections 7(A) or 7(B) is due in accordance with its terms but is for
any reason held by a court to be unavailable on grounds of policy or
otherwise, the Company and Westrock shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with the investigation or
defense of same) which the other may incur in such proportion so that
Westrock shall be responsible for such percent of the aggregate of such
losses, claims, damages and liabilities as shall equal the percentage
of the gross proceeds paid to Westrock and the Company shall be
responsible for the balance; provided, however, that no person guilty
of fraudulent misrepresentation within the meaning of Section 11(f) of
the Act shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this
Section 7(F), any person controlling, controlled by or under common
control with Westrock, or any partner, director, officer, employee,
representative or any agent of any thereof, shall have the same rights
to contribution as Westrock and each person controlling, controlled by
or under common control with the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act and each officer of the
Company and each director of the Company shall have the same rights to
contribution as the Company. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for
contribution may be made against the other party under this Section
7(F), notify such party from whom contribution may be sought, but the
omission to so notify such party shall not relieve the party from whom
contribution may be sought from any obligation they may have hereunder
or otherwise if the party from whom contribution may be sought is not
materially prejudiced thereby. The indemnity and contribution
agreements contained in this Section 7 shall remain operative and in
full force and effect regardless of any investigation made by or on
behalf of any indemnified person or any termination of this Agreement.
8. Payment of Expenses.
-------------------
The Company hereby agrees to bear all of the expenses in connection
with the Offering, including, but not limited to the following: filing fees,
printing and duplicating costs, advertisements, postage and mailing expenses
with respect to the transmission of Offering Materials, registrar and transfer
agent fees, escrow agent fees and expenses, fees of the Company's counsel and
accountants, issue and transfer taxes, if any.
9. Conditions of Closing.
----------------------
The Closing shall be held at the offices of the Investor or its
counsel. The obligations of Westrock hereunder shall be subject to the
continuing accuracy of the representations and warranties of the Company herein
as of the date hereof and as of the Date of Closing (the "Closing Date") with
respect to the Company as if it had been made on and as of such Closing Date;
the accuracy on and as of the Closing Date of the statements of the officers of
the Company made pursuant to the provisions hereof; and the performance by the
Company on and as of the Closing Date of its covenants and obligations hereunder
and to the following further conditions:
A. On the Effective Date, Westrock shall receive the
opinion of counsel to the Company, dated as of the date thereof, which
opinion shall be in form and substance set forth in Annex 1 to this
Agreement.
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B. At or prior to the Closing, Westrock shall have been
furnished such documents, certificates and opinions as they may
reasonably require for the purpose of enabling them to review or pass
upon the matters referred to in this Agreement and the Offering
Materials, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions
herein contained.
C. At and prior to the Closing, (i) there shall have
been no material adverse change nor development involving a prospective
change in the condition or prospects or the business activities,
financial or otherwise, of the Company from the latest dates as of
which such condition is set forth in the Offering Materials; (ii)
except as set forth in the Offering Materials, the Company shall not be
in default under any provision of any instrument relating to any
outstanding indebtedness for which a waiver or extension has not been
otherwise received; (iii) except as set forth in the Offering
Materials, the Company shall not have issued any securities (other than
those to be issued as provided in the Offering Materials) or declared
or paid any dividend or made any distribution of its capital stock of
any class and there shall not have been any change in the indebtedness
(long or short term) or liabilities or obligations of the Company
(contingent or otherwise) and trade payable debt; (iv) no material
amount of the assets of the Company shall have been pledged or
mortgaged, except as indicated in the Offering Materials; and (vi) no
action, suit or proceeding, at law or in equity, against the Company or
affecting any of its properties or businesses shall be pending or
threatened before or by any court or federal or state commission, board
or other administrative agency, domestic or foreign, wherein an
unfavorable decision, ruling or finding could materially adversely
affect the businesses, prospects or financial condition or income of
the Company, except as set forth in the Offering Materials.
D. At Closing, Westrock shall receive a certificate of
the Company signed by an executive officer and chief financial officer,
dated as of the applicable Closing, to the effect that the conditions
set forth in subparagraph (C) above have been satisfied and that, as of
the applicable closing, the representations and warranties of the
Company set forth herein are true and correct.
10. Termination.
-----------
This Agreement shall be co-terminus with, and terminate upon the same
terms and conditions as those set forth in, the Equity Line Purchase Agreement.
The rights and obligations of the Investor, the Company and Westrock under the
Registration Rights Agreement shall survive the termination of this Agreement
unabridged.
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11. Miscellaneous.
-------------
A. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all
which shall be deemed to be one and the same instrument.
B. Any notice required or permitted to be given
hereunder shall be given in writing and shall be deemed effective when
deposited in the United States mail, postage prepaid, or when received
if personally delivered or faxed (upon confirmation of receipt received
by the sending party), addressed as follows:
If to Westrock, to: Westrock Advisors, Inc.
230 Park Avenue
Floor 9
New York, New York 10169
Facsimile:
Attention:
If to the Investor, to: Cornell Capital Partners, LP
101 Hudson Street--Suite 3606
Jersey City, New Jersey 07302
Facsimile:
Attention: Mark Angelo
With a copy to: Butler Gonzalez, LLP
1000 Stuyvesant Avenue--Suite #6
Union, New Jersey 07083
Facsimile: (908) 810-0973
Attention: David Gonzalez, Esq.
If to the Company, to: JAG Media Holdings, Inc.
6865 S.W. 18th Street, Suite B13
Boca Raton, FL 33433
Facsimile: (561) 393-6018
Attention: Executive Vice President
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With a copy to: Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Facsimile: (212) 309-6273
Attn: W. Preston Tollinger, Esq.
or to such other address of which written notice is given to the others.
C. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the
State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement (whether brought against a party hereto
or its respective Affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal courts
sitting in the City of New York, Borough of Manhattan (the "New York
Courts"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of the any of this Agreement). Nothing contained herein
shall be deemed to limit in any way any right to serve process in any
manner permitted by law.
D. This Agreement and the other agreements referenced
herein contain the entire understanding between the parties hereto and
may not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is
sought.
E. If any provision of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
COMPANY:
JAG MEDIA HOLDINGS, INC.
By: /s/ Thomas J. Mazzarisi
--------------------------------
Name: Thomas J. Mazzarisi
Title: Executive Vice President
PLACEMENT AGENT:
WESTROCK ADVISORS, INC.
By: /s/ Victor T. Sicuranza
--------------------------------
Name: Victor T. Sicuranza
Title: Managing Director
INVESTOR:
CORNELL CAPITAL PARTNERS, LP
By: /s/ Mark A. Angelo
--------------------------------
Name:
Title:
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Annex I
-------
(Form of Legal Opinion)
(1) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada and has all requisite
power and authority (corporate and other) to carry on its business and to own,
lease and operate its properties and assets as described in the SEC Documents.
The Company is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the Company owns or leases
property, other than those jurisdictions in which the failure so to qualify
would not have a Material Adverse Effect.
(2) When issued and paid for, the Put Shares and the Placement
Agent Fee Shares will be duly and validly issued, fully paid and nonassessable,
and free of any liens, encumbrances and preemptive or similar rights contained
in the Company's Certificate of Incorporation or Bylaws or in any agreement to
which the Company is party which is filed as an attachment to an SEC Document.
(3) The Company has the requisite corporate power and authority to
enter into and perform its obligations under the Transaction Documents and to
issue the Put Shares and the Placement Agent Fee Shares. The execution and
delivery of the Transaction Documents by the Company and the consummation by it
of the transactions contemplated thereby have been duly authorized by all
necessary corporate action and no further consent or authorization of the
Company, its Board of Directors or stockholders is required. Each of the
Transaction Documents has been duly executed and delivered by the Company and
each of the Transaction Documents constitutes valid and binding obligations of
the Company enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the enforcement
of creditors' rights and remedies or by other equitable principles of general
application.
(4) The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated thereby, including, without limitation, the issuance of the Put
Shares and Placement Agent Fee Shares, do not and will not (i) conflict with or
violate any provision of the Company's Articles of Incorporation or Bylaws, (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, (A) any agreement,
indenture or other written instrument of the Company or instrument to which the
Company is a party attached as an exhibit to the SEC Documents and (B) to
counsel's knowledge, any other agreement, indenture or other written instrument
relating to indebtedness of the Company or instrument to which the Company is a
party, (iii) result in a violation of any law, rule or regulation of any
governmental authority, regulatory body, stock market or trading facility to
which the Company is subject, or by which any property or asset of the Company
is bound or affected, or (iv) result in any violation of any order, judgment,
injunction, decree or other restriction of which we have knowledge of any court
or governmental authority.
17