U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB/A
[ X ] Annual Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act
of 1934 for the Fiscal Year Ended
December 31, 1997
[ ] Transition Report Under Section 13 or
15(d) of the Securities Exchange Act of
1934 for the Transition Period From -----
to -----
Commission File No. 333-26385
Internet Media Corporation
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
Media Entertainment, Inc.
(FORMER NAME OF SMALL BUSINESS ISSUER)
NEVADA 75-2293489
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
8748 Quarters Lake Road, Baton Rouge, Louisiana 70809
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES,
INCLUDING ZIP CODE)
(504) 922-7744
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Securities Registered under Section 12(b) of the Exchange
Act:
Title of Each Class Name of Exchange
on Which Registered
None None
Securities Registered under Section 12(g)
of the Exchange Act: None
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject of such filing requirements for the past 90
days. Yes [ ] No [ X ]
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this
form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [ X ]
Registrant's revenues for its most recent fiscal year were
$596.
The aggregate market value of the voting stock held by non-
affiliates computed based on the average of the closing bid
and asked prices of such stock as of July 20, 1998, was
approximately $3,215,245.
The number of shares outstanding of the issuer's common
equity as of July 20, 1998, was 7,005,120 shares of common
stock, par value $.0001.
Documents Incorporated by Reference: Current Report on Form
8-K, Date of Event: 10/10/97.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
<PAGE>
PART I
Item 1. Description of Business
History
The Company's primary focus is on the development and
exploitation of its proprietary Wireless Internet Access
System. In February 1998, the Company obtained its first
Wireless Internet customer in Baton Rouge. Substantially
all of the Company's business efforts and resources will,
for the foreseeable future, be committed to its Wireless
Internet business segment. In exploiting its Wireless
Internet business opportunity, it is the Company's plan
either (1) to acquire an existing hard-wire dependent, dial-
up Internet Service Provider [ISP] in a particular market
and "plug-in" its proprietary Wireless Internet Access
System or (2) construct a Wireless Internet Access System in
a particular market. The Company is seeking capital with
which to exploit its Wireless Internet technology.
In July 1998, the Company changed its name to "Internet
Media Corporation". The Company was incorporated on
November 1, 1996, under the name "Media Entertainment,
Inc.", to act as a holding company primarily in the wireless
cable and community (low power) television industries. To
this end, the Company acquired Winter Entertainment, Inc.
(WEI), which owns and operates a community (low power)
television station in Baton Rouge, Louisiana, and Missouri
Cable TV Corp. (MCTV), which owns the licenses necessary to
operate wireless cable systems in Poplar Bluff and Lebanon,
Missouri, has acquired licenses and leases of licenses
necessary to operate wireless cable systems in Port Angeles,
Washington, Astoria, Oregon, Sand Point, Idaho, The Dalles,
Oregon, and Fallon, Nevada, and has acquired licenses
necessary to operate community (low power) television
stations in Monroe/Rayville, Louisiana, Bainbridge, Georgia,
and Natchitoches, Louisiana. The Company has, for the
foreseeable future, abandoned its efforts to develop its
wireless cable properties, due to current market conditions.
(See "Business Development Priority and Growth Strategy"
hereunder).
Proposed Acquisitions
Intersurf Online. In March 1998, the Company entered into a
letter of intent to acquire Telepresence, Inc., d/b/a
Intersurf Online ("Intersurf"), the second largest dial-up
ISP in Baton Rouge, Louisiana. The Company anticipates that
it will enter into a definitive acquisition agreement in the
near future, although no assurance can be made that such
will be the case. Should the Company complete is currently
ongoing private offering of its securities, a portion of the
proceeds of such private offering are designated for use in
the acquisition of Intersurf. Without the proceeds of such
private offering, the Company will not possess capital with
which to acquire Intersurf.
Unidentified Dial-up ISP. Recently, the Company reached an
informal understanding with the owner of an additional dial-
up ISP (name undisclosed by agreement) in Baton Rouge, with
respect to the Company's acquisition of such dial-up ISP.
The extent of the understanding is that the owner is
amenable to selling this dial-up ISP to the Company; no
specific terms of acquisition have been negotiated. The
Company believes that this dial-up ISP has approximately 450
customers and is operating profitably, although the Company
has not confirmed its beliefs in this regard. The Company
expects that it will be able to acquire this dial-up ISP for
approximately $60,000 in cash. However, without the
proceeds of its currently ongoing private offering, the
Company will not possess capital with which to acquire this
dial-up ISP.
Business Development Priority and Growth Strategy
Business Development Priority. In October 1997, the
Executive Committee of the Board of Directors of the Company
approved a change in the Company's priority of business
development opportunities. The Company's new development
priority became (1) Wireless Internet; (2) community (low
power) television; and (3) wireless cable television. The
change in development priority is a result of the
unexpectedly rapid completion of a market-ready version of
the Company's proprietary Wireless Internet Access System.
In July 1998, the Company's Executive Committee of the Board
of Directors approved a further refinement of the Company's
development strategy. The Executive Committee determined
that the Company will discontinue all efforts directed
towards the establishment of its wireless cable business.
This determination was based primarily on the wireless cable
industry's current depressed state, which has rendered the
Company's wireless cable business plan essentially
impossible. Nevertheless, the Company believes that its
wireless cable channel rights possess great potential future
value for use in the Company's Wireless Internet business,
at such time as the Federal Communications Commission grants
permission for two-way communications on the wireless cable
spectra, or the medium is de-reglated, which the Company
expects to occur shortly after the turn of the century.
However, no prediction can be made in this regard.
Growth Strategy. The Company's Wireless Internet growth
strategy is a two-pronged approach: first, it is the
Company's intention to identify suitable markets, acquire a
locally-owned dial-up ISP in each market, essentially "plug-
in" its proprietary Wireless Internet Access System and
start selling its Wireless Internet service; second, the
Company intends to construct Wireless Internet Access
Systems in desirable cities where no suitable dial-up
acquisition can be made. The Company believes that its
growth-through-acquisition strategy will permit it to
achieve necessary economies of scale in the shortest
possible time. However, there is no assurance that the
Company will be successful in implementing its strategy, due
primarily to the Company's current lack of capital.
Business - Wireless Internet
General
Wireless Internet is a new type of communications spectrum
recently designated by the FCC. Wireless Internet requires
a transmission facility maintained by the Wireless ISP
[Internet Service Provider] and the user's modem equipped
with an antenna. Wireless Internet capability allows users
to access the Internet from a stationary computer or from a
mobile, lap-top computer located within the Wireless ISP's
transmission area; that is, a user can travel in a car, bus,
train, etc., within the Wireless ISP's transmission area and
maintain constant Internet access. The Company believes
that businesses, particularly service businesses, once made
aware of the Company's Wireless Internet technology, will
readily subscribe to the Company's Wireless ISP service,
although no assurance can be made in this regard.
Proprietary Wireless Internet Access System
The Company's proprietary Wireless Internet System operates
within a broadcast signal in the 900 or 2400 MHz band using
two-way modems outfitted with antennae. Thus, the Company's
Wireless Internet System differs substantially in design
from the Wireless Internet access available through cellular
telephones and differs substantially from traditional
telephone-line-based ISPs because there is no reliance on
hard wire to transfer data. Yet, the Company's management
believes the Company's Wireless Internet System is capable
of greater utility at lower cost than these other modes of
Internet access.
It is the belief of the Company's management that the
Company's Wireless Internet System provides the following
competitive advantages for attracting potential business
customers over other Internet access modes:
Speed. The Company's Wireless Internet System provides a
minimum data transmission speed of 64kbs, with data
transmission speed capability of up to the equivalent of a
T1 telephone line (that is, the data transmission capability
equivalent of 24 ISDN-telephone lines, an ISDN-telephone
line being the equivalent of 24 standard telephone lines).
The Company intends to guaranty 64kbs transmission speed as
a minimum to all customers.
Lower Cost. The Company's Wireless Internet System will,
depending on the particular market, offer cost savings of
between 30% to 50% less than hard-wire Internet access
currently offered by local telephone companies. In
addition, the Company's Wireless Internet System offers
significant savings over cellular-telephone-based Internet
access methods, inasmuch as the Company's Wireless Internet
System is offered on a monthly flat-rate charge rather than
a per-minute charge.
No Telephone Company Involvement. Because the Company's
Wireless Internet System does not utilize telephone lines,
Company customers will not be required to incur the expense
of a hard-wire telephone line through which to access the
Internet. The Company believes this characteristic will be
especially appealing to potential business customers. Also,
in the many areas where there appears to exist disdain for
the local telephone company, the Company believes it will be
able to gain customers, at least in part, by emphasizing the
fact that the local telephone company will no longer be
needed for Internet access.
Security/Encryption. The Company's Wireless Internet
System is designed to allow the encryption (scrambling) of
its broadcast signal, thereby offering a high degree of
security to potential customers, particularly business
customers, who wish to transmit confidential information
over the Internet. As designed, such encryption capability
does not add significantly to the cost of the Company's
Wireless Internet System to its customers.
Mobility. The Company's Wireless Internet System is able
to permit service personnel of a business to file
contemporaneous reports, request and receive technical
assistance and perform other computer-based functions from a
customer's place of business or from a service vehicle, even
if the service vehicle is traveling to its next destination.
The Company believes this mobility feature, coupled with the
high-speed data transmission feature of its Wireless
Internet System, will be attractive to potential customers,
especially business customers.
Ethernet/Networking Capability. The Company's Wireless
Internet System is compatible with existing so-called
"ethernet" systems. Generally, an ethernet can be described
as a self-contained network of desk-top computers, often
located in the same building, through which individual
computer users can communicate electronically (i.e., via e-
mail), as well as access the Internet. The Company is
capable of designing and installing an ethernet system in
any existing building by installing a wireless
communications system that links all computers, including
computers that are to remain linked via hard wire, to one
another and provides all computer users access to the
Internet. The Company believes that its ability to provide
a wireless ethernet system at substantially lower cost than
that of a hard-wire ethernet system will be a competitive
advantage. There is, however, no assurance in this regard.
The Company believes that its Wireless Internet System is
able to satisfy any other special requirements of a
potential customer, without significantly adding to the
system's cost to that customer. However, there can be no
assurance that such will be the case.
The Company's Wireless Internet System is being marketed to
the business sector, as well as home-based Internet users.
Currently, it is the Company's long-term objective to offer
a full array of video entertainment via its Wireless
Internet System. The Company believes its plans are easily
achievable, due to the fact that the Company's Internet
connection can be routed to the user's television using
existing, relatively inexpensive technology. Assuming
market conditions permit, the Company expects that, by the
year 2005, each of its Wireless Internet systems would be
able to offer its subscribers the many video services,
including some services that, given the rapid evolution of
technology, may not currently exist. The video
entertainment services that the Company expects to be able
to offer include:
Movies. The Company believes that it will be able to
offer an ever-expanding movie list, all of which would be
available, in real time, at any time, upon request of the
subscriber. It is expected that each movie would be sold,
or "rented", to subscribers at a cost that would be less
than the same movie were it to be rented from the local
video rental store. The primary impediment to the Company's
offering this service is its lack of capital with which to
acquire necessary equipment, as well as digitized copies of
the desired movies.
Pay-Per-View Events. The Company believes that the
Company will be able to offer to its subscribers access to
pay-per-view events, such as concerts and sporting events,
including boxing matches, such as are currently available
from time to time through local cable television systems.
The primary impediment to the Company's offering this
service is its lack of capital with which to purchase
necessary equipment, including satellite dishes.
"Cable" Television. Although the Company expects that
consumer acceptance will be sluggish at first, the Company
believes that, with adequate capital for equipment and
advertising, as well as consumer education, the Company will
be able to provide a competitive offering of "cable"
television channels that would be equal to those offered by
any local cable television company and direct broadcast
satellite systems. It is quite possible that market forces
will dictate that this type of service would not be
introduced to consumers for the foreseeable future. No
prediction in this regard can be made.
The foregoing services that might be offered in the future
by the Company remain in the development stage and no
introduction date has been set by the Company's management.
All of the services described appear to be possible after
initial tests, due to the high-speed data transmission
capabilities of the Company's Wireless Internet system.
Additional applications are currently being developed by the
Company. No prediction as to when any or all of these
services will be ready for commercial exploitation.
Business Strategy
General. It is the Company's intention either (1) to
acquire an existing hard-wire dependent, dial-up Internet
Service Provider in a particular market and "plug-in" its
Wireless Internet System or (2) construct a Wireless
Internet System in a particular market. The Company
believes this strategy gives it flexibility in entering and
exploiting a particular market.
The Company, through a marketing agreement with Intersurf,
has begun to place customers onto its Wireless Internet
System, which marketing agreement will remain in place until
such time as the acquisition of Intersurf is consummated, of
which there is no assurance. (See "Proposed Acquisitions"
above). Should the Intersurf acquisition be abandoned, the
Company expects that it will continue to operate under its
marketing agreement with Intersurf. Also, the Company has
entered into a joint venture to develop a Wireless Internet
System in Monroe, Louisiana. The Company expects that the
Monroe, Louisiana, joint venture will begin operations
during the third quarter of 1998.
Marketing. In marketing its Wireless ISP services, the
Company will emphasize the superior connection to the
Internet offered by its equipment, the low price relative to
the quality of the Internet connection, the mobility of the
Internet connection and the ability to gain access to the
Internet without dealing with the local telephone company.
In publicizing its product, the Company expects to employ a
significant amount of radio advertising in the majority of
markets. Additional media, such as television, direct mail
and door-to-door sales, will be employed in some, but not
all, markets, depending on a particular market's economic
and social characteristics. The Company believes this
flexibility will allow it to maximize the effectiveness of
its advertising expenditures. There is no assurance that
this plan of marketing will be successful.
Competition
Traditional (telephone-line-dependent) ISPs are currently
engaged in severe competition for market share, particularly
in the larger markets of the U.S. It can be expected that
many competitors will possess far greater resources,
financial and otherwise, than does the Company. It is
possible that the Company will, at first, focus its efforts
on smaller markets, due to the perceived potential for
higher rates of return. However, no final determination in
this regard has been made. There is no assurance that the
Company will be able to compete successfully in any of its
Wireless ISP markets.
Other Wireless Products
In January 1998, the Company delivered its first proprietary
Wireless DataLink System. The Company's Wireless DataLink
System was delivered to the Baton Rouge refinery of one of
the largest international oil companies, the refinery being
the second largest in the U.S. The Company's Wireless
DataLink System was purchased to replace an existing hard-
wire ("T-1" telephone line) data transmission system. The
Company's Wireless DataLink System transfers data at the
rate of 2 megabytes per second.
The Company believes its Wireless DataLink System will offer
businesses a lower cost alternative to hard-wire data
transmission systems. There is no assurance that the
Company's Wireless DataLink System will achieve wide-spread
acceptance.
Business - Community (Low Power) Television
General
Industry History. Community, or low power, television is a
relatively new broadcasting category created by the FCC in
the early 1980's. Community television stations, with their
narrow geographic coverage, usual unaffiliated status and
local programming focus, are becoming a more important part
of the current broadcasting mix. While able to cover, on
average, only between five and 20 miles radius (15-62 square
miles) with their signals, community television stations
have been able to expand greatly their coverage by having
their signals included in local and regional cable systems.
Entry into the community television industry requires
substantially less capital than entry into the high-power
television industry. There are currently approximately
1,700 community television stations licensed by the FCC,
with approximately the same number of applications for new
licenses now pending with the FCC.
Community television stations may be either affiliated with
one of the national networks (ABC, NBC, CBS, FOX, UPN or WB)
or may be independent. The Company does not anticipate that
its community television stations will become network
affiliates in the near term. However, it is expected that,
once operational, each of the Company's stations will become
an affiliate of the Video Catalog Channel, a merchandise
sales operation. The Company's only operational station,
Call sign K13VE, Channel 13, in Baton Rouge, Louisiana, has
been an affiliate of the Video Catalog Channel since going
on the air in January 1996. (See "Business Strategy"
hereunder).
Programming
Lacking a national network affiliation, independent
community (low power) television stations, in general,
depend heavily on independent third parties for programming.
Programs obtained from independent sources consist primarily
of syndicated television shows, many of which have been
shown previously on a network, and syndicated feature films,
which were either made for network television or have been
exhibited previously in motion picture theaters (most of
which films have been shown previously on network and cable
television). Syndicated programs are sold to individual
stations to be broadcast one or more times. Independent
television stations generally have large numbers of
syndication contracts; each contract is a license for a
particular series or program that usually prohibits
licensing the same programming to other television stations
in the same market. A single syndication source may provide
a number of different series or programs.
Licenses for syndicated programs are often offered for cash
sale or on a barter or cash-plus-barter basis to stations.
In the case of a cash sale, the station purchases the right
to broadcast the program, or a series of programs, and sells
advertising time during the broadcast. The cash price of
such programming varies, depending on the perceived
desirability of the program and whether it comes with
commercials that must be broadcast (a cash-plus-barter
basis). Bartered programming is offered to stations without
charge, but comes with a greater number of commercials that
must be broadcast, and, therefore, with less time available
for sale by the station. Recently, the amount of bartered
and cash-plus-barter programming broadcast industry-wide has
increased substantially.
For the foreseeable future, however, the Company anticipates
that each of its community television stations will be an
affiliate of the Video Catalog Channel, deriving all of its
programming therefrom.
Community Television Industry Trends
The Company believes that community television is in the
right position at a very dynamic time in the television
broadcasting market place. With the ever-growing number of
cable (hard-wire and wireless) channels in most markets,
coupled with the lack of programming available for channel
slots past the 70-channel mark, there appears to be room
available on such cable systems for additional stations.
This availability of channel room on cable systems has the
effect of giving community television far greater area
coverage than could be achieved solely by broadcasting a
signal. The potential for community television stations to
achieve historically high revenues exists, if a particular
market and/or region can be exploited effectively.
Nevertheless, the future of community television is somewhat
unclear, in the face of the U.S. government's recent High-
Definition-television-broadcast mandate. If unchanged, this
mandate would require all television broadcasters to begin
all-digital broadcasts by the year 2002. This mandate would
have a materially adverse affect on community television
broadcasters. However, this mandate has come under severe
criticism from private industry and it remains uncertain
whether this mandate will remain in its current form.
Management of the Company believes that it is likely that
manufacturers will, when this mandate is finalized, be
required to include an adapter capable of receiving
community television broadcasts on each High Definition
television. No prediction can be made with respect to the
final provisions of this mandate.
Business Strategy
It is the Company's current intention for each of its
community television stations, as soon as it becomes
operational, to become an affiliate of the Video Catalog
Channel, a merchandise sales operation. It is the Company's
experience, from the operations of its Baton Rouge,
Louisiana, community television station, that this strategy
generates positive cash flow, from inception of
broadcasting. From such financial position, a station's
advertising sales efforts will be increased in an effort to
exploit such station's coverage area. Also, the Company
will attempt to secure a channel on each of the cable
systems within a particular market. There is no assurance
that the Company will be able to exploit effectively any of
its community television markets. It is possible that one
or more of the Company's community television stations
could, in the future, become an affiliate of one of the
national networks, such as FOX, UPN or WB. However, no
prediction in this regard can be made.
Company Markets
General. The Company currently operates a community
television station in Baton Rouge, Louisiana, and holds the
rights to community television stations in Monroe/Rayville,
Louisiana, Bainbridge, Georgia, and Natchitoches, Louisiana.
The Company currently intends to establish its Community
Television stations in the order listed above. Such order
of development was determined after an assessment of the
business potential of each of the markets based upon the
number of homes within the radius of the proposed transmit
site, as well as other demographic factors. Except where
noted below, the Company will seek additional financing,
either equity or debt, or form partnerships for the
development of its markets. The Company does not currently
have such financing or partners in place. The Company
believes such financing will be available on a
station-by-station basis; however, there can be no assurance
that it will be able to obtain such financing or partners on
a timely basis and on satisfactory terms and conditions, if
at all. The failure to obtain additional funds or partners
on a timely basis could materially adversely affect the
Company and its business.
Baton Rouge, Louisiana. K13VE, Channel 13, the Company's
Baton Rouge, Louisiana, community television station, has
been broadcasting since January 1996, as an affiliate of the
Video Catalog Channel. The Company's current broadcast
signal reaches approximately 30,000 households. At some as-
yet determined time in the future, the Company intends to
commit $20,000 to increase the power of such station to its
maximum legal limit, which would permit the Company's
broadcast signal to reach approximately 150,000 households.
It is expected that the commissions earned by K13VE from
Video Catalog Channel sales originating from its broadcast
area will increase proportionately to its increased number
of households reached. There is no assurance that such will
be the case.
Other Stations. The Company owns the licenses to community
television stations located in Monroe/Rayville, Louisiana,
Natchitoches, Louisiana, and Bainbridge, Georgia, which
television stations are expected to be constructed in the
order listed, assuming adequate funding is available, of
which there is no assurance. The Company believes it will
require approximately $50,000 to construct each station.
Because the Company intends to have each of its stations
become an affiliate of the Video Catalog Channel immediately
after construction has been completed, the Company does not
expect to require additional funds for marketing. There is
no assurance that funding will be available to the Company
at such times as it attempts to construct any one of its
community television stations. Absent additional funding,
the Company would likely be unable to construct any of its
community television stations.
Competition
Community television stations compete for advertising
revenue in their markets, primarily with other broadcast
television stations and cable television channels, and
compete with other advertising media, as well. Such
competition is intense. In addition, competition for
programming, management personnel and network affiliations
is severe. There is no assurance that the Company's
community television channels, once built, of which there
is no assurance, will be able to compete effectively in
their respective markets.
Certain Risk Factors
Limited Operating History. The Company has only recently
begun to engage in business activities. The Company's
operations, and proposed operations, are subject to all of
the risks inherent in the establishment of a new business,
particularly one in the highly competitive communications
industry. The likelihood of success of the Company must be
considered in light of the problems, expense, difficulties,
complications and delays frequently encountered in
connection with establishing a new business, including,
without limitation, market acceptance of the Company's
services, regulatory problems, unanticipated expenses and
competition. There is no assurance that the proposed
business activities of the Company will be successful or
that the Company will ever earn a profit from such proposed
activities.
Dependence on Management. The Company is dependent on its
current management for its success. In particular, the
Company is dependent on the efforts of its President, David
M. Loflin, for its success. Mr. Loflin expects to devote
not less than 75% of his time to the business of the Company
during the initial stages of development, which amount of
time is expected to be adequate. On a successful completion
of this Offering, Mr. Loflin will begin to devote his full-
time efforts to the Company's business. The Company and Mr.
Loflin have not entered into an employment agreement, nor
has any key-man life insurance been purchased with respect
to Mr. Loflin or any other members of the Company's
management. However, it is anticipated that the Company and
Mr. Loflin will execute a written employment agreement in
the near future, although no assurance in this regard can be
given. The Company's success is also dependent upon its
ability to attract and retain qualified employees to meet
the Company's needs.
Control of the Company. As of July 13, 1998, the Company's
directors and executive officers owned approximately 68.07%
of the Company's outstanding shares of Common Stock.
Accordingly, these shareholders will continue to be able to
elect the Company's directors and thereby control the
management policies of the Company, as well as determine the
outcome of corporate actions requiring shareholder approval
by majority action, regardless of how other shareholders of
the Company may vote. Such ownership of Common Stock may
have the effect of delaying, deferring or preventing a
change in control of the Company and may adversely affect
the voting rights of other holders of Common Stock.
Conflicts of Interest. It is possible that conflicts of
interest could arise in the negotiation of the terms of any
transaction between the Company and its shareholders,
officers, directors or affiliates. The Company has no plans
or arrangements, such as the hiring of independent
consultants or arbiters, for the resolution of disputes
between the Company and such persons if they arise. The
Company and its shareholders could be adversely affected,
should such individuals choose to place their own interests
before those of the Company. No assurance can be given that
conflicts of interest will not cause the Company to lose
potential opportunities, profits or management attention.
The Company could acquire channel licenses or other assets
from management, principal shareholders or their affiliates
or from entities in which management, principal shareholders
or their affiliates may hold an interest. Such persons or
entities could derive monetary or other benefits from such
transactions. Such benefits could include, without
limitation, the assumption of, or release from, liabilities
incurred by such persons or result in increased control of
the Company by such persons. The Board of Directors of the
Company has adopted a policy regarding transactions between
the Company and any officer, director or affiliate,
including loan transactions, requiring that all such
transactions be approved by a majority of the disinterested
members of the Board of Directors and that all transactions
be for a bona fide business purpose and be structured on
terms at least as favorable to the Company as could be
obtained from unaffiliated, independent third parties.
The Company's President, David M. Loflin, owns a television
station, WTVK Channel 11, in Baton Rouge, Louisiana, which
operates in competition with the Company's Baton Rouge
community television station, K13VE Channel 13. It is
possible that Mr. Loflin's ownership of a competing
television station will result in a conflict of interest for
Mr. Loflin, particularly with respect to obtaining
advertisers. Mr. Loflin intends to resolve any such
conflict that may arise in accordance with his fiduciary
duty and duty of loyalty to the Company. There is no
assurance that Mr. Loflin will be able to resolve any such
conflict of interest to the Company's benefit.
Need for Future Financing. To date, the Company has
received $300,000 under a $600,000 private offering of
securities. However, the Company is in need of additional
financing to exploit fully its business opportunities.
There is no assurance that the Company will be able to
locate such additional financing or, if found, that such
financing would be on terms favorable to the Company.
Uncertainty of Significant Assumptions. The Company's plans
for implementing its proposed business operations and
achieving profitability from its intended operations are
based on the experience, judgment and certain assumptions of
its management, and upon certain available information
concerning the communications industry, in general, and the
Company's proposed plan of operation, in particular. No
independent market studies have been conducted concerning
the extent to which customers will utilize the services and
products to be offered by the Company, nor are any such
studies planned. There can be no assurance that the
Company's plans will materialize, or that the Company's
assumptions will prove correct.
Lack of Patent Protection. The Company has not obtained a
patent relating to its Wireless Internet Access System,
although the Company is investigating the possibility of
obtaining such a patent. There is no assurance that any
such patent will be obtained. As a result, there currently
are no technological or patent barriers to entry by other
companies into the Company's areas of endeavor.
High Definition Television Broadcast Mandate. The future of
community television is somewhat unclear, in the face of the
U.S. government's recent High-Definition-television-
broadcast mandate. If unchanged, this mandate would require
all television broadcasters to begin all-digital broadcasts
by the year 2002. This mandate would have a materially
adverse affect on community television broadcasters,
including the Company. However, this mandate has come under
severe criticism from private industry and it remains
uncertain whether this mandate will remain in its current
form. Management of the Company believes that it is likely
that manufacturers will, when this mandate is finalized, be
required to include an adapter capable of receiving
community television broadcasts on each High Definition
television. No prediction can be made with respect to the
final provisions of this mandate and the effects on the
community television industry, in general, and the Company,
in particular.
Possible Volatility of Market for Common Stock. The market
prices for securities of newly public companies have,
historically, been highly volatile. Future announcements
concerning the Company or its competitors, including
operating results, technological innovations and government
regulations, could have a significant impact on the market
price of the Common Stock, increasing possible volatility.
Dividend Policy. The Company does not anticipate the
payment of cash dividends in the foreseeable future, but
intends to re-invest any profits which may be earned by the
Company's business.
Regulation
Community (Low Power) Television
General. Television broadcasting operations are subject to
the jurisdiction of the FCC under the Communications Act.
The Communications Act empowers the FCC, among other things,
to issue, revoke or modify broadcast licenses, to assign
frequencies, to determine the locations of stations, to
regulate the broadcasting equipment used by stations, to
establish areas to be served, to adopt such regulations as
may be necessary to carry out the provisions of the
Communications Act and to impose certain penalties for
violation of its regulations. The Company's currently
operating community television station, as well as any
future stations, is subject to a wide range of technical,
reporting and operational requirements imposed by the
Communications Act and by FCC rules and policies.
The Communications Act provides that a license may be
granted to any applicant if the public interest, convenience
and necessity will be served thereby, subject to certain
limitations, including the requirement that the FCC allocate
licenses, frequencies, hours of operation and power in a
manner that will provide a fair, efficient and equitable
distribution of service throughout the U.S. Television
licenses generally are issued for five-year terms. Upon
application, and in the absence of a conflicting application
that would require the FCC to hold a hearing, or questions
as to the licensee's qualifications, television licenses
have usually been renewed for additional terms without a
hearing by the FCC. An existing license automatically
continues in effect once a timely renewal application has
been filed until a final FCC decision is issued.
Under existing FCC regulations governing multiple ownership
of broadcast stations, a license to operate a television or
radio station generally will not be granted to any party (or
parties under common control) if such party directly or
indirectly owns, operates, controls or has an attributable
interest in another television or radio station serving the
same market or area. The FCC, however, is favorably
disposed to grant waivers of this rule for certain radio
station-television station combinations in the top 25
television markets, in which there will be at least 30
separately owned, operated and controlled broadcast
licenses, and in certain other circumstances.
FCC regulations further provide that a broadcast license
will not be granted if that grant would result in a
concentration of control of radio and television
broadcasting in a manner inconsistent with the public
interest, convenience or necessity. FCC rules generally
deem such concentration of control to exist if any party, or
any of its officers, directors or shareholders, directly or
indirectly, owns, operates, controls or has an attributable
interest in more than 12 television stations, or in
television stations capable of reaching, in the aggregate, a
maximum of 25% of the national audience. This percentage is
determined by the DMA market ranking of the percentage of
the nation's television households considered within each
market. Because of certain limitations of the UHF signal,
however, the FCC will attribute only 50% of a market's DMA
reach to owners of UHF stations for the purpose of
calculating the audience reach limits. The Company will not
approach such limits for the foreseeable future. To
facilitate minority group participation in radio and
television broadcasting, the FCC will allow entities with
attributable ownership interests in stations controlled by
minority group members to exceed the ownership limits.
The FCC's multiple ownership rules require the attribution
of the licenses held by a broadcasting company to its
officers, directors and certain of its shareholders, so
there would ordinarily be a violation of FCC regulations
where an officer, director or such a shareholder and a
television broadcasting company together hold interests in
more than the permitted number of stations or more than one
station that serves the same area. In the case of a
corporation controlling or operating television stations,
such as the Company, there is attribution only to
shareholders who own 5% or more of the voting stock, except
for institutional investors, including mutual funds,
insurance companies and banks acting in a fiduciary
capacity, which may own up to 10% of the voting stock
without being subject to such attribution, provided that
such entities exercise no control over the management or
policies of the broadcasting company.
The FCC has recently begun a proceeding to consider
liberalization of the various TV ownership restrictions
described above, as well as changes (not all of which would
be liberalizing in effect) in the rules for attributing the
licenses held by an enterprise to various parties. The
Company is unable to predict the outcome of these
proceedings.
The Communications Act and FCC regulations prohibit the
holder of an attributable interest in a television station
from having an attributable interest in a cable television
system located within the coverage area of that station.
FCC regulations also prohibit the holder of an attributable
interest in a television station from having an attributable
interest in a daily newspaper located within the predicted
coverage area of that station.
The Communications Act limits the amount of capital stock
that aliens may own in a television station licensee or any
corporation directly or indirectly controlling such
licensee. No more than 20% of a licensee's capital stock
and, if the FCC so determines, no more than 25% of the
capital stock of a company controlling a licensee, may be
owned or voted by aliens or their representatives. Should
alien ownership exceed this limit, the FCC may revoke or
refuse to grant or renew a television station license or
approve the assignment or transfer of such license.
The Communications Act prohibits the assignment of a
broadcast license or the transfer of control of a licensee
without the prior approval of the FCC. Legislation was
introduced in the past that would impose a transfer fee on
sales of broadcast properties. Although that legislation
was not adopted, similar proposals, or a general spectrum
licensing fee, may be advanced and adopted in the future.
Recent legislation has imposed annual regulatory fees
applicable to the Company.
The foregoing does not purport to be a complete summary of
all of the provisions of the Communications Act or
regulations and policies of the FCC thereunder. Reference
is made to the Communications Act, such regulations and the
public notices promulgated by the FCC.
Other Regulations. The future of community television is
somewhat unclear, in the face of the U.S. government's
recent High-Definition-television-broadcast mandate. If
unchanged, this mandate would require all television
broadcasters to begin all-digital broadcasts by the year
2002. This mandate would have a materially adverse affect
on community television broadcasters. However, this mandate
has come under severe criticism from private industry and it
remains uncertain whether this mandate will remain in its
current form. Management of the Company believes that it is
likely that manufacturers will, when this mandate is
finalized, be required to include an adapter capable of
receiving community television broadcasts on each High
Definition television. No prediction can be made with
respect to the final provisions of this mandate.
The FTC, among other regulatory agencies, imposes a variety
of requirements that affect the business and operations of
broadcast stations. From time to time, proposals for
additional or revised requirements are considered by the
FCC, numerous other Federal agencies and Congress. The
Company is unable to predict future Federal requirements or
what impact, if any, any such requirements may have on
Company television stations.
Company Employees
The Company currently has no salaried employees. However,
the Company's officers are performing all required business
and administrative functions without pay. Should the
Company receive the balance ($300,000) of its currently on-
going private offering, it is expected that the Company
would employ approximately 25 persons by the close of 1998.
The industries in which the Company operates require a high
level of expertise in many positions. The Company does not
anticipate any difficulty in attracting and retaining
necessary personnel.
Cautionary Statement
This Annual Report on Form 10-KSB contains certain "forward-
looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934. All statements, other than
statements of historical facts included in this Annual
Report on Form 10-KSB, including, without limitation, those
under "Proposed Acquisitions", and "Business Development
Priority and Growth Strategy", "Business - Wireless
Internet" above. Suct statements are subject to certain
risks and undertainties, such as changes in prices or demand
for the Company's products as a result of competitive
actions or economic factors, changes in the cost of
equipment, changes in operating costs resulting from new
technologies or inflation and the Company's ability to gain
access to capital markets and/or commercial bank financing
on favorable terms. Should one or more of these risks or
uncertainties, among others, materialize, actual results may
vary materially from those estimated, anticipated or
projected. Although the Company believes that the
expectations reflected by such forward-looking statements
are reasonable based on information currently available to
the Company, no assurance can be given that such expectation
will prove to have been correct. Cautionary statements
identifying important factors that could cause actual
results to differ materially from the Company's expectations
are set forth in this Annual Report on Form 10-KSB,
including, without limitation, in conjunction with the
forward-looking statements included in this Annual Report on
Form 10-KSB that are referred to above. All forward-looking
statements included in this Annual Report on Form 10-KSB and
all subsequent oral forward-looking statements attributable
to the Company or persons acting on its behalf are expressly
qualified in their entirety by these cautionary statements.
Item 2. Description of Property
General. The Company owns small quantities of equipment and
inventory relating to each of its business segments. The
Company leases approximately 650 square feet for its
executive offices in Baton Rouge, Louisiana, for a monthly
rental of $776. The Company expects to lease additional
office space, as well as necessary transmitter space, as it
launches each wireless cable system, each community
television station and Wireless ISP.
Wireless Cable Properties. The Company currently holds the
rights to wireless cable channels in Poplar Bluff, Missouri,
Lebanon, Missouri, Port Angeles, Washington, The Dalles,
Oregon, Sand Point, Idaho, Fallon, Nevada, and Astoria,
Oregon. The Company has, for the foreseeable future,
abandoned its efforts to develop its wireless cable
properties, due to current market conditions.
The Company's wireless cable systems in Poplar Bluff and
Lebanon, Missouri, are based on low power television
channels rather than on the 2500-2700 MHz channels
specifically allocated by the FCC to wireless cable. In
Poplar Bluff, the Company holds the rights to leases of
eight low power television channels, channels 26, 28, 31,
35, 56, 59, 61, 68. In Lebanon, the Company holds the
rights to leases of eight low power television channels,
channels 18, 29, 31, 40, 51, 53, 55 and 59.
The Company holds the rights to leases of three wireless
cable channels in Port Angeles, Washington, channels H1, H2
and H3; the rights to leases of six wireless cable channels
in The Dalles, Oregon, channels B1-2-3 and C1-2-3; the
rights to leases of six wireless cable channels in Sand
Point, Idaho, channels B1-2-3 and C1-2-3. the rights to
leases of five wireless cable channels in Fallon, Nevada,
channels E1-2-3-4 and H3; the rights to leases of two
wireless cable channels in Astoria, Oregon, channels H2 and
H3.
Item 3. Legal Proceedings
The Company is not currently engaged in any legal
proceeding, nor, to the Company's knowledge, is any suit or
other legal action pending or threatened.
Item 4. Submission of Matters to Vote of Security Holders
No matters were submitted to a vote of the Company's
security holders during the fourth quarter of the fiscal
year ended December 31, 1997.
PART II
Item 5. Market for Common Equity and Related
Stockholder Matters
Market Information
The Company's Common Stock began to trade on the OTC
Electronic Bulletin Board ("OTCBB") under the symbol "MEME"
in October 1997. Since trading in the Company's Common
Stock began, the high and low bid prices for the Common
Stock have been $2.50 and $.06 per share, respectively.
Such prices represent quotations between dealers without
adjustment for retail mark-ups, retail mark-downs or
commissions, and may not necessarily represent actual
transactions. On July 20, 1998, the last reported bid and
asked prices for the Company's Common Stock, as reported by
the OTCBB, were $1.40625 and $1.46875 per share,
respectively.
Holders
The approximate number of record holders of the Company's
Common Stock as of July 20, 1998, was 1,060, holding
7,005,120 shares.
Dividends
The Company has never paid cash dividends on its Common
Stock. The Company anticipates that any future earnings, of
which there is no assurance, will be retained for
development of the Company's businesses, and, therefore, it
can be expected that no dividends on the Company's Common
Stock will be declared in the foreseeable future.
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Background
The Company's primary focus is on the development and
exploitation of its proprietary Wireless Internet Access
System. In February 1998, the Company obtained its first
Wireless Internet customer in Baton Rouge, Louisiana. The
Executive Committee of the Board of Directors has determined
that substantially all of the Company's business efforts and
resources will, for the foreseeable future, be committed to
its Wireless Internet business segment. In exploiting its
Wireless Internet business opportunity, it is the Company's
plan either (1) to acquire an existing hard-wire-dependent,
dial-up Internet Service Provider [ISP] in a particular
market and "plug-in" its proprietary Wireless Internet
System or (2) to construct a Wireless Internet Access System
in a particular market. The Company has obtained, and
continues to seek, capital with which to exploit its
Wireless Internet technology.
In July 1998, the Company changed its name to "Internet
Media Corporation". The Company was incorporated on
November 1, 1996, under the name "Media Entertainment,
Inc.", to act as a holding company primarily in the wireless
cable and community (low power) television industries. To
this end, the Company acquired Winter Entertainment, Inc.
(WEI), which owns and operates a community (low power)
television station in Baton Rouge, Louisiana, and Missouri
Cable TV Corp. (MCTV), which owns the licenses necessary to
operate wireless cable systems in Poplar Bluff and Lebanon,
Missouri, has acquired licenses and leases of licenses
necessary to operate wireless cable systems in Port Angeles,
Washington, Astoria, Oregon, Sand Point, Idaho, The Dalles,
Oregon, and Fallon, Nevada, and has acquired licenses
necessary to operate community (low power) television
stations in Monroe/Rayville and Natchitoches, Louisiana, and
Bainbridge, Georgia. By resolution of the Executive
Committee of the Board of Directors, the Company has, for
the foreseeable future, abandoned its efforts to develop its
wireless cable properties, due to current market conditions.
Because the Company, WEI and MCTV were combined in a
reorganization of entities under common control, the
presentation contained in the financial statements of the
Company has been prepared in a manner similar to the
pooling-of-interests method. In this regard, reference is
made to Notes 1 and 3 of the Company's financial statements
appearing elsewhere herein. The following discussion
reflects such financial statement presentation.
Results of Operations
Year Ended December 31, 1997, versus Year Ended
December 31, 1996.
General. During the years ended December 31, 1997 ("Fiscal
97"), and December 31, 1996 ("Fiscal 96"), all of the
Company's revenues were generated by the Community
Television Segment. Since the end of Fiscal 97, the
Company's Wireless Internet Segment has begun to generate
substantially all of the Company's revenues. As discussed
above, the Company has determined to cease, for the
foreseeable future, activities in its Wireless Cable
Segment.
For Fiscal 1997, the Company suffered a net loss of $624,804
compared to a net loss of $24,237 for Fiscal 96. The net
loss for Fiscal 97 is attributable in large measure to the
issuance of shares of Company common stock pursuant to
various consulting agreements. During Fiscal 97, a total of
404,000 shares were issued to consultants, which shares have
been valued for financial accounting purposes at $750,000,
in the aggregate. During Fiscal 97, $438,111 of such
$750,000 was expensed. During Fiscal 96, no shares were
issued for consulting services. Since December 31, 1997,
the Company has issued a total of 495,759 shares under
various consulting agreements, which shares have been valued
for financial accounting purposes at $156,900, in the
aggregate. For the remainder of the year to end December
31, 1998 ("Fiscal 98") and for the first month of 1999, the
Company expects to expense approximately $13,000 of such
$156,900, during each month. Also since December 31, 1997,
the Company has issued a total of 80,000 shares of common
stock to certain of its directors. These shares were valued
at $.80 per share; prior to these issuances, the last
closing bid price for the common stock was $.56 per share.
Wireless Internet Segment. The Company formed the Wireless
Internet Segment during Fiscal 97. During Fiscal 97, the
Wireless Internet Segment did not generate any revenues and
incurred a net loss of approximately $9,200 for the period.
During the first half of Fiscal 98, this segment began to
generate revenues. Should the Company acquire one or more
existing Internet Service Providers (ISP), the Company's
management expects that this segment could generate positive
cash flows from operations, during the remainder of Fiscal
98. On the other hand, should the Company build-out and
start-up one or mor Wireless Internet Systems, management
expects this segment not to achieve positive cash flow
during Fiscal 98. However, no prediction as to future cash
flow and profitability of the Wireless Internet Segment can
be made.
Community Television Segment. For Fiscal 96 and Fiscal 97,
the Company's only revenues were derived from the operations
of its community television station in Baton Rouge,
Louisiana, call sign: K13VE, Channel 13, which station has
been engaged in broadcast operations since January 1996.
For Fiscal 97, the Community Television Segment had revenues
of approximately $600 and a net loss of approximately
$2,700, compared to revenues of $3,337 and a net loss of
$1,217 for Fiscal 96. The Company expects that the lower
Community Television Segment revenues of Fiscal 97 will
continue for the foreseeable future, due to the Company's
decision to focus its resources on the development of its
Wireless Internet Segment. K13VE is, and since the start of
its broadcast operations has been, an affiliate of the Video
Catalog Channel, a video merchandise sales firm. The
Community Television Segment derives revenues from
commissions on sales made by the Video Catalog Channel
originating from zip codes within K13VE's principal
broadcast coverage area. The Community Television Segment
earns a commission equal to 10% of such sales (less returns)
as are attributable to its broadcast area. The Company
expects that K13VE will continue to operate in a similar
manner through the remainder of 1998. However, should K13VE
have an opportunity to become an affiliate of a national
broadcast network, such as FOX or UPN, it can be expected
that it would take advantage of such opportunity. To date,
no such opportunity has been presented to K13VE, and there
is no assurance that any such opportunity will arise.
The Company has received FCC authorization to increase the
power of its currently operating station to its maximum
legal limit. Should the Company be able to obtain necessary
funds, of which there is no assurance, the Company intends
to commit $20,000 to increase the power of such station,
which would permit the Company's broadcast signal to reach
approximately 120,000 additional households. It is expected
that the commissions earned by K13VE from Video Catalog
Channel sales originating from its broadcast area would
increase proportionately to its increased number of
households reached. There is no assurance that such will be
the case.
During Fiscal 97, the Company investigated the possibility
of establishing a network of independent community
television stations around the U.S. The Company believes
such a network to be a viable business, but will not pursue
the network's development until such time as the Wireless
Internet Segment has been more fully developed. In any
event, there is no assurance that the Company will be
successful in establishing such a television network.
Wireless Cable Segment. For Fiscal 96 and Fiscal 97, the
Wireless Cable Segment had no activity, other than to
acquire certain assets. As described above under "Item 1.
Description of Business", the Company has determined to
cease, for the foreseeable future, its Wireless Cable
activities.
Three Months Ended March 31, 1998, versus Three Months Ended
March 31, 1997. Revenues from the Company's operations for
the three months ended March 31, 1998 ("Interim 98"), were
$5,765 (unaudited) compared to revenues of $224 (unaudited)
for the three months ended March 31, 1997 ("Interim 97").
During the current period, substantially all of the
Company's revenues were generated by the Wireless Internet
Segment. The Company expects that, during the second
quarter of 1998, the Wireless Internet Segment will continue
to increase revenues from operations. However, there is no
assurance in this regard. The Company's net loss of
$214,329 (unaudited) is attributable in large part to the
issuance of 538,759 shares pursuant to various consulting
agreements, which shares were valued at a total of $127,701.
During Interim 98, approximately $161,174 of the Company's
pre-paid consulting expenses (including previously issued
shares for consulting services) was expensed. Similar
expenses will be incurred during each remaining quarter of
Fiscal 98.
Wireless Internet Segment. The Wireless Internet Segment
generated revenues of $5,500 (unaudited) during Interim 98.
This segment did not exist during Interim 97. The sale of a
single Wireless DataLink System accounted for this segment's
revenues. The Company will continue to market its
proprietary Wireless DataLink System, although the Company's
primary focus during the remainder of Fiscal 98 will be on
the exploitation of its proprietary Wireless Internet
System.
During Interim 98, the Company entered into a marketing
agreement with Intersurf, a Baton Rouge, Louisiana, dial-up
ISP, and has begun to place customers onto the Company's
Wireless Internet System, which marketing agreement will
remain in place until such time as the proposed acquisition
of Intersurf is consummated or abandoned. (See "Liquidity
and Capital Resources" below). Should the proposed
acquisition be abandoned, the Company expects that it will
continue to operate under its marketing agreement with
Intersurf. Also, the Company has entered into a joint
venture agreement to develop a Wireless Internet system in
Monroe, Louisiana. The Company expects that this joint
venture will begin to produce revenues during the third
quarter of Fiscal 98.
Community Television Segment. Revenues from the operations
of the Community Television Segment for Interim 98 were $265
(unaudited) compared to revenues of $224 (unaudited) for
Interim 97. The Company expects that this segment's
revenues will remain at Interim 98 levels for the remainder
of Fiscal 98.
Wireless Cable Segment. For Interim 97 and Interim 98, the
Wireless Cable Segment had no activity. As described above
under "Item 1. Description of Business", the Company has
determined to cease, for the foreseeable future, its
Wireless Cable activities. Future public disclosure
documents of the Company will reflect this cessation of the
Wireless Cable Segment.
Liquidity and Capital Resources
December 31, 1997. From its inception (November 1996)
through June 1998, the Company required little capital with
which to operate and had, throughout such period of time, a
significant working capital deficit. At December 31, 1997,
the Company's working capital deficit was $198,714 compared
to a working capital deficit of $46,077 at December 31,
1996. During Fiscal 97, the Company's President, David M.
Loflin, loaned to the Company a total of $66,282, which
funds were used primarily for operating expenses of the
Company. All of such funds were advanced on open account and
bear interest at 8% per annum and are payable on demand.
The Company does not currently possess funds necessary to
repay any of the funds to Mr. Loflin. Mr. Loflin has
advised the Company that he does not intend to make demand
for repayment of such loans for the foreseeable future.
Nevertheless, should Mr. Loflin make such demand for
repayment, the Company could be unable to satisfy such
demand, which would have a materially adverse affect on the
Company. In addition, none of the officers of the Company
will be paid a salary, and such persons have agreed to work
without pay, until such time as payment of such officers'
salaries would have no materially adverse effect on the
Company's financial condition. During Fiscal 97, none of the
officers of the Company was paid a salary, nor did any
officer's salary accrue. Until June 1998, the Company
suffered an extreme lack of liquidity, and attendant working
capital deficit. In June 1998, the Company obtained
$300,000 under a $600,000 private offering of its equity
securities, the balance of which offering is expected to
have been secured by the end of August 1998, although there
is no assurance in this regard. With the infusion of funds,
the Company has been able to bring its accounts current and
to proceed with the establishment of a Wireless Internet
System in Santa Fe, New Mexico. The Company does not expect
that it will be able to accumulate working capital through
operations; rather, it is expected that funds obtained in
private sales of its equity securities will provide working
capital to the Company for the remainder of Fiscal 98 and
the first half of 1999. It should be noted that there can
be no assurance given that the Company will be able to
secure necessary funds.
During Fiscal 96, the Company utilized shares of its Common
Stock to acquire all of its currently-held assets. During
Fiscal 97, the Company did not acquire significant
additional assets. However, during the remainder of Fiscal
98, the Company expects to acquire a relatively substantial
amount of equipment as its establishes Wireless Internet
Systems or acquires existing ISPs, as the case may be.
Proposed Acquisitions. In March 1998, the Company entered
into a letter of intent to acquire Intersurf, the second
largest dial-up ISP in Baton Rouge, Louisiana. The Company
anticipates that it will enter into a definitive acquisition
agreement in the near future, although no assurance can be
made that such will be the case. A portion of the proceeds
of its currently on-going private offering are designated
for use in the acquisition of Intersurf. Without the
proceeds of this private offering, it is expected that the
Company will not possess capital with which to acquire
Intersurf.
Recently, the Company reached an informal understanding with
the owner of an additional dial-up ISP (name undisclosed by
agreement) in Baton Rouge, Louisiana, with respect to the
Company's acquisition of such dial-up ISP. The extent of
the understanding is that the owner is amenable to selling
this dial-up ISP to the Company and the Company is amenable
to investigating a possible acquisition; no specific terms
of acquisition have been negotiated. The Company believes
that this dial-up ISP has approximately 450 customers and is
operating profitably, although the Company has not confirmed
its beliefs in this regard. The Company expects that it
will be able to acquire this dial-up ISP for approximately
$60,000 in cash. However, without the proceeds of its
currently on-going private offering, the Company will not
possess capital with which to acquire this dial-up ISP.
Wireless Internet Markets. The Company has completed the
development of its own proprietary Wireless Internet System.
It is the Company's intention to establish a Wireless
Internet System in as many U.S. cities as is possible in as
short a time as is possible. The Company believes that it
will require between $60,000 and $200,000 ($50,000 for
equipment and the balance for marketing and other general
expenses), depending upon the size of a particular city, to
commence Wireless ISP operations in a particular city.
These estimates are not based on a specific study or market
research conducted by the Company, but are based, instead,
on the business experience of the Company's management, as
well as general and informal market surveys conducted by the
Company and others. There is no assurance that such
estimates will be accurate. There is no assurance that the
Company will possess sufficient capital with which to
develop any market.
Establishment of New Wireless Internet Systems;
Acquisitions. The Company is pursuing opportunities in
Baton Rouge, Louisiana, and Santa Fe, New Mexico. The
currently on-going private offering, if completed, will
provide sufficient capital to permit at least one of these
transactions to be completed, and it is possible, depending
on the terms negotiated, that the Company could complete
both of proposed transactions.
Baton Rouge, Louisiana. During Interim 98, the Company
entered into a marketing agreement with Intersurf, a Baton
Rouge, Louisiana, dial-up ISP, and has begun to place
customers onto the Company's Wireless Internet System, which
marketing agreement will remain in place until such time as
the proposed acquisition of Intersurf can be consummated or
abandoned. Should the proposed acquisition be abandoned,
the Company expects that it will continue to operate under
its marketing agreement with Intersurf.
Santa Fe, New Mexico. With the first increment of funding
received under its currently on-going private offering, the
Company has begun to establish a Wireless ISP in Santa Fe,
New Mexico. While conducting such activities, the Company
has explored the potential acquisition of a Santa Fe-based
dial-up ISP, into which the Company would essentially "plug-
in" its Wireless Internet System. No determination has been
made by the Company as to which way it will proceed. Santa
Fe is a city featuring flat terrain and few large trees.
These topographical features will allow the Company to
minimize operating costs therein.
Wireless Internet Joint Venture.
Monroe, Louisiana. During the second quarter of 1998, the
Company entered into a joint venture agreement to implement
the Company's Wireless Internet System in Monroe, Louisiana.
The Company expects that this joint venture will begin to
produce revenues during the third quarter of Fiscal 98.
Community Television Stations. For the foreseeable future,
the Company will not seek sources of capital with which to
construct and operate its community television stations.
Instead, the Company will focus its resources on the
development of its Wireless Internet Segment. At such time
as the Company should allocate capital to the development of
the Community Television Segment, if ever, it will be
necessary to invest up to $100,000 per station.
Baton Rouge, Louisiana. K13VE Channel 13, the Company's
Baton Rouge, Louisiana, community television station, has
been broadcasting since January 1996, as an affiliate of the
Video Catalog Channel. The Company's current broadcast
signal reaches approximately 30,000 households. The Company
is in need of approximately $20,000 in order to boost the
power of such station to its maximum legal limit, which
would permit the Company's broadcast signal to reach
approximately 150,000 households. It is expected that the
commissions earned by K13VE from Video Catalog Channel sales
originating from its broadcast area will increase
proportionately to its increased number of households
reached. There is no assurance that such will be the case.
Other Stations. The Company owns the licenses to community
television stations located in Monroe/Rayville and
Natchitoches, Louisiana, and Bainbridge, Georgia, which
television stations are expected to be constructed in the
order listed, assuming adequate funding is available, of
which there is no assurance. The Company believes it will
require approximately $50,000 to construct each station so
that it will be able to operate as an affiliate of the Video
Catalog Channel. Should the Company desire any such station
to become a fully operational television station, an
additional $100,000 would be required to expand the
facility. Because the Company intends to have each of its
stations become an affiliate of the Video Catalog Channel
immediately after construction has been completed, the
Company does not expect to require additional funds for
marketing. There is no assurance that funding will be
available to the Company at such times as it attempts to
construct any one of its community television stations.
Cash Flows from Operating Activities. During Fiscal 97, the
Company's operations used $112,120 in cash compared to cash
used of $12,207 during the period from inception (December
31, 1995) to December 31, 1996. The use of cash in
operations is a result of the lack of revenues compared to
the operating expenses of the Company, and the increased use
of cash during Fiscal 97 reflects the Company's increased
activities compared to the prior period. The Company's
management does not expect that operations for all of Fiscal
98 will generate positive cash flow. However, management is
unable to predict the level of cash flow to be generated
during such period of time, due to the uncertainty of the
level and timing of funding with which to commence its
Wireless Internet operations.
Cash Flows from Investing Activities. During Fiscal 97,
investing activities of the Company used cash of $19,964
compared to $23,291 in the period from inception (December
28, 1995) to December 31, 1996. During Fiscal 96, cash used
by investing activities was for the acquisition of licenses
and rights to licenses, while cash used in investing
activities during Fiscal 97 was for the acquisition of
equipment and licenses and rights to licenses. Management
does not anticipate that investing activities will provide
any cash for Fiscal 98, taken as a whole.
Cash Flows from Financing Activities. For Fiscal 97,
financing activities provided $117,582 in cash, $66,282 of
which is attributable to loans from the Company's President
and $50,000 of which is attributable to the private sale of
shares of Company common stock. During the period from
inception (December 28, 1995) to December 31, 1996,
financing activities provided $50,000, through loans from
the Company's President. The Company expects that financing
activities (sales of equity securities) will provide
substantially all of the Company's cash during the remainder
of 1998 and the first half of 1999. However, no prediction
as to the level of cash to be provided by financing
activities can be made.
Non-Cash Investing and Financing Activities. During Fiscal
97, non-cash investing and financing activities included the
issuance of 404,000 shares of common stock issued in
consideration of consulting and legal services to be
performed, valued at $750,000. Non-cash investing and
financing activities for the year ended December 31, 1996,
include $179,611 of equipment given as paid-in capital by
the Company's majority shareholder, subscription receivable
of $2,160 for services rendered, and $16,737 in exchange for
common stock to majority shareholder. No prediction can be
made with respect to the Company's future non-cash investing
and financing activities.
March 31, 1998. The Company remained in a substantially
illiquid position throughout Interim 98. At March 31, 1998,
the Company's working capital deficit was $206,723
(unaudited), compared to a working capital deficit at
December 31, 1997, of $198,714 (audited). This continued
deterioration in the Company's working capital deficit is
attributable to the fact that no material revenues were
generated by Company operations, during Interim 98. During
Interim 98, one of the Company's officers, David M. Loflin,
advanced to the Company a total of $30,000, which funds were
used primarily for operating expenses of the Company and the
purchase of equipment. Such advances were made on open
account, bear interest at 8% per annum and are payable on
demand. As of the date of this Annual Report on Form 10-
KSB, the Company owed Mr. Loflin a total of $122,042, plus
accrued and unpaid interest of approximately $9,200. The
Company does not currently possess funds necessary to repay
such loans. Mr. Loflin has advised the Company that he does
not intend to make demand for repayment of the loans for the
foreseeable future. Nevertheless, should Mr. Loflin make
such demand for repayment, the Company could be unable to
satisfy such demand, which would have a materially adverse
effect on the Company. In addition, none of the officers of
the Company will be paid a salary, and such persons have
agreed to work without pay, until such time as payment of
such officers' salaries would have no adverse affect on the
Company's financial condition.
During Interim 98, the Company issued shares of its Common
Stock on four occasions:
A. 400,000 shares were issued to prepay legal
services, which shares were valued at $.10 per
share, or $40,000 in the aggregate.
B. 36,092 shares were issued in payment of financial
public relations and communications consulting
services, which shares were valued at $.953125 per
share, or $34,400, in the aggregate.
C. 22,667 shares were issued to prepay internet and
communications consulting services, which shares
were valued at $.375 per share, or $8,500, in the
aggregate.
D. 80,000 shares were issued to four of the directors of
the Company, in their capacities as directors, as
bonuses. These shares were valued at $.80 per
share, or $64,000, in the aggregate. On the date
of such issuances, the last closing bid price, as
reported by the OTCBB, for the common stock of the
Company was $.56 per share.
Subsequent to Interim 98, the Company issued 37,000 shares
in payment of financial public relations consulting
services, which shares were valued at $2.00 per share, or
$74,000, in the aggregate.
Current Private Offering. The Company, through a registered
broker, is currently conducting a private offering of units
of its securities, in a maximum amount of $600,000. Each
unit consists of two shares of Company common stock and one
warrant to purchase one share of Company common stock at an
exercise price of $2.00 per share. Each unit is offered at
a purchase price of $2.00. To date, $300,000 has been
received under this private offering. The Company expects
that the balance of the offering will be received by the end
of August 1998. However, there is no assurance that this
private offering will be completed successfully.
Cash Flows from Operating Activities. During Interim 98,
the Company's operations used cash of $5,645 (unaudited).
The use of cash in the current period is primarily due to
the Company's net loss of $214,329 (unaudited), which offset
a recognition of services performed for stock. The Company
intends to recognize approximately $150,000 for services
performed for stock each quarter during the remainder of
Fiscal 98. The Company's use of cash in operations during
Interim 97 is attributable primarily to the Company's net
loss for such interim period. Without the successful
completion of its currently on-going private offering, the
Company's management does not expect that operations for all
of Fiscal 98 will generate positive cash flow. However,
management is unable to predict the level of cash flow to be
generated during such period of time, due to the uncertainty
of the level and timing of funding, if any, with which to
commence its proposed Wireless Internet operations. Without
any such funding, it can be expected that the Company will
not be able to generate positive cash flow from operations.
Cash Flows from Investing Activities. Investing activities
of the Company during Interim 98 used no cash. In
comparison, investing activities of the Company during
Interim 97 used $9,258 (unaudited), including $1,758
(unaudited) for the purchase of equipment, $2,500
(unaudited) for an investment in a joint venture and $5,000
(unaudited) for the purchase of licenses and rights to
leases of licenses. The Company's management is unable to
predict whether investing activities will provide cash
during the remainder of Fiscal 98. This uncertainty is due
to uncertainty as to the success of the currently on-going
private offering of the Company or the securing of other
financing commitment. Absent any such funding, it is
expected that investing activities will continue to use the
Company's cash.
Cash Flows from Financing Activities. Financing activities
of the Company provided $5,760 (unaudited) in cash during
Interim 98, compared to Interim 97 when financing activities
provided $54,300 (unaudited) in cash. All of the cash during
the current period was the result of advances to the Company
by its President on open account. The sale of 20,000 shares
of Company Common Stock for a total of $50,000 in cash
provided substantially all of the balance of cash from
financing activities, during Interim 97. The Company's
currently on-going private offering of securities is the
primary means of securing capital presently available to the
Company. Should the Company have success in this regard,
cash provided by financing activities can be expected to be
substantially higher during the second quarter of Fiscal 98.
However, no prediction as to the level of such cash can be
made by management, nor can any assurance be made that any
cash will be provided by financing activities.
Non-Cash Investing Activities. During Interim 98, the
Company's non-cash investing and financing activities
included the following: (A) the issuance of 400,000 shares
of Common Stock in consideration of consulting and legal
services to be performed, which shares were valued at
$40,000, in the aggregate; (B) the issuance of 36,092 shares
of Common Stock in consideration of consulting services to
be performed, which shares were valued at$34,400, in the
aggregate; (C) the issuance of 22,667 shares of Common Stock
in consideration of internet and communications consulting
services to be performed, which shares were valued at
$8,500, in the aggregate and (D) the issuance of 80,000
shares of Common Stock for directors' bonuses, valued, for
financial reporting purposes, at $44,800.
Management's Plans Relating to Future Liquidity
With the recent receipt of $300,000 under its currently on-
going private offering, the Company has become somewhat
liquid. However, the Company's current operations will be
unable, on their own, to maintain the Company's liquidity.
Management believes it will be able to maintain its
liquidity by the receipt of the remaining $300,000 under its
currently on-going private offering of securities, of which
there is no assurance. Management remains of the belief
that the Company will be successful in obtaining needed
funding in the near term. This belief is based on
management's discussions with the selling agent for its
currently on-going private offering of securities.
Capital Expenditures
During the remainder of Fiscal 98, the Company expects to
apply substantially all of its available capital to (1) the
construction of one or more of its Wireless Internet markets
(an average of approximately $200,000 per system) and/or (2)
the acquisition of one or more existing ISPs into which the
Company can essentially "plug-in" its Wireless Internet
System. Although the Company expects that it will possess
sufficient capital with which to construct two Wireless
Internet systems or acquire two existing ISPs, there is no
assurance that such will be the case.
Item 7. Financial Statements
The financial statements required to be furnished under this
Item 7 are attached at the end of this Annual Report on Form
10-KSB. An index to the Company's financial statements is
also included below in Item 13(a).
Item 8. Changes In and Disagreements With Accountants
on Accounting and Financial Disclosure
No change in, or disagreement with, the Company's
independent auditor occurred during the fiscal year ended
December 31, 1997.
PART III
Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance with Section
16(a) of the Exchange Act
Directors and Executive Officers
The following table sets forth the names of the current
officers and directors of the Company.
Name Age Position(s)
- ---- -----------
David M. Loflin(1) 40 President and Director
Waddell D. Loflin(1) 48 Vice President, Secretary
and Director
Richard N. Gill 40 Director
Ross S. Bravata 39 Director
Michael Cohn 40 Director
- ---------------------
(1) David M. Loflin and Waddell D. Loflin are brothers.
The current officers and directors of the Company serve
until the next annual meeting or until their respective
successors are elected and qualified. All officers serve at
the discretion of the Board of Directors. Family
relationships between the Company's officers and directors
are noted above. Certain information regarding the
backgrounds of each of the officers and directors of the
Company is set forth below.
David M. Loflin, President and Director of the Company, has,
for more than the past five years, owned and operated Gulf
Atlantic Communications, Inc. ("Gulf-Atlantic"), a Baton
Rouge, Louisiana-based wireless technology firm specializing
in development of wireless cable systems and broadcast
television stations. Gulf Atlantic has designed,
constructed and operated two wireless cable systems: (1)
Baton Rouge, Louisiana, and (2) Selma, Alabama. Mr. Loflin
developed and currently operates one television station,
WTVK-TV11, Inc. (a Warner Brothers Network affiliate),
Channel 11 in Baton Rouge, Louisiana. For over ten years,
Mr. Loflin has served as a consultant for Wireless One, one
of the largest wireless communications firms in the United
States. Mr. Loflin is a member of the Wireless Cable
Association International and the Community Broadcasters
Association.
Waddell D. Loflin, Vice President, Secretary and Director of
the Company, has, for more than the past five years, served
as Vice President of Operations and Treasurer of Gulf
Atlantic Communications, Inc. and WTVK-TV11, Inc., both in
Baton Rouge, Louisiana. In addition, Mr. Loflin serves as
Production Manager and Film Director for WTVK-TV11, Inc.
Mr. Loflin served as General Manager for Baton Rouge
Television Company, Baton Rouge, Louisiana, a wireless cable
system, where he directed the development and launch of such
wireless cable system. Also, Mr. Loflin has devoted over
five years to demographic research relating to the wireless
cable industry. Mr. Loflin is a member of the Wireless
Cable Association International and the Community
Broadcasters Association. Mr. Loflin holds a B.A. degree in
Social Sciences from Oglethorpe University, Atlanta,
Georgia.
Richard N. Gill, Director of the Company, has, for more than
the past five years, served as Chairman of the Board,
President and General Manager of Campti-Pleasant Hill
Telephone Company, Inc., a Pleasant Hill, Louisiana-based
independent telecommunications company involved in the
cellular telephone service industry, the wireless cable
industry and the Internet service provider industry. Mr.
Gill currently serves on the Board of Directors of Artcrete,
Inc., and is on the Advisory Board of Peoples State Bank,
Pleasant Hill, Louisiana. Mr. Gill received a degree from
the University of Southwestern Louisiana, Lafayette,
Louisiana, where he currently serves as a member of the
Industry Telecommunication Advisory Committee for the
Electrical Engineering Department. Mr. Gill is a
past-Chairman and current member of the Louisiana Telephone
Association. Mr. Gill is also a member of the United States
Telephone Association and the National Telephone Cooperative
Association.
Ross S. Bravata, Director of the Company, has, since 1981,
worked for Novartis (formerly Ciba Corporation), in various
positions, and currently serves as a Senior Control Systems
Technician. In such capacity, Mr. Bravata supervises the
service and maintenance of electronic instrumentation.
Since 1988, Mr. Bravata has served as a director and
principal financial officer of CG Federal Credit Union,
Baton Rouge, Louisiana. Also, Mr. Bravata has, since its
inception in 1994, served as a director of Trinity's
Restaurant, Inc. in Baton Rouge, Louisiana.
Michael Cohn, Director of the Company, has, for 20 years,
owned and operated Arrow Pest Control, Inc., Baton Rouge,
Louisiana. In addition, Mr. Cohn owns Arrow Pest Control of
New Orleans, Wilson and Sons Exterminating in Mobile,
Alabama, and Premier Termite and Pest Control in Florida.
Executive Committee
The Board of Directors of the Company has created an
Executive Committee to facilitate Company management between
regularly scheduled and special meetings of the full Board
of Directors. David M. Loflin, Waddell D. Loflin and Ross
S. Bravata comprise the Executive Committee of the Board of
Directors. The Company's Bylaws (Section 5.1) provide that
the Executive Committee has the authority to exercise all
powers of the Board of Directors, except the power to
declare dividends, issue stock, recommend to shareholders
any matter requiring shareholder approval, change the
membership of any committee, fill the vacancies therein or
discharge any committee member. The Executive Committee has
taken action by unanimous written consent in lieu of a
meeting four times, since its creation.
Executive Compensation
None of the Company's officers received any cash, or other,
compensation during Fiscal 97. Further, no Company officer
will begin to receive cash compensation until such time as
the payment of such compensation would not adversely affect
the Company's operations and proposed development and
expansion. No prediction can be made as to when cash
compensation will begin to be paid to the Company's
officers. It is expected that Mr. David M. Loflin, the
Company's President, will be paid an annual salary of
$120,000, at such time as the Company possesses adequate
funds. Any other cash compensation paid to Company officers
will be determined by the Board of Directors.
Indemnification of Directors and Officers
The Company currently is seeking officer and director
liability insurance, though none has been obtained as of the
date of this Prospectus.
Article X of the Articles of Incorporation of the Company
provides that no director or officer of the Company shall be
personally liable to the Company or its shareholders for
damages for breach of fiduciary duty as a director officer;
provided, however, that such provision shall not eliminate
or limit the liability of a director or officer for (1) acts
or omissions which involve intentional misconduct, fraud or
a knowing violation of law or (2) the payment of dividends
in violation of law. Any repeal or modification of Article
X shall be prospective only and shall not adversely affect
any right or protection of a director or officer of the
Company existing at the time of such repeal or modification
for any breach covered by Article X which occurred prior to
any such repeal or modification. The effect of Article X of
the Company's Articles of Incorporation is that Company
directors and officers will experience no monetary loss for
damages arising out of actions taken (or not taken) in such
capacities, except for damages arising out of intentional
misconduct, fraud or a knowing violation of law, or the
payment of dividends in violation of law.
As permitted by Nevada law, the Company's Bylaws provide
that the Company will indemnify its directors and officers
against expense and liabilities they incur to defend, settle
or satisfy any civil, including any action alleging
negligence, or criminal action brought against them on
account of their being or having been Company directors or
officers unless, in any such action, they are judged to have
acted with gross negligence or willful misconduct. Insofar
as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to
directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been
informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable.
Compensation of Directors
In March 1998, four of the Company's directors, Waddell
Loflin, Ross S. Bravata, Richard N. Gill and Michael Cohn,
were issued 20,000 shares each of Company Common Stock as a
bonus for their services as directors, which shares were
valued at $.80 per share. On the date of such issuances,
the most recent closing bid price of the Common Stock of the
Company was $.56 per share. The directors do not receive a
fixed fee for their services as such.
Compliance with Section 16(a) of the Securities Exchange Act
The Company is not subject to the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934.
Item 10. Executive Compensation
The following table sets forth in summary form the
compensation received during each of the Company's last
three completed fiscal years by the Chief Executive Officer
of the Company and each executive officer of the Company who
received total salary and bonus exceeding $100,000 during
any of the last three fiscal years.
Summary Compensation Table
Annual Compensation
Long-
term
Comp-
pensa-
Other tion All
Annual Awards Other
Name Comp- of Comp-
and pensa- Stock pensa-
Principal Salary Bonus tion Options tion
Position Year $ $ $ # $
- --------- ---- ------ ----- ------ ------- ------
David. M.
Loflin 1997 $0 $0 $0 0 $0
President
(Chief
Principal
Officer
and Chief
Accounting
Officer)
Waddell D.
Loflin 1997 $0 $0 $0 0 $0
Vice
President
and
Secretary
In March 1998, four of the Company's directors, Waddell
Loflin, Ross S. Bravata, Richard N. Gill and Michael Cohn,
were issued 20,000 shares each of Company Common Stock as a
bonus for their services as directors, which shares were
valued at $.80 per share. On the date of such issuances,
the most recent closing bid price of the Common Stock of the
Company was $.56 per share.
Employment Contracts and Termination of Employment and
Change-in-Control Agreements
The Company does not have any written employment contracts
with respect to any of its executive officers. However, the
Company expects to enter into employment contracts with
certain of its key management personnel in the near future,
although the terms of employment have yet to be determined.
The Company has no compensatory plan or arrangement that
results or will result from the resignation, retirement or
any other termination of an executive officer's employment
with the Company and its subsidiaries or from a change in
control of the Company or a change in an executive officer's
responsibilities following a change-in-control.
Option/SAR Grants in Last Fiscal Year
The Company did not grant any options to any person during
the fiscal year ended December 31, 1997. The Company has
never granted any stock appreciation rights ("SARs"), nor
does it expect to grant any SARs in the foreseeable future.
Item 11. Security Ownership of Certain Beneficial
Owners and Management
The following table sets forth certain information as of
July 13, 1998, with respect to the beneficial ownership of
the Company's Common Stock (1) by the Company's officers and
directors, (2) by shareholders known to the Company to own
five percent or more of the Company's Common Stock and (3)
by all officers and directors of the Company, as a group.
On July 13, 1998, there were approximately 7,005,120 shares
of Common Stock issued and outstanding.
Name and Address Shares Owned Percent
of Beneficial Owner Beneficially Owned
- ------------------- ------------ -------
David M. Loflin 4,321,292 61.68%
8748 Quarters Lake Rd.
Baton Rouge, LA 70809
Waddell D. Loflin 324,249 4.62%
8748 Quarters Lake Rd.
Baton Rouge, LA 70809
Richard N. Gill 20,000 *
8748 Quarters Lake Rd.
Baton Rouge, LA 70809
Ross S. Bravata 62,887 *
8748 Quarters Lake Rd.
Baton Rouge, LA 70809
Michael Cohn 40,000 *
8748 Quarters Lake Rd.
Baton Rouge, LA 70809
All officers and
directors as a
group (5 persons) 4,768,428 68.07%
- ----------------------
Less than 1%.
(1) Based on 7,005,120 shares outstanding.
Item 12. Certain Relationships and Related Transactions
Founders
In November 1996, the Company's officers purchased a total
of 1,800,000 shares of Company Common Stock for cash at $.10
per share, a total consideration of $1,800. Specifically,
David M. Loflin, President and a director of the Company,
purchased 1,600,000 shares and Waddell D. Loflin, Vice
President, Secretary and a director of the Company,
purchased 200,000 shares of Company Common Stock.
Joint Venture
In January 1997, the Company entered into a joint venture
with an affiliated company, Web One, Inc., to operate as a
Wireless Internet Service Provider in Baton Rouge,
Louisiana. This joint venture has been abandoned with no
profit or loss being allocated to the Company.
Loans by Officers
Since its formation, the Company has obtained loans from
David M. Loflin loaned a total of $55,000, which loans are
evidenced by various promissory notes bearing interest at
eight percent per annum and are payable on demand. On other
occasions, Mr. Loflin advanced to the Company on open
account a total of $67,042, which advances are not evidenced
by promissory notes, but bear interest at eight percent per
annum and are payable on demand. Mr. Loflin has advised the
Company that he does not intend to demand payment of any
such loans and advances until such time as repayment would
not adversely affect the financial position of the Company.
Subscription Agreements
Effective December 20, 1996, the Company entered into a
Subscription Agreement with its President, David M. Loflin,
whereby the Company issued 1,578,512 shares of Common Stock
to Mr. Loflin in exchange for assignments of licenses and
leases of licenses of television channels and wireless cable
television channels and options to acquire such assets, as
follows: Monroe/Rayville, Louisiana (channel 26),
Natchitoches, Louisiana (channel 38), Port Angeles,
Washington (channels H1-2-3), Astoria, Oregon (channels
H2-3), Sand Point, Utah (channels B1-2-3; C1-2-3), The
Dalles, Oregon (channels B1-2-3; C1-2-3), and Fallon, Nevada
(channels E1-2-3-4; H3)
The assets acquired by the Company under such Subscription
Agreement were valued at $1,826,873, which value was
determined pursuant to a market report and appraisal as of
December 20, 1996 (the "Appraisal"), delivered to the
Company by Broadcast Services International, Inc.,
Sacramento, California. (See "Appraisal" hereunder for a
full discussion of the Appraisal). Mr. Loflin's total
acquisition costs of the assets underlying such Subscription
Agreement are unknown. Accordingly, the financial
statements of the Company attribute no value to such assets.
See the second paragraph under "Appraisal" hereinbelow for a
discussion of Mr. Loflin's acquisition costs of the assets
vis-a-vis the appraised value of such assets.
Effective December 20, 1996, the Company entered into a
Subscription Agreement with its Vice President, Waddell D.
Loflin, whereby the Company issued 104,249 shares of Common
Stock to Mr. Loflin in exchange for an assignment of the
license of television channel 36 in Bainbridge, Georgia.
The assets acquired by the Company under such Subscription
Agreement were valued at $120,652, which value was
determined pursuant to the Appraisal. Mr. Loflin's
acquisition costs of the assets underlying such Subscription
Agreement are unknown. Accordingly, the financial
statements of the Company attribute no value to such assets.
See the second paragraph under "Appraisal" hereinbelow for a
discussion of Mr. Loflin's acquisition costs of the assets
vis-a-vis the appraised value of such assets.
Reorganizations
Effective December 31, 1996, the Company entered into an
Agreement and Plan of Reorganization (the "WEI
Reorganization") among the Company, Winter Entertainment,
Inc., a Delaware corporation (WEI), and David M. Loflin, as
WEI's sole shareholder, pursuant to which transaction WEI
became a wholly-owned subsidiary of the Company. WEI owns
and operates K13VE Channel 13 in Baton Rouge, Louisiana.
Under the WEI Reorganization, Mr. Loflin received 227,336
shares of Company Common Stock in exchange for his shares of
WEI common stock. The shares of WEI common stock acquired
by the Company in the WEI Reorganization were valued at
$263,106, which value was determined pursuant to the
Appraisal. WEI's acquisition costs relating to the rights
to K13VE Channel 13 were $6,750. In addition, WEI has
capitalized a total of $10,587 in exploiting such channel
rights, including station construction costs. See the
second paragraph under "Appraisal" hereinbelow for a
discussion of WEI's acquisition costs relating to K13VE
Channel 13 vis-a-vis the appraised value thereof.
Effective December 31, 1996, the Company entered into an
Agreement and Plan of Reorganization (the "MCTV
Reorganization") among the Company, Missouri Cable TV Corp.,
a Louisiana corporation (MCTV), and the shareholders of
MCTV, pursuant to which transaction MCTV became a
wholly-owned subsidiary of the Company. MCTV owns licenses
and leases of licenses of wireless cable television channels
in Poplar Bluff, Missouri, which system is ready for
broadcast operations, and Lebanon, Missouri, which system
has yet to be developed. Under the MCTV Reorganization,
David M. Loflin, as a shareholder of MCTV, received
1,179,389 shares of Company Common Stock in exchange for his
shares of MCTV common stock. The shares of MCTV common
stock acquired by the Company from Mr. Loflin in the MCTV
Reorganization were valued at $1,364,553. Also under the
MCTV Reorganization, Ross S. Bravata, a director of the
Company, received, as a shareholder of MCTV, 42,887 shares
of Company Common Stock in exchange for his shares of MCTV
common stock. The shares of MCTV common stock acquired by
the Company from Mr. Bravata were valued at $49,620. In
addition, Michael Cohn, a director of the Company,
received, as a shareholder of MCTV, 53,608 shares of Company
Common Stock in exchange for his shares of MCTV common
stock. The shares of MCTV common stock acquired by the
Company from Mr. Cohn were valued at $62,024. The value of
the shares of MCTV common stock acquired by the Company from
Messrs. Loflin, Bravata and Cohn under the MCTV
Reorganization was determined pursuant to the Appraisal.
MCTV acquired substantially all of its assets from Mr. David
Loflin, whose acquisition costs of such assets were
$179,611. The other shareholders of MCTV received their
shares of MCTV common stock for nominal consideration.
Since acquiring its assets from Mr. Loflin, MCTV has
capitalized an additional $22,722 in exploiting such assets.
See the second paragraph under "Appraisal" hereinbelow for a
discussion of Mr. Loflin's acquisition costs relating to
MCTV's assets vis-a-vis the appraised value thereof.
Stock Purchase
In March 1997, one of the Company's directors, Michael Cohn,
purchased 20,000 shares of Company Common Stock for cash in
the amount of $50,000. At the time of such transaction, Mr.
Cohn was not a director of the Company.
Stock Bonus
In March 1998, four of the Company's directors, Waddell
Loflin, Ross S. Bravata, Richard N. Gill and Michael Cohn,
were issued 20,000 shares each of Company Common Stock as a
bonus for their services as directors, which shares were
valued at $.80 per share. On the date of such issuances,
the most recent closing bid price of the Common Stock of the
Company was $.56 per share.
Appraisal
Background. The Appraisal was delivered to the Company by
Broadcast Services International, Inc., a Sacramento,
California-based communications appraisal firm. The report
of BSI was based on 1990 Census Data. With respect to the
wireless cable markets, the engineering studies relied upon
by BSI indicate the number of households within the
broadcast radius using the 1200 MHZ frequency. The 1200 MHZ
frequency was assumed, due to BSI's experience that, given
all of the variables that may be present in a
market-by-market system build-out, the actual benchmark
performance is more truly reflected by using the higher
(1200 MHZ) frequency, such that the signal attenuation is
not over-stated. Valuation formulas for the wireless cable
markets of the Company were based on initial public
offerings within the wireless cable industry during the past
three years. The formulas used in evaluation of the
Company's broadcast channels are based on recent sales and
market evaluation techniques employed by the Community
Broadcasters Association, among others.
Use of Appraisal. At the Company's inception, the Company's
Board of Directors adopted a plan that provided for the
initial capitalization of the Company to be 6,000,000 shares
of Common Stock. 1,800,000 of such shares were sold as
founders' stock and the 360,000 shares which are the subject
of this Prospectus were sold to ECA. The balance of such
shares, 3,840,000 shares, were to be utilized to acquire the
Company's assets, which assets were acquired pursuant to the
Subscription Agreements with Mr. David Loflin and Mr.
Waddell Loflin, the WEI Reorganization and the MCTV
Reorganization. The Board of Directors utilized the
Appraisal as a means to allocate the 3,840,000 shares among
the assets underlying the referenced Subscription
Agreements, the WEI Reorganization and the MCTV
Reorganization, as follows:
Appraised
Value of Shares Historical
Assets of Common Cost
Transaction Acquired Stock Issued of Assets
- ----------- --------- ------------ ----------
Subscription
Agreement
with David
M. Loflin $1,826,873 1,578,512 Unknown
Subscription
Agreement
with Waddell
D. Loflin 120,652 104,249 Unknown
WEI Reorg-
anization 263,106 227,336 $17,337
MCTV Reorg-
anization 2,233,555 1,929,903 $202,333
Total $4,444,186 3,840,000 $219,670
The apparent $1.157 per share value was determined by
dividing the 3,840,000 shares of Company Common Stock
allocated by the Board of Directors for asset acquisition
into the $4,444,186 total appraised value of the assets
acquired. The Board of Directors utilized this apparent per
share value for corporate purposes, that is, the
determination of consideration received for the issuance of
shares of Common Stock. However, the independent appraiser
did not value the shares of Company Common Stock issued in
consideration of the assets acquired. Rather, the
independent appraiser valued only the assets acquired by the
Company in the various transactions. The $1.157 per share
figure was utilized by the Board of Directors primarily as a
means of allocating the 3,840,000 shares among the four
asset acquisition transactions consummated in completing its
plan for the initial capitalization of the Company. Thus,
the $1.157 figure, while utilized in two ways by the Board
of Directors, was determined arbitrarily by the Board of
Directors and is not based on any accounting or other
financial criteria.
The appraised value of the assets described above bears no
relationship to the costs of such assets to the affiliates
from whom they were acquired. Prospective purchasers of
Units should note that it is possible that the Company would
be unable to realize any of such asset's appraised value in
a sale transaction.
Item 13. Exhibits and Reports on Form 8-K
(a)(1) Financial Statements
Index to Financial Statements of the Company
Independent Auditors Report
Consolidated Balance Sheets as of December 31, 1997
and 1996
Consolidated Statements of Operations for the Years
Ended December 31, 1997 and 1996
Consolidated Statements of Shareholders' Equity for the
Years Ended December 31, 1997 and 1996
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1997 and 1996
Notes to Consolidated Financial Statements
(a)(2) Exhibits
Exhibit No. Description
- ----------- -----------
10.1 Selling Agreement, dated as of April 28,
1998, between Registrant and Centex
Securities, Inc.
10.2 Registration Rights Letter Agreement, dated
as of June 19, 1998, between Registrant and
Dennis A. Faker.
10.3 Registration Rights Letter Agreement, dated
as of June 19, 1998, between Registrant and
Jeanne M. Rowzee.
10.4 Registration Rights Letter Agreement, dated
as of June 19, 1998, between Registrant and
William E. Miofsky.
10.5 Registration Rights Letter Agreement, dated
as of June 19, 1998, between Registrant and
Rogers Family Trust.
10.6 Registration Rights Letter Agreement, dated
as of June 19, 1998, between Registrant and
Barbara V. Schiller.
10.7 Registration Rights Letter Agreement, dated
as of June 19, 1998, between Registrant and
Clarence Yim.
10.8 Registration Rights Letter Agreement, dated
as of June 19, 1998, between Registrant and
R. Logan Kock.
10.9 Warrant Agreement, dated as of May 22, 1998,
between Registrant and Securities Transfer
Corporation, relating to the warrants issued
in the private offering.
10.10 Finder's Fee Letter Agreement, dated as of
March 27, 1998, between Registrant and H+N
Partners.
10.11 Investment Banking Agreement, dated as of
June 15, 1998, between Registrant and H+N
Partners.
10.12 Financial Public Relations Agreement, dated
as of June 15, 1998, between Registrant and
H+N Partners.
11 Statement Regarding Computation of Per Share
Earnings.
(b) Reports on Form 8-K
During the quarter ended December 31, 1997, the Company
filed a Current Report on Form 8-K, as follows: Date of
Event: 10/10/97, wherein the Company reported a change in
business development priority. Such Current Report on Form
8-K is incorporated herein by this reference.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the Registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
INTERNET MEDIA CORPORATION
By: /s/ David M. Loflin
David M. Loflin
President
In accordance with the Exchange Act, this report has ben
signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ David M. Loflin Date: July 26, 1998
David M. Loflin
President (Principal
Executive Officer and
Principal Accounting
Officer) and Director
/s/ Waddell D. Loflin Date: July 26, 1998
Waddell D. Loflin
Vice President and
Director
/s/ Ross S. Bravata Date: July 27, 1998
Ross S. Bravata
Director
Date: July , 1998
Richard N. Gill
Director
Date: July , 1998
Michael Cohn
Director
Supplemental Information to be Furnished With Reports Filed
Pursuant to Section 15(d) of the Exchange Act by Non-
reporting Issuers.
As of the date of this Annual Report on Form 10-KSB, no
annual report or proxy material has been sent to security
holders of the Company. It is anticipated that an annual
report and proxy material will be furnished to security
holders subsequent to the filing of this Annual Report on
Form 10-KSB.
<PAGE>
Index to Financial Statements of the Company
Independent Auditors Report
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Operations for the Years
Ended December 31, 1997 and 1996
Consolidated Statements of Shareholders' Equity for
the Years Ended December 31, 1997 and 1996
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1997 and 1996
Notes to Consolidated Financial Statements
<PAGE>
To the Board of Directors and Stockholders
Internet Media Corporation (formerly Media Entertainment,
Inc.)
We have audited the accompanying consolidated balance sheets
of Internet Media Corporation (formerly Media Entertainment
Inc.) and subsidiaries, (a development stage company) as of
December 31, 1997 and 1996, and the related consolidated
statements of operations, changes in stockholders' equity
and cash flows for the year ended December 31, 1997, and the
period from inception (December 28, 1995) to December 31,
1996. These consolidated financial statements are the
responsibility of the company's management. Our
responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free
of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the consolidated financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the consolidated financial position of Internet Media
Corporation (formerly Media Entertainment, Inc.) and
subsidiaries as of December 31, 1997 and 1996, and the
consolidated results of their operations and their cash
flows for each of the periods then ended in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 1 to the financial
statements, the Company is in its development stage and has
insignificant operating revenue. In addition, the Company
has limited capital resources and a loss from operations
since inception, all of which raise substantial doubt about
its ability to continue as a going concern. Management's
plans in regard to these matters are also discussed in Note
1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
WEAVER AND TIDWELL, L.L.P.
Fort Worth, Texas
July 13, 1998
<PAGE>
INTERNET MEDIA CORPORATION
(formerly Media Entertainment, Inc.) and Subsidiaries
(a development stage company)
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1997
1996 1997
ASSETS
CURRENT ASSETS
Cash $ 14,502 $ 0
Accounts receivable 310 224
Total current
assets 14,812 224
PROPERTY AND EQUIPMENT,
net of accumulated
depreciation of
$706 and $1,412,
respectively 196,214 210,472
INTANGIBLES
Organization costs,
net of accumulated
amortization of $19
and $134,
respectively 550 435
Licenses and rights to
leases of licenses,
net of accumulated
amortization of $725
and $2,625,
respectively 22,024 25,125
22,574 25,560
TOTAL ASSETS $233,600 $236,256
The Notes to Consolidated Financial Statements
are an integral part of these statements.
1996 1997
LIABILITIES AND
STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Bank overdraft $ 0 $ 116
Notes payable to
stockholder 50,000 116,282
Accounts payable 0 65,105
Accounts payable
- affiliate 10,069 10,069
Accrued interest
- stockholder 820 6,835
Accrued expenses 0 531
Total current
liabilities 60,889 198,938
STOCKHOLDERS' EQUITY
Common stock,
$.0001 par value,
100,000,000 shares
authorized,6,000,000
and 6,424,000 shares
issued and out-
standing,1996 and
1997, respectively 600 642
Additional paid-in
capital 198,508 998,466
Deficit accumulated
during the
development stage ( 24,237) (649,041)
Subscriptions
receivable ( 2,160) ( 860)
Deferred consulting 0 (311,889)
172,711 37,318
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $233,600 $236,256
The Notes to Consolidated Financial Statements
are an integral part of these statements.
INTERNET MEDIA CORPORATION
(formerly Media Entertainment, Inc.) and Subsidiaries
(a development stage company)
Consolidated Statements of Operations
Cumulative
Period From Since
Inception Inception
December 28, (December 28,
1995) to Year Ended 1995) to
December 31, December 31, December 31,
1996 1997 1997
Revenue $ 3,337 $ 596 $ 3,933
Expenses:
Depreciation
and amort-
ization 1,450 2,721 4,171
Professional
fees 15,238 530,669 545,907
Rent 1,820 11,877 13,697
Salary 4,691 44,733 49,424
Other 4,375 35,402 39,777
27,574 625,402 652,976
Net loss ($24,237) ($624,804) ($649,041)
Net loss
per share ($0.04) ($0.10) ($0.46)
Weighted
average
Number of
shares
outstand-
ing 631,622 6,193,678 1,402,697
The Notes to Consolidated Financial Statements
are an integral part of these statements.
INTERNET MEDIA CORPORATION
(formerly Media Entertainment, Inc.) and Subsidiaries
(a development stage company)
Consolidated Statements of Changes
in Stockholders' Equity
Period from Inception (December 28, 1995)
to December 31, 1996 and
Year Ended December 31, 1997
Deficit
Accumu-
lated Sub-
During scrip
Addi- the tions
tional Develop- Rec- Deferred
Common Stock Paid-in ment eiv- Consult-
Shares Amount Capital Stage able ing
Balance
at in-
cep-
tion,
Decem-
ber 28,
1995 0 $ 0 $ 0 $ 0 $ 0 $ 0
Issuance
of com-
mon
stock
for
as-
sets 227,336 23 17,314 0 0 0
Net
income
(loss) 0 0 0 0 0 0
Balance,
Decem-
ber 31,
1995 227,336 23 17,314 0 0 0
Issuance
of com-
mon
stock
for
as-
sets 1,929,903 193 179,418 0 0 0
Issuance
of com-
mon
stock
for
sub-
scrip-
tion
re-
ceiv-
able 2,160,000 216 1,944 0 (2,160) 0
Issuance
of com-
mon
stock
for
as-
sign-
ment
of
licen-
ses
and
leas-
es 1,682,761 168 ( 168) 0 0 0
Net
loss 0 0 0 (24,237) 0 0
Balance,
De-
cem-
ber
31,
1996 6,000,000 600 198,508 (24,237) (2,160) 0
Issuance
of com-
mon
stock
for
future
serv-
ices 404,000 40 749,960 0 0 (50,000)
Payment
on sub-
scrip-
tion
receiv-
able 0 0 0 0 1,300 0
Issuance
of com-
mon
stock
for
cash 20,000 2 49,998 0 0 0
Recog-
nition
of
ser-
vices
per-
formed
for
stock 0 0 0 0 0 438,111
Net
loss 0 0 0 (624,804) 0 0
Balance,
Decem-
ber
31,
1997 6,424,000 642 998,466 (649,041) (860)(311,889)
The Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE>
INTERNET MEDIA CORPORATION
(formerly Media Entertainment, Inc.) and Subsidiaries
(a development stage company)
Consolidated Statements of Cash Flows
Cumulative
Since
Period From Inception
Inception Year (December
December 28, Ended 28, 1995)
1995) to Decem- to Decem-
December 31, ber 31, ber 31
1996 1997 1997
CASH FLOWS FROM
OPERATING
ACTIVITIES
Net loss ($ 24,237) ($624,804) ($649,041)
Adjustments
to recon-
cile net
loss to
net cash
used in
operating
activities
Depreciation 706 706 1,412
Amortization 745 2,014 2,759
Recognition
of services
performed
for stock 0 438,111 438,111
Changes in:
Bank
overdraft 116 116
Accounts
receivable (310) 86 (224)
Accounts
payable
and
accruals 10,889 71,651 82,540
Net cash
used in
operat-
ing
activ-
ities (12,207) (112,120) (124,327)
CASH FLOWS FROM
INVESTING
ACTIVITIES
Purchase of
equipment (6,722) (14,964) (21,686)
Payment of
organiza-
tion costs (569) 0 (569)
Purchase of
licenses
and rights
to leases
of licenses (16,000) (5,000) (21,000)
Net
cash
used
in
invest-
ing
activ-
ities (23,291) (19,964) (43,255)
CASH FLOWS FROM
FINANCING
ACTIVITIES
Increase in
note payable
to stock-
holder 50,000 66,282 116,282
Sale of
common
stock 0 50,000 50,000
Payment of
subscrip-
tions
receivable 0 1,300 1,300
Net
cash
provi-
ded
by
financ-
ing
activ-
ities 50,000 117,582 167,582
Net
increase
(decrease)
in cash 14,502 (14,502) 0
Cash, beginning
of period 0 14,502 0
Cash, end
of period $14,502 $ 0 $ 0
Noncash investing and financing activities for the year
ended December 31, 1997 include 404,000 shares issued for
consulting and legal services to be performed valued at
$750,000.
Noncash investing and financing activities for the year
ended December 31, 1996 include $179,611 of equipment given
as paid-in capital by majority shareholder, subscriptions
receivable of $2,160 for services rendered, and $16,737 in
exchange for common stock to majority shareholder.
The Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE>
INTERNET MEDIA CORPORATION
(formerly Media Entertainment, Inc.) and Subsidiaries
(a development stage company)
Notes to Consolidated Financial Statements
NOTE 1. NATURE OF BUSINESS, ORGANIZATION AND
BASIS OF PRESENTATION
Internet Media Corporation (IMC) was incorporated as Media
Entertainment, Inc. in the State of Nevada on November 1,
1996, to operate as a holding company in the wireless cable
television and community (low power) television industries,
as well as other segments of the communications industry.
Effective December 31, 1996, IMC acquired all of the
outstanding common stock of Winter Entertainment, Inc., a
Delaware corporation incorporated on December 28, 1995
(WEI), and Missouri Cable TV Corp., a Louisiana corporation
incorporated on October 9, 1996 (MCTV). WEI operates a
community television station in Baton Rouge, Louisiana; MCTV
owns wireless cable television channels in Poplar Bluff,
Missouri, which system has been constructed and is ready for
operation, and Lebanon, Missouri. The acquisition of WEI
and MCTV by Media was accounted for as a reorganization of
companies under common control. The assets and liabilities
acquired were recorded at historical cost in a manner
similar to a pooling of interests. Therefore, these
financial statements include the operations of IMC and its
predecessors from inception of WEI on December 28, 1995.
WEI had no operations or cash flows for the period ended
December 31, 1995. Therefore, statements of operations and
cash flows for the three days ended December 31, 1995 are
not presented.
The financial statements have been prepared on a going
concern basis, which contemplates realization of assets and
liquidation of liabilities in the ordinary course of
business. Since the Company is in the development stage, it
has limited capital resources, insignificant revenue and a
loss from operations since its inception. The
appropriateness of using the going concern basis is
dependent upon the Company's ability to obtain additional
financing or equity capital and, ultimately, to achieve
profitable operations. The uncertainty of these conditions
raises substantial doubt about its ability to continue as a
going concern. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
Management plans to raise capital by obtaining financing
and, eventually, through public offerings. Management
intends to use the proceeds from any borrowings to acquire
and develop markets to implement its Wireless Internet
Access System and sell its service. The Company believes
that these actions will enable the Company to carry out its
business plan and ultimately to achieve profitable
operations.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include
all the accounts of IMC and its wholly owned subsidiaries,
WEI and MCTV. All intercompany transactions and balances
have been eliminated in consolidation. The consolidated
group is referred to as the "Company".
Broadcast Equipment
Equipment is recorded at cost. Depreciation is calculated
using a straight-line method over the estimated useful lives
of the assets, ranging from 3 to 15 years.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES - continued
Cash Equivalents
The Company considers all highly liquid investments with
original maturities of ninety days or less from the date of
purchase to be cash equivalents.
Revenue
Revenue is recognized in the period services are provided.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
New Accounting Pronouncements
The Financial Accounting Standards Board (FASB) has issued
Financial Accounting Standards (SFAS) No. 130 "Reporting
Comprehensive Income". This statement requires an
enterprise to display total comprehensive income (total
nonowner changes in equity) in a full set of financial
statements. Currently the Company has no items to be
reported as "other comprehensive income".
In addition, FASB has issued SFAS No. 131 "Disclosures about
Segments of an Enterprise and Related Information". This
statement requires a "management approach" as opposed to an
industry approach in defining operations to be shown as
separate segments.
The Company must initially apply SFAS No. 130 and No. 131
for its fiscal year beginning January 1, 1998. The Company
anticipates no significant changes in financial statement
presentation as a result of implementing these new
accounting standards.
Loss Per Common Share
The loss per common share has been computed by dividing the
net loss by the weighted average number of shares of common
stock outstanding throughout the year. Calculation of loss
per common share - assuming dilution is not presented
because the effects of shares issuable upon exercise of
stock options and contingently issuable shares would be
antidilutive.
The outstanding stock options described in Note 10 could
potentially have a dilutive effect on earnings per share
should the Company generate income from operations or net
income in the future.
Amortization
Organization costs are being amortized on a straight-line
basis over 60 months. Licenses and rights to leases of
licenses will be amortized on a straight-line basis over the
license and lease rights periods expected to be 5 to 15
years.
NOTE 3. ACQUISITIONS
Effective December 31, 1996, the Company acquired WEI and
MCTV by issuing 2,157,239 shares of common stock in exchange
for all the common stock of each company. The majority
stockholder of the Company was also the sole stockholder of
WEI and the majority stockholder of MCTV. Therefore, the
acquisitions have been accounted for at historical cost in a
manner similar to a pooling of interests. The consolidated
statement of operations includes the Company and its
predecessors WEI and MCTV from inception of WEI.
NOTE 4. WIRELESS CABLE ASSETS
Property and equipment includes wireless cable station
equipment which is operational but has not been put into
use. The equipment is recorded at cost of approximately
$201,00 and is not being depreciated. In addition, the
Company owns licenses in the wireless cable markets which
operate on the same frequencies and will be used in the
wireless internet market.
Management's strategy is to pursue the wireless internet
service market. Management plans on using the existing
wireless cable equipment to provide interactive wireless
internet service and to use its license agreements to
develop wireless internet markets. The Company's ability to
provide two-way interactive internet service on its current
channel license agreements depends on pending Federal
Communication Commission approval of two-way communication
on the related frequencies.
NOTE 5. LICENSES AND RIGHTS TO LEASES OF LICENSES
The Company owns licenses or rights to leases of licenses in
the following wireless cable and community television
markets:
Wireless Cable Market Expiration Date
Poplar Bluff, Missouri October 16, 2006
Lebanon, Missouri October 16, 2006
Port Angeles, Washington December 21, 2003
Astoria, Oregon December 21, 2003
Sand Point, Idaho August 09, 2006
The Dalles, Oregon August 09, 2006
Fallon, Nevada August 09, 2006
Community Television Market
Baton Rouge, Louisiana July 01, 2007
Monroe/Rayville, Louisiana July 01, 2007
Natchitoches, Louisiana July 01, 2007
Bainbridge, Georgia July 01, 2007
Application for renewal of licenses must be filed within a
certain period prior to expiration.
NOTE 6. NOTES PAYABLE STOCKHOLDER
1996 1997
Notes payable to majority
stockholder, interest accrues
at 8%, due on demand and
unsecured $ 50,000 $116,282
NOTE 7. FINANCIAL INSTRUMENTS
Financial instruments consist principally of cash, accounts
payable, and notes payable. Recorded values approximate
fair values due to the short maturities of these
instruments.
NOTE 8. INCOME TAXES
Deferred income tax assets and liabilities are computed for
differences between financial statement and tax basis of
assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws
and rates applicable to the period in which the differences
are expected to affect taxable income. Valuation allowances
are established when necessary to reduce deferred tax assets
to the amount expected to be realized. Income tax expense
is the tax payable or refundable for the period plus or
minus the change during the period in deferred tax assets
and liabilities. At December 31, 1996 and 1997, there was
no current or deferred tax expense.
Deferred tax asset and liability balances are as follows:
1996 1997
Deferred tax asset $ 8,241 $220,674
Deferred tax liability 0 0
Net deferred tax asset 8,241 220,674
Valuation allowance (8,241) (220,674)
$ 0 $ 0
The net change in the valuation allowance for the periods
ended December 31, 1996 and 1997 were $8,241 and $212,433,
respectively. The deferred tax asset results from net
operating loss carryovers.
The Company has a net operating loss carryover of
approximately $656,000 available to offset future income for
income tax reporting purposes which will ultimately expire
in 2012 if not previously utilized.
NOTE 9. INVESTMENT IN JOINT VENTURE
During the year ended December 31, 1997, the Company entered
into an agreement with Web One, Inc. forming Web One
Wireless I.S.P. - Baton Rouge, J.V. (the "Joint Venture").
The Joint Venture was created to operate as a Wireless
Internet Service Provider in Baton Rouge, Louisiana. The
agreement gives the Company the option to buy all the
outstanding capital stock of Web One, Inc. at any time on or
before August 1, 1998. The option price is to be based on
an appraisal of Web One, Inc. Subsequent to year end, the
Joint Venture was abandoned, and as a result the initial
investment of $2,500 has been impaired and provided for in
the financial statements.
NOTE 10. STOCK OPTIONS
The Company entered into a stock options agreement effective
October 14, 1997. Pursuant to the agreement, the Company
issued 300,000 options to purchase common stock in
consideration for consulting services to be performed for
one year from the date of the agreement. Options may be
exercised from the date of the Agreement through the
expiration dates as follows: 100,000 shares may be purchased
at a price of $3.00 per share and expire on January 31,
1998, 100,000 shares may be purchased at a price of $4.00
per share and expire on June 30, 1998 and 100,000 shares may
be purchased at a price of $5.00 per share and expire on
September 30, 1998.
Based on the market value of the underlying stock,
management has determined that the stock options have no
fair value. Therefore, no compensation expense has been
recognized for options granted for the year ended December
31, 1997. In addition, no options have been or are expected
to be exercised.
NOTE 11. RELATED PARTY
The Company has issued stock pursuant to various consulting
agreements. Deferred consulting costs, which are valued on
the stock price on the date of the agreements, are recorded
as a reduction of shareholder's equity and will be amortized
over the life of the agreements.
NOTE 12. SUBSEQUENT EVENTS
In March 1998, four directors of the Company were issued
20,000 shares each of the Company common stock as a bonus
for their services as directors. Compensation expense of
approximately $45,000 will be recorded based on the fair
value of the common stock on the date of issue.
The Company is currently negotiating to acquire two internet
service providers in Baton Rouge, LA. However, no specific
agreements have been reached with either party.
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
10.1 Selling Agreement, dated as of April 28,
1998, between Registrant and Centex
Securities, Inc.
10.2 Registration Rights Letter Agreement, dated
as of June 19, 1998, between Registrant and
Dennis A. Faker.
10.3 Registration Rights Letter Agreement, dated
as of June 19, 1998, between Registrant and
Jeanne M. Rowzee.
10.4 Registration Rights Letter Agreement, dated
as of June 19, 1998, between Registrant and
William E. Miofsky.
10.5 Registration Rights Letter Agreement, dated
as of June 19, 1998, between Registrant and
Rogers Family Trust.
10.6 Registration Rights Letter Agreement, dated
as of June 19, 1998, between Registrant and
Barbara V. Schiller.
10.7 Registration Rights Letter Agreement, dated
as of June 19, 1998, between Registrant and
Clarence Yim.
10.8 Registration Rights Letter Agreement, dated
as of June 19, 1998, between Registrant and
R. Logan Kock.
10.9 Warrant Agreement, dated as of May 22, 1998,
between Registrant and Securities Transfer
Corporation, relating to the warrants issued
in the private offering.
10.10 Finder's Fee Letter Agreement, dated as of
March 27, 1998, between Registrant and H+N
Partners.
10.11 Investment Banking Agreement, dated as of
June 15, 1998, between Registrant and H+N
Partners.
10.12 Financial Public Relations Agreement, dated
as of June 15, 1998, between Registrant and
H+N Partners.
11 Statement Regarding Computation of Per Share
Earnings.
<PAGE>
- ---------------------------
EXHIBIT 10.1
- ---------------------------
April 28, 1998
Centex Securities, Inc.
1020 Prospect Street
Suite 200
La Jolla, California 92037
Selling Agreement
Gentlemen:
Media Entertainment, Inc., a Nevada corporation (the "Compa-
ny"), hereby confirms its agreement with you concerning the
offer and sale, on a private basis (the "Offering"),
pursuant to section 4(6) of the Securities Act of 1933, as amended
(the "Act"), of 300,000 units (the "Units") of the Company's
securities, at an offering price of $2.00 per Unit, each
Unit to consist of two shares of the Company's $.0001 par
value common stock (the "Common Stock") and one common stock
purchase warrant (the "Warrants") to purchase one additional
share of Common Stock, at an exercise price of $2.00 per
share. The Warrants may be exercised at any time after
their issuance and for a period of two years after such date
of issuance. Upon thirty-days' written notice, the Warrants
shall be redeemable by the Company for $.01 per Warrant, if
the price of the Common Stock is at least $4.00 per share
for 5 trading days preceding the redemption date. Further,
the shares of Common Stock underlying the Warrants shall
possess certain registration rights.
The Offering of Units is further described in the Private
Placement Memorandum (the "PPM") to be prepared by the
Company. The offering shall extend for a period of 30 days
from the date of delivery of the PPM, evidenced by the date
on the cover sheet of the PPM. The offering period may be
extended for an additional period of 10 days by the Company,
in its sole discretion.
1. The Underwriter. The Company hereby appoints
Centex Securities, Inc. (the "Underwriter") as its exclusive
selling agent in connection with the sale by the Company of
the Units. The Underwriter shall act as the exclusive
selling agent for the Offering on a "Best-Efforts, All-or-
None" basis. Each such Unit shall be paid for in cash or by
certified funds and deposited with the Underwriter pending
sale of all Units offered. If all of the Units offered are
sold, the Company shall pay the Underwriter as a selling
commission and expense allowance, at the closing (the
"Closing") herein provided for, an amount equal to 10% of
the cash disbursed at the Closing. In addition, the Company
shall deliver to the Underwriter 60,000 of the Company's
common stock purchase warrants (the "Underwriter's
Warrants") to purchase one share each of Common Stock
exercisable for a period of four years from the date of
issue, at an exercise price of $1.25 per share. The
Underwriter's Warrants shall be governed by a Warrant
Agreement in the form attached hereto as Exhibit "A", and
the certificate(s) evidencing the Underwriter's Warrants
shall be in the form of Exhibit "B" attached hereto. The
shares of Common Stock underlying the Underwriter's Warrant
shall have certain registration rights, as described in the
Registration Rights Letter Agreement attached hereto as
Exhibit "C".
Subscribers for the Units are to make remittances for
payment for the Units payable to "Media Entertainment,
Inc.".
2. The Offering - Closing Time. (a) The
Underwriter shall utilize its best efforts to obtain
subscription agreements for the purchase of the Units only
from persons who are "accredited investors", as that term is
defined in Regulation D of the Rules and Regulations of the
Securities and Exchange Commission (the "Commission"). Such
activities shall be conducted in a non-public manner so as
to qualify for the exemption from registration under the Act
provided in section 4(6) thereof and any other available exemption.
(b) Each purchaser of a Unit or Units shall be
furnished with a copy of the offering materials (including
the PPM and exhibits and Subscription Agreement), all in
form and substance satisfactory to counsel to the
Underwriter and prepared by the Company. The PPM shall be
dated as of the date of delivery by the Company to the
Underwriter of the PPM and accompanying materials, and the
Offering shall expire on the date that is 30 days from such
date of delivery, unless extended in accordance with the
PPM. The Offering may be earlier terminated by the
Underwriter if it shall sooner notify the Company that it
has obtained acceptable subscription agreements for the
purchase of all of the Units.
(c) Each subscriber shall be required to execute and
deliver to the Underwriter a copy of the Subscription
Agreement, together with his check in the appropriate amount
for the Units subscribed. All such checks shall be held by
the Underwriter pending sale of all of the Units. In the
event that acceptable subscriptions for all of the Units
offered are not obtained prior to the expiration of the
Offering, all such amounts shall be returned by the
Underwriter to the investors.
(d) The Closing shall be held at the offices of the
Company, 8748 Quarters Lake Road, Baton Rouge, Louisiana
70809, or at such other place as shall be agreed upon by the
Underwriter and the Company, at 11:00 a.m., Baton Rouge,
Louisiana, time, on the day following the expiration of the
Offering as provided in section 2(b) hereof or such earlier time as
may be acceptable to the parties. Payment of funds received
from subscribers for the Units shall be made to the Company
in cash or by a certified or cashier's check payable to the
Company.
3. Representations and Warranties of the Company.
In order to induce the Underwriter to enter into this
Agreement, the Company represents and warrants as follows:
(a) The Company will prepare a PPM meeting the
requirements of the Act.
(b) The PPM and all other documents utilized in the
Offering, prepared by the Company, will conform with all of
the requirements of the Act in all material respects.
Neither the PPM nor the other material to be used in the
Offering will contain any untrue statements of material
facts nor any omissions of material facts required to be
stated therein or that are necessary to make the statements
therein not misleading, except that this warranty does not
apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to
the Company by and with respect to you, or any dealer
through you, expressly for use in the PPM or other document
or documents used in the Offering.
(c) The outstanding capital stock of the Company has
been duly and validly authorized, issued and is fully paid
and non-assessable. The Units, including the shares of
Common Stock included therein, when issued and delivered
against payment as provided in this Agreement, will be
validly issued, fully paid and non-assessable. The shares
of Common Stock underlying the Warrants included in the
Units will be, upon issuance as provided in the Warrant
Agreement relating to the Warrants, validly issued, fully
paid and non-assessable. The Units, including the shares of
Common Stock included therein and the shares of Common Stock
underlying the Warrants, upon issuance, will not be subject
to pre-emptive rights of any shareholders of the Company.
The Units will conform to all statements in the PPM.
(d) The Company has been legally incorporated and is
now, and always during the period of the Offering will be, a
validly existing corporation under the laws of the State of
Nevada lawfully qualified to conduct the business for which
it was organized and which it proposes to conduct. The
Company will always, during the period of the Offering, be
qualified to conduct business as a foreign corporation in
each jurisdiction where the nature of its business requires
such qualification.
(e) The Company has an authorized capitalization of
100,000,000 shares of Common Stock ($.0001 par value). If
the Units are sold, the shares of Common Stock included in
the Units will represent approximately 8.5% of the Company's
shares of Common Stock outstanding after the Offering.
Except as disclosed in the PPM, there are no outstanding
options, warrants or other rights to purchase securities of
the Company, however characterized. Except as disclosed in
the PPM, there are no securities of the Company, however
characterized, held in its treasury. With respect to the
offer to sell, sale, offer to purchase or purchase of any of
its securities, the Company has not made any intentional or
reckless violations of the anti-fraud provisions of the
federal securities laws, rules or regulations promulgated
thereunder or the laws, rules or regulations of any
jurisdiction wherein such securities transactions or
solicitations occurred.
(f) The financial statements, together with related
schedules and notes, included in the PPM present fairly the
financial condition of the Company and are reported upon by
independent public accountants according to generally
accepted accounting principles and as required by the rules
and regulations of the Commission.
(g) Except as disclosed in the PPM, the Company does
not have any contingent liabilities, obligations or claims
nor has it received threats of claims or regulatory actions.
Further, except as disclosed in the PPM, subsequent to the
date information is given in the PPM, and prior to the close
of the Offering: (1) there shall not be any material adverse
changes in the management or condition, financial or
otherwise, of the Company or in its business taken as a
whole; (2) there shall not have been any material
transaction entered into by the Company other than the
transactions in the ordinary course of business; (3) the
Company shall not have incurred any material obligations,
contingent or otherwise, which are not disclosed in the PPM;
(4) there shall not have been nor will there be any change
in the capital or long-term debt (except current payments)
of the Company; and (5) the Company has not and will not
have paid or declared any dividends or other distributions
on its common shares.
(h) The Company's securities, however characterized,
are not subject to pre-emptive rights.
(i) The Company will have the legal right and
authority to enter into this Agreement upon its execution,
to effect the proposed sale of the Units and to effect all
other transactions contemplated by this Agreement.
(j) The Company and the Underwriter acknowledge the
introduction made by H+N Partners. As described in the PPM,
a portion of the proceeds of the Offering will be paid by
the Company to H+N Partners as a finder's fee.
(k) The Company possesses adequate certificates or
permits issued by the appropriate federal, state and local
regulatory authorities necessary to conduct its business and
to retain possession of its properties. The Company has not
received any notice of any proceeding relating to the
revocation or modification of any of these certificates or
permits.
(l) The Company has filed all tax returns, or are on
extension, required to be filed and is not in default in the
payment of any taxes which have become due pursuant to any
law or any assessment.
(m) The Company has marketable title to all
properties including intellectual properties described in
the PPM as owned by it. The properties are free and clear
of all liens, charges, encumbrances or restrictions, however
characterized, except as described in the PPM. All of the
contracts, leases, subleases, patents, copyrights, licenses
and agreements, however characterized, under which the
Company holds its properties as described in the PPM are in
full force and effect. The Company has not defaulted under
any of the material terms or provisions of any contracts,
leases, subleases, patents, copyrights, licenses or
agreements under which the Company holds its properties.
There are no known claims against the Company concerning the
Company's rights under the leases, subleases, patents,
copyrights, licenses and agreements and concerning its right
to continued possession of its properties.
(n) All original documents and other information
relating to the Company's affairs have been and will
continue to be made available upon request to the
Underwriter and to its counsel at the Underwriter's office
or at the office of the Underwriter's counsel and copies of
any such documents will be furnished upon request to the
Underwriter and to its counsel. Included within the
documents made available have been at least the Articles of
Incorporation and any amendments thereof, minutes of all of
the meetings of the incorporators, directors and
shareholders, all financial statements and copies of all
contracts, leases, patents, copyrights, licenses or
agreements to which the Company is a party or in which the
Company has an interest.
(o) The Company will use the proceeds from the sale
of the Units to be sold by the Underwriter on behalf of the
Company as set forth in the PPM.
(p) There are no contracts or other documents
required to be described in the PPM or to be included as
exhibits to the PPM which have not been described or
included as required.
(q) The Company is not in material default under any
of the contracts, leases, licenses or agreements to which it
is a party. The proposed Offering of the Units will not
cause the Company to become in material default under any of
its contracts, leases, subleases, patents, copyrights,
licenses or agreements nor will it create a conflict between
the Company and any of the contracting parties to the
contracts, leases and other agreements. Further, the
Company is not in material default in performance of any
obligation, agreement or condition contained in any
debenture or loan agreement of the Company. The execution
and delivery of this Agreement will not conflict with or
result in a breach of any of the material terms, conditions
or provisions of, or constitute a material default under,
the Articles of Incorporation or Bylaws of the Company, as
amended, or any note, indenture, mortgage, deed of trust, or
other agreement or instrument to which the Company is a
party or by which it or any of its property is bound, or any
existing law, order, rule, regulation, writ, injunction, or
decree of any government, governmental instrumentality,
agency or body, arbitration tribunal or court, domestic or
foreign, having jurisdiction over the Company or its
properties. The consent, approval, authorization, or order
of any court or governmental instrumentality, agency or body
is not required for the consummation of the transactions
herein contemplated except such as may be required under the
Act or under the Blue-sky or securities laws of any state or
jurisdiction.
Each contract to which the Company is a party has been
duly and validly executed, is in full force and effect in
all material respects in accordance with its respective
terms. The Company knows of no present situation, condition
or fact which would prevent compliance with the terms of
such contracts. Except for amendments or modifications of
contracts in the ordinary course of business, the Company
has no knowledge that any other party to any contract, in
which the Company has an interest, has any intention not to
render full performance under such contract.
(r) Except as disclosed in the PPM, there is, and
prior to the close of the Offering of the Units there will
be, no action, suit or proceeding before any court or
governmental agency, authority or body pending or to the
knowledge of the Company threatened, which might result in
judgments against the Company.
4. Representations and Warranties of the
Underwriter. The Underwriter represents and warrants as
follows:
(a) It is registered as a broker-dealer with the
Commission, in good standing with the State of California
and is registered, to the extent that registration is
required, with the appropriate governmental agency in each
state in which it intends to offer or sell the Units and it
is a member of the National Association of Securities
Dealers, Inc. ("NASD") and will use its best efforts to
maintain such registrations, qualifications and memberships
throughout the term of the Offering.
(b) To the knowledge of the Underwriter, no action
or proceeding is pending against the Underwriter or any of
its officers or directors concerning the Underwriter's
activities as a broker or dealer that would affect the
Company's Offering of the Units.
(c) The Underwriter will offer the Units only in
those states that are listed in Exhibit "D" attached hereto
and incorporated herein by this reference.
(d) The Underwriter, in connection with the offer
and sale of the Units and in the performance of its duties
and obligations under this Agreement, agrees to use its best
efforts to comply with all applicable federal laws; the laws
of the states or other jurisdictions in which the Units are
offered and sold; and the Rules and Regulations of the NASD.
(e) The Underwriter is a corporation duly organized,
validly existing and in good standing under the laws of the
State of California with all requisite power and authority
to enter into this Agreement and to carry out its
obligations hereunder.
(f) This Agreement has been duly authorized,
executed and delivered by the Underwriter and is a valid
agreement on the part of the Underwriter.
(g) Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will
result in any breach of any of the terms or conditions of,
or constitute a default under, the Certificate and Articles
of Incorporation or Bylaws of the Underwriter or any
indenture, agreement or other instrument to which the
Underwriter is a party or violate any order directed to the
Underwriter of any court or any federal or state regulatory
body or administrative agency having jurisdiction over the
Underwriter or its affiliates.
(h) The Underwriter and the Company acknowledge the
introduction made by H+N Partners. As described in the PPM,
a portion of the proceeds of the Offering will be paid by
the Company to H+N Partners as a finder's fee.
5. Expenses of the Underwriter. The Underwriter
shall pay all costs incurred or to be incurred by the
Underwriter or by its personnel in connection with the
Offering of the Units, except those to be paid by the
Company as described below.
6. Expenses of the Company. The Company agrees
that it will pay the following fees and expenses:
(a) All fees and expenses of its legal counsel who
will be engaged to prepare certain information, documents
and papers for use in connection with the Offering, and
filing with state or local securities authorities;
(b) All fees and expenses of its accountants
incurred in connection with the Offering of the Units and
the preparation of all documents and filings made as part of
the Offering;
(c) All costs in issuing and delivering the Units;
(d) All costs of printing and delivering to the
Underwriter and Selected Dealers as many copies of the PPM
as may be reasonably requested by the Underwriter;
(e) All of the Company's mailing, telephone, travel,
clerical and other office costs incurred or to be incurred
in connection with the offering of the Units;
(f) All fees and costs which may be imposed by the
various state or local securities authorities imposed for
filing a notice of sale relating to the Offering of the
Units; and
(g) All other expenses incurred by the Company in
performance of its obligations under this Agreement.
7. Further Agreements of the Company. The Company
further agrees with the Underwriter as follows:
(a) The Company will use its best efforts to perfect
an exemption from registration permitting the sale of the
Units in the states listed in Exhibit "D" attached hereto.
(b) Except with the Underwriter's approval, the
Company agrees that the Company will not do the following
until (1) the completion of the Offering of the Units, or
(2) the termination of this Agreement, whichever occurs
later;
(i) Undertake or authorize any change in its
capital structure or authorize, issue, or
permit any public or private offering of
additional securities;
(ii) Authorize, create, issue, or sell any
funded obligations, notes, or other
evidences of indebtedness, except in the
ordinary course of business;
(iii) Consolidate or merge with or into any
other corporation; or
(iv) Create any mortgage or any lien upon any
of its properties or assets except in the
ordinary course of its business.
8. Company's Indemnification. (a) The Company
agrees to indemnify, defend and hold harmless the
Underwriter from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable
legal or other expenses) incurred by the Underwriter in
connection with defending or investigating any such claims
or liabilities, whether or not resulting in any liability to
the Underwriter, which the Underwriter may incur under
federal or state securities laws and regulations thereunder,
state statutes or at common law or otherwise, but only to
the extent that such losses, claims, damages, liabilities
and expenses shall arise out of or be based upon a violation
or alleged violation of the federal or state securities laws
or regulations promulgated thereunder, a state statute or
the common law resulting from any untrue statement or
alleged untrue statement of a material fact contained in the
PPM or shall arise out of or be based upon any omission or
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided, however, that this
indemnity agreement shall not apply to any such losses,
claims, damages, liabilities or expenses arising out of or
based upon any such violation based upon a statement or
omission made in reliance upon written information furnished
for use in the PPM by the Underwriter.
(b) The foregoing indemnity of the Company in favor
of the Underwriter shall not be deemed to protect the
Underwriter against any liability to which the Underwriter
would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the
Underwriter's duties, or by reason of the Underwriter's
reckless disregard of the Underwriter's obligations and
duties under the Act or this Agreement.
(c) The Underwriter agrees to give the Company an
opportunity to participate in the defense or preparation of
the defense of any action brought against the Underwriter to
enforce any such claim or liability and the Company shall
have the right so to participate. The agreement of the
Company under the foregoing indemnity is expressly
conditioned upon notice of any such action having been sent
by the Underwriter to the Company, by letter or telegram
(addressed as provided in this Agreement), promptly after
the receipt of written notice of such action against the
Underwriter, such notice either being accompanied by copies
of papers served or filed in connection with such action or
by a statement of the nature of the action to the extent
known to Underwriter. Failure to notify the Company as
herein provided shall not relieve it from any liability
which it may have to the Underwriter other than on account
of the indemnity agreement contained in this paragraph 8.
9. Underwriter's Indemnification. (a) The
Underwriter likewise agrees to indemnify, defend and hold
harmless the Company against any and all losses, claims,
damages, liabilities and expenses to which the Company may
become subject, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact
contained in the PPM or the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
resulting from the use of written information furnished to
the Company by the Underwriter for use in the preparation of
the PPM.
(b) The Company agrees to give the Underwriter an
opportunity to participate in the defense or preparation of
the defense of any action brought against the Company to
enforce any such claim or liability and the Underwriter
shall have the right so to participate. The Underwriter's
liability under the foregoing indemnity is expressly
conditioned upon notice of any such action having been sent
by the Company to the Underwriter by letter or telegram
(addressed as provided for in this Agreement), promptly
after the receipt by the Company of written notice of such
action against the Company, such notice either being
accompanied by copies of papers served or filed in
connection with such action to the extent known to the
Company. Failure to notify the Underwriter as herein
provided shall not relieve the Underwriter from any
liability which the Underwriter may have to the Company
other than on account of the indemnity agreement contained
in this paragraph 9.
(c) The provisions of paragraphs 8 and 9 shall not
in any way prejudice any right or rights which the
Underwriter may have against the Company or the Company may
have against the Underwriter under any statute, including
the Act, at common law or otherwise.
(d) The indemnity agreements contained in paragraphs
8 and 9 shall survive the termination of this Agreement and
shall inure to the benefit of the Company, the Underwriter,
their respective successors, heirs and personal
representatives and shall be valid irrespective of any
investigation made by or on behalf of the Underwriter or the
Company.
10. Conditions Precedent to the Obligations of the
Underwriter. All obligations of the Underwriter under this
Agreement are subject to the following conditions precedent:
(a) Counsel for the Underwriter shall have completed
a review of the form and content of the PPM, of the
organization and present legal status of the Company and of
the legality and validity of the authorization and issuance
of the issued and outstanding stock of the Company and of
the Units.
(b) The Company shall have performed all of its
obligations under this Agreement. All of the statements,
representations and warranties contained in this Agreement
shall be complete and true.
(c) From the date of this Agreement until the
completion of the Offering, no material adverse changes
shall have occurred in the business, properties and assets
of the Company other than changes occurring in the ordinary
course of business.
(d) From the date of this Agreement until the
completion of the Offering, no claims or litigation shall
have been instituted or threatened against the Company for
substantial amounts or which would materially adversely
affect the Company, its business or property. Further, no
proceeding shall have been instituted or threatened against
the Company before any regulatory body wherein an
unfavorable ruling would have a material adverse effect on
the Company.
(e) From the date of this Agreement until the
completion of the Offering, no material adverse change shall
have occurred in the operation, financial condition,
management or credit of the Company or in any conditions
affecting the prospects of its business.
(f) From the date of this Agreement until the
completion of the Offering, the Company shall not have
sustained any loss on account of fire, flood, accident or
calamity of such character as materially adversely affects
its business or property, regardless of whether or not the
loss has been insured.
(g) On the date of the release of the funds in the
escrow account to the Company, the Underwriter shall have
received from the president or vice president of the Company
and the treasurer of the Company certificates dated as of
such date, in form satisfactory to the Underwriter to the
effect that:
(1) The representations and warranties of the
Company contained in paragraph 3 of this
Agreement are complete and true;
(2) All of the conditions precedent in
paragraphs 10(b)-10(f) of this Agreement
have been performed and the
representations of these conditions
precedent are true;
(3) This Agreement has been duly authorized
and executed and constitute the valid
agreement of the Company and is
enforceable according to its terms; and
(4) The respective parties have each carefully
examined the PPM and to the best of their
knowledge the PPM contains all statements
required to be stated therein. All
statements contained therein are true and
correct, the PPM does not include any
untrue statement of a material fact nor
omits to state any material fact required
to be stated therein or necessary to make
the statements therein not misleading.
Since the date of the PPM, there has
occurred no event required to be stated
therein or necessary to make the
statements therein not misleading.
(h) On the date the funds are delivered to the
Company, the Underwriter shall receive a written opinion
from the Company's counsel stating that:
(1) Counsel is unaware of any contracts or
other documents required to be described
in the PPM that are material to the
representations in the PPM that would
require disclosure in order to make
statements made not misleading;
(2) Counsel is unaware of any contracts or
documents that have not been disclosed in
the PPM that are material to the
representations in the PPM that would
require disclosure in order to make
statements made not misleading;
(3) To the best knowledge of counsel and after
reasonable investigation, the Company is
not in default of any of the contracts,
leases or agreements to which it is a
party and the proposed offering of Units
will not cause the Company to become in
default of any of its contracts, leases or
agreements nor will it create a conflict
between the Company and any of the
contracting parties to the contracts,
leases and other agreements;
(4) To the best knowledge of counsel and after
reasonable investigation, except as
described in the PPM, the Company has
marketable title to all properties
described in the PPM as owned by it; the
properties are free and clear of all
liens, charges, encumbrances or
restrictions; all of the leases, subleases
and other agreements under which the
Company holds its properties are in full
force and effect; the Company is not in
default under any of the material terms or
provisions of any of the leases, subleases
or other agreements; and there are no
claims against the other agreements; and
there are no claims against the Company
concerning its rights under the leases,
subleases and other agreements and
concerning its rights to continued
possession of its properties;
(5) This Agreement has been duly authorized
and executed by the Company and
constitutes the valid agreement of the
Company, except that no opinion need be
expressed as to the validity of the
indemnification provisions insofar as they
are or may be held to be violative of
public policy (under either state or
federal law), the availability of specific
performance or other equitable remedies,
the effects of bankruptcy, insolvency,
moratorium and all other similar laws and
decisions affecting the rights of
creditors generally and as to whether or
not this Agreement may be an illusory
contract;
(6) To the best knowledge of counsel and after
reasonable investigation, no claim or
litigation has been instituted or
threatened against the Company;
(7) To the best knowledge of counsel and after
reasonable investigation, all documents
and contracts relating to the Company's
affairs have been furnished to the
Underwriter;
(8) To the best knowledge of counsel and after
reasonable investigation, the Company
possesses adequate licenses, certificates,
authorizations or permits issued by the
appropriate federal, state and local
regulatory authorities necessary to
conduct its business as described in the
PPM and to retain possession of its
properties. Counsel is unaware of any
notice of any proceeding relating to the
revocation or modification of any of these
certificates or permits having been
received by the Company;
(9) To the best knowledge of counsel and after
reasonable investigation, neither the
Company nor its affiliates is currently
offering any securities for sale except
via the PPM;
(10) No pre-emptive rights exist with respect
to the Company's securities;
(11) The Company has two subsidiaries: Missouri
Cable TV Corp., a Louisiana corporation;
and Winter Entertainment, Inc., a Delaware
corporation;
(12) Counsel has participated in the
preparation of the PPM and no facts have
come to the attention of such counsel to
lead counsel to believe that the PPM
(except for the financial statements and
other financial data included therein, as
to which counsel need express no opinion)
contain any untrue statement of a material
fact or omit to state a material fact
required to be stated therein or necessary
to make the statements therein not
misleading;
(13) The Company has authorized capitalization
of 100,000,000 shares of Common Stock
($.0001 par value). There are no
outstanding options, warrants or other
rights to purchase shares of the Company's
common stock known to counsel other than
as described in the PPM;
(14) The Company has been incorporated and is a
validly existing corporation under the
laws of the State of Nevada and has full
corporate power and authority under such
laws to own its properties and to conduct
its business as described in the PPM. To
the best of counsel's knowledge,
information and belief, the Company is
qualified to conduct business as a foreign
corporation in each jurisdiction where the
nature of its business activities requires
such qualification except where failure to
so qualify would not have a material
adverse effect upon the business or
financial condition of the Company; and
(15) The Company's shares of Common Stock that
are issued and outstanding are fully paid
and non-assessable and the Units,
including the shares of Common Stock
included in the Units and the shares of
Common Stock underlying the Warrants, when
issued and paid for in accordance with
their terms will be fully paid and non-
assessable. The Units conform to the
description thereof contained in the PPM.
The Company has authorized the issuance of
the Units, including the shares of Common
Stock included in the Units and the shares
of Common Stock underlying the Warrants,
and has full power and authority to issue
and sell the Units, on the terms and
conditions herein set forth.
11. Termination. (a) This Agreement may be
terminated by the Underwriter by notice to the Company in
the event that the Company shall have failed or been unable
to comply with any of the terms, conditions or provisions of
this Agreement on the part of the Company to be performed,
complied with or fulfilled within the respective times
herein provided for, unless compliance therewith or
performance or satisfaction thereof shall have been
expressly waived by the Underwriter in writing.
(b) This Agreement may be terminated by the
Underwriter by notice to the Company if the Underwriter
believes in its sole judgment that any adverse changes have
occurred in the management of the Company, that material
adverse changes have occurred in the financial condition or
obligations of the Company or if the Company shall have
sustained a loss by strike, fire, flood, accident or other
calamity of such a character as, in the sole judgment of the
Underwriter, may interfere materially with the conduct of
the Company's business and operations regardless of whether
or not such loss shall have been insured.
(c) Any termination of this Agreement pursuant to
this section 11 shall be without liability of any character
(including, but not limited to, loss of anticipated profits
or consequential damages) on the part of any party thereto.
12. Notices. All notices shall be in writing and
shall be delivered at or mailed to the following address or
sent by telegram to the following addresses with written
confirmation thereafter:
To the Company: Media Entertainment, Inc.
8748 Quarters Lake Road
Baton Rouge, Louisiana 70809
Attention: David M. Loflin, President
with copies to: Newlan & Newlan
Attorneys at Law
2512 Program Drive, Suite 101
Dallas, Texas 75220
To the Underwriter: Centex Securities, Inc.
1020 Prospect Street, Suite 200
La Jolla, California 92037
Attention: Bruce Biddick
13. Representations, Warranties, Covenants and
Agreements to Survive Delivery. All representations,
warranties, covenants and agreements contained in this
Agreement (including the indemnity agreements contained in
paragraphs 8 and 9 hereof), shall remain operative and in
full force and effect, regardless of any investigation made
by or on behalf of the Underwriter, or by or on behalf of
the Company, or any person indemnified under paragraphs 8
and 9, and shall survive delivery of, and payment for, the
Units.
14. Parties. This Agreement shall inure to the
benefit of, and be binding upon, the Underwriter and the
Company and their respective successors. Nothing expressed
or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other
than the parties hereto and their respective successors and
its officers, directors and controlling persons, any legal
or equitable rights, remedy or claim under or in respect of
this Agreement or any provision herein contained, under or
in respect of this Agreement or any provision herein
contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective
successors and said officers and directors and controlling
persons and for the benefit of no other person, firm or
corporation. No purchaser of any Units shall be deemed to
be a successor by reason merely of such purchase.
15. Arbitration. In the event of any dispute between
the parties arising out of this Agreement, relating to any
question of contract or tort, including any claims allegedly
based on a violation of any securities laws or regulations,
state or federal, both the Company and the Underwriter agree
to submit such dispute through the American Arbitration
Association (the "Association") at the Association's Dallas,
Texas, offices, in accordance with the then-current rules of
the Association; the award given by the arbitrators shall be
binding and a judgment can be obtained on any such award in
any court of competent jurisdiction. It is expressly agreed
that the arbitrators, as part of their award, can award
attorneys fees to the prevailing party.
16. Miscellaneous Provisions.
(a) Time shall be of the essence of this Agreement.
(b) This Agreement shall be construed according to
the laws of the State of Louisiana.
(c) This Agreement is made solely for the benefit of
the Company and its officers, directors and controlling
persons within the meaning of section 15 of the Act and of the
Underwriter and its officers, directors and controlling
persons within the meaning of section 15 of the Act, and their
respective successors, heirs and personal representatives,
and no other person shall acquire or have right under or by
virtue of this Agreement. The term "successor" as used in
this Agreement shall not include any purchaser, as such, of
the Units.
If this Agreement correctly sets forth our
understanding, please indicate your acceptance in the space
provided below for that purpose, and return to us a
counterpart hereof, whereupon this instrument, along with
all counterparts, will become a binding agreement between
the Underwriter and the Company in accordance with its
terms.
Very truly yours,
MEDIA ENTERTAINMENT, INC.
By: /s/ David M. Loflin
David M. Loflin, President
Confirmed and accepted as of
the date of this Agreement:
CENTEX SECURITIES, INC.
By: /s/
its authorized representative
<PAGE>
- ---------------------------
EXHIBIT 10.2
- ---------------------------
June 19, 1998
Dennis A. Faker
Registration Rights
Letter Agreement
Dear Mr. Faker:
This letter will confirm our agreement and
understanding with respect to certain rights to register,
under the Securities Act of 1933, as amended (the "Act"),
and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 50,000 shares of the $.0001 par
value common stock (the "Subject Shares") of Media
Entertainment, Inc., a Nevada corporation (the "Company"),
which shares of Common Stock underlie certain common stock
purchase warrants (the "Warrants") of the Company owned by
you. It is our understanding that:
1. Registration Rights. At any time during the
exercise period of the Warrants and after you have elected
to exercise all of the Warrants owned by you, you may demand
on one occasion, in writing, the registration under the Act
for sale the Subject Shares underlying the Warrants owned by
you; provided, however, that such registration right may not
be exercised prior to July 1, 1998. Upon receipt of your
written demand for registration, the Company will take steps
to register your Subject Shares in a registration statement
(the "Registration Statement") under the Act. Your right to
such registration may be exercised one time only.
2. Expenses. All expenses incurred in connection
with the registration of the Subject Shares requested
pursuant to Section 1, including, without limitation, all
accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the
Company.
3. Registration Procedures. At such time as the
Company is required to register any of the Subject Shares
hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with
the Securities and Exchange Commission
(the "Commission"), a Registration
Statement with respect to the Subject
Shares and use its best efforts to cause
such Registration Statement to become
effective, such Registration Statement to
comply as to form and content and in all
material respects to the Commission's
forms, rules and regulations;
(b) prepare and file with the Commission such
amendments and supplements to the
Registration Statement, the prospectus and
any summary or preliminary prospectus
forming a part of, and used in connection
therewith, as may be necessary to keep
such Registration Statement and prospectus
effective and current and to comply with
the provisions of the Act with respect to
the disposition of all of the Subject
Shares and other securities, if any,
covered by such Registration Statement
until the earlier of such time as all of
such securities have been disposed of in
accordance with the intended methods of
disposition by the seller or sellers
thereof set forth in such Registration
Statement or the expiration of 120 days
after such Registration Statement becomes
effective; and will furnish to you prior
to the filing thereof a copy of any
amendment or supplement to such
Registration Statement or prospectus and
shall not file any such amendment or
supplement to which you shall have
reasonably objected on the grounds that
such amendment or supplement does not
comply in all material respects with the
requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed
copies of such Registration Statement and
of each such amendment and supplement
thereto (in each case including all
exhibits), such number of copies of the
prospectus included in such Registration
Statement (including each preliminary
prospectus and any summary prospectus),
all in conformity as to form and substance
with the requirements of the Act, such
number of copies of documents, if any,
incorporated by reference in such
Registration Statement or prospectus, and
such other documents, as you may
reasonably request;
(d) use its best efforts to register or
qualify all the Subject Shares covered by
such Registration Statement under such
other securities or blue sky laws of such
U.S. jurisdictions, as reasonably
requested by you, that permit
"registration by coordination" of
securities offerings (the Company shall
not be required to register or qualify the
Subject Shares in any state invoking merit
review authority), to keep such
registration or qualification in effect
for a minimum of 120 days after its
initial effective date, and do any and all
other acts and things which may be
necessary or advisable to enable you to
consummate the disposition in such
jurisdictions of your Subject Shares
covered by such Registration Statement,
except that the Company shall not, for any
such purpose, be required to qualify
generally to do business as a foreign
corporation in any jurisdiction wherein it
would not, but for the requirements of
this subdivision (d), be obligated to be
so qualified, or to subject itself to
taxation in any such jurisdiction or to
consent to general service of process in
any such jurisdiction;
(e) furnish to you a signed counterpart,
addressed to you, of (i) an opinion of
counsel for the Company, dated the
effective date of such Registration
Statement, and (ii) a "comfort" letter,
dated the effective date of such
Registration Statement, signed by the
independent public accountants who have
certified the Company's financial
statements included in such Registration
Statement, covering substantially the same
matters with respect to such Registration
Statement (and the prospectus included
therein) and, in the case of such
accountants' letter, with respect to
events subsequent to the date of such
financial statements, as are customarily
covered in opinions of issuer's counsel
and in accountants' letters delivered to
underwriters in underwritten public
offerings of securities and such other
legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when
a prospectus relating thereto is required
to be delivered under the Act, upon
discovery that, or upon the happening of
any event as a result of which, the
prospectus included in such Registration
Statement, as then in effect, includes an
untrue statement of a material fact or
omits to state any material fact required
to be stated therein or necessary to make
the statements therein not misleading in
light of the circumstances then existing,
and, at your request, prepare and furnish
to you a reasonable number of copies of a
supplement to, or an amendment of, such
prospectus as may be necessary so that, as
thereafter delivered to the purchasers of
the Subject Shares, such prospectus shall
not include 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 not misleading in the
light of the circumstances then existing;
(g) otherwise use its best efforts to comply
with all applicable rules and regulations
of the Commission, and make available to
its securities holders, as soon as
reasonably practicable, an earnings
statement covering the period of at least
twelve months beginning with the first
month of the first fiscal quarter after
the effective date of such Registration
Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of
the Act; and
(h) provide and cause to be maintained a
transfer agent and registrar for the
Subject Shares covered by such
Registration Statement from and after a
date not later than the effective date of
such Registration Statement.
The Company may require you to furnish the Company
such information regarding your sales of the Subject Shares
as the Company may from time to time reasonably request in
writing and as shall be required by law or by the Commission
in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in
the preparation of such Registration Statement and all
prospectuses and supplements or amendments thereto.
4. Preparation; Reasonable Investigation. In
connection with the preparation and filing of the
Registration Statement registering your Subject Shares under
the Act, the Company will give you and your underwriters, if
any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein and
filed with the Commission and each amendment thereof or
supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss
the business of the Company with its officers and the
independent public accountants who have certified its
financial statements as shall be necessary in the opinion of
you and such underwriter or your respective counsel, to
conduct a reasonable investigation within the meaning of the
Act.
5. Indemnification.
(a) Indemnification by the Company. In the
event of registration of your Subject
Shares under the Act, the Company will,
and hereby does, indemnify and hold you
harmless, against any and all losses,
claims, damages, liabilities or expenses,
joint or several (including, without
limitation, the costs and expenses of
investigating, preparing for and defending
any legal proceeding, including reasonable
attorneys' fees) to which you may become
subject under the Act or otherwise,
insofar as such losses, claims, damages,
liabilities or expenses (or actions or
proceedings in respect thereof) arise out
of, or are based upon, (i) any untrue
statement or alleged untrue statement of
any material fact contained in the
Registration Statement under which your
Subject Shares were registered under the
Act, any preliminary prospectus, final
prospectus or summary prospectus contained
therein, or any amendment or supplement
thereto, or any document incorporated by
reference therein, or (ii) any omission or
alleged omission to state therein a
material fact required to be stated
therein or necessary to make the
statements therein not misleading, and the
Company will reimburse you for any legal
or any other expenses reasonably incurred
by you in connection with investigating or
defending any such loss, claim, liability,
action or proceeding; provided, however,
that the Company shall not be liable in
any such case to the extent that any such
loss, claim, damage, liability or expense
(or action or proceeding in respect
thereof) arises out of or is based upon an
untrue statement or alleged untrue
statement or omission or alleged omission
made in such Registration Statement, any
such preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement in reliance upon, and in
conformity with, written information
furnished to the Company through an
instrument duly executed by you stating
that it is for use in the preparation
thereof. Such indemnity shall remain in
full force and effect regardless of any
investigation made by or on behalf of you
and shall survive the transfer of the
Subject Shares by you.
(b) Indemnification by You. In the event of
registration of your Subject Shares under
the Act, pursuant to which you offer or
sell Subject Shares covered by such
Registration Statement, you will, and
hereby do, indemnify and hold harmless (in
the same manner and to the same extent as
set forth in subdivision (a) of this
Section 5) the Company, each director of
the Company, each officer of the Company
who shall sign such Registration Statement
and each other person, if any, who
controls the Company within the meaning of
the Act, with respect to any statement in,
or omission from, such Registration
Statement, any preliminary prospectus,
final prospectus or summary prospectus
included therein, or any amendment or
supplement thereto, if such statement or
omission was made in reliance upon and in
conformity with written information
furnished to the Company through an
instrument duly executed by you
specifically stating that it is for use in
the preparation of such Registration
Statement, preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement. Such indemnity shall
remain in full force and effect regardless
of any investigation made by or on behalf
of the Company or any such director,
officer or controlling person and shall
survive the transfer of Subject Shares by
you.
(c) Notice of Claims, etc. Promptly after
receipt by an indemnified party of notice
of the commencement of any action or
proceeding involving a claim referred to
in the preceding subdivisions of this
Section 5, such indemnified party will, if
a claim in respect thereof is to be made
against an indemnifying party, give
written notice to the latter of the
commencement of such action, provided,
however, that the failure of any
indemnified party to give notice as
provided herein shall not relieve the
indemnifying party of its obligations
under the preceding subdivisions of this
Section 5. In case any such action is
brought against an indemnified party,
unless in such indemnified party's
reasonable judgment a conflict of interest
between such indemnified and indemnifying
party may exist in respect of such claim,
the indemnifying party shall be entitled
to participate in, and to assume the
defense thereof, jointly with any other
indemnifying party similarly notified, to
the extent that it may wish, with counsel
reasonably satisfactory to such
indemnified party, and after notice from
the indemnifying party to such indemnified
party of its election so to assume the
defense thereof, the indemnifying party
shall not be liable to such indemnified
party for any legal or other expenses
subsequently incurred by the latter in
connection with the defense thereof other
than reasonable costs of investigation.
No indemnifying party shall, without the
consent of the indemnified party, consent
to entry of any judgment or enter into any
settlement of such proceedings which does
not include as an unconditional term
thereof the giving by the claimant or
plaintiff to such indemnified party of a
complete and unconditional release from
all liability in respect to such claim or
litigation.
(d) Indemnification Payments. The
indemnification required by this Section 5
shall be made by periodic payments of the
amount thereof during the course of the
investigation or defense, as and when
bills are received or expense, loss,
damage or liability is incurred.
(e) Contribution. If the indemnification
provided for in this Section 5 is held by
a court of competent jurisdiction to be
unavailable with respect to any loss,
liability, claim, damage or expense
referred to herein, then the indemnifying
party, in lieu of indemnifying such
indemnified party hereunder, shall
contribute to the amount paid or payable
by such indemnified party as a result of
such loss, liability, damage or expense,
in such manner as the underwriter(s) shall
require in the underwriting agreement and,
to the extent not specified therein with
respect to any indemnified party
contemplated by this Section 5 as entitled
to indemnification, in such proportion as
is appropriate to reflect the relative
fault of the indemnifying party on the one
hand and of such indemnified party on the
other in connection with the actual or
alleged statements or omissions which
resulted in such loss, liability, damage
or expense, as well as any other relevant
equitable considerations. The relative
fault of the indemnifying party and of
such indemnified party shall be determined
by reference to, among other things,
whether the untrue or allegedly untrue
statement of a material fact or the
omission or alleged omission to state a
material fact relates to information
supplied by the indemnifying party or by
such indemnified party and the parties'
relative intent, knowledge, access to
information and opportunities to correct
or prevent such statement or omission.
The indemnity and contribution provided
herein shall be in addition to, and not in
lieu of, any other liability that one
party may have to another.
6. Arbitration. In the event of any dispute
between the parties arising out of this Agreement, relating
to any question of contract or tort, including any claims
allegedly based on a violation of any securities laws or
regulations, state or federal, both the Company and you
agree to submit such dispute through the American
Arbitration Association (the "Association") at the
Association's Dallas, Texas, offices, in accordance with the
then-current rules of the Association; the award given by
the arbitrators shall be binding and a judgment can be
obtained on any such award in any court of competent
jurisdiction. It is expressly agreed that the arbitrators,
as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be
amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained
your written consent to such amendment, action or omissions
to act.
8. Notices. Notices and other communications under
this Agreement shall be in writing and shall be sent by
registered mail, postage prepaid, addressed:
(a) if to you, at the address shown above,
unless you have advised the Company in
writing of a different address as to which
notices shall be sent under this
Agreement; and
(b) if to the Company, at 8748 Quarters Lake
Road, Baton Rouge, Louisiana 70809, to the
attention of Mr. David M. Loflin,
President, or to such other address as the
Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto,
whether so expressed or not. This Agreement embodies the
entire agreement and understanding between the Company and
you with respect to the subject matter hereof and supersedes
all prior agreements and understandings relating to the
subject matter hereof. This Agreement shall be construed
and enforced in accordance with, and governed by, the law of
the State of Louisiana. The headings in this Agreement are
for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute
one instrument.
Yours very truly,
MEDIA ENTERTAINMENT, INC.
By: /s/ David M. Loflin
David M. Loflin, President
<PAGE>
- ---------------------------
EXHIBIT 10.3
- ---------------------------
June 19, 1998
Jeanne M. Rowzee
Registration Rights
Letter Agreement
Dear Ms. Rowzee:
This letter will confirm our agreement and
understanding with respect to certain rights to register,
under the Securities Act of 1933, as amended (the "Act"),
and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 50,000 shares of the $.0001 par
value common stock (the "Subject Shares") of Media
Entertainment, Inc., a Nevada corporation (the "Company"),
which shares of Common Stock underlie certain common stock
purchase warrants (the "Warrants") of the Company owned by
you. It is our understanding that:
1. Registration Rights. At any time during the
exercise period of the Warrants and after you have elected
to exercise all of the Warrants owned by you, you may demand
on one occasion, in writing, the registration under the Act
for sale the Subject Shares underlying the Warrants owned by
you; provided, however, that such registration right may not
be exercised prior to July 1, 1998. Upon receipt of your
written demand for registration, the Company will take steps
to register your Subject Shares in a registration statement
(the "Registration Statement") under the Act. Your right to
such registration may be exercised one time only.
2. Expenses. All expenses incurred in connection
with the registration of the Subject Shares requested
pursuant to Section 1, including, without limitation, all
accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the
Company.
3. Registration Procedures. At such time as the
Company is required to register any of the Subject Shares
hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with
the Securities and Exchange Commission
(the "Commission"), a Registration
Statement with respect to the Subject
Shares and use its best efforts to cause
such Registration Statement to become
effective, such Registration Statement to
comply as to form and content and in all
material respects to the Commission's
forms, rules and regulations;
(b) prepare and file with the Commission such
amendments and supplements to the
Registration Statement, the prospectus and
any summary or preliminary prospectus
forming a part of, and used in connection
therewith, as may be necessary to keep
such Registration Statement and prospectus
effective and current and to comply with
the provisions of the Act with respect to
the disposition of all of the Subject
Shares and other securities, if any,
covered by such Registration Statement
until the earlier of such time as all of
such securities have been disposed of in
accordance with the intended methods of
disposition by the seller or sellers
thereof set forth in such Registration
Statement or the expiration of 120 days
after such Registration Statement becomes
effective; and will furnish to you prior
to the filing thereof a copy of any
amendment or supplement to such
Registration Statement or prospectus and
shall not file any such amendment or
supplement to which you shall have
reasonably objected on the grounds that
such amendment or supplement does not
comply in all material respects with the
requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed
copies of such Registration Statement and
of each such amendment and supplement
thereto (in each case including all
exhibits), such number of copies of the
prospectus included in such Registration
Statement (including each preliminary
prospectus and any summary prospectus),
all in conformity as to form and substance
with the requirements of the Act, such
number of copies of documents, if any,
incorporated by reference in such
Registration Statement or prospectus, and
such other documents, as you may
reasonably request;
(d) use its best efforts to register or
qualify all the Subject Shares covered by
such Registration Statement under such
other securities or blue sky laws of such
U.S. jurisdictions, as reasonably
requested by you, that permit
"registration by coordination" of
securities offerings (the Company shall
not be required to register or qualify the
Subject Shares in any state invoking merit
review authority), to keep such
registration or qualification in effect
for a minimum of 120 days after its
initial effective date, and do any and all
other acts and things which may be
necessary or advisable to enable you to
consummate the disposition in such
jurisdictions of your Subject Shares
covered by such Registration Statement,
except that the Company shall not, for any
such purpose, be required to qualify
generally to do business as a foreign
corporation in any jurisdiction wherein it
would not, but for the requirements of
this subdivision (d), be obligated to be
so qualified, or to subject itself to
taxation in any such jurisdiction or to
consent to general service of process in
any such jurisdiction;
(e) furnish to you a signed counterpart,
addressed to you, of (i) an opinion of
counsel for the Company, dated the
effective date of such Registration
Statement, and (ii) a "comfort" letter,
dated the effective date of such
Registration Statement, signed by the
independent public accountants who have
certified the Company's financial
statements included in such Registration
Statement, covering substantially the same
matters with respect to such Registration
Statement (and the prospectus included
therein) and, in the case of such
accountants' letter, with respect to
events subsequent to the date of such
financial statements, as are customarily
covered in opinions of issuer's counsel
and in accountants' letters delivered to
underwriters in underwritten public
offerings of securities and such other
legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when
a prospectus relating thereto is required
to be delivered under the Act, upon
discovery that, or upon the happening of
any event as a result of which, the
prospectus included in such Registration
Statement, as then in effect, includes an
untrue statement of a material fact or
omits to state any material fact required
to be stated therein or necessary to make
the statements therein not misleading in
light of the circumstances then existing,
and, at your request, prepare and furnish
to you a reasonable number of copies of a
supplement to, or an amendment of, such
prospectus as may be necessary so that, as
thereafter delivered to the purchasers of
the Subject Shares, such prospectus shall
not include 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 not misleading in the
light of the circumstances then existing;
(g) otherwise use its best efforts to comply
with all applicable rules and regulations
of the Commission, and make available to
its securities holders, as soon as
reasonably practicable, an earnings
statement covering the period of at least
twelve months beginning with the first
month of the first fiscal quarter after
the effective date of such Registration
Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of
the Act; and
(h) provide and cause to be maintained a
transfer agent and registrar for the
Subject Shares covered by such
Registration Statement from and after a
date not later than the effective date of
such Registration Statement.
The Company may require you to furnish the Company
such information regarding your sales of the Subject Shares
as the Company may from time to time reasonably request in
writing and as shall be required by law or by the Commission
in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in
the preparation of such Registration Statement and all
prospectuses and supplements or amendments thereto.
4. Preparation; Reasonable Investigation. In
connection with the preparation and filing of the
Registration Statement registering your Subject Shares under
the Act, the Company will give you and your underwriters, if
any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein and
filed with the Commission and each amendment thereof or
supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss
the business of the Company with its officers and the
independent public accountants who have certified its
financial statements as shall be necessary in the opinion of
you and such underwriter or your respective counsel, to
conduct a reasonable investigation within the meaning of the
Act.
5. Indemnification.
(a) Indemnification by the Company. In the
event of registration of your Subject
Shares under the Act, the Company will,
and hereby does, indemnify and hold you
harmless, against any and all losses,
claims, damages, liabilities or expenses,
joint or several (including, without
limitation, the costs and expenses of
investigating, preparing for and defending
any legal proceeding, including reasonable
attorneys' fees) to which you may become
subject under the Act or otherwise,
insofar as such losses, claims, damages,
liabilities or expenses (or actions or
proceedings in respect thereof) arise out
of, or are based upon, (i) any untrue
statement or alleged untrue statement of
any material fact contained in the
Registration Statement under which your
Subject Shares were registered under the
Act, any preliminary prospectus, final
prospectus or summary prospectus contained
therein, or any amendment or supplement
thereto, or any document incorporated by
reference therein, or (ii) any omission or
alleged omission to state therein a
material fact required to be stated
therein or necessary to make the
statements therein not misleading, and the
Company will reimburse you for any legal
or any other expenses reasonably incurred
by you in connection with investigating or
defending any such loss, claim, liability,
action or proceeding; provided, however,
that the Company shall not be liable in
any such case to the extent that any such
loss, claim, damage, liability or expense
(or action or proceeding in respect
thereof) arises out of or is based upon an
untrue statement or alleged untrue
statement or omission or alleged omission
made in such Registration Statement, any
such preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement in reliance upon, and in
conformity with, written information
furnished to the Company through an
instrument duly executed by you stating
that it is for use in the preparation
thereof. Such indemnity shall remain in
full force and effect regardless of any
investigation made by or on behalf of you
and shall survive the transfer of the
Subject Shares by you.
(b) Indemnification by You. In the event of
registration of your Subject Shares under
the Act, pursuant to which you offer or
sell Subject Shares covered by such
Registration Statement, you will, and
hereby do, indemnify and hold harmless (in
the same manner and to the same extent as
set forth in subdivision (a) of this
Section 5) the Company, each director of
the Company, each officer of the Company
who shall sign such Registration Statement
and each other person, if any, who
controls the Company within the meaning of
the Act, with respect to any statement in,
or omission from, such Registration
Statement, any preliminary prospectus,
final prospectus or summary prospectus
included therein, or any amendment or
supplement thereto, if such statement or
omission was made in reliance upon and in
conformity with written information
furnished to the Company through an
instrument duly executed by you
specifically stating that it is for use in
the preparation of such Registration
Statement, preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement. Such indemnity shall
remain in full force and effect regardless
of any investigation made by or on behalf
of the Company or any such director,
officer or controlling person and shall
survive the transfer of Subject Shares by
you.
(c) Notice of Claims, etc. Promptly after
receipt by an indemnified party of notice
of the commencement of any action or
proceeding involving a claim referred to
in the preceding subdivisions of this
Section 5, such indemnified party will, if
a claim in respect thereof is to be made
against an indemnifying party, give
written notice to the latter of the
commencement of such action, provided,
however, that the failure of any
indemnified party to give notice as
provided herein shall not relieve the
indemnifying party of its obligations
under the preceding subdivisions of this
Section 5. In case any such action is
brought against an indemnified party,
unless in such indemnified party's
reasonable judgment a conflict of interest
between such indemnified and indemnifying
party may exist in respect of such claim,
the indemnifying party shall be entitled
to participate in, and to assume the
defense thereof, jointly with any other
indemnifying party similarly notified, to
the extent that it may wish, with counsel
reasonably satisfactory to such
indemnified party, and after notice from
the indemnifying party to such indemnified
party of its election so to assume the
defense thereof, the indemnifying party
shall not be liable to such indemnified
party for any legal or other expenses
subsequently incurred by the latter in
connection with the defense thereof other
than reasonable costs of investigation.
No indemnifying party shall, without the
consent of the indemnified party, consent
to entry of any judgment or enter into any
settlement of such proceedings which does
not include as an unconditional term
thereof the giving by the claimant or
plaintiff to such indemnified party of a
complete and unconditional release from
all liability in respect to such claim or
litigation.
(d) Indemnification Payments. The
indemnification required by this Section 5
shall be made by periodic payments of the
amount thereof during the course of the
investigation or defense, as and when
bills are received or expense, loss,
damage or liability is incurred.
(e) Contribution. If the indemnification
provided for in this Section 5 is held by
a court of competent jurisdiction to be
unavailable with respect to any loss,
liability, claim, damage or expense
referred to herein, then the indemnifying
party, in lieu of indemnifying such
indemnified party hereunder, shall
contribute to the amount paid or payable
by such indemnified party as a result of
such loss, liability, damage or expense,
in such manner as the underwriter(s) shall
require in the underwriting agreement and,
to the extent not specified therein with
respect to any indemnified party
contemplated by this Section 5 as entitled
to indemnification, in such proportion as
is appropriate to reflect the relative
fault of the indemnifying party on the one
hand and of such indemnified party on the
other in connection with the actual or
alleged statements or omissions which
resulted in such loss, liability, damage
or expense, as well as any other relevant
equitable considerations. The relative
fault of the indemnifying party and of
such indemnified party shall be determined
by reference to, among other things,
whether the untrue or allegedly untrue
statement of a material fact or the
omission or alleged omission to state a
material fact relates to information
supplied by the indemnifying party or by
such indemnified party and the parties'
relative intent, knowledge, access to
information and opportunities to correct
or prevent such statement or omission.
The indemnity and contribution provided
herein shall be in addition to, and not in
lieu of, any other liability that one
party may have to another.
6. Arbitration. In the event of any dispute
between the parties arising out of this Agreement, relating
to any question of contract or tort, including any claims
allegedly based on a violation of any securities laws or
regulations, state or federal, both the Company and you
agree to submit such dispute through the American
Arbitration Association (the "Association") at the
Association's Dallas, Texas, offices, in accordance with the
then-current rules of the Association; the award given by
the arbitrators shall be binding and a judgment can be
obtained on any such award in any court of competent
jurisdiction. It is expressly agreed that the arbitrators,
as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be
amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained
your written consent to such amendment, action or omissions
to act.
8. Notices. Notices and other communications under
this Agreement shall be in writing and shall be sent by
registered mail, postage prepaid, addressed:
(a) if to you, at the address shown above,
unless you have advised the Company in
writing of a different address as to which
notices shall be sent under this
Agreement; and
(b) if to the Company, at 8748 Quarters Lake
Road, Baton Rouge, Louisiana 70809, to the
attention of Mr. David M. Loflin,
President, or to such other address as the
Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto,
whether so expressed or not. This Agreement embodies the
entire agreement and understanding between the Company and
you with respect to the subject matter hereof and supersedes
all prior agreements and understandings relating to the
subject matter hereof. This Agreement shall be construed
and enforced in accordance with, and governed by, the law of
the State of Louisiana. The headings in this Agreement are
for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute
one instrument.
Yours very truly,
MEDIA ENTERTAINMENT, INC.
By: /s/ David M. Loflin
David M. Loflin, President
<PAGE>
- ---------------------------
EXHIBIT 10.4
- ---------------------------
June 19, 1998
William Miofsky
Registration Rights
Letter Agreement
Dear Mr. Miofsky:
This letter will confirm our agreement and
understanding with respect to certain rights to register,
under the Securities Act of 1933, as amended (the "Act"),
and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 50,000 shares of the $.0001 par
value common stock (the "Subject Shares") of Media
Entertainment, Inc., a Nevada corporation (the "Company"),
which shares of Common Stock underlie certain common stock
purchase warrants (the "Warrants") of the Company owned by
you. It is our understanding that:
1. Registration Rights. At any time during the
exercise period of the Warrants and after you have elected
to exercise all of the Warrants owned by you, you may demand
on one occasion, in writing, the registration under the Act
for sale the Subject Shares underlying the Warrants owned by
you; provided, however, that such registration right may not
be exercised prior to July 1, 1998. Upon receipt of your
written demand for registration, the Company will take steps
to register your Subject Shares in a registration statement
(the "Registration Statement") under the Act. Your right to
such registration may be exercised one time only.
2. Expenses. All expenses incurred in connection
with the registration of the Subject Shares requested
pursuant to Section 1, including, without limitation, all
accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the
Company.
3. Registration Procedures. At such time as the
Company is required to register any of the Subject Shares
hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with
the Securities and Exchange Commission
(the "Commission"), a Registration
Statement with respect to the Subject
Shares and use its best efforts to cause
such Registration Statement to become
effective, such Registration Statement to
comply as to form and content and in all
material respects to the Commission's
forms, rules and regulations;
(b) prepare and file with the Commission such
amendments and supplements to the
Registration Statement, the prospectus and
any summary or preliminary prospectus
forming a part of, and used in connection
therewith, as may be necessary to keep
such Registration Statement and prospectus
effective and current and to comply with
the provisions of the Act with respect to
the disposition of all of the Subject
Shares and other securities, if any,
covered by such Registration Statement
until the earlier of such time as all of
such securities have been disposed of in
accordance with the intended methods of
disposition by the seller or sellers
thereof set forth in such Registration
Statement or the expiration of 120 days
after such Registration Statement becomes
effective; and will furnish to you prior
to the filing thereof a copy of any
amendment or supplement to such
Registration Statement or prospectus and
shall not file any such amendment or
supplement to which you shall have
reasonably objected on the grounds that
such amendment or supplement does not
comply in all material respects with the
requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed
copies of such Registration Statement and
of each such amendment and supplement
thereto (in each case including all
exhibits), such number of copies of the
prospectus included in such Registration
Statement (including each preliminary
prospectus and any summary prospectus),
all in conformity as to form and substance
with the requirements of the Act, such
number of copies of documents, if any,
incorporated by reference in such
Registration Statement or prospectus, and
such other documents, as you may
reasonably request;
(d) use its best efforts to register or
qualify all the Subject Shares covered by
such Registration Statement under such
other securities or blue sky laws of such
U.S. jurisdictions, as reasonably
requested by you, that permit
"registration by coordination" of
securities offerings (the Company shall
not be required to register or qualify the
Subject Shares in any state invoking merit
review authority), to keep such
registration or qualification in effect
for a minimum of 120 days after its
initial effective date, and do any and all
other acts and things which may be
necessary or advisable to enable you to
consummate the disposition in such
jurisdictions of your Subject Shares
covered by such Registration Statement,
except that the Company shall not, for any
such purpose, be required to qualify
generally to do business as a foreign
corporation in any jurisdiction wherein it
would not, but for the requirements of
this subdivision (d), be obligated to be
so qualified, or to subject itself to
taxation in any such jurisdiction or to
consent to general service of process in
any such jurisdiction;
(e) furnish to you a signed counterpart,
addressed to you, of (i) an opinion of
counsel for the Company, dated the
effective date of such Registration
Statement, and (ii) a "comfort" letter,
dated the effective date of such
Registration Statement, signed by the
independent public accountants who have
certified the Company's financial
statements included in such Registration
Statement, covering substantially the same
matters with respect to such Registration
Statement (and the prospectus included
therein) and, in the case of such
accountants' letter, with respect to
events subsequent to the date of such
financial statements, as are customarily
covered in opinions of issuer's counsel
and in accountants' letters delivered to
underwriters in underwritten public
offerings of securities and such other
legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when
a prospectus relating thereto is required
to be delivered under the Act, upon
discovery that, or upon the happening of
any event as a result of which, the
prospectus included in such Registration
Statement, as then in effect, includes an
untrue statement of a material fact or
omits to state any material fact required
to be stated therein or necessary to make
the statements therein not misleading in
light of the circumstances then existing,
and, at your request, prepare and furnish
to you a reasonable number of copies of a
supplement to, or an amendment of, such
prospectus as may be necessary so that, as
thereafter delivered to the purchasers of
the Subject Shares, such prospectus shall
not include 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 not misleading in the
light of the circumstances then existing;
(g) otherwise use its best efforts to comply
with all applicable rules and regulations
of the Commission, and make available to
its securities holders, as soon as
reasonably practicable, an earnings
statement covering the period of at least
twelve months beginning with the first
month of the first fiscal quarter after
the effective date of such Registration
Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of
the Act; and
(h) provide and cause to be maintained a
transfer agent and registrar for the
Subject Shares covered by such
Registration Statement from and after a
date not later than the effective date of
such Registration Statement.
The Company may require you to furnish the Company
such information regarding your sales of the Subject Shares
as the Company may from time to time reasonably request in
writing and as shall be required by law or by the Commission
in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in
the preparation of such Registration Statement and all
prospectuses and supplements or amendments thereto.
4. Preparation; Reasonable Investigation. In
connection with the preparation and filing of the
Registration Statement registering your Subject Shares under
the Act, the Company will give you and your underwriters, if
any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein and
filed with the Commission and each amendment thereof or
supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss
the business of the Company with its officers and the
independent public accountants who have certified its
financial statements as shall be necessary in the opinion of
you and such underwriter or your respective counsel, to
conduct a reasonable investigation within the meaning of the
Act.
5. Indemnification.
(a) Indemnification by the Company. In the
event of registration of your Subject
Shares under the Act, the Company will,
and hereby does, indemnify and hold you
harmless, against any and all losses,
claims, damages, liabilities or expenses,
joint or several (including, without
limitation, the costs and expenses of
investigating, preparing for and defending
any legal proceeding, including reasonable
attorneys' fees) to which you may become
subject under the Act or otherwise,
insofar as such losses, claims, damages,
liabilities or expenses (or actions or
proceedings in respect thereof) arise out
of, or are based upon, (i) any untrue
statement or alleged untrue statement of
any material fact contained in the
Registration Statement under which your
Subject Shares were registered under the
Act, any preliminary prospectus, final
prospectus or summary prospectus contained
therein, or any amendment or supplement
thereto, or any document incorporated by
reference therein, or (ii) any omission or
alleged omission to state therein a
material fact required to be stated
therein or necessary to make the
statements therein not misleading, and the
Company will reimburse you for any legal
or any other expenses reasonably incurred
by you in connection with investigating or
defending any such loss, claim, liability,
action or proceeding; provided, however,
that the Company shall not be liable in
any such case to the extent that any such
loss, claim, damage, liability or expense
(or action or proceeding in respect
thereof) arises out of or is based upon an
untrue statement or alleged untrue
statement or omission or alleged omission
made in such Registration Statement, any
such preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement in reliance upon, and in
conformity with, written information
furnished to the Company through an
instrument duly executed by you stating
that it is for use in the preparation
thereof. Such indemnity shall remain in
full force and effect regardless of any
investigation made by or on behalf of you
and shall survive the transfer of the
Subject Shares by you.
(b) Indemnification by You. In the event of
registration of your Subject Shares under
the Act, pursuant to which you offer or
sell Subject Shares covered by such
Registration Statement, you will, and
hereby do, indemnify and hold harmless (in
the same manner and to the same extent as
set forth in subdivision (a) of this
Section 5) the Company, each director of
the Company, each officer of the Company
who shall sign such Registration Statement
and each other person, if any, who
controls the Company within the meaning of
the Act, with respect to any statement in,
or omission from, such Registration
Statement, any preliminary prospectus,
final prospectus or summary prospectus
included therein, or any amendment or
supplement thereto, if such statement or
omission was made in reliance upon and in
conformity with written information
furnished to the Company through an
instrument duly executed by you
specifically stating that it is for use in
the preparation of such Registration
Statement, preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement. Such indemnity shall
remain in full force and effect regardless
of any investigation made by or on behalf
of the Company or any such director,
officer or controlling person and shall
survive the transfer of Subject Shares by
you.
(c) Notice of Claims, etc. Promptly after
receipt by an indemnified party of notice
of the commencement of any action or
proceeding involving a claim referred to
in the preceding subdivisions of this
Section 5, such indemnified party will, if
a claim in respect thereof is to be made
against an indemnifying party, give
written notice to the latter of the
commencement of such action, provided,
however, that the failure of any
indemnified party to give notice as
provided herein shall not relieve the
indemnifying party of its obligations
under the preceding subdivisions of this
Section 5. In case any such action is
brought against an indemnified party,
unless in such indemnified party's
reasonable judgment a conflict of interest
between such indemnified and indemnifying
party may exist in respect of such claim,
the indemnifying party shall be entitled
to participate in, and to assume the
defense thereof, jointly with any other
indemnifying party similarly notified, to
the extent that it may wish, with counsel
reasonably satisfactory to such
indemnified party, and after notice from
the indemnifying party to such indemnified
party of its election so to assume the
defense thereof, the indemnifying party
shall not be liable to such indemnified
party for any legal or other expenses
subsequently incurred by the latter in
connection with the defense thereof other
than reasonable costs of investigation.
No indemnifying party shall, without the
consent of the indemnified party, consent
to entry of any judgment or enter into any
settlement of such proceedings which does
not include as an unconditional term
thereof the giving by the claimant or
plaintiff to such indemnified party of a
complete and unconditional release from
all liability in respect to such claim or
litigation.
(d) Indemnification Payments. The
indemnification required by this Section 5
shall be made by periodic payments of the
amount thereof during the course of the
investigation or defense, as and when
bills are received or expense, loss,
damage or liability is incurred.
(e) Contribution. If the indemnification
provided for in this Section 5 is held by
a court of competent jurisdiction to be
unavailable with respect to any loss,
liability, claim, damage or expense
referred to herein, then the indemnifying
party, in lieu of indemnifying such
indemnified party hereunder, shall
contribute to the amount paid or payable
by such indemnified party as a result of
such loss, liability, damage or expense,
in such manner as the underwriter(s) shall
require in the underwriting agreement and,
to the extent not specified therein with
respect to any indemnified party
contemplated by this Section 5 as entitled
to indemnification, in such proportion as
is appropriate to reflect the relative
fault of the indemnifying party on the one
hand and of such indemnified party on the
other in connection with the actual or
alleged statements or omissions which
resulted in such loss, liability, damage
or expense, as well as any other relevant
equitable considerations. The relative
fault of the indemnifying party and of
such indemnified party shall be determined
by reference to, among other things,
whether the untrue or allegedly untrue
statement of a material fact or the
omission or alleged omission to state a
material fact relates to information
supplied by the indemnifying party or by
such indemnified party and the parties'
relative intent, knowledge, access to
information and opportunities to correct
or prevent such statement or omission.
The indemnity and contribution provided
herein shall be in addition to, and not in
lieu of, any other liability that one
party may have to another.
6. Arbitration. In the event of any dispute
between the parties arising out of this Agreement, relating
to any question of contract or tort, including any claims
allegedly based on a violation of any securities laws or
regulations, state or federal, both the Company and you
agree to submit such dispute through the American
Arbitration Association (the "Association") at the
Association's Dallas, Texas, offices, in accordance with the
then-current rules of the Association; the award given by
the arbitrators shall be binding and a judgment can be
obtained on any such award in any court of competent
jurisdiction. It is expressly agreed that the arbitrators,
as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be
amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained
your written consent to such amendment, action or omissions
to act.
8. Notices. Notices and other communications under
this Agreement shall be in writing and shall be sent by
registered mail, postage prepaid, addressed:
(a) if to you, at the address shown above,
unless you have advised the Company in
writing of a different address as to which
notices shall be sent under this
Agreement; and
(b) if to the Company, at 8748 Quarters Lake
Road, Baton Rouge, Louisiana 70809, to the
attention of Mr. David M. Loflin,
President, or to such other address as the
Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto,
whether so expressed or not. This Agreement embodies the
entire agreement and understanding between the Company and
you with respect to the subject matter hereof and supersedes
all prior agreements and understandings relating to the
subject matter hereof. This Agreement shall be construed
and enforced in accordance with, and governed by, the law of
the State of Louisiana. The headings in this Agreement are
for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute
one instrument.
Yours very truly,
MEDIA ENTERTAINMENT, INC.
By: /s/ David M. Loflin
David M. Loflin, President
<PAGE>
- ---------------------------
EXHIBIT 10.5
- ---------------------------
June 19, 1998
Rogers Family Trust
Registration Rights
Letter Agreement
Ladies and Gentlemen:
This letter will confirm our agreement and
understanding with respect to certain rights to register,
under the Securities Act of 1933, as amended (the "Act"),
and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 50,000 shares of the $.0001 par
value common stock (the "Subject Shares") of Media
Entertainment, Inc., a Nevada corporation (the "Company"),
which shares of Common Stock underlie certain common stock
purchase warrants (the "Warrants") of the Company owned by
you. It is our understanding that:
1. Registration Rights. At any time during the
exercise period of the Warrants and after you have elected
to exercise all of the Warrants owned by you, you may demand
on one occasion, in writing, the registration under the Act
for sale the Subject Shares underlying the Warrants owned by
you; provided, however, that such registration right may not
be exercised prior to July 1, 1998. Upon receipt of your
written demand for registration, the Company will take steps
to register your Subject Shares in a registration statement
(the "Registration Statement") under the Act. Your right to
such registration may be exercised one time only.
2. Expenses. All expenses incurred in connection
with the registration of the Subject Shares requested
pursuant to Section 1, including, without limitation, all
accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the
Company.
3. Registration Procedures. At such time as the
Company is required to register any of the Subject Shares
hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with
the Securities and Exchange Commission
(the "Commission"), a Registration
Statement with respect to the Subject
Shares and use its best efforts to cause
such Registration Statement to become
effective, such Registration Statement to
comply as to form and content and in all
material respects to the Commission's
forms, rules and regulations;
(b) prepare and file with the Commission such
amendments and supplements to the
Registration Statement, the prospectus and
any summary or preliminary prospectus
forming a part of, and used in connection
therewith, as may be necessary to keep
such Registration Statement and prospectus
effective and current and to comply with
the provisions of the Act with respect to
the disposition of all of the Subject
Shares and other securities, if any,
covered by such Registration Statement
until the earlier of such time as all of
such securities have been disposed of in
accordance with the intended methods of
disposition by the seller or sellers
thereof set forth in such Registration
Statement or the expiration of 120 days
after such Registration Statement becomes
effective; and will furnish to you prior
to the filing thereof a copy of any
amendment or supplement to such
Registration Statement or prospectus and
shall not file any such amendment or
supplement to which you shall have
reasonably objected on the grounds that
such amendment or supplement does not
comply in all material respects with the
requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed
copies of such Registration Statement and
of each such amendment and supplement
thereto (in each case including all
exhibits), such number of copies of the
prospectus included in such Registration
Statement (including each preliminary
prospectus and any summary prospectus),
all in conformity as to form and substance
with the requirements of the Act, such
number of copies of documents, if any,
incorporated by reference in such
Registration Statement or prospectus, and
such other documents, as you may
reasonably request;
(d) use its best efforts to register or
qualify all the Subject Shares covered by
such Registration Statement under such
other securities or blue sky laws of such
U.S. jurisdictions, as reasonably
requested by you, that permit
"registration by coordination" of
securities offerings (the Company shall
not be required to register or qualify the
Subject Shares in any state invoking merit
review authority), to keep such
registration or qualification in effect
for a minimum of 120 days after its
initial effective date, and do any and all
other acts and things which may be
necessary or advisable to enable you to
consummate the disposition in such
jurisdictions of your Subject Shares
covered by such Registration Statement,
except that the Company shall not, for any
such purpose, be required to qualify
generally to do business as a foreign
corporation in any jurisdiction wherein it
would not, but for the requirements of
this subdivision (d), be obligated to be
so qualified, or to subject itself to
taxation in any such jurisdiction or to
consent to general service of process in
any such jurisdiction;
(e) furnish to you a signed counterpart,
addressed to you, of (i) an opinion of
counsel for the Company, dated the
effective date of such Registration
Statement, and (ii) a "comfort" letter,
dated the effective date of such
Registration Statement, signed by the
independent public accountants who have
certified the Company's financial
statements included in such Registration
Statement, covering substantially the same
matters with respect to such Registration
Statement (and the prospectus included
therein) and, in the case of such
accountants' letter, with respect to
events subsequent to the date of such
financial statements, as are customarily
covered in opinions of issuer's counsel
and in accountants' letters delivered to
underwriters in underwritten public
offerings of securities and such other
legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when
a prospectus relating thereto is required
to be delivered under the Act, upon
discovery that, or upon the happening of
any event as a result of which, the
prospectus included in such Registration
Statement, as then in effect, includes an
untrue statement of a material fact or
omits to state any material fact required
to be stated therein or necessary to make
the statements therein not misleading in
light of the circumstances then existing,
and, at your request, prepare and furnish
to you a reasonable number of copies of a
supplement to, or an amendment of, such
prospectus as may be necessary so that, as
thereafter delivered to the purchasers of
the Subject Shares, such prospectus shall
not include 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 not misleading in the
light of the circumstances then existing;
(g) otherwise use its best efforts to comply
with all applicable rules and regulations
of the Commission, and make available to
its securities holders, as soon as
reasonably practicable, an earnings
statement covering the period of at least
twelve months beginning with the first
month of the first fiscal quarter after
the effective date of such Registration
Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of
the Act; and
(h) provide and cause to be maintained a
transfer agent and registrar for the
Subject Shares covered by such
Registration Statement from and after a
date not later than the effective date of
such Registration Statement.
The Company may require you to furnish the Company
such information regarding your sales of the Subject Shares
as the Company may from time to time reasonably request in
writing and as shall be required by law or by the Commission
in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in
the preparation of such Registration Statement and all
prospectuses and supplements or amendments thereto.
4. Preparation; Reasonable Investigation. In
connection with the preparation and filing of the
Registration Statement registering your Subject Shares under
the Act, the Company will give you and your underwriters, if
any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein and
filed with the Commission and each amendment thereof or
supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss
the business of the Company with its officers and the
independent public accountants who have certified its
financial statements as shall be necessary in the opinion of
you and such underwriter or your respective counsel, to
conduct a reasonable investigation within the meaning of the
Act.
5. Indemnification.
(a) Indemnification by the Company. In the
event of registration of your Subject
Shares under the Act, the Company will,
and hereby does, indemnify and hold you
harmless, against any and all losses,
claims, damages, liabilities or expenses,
joint or several (including, without
limitation, the costs and expenses of
investigating, preparing for and defending
any legal proceeding, including reasonable
attorneys' fees) to which you may become
subject under the Act or otherwise,
insofar as such losses, claims, damages,
liabilities or expenses (or actions or
proceedings in respect thereof) arise out
of, or are based upon, (i) any untrue
statement or alleged untrue statement of
any material fact contained in the
Registration Statement under which your
Subject Shares were registered under the
Act, any preliminary prospectus, final
prospectus or summary prospectus contained
therein, or any amendment or supplement
thereto, or any document incorporated by
reference therein, or (ii) any omission or
alleged omission to state therein a
material fact required to be stated
therein or necessary to make the
statements therein not misleading, and the
Company will reimburse you for any legal
or any other expenses reasonably incurred
by you in connection with investigating or
defending any such loss, claim, liability,
action or proceeding; provided, however,
that the Company shall not be liable in
any such case to the extent that any such
loss, claim, damage, liability or expense
(or action or proceeding in respect
thereof) arises out of or is based upon an
untrue statement or alleged untrue
statement or omission or alleged omission
made in such Registration Statement, any
such preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement in reliance upon, and in
conformity with, written information
furnished to the Company through an
instrument duly executed by you stating
that it is for use in the preparation
thereof. Such indemnity shall remain in
full force and effect regardless of any
investigation made by or on behalf of you
and shall survive the transfer of the
Subject Shares by you.
(b) Indemnification by You. In the event of
registration of your Subject Shares under
the Act, pursuant to which you offer or
sell Subject Shares covered by such
Registration Statement, you will, and
hereby do, indemnify and hold harmless (in
the same manner and to the same extent as
set forth in subdivision (a) of this
Section 5) the Company, each director of
the Company, each officer of the Company
who shall sign such Registration Statement
and each other person, if any, who
controls the Company within the meaning of
the Act, with respect to any statement in,
or omission from, such Registration
Statement, any preliminary prospectus,
final prospectus or summary prospectus
included therein, or any amendment or
supplement thereto, if such statement or
omission was made in reliance upon and in
conformity with written information
furnished to the Company through an
instrument duly executed by you
specifically stating that it is for use in
the preparation of such Registration
Statement, preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement. Such indemnity shall
remain in full force and effect regardless
of any investigation made by or on behalf
of the Company or any such director,
officer or controlling person and shall
survive the transfer of Subject Shares by
you.
(c) Notice of Claims, etc. Promptly after
receipt by an indemnified party of notice
of the commencement of any action or
proceeding involving a claim referred to
in the preceding subdivisions of this
Section 5, such indemnified party will, if
a claim in respect thereof is to be made
against an indemnifying party, give
written notice to the latter of the
commencement of such action, provided,
however, that the failure of any
indemnified party to give notice as
provided herein shall not relieve the
indemnifying party of its obligations
under the preceding subdivisions of this
Section 5. In case any such action is
brought against an indemnified party,
unless in such indemnified party's
reasonable judgment a conflict of interest
between such indemnified and indemnifying
party may exist in respect of such claim,
the indemnifying party shall be entitled
to participate in, and to assume the
defense thereof, jointly with any other
indemnifying party similarly notified, to
the extent that it may wish, with counsel
reasonably satisfactory to such
indemnified party, and after notice from
the indemnifying party to such indemnified
party of its election so to assume the
defense thereof, the indemnifying party
shall not be liable to such indemnified
party for any legal or other expenses
subsequently incurred by the latter in
connection with the defense thereof other
than reasonable costs of investigation.
No indemnifying party shall, without the
consent of the indemnified party, consent
to entry of any judgment or enter into any
settlement of such proceedings which does
not include as an unconditional term
thereof the giving by the claimant or
plaintiff to such indemnified party of a
complete and unconditional release from
all liability in respect to such claim or
litigation.
(d) Indemnification Payments. The
indemnification required by this Section 5
shall be made by periodic payments of the
amount thereof during the course of the
investigation or defense, as and when
bills are received or expense, loss,
damage or liability is incurred.
(e) Contribution. If the indemnification
provided for in this Section 5 is held by
a court of competent jurisdiction to be
unavailable with respect to any loss,
liability, claim, damage or expense
referred to herein, then the indemnifying
party, in lieu of indemnifying such
indemnified party hereunder, shall
contribute to the amount paid or payable
by such indemnified party as a result of
such loss, liability, damage or expense,
in such manner as the underwriter(s) shall
require in the underwriting agreement and,
to the extent not specified therein with
respect to any indemnified party
contemplated by this Section 5 as entitled
to indemnification, in such proportion as
is appropriate to reflect the relative
fault of the indemnifying party on the one
hand and of such indemnified party on the
other in connection with the actual or
alleged statements or omissions which
resulted in such loss, liability, damage
or expense, as well as any other relevant
equitable considerations. The relative
fault of the indemnifying party and of
such indemnified party shall be determined
by reference to, among other things,
whether the untrue or allegedly untrue
statement of a material fact or the
omission or alleged omission to state a
material fact relates to information
supplied by the indemnifying party or by
such indemnified party and the parties'
relative intent, knowledge, access to
information and opportunities to correct
or prevent such statement or omission.
The indemnity and contribution provided
herein shall be in addition to, and not in
lieu of, any other liability that one
party may have to another.
6. Arbitration. In the event of any dispute
between the parties arising out of this Agreement, relating
to any question of contract or tort, including any claims
allegedly based on a violation of any securities laws or
regulations, state or federal, both the Company and you
agree to submit such dispute through the American
Arbitration Association (the "Association") at the
Association's Dallas, Texas, offices, in accordance with the
then-current rules of the Association; the award given by
the arbitrators shall be binding and a judgment can be
obtained on any such award in any court of competent
jurisdiction. It is expressly agreed that the arbitrators,
as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be
amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained
your written consent to such amendment, action or omissions
to act.
8. Notices. Notices and other communications under
this Agreement shall be in writing and shall be sent by
registered mail, postage prepaid, addressed:
(a) if to you, at the address shown above,
unless you have advised the Company in
writing of a different address as to which
notices shall be sent under this
Agreement; and
(b) if to the Company, at 8748 Quarters Lake
Road, Baton Rouge, Louisiana 70809, to the
attention of Mr. David M. Loflin,
President, or to such other address as the
Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto,
whether so expressed or not. This Agreement embodies the
entire agreement and understanding between the Company and
you with respect to the subject matter hereof and supersedes
all prior agreements and understandings relating to the
subject matter hereof. This Agreement shall be construed
and enforced in accordance with, and governed by, the law of
the State of Louisiana. The headings in this Agreement are
for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute
one instrument.
Yours very truly,
MEDIA ENTERTAINMENT, INC.
By: /s/ David M. Loflin
David M. Loflin, President
<PAGE>
- ---------------------------
EXHIBIT 10.6
- ---------------------------
June 19, 1998
Barbara V. Schiller
Registration Rights
Letter Agreement
Dear Ms. Schiller:
This letter will confirm our agreement and
understanding with respect to certain rights to register,
under the Securities Act of 1933, as amended (the "Act"),
and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 50,000 shares of the $.0001 par
value common stock (the "Subject Shares") of Media
Entertainment, Inc., a Nevada corporation (the "Company"),
which shares of Common Stock underlie certain common stock
purchase warrants (the "Warrants") of the Company owned by
you. It is our understanding that:
1. Registration Rights. At any time during the
exercise period of the Warrants and after you have elected
to exercise all of the Warrants owned by you, you may demand
on one occasion, in writing, the registration under the Act
for sale the Subject Shares underlying the Warrants owned by
you; provided, however, that such registration right may not
be exercised prior to July 1, 1998. Upon receipt of your
written demand for registration, the Company will take steps
to register your Subject Shares in a registration statement
(the "Registration Statement") under the Act. Your right to
such registration may be exercised one time only.
2. Expenses. All expenses incurred in connection
with the registration of the Subject Shares requested
pursuant to Section 1, including, without limitation, all
accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the
Company.
3. Registration Procedures. At such time as the
Company is required to register any of the Subject Shares
hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with
the Securities and Exchange Commission
(the "Commission"), a Registration
Statement with respect to the Subject
Shares and use its best efforts to cause
such Registration Statement to become
effective, such Registration Statement to
comply as to form and content and in all
material respects to the Commission's
forms, rules and regulations;
(b) prepare and file with the Commission such
amendments and supplements to the
Registration Statement, the prospectus and
any summary or preliminary prospectus
forming a part of, and used in connection
therewith, as may be necessary to keep
such Registration Statement and prospectus
effective and current and to comply with
the provisions of the Act with respect to
the disposition of all of the Subject
Shares and other securities, if any,
covered by such Registration Statement
until the earlier of such time as all of
such securities have been disposed of in
accordance with the intended methods of
disposition by the seller or sellers
thereof set forth in such Registration
Statement or the expiration of 120 days
after such Registration Statement becomes
effective; and will furnish to you prior
to the filing thereof a copy of any
amendment or supplement to such
Registration Statement or prospectus and
shall not file any such amendment or
supplement to which you shall have
reasonably objected on the grounds that
such amendment or supplement does not
comply in all material respects with the
requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed
copies of such Registration Statement and
of each such amendment and supplement
thereto (in each case including all
exhibits), such number of copies of the
prospectus included in such Registration
Statement (including each preliminary
prospectus and any summary prospectus),
all in conformity as to form and substance
with the requirements of the Act, such
number of copies of documents, if any,
incorporated by reference in such
Registration Statement or prospectus, and
such other documents, as you may
reasonably request;
(d) use its best efforts to register or
qualify all the Subject Shares covered by
such Registration Statement under such
other securities or blue sky laws of such
U.S. jurisdictions, as reasonably
requested by you, that permit
"registration by coordination" of
securities offerings (the Company shall
not be required to register or qualify the
Subject Shares in any state invoking merit
review authority), to keep such
registration or qualification in effect
for a minimum of 120 days after its
initial effective date, and do any and all
other acts and things which may be
necessary or advisable to enable you to
consummate the disposition in such
jurisdictions of your Subject Shares
covered by such Registration Statement,
except that the Company shall not, for any
such purpose, be required to qualify
generally to do business as a foreign
corporation in any jurisdiction wherein it
would not, but for the requirements of
this subdivision (d), be obligated to be
so qualified, or to subject itself to
taxation in any such jurisdiction or to
consent to general service of process in
any such jurisdiction;
(e) furnish to you a signed counterpart,
addressed to you, of (i) an opinion of
counsel for the Company, dated the
effective date of such Registration
Statement, and (ii) a "comfort" letter,
dated the effective date of such
Registration Statement, signed by the
independent public accountants who have
certified the Company's financial
statements included in such Registration
Statement, covering substantially the same
matters with respect to such Registration
Statement (and the prospectus included
therein) and, in the case of such
accountants' letter, with respect to
events subsequent to the date of such
financial statements, as are customarily
covered in opinions of issuer's counsel
and in accountants' letters delivered to
underwriters in underwritten public
offerings of securities and such other
legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when
a prospectus relating thereto is required
to be delivered under the Act, upon
discovery that, or upon the happening of
any event as a result of which, the
prospectus included in such Registration
Statement, as then in effect, includes an
untrue statement of a material fact or
omits to state any material fact required
to be stated therein or necessary to make
the statements therein not misleading in
light of the circumstances then existing,
and, at your request, prepare and furnish
to you a reasonable number of copies of a
supplement to, or an amendment of, such
prospectus as may be necessary so that, as
thereafter delivered to the purchasers of
the Subject Shares, such prospectus shall
not include 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 not misleading in the
light of the circumstances then existing;
(g) otherwise use its best efforts to comply
with all applicable rules and regulations
of the Commission, and make available to
its securities holders, as soon as
reasonably practicable, an earnings
statement covering the period of at least
twelve months beginning with the first
month of the first fiscal quarter after
the effective date of such Registration
Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of
the Act; and
(h) provide and cause to be maintained a
transfer agent and registrar for the
Subject Shares covered by such
Registration Statement from and after a
date not later than the effective date of
such Registration Statement.
The Company may require you to furnish the Company
such information regarding your sales of the Subject Shares
as the Company may from time to time reasonably request in
writing and as shall be required by law or by the Commission
in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in
the preparation of such Registration Statement and all
prospectuses and supplements or amendments thereto.
4. Preparation; Reasonable Investigation. In
connection with the preparation and filing of the
Registration Statement registering your Subject Shares under
the Act, the Company will give you and your underwriters, if
any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein and
filed with the Commission and each amendment thereof or
supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss
the business of the Company with its officers and the
independent public accountants who have certified its
financial statements as shall be necessary in the opinion of
you and such underwriter or your respective counsel, to
conduct a reasonable investigation within the meaning of the
Act.
5. Indemnification.
(a) Indemnification by the Company. In the
event of registration of your Subject
Shares under the Act, the Company will,
and hereby does, indemnify and hold you
harmless, against any and all losses,
claims, damages, liabilities or expenses,
joint or several (including, without
limitation, the costs and expenses of
investigating, preparing for and defending
any legal proceeding, including reasonable
attorneys' fees) to which you may become
subject under the Act or otherwise,
insofar as such losses, claims, damages,
liabilities or expenses (or actions or
proceedings in respect thereof) arise out
of, or are based upon, (i) any untrue
statement or alleged untrue statement of
any material fact contained in the
Registration Statement under which your
Subject Shares were registered under the
Act, any preliminary prospectus, final
prospectus or summary prospectus contained
therein, or any amendment or supplement
thereto, or any document incorporated by
reference therein, or (ii) any omission or
alleged omission to state therein a
material fact required to be stated
therein or necessary to make the
statements therein not misleading, and the
Company will reimburse you for any legal
or any other expenses reasonably incurred
by you in connection with investigating or
defending any such loss, claim, liability,
action or proceeding; provided, however,
that the Company shall not be liable in
any such case to the extent that any such
loss, claim, damage, liability or expense
(or action or proceeding in respect
thereof) arises out of or is based upon an
untrue statement or alleged untrue
statement or omission or alleged omission
made in such Registration Statement, any
such preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement in reliance upon, and in
conformity with, written information
furnished to the Company through an
instrument duly executed by you stating
that it is for use in the preparation
thereof. Such indemnity shall remain in
full force and effect regardless of any
investigation made by or on behalf of you
and shall survive the transfer of the
Subject Shares by you.
(b) Indemnification by You. In the event of
registration of your Subject Shares under
the Act, pursuant to which you offer or
sell Subject Shares covered by such
Registration Statement, you will, and
hereby do, indemnify and hold harmless (in
the same manner and to the same extent as
set forth in subdivision (a) of this
Section 5) the Company, each director of
the Company, each officer of the Company
who shall sign such Registration Statement
and each other person, if any, who
controls the Company within the meaning of
the Act, with respect to any statement in,
or omission from, such Registration
Statement, any preliminary prospectus,
final prospectus or summary prospectus
included therein, or any amendment or
supplement thereto, if such statement or
omission was made in reliance upon and in
conformity with written information
furnished to the Company through an
instrument duly executed by you
specifically stating that it is for use in
the preparation of such Registration
Statement, preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement. Such indemnity shall
remain in full force and effect regardless
of any investigation made by or on behalf
of the Company or any such director,
officer or controlling person and shall
survive the transfer of Subject Shares by
you.
(c) Notice of Claims, etc. Promptly after
receipt by an indemnified party of notice
of the commencement of any action or
proceeding involving a claim referred to
in the preceding subdivisions of this
Section 5, such indemnified party will, if
a claim in respect thereof is to be made
against an indemnifying party, give
written notice to the latter of the
commencement of such action, provided,
however, that the failure of any
indemnified party to give notice as
provided herein shall not relieve the
indemnifying party of its obligations
under the preceding subdivisions of this
Section 5. In case any such action is
brought against an indemnified party,
unless in such indemnified party's
reasonable judgment a conflict of interest
between such indemnified and indemnifying
party may exist in respect of such claim,
the indemnifying party shall be entitled
to participate in, and to assume the
defense thereof, jointly with any other
indemnifying party similarly notified, to
the extent that it may wish, with counsel
reasonably satisfactory to such
indemnified party, and after notice from
the indemnifying party to such indemnified
party of its election so to assume the
defense thereof, the indemnifying party
shall not be liable to such indemnified
party for any legal or other expenses
subsequently incurred by the latter in
connection with the defense thereof other
than reasonable costs of investigation.
No indemnifying party shall, without the
consent of the indemnified party, consent
to entry of any judgment or enter into any
settlement of such proceedings which does
not include as an unconditional term
thereof the giving by the claimant or
plaintiff to such indemnified party of a
complete and unconditional release from
all liability in respect to such claim or
litigation.
(d) Indemnification Payments. The
indemnification required by this Section 5
shall be made by periodic payments of the
amount thereof during the course of the
investigation or defense, as and when
bills are received or expense, loss,
damage or liability is incurred.
(e) Contribution. If the indemnification
provided for in this Section 5 is held by
a court of competent jurisdiction to be
unavailable with respect to any loss,
liability, claim, damage or expense
referred to herein, then the indemnifying
party, in lieu of indemnifying such
indemnified party hereunder, shall
contribute to the amount paid or payable
by such indemnified party as a result of
such loss, liability, damage or expense,
in such manner as the underwriter(s) shall
require in the underwriting agreement and,
to the extent not specified therein with
respect to any indemnified party
contemplated by this Section 5 as entitled
to indemnification, in such proportion as
is appropriate to reflect the relative
fault of the indemnifying party on the one
hand and of such indemnified party on the
other in connection with the actual or
alleged statements or omissions which
resulted in such loss, liability, damage
or expense, as well as any other relevant
equitable considerations. The relative
fault of the indemnifying party and of
such indemnified party shall be determined
by reference to, among other things,
whether the untrue or allegedly untrue
statement of a material fact or the
omission or alleged omission to state a
material fact relates to information
supplied by the indemnifying party or by
such indemnified party and the parties'
relative intent, knowledge, access to
information and opportunities to correct
or prevent such statement or omission.
The indemnity and contribution provided
herein shall be in addition to, and not in
lieu of, any other liability that one
party may have to another.
6. Arbitration. In the event of any dispute
between the parties arising out of this Agreement, relating
to any question of contract or tort, including any claims
allegedly based on a violation of any securities laws or
regulations, state or federal, both the Company and you
agree to submit such dispute through the American
Arbitration Association (the "Association") at the
Association's Dallas, Texas, offices, in accordance with the
then-current rules of the Association; the award given by
the arbitrators shall be binding and a judgment can be
obtained on any such award in any court of competent
jurisdiction. It is expressly agreed that the arbitrators,
as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be
amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained
your written consent to such amendment, action or omissions
to act.
8. Notices. Notices and other communications under
this Agreement shall be in writing and shall be sent by
registered mail, postage prepaid, addressed:
(a) if to you, at the address shown above,
unless you have advised the Company in
writing of a different address as to which
notices shall be sent under this
Agreement; and
(b) if to the Company, at 8748 Quarters Lake
Road, Baton Rouge, Louisiana 70809, to the
attention of Mr. David M. Loflin,
President, or to such other address as the
Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto,
whether so expressed or not. This Agreement embodies the
entire agreement and understanding between the Company and
you with respect to the subject matter hereof and supersedes
all prior agreements and understandings relating to the
subject matter hereof. This Agreement shall be construed
and enforced in accordance with, and governed by, the law of
the State of Louisiana. The headings in this Agreement are
for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute
one instrument.
Yours very truly,
MEDIA ENTERTAINMENT, INC.
By: /s/ David M. Loflin
David M. Loflin, President
<PAGE>
- ---------------------------
EXHIBIT 10.7
- ---------------------------
June 19, 1998
Clarence Yim
Registration Rights
Letter Agreement
Dear Mr. Yim:
This letter will confirm our agreement and
understanding with respect to certain rights to register,
under the Securities Act of 1933, as amended (the "Act"),
and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 50,000 shares of the $.0001 par
value common stock (the "Subject Shares") of Media
Entertainment, Inc., a Nevada corporation (the "Company"),
which shares of Common Stock underlie certain common stock
purchase warrants (the "Warrants") of the Company owned by
you. It is our understanding that:
1. Registration Rights. At any time during the
exercise period of the Warrants and after you have elected
to exercise all of the Warrants owned by you, you may demand
on one occasion, in writing, the registration under the Act
for sale the Subject Shares underlying the Warrants owned by
you; provided, however, that such registration right may not
be exercised prior to July 1, 1998. Upon receipt of your
written demand for registration, the Company will take steps
to register your Subject Shares in a registration statement
(the "Registration Statement") under the Act. Your right to
such registration may be exercised one time only.
2. Expenses. All expenses incurred in connection
with the registration of the Subject Shares requested
pursuant to Section 1, including, without limitation, all
accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the
Company.
3. Registration Procedures. At such time as the
Company is required to register any of the Subject Shares
hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with
the Securities and Exchange Commission
(the "Commission"), a Registration
Statement with respect to the Subject
Shares and use its best efforts to cause
such Registration Statement to become
effective, such Registration Statement to
comply as to form and content and in all
material respects to the Commission's
forms, rules and regulations;
(b) prepare and file with the Commission such
amendments and supplements to the
Registration Statement, the prospectus and
any summary or preliminary prospectus
forming a part of, and used in connection
therewith, as may be necessary to keep
such Registration Statement and prospectus
effective and current and to comply with
the provisions of the Act with respect to
the disposition of all of the Subject
Shares and other securities, if any,
covered by such Registration Statement
until the earlier of such time as all of
such securities have been disposed of in
accordance with the intended methods of
disposition by the seller or sellers
thereof set forth in such Registration
Statement or the expiration of 120 days
after such Registration Statement becomes
effective; and will furnish to you prior
to the filing thereof a copy of any
amendment or supplement to such
Registration Statement or prospectus and
shall not file any such amendment or
supplement to which you shall have
reasonably objected on the grounds that
such amendment or supplement does not
comply in all material respects with the
requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed
copies of such Registration Statement and
of each such amendment and supplement
thereto (in each case including all
exhibits), such number of copies of the
prospectus included in such Registration
Statement (including each preliminary
prospectus and any summary prospectus),
all in conformity as to form and substance
with the requirements of the Act, such
number of copies of documents, if any,
incorporated by reference in such
Registration Statement or prospectus, and
such other documents, as you may
reasonably request;
(d) use its best efforts to register or
qualify all the Subject Shares covered by
such Registration Statement under such
other securities or blue sky laws of such
U.S. jurisdictions, as reasonably
requested by you, that permit
"registration by coordination" of
securities offerings (the Company shall
not be required to register or qualify the
Subject Shares in any state invoking merit
review authority), to keep such
registration or qualification in effect
for a minimum of 120 days after its
initial effective date, and do any and all
other acts and things which may be
necessary or advisable to enable you to
consummate the disposition in such
jurisdictions of your Subject Shares
covered by such Registration Statement,
except that the Company shall not, for any
such purpose, be required to qualify
generally to do business as a foreign
corporation in any jurisdiction wherein it
would not, but for the requirements of
this subdivision (d), be obligated to be
so qualified, or to subject itself to
taxation in any such jurisdiction or to
consent to general service of process in
any such jurisdiction;
(e) furnish to you a signed counterpart,
addressed to you, of (i) an opinion of
counsel for the Company, dated the
effective date of such Registration
Statement, and (ii) a "comfort" letter,
dated the effective date of such
Registration Statement, signed by the
independent public accountants who have
certified the Company's financial
statements included in such Registration
Statement, covering substantially the same
matters with respect to such Registration
Statement (and the prospectus included
therein) and, in the case of such
accountants' letter, with respect to
events subsequent to the date of such
financial statements, as are customarily
covered in opinions of issuer's counsel
and in accountants' letters delivered to
underwriters in underwritten public
offerings of securities and such other
legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when
a prospectus relating thereto is required
to be delivered under the Act, upon
discovery that, or upon the happening of
any event as a result of which, the
prospectus included in such Registration
Statement, as then in effect, includes an
untrue statement of a material fact or
omits to state any material fact required
to be stated therein or necessary to make
the statements therein not misleading in
light of the circumstances then existing,
and, at your request, prepare and furnish
to you a reasonable number of copies of a
supplement to, or an amendment of, such
prospectus as may be necessary so that, as
thereafter delivered to the purchasers of
the Subject Shares, such prospectus shall
not include 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 not misleading in the
light of the circumstances then existing;
(g) otherwise use its best efforts to comply
with all applicable rules and regulations
of the Commission, and make available to
its securities holders, as soon as
reasonably practicable, an earnings
statement covering the period of at least
twelve months beginning with the first
month of the first fiscal quarter after
the effective date of such Registration
Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of
the Act; and
(h) provide and cause to be maintained a
transfer agent and registrar for the
Subject Shares covered by such
Registration Statement from and after a
date not later than the effective date of
such Registration Statement.
The Company may require you to furnish the Company
such information regarding your sales of the Subject Shares
as the Company may from time to time reasonably request in
writing and as shall be required by law or by the Commission
in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in
the preparation of such Registration Statement and all
prospectuses and supplements or amendments thereto.
4. Preparation; Reasonable Investigation. In
connection with the preparation and filing of the
Registration Statement registering your Subject Shares under
the Act, the Company will give you and your underwriters, if
any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein and
filed with the Commission and each amendment thereof or
supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss
the business of the Company with its officers and the
independent public accountants who have certified its
financial statements as shall be necessary in the opinion of
you and such underwriter or your respective counsel, to
conduct a reasonable investigation within the meaning of the
Act.
5. Indemnification.
(a) Indemnification by the Company. In the
event of registration of your Subject
Shares under the Act, the Company will,
and hereby does, indemnify and hold you
harmless, against any and all losses,
claims, damages, liabilities or expenses,
joint or several (including, without
limitation, the costs and expenses of
investigating, preparing for and defending
any legal proceeding, including reasonable
attorneys' fees) to which you may become
subject under the Act or otherwise,
insofar as such losses, claims, damages,
liabilities or expenses (or actions or
proceedings in respect thereof) arise out
of, or are based upon, (i) any untrue
statement or alleged untrue statement of
any material fact contained in the
Registration Statement under which your
Subject Shares were registered under the
Act, any preliminary prospectus, final
prospectus or summary prospectus contained
therein, or any amendment or supplement
thereto, or any document incorporated by
reference therein, or (ii) any omission or
alleged omission to state therein a
material fact required to be stated
therein or necessary to make the
statements therein not misleading, and the
Company will reimburse you for any legal
or any other expenses reasonably incurred
by you in connection with investigating or
defending any such loss, claim, liability,
action or proceeding; provided, however,
that the Company shall not be liable in
any such case to the extent that any such
loss, claim, damage, liability or expense
(or action or proceeding in respect
thereof) arises out of or is based upon an
untrue statement or alleged untrue
statement or omission or alleged omission
made in such Registration Statement, any
such preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement in reliance upon, and in
conformity with, written information
furnished to the Company through an
instrument duly executed by you stating
that it is for use in the preparation
thereof. Such indemnity shall remain in
full force and effect regardless of any
investigation made by or on behalf of you
and shall survive the transfer of the
Subject Shares by you.
(b) Indemnification by You. In the event of
registration of your Subject Shares under
the Act, pursuant to which you offer or
sell Subject Shares covered by such
Registration Statement, you will, and
hereby do, indemnify and hold harmless (in
the same manner and to the same extent as
set forth in subdivision (a) of this
Section 5) the Company, each director of
the Company, each officer of the Company
who shall sign such Registration Statement
and each other person, if any, who
controls the Company within the meaning of
the Act, with respect to any statement in,
or omission from, such Registration
Statement, any preliminary prospectus,
final prospectus or summary prospectus
included therein, or any amendment or
supplement thereto, if such statement or
omission was made in reliance upon and in
conformity with written information
furnished to the Company through an
instrument duly executed by you
specifically stating that it is for use in
the preparation of such Registration
Statement, preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement. Such indemnity shall
remain in full force and effect regardless
of any investigation made by or on behalf
of the Company or any such director,
officer or controlling person and shall
survive the transfer of Subject Shares by
you.
(c) Notice of Claims, etc. Promptly after
receipt by an indemnified party of notice
of the commencement of any action or
proceeding involving a claim referred to
in the preceding subdivisions of this
Section 5, such indemnified party will, if
a claim in respect thereof is to be made
against an indemnifying party, give
written notice to the latter of the
commencement of such action, provided,
however, that the failure of any
indemnified party to give notice as
provided herein shall not relieve the
indemnifying party of its obligations
under the preceding subdivisions of this
Section 5. In case any such action is
brought against an indemnified party,
unless in such indemnified party's
reasonable judgment a conflict of interest
between such indemnified and indemnifying
party may exist in respect of such claim,
the indemnifying party shall be entitled
to participate in, and to assume the
defense thereof, jointly with any other
indemnifying party similarly notified, to
the extent that it may wish, with counsel
reasonably satisfactory to such
indemnified party, and after notice from
the indemnifying party to such indemnified
party of its election so to assume the
defense thereof, the indemnifying party
shall not be liable to such indemnified
party for any legal or other expenses
subsequently incurred by the latter in
connection with the defense thereof other
than reasonable costs of investigation.
No indemnifying party shall, without the
consent of the indemnified party, consent
to entry of any judgment or enter into any
settlement of such proceedings which does
not include as an unconditional term
thereof the giving by the claimant or
plaintiff to such indemnified party of a
complete and unconditional release from
all liability in respect to such claim or
litigation.
(d) Indemnification Payments. The
indemnification required by this Section 5
shall be made by periodic payments of the
amount thereof during the course of the
investigation or defense, as and when
bills are received or expense, loss,
damage or liability is incurred.
(e) Contribution. If the indemnification
provided for in this Section 5 is held by
a court of competent jurisdiction to be
unavailable with respect to any loss,
liability, claim, damage or expense
referred to herein, then the indemnifying
party, in lieu of indemnifying such
indemnified party hereunder, shall
contribute to the amount paid or payable
by such indemnified party as a result of
such loss, liability, damage or expense,
in such manner as the underwriter(s) shall
require in the underwriting agreement and,
to the extent not specified therein with
respect to any indemnified party
contemplated by this Section 5 as entitled
to indemnification, in such proportion as
is appropriate to reflect the relative
fault of the indemnifying party on the one
hand and of such indemnified party on the
other in connection with the actual or
alleged statements or omissions which
resulted in such loss, liability, damage
or expense, as well as any other relevant
equitable considerations. The relative
fault of the indemnifying party and of
such indemnified party shall be determined
by reference to, among other things,
whether the untrue or allegedly untrue
statement of a material fact or the
omission or alleged omission to state a
material fact relates to information
supplied by the indemnifying party or by
such indemnified party and the parties'
relative intent, knowledge, access to
information and opportunities to correct
or prevent such statement or omission.
The indemnity and contribution provided
herein shall be in addition to, and not in
lieu of, any other liability that one
party may have to another.
6. Arbitration. In the event of any dispute
between the parties arising out of this Agreement, relating
to any question of contract or tort, including any claims
allegedly based on a violation of any securities laws or
regulations, state or federal, both the Company and you
agree to submit such dispute through the American
Arbitration Association (the "Association") at the
Association's Dallas, Texas, offices, in accordance with the
then-current rules of the Association; the award given by
the arbitrators shall be binding and a judgment can be
obtained on any such award in any court of competent
jurisdiction. It is expressly agreed that the arbitrators,
as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be
amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained
your written consent to such amendment, action or omissions
to act.
8. Notices. Notices and other communications under
this Agreement shall be in writing and shall be sent by
registered mail, postage prepaid, addressed:
(a) if to you, at the address shown above,
unless you have advised the Company in
writing of a different address as to which
notices shall be sent under this
Agreement; and
(b) if to the Company, at 8748 Quarters Lake
Road, Baton Rouge, Louisiana 70809, to the
attention of Mr. David M. Loflin,
President, or to such other address as the
Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto,
whether so expressed or not. This Agreement embodies the
entire agreement and understanding between the Company and
you with respect to the subject matter hereof and supersedes
all prior agreements and understandings relating to the
subject matter hereof. This Agreement shall be construed
and enforced in accordance with, and governed by, the law of
the State of Louisiana. The headings in this Agreement are
for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute
one instrument.
Yours very truly,
MEDIA ENTERTAINMENT, INC.
By: /s/ David M. Loflin
David M. Loflin, President
<PAGE>
- ---------------------------
EXHIBIT 10.8
- ---------------------------
June 19, 1998
R. Logan Kock
Registration Rights
Letter Agreement
Dear Mr. Kock:
This letter will confirm our agreement and
understanding with respect to certain rights to register,
under the Securities Act of 1933, as amended (the "Act"),
and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 50,000 shares of the $.0001 par
value common stock (the "Subject Shares") of Media
Entertainment, Inc., a Nevada corporation (the "Company"),
which shares of Common Stock underlie certain common stock
purchase warrants (the "Warrants") of the Company owned by
you. It is our understanding that:
1. Registration Rights. At any time during the
exercise period of the Warrants and after you have elected
to exercise all of the Warrants owned by you, you may demand
on one occasion, in writing, the registration under the Act
for sale the Subject Shares underlying the Warrants owned by
you; provided, however, that such registration right may not
be exercised prior to July 1, 1998. Upon receipt of your
written demand for registration, the Company will take steps
to register your Subject Shares in a registration statement
(the "Registration Statement") under the Act. Your right to
such registration may be exercised one time only.
2. Expenses. All expenses incurred in connection
with the registration of the Subject Shares requested
pursuant to Section 1, including, without limitation, all
accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the
Company.
3. Registration Procedures. At such time as the
Company is required to register any of the Subject Shares
hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with
the Securities and Exchange Commission
(the "Commission"), a Registration
Statement with respect to the Subject
Shares and use its best efforts to cause
such Registration Statement to become
effective, such Registration Statement to
comply as to form and content and in all
material respects to the Commission's
forms, rules and regulations;
(b) prepare and file with the Commission such
amendments and supplements to the
Registration Statement, the prospectus and
any summary or preliminary prospectus
forming a part of, and used in connection
therewith, as may be necessary to keep
such Registration Statement and prospectus
effective and current and to comply with
the provisions of the Act with respect to
the disposition of all of the Subject
Shares and other securities, if any,
covered by such Registration Statement
until the earlier of such time as all of
such securities have been disposed of in
accordance with the intended methods of
disposition by the seller or sellers
thereof set forth in such Registration
Statement or the expiration of 120 days
after such Registration Statement becomes
effective; and will furnish to you prior
to the filing thereof a copy of any
amendment or supplement to such
Registration Statement or prospectus and
shall not file any such amendment or
supplement to which you shall have
reasonably objected on the grounds that
such amendment or supplement does not
comply in all material respects with the
requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed
copies of such Registration Statement and
of each such amendment and supplement
thereto (in each case including all
exhibits), such number of copies of the
prospectus included in such Registration
Statement (including each preliminary
prospectus and any summary prospectus),
all in conformity as to form and substance
with the requirements of the Act, such
number of copies of documents, if any,
incorporated by reference in such
Registration Statement or prospectus, and
such other documents, as you may
reasonably request;
(d) use its best efforts to register or
qualify all the Subject Shares covered by
such Registration Statement under such
other securities or blue sky laws of such
U.S. jurisdictions, as reasonably
requested by you, that permit
"registration by coordination" of
securities offerings (the Company shall
not be required to register or qualify the
Subject Shares in any state invoking merit
review authority), to keep such
registration or qualification in effect
for a minimum of 120 days after its
initial effective date, and do any and all
other acts and things which may be
necessary or advisable to enable you to
consummate the disposition in such
jurisdictions of your Subject Shares
covered by such Registration Statement,
except that the Company shall not, for any
such purpose, be required to qualify
generally to do business as a foreign
corporation in any jurisdiction wherein it
would not, but for the requirements of
this subdivision (d), be obligated to be
so qualified, or to subject itself to
taxation in any such jurisdiction or to
consent to general service of process in
any such jurisdiction;
(e) furnish to you a signed counterpart,
addressed to you, of (i) an opinion of
counsel for the Company, dated the
effective date of such Registration
Statement, and (ii) a "comfort" letter,
dated the effective date of such
Registration Statement, signed by the
independent public accountants who have
certified the Company's financial
statements included in such Registration
Statement, covering substantially the same
matters with respect to such Registration
Statement (and the prospectus included
therein) and, in the case of such
accountants' letter, with respect to
events subsequent to the date of such
financial statements, as are customarily
covered in opinions of issuer's counsel
and in accountants' letters delivered to
underwriters in underwritten public
offerings of securities and such other
legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when
a prospectus relating thereto is required
to be delivered under the Act, upon
discovery that, or upon the happening of
any event as a result of which, the
prospectus included in such Registration
Statement, as then in effect, includes an
untrue statement of a material fact or
omits to state any material fact required
to be stated therein or necessary to make
the statements therein not misleading in
light of the circumstances then existing,
and, at your request, prepare and furnish
to you a reasonable number of copies of a
supplement to, or an amendment of, such
prospectus as may be necessary so that, as
thereafter delivered to the purchasers of
the Subject Shares, such prospectus shall
not include 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 not misleading in the
light of the circumstances then existing;
(g) otherwise use its best efforts to comply
with all applicable rules and regulations
of the Commission, and make available to
its securities holders, as soon as
reasonably practicable, an earnings
statement covering the period of at least
twelve months beginning with the first
month of the first fiscal quarter after
the effective date of such Registration
Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of
the Act; and
(h) provide and cause to be maintained a
transfer agent and registrar for the
Subject Shares covered by such
Registration Statement from and after a
date not later than the effective date of
such Registration Statement.
The Company may require you to furnish the Company
such information regarding your sales of the Subject Shares
as the Company may from time to time reasonably request in
writing and as shall be required by law or by the Commission
in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in
the preparation of such Registration Statement and all
prospectuses and supplements or amendments thereto.
4. Preparation; Reasonable Investigation. In
connection with the preparation and filing of the
Registration Statement registering your Subject Shares under
the Act, the Company will give you and your underwriters, if
any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein and
filed with the Commission and each amendment thereof or
supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss
the business of the Company with its officers and the
independent public accountants who have certified its
financial statements as shall be necessary in the opinion of
you and such underwriter or your respective counsel, to
conduct a reasonable investigation within the meaning of the
Act.
5. Indemnification.
(a) Indemnification by the Company. In the
event of registration of your Subject
Shares under the Act, the Company will,
and hereby does, indemnify and hold you
harmless, against any and all losses,
claims, damages, liabilities or expenses,
joint or several (including, without
limitation, the costs and expenses of
investigating, preparing for and defending
any legal proceeding, including reasonable
attorneys' fees) to which you may become
subject under the Act or otherwise,
insofar as such losses, claims, damages,
liabilities or expenses (or actions or
proceedings in respect thereof) arise out
of, or are based upon, (i) any untrue
statement or alleged untrue statement of
any material fact contained in the
Registration Statement under which your
Subject Shares were registered under the
Act, any preliminary prospectus, final
prospectus or summary prospectus contained
therein, or any amendment or supplement
thereto, or any document incorporated by
reference therein, or (ii) any omission or
alleged omission to state therein a
material fact required to be stated
therein or necessary to make the
statements therein not misleading, and the
Company will reimburse you for any legal
or any other expenses reasonably incurred
by you in connection with investigating or
defending any such loss, claim, liability,
action or proceeding; provided, however,
that the Company shall not be liable in
any such case to the extent that any such
loss, claim, damage, liability or expense
(or action or proceeding in respect
thereof) arises out of or is based upon an
untrue statement or alleged untrue
statement or omission or alleged omission
made in such Registration Statement, any
such preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement in reliance upon, and in
conformity with, written information
furnished to the Company through an
instrument duly executed by you stating
that it is for use in the preparation
thereof. Such indemnity shall remain in
full force and effect regardless of any
investigation made by or on behalf of you
and shall survive the transfer of the
Subject Shares by you.
(b) Indemnification by You. In the event of
registration of your Subject Shares under
the Act, pursuant to which you offer or
sell Subject Shares covered by such
Registration Statement, you will, and
hereby do, indemnify and hold harmless (in
the same manner and to the same extent as
set forth in subdivision (a) of this
Section 5) the Company, each director of
the Company, each officer of the Company
who shall sign such Registration Statement
and each other person, if any, who
controls the Company within the meaning of
the Act, with respect to any statement in,
or omission from, such Registration
Statement, any preliminary prospectus,
final prospectus or summary prospectus
included therein, or any amendment or
supplement thereto, if such statement or
omission was made in reliance upon and in
conformity with written information
furnished to the Company through an
instrument duly executed by you
specifically stating that it is for use in
the preparation of such Registration
Statement, preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement. Such indemnity shall
remain in full force and effect regardless
of any investigation made by or on behalf
of the Company or any such director,
officer or controlling person and shall
survive the transfer of Subject Shares by
you.
(c) Notice of Claims, etc. Promptly after
receipt by an indemnified party of notice
of the commencement of any action or
proceeding involving a claim referred to
in the preceding subdivisions of this
Section 5, such indemnified party will, if
a claim in respect thereof is to be made
against an indemnifying party, give
written notice to the latter of the
commencement of such action, provided,
however, that the failure of any
indemnified party to give notice as
provided herein shall not relieve the
indemnifying party of its obligations
under the preceding subdivisions of this
Section 5. In case any such action is
brought against an indemnified party,
unless in such indemnified party's
reasonable judgment a conflict of interest
between such indemnified and indemnifying
party may exist in respect of such claim,
the indemnifying party shall be entitled
to participate in, and to assume the
defense thereof, jointly with any other
indemnifying party similarly notified, to
the extent that it may wish, with counsel
reasonably satisfactory to such
indemnified party, and after notice from
the indemnifying party to such indemnified
party of its election so to assume the
defense thereof, the indemnifying party
shall not be liable to such indemnified
party for any legal or other expenses
subsequently incurred by the latter in
connection with the defense thereof other
than reasonable costs of investigation.
No indemnifying party shall, without the
consent of the indemnified party, consent
to entry of any judgment or enter into any
settlement of such proceedings which does
not include as an unconditional term
thereof the giving by the claimant or
plaintiff to such indemnified party of a
complete and unconditional release from
all liability in respect to such claim or
litigation.
(d) Indemnification Payments. The
indemnification required by this Section 5
shall be made by periodic payments of the
amount thereof during the course of the
investigation or defense, as and when
bills are received or expense, loss,
damage or liability is incurred.
(e) Contribution. If the indemnification
provided for in this Section 5 is held by
a court of competent jurisdiction to be
unavailable with respect to any loss,
liability, claim, damage or expense
referred to herein, then the indemnifying
party, in lieu of indemnifying such
indemnified party hereunder, shall
contribute to the amount paid or payable
by such indemnified party as a result of
such loss, liability, damage or expense,
in such manner as the underwriter(s) shall
require in the underwriting agreement and,
to the extent not specified therein with
respect to any indemnified party
contemplated by this Section 5 as entitled
to indemnification, in such proportion as
is appropriate to reflect the relative
fault of the indemnifying party on the one
hand and of such indemnified party on the
other in connection with the actual or
alleged statements or omissions which
resulted in such loss, liability, damage
or expense, as well as any other relevant
equitable considerations. The relative
fault of the indemnifying party and of
such indemnified party shall be determined
by reference to, among other things,
whether the untrue or allegedly untrue
statement of a material fact or the
omission or alleged omission to state a
material fact relates to information
supplied by the indemnifying party or by
such indemnified party and the parties'
relative intent, knowledge, access to
information and opportunities to correct
or prevent such statement or omission.
The indemnity and contribution provided
herein shall be in addition to, and not in
lieu of, any other liability that one
party may have to another.
6. Arbitration. In the event of any dispute
between the parties arising out of this Agreement, relating
to any question of contract or tort, including any claims
allegedly based on a violation of any securities laws or
regulations, state or federal, both the Company and you
agree to submit such dispute through the American
Arbitration Association (the "Association") at the
Association's Dallas, Texas, offices, in accordance with the
then-current rules of the Association; the award given by
the arbitrators shall be binding and a judgment can be
obtained on any such award in any court of competent
jurisdiction. It is expressly agreed that the arbitrators,
as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be
amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained
your written consent to such amendment, action or omissions
to act.
8. Notices. Notices and other communications under
this Agreement shall be in writing and shall be sent by
registered mail, postage prepaid, addressed:
(a) if to you, at the address shown above,
unless you have advised the Company in
writing of a different address as to which
notices shall be sent under this
Agreement; and
(b) if to the Company, at 8748 Quarters Lake
Road, Baton Rouge, Louisiana 70809, to the
attention of Mr. David M. Loflin,
President, or to such other address as the
Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto,
whether so expressed or not. This Agreement embodies the
entire agreement and understanding between the Company and
you with respect to the subject matter hereof and supersedes
all prior agreements and understandings relating to the
subject matter hereof. This Agreement shall be construed
and enforced in accordance with, and governed by, the law of
the State of Louisiana. The headings in this Agreement are
for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute
one instrument.
Yours very truly,
MEDIA ENTERTAINMENT, INC.
By: /s/ David M. Loflin
David M. Loflin, President
<PAGE>
June 19, 1998
Rogers Family Trust
Registration Rights
Letter Agreement
Ladies and Gentlemen:
This letter will confirm our agreement and
understanding with respect to certain rights to register,
under the Securities Act of 1933, as amended (the "Act"),
and applicable state securities laws ("Blue Sky Laws"), the
offer and sale of up to 50,000 shares of the $.0001 par
value common stock (the "Subject Shares") of Media
Entertainment, Inc., a Nevada corporation (the "Company"),
which shares of Common Stock underlie certain common stock
purchase warrants (the "Warrants") of the Company owned by
you. It is our understanding that:
1. Registration Rights. At any time during the
exercise period of the Warrants and after you have elected
to exercise all of the Warrants owned by you, you may demand
on one occasion, in writing, the registration under the Act
for sale the Subject Shares underlying the Warrants owned by
you; provided, however, that such registration right may not
be exercised prior to July 1, 1998. Upon receipt of your
written demand for registration, the Company will take steps
to register your Subject Shares in a registration statement
(the "Registration Statement") under the Act. Your right to
such registration may be exercised one time only.
2. Expenses. All expenses incurred in connection
with the registration of the Subject Shares requested
pursuant to Section 1, including, without limitation, all
accounting and printing costs and fees, filing fees and
reasonable attorney fees incurred, shall be paid by the
Company.
3. Registration Procedures. At such time as the
Company is required to register any of the Subject Shares
hereunder, the Company will promptly:
(a) prepare and file, in a timely manner, with
the Securities and Exchange Commission
(the "Commission"), a Registration
Statement with respect to the Subject
Shares and use its best efforts to cause
such Registration Statement to become
effective, such Registration Statement to
comply as to form and content and in all
material respects to the Commission's
forms, rules and regulations;
(b) prepare and file with the Commission such
amendments and supplements to the
Registration Statement, the prospectus and
any summary or preliminary prospectus
forming a part of, and used in connection
therewith, as may be necessary to keep
such Registration Statement and prospectus
effective and current and to comply with
the provisions of the Act with respect to
the disposition of all of the Subject
Shares and other securities, if any,
covered by such Registration Statement
until the earlier of such time as all of
such securities have been disposed of in
accordance with the intended methods of
disposition by the seller or sellers
thereof set forth in such Registration
Statement or the expiration of 120 days
after such Registration Statement becomes
effective; and will furnish to you prior
to the filing thereof a copy of any
amendment or supplement to such
Registration Statement or prospectus and
shall not file any such amendment or
supplement to which you shall have
reasonably objected on the grounds that
such amendment or supplement does not
comply in all material respects with the
requirements of the Act or the rules or
regulations thereunder;
(c) furnish to you such number of conformed
copies of such Registration Statement and
of each such amendment and supplement
thereto (in each case including all
exhibits), such number of copies of the
prospectus included in such Registration
Statement (including each preliminary
prospectus and any summary prospectus),
all in conformity as to form and substance
with the requirements of the Act, such
number of copies of documents, if any,
incorporated by reference in such
Registration Statement or prospectus, and
such other documents, as you may
reasonably request;
(d) use its best efforts to register or
qualify all the Subject Shares covered by
such Registration Statement under such
other securities or blue sky laws of such
U.S. jurisdictions, as reasonably
requested by you, that permit
"registration by coordination" of
securities offerings (the Company shall
not be required to register or qualify the
Subject Shares in any state invoking merit
review authority), to keep such
registration or qualification in effect
for a minimum of 120 days after its
initial effective date, and do any and all
other acts and things which may be
necessary or advisable to enable you to
consummate the disposition in such
jurisdictions of your Subject Shares
covered by such Registration Statement,
except that the Company shall not, for any
such purpose, be required to qualify
generally to do business as a foreign
corporation in any jurisdiction wherein it
would not, but for the requirements of
this subdivision (d), be obligated to be
so qualified, or to subject itself to
taxation in any such jurisdiction or to
consent to general service of process in
any such jurisdiction;
(e) furnish to you a signed counterpart,
addressed to you, of (i) an opinion of
counsel for the Company, dated the
effective date of such Registration
Statement, and (ii) a "comfort" letter,
dated the effective date of such
Registration Statement, signed by the
independent public accountants who have
certified the Company's financial
statements included in such Registration
Statement, covering substantially the same
matters with respect to such Registration
Statement (and the prospectus included
therein) and, in the case of such
accountants' letter, with respect to
events subsequent to the date of such
financial statements, as are customarily
covered in opinions of issuer's counsel
and in accountants' letters delivered to
underwriters in underwritten public
offerings of securities and such other
legal and financial matters, as you may
reasonably request;
(f) immediately notify you, at any time, when
a prospectus relating thereto is required
to be delivered under the Act, upon
discovery that, or upon the happening of
any event as a result of which, the
prospectus included in such Registration
Statement, as then in effect, includes an
untrue statement of a material fact or
omits to state any material fact required
to be stated therein or necessary to make
the statements therein not misleading in
light of the circumstances then existing,
and, at your request, prepare and furnish
to you a reasonable number of copies of a
supplement to, or an amendment of, such
prospectus as may be necessary so that, as
thereafter delivered to the purchasers of
the Subject Shares, such prospectus shall
not include 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 not misleading in the
light of the circumstances then existing;
(g) otherwise use its best efforts to comply
with all applicable rules and regulations
of the Commission, and make available to
its securities holders, as soon as
reasonably practicable, an earnings
statement covering the period of at least
twelve months beginning with the first
month of the first fiscal quarter after
the effective date of such Registration
Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of
the Act; and
(h) provide and cause to be maintained a
transfer agent and registrar for the
Subject Shares covered by such
Registration Statement from and after a
date not later than the effective date of
such Registration Statement.
The Company may require you to furnish the Company
such information regarding your sales of the Subject Shares
as the Company may from time to time reasonably request in
writing and as shall be required by law or by the Commission
in connection therewith. Such information shall be
furnished in writing by you stating that it is for use in
the preparation of such Registration Statement and all
prospectuses and supplements or amendments thereto.
4. Preparation; Reasonable Investigation. In
connection with the preparation and filing of the
Registration Statement registering your Subject Shares under
the Act, the Company will give you and your underwriters, if
any, and your counsel and accountants at your own expense,
the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein and
filed with the Commission and each amendment thereof or
supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss
the business of the Company with its officers and the
independent public accountants who have certified its
financial statements as shall be necessary in the opinion of
you and such underwriter or your respective counsel, to
conduct a reasonable investigation within the meaning of the
Act.
5. Indemnification.
(a) Indemnification by the Company. In the
event of registration of your Subject
Shares under the Act, the Company will,
and hereby does, indemnify and hold you
harmless, against any and all losses,
claims, damages, liabilities or expenses,
joint or several (including, without
limitation, the costs and expenses of
investigating, preparing for and defending
any legal proceeding, including reasonable
attorneys' fees) to which you may become
subject under the Act or otherwise,
insofar as such losses, claims, damages,
liabilities or expenses (or actions or
proceedings in respect thereof) arise out
of, or are based upon, (i) any untrue
statement or alleged untrue statement of
any material fact contained in the
Registration Statement under which your
Subject Shares were registered under the
Act, any preliminary prospectus, final
prospectus or summary prospectus contained
therein, or any amendment or supplement
thereto, or any document incorporated by
reference therein, or (ii) any omission or
alleged omission to state therein a
material fact required to be stated
therein or necessary to make the
statements therein not misleading, and the
Company will reimburse you for any legal
or any other expenses reasonably incurred
by you in connection with investigating or
defending any such loss, claim, liability,
action or proceeding; provided, however,
that the Company shall not be liable in
any such case to the extent that any such
loss, claim, damage, liability or expense
(or action or proceeding in respect
thereof) arises out of or is based upon an
untrue statement or alleged untrue
statement or omission or alleged omission
made in such Registration Statement, any
such preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement in reliance upon, and in
conformity with, written information
furnished to the Company through an
instrument duly executed by you stating
that it is for use in the preparation
thereof. Such indemnity shall remain in
full force and effect regardless of any
investigation made by or on behalf of you
and shall survive the transfer of the
Subject Shares by you.
(b) Indemnification by You. In the event of
registration of your Subject Shares under
the Act, pursuant to which you offer or
sell Subject Shares covered by such
Registration Statement, you will, and
hereby do, indemnify and hold harmless (in
the same manner and to the same extent as
set forth in subdivision (a) of this
Section 5) the Company, each director of
the Company, each officer of the Company
who shall sign such Registration Statement
and each other person, if any, who
controls the Company within the meaning of
the Act, with respect to any statement in,
or omission from, such Registration
Statement, any preliminary prospectus,
final prospectus or summary prospectus
included therein, or any amendment or
supplement thereto, if such statement or
omission was made in reliance upon and in
conformity with written information
furnished to the Company through an
instrument duly executed by you
specifically stating that it is for use in
the preparation of such Registration
Statement, preliminary prospectus, final
prospectus, summary prospectus, amendment
or supplement. Such indemnity shall
remain in full force and effect regardless
of any investigation made by or on behalf
of the Company or any such director,
officer or controlling person and shall
survive the transfer of Subject Shares by
you.
(c) Notice of Claims, etc. Promptly after
receipt by an indemnified party of notice
of the commencement of any action or
proceeding involving a claim referred to
in the preceding subdivisions of this
Section 5, such indemnified party will, if
a claim in respect thereof is to be made
against an indemnifying party, give
written notice to the latter of the
commencement of such action, provided,
however, that the failure of any
indemnified party to give notice as
provided herein shall not relieve the
indemnifying party of its obligations
under the preceding subdivisions of this
Section 5. In case any such action is
brought against an indemnified party,
unless in such indemnified party's
reasonable judgment a conflict of interest
between such indemnified and indemnifying
party may exist in respect of such claim,
the indemnifying party shall be entitled
to participate in, and to assume the
defense thereof, jointly with any other
indemnifying party similarly notified, to
the extent that it may wish, with counsel
reasonably satisfactory to such
indemnified party, and after notice from
the indemnifying party to such indemnified
party of its election so to assume the
defense thereof, the indemnifying party
shall not be liable to such indemnified
party for any legal or other expenses
subsequently incurred by the latter in
connection with the defense thereof other
than reasonable costs of investigation.
No indemnifying party shall, without the
consent of the indemnified party, consent
to entry of any judgment or enter into any
settlement of such proceedings which does
not include as an unconditional term
thereof the giving by the claimant or
plaintiff to such indemnified party of a
complete and unconditional release from
all liability in respect to such claim or
litigation.
(d) Indemnification Payments. The
indemnification required by this Section 5
shall be made by periodic payments of the
amount thereof during the course of the
investigation or defense, as and when
bills are received or expense, loss,
damage or liability is incurred.
(e) Contribution. If the indemnification
provided for in this Section 5 is held by
a court of competent jurisdiction to be
unavailable with respect to any loss,
liability, claim, damage or expense
referred to herein, then the indemnifying
party, in lieu of indemnifying such
indemnified party hereunder, shall
contribute to the amount paid or payable
by such indemnified party as a result of
such loss, liability, damage or expense,
in such manner as the underwriter(s) shall
require in the underwriting agreement and,
to the extent not specified therein with
respect to any indemnified party
contemplated by this Section 5 as entitled
to indemnification, in such proportion as
is appropriate to reflect the relative
fault of the indemnifying party on the one
hand and of such indemnified party on the
other in connection with the actual or
alleged statements or omissions which
resulted in such loss, liability, damage
or expense, as well as any other relevant
equitable considerations. The relative
fault of the indemnifying party and of
such indemnified party shall be determined
by reference to, among other things,
whether the untrue or allegedly untrue
statement of a material fact or the
omission or alleged omission to state a
material fact relates to information
supplied by the indemnifying party or by
such indemnified party and the parties'
relative intent, knowledge, access to
information and opportunities to correct
or prevent such statement or omission.
The indemnity and contribution provided
herein shall be in addition to, and not in
lieu of, any other liability that one
party may have to another.
6. Arbitration. In the event of any dispute
between the parties arising out of this Agreement, relating
to any question of contract or tort, including any claims
allegedly based on a violation of any securities laws or
regulations, state or federal, both the Company and you
agree to submit such dispute through the American
Arbitration Association (the "Association") at the
Association's Dallas, Texas, offices, in accordance with the
then-current rules of the Association; the award given by
the arbitrators shall be binding and a judgment can be
obtained on any such award in any court of competent
jurisdiction. It is expressly agreed that the arbitrators,
as part of their award, can award attorneys fees to the
prevailing party.
7. Amendments and Waivers. This Agreement may be
amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained
your written consent to such amendment, action or omissions
to act.
8. Notices. Notices and other communications under
this Agreement shall be in writing and shall be sent by
registered mail, postage prepaid, addressed:
(a) if to you, at the address shown above,
unless you have advised the Company in
writing of a different address as to which
notices shall be sent under this
Agreement; and
(b) if to the Company, at 8748 Quarters Lake
Road, Baton Rouge, Louisiana 70809, to the
attention of Mr. David M. Loflin,
President, or to such other address as the
Company shall have furnished to you.
9. Miscellaneous. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto,
whether so expressed or not. This Agreement embodies the
entire agreement and understanding between the Company and
you with respect to the subject matter hereof and supersedes
all prior agreements and understandings relating to the
subject matter hereof. This Agreement shall be construed
and enforced in accordance with, and governed by, the law of
the State of Louisiana. The headings in this Agreement are
for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute
one instrument.
Yours very truly,
MEDIA ENTERTAINMENT, INC.
By: /s/ David M. Loflin
David M. Loflin, President
<PAGE>
- ---------------------------
EXHIBIT 10.9
- ---------------------------
WARRANT AGREEMENT
THIS AGREEMENT dated as of May 18, 1998, between Media
Entertainment, Inc., a Nevada corporation (the "Company"),
and Securities Transfer Corporation, a Texas corporation
(the "Warrant Agent").
RECITALS:
A. Pursuant to a private offering of 300,000
units of securities (the "Units") by the
Company, the Company proposes to issue to
the purchasers of the Units 300,000
Warrants (individually, a "Warrant", and,
collectively, the "Warrants"), to purchase
an aggregate of 300,000 shares of Common
Stock of the Company (the "Warrant
Shares").
B. The Company desires to provide for the
issuance of warrant certificates (the
"Warrant Certificates") representing the
Warrants.
C. The Company desires the Warrant Agent to
act on behalf of the Company, and the
Warrant Agent is willing to so act, in
connection with the issuance,
registration, transfer and exchange of
Warrant Certificates and exercise of the
Warrants.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements hereinafter set forth and for the purpose
of defining the terms and provisions of the Warrant
Certificates and the Warrants, and the respective rights and
obligations thereunder of the Company, the registered
holders of the Warrant Certificates and the Warrant Agent,
the parties hereto agree as follows:
1. Definitions. As used herein:
A. "Common Stock" shall mean shares of common
stock of the Company, $.0001 par value
(the "Common Stock"), whether now or
hereafter authorized, which have the right
to participate in the distribution of
earnings and assets of the Company without
limit as to amount or percentage.
B. "Corporate Office" shall mean the place of
business of the Warrant Agent located in
Dallas, Texas, or its successor (for the
mailing address of the Warrant Agent, see
paragraph 12 hereof).
C. "Exercise Period" shall mean the period
commencing on the date of the issuance of
the Warrants and ending on the Expiration
Date.
D. "Exercise Price" shall mean a purchase
price of $2.00 per share of Common Stock
(the "Warrant Exercise Price").
E. "Expiration Date" shall mean 5:00 p.m.
Central Time, on the date which is two (2)
years from the date of execution hereof,
or if such day shall be a holiday or day
on which banks are authorized to close,
then 5:00 p.m. Central Time, whichever is
in effect, on the next following day that
in the State of Texas is not a holiday or
a day on which banks are authorized to
close.
F. "Registered Holder" shall mean the person
in whose name any Warrant Certificate
shall be registered on the books
maintained by the Warrant Agent pursuant
to this Agreement.
G. "Subsidiary" shall mean any corporation of
which shares having ordinary voting power
to elect a majority of the Board of
Directors of such corporation (regardless
of whether the shares of any other class
or classes of such corporation shall have
or may have voting power by reason of the
happening of any contingency) are at the
time directly or indirectly owned by the
Company or one or more subsidiaries of the
Company.
H. "Transfer Agent" shall mean the Company's
transfer agent, Securities Transfer
Corporation, or its successor.
I. "Warrant" or "Warrants" shall mean and
include up to 300,000 Warrants to be
issued to the purchasers of the Units to
purchase a like number of shares of the
authorized and unissued Common Stock of
the Company.
J. "Warrant Shares" shall mean and include up
to 300,000 shares of authorized and
unissued Common Stock initially reserved
for issuance on exercise of the Warrants
and any additional shares of Common Stock
or other property which may hereafter be
issuable or deliverable on exercise of the
Warrants pursuant to paragraph 5 of this
Agreement.
2. Appointment of Warrant Agent. The Company
hereby appoints the Warrant Agent to act as
agent for the Company in accordance with the
instructions set forth hereafter in this
Agreement, and the Warrant Agent hereby accepts
such appointment and agrees to perform the
duties and obligations required of it, as such
duties and obligations are set forth herein.
3. Warrants and Issuance of Warrant Certificates.
Each Warrant shall initially entitle the
Registered Holder of the Warrant Certificate
representing such Warrant to purchase one shares
of Common Stock on exercise thereof, subject to
modification and adjustment as hereinafter
provided in paragraph 9. The Warrant
Certificates will be issued and delivered by the
Warrant Agent on written order of the Company
signed by its President and attested by its
Secretary or Assistant Secretary. The Warrant
Agent shall deliver Warrant Certificates in
required whole number denominations to the
persons entitled thereto in connection with any
transfer or exchange permitted under this
Agreement.
4. Form and Execution of Warrant Certificates. The
Warrant Certificates representing the Warrants
to be issued to the purchasers of the Units
shall be substantially in the form attached as
Exhibit "A" and may have such letters, numbers
or other marks of identification and such
legends, summaries or endorsements printed,
lithographed or engraved thereon as the Company
may deem appropriate and as are not inconsistent
with the provisions hereof.
The Warrant Certificates shall be dated as of
the date of issuance, whether on initial
issuance, transfer, exchange or in lieu of
mutilated, lost, stolen or destroyed Warrant
Certificates.
Warrant Certificates representing the Warrants
to be issued to the purchasers of the Units
shall be numbered serially with the letters
"WPO" preceding the number of each Warrant
Certificate.
Warrant Certificates shall be executed on behalf
of the Company by its President and Secretary,
by manual signatures or by facsimile signatures
printed thereon, and shall have imprinted
thereon a facsimile of the Company's seal.
Warrant Certificates shall be manually
countersigned by the Warrant Agent and shall not
be valid for any purpose unless so
countersigned. In the event any officer of the
Company who executed the Warrant Certificates
shall cease to be an officer of the Company
before the date of issuance of the Warrant
Certificates or before countersignature and
delivery by the Warrant Agent, such Warrant
Certificates may be countersigned, issued and
delivered by the Warrant Agent with the same
force and effect as though the person who signed
such Warrant Certificates had not ceased to be
an officer of the Company.
5. Exercise of Warrants. The Warrants shall be
exercisable during the Exercise Period. A
Warrant shall be deemed to have been exercised
immediately prior to the close of business on
the date of the surrender for exercise (the
"Exercise Date") of the Warrant Certificate.
The exercise form shall be executed by the
Registered Holder thereof or his attorney duly
authorized in writing and shall be delivered
together with payment to the Warrant Agent, in
cash or by official bank or certified check, of
an amount in lawful money of the United States
of America. Such payment shall be in an amount
equal to the Exercise Price per Warrant as
hereinabove defined.
The person entitled to receive the number of
Warrant Shares deliverable on such exercise
shall be treated for all purposes as the holder
of such Warrant Shares as of the close of
business on the Exercise Date. The Company
shall not be obligated to issue any fractional
share interests in Warrant Shares issuable on
exercise of a Warrant. If more than one Warrant
shall be exercised at one time by the same
Registered Holder, the number of full shares
which shall be issuable on exercise thereof
shall be computed on the basis of the aggregate
number of full shares issuable on such exercise.
As soon as practicable on or after the Exercise
Date and in any event within 30 days after such
date, the Warrant Agent shall cause to be issued
and delivered to the person or persons entitled
to receive the same, a certificate or
certificates for the number of Warrant Shares
deliverable on such exercise. No adjustment
shall be made in respect of cash dividends on
Warrant Shares deliverable on exercise of any
Warrant. The Warrant Agent shall promptly
notify the Company in writing of any exercise of
any Warrant and of the number of Warrant Shares
delivered and shall cause payment of an amount
in cash equal to the Exercise Price to be made
promptly to the order of the Company. The
parties contemplate such payments will be made
by the Warrant Agent to the Company as collected
funds are received by the Warrant Agent. The
Warrant Agent shall hold any proceeds collected
and not yet paid to the Company in a
Federally-insured escrow account at a commercial
bank selected by the Warrant Agent, at all times
relevant hereto. Following a determination by
the Warrant Agent that collected funds have been
received, the Warrant Agent shall cause share
certificates to be issued representing the
number of Warrants exercised by the holder.
Expenses incurred by the Warrant Agent
hereunder, including administrative costs, costs
of maintaining records and other expenses, shall
be paid by the Company according to the standard
fees imposed by the Warrant Agent for such
services.
A detailed accounting statement setting forth
the number of Warrants exercised, the net amount
of exercised funds and all expenses incurred by
the Warrant Agent shall be transmitted to the
Company on payment of each exercise amount.
Such accounting statement shall serve as an
interim accounting for the Company during the
Exercise Period. The Warrant Agent shall render
to the Company a complete accounting setting
forth the number of Warrants exercised, the
identity of persons exercising such Warrants,
the number of shares issued, the amounts to be
distributed to the Company and all other
expenses incurred by the Warrant Agent, at the
completion of the Exercise Period.
6. Reservation of Shares and Payment of Taxes. The
Company covenants that it will, at all times,
reserve and have available from its authorized
shares of Common Stock such number of shares of
Common Stock as shall then be issuable on
exercise of all outstanding Warrants. The
Company covenants that all Warrant Shares, when
issued, shall be duly and validly issued, fully
paid and non-assessable, and free from all
taxes, liens and charges with respect to the
issue thereof.
If any Warrant Shares require registration with,
or approval of, any government authority under
any Federal or state law before such shares may
be validly issued or delivered, the Company
covenants it will, in good faith and as
expeditiously as possible, endeavor to secure
such registration or approval, as the case may
be.
Warrantholders shall pay all documentary stamp
or similar taxes and other government charges
that may be imposed with respect to the issuance
of the Warrants, or the issuance, transfer or
delivery of any Warrant Shares on exercise of
the Warrants. In the event the Warrant Shares
are to be delivered in a name other than the
name of the Registered Holder of the Warrant
Certificate, no such delivery shall be made
unless the person requesting the same has paid
to the Warrant Agent the amount of any such
taxes or charges incident thereto.
The Warrant Agent is hereby irrevocably
authorized to requisition certificates for
Warrant Shares from the Transfer Agent as
required from time to time. The Company has,
contemporaneously with the execution of this
Agreement, authorized the Transfer Agent to
comply with all such requisitions. The Company
will file with the Warrant Agent a statement
setting forth the name and address of its
Transfer Agent for the Company's Common Stock
issuable on exercise of the Warrants and of any
successor Transfer Agent.
7. Registration of Transfer of Warrant
Certificates. The Warrant Certificates may not
be transferred in whole or in part except as
authorized in this Agreement. Warrant
Certificates to be exchanged shall be
surrendered to the Warrant Agent at its
Corporate Office. The Company shall execute,
and the Warrant Agent shall countersign, issue
and deliver in exchange therefor, the Warrant
Certificate or Certificates which the holder
making the transfer shall be entitled to
receive.
The Warrant Agent shall keep transfer books at
its Corporate Office in which it shall register
Warrant Certificates and the transfer thereof.
On due presentment for transfer of any Warrant
Certificates at such office, the Company shall
execute, and the Warrant Agent shall issue and
deliver to the transferee or transferees, a new
Warrant Certificate or Certificates representing
an equal aggregate number of Warrants.
The Warrants will not be publicly traded.
8. Loss or Mutilation. On receipt by the Company
and the Warrant Agent of evidence satisfactory
as to the ownership of and the loss, theft,
destruction or mutilation of any Warrant
Certificate, the Company shall execute, and the
Warrant Agent shall countersign and deliver in
lieu thereof, a new Warrant Certificate
representing an equal aggregate number of
Warrants. In the case of loss, theft or
destruction of any Warrant Certificate, the
individual requesting issuance of a new Warrant
Certificate shall be required to indemnify the
Company and Warrant Agent in an amount
satisfactory to each of them. In the event a
Warrant Certificate is mutilated, such
Certificate shall be surrendered and cancelled
by the Warrant Agent prior to delivery of a new
Warrant Certificate. Applicants for a
substitute Warrant Certificate shall also comply
with such other regulations and pay such other
reasonable charges as the Company may prescribe.
9. Adjustment of Exercise Price and Shares.
A. In the event, prior to the expiration of
the Warrants by exercise or by their
terms, the Company shall issue any of its
Common Stock as a stock dividend or shall
subdivide the number of outstanding shares
of Common Stock into a greater number of
shares, then, in either of such events,
the Exercise Price in effect at the time
of such action shall be reduced
proportionately and the number of shares
of Common Stock purchasable pursuant to
the Warrants shall be increased
proportionately. Conversely, in the event
the Company shall reduce the number of its
outstanding shares of Common Stock by
combining such shares into a smaller
number of shares, then, in such event, the
Exercise Price in effect at the time of
such action shall be increased
proportionately and the number of shares
of Common Stock at that time purchasable
pursuant to the Warrants shall be
decreased proportionately. Such stock
dividend paid or distributed on the Common
Stock in shares of any other class of the
Company or securities convertible into
shares of Common Stock shall be treated as
a dividend paid or distributed in shares
of Common Stock to the extent shares of
Common Stock are issuable on the payment
or conversion thereof.
B. In the event, prior to the expiration of
the Warrants by exercise or by their
terms, the Company shall be recapitalized
by reclassifying its outstanding shares of
Common Stock into shares with a different
par value, or by changing its outstanding
Common Stock to shares without par value
or in the event of any other material
change of the capital structure of the
Company or of any successor corporation by
reason of any reclassification,
recapitalization or conveyance, prompt,
proportionate, equitable, lawful and
adequate provision shall be made whereby
any holder of the Warrants shall
thereafter have the right to purchase, on
the basis and the terms and conditions
specified in this Agreement, in lieu of
the shares of Common Stock of the Company
theretofore purchasable on the exercise of
any Warrant, such securities or assets as
may be issued or payable with respect to,
or in exchange for, the number of shares
of Common Stock of the Company theretofore
purchasable on exercise of the Warrants
had such reclassification,
recapitalization or conveyance not taken
place; and, in any such event, the rights
of any holder of a Warrant to any
adjustment in the number of shares of
Common Stock purchasable on exercise of
such Warrant, as set forth above, shall
continue and be preserved in respect of
any stock, securities or assets which the
holder becomes entitled to purchase;
provided, however, that a merger,
acquisition of a going business or a
portion thereof (whether for cash, stock,
notes, other securities, or a combination
of cash and securities), exchange of stock
for stock, exchange of stock for assets,
or like transaction involving the Company
will not be considered a "material change"
for purposes of this paragraph, and no
adjustment shall be made under this
paragraph 9 by reason of any such merger,
acquisition, exchange of stock for stock,
exchange of stock for assets, or like
transaction.
C. In the event the Company, at any time
while the Warrants shall remain unexpired
and unexercised, shall sell all or
substantially all of its property, or
dissolves, liquidates or winds up its
affairs, prompt, proportionate, equitable,
lawful and adequate provision shall be
made as part of the terms of such sale,
dissolution, liquidation or winding up
such that the holder of a Warrant may
thereafter receive, on exercise of such
Warrant, in lieu of each share of Common
Stock of the Company which such holder
would have been entitled to receive upon
exercise of such Warrant, the same kind
and amount of any stock, securities or
assets as may be issuable, distributable
or payable on any such sale, dissolution,
liquidation or winding up with respect to
each share of Common Stock of the Company;
provided, however, that, in the event of
any such sale, dissolution, liquidation or
winding up, the right to exercise the
Warrants shall terminate on a date fixed
by the Company, such date to be not
earlier than 5:00 p.m., Central Time, on
the 30th day next succeeding the date on
which notice of such termination of the
right to exercise the Warrants has been
given by mail to the holders thereof at
such addresses as may appear on the books
of the Company.
D. In the event, prior to the expiration of
the Warrants by exercise or by their
terms, the Company shall take a record of
the holders of its Common Stock for the
purpose of entitling them to purchase
shares of its Common Stock at a price per
share more than 10% below the then-current
market price per share (as defined below)
of its Common Stock at the date of taking
such record, then (i) the number of shares
of Common Stock purchasable pursuant to
the Warrants shall be redetermined as
follows: the number of shares of Common
Stock purchasable pursuant to a Warrant
immediately prior to such adjustment
(taking into account fractional interests
to the nearest 1,000th of a share) shall
be multiplied by a fraction, the numerator
of which shall be the number of shares of
Common Stock of the Company then
outstanding (excluding the Common Stock
then owned by the Company) immediately
prior to the taking of such record, plus
the number of additional shares offered
for purchase, and the denominator of which
shall be the number of shares of Common
Stock of the Company outstanding
(excluding the Common Stock owned by the
Company) immediately prior to the taking
of such record, plus the number of shares
which the aggregate offering price of the
total number of additional shares so
offered would purchase at such current
market price; and (ii) the Exercise Price
per share of Common Stock purchasable
pursuant to a Warrant shall be
redetermined as follows: the Exercise
Price in effect immediately prior to the
taking of such record shall be multiplied
by a fraction, the numerator of which is
the number of shares of Common Stock
purchasable immediately prior to the
taking of such record, and the denominator
of which is the number of shares of Common
Stock purchasable immediately after the
taking of such record as determined
pursuant to clause (i) above. For the
purpose hereof, the current market price
per share of Common Stock of the Company
at any date shall be deemed to be the
average of (A) the highest bid and asked
prices as reported by NASDAQ if the Common
Stock of the Company is admitted to
listing for trading thereon, or (B) the
highest bid and asked prices reported on
the OTC Electronic Bulletin Board of the
NASD, for 30 consecutive business days
commencing 15 business days prior to the
record date.
E. On exercise of the Warrants by the
holders, the Company shall not be required
to deliver fractions of shares of Common
Stock; provided, however, that prompt,
proportionate, equitable, lawful and
adequate adjustment in the Exercise Price
payable shall be made in respect of any
such fraction of one share of Common Stock
on the basis of the Exercise Price per
share.
F. In the event, prior to expiration of the
Warrants by exercise or by their terms,
the Company shall determine to take a
record of the holders of its Common Stock
for the purpose of determining
shareholders entitled to receive any stock
dividend, distribution or other right
which will cause any change or adjustment
in the number, amount, price or nature of
the Common Stock or other stock,
securities or assets deliverable on
exercise of the Warrants pursuant to the
foregoing provisions, the Company shall
give to the Registered Holders of the
Warrants at the addresses as may appear on
the books of the Company at least 15 days'
prior written notice to the effect that it
intends to take such a record. Such
notice shall specify the date as of which
such record is to be taken; the purpose
for which such record is to be taken; and
the number, amount, price and nature of
the Common Stock or other stock,
securities or assets which will be
deliverable on exercise of the Warrants
after the action for which such record
will be taken has been completed. Without
limiting the obligation of the Company to
provide notice to the Registered Holders
of the Warrant Certificates of any
corporate action hereunder, the failure of
the Company to give notice shall not
invalidate such corporate action of the
Company.
G. The Warrant shall not entitle the holder
thereof to any of the rights of
shareholders or to any dividend declared
on the Common Stock, unless the Warrant is
exercised and the Warrant Shares purchased
prior to the record date fixed by the
Board of Directors of the Company for the
determination of holders of Common Stock
entitled to such dividend or other right.
H. No adjustment of the Exercise Price shall
be made as a result of, or in connection
with, (i) the establishment of one or more
employee stock option plans for employees
of the Company, or the modification,
renewal or extension of any such plan, or
the issuance of Common Stock on exercise
of any options pursuant to any such plan,
(ii) the issuance of individual warrants
or options to purchase Common Stock, the
issuance of Common Stock upon exercise of
such warrants or options, or the issuance
of Common Stock in connection with
compensation arrangements for directors,
officers, employees, consultants or agents
of the Company or any Subsidiary, and the
like, or (iii) the issuance of Common
Stock in connection with a merger,
acquisition of a going business or a
portion thereof (whether for cash, stock,
notes, other securities, or a combination
of cash and securities), exchange of stock
for stock, exchange of stock for assets,
or like transaction.
10. Duties, Compensation and Termination of Warrant
Agent. The Warrant Agent shall act hereunder as
agent and in a ministerial capacity for the
Company, and its duties shall be determined
solely by the provisions hereof. The Warrant
Agent shall not, by issuing and delivering
Warrant Certificates or by any other act
hereunder, be deemed to make any representations
as to the validity, value or authorization of
the Warrant Certificates or the Warrants
represented thereby or of the Common Stock or
other property delivered on exercise of any
Warrant. The Warrant Agent shall not be under
any duty or responsibility to any holder of the
Warrant Certificates to make or cause to be made
any adjustment of the Exercise Price or to
determine whether any fact exists which may
require any such adjustments.
The Warrant Agent shall not (i) be liable for
any recital or statement of fact contained
herein or for any action taken or omitted by it
in reliance on any Warrant Certificate or other
document or instrument believed by it in good
faith to be genuine and to have been signed or
presented by the proper party or parties, (ii)
be responsible for any failure on the part of
the Company to comply with any of its covenants
and obligations contained in this Agreement or
in the Warrant Certificates, or (iii) be liable
for any act or omission in connection with this
Agreement, except for its own negligence or
willful misconduct.
The Warrant Agent may, at any time, consult with
counsel satisfactory to it (who may be counsel
for the Company) and shall incur no liability or
responsibility for any action taken or omitted
by it in good faith in accordance with such
notice, statement, instruction, request,
direction, order or demand.
Any notice, statement, instruction, request,
direction, order or demand of the Company shall
be sufficiently evidenced by an instrument
signed by its President and attested by its
Secretary or Assistant Secretary. The Warrant
Agent shall not be liable for any action taken
or omitted by it in accordance with such notice,
statement, instruction, request, direction,
order or demand.
The Company agrees to pay the Warrant Agent
compensation for its services hereunder and to
reimburse the Warrant Agent for its reasonable
expenses in accordance with the terms of Exhibit
"B" attached hereto and incorporated herein by
this reference. The Company further agrees to
indemnify the Warrant Agent against any and all
losses, expenses and liabilities, including
judgments, costs and counsel fees, for any
action taken or omitted by the Warrant Agent in
the execution of its duties and powers
hereunder, excepting losses, expenses and
liabilities arising as a result of the Warrant
Agent's negligence or willful misconduct.
The Warrant Agent may resign its duties or the
Company may terminate the Warrant Agent and the
Warrant Agent shall be discharged from all
further duties and liabilities hereunder (except
liabilities arising as a result of the Warrant
Agent's own negligence or willful misconduct) on
30 days' prior written notice to the other
party. At least 15 days prior to the date such
resignation is to become effective, the Warrant
Agent shall cause a copy of such notice of
resignation to be mailed to the Registered
Holder of each Warrant Certificate. On such
resignation or termination, the Company shall
appoint a new Warrant Agent. If the Company
shall fail to make such appointment within a
period of 30 days after it has been notified in
writing of the resignation by the Warrant Agent,
then the Registered Holder of any Warrant
Certificate may apply to any court of competent
jurisdiction for the appointment of a new
Warrant Agent. Any new Warrant Agent, whether
appointed by the Company or by such court, shall
be a bank or trust company having a capital and
surplus, as shown by its last published report
to its shareholders, of not less than
$1,000,000.
After acceptance in writing of an appointment of
a new Warrant Agent is received by the Company,
such new Warrant Agent shall be vested with the
same powers, rights, duties and responsibilities
as if it had been originally named herein as the
Warrant Agent, without any further assurance,
conveyance, act or deed; provided, however, if
it shall be necessary or expedient to execute
and deliver any further assurance, conveyance,
act or deed, the same shall be done at the
expense of the Company and shall be legally and
validly executed. The Company shall file a
notice of appointment of a new Warrant Agent
with the resigning Warrant Agent and shall
forthwith cause a copy of such notice to be
mailed to the Registered Holder of each Warrant
Certificate.
Any corporation into which the Warrant Agent or
any new Warrant Agent may be converted or
merged, or any corporation resulting from any
consolidation to which the Warrant Agent or any
new Warrant Agent shall be a party, or any
corporation succeeding to the corporate trust
business of the Warrant Agent shall be a
successor Warrant Agent under this Agreement,
provided that such corporation is eligible for
appointment as a successor to the Warrant Agent.
Any such successor Warrant Agent shall promptly
cause notice of its succession as Warrant Agent
to be mailed to the Company and to the
Registered Holder of each Warrant Certificate.
No further action shall be required for
establishment and authorization of such
successor Warrant Agent.
The Warrant Agent, its officers or directors and
its subsidiaries or affiliates may buy, hold or
sell Warrants or other securities of the Company
and otherwise deal with the Company in the same
manner and to the same extent and with like
effect as though it were not the Warrant Agent.
Nothing herein shall preclude the Warrant Agent
from acting in any other capacity for the
Company.
11. Modification of Agreement. The Warrant Agent
and the Company may, by supplemental agreement,
make any changes or corrections in this
Agreement they shall deem appropriate to cure
any ambiguity or to correct any defective or
inconsistent provision or mistake or error
herein contained. Additionally, the parties may
make any changes or corrections deemed necessary
which shall not adversely affect the interests
of the holders of Warrant Certificates;
provided, however, this Agreement shall not
otherwise be modified, supplemented or altered
in any respect, except with the consent in
writing of the Registered Holders of Warrant
Certificates representing not less than 66 2/3%
of the Warrants outstanding; provided, however,
that no change in the number or nature of the
Warrant Shares purchasable on exercise of a
Warrant, or the Exercise Price or the Exercise
Period thereof shall be made without the
consent, in writing, of the Registered Holder of
the Warrant Certificate representing such
Warrant, other than such changes as are
specifically prescribed by this Agreement.
12. Notices. All notices, demands, elections,
opinions or requests (however characterized or
described) required or authorized hereunder
shall be deemed given sufficiently in writing
and sent via a nationally recognized overnight
courier service, by registered or certified
mail, return receipt requested and postage
prepaid, or by facsimile to:
in the case of the Company: Media Entertainment, Inc.
Attention: David M. Loflin
8748 Quarters Lake Road
Baton Rouge, Louisiana 70809
Facsimile: (504) 922-9123
with a copy to: Newlan & Newlan
Attorneys at Law
2512 Program Drive, Suite 101
Dallas, Texas 75220
Facsimile: (214) 654-9520
and, in the case of the Warrant Agent:
Securities Transfer Corporation
Attention: Kevin Halter, Jr.
16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
Facsimile: (972) 248-4797
and, if to the Registered Holder of a Warrant
Certificate, at the address of such holder as
set forth on the books maintained by the Warrant
Agent.
13. Persons Benefitting. This Agreement shall be
binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective
successors and assigns, and the holders from
time to time of the Warrant Certificates.
Nothing in this Agreement is intended to or
shall be construed to confer on any other person
any right, remedy or claim or to impose on any
other person any duty, liability or obligation.
14. Further Instruments. The parties shall execute
and deliver any and all such other instruments
and shall take any and all such other actions as
may be reasonable or necessary to carry out the
intention of this Agreement.
15. Severability. If any provision of this
Agreement shall be held, declared or pronounced
void, voidable, invalid, unenforceable or
inoperative for any reason by any court of
competent jurisdiction, government authority or
otherwise, such holding, declaration or
pronouncement shall not affect adversely any
other provision of this Agreement, which shall
otherwise remain in full force and effect and be
enforced in accordance with its terms, and the
effect of such holding, declaration or
pronouncement shall be limited to the territory
or jurisdiction in which made.
16. Waiver. All the rights and remedies of either
party under this Agreement are cumulative and
not exclusive of any other rights and remedies
as provided by law. No delay or failure on the
part of either party in the exercise of any
right or remedy arising from a breach of this
Agreement shall operate as a waiver of any
subsequent right or remedy arising from a
subsequent breach of this Agreement. The
consent of any party where required hereunder to
any act or occurrence shall not be deemed to be
a consent to any other act or occurrence.
17. General Provisions. This Agreement shall be
construed and enforced in accordance with, and
governed by, the laws of the State of Texas.
Except as otherwise expressly stated herein,
time is of the essence in performing hereunder.
This Agreement embodies the entire agreement and
understanding between the parties and supersedes
all prior agreements and understandings relating
to the subject matter hereof, and this Agreement
may not be modified or amended or any term or
provision hereof waived or discharged except in
writing signed by the party against whom such
amendment, modification, waiver or discharge is
sought to be enforced. The headings of this
Agreement are for convenience of reference only
and shall not limit or otherwise affect the
meaning thereof. This Agreement may be executed
in any number of counterparts, each of which
shall be deemed an original, but all of which
taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first
above-mentioned.
MEDIA ENTERTAINMENT, INC.
By: /s/ David M. Loflin
David M. Loflin, President
SECURITIES TRANSFER CORPORATION
By: /s/ Kevin Halter,Jr.
Kevin Halter, Jr., President
<PAGE>
- ---------------------------
EXHIBIT 10.10
- ---------------------------
March 27,1998
H+N Partners
B. Edward Haun
1444 Wazee Street
Denver, Colorado 802
Finder's Fee Letter
Gentlemen:
This letter will serve to memorialize our agreement with
respect to payment of finder's fees for your services in
locating and referring a securities broker to this company
for the purpose of making a private sale of securities. We
intend to make a private offering of Common Stock of Media
Entertainment, Inc. (the "Company"). You have agreed to use
your best efforts to introduce the Company to a securities
broker with the ability to offer the Company's securities,
on a private placement basis, to persons qualified as
Accredited Investors, as that term is used in Rule 501 of
Regulation D of the Rules of the Securities and Exchange
Commission for the purpose of their making an investment in
the Company. The total offering is to be $800,000, and
shall consist of Units of securities, each Unit consisting
of one share of Common Stock and one Common Stock Purchase
Warrant (the "Warrants"). The offering price of the Units
will equal the opening bid price of the Company's common
stock on the NASD's OTC Electronic Bulletin Board (Symbol:
MEME) on the day of execution of a Selling Agreement between
the Company and a securities broker introduced by you. The
exercise price of the Warrants is to be two times the
offering price of the Units. The exercise period of the
Warrants is to be three years from the date of their issue
and they will contain standard anti-dilution provisions.
We have agreed to pay to you (i) cash compensation equal to
5% of the funds invested in the Units and (ii) issue to you
200,000 Common Stock Purchase Warrants to purchase one share
of Common Stock of the Company at an exercise price equal to
$1.25 per share as to 100,000 warrants and an exercise price
equal to $1.50 per share as to the remaining 100,000
warrants, with an exercise period equal to three years from
the date of their issuance and they will contain standard
anti-dilution provisions. In performing your duties as a
finder, you are to do no more in the process of selling the
offered securities than refer one or more securities brokers
to us and make introductions of them. You agree not to
perform any services that would normally be performed by a
licensed securities broker or dealer, as you will not be
acting in the capacity of a securities broker or agent.
When you have made an introduction or referred a securities
broker or brokers who are capable of undertaking the subject
offering, you will have performed all of the service
required for you to have earned the described finder's fee,
should such referred securities broker or brokers undertake
and complete an offering along the lines set forth herein.
You will be paid both your cash compensation and have the
Warrants issued to you, at such time as the offering of
securities is concluded, the investment funds are accepted
by the Company and the Units offered and sold are issued to
the purchasers thereof.
With respect to referrals and/or introductions to be made by
you, you are to advise the Company in writing of the
identity of such Securities Broker or Brokers. If such
referred person is already known to the Company and is a
securities broker with whom the Company has an existing
relationship through its efforts, we will advise you on the
day we receive your letter of introduction or reference, and
you will not be considered a finder as to that securities
broker. If we do not so advise you on the day of receipt of
your advice, you will be considered a finder of such
securities broker.
If this letter properly reflects your understanding, please
indicate such in the space below. We thank you for your
assistance and look forward to working with you.
Sincerely,
/s/ David M. Loflin
David M. Loflin
President
ACCEPTED AND AGREED:
/s/ Bruce E. Haun
Bruce E. Haun
on behalf of H + N Partners
<PAGE>
- ---------------------------
EXHIBIT 10.11
- ---------------------------
INVESTMENT BANKING AGREEMENT
This Investment Banking Agreement is made as of the 15th day
of June, 1998, by and between H+N Partners, a fictitious
name division of B. Edward Haun & Company, a Colorado
corporation ("Banker"), and Media Entertainment, Inc., a
Nevada corporation (the "Company").
WHEREAS, Banker possesses experience in the field of
corporate finance and investment banking for publicly traded
companies; and
WHEREAS, the Company is a publicly-held company that files
periodic reports pursuant to the requirements of the
Securities Exchange Act of 1934, with its Common Stock
trading on the NASD's OTC Electronic Bulletin Board under
the symbol "MEME"; and
WHEREAS, the Company desires to obtain counsel and services
with respect to attracting investment, acquisitions of other
companies and increasing in its asset base and market
capitalization of its publicly traded common stock; and
WHEREAS, the Company desires to engage Banker and Banker is
willing to accept such engagement as investment banker to
the Company.
NOW THEREFORE, for good and valuable consideration, receipt
and adequacy of which is hereby acknowledged, it is agreed
by and between the parties:
I. ENGAGEMENT OF BANKER
For the compensation and subject to all of the terms and
conditions set forth herein, the Company hereby engages
Banker to serve the Company as an investment banker.
II. OBLIGATIONS OF BANKER
Banker shall, in the performance of its services to be
provided hereunder:
A. Provide counsel in all matters relating to the
corporate financing needs of the Company and its desired
growth by acquisition and merger;
B. Render to the Company advice and counsel with respect
to the future financing and growth of the Company; and
C. Use its best efforts to locate one or more securities
brokerage firms who are to be members of the National
Association of Securities Dealers, Inc., to provide
underwriting services designed to raise equity funding for
the Company.
III. COMPENSATION
It is acknowledged that it is the goal of the parties to
effectuate an underwriting of the Company's securities
through the medium of a securities underwriter located by
Banker. It is further acknowledged that Banker's
compensation under this Agreement is contingent upon the
successful arrangement, implementation and consummation of
an offering or offerings of Company securities by an
underwriter designated and referred to the Company by
Banker. There are set forth below pro forma examples of
offering transactions of the character contemplated by this
Agreement. The compensation of Banker is contingent upon
successful completion of an offering generally meeting the
criteria set forth in these pro forma transactions. The
compensation of Banker is set forth to indicate the method
of compensation and the ratio of compensation to offering
size.
1. With respect to a financing of the Company by a
securities broker designated and referred to the Company by
Banker resulting from a public offer and sale of equity or
debt securities, or a combination of debt and equity
securities, convertible or otherwise, in an amount of
$5,000,000 and up to $8,000,000 in aggregate proceeds of
sale of such securities, Banker will be paid a cash fee
equal to 2% of the aggregate amount of securities sold, and
the Company shall issue to Banker 200,000 Common Stock
Purchase Warrants (the "Warrants") entitling Banker to
purchase, on exercise of the Warrants, 200,000 shares of the
Company's Common Stock at an exercise price of $3.50 per
share. The Warrants shall have an exercise term of three
years from the date of their issuance and shall contain
standard anti-dilution provisions.
2. With respect to a financing of the Company by a
securities broker designated and referred to the Company by
Banker resulting from a public offer and sale of equity or
debt securities, or a combination of debt and equity
securities, convertible or otherwise, in an amount of
$9,000,000 and up to $16,000,000 in aggregate proceeds of
sale of such securities, Banker will be paid a cash fee
equal to 2% of the aggregate amount of securities sold, and
the Company shall issue to Banker 400,000 Common Stock
Purchase Warrants (the "Warrants") entitling Banker to
purchase, on exercise of the Warrants, 400,000 shares of the
Company's Common Stock at an exercise price of $3.50 per
share. The Warrants shall have an exercise term of three
years from the date of their issuance and shall contain
standard anti-dilution provisions.
IV. TERM AND TERMINATION; EXCLUSIVITY
Term and Termination. This Agreement shall be for a term
of nine months from the date of mutual execution hereof. It
may be terminated by either party on ten days' written
notice of reasonable dissatisfaction by one of the parties
with the performance of the other party.
Exclusivity. Banker shall be the exclusive investment
banker for the Company during the term of this Agreement.
Further, the Company agrees that it will not, subsequent to
the termination of this Agreement for any reason, do
business with any securities brokerage firm introduced to
the Company by Banker for the purpose of acting as an
underwriter of the Company's securities, for a period of
three years.
V. REPRESENTATIONS AND WARRANTIES
A. The Company represents and warrants to Banker that:
1. the Company will cooperate fully and timely with
Banker to enable Banker to perform its obligations
hereunder;
2. the execution and performance of this Agreement by
the Company has been duly authorized by the Board of
Directors of the Company;
3. the performance by the Company of this Agreement
will not violate any applicable court decree, law or
regulation, nor will it violate any provisions of the
organizational documents of the Company or any contractual
obligation by which the Company may be bound;
4. the Company will promptly deliver to Banker a
complete due diligence package, to include all of the
Company's periodic reports, the Company's Prospectus dated
August 12, 1997, a Disclosure Statement promulgated pursuant
to Rule 15c2-11, all future press releases and all other
relevant materials, including, but not limited to, corporate
reports, brochures, etc.; and
5. to the knowledge of the Company, all such
information shall be true, accurate, complete and not
misleading, in all respects.
B. Banker represents and warrants to the Company that:
1. the execution and performance of this Agreement by
Banker has been duly authorized by the Board of Directors of
Banker;
2. Banker is in good standing under the laws of the
State of Colorado; and
3. the performance by Banker of this Agreement will not
violate any applicable court decree, law or regulation, nor
will it violate any provisions of the organizational
documents of Banker or any contractual obligation by which
Banker may be bound.
VI. INDEMNITY AND HOLD HARMLESS
The Company and Banker agree that each will indemnify and
hold harmless the other, each of their respective directors,
each of their respective officers, their respective legal
counsel and each person or persons who control the Company
or Banker within the meaning of the Securities Act of 1933,
as amended (the "Act") (each of the foregoing being herein
referred to as "controlling persons"), against any losses,
claims, damages or liabilities (which shall, for all
purposes of this Agreement, include, but not be limited to,
all costs of defense and investigation and all attorneys'
fees) to which the Company or Banker, or any such director,
officer, counsel or controlling person may become subject
under the Act or the Securities Exchange Act of 1934, or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of, or
are based upon, any action or omission of either Banker or
the Company done in the performance of this Agreement.
VII. INSIDE INFORMATION
It is acknowledged that in the course of the performance of
its obligations hereunder, Banker will become privy to
material non-public information concerning the business and
financial condition of the Company, generally termed "inside
information". Until such time as such inside information
may become publicly known, Banker agrees that any inside
information gained by it in the performance of this
Agreement will not be revealed or disclosed to any person or
entity, except as is necessary in the proper performance of
this Agreement. Banker will not directly or indirectly buy
or sell any of the securities of the Company at any time
when it is privy to material, non-public information.
VIII. NOTICES
All notices hereunder shall be in writing and addressed to
the party at the address herein set forth, or at such other
address as to which notice pursuant to this section may be
given, and shall be given by personal delivery, by certified
mail (return receipt requested), Express Mail or by national
or international courier. Notices will be deemed given upon
the earlier of actual receipt or three (3) business days
after being mailed or delivered to such courier service.
Notices shall be addressed to Banker at:
H+N Partners
B. Edward Haun & Company
1444 Wazee Street
Denver, Colorado 80202
and to the Company at:
Media Entertainment, Inc.
8748 Quarters Lake Road
Baton Rouge, Louisiana 70809
with a copy to:
Newlan & Newlan, Attorneys at Law
2512 Program Drive, Suite 101
Dallas, Texas 75220
IX. MISCELLANEOUS
A. In the event of a dispute between the parties arising
out of this Agreement, both Banker and the Company agree to
submit such dispute with the American Arbitration
Association (the "Association") at the Association's Dallas,
Texas, offices, in accordance with the then-current rules of
the Association; the award given by the arbitrators shall be
binding and a judgment can be obtained on any such award in
any court of competent jurisdiction. It is expressly agreed
that the arbitrators, as part of their award, may award
attorneys fees to the prevailing party.
B. This Agreement is not assignable in whole or in any
part, and shall be binding upon the parties, their
successors or assigns.
C. This Agreement may be executed in multiple
counterparts which shall be deemed an original. It shall
not be necessary that each party execute each counterpart,
or that any one counterpart be executed by more than one
party, if each party executes at least one counterpart.
D. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Louisiana.
MEDIA ENTERTAINMENT, INC.
By: /s/ David M. Loflin
David M. Loflin
President
H + N PARTNERS
By: /s/ Bruce E. Haun
Bruce E. Haun
<PAGE>
- ---------------------------
EXHIBIT 10.12
- ---------------------------
FINANCIAL PUBLIC RELATIONS SERVICES AGREEMENT
This Financial Public Relations Services Agreement is made
as of the 15th day of June, 1998, by and between H+N
Partners, a fictitious name division of B. Edward Haun &
Company, a Colorado corporation ("Consultant"), and Media
Entertainment, Inc., a Nevada corporation (the "Company").
WHEREAS, Consultant possesses experience in the field of
financial public relations; and
WHEREAS, the Company is a publicly-held company and files
periodic reports pursuant to the requirements of the
Securities Exchange Act of 1934, with its common stock
trading on the NASD's OTC Electronic Bulletin Board under
the symbol "MEME"; and
WHEREAS, the Company desires to hire Consultant and
Consultant is willing to accept the Company as a client.
NOW THEREFORE, in consideration of the mutual covenants
herein contained, it is agreed:
1. The Company hereby engages Consultant, on a non-
exclusive basis, to render consulting services with respect
to financial public relations, on behalf of the Company.
Consultant hereby accepts such engagement and agrees to
render such consulting services as are listed on Exhibit "A"
attached hereto and incorporated herein by this reference,
throughout the term of this Agreement. Consultant agrees
that it shall be responsible for all expenses incurred in
its performance hereunder.
It is further agreed that Consultant shall have no
authority to bind the Company to any contract or obligation
or to transact any business in the Company's name or on
behalf of the Company, in any manner. The parties intend
that Consultant shall perform its services required
hereunder as an independent contractor.
2. The term of this Agreement shall commence upon
execution of this Agreement and shall continue for one (1)
year, and shall renew automatically for additional one-year
periods, unless either party shall notify the other of its
intention not to renew this Agreement within 60 days of the
expiration of the initial term or any renewal term of this
Agreement.
3. In consideration of the services to be performed by
Consultant, the Company agrees to pay to Consultant the
compensation set forth on Exhibit "B" attached hereto and
incorporated herein by this reference.
4. The Company represents and warrants to Consultant
that:
A. The Company will cooperate fully and timely with
Consultant to enable Consultant to perform its obligations
hereunder.
B. The execution and performance of this Agreement by
the Company has been duly authorized by the Board of
Directors of the Company.
C. The performance by the Company of this Agreement
will not violate any applicable court decree, law or
regulation, nor will it violate any provisions of the
organizational documents of the Company or any contractual
obligation by which the Company may be bound.
5. Until such time as the same may become publicly known,
the parties agree that any information provided to either of
them by the other of a confidential nature will not be
revealed or disclosed to any person or entity, except in the
performance of this Agreement, and upon completion of
Consultant's services and upon the written request of the
Company, any original documentation provided by the Company
will be returned to it. Consultant, including each of its
affiliates, will not directly or indirectly buy or sell the
securities of the Company at any time when it or they are
privy to non-public information.
Consultant agrees that it will not disseminate any printed
matter relating to the Company, including, without
limitation, press releases, without prior written approval
of the Company's legal counsel.
Consultant acknowledges that, in light of the fact that
Consultant is in a special relationship with the Company due
to the entrustment by the Company to Consultant of non-
public, material "inside" information concerning the
Company, the relationship between the Company and Consultant
shall be that of a special relationship.
6. All notices hereunder shall be in writing and
addressed to the party at the address herein set forth, or
at such other address as to which notice pursuant to this
section may be given, and shall be given by personal
delivery, by certified mail (return receipt requested),
Express Mail or by national or international overnight
courier. Notices will be deemed given upon the earlier of
actual receipt of three (3) business days after being mailed
or delivered to such courier service.
Notices shall be addressed to Consultant at:
H+N Partners
B. Edward Haun & Company
1444 Wazee Street
Denver, Colorado 80202
and to the Company at:
Media Entertainment, Inc.
8748 Quarters Lake Road
Baton Rouge, Louisiana 70809
with a copy to:
Newlan & Newlan, Attorneys at Law
2512 Program Drive, Suite 101
Dallas, Texas 75220
7. Miscellaneous.
A. In the event of a dispute between the parties
arising out of this Agreement, both Consultant and the
Company agree to submit such dispute through the American
Arbitration Association (the "Association") at the
Association's Dallas, Texas, offices, in accordance with the
then-current rules of the Association; the award given by
the arbitrators shall be binding and a judgment can be
obtained on any such award in any court of competent
jurisdiction. It is expressly agreed that the arbitrators,
as part of their award, can award attorneys fees to the
prevailing party.
B. This Agreement is not assignable in whole or in any
part, and shall be binding upon the parties, their heirs,
representatives, successors or assigns.
C. This Agreement may be executed in multiple
counterparts which shall be deemed an original. It shall
not be necessary that each party execute each counterpart,
or that any one counterpart be executed by more than one
party, if each party executes at least one counterpart.
D. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Texas.
MEDIA ENTERTAINMENT, INC.
By: /s/ David M. Loflin
David M. Loflin
President
H+N PARTNERS
By: /s/ Bruce Haun
Bruce Haun
---------------------------------------------
Exhibit "A"
Financial Public Relations Services Agreement
---------------------------------------------
SERVICES TO BE PERFORMED BY CONSULTANT
ON BEHALF OF THE COMPANY
The consulting services to be provided by Consultant under
the Financial Public Relations Services Agreement to which
this Exhibit "A" is attached include, but shall not be
limited to:
Prepare an overall public relations strategy for the
Company.
Increase network of individual brokers buying the Common
Stock of the Company.
Develop relationships for the Company with regional
brokerage firms and investment newsletters for additional
buying sponsorship of the Common Stock of the Company.
Contact and keep fully informed stockbrokers that are
currently interested in the Company.
Coordinate appropriate public relations efforts with the
development of detailed stockbroker lists and media lists,
and develop personal contacts with important analysts, money
managers, financial editors and reporters.
Fax, or otherwise deliver, on a broad basis, Company
information to stockbrokers.
Respond to daily inquiries from investors.
Coordinate appropriate public relations efforts with the
development of detailed stockbroker lists and financial and
general interest media lists (editors and reporters);
solicit and coordinate press interviews.
Solicit coverage of the Company from third-party investment
newsletters.
Draft or edit news releases.
Develop personal contacts with influential analysts and
investment managers.
Work closely with an outside consultant to develop pro
formas for investment bankers, et al.
Identify and initiate discussions with investment bankers
and other sources of capital; follow up as necessary.
Seek to identify and initiate discussions with potential
joint venture candidates (the Company has agreed to
additional compensation for the consummation of such
agreements on a case-by-case basis).
Work with communications industry contacts to locate and
recommend management and Board of Directors candidates, if
requested.
Develop an initial Corporate Report on the Company, and
Corporate Updates, as needed.
Perform a market study that pinpoints analysts and
investment managers deemed most likely to purchase and
recommend purchase of the Company's Common Stock.
Make available existing database of approximately 1,500
investment industry contacts to the Company for mailings.
Coordinate technology demonstrations, informational
meetings, "road shows" and conference calls.
Supervise mailings and mailing-list management.
Prepare and/or arrange for publication in financial
periodicals "stories" on th Company; vignettes on personnel,
establishment of a "city", the technology and why it is
important.
Prepare for publication on the Company's Internet site
articles and news items about the Company and the Common
Stock.
Provide to the Company a Monthly Summary Report of
Consultant's Activities by the 10th day of the following
month.
---------------------------------------------
Exhibit "B"
Financial Public Relations Services Agreement
---------------------------------------------
COMPENSATION TO BE PAID BY THE
COMPANY TO CONSULTANT
Consultant shall receive, upon execution of the Financial
Public Relations Services Agreement (the "Agreement") to
which this Exhibit "B" relates, the following:
37,000 shares of Company Common Stock, which shares shall be
valued at a price of $2.00 per share, or $74,000, in the
aggregate. The Company shall cause all such shares to be
registered pursuant to a Registration Statement on Form S-8
to be filed by the Company as soon as is practicable
following the filing with the SEC the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1997,
which the Company shall pursue with reasonable diligence.
Consultant represents and warrants to the Company that the
shares of the Company being acquired pursuant to the
Agreement are being acquired for its own account and for
investment and not with a view to the public resale or
distribution of such shares and further acknowledges that
the shares being issued have not been registered under the
Securities Act or any state securities law and are
"restricted securities", as that term is defined in Rule 144
promulgated by the SEC, and must be held indefinitely,
unless they are subsequently registered or an exemption from
such registration is available.
Consultant represents and warrants that it has investigated
the Company, its financial condition, business and
prospects, and has had the opportunity to ask questions of,
and to receive answers from, the Company with respect
thereto. Consultant acknowledges that it is aware that the
Company is substantially illiquid and is dependent upon the
successful completion of its currently on-going private
offering to achieve its business objectives.
Consultant acknowledges that the share certificate or
certificates of the Company issued to it pursuant to this
Agreement will bear a legend restricting future transfer in
the following , or similar, form:
"THE STOCK REPRESENTED BY THIS CERTIFICATE HAS BEEN ISSUED
IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION AFFORDED BY
SECTION 4(6) OF THE SECURITIES ACT OF 1933, AS AMENDED. THE
STOCK MAY NOT BE TRANSFERRED WITHOUT REGISTRATION, EXCEPT IN
A TRANSACTION EXEMPT FROM SUCH REGISTRATION."
<PAGE>
- ---------------------------
EXHIBIT 11
- ---------------------------
STATEMENT REGARDING COMPUTATION
OF PER SHARE EARNINGS
Cumu- Cumu-
lative lative
Number Days Since Days Since
of Out- Incep- Out Incep-
Shares standing tion standing tion
------ -------- ------ -------- -------
Period from
inception
(December
28, 1995)
to December
31, 1996
December
28 227,336 3/3 227,336 731/731 227,336
------- -------
December
31 227,336 227,336
======= =======
Year ended
December
31, 1996
January
1 227,336 364/364 227,336
November
1 1,800,000 61/364 301,648 425/731 1,046,512
November
15 360,000 47/364 46,484 411/731 26,135
December
20 1,578,512 11/364 47,702 375/731 24,471
December
20 104,249 11/364 3,150 375/731 1,616
December
31 1,929,903 1/364 5,302 365/731 2,647
--------- -------
December
31 6,000,000 631,622
========= =======
Year ended
December
31, 1997
January
1 6,000,000 364/364 6,000,000
February 150,000 333/364 137,225 333/731 62,512
March 7 20,000 298/364 18,667 298/731 7,610
September
22 10,000 101/364 2,775 101/731 383
October
1 60,000 94/364 15,495 94/731 1,992
October
17 40,000 76/364 8,352 76/731 868
November
6 44,000 56/364 6,769 56/731 519
December
16 100,000 16/364 4,396 16/731 96
December --------- --------- ---------
31 6,424,000 6,193,678 1,402,697
========= ========= =========
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-END> DEC-31-1996 DEC-31-1997
<CASH> 14502 0
<SECURITIES> 0 0
<RECEIVABLES> 310 224
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 14812 224
<PP&E> 196920 211884
<DEPRECIATION> (706) (1412)
<TOTAL-ASSETS> 233600 236256
<CURRENT-LIABILITIES> 60889 198938
<BONDS> 0 0
0 0
0 0
<COMMON> 600 642
<OTHER-SE> 172111 36676
<TOTAL-LIABILITY-AND-EQUITY> 233600 236256
<SALES> 3337 596
<TOTAL-REVENUES> 3337 596
<CGS> 0 0
<TOTAL-COSTS> 27574 625402
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (24237) (624804)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (24237) (624804)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (24237) (624804)
<EPS-PRIMARY> (.04) (.10)
<EPS-DILUTED> (.04) (.10)
</TABLE>
