<PAGE>
As filed with the Securities and Exchange Commission on February 4, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
Form S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------
foreignTV.com, Inc.
(Exact name of registrant as specified in its charter)
Delaware 4899 13-4037641
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification
incorporation Classification Code) Number)
or organization)
162 Fifth Avenue, Suite 1005A
New York, New York 10010
(212) 206-1121
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------------
JONATHAN BRAUN, Chief Executive Officer
foreignTV.com, Inc.
162 Fifth Avenue, Suite 1005A
New York, New York 10010
(212) 206-1121
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
Copies to:
IRA I. ROXLAND, ESQ.
COOPERMAN LEVITT WINIKOFF LAW OFFICES OF
LESTER & NEWMAN, P.C. VICTOR EDWIN STEWART, ESQ.
800 Third Avenue 269 South Irving Street
New York, New York 10022 Ridgewood, New Jersey 07450
(212) 688-7000 (201) 445-3661
Fax: (212) 755-2839 Fax: (201) 445-5301
----------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement
<PAGE>
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering price aggregate offering registration
per unit(1) price(1) fee
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Units, consisting of one share of Common
Stock, $.01 par value, and one Warrant to
purchase one share of Common Stock(2) 1,700,000 uts. $6.00 $10,200,000 $2,835.60
- ------------------------------------------------------------------------------------------------------------------------
Underwriter's Unit Purchase Option 170,000 opts. - Nominal (2)
- ------------------------------------------------------------------------------------------------------------------------
Units, issuable upon exercise of the
Underwriter's Unit Purchase Option,
consisting of one share of Common Stock,
$.01 par value, and one Warrant to purchase
one share of Common Stock(4) 170,000 uts. $6.60 $ 1,122,000 $ 311.92
- ------------------------------------------------------------------------------------------------------------------------
Common Stock(3)(4) 1,870,000 shs. $9.00 $16,830,000 $4,678.74
- ------------------------------------------------------------------------------------------------------------------------
Total $28,152,000 $7,826.26
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) No fee pursuant to Rule 457(g).
(3) Issuable upon exercise of Warrants.
(4) Includes such presently indeterminate number of additional shares of Common
Stock as may be issued pursuant to the anti-dilution provisions of the
Warrants or the Underwriter's Unit Purchase Option.
________________________________
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION BECOMES EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES NOR DOES IT SEEK OFFERS TO
BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.
-----------------------
Subject to Completion
Preliminary Prospectus dated February 4, 1999
PROSPECTUS
foreignTV.com, Inc.
------------------
This is an initial public offering of our securities. Westminster Securities
Corporation, our underwriter, acting as our exclusive agent, is offering for
sale a minimum of 850,000 units and a maximum of 1,700,000 units. The
Underwriter has agreed to exert its best efforts to sell the units on our
behalf, but has not committed to purchase any of the units for itself.
Each unit consists of:
. one share of common stock, and
. one warrant, which
. entitles the holder to purchase one share of common stock at
a price of $9.00 at any time through , 2002.
. may be redeemed by us, under certain circumstances, at
$0.05 per warrant at any time prior to its expiration.
-----------------
Investing in Our Securities Involves Certain Risks. Please Read the Risk
Factors Beginning on Page 8 Before Making a Decision to Invest in Our
Securities.
-----------------
The Underwriter will deposit all investor funds in an escrow account that will
be established at CitiBank, N.A., 153 East 53rd Street, New York, New York
10043.
<PAGE>
. If the Underwriter cannot sell at least 850,000 units by ,
1999, unless extended to , 1999, this offering will be terminated and all
investor funds in the CitiBank escrow account will be promptly returned to
investors, with interest.
. If the Underwriter is able to sell at least 850,000 units by ,
1999 (or by , 1999 if extended), we will receive all investor funds in the
CitiBank escrow account, less the underwriter's commissions and expense
reimbursements, and this offering will continue as to the remaining units until
____, 1999.
-------------------
Neither the Securities and Exchange Commission nor any state securities
Commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. It is illegal for any person to tell you
otherwise.
-------------------
Per Unit Total
-------- -------------------------
Minimum Maximum
------- -------
Public Offering Price $6.00 $5,100,000 $10,200,000
Underwriting Commissions $ .54 $ 459,000 $ 918,000
Proceeds, before expenses,
to foreignTV.com $5.46 $4,641,000 $ 9,282,000
-------------------
We intend to have our units, common stock and warrants quoted on the OTC
Bulletin Board under the symbols FNTV, FNTVW and FNTVU. If all or a substantial
part of the units are sold in this offering, we will seek to list the units,
common stock and warrants on The NASDAQ SmallCap Market.
------------------
WESTMINSTER SECURITIES CORPORATION
--------------
, 1999
2
<PAGE>
This prospectus contains certain forward-looking statements and information
relating to foreignTV.com, Inc. We intend to identify foward-looking statements
in this prospectus using words such as "believes, "intends" "expects" "predicts"
"may, "will," "should," "contemplates," "anticipates" or similar statements.
These statements are based on our beliefs as well as assumptions we made
using information currently available to us. Because these statements reflect
our current views concerning future events, these statements involve certain
risks, uncertainties and assumptions. Actual future results may differ
significantly from the results discussed in the forward-looking statements.
Some, but not all, of the factors that may cause such a difference include those
discussed in the Risk Factors section beginning on page 8 of this prospectus.
---------------
SUMMARY
The following summary highlights selected information from this prospectus
and may not contain all the information that is important to you. To understand
our proposed business and this offering fully, you should read this entire
prospectus carefully, including the financial statements and related notes
beginning on page F-1.
3
<PAGE>
foreignTV.com, Inc.
Our Proposed Business
- ---------------------
We aim to become a leading Internet broadcaster, initially specializing in
the origination of compelling foreign content, which we believe is not currently
available in a similar format on the Internet. We propose to develop a network
of Internet web sites, utilizing geographic location-specific domain names that
we have licensed for our exclusive use, for an initial term of 25 years. Each
site on our proposed foreignTV.com network, which will be accessible either
directly by its own domain name or through a link on the foreignTV.com home
page, will offer original programming, in English, about local events, news,
politics, entertainment, business and culture, with a strong human interest
appeal to provide viewers with a sense of what it is like to not only visit but
actually live and work in that particular location. Each site will have its own
content bureau, which will employ reporters, anchors and producers who will
develop and produce the content for that site. Ultimately, we intend to create
additional channels for locations in the United States and for special interest
programming.
Our programming will be viewable on the Internet by means of currently
available streaming video technology, which allows a viewer to watch live or on-
demand programming without the time consuming task of downloading content from a
web site to the viewer's computer hard drive. As streaming technology is
perfected, we anticipate that watching a program on the foreignTV.com network
will be similar to watching a program on network or cable television. We will
not own the broadcasting technology used to transmit our content over the
Internet. Rather, we intend to license such technology from streaming media
broadcast hosts, and to contract with Internet service providers for network
support.
We expect to offer a comprehensive, informative and entertaining
experience. A visitor to our proposed parisTV.com site, for instance, may view
an exclusive video news report about current events in Paris, produced in Paris
but in English and from an American-style human interest angle; watch an
interview with a local personality; go on a video tour of the streets of Paris;
preview an award-winning French film; or buy the latest novel or non-fiction
book about Paris, sample and purchase French music or make airline, hotel, and
restaurant reservations through e-commerce tie-ins.
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<PAGE>
Our Concept
- -----------
We will attempt to attract viewers to our foreignTV.com web sites by
offering original programming that we believe a viewer presently cannot find
through other sources due to the American media's trend towards featuring local
news to the exclusion of "non-sensational" foreign news. Additionally, we
believe that viewers will be attracted to foreignTV.com because of our niche
programming (the concept that viewers prefer channels that offer a particular
subject matter as opposed to being grouped into one-size-fits-all categories)
and our human interest approach to the subject matter, which will further
differentiate us from conventional news and travel sites.
We intend to offer access to the foreignTV.com network and its programming
free of charge to viewers. Our intention is to derive revenues from selling
advertising space on our web sites using targeted marketing efforts. We also
intend to obtain commission revenues from e-commerce tie-ins.
We are still in the planning stages of our development and have not as of
yet created any of the content to be offered on the foreignTV.com network or
established any of our contemplated network sites. We intend to establish,
develop and operate two foreignTV.com network sites - for locations in London,
England and in Paris, France - if the minimum number of units that we are
offering are sold, and an additional two sites - which we anticipate will be for
locations in Berlin, Germany and in Tokyo, Japan - if all of the units that we
are offering are sold.
Our History
- -----------
We were incorporated in Delaware on November 12, 1998. Our offices are
located at 162 Fifth Avenue, Suite 1005A, New York, New York 10010, and our
telephone number is (212) 206-1121. Our Internet site can be accessed at
"http://www.foreigntv.com."
The Offering
Securities offered 1,700,000 units, at $6.00 per unit, each unit
consisting of one share of common stock and one
warrant to purchase one share of common stock.
Common stock outstanding 8,300,000 shares
prior to this offering
5
<PAGE>
Common stock to be
outstanding after 9,150,000 shares (minimum)
this offering(1) 10,000,000 shares (maximum)
Warrants:
Number to be
outstanding after 850,000 warrants (minimum)
this offering(1) 1,700,000 warrants (maximum)
Exercise price The exercise price of each warrant is $9.00 per
share, subject to adjustment in certain
circumstances.
Exercise period The warrants will be exercisable at any time,
until they expire on , 2002.
Redemption We may redeem the outstanding warrants in whole or
in part, at any time upon at least 30 days prior
written notice to the registered holders, at a
price of $.05 per warrant, provided that the
closing bid price of the common stock was at least
$12.00 for the 20 consecutive trading days ending
on the third business day prior to our giving
notice of redemption to the warrantholders, and
provided there is then a current registration
statement in place for the shares underlying the
warrants.
Proposed OTC Bulletin
Board Symbols for
common stock, FNTV
warrants FNTVW
and units FNTVU
Proposed Nasdaq
Small-Cap Market(2)
Symbols for
common stock, FNTV
warrants FNTVW
and units FNTVU
- ----------
6
<PAGE>
(1) We have reserved additional shares of our common stock for issuance upon
the occurrence of the following:
. 1,700,000 shares upon exercises of the maximum number of warrants
included in the units.
. 170,000 shares upon exercise of the Underwriter's unit warrants.
. 170,000 shares upon exercises of the warrants included in the
Underwriter's units.
. 400,000 shares upon exercises of options available for grant under our
Stock Option Plan.
(2) If we sell all or a substantial number of the units, we will seek to list
the units, common stock and warrants on The Nasdaq Small-Cap Market,
although we cannot assure investors that we will achieve such listing.
Summary Financial Information
The following data have been derived from our financial statements and
should be read in conjunction with those statements, which are included in this
prospectus. The "As Adjusted" financial information gives effect to the sale of
both the minimum and maximum number of units as if such sale had occurred at
December 31, 1998.
December 31,1998
--------------------------------
Actual(1) As Adjusted(1)
----------- -----------------
Minimum Maximum
------- -------
Balance Sheet Data:
Total assets $83,000 $4,622,000 $9,161,000
Total liabilities $ - $ - $ -
Stockholders' equity $83,000 $4,622,000 $9,161,000
- ----------------
(1) Assumes our receipt as of December 31, 1998 of the proceeds from our
sale in January 1999 of 8,300,000 shares of our common stock at a price
of $.01 per share, or an aggregate of $83,000.
7
<PAGE>
RISK FACTORS
An investment in our securities involves certain risks. To understand these
risks and to evaluate an investment in our securities, you should read this
entire prospectus, including the following risk factors.
WE DO NOT HAVE ANY OPERATING HISTORY, AND WE EXPECT TO INCUR SIGNIFICANT LOSSES
FOR THE FORESEEABLE FUTURE
We are a newly formed company with no operating history. Our prospects must
be considered in light of the risks, uncertainties, expenses and difficulties
encountered by companies in their early stages of development, particularly
those in new and rapidly evolving markets such as the market for Internet
content. To achieve and sustain profitability, we believe that we must, among
other things:
. provide compelling and unique content that is attractive to Internet
users.
. establish and maintain relationships with Internet service providers,
streaming video broadcast hosts, advertisers and e-commerce
businesses.
. respond to competitive developments.
. attract, retain and motivate qualified personnel.
We can offer no assurance to investors that we can successfully address these
factors, and the possibility that we may fail to do so makes the prediction of
future operating results difficult, if not impossible. We expect to incur
significant losses on both a quarterly and an annual basis for the foreseeable
future. Consequently, for these and other reasons, we cannot assure investors
that we will ever achieve profitability.
WE CANNOT ASSURE PUBLIC ACCEPTANCE OF OUR PROPOSED SERVICES
We intend to fill a void created by what we believe to be the growing trend
of traditional news broadcasters to focus on domestic news at the expense of
"non-sensational" international news by creating a network of Internet sites
reporting and broadcasting local news, politics, culture and lifestyles of
prominent cities throughout the world.
8
<PAGE>
Our success in attracting viewers to our network will depend on, among
other things, the following:
. our ability to differentiate our services from traditional news
sources.
. our ability to create compelling content.
. our ability to market the foreignTV.com brand name.
. the reliability of our services and the technology to view
streaming video.
We cannot assure investors that our business concept will prove to be attractive
to viewers. Additionally, the Internet is rapidly evolving and we are not able
to assure investors that a new market entrant with a similar format may not
compete with foreignTV.com in the foreseeable future or a new technology will
not evolve that will render streaming technology obsolete.
WE CANNOT ASSURE BROAD PUBLIC ACCEPTANCE OF STREAMING TECHNOLOGY
Our success will depend upon market acceptance of streaming technology.
Without such technology, viewers of our proposed on-demand programming would not
be able to initiate its playback until such programming was downloaded in its
entirety, resulting in significant waiting times. The acceptance of streaming
technology is dependant on a number of factors, including but not limited to the
following:
. Market acceptance of streaming players such as RealNetworks,
Inc.'s RealPlayer(R) and the Microsoft Corporation's Windows
Media Player(TM) (formerly Netshow(R)).
. Increased bandwidth capacity.
. Technical expertise of Internet users to download and operate
streaming players.
. Reconfiguring older web browsers to handle the inclusion of
streaming players.
Early streaming technology suffered from poor audio quality, and current video
streaming at 28.8 kbps (thousands of bits per second) is of lower quality than
conventional media broadcasts. Widespread
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<PAGE>
adoption of streaming media technology depends on improving audio and video
quality. In addition, congestion over the Internet may interrupt audio and video
streams, resulting in user dissatisfaction. Our prospects will be adversely
affected if streaming media technology fails to achieve or maintain broad
acceptance.
WE WILL DEPEND UPON THE ACCEPTANCE OF THE INTERNET AS AN ADVERTISING MEDIUM
We anticipate deriving revenues from the sale of advertisements on our
network. The market for Internet advertising has only recently begun to
develop, is rapidly evolving and is characterized by an increasing number of
market entrants. As is typical in a new and rapidly evolving industry, demand
and market acceptance for recently introduced products and services are subject
to a high level of uncertainty. Our ability to generate advertising revenue will
depend upon a number of factors, including:
. the development of the Internet as an advertising medium.
. pricing of advertising on other Web sites.
. the amount of traffic on our proposed Web site.
. our ability to demonstrate user demographic characteristics that are
attractive to advertisers.
. the establishment of desirable advertising agency relationships.
Most potential advertisers and their advertising agencies have limited
experience with the use of the Internet as an advertising medium and have not
devoted a significant portion of their advertising expenditures to Web-based
advertising. Furthermore, standards have as yet been widely accepted for the
measurement of the effectiveness of Web-based advertising. Acceptance of the
Internet among advertisers and advertising agencies will also depend, to a large
extent, on the level of Internet use by consumers and upon growth in the
commercial use of the Internet. Because global commerce and the on-line exchange
of information is new and evolving, we are unable to predict with any assurance
whether the Internet will prove to be a viable commercial marketplace in the
long term. Our prospective revenues would be adversely affected if widespread
commercial use of the Internet
10
<PAGE>
does not develop or is substantially delayed, or if the Internet does not
develop as an effective and measurable advertising medium.
WE WILL DEPEND UPON THE ACCEPTANCE OF THE INTERNET AS A COMMERCIAL AND RETAIL
MEDIUM
Besides advertising, our only other intended source of revenue is from e-
commerce tie-ins. We intend to enter into agreements with e-commerce businesses
in which we would provide direct links to their respective web sites in exchange
for commissions upon all service or product sales to persons who "click through"
(i.e., access) such web sites from the foreignTV.com network.
E-commerce has only recently begun to develop and is rapidly evolving. As
is typical in a new and rapidly evolving industry, demand and market acceptance
for recently introduced services and products are subject to a high level of
uncertainty. Consumer satisfaction from shopping over the Internet has been
mixed and we cannot assure investors that e-commerce will continue to grow. Our
ability to derive revenues from arrangements with e-commerce businesses depend
upon a number of factors, including:
. Acceptance by the general public of the Internet as a convenient and
safe shopping forum.
. The offer of quality products at competitive process.
. Our ability to attract viewers and direct such viewers to our e-commerce
business tie-ins.
WE WILL DEPEND ON PROVIDERS OF STREAMING TECHNOLOGY
We do not intend to develop our own streaming technology. Instead, we
intend to license such technology from companies such as RealNetworks, Inc. or
the Microsoft Corporation to deliver our proposed content over the Internet. We
believe that we will be able to license such technology at competitive rates.
However, we cannot assure investors that we will be able to do so. At present,
prospective viewers can download streaming software off the Internet, in most
instances at no charge. We cannot assure investors that streaming software will
continue to be made available to the public free of charge. If users are
charged to acquire streaming software, streaming technology may not be widely
accepted by Internet users.
11
<PAGE>
WE WILL DEPEND ON THE INTERNET INFRASTRUCTURE
Our success will depend in large part upon the development and maintenance
of the Internet infrastructure, such as a reliable network with the necessary
speed, data capacity and security, or timely development of complementary
products such as high speed modems, for providing reliable Internet access and
services. The Internet has experienced, and is expected to continue to
experience significant growth in the number of users, amount of traffic and
capacity requirements due to the wider acceptance of streaming technology by
Internet users, frequency of use or increased bandwidth requirements of users.
To the extent that the Internet continues to experience such growth, we cannot
assure investors that the Internet infrastructure will continue to be able to
support the demands placed on it or that its performance or reliability will not
be adversely affected. Furthermore, the Internet has experienced a variety of
outages and other delays as a result of damage to portions of its
infrastructure, including those resulting from the inability of certain
computers or software to distinguish dates in the 21/st/ century from those in
the 20/th/ century. In addition, the Internet could lose its viability due to
delays in the development or adoption of new standards and protocols of use to
handle increased levels of activity or due to increased governmental regulation.
WE WILL DEPEND ON TELECOMMUNICATIONS CARRIERS
We will have to rely on local and long-distance telecommunications
companies to provide us with data communications capacity. These providers may
experience service disruptions or have limited capacity, which could disrupt our
provision of streaming video content to our subscribers. We may not be able to
replace or supplement these services on a timely basis, if at all. In addition,
because we must rely on third-party telecommunications services providers for
our connection to the Internet, we may not be able to control decisions
regarding the availability of, or our access to, services at any particular
time.
WE WILL DEPEND ON OUR KEY PERSONNEL
Our success will depend to a large degree upon the efforts of our
management, our technical and marketing personnel and the reporter/anchors who
will be staffing our content bureaus. Our success will also depend on our
ability to attract and retain additional qualified management, technical and
marketing personnel
12
<PAGE>
and reporter/anchors. Hiring employees with the combination of skills and
attributes required to carry out our strategy is extremely competitive. We do
not have "key person" life insurance policies upon any of our officers or other
personnel. Our loss of the services of key personnel, particularly either or
both of Jonathan Braun, our Vice Chairman and Chief Executive Officer, and our
President, Albert T. Primo, or our inability to attract qualified replacements,
could adversely affect our prospective growth.
WE WILL COMPETE WITH NUMEROUS LARGER AND WELL-FINANCED COMPANIES
The market for Internet broadcasting is highly competitive and we expect
that such competition will continue to intensify. We will compete with:
. other Web sites, Internet portals and Internet broadcasters that
provide content to attract users.
. on-line services, other Web site operators and advertising networks,
as well as traditional media such as television, radio and print, for
a share of advertisers' total advertising budgets.
. traditional media such as television, radio and print with
international content.
We will compete against a variety of businesses that provide content
through one or more mediums, such as print, radio, television, cable television
and the Internet. Traditional media companies have not established a significant
streaming media presence on the Internet and may expend resources to establish a
more significant presence in the future. To compete successfully, we will have
to provide sufficiently compelling and popular content to generate users and
support advertising intended to reach such users. We believe that the principal
competitive factors in attracting Internet users include the quality of service
and the relevance, timeliness, depth and breadth of content and services
offered.
We expect competition from on-line services, other Web site operators and
advertising networks, as well as traditional media such as television, radio and
print for a share of advertisers' total advertising budgets. We believe that the
principal competitive factors for attracting advertisers include:
13
<PAGE>
. the number of users accessing our Web sites.
. the demographics of our users.
. our ability to deliver focused advertising and interactivity through
our Web sites.
. the overall cost-effectiveness and value of advertising on our
network.
There is intense competition for the sale of advertising on high-traffic
Web sites, which has resulted in a wide range of rates quoted by different
vendors for a variety of advertising services, making it difficult to project
levels of Internet advertising that will be realized generally or by any
specific company. Any competition for advertisers among present and future Web
sites, as well as competition with other traditional media for advertising
placements, could result in significant price competition.
We also expect to compete for traditional media advertising sales with
national radio and television networks, as well as local radio and television
stations. Initially, local radio and television content providers and national
radio and television networks in virtually all instances will have larger and
more established sales organizations than us. These companies will
also have greater name recognition and more established relationships with
advertisers and advertising agencies than us. Such competitors may be able to
undertake more extensive marketing campaigns, obtain a more attractive inventory
of ad spots, adopt more aggressive pricing policies and devote substantially
more resources to selling advertising inventory.
WE CANNOT PREDICT OUR FUTURE REVENUES
We intend to derive substantially all of our revenue from the sale of
advertising and from commissions paid upon e-commerce sales initiated by click-
throughs from viewers of the foreignTV.com network. We do not expect to be able
to attract advertisers or derive e-commerce commissions until our proposed
foreignTV.com network attracts a substantial amount of viewers. We cannot
assure investors that our proposed programming content will attract and retain a
sufficient number of advertisers or produce a sufficient level of e-commerce
end-sales that will generate meaningful revenues. Our expense levels may prove
to be greater than our revenue expectations. Our potential revenues also may be
affected by external factors, such as:
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<PAGE>
. lack of advertisers or e-commerce businesses on the Internet in general.
. more Internet sites competing for advertisers' dollars.
. pricing changes for Internet advertisements as the medium becomes more
competitive.
. the lack of user traffic on the foreignTV.com network or the Internet in
general.
. acceptance by the general public of the Internet as a convenient and
safe shopping forum.
. the offer by e-commerce businesses of quality services and products at
competitive prices to attract shoppers on-line.
. our ability to direct viewers to click through to specific e-commerce
businesses' web sites.
. technical difficulties with respect to the use of streaming technology.
. the failure of streaming technology to advance enough to make streaming
video pleasurable to watch by ordinary household viewers.
WE WILL BE EXPOSED TO RISKS ASSOCIATED
WITH INTERNATIONAL OPERATIONS
We intend to establish and operate content bureaus in foreign countries
which will produce and supply original content programming for the foreignTV.com
network. Opening a bureau and managing operations in a foreign country entails
significant expenditures and some knowledge of the country's national and local
laws, including tax and labor laws. Only two of our executive officers have any
experience in conducting business operations in foreign countries, and such
experience is not directly related to our proposed foreign activities.
Furthermore, there are certain risks inherent in conducting business
internationally, including, among others, regulatory requirements, legal
uncertainty regarding liability, difficulties in staffing and managing foreign
operations, longer payment cycles, different accounting practices, currency
exchange rate fluctuations, tariffs and other trade barriers, political
instability and potentially adverse tax
15
<PAGE>
consequences, any of which could adversely affect our growth opportunities.
Furthermore, we intend to hire English-speaking, experienced employees to
create the content in each location in which we develop a web site. We cannot
assure investors that we will be able to attract and retain such employees.
OUR INTELLECTUAL PROPERTY
PROTECTION MAY BE INEFFECTUAL
We regard our copyrights, trade secrets and similar intellectual property
as significant to our growth and success. We rely upon a combination of
copyright and trademark laws, trade secret protection, confidentiality and non-
disclosure agreements and contractual provisions with our employees and with
third parties to establish and protect our proprietary rights. We have applied
for federal trademark protection for "foreignTV.com" and intend to apply for
federal trademark protection for all domain names used in the foreignTV.com
network. Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related industries are
uncertain and still evolving. We are unable to assure investors as to the future
viability or value of any of our proprietary rights or those of other companies
within the industry. We are also unable to assure investors that the steps taken
by us to protect our proprietary rights will be adequate. Furthermore, we can
give no assurance that our proposed business activities will not infringe upon
the proprietary rights of others, or that other parties will not assert
infringement claims against us.
WE WILL NEED SIGNIFICANT
ADDITIONAL FINANCING
Even if we are able to sell all of the units, the net proceeds will be
insufficient to enable us to develop, establish and operate a broadcast network
of more than four foreignTV.com web sites. We will require substantial
additional financing in order to seek to expand our network beyond these initial
sites, and to become a meaningful competitor in the Internet broadcast industry.
We have no current arrangements with respect to, or sources of, additional
financing and there can be no assurance that any such financing will be
available to us on commercially reasonable terms, or at all. Moreover, if we
raise this additional capital through borrowing or other debt financing, we
would incur substantial
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interest expense. Sales of additional equity securities will dilute on a pro
rata basis, the percentage ownership of all holders of common stock. Any
inability to obtain additional financing will materially adversely affect us,
including possibly requiring us to significantly curtail operations.
OUR INITIAL PROGRAMMING WILL BE LIMITED
We intend to create original programming that will be produced by local
content bureaus in each location in which we establish a Web site. We expect to
have limited resources for the foreseeable future to produce original
programming. The lack of original programming, with a consequent inability to
attract and maintain a significant viewer base, could adversely affect our
prospects.
WE WILL BE SUBJECT TO RAPID TECHNOLOGICAL CHANGE
The market for Internet broadcast services is characterized by rapid
technological developments, frequent new product introductions and evolving
industry standards. Changes in network infrastructure, transmission and content
delivery methods and the emergence of new broadband access technologies or
advances in streaming and compression technologies could dramatically change the
structure and competitive dynamic of the market for streaming media. We cannot
give assurance to our investors that we will be able to respond, either cost
effectively or sufficiently, to these or similar developments.
WE MAY HAVE LIABILITY FOR INTERNET CONTENT
It is possible that we could be subject to claims under both United States
and foreign law for defamation, libel, invasion of privacy, negligence,
copyright or trademark infringement, or other theories based on the nature and
content of materials that we disseminate over the Internet. Although we intend
to acquire and maintain general liability insurance, it is possible that such
insurance may not cover potential claims of this type or may not be adequate to
indemnify us for all liabilities that may be imposed upon us. If we incur any
liability in excess of our insurance coverage, our proposed business and
operating results may be adversely affected.
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<PAGE>
CONSEQUENCES OF POSSIBLE GOVERNMENT
REGULATION OF THE INTERNET
Although there are currently few laws and regulations directly applicable
to the Internet, it is likely that new laws and regulations will be adopted in
the United States and elsewhere covering issues as music licensing, copyrights,
privacy, pricing, sales taxes and characteristics and quality of Internet
services. The adoption of restrictive laws and regulations could slow Internet
growth or its use as a commercial or advertising medium.
OUR SECURITY MEASURES MAY FAIL
Problems caused by third parties could lead to interruptions, delays or
cessation of our proposed streaming video broadcasts. Inappropriate use of the
Internet by third parties could also potentially jeopardize the security of
confidential information which could deter certain foreignTV.com viewers from
making click-through e-commerce purchases, thereby adversely impacting a
potentially significant source of our anticipated revenue. We cannot assure
investors that users of our programming or persons clicking through to e-
commerce businesses from our network will not assert claims of liability against
us as a result of any such failures or breaches. Further, until more
comprehensive security technologies are developed, the security concerns of
actual and potential users may inhibit the growth of the Internet service
industry in general and our revenue prospects in particular.
THE YEAR 2000 ISSUE COULD ADVERSELY
AFFECT OUR PROPOSED OPERATIONS
The Year 2000 issue is the result of computer programs only being able to
use two digits rather than four to define the applicable year. Thus, date-
sensitive software may recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in system failures or miscalculations, causing
disruptions of operations, including, among others, a temporary inability to
process transactions, send invoices or engage in similar normal business
activities. We have reviewed our existing systems and we have determined that
there are no significant Year 2000 issues that need to be addressed. As we have
not as yet established strategic relationships with any Internet service
providers or streaming video broadcast "hosts," we are unable to predict the
extent to which the Year 2000 issue will affect their rendition of services on
our behalf. We will seek representations from these as well as
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<PAGE>
from any other third party hardware or software supplier that their respective
service or product offerings are Year 2000 compliant.
WE WILL HAVE DISCRETION TO USE A
SIGNIFICANT PORTION OF THE NET OFFERING PROCEEDS
We will retain discretion over how to use a significant portion
($2,609,800) of the net proceeds of this offering if all of the units are sold.
We have not identified specific uses for these proceeds, but we intend to use
them for general corporate purposes, which may include working capital
expenditures and officers' salaries. However, because of the number and
variability of factors that determine our use of the net proceeds of this
offering, we cannot assure investors that these applications will not vary
substantially from our current intentions. Pending this utilization, we intend
to invest the net proceeds of this offering in short-term investment grade and
government securities.
THE BOOK VALUE OF YOUR COMMON STOCK WILL BE
SUBSTANTIALLY DILUTED IN THIS OFFERING
The public offering price of the common stock component of the units
(assuming no value is assigned to the warrant component) will be substantially
higher than the pro forma tangible book value per share of outstanding common
stock. Purchasers of common stock in this offering will therefore experience
immediate and substantial dilution in tangible book value per share, and the
existing stockholders will receive a material increase in the tangible book
value per share of their shares of common stock. The dilution to investors in
this offering will be $5.50 per share assuming the minimum number of units are
sold and $5.08 per share assuming all of the units are sold.
THE LARGE NUMBER OF SHARES OF COMMON STOCK
AVAILABLE FOR FUTURE SALE COULD ADVERSELY
AFFECT THE PRICE OF OUR PUBLICLY TRADED COMMON STOCK
Upon completion of our offering, we will have 9,150,000 shares of common
stock outstanding if the minimum number of units are sold and 10,000,000 shares
of common stock outstanding if all of the units are sold, of which 8,300,000
shares will be "restricted shares."
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The 850,000 shares (or 1,700,000 shares if all of the units are sold) of
common stock sold in this offering will be freely tradeable without further
restriction or further registration under the Securities Act of 1933, as amended
(the "Securities Act"), except for shares by our affiliates (as this term is
defined in the Securities Act), which will be subject to the limitations of Rule
144 ("Rule 144") under the Securities Act. Subject to certain contractual
limitations, holders of restricted shares generally will be entitled to sell
these shares in the public securities market without registration either
pursuant to Rule 144 or any other applicable exemption under the Securities Act.
CERTAIN ANTI-TAKEOVER PROVISIONS
Our Board of Directors has the authority to issue up to 5,000 shares of
preferred stock and to determine the price, rights, preferences, privileges and
restrictions, including voting right, of these shares without approval of our
stockholders. Any future issuance of shares of preferred stock could delay,
defer or prevent a change in control of foreignTV.com, may discourage bids for
the common stock at a premium above the market price of the common stock, and
may adversely affect the market price of, and the voting and other rights of,
the holders of common stock. We have no present plans to issue any shares of
preferred stock.
We are also subject to certain provisions of Delaware law that could have
the effect of delaying, deferring or preventing a change of control of
foreignTV.com, including Section 203 of the Delaware General Corporation Law,
which prohibits a Delaware corporation from engaging in any business combination
with any interested stockholder for a period of three years from the date the
person became an interested stockholder unless certain conditions are met.
THE MARKET PRICE OF OUR COMMON STOCK AFTER
THIS OFFERING MAY BE VOLATILE
The market price of our securities following this offering may be highly
volatile as has been usual with the securities of other small capitalization
companies and Internet stocks in general. Factors such as our operating results,
announcements as to technological developments and various factors affecting
streaming technology and the Internet industry in general may have a significant
impact on the market price of our securities. In addition, in recent months the
stock market has experienced a high level of price and volume volatility,
especially with respect to
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Internet stocks, and the market prices for the securities of many companies
(particularly of small and emerging growth companies) which trade in the over
the counter market have experienced high price fluctuation which have not
necessary been related to the operating performance of such companies.
RISK OF LOW PRICED STOCK
If the trading price of our common stock was to fall below $5.00 per share,
trading in our securities would be subject to the requirements of the penny
stock rules promulgated by the Securities and Exchange Commission ("SEC"). Such
rules require the delivery prior to any penny stock transaction of a disclosure
schedule explaining the penny stock market and all associated risks and impose
various sales practice requirements on broker-dealers who sell penny stocks to
persons other than established customers and accredited investors (generally
defined as institutions or an investor with a net worth in excess of $1,000,000
or annual income exceeding $200,000 or $300,000 together with the spouse). For
these types of transactions the broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transaction prior to sale. The additional burdens imposed upon
broker-dealers by such requirements may discourage broker-dealers from effecting
transactions in our common stock which could severely limit its market price and
liquidity.
WE ARE UNLIKELY TO PAY DIVIDENDS
We have not paid any dividends on our common stock to date. The payment of
future dividends, if any, will be contingent upon our revenues and earnings, if
any, capital requirements and general financial condition. The payment of any
such dividends will be within the discretion of the Board of Directors. The
Board of Directors presently intends to retain all earnings, if any, for use in
our business operations. Accordingly, we do not anticipate declaring any
dividends in the foreseeable future.
WE WILL CONTINUE TO CONTROL OUR AFFAIRS
Upon completion of this offering and assuming the sale of the minimum
number of units, our current stockholders, including our officers and directors,
collectively, will own approximately 91% of the then-issued and outstanding
shares of our common stock (83% if
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all of the units are sold). Stockholders are not entitled to cumulate their
votes for the election of directors. Accordingly, it is likely that the current
stockholders will be able to elect all of the members of the Board of Directors
and otherwise direct our affairs.
OTC BULLETIN BOARD
We expect the units, common stock and warrants will be traded in the over-
the-counter market. We anticipate that they will be quoted on the OTC Bulletin
Board, an NASD sponsored and operated inter-dealer automated quotation system
for equity securities not included in The Nasdaq Stock Market, as well as in the
NQB Pink Sheets published by National Quotation Bureau Incorporated. The OTC
Bulletin Board was introduced as an alternative to "pink sheet" trading of over-
the-counter securities. Although we believe that the OTC Bulletin Board has
been recognized by the brokerage community as an acceptable alternative to the
NQB Pink Sheets, we cannot assure investors that the liquidity and prices of our
securities in the secondary market will not be adversely affected.
If we satisfy the minimum listing requirements, either upon the sale of all
or substantially all of the units, we will seek to list the units, as well as
our common stock and warrants, on The Nasdaq SmallCap Market. We can offer no
assurance to investors that we will be able to achieve such listing requirements
upon either the sale of all or substantially all of the units or at any future
time.
CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION
REQUIRED IN CONNECTION WITH EXERCISE OF WARRANTS
We will be able to issue shares of our common stock upon exercise of the
warrants only if there is a then-current prospectus relating to the common stock
issuable upon the exercise of the warrants under an effective registration
statement filed with the SEC, and only if such common stock is qualified for
sale or exempt from qualification under applicable state securities laws of the
jurisdictions in which the various holders of warrants reside. Although we have
agreed to use our best efforts to meet such requirements, we cannot assure
investors that we will be able to do so. The warrants may be deprived of any
value and the market for the warrants may be limited if a then current
prospectus covering the common stock issuable upon the exercise of the warrants
is not effective pursuant to an effective registration statement or if
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such common stock is not qualified or exempt from qualification in the
jurisdictions in which the holders of the warrants reside.
USE OF PROCEEDS
We anticipate that the net proceeds from the sale of the minimum number of
units, after deducting underwriting commissions and other expenses of this
offering, will aggregate $4,356,000 ($8,867,000 if all of the units are sold).
We currently intend to use such net proceeds for the following purposes:
<TABLE>
<CAPTION>
Minimum Maximum
------- -------
<S> <C> <C> <C> <C>
Development and establishment
of network sites $ 300,000 (6.9%) $ 600,000 (6.8%)
Establishment of foreign-based
"content" bureaus and
development of programming 2,000,000 (45.9%) 4,000.000 (45.1%)
Network promotion and advertising 200,000 (4.6%) 1,500,000 (16.9%)
Payment of license fees to
affiliated persons or entities(1) 157,200 (3.6%) 157,200 (1.8%)
Working capital and general
corporate purposes, including
payment of officers'
salaries 1,698,800 (39.0%) 2,609,800 (29.4%)
---------- ------- ---------- -------
$4,356,000 (100.0%) $8,867,000 (100.0%)
========== ======= ========== =======
</TABLE>
_______
(1) Represents payment of license fees to affiliated persons or entities for a
period of two years from the date of this prospectus.
The foregoing represents our best estimate of our use of the net proceeds
from the sale of units, based upon our present planning, Internet industry
conditions and our estimated future revenues and expenditures. We may change
our intended use of such net proceeds in response to unanticipated events such
as increased expenses, accelerated growth or stronger than anticipated
competition, which may cause us to redirect our current priorities and re-
allocate or use portions of such net proceeds for other purposes.
We anticipate that the net proceeds that we will receive from the sale of
the minimum number of units will be adequate to fund our currently proposed
activities for at least 18 months. Pending our use of such net proceeds, we
intend to invest such net proceeds in short-term, investment grade, interest-
bearing instruments.
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<PAGE>
DILUTION
The difference between the public offering price per share of our common
stock (assuming no value is attributed to the warrants included in the units)
and the pro forma net tangible book value per share of our common stock after
this offering constitutes the dilution to investors in this offering. Net
tangible book value per share is determined by dividing our net tangible book
value (total tangible assets less total liabilities) by the number of
outstanding shares of common stock.
At December 31, 1998 and after giving retroactive effect to our sale in
January 1999 of 8,300,000 shares of our common stock at $.01 per share, or an
aggregate of $83,000, our net tangible book value was $83,000, or $(.01) per
share of common stock. After giving effect to the sale of a minimum of 850,000
and a maximum of 1,700,000 shares of common stock included in the units, less
the estimated expenses of this offering, our pro forma net tangible book value
at December 31, 1998 would have been $4,622,000, or $.50 per share if the
minimum number of units is sold or $9,161,000 or $.92 per share if the maximum
number of units is sold, representing an immediate increase in our net tangible
book value of $.49 per share (minimum) and $.91 per share (maximum) to current
stockholders and an immediate dilution of $5.50 per share (minimum) and $5.08
per share (maximum) to new investors. The following table illustrates the
foregoing information with respect to dilution to new investors on a per share
basis (assuming no value is attributed to the warrants included in the units):
Minimum Maximum
------- -------
Public offering price......................... $ 6.00 $ 6.00
Net tangible book value before offering $ 83,000 $ 83,000
Increase attributable to new investors $4,539,000 $9,078,000
Pro forma net tangible book value after
offering $4,622,000 $9,161,000
Dilution to new investors $ 5.50 $ 5.08
The following table sets forth, with respect to our current stockholders
and new investors, a comparison of the number of shares of common stock acquired
from us, the percentage ownership of such shares, the total consideration paid,
the percentage of total consideration paid and the average price per share (1):
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<TABLE>
<CAPTION>
Shares Purchased Percentage Total Consideration
-------------------- ----------- --------------------- Average Price
Amount Amount Percent Per Share
-------------------- ------------------- ----------------- -------------------
Minimum Maximum Minimum Maximum Minimum Maximum Minimum Maximum Minimum Maximum
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Existing
Stock-
holders 8,300,000 8,300,000 90.7% 83.0% $83,000 $83,000 1.6% 0.8% $0.01 $ .01
New
Investors 850,000 1,700,000 9.3% 17.0% $5,100,000 $10,200,000 98.4% 99.2% $6.00 $6.00
--------- ---------- -------- ------- --------- ----------- -------- -------
Total 9,150,000 10,000,000 100.0% 100.0% 5,183,000 $10,283,000 100.0% 100.0%
</TABLE>
- -------------
(1) Does not include the issuance of up to 2,440,000 shares of our common stock
which we have reserved for issuance upon future exercises of options and
warrants.
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CAPITALIZATION
The following table sets forth our capitalization at December 31, 1998 and
as adjusted to give effect to the sale of the units and the application of the
estimated net proceeds derived from the sale of the minimum and maximum number
of units offered by this prospectus.
Actual(1) As Adjusted(1)(2)
----------- ---------------------
Maximum Minimum
------- -------
Stockholders' equity:
Preferred Stock, $.01
par value, 5,000 shares
authorized; -0- shares
issued and outstanding - - -
Common Stock, $.01 par value,
30,000,000 shares authorized;
8,300,000 shares issued and
outstanding; 9,150,000 and
10,000,000 shares issued and
outstanding, as adjusted $ 83,000 $ 91,500 $ 100,000
--------- ----------- -----------
83,000 91,500 100,000
Capital in excess of par value -0- 4,530,500 9,061,000
Accumulated deficit (-0-) $ -0- $ -0-
--------- ----------- -----------
Total stockholders' equity $ 83,000 $ 4,622,000 $ 9,161,000
========= =========== ===========
- ---------------
(1) Assumes our receipt as of December 31, 1998 of the proceeds from our sale
in January 1999 of 8,300,000 shares of our commom stock at a price of $.01
per share, or an aggregate of $83,000.
(2) Does not include up to 2,440,000 shares of our common stock that we have
reserved for issuance upon future exercises of options and warrants.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We are in a developmental stage. We have not generated any revenues to
date. Our entire activity since our inception has been to prepare for our
proposed fundraising through an offering of our equity securities.
We will be unable to begin our proposed operations unless and until we are
able to sell a minimum of 850,000 units. We expect to receive net proceeds from
such sale of approximately $4,356,000, which we intend to primarily utilize for
the development and establishment of two network sites, for the establishment of
a like number of "content" bureaus and for program development, as well as for
the other purposes set forth under "Use of Proceeds" elsewhere in this
prospectus.
If we are able to sell all of the units, we expect to receive net proceeds
of approximately $8,867,000, which we intend to primarily utilize for the
development and establishment of two additional network sites, or a total of
four such sites, as well as for the establishment of a like number of "content"
bureaus. We will also substantially increase our expenditures to promote our
proposed foreignTV.com network in an effort to develop advertising revenues and
e-commerce tie-in commissions.
Our business plan, which assumes that we will not derive any significant
revenues from either advertising sales or e-commerce for at least 12 months
after our first sale of units, contemplates that the net proceeds that we expect
to receive from the sale of a minimum of 850,000 units should be sufficient to
sustain our proposed operations for at least 18 months after our receipt of such
net proceeds.
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PROPOSED BUSINESS
foreignTV.com
- -------------
We aim to become a leading Internet broadcaster, initially specializing in
the origination of compelling international content, which we believe is not
currently available in a similar format on the Internet. We propose to develop a
network of Internet web sites, utilizing geographic location-specific domain
names that we have licensed for our exclusive use for an initial term of 25
years, to offer viewers foreign newscasts and other programming produced in
various locations worldwide. Each site, or "channel," on our proposed
foreignTV.com network, which will be accessible either directly by its own
domain name or through a link on the foreignTV.com home page, will offer
original programming, in English, of local events, politics, entertainment,
business and culture, with a strong human interest appeal to provide viewers
with a sense of what it is like to not only visit but actually live and work in
that particular location. Each site will have its own content bureau, which will
employ reporters, anchors and producers who will develop and produce the content
for that site. Ultimately, we intend to create additional channels for locations
in the United States and for special interest programming.
Our programming will be viewable on the Internet by means of currently
available streaming video technology, which allows a viewer to watch live or on-
demand programming without the time consuming demands of downloading video
directly onto the viewer's computer hard drive. As streaming technology is
perfected, we anticipate that watching a program on the foreignTV.com network
will be similar to watching a program on network or cable television.
We expect to offer a comprehensive, informative and entertaining
experience, which will enable a visitor to our proposed parisTV.com web site,
for instance, to view an exclusive video news report about current events in
Paris, produced in Paris but in English and from an American-style human
interest angle; watch an interview with a local personality; go on a video tour
of the streets of Paris; preview an award-winning French film; or buy the latest
novel or non-fiction book about Paris, sample and purchase French music or make
airline, hotel, and restaurant reservations through e-commerce tie-ins.
We will not own the broadcasting technology used to transmit our content
over the Internet. Rather, we intend to license such technology from streaming
media broadcast hosts, and contract with Internet service providers for network
support.
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Industry Background
- -------------------
The Internet
The Internet is a global web of computer networks. Developed over 25 years
ago, this "network of networks" allows any computer attached to the Internet to
talk to any other using the Internet Protocol. The Internet has traditionally
been subsidized by the U.S. federal government. As the number of commercial
entities that rely on the Internet for business communications and commerce has
increased, the level of federal subsidies has significantly diminished, and
funding for the Internet infrastructure and backbone operations has shifted
primarily to the private sector. Further, the Internet has historically been
used by academic institutions, defense contractors and government agencies
primarily for remote access to host computers and for sending and receiving e-
mail.
Individuals are connecting directly to the Internet through Internet access
services such as those provided by MCI, NETCOM, Performance Systems
International, Inc. ("PSI"), and UUNET Technologies, Inc. ("UUNET"). These
services are growing as easy-to-use software package make accessing the Internet
as easy as getting onto the popular on-line services. To compete with these
direct Internet access providers, consumer on-line services including America
On-line, Inc.("AOL"), CompuServe, Inc. ("CompuServe"), and Prodigy Services Co.
("Prodigy"), have also introduced Internet access gateways for their existing
subscribers. With these gateways, the on-line services effectively become large
Internet "on-ramps," bringing large numbers of subscribers onto the Internet.
World Wide Web
Much of the recent growth in Internet use by businesses and individuals has
been driven by the emergence of a network of servers and information available
on the Internet called the World Wide Web ("Web"). The Web, based on a
client/server model and a set of standards for information access and
navigation, can be accessed using software that allows non-technical users to
exploit the capabilities of the Internet. The Web enables users to find,
retrieve and link information on the Internet in a consistent way that makes the
underlying complexities transparent to the user. Electronic documents are
published on Web servers in a common format described by the Hypertext Markup
Language ("HTML"). Web client software can retrieve these documents across the
Internet by
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making requests using a standard protocol called Hypertext Transfer Protocol
("HTTP").
The proliferation of Web clients has created significant demand for
software to enable Internet servers and private servers on corporate networks to
function as Web servers. These servers are used by organizations to offer their
products and services on the Internet and to publish confidential company
information to employees inside the enterprise. Web usage is expected to be
further fueled by advances in Web client, server and application software, in
concert with technological developments that drive cost reductions and
performance enhancements.
Internet Commerce
The Internet provides organizations and individuals with new means to
conduct business. Commercial uses of the Internet include business-to-business
and business-to-consumer transactions, product marketing, advertising,
entertainment, electronic publishing, electronic services and customer support.
The Internet offers a new and powerful medium for traditional retail and mail
order businesses to target and manage a wider customer base more rapidly,
economically and productively. We believe that only a small fraction of this
retail business is currently conducted electronically but we expect it to grow
substantially. Another important application for Internet commerce is
electronic publishing through advertiser supported and fee-based Internet
services. Electronic publishing offers substantial savings as compared to
publishing on paper or computer discs. In addition, Web software permits the
publishing of audio files and video clips as well as text and graphical data.
In addition to retailers and publishers, other new businesses are appearing
on the Web as it provides access to a growing base of home, business and
education customers. Financial service institutions are providing on-line
banking information, stock information and trading services. Companies from
many industries are publishing product and company information to their channel
partners and customers, providing customer support via the Web, allowing
customers to immediately buy products on-line, and collecting customer feedback
and demographic information interactively.
Streaming Technology
- --------------------
Until quite recently, all Internet sites were text-based with little or no
movement or sound. It was possible to view a video
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clip, but it required downloading the video onto the viewer's computer.
Technology introduced in 1995 called "streaming" changed this by introducing
sound, video and animation to sites all over the Internet, either as "on demand"
or live broadcasts.
Streaming addresses three major problems that downloading multimedia files
onto a viewer's computer are plagued with:
. the entire file needs to be downloaded before the viewer can play back
the file.
. lack of sufficient bandwidth (the term used to express a system's data
carrying capacity).
. some content developers do not want their multi-media files to be
downloaded and stored. Streaming addresses copyright issues because
the files cannot be downloaded.
Downloading
Streaming reduces the time a viewer needs to wait while an audio or video
digital file is downloaded onto the viewer's computer. Before streaming
technology, a viewer wishing to watch a video clip while on the Internet had to
download the entire file before any part of it could be viewed. For a PC owner
using a 28.8kbs narrow bandwidth modem, the most common speed of household PC
modems, it could take between 5-10 minutes to download a 30 second to one minute
(500k-1MB) audio file or a 5 seconds to 45 second (500K-3MB) video file. Larger
files would take even longer to download, during which time the viewer was left
to do nothing else but watch a status meter. When a user opens or accesses an
audio or video file that uses streaming technology, a portion of the data is
first downloaded into a "buffer," usually in a matter of seconds. When the
buffer is full, the data starts to play from the buffer, while additional data
is continuously downloaded to keep the buffer full.
Technology
Streaming multimedia is created by taking standard video tape formats and
digitizing and compressing the information using encoder software on a Pentium-
class PC. The final product - a digital file - is then placed on a server where
a user can link to it using streaming software.
Although software is required to view streaming video, many browsers now
come with built in players. Additionally, programs such as RealNetwork's
RealPlayer(R) or Microsoft's Windows Media Player(TM) (formerly Netshow(R))
which play streaming multimedia clips,
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can be downloaded from the Internet for free. It is estimated that more than 40
million users have downloaded these and similar programs since 1996. The
technology has advanced to the point where the quality of audio streaming over a
28.8kbps modem, such as listening to your favorite radio station over the
Internet, rivals FM radio and over a T1 line, which is most often found in
offices, rivals compact disk quality. Video (which requires much more data to
download than audio streaming) can now also be viewed over 28.8kbps modems,
although not without legitimate complaints as to quality. T1 lines allow for
improved picture quality, however it still does not rival the quality of a
television broadcast.
Streaming technology requires large amounts of bandwidth due to the immense
amount of data contained in each video clip. Bandwidth technologies have not yet
progressed to the point to implement a full-scale video network allowing a
viewer to watch his or her favorite movies or television shows over the
Internet, but the Company believes that technological improvements will make
that a reality in the near future. Technological improvements to compression,
bandwidth and the introduction of multi-casting -where a broadcaster can send a
single data stream to a virtually unlimited number of users - will allow
streaming video quality, and subsequently, viewers, to increase dramatically.
Increased viewers to Internet sites utilizing such technology will give a
competitive edge over sites that do not utilize streaming technology.
Additionally, the introduction of cable modems, which rival the speed of T1
lines, are introducing higher quality streaming videos into people's homes.
According to Dataquest, as reported in Wired News, sales of cable modems more
than doubled in 1998 and worldwide shipments of cable modems will hit 492,000,
up from 214,000 units in 1997. Worldwide shipments are estimated to reach 2.4
million units by 2002. Further advances in PC-based technologies are also
increasing the likelihood that streaming video that rivals television picture
quality will someday be ubiquitous in people's homes. For instance, Compaq
Corporation has recently announced that it will market a PC with pre-installed
high speed Internet access equipment, which is being billed as a bid to extend
the powers of the Internet to US consumers and to accelerate development of a
mass market for high speed Internet use.
Although the quality of streaming video is not yet comparable with
television, the Company believes that most users have positive experiences with
or recognize the potential of streaming at this early stage of technology and
will continue to use it as the technology matures.
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The Internet as Television
An additional advantage of streaming multimedia is that it allows a user to
view content on his or her own time, not just on television network schedules.
The borderless nature of the Internet lets viewers watch what they want when
they want it. We believe that once the picture quality improves to rival
today's television broadcasts, the average PC user will prefer the convenience
and ease of calling up a program over the Internet instead of traditional
broadcast or cable television.
Broadcasting audio and video content over the Internet offers certain other
advantages that are not generally available from traditional media sources.
Currently available analog technology and government regulations limit the
ability of radio and television stations to broadcast beyond certain geographic
areas and radios and televisions are not widely used in office buildings and
other workplaces, where Internet access has become commonplace.
Our Growth Strategy
- -------------------
We will attempt to create a network of web sites which will broadcast
original programming using streaming video technology through the Internet.
Each individually accessible web site will also be linked to the foreignTV.com
home page, so when a user logs onto foreignTV.com, he or she will have the
option of clicking through to any one of our other sites. Each site will
deliver content produced in different locations world-wide and will broadcast
programming only related to that location. Although the programming will be
produced in that specific location, it will be sent back to foreignTV.com's
offices for editing and eventual transmittal over the Internet.
We intend to attract viewers to our foreignTV.com web sites by offering
original programming that we believe a viewer presently cannot find anywhere
else. According to publications such as the Economist and the New York Times,
the current trend in the news media is away from foreign reporting towards
domestic, from politics to human interest and from issues to people. We will
seek to capitalize on this trend by filling the void left by the US news media
with our original, foreign-based programming.
We believe that in-depth network news coverage of world affairs is
diminishing in both quantity and quality; with the exceptions of wars, terrorist
incidents, disasters and the like, the sensation-seeking networks are turning
away from the world.
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This is in part due to a feeling of relative calm following the end of the Cold
War as well as a rich-world insularity. Although specific examples of global
unrest still prevail, the collapse of southeast Asian and Latin American
economies and the Iraqi crisis for example, we believe the inward-bound
reflections of the major news networks is continuing. An example of these
cutbacks can be seen in the lack of on-the-scene reporting which sacrifices the
depth and perspective that only an on-the-scene reporter can give. We believe
that the increased competition between journalism and entertainment, along with
what appears to be a widespread belief held by producers that American audiences
are no longer as interested in daily events happening beyond the United States'
borders, is causing a decline of international-oriented news. Americans who
require or demand international-oriented news must now turn to new media to
satisfy their cravings.
An additional trend we will seek to capitalize upon is niche programming.
Niche programming refers to the concept that as more and more channels are
beamed into people's homes, people will no longer watch one-size-fits-all
programming and will instead focus on channels that offer a particular subject
matter, such as a television station that solely broadcasts golf and golf-
related shows.
We are still in the planning stages of our development and have not as yet
created any of the content to be offered on the foreignTV.com network or develop
any of the network sites to view such content. We intend to initially develop,
establish and operate two foreignTV.com network sites - for locations in London,
England and Paris, France - if we are able to sell the minimum number of units,
and an additional two sites - which we anticipate will be for locations in
Berlin, Germany and Tokyo, Japan - if we are able to sell all of the units.
We intend to offer access to the foreignTV.com network and its
programming free of charge to viewers. Our intention is to derive revenues from
the sale of advertising, as well as from commissions arising from e-commerce
tie-ins, with the anticipation that such revenues will increase if, as and when
we create and offer more programming and more viewers log onto the network.
Content Bureaus
We intend to establish content bureaus in principal cities around the
world, which will be the equivalent of a foreign news bureau to a broadcast
television station. Each foreignTV.com
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network site will have its own content bureau to provide the original content to
be shown on that site.
Each content bureau will be staffed by qualified Americans or English
speaking nationals who have a background in production, journalism or reporting,
to produce content under the direction of foreignTV.com's home office in the
United States. It is our intention to initially employ four full-time
reporter/anchors and one support person for each content bureau, as well as
hiring one or more free-lance workers as needed. These reporter/anchors will not
only create the programming, either entirely on their own or pursuant to
agreements with local production studios, but will also star in the programs, as
interviewers, news anchors or hosts. The raw footage created by the
reporter/anchors will then be sent back to the Company's main office in New York
where it will be edited and formatted for viewing over the Internet.
Licensing of Domain Names
- -------------------------
Domain names are part of Internet addresses. The top level of a domain
name (i.e., the last part) indicates what kind of an organization runs the site:
.com is commercial, .edu is educational, .gov is government and .org is non-
profit, and there are approximately 100 other top level domain names that
represent the country of origin. The second level of the domain name (preceding
the period) is selected by its owner. Domain names are registered with InterNIC
Registration Services ("InterNIC"), managed by Network Solutions, Inc.
License Agreement with
The Center of Contemporary Diplomacy
The Center of Contemporary Diplomacy, Inc. (the "Center") is a New York
not-for-profit, tax-exempt organization formed in 1997 for the purpose promoting
and preserving world peace through public awareness and understanding of
diplomacy in international relations. Among the Center's activities is the
monitoring and observation of elections in third-world countries and emerging
democracies, especially in the Continent of Africa.
The Center, which is a corporate member of the Council on Foreign Relations
based in New York City, was founded by I. William Lane, our Chairman of the
Board, and Jonathan Braun, our Vice Chairman and Chief Executive Officer. Dr.
Lane is currently serving as the Center's Chairman of the Board and Mr. Braun is
the Center's President, respectively. Additionally, Mr. Albert T.
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Primo, our President, and Mr. Marc D. Leve, our Vice President-Legal Affairs,
Secretary and Treasurer, are officers of the Center. Its web site is
"www.centerfordiplomacy.org."
The Center currently owns the right, which it has licensed to us, to use 91
different domain names that combine prefixes ending in or incorporating the word
TV with the .com, .org or .net suffix and 4 domain names that either incorporate
the word "channel" or contain a country name in the prefix. As with all
Internet addresses, the names are not case sensitive -- the letters TV are
capitalized for design purposes only. We believe this library to be the largest
of its kind. A listing of these domain names is set forth below (in alphabetical
order):
airtravelTV.com lisbonTV.com
amsterdamTV.com madridTV.com
asiaTVonline.com milanTV.com
athensTV.com monacoTV.com
australia-TV.com mongoliaTV.com
bakuTV.com norwayTV.com
beijingTV.com osloTV.com
berlinTV.com pacificTV.com
bombayTV.com palestineTV.com
brazil-TV.com panafricanTV.com
brusselsTV.com parisTV.com
budapest-TV.com polandTV.com
caspianTV.com pragueTV.com
copenhagenTV.com publicaffairsTV.com
cracowTV.com puertoricoTV.com
danishTV.com quebecTV.com
davosTV.com romeTV.com
denmarkTV.com saigonTV.com
diplomacyTV.com scandinavianet.com
dublin-TV.com scandinaviaTV.com
ecochannel.com scandinavianTV.com
europeTV.com scotlandTV.com
explorationchannel.com seoulTV.com
explorationTV.com southamericaTV.com
finlandTV.com southamericanTV.com
foreignTV.net spychannel.com
foreignTV.org stockholmTV.com
foreignaffairsTV.com swedenTV.com
genevaTV.com swedishTV.com
globalvillageTV.com taipeiTV.com
globalvillageTV.net tehranTV.com
globalvillageTV.org telavivTV.com
harlemTV.com turkishTV.com
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havanaTV.com tokyoTVchannel.com
helsinkiTV.com trinidadTV.com
holylandTV.com tuscanyTV.com
hongkong-TV.com unitednationsTV.com
icelandTV.com veniceTV.com
icelandicTV.com viennaTV.com
irelandTV.com warsawTV.com
istanbulTV.com worldaffairsTV.com
italianTV.com worldhistoryTV.com
italy-TV.com worldnewsTV.com
jamaica-TV.com worldreligionTV.com
korea-TV.com worldTVchannel.com
krakowTV.com worldTVnetwork.com
london-TV.com worldTVonline.com
zurichTV.com
We anticipate that "TV" incorporated in a domain name, whether in the
specific part prior to the "." or the more general term after the ".",
ultimately will be recognized as the mark of Internet sites utilizing streaming
technology. We therefore believe that our license to use the Center's large
collection of such names will afford us the potential to enhance the likelihood
of attracting casual Internet viewers to our proposed network sites.
We have entered into an agreement with the Center which affords us a 25-
year exclusive license for unlimited use of these domain names, including the
right to sublicense their use to others. This agreement requires us to pay the
Center an annual license fee of $600 per domain name for each of the first five
years of such 25-year term, increasing by 5% a year thereafter through the 13th
year, by 7% per year thereafter through the 21st year, by 10% per year through
the 24th year and at a rate of $2,500 per domain name for the final year. These
fees are payable to the Center irrespective of whether or not we use any or all
of such domain names. The initial annual cost to us will be $57,000, increasing
to $237,500 for the final year of this 25-year license.
In addition, we are obligated to pay the annual maintenance fee for domain
names, currently $35 per name, to InterNIC for the 25-year term of this
agreement. We are also obligated to indemnify the Center against any and all
claims asserted against the Center relating to our use of the domain names.
The license will automatically renew upon its scheduled expiration for an
additional term of 25 years unless we and the
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Center otherwise agree, except that we may unilaterally terminate the license at
any time by paying the Center a sum equal to (i) the aggregate license fees
payable to the Center in the year in which we so terminate the license and (ii)
the aggregate license fees we would have been required to pay to the Center in
the immediately subsequent year.
The Center has agreed that for the term of our license, it will not
register any further domain names containing the letters "TV" or which states or
implies streaming or any other similar aspect of foreignTV.com's proposed
business. The Center has also agreed that should it license any further domain
names to us for our exclusive use, our license fee shall be equal to the initial
registration fee paid by the Center for its rights to such domain names.
License Agreement with Jonathan Braun
We have entered into a substantially identical license agreement with
Jonathan Braun, our Vice Chairman and Chief Executive Officer, at an initial
annual cost to us of $21,600, increasing to $90,000 for the final year of this
25-year license. Mr. Braun currently owns or has the exclusive right to use the
following domain names (in alphabetical order):
arthistoryTV.com aspenTV.com
beverlyhillsTV.com bigeasyTV.com
bluesTV.com californiastreaming.com
collegetownTV.com emergencyTV.com
hamptonsTV.com jacksonholeTV.com
maineTV.com manhattanTV.com
martialartsTV.com mauiTV.com
medium4.com medium4TV.com
multichannelTV.com nantucket-TV.com
newenglandTV.com nicheTV.com
offroadTV.com popcultureTV.com
ruralTV.com santafeTV.com
siliconvalleyTV.com smalltownTV.com
southbeachTVchannel.com streamingUSA.com
swimchannel.com swimmingTV.com
taosTV.com texasTV.com
vermont-TV.com vinyardTV.com
westernTV.com wildernessTV.com
In addition to our efforts to develop the foreignTV.com network, we intend
to eventually develop a domestic streaming video network of sites produced in
U.S. locations and a special interest streaming video network of sites, which
will be similar in structure to the foreignTV.com network. We intend to
undertake
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such development only if and when we are able to complete at least 12 fully-
developed foreignTV.com sites, which is subject to the future availability of
adequate financing.
Advertising and E-commerce
- --------------------------
Advertising
We expect to derive our revenues from the sale of advertising space on our
network web sites and from commissions to be paid to us by e-commerce businesses
for originating click-through sales of their services and products.
With respect to advertising, we intend to offer prospective advertisers the
opportunity to place customized ads on our web sites. Some of the choices we
intend to provide include:
. The ability to brand entire sections of our Web sites which may
include rotating and permanent placement of buttons, logos and Web
site links, integrated gateway ads, multimedia banner ads and mentions
on the foreignTV.com home page and channel home pages.
. Inclusion in an e-mail newsletter, which we intend to make available
on a subscription basis to viewers of our network sites at no cost,
containing highlights of upcoming events and new programming.
. The integration of audio and video into text and graphics banner ads
which will play when the user clicks on the banner. We believes that
video can increase the impact of a banner ad, which can in turn be
sold at a higher cost than traditional banner ads.
We do not intend to initially employ a direct advertising sales force.
Instead, we plan to engage a leading Internet ad sales rep firm, such as the
industry leader, DoubleClick Inc.
E-commerce
Besides advertising, our other intended source of revenue is from e-
commerce tie-ins with e-commerce businesses. We intend to enter into agreements
with such businesses in which we would provide direct links to their respective
web sites in exchange for commissions to be paid to us upon each sale of their
services or
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products to a buyer who clicked through to such e-commerce businesses from the
foreignTV.com network.
We believe that retail sales over the Internet will grow substantially over
the next few years as more people log onto the Internet in general, more
services market and sell their services or products on-line and safety concerns
about transmitting confidential data are addressed. According to Forrester
Research, Inc., world-wide e-commerce sales will reach as high as $3.2 trillion
in the year 2003 and on-line travel reservations will produce up to 29.5 billion
in revenue in the year 2003. By entering into alliances with e-commerce
companies while the industry is young, we hope to grow along with such companies
as the industry matures.
Network Promotion
- -----------------
Our marketing efforts will include hiring and training a public relations
staff, which will be responsible for news releases targeted to major print and
broadcast media, and the production and on-air placement of high-quality,
professional video news releases aimed at major-market US and overseas TV
stations and cable networks.
We also intend to market the foreignTV.com network by exchanging banner ads
with high-traffic Web sites and develop and distribute free E-mail newsletters
to our registered users to highlight upcoming events and content.
We also intend to enter into strategic relationships with other content
providers, key Internet companies, and technology and bandwidth providers, as we
believe such relationships may enable us to increase traffic and brand
awareness.
We hope that by gaining share in the market for streaming video at this
early stage, the foreignTV.com networks will gain in brand recognition when
streaming multimedia becomes more commonplace over the Internet. Greater brand
recognition, in turn, may translate into a steadily building user base with
great potential value for advertisers, e-commerce companies, other content
providers and any company with an interest in attracting and aggregating a
growing audience of Internet users.
In addition, the Center is currently in negotiations to develop and produce
a half-hour, weekly foreign affairs cable TV magazine-style program entitled
"The World This Week," which it
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hopes to air on leased access type stations on cable television networks in New
York, Washington, DC and select additional markets. The Company intends to
utilize this program as a traditional media vehicle for promoting and
advertising foreignTV.com and as a tool for creating content for the
foreignTV.com network by interviewing international personalities in government,
industry and entertainment.
Competition
- -----------
The market for Internet broadcasting is highly competitive and we expect
that such competition will continue to intensify. We will compete with:
. other Web sites, Internet portals and Internet broadcasters that
provide content to attract users.
. on-line services, other Web site operators and advertising networks,
as well as traditional media such as television, radio and print, for
a share of advertisers' total advertising budgets.
. local radio and television stations and national radio and television
networks for sales of advertising spots.
We will compete against a variety of businesses that provide content
through one or more mediums, such as print, radio, television, cable television
and the Internet. Although traditional media companies have not established a
significant streaming media presence on the Internet, they may expend resources
to establish a more significant presence in the future. To compete
successfully, we will have to provide sufficiently compelling and popular
content to attract viewers and support advertising intended to reach such users.
We believe that the principal competitive factors in attracting Internet users
include the quality of service and the relevance, timeliness, depth and breadth
of content and services offered.
We expect competition from on-line services, other Web site operators and
advertising networks, as well as traditional media such as television, radio and
print for a share of advertisers' total advertising budgets. We believe that the
principal competitive factors for attracting advertisers include:
. the number of users accessing our Web sites
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. the demographics of our users
. our ability to deliver focused advertising and interactivity through
our Web sites
. the overall cost-effectiveness and value of advertising on our network
There is intense competition for the sale of advertising on high-traffic
Web sites, which has resulted in a wide range of rates quoted by different
vendors for a variety of advertising services, making it difficult to project
levels of Internet advertising that will be realized generally or by any
specific company. Any competition for advertisers among present and future Web
sites, as well as competition with other traditional media for advertising
placements, could result in significant price competition.
We also expect to compete for traditional media advertising sales with
national radio and television networks, as well as local radio and television
stations. Initially, local radio and television content providers and national
radio and television networks in virtually all instances will have larger and
more established sales organizations than us. These companies, initially, will
also have greater name recognition and more established relationships with
advertisers and advertising agencies than us. Such competitors may be able to
undertake more extensive marketing campaigns, obtain a more attractive inventory
of ad spots, adopt more aggressive pricing policies and devote substantially
more resources to selling advertising inventory.
We believe there is no similar content-based network of original
international programming that would compete with foreignTV.com. However, there
are a number of Internet companies that aggregate and broadcast streaming video
and audio, including music, music videos, movie trailers, sports, news and
business events. The largest of these companies is broadcast.com, which went
public in 1998. Although broadcast.com has exclusive and non-exclusive licences
to broadcast a wide range of events, we do not believe we will compete with
broadcast.com directly, or any other streaming content provider, based upon
subject matter as we are not aware of any other streaming content provider which
produces its own programming and focuses on local events, politics,
entertainment, business and culture in locations around the world. However, our
ability to market our name and services and to differentiate ourselves from
broadcast.com and other will have a direct impact on the number of viewers we
will be able to obtain. We can give no assurance to investors that broadcast.com
or any
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another streaming media site will not focus internationally to directly compete
with foreignTV.com. As the Internet becomes more ubiquitous, and quality
streaming content becomes more accessible, there will be additional competitors
seeking to broadcast content over the Internet which can detract from
foreignTV.com's potential audience.
Intellectual Property
- ---------------------
We regard our copyrights, trade secrets and similar intellectual property
as significant to our growth and success. We rely upon a combination of
copyright and trademark laws, trade secret protection, confidentiality and non-
disclosure agreements and contractual provisions with our employees and with
third parties to establish and protect our proprietary rights. We have applied
for federal trademark protection for "foreignTV.com" and intend to apply for
federal trademark protection for all domain names used in the foreignTV.com
network. Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related industries are
uncertain and still evolving. We are unable to assure investors as to the future
viability or value of any of our proprietary rights or those of other companies
within the industry. We are also unable to assure investors that the steps taken
by us to protect our proprietary rights will be adequate. Furthermore, we can
give no assurance that our proposed business activities will not infringe upon
the proprietary rights of others, or that other parties will not assert
infringement claims against us.
Government Regulation
- ---------------------
There are few laws or regulations directly applicable to the Internet. The
appeal of the Internet makes it likely, however, that state or national laws may
be implemented in the future covering such issues as taxes, intellectual
property and property ownership, privacy, defamation and freedom of speech.
Most laws were adopted prior to the advent of the Internet, and their
applications are uncertain. Any new law or regulation may have the effect of
limiting the use of the Internet and its growth as a new medium to communicate.
Employees
- ---------
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We do not presently have any employees other than our executive officers.
If we are able to sell the minimum number of units, we intend to hire up to four
full-time computer programmers, web designers and editors to be based in our New
York office and four reporter/anchors and one support person for each content
bureau opened overseas.
Facilities
- ----------
We presently maintain our executive offices on a rent-free basis in
premises of approximately 300 square feet that we share with Y Design, Ltd., a
New Media design firm which was founded by Mr. Yeon S. Hong, our Vice President-
Creative. If we are able to sell the minimum number of units, we have agreed to
reimburse Mr. Hong for his rental costs for these premises (approximately $500
per month) from that time forward until we can locate, lease and occupy
approximately 7,000 square feet of office space, which we presently anticipate
will be situated in the Borough of Manhattan in New York City, and thereafter
through the expiration of Mr. Hong's present lease in August 1999.
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MANAGEMENT
Directors and Executive Officers
Our current directors and executive officers are as follows:
Name Age Position
- ---- --- --------
I. William Lane 76 Chairman of the Board of
Directors
Jonathan Braun 48 Vice Chairman, Chief
Executive Officer and
Director
Albert T. Primo 63 President and Director
Bruno Finel 39 Senior Vice President-
European Operations and
Director
Marc D. Leve 41 Vice President-Legal
Affairs, Secretary,
Treasurer and Director
Yeon S. Hong 29 Vice President-Creative
Elorian C. Landers 51 Vice President-Corporate
Development
I. William Lane, PhD has been the Chairman of the Board of Directors of the
Company since its inception in December 1998. Dr. Lane has served as a
consultant to Lane Labs, a natural medicine company founded upon Dr. Lane's
principles and teachings, primarily dealing with cancer research, since 1994.
He has been the Chairman of Cartilage Consultants, Inc., a company that
researches and provides consulting services for the use of shark cartilage and
other natural medicines, since 1989. Dr. Lane is also Chairman of the Center.
Dr. Lane received his B.S. and Masters in Nutritional Science from Cornell
University and his PhD. in Agricultural Biochemistry and Nutrition from Rutgers
University.
Jonathan Braun founded and has served as Vice Chairman and Chief Executive
Officer of the Company since its inception. From 1995 to 1997, Mr. Braun was
the President of Marinex Multimedia
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Corporation, a CD-rom publishing and Internet content provider company. From
1991 to 1995 Mr. Braun was the President of Marinex, Inc., a public relations
firm he founded. Mr. Braun began his career as a journalist working for such
publications as Parade Magazine, The Jewish Week, and the New York Daily News
and currently serves on the editorial board of Midstream, a monthly journal
specializing in Israel and the Middle East. Mr. Braun received his Masters of
Science from The Columbia University School of Journalism and his B.A. in
Political Science from the City College of New York, where he graduated Phi Beta
Kappa and magna cum laude. Mr. Braun is also President of the Center.
Albert T. Primo has been a director and the President of the Company since
its inception. Mr. Primo is the President of Primo Newservice, a company that
has provided advice to television and cable systems on news production and
marketing since 1976, the Executive Producer/Narrator of Sci-Tech TV, a thirty
minute TV magazine devoted to science and technology since 1994 and the
Executive Producer of Newsworthy, a weekly television feature magazine
syndicated to 58 television stations and 1,200 cable systems since 1989.
According to articles which have appeared in The Wall Street Journal, USA Today
and Advertising Age, Mr. Primo is credited with being the author of the
"eyewitness news" format that is currently widely used in the television news
industry. He has produced programming and worked in the broadcast industry for
over 40 years, including stints as the executive producer of prime-time
television specials and investigative news series, the owner of a radio station
and a weekly newspaper in Connecticut and the Vice President, News of ABC-TV
from 1972 to 1974. He received his B.A. from the University of Pittsburgh.
Bruno Finel has been a director and Vice President-European Operations of
the Company since its inception. Mr. Finel is the Managing Director and
principal stockholder of Cablevision, a ten-year old Paris-based company that
produces programs for African, French and European television and provides
communication and investment counseling on behalf of the governments of Namibia,
the Ivory Coast, Togo and Tunisia. In addition, Mr. Finel created and is
managing, through Cablevision, the official public information web sites of
Namibia, Togo and Tunisia and has created news and information related web sites
devoted to Sudan and Tunisia.
Marc D. Leve has been a director, Vice President-Legal Affairs, Secretary
and Treasurer of the Company since its inception. Mr. Leve is, and has been an
attorney with Yerushalmi & Associates, LLP, a New York law firm, and its
predecessor firm, since 1995. He was an associate at Yerushalmi, Shiboleth,
Ysraeli & Roberts, LLP from 1993 to 1995. Mr. Leve has
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been General Counsel, Vice President, Secretary and a director of the Center
since shortly after its inception. Mr. Leve received an LLB in 1984 from Bar
Ilan University in Israel. He is admitted to practice law in Israel and in the
State of New York.
Yeon Hong has been Vice President-Creative of the Company since its
inception. Mr. Hong is the founder, President and Creative Director of Y
Design, Ltd., a New Media design firm that services Fortune 500 companies such
as Samsung America and EDS since 1997. Mr. Hong also works as a freelance
Art/Creative Director for such companies as Time Warner, MCI, Beverly Hills Polo
Club, Barron's Weekly News, Columbia House and Waters Design since 1991. Mr.
Hong was Vice President and Creative Director of Marinex Multimedia Corporation
from 1994 to 1995. Mr. Hong served as the Creative Director for CBC Media,
Inc., where he launched The Web Stop, an Internet portal Web site from 1995 to
1997. Mr. Hong received his BA in Communications Arts from The University of
Buffalo and has also studied engineering and computer programming studies from
The Rochester Institute of Technology.
Elorian C. Landers has been Vice President-Corporate Development of the
Company since its inception. Mr. Landers is the Managing Partner of South Coast
Venture Group, a venture capital firm in Houston, Texas, since 1991 and is a
founder and the Acting President of Fyrglas, Inc., an innovator in fiber optic
imaged gifts and promotional items. Mr. Landers has over 20 years experience in
marketing, advertising and public relations. Mr. Landers received his B.A in
Marketing and Advertising from Art Center College in Pasadena, California.
All of our directors hold office until the next annual meeting of
stockholders and the election and qualification of their successors. Our
directors receive no compensation for serving on our Board of Directors other
than reimbursement of reasonable expenses incurred in attending meetings.
Officers are elected annually by the Board of Directors and serve at the
discretion of the Board.
Executive Compensation
- ----------------------
We do not presently pay compensation to any of our officers and directors,
although we do reimburse them on an accountable basis for any reasonable
expenditures made on our behalf.
We intend to enter into five year employment agreements with each of
Jonathan Braun, Albert T. Primo and Bruno Finel, effective
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upon the sale of the minimum number of units (retroactive to January 1, 1999 in
the case of Mr. Braun), which will require each such person to devote
substantially his full time efforts to our affairs and will provide for each to
receive an initial minimum base salary of $150,000 per annum, annually
increasing thereafter at a rate of not less than 10%. Additionally, each such
person will receive a one-time bonus of $25,000 if and when we first achieve
profitability.
Each such employment agreement will also provide for the payment of
severance in the event of our termination of employment other than for "cause"
in an aggregate lump sum equal to one year's minimum base salary for the
affected employee at the rate prevailing at the date of his termination,
augmented by a like amount for each year of prior employment (to be
appropriately pro-rated for partial years).
Messrs. Braun, Primo and Finel will also be entitled to participate in such
benefit plans, including life insurance, hospitalization, pension or profit-
sharing plans, as the company may adopt from time to time. Messrs. Braun, Primo
and Finel will also be precluded from entering into the employ of, or investing
in (subject to limitations) an Internet company for a period of 2 years
following the expiration of their respective employment terms. Mr. Braun will
additionally receive a vehicle allowance of $575 per month and we will pay for
his office parking.
We also intend to enter into substantially similar employment agreements
with Marc Leve and Yeon Hong upon the closing of the Minimum Offering, which
will afford Messrs. Leve and Hong minimum annual compensation levels of $100,000
each. Mr. Leve will additionally be entitled to continue his private law
practice, so long as such practice does not conflict with his duties as our Vice
President, Secretary and Treasurer. Additionally, pursuant to Mr. Hong's
employment agreement, we have agreed, commencing upon our sale of the minimum
number of units, to thereafter reimburse Mr. Hong on a dollar-for-dollar basis
for the rent currently paid by Mr. Hong's company, Y Design, Ltd., for leased
office space that we currently share with such company until the end of the
lease term in August 1999.
Stock Option Plan
- -----------------
Our Stock Option Plan ("Plan") was adopted by both our Board of Directors
and a majority in interest of our stockholders in January 1999. The Plan
provides for the granting of options which are intended to qualify either as
incentive stock options ("Incentive Stock Options") within the meaning of
Section 422 of the Internal Revenue Code of 1986 or as options which are not
intended to meet the requirements of such section ("Nonstatutory
48
<PAGE>
Stock Options"). The total number of shares of common stock reserved for
issuance under the Plan is 400,000. Options to purchase shares may be granted
under the Plan to persons who, in the case of Incentive Stock Options, are our
employees (including officers), or, in the case of Nonstatutory Stock Options,
are employees (including officers) or non-employee directors.
Our Plan provides for its administration by our Board of Directors or a
committee chosen by the Board of Directors, which has discretionary authority,
subject to certain restrictions, to determine the number of shares issued
pursuant to Incentive Stock Options and Nonstatutory Stock Options and the
individuals to whom, the times at which and the exercise price for which options
will be granted.
The exercise price of all Incentive Stock Options granted under the Plan
must be at least equal to the fair market value of such shares on the date of
the grant or, in the case of Incentive Stock Options granted to the holder of
more than 10% of our common stock, at least 110% of the fair market value of
such shares on the date of the grant. The maximum exercise period for which
Incentive stock Options may be granted is ten years from the date of grant (five
years in the case of an individual owning more than 10% of our common stock).
The aggregate fair market value (determined at the date of the option grant) of
shares with respect to which Incentive Stock Options are exercisable for the
first time by the holder of the option during any calendar year shall not exceed
$100,000.
No options have been granted under the Plan as of the date of this
prospectus.
CERTAIN TRANSACTIONS
Each of our executive officers, directors and other initial stockholders
acquired their respective shares of our common stock in January 1999 at a price
of $.01 per share, or an aggregate of $83,000.
As discussed elsewhere in this prospectus, we have entered into licensing
arrangements for use of certain domain names owned by the Center. Messrs. Lane,
Braun, Primo and Leve are officers of the Center. We have also entered into a
substantially similar licensing arrangement with Mr. Braun for certain other
domain names owned by him. Although we believe that the terms of the respective
licensing
49
<PAGE>
arrangements are no less favorable to us than those we could have negotiated
with persons having no relation to us, these arrangements should be viewed by
investors as being non-arms-length in their nature.
50
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth the number and percentage of outstanding
shares of our common stock included in both the minimum number of units and in
all of the units which we are offering for sale that were owned as of January
31, 1999 and that will be owned following completion of this offering, based on
information obtained from the persons named below, by (i) each person known by
us to be the owner of more than 5% of the outstanding shares of Common Stock,
(ii) each director and officer and (iii) all officers and directors as a group.
Percentage of
Amount and Outstanding Shares Owned
Nature of -----------------------------
Name and Address of Beneficial Before After
Beneficial Owner Ownership(1) Offering Offering
- ------------------- ------------ -------- --------
Minimum Maximum
------- -------
I. William Lane 2,700,000 32.5% 29.% 27.0%
80 Woodland Avenue
Short Hills, NJ 07078
Jonathan Braun 3,100,000 37.3% 33.9% 31.0%
24 Holly Hill Lane
Katonah, NY 10536
Albert T. Primo 750,000 9.0% 8.2% 7.5%
182 Sound Beach Avenue
Old Greenwich, CT 06870
Bruno Finel 600,000 7.2% 6.6% 6.0%
15, rue Ambroise Thomas
Paris 75009 France
Elorian C. Landers 500,000 6.0% 5.5% 5.0%
9307 West Sam Houston
Parkway
Houston, TX 77099
Marc D. Leve 200,000 2.4% 2.2% 2.0%
264 Lexington Avenue
New York, NY 10016
Yeon Hong 200,000 2.4% 2.2% 2.0%
622A Bruce Street
Ridgefield, NJ 07657
51
<PAGE>
All officers and directors
as a group (7 persons) 8,050,000 97.0% 88.0% 80.5%
- -----------------
(1) Unless otherwise noted, we believe that all persons named in the table have
sole voting and investment power with respect to all shares of our common
stock beneficially owned by them.
Messrs. Lane, Braun and Primo may be deemed to be our "parents" and
"promoters", as such terms are defined under the federal securities laws.
DESCRIPTION OF SECURITIES
General
- -------
Our authorized capitalization consists of 30,000,000 shares of common
stock, par value $.01 per share, and 5,000 shares of preferred stock, par value
$.01 per share. As of the date of this prospectus, 8,300,000 shares of common
stock are outstanding, held of record by 15 persons. No shares of preferred
stock are currently outstanding.
Units
- -----
Each unit consists of one share of common stock and one warrant, each
warrant entitling the holder to purchase one share of common stock. The common
stock and warrants will become separable and transferable 90 days after the date
of this prospectus, or on such earlier date as may be determined by the
Underwriter.
Common Stock
- ------------
Each stockholder of record is entitled to one vote for each share of our
common stock owned by that stockholder on all matters properly submitted to the
stockholders for their vote. Our Certificate of Incorporation does not provide
for cumulative voting for the election of our directors, with the result that
stockholders owning or controlling more than 50% of the shares voted for the
election of directors can elect all of the directors. Subject to the dividend
rights of holders of preferred stock, holders of common stock are entitled to
receive dividends when, as and if declared by the Board
52
<PAGE>
of Directors out of funds legally available for this purpose. In the event of
our liquidation, dissolution or winding up, the holders of common stock are
entitled to receive on a pro rata basis any assets remaining available for
distribution after payment of our liabilities and after provision has been made
for payment of liquidation preferences to all holders of preferred stock.
Holders of common stock have no conversion or redemption provisions or
preemptive or other subscription rights. The outstanding shares of common stock
are, and the shares of common stock included in the units, when issued and paid
for as set forth in this prospectus, will be, fully paid and nonassessable.
Preferred Stock
- ---------------
Our Certificate of Incorporation authorizes us to issue 5,000 shares of so-
called "blank check" preferred stock having rights senior to our common stock.
Our Board of Directors is authorized, without further stockholder approval, to
issue preferred stock in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, conversion
rights, voting rights, redemption terms and liquidation preferences, and to fix
the number of shares constituting any series and the designations of these
series.
The issuance of preferred stock may have the effect of delaying or
preventing a change of control of the Company. The issuance of preferred stock
could decrease the amount of earnings and assets available for distribution to
the holders of common stock or could adversely affect the voting power or other
rights of the holders of Common Stock. We currently have no plans to issue any
shares of preferred stock.
Warrants
- --------
Each warrant entitles the holder of record to purchase one share of our
common stock at a price of $9.00 per share, subject to adjustment in certain
circumstances, at any time until the warrants expire at 5:00 p.m., New York City
time, on , 2002.
We may redeem the warrants, in whole and not in part, at our option, at a
price of $.05 per warrant at any time after their issuance upon not less than 30
days' prior written notice to the warrantholders, provided that the reported
closing bid price of the common stock equals or exceeds $12.00 per share, for
the 20 consecutive trading days ending on the third business day prior to our
giving
53
<PAGE>
notice of redemption to warrantholders. The warrantholders shall have exercise
rights until the close of business on the date fixed for redemption.
The warrants will be issued in registered form under a Warrant Agreement
between the Company and American Stock Transfer & Trust Company, as Warrant
Agent. We refer you to the Warrant Agreement (which has been filed as an exhibit
to the Registration Statement on Form S-1 (of which this prospectus is a part)
for a complete description of the terms and conditions of the warrants (their
description contained in this prospectus being qualified in its entirety by
reference to such Warrant Agreement).
The exercise price and number of shares of common stock issuable on
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events such as stock dividends, or a recapitalization, reorganization,
merger or consolidation of the Company. However, the warrants are not subject to
adjustment for issuances of common stock at a price below their exercise price.
We have the right, in our sole discretion, to decrease the exercise price
of the warrants for a period of not less than 30 days on not less than 30 days'
prior written notice to the warrantholders. In addition, we have the right, in
our sole discretion, to extend the expiration date of the warrants on five
business days' prior written notice to the warrantholders.
Warrantholders may exercise warrants by surrendering the certificates
evidencing warrants on or prior to the warrants' expiration date at the offices
of the Warrant Agent, with the exercise form on the reverse side of such
certificate completed and executed as indicated, accompanied by full payments of
the exercise price (by certified check, payable to the Company) to the Warrant
Agent for the number of warrants being exercised. Warrantholders do not have the
rights or privileges of holders of common stock.
Warrants will not be exercisable unless at the time of exercise we have
filed with the SEC a current prospectus covering our shares of common stock
issuable upon their exercise and such shares have been registered or qualified
or deemed to be exempt under the securities laws of the state of residence of
the warrantholder desiring such exercise. We will use our best efforts to have
all shares so registered or qualified on or before the exercise date and to
maintain a current prospectus relating thereto until the expiration of the
warrants, subject to the terms of the Warrant Agreement. While it is our
intention to do so, we cannot assure investors that we will be able do so.
54
<PAGE>
No fractional shares will be issued upon exercise of the warrants. However,
if a warrantholder exercises all warrants then owned of record by him, we will
pay to such warrantholder, in lieu of the issuance of any fractional share which
is otherwise issuable to such warrantholder, an amount in cash based on the
market value of the common stock on the last trading day prior to the exercise
date.
Dividends
- ---------
We have not paid any dividends on our common stock to date. Our payment of
dividends in the future, if any, will be contingent upon our revenues and
earnings, if any, capital requirements and general financial condition. The
payment of any future dividends will be within the discretion of our Board of
Directors. It is the present intention of our Board of Directors to retain all
earnings, if any, for use in our business operations and, accordingly, we do not
anticipate declaring any dividends in the foreseeable future.
Limitation of Liability
- -----------------------
As permitted by the Delaware General Corporation Law, our Certificate of
Incorporation provides that our directors shall not be personally liable to us
or our stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to us or our stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, relating to unlawful
payment of dividends or unlawful stock purchases or redemption of stock or(iv)
for any transaction from which the director derives an improper personal
benefit. As a result of this provision, we and our stockholders may be unable to
obtain monetary damages from a director for breach of his or her duty of care.
Our Certificate of Incorporation and Bylaws provide for the indemnification
of our directors and officers (and, to the extent authorized by the Board of
Directors in its sole and absolute discretion, employees and agents) to the
fullest extent authorized by, and subject to the conditions set forth in the
Delaware General Corporation Law, except that we will indemnify a director or
officer in connection with a proceeding (or part thereof) initiated by such
person only if the proceeding (or part thereof) was authorized by our Board of
Directors. The indemnification provided under the Certificate of Incorporation
and Bylaws includes the right to be paid the expenses (including attorneys's
fees) in advance of any proceeding for which
55
<PAGE>
indemnification may be had, provided that the payment of these expenses
(including attorneys' fees) incurred by a director, officer, employee or agent
in advance of the final disposition of a proceeding may be made only upon
delivery to us of an undertaking by or on behalf of the director, officer,
employee or agent to repay all amounts so paid in advance if it is ultimately
determined that the director or officer is not entitled to be indemnified.
Under the Bylaws, we have the power to purchase and maintain insurance on
behalf of any person who is or was one of our directors, officers, employees or
agents, against any liability asserted against the person or incurred by the
person in any such capacity, or arising out of the person's status as such, and
related expenses, whether or not we would have the power to indemnify the person
against such liability under the provisions of the Delaware General Corporation
Law. We currently have no plans to purchase director and officer liability
insurance on behalf of our directors and officers.
Delaware Anti-Takeover Law
- --------------------------
We will be subject to the provisions of Section 203 of the Delaware General
Corporation Law. Section 203 prohibits publicly held Delaware corporations from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed manner. A "business combination" includes mergers, asset sales and
other transactions resulting in a financial benefit to the interested
stockholder. Subject to certain exceptions, an "interested stockholder" is a
person who, together with affiliates and associates, owns, or within three years
did own, 15% or more of the corporation's voting stock. These provisions could
have the effect of delaying, deferring or preventing a change of control of the
Company or reducing the price that certain investors might be willing to pay in
the future for shares of our common stock.
Transfer Agent
- --------------
The transfer agent for our common stock and the warrant agent for our
warrants is American Stock Transfer & Trust Company, 40 Wall Street, New York,
New York 10005.
56
<PAGE>
Shares Eligible for Future Sale
- -------------------------------
Upon completion of this offering and assuming the sale of the minimum
number of units, we will have 9,150,000 shares of common stock outstanding
(10,000,000 shares if all of the units are sold). Of these shares, 850,000
shares (1,700,000 shares if all of the units are sold) will be freely tradeable
without restriction or further registration under the Securities Act, except
that any shares purchased by our "affiliates" (in general, persons who have a
control relationship with the Company) will be subject to limitations of Rule
144. The remaining 8,300,000 shares will be restricted shares under the
Securities Act. In addition, all holders of record of 10,000 or more restricted
shares are subject to lock-up agreements with the Underwriter which provide that
their respective shares cannot be publicly offered for sale absent the
Underwriter's prior consent prior to , 2002. The Underwriter has advised us
that it has no general policy with respect to the release of shares prior to the
end of the lock-up period and has no present intention to waive or modify any of
these restrictions.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate of the Company, who has
owned restricted shares of common stock beneficially for at least one year is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the total number of outstanding shares of the
same class or, if the common stock is quoted on The Nasdaq Stock Market, the
average weekly trading volume during the four calendar weeks preceding the date
upon which notice of the sale is filed with the SEC, provided certain
requirements concerning availability of public information, manner of sale and
notice of sale are satisfied. A person who has not been one of our affiliates
for at least the three months immediately preceding the sale and who has
beneficially owned restricted shares for at least two years is entitled to sell
such shares under Rule 144 without regard to any of the requirements described
above.
There has been no market for the common stock prior to this offering. We
cannot predict what effect, if any, that either sales of restricted common stock
or its availability for sale will have from time to time on then prevailing
market prices. Nevertheless, the possibility that substantial amounts of common
stock may be sold in the public market may adversely affect the market price for
such common stock and could impair our ability to raise capital through the sale
of our equity securities.
UNDERWRITING
As of the date of this prospectus, we will enter into an Underwriting
Agreement with Westminster Securities Corporation (the "Underwriter"), 19 Rector
Street, New York, New York 10006, which will
57
<PAGE>
provide that the Underwriter, acting on our behalf as our exclusive agent, will
use its best efforts to sell a minimum of 850,000 units on an "all or none"
basis. Such minimum number of units must be sold within a period of 90 days from
the date of this prospectus, subject to an extension by mutual agreement for an
additional period of up to 90 days (plus an additional 10 business days to
permit clearing of funds deposited prior to the beginning of such 10-day
period), or this offering will be terminated. If the Underwriter successfully
sells the minimum number of units, the Underwriter will use its best efforts to
sell up to an additional 850,000 units. The Underwriter has made no commitment
to purchase any of the units. The Underwriting Agreement also includes
provisions providing for its termination by the Underwriter upon the occurrence
of certain conditions including, in the opinion of the Underwriter, such adverse
market conditions so as to make proceeding with this offering impractical.
All subscriptions for units are to be made by check payable to CitiBank,
N.A., as Escrow Agent for foreignTV.com,Inc." and, when remitted to the
Underwriter, are to be deposited by the Underwriter by noon of the next business
day following receipt in an escrow account with CitiBank, N.A., 153 East 53rd
Street, New York, New York 10043, as Escrow Agent, pursuant to the terms of an
Escrow Agreement entered into by us, the Underwriter and the Escrow Agent.
During the subscription period, subscribers for units will not be entitled to a
return of their subscriptions. If payment for the minimum number of units is
not deposited with the Escrow Agent within the subscription period, all escrowed
funds will be promptly returned to subscribers, with interest. If payment for
the minimum number of units is deposited with the Escrow Agent within the
subscription period, such funds will be paid to us, less commissions and expense
reimbursements payable to the Underwriter. Until such time as the proceeds from
the sale of units are actually received by us and certificates evidencing the
common stock and warrants comprising the units delivered to purchasers, such
purchasers will be deemed subscribers and not securityholders.
Subject to the sale of the minimum number of units, we have agreed to pay
the Underwriter a cash commission of $.54 for each unit sold. In addition, we
have agreed to pay the Underwriter a non-accountable expense allowance of two
percent (2%) of the gross proceeds from the sale of the units and to pay all
expenses in connection with qualifying the units and their underlying securities
under the laws of such states as the Underwriter may reasonably designate.
The Underwriter has advised us that it proposes to offer the units to the
public at the public offering price set forth on the
58
<PAGE>
cover page of this prospectus. The Underwriter has the right to offer the units
through members of the National Association of Securities Dealers, Inc. ("NASD")
and to foreign dealers who agree to be bound by the NASD's Rules of Fair
Practice and may pay such dealers concessions for units sold by them as the
Underwriter may determine. The Underwriter has informed us that it does not
expect sales to its discretionary accounts to exceed five percent of the minimum
number of units.
The Underwriter may sell a substantial portion of the units to purchasers
who reside outside the United States. The effect of any such sales may decrease
the size and scope of the domestic market for the units and their component
securities, thereby limiting their liquidity.
We have agreed to indemnify the Underwriter against certain liabilities,
including liabilities under the Securities Act.
We have granted the Underwriter the right for a period of 3 years from the
date of this prospectus to have a representative of the Underwriter present at
all meetings of our Board of Directors. Such representative will be entitled to
receive the same notices and communications sent by us to our directors and to
attend directors' meetings, but will not be entitled to vote at any such
meetings. John O'Shea, the Underwriter's President, will serve as the
Underwriter's representative.
We have engaged the Underwriter to act as our exclusive solicitation agent
in connection with the exercise of the warrants. Upon the exercise of the
warrants more than one year after the date of this prospectus, and to the extent
not inconsistent with the guidelines of the NASD and the Rules and Regulations
of the SEC, we have agreed to pay the Underwriter a commission equal to 3% of
the proceeds received by us from the exercise of the warrants. However, we will
pay no compensation to the Underwriter in connection with the exercise of the
warrants if (a) the market price of the underlying shares of common stock is
lower than the exercise price, (b) the warrants are held in a discretionary
account, or (c) the warrants are exercised in an unsolicited transaction. In
addition, absent an exemption afforded by the provisions of Regulation M under
the Exchange Act, the Underwriter will be prohibited from engaging in any market
making activities or solicited brokerage activities with regard to any of our
securities until the later of the termination of such solicitation activity or
the termination by waiver or otherwise of any right the Underwriter may have to
receive a fee for the exercise of the warrants following such solicitation. The
Underwriter may employ subagents for such solicitation activity.
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<PAGE>
In connection with this offering, we have agreed to sell to the
Underwriter, at nominal cost, an option to purchase up to 170,000 units. These
units are substantially identical to those being publicly offered by us except
that the warrants comprising a part of these units cannot be redeemed. Further,
the Underwriter's units are exercisable initially at $6.60 per unit for a period
of four years commencing one year from the date of this prospectus. The exercise
price of these units may be adjusted upon the occurrence of certain events,
including any recapitalization, reclassification, stock dividend, stock split,
stock combination or similar transaction. We have agreed to use our best efforts
to maintain an effective registration statement with respect to the
underwriter's units and their underlying securities. In addition, the holders of
these units have been granted certain demand and "piggy back" registration
rights under the Securities Act for periods of 3 and 4 years, respectively, from
the date of this prospectus with respect to those securities directly and
indirectly issuable upon exercise of the units.
Pricing of this Offering
- ------------------------
Prior to this offering there has been no public market for any of our
securities. Accordingly, the public offering price of the units and the terms of
the warrants was determined by negotiation between us and the Underwriter. Among
the factors considered in determining the public offering price were:
. Estimates of our business potential;
. Prevailing market conditions in the U.S. economy and in the industry in
which we propose to compete;
. The market capitalization and stages of other companies which the
Underwriter believes to be comparable to us; and
. An assessment of our management.
LEGAL MATTERS
The validity of our securities will be passed upon on our behalf by
Cooperman Levitt Winikoff Lester & Newman, P.C., New York, New York ("Cooperman
Levitt"). Certain legal matters will be passed upon for the Underwriter by
Victor Edwin Stewart, Esq., Ridgewood, New Jersey. Members of Cooperman Levitt
beneficially own 40,000 shares of our common stock.
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<PAGE>
EXPERTS
The financial statements included in this prospectus have been audited by
Martin A. Weiselberg, independent certified public accountant, as indicated in
his report with respect thereto, and are included herein in reliance upon his
authority as an expert in accounting and auditing in giving said report.
Reference is made to said report which includes an explanatory paragraph with
respect to the fact that our ability to commence operations is dependent upon,
among other factors, the success of this offering or other fundraising
activities.
ADDITIONAL INFORMATION
We have filed with the SEC a Registration on Form S-1 (including exhibits,
schedules and amendments) pursuant to the Securities Act with respect to this
offering of our securities. This prospectus is part of the Form S-1 but does not
contain all of the information in the S-1. We refer you to the Form S-1 for
further information about the Company, our securities and this offering.
Statements in this prospectus about documents filed as exhibits to the S-l are
necessarily summaries of these documents, and each of these statements is
qualified in its entirety by reference to the copy of the applicable document
filed with the SEC. The Form S-1 is available for inspection at the SEC's Public
Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may
obtain information about the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site that
contains the S-l. The address of the SEC's Internet site is
"http://www.sec.gov."
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INDEPENDENT AUDITOR'S REPORT
----------------------------
TO foreignTV.com,Inc.
We have audited the accompanying balance sheet of foreignTV.com,Inc. (a
corporation in the development stage)as of December 31, 1998, and the related
statement of changes in shareholder's equity for the period from November 12,
1998 (date of inception) to December 31, 1998. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of foreignTv.com, Inc. as of
December 31, 1998, and changes in shareholders' equity for the period from
November 12, 1998 (date of inception)to December 31, 1998 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As shown in the accompanying financial
statements the company is a development stage enterprise with no significant
operating results to date. The factors discussed in Note 1 to the financial
statements raise substantial doubt as to the ability of the Company to continue
as a going concern. Management's plans in regards to those matters are also
described in Note 1. The financial statements do not include any adjustment that
might result from the outcome of this uncertainty.
/s/ Martin A. Weiselberg, CPA
Martin A. Weiselberg, CPA
January 28,1998
New York, New York
F-1
<PAGE>
foreignTV.com,Inc.
(a corporation in the development stage)
BALANCE SHEET
DECEMBER 31,1998
ASSETS
------
Current Assets
Deferred Offering Costs $ 6,670
--------
Total Assets $ 6,670
========
LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------
Due To Officer 6,670
--------
Total Liabilities 6,670
--------
Shareholders' equity
Preferred Stock, $.01 par value;
Authorized 5,000 shares,
issued and outstanding -0- shares -
Common Stock, $.01 par value;
Authorized 30,000,000 Shares,
issued and outstanding 8,300,000 83,000
Additional Paid In Capital -
--------
83,000
Less Subscriptions Receivable (83,000)
--------
Total Shareholders Equity -
--------
$ 6,670
========
The accompanying notes are an integral part of these financial
statements.
F-2
<PAGE>
foreignTV.com,Inc.
(a corporation in the development stage)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM NOVEMBER 12, 1998(date of inception)
TO DECEMBER 31, 1998
Common Stock Additional Total
------------------------- Paid In Shareholders'
Shares Amount Capital Equity
------------------------- ------------ -------------
Beginning Balance - - - -
Issuance Of Common
Stock for
Subscriptions 8,300,000 $ 83,000 $ - $ 83,000
Less subscriptions
receivable (83,000) - (83,000)
Balance at
December 31,1998 8,300,000 $ - $ - $ -
========= ========= ======== ========
The accompanying notes are an integral part of these financial
statements.
F-3
<PAGE>
foreignTV.com Inc.
NOTES TO FINANCIAL STATEMENTS
1- Organization
foreignTV.com ,Inc. (the "Company"), a Delaware corporation in the development
stage, was founded on November 12, 1998. The Company was organized to develop
opportunities as an Internet broadcaster specializing in international content
not available from other sources. The Company proposes to develop a network of
Internet web sites, using domain names that will be licensed or otherwise
acquired to offer viewers foreign newscasts and other programming produced in
various locations throughout the world.
The Company is currently in the development stage. All activities of the Company
to date relates to its formation and proposed fund raising. For the period from
November 12, 1998 (date of inception) through December 31, 1998 there were no
material operations or cash activities on the part of the Company.
The Company's ability to commence operations is contingent upon its ability to
obtain financing through a public offering (the "Proposed Offering") of the
Company's common stock. Note 8 Discusses the details of the Prosposed Offering.
Upon completion of the Propsosed Offering the Company will not satisfy the
criteria for qualifying its securities in the NASDAQ system. The Company's
securities will be traded in the over the counter market. It is anticipated that
they will be quoted on the OTC Bulletin Board, an NASD sponsored and operated
inter-dealer automated quotation system for equity securities not included on
the NASDAQ stock market, as well as in the NQB Pink Sheets published by National
Quotation Bureau Incorporated. The OTC Bulletin Board was introduced as an
alternative to "pink sheet" trading of over the counter securities. Although the
Company believes that the OTC Bulletin Board has been recognized by the
brokerage community as an acceptable alternative to the NQB Pink Sheets, there
can be no assurance that the liquidity and prices of the Units and their
component securities in the secondary market will not be adversely affected.
F-4
<PAGE>
ForeignTV.com Inc.
NOTES TO FINANCIAL STATEMENTS
2- Summary Of Significant Accounting Policies
Income Taxes
The Company account for income taxes in accordance with Statement of Financial
Accounting Standards ("SFAS")No. 109, " Accounting For Income Taxes" ("SFAS
109"). SFAS 109 requires a company to recognize deferred income tax liabilities
and assets for the expected future tax consequences of events that have been
recognized in a company's financial statements or tax returns.
Under this method, deferred tax liabilities and assets are determined based on
the difference between the financial statement carrying amounts and the tax
basis of assets and liabilities using enacted tax rates in effect in the year in
which the differences are expected to reverse. At December 31, 1998 there are no
such differences.
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 reported period. Actual
results could differ from those estimates.
Effect Of Recently Issued Accounting Standards
In June 1997 the Financial Accounting Standards Board ("FASB") issued two new
disclosure standards.
SFAS No. 130 ("SFAS No. 130") "reporting Comprehensive Income" established
standards for reporting and display of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all changes in
equity except those resulting from investment by owners and distributions to
owners.
F-5
<PAGE>
ForeignTV.com Inc.
NOTES TO FINANCIAL STATEMENTS
SFAS No. 131 ("SFAS No. 131") "Disclosure About Segments of an Enterprise and
Related Information", which supersedes SFAS No.14 "Financial Reporting for
Segments of a Business Enterprise", establishes standards for the way that
public enterprises report information about operating segments in annual
financial statements and requires reporting of selected information about
operating segments in interim financial statements issued to the public.
Both of these new standards are effective for financial statements for periods
beginning after December 15, 1997 and require comparative information for
earlier years to be restated. The company's results of operations and financial
position will be unaffected by implementation of these new standards.
During February 1998 the FASB issued SFAS No.132 ("SFAS No. 132") "Employers
Disclosure about Pensions and Other Postretirement Benefits", which standardizes
the disclosure requirements for pension and other postretirement benefits. The
adoption of SFAS No.132 in 1998 is not expected to impact the company's current
disclosure.
3- Preferred Stock
The Company is authorized to issue preferred stock and to fix the rights,
preferences, privileges, and restrictions thereof, including dividend rights,
conversion rights, voting rights, redemption terms and liquidation preferences.
4- Supplemental Cash Flow Information
No cash was paid for interest or income taxes for the period from November 12,
1998(date of inception) through December 31, 1998.
Noncash investing and financing activities for the period from November 12,
1998(date of inception) through December 31, 1998 include the following:
Payment by shareholders
of offering costs on behalf
of the Company $ 6,670
F-6
<PAGE>
ForeignTV.com Inc.
NOTES TO FINANCIAL STATEMENTS
5- License Agreements
The Company entered into two license agreements with related parties for the
sole and absolute use of certain Internet domain names. One of the agreements is
with an officer and director of the Company and the other is with a not-for-
profit organization whose board of directors is substantially identical to that
of the Company. The term of the agreements is twenty five years through December
31, 2023 with an additional renewal period of twenty five years thereafter. The
agreements require the Company to pay license fees which begin at $600 per
domain name and escalate to $2,500 per domain name through the twenty fifth year
of the agreement. Thereafter, the fee increase is based on the Consumer Price
Index. The agreement with the not-for-profit organization also requires the
Company to provide office space, on its premises, for up to four employees of
the not-for-profit organization for up to three years.
F-7
<PAGE>
6-Stock Option Plan
The Company's Board of Directors has approved a stock option plan (the "Plan").
The Plan, which is subject to shareholder approval, provides for issuance of up
to 400,000 options (the "Options') to acquire shares of the Company's Common
Stock.
The Options are intended to qualify either as incentive stock options
("Incentive Stock Options") within the meaning of Section 422 of the Internal
Revenue Code of 1986 or as options which are not intended to meet the
requirements of such section ("Nonstatutory Stock Options"). The Options may be
granted under the Plan to persons who, in the case of Incentive Stock Options,
are key employees (including officers) of the Company or, in the case of
Nonstatutory Stock Options, are key employees (including officers) and
nonemployee directors of the Company, except that Nonstatutory Stock Options may
not be granted to a holder of more than 10% of the total voting power of the
Company.
The exercise price of all Incentive Stock Options granted under the Plan must be
at least equal to the fair market value of such shares on the date of grant or,
in the case of Incentive Stock Options granted to the holder of 10% or more of
the Company's Common Stock, at least 110% of the fair market value of such
shares on the date of grant. The exercise price of all Nonstatutory Stock
Options granted under the Plan shall be determined by the Board of Directors of
the Company at the time of grant. The maximum exercise period for which the
Options may be granted is ten years from the date of grant (five years in the
case of Incentive Stock Options granted to an individual owning more than 10% of
the Company's Common Stock). The aggregate fair market value (determined at the
date of the option grant) of such shares with respect to which Incentive Stock
Options are exercisable for the first time by the holder of the option during
any calendar year shall not exceed $100,000
The FASB issued Statement of Financial Accounting Standards No. 123, "Accounting
for Stock Based Compensation" ("SFAS 123"), which will require companies either
to reflect in their financial statements or reflect as supplemental disclosure
the impact on earnings and earnings per share of the fair value of stock based
compensation using certain pricing models for the option component of stock
option plans. As of December 31, 1998, no options have been granted under the
Plan. Disclosure, as required SFAS 123, will be made upon the issuance of
options.
7- Proposed Initial Public Offering
The Proposed Offering calls for the Company to offer for public sale up to
1,700,000 units (the "Units") at a price of $6.00 per Unit. Each Unit consists
of one share of Common Stock, $.01 par value, and one redeemable warrant. Each
warrant entitles the holder to purchase from the Company one share of Common
Stock at an exercise price of $9.00. The warrants will be exercisable at any
time, until they expire three years after the effective date of the Proposed
Offering. The warrants may be redeemed by the Company, in whole or in part, at
any time upon at least 30 days prior written notice to the registered holders,
at a price of $.05 per warrant, provided that the closing bid price of the
Common Stock was at least $12.00 for the 20
F-8
<PAGE>
consecutive trading days ending on the third business day preceding the date of
the Company's giving of notice of redemption to the warrantholders, and provided
there is then a current registration statement in effect for the shares
underlying the warrants.
The Units are being offered for public sale on the Company's behalf by the
Underwriter, as the Company's exclusive agent, on a "best efforts, all or none"
basis as to the first 850,000 Units and, if such 850,000 Units are sold, on a
"best efforts" basis as to the remaining 850,000 Units. The Underwriter has not
committed to purchase any of the Units for its own account.
In connection with the Proposed Offering, the Company will sell to the
Underwriter, for nominal consideration, warrants to purchase Units (the
"Underwriter's Unit Warrants") at the rate of one Underwriter's Unit Warrant for
each ten Units sold in the Proposed Offering, up to a maximum of 170,000
Underwriter's Unit Warrants. The units issuable upon exercise of the
Underwriter's Unit Warrants are substantially identical to the Units except that
they are not redeemable by the Company and expire five years after the effective
date of the Proposed Offering. The Underwriter's Unit Warrants are exercisable
at $6.60 per unit.
As of December 31, 1998 the Company had recorded deferred charges of $6,670
relating to various expenses incurred in connection with the Proposed Offering.
Upon consummation of the Proposed Offering these costs will be charged to
equity. Should the Proposed Offering prove to be unsuccessful these deferred
costs , as well as any other additional expenses that may be incurred, will be
charged to operations.
8 - Contingency
The Company has agreed to indemnify the Underwriter against certain liabilities,
including liabilities under the Securities Act. The Company has also agreed to
pay to the Underwrite an expense allowance on a non-accountable basis equal to
2% of the gross proceeds derived from the sale of the Units.
F-9
<PAGE>
================================================================================
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and, if given or made, such information or representations must not
be relied on as having been authorized by the Company or by the Underwriter.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy the Units offered hereby by anyone in any jurisdiction in which
such offer or solicitation is not authorized or is unlawful. The delivery of
this Prospectus shall not, under any circumstances create any implication that
the information herein is correct as of any time subsequent to the date of the
Prospectus.
____________________
TABLE OF CONTENTS
Page
----
Summary............................................. 3
Risk Factors........................................ 8
Use of Proceeds..................................... 23
Dilution............................................ 24
Dividend Policy.....................................
Capitalization...................................... 26
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................................... 27
Proposed Business................................... 28
Management.......................................... 45
Certain Transactions................................ 49
Principal Stockholders.............................. 51
Description of Securities........................... 52
Shares Available for Future Sale.................... 57
Underwriting........................................ 57
Legal Matters....................................... 60
Experts............................................. 61
Additional Information.............................. 61
Financial Statements................................F-1
--------------------
Until , 1999, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
Prospectus. This is in addition to the dealers' obligation to deliver a
Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
================================================================================
================================================================================
1,700,000 Units
foreignTV.com, Inc.
____________________
PROSPECTUS
____________________
WESTMINSTER
SECURITIES CORPORATION
, 1999
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth various expenses, other than underwriting
commissions, which will be incurred in connection with the offering. Other than
the SEC registration fee, NASD filing fee and the non-accountable expense
allowance of Westminster Securities Corporation (the "Underwriter"), all amounts
set forth below are estimates:
Minimum Maximum
SEC registration fee $ 7,826.26 $ 7,826.26
NASD filing fee 3,315.20 3,315.20
Underwriter's nonaccountable
expense allowance . 102,000.00 204,000.00
Blue sky fees and expenses * *
Printing and engraving expenses * *
Legal fees and expenses * *
Accounting fees and expenses * *
Transfer and Warrant Agent fees * *
NASDAQ listing fee N/A *
Miscellaneous expenses * *
----------- -----------
$ * $ *
=========== ===========
________
* To be filed by amendment to this Registration Statement.
Item 14. Indemnification of Directors and Officers
Article FIFTH of the Certificate of Incorporation of foreignTV.com
("Registrant") provides that Registrant shall indemnify to the fullest extent
permitted by Sections 102(b)(7) and 145 of the Delaware General Corporation Law,
as amended from time to time, each of its officers and directors, such right to
indemnification being expressed in said Article FIFTH as a contractual right,
and may so indemnify such other persons that such Sections grant Registrant the
power to indemnify. Article
II-1
<PAGE>
FIFTH of the Certificate of Incorporation of Registrant also provides that no
director shall be liable to the corporation or any of its stockholders for
monetary damages for breach of fiduciary duty as a director, except with respect
to (1) a breach of the director's duty of loyalty to the corporation or its
stockholders, (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) liability under
Section 174 of the Delaware General Corporation Law or (4) a transaction from
which the director derived an improper personal benefit.
Reference is made to Section 9 of the Underwriting Agreement, which
provides for indemnification of the officers and directors of Registrant under
certain circumstances.
Item 15. Recent Sales of Unregistered Securities
The following sets forth information relating to all securities of
Registrant sold by it since November 12, 1998, the date of Registrant's
inception, all such sales having occurred in January 1999:
Conside-
Number of ration
Name Shares Per Share
---- --------- ---------
Jonathan Braun 3,100,000 $0.01
I. William Lane 2,700,000 $0.01
Albert T. Primo 750,000 $0.01
Bruno Finel 600,000 $0.01
Yeon S. Hong 200,000 $0.01
Marc D. Leve 200,000 $0.01
Elorian C. Landers 500,000 $0.01
Junichi Watanabe 50,000 $0.01
Klaus Kraemer 50,000 $0.01
Rubin Shur 20,000 $0.01
II-2
<PAGE>
Norma Sacks 20,000 $0.01
E. Gabriel Perle 60,000 $0.01
Cooperman Levitt
Winikoff Lester &
Newman, P.C. 40,000 $0.01
Ann Morrell 3,000 $0.01
Seymour Stauber 7,000 $0.01
Exemption from registration under the Securities Act of 1933, as
amended (the "Securities Act"), is claimed for the sales of Common Stock
referred to above in reliance upon the exemption afforded by Section 4(2) of the
Securities Act for transactions not involving a public offering. Each
certificate evidencing such shares of Common Stock bears an appropriate
restrictive legend and "stop transfer" orders are maintained on Registrant's
stock transfer records thereagainst. None of these sales involved participation
by an underwriter or a broker-dealer.
Item 16. Exhibits and Financial Statement Schedules
(a) The following is a list of Exhibits filed herewith as part of the
Registration Statement:
1.1 Form of Underwriting Agreement between Registrant and the Underwriter
3.1 Amended and Restated Certificate of Incorporation of Registrant
3.3 By-laws of Registrant
4.1 Form of certificate evidencing shares of Common Stock
4.2 Form of certificate evidencing Common Stock Purchase Warrant
4.4 Form of Unit Purchase Option between Registrant and the Underwriter
II-3
<PAGE>
4.5 Form of Warrant Agreement between Registrant and American Stock
Transfer & Trust Company, as transfer agent
5.1* Opinion of Cooperman Levitt Winikoff Lester & Newman, P.C.
10.1 1999 Stock Option Plan
10.2 License Agreement between Registrant and the Center for Contemporary
Diplomacy, Inc.
10.3 License Agreement between Registrant and Jonathan Braun
10.4 Form of Escrow Agreement by and among Registrant and CitiBank, N.A.
10.5 Proposed Form of Employment Agreement between Registrant and Jonathan
Braun
10.6 Proposed Form of Employment Agreement between Registrant and Albert
Primo
10.7 Proposed Form of Employment Agreement between Registrant and Bruno
Finel
10.8 Proposed Form of Employment Agreement between Registrant and Marc Leve
10.9 Proposed Form of Employment Agreement between Registrant and Yeon Hong
23.1 Consent of Martin A. Weiselberg & Co.
23.2* Consent of Cooperman Levitt Winikoff Lester & Newman, P.C. (to be
included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature page of Part II of this
Registration Statement)
27.1 Financial Data Schedule
- -------------------
* To be filed by Amendment to this Registration Statement.
II-4
<PAGE>
(b) Financial Statement Schedules.
None.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) That for purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this Registration Statement as
of the time it was declared effective.
(2) That for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any Prospectus required by Section 10(a)(3) of the
Securities Act;
(b) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in "Calculation of
II-5
<PAGE>
Registration Fee" table in the effective registration statement;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(4) That for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(6) To provide to the Underwriter at the closing specified in the
Underwriting Agreement, certificates in such denominations and registered in
such names as required by the Underwriter to permit prompt delivery to each
purchaser.
(7) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
Registrant pursuant to Item 14 of this Part II to the Registration Statement, or
otherwise, Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a director, officer or controlling
person of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 3rd day of February, 1999.
foreignTV.com, Inc.
By: /s/Marc D. Leve
----------------------------------
Marc D. Leve
Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints I. William Lane, Jonathan Braun and Marc
D. Leve, and each of them, with full power to act without the other, his true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
__________________
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
II-7
<PAGE>
/s/I. William Lane Chairman February 3, 1999
- -------------------
I. William Lane
Chief Executive
/s/Jonathan Braun Officer and Director February 3, 1999
- -------------------
Jonathan Braun
President and Director
/s/Albert T. Primo (Chief Operating Officer) February 3, 1999
- -------------------
Albert T. Primo
Vice President-Legal,
Secretary, Treasurer
and Director
(Chief Accounting and
/s/Marc D. Leve Financial Officer) February 3, 1999
- -------------------
Marc D. Leve
Senior Vice President-
European Operations and
/s/Bruno Finel Director February 3, 1999
- -------------------
Bruno Finel
II-8
<PAGE>
EXHIBIT 1.1
850,000 Units
foreignTV.com, Inc.
Each Unit consisting of One (1) Share of Common Stock
and
One (1) Redeemable Common Stock Purchase Warrant
UNDERWRITING AGREEMENT
----------------------
, 1999
Westminster Securities Corporation
19 Rector Street
New York, New York 10006
Ladies and Gentlemen:
foreignTV.com Inc., a Delaware corporation (the "Company"), hereby confirms
its agreement with you as follows:
1. Introduction. The Company proposes to offer for sale through you, as
------------
its exclusive agent, an aggregate of 1,700,000 Units (the "Units"), each Unit
consisting of one (1) share of Common Stock, par value $.01 per share, of the
Company (the "Shares") and one (1) Redeemable Common Stock Purchase Warrant (the
"Warrants"), each Warrant exercisable to purchase one (1) additional share of
Common Stock of the Company, on a "best efforts, all or none" basis as to the
first 850,000 Units and on a "best efforts" basis as to an additional 850,000
Units.
The Warrants will be issued pursuant to a warrant agreement (the "Warrant
Agreement") to be dated as of the Closing Date (as hereinafter defined) between
the Company and American Stock Transfer & Trust Company, as warrant agent (the
"Warrant Agent").
The Company may redeem the Warrants, in whole and not in part, at its
election, at a redemption price of $.05 per Warrant at any time after the
Warrants become exercisable upon not less than thirty (30) days prior written
notice (the "Redemption Notice") to the several holders of the Warrants,
provided that the reported closing bid price for the Common Stock equaled or
exceeded $12.00 per share for the twenty (20) consecutive trading days ending on
the third day prior to giving notice of redemption to Warrantholders, and
provided further that an effective Registration Statement covering the Warrants
is on file with the Securities and Exchange Commission and that such
Registration Statement remains in full force and effect throughout the
redemption period. The Warrantholders shall have
<PAGE>
exercise rights until the close of business on the date fixed for redemption.
The Company also proposes to issue and sell to you, at a price of $.001 per
warrant, for your account and that of your designees, warrants (the
"Underwriter's Unit Warrants") to purchase one (1) Unit for each ten (10) Units
sold by you on the Company's behalf pursuant to this Agreement (the
"Underwriter's Units"). The Underwriter's Unit Warrants are exercisable
initially at a price of $6.60 per Underwriter's Unit for a period of four years
commencing one year from the effective date of the Registration Statement. The
exercise price of the Underwriter's Unit Warrant may be adjusted upon the
occurrence of certain events, including any recapitalization, reclassification,
stock dividend, stock split, stock combination or similar transaction. We agree
to use our best efforts to maintain an effective registration statement with
respect to the Underwriter's Unit Warrants and their underlying securities, and
have granted you certain demand and piggyback registration rights, all as more
fully described in the Underwriter's Unit Warrant Agreement. The Underwriter's
Units are identical to those being publicly offered by the Company, except that
the warrants comprising a part of these Units (the "Underwriter's Warrants")
cannot be redeemed by the Company. The sale of the Underwriter's Unit Warrants
will be consummated in accordance with the terms and conditions of the form of
Underwriter's Unit Warrant Agreement filed as an exhibit to the Registration
Statement (as hereinafter defined). The shares of Common Stock issuable upon
exercise of the Warrants, the Underwriter's Unit Warrants and the Underwriter's
Warrants are hereinafter sometimes collectively referred to as the "Underlying
Shares".
The Units, Shares, Warrants, Underwriter's Unit Warrants, and Underwriter's
Warrants (hereinafter sometimes collectively referred to as the "Securities")
are more fully described in the Prospectus referred to below.
2. Representations and Warranties of the Company. The Company represents
---------------------------------------------
and warrants to, and agrees with, you that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, and an amendment or amendments
thereto, on Form S-l (No. 33- ), including any related preliminary
prospectus ("Preliminary Prospectus"), for the registration of the Securities
under the Securities Act of 1933, as amended (the "Act"). The Company will not,
before such registration statement becomes effective (the "Effective Date"),
file any other amendment thereto to which you shall reasonably object in writing
after being furnished with a copy thereof. Except as the context may otherwise
require, such registration statement, as amended, on file with the Commission at
the time the registration statement becomes effective (including the
2
<PAGE>
prospectus, financial statements, schedules, exhibits and all other documents
filed as a part thereof), is herein called the "Registration Statement", and the
prospectus, in the form filed with the Commission pursuant to Rule 424(b) of the
General Rules and Regulations of the Commission under the Act (the
"Regulations") is herein called the "Prospectus".
(b) Each Preliminary Prospectus, at the time of filing thereof,
contained all material statements which are required to be stated therein in
accordance with the Act and the Regulations, and conformed in all material
respects with the requirements of the Act and the Regulations and did not
include any untrue statement of material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
Each Preliminary Prospectus was endorsed with the legend required by Item
501(c)(3) of Regulation S-K of the Regulations and, if applicable, Rule 430A of
the Regulations. The Registration Statement at the time it becomes effective and
the Prospectus at the time it is filed with the Commission pursuant to Rule
424(b) and on the Closing Date (and the Additional Closing Date, if any,
determined as hereinafter provided in Section 3) will contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations, and will in all material respects conform to the
requirements of the Act and the Regulations, and the Registration Statement and
the Prospectus will not, on such dates, 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, in light of the circumstances under
which they were made, not misleading, except that no representations or
warranties are made with respect to statements or omissions made in reliance
upon and in conformity with written information furnished to the Company with
respect to you by or on behalf of you expressly for use in the Registration
Statement or Prospectus or any amendment or supplement thereto.
(c) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company is duly qualified and in good standing as a foreign corporation in all
jurisdictions where the character or location of its properties (owned or
leased) or the nature of its business makes such qualification necessary, except
where the failure so to qualify would not have a material adverse effect on the
business, properties or operations of the Company. The Company has all
requisite corporate power and authority, and all necessary authorizations,
approvals, orders, licenses, certificates and permits of and from all
governmental regulatory officials and bodies, to own its properties and conduct
its business as described in the Prospectus, and the Company has all such power,
authority, authorizations, approvals, orders, licenses, certificates and permits
to enter into this Agreement, the escrow agreement contemplated by
3
<PAGE>
Section 3 hereof (the "Escrow Agreement") and the Warrant Agreement and to carry
out the provisions and conditions hereof and thereof. The Company owns, or
possesses adequate rights to use, all patents, trademarks, service marks,
copyrights, trade secrets, confidential information, processes and formulations
used and proposed to be used in its business as described in the Prospectus
(collectively the "Intangibles"). To the knowledge of the Company, the Company
has not infringed and is not infringing with the right of others with respect to
the Intangibles, and neither the Company nor any officer or director of the
Company has received any notice of conflict with the asserted rights of others
with respect to the Intangibles which might, singly or in the aggregate,
materially adversely affect the business and prospects of the Company, and none
knows any basis therefor.
(d) The Company has either good and marketable title in fee simple to,
or valid and enforceable leasehold estates in, all items of real property and
personal property which are stated in the Prospectus to be owned or leased by
it, in each case free and clear of all liens, encumbrances, claims, security
interests, subleases and defects, other than those referred to in the Prospectus
and those which do not have a material adverse effect upon the operations of the
Company. The Company has the right to operate all of its facilities in their
present locations and the operation of such facilities does not violate the
provisions of any lease with respect thereto to which the Company is a party.
(e) There is no litigation or governmental proceeding pending or, to
the knowledge of the Company, threatened against, or involving the properties or
business of, the Company, nor are there any actions, suits or proceedings
related to environmental matters or related to discrimination on the basis of
age, sex, religion or race and no labor disturbance by the employees of the
Company exist, which might materially and adversely affect the value, prospects
(financial or otherwise) or operation of any of such properties or the business
of the Company, except as referred to in the Prospectus.
(f) All contracts, agreements, documents and other instruments
required to be filed as exhibits to the Registration Statement have been filed
with the Commission.
(g) The financial statements and related schedules of the Company
included in the Registration Statement and Prospectus present fairly the
financial position and the results of operations of the Company at the
respective dates and for the respective periods to which they apply; and such
financial statements and related Schedules have been prepared in conformity with
generally accepted accounting principles, consistently applied throughout the
periods involved. The summary financial data in the Registration Statement and
Prospectus present fairly the information shown therein and have been compiled
on a basis consistent with that of the audited and unaudited
4
<PAGE>
financial statements included in the Registration Statement and Prospectus. The
capitalization of the Company, as set forth under the caption "Capitalization"
in the Prospectus, was as so described on the date of which it is set forth
therein.
(h) Martin A. Weiselberg & Co., whose report is filed with the
Commission as a part of the Registration Statement and Prospectus, are
independent accountants as required by the Act and the Regulations.
(i) The Company does not own any shares of capital stock or any other
securities of any corporation nor does the Company have any equity interest in
any firm, partnership, association or other entity, except as referred to in the
Prospectus.
(j) There has been no material adverse change in the condition,
business, properties, or prospects (financial or otherwise) of the Company from
that on the latest dates as of which such condition, business or prospects are
set forth in the Registration Statement and the Prospectus except as referred to
therein; and the outstanding debt, the properties and the business of the
Company conform in all material respects to the descriptions thereof contained
in the Registration Statement and Prospectus.
(k) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default, in the due performance and
observance of any term, covenant or condition of any indenture, mortgage, deed
of trust, note, bank loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which the Company or any of its
properties may be bound or affected, which default would have a material adverse
effect on the Company, except defaults which the Company has disclosed to you in
writing and for which the Company has received written waivers.
(l) The Company is not in breach of any term or provision of its
Certificate of Incorporation, by-laws or other charter documents or, to the
Company's knowledge, in violation of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation. The Company is not, to its
knowledge, in violation of any laws, ordinances, governmental rules or
regulations to which it is subject and the Company has not failed to obtain any
licenses, permits, franchises or other governmental authorizations materially
necessary to the ownership of its properties or to the conduct of its business.
(m) Neither the execution and delivery of this Agreement, the Escrow
Agreement, the Underwriter's Unit Warrant Agreement and the Warrant Agreement,
nor the consummation of the transactions herein and therein contemplated, nor
compliance with the terms and provisions hereof and thereof will conflict with,
or result in a
5
<PAGE>
breach of, any of the terms, provisions or conditions of the Certificate of
Incorporation, by-laws or other charter documents of the Company. The execution
and delivery of this Agreement, the Escrow Agreement, the Underwriter's Unit
Warrant Agreement and the Warrant Agreement, the consummation of the
transactions herein and therein contemplated, and compliance with the terms and
provisions hereof and thereof will not conflict with, or result in a breach of,
or constitute a default under any of the terms, provisions or conditions of any
agreement or instrument to which the Company is a party or by which the Company
is bound or violate any franchise, license, permit, judgment, decree, order,
statute, rule or regulation of any government, governmental authority or court
having jurisdiction over the Company.
(n) All of the issued and outstanding shares of Common Stock are duly
and validly authorized, issued and outstanding, fully paid and nonassessable.
None of the outstanding Common Stock has been issued in violation of the
preemptive rights of any stockholder of the Company. None of the holders of the
outstanding Common Stock is subject to personal liability solely by reason of
being such a holder. The offers and sales of the outstanding Common Stock were
at all relevant times either registered under the Act and the applicable state
securities or "blue sky" laws or exempt from such registration requirements.
The Company's capital stock conforms in all material respects to all statements
in relation thereto contained in the Registration Statement and Prospectus.
Based on the assumptions stated in the Registration Statement and Prospectus,
the Company will have on the Closing Date the adjusted stock capitalization set
forth therein. Except as set forth in the Registration Statement and
Prospectus, on the Effective Date, on the Closing Date and on the Additional
Closing Date (as hereinafter defined), as the case may be, there will be no
outstanding options or warrants for the purchase of, or other outstanding rights
to purchase Common Stock or securities convertible into or exchangeable for
Common Stock.
(o) The issuance and sale of the Shares and the Underlying Shares have
been duly authorized and, when paid for, issued and delivered as contemplated by
this Agreement, the Warrants, the Underwriter's Unit Warrants and the
Underwriter's Warrants, as the case may be, the Shares and the Underlying Shares
will be validly issued, fully paid and nonassessable. The holders of the Shares
and the Underlying Shares will not be subject to personal liability solely by
reason of being such holders and none of such securities will be subject to
preemptive rights of any stockholder of the Company.
(p) The issuance and sale of the Warrants, the Underwriter's Unit
Warrants and the Underwriter's Warrants have been duly authorized and, when paid
for, issued and delivered as contemplated by this Agreement, the Warrants, the
Underwriter's Unit Warrants and the Underwriter's Warrants will constitute valid
and
6
<PAGE>
binding obligations of the Company, enforceable in accordance with their terms.
The Underlying Shares have been duly reserved for issuance upon exercise of the
Warrants, the Underwriter's Unit Warrants and the Underwriter's Warrants in
accordance with their respective terms. The Shares and the Warrants offered by
the Prospectus have been duly authorized by the Company to be offered in the
form of Units. The Units, Shares, Warrants, Underwriter's Unit Warrants and
Underwriter's Warrants will conform to the descriptions thereof contained in the
Registration Statement and Prospectus.
(q) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as may otherwise
be indicated or contemplated herein or therein, the Company has not (i) issued
any securities except securities as provided herein or in the Registration
Statement, or incurred any material liability or obligation, direct or
contingent, for borrowed money, (ii) entered into any material transaction not
in the ordinary course of business, (iii) entered into any transaction with an
affiliate of the Company, or (iv) declared or paid any dividend on its shares of
Common Stock.
(r) No consent, authorization or approval is required from any
Federal, state or local governmental agency or body in order to consummate the
transactions contemplated herein or in the Registration Statement and
Prospectus, other than such consents, authorizations or approvals as have been
obtained.
(s) No person holds a right to require or participate in the
registration under the Act of any securities of the Company to be effected by
the Registration Statement, which right has not been duly waived by the holder
thereof as of the date hereof.
(t) The Company has timely filed all Federal, state, and local tax
returns which are required to be filed, other than its tax returns for fiscal
1998 that might not yet have become due as of the date of this Underwriting
Agreement, and has paid all taxes shown on such returns and all assessments
received by it to the extent that the same have become due.
(u) To the knowledge of the Company's officers and directors (such
officers and directors having made reasonable investigation with respect
thereto), neither the Company nor any officer, director or employee of the
Company has made any payment of funds of the Company or purchased any property
with Company funds in a manner prohibited by law, and no funds of the Company or
property purchased with Company funds have been set aside to be used for any
payment prohibited by law. The Company's internal accounting controls and
procedures are sufficient to cause the Company to comply in all material
respects with the Foreign Corrupt Practices Act of 1977, as amended.
7
<PAGE>
(v) The Company has reviewed the requirements for the use of Form S-l
under the Act and has determined that it qualifies for the use of such Form
thereunder.
(w) Except as set forth in the Registration Statement and Prospectus,
the Company does not know of any claims for services in the nature of a finders
fee, brokerage fee or otherwise with respect to this offering for which the
Company or you may be responsible.
(x) The Company has obtained from all of its stockholders, other than
two individuals whose aggregate combined holdings of Common Stock are not, as of
the date of this Underwriting Agreement, in excess of 10,000 shares, their
written agreement that for a period of eighteen (18) months from the date of the
Prospectus, they will not, without your prior written consent, publicly sell,
contract to sell, or grant any option for the sale of or otherwise dispose of
directly or indirectly, any shares of Common Stock of the Company (or any
securities convertible or exercisable into or exchangeable for such shares of
Common Stock) owned by them, whether pursuant to Rule 144 of the Regulations or
otherwise, except as provided herein or in the Registration Statement.
The Company will deliver the aforementioned undertakings to you at or
prior to the Effective Date.
3. Representations and Warranties of Westminster Securities Corporation.
--------------------------------------------------------------------
You represent and warrant to, and agree with, the Company that:
(a) You have been duly organized and are validly existing as a
corporation in good standing under the laws of the State of New York. You are
duly qualified and in good standing as a foreign corporation in all
jurisdictions where the character or location of your properties (owned or
leased) or the nature of your business makes such qualification necessary,
except where the failure so to qualify would not have a material adverse effect
on your business, properties or operations. You have all requisite corporate
power and authority, and all necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental regulatory
officials and bodies, to own your properties and conduct your business and you
have all such power, authority, authorizations, approvals, orders, licenses,
certificates and permits to enter into this Agreement, the Underwriter's Warrant
Agreement and the Selected Dealer Agreement and to carry out the provisions and
conditions hereof and thereof.
(b) You are not, to your knowledge, in violation of any securities
laws, ordinances, governmental rules or regulations to which you are subject,
including, without limitation, the Rules of
8
<PAGE>
Fair Practice and Procedure of the National Association of Securities Dealers,
Inc. ("NASD").
4. Purchase, Sale and Delivery. On the basis of the representations and
---------------------------
warranties of the Company herein contained, but subject to the terms and
conditions herein set forth:
(a) Appointment as Agent. The Company hereby appoints you as its
--------------------
exclusive agent for a period of ninety (90) days from the Effective Date, which
period may be extended for an additional period of ninety (90) days if so agreed
in writing by you and the Company (the "Offering Period"), to sell the Units,
and you accept such appointment and agree to use your best efforts to find
purchasers for the Units. The price at which you shall sell the Units to the
public, as exclusive agent for the Company, and the commission to be allowed to
you by the Company on account of any such sales of the Units shall be Six
Dollars ($6.00) and fifty-four cents ($.54), respectively.
(b) Delivery and Payment. Delivery of certificates evidencing the
--------------------
Shares and the Warrants comprising the Units shall be made by certified or
official bank check in New York Clearing House funds or similar next day funds,
payable to the order of the Company at your offices, or such other place as
shall be agreed upon between us. Such delivery and payment shall be made at
10:00 A.M., New York time, on such date after the Registration Statement has
become effective as you shall designate, but only if a minimum of 850,000 Units
shall have been sold, on at least five (5) full business days prior notice by
you to the Company. The hour and date of such delivery and payment are herein
called the "Closing Date". Delivery of certificates evidencing the Shares and
the Warrants comprising the Units sold by you in excess of 850,000 Units shall
be made at your offices, or such other place as shall be agreed upon between us,
on such date subsequent to the Closing Date as you shall designate, on at least
two (2) full business days prior written notice by you to the Company, but in no
event later than four (4) business days after the expiration of the Offering
Period (the "Additional Closing Date"). Payment for any Units sold in excess of
850,000 Units shall be made on the Additional Closing Date in the same manner as
that for the first 850,000 Units.
(c) Certificates. Certificates evidencing the Shares and the Warrants
------------
comprising the Units shall be registered in such name or names and in such
authorized denominations as you may request in writing at least two (2) business
days prior to each of the Closing Date and the Additional Closing Date,
respectively. The Company will permit you to examine and package such
certificates at least one (1) full business day prior to each of the Closing
Date and the Additional Closing Date, respectively.
9
<PAGE>
(d) Escrow Arrangements. It is a condition of this Agreement that you
-------------------
shall use your best efforts to sell all of the Units on behalf of the Company,
that any and all funds received from such sale without deduction therefrom
whatsoever, including but not limited to any underwriting commission or selling
group concession or otherwise, shall be forthwith deposited in an escrow account
to be established with a banking institution reasonably satisfactory to you (the
"Escrow Agent" ). All subscribers' checks shall be made payable to the Escrow
Agent and you shall transmit all such checks to the Escrow Agent by noon of the
next business day following their receipt by you. You shall further, with
respect to the handling and transmission of subscribers' funds, at all times
comply with Rule l5c2-4 of the Exchange Act. In the event at least 850,000 Units
are not sold within the Offering Period, then all sums so deposited shall be
returned to the subscribers without interest thereon and without any charge
thereon or deduction therefrom.
(e) Warrant Solicitation Fees. We hereby engage you to act as our
-------------------------
exclusive solicitation agent in connection with the exercise of the Warrants.
You may employ subagents for such solicitation activity. Upon the exercise of
the Warrants, and to the extent not inconsistent with the guidelines of the NASD
and the Rules and Regulations of the SEC, we agree to pay you a commission equal
to three percent (3%) of the proceeds received by us from the exercise of the
Warrants. We shall pay no compensation to you, however, if: (i) the market price
of the underlying Shares is lower than the exercise price; (ii) the Warrants are
held in a discretionary account; or (iii) the Warrants are exercised in an
unsolicited transaction. In addition, unless granted an exemption by the SEC
from Regulation M under the Exchange Act, you agree not to engage in any market
making activities or solicited brokerage activities with regard to any of our
Securities until the later of the termination of such solicitation activity or
the termination by waiver or otherwise of any right you might have to receive a
fee for the exercise of the Warrants following such solicitation.
5. Offering. In offering the Units for public sale, you shall offer
--------
same solely as exclusive agent for the Company and such offer shall be made
solely on the terms and subject to the conditions set forth in the Prospectus.
You shall commence making such offer as exclusive agent for the Company on the
Effective Date or as soon thereafter as you may deem advisable.
6. Covenants of the Company. The Company covenants that it will:
------------------------
(a) Use its best efforts to cause the Registration Statement to become
effective and will notify you immediately, and confirm the notice in
writing, (i) when the Registration Statement, or any post-effective
amendment
10
<PAGE>
thereto, shall have become effective, (ii) of the issuance by the
Commission of any stop order or of the initiation or the threatening
of any proceedings for that purpose, and (iii) of the receipt of any
comments by the Commission. The Company will use its best efforts to
prevent the issuance of any stop order or any order preventing or
suspending the use of the Registration Statement or Prospectus and, if
such order is issued, to obtain the lifting thereof as promptly as
possible.
(b) During the time when a prospectus is required to be delivered
under the Act, comply so far as it is able with all requirements imposed
upon it by the Act, as now and hereafter amended, and by the Regulations,
as from time to time in force, so far as necessary to permit the
continuance of sales or of dealings in the Units in accordance with the
provisions hereof and the Prospectus. If at any time when a prospectus
relating to the Units is required to be delivered under the Act, an event
shall have occurred as a result of which, in the reasonable opinion of
counsel for the Company or your counsel, the Registration Statement or
Prospectus, as then amended or supplemented, 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, in the light of
the circumstances under which they were made, not misleading, or it is
necessary at any time to amend or supplement the Registration Statement or
Prospectus to comply with the Act, the Company will notify you promptly and
prepare and file with the Commission an appropriate amendment or supplement
(in form reasonably satisfactory to you).
(c) Deliver to you, without charge, such number of copies of each
Preliminary Prospectus as you may reasonably request and, as soon as the
Registration Statement, or any amendment or supplement thereto, becomes
effective, deliver to you two (2) signed copies of the Registration
Statement, including exhibits, and all amendments and post-effective
amendments thereto, including exhibits, and such number of copies of the
Prospectus, the Registration Statement and amendments and supplements
thereto, if any, without exhibits, as you may reasonably request for the
purposes contemplated by the Act.
(d) Endeavor in good faith, in cooperation with you, at or prior to
the time the Registration Statement becomes effective, to qualify the Units
for offering and sale under the securities laws relating to the offering or
sale of the Units of such jurisdictions as you may reasonably
11
<PAGE>
designate, provided, however, that no such qualification shall be required
in any jurisdiction where, as a result thereof, the Company would be
subject to service of general process or qualification to do business as a
foreign corporation doing business in such jurisdiction. In each
jurisdiction where the qualification of the Units shall be effected, the
Company will, unless you agree that such action is not at the time
necessary or advisable, file and make such statements or reports at such
times as are or may reasonably be required by the laws of such
jurisdiction.
(e) Make generally available to its security holders, in the manner
specified in Rule 158(b) under the Act, and deliver to you as soon as
practicable, and in any event not later than 40 days after the end of its
fiscal quarter in which the first anniversary date of the Effective Date
occurs, an earnings statement (which need not be certified by independent
certified public accountants unless required by the Act or the Regulations,
but which shall satisfy the provisions of Rule 158(a) under the Act
covering a period of at least twelve (12) months beginning after the
Effective Date.
(f) For a period equal to the greater of (i) the period from the
Effective Date to the expiration or redemption of all of the Warrants or
(ii) one year from the Effective Date, furnish you the following:
(i) as soon as practicable after they have been filed with the
Commission, a copy of each annual, quarterly and current report on
Forms lO-K, lO-Q, lO-C and 8-K and exhibits thereto, as soon as
practicable after they have been sent by the Company to its security
holders, a copy of any communications sent by it to its security
holders generally;
(ii) as soon as practicable, a copy of any Schedule l3D, l3G,
l4D-l or 13E-3 received or prepared by the Company from time to time;
(iii) as soon as practicable, a copy of every press release and
every material news items and article in respect of the Company or its
affairs which was released by the Company;
(iv) such additional documents and information with respect to
the Company and its affairs as you may from time to time reasonably
request.
12
<PAGE>
(g) Apply the net proceeds from the offering received by the Company
in the manner set forth under "Use of Proceeds" in the Prospectus and
comply with Rule 463 under the Act.
(h) Furnish to you as early as practicable prior to the Closing Date
and the Additional Closing Date, as the case may be, but no later than two
(2) full business days prior thereto, a copy of the latest available
unaudited interim financial statements of the Company which have been read
by the Company' s independent public accountants, as stated in their letter
to be furnished pursuant to subsection (f) of Section 8 hereof.
(i) Not file any amendment or supplement to the Registration Statement
or Prospectus after the Effective Date to which you shall reasonably object
in writing after being furnished a copy thereof.
(j) Furnish to its security holders annual reports containing audited
financial statements and such other periodic reports as it may determine to
be appropriate or as may be required by law.
(k) Cause the Units, Shares and Warrants to be registered on the OTC
Bulletin Board and if all or a substantial number of the Units are sold, to
use our best efforts to have the Units, Warrants and Shares listed on the
Nasdaq Small-Cap Market, and to maintain such inclusion for at least five
(5) years from the Closing Date; provided, however, that the Warrants need
be maintained therein only until the earlier of their redemption or
expiration, as the case may be.
(l) Use its best efforts to be included in Standard & Poors'
Corporations Records and Moodys' OTC Industrial Manual as soon as possible
following the Closing Date and to continue to be included in both of such
manuals for at least five (5) years from the Closing Date.
(m) appoint a transfer agent for the Common Stock and a warrant agent
for the Warrants (which may be the same as the transfer agent), each
reasonably acceptable to you, and for three (3) years from the Closing Date
furnish to you, at the Company's sole cost and expense, with copies of,
respectively, daily Common Stock and Warrant transfer sheets and with
copies of all Depository Trust Company weekly reports with respect thereto,
(n) maintain and continue to maintain a system of internal accounting
controls sufficient to provide reasonable assurances that: (i) transactions
are executed in
13
<PAGE>
accordance with management's general or specific authorization; (ii)
transactions are recorded as necesary in order to permit preparation of
financial statements in accordance with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(o) for as long as any of the Warrants or Underwriter's Warrants
remain outstanding, permit you to have a representative present at all
meetings of our Board of Directors. Such representative will be entitled to
receive the same notices and communications sent by us to our directors and
to attend directors' meetings, but will not be entitled to vote at any such
meetings.
(p) not later than four (4) months following the Closing Date, cause
to be delivered to each of you and your counsel, Victor Edwin Stewart,
Esq., a bound volume containing therein all filings, including exhibits,
and correspondence to and from the Commission, NASD and all states or other
jurisdictions concerning the offering of the Units, underwriting documents
and closing documents, plus any other relevant material.
(q) afford to you for a period of 30 months from the Effective Date,
an exclusive right of first refusal with respect to any proposed public
offering by the Company of its Common Stock (or any securities convertible
or exercisable into or exchangeable for shares of Common Stock) on equal or
more favorable terms as those offered in writing by any other reputable
investment banking or other financial institution or organization providing
similar services. Such right of first refusal must be exercised within ten
(10) business days after receipt of written notice by you from the Company
of a proposed public offering, which notice shall be given not less than
ten (10) business days prior to any such proposed offering and if not
accepted by you, shall thereafter cease with respect to such proposed
offering only. If such right of first refusal is not exercised, and the
terms offered by such investment banking or other financial institution or
organization providing similar services are materially changed, such
offering shall again be offered to you, and the right of first refusal must
be exercised within ten (10) business days after the receipt of written
notice to you from the Company of the revised terms or shall
14
<PAGE>
thereafter cease with respect to such proposed offering only.
7. Payment of Expenses.
-------------------
(a) The Company hereby agrees to pay, whether or not the transactions
contemplated hereunder are consummated, all expenses in connection with: (i) the
preparation, printing, filing and mailing of the Registration Statement
(including financial statements and exhibits) and Prospectus, including the cost
of all copies thereof and of the Preliminary Prospectus and any amendments or
supplements thereto supplied to you in quantities as hereinabove stated, and the
Selected Dealer Agreement; (ii) the issuance, transfer and delivery of the
Shares and Warrants comprising the Units, including any transfer or other taxes
payable thereon; (iii) the fees, expenses and other costs of qualifying the
Units for sale under state or foreign securities or "blue sky" laws, including
the costs of printing and mailing a "blue sky" survey and the fees and
disbursements of counsel in connection therewith; (iv) the fees of your special
securities counsel, consisting of $5,000 already paid as an advance to such
counsel and, in the event that the underwriting contemplated herein is
terminated prior to the Closing, a further $5,000 to such counsel, including
reasonable disbursements; (v) fees payable to the NASD attendant to securing any
required review; (vi) the costs of placing "Tombstone" advertisements in any
publications which may be reasonably selected by you; and (vii) all other costs
and expenses incident to the Company's performance of its obligations hereunder
which are not otherwise specifically provided for in this Section 6.
(b) On the Closing Date and on the Additional Closing Date, as the
case may be, you shall deduct from the payment for the Units sold for the
Company's account in each such instance two percent (2%) of the gross proceeds
of the offering as payment of your expense allowance relating to the
transactions contemplated hereby.
(c) Anything in this Agreement to the contrary notwithstanding, if
this Agreement shall not become effective by reason of an election of the
Company pursuant to Section 11, or if this Agreement shall not be carried out
within the time specified herein by reason of any failure on the part of the
Company to perform any undertaking or satisfy any condition of this Agreement by
it to be performed or satisfied, the sole liability of the Company to you, in
addition to the obligations assumed by the Company pursuant to this Section 7,
will be to reimburse you on an accountable basis for such reasonable out-of-
pocket expenses (including the reasonable fees and disbursements of your
counsel) as shall have been incurred by you in connection with this Agreement
and the proposed offering of the Units and, upon demand, the Company will pay
the full amount thereof to you. If this Agreement shall not become effective by
reason of an election by you pursuant to Section 11 or if this Agreement shall
be
15
<PAGE>
terminated or otherwise not carried out within the time specified herein for any
reason other than the failure on the part of the Company to perform any
undertaking or satisfy any condition of this Agreement by it to be performed or
satisfied, the Company shall have no liability to you other than for obligations
assumed by the Company pursuant to this Section 7. All fees and disbursements
paid by the Company pursuant to clause (iii) of Subsection 7(a) hereof shall be
non-refundable.
8. Conditions of Your Obligations. Your obligation to pay for the
------------------------------
Units, as provided herein, shall be subject in, all material respects to the
continuing accuracy of the representations and warranties of the Company as of
the date hereof and as of the Closing Date (and the Additional Closing Date, as
the case may be), to the performance by the Company of its obligations hereunder
and to the following conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., New York City time, on the date of this Agreement or such later
date and time as shall be consented to in writing by you and, at the Closing
Date and the Additional Closing Date, no stop order shall have been issued or
proceeding therefor initiated or threatened by the Commission;
(b) At the Closing Date and the Additional Closing Date, as the case
may be, you shall have received the favorable opinion of Cooperman Levitt
Winikoff Lester & Newman, P.C., counsel for the Company, dated the Closing Date
or the Additional Closing Date, as the case may be, addressed to you and
substantially in the form set forth as Exhibit A, which is attached hereto and
incorporated herein.
Such opinion shall be to such further effect with respect to other
legal matters relating to this Agreement and the sale of the Units hereunder as
your counsel may reasonably request. Such opinion shall state that any opinion
given therein qualified by the phrase "to such counsel's knowledge" is being
given by such counsel after reasonable investigation of the matters therein
discussed. In rendering the opinions set forth in Exhibit A hereto, such counsel
may rely upon certificates of officers of the Company and of public officials as
to matters of fact. In giving the foregoing opinions, such counsel may rely on
such other counsel as it deems advisable; provided that such counsel shall state
that, in such counsel's opinion, you are justified in relying on such opinions
of other counsel. Copies of all such opinions and certificates shall be
furnished to your counsel on the Closing Date and the Additional Closing Date,
as the case may be.
(c) On or prior to the Closing Date and the Additional Closing Date,
as the case may be, you shall have been furnished such
16
<PAGE>
documents, certificates and opinions as you may reasonably require for the
purpose of enabling you to review the matters referred to in subsection (b) of
this Section 8, and in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions herein
contained.
(d) Prior to the Closing Date and the Additional Closing Date, as the
case may be, (i) there shall have been no material adverse change in the
condition, business activities or prospects, financial or otherwise, of the
Company from that as of the latest date as of which such condition is set forth
in the Registration Statement and Prospectus; (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the
Company, from the latest date as of which the financial condition of the Company
is set forth in the Registration Statement and Prospectus, other than
transactions referred to or contemplated therein or herein, or to which you have
given your written consent; (iii) the Company shall not be in default (nor shall
an event have occurred which, with notice, or lapse of time or both would
constitute a default or acceleration) under any provision of any agreement,
understanding or instrument relating to any indebtedness, except defaults which
the Company has disclosed to you in writing and for which the Company has
received written waivers; (iv) no material amount of the assets of the Company
shall have been pledged or mortgaged, except as set forth in the Registration
Statement and Prospectus; (v) no action, suit or proceeding, at law or in
equity, shall have been pending or, to the knowledge of the Company, threatened
against the Company or affecting any of its properties or business before or by
any court or federal, state or other jurisdictional commission, board or other
administrative agency wherein an unfavorable decision, ruling or finding would
materially adversely affect the business, operations, prospects or financial
condition or income of the Company except as set forth in the Registration
Statement and Prospectus; and (vi) no stop order shall have been issued under
the Act and no proceedings therefor shall have been initiated or threatened by
the Commission.
(e) At the Closing Date and the Additional Closing Date, as the case
may be, you shall have received a certificate of the President and the principal
financial or accounting officer of the Company, dated the Closing Date and the
Additional Closing Date, as the case may be, to the effect that the conditions
set forth in subsection (d) above have been satisfied and as to the truth and
accuracy, as of the Closing Date and the Additional Closing Date, as the case
may be, of the representations and warranties of the Company set forth in
Section 2 hereof.
(f) At the time this Agreement is executed and at the Closing Date and
the Additional Closing Date, as the case may be, you shall have received a
letter, addressed to you in form and substance reasonably satisfactory to you in
all respects (including the
17
<PAGE>
non-material nature of the changes or decreases, if any, referred to in clause
(iii) below), from Martin A. Weiselberg & Co., dated as of the date of this
Agreement and as of the Closing Date and the Additional Closing Date, as the
case may be:
(i) confirming that they are independent public accountants with
respect to the Company within the meaning of the Act and the
Regulations;
(ii) stating that in their opinion, the financial statements and
related supplemental schedules of the Company included in the
Registration Statement examined by them comply as to form in all
material respects with the applicable accounting requirements of the
Act and the Regulations;
(iii) stating that, on the basis of a review (but not an
examination made in accordance with generally accepted auditing
standards) which included a reading of the latest available unaudited
interim financial statements of the Company (with an indication of the
date of the latest available unaudited interim financial statements),
a reading of the latest available minutes of the stockholders and
Board of Directors of the Company and committees, if any, of such
Board and inquiries to certain officers and other employees of the
Company responsible for financial and accounting matters and other
specified procedures and inquiries, nothing has come to their
attention that would cause them to believe that (A) the unaudited
financial statements and related schedules of the Company included in
the Registration Statement (i) do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and Regulations, or (ii) were not fairly presented in conformity
with generally accepted accounting principles on a basis substantially
consistent with that of the audited financial statements included in
the Registration Statement and Prospectus; (B) at a specified date not
more than five (5) business days prior to the date of such letter,
there was any change in the long-term debt or capital stock of the
Company as compared with the amounts shown in the , 1999 balance sheet
of the Company included in the Registration Statement and Prospectus,
other than as set forth in or contemplated by the Registration
Statement and Prospectus, or, if there was any change, setting forth
the amount of such change; or (C) during the period from , 1999 to a
specified date not more than five (5) business days prior to the date
of such letter, there was any decrease in net sales,
18
<PAGE>
net operating income, net income or earnings per common share of the
Company, or contemplated by the Registration Statement and Prospectus,
or, if there was any decrease, setting forth the amount of such
decrease; and
(iv) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, and other
information pertaining to the Company set forth in the Prospectus,
which have been specified by you prior to the date of this Agreement,
to the extent that such amounts, numbers, percentages, and other
information may be derived from the general accounting records of the
Company, and excluding any questions requiring an interpretation by
legal counsel, with the results obtained from the application of
specified readings, inquiries and other appropriate procedures (which
procedures do not constitute an examination in accordance with
generally accepted auditing standards) set forth in the letter, and
found them to be in agreement.
(g) All proceedings taken in connection with the sale of the Units as
herein contemplated shall be reasonably satisfactory in form and substance to
you and to your counsel.
(h) There shall have been duly tendered to you certificates
representing the Shares and the Warrants comprising the Units agreed to be sold
by the Company on the Closing Date and the Additional Closing Date, as the case
may be.
(i) No order suspending the sale of the Units in any jurisdiction
designated by you pursuant to subsection (d) of Section 6 hereof, shall have
been issued on the Closing Date or the Additional Closing Date, as the case may
be, and no proceedings for that purpose shall have been instituted or to your
knowledge or that of the Company shall be contemplated.
Any certificate signed by any duly authorized officer of the Company
in such capacity and delivered to you or your counsel shall be deemed a
representation and warranty by the Company to you as to the statements made
therein. If any material condition to your obligations hereunder to be
fulfilled prior to or at the Closing Date or the Additional Closing Date, as the
case may be, is not so fulfilled, you may terminate this Agreement or, if you so
elect, waive any such conditions which have not been fulfilled or extend the
time for their fulfillment.
9. Indemnification
---------------
19
<PAGE>
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless you and each person, if any, who controls you within
the meaning of Section 15 of the Act or Section 2O(a) of the Exchange Act,
against any and all loss, liability, claim, dunnage and expense whatsoever
(including, but not limited to any and all expense whatsoever reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever) arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained
(x) in any Preliminary Prospectus, the Registration Statement or the Prospectus
(as from time to time amended and supplemented) or (y) in any application or
other document (in this Section 9 collectively called "application") executed by
the Company or based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Units under the
securities laws thereof or filed with the Commission or any securities exchange,
or the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading;
unless such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company with respect to you by or on
behalf of you expressly for use in the Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment or supplement thereof, or in any
application or in any communication to the Commission, as the case may be.
If any action is brought against you or a controlling person in
respect of which indemnity may be sought against the Company pursuant to the
foregoing paragraph, you shall promptly notify in writing the party or parties
against whom indemnification is to be sought of the institution of such action
and the indemnifying parties shall assume the defense of such action, including
the employment of counsel (reasonably satisfactory to you or such controlling
person) and payment of expenses. You or such controlling person shall have the
right to employ your own counsel in any such case, but the fees and expenses of
such counsel shall be at your expense or the expense of such controlling person
unless the employment of such counsel shall have been authorized in writing by
the indemnifying parties in connection with the defense of such action or the
indemnifying parties shall not have employed counsel to have charge of the
defense of such action or counsel for such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to the indemnifying
parties (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties. Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent. The Company agrees
promptly to notify you of the
20
<PAGE>
commencement of any litigation or proceedings against the Company or any of its
officers or directors in connection with the issue and sale of the Units or in
connection with such Preliminary Prospectus, Registration Statement or
Prospectus, or any amendment or supplement thereto, or any such application.
With respect to any untrue statement or alleged untrue statement made in, or
omission or alleged omission from, any Preliminary Prospectus, the indemnity
agreement contained in this subsection (a) with respect to such Preliminary
Prospectus shall not inure to your benefit (or the benefit of any person
controlling you), if the Prospectus (or the Prospectus as amended or
supplemented if the Company shall have made any amendments thereof or
supplements thereto which shall have been furnished to you prior to the time of
confirmation of such sale) does not contain such statement, alleged statement,
omission or alleged omission, and a copy of such Prospectus shall have been sent
or given to such person at or prior to the written confirmation of such sale to
such person.
(b) You agree to indemnify and hold harmless the Company, each of the
directors of the Company, each of the officers of the Company who shall have
signed the Registration Statement and each other person, if any, who controls
the Company within the meaning of Section l5 of the Act or Section 2O(a) of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
you but only with respect to statements or omissions, or alleged statements or
omissions, if any, made in any Preliminary Prospectus, Registration Statement or
Prospectus or any amendment or supplement thereto or any application in reliance
upon, and in conformity with, written information furnished to the Company with
respect to you by or on behalf of you for use in any Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment or supplement thereto or
in any application, as the case may be. In case any action shall be brought
against the Company or any person so indemnified, based on any Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment or
supplement thereto or any application, and in respect of which indemnity may be
sought against you, you shall have the rights and duties given to the Company
and the Company and each other person so indemnified shall have the rights and
duties given to you by the provisions of subsection (a) above.
(c) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable to such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and you on the other
from the offering of the Units. If, however, the allocation provided by the
immediately preceding sentence is not
21
<PAGE>
permitted by applicable law or if the indemnified party failed to give the
notice required above in this Section 9, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and you on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and you on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting commissions
received by you, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or you on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and you agree that it would not
be just and equitable if contribution pursuant to this subsection (c) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
subsection (c). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (c) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (c), you shall not be required to contribute any
amount in excess of the amount by which the total price at which the Units
underwritten by you and distributed to the public were offered to the public
exceeds the amount of any damages which you have otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission; and no person guilty of fraudulent misrepresentation (within the
meaning of Section 11 of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
10. Representations and Agreements to Survive Delivery. Except as
--------------------------------------------------
the context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties
and agreements at the Closing Date and the Additional Closing Date, and such
representations, warranties and agreements of you and the Company, including the
indemnity and contribution agreements contained in Section 9 hereof, shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of you or any controlling person,
22
<PAGE>
or by or on behalf of the Company or any controlling person, and shall survive
termination of this Agreement and/or delivery of the Units to you.
11. Effective Date of this Agreement; Termination Thereof.
-----------------------------------------------------
(a) This Agreement shall become effective at 9:30 A.M., New York Time,
on the first full business day following the day on which the Registration
Statement becomes effective or at the time of the initial public offering by you
of the Units, whichever is earlier. The time of the initial public offering,
for the purpose of this Section 11, shall mean the time, after the Registration
Statement becomes effective, of the release by you for publication of the first
newspaper advertisement which is subsequently published relating to the Units or
the time, after the Registration Statement becomes effective, when the Units are
first released by you for offering by you or dealers by letter or telegram,
whichever shall first occur. You or the Company may prevent this Agreement from
becoming effective without liability of any party to any other party, except as
noted below, by giving the notice indicated below in Section l1(c) before the
time this Agreement becomes effective,
(b) You shall have the right to terminate this Agreement at any time
prior to the Closing Date or the Additional Closing Date, as the case may be,
if, after the date of this Agreement, any domestic or international event or act
or occurrence has materially disrupted or, in the exercise of your reasonable
judgment, will in the immediate future materially disrupt, securities markets in
the United States; or trading on the New York Stock Exchange shall have been
suspended, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, on the New
York Stock Exchange by such Exchange or by order of the Commission or any other
governmental authority having jurisdiction; or the United States shall have
become involved in a war or major hostilities; or a banking moratorium has been
declared by a New York or Federal authority; or the Company shall have sustained
a material loss by fire, flood, accident, hurricane, earthquake, theft, sabotage
or other calamity or malicious act which, whether or not said loss shall have
been insured, will, in your reasonable opinion, interfere materially and
adversely with the conduct of the business and operations of the Company; or
there shall have been such material adverse change in the condition or prospects
of the Company or the market for its and similar securities as in your
reasonable judgment would make it inadvisable to proceed with the offering, sale
and delivery of the Units.
(c) If you elect to prevent this Agreement from becoming effective or
to terminate this Agreement as provided in this
23
<PAGE>
Section 11, the Company shall be notified promptly by you by telephone or
telegram, confirmed by letter. If the Company elects to prevent this Agreement
from becoming effective, you shall be notified promptly by the Company by
telephone or telegram, confirmed by letter.
(d) Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Section 10 shall not be in any way affected by such election or
termination or failure to carry out the terms of this Agreement or any part
hereof,
12. Notices. All communications hereunder, except as herein
-------
otherwise specifically provided, shall be in writing and, if sent to you, shall
be mailed, delivered or telegraphed and confirmed to Westminster Securities
Corporation, 19 Rector Street, New York, New York 10006, Attention: President,
and if sent to the Company, shall be mailed, delivered or telegraphed and
confirmed to foreignTV.com, Inc., 162 Fifth Avenue, Suite 1005A, New York, New
York 10010, Attention: CEO.
13. Parties. This Agreement shall be binding upon you, the Company,
-------
and the controlling persons, directors and officers referred to in Section 9
hereof, and their respective successors, legal representatives and assigns, and
no other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any
provision herein contained.
14. Construction. This Agreement shall be construed in accordance
------------
with the laws of the State of New York.
If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
foreignTV.com, Inc.
By:_____________________________
Jonathan Braun, CEO
24
<PAGE>
Accepted as of the date first
above written:
WESTMINSTER SECURITIES CORPORATION
By:____________________________
John P. O'Shea, President
25
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
foreignTV.com, Inc.
Under Section 245 of the Delaware Corporation
The undersigned, President of foreignTV.com, Inc., a corporation existing
under the laws of the State of Delaware, DOES HEREBY CERTIFY as follows:
FIRST: That the name of the corporation is
foreignTV.com, Inc.
SECOND: That the Certificate of Incorporation of the corporation was filed
with the Secretary of State of Delaware on November 12, 1998.
THIRD: That this Restated Certificate of Incorporation amends the
provisions of the Corporation's Certificate of Incorporation by deletion of
Articles Fourth, Fifth and Sixth, and by insertion of new Articles Fourth and
Fifth thereof and the corresponding renumbering of the said Articles, which was
duly adopted by the Board of Directors of the Corporation, was declared
advisable by Board of Directors and approved by written consents executed by the
holders of a majority of the outstanding stock of the Corporation entitled to
vote thereon in the manner prescribed by Sections 228 and 242 of the Delaware
General Corporation Law. This Restated Certificate of Incorporation was duly
adopted in the manner prescribed by Section 245 of the Delaware General
Corporation Law.
FOURTH: That the text of the Certificate of Incorporation of
foreignTV.com, Inc. is hereby restated to read in full as follows:
<PAGE>
FIRST: The name of this corporation shall be:
foreignTV.com, Inc.
SECOND: Its registered office in the State of Delaware is to be located at
1013 Centre Road, in the City of Wilmington, County of New Castle, DE 19805, and
its registered agent at such address is The Company Corporation.
THIRD: The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: a. The Corporation shall be authorized to issue the following
shares of stock:
Class of Shares Number of Shares Par Value
--------------- ---------------- ---------
Common Shares 30,000,000 $0.01
Preferred Shares 5,000 $0.01
b. The designation and the powers, preferences and rights, and
the qualifications or restrictions of the Preferred Shares are as follows:
(1) The Preferred Shares shall be issued from time to time
in one or more series, with such distinctive serial designations as
shall be stated and expressed in the resolution or resolutions
providing for the issue of such Preferred Shares from time to time
adopted by the Board of Directors; and in such resolution or
resolutions providing for the issue of Preferred Shares of each
particular series, the Board of Directors is expressly authorized to
fix the annual rate or rates of dividends for the particular series;
the dividend payment dates for the particular series and the date from
which dividends on all Preferred Shares of such series issued prior to
the record date for the first dividend payment date shall be
cumulative; the redemption price or prices for the particular series;
the voting powers for the particular series; the rights, if any, of
holders of the Prefered Shares of the particular series to convert the
same into shares of any other series or class or other securities of
the Corporation, with any provisions for the subsequent adjustment of
such conversion rights; and to classify or reclassify any unissued
preferred shares by fixing or altering from time to time any of the
foregoing rights, privileges and qualifications.
- --------------------------------------------------------------------------------
Amended and Restated Certificate of Incorporation Page 2
<PAGE>
(2) All the Preferred Shares of any one series shall be
identical with each other in all respects, except that Preferred
Shares of any one series issued at different times may differ as to
the dates from which dividends thereon shall be cumulative; and all
Preferred Shares shall be of equal rank, regardless of series and
shall be identical in all respects except as to the particulars fixed
by the Board of Directors as hereinabove provided or as fixed herein.
c. (1) Subject to the preferential dividend rights applicable
to Preferred Shares, the holders of Common Shares shall be entitled to
receive such dividends as may be declared by the Board of Directors
(2) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, after
distribution in full of the preferential amounts to be distributed to
the holders of Preferred Shares, the holders of Common Shares shall be
entitled to receive all of the remaining assets of the Corporation
available for distribution to holders of Common Shares, ratably in
proportion to the number of Common Shares held by them.
(3) Except as otherwise required by statute or as otherwise
provided in this Certificate of Incorporation, the holders of Common
Shares shall be entitled to vote on all matters at all meetings of the
stockholders of the Corporation and shall be entitled to one vote for
each Common Share entitled to vote at such meeting, voting together,
as one Class with the holders of Preferred Shares who are entitled to
vote, if any such Preferred Shares are then outstanding and not as a
separate class.
FIFTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and for further
definition, limitation and regulation of the powers of the corporation and of
its directors and stockholders:
a. The number of directors of the Corporation shall be such as from
time to time shall be fixed by, or in the manner provided, in the by-laws of the
Corporation. Election of directors need not be by ballot unless the by-laws so
provide.
b. The Board of Directors shall have power, without the consent,
assent or vote of the stockholders, to do the following:
(1) to make, alter, amend, change, add to, or repeal the by-laws
of the corporation;
- --------------------------------------------------------------------------------
Amended and Restated Certificate of Incorporation Page 3
<PAGE>
(2) to fix and vary the amount to be reserved for any proper
purpose;
(3) to authorize and cause to be executed mortgages and liens and
other security interest upon all or any part of the property of the
corporation;
(4) to determine the use and disposition of any surplus or net
profits; and to fix the times for the declaration and payment of
dividends;
(5) to determine from time to time whether, and to what times and
places and under what conditions the accounts and books of the
corporation (other than the stock ledger) or any of them, shall be
open to the inspection of the stockholders.
c. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
d. The corporation shall, to the full extent permitted by Section
145 of the Delaware General Corporation Law, as amended, from time to time,
indemnify all persons whom it may indemnify pursuant thereto.
e. A director of the corporation shall not be personal ly liable to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to
- --------------------------------------------------------------------------------
Amended and Restated Certificate of Incorporation Page 4
<PAGE>
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve gross and intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director knowingly derived an improper
personal benefit.
f. Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer, of the corporation or is or was
serving at the request of the corporation as a director or officer, of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, or in any other capacity while serving as a director or officer, shall
be indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director or officer, and shall inure to the benefit of his or her heirs,
executors and administrators: provided, however, that, except as provided in
paragraph (e) hereof, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
board of directors of the corporation. The right to indemnification conferred
in this paragraph shall be a contract right and shall include the right to be
paid by the corporation the expenses incurred in defending any such proceeding
in advance of its final disposition; provided, however, that if the Delaware
General Corporation Law requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding, shall be made
only upon delivery to the corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this paragraph or otherwise. The corporation may, by action of its board of
directors, provide indemnification to employees and agents
- --------------------------------------------------------------------------------
Amended and Restated Certificate of Incorporation Page 5
<PAGE>
of the corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
g. If a claim under paragraph (f) of this Article Fifth is not paid
in full by the corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim, including reasonable attorneys fees. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law for
the corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the corporation. Neither the failure of the
corporation (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the corporation
(including its board of directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard or conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
h. The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in this
Article Fifth shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of the certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
i. The corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the corporation
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
IN WITNESS WHEREOF, I have signed this certificate this 27th day of
January, 1999.
/s/ Albert T. Primo
------------------------
Albert T. Primo
President
- --------------------------------------------------------------------------------
Amended and Restated Certificate of Incorporation Page 6
<PAGE>
EXHIBIT 3.3
BY-LAWS
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ARTICLE I.
MEETINGS OF STOCKHOLDERS
------------------------
SECTION 1. Annual Meeting. A meeting of stockholders shall be held
------ -------
annually for the election of directors and the transaction of such other
business as is related to the purpose or purposes set forth in the notice of
meeting on such date as may be fixed by the Board of Directors, or if no date is
so fixed on the second Tuesday in April in each and every year, unless such day
shall fall on a legal holiday, in which case such meeting shall be held on the
next succeeding business day, at such time and at such place as may be fixed by
the Board of Directors.
SECTION 2. Special Meetings. Special meetings of the stockholders for any
------- --------
purpose may be called by the Board of Directors, the Chairman of the Board, the
Chief Executive Officer, the President or the Secretary, and shall be called by
the Chairman of the Board, the Chief Executive Officer, the President or the
Secretary at the written request of the holders of record of a majority of the
outstanding shares of the Corpora tion entitled to vote at such meeting.
Special meetings shall be held at such time as may be fixed in the call and
stated in the notices of meeting or waiver thereof. At any special meeting only
such business may be transacted as is related to the purpose or purposes for
which the meeting is convened.
SECTION 3. Place of Meetings. Meetings of stockholders shall be held at
-----------------
such place, within or without the State of Delaware or the United States of
America, as may be fixed in the call and stated in the notice of meeting or
waiver thereof.
SECTION 4. Notice of Meetings; Adjourned Meetings.
---------------------------------------
a. Notice of each meeting of stockholders shall be given in writing
and shall state the place, date and hour of the meeting. The purpose or
purposes for which the meeting is called shall be stated in the notices of each
special meeting and of each annual meeting at which any business other than the
election of directors is to be transacted.
b. A copy of the notice of any meeting shall be given, personally or
by mail, not less then ten (10) nor more than sixty (60) days before the date of
the meeting,
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to each stockholder entitled to vote at such meeting. If mailed, such notice
shall be deemed given when deposited in the United States mail, with postage
thereon prepaid, directed to the stockholder at his address as it appears on the
record of stockholders.
c. When a meeting is adjourned for less than thirty (30) days in any
one adjournment, it shall not be necessary to give any notice of the adjourned
meeting if the time and place to which the meeting is adjourned are announced at
the meeting at which the adjournment is taken, and at the adjourned meeting any
business may be transacted that might have been transacted on the original date
of the meeting. When a meeting is adjourned for thirty (30) days or more, notice
of the adjourned meeting shall be given as in the case of an original meeting.
SECTION 5. Waiver of Notice.
----------------
a. The transactions of any meeting of stockholders, however called
and with whatever notice, if any, are as valid as though had at a meeting duly
held after regular call and notice, if: (i) all the stockholders entitled to
vote are present in person or by proxy and no objection to holding the meeting
is made by anyone so present, and if, (ii) either before or after the meeting,
each of the persons entitled to vote, not present in person or by proxy, signed
a written waiver of notice, or a consent to the holding of the meeting, or an
approval of the action taken as shown by the minutes thereof.
b. Whenever notice is required to be given to any stockholder, a
written waiver thereof signed by such stockholder, whether before or after the
time thereon stated, shall be deemed equivalent to such notice. Attendance of a
person at a meeting of stockholders shall constitute a waiver of notice of such
meeting, except when such stockholder attends for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of any meeting of stockholders need be
specified in any written waiver of notice thereof.
SECTION 6. Qualification of Voters. Except as may be otherwise provided
------------------------
in the Certificate of Incorporation, every stockholder of record shall be
entitled to one vote on each matter submitted to a vote at a meeting of
stockholders for every share standing in his name on the record of stockholders.
SECTION 7. Conduct of Meetings.
-------------------
a. Unless otherwise determined by the Board, at each meeting of the
stockholders, one of the following shall act as chairman of the meeting and
preside thereat, in the following order of precedence: (i) the Chairman, (ii)
the Vice Chairman, if any, (iii) the Chief Executive Officer, (iv) the
President, (v) one of the Vice Presidents in their order of rank and seniority,
or, if none of the foregoing is in office and present and acting, by a chairman
designated by the Board to act as chairman of such meeting and to preside
thereat.
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b. The Secretary or, if he shall be presiding over such meeting in
accordance with the provisions of this Section 7, or if he shall be absent from,
such meeting, the person (who shall be an Assistant Secretary, if an Assistant
Secretary has been appointed and is present) whom the chairman of such meeting
shall appoint, shall act as secretary of such meeting and keep the minutes
thereof.
SECTION 8. List of Stockholders.
--------------------
a. A complete list of stockholders entitled to vote at any meeting
of stockholders, arranged in alphabetical order for each class of stock, and
showing the address of each stockholder and the number of shares registered in
the name of each stockholder, shall be open to the examination of any such
stockholder, for any purpose germane to the meeting, during ordinary business
hours for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which places shall be
specified in the notice of the meeting, or if not so specified, at the place
where the meeting is to be held.
b. The list of stockholders shall also be kept at the place of the
meeting during the whole time thereof and shall be open to the examination of
any stockholder who is present. This list shall presumptively determine the
identity of the stockholders entitled to vote at the meeting and the number of
shares held by each of them.
SECTION 9. Quorum.
------
a. At any meeting of the stockholders the presence, in person or by
proxy, of the holders of a majority of the shares entitled to vote thereat shall
constitute a quorum for the transaction of any business.
b. When a quorum is once present to organize a meeting, it is not
broken by the subsequent withdrawal of any stockholders.
c. In the absence of a quorum, a majority in interest of the
stockholders present in person or represented by proxy and entitled to vote, or,
in the absence of all the stockholders entitled to vote, any officer entitled to
preside at, or act as secretary of, such meeting, shall have the power to
adjourn the meeting from time to time, until stockholders holding the requisite
amount of stock to constitute a quorum shall be present or represented. At any
such adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally called.
SECTION 10. Proxies.
-------
a. Every stockholder entitled to vote at a meeting of stockholders or
to express consent or dissent without a meeting may authorize another person or
persons to act for him by proxy.
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b. Every proxy must be executed by the stockholder or his attorney-
in-fact. No proxy shall be valid after the expiration of three (3) years from
the date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the stockholder executing it, except as otherwise
provided therein and as permitted by law. Except as otherwise provided in the
proxy, any proxy holder may appoint in writing a substitute to act in his place.
SECTION 11. Voting.
------
a. Except as otherwise required by law, directors shall be elected by
a plurality of the votes cast at a meeting of stockholders by the holders of
shares entitled to vote in the election.
b. Whenever any corporate action, other than the election of
directors, is to be taken by vote of the stockholders at a meeting, it shall,
except as otherwise required by law or the Certificate of Incorporation, be
authorized by a majority of the votes cast thereat, in person or by proxy.
SECTION 12. Action Without A Meeting. Whenever stockholders are required
------------------------
or permitted to take any action at a meeting or by vote, such action may be
taken without a meeting, without prior notice and without a vote, by consent in
writing setting forth the action so taken, signed by the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
SECTION 13. Record Date.
-----------
a. The Board of Directors is authorized to fix a day not more than
sixty (60) days nor less than ten (10) days prior to the day of holding any
meeting of stockholders as the day as of which stockholders entitled to notice
of and to vote at such meeting shall be determined (the "Record Date"); and only
stockholders of record on the Record Date shall be entitled to notice or to vote
at such meeting. If no Record Date is fixed by the Board of Directors, the
Record Date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new Record Date for the
adjourned meeting.
b. The Board of Directors is authorized to fix a Record Date, which
shall not precede and which shall be not more than 10 days after the date upon
which the
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resolution fixing the Record Date is adopted by the Board of Directors, to
determine the stockholders entitled to consent to corporate action in writing
without a meeting.
(1) If no Record Date has been fixed by the Board of Directors,
the Record Date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the
Board of Directors is required by the General Corporation Law of the State
of Delaware, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in this State, its
principal place of business or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders
are recorded. Delivery made to the Corporation's registered office shall be
by hand or by certified or registered mail, return receipt requested.
(2) If no record date has been fixed by the Board of Directors,
and prior action by the Board of Directors is required by the General
Corporation Law of the State of Delaware, the Record Date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
c. The Board of Directors is authorized to fix a Record Date to
determine the stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders entitled to exercise
any rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action. Such Record Date shall not precede the date
upon which the resolution fixing the Record Date is adopted by the Board of
Directors, shall be not more than 60 days prior to such action. If no Record
Date is fixed, the Record Date for determining stockholders for any such purpose
shall be at the close of business on the day on which the Board adopts the
resolution relating thereto.
SECTION 14. Inspectors of Election.
----------------------
a. The Chairman of any meeting of the stockholders may appoint one or
more Inspectors of Election ("Inspectors"). Any Inspector may be removed, and a
new Inspector or Inspectors appointed, by the Board at any time.
b. The Inspectors need not be stockholders of the Corporation, and
any director or officer of the Corporation may be an Inspector on any question
other than a vote for or against his election to any position with the
Corporation or on any other matter in which he may be directly interested.
c. Any Inspector so appointed to act at any meeting of the
stockholders, before entering upon the discharge of his or her duties, shall
take and sign an oath
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faithfully to execute the duties of Inspector at such meeting with strict
impartiality, and according to the best of his or her ability.
d. The Inspectors shall determine the number of shares of stock
outstanding and the voting power of each, the shares of stock represented at the
meeting, the existence of a quorum, the validity and effect of proxies, hear and
determine all challenges and questions arising in connection with the right to
vote, decide upon the qualifications of voters, accept, count and tabulate all
votes and ballots (if any), declare the results of such vote, and do such acts
as are proper to conduct the election or vote with fairness to all stockholders
entitled to vote thereat.
e. Unless waived by vote of the stockholders pursuant to these
Bylaws, the Inspectors shall deliver to the secretary of the meeting a
certificate stating the number of shares of stock issued and outstanding and
entitled to vote thereon and the number of shares voted for and against the
question, respectively, as well as any challenge , question or matter determined
by him or them at such meeting.
ARTICLE II.
BOARD OF DIRECTORS
------------------
SECTION 1. Power of Board and Qualification of Directors. The business,
---------------------------------------------
property and affairs of the Corporation shall be managed by the Board of
Directors, which may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by law or by the Certificate directed or
required to be exercised or done by the stockholders.
SECTION 2. Number of Directors. The number of directors constituting the
-------------------
entire Board of Directors shall be such number not less than one (1) nor more
than fifteen (15) as may be fixed from time to time by resolution adopted by the
stockholders or by the Board of Directors. The initial Board of Directors shall
be five (5).
SECTION 3. Election and Term of Directors. At each annual meeting of
------------------------------
stockholders, directors shall be elected to serve until the next annual meeting
or until his or her resignation or removal. At each meeting of the stockholders
for the election of directors at which a quorum is present, the persons
receiving the greatest number of votes, up to the number of directors to be
elected, of the stockholders present in person or by proxy and entitled to vote
thereon shall be the directors; provided, however, that for purposes of such
vote no stockholder shall be allowed to cumulate his votes. Election of
directors may be conducted in any manner approved at such meeting.
SECTION 4. Qualification of Directors. A director need not be a
--------------------------
stockholder, a citizen of the United States or a resident of the State of
Delaware.
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SECTION 5. Resignations. Any director of the Corporation may resign at
------------
any time by giving written notice to the Board of Directors, the Chairman of the
Board, the Chief Executive Officer, the President or the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein;
and unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
SECTION 6. Removal of Directors. Any or all of the directors may be
--------------------
removed with or without cause by the holders of a majority of shares of stock
entitled to vote at an election of directors.
SECTION 7. Newly Created Directorships and Vacancies. Newly created
-----------------------------------------
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board of Directors for any reason except the removal
of directors by stockholders without cause may be filled by vote of a majority
of the directors then in office, although less than a quorum exists, or may be
filled by the stockholders. Vacancies occurring as a result of the removal of
directors by stockholders, without cause, shall be filled by the stockholders. A
director elected to fill a vacancy or a newly created directorship shall be
elected to hold office until the next annual meeting of stockholders.
SECTION 8. Executive and Other Committee of Directors. The Board of
------------------------------------------
Directors, by resolution adopted by a majority of the entire Board, may
designate from among its members an executive committee and other committees,
each consisting of one or more directors, and each of which, to the extent
provided in the resolution, shall have all the authority of the Board to the
full extent authorized by law and including the power and authority to declare a
dividend or to authorize the issuance of stock.
The Board of Directors may designate one or more directors as alternate
members of any such committee, who may replace any absent member or members at
any meeting of such committee.
SECTION 9. Compensation of Directors. The Board of Directors shall have
-------------------------
authority to fix the compensation of directors for services in any capacity, or
to allow a fixed sum plus expenses, if any, for attendance at meetings of the
Board or of committees designated thereby. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
SECTION 10. Interest of Director in a Transaction.
-------------------------------------
a. No contract or transaction between the Corporation and one or more
of its directors or officers, or between the Corporation and any other
corporation, partnership, association or other organization in which one or more
of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable
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solely for this reason, or solely because the director or officer is present at
or participates in the meeting of the Board or committee thereof which
authorized the contract or transaction, or solely because his or their votes are
counted for such purpose, if:
(1) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee, in good faith,
authorizes the contract or transaction by the affirmative vote of a
majority of the disinterested directors, even though the disinterested
directors be less than as quorum; or
(2) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved, in good faith, by vote of the stockholders; or
(3) The contract or transaction is fair as to the Corporation as of
the time it is authorized, approved or ratified, by the Board of Directors,
a committee thereof, or the stockholders.
b. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorized the contract or transaction.
ARTICLE III.
MEETINGS OF THE BOARD
---------------------
SECTION 1. Regular Meetings. Regular meetings of the Board of Directors
----------------
may be held without notice at such time and places, within or without the State
of Delaware, or the United States of America, as may from time to time be fixed
by the Board.
SECTION 2. Special Meetings; Notice; Waiver.
--------------------------------
a. Special meetings of the Board of Directors may be held at any
time, place, within or without the State of Delaware or the United States of
America, upon the call of the Chairman of the Board, the Chief Executive
Officer, the President or the Secretary, by oral, telegraphic or written notice,
duly given to or sent or mailed to each director not less than two (2) days
before such meeting. Special meetings shall be called by the Chairman of the
Board, the Chief Executive Officer, the President or the Secretary on the
written request of any two directors.
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b. Notice of a special meeting need not be given to any director who
submits a signed waiver or notice whether before or after the meeting, or who
attends the meeting without protesting, prior thereto or at its commencement,
the lack of notice to him.
c. A notice, or waiver of notice, need not specify the purpose of any
special meeting of the Board of Directors.
SECTION 3. Conduct of Meetings.
-------------------
a. At every meeting of the Board of Directors, the Chairman of the
Board, if there be one, or, in the case of a vacancy in the office or absence of
the Chairman of the Board, the following officers present in the order stated
shall act as Chairman of the meeting: Vice Chairman, Chief Executive Officer,
the President, the Vice Presidents in their order of rank and seniority, or a
chairman chosen by a majority of the directors present.
b. The Secretary, or in his absence, an Assistant Secretary, or in
the absence of the Secretary and the Assistant Secretaries, any person appointed
by the Chairman of the meeting shall act as secretary.
SECTION 4. Quorum; Action by the Board; Adjournment.
----------------------------------------
a. At all meetings of the Board of Directors, a majority of the whole
Board shall constitute a quorum for the transaction of business, except that
when the number of directors constituting the whole Board shall be an even
number, one-half of that number shall constitute a quorum.
b. The vote of a majority of the directors present at the time of the
vote, if a quorum is present at such time, shall be the act of the Board, except
as may be otherwise specifically provided by law or by the Certificate of
Incorporation or by these By-Laws.
c. A majority of the directors present, whether or not a quorum is
present, may adjourn any meeting to another time and place.
SECTION 5. Action Without a Meeting. Any action required or permitted to
------------------------
be taken at any meeting of the Board, or any committee thereof, may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes or proceedings of the Board or committee, whether done before or after
the action so taken.
SECTION 6. Action Taken by Conference Telephone. Members of the Board of
------------------------------------
Directors or any committee thereof may participate in a meeting by means of
conference
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telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other.
ARTICLE IV
OFFICERS
--------
SECTION 1. Officers. The Board of Directors shall elect or appoint a
--------
Chairman, Chief Executive Officer, President, one or more Vice Presidents, and a
Secretary of the Corporation.
SECTION 2. Other Officers. The Board of Directors may, from time to time,
--------------
elect or appoint a Vice Chairman, a Chief Financial and Accounting Officer, a
Treasurer and such other officers as it may determine. Any two or more offices
may be held by the same person.
SECTION 3. Chairman of the Board. The Chairman of the Board of Directors
---------------------
shall preside at all meetings of the Shareholders and of the Board of Directors
and shall have such other duties and powers as may be prescribed by the Board of
Directors from time to time.
SECTION 4. Chief Executive Officer. The chief executive officer of the
-----------------------
Corporation shall have all the rights and powers incident to that position, and
shall have such other duties and powers as may be prescribed by the Board of
Directors from time to time.
SECTION 5. President. The President shall be the chief operating officer
---------
of the Corporation with all the rights and powers incident to that position, and
shall have such other duties and powers as may be prescribed by the Board of
Directors from time to time.
SECTION 6. Vice President. The Vice Presidents shall perform such duties
--------------
as may be prescribed or assigned to them by the Board of Directors, the Chief
Executive Officer or the President. In the absence of the President the first-
elected Vice President shall perform the duties of the President. In the event
of the refusal or incapacity of the President to function as such, the first-
elected Vice President shall perform the duties of the President until such time
as the Board of Directors elects a new President. In the event of the absence,
refusal or incapacity of the first-elected Vice President, the other Vice
Presidents, in order of their rank, shall so perform the duties of the
President; and the order of rank of such other Vice Presidents shall be
determined by the designated rank of their offices or, in the absence of such
designation, by seniority in the office of Vice President; provided that said
order or rank may be established otherwise by action of the Board of Directors.
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SECTION 7. Treasurer. The Treasurer shall perform all the duties
---------
customary to that office, and shall have the care and custody of the funds and
securities of the Corporation. He shall at all reasonable times exhibit his
books and accounts to any director upon application, and shall have such other
duties and powers as may be prescribed by the Board of Directors from time to
time.
SECTION 8. Secretary. The Secretary shall, to the extent practicable,
---------
attend all meetings of the stockholders and all meetings of the Board and shall
also perform like duties for the standing committees when required. The
Secretary shall record all votes and the minutes of all proceedings in a book to
be kept for that purpose. He may give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors, the Chairman
or the Chief Executive Officer, under whose supervision he shall act. He shall
keep in safe custody the seal of the Corporation and affix the same to any duly
authorized instrument requiring it and, when so affixed, it shall be attested by
his signature or by the signature of the Treasurer or, if appointed, an
Assistant Secretary or an Assistant Treasurer. He shall keep in safe custody the
certificate books and stockholder records and such other books and records as
the Board may direct, and shall perform all other duties incident to the office
of Secretary and shall have such other duties and powers as may be prescribed by
the Board of Directors from time to time.
SECTION 9. Assistant Treasurer and Assistant Secretary. Any Assistant
-------------------------------------------
Treasurer or Assistant Secretary shall perform such duties as may be prescribed
or assigned to him by the Board of Directors, the Chairman of the Board, the
Chief Executive Officer or the President.
SECTION 10. Term of Office; Removal. Each officer shall hold office for
-----------------------
such term as may be prescribed by the Board. Any officer may be removed at any
time by the Board with or without cause. The removal of an officer without
cause shall be without prejudice to his contract rights, if any. The election
or appointment of an officer shall not, of itself, create contract rights.
SECTION 11. Compensation. The compensation of all officers of the
------------
Corporation shall be fixed by the Board of Directors.
SECTION 12. Voting of Securities. Securities of other corporations held
--------------------
by the corporation may be voted by any officer designated by the Board and, in
the absence of any such designation, by the President. any Vice President, the
Secretary, or the Treasurer.
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ARTICLE V
SHARE CERTIFICATES; TRANSFER OF SHARES
--------------------------------------
SECTION 1. Form of Share Certificates. The shares of the Corporation
--------------------------
shall be represented by certificates, in such form as the Board of Directors may
from time to time prescribe, signed by the Chairman of the Board, the Chief
Executive Officer, the President, or a Vice President, and by the Secretary, an
Assistant Secretary, the Treasurer or an Assistant Treasurer, and shall be
sealed with the seal of the Corporation or a facsimile thereof. The signatures
of the officers upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar other than the
Corporation or its employees. In case any such officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date of
issue.
SECTION 2. Addresses of Stockholders. Each stockholder shall
-------------------------
designate to the Secretary an address at which notices of meetings and all other
corporate notices may be served or mailed to him, and, if any stockholder shall
fail to designate such address, corporate notices may be served upon him by mail
directed to him at his post-office address, if any, as the same appears on the
share record books of the Corporation or at his last known post-office address.
SECTION 3. Lost Certificates. In case of the loss, theft.
-----------------
mutilation or destruction of a stock certificate, a duplicate certificate will
be issued by the Corporation upon notification thereof and receipt of such
proper indemnity, surety, or other assurances as the Board of Directors may
require.
SECTION 4. Transfer of Shares. Transfers of shares of stock shall
------------------
only be made upon the books of the Corporation upon the request of the
registered holder thereof, or of his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the Corporation, and upon
surrender of the certificate or certificates for such shares properly endorsed
or accompanied by a stock power duly executed.
SECTION 5. Registered Stockholders.
------------------------
a. Except as otherwise provided by law, the Corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends or other distributions and to vote as
such owner, and to hold such person liable for calls and assessments, and shall
not be bound to recognize any equitable or legal claim to or interest in such
shares on the part of any other person.
b. The Board of Directors may make such rules and regulations as it
may deem expedient, not inconsistent with these By-Laws, concerning the issue,
transfer and registration of certificates for stock of the Corporation.
- --------------------------------------------------------------------------------
foreignTV.com, Inc. -- BY-LAWS Page 12
<PAGE>
ARTICLE VI
INDEMNIFICATION AND INSURANCE
-----------------------------
SECTION 1. Actions by or in the Right of the Corporation. Any person
---------------------------------------------
made a party to an action by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he, his testator or intestate,
is or was a Director or officer of the Corporation shall be indemnified by the
Corporation against the reasonable expenses, including attorneys fees, actually
and necessarily incurred by him in connection with the defense of such action or
in connection with an appeal therein, to the fullest extent permitted by the
General Corporation Law or any successor thereto.
SECTION 2. Action or Proceeding Other Than by or in The Right of the
---------------------------------------- ----------------
Corporation. Any person made or threatened to be made a party to an action or
- -----------
proceeding other than one by or in the right of the Corporation to procure a
judgment in its favor, whether civil or criminal, including an action by or in
the right of any other corporation of any type or kind, domestic or foreign,
which any Director or officer of the Corporation served in any capacity at the
request of the Corporation, by reason of the fact that he, his testator or
intestate, was a Director or officer of the Corporation, or served such other
corporation in any capacity, shall be indemnified by the Corporation against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys fees actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, if such Director or officer acted in good
faith for a purpose which he reasonably believed to be in the best interests of
the Corporation and, in criminal actions or proceedings, in which he had no
reasonable cause to believe that his conduct was unlawful. The termination of
any such civil or criminal action or proceeding by judgment, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not in
---- ----------
itself create a presumption that any such Director or officer did not act in
good faith for a purpose which he reasonably believed to be in the best
interests of the Corporation or that he had reasonable cause to believe that his
conduct was unlawful.
SECTION 3. Opinion of the Counsel. In taking any action or making
----------------------
any determination pursuant to this Article, the Board of Directors and each
Director, officer or employee, whether or not interested in any such action or
determination, may rely upon an opinion of counsel selected by the Board.
SECTION 4. Other Indemnification; Limitation. The Corporations
---------------------------------
obligations under this Article shall not be exclusive or in limitation of but
shall be in addition to any other rights to which any such person may be
entitled under any other provision of these By-Laws, or by contract, or as a
matter of law, or otherwise. All of the provisions of this Article VI of the
By-Laws shall be valid only to the extent permitted by the Certificate of
Incorporation and the laws of the State of Delaware.
- --------------------------------------------------------------------------------
foreignTV.com, Inc. -- BY-LAWS Page 13
<PAGE>
SECTION 5. Insurance and Trust Fund. In furtherance and not in
------------------------
limitation of the powers conferred by statute:
a. The Corporation may purchase and maintain insurance, at its
expense, to protect itself and any person who is or was a director, officer,
employee or agent of the Corporation or any person who is or was serving at the
request of the Corporation as a director, officer, employer or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, asserted against him and any expense, or loss
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify such person
against any liability under the provisions of law.
b. In addition to any insurance, the Corporation may create a trust
fund, grant a security interest and/or use other means (including, without
limitation, letters of credit, surety bonds and/or other similar arrangements),
as well as enter into contracts providing indemnification to the fullest extent
permitted by law and including as part thereof provisions with respect to any or
all of the foregoing, to ensure the payment of such amount as may become
necessary to effect indemnification as provided therein, or elsewhere.
SECTION 6. Indemnification of Employees and Agents of the
----------------------------------------------
Corporation. The Corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification, including the right to
be paid by the Corporation the expenses incurred in defending any proceeding in
advance of its final disposition, to any employee or agent of the Corporation to
the fullest extent of the provisions of this Section or otherwise with respect
to the indemnification and advancement of expenses of directors and officers of
the Corporation.
ARTICLE VII
MISCELLANEOUS PROVISIONS
------------------------
SECTION 1. Corporate Seal. The corporate seal shall have inscribed
--------------
thereon the name of the Corporation and shall be in such form as the Board of
Directors may from time to time determine.
SECTION 2. Fiscal Year. The fiscal year of the Corporation shall be
-----------
the twelve month period prescribed by the Board of Directors.
SECTION 3. Checks and Notes. All checks and demands for money and
----------------
notes or other instrument evidencing indebtedness or obligations of the
Corporation shall be signed by such officer or officers or other person or
persons as shall be authorized from time to time by the Board of Directors.
- --------------------------------------------------------------------------------
foreignTV.com, Inc. -- BY-LAWS Page 14
<PAGE>
SECTION 4. Dividends. Subject to the provisions of the Certificate
---------
of Incorporation, if any, dividends upon the capital stock of the Corporation
may be declared by the Board of Directors at any regular or special meeting or
by any Committee of the Board of Directors having such authority at any meeting
thereof, and may be paid in cash, in property, in shares of the capital stock,
or in any combination thereof. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors from tim e to time, in its absolute discretion,
deems proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for any proper purpose, and the Board of Directors may modify or abolish any
such reserve.
ARTICLE VIII
AMENDMENTS
----------
SECTION 1. Power to Amend. By-Laws of the Corporation may be
---------------
adopted, amended or repealed by the Board of Directors, subject to amendment or
repeal by the vote of the holders of a majority of the shares then entitled to
vote thereon.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy
of the By-Laws of foreignTV.com, Inc., a Delaware corporation, as in effect on
the date hereof.
Dated: January 28, 1999
New York, New York.
__________________________
Secretary of foreignTV.com, Inc.
- --------------------------------------------------------------------------------
foreignTV.com, Inc. -- BY-LAWS Page 15
<PAGE>
EXHIBIT 4.1
foreignTV.com, Inc.
[GRAPHIC] INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE [GRAPHIC]
COMMON STOCK
FTV
CUSIP
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, $.01 PAR
VALUE PER SHARE, OF
------------------------ ------------------------
- ----------------------------- foreignTV.com, Inc. ------------------------------
------------------------ ------------------------
(the "Corporation") transferable on the books of the Corporation by the holder
hereof in person or by duly authorized attorney upon the surrender of this
Certificate properly endorsed. This Certificate and the shares represented
hereby are subject to all of the terms and conditions contained in the
Certificate of Incorporation of the Corporation and all amendments hereto.
This Certificate is not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
[SEAL]
SECRETARY
CHAIRMAN OF THE BOARD
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
New York, NY
Transfer Agent
By
Authorized Signature
<PAGE>
foreignTV.com, Inc.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT-______________Custodian __________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act__________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For Value Received,_______________________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
__________________________________________________________________________Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Company with full
power of substitution in the premises.
Dated ________________
______________________________________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed:
______________________________________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
<PAGE>
EXHIBIT 4.2
NUMBER VOID AFTER , 2002 WARRANTS
REDEEMABLE WARRANT CERTIFICATE TO
PURCHASE SHARES OF COMMON STOCK
foreignTV.com, Inc.
CUSIP
THIS CERTIFIES THAT, FOR VALUE RECEIVED
or registered assigns
(the "Registered Holder") is the owner of the number of Redeemable Common Stock
Purchase Warrants (the "Warrants") specified above. Each Warrant initially
entitles the Registered Holder to purchase, subject to the terms and conditions
set forth in this Certificate and the Warrant Agreement (as hereinafter
defined), one fully paid and nonassessable share of Common Stock, $.01 par
value, of foreignTV.com, Inc., a Delaware corporation (the "Company"), at any
time from the Commencement Date (as hereinafter defined) to the Expiration Date
(as hereinafter defined) upon the presentation and surrender of this Warrant
Certificate with the Subscription Form on the reverse hereof duly executed, at
the corporate office of American Stock Transfer & Trust Company, 40 Wall Street,
New York, New York 10005, as Warrant Agent, or its successor (the "Warrant
Agent"), accompanied by payment of $9.00, subject to adjustment (the "Purchase
Price"), in lawful money of the United States of America in cash or by check
made payable to the Warrant Agent for the account of the Company.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated as of , 1999, by
and between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the Warrants represented hereby, the Company shall
cancel this Warrant Certificate upon the surrender hereof and shall execute and
deliver a new Warrant Certificate or Warrant Certificates of like tenor, which
the Warrant Agent shall countersign, for the balance of such Warrants.
The term "Commencement Date" shall mean , 1999. The term "Expiration
Date" shall mean 5:00 P.M. (New York City time) on , 2002. If each such date
shall in the State of New York be a holiday or a day on which the banks are
authorized to close, then the Expiration Date shall mean 5:00 P.M. (New York
City time) the next following day which in the State of New York is not a
holiday or a day on which banks are authorized to close.
The Company shall not be obligated to deliver any securities pursuant to
the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to such securities
is effective or an exemption thereunder is available. The Company has covenanted
and agreed that it will file a registration statement under the Federal
securities laws, use its best efforts to cause the same to become effective, to
keep such registration statement current, if required under the Act, while any
of the Warrants are outstanding, and deliver a prospectus which complies with
Section 10(a)(3) of the Act to the Registered Holder exercising this Warrant.
This Warrant shall not be exercisable by a Registered Holder in any state where
such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment and payment of any tax or other
charge imposed in connection therewith or incident thereto, for registration of
transfer of this Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number of Warrants will
be issued to the transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of $.05 per
Warrant, at any time commencing after the Commencement Date, provided that (1)
the high bid price for the Company's Common Stock as reported by the National
Association of Securities Dealers Automated Quotation System, or (ii) the
closing price on the primary exchange on which the Common Stock is traded, if
the Common Stock is traded on a securities exchange, shall have, for twenty (20)
consecutive trading days immediately prior to the notice of redemption, equaled
or exceeded $12.00 per share (subject to adjustment in the event of any stock
splits or other similar events). Notice of redemption shall be given not less
than the thirtieth day before the date fixed for redemption, all as provided in
the Warrant Agreement. On and after the date fixed for redemption the Registered
Holder shall have no rights with respect to this Warrant except to receive the
$.05 per Warrant upon surrender of this Certificate.
In accordance with and subject to the Warrant Agreement, Westminster
Securities Corporation shall be entitled to receive a commission equal to 3% of
the proceeds received by the Company from the exercise of the Warrants more than
one year after the Commencement Date.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary, except as provided in the
Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
conflicts of laws.
This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated:
foreignTV.com, Inc.
By
[SEAL] By
SECRETARY
CHAIRMAN OF THE BOARD
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Warrant Agent
By
Authorized Officer
<PAGE>
SUBSCRIPTION FORM
To Be Executed by the Registered Holder in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to
exercise Warrants represented by this Warrant Certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in name of
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER
[ ]
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or type name and address)
and be delivered to
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
Dated:______________________ X_______________________________
________________________________
________________________________
________________________________
Address
________________________________
________________________________
Social Security or Taxpayer
Identification Number
________________________________
Signature Guaranteed
The undersigned represents that the exercise of the within Warrant was solicited
by Westminster Securities Corporation. If not solicited by Westminster
Securities Corporation, please write "unsolicited" in the space below or write
the name of the broker/dealer which solicited your exercise. Unless otherwise
indicated, it will be assumed that the exercise was solicited by Westminster
Securities Corporation.
________________________________
(Write "unsolicited" on above
line if not solicited by
Westminster Securities
Corporation)
Dated:____________________________ ________________________________
Signature
ASSIGNMENT
FOR VALUE RECEIVED,______________ hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER
[ ]
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or type name and address)
________________________________________________________________ of the Warrants
represented by this Warrant Certificate, and hereby irrevocably constitutes
and appoints
_______________________________________________________________________ Attorney
to transfer this Warrant Certificate on the books of the Company,
with full power of substitution in the premises.
Dated:_____________________________ X___________________________
Signature Guaranteed
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO
THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND
MUST BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF
THE AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE
OR MIDWEST STOCK EXCHANGE.
<PAGE>
EXHIBIT 4.4
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
foreignTV.COM, Inc.
and
WESTMINSTER SECURITIES CORPORATION
------------------------------------------------
UNDERWRITER'S UNIT WARRANT AGREEMENT
Dated: , 1999
------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
PARTIES................................................ 1
RECITALS............................................... 1
Section 1. Transferability and Form of
Warrant................................. 2
Section 2. Exchange of Warrant Certificates........... 5
Section 3. Term of Warrants; Exercise
of Warrants............................. 5
Section 4. Payment of Taxes........................... 7
Section 5. Mutilated or Missing Warrants.............. 8
Section 6. Reservation of Shares...................... 8
Section 7. Warrant Price...............................9
Section 8. Adjustments................................ 9
Section 9. Fractional Interests.......................19
Section 10. No Right as Stockholders;
Notices to Warrant Holders..............20
Section 11. Registration Rights........................21
Section 12. Indemnification............................25
Section 13. Notices....................................31
Section 14. Successors.................................32
Section 15. Merger or Consolidation
of the Company..........................32
Section 16. Survival...................................32
Section 17. Applicable Law.............................33
Section 18. Benefits of this Agreement.................33
Section 19. Counterparts...............................33
Section 20. Captions...................................33
TESTIMONIUM............................................34
SIGNATURES.............................................34
EXHIBIT A (Form of Warrant,
Election to Purchase and Assignment)
- ------------------
* This Table of Contents does not constitute a part of this
<PAGE>
Warrant Agreement nor does it have any bearing upon the interpretation of
any of its terms and provisions.
<PAGE>
UNDERWRITER'S UNIT WARRANT AGREEMENT
dated as of 1999 between
foreignTV.COM, Inc., a Delaware
corporation (the "Company"), and
WESTMINSTER SECURITIES CORPORATION,
a New York corporation (the
"Underwriter").
----------------------------------
The Company proposes to issue to the Underwriter and its designees,
warrants (the "Underwriter's Unit Warrants") to purchase units (the "Units"),
each Unit consisting of one (1) share of Common Stock, par value $.01 per share,
of the Company (the "Common Stock") and one (1) Common Stock Purchase Warrant
(the "Underwriter's Common Stock Warrants"), each Underwriter's Common Stock
Warrant exercisable to purchase one (1) additional share of Common Stock at
$9.00 per share, at any time and from time to time commencing on , 2000
and expiring on , 2004 at a price of $6.60 per Unit, in an amount equal to
ten percent (10%) of the units sold in connection with a public offering by the
Company (the "Public Offering") under Registration Statement No. (the
"Registration Statement"), up to a maximum of 170,000 Units. The Units, which
have been included in the Registration Statement, are similar but not identical
to the units sold in the Public Offering (the "Public Units") and neither the
Underwriter's Unit Warrants nor the Underwriter's Common Stock Warrants
comprising a portion thereof are redeemable by the Company. The Common Stock
and the shares of Common Stock issuable upon exercise of the Underwriter's
Common Stock Warrants are hereinafter collectively referred to as the "Shares".
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and for the purpose
of defining the terms and provisions of the Underwriter's Unit Warrants and the
respective rights and obligations thereunder of the Company, the Underwriter and
any subsequent Holder as provided in Section 1.3 hereof, the Company and the
Underwriter hereby agree as follows:
Section 1. Transferability and Form of Warrant.
-----------------------------------
1.1. Registration. The Underwriter's Unit Warrants shall be numbered
------------
and shall be registered on the books of the Company when issued.
1.2. Transfer. The Underwriter's Unit Warrants shall be registered
--------
for transfer only on the books of the Company maintained at its then principal
office, presently located in New York, New York, upon delivery thereof duly
endorsed by a Holder (as defined below) thereof or by its duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment or authority to transfer. Upon any registration of transfer, the
Company shall execute and deliver new Underwriter's Unit Warrants to the person
entitled thereto.
1.3. Limitations on Transfer of the Warrants. For a period of one (1)
---------------------------------------
year from the date hereof, the Underwriter's designees for the purposes of
acquiring Underwriter's Unit Warrants shall be limited to, and the Underwriter's
Unit Warrants shall be nontransferable by the Underwriter or its designees
except to (i) one
2
<PAGE>
or more persons, each of whom on the date of transfer is an officer of the
Underwriter; (ii) a partnership or partnerships, the general Partners of which
are the Underwriter and one or more persons, each of whom on the date of
transfer is an officer of the Underwriter; (iii) one or more members of the
selling group assembled by the Underwriter for the Public Offering, or any
officers or partners thereof, or (iv) any person receiving the Underwriter's
Unit Warrants from one or more of the persons listed in this Section 1.3 at such
person's or persons' death pursuant to will, trust or the laws of intestate
succession. The Underwriter's Unit Warrants may be divided or combined, upon
request to the Company by a Holder thereof, into a certificate or certificates
evidencing the same aggregate number of Shares issuable thereunder. Unless the
context indicates otherwise, the term "Holder" shall mean and include the
Underwriter and any transferee or transferees of Underwriter's Unit Warrants
pursuant to this Section 1.3, and the term "Underwriter's Unit Warrants" shall
include any and all Underwriter's Unit Warrants outstanding pursuant to this
Agreement, including those evidenced by a certificate or certificates issued
upon division, exchange, substitution or transfer pursuant to this Agreement.
1.4. Form of Underwriter's Unit Warrants. The text of the
-----------------------------------
Underwriter's Unit Warrants and of the form of election to purchase Units shall
be substantially as set forth in Exhibit A attached hereto. The price of Shares
and the number of Shares issuable upon
3
<PAGE>
exercise of Underwriter's Unit Warrants are subject to adjustment upon the
occurrence of certain events, all as herein-after provided. The Underwriter's
Unit Warrants shall be executed on behalf of the Company by its President or one
of its Vice Presidents, under its corporate seal reproduced thereon attested by
its Secretary or an Assistant Secretary.
Underwriter's Unit Warrants bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the Company, shall
bind the Company, notwithstanding that such individuals or any one of them shall
have ceased to hold such offices prior to the delivery of such Underwriter's
Unit Warrants or did not hold such office on the date of this Agreement.
Underwriter's Unit Warrants shall be dated as of the date of
countersignature thereof by the Company either upon initial issuance or upon
division, exchange, substitution or transfer.
1.5. Legend on Underwriter's Unit Warrant Shares. Each certificate
-------------------------------------------
for Shares initially issued upon exercise of an Underwriter's Unit Warrant,
unless at the time of exercise such Shares are subject to a currently effective
registration statement under the Securities Act of 1933, as amended (the "Act"),
shall bear the following legend:
"The securities represented by this certificate have not been registered under
the Securities Act of 1933 and may not be sold, exchanged, hypothecated or
transferred in any manner except in compliance with Section 11 of the
Underwriter's Warrant Agreement pursuant to which they were issued."
4
<PAGE>
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to an effective registration statement under
the Act of the securities represented thereby) shall also bear the above legend
unless in the opinion of Cooperman Levitt Winikoff Lester & Newman, P.C., or
such other counsel as shall be reasonably acceptable to the Company, the
securities represented thereby need no longer be subject to such restrictions.
Section 2. Exchange of Underwriter's Unit Warrant Certificates.
---------------------------------------------------
Underwriter's Unit Warrant certificates may be exchanged for another certificate
or certificates entitling the Holder thereof to purchase a like aggregate number
of Units as the certificate or certificates surrendered then entitle such Holder
to purchase. Any Holder of an Underwriter's Unit Warrant desiring to exchange
Underwriter's Unit Warrant certificates shall make such request in writing
delivered to the Company, and shall surrender, properly endorsed, the
certificate or certificates evidencing the Underwriter's Unit Warrant or
Underwriter's Unit Warrants to be so exchanged. Thereupon, the Company shall
execute and deliver to the person entitled thereto a new Underwriter's Unit
Warrant certificate or certificates, as the case may be, as so requested.
Section 3. Term of Underwriter's Unit Warrants; Exercise of Underwriter's
--------------------------------------------------------------
Unit Warrants. Subject to the terms of this
- -------------
5
<PAGE>
Agreement, each Holder shall have the right, at any time during the period
commencing at 9:00 A.M., New York City time, on , 2000 until 5:30 P.M.,
New York City time on , 2004 (the "Termination Date"), to purchase
from the Company that number of Units to which the Holder may at the time be
entitled to purchase pursuant to such Underwriter's Unit Warrants, upon
surrender to the Company at its then principal office, of the certificate or
certificates evidencing the Underwriter's Unit Warrants to be exercised,
together with the form of election to purchase on the reverse thereof duly
completed and signed, and upon payment to the Company of the Underwriter's
Warrant Price (as defined in and determined in accordance with the provisions of
Sections 7 and 8 hereof), for the number of Units in respect of which such
Underwriter's Unit Warrants are then exercised. Payment of the aggregate
Underwriter's Warrant Price shall be made in cash or by certified or bank
cashier's check.
Subject to Section 4 hereof, upon such surrender of Underwriter's Unit
Warrants and payment of the Underwriter's Warrant Price as aforesaid, the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the Holder and in such name or names as the Holder may
designate, a certificate or certificates for the number of full Shares and
Underwriter's Common Stock Warrants so purchased upon the exercise of such
Underwriter's Unit Warrants, together with cash, as provided in
6
<PAGE>
Section 9 hereof, in respect of any fractional Shares and Underwriter's Common
Stock Warrants otherwise issuable upon such surrender. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
Shares and Underwriter's Common Stock Warrants as of the date of the surrender
of such Underwriter's Unit Warrants and payment of the Underwriter's Warrant
Price, as aforesaid; provided, however, that if, at the date of surrender of
such Underwriter's Unit Warrants and payment of such Underwriter's Warrant
Price, the transfer books for the Shares or other class of securities
purchasable upon the exercise of such Underwriter's Unit Warrants shall be
closed, the certificates for the Shares and Underwriter's Common Stock Warrants
in respect of which such Underwriter's Unit Warrants are then exercised shall be
issuable as of the date on which such books shall next be opened (whether before
or after the Termination Date) and until such date the Company shall be under no
duty to deliver any certificate for such Shares and Underwriter's Common Stock
Warrants; provided further, however, that the transfer books of record, unless
otherwise required by law, shall not be closed at any one time for a period
longer than twenty (20) days. The rights of purchase represented by the
Underwriter's Unit Warrants shall be exercisable at the election of the Holders
thereof either in full or from time to time in part and, in the event that a
certificate evidencing Underwriter's Unit Warrants is exercised in
7
<PAGE>
respect of less than all of the Shares and Underwriter's Common Stock Warrants
specified therein at any time prior to the date of expiration of the
Underwriter's Unit Warrants, a new certificate evidencing the remaining
Underwriter's Unit Warrant or Warrants will be issued.
Section 4. Payment of Taxes. The Company will pay all documentary
----------------
stamp taxes, if any, attributable to the initial issuance of Shares issuable
upon the exercise of Underwriter's Unit Warrants; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue or delivery of any Underwriter's
Unit Warrants or certificates for Shares.
Section 5. Mutilated or Missing Warrants. In case any of the
-----------------------------
certificates evidencing the Underwriter's Unit Warrants shall be mutilated,
lost, stolen or destroyed, the Company may, in its discretion, issue and deliver
in exchange and substitution for and upon cancellation of the mutilated
Underwriter's Unit Warrant certificate, or in lieu of and substitution for the
Underwriter's Unit Warrant certificate lost, stolen or destroyed, a new
Underwriter's Unit Warrant certificate of like tenor and representing an
equivalent right or interest; but only upon receipt of evidence satisfactory to
the Company of such loss, theft or destruction of such Underwriter's Unit
Warrant and indemnity, if requested, also satisfactory to it.
8
<PAGE>
Section 6. Reservation of Shares. There have been reserved, and the
---------------------
Company shall at all times keep reserved, out of its authorized Common Stock
that number of shares of Common Stock sufficient to provide for the exercise of
the rights of purchase represented by the outstanding Underwriter's Unit
Warrants (including the rights of purchase represented by the Underwriter's
Common Stock Warrants comprising a portion of the Underwriter's Unit Warrants).
The Transfer Agent for the Common Stock and every subsequent transfer agent for
any shares of the Company's capital stock issuable upon the exercise of any of
the rights of purchase aforesaid will be irrevocably authorized and directed at
all times to reserve such number of authorized shares as shall be requisite for
such purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent for the Common Stock and with every subsequent transfer agent for
any shares of the Company's capital stock issuable upon the exercise of the
rights of purchase represented by the Underwriter's Unit Warrants and the
Underwriter's Common Stock Warrants. The Company will supply such Transfer Agent
with duly executed stock certificates for such purpose and will provide or
otherwise make available any cash which may be payable as provided in Section 9
hereof.
Section 7. Underwriter's Unit Warrant Price. The initial price at
--------------------------------
which Units shall be purchasable upon exercise of Underwriter's Unit Warrants
shall be $6.60 per Unit (the
9
<PAGE>
"Underwriter's Warrant Price"), subject in each case to adjustment pursuant to
Section 8 hereof as if such price had been the Underwriter's Warrant Price on
the date the Underwriter's Unit Warrants were first issued.
Section 8. Adjustments. The number and kind of securities
-----------
purchasable upon the exercise of each Underwriter's Unit Warrant (assuming for
the purposes of this Section 8 the concurrent exercise of the Underwriter's
Common Stock Warrants) and the Underwriter's Warrant Price shall be subject to
adjustment from time to time upon the happening of certain events, as follows:
8.1. The number of Shares purchasable upon the exercise of each
Underwriter's Unit Warrant and the Underwriter's Warrant Price shall be subject
to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company,
the number of Shares purchasable upon exercise of each Underwriter's Unit
Warrant immediately prior thereto shall be adjusted so that the Holder of each
Underwriter's Unit Warrant shall be entitled to receive the kind and number of
Shares or other securities of the Company which he would have owned or have been
entitled to receive after the happening
10
<PAGE>
of any of such event or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event.
(b) In case the Company shall issue rights, options or warrants to all
or substantially all holders of its shares of Common Stock, without any charge
to such holders, entitling them to subscribe for or purchase shares of Common
Stock at a price per share which is lower at the record date mentioned below
than the greater of the current market price per share of Common Stock (as
defined in clause (d) of this Section 8.1 below) and the then Underwriter's
Warrant Price, the number of Shares thereafter purchasable upon the exercise of
each Underwriter's Unit Warrant shall be determined by multiplying the number of
Shares theretofore purchasable upon exercise of each Underwriter's Unit Warrant
by a fraction, of which the numerator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of additional shares of Common Stock offered for subscription or
purchase, and of which the denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of shares which the aggregate offering price of the total number
of shares of Common Stock so offered would purchase at the greater of such
current market price or the then existing Underwriter's Warrant
11
<PAGE>
Price. Such adjustment shall be made whenever such rights, options or warrants
are issued, and shall become effective retroactively immediately after the
record date for the determination of stockholders entitled to receive such
rights, options or warrants.
(c) In case the Company shall distribute to all or substantially all
holders of its shares of Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions out of earnings) or rights, options
or warrants or convertible securities containing the right to subscribe for or
purchase shares of Common Stock (excluding those referred to in clause (b) of
this Section 8.1 above), then in each case the number of Shares thereafter
purchasable upon the exercise of each Underwriter's Unit Warrant shall be
determined by multiplying the number of Shares theretofore purchasable upon
exercise of the Underwriter's Unit Warrant, by a fraction, of which the
numerator shall be the then current market price per share of Common Stock (as
defined in clause (d) of this Section 8.1 below) on the date of such
distribution, and of which the denominator shall be such current market price
per share of Common Stock, less the then fair value (as determined by the Board
of Directors of the Company, whose determination shall be conclusive) of the
portion of the assets or evidences of indebtedness so distributed or of such
subscription rights, options or warrants, or of such convertible securities
applicable to one share of Common Stock. Such adjustment shall be made whenever
any such distribution is made, and
12
<PAGE>
shall become effective on the date of distribution retroactive to the record
date for the determination of shareholders entitled to receive such
distribution.
(d) For the purposes of this Agreement, the current or closing market
price per share of Common Stock of the Company at any date shall be deemed to be
(i) if the shares of Common Stock are traded in the over-the-counter market and
not on any national securities exchange and not in the NASDAQ National Market
System, the average of the mean between the bid and asked prices per share, as
reported by NASDAQ or if not available by the National Quotation Bureau,
Incorporated, or an equivalent generally accepted reporting service, for the
twenty (20) consecutive trading days immediately preceding the date for which
the determination of current or closing market price is to be made, or, (ii) if
the shares of Common Stock are traded on a national securities exchange or in
the NASDAQ National Market System, the average daily per share closing price on
the principal national securities exchange on which they are so listed or in the
NASDAQ National Market System, as the case may be, for the twenty (20)
consecutive trading days immediately preceding the date for which the
determination of current or closing market price is to be made. The closing
price referred to in subclause (ii) above shall be the last reported sales price
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices, in either case on the national
13
<PAGE>
securities exchange on which the shares of Common Stock are then listed or in
the NASDAQ National Market System.
(e) No adjustment in the number of Shares purchasable hereunder shall
be required unless such adjustment would require an increase or decrease of at
least one percent (1%) in the number of Shares purchasable upon the exercise of
each Underwriter's Unit Warrant or Underwriter's Common Stock Warrant; provided,
however, that any adjustments which by reason of this clause (e) of Subsection
8.1 are not required to be made shall be carried forward and taken into account
in any subsequent adjustment.
(f) Whenever the number of Shares purchasable upon the exercise of
each Underwriter's Unit Warrant is adjusted, as herein provided, the
Underwriter's Warrant Price per Unit payable upon exercise of each Underwriter's
Unit Warrant shall be adjusted by multiplying such Underwriter's Warrant Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of Shares purchasable upon the exercise of each Underwriter's Unit
Warrant immediately prior to such adjustment, and of which the denominator shall
be the number of Shares so purchasable immediately thereafter.
(g) In case the Company shall sell and issue shares of Common Stock,
or rights, options, warrants or convertible securities containing the right to
subscribe for or purchase shares of Common Stock, at a price per share of Common
Stock (determined in the case
14
<PAGE>
of such rights, options, warrants or convertible securities, by dividing (i) the
total amount received or receivable by the Company in consideration of the sale
and issuance of such rights, options, warrants or convertible securities, plus
the total consideration payable to the Company upon exercise or conversion
thereof, by (ii) the total number of shares of Common Stock covered by such
rights, options, warrants or convertible securities) lower than the greater of
the current market price (as defined in clause (d) of Section 8.1 above) in
effect immediately prior to such sale and issuance and the then Underwriter's
Warrant Price, then the Underwriter's Warrant Price shall be reduced to a price
(calculated to the nearest cent) determined by dividing (i) an amount equal to
the sum of (A) the number of shares of Common Stock outstanding immediately
prior to such sale and issuance multiplied by the greater of the current market
price and the then existing Underwriter's Warrant Price, plus (B) the
consideration received by the Company upon such sale and issuance, by (ii) the
total number of shares of Common Stock outstanding immediately after such sale
and issuance. The number of Shares purchasable upon the exercise of each
Underwriter's Unit Warrant and Underwriter's Common Stock Warrant shall be that
number determined by multiplying the number of Shares issuable upon exercise
immediately prior to such adjustment by a fraction, of which the numerator is
the Underwriter's Warrant Price in effect immediately prior to such adjustment
and the denominator is the Underwriter's
15
<PAGE>
Warrant Price as so adjusted. For the purposes of such adjustments, the shares
of Common Stock which the holders of any such rights, options, warrants or
convertible securities shall be entitled to subscribe for or purchase shall be
deemed to be issued and outstanding as of the date of such sale and issuance and
the consideration received by the Company therefor shall be deemed to be the
consideration received by the Company for such rights, options, warrants or
convertible securities, plus the consideration or premiums stated in such
rights, options, warrants or convertible securities to be paid for the shares of
Common Stock, covered thereby. In case the Company shall sell and issue shares
of Common Stock or rights, options, warrants, or convertible securities
containing the right to subscribe for or purchase shares of Common Stock for a
consideration consisting, in whole or in part, of property other than cash or
its equivalent, then in determining the "price per share of Common Stock" and
the "consideration received by the Company" for purposes of the first sentence
of this clause (g) of Subsection 8.1, the Board of Directors shall determine, in
its discretion, the fair value of said property and such determination, if made
in good faith, shall be binding upon all Holders of Underwriter's Unit Warrants.
There shall be no adjustment of the Underwriter's Warrant Price pursuant to this
clause (g) of Subsection 8.1 if the amount of such adjustment would be less than
$.05 per Share; provided, however, that any adjustment which by reason of this
16
<PAGE>
provision is not required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(h) Whenever the number of Shares purchasable upon the exercise of
each Underwriter's Unit Warrant or the Underwriter's Warrant Price of such
Shares is adjusted, as herein provided, the Company shall cause to be promptly
mailed by first class mail, postage prepaid, to each Holder of an Underwriter's
Unit Warrant or Warrants notice of such adjustment or adjustments together with
a certificate of a firm of independent public accountants selected by the Board
of Directors of the Company (who may be the regular accountants employed by the
Company) setting forth the number of Shares purchasable upon the exercise of
each Underwriter's Unit Warrant and Underwriter's Common Stock Warrant and the
Underwriter's Warrant Price of such Shares after such adjustment, a brief
statement of the facts requiring such adjustment and the computation by which
such adjustment was made. Such certificate shall be conclusive evidence of the
correctness of such adjustment.
(i) For the purpose of this Section 8.1, the term "shares of Common
Stock" shall mean (i) the class of stock designated as the Common Stock of the
Company at the date of this Agreement, or (ii) any other class of stock
resulting from successive changes or reclassifications of such shares consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value, In the event that at any time, as a result of an
adjustment
17
<PAGE>
made pursuant to this Section 8.1, the holders of an Underwriter's Unit Warrant
or Warrants shall become entitled to purchase any shares of the Company other
than shares of Common Stock, thereafter the number of such other shares so
purchasable upon exercise of each Underwriter's Unit Warrant and the
Underwriter's Warrant Price of such shares shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Shares contained in clauses (a) through (h),
inclusive, of this Section 8.1 above, and the provisions of Section 3 and
Sections 8.2 through 8.5, inclusive, with respect to the Shares shall apply on
like terms to any such other shares.
(j) Upon the expiration of any rights, options, warrants or conversion
privileges, if any thereof shall not have been exercised, the number of shares
purchasable upon exercise of an Underwriter's Unit Warrant or Underwriter's
Common Stock Warrant and the Underwriter's Warrant Price to the extent the
Underwriter's Unit Warrants and Underwriter's Common Stock Warrants shall not
then have been exercised, shall, upon such expiration, be readjusted and shall
thereafter be such as they would have been had it been originally adjusted (or
had the original adjustment not been required, as the case may be) on the basis
of (A) the only shares of Common Stock so issued were the shares of Common
Stock, if any, actually issued or sold upon the exercise of such rights,
options, warrants or conversion rights and (B) such shares of Common Stock, if
any, were
18
<PAGE>
issued or sold for the consideration actually received by the Company upon such
exercise plus the consideration, if any, actually received by the Company for
the issuance, sale or grant of all of such rights, options, warrants or
conversion rights whether or not exercised; provided, further, that no such
readjustment shall have the effect of increasing the Underwriter's Warrant Price
by an amount in excess of the amount of the adjustment initially made in respect
of the issuance, sale or grant of such rights, options, warrants or convertible
rights.
8.2. No Adjustment for Dividends. Except as provided in Section 8.1,
---------------------------
no adjustment in respect of any dividends shall be made during the term of the
Underwriter's Unit Warrants or upon the exercise of the Underwriter's Unit
Warrants.
8.3. No Adjustment in Certain Cases. Anything herein to the contrary
------------------------------
notwithstanding, no adjustment shall be made in respect of (i) the issuance of
shares of Common Stock pursuant to the sale of Public Units as contemplated by
the Registration Statement, (ii) the issuance of shares of Common Stock pursuant
to the exercise of the Company's Redeemable Common Stock purchase warrants
comprising a portion of the Public Units, or (iii) the issuance of shares of
Common Stock upon exercise in accordance with their terms of any options, or
warrants issued on or before the date hereof, as the same may be extended or
modified subsequent hereto to increase their respective exercise prices.
19
<PAGE>
8.4. Preservation of Purchase Rights upon Reclassifica- tion,
-------------------------------------------------- -----
Consolidation, etc. In case of any consolidation of the Company with or merger
- -------------------
of the Company into another corporation or in case of any sale or conveyance to
another corporation or entity of the property, assets or business of the Company
as an entirety or substantially as an entirety, the Company or such successor or
purchasing corporation or entity, as the case may be, shall execute with the
Holder of Underwriter's Unit Warrants an agreement that each Holder of an
Underwriter's Unit Warrant shall have the right thereafter upon payment of the
Underwriter's Warrant Price in effect immediately prior to such action to
purchase upon exercise of each Underwriter's Unit Warrant the kind and amount of
shares and other securities and property (including cash) which such Holder
would have owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such Underwriter's Unit Warrant
been exercised immediately prior to such action. Such agreement shall provide
for adjustments, which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 8. The Company shall mail by first
class mail, postage prepaid, to the Holder of each Underwriter's Unit Warrant,
notice of the execution of any such agreement. The provisions of this Section
8.4 shall similarly apply to successive consolidations, mergers, sales or
conveyances.
8.5. Statement on Underwriter's Unit Warrants.
----------------------------------------
20
<PAGE>
Irrespective of any adjustments in the Underwriter's Warrant Price or the number
or kind of shares purchasable upon the exercise of the Underwriter's Unit
Warrants, Underwriter's Unit Warrants theretofore or thereafter issued may
continue to express the same price and number and kind of shares as are stated
in the Underwriter's Unit Warrants initially issuable pursuant to this
Agreement.
Section 9. Fractional Interests. The Company shall not be required
--------------------
to issue fractional Shares upon the exercise of either Underwriter's Unit
Warrants or the Underwriter's Common Stock Warrants. If more than one
Underwriter's Unit Warrant or Underwriter's Common Stock Warrant shall be
presented for exercise in full at the same time by the same Holder, the number
of full Shares which shall be issuable upon the exercise thereof shall be
computed on the basis of the aggregate number of Shares represented by the
Underwriter's Unit Warrants or Underwriter's Common Stock Warrants so presented.
If any fraction of a Share would, except for the provisions of this Section 9,
be issuable on the exercise of any Underwriter's Unit Warrant or Underwriter's
Common Stock Warrant (or specified portion thereof), the Company shall pay an
amount in cash equal to the current market price per Share (as defined in clause
(d) of Section 8.1 above) multiplied by such fraction.
Section 10. No Right as Stockholders; Notices to Underwriter's
--------------------------------------------------
Warrant Holders. Nothing contained in this Agreement or in any of the
- ---------------
Underwriter's Unit Warrants or the Underwriter's
21
<PAGE>
Common Stock Warrants shall be construed as conferring upon the Holders or their
transferees the right to vote or to receive dividends or to consent or to
receive notice as stockholders in respect of any meeting of stockholders for the
election of directors of the Company or any other matter, or any rights
whatsoever as stockholders of the Company. If, however, at any time prior to the
expiration of the Underwriter's Unit Warrants or the Underwriter's Common Stock
Warrants and prior to their exercise, any of the following events shall occur:
(a) any action which would require an adjustment pursuant to Sections
8.1 or 8.4, or
(b) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger, or sale of all or
substantially all of its property, assets, and business as an entirety)
shall be proposed;
then in any one or more of said events, the Company shall give notice in writing
of such event to the Holders as provided in Section 14 hereof at least twenty
(20) days prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled to such
dividend, distribution, or subscription rights, or for the determination of
stockholders entitled to vote on such proposed dissolution, liquidation or
winding up. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be.
22
<PAGE>
Section 11. Registration Rights.
-------------------
11.1. The Underwriter's Unit Warrants, the Underwriter's Common Stock
Warrants and the Shares (hereinafter collectively referred to as the
"Underwriter's Securities") have been included in the Registration Statement
filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Act. By acceptance of the Underwriter's Unit Warrants,
each Holder agrees that prior to making any disposition of any of the
Underwriter's Securities, such Holder shall give written notice to the Company
describing briefly the manner in which any such proposed disposition is to be
made; and no such disposition shall be made if the Company has notified such
Holder that in the opinion of counsel reasonably satisfactory to the Holder a
post-effective amendment to the Registration Statement or other registration or
notification under the Act is required with respect to such disposition and no
such post-effective amendment or other registration or notification has been
filed by the Company and declared effective, if necessary, by the Commission,
11.2. The Company shall be obligated to the Holders of the
Underwriter's Securities (hereinafter collectively referred to as the "Holders")
and Shares to file such post-effective amendment or other registration or
notification only as follows:
(a) Whenever during the four (4) year period commencing on the first
anniversary of the initial closing of the
23
<PAGE>
Public Offering (the "Closing Date"), the Company proposes to file with the
Commission a post-effective amendment or other registration or notification of
its securities (other than as to the Underwriter's Securities or as to
securities issued pursuant to an employee benefit plan or as to a transaction
subject to Rule 145, promulgated under the Act), it shall, at least thirty (30)
days prior to such filing, give written notice of such proposed filing to the
Holders at the addresses appearing on the records of the Company, and shall
offer to include and shall include in such filing any proposed disposition of
the Underwriter's Securities upon receipt by the Company, not less than ten (10)
days prior to the proposed filing date, of requests from Holders therefor
setting forth the facts with respect to such proposed disposition.
If on the first occasion hereafter when the Company determines to file
a registration statement with respect to an underwritten public offering of
shares of Common Stock or other debt or equity securities of the Company, the
managing underwriter of such public offering shall furnish its written opinion
to the Holders that in its judgment inclusion of any of the Underwriter's
Securities in such offering would exceed the maximum amount of securities (as
specified in such opinion) which could then be marketed at a price reasonably
related to the then current market value of such securities and without
materially and adversely affecting such proposed offering, then, in such event,
the Company shall have the
24
<PAGE>
option of including all or any part of the Underwriter's Securities as to which
such inclusion has been requested (i) in the registration statement filed by the
Company (in which event the Company may require that each such Holder agree that
he, she or it, as the case may be, will not sell his, her or its respective
portion of the Underwriter's Securities for ninety (90) days from the effective
date of such registration statement or such shorter period as the Company may
permit), or (ii) in a separate registration statement filed by the Company
within a period of sixty (60) days after the effective date of the Company's
registration statement contemplated by clause (i) of this Section ll.2(a).
(b) In addition to any registration rights pursuant to Section 11.2
(a) above, on any two (2) occasions during the six (6) year period commencing on
the first anniversary of the Closing Date (the second such occasion being no
less than six (6) months after the first such occasion), the Company will, upon
receipt of a written request from Holders of at least fifty percent (50%) of the
Under-writer's Securities (including for this purpose Shares issuable upon
exercise of all the Underwriter's Unit Warrants and the Underwriter's Common
Stock Warrants, whether or not theretofore exercised), prepare and file as
promptly as practicable (but in any event within sixty (60) days of any such
request), at its own expense on the first such occasion and at such Holders'
expense on the second such occasion, a post-effective amendment or such other
registration or notification
25
<PAGE>
with the Commission sufficient to permit the public offering of all of the
Underwriter's Securities, and will use its best efforts at its own expense
through its officers, directors, auditors and counsel, in all matters necessary
or advisable, to cause such post-effective amendment or other registration or
notification to become effective as promptly as practicable.
(c) Except as specifically provided in clause (b) of Section 11.2, (i)
all fees, disbursements and out-of-pocket expenses in connection with any filing
required under this Section 11 and in complying with applicable securities and
Blue Sky laws shall be borne by the Company, excluding brokerage commissions,
transfer taxes, if any, and charges of Holders' counsel, and (ii) the Company at
its expense will supply the Holders with copies of such post-effective amendment
or other registration statement or notification and the prospectus or offering
circular included therein and other related documents in such quantities as may
be reasonably requested by such Holders.
(d) The Company shall not be required by this Section 11 to file such
post-effective amendment or registration or other notification if, in the
reasonable opinion of counsel for both the Holders and the Company (or, should
they not agree, in the opinion of another counsel experienced in securities law
matters reasonably acceptable to counsel for the Holders and the Company), the
proposed public offering or other transfer as to which such post-effective
26
<PAGE>
amendment or other registration or notification is requested is exempt from
applicable federal and state securities laws and would result in all purchasers
or transferees obtaining securities which are not "restricted securities", as
defined in Rule 144 under the Act.
(e) The Company agrees that until all of the Underwriter's Securities
shall have been sold under a registration statement or other notification or
pursuant to Rule 144 under the Act, it will keep current in filing all materials
required to be filed with the Commission in order to permit the holders thereof
to sell such securities under such Rule 144.
Section 12. Indemnification.
---------------
12.1. In the event of the filing of any post-effective amendment or
other registration or notification with respect to the Underwriter's Securities
pursuant to Section 11 above:
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Holders and each person, if any, who controls
the Holder within the meaning of Section 15 of the Act or Section 2O(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), against any
and all loss, liability, claim, damage and expense whatsoever (including, but
not limited to any and all expense whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever) arising out of or based upon any
27
<PAGE>
untrue statement or alleged untrue statement of a material fact contained (x) in
any such registration statement, notification, preliminary prospectus,
prospectus or offering circular (as from time to time amended and supplemented)
or (y) in any application or other document (in this Section 12 collectively
called "application") executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Underwriter's Securities under the securities laws thereof or filed
with the Commission or any securities exchange, or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading; unless such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Company with respect to the Holders by or on behalf of the Holders
expressly for use such registration statement, notification, preliminary
prospectus, prospectus or offering circular, or any amendment or supplement
thereto, or in any application or in any communication to the Commission, as the
case may be.
If any action is brought against any Holder or a controlling person in
respect of which indemnity may be sought against the Company pursuant to clause
(a) of this Section 12.1, such Holder shall promptly notify in writing the party
or parties against whom indemnification is to be sought of the institution of
such action and the indemnifying parties shall assume the defense of such
28
<PAGE>
action, including the employment of counsel (reasonably satisfactory to such
Holder or such controlling person) and payment of expenses. Such Holder or such
controlling person shall have the right to employ his, her or its own counsel in
any such case, but the fees and expenses of such counsel shall be at such
Holder's expense or the expense of such controlling person unless the employment
of such counsel shall have been authorized in writing by the indemnifying
parties in connection with the defense of such action or the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action or counsel for such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to the indemnifying parties (in which case
the indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this clause (a) of Section 12.1 to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its written consent. The Company agrees promptly to notify the Holders
of the commencement of any litigation or proceedings against the Company or any
of its officers or directors in connection with such registration statement,
notification, preliminary prospectus, or prospectus or offering circular, or any
amendment or supplement
29
<PAGE>
thereto, or any such application. With respect to any untrue statement or
alleged untrue statement made in, or omission or alleged omission from, any
preliminary prospectus, the indemnity agreement contained in this clause (a) of
Section 12.1 with respect to such preliminary prospectus shall not inure to the
Holders' benefit (or the benefit of any person or persons controlling the
Holders), if the prospectus (or the prospectus as amended or supplemented if the
Company shall have made any amendments thereof or supplements thereto which
shall have been furnished to the Holders prior to the time of confirmation of
such sale) does not contain such statement, alleged statement, omission or
alleged omission, and a copy of such prospectus shall not have been sent or
given to such person at or prior to the written confirmation of such sale to
such person.
(b) Each Holder, severally and not jointly, agree to indemnify and
hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed such registration statement and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 2O(a) of the Exchange Act to the same extent as
the foregoing indemnify from the Company to such Holder but only with respect to
statements or omissions, or alleged statements or omissions, if any, made in any
such registration statement, notification, preliminary prospectus, prospectus or
any amendment or supplement thereto or any application in reliance upon, and in
conformity with, written
30
<PAGE>
information furnished to the Company with respect to such Holder by or on behalf
of such Holder for use in any such registration statement, notification,
preliminary prospectus, prospectus or offering circular or any amendment or
supplement thereto or in any application, as the case may be. In case any action
shall be brought against the Company or any person so indemnified, based on any
registration statement, notification, preliminary prospectus, prospectus or
offering circular or any amendment or supplement thereto or any application, and
in respect of which indemnity may be sought against such Holder, that Holder
shall have the rights and duties given to the Company and the Company and each
other person so indemnified shall have the rights and duties given to that
Holder by the provisions of clause (a) of Section 12.1 above.
(c) If the indemnification provided for in this Section 12 is
unavailable or insufficient to hold harmless an indemnified party under clauses
(a) or (b) of Section 12.1 above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable to such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Holders on the
other from the offering of the Underwriter's Securities. If, however, the
allocation provided by the immediately
31
<PAGE>
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required above in this Section 12, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Holders on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Holders on the other
shall be deemed to be in the same proportion as the total offering price of all
of the Company's securities covered by such registration statement or
notification (including such of the Underwriter's Securities as are covered
thereby) bears to the offering price of such of the Underwriter's Securities as
are covered thereby. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Holders on the other
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Holders agree that it would not be just and equitable if contribution
pursuant to this clause (c) of Section 12.1
32
<PAGE>
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
such clause (c). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this clause (c) of Section 12,1 shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this clause (c) of Section 12.1, the Holders
shall not be required to contribute any amount in excess of the amount by which
the offering price of all of the Underwriter's Securities covered by such
registration statement or notification exceeds the amount of any damages which
the Holders would have otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission; and no person
guilty of fraudulent misrepresentation (within the meaning of Section 11 of the
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
Section 13. Notices. Any notice pursuant to this Agreement by the
-------
Company or by any Holder or Holders shall be in writing and shall be deemed to
have been duly given if delivered or mailed certified mail, return receipt
requested:
(a) If to the Underwriter - addressed to Westminster Securities
Corporation, 19 Rector Street, New York, New York 10006,
33
<PAGE>
Att: President;
(b) If to the Company - addressed to it at foreignTV.COM, 162 Fifth
Avenue, Suite 1005A, New York, New York 10010, Att: President; and
(c) If to the Holders addressed to such Holders at their respective
addresses on the books of the Company.
Each party hereto may from time to time change the address to which
notices to it are to be delivered or mailed hereunder by notice in accordance to
the other party.
Section 14. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Holders shall bind and
inure to the benefit of their respective successors
and assigns hereunder.
Section 15. Merger or Consolidation of the Company. The Company will
--------------------------------------
not merge or consolidate with or into any other corporation unless the
corporation resulting from such merger or consolidation (if not the Company)
shall expressly assume, by supplemental agreement satisfactory in form to the
Underwriter and duly executed and delivered to the Underwriter, the due and
punctual performance and observance of each and every covenant and condition of
this Agreement to be performed and observed by the Company.
Section 16. Survival. All statements contained in any schedule, any
--------
exhibit, certificate or other instrument delivered by or on behalf of the
parties hereto, or in connection with the
34
<PAGE>
transactions contemplated by this Agreement, shall be deemed to be
representations and warranties hereunder. Notwithstanding any investigations
made by or on behalf of the parties to this Agreement, all representations,
warranties and agreements made by the parties to this Agreement or pursuant
hereto shall survive, except that if a party hereto has actual knowledge at the
date hereof of facts which would constitute a breach of the representations and
warranties contained herein, such breaches shall be waived by such party if such
party consummated the transactions contemplated by this Agreement.
Section 17. Applicable Law. This Agreement and each Underwriter's
--------------
Unit Warrant issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State.
Section 18. Benefits of this Agreement. Nothing in this Agreement
--------------------------
shall be construed to give to any person or Corporation other than the Company
and the Holders of any legal or equitable right, remedy or claim under this
Agreement and this Agreement shall be for the sole and exclusive benefit of the
Company and the Holders.
Section 19. Counterparts. This Agreement may be executed in any
------------
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 20. Captions. The captions of Sections and
--------
35
<PAGE>
clauses of this Agreement have been inserted for convenience only and shall have
no substantive effect.
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
Attest foreignTV.COM, Inc.
By: _________________________
- --------------------
WESTMINSTER SECURITIES CORPORATION
Attest
By: _________________________
- --------------------
37
<PAGE>
EXHIBIT A
No.
WARRANT TO PURCHASE UNITS
(Each Unit consisting of one (1) Share of Common Stock
and one (1) Common Stock Purchase Warrant, each
exercisable to purchase one (1) Additional Share
of Common Stock through , 2004)
VOID AFTER 5:30 P.M., NEW YORK CITY TIME, ON , 2004
foreignTV.com, Inc.
This certifies that, for value received,
, the holder hereof or registered assigns (the "Holder"), is entitled
to purchase from foreignTV.com, Inc., a Delaware corporation (the "Company"), at
any time during the period commencing at 9:00 A.M., New York City time, on
, 1999 and ending at 5:30 P.M., New York City time, on , 2004, at
an initial purchase price of $6.60 per Unit (the "Underwriter's Warrant Price")
up to the number of Units set forth above. The number of Units purchasable upon
exercise of this Warrant and the Underwriter's Warrant Price per share shall be
subject to adjustment from time to time as set forth in the Underwriter's Unit
Warrant Agreement referred to below.
This Warrant may be exercised in whole or in part by presentation of this
Warrant with the Purchase Form on the reverse
<PAGE>
side hereof duly executed and simultaneous payment of the Underwriter's Warrant
Price (subject to adjustment) at the principal office of the Company. Payment of
such price shall be made at the option of the Holder hereof in cash or by
certified check or bank cashier's check.
This Warrant is one of a duly authorized issue of Warrants evidencing
the right to purchase up to a maximum of Units, each Unit consisting of
one (1) share of Common Stock, par value $.01 per share, of the Company and one
(1) Common Stock Purchase Warrant, each Common Stock Purchase Warrant
exercisable to purchase one (1) additional Share of Common Stock of the Company,
at a price of $6.60 per share through , 2004 and is issued under and in
accordance with an Underwriter's Unit Warrant Agreement dated as of
, 1999 (the "Underwriter's Unit Warrant Agreement") between the Company and
Westminster Securities Corporation and is subject to the terms and provisions
contained in the Underwriter's Unit Warrant Agreement, all of which are hereby
consented to by the Holder by acceptance hereof. A copy of the Underwriter's
Unit Warrant Agreement may be obtained for inspection by the Holder upon written
request to the Company.
Upon any partial exercise of this Warrant, there shall be
countersigned and issued to the Holder a new Warrant in respect of the Units as
to which this Warrant shall not have been exercised. This Warrant may be
exchanged at the office of the Company by surrender of this Warrant properly
endorsed either separately or in
<PAGE>
combination with one or more other Warrants for one or more new Warrants of the
same aggregate number of Units evidenced by the Warrant or Warrants exchanged.
No fractional securities will be issued upon the exercise of rights to purchase
hereunder, but the Company shall pay the cash value of any fraction upon the
exercise of one or more Warrants. This Warrant is transferable at the office of
the Company in the manner and subject to the limitations set forth in the
Underwriter's Unit Warrant Agreement.
The Holder may be treated by the Company and all other persons dealing with
this Warrant as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented hereby, or to the registration of
transfer hereof on the books of the Company any notice to the contrary
notwithstanding, and until such registration of transfer on such books, the
Company may treat the Holder as the owner for all purposes.
This Warrant does not entitle any Holder to any of the rights of a
stockholder of the Company.
Dated: , 1999
foreignTV.com, Inc.
By: ______________________________
<PAGE>
foreignTV.com, Inc.
PURCHASE FORM
-------------
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for, and to purchase thereunder,
Units provided for therein, and requests that certificates for the shares of
Common Stock and Underwriter's Common Stock Warrants (as defined in the
Underwriter's Unit Warrant Agreement) comprising the Units be issued in the name
of:
- --------------------------------------------------------------------------------
(please print name, address, and social security number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
and, if said number of Units shall not be all the shares purchasable thereunder,
that a new Warrant Certificate for the balance remaining of the Units
purchasable under the within Warrant Certificate be registered in the name of
the undersigned Holder or his Assignee as below indicated and delivered to the
address stated below.
DATED: ,
<PAGE>
Name of Warrantholder
or Assignee __________________________________________
(please print)
Address Signature: __________________________________________
NOTE: THE ABOVE SIGNATURE MUST
Signature CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THIS
WARRANT CERTIFICATE IN EVERY
PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE
WHATEVER, UNLESS THIS WARRANT
HAS BEEN ASSIGNED.
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto __________________________________________________
- --------------------------------------------------------------------------------
(name and address of assignee must be printed or typewritten)
the within Warrant, hereby irrevocably constituting and
appointing ______________________________________________________
Attorney to transfer said Warrant on the books of the Company with
full power of substitution in the premises.
Dated: ,
------------------------------
SIGNATURE OF REGISTERED HOLDER
NOTE: THE SIGNATURE OF THIS ASSIGNMENT
Signature MUST CORRESPOND WITH THE NAME AS
Guaranteed: IT APPEARS UPON THE FACE OF THE
WITHIN WARRANT CERTIFICATE IN
EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
<PAGE>
EXHIBIT 4.5
WARRANT AGREEMENT dated , 1999, between
foreignTV.com, Inc., a Delaware corporation, with
offices at 162 Fifth Avenue, Suite 1005A, New
York, New York 10010 (the "Company"), and AMERICAN
STOCK TRANSFER & TRUST COMPANY, a New York limited
purpose trust company, with offices at 40 Wall
Street, New York, New York 10005 (the "Warrant
Agent").
------------------------------------
The Company has determined to issue and deliver up to 1,700,000 Redeemable
Common Stock Purchase Warrants (the "Redeemable Warrants"), and (ii) up to
170,000 redeemable warrants issued to Westminster Securities Corporation (the
"Underwriter") or its designees (the "Underwriter's Warrants" and, together with
the Redeemable Warrants, "Warrants") evidencing the right of the holders thereof
to purchase an aggregate of 1,870,000 shares of common stock of the Company,
$.01 par value per share ("Common Stock"), which Warrants are to be issued and
delivered as part of units ("Units") as described in the Company's Registration
Statement on Form S-1, No. 333- , declared effective
, 1999 ("Registration Statement");
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, exchange, redemption and exercise of the Warrants;
The Company desires to provide for the form and provisions of the Warrants,
the terms upon which they shall be issued and exercised, and the respective
rights, limitation of rights, and immunities of the Company, the Warrant Agent,
and the holders of the Warrants; and
All acts and things have been done and performed which are necessary to
make the Warrants, when executed on behalf of the Company and countersigned by
or on behalf of the Warrant Agent, as provided herein, the valid, binding and
legal obligations of the Company, and to authorize the execution and delivery of
this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
1. Appointment of Warrant Agent. The Company hereby appoints the Warrant
----------------------------
Agent to act as agent for the Company for the Warrants, and the Warrant Agent
hereby accepts such appointment and agrees to perform the same in accordance
with the terms and conditions set forth in this Agreement.
2. Warrants.
--------
2.1. Form of Warrant. Each Warrant shall be issued in registered form
---------------
only, shall be in substantially the form of Exhibit A hereto, shall be signed
by, or bear the facsimile signature of, the Chairman of the Board or President
and Secretary or Assistant Secretary of the Company and shall bear a facsimile
of the Company's seal. In the event the person whose facsimile signature
<PAGE>
has been placed upon any Warrant shall have ceased to serve in the capacity in
which such person signed the Warrant before such Warrant is issued, it may be
issued with the same effect as if he had not ceased to be such at the date of
issuance. No Warrant may be exercised until it has been countersigned by the
Warrant Agent as provided in Section 2.3 hereof.
2.2. Effect of Countersignature. Unless and until countersigned by
--------------------------
the Warrant Agent pursuant to this Agreement, a Warrant shall be invalid and of
no effect.
2.3. Events for Countersignature. The Warrant Agent shall countersign
---------------------------
a Warrant only upon the occurrence of either of the following events:
(a) if the Warrant is to be issued in exchange or
substitution for one or more previously countersigned
Warrants, as hereinafter provided, or
(b) if the Company instructs the Warrant Agent to do so.
2.4. Registration.
------------
2.4.1. Warrant Register. The Warrant Agent shall maintain
----------------
books ("Warrant Register") for the registration of original issuance and the
registration of transfer of the Warrants. Upon the initial issuance of the
Warrants, the Warrant Agent shall issue and register the Warrants in the names
of the respective holders thereof in such denominations and otherwise in
accordance with instructions delivered to the Warrant Agent by the Company.
2.4.2. Registered Holder. Prior to due presentment for
-----------------
registration of transfer of any Warrant, the Company and the Warrant Agent may
deem and treat the person in whose name such Warrant shall be registered upon
the Warrant Register ("registered holder"), as the absolute owner of such
Warrant and of each Warrant represented thereby (notwithstanding any notation of
ownership or other writing on the Warrant Certificate made by anyone other than
the Company or the Warrant Agent), for the purpose of any exercise thereof, and
for all other purposes, and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
3. Terms and Exercise of Redeemable Warrants
-----------------------------------------
3.1. Warrant Price. Each Warrant shall, when countersigned by the
-------------
Warrant Agent, entitle the registered holder thereof, subject to the provisions
of such Warrant and of this Warrant Agreement, to purchase from the Company the
number of shares of Common Stock stated therein, at the price of $9.00 per whole
share, subject to the adjustments provided in Section 4 hereof. The term
"Warrant Price" as used in this Warrant Agreement refers to the price per share
at which Common Stock may be purchased at the time a Warrant is exercised.
3.2. Duration of Warrants. A Warrant may be exercised only during the
--------------------
period ("Exercise Period") commencing on the date hereof, and terminating on the
earlier to occur of (i) , 2002 or (ii) the date fixed for
redemption of such Warrant as provided in Section 6 of this
2
<PAGE>
Agreement. Each Warrant not exercised on or before the Expiration Date shall
become void, and all rights thereunder and all rights in respect thereof under
this Agreement shall cease at the close of business on the Expiration Date. The
Company in its sole discretion may extend the duration of the Warrants by
delaying the Expiration Date.
3.3. Exercise of Warrants.
--------------------
3.3.1. Payment. A Warrant, when countersigned by the Warrant
-------
Agent, may be exercised by the registered holder thereof by surrendering it, at
the office of the Warrant Agent, or at the office of its successor as Warrant
Agent, in the Borough of Manhattan, City and State of New York, with the
subscription form, as set forth in the Warrant and in substantially the form of
Exhibit A hereto, duly executed, and by paying in full, in lawful money of the
United States, in cash, good certified check or good bank draft payable to the
order of the Company, the Warrant Price for each full share of Common Stock as
to which the Warrant is exercised and any and all applicable taxes due in
connection with the exercise of the Warrant, the exchange of the Warrant for the
Common Stock, and the issuance of the Common Stock.
3.3.2. Issuance of Certificates. As soon as practicable after
------------------------
the exercise of any Warrant, the Company shall issue to the registered holder of
such Warrant a certificate or certificates for the number of full shares of
Common Stock to which he is entitled, registered in such name or names as may be
directed by him, and if such Warrant shall not have been exercised in full, a
new countersigned Warrant for the number of shares as to which such Warrant
shall not have been exercised. Notwithstanding the foregoing, the Company shall
not be obligated to deliver any securities pursuant to the exercise of a Warrant
unless a registration statement under the Securities Act of 1933 with respect to
the securities is then currently effective. Warrants may not be exercised by,
or securities issued to, any registered holder in any state in which such
exercise would be unlawful.
3.3.3. Valid Issuance. All shares of Common Stock issued upon
--------------
the proper exercise of a Warrant in conformity with this Agreement shall be
validly issued.
3.3.4. Date of Issuance. Each person in whose name any such
----------------
certificate for shares of Common Stock is issued shall for all purposes be
deemed to have become the holder of record of such shares on the date on which
the Warrant was surrendered and payment of the Warrant Price was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
3.3.5. Warrant Solicitation Fee.
------------------------
(i) The Company has engaged the Underwriter as the
exclusive agent for the solicitation of the
exercise of the Warrants. The Company has also
agreed to (i) assist the Underwriter with respect
to such solicitation, if requested by the
Underwriter, and (ii) at the Underwriter's
request, provide the Underwriter and direct the
Company's transfer and warrant agent to deliver to
the Underwriter, at the
3
<PAGE>
Company's cost, lists of the record and, to the
extent known, beneficial owners of, the Company's
Warrants. Accordingly, the Company hereby
instructs the Warrant Agent to cooperate with the
Underwriter in every respect in connection with
the Underwriter's solicitation activities,
including but not limited to providing to the
Underwriter, at the Company's cost, a list of
record and beneficial holders of the Warrants.
(ii) If, upon the exercise of any Warrant (i) the
market price of the Company's Common Stock is
greater than the then Warrant Price, (ii) the
exercise of the Warrant was solicited by the
Underwriter, and (iii) the Warrant was not held in
a discretionary account, then the Warrant Agent,
simultaneously with the distribution of proceeds
to the Company received upon exercise of the
Warrant(s) so exercised, shall, on behalf of the
Company, pay from the proceeds received upon
exercise of the Warrant(s), a fee of 3% of the
Warrant Price to the Underwriter. The Underwriter
and the Company may at any time during business
hours, examine the records of the Warrant Agent,
including its ledger of original Warrants
certificates returned to the Warrant Agent upon
exercise of Warrants.
4. Adjustments.
-----------
4.1 Stock Dividends - Split-Ups. If after the date hereof, and
---------------------------
subject to the provisions of Section 4.5 below, the number of outstanding shares
of Common Stock is increased by a stock dividend payable in shares of Common
Stock or by a split-up of shares of Common Stock or other similar event, then,
on the effective day thereof, such stock dividend or split-up, the number of
shares issuable on exercise of each Warrant shall be increased in proportion to
such increase in outstanding shares and the then applicable Warrant Price shall
be correspondingly decreased.
4.2 Aggregation of Shares. If after the date hereof, and subject to
---------------------
the provisions of Section 4.5, the number of outstanding shares of Common Stock
is decreased by a consolidation, combination or reclassification of shares of
Common Stock or other similar event, then, after the effective date of such
consolidation, combination or reclassification, the number of shares issuable on
exercise of each Warrant shall be decreased in proportion to such decrease in
outstanding shares and the then applicable Warrant Price shall be
correspondingly increased.
4.3 Reorganization, etc. If after the date hereof any capital
--------------------
reorganization or reclassification of the Common Stock of the Company, or
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation
4
<PAGE>
or other similar event shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger, or sale, lawful and
fair provision shall be made whereby the Warrant holders shall thereafter have
the right to purchase and receive, upon the basis and upon the terms and
conditions specified in the Warrants and in lieu of the shares of Common Stock
of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented thereby, such shares of stock, securities, or
assets as may be issued or payable with respect to or in exchange for the number
of outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented by the Warrants, had such reorganization,
reclassification, consolidation, merger, or sale not taken place and in such
event appropriate provision shall be made with respect to the rights and
interests of the Warrant holders to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Warrant Price
and of the number of shares purchasable upon the exercise of the Warrants) shall
thereafter be applicable, as nearly as may be in relation to any share of stock,
securities, or assets thereafter deliverable upon the exercise hereof. The
Company shall not effect any such consolidation, merger, or sale unless prior to
the consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger, or the corporation purchasing such
assets, shall assume by written instrument executed and delivered to the Warrant
Agent the obligation to deliver to the Warrant holders such shares of stock,
securities, or assets as, in accordance with the foregoing provisions, such
holders may be entitled to purchase.
4.4 Notices of Changes in Warrant. Upon every adjustment of the
-----------------------------
Warrant Price or the number of shares issuable on exercise of a Warrant, the
Company shall give written notice thereof to the Warrant Agent, which notice
shall state the Warrant Price resulting from such adjust ment and the increase
or decrease, if any, in the number of shares purchasable at such price upon the
exercise of a Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. Upon the
occurrence of any event specified in Sections 4.1., 4.2., or 4.3., then, in any
such event, the Company shall give written notice in the manner set forth above
of the record date for such dividend, distribution, or subscription rights, or
the effective date of such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding up or issuance. Such notice
shall also specify the date as of which the holders of Common Stock of record
shall participate in such dividend, distribution, or subscription rights, or
shall be entitled to exchange their Common Stock for stock, securities, or other
assets deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding up or issuance. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
such event.
4.5 No Fractional Shares. Notwithstanding any provision contained in
--------------------
this Warrant Agreement to the contrary, the Company shall not issue fractional
shares upon exercise of Warrants. If, by reason of any adjustment made pursuant
to this Section 4, the holder of any Warrant would be entitled, upon the
exercise of such Warrant, to receive a fractional interest in a share, the
Company shall, upon such exercise, purchase such fractional interest, determined
as follows:
(i) If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on such exchange or listed
for trading on the Nasdaq National Market or Nasdaq SmallCap Market or the OTC
Bulletin Board, the current value shall be the last reported sale price of the
Common Stock on such exchange on the last business day prior
5
<PAGE>
to the date of exercise of this Warrant or if no such sale is made on such day,
the average of the closing bid and asked prices for such day on such exchange;
or
(ii) If the Common Stock is not listed or admitted to unlisted
trading privileges, the current value shall be the mean of the last reported bid
and asked prices reported by the National Quotation Bureau, Inc. on the last
business day prior to the date of the exercise of this Warrant; or
(c) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices
are not so reported, the current value shall not be an
amount determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
4.6 Form of Warrant. The form of Warrant need not be changed because
---------------
of any adjustment pursuant to this Section 4, and Warrants issued after such
adjustment may state the same Warrant Price and the same number of shares as is
stated in the Warrants initially issued pursuant to this Agreement. However,
the Company may at any time in its sole discretion make any change in the form
of Warrant that the Company may deem appropriate and that does not affect the
substance thereof, and any Warrant thereafter issued or countersigned, whether
in exchange or substitution for an outstanding Warrant or otherwise, may be in
the form as so changed.
5. Transfer and Exchange of Warrants.
----------------------------------
5.1 Registration of Transfer. The Warrant Agent shall register the
------------------------
transfer, from time to time, of any outstanding Warrant upon the Warrant
Register, upon surrender of such Warrant for transfer, properly endorsed with
signatures properly guaranteed and accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant representing an equal aggregate
number of Warrants shall be issued and the old Warrant shall be canceled by the
Warrant Agent. The Warrant so cancelled shall be delivered by the Warrant Agent
to the Company from time to time upon request.
5.2 Procedure for Surrender of Warrants. Warrants may be surrendered
-----------------------------------
to the Warrant Agent, together with a written request for exchange or transfer,
and thereupon the Warrant Agent shall issue in exchange therefor one or more new
Warrants as requested by the registered holder of the Warrants so surrendered,
representing an equal aggregate number of Warrants; provided, however, that in
the event that a Warrant surrendered for transfer bears a restrictive legend,
the Warrant Agent shall not cancel such Warrant and issue new Warrants in
exchange therefor until the Warrant Agent has received an opinion of counsel for
the Company stating that such transfer may be made and indicating whether the
new Warrants must also bear a restrictive legend.
5.3 Fractional Warrants. The Warrant Agent shall not be required to
-------------------
effect any registration of transfer or exchange which will result in the
issuance of a warrant certificate for a fraction of a warrant.
6
<PAGE>
5.4 Service Charges. No service charge shall be made for any
---------------
exchange or registration of transfer of Warrants.
5.5 Warrant Execution and Countersignature. The Warrant Agent is
--------------------------------------
hereby authorized to countersign and to deliver, in accordance with the terms of
this Agreement, the Warrants required to be issued pursuant to the provisions
hereof, and the Company, whenever required by the Warrant Agent, will supply the
Warrant Agent with Warrants duly executed on behalf of the Company for such
purpose.
6. Redemption.
----------
6.1 Redemption. Subject to Section 3.3.5 hereof, each of the
----------
Redeemable Warrants may be redeemed, at the option of the Company, as a whole
and not in part, after they become exercisable and prior to their expiration, at
the office of the Warrant Agent, upon the notice referred to in Section 6.2., at
the price of $.05 per Warrant ("Redemption Price"), provided that the reported
high bid price of the Common Stock if the Common Stock is quoted on the OTC
Bulletin Board (or the last sales price of the Common Stock is quoted on the
National Association of Securities Dealers Quotation System or principally
quoted on a securities exchange) has been at least $12.00 on each of the twenty
(20) consecutive trading days ending on the third business day prior to the date
on which notice of redemption is given.
6.2 Date Fixed for, and Notice of, Redemption. In the event the
-----------------------------------------
Company shall elect to redeem all or any part of the Redeemable Warrants, the
Company shall fix a date for the redemption. Notice of redemption shall be
mailed by first class mail, postage prepaid, by the Company not less than 30
days from the date fixed for redemption to the registered holders of the
Warrants to be redeemed at their last address as they shall appear on the
registration books. Any notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the registered
holder received such notice.
6.3 Exercise After Notice of Redemption. The Redeemable Warrants may
-----------------------------------
be exercised in accordance with Section 3 of this Agreement at any time after
notice of redemption shall have been given by the Company pursuant to Section
6.2. hereof and prior to the time and date fixed for redemption. On and after
the redemption date, the record holder of the Redeemable Warrants shall have no
further rights except to receive, upon surrender of the Redeemable Warrants, the
redemption price.
7. Other Provisions Relating to Rights of Holders of Warrants.
----------------------------------------------------------
7.1 No Rights as Stockholder. A Warrant does not entitle the
------------------------
registered holder thereof to any of the rights of a stockholder of the Company,
including, without limitation, the right to receive dividends, or other
distributions, exercise any preemptive rights to vote or to consent or to
receive notice as stockholders in respect of the meetings of stockholders or the
election of directors of the Company or any other matter.
7.2 Lost, Stolen, Mutilated, or Destroyed Warrants. If any Warrant
----------------------------------------------
is lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent may
on such terms as to indemnity
7
<PAGE>
or otherwise as they may in their discretion impose (which shall, in the case of
a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination, tenor, and date as the Warrant so lost, stolen, mutilated, or
destroyed. Any such new Warrant shall constitute a substitute contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated,
or destroyed Warrant shall be at any time enforceable by anyone.
7.3 Reservation of Common Stock. The Company shall at all times
---------------------------
reserve and keep available a number of its authorized but unissued shares of
Common Stock that will be sufficient to permit the exercise in full of all
outstanding Warrants issued pursuant to this Agreement.
7.4 Registration Statement. The Company has filed with the
----------------------
Securities and Exchange Commission the Registration Statement for the
registration, under the Securities Act of 1933, of, among others, the Warrants
and the Common Stock issuable upon exercise of the Warrants.
7.5 Registration of Common Stock. The Company agrees that prior to
----------------------------
the commencement of the Exercise Period, it shall file with the Securities and
Exchange Commission a post-effective amendment to the Registration Statement, or
a new registration statement, for the registration, under the Securities Act of
1933, of the Common Stock issuable upon exercise of the Warrants. In either
case, the Company will use its best efforts to cause the same to become
effective and to maintain the effectiveness of such registration statement until
the expiration of the Warrants in accordance with the provisions of this
Agreement. In connection with the filing of such registration statement, the
Company shall disclose in such amendment or new registration statement the
warrant solicitation fee payable to the Underwriter.
8. Concerning the Warrant Agent and Other Matters.
----------------------------------------------
8.1 Payment of Taxes. The Company will from time to time promptly
----------------
pay all taxes and charges that may be imposed upon the Company or the Warrant
Agent in respect of the issuance or delivery of shares of Common Stock upon the
exercise of Warrants, but the Company shall not be obligated to pay any transfer
taxes in respect of the Warrants or such shares.
8.2 Resignation, Consolidation, or Merger of Warrant Agent.
------------------------------------------------------
8.2.1. Appointment of Successor Warrant Agent. The Warrant
--------------------------------------
Agent, or any successor to it hereafter appointed, may resign its duties and be
discharged from all further duties and liabilities hereunder after giving sixty
(60) days' notice in writing to the Company. If the office of the Warrant Agent
becomes vacant by resignation or incapacity to act or otherwise, the Company
shall appoint in writing a successor Warrant Agent in place of the 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 such resignation or incapacity by
the Warrant Agent or by the holder of the Warrant (who shall, with such notice,
submit his Warrant for inspection by the Company), then the holder of any
Warrant may apply to the Supreme Court of the State of New York for the County
of New York for the appointment of a successor Warrant Agent. Any successor
Warrant Agent, whether appointed by the Company or by such court, shall be a
corporation organized and existing or qualified to do business under the laws of
the State of New York, in good standing and having its
8
<PAGE>
principal office in the Borough of Manhattan, City and State of New York, and
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by federal or state authority. After appointment, any
successor Warrant Agent shall be vested with all the authority, powers, rights,
immunities, duties, and obligations of its predecessor Warrant Agent with like
effect as if originally named as Warrant Agent hereunder, without any further
act or deed; but if for any reason it becomes necessary or appropriate, the
predecessor Warrant Agent shall execute and deliver, at the expense of the
Company, an instrument transferring to such successor Warrant Agent all the
authority, powers, and rights of such predecessor Warrant Agent hereunder; and
upon request of any successor Warrant Agent the Company shall make, execute,
acknowledge, and deliver any and all instruments in writing for more fully and
effectually vesting in and confirming to such successor Warrant Agent all such
authority, powers, rights, immunities, duties, and obligations.
8.2.2. Notice of Successor Warrant Agent. In the event a
---------------------------------
successor Warrant Agent shall be appointed, the Company shall give notice
thereof to the predecessor Warrant Agent and the transfer agent for the Common
Stock not later than the effective date of any such appointment.
8.2.3. Merger or Consolidation of Warrant Agent. Any
----------------------------------------
corporation into which the Warrant Agent may be merged or with which it may be
consolidated or any corporation resulting from any merger or consolidation to
which the Warrant Agent shall be a party shall be the successor Warrant Agent
under this Agreement without any further act.
8.3 Fees and Expenses of Warrant Agent.
----------------------------------
8.3.1. Remuneration. The Company agrees to pay the Warrant
------------
Agent reasonable remuneration for its services as such Warrant Agent hereunder
and will reimburse the Warrant Agent upon demand for all expenditures that the
Warrant Agent may reasonably incur in the execution of its duties hereunder.
8.3.2. Further Assurances. The Company and the Warrant Agent
------------------
agree to perform, execute, acknowledge, and deliver or cause to be performed,
executed, acknowledged, and delivered all such further and other acts,
instruments, and assurances as may reasonably be required by the Warrant Agent
or the Company for the carrying out or performing of the provisions of this
Agreement.
8.4 Liability of Warrant Agent.
--------------------------
8.4.1. Reliance on Company Statement. Whenever in the
-----------------------------
performance of its duties under this Warrant Agreement, the Warrant Agent shall
deem it necessary or desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
statement signed by the President of the Company and delivered to the Warrant
Agent. The Warrant Agent may rely upon such statement for any action taken or
suffered in good faith by it pursuant to the provisions of this Agreement.
8.4.2. Indemnity. The Warrant Agent shall be liable hereunder
---------
only for its own negligence or willful misconduct or any actions taken in bad
faith. The Company agrees to
9
<PAGE>
indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs and reasonable counsel fees, for
anything done or omitted by the Warrant Agent in the execution of this Agreement
except as a result of the Warrant Agent's negligence, willful misconduct, or bad
faith.
8.4.3. Exclusions. The Warrant Agent shall have no
----------
responsibility with respect to the validity of this Agreement or with respect to
the validity or execution of any Warrant (except its countersignature thereof);
nor shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Warrant; nor shall it be
responsible to make any adjustments required under the provisions of Section 4.
hereof or responsible for the manner, method, or amount of any such adjustment
or the ascertaining of the existence of facts that would require any such
adjustment; nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock to be issued pursuant to this Agreement or any Warrant or as to
whether any shares of Common Stock will when issued be valid and fully paid and
nonassessable.
8.5 Acceptance of Agency. The Warrant Agent hereby accepts the
--------------------
agency established by this Agreement and agrees to perform the same upon the
terms and conditions herein set forth and among other things, shall account
promptly to the Company with respect to Warrants exercised and concurrently
account for, and pay to the Company, all moneys received by the Warrant Agent
for the purchase of shares of the Company's Common Stock through the exercise of
Warrants.
9. Miscellaneous Provisions.
------------------------
9.1 Successors. All the covenants and provisions of this Agreement
----------
by or for the benefit of the Company or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns.
9.2 Notices. Any notice, statement or demand authorized by this
-------
Warrant Agreement to be given or made by the Warrant Agent or by the holder of
any Warrant to or by the Company shall be sufficiently given or made if sent by
certified mail, or private courier service, postage prepaid, addressed (until
another address is filed in writing by the Company with the Warrant Agent), as
follows:
ForeignTV.com, Inc.
162 Fifth Avenue, Suite 1005A
New York, New York 10010
Attn: President
with a copy to:
Cooperman Levitt Winikoff
Lester & Newman, P.C.
800 Third Avenue
New York, New York 10022
Attn: Ira I. Roxland, Esq.
10
<PAGE>
Any notice, statement or demand authorized by this Agreement to be given or made
by the holder of any Warrant or by the Company to or on the Warrant Agent shall
be sufficiently given or made if sent by certified mail or private courier
service, postage prepaid, addressed (until another address is filed in writing
by the Warrant Agent with the Company), as follows:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10006
Attn: Compliance Department
9.3 Applicable law. The validity, interpretation, and performance of
--------------
this Agreement and of the Warrants shall be governed in all respects by the laws
of the State of New York, without giving effect to conflict of laws. Each of
the Company and the Warrant Agent hereby agrees that any action, proceeding or
claim against it arising out of, relating in any way to this Agreement shall be
brought and enforced in the courts of the State of New York of the United States
of America for the Southern District of New York, and irrevocably submits to
such jurisdiction, which jurisdiction shall be exclusive. Each of the Company
and the Warrant Agent hereby waives any objection to such exclusive jurisdiction
and that such courts represent an inconvenient forum. Any such process or
summons to be served upon the Company or the Warrant Agent may be served by
transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
9.2 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon each of the Company and the Warrant Agent in any action, proceeding
or claim. Each of the Company and the Warrant Agent agrees that the prevailing
party(ies) in any such action shall be entitled to recover from the other
party(ies) all of its reasonable attorneys' fees and expenses relating to such
action or proceeding and/or incurred in connection with the preparation
therefor.
9.4 Persons Having Rights under this Agreement. Nothing in this
------------------------------------------
Agreement expressed and nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to, any
person or corporation other than the parties hereto and the registered holders
of the Warrants and, for the purposes of Sections 3.3.5 and 6.1 hereof, the
Underwriter, any right, remedy, or claim under or by reason of this Warrant
Agreement or of any covenant, condition, stipulation, promise, or agreement
hereof. All covenants, conditions, stipulations, promises, and agreements
contained in this Warrant Agreement shall be for the sole and exclusive benefit
of the parties hereto and their successors and assigns and of the registered
holders of the Warrants. The parties hereto agree that the Underwriter is
intended to be a third-party beneficiary with respect to Sections 3.3.5 and 6.1,
with all legal rights and remedies available to it as fully as if it were a
party hereto.
9.5 Examination of the Warrant Agreement. A copy of this Agreement
------------------------------------
shall be available at all reasonable times at the office of the Warrant Agent in
the Borough of Manhattan, City and State of New York, for inspection by the
registered holder of any Warrant. The Warrant Agent may require any such holder
to submit his Warrant for inspection by it.
9.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
11
<PAGE>
9.7 Effect of Headings. The Section headings herein are for
------------------
convenience only and are not part of this Warrant Agreement and shall not affect
the interpretation thereof.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto
12
<PAGE>
under their respective corporate seals as of the day and year first above
written.
foreignTV.com, Inc.
By:______________________________________
Name:
Title:
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By:______________________________________
Name:
Title:
13
<PAGE>
Exhibit 10.1
foreignTV.com, Inc.
1999 STOCK OPTION PLAN
1. Purpose. The purpose of the foreignTV.com, Inc. 1999 Stock Option Plan
-------
(the "Plan") is to encourage key employees of foreignTV.com, Inc. (the
"Company") and of any present or future parent or subsidiary of the Company
(collectively, "Related Corporations") and other individuals who render services
to the Company or a Related Corporation, by providing opportunities to
participate in the ownership of the Company and its future growth through (a)
the grant of options which qualify as "incentive stock options" ("ISOs") under
Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code");
and (b) the grant of options which do not qualify as ISOs ("Non-Qualified
Options"). Both ISOs and Non-Qualified Options are referred to hereafter
individually as an "Option" and collectively as "Options." As used herein, the
terms "parent" and "subsidiary" mean "parent corporation" and "subsidiary
corporation," respectively, as those terms are defined in Section 424 of the
Code.
2. Administration of the Plan.
--------------------------
(a) Board or Committee Administration. The Plan shall be administered
by the Board of Directors of the Company (the "Board") or by a committee
appointed by the Board (the "Committee"); provided that the Plan shall be
administered: (i) to the extent required by applicable regulations under Section
162(m) of the Code, by two or more "outside directors" (as defined in applicable
regulations thereunder) and (ii) to the extent required by Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended, or any
successor provision ("Rule 16b-3"), by a disinte-rested administrator or
administrators within the meaning of Rule 16b-3. All references in this Plan to
the "Committee" shall mean the Board if no Committee has been appointed. Subject
to ratification of the grant or authorization of each Option by the Board (if so
required by applicable state law), and subject to the terms of the Plan, the
Committee shall have the authority to (i) determine to whom (from among the
class of employees eligible under paragraph 3 to receive ISOs) ISOs shall be
granted, and to whom (from among the class of individuals and entities eligible
under paragraph 3 to receive Non-Qualified Options) Non-Qualified Options may be
granted; (ii) determine the time or times at which Options shall be granted;
(iii) determine the purchase price of shares subject to each Option, which
prices shall not be less than the minimum price specified in paragraph 6; (iv)
determine whether each Option granted shall be an ISO or a Non-Qualified Option;
(v) determine (subject to paragraph 7) the time or times when each Option shall
become exercisable and the duration of the exercise
<PAGE>
period; (vi) extend the period during which outstanding Options may be
exercised; (vii) determine whether restrictions are to be imposed on shares
subject to Options and the nature of such restrictions, if any, and (viii)
interpret the Plan and prescribe and rescind rules and regulations relating to
it. If the Committee determines to issue a Non-Qualified Option, it shall take
whatever actions it deems necessary, under Section 422 of the Code and the
regulations promulgated thereunder, to ensure that such Option is not treated as
an ISO. The interpretation and construction by the Committee of any provisions
of the Plan or of any Option granted under it shall be final unless otherwise
determined by the Board. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem advisable. No member of
the Board or the Committee shall be liable for any action or determination made
in good faith with respect to the Plan or any Option granted under it.
(b) Committee Actions. The Committee may select one of its members as
its chairman, and shall hold meetings at such time and places as it may
determine. A majority of the Committee shall constitute a quorum and acts of a
majority of the members of the Committee at a meeting at which a quorum is
present, or acts reduced to or approved in writing by all the members of the
Committee (if consistent with applicable state law), shall be the valid acts of
the Committee. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies
however caused, or remove all members of the Committee and thereafter directly
administer the Plan.
(c) Grant of Options to Board Members. Subject to the provisions of
the first sentence of paragraph 2(a) above, if applicable, Options may be
granted to members of the Board. All grants of Options to members of the Board
shall in all other respects be made in accordance with the provisions of this
Plan applicable to other eligible persons. Consistent with the provisions of the
first sentence of Paragraph 2(a) above, members of the Board who either (i) are
eligible to receive grants of Options pursuant to the Plan or (ii) have been
granted Options may vote on any matters affecting the administration of the Plan
or the grant of any Options pursuant to the Plan, except that no such member
shall act upon the granting to himself or herself of Options, but any such
member may be counted in determining the existence of a quorum at any meeting of
the Board during which action is taken with respect to the granting to such
member of Options.
(d) Exculpation. No member of the Board shall be personally liable
for monetary damages for any action taken or any failure to take any action in
connection with the administration of
2
<PAGE>
the Plan or the granting of Options under the Plan, provided that this
subparagraph 3(c) shall apply to (i) any breach of such member's duty of loyalty
to the Company or its stockholders, (ii) acts or omissions not in good faith or
involving intentional misconduct or a knowing violation of law, (iii) acts or
omissions that would result in liability under Section 174 of the General
Corporation Law of the State of Delaware, as amended, and (iv) any transaction
from which the member derived an improper personal benefit.
(e) Indemnification. Service on the Committee shall constitute
service as a member of the Board. Each member of the Committee shall be
entitled without further act on his or her part to indemnity from the Company to
the fullest extent provided by applicable law and the Company's Certificate of
Incorporation and/or By-laws in connection with or arising out of any action,
suit or proceeding with respect to the administration of the Plan or the
granting of Options thereunder in which he or she may be involved by reason of
his or her being or having been a member of the Committee, whether or not he or
she continues to be a member of the Committee at the time of the action, suit or
proceeding.
3. Eligible Employees and Others. ISOs may be granted only to employees of
-----------------------------
the Company or any Related Corporation. Non-Qualified Options may be granted to
any employee, officer or director (whether or not also an employee) or
consultant of the Company or any Related Corporation. The Committee may take
into consideration a recipient's individual circumstances in determining whether
to grant an Option. The granting of any Option to any individual or entity shall
neither entitle that individual or entity to, nor disqualify such individual or
entity from, participation in any other grant of Options.
4. Stock. The stock subject to Options shall be authorized but unissued
-----
shares of Common Stock of the Company, par value $.01 per share (the "Common
Stock"), or shares of Common Stock reacquired by the Company in any manner. The
aggregate number of shares which may be issued pursuant to the Plan is 400,000,
subject to adjustment as provided in paragraph 13. If any Option granted under
the Plan shall expire or terminate for any reason without having been exercised
in full or shall cease for any reason to be exercisable in whole or in part, the
shares of Common Stock subject to such Option shall again be available for
grants of Options under the Plan.
5. Granting of Options. Options may be granted under the Plan at any time
-------------------
on or after January 25, 1999 and prior to January 25, 2009. The date of grant
of an Option under the Plan will be the date specified by the Committee at the
time it grants the
3
<PAGE>
Option; provided, however, that such date shall not be prior to the date on
which the Committee acts to approve the grant. Options granted under the Plan
are intended to qualify as performance based compensation to the extent required
under proposed Treasury Regulation Section 1.162-27.
6. Minimum Option Price; ISO Limitations.
-------------------------------------
(a) Price for Non-Qualified Options. The exercise price per share
specified in the agreement relating to each Non-Qualified Option granted under
the Plan shall in no event be less than the minimum legal consideration required
therefor under the laws of any jurisdiction in which the Company or its
successors in interest may be organized. Non-Qualified Options granted under the
Plan, with an exercise price less than the fair market value per share of Common
Stock on the date of grant, are intended to qualify as performancebased
compensation under Section 162(m) of the Code and any applicable regulations
thereunder. Any such Non-Qualified Options granted under the Plan shall be
exercisable only upon the attainment of a preestablished, objective performance
goal established by the Committee.
(b) Price for ISOs. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less than the
fair market value per share of Common Stock on the date of such grant. In the
case of an ISO to be granted to an employee owning stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or any Related Corporation, the price per share specified in the
agreement relating to such ISO shall not be less than one hundred ten percent
(110%) of the fair market value per share of Common Stock on the date of grant.
For purposes of determining stock ownership under this paragraph, the rules of
Section 424(d) of the Code shall apply.
(c) $100,000 Annual Limitation on ISO Vesting. Each eligible employee
may be granted Options treated as ISOs only to the extent that, in the aggregate
under this Plan and all incentive stock option plans of the Company and any
Related Corporation, ISOs do not become exercisable for the first time by such
employee during any calendar year with respect to stock having a fair market
value (determined at the time the ISOs were granted) in excess of $1 00,000. The
Company intends to designate any Options granted in excess of such limitation as
Non-Qualified Options.
(d) Determination of Fair Market Value. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded, "fair
market value" shall be determined as of the date of grant or, if the prices or
quotes discussed in this sentence are unavailable for such date, the last
business day for
4
<PAGE>
which such prices or quotes are available prior to the date of grant and shall
mean (i) the average (on that date) of the high and low prices of the Common
Stock on the principal national securities exchange on which the Common Stock is
traded, if the Common Stock is then traded on a national securities exchange; or
(ii) the last reported sale price (on that date) of the Common Stock on the
Nasdaq National Market, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price (or average of bid prices)
last quoted (on that date) by an established quotation service for over-the-
counter securities, if the Common Stock is not reported on the Nasdaq National
Market. If the Common Stock is not publicly traded at the time an Option is
granted under the Plan, "fair market value" shall mean the fair value of the
Common Stock as determined by the Committee after taking into consideration all
factors which it deems appropriate, including, without limitation, recent sale
and offer prices of the Common Stock in private transactions negotiated at arm's
length.
7. Option Duration. Subject to earlier termination as provided in
---------------
paragraphs 9 and 10 or in the agreement relating to such Option, each Option
shall expire on the date specified by the Committee, but not more than (i) ten
years from the date of grant in the case of Options generally and (ii) five
years from the date of grant in the case of ISOs granted to an employee owning
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, as determined
under paragraph 6(b). Subject to earlier termination as provided in paragraphs 9
and 10, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into a Non-Qualified Option pursuant to paragraph 16.
8. Exercise of Option. Subject to the provisions of paragraphs 9 through
------------------
12, each Option granted under the Plan shall be exercisable as follows:
(a) Vesting. The Option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments as the
Committee may specify.
(b) Full Vesting of Installments. Once an installment becomes
exercisable, it shall remain exercisable until expiration or termination of the
Option, unless otherwise specified by the Committee.
(c) Partial Exercise. Each Option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total number
of shares with respect to which it is then exercisable.
5
<PAGE>
(d) Acceleration of Vesting. The Committee shall have the right to
accelerate the date that any installment of any Option becomes exercisable;
provided that the Committee shall not, without the consent of an optionee,
accelerate the permitted exercise date of any installment of any Option granted
to any employee as an ISO (and not previously converted into a Non-Qualified
Option pursuant to paragraph 16) if such acceleration would violate the annual
vesting limitation contained in Section 422(d) of the Code, as described in
paragraph 6(c).
9. Termination of Employment. Unless otherwise specified in the agreement
-------------------------
relating to such ISO, if an ISO optionee ceases to be employed by the Company
and all Related Corporations other than by reason of death or disability or as
otherwise specified in paragraph 10, no further installments of his or her ISOs
shall become exercisable, and his or her ISOs shall terminate on the earlier of
(a) ninety (90) days after the date of termination of his or her employment, or
(b) their specified expiration dates, except to the extent that such ISOs (or
unexercised installments thereof) have been converted into Non-Qualified Options
pursuant to paragraph 16. For purposes of this paragraph 9, employment shall be
considered as continuing uninterrupted during any bona fide leave of absence
---- ----
(such as those attributable to illness, military obligations or governmental
service) provided that the period of such leave does not exceed 90 days or, if
longer, any period during which such optionee's right to reemployment is
guaranteed by statute. A bona fide leave of absence with the written approval of
---- ----
the Committee shall not be considered an interruption of employment under this
paragraph 9, provided that such written approval contractually obligates the
Company or any Related Corporation to continue the employment of the optionee
after the approved period of absence. ISOs granted under the Plan shall not be
affected by any change of employment within or among the Company and Related
Corporations, so long as the optionee continues to be an employee of the Company
or any Related Corporation. Nothing in the Plan shall be deemed to give any
grantee of any Option the right to be retained in employment or other service by
the Company or any Related Corporation for any period of time.
10. Death; Disability; Breach.
-------------------------
(a) Death. If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of his or her death, any ISO owned by
such optionee may be exercised, to the extent otherwise exercisable on the date
of death, by the estate, personal representative or beneficiary who has acquired
the ISO by will or by the laws of descent and distribution, until the earlier of
(i) the specified expiration date of the ISO or (ii) one (1)
6
<PAGE>
year from the date of the optionee's death.
(b) Disability. If an ISO optionee ceases to be employed by the
Company and all Related Corporations by reason of his or her disability, such
optionee shall have the right to exercise any ISO held by him or her on the date
of termination of employment, for the number of shares for which he or she could
have exercised it on that date, until the earlier of (i) the specified
expiration date of the ISO or (ii) one (1) year from the date of the termination
of the optionee's employment. For the purposes of the Plan, the term
"disability" shall mean "permanent and total disability" as defined in Section
22(e)(3) of the Code or any successor statute.
(c) Breach. If an ISO optionee ceases to be employed by the Company
and all Related Corporation by reason of a finding by the Committee, after full
consideration of the facts presented on behalf of both the Company and the
Optionee, that the ISO optionee has breached his or her employment or service
contract with the Company or any Related Corporation, or has been engaged in
disloyalty to the Company or any Related Corporation, then, in such event, in
addition to immediate termination of the Option, the ISO optionee shall
automatically forfeit all shares for which the Company has not yet delivered
share certificates upon refund by the Company of the exercise price of such
Option. Notwithstanding anything herein to the contrary, the Company may
withhold delivery of share certificates pending the resolution of any inquiry
that could lead to a finding resulting in a forfeiture.
11. Assignability. No Option shall be assignable or transferable by the
-------------
grantee except by will, by the laws of descent and distribution or, in the case
of Non-Qualified Options only, pursuant to a valid domestic relations order.
Except as set forth in the previous sentence, during the lifetime of a grantee
each Option shall be exercisable only by such grantee.
12. Terms and Conditions of Options. Options shall be evidenced by
-------------------------------
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. The Committee may specify that any Non-
Qualified Option shall be subject to the restrictions set forth herein with
respect to ISOs, or to such other termination and cancellation provisions as the
Committee may determine. The Committee may from time to time confer authority
and responsibility on one or more of its own members and/or one or more officers
of the Company to execute and deliver
7
<PAGE>
such instruments. The proper officers of the Company are authorized and directed
to take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.
13. Adjustments. Upon the occurrence of any of the following events, an
-----------
optionee's rights with respect to Options granted to such optionee hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:
(a) Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of Options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
(b) Consolidations or Mergers. If the Company is to be consolidated
with or acquired by another entity in a merger, sale of all or substantially all
of the Company's assets or otherwise (an "Acquisition"), the Committee or the
board of directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding Options, either (i)
make appropriate provision for the continuation of such Options by substituting
on an equitable basis for the shares then subject to such Options either (A) the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition, (B) shares of stock of the surviving
corporation or (C) such other securities as the Successor Board deems
appropriate, the fair market value of which shall approximate the fair market
value of the shares of Common Stock subject to such Options immediately
preceding the Acquisition; or (ii) upon written notice to the optionees, provide
that all Options must be exercised, to the extent then exercisable, within a
specified number of days of the date of such notice, at the end of which period
the Options shall terminate; or (iii) terminate all Options in exchange for a
cash payment equal to the excess of the fair market value of the shares subject
to such Options (to the extent then exercisable) over the exercise price
thereof.
(c) Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph (c) above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, an optionee upon exercising an Option shall be entitled to receive
for the purchase price paid upon such exercise the securities he or she would
have
8
<PAGE>
received if he or she had exercised such Option prior to such recapitalization
or reorganization.
(d) Modification of ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs (a), (b) or (c) with respect to ISOs
shall be made only after the Committee, after consulting with counsel for the
Company, determines whether such adjustments would constitute a "modification"
of such ISOs (as that term is defined in Section 424 of the Code) or would cause
any adverse tax consequences for the holders of such ISOs. If the Committee
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs or would cause adverse tax consequences to the
holders, it may refrain from making such adjustments.
(e) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such other
time and subject to such other conditions as shall be determined by the
Committee.
(f) Issuances of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to Options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.
(g) Fractional Shares. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.
(h) Adjustments. Upon the happening of any of the events described in
subparagraphs (a), (b) or (c) above, the class and aggregate number of shares
set forth in paragraph 4 hereof that are subject to Options which previously
have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the Successor Board shall determine the specific adjustments to
be made under this paragraph 13 and, subject to paragraph 2, its determination
shall be conclusive.
14. Means of Exercising Options. An Option (or any part or installment
---------------------------
thereof) shall be exercised by giving written notice to the Company at its
principal office address, or to such transfer agent as the Company shall
designate. Such notice shall identify the Option being exercised and specify the
number of shares as to which such Option is being exercised, accompanied by full
payment of the purchase price therefor either (a) in United States dollars
9
<PAGE>
in cash or by check, (b) at the discretion of the Committee, through delivery of
shares of Common Stock having a fair market value equal as of the date of the
exercise to the cash exercise price of the Option, (c) at the discretion of the
Committee, by delivery of the grantee's personal recourse note bearing interest
payable not less than annually at no less than 100% of the lowest applicable
Federal rate, as defined in Section 1274(d) of the Code, (d) at the discretion
of the Committee and consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the Option and an authorization to
the broker or selling agent to pay that amount to the Company, which sale shall
be at the participant's direction at the time of exercise, or (e) at the
discretion of the Committee, by any combination of (a), (b), (c) and (d) above.
If the Committee exercises its discretion to permit payment of the exercise
price of an ISO by means of the methods set forth in clauses (b), (c), (d) or
(e) of the preceding sentence, such discretion shall be exercised in writing at
the time of the grant of the ISO in question. The holder of an Option shall not
have the rights of a shareholder with respect to the shares covered by such
Option until the date of issuance of a stock certificate to such holder for such
shares. Except as expressly provided above in paragraph 13 with respect to
changes in capitalization and stock dividends, no adjustment shall be made for
dividends or similar rights for which the record date is before the date such
stock certificate is issued.
15. Term and Amendment of Plan. This Plan was adopted by the Board on
--------------------------
January 25, 1999, subject, with respect to the validation of ISOs granted under
the Plan, to approval of the Plan by the stockholders of the Company at the next
Meeting of Stockholders or, in lieu thereof, by written consent. If the approval
of stockholders is not obtained on or prior to January 25, 2000, any grants of
ISOs under the Plan made prior to that date will be rescinded. The Plan shall
expire at the end of the day on January 25, 2009 (except as to Options
outstanding on that date). Subject to the provisions of paragraph 5 above,
Options may be granted under the Plan prior to the date of stockholder approval
of the Plan. The Board may terminate or amend the Plan in any respect at any
time, except that, without the approval of the stockholders obtained within 12
months before or after the Board adopts a resolution authorizing any of the
following actions: (a) the total number of shares that may be issued under the
Plan may not be increased (except by adjustment pursuant to paragraph 13); (b)
the benefits accruing to participants under the Plan may not be materially
increased; (c) the requirements as to eligibility for participation in the Plan
may not be materially modified; (d) the provisions of paragraph 3 regarding
eligibility for grants of ISOs may not be modified; (e) the provisions of
paragraph 6(b) regarding
10
<PAGE>
the exercise price at which shares may be offered pursuant to ISOs may not be
modified (except by adjustment pursuant to paragraph 13); (f) the expiration
date of the Plan may not be extended; and (g) the Board may not take any action
which would cause the Plan to fail to comply with Rule 16b-3. Except as
otherwise provided in this paragraph 15, in no event may action of the Board or
stockholders alter or impair the rights of a grantee, without such grantee's
consent, under any Option previously granted to such grantee.
16. Application Of Funds. The proceeds received by the Company from the
--------------------
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.
17. Notice to Company of Disqualifying Disposition. By accepting an ISO
----------------------------------------------
granted under the Plan, each optionee agrees to notify the Company in writing
immediately after such optionee makes a Disqualifying Disposition (as described
in Sections 421, 422 and 424 of the Code and regulations thereunder) of any
stock acquired pursuant to the exercise of ISOs granted under the Plan. A
Disqualifying Disposition is generally any disposition occurring on or before
the later of (a) the date two years following the date the ISO was granted or
(b) the date one year following the date the ISO was exercised.
18. Withholding of Additional Income Taxes. Upon the exercise of a Non-
--------------------------------------
Qualified Option, the grant of an Award, the making of a Purchase of Common
Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 18), the vesting or transfer of restricted
stock or securities acquired on the exercise of an Option hereunder, or the
making of a distribution or other payment with respect to such stock or
securities, the Company may withhold taxes in respect of amounts that constitute
compensation includible in gross income. The Committee in its discretion may
condition (i) the exercise of an Option, (ii) the grant of an Award, (iii) the
making of a Purchase of Common Stock for less than its fair market value, or
(iv) the vesting or transferability of restricted stock or securities acquired
by exercising an Option, on the grantee's making satisfactory arrangement for
such withholding. Such arrangement may include payment by the grantee in cash or
by check of the amount of the withholding taxes or, at the discretion of the
Committee, by the grantee's delivery of previously held shares of Common Stock
or the withholding from the shares of Common Stock otherwise deliverable upon
exercise of a Option shares having an aggregate fair market value equal to the
amount of such withholding taxes.
11
<PAGE>
19. Governmental Regulation. The Company's obligation to sell and deliver
-----------------------
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
send tax information statements to employees and former employees that exercise
ISOs under the Plan, and the Company may be required to file tax information
returns reporting the income received by grantees of Options in connection with
the Plan.
20. Governing Law. The validity and construction of the Plan and the
-------------
instruments evidencing Options shall be governed by the laws of Delaware.
12
<PAGE>
EXHIBIT 10.2
DOMAIN NAME
LICENSE AGREEMENT
between
foreignTV.com, Inc.
and
The Center For Contemporary Diplomacy, Inc.
<PAGE>
TABLE OF CONTENTS
-----------------
1. DEFINITIONS. ............................................ 1
------------
2. LICENSE GRANT. .......................................... 3
--------------
3. TERM OF THE LICENSE, RENEWAL. ........................... 4
-----------------------------
4. LICENSEE'S EFFORTS. ..................................... 5
-------------------
5. LICENSE FEE. ............................................ 6
------------
6. OWNERSHIP AND PROTECTION OF THE DOMAIN NAMES. ........... 6
---------------------------------------------
7. OWNERSHIP AND PROTECTION OF LICENSEE'S TRADEMARKS. ...... 7
--------------------------------------------------
8. REPRESENTATIONS AND WARRANTIES. ......................... 7
-------------------------------
9. TERMINATION. ............................................ 8
------------
10. INDEMNIFICATIONS. ....................................... 10
-----------------
11. NON-COMPETITION. ........................................ 11
----------------
12. MISCELLANEOUS. .......................................... 12
--------------
<PAGE>
LICENSE AGREEMENT
LICENSE AGREEMENT, dated as of January 1, 1999 by and between The Center
For Contemporary Diplomacy, Inc., a New York not-for-profit corporation, having
an address at 182 Sound Beach Ave., Old Greenwich, CT 06870 (the: "Owner"), and
foreignTV.com, Inc., a Delaware Corporation having an office and place of
business at 162 Fifth Avenue, Suite 1005A, New York, New York 10010 (the:
"Licensee").
WHEREAS, Licensee desires to obtain an exclusive right to use the Domain
Names (as defined hereinbelow) in connection with its Internet Business, and
Owner is willing to grant to Licensee such License under the terms and
conditions hereinafter specifically set forth; and
NOW, THEREFORE, in consideration of the mutual covenants, undertakings, and
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which the parties hereby acknowledge and confirm, and
intending to be legally bound, the parties agree as follows:
1. DEFINITIONS.
------------
Throughout this Agreement the following terms shall have the meanings set
forth below:
(a) "Additional Name" means any additional domain name or URL owned by the
Owner that is not included on Schedule "A", that does not compete with the
business of the Licensee, does not contain the letters "TV" or any of the words
"channel" "station" "network" or "streaming" and is otherwise permitted
hereunder.
(b) "Affiliate" means, as to any Person or entity, any other person or
entity which directly or indirectly controls, is controlled by or is under
common control with such person or entity. Control shall mean the right to
control, or actual control of, direction of management of such other entity,
whether by ownership of voting securities, by agreement, or otherwise.
(c) "Agreement" means this License Agreement, as amended, modified or
supplemented from time to time, as the context requires.
(d) "Content" means text, graphics, photographs, video, audio and/or other
data or information, including, without limitation, Television Content, relating
to any subject.
(e) "CPI" means the U.S. Consumer Price Index for all urban consumers for
the national average.
(f) "Domain Names" means the domain names and URLs, and any successors
thereto, currently set forth in Schedule "A" hereto.
1
<PAGE>
(g) "Domain Name Registration Agreement" means, collectively, those certain
Domain Name Registration Agreements, a sample of which is set forth on Schedule
"B", that have been entered into between the Owner and NSI, relating to each of
the Domain Names, including its Domain Name Dispute Policy, and any amendment,
substitution, or modification thereof, and including any other agreements,
rules, regulations, policies, that govern or control with respect thereto.
(h) "Intellectual Property" means all inventions, discoveries, trademarks,
patents, trade names, copyrights, moral rights, jingles, know-how, intellectual
property, software, shop rights, licenses, developments, research data, designs,
technology, trade secrets, test procedures, processes, route lists, computer
programs, computer discs, computer tapes, literature, reports and other
confidential information, intellectual and similar intangible property rights,
whether or not patentable or copyrightable (or otherwise subject to legally
enforceable restrictions or protections against unauthorized third party usage),
and any and all applications for, registrations of and extensions, divisions,
renewals and reissuance of, any of the foregoing, and rights therein, including
without limitation (a) rights under any royalty or licensing agreements, and (b)
programming and programming rights, whether on film, tape or any other medium.
(i) "Internet" means global network of interconnected computer networks,
each using the Transmission Control Protocol/Internet Protocol and/or such other
standard network interconnection protocols as may be adopted from time to time,
which is used to transmit Content that is directly or indirectly delivered to a
computer or other digital electronic device for display to an end-user, whether
such Content is delivered through on-line browsers, off-line browsers, or
through "push" technology, electronic mail, broadband distribution, satellite,
wireless or otherwise, and any subset of such global network, such as
"intranets."
(j) "Internet Business" means an Internet service or Web site that (i)
provides information or news services, including without limitation the delivery
of Content to consumers, or (ii) uses the Domain Names or any other Intellectual
Property associated therewith or relating thereto.
(k) "Internet Site" means any site or service delivering Content on or
through the Internet, including, without limitation, any on-line service such as
America Online, Compuserve, Prodigy and the Microsoft Network.
(l) "InterNic" or "NSI" means Network Solutions, Inc., or any successor,
assignee, or replacement thereof, that maintains and handles the registration of
domain names and URLs.
(m) "License Fee" means the license fee which the Licensee is obligated to
pay the Owner hereunder pursuant to Section 5.
2
<PAGE>
(n) "Licensee's Trademarks" Trademarks and other Intellectual Property used
by Licensee in its Internet Business, other than the Domain Names, including
trademarks that are based on or incorporate all or any of the Domain Names.
(o) "Mirror Site" means an Internet Site which contains the exact form and
content as any of the Licensee's Internet Sites which (a) is located at a
geographic location distinct from the Licensee's Internet Sites and (b) is
created for the purpose of improving the performance of and accessibility to the
Licensee's Sites.
(p) "Person" means any natural person, legal entity, or other organized
group of persons or entities. (All pronouns whether personal or impersonal,
which refer to Person include natural persons and other Persons.)
(q) "Quarter" means successive three month periods commencing January 1,
1999.
(r) "Television Content" consists of Content broadcast on television, cable
or satellite.
(s) "Term" means the Term of this license as defined in Section 3 hereof,
including any renewals or extensions thereof.
(t) "Year" means each calendar year during Term of this Agreement.
2. LICENSE GRANT.
--------------
2.1. Grant. Subject to the terms and conditions set forth herein, Owner
hereby grants to Licensee throughout the Licensed Term, the exclusive right and
license as follows:
(a) to use copy, publicly display, edit, revise, perform, distribute
or otherwise make available on or through Internet Sites and/or Mirror
Sites the Domain Names in connection with the Licensee's Internet Business
and all other business connected or associated therewith, including but not
limited to any advertising, merchandising of products, use in print,
broadcasting in any other medium, including television, radio, satellite,
cable, videocassette or otherwise; and
(b) to own, register in its own name and for its own account, use,
exploit, sell and license any Trademarks, Tradenames, Service Marks,
Service Names, Copyrights, and any other Intellectual Property, and the
goodwill associated therewith, relating to or utilizing the Domain Names or
any part thereof in any form, language, style or manner, in the Licensee's
own name and on its own account.
3
<PAGE>
2.2. Additional Names. If the Owner shall in the future offer to
license any Additional Name to the Licensee, the license thereof shall be for
the Term and under the terms and conditions of this Agreement, provided however,
that the applicable License Fee for such domain name shall be the InterNic
registration fee, payable once, without any further consideration by the
Licensee. Anything to the contrary notwithstanding, any Additional Name not
licensed by the Licensee, may be used, sold, hypothecated, licensed or otherwise
disposed of by the Owner in any way or form, as determined in its sole and
absolute discretion, provided that such use does not violate the non-competition
provisions hereof.
2.3. Exclusivity. Throughout the Licensed Term Licensee's rights shall be
exclusive and Owner shall not use the Domain Names in any way, manner or form,
nor shall Owner grant or undertake to grant a license to another person or
entity, or make or undertake to make any sale, hypothecation or other alienation
or disposition of the Domain Names effective during the Licensed Term of this
license. Without derogating from the generality of the previous sentence, the
Owner shall not register in its own name or account or on behalf of or to the
account of any other Person, any name using the letters "TV" or the words
"channel" "station" "network" or "streaming" alone or in combination with any
other letters or words, as a top-level or secondary-level domain name or in any
other form that designates or connotes an Internet Site. If the Owner fails to
comply with this Section, the Licensee shall be entitled to require the Owner to
assign all title to, rights in and benefit from such domain name to the Licensee
free of charge, without prejudice to any other remedy to which the Licensee
shall be entitled under law or this Agreement.
2.4. Licensee's Right to Sublicense. Licensee may enter into sublicenses
with sub-licensees with respect to all or any of the Domain Names for any
purpose whatsoever, within the scope of the License herein without requiring any
approval of the Owner.
2.5. Compliance with Domain Name Registration Agreement. Licensee hereby
agrees to comply with and adhere to, on its own behalf and on behalf of Owner,
the provisions of the Domain Name Registration Agreement and timely pay, all
amounts due thereunder for renewals, or otherwise, to maintain the registration
and validity of all of the Domain Names.
3. TERM OF THE LICENSE, RENEWAL.
-----------------------------
3.1. Term. The License under this Agreement shall remain in effect for a
period of Twenty Five (25) Years, ending December 31, 2023, unless terminated in
accordance with the terms hereof or otherwise by law (the "Term").
3.2. Renewal of Term. The Term of the license shall automatically be
renewed for an additional period of Twenty Five (25) years
4
<PAGE>
commencing January 1, 2024, unless agreed otherwise by the parties, provided
that Licensee is not in default of any provision of this Agreement at the end of
the Term.
4. LICENSEE'S EFFORTS.
-------------------
4.1. Licensee's Discretion. Licensee shall have sole, absolute and
unfettered discretion to exploit the Domain Names and use them in its Internet
Business as it sees fit. Licensee agrees and understands that it shall bear all
its own costs associated with its Internet Business.
4.2. No Partnership or Agency. Owner and Licensee are independent
contractors, and neither party shall be, nor represent itself to be, the joint
venturer, franchiser, franchisee, partner, broker, employee, servant, agent or
representative of the other party for any purpose. Neither party shall have the
authority to make any representations or incur any obligations on behalf of the
other party and neither party shall be responsible for the acts or omissions of
the party, subject to Section 4.3.
4.3. Licensee's Assistance. Licensee shall from time to time act as the
liaison and/or coordinator for Owner in connection with Owner's dealings with
InterNic and for that purpose that the Licensee shall be deemed to represent and
be the agent of Owner before InterNic, for the sole purpose of complying with
the Domain Name Registration Agreement and maintaining the validity and
registration of the Domain Names.
4.4. Ownership of Licensee's Content. All Content which Licensee intends
to display, exhibit, broadcast, show, make available or otherwise use, on or in
connection with any of its Internet Sites and/or Mirror Sites shall be the
property of Licensee (or of any Person from whom Licensee may have licensed it),
and, anything to the contrary notwithstanding, the Owner shall have no title,
right, or any Intellectual Property rights relating thereto.
4.5. Liability for Licensee's Content. The Licensee shall be solely
responsible for the engineering, production, maintenance and monitoring of all
Content which is made available on its Internet Sites or Mirror Sites, and any
errors, omissions and/or inaccuracies in the transmission or transcription of
the Content, and obtaining license for the use of any material, including
applicable music rights, copyrights or any other Intellectual Property and, (ii)
secure, at its sole cost and expense, and pay for all performing, duplication
and/or recording rights licenses, if any, necessary for the use of such Content
on the Internet. Licensee shall not establish any links from the Domain Names or
conduct cross promotions with any Internet Site which uses or exhibits any
gambling, pornographic or obscenity Content.
5
<PAGE>
5. LICENSE FEE.
------------
5.1. License Fee. Licensee shall pay Owner an annual Fee, each Year, in
the amount per Domain Name as set forth on Schedule C. (the "License Fee"). The
License Fee shall be the sole consideration payable by Licensee without any
obligation to pay royalties or any other amounts. The initial amount of the
License Fee shall be $600 per Year and increase each Year in accordance with
Schedule C. In the twenty-fifth Year of the Term, and throughout the entire
period of the renewal of the Term, the License Fee shall be $2,500, provided,
however, that such amount shall be increased in each succeeding year by the rate
by which the CPI has changed, using January 1 of each year as the base CPI.
5.2. Payments. All payments of License Fees due under this Agreement,
including, shall be paid by Licensee in freely remittable and transferable U.S.
Dollars, to Owner at the location designated by Owner, and shall be due and
payable in Quarterly installments, each equal to one fourth of the total License
Fees for that Year, within the last day of each Quarter, unless agreed otherwise
by the Parties.
5.3. Other Consideration. As additional consideration for the license
hereunder to use the Domain Names, Licensee agrees to provide office space on
its premises for up to four (4) individual employees of the Owner during the
first three (3) years of the Term.
6. OWNERSHIP AND PROTECTION OF THE DOMAIN NAMES.
---------------------------------------------
6.1. No Contest. Licensee shall not contest or dispute that Owner is the
rightful owner of the Domain Names and Licensee shall not claim any title to or
right to use the Domain Name or any variation thereof, other than the right to
use the under this License Agreement.
6.2. Property of Owner. The Domain Names shall remain the property of
Owner and Licensee shall have no rights therein and shall take no action
inconsistent with Owner's ownership or challenge the validity thereof.
6.3. Domain Name Enforcement. In the event that Licensee learns of any
infringement or imitation of any Domain Name or of any use by any unauthorized
person, Licensee shall promptly notify Owner. Owner thereupon shall take such
action, or no action, as it, in its sole discretion, deems advisable for the
protection of the Domain Name. Licensee shall cooperate with Owner in all
respects, including, without limitation, by being a plaintiff or co-plaintiff
and by causing its officers to execute pleadings and other necessary documents.
In no event, shall Owner be required to take any action if it is deemed
inadvisable to do so. If Owner deems it inadvisable to take any such action,
Licensee may then take such action at its own expense. In such event Owner
shall, at Licensee's expense, render all reasonable assistance to Licensee in
connection therewith.
6
<PAGE>
7. OWNERSHIP AND PROTECTION OF LICENSEE'S TRADEMARKS.
--------------------------------------------------
7.1. No Contest. Owner shall not contest or dispute that Licensee is the
rightful owner of Licensee's Trademarks and the goodwill associated therewith,
and the Owner shall not claim any title to or right to use the Licensee's
Trademarks or any variation thereof.
7.2. Property of Licensee. All Licensee's Trademarks, used by Licensee
shall remain the property of Licensee and Owner shall have no rights therein and
shall take no action inconsistent with Licensee's ownership or challenge the
validity thereof. The Owner recognizes the great value of the goodwill
associated with the Licensee's Trademarks and the identification of the Content
and other products with the Licensee's Trademarks and acknowledges that the
Licensee's Trademarks and all rights therein and goodwill pertaining thereto
belong to Licensee. Owner shall not at any time use, promote, advertise,
display or otherwise commercialize the Licensee's Trademarks or any material
utilizing or reproducing the Licensee's Trademarks in a manner that will
adversely affect any rights, ownership or otherwise of Licensee or in a manner
that would derogate or detract from the repute of Licensee, or the Licensee's
Trademarks.
8. REPRESENTATIONS AND WARRANTIES.
-------------------------------
8.1. Representations and Warranties of Owner. The Owner represents and
warrants to Licensee the following:
(a) Owner is a not-for-profit corporation duly organized, validly
existing and in good standing under the laws of the State of New York.
(b) Owner has all necessary corporate power and authority to make,
execute, deliver and consummate this Agreement, and has taken all necessary
action required to be taken to authorize Owner to execute and deliver this
Agreement and to perform all of its obligations, undertaking and agreements
to be observed and performed under this Agreement. This Agreement has been
duly executed and delivered by Owner and is a valid and binding agreement
of Owner. The execution and delivery of this Agreement by Owner does not,
and the consummation by Owner of the transactions contemplated hereby will
not, violate any provision of Owner's Articles of Incorporation or By-Laws
or violate or result with the giving of notice or the lapse of time or
both, in a violation of any provisions of, or result in the acceleration of
or entitle any party to accelerate (whether after the giving of notice, or
lapse of time or both) any obligation under any mortgage, lien, lease,
agreement, license, instrument, law, ordinance, regulation, order,
arbitration award, judgment or decree to which Owner is a party or by which
Owner is bound.
7
<PAGE>
(c) Owner is the registered owner of the entire right, title and
interest in the Domain Names listed in Schedule A; and it is not aware of
any undisclosed material facts indicating that the use, of the Domains
might infringe upon any the Intellectual Property or other rights vested in
a third party.
(d) Owner makes no representations or warranties of any kind, express
or implied with respect to the Domain Names and the performance, quality,
feasibility, efficacy or any other aspect of any of the Domain Names or the
Internet Business that will be conducted therewith.
8.2. Representations and Warranties of Licensee. The Licensee represents
and warrants to Owner the following:
(a) Licensee is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(b) Licensee has all necessary corporate power and authority to make,
execute, deliver and consummate this Agreement, and has taken all necessary
action required to be taken to authorize Licensee to execute and deliver
this Agreement and to perform all of its obligations, undertaking and
agreements to be observed and performed under this Agreement. This
Agreement has been duly executed and delivered by Licensee and is a valid
and binding agreement of Licensee. The execution and delivery of this
Agreement by Licensee does not, and the consummation by Licensee of the
transactions contemplated hereby will not, violate any provision of
Licensee's Articles of Incorporation or By-Laws or violate or result with
the giving of notice or the lapse of time or both, in a violation of any
provisions of, or result in the acceleration of or entitle any party
accelerate (whether after the giving of notice, or lapse of time or both)
any obligation under any mortgage, lien, lease, agreement, license,
instrument, law, ordinance, regulation, order, arbitration award, judgment
or decree to which Licensee is a party or by which Licensee is bound.
9. TERMINATION.
------------
9.1. Expiration/Termination. In the event of expiration or termination of
this Agreement, any rights to the Domain Name Owner may have granted to Licensee
under this Agreement shall immediately revert to Owner, provided however, that
any other Intellectual Property owned by Licensee hereunder shall remain the
property of the Licensee. Upon expiration or termination of this Agreement, the
Licensee shall cease all use of the Domain Names on the Internet, without
prejudice to any Trademarks or other Intellectual Property used by the Licensee.
8
<PAGE>
9.2. Grounds for Termination.
(a) Termination for Breach. Owner may terminate this Agreement
immediately, without liability to Licensee, by sending written notice to
Licensee if (a) Licensee breaches any provision or fails to perform any of
its obligations under this Agreement and does not remedy such failure
within thirty (30) days after written notice thereof. If Licensee receives
two (2) notices of default concerning payments and/or submission of reports
within any twelve (12) month period and this Agreement is not terminated,
then any future default may, at the sole option and in the sole discretion
of Owner be deemed incurable and the termination of the License shall be
effective immediately upon the giving of notice.
(b) Termination for Other Grounds. This Agreement shall terminate
automatically upon the occurrence of any of the following events: (a)
Licensee shall become insolvent or generally fail to pay, or admit in
writing its inability to pay, debts as they become due; or (b) Licensee
shall apply for, or consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator, or other custodian for, any of its assets,
or make a general assignment for the benefit of creditors; or (c) in the
absence of such application, consent or acquiescence, a trustee, receiver,
sequestrator or other custodian shall be appointed for Licensee for a
substantial part of its assets, and not discharged within 30 days; or (d)
any bankruptcy reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law shall be commenced in
respect of Licensee, and, if not commenced by Licensee, shall be consented
to or acquiesced in by Licensee, or shall result in the entry of an order
for relief (or its substantial equivalent) or shall remain for 30 days
undismissed; or (e) the filing of a petition by or against Licensee under
the United States Bankruptcy Code, as amended, or under the insolvency laws
of any state, or Licensee or a third party commences a proceeding or files
a petition of similar import under another applicable bankruptcy or
insolvency law in which Licensee is the subject of such action; or (f)
Licensee defaults on a common law or statutory lien.
(1) Notwithstanding the foregoing, in the event that pursuant to
the U.S. Bankruptcy Code or any amendment or successor thereto (the
"Code") a trustee in bankruptcy of Licensee or an Affiliate, as
debtor, is permitted to assign this Agreement to a third party, which
assignment satisfies the requirements of the Code, the trustee or
Licensee or such Affiliate, as the case may be, shall notify Owner of
same in writing. Said notice shall set forth the name and address of
the proposed assignee, the proposed consideration for the assignment
and all other relevant details thereof. The giving of such notice
shall be deemed to constitute
9
<PAGE>
an offer to Owner to have this Agreement assigned to it or to this
designee for such consideration, or its equivalent in money, and upon
such terms as are specified in the notice. The aforesaid offer may be
accepted only by written notice given to the trustee or Licensee or
such Affiliate, as the case may be, by Owner within thirty (30) days
after Owner's receipt of the notice from such party. If Owner fails
to give its notice to such party within said thirty (30) days, such
party may complete the assignment referred to in its notice, but only
if such assignment is to the entity named in said notice and for the
consideration and upon the terms specified therein. Nothing contained
herein shall be deemed to preclude or impair any rights which Owner
may have as a creditor in any bankruptcy proceeding.
(c) Termination by Notice of Licensee. This Agreement may be
terminated by Licensee at any time by written notice given by Licensee to
the Owner no less than sixty (60) days prior to the effective date of such
termination as specified in the notice, provided, however, that such notice
is accompanied by payment of (i) the remainder of any outstanding payments
due on account of License Fees for the Year in which the notice is given
and any outstanding amounts due for previous Years; and (ii) payment of the
License Fee for the immediately subsequent Year; and (iii) payment of all
amounts due, through that Year, under the Domain Name Registration
Agreement.
9.3. Survival. Sections 6 and 7 hereof shall survive termination of this
Agreement.
10. INDEMNIFICATIONS.
-----------------
10.1. Owner's Indemnity. Owner warrants that it has the right to grant
the license contained in this Agreement. Subject to the limitations set forth in
this Subsection, Owner agrees to indemnify and hold Licensee harmless from any
claim, suit, loss and damage made or sustained by Licensee by reason of a breach
of this warranty, provided that Licensee gives Owner prompt written notice of
any such claim. It is expressly understood and agreed that the foregoing
warranty and indemnity shall be Licensee's sole remedy in respect of any claim
loss, damage, or expense sustained or made by Licensee in respect of any failure
or alleged failure on the part of Owner to perform its obligations under this
License Agreement and that Owner's indemnification obligations are limited to
the amount of Royalties paid to Owner hereunder. Owner makes no
representations, warranties or guarantees, express or implied, other than those
expressly set forth in this SubSection. Notwithstanding anything in this
Agreement to the contrary, Owner shall not be liable to Licensee for special or
consequential damages claimed or suffered by Licensee whether arising out of a
breach of its obligations under this
10
<PAGE>
Agreement, or otherwise. Owner shall have the right to defend (and control the
defense) or settle (in its sole discretion) any litigation for which indemnity
is sought hereunder and Licensee shall cooperate in the defense and/or
settlement of the same. If a final injunction is obtained in such action against
Licensee's use of any Domain Name or if in Owner's opinion any Domain Name is
likely to become the subject of a claim of infringement, Owner will at its
option and expense either: (i) procure for Licensee the right to continue to use
the Domain Names; or (ii) modify the Domain Name so that it becomes non-
infringing; or (iii) may terminate this Agreement.
10.2. Licensee's Indemnity. Licensee shall indemnify and defend and
hold Owner harmless from and against any and all liabilities, claims, expenses,
suits, damages, judgments and losses, including attorneys fees, for which Owner
may become liable or may incur or pay, in or as a result of, or by reason of any
acts or omissions that may be committed or suffered by Licensee or any of its
servants agents or employees, in connection with Licensee's performance under
this agreement, including but not limited to (i) claims based on the Licensee's
Content or Television Content; (ii) claims for alleged infringement of any
Intellectual Property or other right that result from Licensee's own Internet
Business or other activities ; or (iii) Licensee's unauthorized use of and
Domain Names.
10.3. Insurance. To the extent that Licensee shall, in its sole
discretion, procure and maintain insurance coverage during the Term of this
Agreement, said insurance shall name Owner as an additional insured; provided,
however, that nothing in this Section shall be construed as imposing an
obligation on Licensee to procure or maintain insurance coverage.
11. NON-COMPETITION.
----------------
11.1. The Owner shall not register any further domain names containing
the letters "TV" or which states or implies streaming or any other similar
aspect of the Licensee's Internet Business, and (ii) shall not own any interest
in, provide any financing for, or perform any service for, any business
organization which engages in competition with the Licensee or, as a sole
proprietor, director, officer, shareholder, employee, manager, consultant,
independent contractor, advisor or otherwise, engage in competition with, any
business conducted by the Licensee or by its subsidiaries or any business which
the Licensee or any of its subsidiaries had developed substantial plans to enter
into during the Term of this Agreement; provided, however, that the ownership of
a passive investment constituting equity of under Five (5%) in a publicly traded
corporation, will not, in and of itself, be deemed competition hereunder.
11.2. It is understood and acknowledged that unauthorized competition
in violation of this Agreement may cause irreparable harm, the amount of which
say be difficult to ascertain; it is therefore agreed that the Licensee shall
have the right to apply to a court
11
<PAGE>
of competent jurisdiction for an order restraining any such further disclosure,
unauthorized use or misappropriation and for such other relief as deemed
appropriate.
11.3. If any provision of this Section is determined to be invalid,
void unenforceable, it shall be deemed severable from the remainder of the
Agreement and shall in no way invalidate any other provision. If any provision
is determined to be invalid, void or unenforceable due to its scope or breadth,
that provision shall be deemed valid to the extent of the scope or breadth
permitted by law and shall be deemed to have been re-written accordingly.
12. MISCELLANEOUS.
--------------
12.1. Governing Law/Jurisdiction. This Agreement, all Exhibits and
amendments hereto, shall be governed in all respects under the internal laws of
the State of New York applicable to agreements made and to be performed wholly
in the State of New York (excluding any such law which may direct the
application of the laws of any other jurisdiction), except that any questions
governed by the trademark statutes of the United States of America shall be
governed by and determined under such statutes. The parties hereby submit to
the jurisdiction of the state and federal courts of the State of New York and
with venue in New York County for emergency and other relief in connection with
arbitration conducted hereunder and preventing material and irreparable harm to
the Domain Names or the Licensee's Trademarks, and agree that they will not
resort to the courts or other governmental agencies of any other jurisdiction
for the resolution of any such dispute or controversy and agree to service by
mail and waives any requirements of personal service.
12.2. Specific Enforcement. Parties acknowledge that any actions in
breach or violation of the provisions of this Agreement could materially and
irreparably harm the Domain Names or the Licensee's Trademarks and an injured
party could not be adequately compensated by monetary damages. In the event of
a breach or reasonably likely breach of this Agreement, by reason of the
inadequacy of monetary damages as a remedy to such breach, the injured party
shall have the right to obtain temporary or permanent injunctive or mandatory
relief in a court of competent jurisdiction, it being the intention of the
parties that this Agreement be specifically enforced to the maximum extent
permitted by law.
12.3. Arbitration. The parties agree that any dispute, controversy or
claim between the parties under this Agreement, if not resolved by amicable
negotiations, shall be submitted to the New York Region office of the American
Arbitration ("AAA") for binding arbitration hereunder.
(a) Any arbitration proceeding under this provision shall be conducted
in accordance with the Commercial Rules of the AAA
12
<PAGE>
that are in effect at the time the demand for arbitration is made.
(b) The arbitration shall be conducted before one (1) arbitrator
pursuant to the Commercial Rules. Discovery shall be permitted to the
fullest extent permitted by such rules, as shall be ordered by the
Arbitrator.
(c) The arbitrator may order specific performance or an injunction and
shall be granted all powers to the maximum extent possible and practical to
protect the respective rights of the parties herein and enforce the
provisions of this Agreement. The arbitrator may make any order concerning
severance of issues and/or claims to be presented at the arbitration, as
long as they deal directly with the contents of this Agreement.
(d) Any order, decision, determination or award made by the arbitrator
shall be conclusive, final and binding upon all of the parties, and their
respective heirs, executors, administrators, successors and assigns.
Judgment upon any such order, decision, determination or award may be
confirmed, entered and enforced in any court of competent jurisdiction;
(e) The prevailing party shall be entitled to recover reasonable out-
of-pocket attorneys' fees, costs and expenses directly related to the
arbitration from the non-prevailing party.
12.4. Entire Agreement/Amendment/Waiver. This Agreement is the
complete agreement between the parties and supersedes all prior oral and written
communications and negotiations. This Agreement may be modified, changed or
amended only in a writing signed by both parties. The delay or failure of
either party to exercise any right provided herein shall in no way affect its
rights at a later time to enforce that right or any other rights under this
Agreement. No waiver shall be effective unless in writing signed by the waiving
party.
12.5. Headings/Severability. The headings and titles used in this
Agreement are for convenience only and shall not limit, expand or otherwise
affect any of its terms. If any provisions of this Agreement is declared
invalid, it shall be deemed adjusted to conform to the legal requirements, or if
no adjustment can be made, the provision shall be deleted, unless such
adjustment or deletion materially frustrates the purpose of the parties in
entering this Agreement.
12.6. Notices. All notices, approvals, consents, statements and
other communications hereunder shall be in writing and shall be deemed given (a)
when delivered personally or delivered by telecopy (accompanied by a
contemporaneous telecopier confirmation) with subsequent mailing (on the same
day), to the parties on a business day during normal business hours at the
addresses or telecopies numbers set in Schedule "D" (or at such other address or
telecopier number for such person as shall be specified by like notice) or (b) 5
days after being mailed by registered or certified mail (return receipt
13
<PAGE>
requested) to the parties at the addresses (or at such other address for the
party as shall be specified by like notice) set forth.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed as of the day and year first written above.
Owner,
Center For Contemporary Diplomacy, Inc.
By: /s/ Jonathan Braun
------------------------------------
Name: Jonathan Braun
Title: President
Licensee,
foreignTV.com, Inc.
By: /s/ Marc Leve
------------------------------------
Name: Marc Leve
Title: Vice President and Secretary
14
<PAGE>
SCHEDULE A
----------
Domain Names
------------
airtravelTV.com
amsterdamTV.com
asiaTVonline.com
athensTV.com
australia-TV.com
bakuTV.com
beijingTV.com
berlinTV.com
bombayTV.com
brazil-TV.com
brusselsTV.com
budapest-TV.com
caspianTV.com
copenhagenTV.com
cracowTV.com
danishTV.com
davosTV.com
denmarkTV.com
diplomacyTV.com
dublin-TV.com
ecochannel.com
europeTV.com
explorationchannel.com
explorationTV.com
finlandTV.com
foreignTV.com
foreignTV.net
foreignTV.org
foreignaffairsTV.com
genevaTV.com
globalvillageTV.com
globalvillageTV.net
globalvillageTV.org
harlemTV.com
havanaTV.com
helsinkiTV.com
holylandTV.com
hongkong-TV.com
icelandTV.com
icelandicTV.com
irelandTV.com
istanbulTV.com
italianTV.com
italy-TV.com
jamaica-TV.com
korea-TV.com
krakowTV.com
london-TV.com
lisbonTV.com
madridTV.com
milanTV.com
monacoTV.com
mongoliaTV.com
norwayTV.com
osloTV.com
pacificTV.com
palestineTV.com
panafricanTV.com
parisTV.com
polandTV.com
pragueTV.com
publicaffairsTV.com
puertoricoTV.com
quebecTV.com
romeTV.com
saigonTV.com
scandinavianet.com
scandinaviaTV.com
scandinavianTV.com
scotlandTV.com
seoulTV.com
southamericaTV.com
southamericanTV.com
spychannel.com
stockholmTV.com
swedenTV.com
swedishTV.com
taipeiTV.com
tehranTV.com
telavivTV.com
turkishTV.com
tokyoTVchannel.com
trinidadTV.com
tuscanyTV.com
unitednationsTV.com
veniceTV.com
viennaTV.com
warsawTV.com
worldaffairsTV.com
worldhistoryTV.com
worldnewsTV.com
worldreligionTV.com
worldTVchannel.com
worldTVnetwork.com
worldTVonline.com
zurichTV.com
15
<PAGE>
SCHEDULE B
----------
NETWORK SOLUTIONS, INC.
DOMAIN NAME REGISTRATION AGREEMENT
A. Introduction. This domain name registration agreement ("Registration
Agreement") is submitted to NETWORK SOLUTIONS, INC. ("NSI") for the purpose of
applying for and registering a domain name on the Internet. If this Registration
Agreement is accepted by NSI, and a domain name is registered in NSI's domain
name database and assigned to the Registrant, Registrant ("Registrant") agrees
to be bound by the terms of this Registration Agreement and the terms of NSI's
Domain Name Dispute Policy ("Dispute Policy") which is incorporated herein by
reference and made a part of this Registration Agreement. This Registration
Agreement shall be accepted at the offices of NSI.
B. Fees and Payments.
1) Registration or renewal (re-registration) date through March 31, 1998:
Registrant agrees to pay a registration fee of One Hundred United States Dollars
(US$100) as consideration for the registration of each new domain name or Fifty
United States Dollars (US$50) to renew (re-register) an existing registration.
2) Registration or renewal date on and after April 1, 1998: Registrant agrees
to pay a registration fee of Seventy United States Dollars (US$70) as
consideration for the registration of each new domain name or the applicable
renewal (re-registration) fee (currently Thirty-Five United States Dollars
(US$35)) at the time of renewal (re-registration).
3) Period of Service: The non-refundable fee covers a period of two (2) years
for each new registration, and one (1) year for each renewal, and includes any
permitted modification(s) to the domain name record during the covered period.
4) Payment: Payment is due to Network Solutions within thirty (30) days from
the date of the invoice.
C. Dispute Policy. Registrant agrees, as a condition to submitting this
Registration Agreement, and if the Registration Agreement is accepted by NSI,
that the Registrant shall be bound by NSI's current Dispute Policy. The current
version of the Dispute Policy may be found at the InterNIC Registration Services
web site: "http://www.netsol.com/rs/dispute-policy.html".
D. Dispute Policy Changes or Modifications. Registrant agrees that NSI, in its
sole discretion, may change or modify the Dispute Policy, incorporated by
reference herein, at any time. Registrant agrees that Registrant's maintaining
the registration of a domain name after changes or modifications to the Dispute
Policy become effective constitutes Registrant's continued acceptance of these
changes or
16
<PAGE>
modifications. Registrant agrees that if Registrant considers any such changes
or modifications to be unacceptable, Registrant may request that the domain name
be deleted from the domain name database.
E. Disputes. Registrant agrees that, if the registration of its domain name is
challenged by any third party, the Registrant will be subject to the provisions
specified in the Dispute Policy.
F. Agents. Registrant agrees that if this Registration Agreement is completed
by an agent for the Registrant, such as an ISP or Administrative Contact/Agent,
the Registrant is nonetheless bound as a principal by all terms and conditions
herein, including the Dispute Policy.
G. Limitation of Liability. Registrant agrees that NSI shall have no liability
to the Registrant for any loss Registrant may incur in connection with NSI's
processing of this Registration Agreement, in connection with NSI's processing
of any authorized modification to the domain name's record during the covered
period, as a result of the Registrant's ISP's failure to pay either the initial
registration fee or renewal fee, or as a result of the application of the
provisions of the Dispute Policy. Registrant agrees that in no event shall the
maximum liability of NSI under this Agreement for any matter exceed Five Hundred
United States Dollars (US$500).
H. Indemnity. Registrant agrees, in the event the Registration Agreement is
accepted by NSI and a subsequent dispute arises with any third party, to
indemnify and hold NSI harmless pursuant to the terms and conditions contained
in the Dispute Policy.
I. Breach. Registrant agrees that failure to abide by any provision of this
Registration Agreement or the Dispute Policy may be considered by NSI to be a
material breach and that NSI may provide a written notice, describing the
breach, to the Registrant. If, within thirty (30) days of the date of mailing
such notice, the Registrant fails to provide evidence, which is reasonably
satisfactory to NSI, that it has not breached its obligations, then NSI may
delete Registrant's registration of the domain name. Any such breach by a
Registrant shall not be deemed to be excused simply because NSI did not act
earlier in response to that, or any other, breach by the Registrant.
J. No Guaranty. Registrant agrees that, by registration of a domain name, such
registration does not confer immunity from objection to either the registration
or use of the domain name.
K. Warranty. Registrant warrants by submitting this Registration Agreement
that, to the best of Registrant's knowledge and belief, the information
submitted herein is true and correct, and that any future changes to this
information will be provided to NSI in a timely manner according to the domain
name modification procedures in place at that time. Breach of this warranty will
constitute a material breach.
17
<PAGE>
L. Revocation. Registrant agrees that NSI may delete a Registrant's domain
name if this Registration Agreement, or subsequent modification(s) thereto,
contains false or misleading information, or conceals or omits any information
NSI would likely consider material to its decision to approve this Registration
Agreement.
M. Right of Refusal. NSI, in its sole discretion, reserves the right to refuse
to approve the Registration Agreement for any Registrant. Registrant agrees that
the submission of this Registration Agreement does not obligate NSI to accept
this Registration Agreement. Registrant agrees that NSI shall not be liable for
loss or damages that may result from NSI's refusal to accept this Registration
Agreement.
N. Severability. Registrant agrees that the terms of this Registration
Agreement are severable. If any term or provision is declared invalid, it shall
not affect the remaining terms or provisions which shall continue to be binding.
O. Entirety. Registrant agrees that this Registration Agreement and the
Dispute Policy is the complete and exclusive agreement between Registrant and
NSI regarding the registration of Registrant's domain name. This Registration
Agreement and the Dispute Policy supersede all prior agreements and
understandings, whether established by custom, practice, policy, or precedent.
P. Governing Law. Registrant agrees that this Registration Agreement shall be
governed in all respects by and construed in accordance with the laws of the
Commonwealth of Virginia, United States of America. By submitting this
Registration Agreement, Registrant consents to the exclusive jurisdiction and
venue of the United States District Court for the Eastern District of Virginia,
Alexandria Division. If there is no jurisdiction in the United States District
Court for the Eastern District of Virginia, Alexandria Division, then
jurisdiction shall be in the Circuit Court of Fairfax County, Fairfax, Virginia.
Q. This is Domain Name Registration Agreement Version Number 4.0. This
Registration Agreement is only for registrations under top-level domains: COM,
ORG, NET, and EDU. By completing and submitting this Registration Agreement for
consideration and acceptance by NSI, the Registrant agrees that he/she has read
and agrees to be bound by A through P above.
Authorization
0a. (N)ew (M)odify (D)elete....:
0b. Auth Scheme................:
0c. Auth Info..................:
1. Comments...................:
2. Complete Domain Name.......:
18
<PAGE>
Organization Using Domain Name
3a. Organization Name..........:
3b. Street Address.............:
3c. City.......................:
3d. State......................:
3e. Postal Code................:
3f. Country....................:
Administrative Contact
4a. NIC Handle (if known)......:
4b. (I)ndividual (R)ole........:
4c. Name (Last, First).........:
4d. Organization Name..........:
4e. Street Address.............:
4f. City.......................:
4g. State......................:
4h. Postal Code................:
4i. Country....................:
4j. Phone Number...............:
4k. Fax Number.................:
4l. E-Mailbox..................:
Technical Contact
5a. NIC Handle (if known)......:
5b. (I)ndividual (R)ole........:
5c. Name (Last, First).........:
5d. Organization Name..........:
53. Street Address.............:
5f. City.......................:
5g. State......................:
5h. Postal Code................:
5i. Country....................:
5j. Phone Number...............:
5k. Fax Number.................:
5l. E-Mailbox..................:
Billing Contact
6a. NIC Handle (if known)......:
6b. (I)ndividual (R)ole........:
6c. Name (Last, First).........:
6d. Organization Name..........:
6e. Street Address.............:
6f. City.......................:
6g. State......................:
6h. Postal Code................:
6i. Country....................:
6j. Phone Number...............:
6k. Fax Number.................:
6l E-Mailbox..................:
Prime Name Server
7a. Primary Server Hostname....:
7b. Primary Server Netaddress..:
Secondary Name Server(s)
8a. Secondary Server Hostname..:
8b. Secondary Server Netaddress:
END OF AGREEMENT
For instructions, please refer to:
"http://rs.internic.net/help/instructions.txt"
[ URL ftp://rs.internic.net/templates/domain-template.txt ] [ 03/98]
Domain Version Number: 4.0
19
<PAGE>
SCHEDULE C
----------
LICENSE FEE PAYMENT SCHEDULE
----------------------------
===========================================================
LICENSE FEE SCHEDULE (based on 95 names)
- -----------------------------------------------------------
Year License Fee per Name Total
- -----------------------------------------------------------
1. $600.00 $57,000.00
2. $600.00 $57,000.00
3. $600.00 $57,000.00
4. $600.00 $57,000.00
5. $600.00 $57,000.00
6. (5%) $630.00 $59,850.00
7. $661.50 $62,842.50
8. $694.58 $65,985.10
9. $729.31 $69,284.45
10. $765.78 $72,749.10
11. $804.07 $76,386.65
12. $844.27 $80,205.65
13. (7%) $903.37 $85,820.15
14. $966.61 $91,827.95
15. $1,034.27 $98,255.65
16. $1,106.67 $105,133.65
17. $1,184.14 $112,493.30
18. $1,267.03 $120,367.85
19. $1,355.72 $128,793.40
20. $1,450.62 $137,808.90
21. (10%) $1,595.68 $151,589.60
22. $1,755.25 $166,748.75
23. $1,930.78 $183,424.10
24. $2,123.86 $201,766.70
25. ($2,500) $2,500.00 $237,500.00
26-50 $2,500.00 $237,500.00
To be increased in each
succeeding year by the
rate by which the CPI has
changed, using January 1
of each year as the base
CPI.
- ---------------------------------------------------------
TOTAL: $2,831,238.45
=========================================================
20
<PAGE>
SCHEDULE D
----------
ADDRESSES FOR NOTICES
---------------------
Owner: Center For Contemporary Diplomacy, Inc.
182 Sound Beach Ave.
Old Greenwich, CT 06870
Telephone No.: (203) 637 0044
Telecopier No.: (203) 698 0812
Licensee: foreignTV.com, Inc.
162 Fifth Avenue
Suite 1005A
New York, New York 10010
Telephone No.: (212) 206-1121
Telecopier No.: (212) 242-4556
21
<PAGE>
Exhibit 10.3
DOMAIN NAME
LICENSE AGREEMENT
between
foreignTV.com, Inc.
and
Jonathan Braun
1
<PAGE>
TABLE OF CONTENTS
-----------------
1. DEFINITIONS........................................................ 1
-----------
2. LICENSE GRANT...................................................... 3
-------------
3. TERM OF THE LICENSE, RENEWAL....................................... 4
-----------------------------
4. LICENSEE'S EFFORTS................................................. 5
-------------------
5. LICENSE FEE........................................................ 6
------------
6. OWNERSHIP AND PROTECTION OF THE DOMAIN NAMES....................... 6
---------------------------------------------
7. OWNERSHIP AND PROTECTION OF LICENSEE'S TRADEMARKS.................. 6
--------------------------------------------------
8. REPRESENTATIONS AND WARRANTIES..................................... 7
-------------------------------
9. TERMINATION........................................................ 8
-----------
10. INDEMNIFICATIONS................................................... 10
----------------
11. NON-COMPETITION.................................................. 11
---------------
12. MISCELLANEOUS.................................................... 12
-------------
1
<PAGE>
LICENSE AGREEMENT
LICENSE AGREEMENT, dated as of January 1, 1999 by and between Jonathan
Braun, of 24 Hollyhill Lane, Katona, N.Y. 10536 (the: "Owner"), and
foreignTV.com, Inc., a Delaware Corporation having an office and place of
business at 162 Fifth Avenue, Suite 1005A, New York, New York 10010 (the:
"Licensee").
WHEREAS, Licensee desires to obtain an exclusive right to use the Domain
Names (as defined hereinbelow) in connection with its Internet Business, and
Owner is willing to grant to Licensee such License under the terms and
conditions hereinafter specifically set forth; and
NOW, THEREFORE, in consideration of the mutual covenants, undertakings, and
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which the parties hereby acknowledge and confirm, and
intending to be legally bound, the parties agree as follows:
1. DEFINITIONS.
------------
Throughout this Agreement the following terms shall have the meanings set
forth below:
(a) "Additional Name" means any additional domain name or URL owned by the
Owner that is not included on Schedule "A", that does not compete with the
business of the Licensee, does not contain the letters "TV" or any of the words
"channel" "station" "network" or "streaming" and is otherwise permitted
hereunder.
(b) "Affiliate" means, as to any Person or entity, any other person or
entity which directly or indirectly controls, is controlled by or is under
common control with such person or entity. Control shall mean the right to
control, or actual control of, direction of management of such other entity,
whether by ownership of voting securities, by agreement, or otherwise.
(c) "Agreement" means this License Agreement, as amended, modified or
supplemented from time to time, as the context requires.
(d) "Content" means text, graphics, photographs, video, audio and/or other
data or information, including, without limitation, Television Content, relating
to any subject.
(e) "CPI" means the U.S. Consumer Price Index for all urban consumers for
the national average.
(f) "Domain Names" means the domain names and URLs, and any successors
thereto, currently set forth in Schedule "A" hereto.
1
<PAGE>
(g) "Domain Name Registration Agreement" means, collectively, those certain
Domain Name Registration Agreements, a sample of which is set forth on Schedule
"B", that have been entered into between the Owner and NSI, relating to each of
the Domain Names, including its Domain Name Dispute Policy, and any amendment,
substitution, or modification thereof, and including any other agreements,
rules, regulations, policies, that govern or control with respect thereto.
(h) "Intellectual Property" means all inventions, discoveries, trademarks,
patents, trade names, copyrights, moral rights, jingles, know-how, intellectual
property, software, shop rights, licenses, developments, research data, designs,
technology, trade secrets, test procedures, processes, route lists, computer
programs, computer discs, computer tapes, literature, reports and other
confidential information, intellectual and similar intangible property rights,
whether or not patentable or copyrightable (or otherwise subject to legally
enforceable restrictions or protections against unauthorized third party usage),
and any and all applications for, registrations of and extensions, divisions,
renewals and reissuance of, any of the foregoing, and rights therein, including
without limitation (a) rights under any royalty or licensing agreements, and (b)
programming and programming rights, whether on film, tape or any other medium.
(i) "Internet" means global network of interconnected computer
networks, each using the Transmission Control Protocol/Internet Protocol and/or
such other standard network interconnection protocols as may be adopted from
time to time, which is used to transmit Content that is directly or indirectly
delivered to a computer or other digital electronic device for display to an
end-user, whether such Content is delivered through on-line browsers, off-line
browsers, or through "push" technology, electronic mail, broadband distribution,
satellite, wireless or otherwise, and any subset of such global network, such as
"intranets."
(j) "Internet Business" means an Internet service or Web site that (i)
provides information or news services, including without limitation the delivery
of Content to consumers, or (ii) uses the Domain Names or any other Intellectual
Property associated therewith or relating thereto.
(k) "Internet Site" means any site or service delivering Content on or
through the Internet, including, without limitation, any on-line service such as
America Online, Compuserve, Prodigy and the Microsoft Network.
(l) "InterNic" or "NSI" means Network Solutions, Inc., or any successor,
assignee, or replacement thereof, that maintains and handles the registration of
domain names and URLs.
(m) "License Fee" means the license fee which the Licensee is obligated to
pay the Owner hereunder pursuant to Section 5.
2
<PAGE>
(n) "Licensee's Trademarks" Trademarks and other Intellectual Property used
by Licensee in its Internet Business, other than the Domain Names, including
trademarks that are based on or incorporate all or any of the Domain Names.
(o) "Mirror Site" means an Internet Site which contains the exact form and
content as any of the Licensee's Internet Sites which (a) is located at a
geographic location distinct from the Licensee's Internet Sites and (b) is
created for the purpose of improving the performance of and accessibility to the
Licensee's Sites.
(p) "Person" means any natural person, legal entity, or other organized
group of persons or entities. (All pronouns whether personal or impersonal,
which refer to Person include natural persons and other Persons.)
(q) "Quarter" means successive three month periods commencing January 1,
1999.
(r) "Television Content" consists of Content broadcast on television, cable
or satellite.
(s) "Term" means the Term of this license as defined in Section 3 hereof,
including any renewals or extensions thereof.
(t) "Year" means each calendar year during Term of this Agreement.
2. LICENSE GRANT.
--------------
2.1. Grant. Subject to the terms and conditions set forth herein, Owner
hereby grants to Licensee throughout the Licensed Term, the exclusive right and
license as follows:
(a) to use copy, publicly display, edit, revise, perform, distribute
or otherwise make available on or through Internet Sites and/or Mirror
Sites the Domain Names in connection with the Licensee's Internet Business
and all other business connected or associated therewith, including but not
limited to any advertising, merchandising of products, use in print,
broadcasting in any other medium, including television, radio, satellite,
cable, videocassette or otherwise; and
(b) to own, register in its own name and for its own account, use,
exploit, sell and license any Trademarks, Tradenames, Service Marks,
Service Names, Copyrights, and any other Intellectual Property, and the
goodwill associated therewith, relating to or utilizing the Domain Names or
any part thereof in any form, language, style or manner, in the Licensee's
own name and on its own account.
3
<PAGE>
2.2. Additional Names. If the Owner shall in the future offer to
license any Additional Name to the Licensee, the license thereof shall be for
the Term and under the terms and conditions of this Agreement, provided however,
that the applicable License Fee for such domain name shall be the InterNic
registration fee, payable once, without any further consideration by the
Licensee. Anything to the contrary notwithstanding, any Additional Name not
licensed by the Licensee, may be used, sold, hypothecated, licensed or otherwise
disposed of by the Owner in any way or form, as determined in its sole and
absolute discretion, provided that such use does not violate the non-competition
provisions hereof.
2.3. Exclusivity. Throughout the Licensed Term Licensee's rights shall be
exclusive and Owner shall not use the Domain Names in any way, manner or form,
nor shall Owner grant or undertake to grant a license to another person or
entity, or make or undertake to make any sale, hypothecation or other alienation
or disposition of the Domain Names effective during the Licensed Term of this
license. Without derogating from the generality of the previous sentence, the
Owner shall not register in its own name or account or on behalf of or to the
account of any other Person, any name using the letters "TV" or the words
"channel" "station" "network" or "streaming" alone or in combination with any
other letters or words, as a top-level or secondary-level domain name or in any
other form that designates or connotes an Internet Site. If the Owner fails to
comply with this Section, the Licensee shall be entitled to require the Owner to
assign all title to, rights in and benefit from such domain name to the Licensee
free of charge, without prejudice to any other remedy to which the Licensee
shall be entitled under law or this Agreement.
2.4. Licensee's Right to Sublicense. Licensee may enter into sublicenses
with sub-licensees with respect to all or any of the Domain Names for any
purpose whatsoever, within the scope of the License herein without requiring any
approval of the Owner.
2.5. Compliance with Domain Name Registration Agreement. Licensee hereby
agrees to comply with and adhere to, on its own behalf and on behalf of Owner,
the provisions of the Domain Name Registration Agreement and timely pay, all
amounts due thereunder for renewals, or otherwise, to maintain the registration
and validity of all of the Domain Names.
3. TERM OF THE LICENSE, RENEWAL.
-----------------------------
3.1. Term. The License under this Agreement shall remain in effect for a
period of Twenty Five (25) Years, ending December 31, 2023, unless terminated in
accordance with the terms hereof or otherwise by law (the "Term").
3.2. Renewal of Term. The Term of the license shall automatically be
renewed for an additional period of Twenty Five (25) years
4
<PAGE>
commencing January 1, 2024, unless agreed otherwise by the parties, provided
that Licensee is not in default of any provision of this Agreement at the end of
the Term.
4. LICENSEE'S EFFORTS.
-------------------
4.1. Licensee's Discretion. Licensee shall have sole, absolute and
unfettered discretion to exploit the Domain Names and use them in its Internet
Business as it sees fit. Licensee agrees and understands that it shall bear all
its own costs associated with its Internet Business.
4.2. No Partnership or Agency. Owner and Licensee are independent
contractors, and neither party shall be, nor represent itself to be, the joint
venturer, franchiser, franchisee, partner, broker, employee, servant, agent or
representative of the other party for any purpose. Neither party shall have the
authority to make any representations or incur any obligations on behalf of the
other party and neither party shall be responsible for the acts or omissions of
the party, subject to Section 4.3.
4.3. Licensee's Assistance. Licensee shall from time to time act as the
liaison and/or coordinator for Owner in connection with Owner's dealings with
InterNic and for that purpose that the Licensee shall be deemed to represent and
be the agent of Owner before InterNic, for the sole purpose of complying with
the Domain Name Registration Agreement and maintaining the validity and
registration of the Domain Names.
4.4. Ownership of Licensee's Content. All Content which Licensee intends
to display, exhibit, broadcast, show, make available or otherwise use, on or in
connection with any of its Internet Sites and/or Mirror Sites shall be the
property of Licensee (or of any Person from whom Licensee may have licensed it),
and, anything to the contrary notwithstanding, the Owner shall have no title,
right, or any Intellectual Property rights relating thereto.
4.5. Liability for Licensee's Content. The Licensee shall be solely
responsible for the engineering, production, maintenance and monitoring of all
Content which is made available on its Internet Sites or Mirror Sites, and any
errors, omissions and/or inaccuracies in the transmission or transcription of
the Content, and obtaining license for the use of any material, including
applicable music rights, copyrights or any other Intellectual Property and, (ii)
secure, at its sole cost and expense, and pay for all performing, duplication
and/or recording rights licenses, if any, necessary for the use of such Content
on the Internet. Licensee shall not establish any links from the Domain Names or
conduct cross promotions with any Internet Site which uses or exhibits any
gambling, pornographic or obscenity Content.
5
<PAGE>
5. LICENSE FEE.
------------
5.1. License Fee. Licensee shall pay Owner an annual Fee, each Year, in
the amount per Domain Name as set forth on Schedule C. (the "License Fee"). The
License Fee shall be the sole consideration payable by Licensee without any
obligation to pay royalties or any other amounts. The initial amount of the
License Fee shall be $600 per Year and increase each Year in accordance with
Schedule C. In the twenty-fifth Year of the Term, and throughout the entire
period of the renewal of the Term, the License Fee shall be $2,500, provided,
however, that such amount shall be increased in each succeeding year by the rate
by which the CPI has changed, using January 1 of each year as the base CPI.
5.2. Payments. All payments of License Fees due under this Agreement,
including, shall be paid by Licensee in freely remittable and transferable U.S.
Dollars, to Owner at the location designated by Owner, and shall be due and
payable in Quarterly installments, each equal to one fourth of the total License
Fees for that Year, within the last day of each Quarter, unless agreed otherwise
by the Parties.
6. OWNERSHIP AND PROTECTION OF THE DOMAIN NAMES.
---------------------------------------------
6.1. No Contest. Licensee shall not contest or dispute that Owner is the
rightful owner of the Domain Names and Licensee shall not claim any title to or
right to use the Domain Name or any variation thereof, other than the right to
use the under this License Agreement.
6.2. Property of Owner. The Domain Names shall remain the property of
Owner and Licensee shall have no rights therein and shall take no action
inconsistent with Owner's ownership or challenge the validity thereof.
6.3. Domain Name Enforcement. In the event that Licensee learns of any
infringement or imitation of any Domain Name or of any use by any unauthorized
person, Licensee shall promptly notify Owner. Owner thereupon shall take such
action, or no action, as it, in its sole discretion, deems advisable for the
protection of the Domain Name. Licensee shall cooperate with Owner in all
respects, including, without limitation, by being a plaintiff or co-plaintiff
and by causing its officers to execute pleadings and other necessary documents.
In no event, shall Owner be required to take any action if it is deemed
inadvisable to do so. If Owner deems it inadvisable to take any such action,
Licensee may then take such action at its own expense. In such event Owner
shall, at Licensee's expense, render all reasonable assistance to Licensee in
connection therewith.
7. OWNERSHIP AND PROTECTION OF LICENSEE'S TRADEMARKS.
--------------------------------------------------
6
<PAGE>
7.1. No Contest. Owner shall not contest or dispute that Licensee is the
rightful owner of Licensee's Trademarks and the goodwill associated therewith,
and the Owner shall not claim any title to or right to use the Licensee's
Trademarks or any variation thereof.
7.2. Property of Licensee. All Licensee's Trademarks, used by Licensee
shall remain the property of Licensee and Owner shall have no rights therein and
shall take no action inconsistent with Licensee's ownership or challenge the
validity thereof. The Owner recognizes the great value of the goodwill
associated with the Licensee's Trademarks and the identification of the Content
and other products with the Licensee's Trademarks and acknowledges that the
Licensee's Trademarks and all rights therein and goodwill pertaining thereto
belong to Licensee. Owner shall not at any time use, promote, advertise,
display or otherwise commercialize the Licensee's Trademarks or any material
utilizing or reproducing the Licensee's Trademarks in a manner that will
adversely affect any rights, ownership or otherwise of Licensee or in a manner
that would derogate or detract from the repute of Licensee, or the Licensee's
Trademarks.
8. REPRESENTATIONS AND WARRANTIES.
-------------------------------
8.1. Representations and Warranties of Owner. The Owner represents and
warrants to Licensee the following:
(a) This Agreement has been duly executed and delivered by Owner and
is a valid and binding agreement of Owner. The execution and delivery of
this Agreement by Owner does not, and the consummation by Owner of the
transactions contemplated hereby will not, violate or result with the
giving of notice or the lapse of time or both, in a violation of any
provisions of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice, or lapse of time or both)
any obligation under any mortgage, lien, lease, agreement, license,
instrument, law, ordinance, regulation, order, arbitration award, judgment
or decree to which Owner is a party or by which Owner is bound.
(b) Owner is the registered owner of the entire right, title and
interest in the Domain Names listed in Schedule A; and he is not aware of
any undisclosed material facts indicating that the use, of the Domains
might infringe upon any the Intellectual Property or other rights vested in
a third party.
(c) Owner makes no representations or warranties of any kind, express
or implied with respect to the Domain Names and the performance, quality,
feasibility, efficacy or any other aspect of any of the Domain Names or the
Internet Business that will be conducted therewith.
7
<PAGE>
8.2. Representations and Warranties of Licensee. The Licensee represents
and warrants to Owner the following:
(a) Licensee is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(b) Licensee has all necessary corporate power and authority to make,
execute, deliver and consummate this Agreement, and has taken all necessary
action required to be taken to authorize Licensee to execute and deliver
this Agreement and to perform all of its obligations, undertaking and
agreements to be observed and performed under this Agreement. This
Agreement has been duly executed and delivered by Licensee and is a valid
and binding agreement of Licensee. The execution and delivery of this
Agreement by Licensee does not, and the consummation by Licensee of the
transactions contemplated hereby will not, violate any provision of
Licensee's Articles of Incorporation or By-Laws or violate or result with
the giving of notice or the lapse of time or both, in a violation of any
provisions of, or result in the acceleration of or entitle any party
accelerate (whether after the giving of notice, or lapse of time or both)
any obligation under any mortgage, lien, lease, agreement, license,
instrument, law, ordinance, regulation, order, arbitration award, judgment
or decree to which Licensee is a party or by which Licensee is bound.
9. TERMINATION.
------------
9.1. Expiration/Termination. In the event of expiration or termination of
this Agreement, any rights to the Domain Name Owner may have granted to Licensee
under this Agreement shall immediately revert to Owner, provided however, that
any other Intellectual Property owned by Licensee hereunder shall remain the
property of the Licensee. Upon expiration or termination of this Agreement, the
Licensee shall cease all use of the Domain Names on the Internet, without
prejudice to any Trademarks or other Intellectual Property used by the Licensee.
9.2. Grounds for Termination.
(a) Termination for Breach. Owner may terminate this Agreement
immediately, without liability to Licensee, by sending written notice to
Licensee if (a) Licensee breaches any provision or fails to perform any of
its obligations under this Agreement and does not remedy such failure
within thirty (30) days after written notice thereof. If Licensee receives
two (2) notices of default concerning payments and/or submission of reports
within any twelve (12) month period and this Agreement is not terminated,
then any future default may, at the sole option and in the sole discretion
of Owner be deemed incurable and the termination of
8
<PAGE>
the License shall be effective immediately upon the giving of notice.
(b) Termination for Other Grounds. This Agreement shall terminate
automatically upon the occurrence of any of the following events: (a)
Licensee shall become insolvent or generally fail to pay, or admit in
writing its inability to pay, debts as they become due; or (b) Licensee
shall apply for, or consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator, or other custodian for, any of its assets,
or make a general assignment for the benefit of creditors; or (c) in the
absence of such application, consent or acquiescence, a trustee, receiver,
sequestrator or other custodian shall be appointed for Licensee for a
substantial part of its assets, and not discharged within 30 days; or (d)
any bankruptcy reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law shall be commenced in
respect of Licensee, and, if not commenced by Licensee, shall be consented
to or acquiesced in by Licensee, or shall result in the entry of an order
for relief (or its substantial equivalent) or shall remain for 30 days
undismissed; or (e) the filing of a petition by or against Licensee under
the United States Bankruptcy Code, as amended, or under the insolvency laws
of any state, or Licensee or a third party commences a proceeding or files
a petition of similar import under another applicable bankruptcy or
insolvency law in which Licensee is the subject of such action; or (f)
Licensee defaults on a common law or statutory lien.
(1) Notwithstanding the foregoing, in the event that pursuant to
the U.S. Bankruptcy Code or any amendment or successor thereto (the
"Code") a trustee in bankruptcy of Licensee or an Affiliate, as
debtor, is permitted to assign this Agreement to a third party, which
assignment satisfies the requirements of the Code, the trustee or
Licensee or such Affiliate, as the case may be, shall notify Owner of
same in writing. Said notice shall set forth the name and address of
the proposed assignee, the proposed consideration for the assignment
and all other relevant details thereof. The giving of such notice
shall be deemed to constitute an offer to Owner to have this Agreement
assigned to it or to this designee for such consideration, or its
equivalent in money, and upon such terms as are specified in the
notice. The aforesaid offer may be accepted only by written notice
given to the trustee or Licensee or such Affiliate, as the case may
be, by Owner within thirty (30) days after Owner's receipt of the
notice from such party. If Owner fails to give its notice to such
party within said thirty (30) days, such party may complete the
assignment referred to in its notice, but only if such assignment is
to the entity named in said notice and for the consideration and upon
the terms specified therein. Nothing contained
9
<PAGE>
herein shall be deemed to preclude or impair any rights which Owner
may have as a creditor in any bankruptcy proceeding.
(c) Termination by Notice of Licensee. This Agreement may be
terminated by Licensee at any time by written notice given by Licensee to
the Owner no less than sixty (60) days prior to the effective date of such
termination as specified in the notice, provided, however, that such notice
is accompanied by payment of (i) the remainder of any outstanding payments
due on account of License Fees for the Year in which the notice is given
and any outstanding amounts due for previous Years; and (ii) payment of the
License Fee for the immediately subsequent Year; and (iii) payment of all
amounts due, through that Year, under the Domain Name Registration
Agreement.
9.3. Survival. Sections 6 and 7 hereof shall survive termination of this
Agreement.
10. INDEMNIFICATIONS.
-----------------
10.1. Owner's Indemnity. Owner warrants that it has the right to grant
the license contained in this Agreement. Subject to the limitations set forth in
this Subsection, Owner agrees to indemnify and hold Licensee harmless from any
claim, suit, loss and damage made or sustained by Licensee by reason of a breach
of this warranty, provided that Licensee gives Owner prompt written notice of
any such claim. It is expressly understood and agreed that the foregoing
warranty and indemnity shall be Licensee's sole remedy in respect of any claim
loss, damage, or expense sustained or made by Licensee in respect of any failure
or alleged failure on the part of Owner to perform its obligations under this
License Agreement and that Owner's indemnification obligations are limited to
the amount of Royalties paid to Owner hereunder. Owner makes no
representations, warranties or guarantees, express or implied, other than those
expressly set forth in this SubSection. Notwithstanding anything in this
Agreement to the contrary, Owner shall not be liable to Licensee for special or
consequential damages claimed or suffered by Licensee whether arising out of a
breach of its obligations under this Agreement, or otherwise. Owner shall have
the right to defend (and control the defense) or settle (in its sole discretion)
any litigation for which indemnity is sought hereunder and Licensee shall
cooperate in the defense and/or settlement of the same. If a final injunction is
obtained in such action against Licensee's use of any Domain Name or if in
Owner's opinion any Domain Name is likely to become the subject of a claim of
infringement, Owner will at its option and expense either: (i) procure for
Licensee the right to continue to use the Domain Names; or (ii) modify the
Domain Name so that it becomes non-infringing; or (iii) may terminate this
Agreement.
10
<PAGE>
10.2. Licensee's Indemnity. Licensee shall indemnify and defend and
hold Owner harmless from and against any and all liabilities, claims, expenses,
suits, damages, judgments and losses, including attorneys fees, for which Owner
may become liable or may incur or pay, in or as a result of, or by reason of any
acts or omissions that may be committed or suffered by Licensee or any of its
servants agents or employees, in connection with Licensee's performance under
this agreement, including but not limited to (i) claims based on the Licensee's
Content or Television Content; (ii) claims for alleged infringement of any
Intellectual Property or other right that result from Licensee's own Internet
Business or other activities ; or (iii) Licensee's unauthorized use of and
Domain Names.
10.3. Insurance. To the extent that Licensee shall, in its sole
discretion, procure and maintain insurance coverage during the Term of this
Agreement, said insurance shall name Owner as an additional insured; provided,
however, that nothing in this Section shall be construed as imposing an
obligation on Licensee to procure or maintain insurance coverage.
11. NON-COMPETITION.
----------------
11.1. The Owner shall not register any further domain names containing
the letters "TV" or which states or implies streaming or any other similar
aspect of the Licensee's Internet Business, and (ii) shall not own any interest
in, provide any financing for, or perform any service for, any business
organization which engages in competition with the Licensee or, as a sole
proprietor, director, officer, shareholder, employee, manager, consultant,
independent contractor, advisor or otherwise, engage in competition with, any
business conducted by the Licensee or by its subsidiaries or any business which
the Licensee or any of its subsidiaries had developed substantial plans to enter
into during the Term of this Agreement; provided, however, that the ownership of
a passive investment constituting equity of under Five (5%) in a publicly traded
corporation, will not, in and of itself, be deemed competition hereunder.
11.2. It is understood and acknowledged that unauthorized competition
in violation of this Agreement may cause irreparable harm, the amount of which
say be difficult to ascertain; it is therefore agreed that the Licensee shall
have the right to apply to a court of competent jurisdiction for an order
restraining any such further disclosure, unauthorized use or misappropriation
and for such other relief as deemed appropriate.
11.3. If any provision of this Section is determined to be invalid,
void unenforceable, it shall be deemed severable from the remainder of the
Agreement and shall in no way invalidate any other provision. If any provision
is determined to be invalid, void or unenforceable due to its scope or breadth,
that provision shall be deemed valid to the extent of the scope or breadth
permitted by law and shall be deemed to have been re-written accordingly.
11
<PAGE>
12. MISCELLANEOUS.
--------------
12.1. Governing Law/Jurisdiction. This Agreement, all Exhibits and
amendments hereto, shall be governed in all respects under the internal laws of
the State of New York applicable to agreements made and to be performed wholly
in the State of New York (excluding any such law which may direct the
application of the laws of any other jurisdiction), except that any questions
governed by the trademark statutes of the United States of America shall be
governed by and determined under such statutes. The parties hereby submit to
the jurisdiction of the state and federal courts of the State of New York and
with venue in New York County for emergency and other relief in connection with
arbitration conducted hereunder and preventing material and irreparable harm to
the Domain Names or the Licensee's Trademarks, and agree that they will not
resort to the courts or other governmental agencies of any other jurisdiction
for the resolution of any such dispute or controversy and agree to service by
mail and waives any requirements of personal service.
12.2. Specific Enforcement. Parties acknowledge that any actions in
breach or violation of the provisions of this Agreement could materially and
irreparably harm the Domain Names or the Licensee's Trademarks and an injured
party could not be adequately compensated by monetary damages. In the event of
a breach or reasonably likely breach of this Agreement, by reason of the
inadequacy of monetary damages as a remedy to such breach, the injured party
shall have the right to obtain temporary or permanent injunctive or mandatory
relief in a court of competent jurisdiction, it being the intention of the
parties that this Agreement be specifically enforced to the maximum extent
permitted by law.
12.3. Arbitration. The parties agree that any dispute, controversy or
claim between the parties under this Agreement, if not resolved by amicable
negotiations, shall be submitted to the New York Region office of the American
Arbitration ("AAA") for binding arbitration hereunder.
(a) Any arbitration proceeding under this provision shall be conducted
in accordance with the Commercial Rules of the AAA that are in effect at
the time the demand for arbitration is made.
(b) The arbitration shall be conducted before one (1) arbitrator
pursuant to the Commercial Rules. Discovery shall be permitted to the
fullest extent permitted by such rules, as shall be ordered by the
Arbitrator.
(c) The arbitrator may order specific performance or an injunction and
shall be granted all powers to the maximum extent possible and practical to
protect the respective rights of the parties herein and enforce the
provisions of this Agreement. The arbitrator may make any order concerning
severance of issues and/or claims to be presented at the arbitration, as
long as they deal directly with the contents of this Agreement.
12
<PAGE>
(d) Any order, decision, determination or award made by the arbitrator
shall be conclusive, final and binding upon all of the parties, and their
respective heirs, executors, administrators, successors and assigns.
Judgment upon any such order, decision, determination or award may be
confirmed, entered and enforced in any court of competent jurisdiction;
(e) The prevailing party shall be entitled to recover reasonable out-
of-pocket attorneys' fees, costs and expenses directly related to the
arbitration from the non-prevailing party.
12.4. Entire Agreement/Amendment/Waiver. This Agreement is the
complete agreement between the parties and supersedes all prior oral and written
communications and negotiations. This Agreement may be modified, changed or
amended only in a writing signed by both parties. The delay or failure of
either party to exercise any right provided herein shall in no way affect its
rights at a later time to enforce that right or any other rights under this
Agreement. No waiver shall be effective unless in writing signed by the waiving
party.
12.5. Headings/Severability. The headings and titles used in this
Agreement are for convenience only and shall not limit, expand or otherwise
affect any of its terms. If any provisions of this Agreement is declared
invalid, it shall be deemed adjusted to conform to the legal requirements, or if
no adjustment can be made, the provision shall be deleted, unless such
adjustment or deletion materially frustrates the purpose of the parties in
entering this Agreement.
12.6. Notices. All notices, approvals, consents, statements and
other communications hereunder shall be in writing and shall be deemed given (a)
when delivered personally or delivered by telecopy (accompanied by a
contemporaneous telecopier confirmation) with subsequent mailing (on the same
day), to the parties on a business day during normal business hours at the
addresses or telecopies numbers set in Schedule "D" (or at such other address or
telecopier number for such person as shall be specified by like notice) or (b) 5
days after being mailed by registered or certified mail (return receipt
requested) to the parties at the addresses (or at such other address for the
party as shall be specified by like notice) set forth.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed as of the day and year first written above.
Owner,
Jonathan Braun
__________________________
Jonathan Braun
Licensee,
foreignTV.com, Inc.
By:___________________________
Name:
Title:
14
<PAGE>
SCHEDULE A
----------
Domain Names
------------
arthistoryTV.com multichannelTV.com texasTV.com
aspenTV.com nantucket-TV.com vermont-TV.com
beverlyhillsTV.com newenglandTV.com vinyardTV.com
bigeasyTV.com nicheTV.com westernTV.com
bluesTV.com offroadTV.com wildernessTV.com
californiastreamin g.com popcultureTV.com
collegetownTV.com ruralTV.com
emergencyTV.com santafeTV.com
hamptonsTV.com siliconvalleyTV.com
jacksonholeTV.com smalltownTV.com
maineTV.com southbeachTVchanne l.com
manhattanTV.com streamingusa.com
martialartsTV.com swimchannel.com
mauiTV.com swimmingTV.com
medium4.com taosTV.com
medium4TV.com
15
<PAGE>
SCHEDULE B
----------
NETWORK SOLUTIONS, INC.
DOMAIN NAME REGISTRATION AGREEMENT
A. Introduction. This domain name registration agreement ("Registration
Agreement") is submitted to NETWORK SOLUTIONS, INC. ("NSI") for the purpose of
applying for and registering a domain name on the Internet. If this Registration
Agreement is accepted by NSI, and a domain name is registered in NSI's domain
name database and assigned to the Registrant, Registrant ("Registrant") agrees
to be bound by the terms of this Registration Agreement and the terms of NSI's
Domain Name Dispute Policy ("Dispute Policy") which is incorporated herein by
reference and made a part of this Registration Agreement. This Registration
Agreement shall be accepted at the offices of NSI.
B. Fees and Payments.
1) Registration or renewal (re-registration) date through March 31, 1998:
Registrant agrees to pay a registration fee of One Hundred United States Dollars
(US$100) as consideration for the registration of each new domain name or Fifty
United States Dollars (US$50) to renew (re-register) an existing registration.
2) Registration or renewal date on and after April 1, 1998: Registrant agrees
to pay a registration fee of Seventy United States Dollars (US$70) as
consideration for the registration of each new domain name or the applicable
renewal (re-registration) fee (currently Thirty-Five United States Dollars
(US$35)) at the time of renewal (re-registration).
3) Period of Service: The non-refundable fee covers a period of two (2) years
for each new registration, and one (1) year for each renewal, and includes any
permitted modification(s) to the domain name record during the covered period.
4) Payment: Payment is due to Network Solutions within thirty (30) days from
the date of the invoice.
C. Dispute Policy. Registrant agrees, as a condition to submitting this
Registration Agreement, and if the Registration Agreement is accepted by NSI,
that the Registrant shall be bound by NSI's current Dispute Policy. The current
version of the Dispute Policy may be found at the InterNIC Registration Services
web site: "http://www.netsol.com/rs/dispute-policy.html".
D. Dispute Policy Changes or Modifications. Registrant agrees that NSI, in its
sole discretion, may change or modify the Dispute Policy, incorporated by
reference herein, at any time. Registrant agrees that Registrant's maintaining
the registration of a domain name after changes or modifications to the Dispute
Policy become effective constitutes Registrant's continued acceptance of these
changes or
16
<PAGE>
modifications. Registrant agrees that if Registrant considers any such changes
or modifications to be unacceptable, Registrant may request that the domain name
be deleted from the domain name database.
E. Disputes. Registrant agrees that, if the registration of its domain name is
challenged by any third party, the Registrant will be subject to the provisions
specified in the Dispute Policy.
F. Agents. Registrant agrees that if this Registration Agreement is completed
by an agent for the Registrant, such as an ISP or Administrative Contact/Agent,
the Registrant is nonetheless bound as a principal by all terms and conditions
herein, including the Dispute Policy.
G. Limitation of Liability. Registrant agrees that NSI shall have no liability
to the Registrant for any loss Registrant may incur in connection with NSI's
processing of this Registration Agreement, in connection with NSI's processing
of any authorized modification to the domain name's record during the covered
period, as a result of the Registrant's ISP's failure to pay either the initial
registration fee or renewal fee, or as a result of the application of the
provisions of the Dispute Policy. Registrant agrees that in no event shall the
maximum liability of NSI under this Agreement for any matter exceed Five Hundred
United States Dollars (US$500).
H. Indemnity. Registrant agrees, in the event the Registration Agreement is
accepted by NSI and a subsequent dispute arises with any third party, to
indemnify and hold NSI harmless pursuant to the terms and conditions contained
in the Dispute Policy.
I. Breach. Registrant agrees that failure to abide by any provision of this
Registration Agreement or the Dispute Policy may be considered by NSI to be a
material breach and that NSI may provide a written notice, describing the
breach, to the Registrant. If, within thirty (30) days of the date of mailing
such notice, the Registrant fails to provide evidence, which is reasonably
satisfactory to NSI, that it has not breached its obligations, then NSI may
delete Registrant's registration of the domain name. Any such breach by a
Registrant shall not be deemed to be excused simply because NSI did not act
earlier in response to that, or any other, breach by the Registrant.
J. No Guaranty. Registrant agrees that, by registration of a domain name, such
registration does not confer immunity from objection to either the registration
or use of the domain name.
K. Warranty. Registrant warrants by submitting this Registration Agreement
that, to the best of Registrant's knowledge and belief, the information
submitted herein is true and correct, and that any future changes to this
information will be provided to NSI in a timely manner according to the domain
name modification procedures in place at that time. Breach of this warranty will
constitute a material breach.
17
<PAGE>
L. Revocation. Registrant agrees that NSI may delete a Registrant's domain
name if this Registration Agreement, or subsequent modification(s) thereto,
contains false or misleading information, or conceals or omits any information
NSI would likely consider material to its decision to approve this Registration
Agreement.
M. Right of Refusal. NSI, in its sole discretion, reserves the right to refuse
to approve the Registration Agreement for any Registrant. Registrant agrees that
the submission of this Registration Agreement does not obligate NSI to accept
this Registration Agreement. Registrant agrees that NSI shall not be liable for
loss or damages that may result from NSI's refusal to accept this Registration
Agreement.
N. Severability. Registrant agrees that the terms of this Registration
Agreement are severable. If any term or provision is declared invalid, it shall
not affect the remaining terms or provisions which shall continue to be binding.
O. Entirety. Registrant agrees that this Registration Agreement and the
Dispute Policy is the complete and exclusive agreement between Registrant and
NSI regarding the registration of Registrant's domain name. This Registration
Agreement and the Dispute Policy supersede all prior agreements and
understandings, whether established by custom, practice, policy, or precedent.
P. Governing Law. Registrant agrees that this Registration Agreement shall be
governed in all respects by and construed in accordance with the laws of the
Commonwealth of Virginia, United States of America. By submitting this
Registration Agreement, Registrant consents to the exclusive jurisdiction and
venue of the United States District Court for the Eastern District of Virginia,
Alexandria Division. If there is no jurisdiction in the United States District
Court for the Eastern District of Virginia, Alexandria Division, then
jurisdiction shall be in the Circuit Court of Fairfax County, Fairfax, Virginia.
Q. This is Domain Name Registration Agreement Version Number 4.0. This
Registration Agreement is only for registrations under top-level domains: COM,
ORG, NET, and EDU. By completing and submitting this Registration Agreement for
consideration and acceptance by NSI, the Registrant agrees that he/she has read
and agrees to be bound by A through P above.
Authorization
0a. (N)ew (M)odify (D)elete....:
0b. Auth Scheme................:
0c. Auth Info..................:
1. Comments...................:
2. Complete Domain Name.......:
18
<PAGE>
Organization Using Domain Name 5d. Organization Name..........:
5e. Street Address.............:
3a. Organization Name..........: 5f. City.......................:
3b. Street Address.............: 5g. State......................:
3c. City.......................: 5h. Postal Code................:
3d. State......................: 5i. Country....................:
3e. Postal Code................: 5j. Phone Number...............:
3f. Country....................: 5k. Fax Number.................:
5l. E-Mailbox..................:
Administrative Contact
4a. NIC Handle (if known)......: Billing Contact
4b. (I)ndividual (R)ole........: 6a. NIC Handle (if known)......:
4c. Name (Last, First).........: 6b. (I)ndividual (R)ole........:
4d. Organization Name..........: 6c. Name (Last, First).........:
4e. Street Address.............: 6d. Organization Name..........:
4f. City.......................: 6e. Street Address.............:
4g. State......................: 6f. City.......................:
4h. Postal Code................: 6g. State......................:
4i. Country....................: 6h. Postal Code................:
4j. Phone Number...............: 6i. Country....................:
4k. Fax Number.................: 6j. Phone Number...............:
4l. E-Mailbox..................: 6k. Fax Number.................:
6l. E-Mailbox..................:
Technical Contact
5a. NIC Handle (if known)......: Prime Name Server
5b. (I)ndividual (R)ole........: 7a. Primary Server Hostname....:
5c. Name (Last, First).........: 7b. Primary Server Netaddress..:
Secondary Name Server(s)
8a. Secondary Server Hostname..:
8b. Secondary Server Netaddress:
END OF AGREEMENT
For instructions, please refer to:
"http://rs.internic.net/help/instructions.txt"
[ URL ftp://rs.internic.net/templates/domain-template.txt ] [ 03/98]
Domain Version Number: 4.0
19
<PAGE>
SCHEDULE C
----------
LICENSE FEE PAYMENT SCHEDULE
----------------------------
================================================================================
LICENSE FEE SCHEDULE (Based on 36 names)
- --------------------------------------------------------------------------------
Year License Fee per Name Total
- --------------------------------------------------------------------------------
1. $ 600.00 $ 21,600.00
- --------------------------------------------------------------------------------
2. $ 600.00 $ 21,600.00
- --------------------------------------------------------------------------------
3. $ 600.00 $ 21,600.00
- --------------------------------------------------------------------------------
4. $ 600.00 $ 21,600.00
- --------------------------------------------------------------------------------
5. $ 600.00 $ 21,600.00
- --------------------------------------------------------------------------------
6. (5%) $ 630.00 $ 22,680.00
- --------------------------------------------------------------------------------
7. $ 661.50 $ 23,814.00
- --------------------------------------------------------------------------------
8. $ 694.58 $ 25,004.88
- --------------------------------------------------------------------------------
9. $ 729.31 $ 26,255.16
- --------------------------------------------------------------------------------
10. $ 765.78 $ 27,568.08
- --------------------------------------------------------------------------------
11. $ 804.07 $ 28,946.52
- --------------------------------------------------------------------------------
12. $ 844.27 $ 30,393.72
- --------------------------------------------------------------------------------
13. (7%) $ 903.37 $ 32,521.32
- --------------------------------------------------------------------------------
14. $ 966.61 $ 34,797.96
- --------------------------------------------------------------------------------
15. $1,034.27 $ 37,233.72
- --------------------------------------------------------------------------------
16. $1,106.67 $ 39,840.12
- --------------------------------------------------------------------------------
17. $1,184.14 $ 42,629.04
- --------------------------------------------------------------------------------
18. $1,267.03 $ 45,613.08
- --------------------------------------------------------------------------------
19. $1,355.72 $ 48,805.92
- --------------------------------------------------------------------------------
20. $1,450.62 $ 52,222.32
- --------------------------------------------------------------------------------
21. (10%) $1,595.68 $ 57,444.48
- --------------------------------------------------------------------------------
22. $1,755.25 $ 63,189.00
- --------------------------------------------------------------------------------
23. $1,930.78 $ 69,508.08
- --------------------------------------------------------------------------------
24. $2,123.86 $ 76,458.96
- --------------------------------------------------------------------------------
25. ($2,500) $2,500.00 $ 90,000.00
- --------------------------------------------------------------------------------
26-50 $2,500.00 $ 90,000.00
To be increased in each
succeeding year by the
rate by which the CPI has
changed, using January 1
of each year as the base
CPI.
- --------------------------------------------------------------------------------
TOTAL: $982,926.36
================================================================================
20
<PAGE>
SCHEDULE D
----------
ADDRESSES FOR NOTICES
---------------------
Owner: Jonathan Braun
24 Hollyhill Lane
Katona, N.Y. 10536
Telephone: 914 232 0358
facimile: 914 232 5662
Licensee: foreignTV.com, Inc.
162 Fifth Avenue
Suite 1005A
New York, New York 10010
Telephone No.: (212) 206-1121
Telecopier No.: (212) 242-4556
21
<PAGE>
EXHIBIT 10.4
ESCROW AGREEMENT
----------------
, 1999
[Name and Address
of Escrow Agent]
Ladies and Gentlemen:
The undersigned, Westminster Securities Corporation (herein-after called
the "Underwriter"), and foreignTV.com, Inc., a Delaware corporation (hereinafter
called the "Issuer"), have entered into an underwriting agreement pursuant to
which the Underwriter has been employed to use its best efforts, as agent for
the Issuer, to sell and distribute a maximum of 1,700,000 units ("Units"), each
Unit consisting of one (1) share of Common Stock, $.01 par value, of the Issuer
("Common Stock"), and one (1) Warrant to purchase one (1) share of Common Stock
at $9.00 per Warrant. The nature of the underwriting commitment is such that,
unless at least 850,000 Units have been subscribed and paid for within ninety
(90) days after the prospectus relating to such offering first becomes available
for public distribution, or within an additional 90 days if the Underwriter and
Issuer so agree, the employment of the Underwriter will be terminated and all
funds will be returned to the Underwriter for refund in full to the respective
subscribers, with interest and without deduction.
The public offering is required to be commenced promptly after receipt of
notice that the Securities and Exchange Commission has declared the Registration
Statement containing the prospectus effective (the "Effective Date").
The Underwriter will deposit the gross proceeds from all sales of the Stock
with you as Escrow Agent on the terms and conditions hereafter set forth:
1. Persons subscribing to purchase the Units will be instructed to remit
the purchase price in the form of cash or
<PAGE>
checks, drafts, money orders or other instruments for the payment of money,
payable to the order of "Westminster Securities Corporation - foreignTV.com,
Inc. Escrow Account". Such payment instruments will be remitted directly to the
Underwriter by the subscribers, or by selected dealers through whom the
Underwriter may offer the Units, and each day's receipts will be delivered by
the Underwriter to you before 3:00 P.M., on the following business day (duly
endorsed in blank or to your order by the Underwriter as to those of such
instruments which are drawn to its order), accompanied by a letter of
transmittal in duplicate setting forth as to each subscriber, the name, address,
number of Units purchased and the amount remitted. Any cash received by the
Underwriter on account of the purchase price of such shares will be likewise
delivered to you before 3:00 P.M. on the following business day.
2. The aforesaid instruments of payment are to be collected by you, but
only if properly endorsed or otherwise in such form as shall permit their
immediate collection by you, and the proceeds thereof, together with all cash
delivered to you, hereunder, are to be held in escrow until the total amount of
such cash and proceeds reaches the sum of $5,100,000 (which represents the
proceeds from the sale of 850,000 Units).
3. In the event you do not receive from the Underwriter within the period
set forth in the first unnumbered paragraph of this Agreement, cash and
instruments of payment in the aggregate sum of $5,100,000 or in the event that
such cash and instruments of payment in the aggregate sum of $5,100,000 are
received but not collected within the aforesaid period and a 10-day collection
period, you shall issue and deliver by registered mail, to the Underwriter
certified or cashier's checks in amounts equal to the aggregate amounts received
from it and collected by you, together with accrued interest thereon. You shall
notify the Underwriter and the Issuer of your distribution of funds received and
collected by you, as aforementioned, provided, however, that such distribution
shall be made only in respect of funds in hand, in cash, with you at such time.
4. Upon collection by you of $5,100,000 within the period set forth in
the first unnumbered paragraph of this Agreement (plus a ten (10) day collection
period), which sum of $5,100,000 repre sents the proceeds from the sale of
850,000 Units, you shall immediately notify the Issuer and the Underwriter of
such fact in
2
<PAGE>
writing and you will continue to hold the said $5,100,000 in escrow until given
instructions in writing by the Underwriter as to the disposition of said funds.
Upon such instructions being given you in writing by the Underwriter, you will
deliver at a time fixed by the Underwriter said $5,100,000 in the following
manner:
(a) to the Issuer, at the office of the Underwriter, 19 Rector Street,
New York, New York 10006, a certified or cashier's check payable in New York
Clearing House funds to the order of the Issuer in the amount of $4,641,000.
(b) to the Underwriter, at the office of the Underwriter, a certified
or cashier's check payable in New York Clearing House funds to the order of the
Underwriter in the amount of $ 459,000 representing commissions.
5. It is understood and agreed further, that you shall
(a) be under no duty or responsibility to enforce any of the terms or
conditions of the Underwriting Agreement between the Underwriter and the Issuer,
or to enforce payment of the purchase price for any Units subscribed to pursuant
to the public offering and sale contemplated therein;
(b) be under no duty or obligation to accept any letters of
transmittal hereunder from the Underwriter unless the same are accompanied by
cash, checks, drafts or other instruments for the payment of money which are
immediately negotiable and collectible, but you shall promptly notify the
Underwriter of any discrepancy between the amount set forth in any letter of
transmittal and the sum or sums delivered to you therewith nor will you be
required to keep records of any information on checks, drafts or other
instruments received or collected by you except as to the amount of same;
(c) be under no duty or responsibility to enforce collection of any
check, draft or other instrument for the payment of money delivered to you
hereunder, but you shall promptly notify and return to the Underwriter any
check, draft or other instrument of payment received from it, upon which payment
is refused, together with the letter of transmittal which was delivered to you
with such check, draft or other instrument of payment;
3
<PAGE>
(d) be protected in acting upon any notice, request, certificate,
approval, consent, letter of transmittal or other paper believed by you to be
genuine and to be signed by the proper party or parties, it being understood
that all notices, requests, certificates, approvals, consents or other papers
except letters of transmittal delivered to you on behalf of the Underwriter
shall be signed by the same persons who have signed this instrument on behalf of
the Underwriter;
(e) be deemed conclusively to have given and delivered any notice
required to be given or delivered hereunder if the same is in writing, signed by
any one of your authorized officers and mailed by ordinary first class mail in a
sealed post-paid wrapper, addressed to the Underwriter and the Issuer, at their
respective addresses set forth herein;
(f) be entitled to consult with your counsel and shall not be liable
for any action taken or omitted by you in accordance with the opinion and advice
of such counsel whether such counsel be a member of your in-house staff or
independent counsel;
(g) receive a fee as set forth on Exhibit A hereto for acting as the
escrow agent hereunder, payable by the Issuer;
(h) be not liable to either the Issuer or the Underwriter or to any
person with respect to any action taken or omitted to be taken by you in good
faith;
(i) be indemnified and held harmless by the Underwriter and the
Issuer, jointly and severally, for any and all claims, liabilities and expenses
arising as a result of your performance of this Agreement;
(j) be entitled to rely on any documents which you believe to have
been signed by the person whose name appears thereon as signatory and which you
believe comply with the requirements hereof;
4
<PAGE>
(k) send all notices hereunder to the following:
If to the Issuer: If to the Underwriter:
foreignTV.com, Inc. Westminster Securities Corporation
162 Fifth Avenue 19 Rector Street
Suite 1005A Suite 1105
New York, NY 10010 New York, NY 10006
Attn: Chief Operating Attn: President
Officer
Very truly yours,
WESTMINSTER SECURITIES CORPORATION
By: ____________________________
Name:
Title:
The foregoing escrow arrangements are hereby accepted and agreed to this
day of , 1999.
foreignTV.com, Inc.
By: _____________________________
Name:
Title:
The foregoing terms and conditions of this Escrow Agreement as set forth
above are hereby accepted and agreed to this day of , 1999.
[NAME OF ESCROW AGENT]
By: ______________________________
Name:
Title:
5
<PAGE>
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
--------------------
BRAUN - foreignTV.com, INC.
CONTENTS
Page
----
1. Employment........................................................... 1
2. Employment Term...................................................... 1
3. Position and Duties.................................................. 1
4. Authority............................................................ 3
5. Best Efforts of the Executive........................................ 3
6. Representations of the Executive..................................... 3
7. Representations of the Company....................................... 4
8. Liability and Insurance.............................................. 4
9. Compensation......................................................... 4
10. Sick Leave........................................................... 6
11. Medical Insurance.................................................... 6
12. Expenses............................................................. 6
13. Payment of Taxes..................................................... 6
<PAGE>
14. Termination..................................................... 7
15. Compensation and Effects Following Termination.................. 9
16. Non-Competition................................................. 11
17. Nondisclosure of Confidential Information....................... 12
18. Noninterference................................................. 12
19. Specific Enforcement............................................ 12
20. Severability.................................................... 13
21. Entire Agreement and Amendment.................................. 13
22. Assignment...................................................... 13
23. Waiver of Compliance............................................ 13
24. Descriptive Headings............................................ 14
25. Affiliate....................................................... 14
26. Counterparts.................................................... 14
27. Notices......................................................... 14
28. Law Governing................................................... 15
29. Arbitration..................................................... 15
<PAGE>
Employment Agreement
--------------------
This Agreement made as of _____________, 1999, by and between
Jonathan Braun (the "Executive") and foreignTV.com, Inc., a Delaware
corporation, (the "Company") (hereinafter collectively: the "Parties")
WHEREAS, the Company wishes to hire the Executive to work for it as its
Chief Executive Officer with duties and responsibilities as set forth in this
Agreement below; and
WHEREAS, the Company and the Executive wish to set forth in writing the
terms and conditions pursuant to which the Executive shall be employed by the
Company.
NOW, THEREFORE, In consideration of the mutual representations, covenants,
agreements and stipulations contained herein, the parties intending to be
legally bound agree as follows:
1. Employment.
1.1. The Company hereby employs the Executive as its Chief Executive
Officer, and the Executive hereby accepts and agrees to such hiring, engagement
and employment, for the Term of the employment (as defined below) and all on the
terms and conditions hereafter set forth.
1.2. The Executive shall have the duties and rights set forth and provided
in this Agreement, and the Parties agree that all terms and conditions of
Executive's employment with the Company shall be governed solely by this
Agreement except where expressly stated otherwise.
2. Employment Term.
The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to such employment, subject to the terms and conditions set forth herein,
for a term for five years, commencing retroactively as of January 1, 1999 and
continuing through December 31, 2004 (the "Term"), unless sooner terminated as
herein set forth.
3. Position and Duties.
3.1. As Chief Executive Officer, the Executive shall also serve as an
officer and/or as a director of any of the corporations or entities affiliated
with the Company, as may be requested of him by the Board of Directors of the
Company (the "Board").
1
<PAGE>
3.2. The Executive shall serve in the capacities of and perform the
obligations and duties of the office of Chief Executive Officer as set forth in
the Certificate of Incorporation and By-Laws of the Company as amended from time
to time. In the absence of the Chairman of the Company, the Executive shall act
as Chairman in his place.
3.3. Executive's employment hereunder shall be subject to the general
supervision, orders, advice and direction of the Company, as determined by the
Board. Executive shall perform such duties which are customarily performed by a
person holding a similar position with other employers engaged in the same or
similar business.
3.4. The Executive shall report and be directly responsible to the Board
of Directors of the Company and shall also have such other powers and duties as
may from time to time be prescribed by the Board.
3.5. The Executive shall devote his full working time and efforts to the
business and affairs of the Company and its subsidiaries and affiliates. It is
understood and agreed that the pursuit of personal investments and activities
which are not violative of the non-competition provisions of this Agreement and
which do not materially impair or detract from Employee's performance of his
duties to the Company shall not be in contravention of this Section 3.5. It is
expressly agreed that the Executive's employment by and activities in and
relating to the not-for-profit corporation, the Center For Contemporary
Diplomacy, Inc. (the "Center"), shall not be deemed to be in contravention of
this Section 3.5.
3.6. Subject to the terms of this Agreement, the Executive shall be
responsible for the general management of the Company's affairs and the day-to-
day managing, operating and administration of the Company's business, and
generally do all things reasonably deemed necessary or desirable by the Board
for the proper management, operation and administration of the Company's
business, with requisite authority to carry out his duties.
3.7. The Company shall not require the Executive to be employed in any
location other than metropolitan New York City unless he consents in writing to
such location.
3.8. During the Term of his employment, Executive shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; he shall be provided with the perquisites customarily
associated with the position of a senior executive and Chief Executive Officer
of a company.
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4. Authority.
4.1. The Company authorizes the Executive, for the Company's account and
on its behalf, to perform any act or do anything necessary or desirable in order
to carry out the Executive's duties as set forth in this agreement and
everything done by the Executive under the provisions of shall be done as agent
of the Company, and all obligations or expenses incurred hereunder shall be at
the expense of Company.
4.2. All obligations or expenses incurred hereunder shall be for the
account of, on behalf of, and at the expense of the Company except as otherwise
specifically provided for in this Agreement, provided, however that the Company
-------- -------
shall not be obligated to reimburse the Executive for any expenses incurred in
entering this Agreement or in payment for any legal, accounting, or other
professional counsel, advice, or services sought or received by Executive in
connection with the negotiation and consummation of this terms of this
Agreement.
5. Best Efforts of the Executive.
The Executive shall use his best efforts in performing his duties
hereunder, and in furthering the interests of the Company and its business. The
Executive shall render his services in a faithful, responsible and competent
manner, all in accordance with the terms and conditions of this Agreement and
the Company's policies and procedures.
6. Representations of the Executive.
The Executive represents and warrants to the Company that:
6.1. He has the expertise, experience and capability to perform the duties
assigned to him hereunder;
6.2. He is not suffering from any physical or mental condition which may
impair his capability to perform the duties assigned to him hereunder;
6.3. He is familiar and/or will familiarize himself with the Company's
policies and procedures, will fully adhere to them during his employment
hereunder, and will refrain from any act or communication that may reflect
unfavorably upon the Company, its business or its affiliates; and
6.4. He has carefully read and understood this Agreement, and is entering
into it of his own free will.
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7. Representations of the Company.
The Company represents and warrants that it is relying on the Executive's
representations in entering into this Agreement, and that it is willing to
employ the Executive subject to the terms and conditions of this Agreement and
to perform its obligations hereunder.
8. Liability and Insurance.
8.1. The Executive shall not be liable to the Company for any loss or
damage not caused by the Executive's own gross negligence or intentional failure
to comply with his obligations hereunder.
8.2. The Company will indemnify the Executive against and hold the
Executive harmless from (a) any liability, damages, costs and expenses
(including reasonable attorneys' fees) sustained or incurred for injury to any
person or property in, about and in connection with the Company's business, from
any cause whatsoever, unless such injury shall be caused by the Executive's own
(i) illegal or unlawful act of a nature involving moral turpitude, (ii) gross
negligence, or (iii) repeated failure to comply with his obligations which
remained uncured after notice by the Board, hereunder; and (b) any liability
damages, penalties, costs and expenses, statutory or otherwise, for all acts
properly performed by the Executive pursuant to the instruction of the Board;
provided, in each of the foregoing instances, that the Executive promptly
advises the Board of its receipt of information concerning any such injury and
the amount of any such liability, damages, penalties, costs and expenses. The
Company shall pay all expenses, including any and all attorney's fees, actually
incurred by Executive in connection with the investigation of any such matter,
the defense of any such action ,suit or proceeding and in connection with any
appeal thereon, including the cost of any settlements. The indemnification
under this Section 8.2 shall be deemed as adding to any other obligation of the
Company to indemnify the Executive as an officer or director of the Company, to
the maximum extent permitted by applicable law.
8.3. The Company shall carry sufficient liability insurance, workmen's
compensation and will deliver, upon Executive's demand, a copy of such liability
insurance to the Executive or a certificate evidencing the same.
9. Compensation.
9.1. Base Salary.
-----------
(a) During the Term of employment, the Company shall pay the Executive
an annual base salary of $150,000, payable in substantially equal
installments that shall be weekly, bi-weekly, semi-monthly or monthly,
depending on the policy that
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the Company adopts for payment of base salary to its senior officers.
(b) The Executive's base salary will be subject to review at least
once at the end of each calendar year, provided that upon each review the
annual increase shall be no less than 10% of the Base for the immediately
preceding year.
9.2. Incentive Compensation.
----------------------
(a) The Company, if determined desirable and if conditions so allow,
at the determination and discretion of the Board, grant the Executive a
bonus based on Executive's achievements, it being acknowledged and agreed
that the Company will be under no obligation to grant such a bonus.
(b) When the Company achieves a positive net operating income, as
determined by independent auditors, in any fiscal year, the Executive shall
be automatically entitled to a one-time bonus of $25,000.
9.3. Withholding. The Company shall be entitled to withhold such amounts
-----------
from compensation and other payments as are necessary to comply with federal,
state and local withholding laws.
9.4. Benefits.
--------
(a) During the Term of employment hereunder, the Executive shall be
entitled to participate in and receive all benefits under all of the
benefit plans and arrangements of the Company currently or hereafter made
available by the Company to its Executives, senior officers, or in lieu of
any of such plans and arrangements of the Company, plans and arrangements
agreed to by the Board and the Executive.
Nothing provided for in this Section 9.4 (a), shall be
interpreted to limit or in any way affect to the Company's right to amend
or terminate any of its benefit plans and arrangements with respect to its
senior officers, or other employees, whether or not the Executive is then
participating in such plan or arrangement.
(b) In addition to the provisions of Section 9.4(a), and subject to
the directives of the Board, the Executive shall have a car allowance of up
to $575 per month, plus parking and insurance. The Executive shall also
have an allowance for a telephone line at his home and a mobile telephone
for Company business.
(c) If employee is insurable at regular rates the Company shall
purchase a disability insurance policy providing for a net after tax income
substantially equivalent to what
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Executive's net after tax income would be on his base salary, such payments
to begin after Executive is disabled for 60 days. If Executive is
insurable at rates in excess of "regular rates", if Executive pays such
excess, Company will pay the balance of the premium.
9.5. Vacations. The Executive shall be entitled to five (5) weeks, or
---------
twenty five (25) business days, paid vacation in each calendar year.
10. Sick Leave; Personal Days.
In case of illness, the Executive shall be entitled to up to fourteen (14)
days of sick leave per year and up to seven (7) personal per year. During
authorized sick leave, the Executive's salary and other benefits shall continue
to be paid or accrued. Unused sick days may be carried over from year to year
but are not reimbursable upon the termination of this Agreement.
11. Medical Insurance.
The Executive, his spouse and children under 18 living with him, shall be
covered by the Company's group medical insurance policy, dental and long term
disability insurance, at no cost to the Executive, throughout the Term of his
employment.
12. Expenses.
The Executive shall receive reimbursement on a monthly basis for reasonable
business expenses incurred by him in connection with the performance of his
duties hereunder. Executive shall provide the Company with proper documentation
for each expense. If the Company reimburses the Executive for expenses later
determined to be non-deductible for federal income tax purposes, all such
amounts shall be treated as additional compensation to him.
13. Payment of Taxes
13.1. To the extent required by prevailing law, the Company shall deduct
from the salary payable to the Executive under this Agreement all social
security, federal, state and local taxes and charges as may now be in effect or
which may hereafter be enacted or required by applicable law as charges on the
compensation of the Executive.
13.2. To the extent required by prevailing law, the Company shall pay such
social security, disability, unemployment and workmen's compensation charges
imposed upon the Company by virtue of its employment of the Executive.
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13.3. The Executive shall notify the Company of any change in his place of
residence or status which may affect his tax liability.
14. Termination. The Executive's employment (herein the "Employment")
hereunder shall terminate only at the expiration of the Term, or prior thereto
upon the occurrence of one of the following:
14.1. Death. The Executive's employment hereunder shall terminate upon his
-----
death ("Death").
14.2. Disability.
----------
(a) The Company may terminate the Employment hereunder if he becomes
physically or mentally incapacitated and by reason thereof becomes unable to
perform his duties hereunder for a period of 60 or more days during any period
of twelve consecutive months; and
(b) The Executive may terminate his employment hereunder if, in the
judgment of a physician selected by him and in the concurrent judgment of a
physician of the Company's selection, the Executive's health has become impaired
to an extent that makes the continued performance of his duties hereunder
hazardous to his physical or mental health or his life (such reason for
termination by the Company or by the Executive is hereinbelow referred to as
"Disability").
The Company may waive its right to seek concurrent judgment of a
physician of its selection. If the Company exercises said right, and if the
respective judgments of the physician selected by the Executive and the
physician selected by the Company do not concur, the judgment of a third
physician to be chosen by the Executive and the Company's physicians shall be
controlling.
14.3. Cause. The Company may terminate the Employment hereunder for cause
-----
(herein "Cause"). The Company will have Cause to terminate the Employment
hereunder upon:
(a) any willful or intentional and gross act or conduct by the
Executive having the effect of materially injuring the Company or its
affiliates;
(b) the Executive's conviction of a crime (including conviction
pursuant to a plea of nolo contendere) involving, in the judgment of the Board
fraud, dishonesty or moral turpitude; or
(c) any material, recurring and ongoing defaults, material
nonperformance or material violations by the Executive of the material terms of
this Agreement, which, despite specific written notice by the Board, remain
uncured after an unreasonable
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period of time, which such period shall be no less than sixty (60) days.
14.4. On Company's Notice. The Company may terminate the Employment with
-------------------
no reason or cause whatsoever (herein termination "On the Company's Notice").
14.5. By Executive Without Reason. The Executive may terminate the
---------------------------
Employment (herein termination "On the Executive's Notice").
14.6. By Executive With Reason. The Executive may terminate the Employment
------------------------
at any time for "good reason" (herein termination "By Executive With Reason"),
upon one or more of the following:
(a) The failure to elect or appoint, or re-elect or re-appoint the
Executive to, or removal or improperly attempted removal of Executive from,
his position as Chief Executive Officer of the Company, except in
connection with the proper termination of Executive's employment by reason
of Cause, Death or Disability as provided herein;
(b) A reduction in Executive's overall compensation other than his
discretionary bonus under Section 9.3(a), or an adverse change in the
nature or scope of the authorities, powers, functions or duties normally
attached to Executive's position with the Company;
(c) The Company's failure or refusal to perform any obligations
required to be performed in accordance with this Agreement after reasonable
notice an opportunity to cure same; and
(d) A change in control of the company occurs. As used in this
Section 14(d), a "Change in Control" shall be deemed to have occurred upon
the passage of (i) ten (10) days following a public announcement that a
person or group of affiliated or associated persons have acquired, or
obtained the right to acquire, beneficial ownership of fifteen (15%)
percent of the outstanding Common Stock of the Company (the "Shares"); or
(ii) ten (10) days following the commencement of, or announcement of an
intention to make a tender offer or exchange offer, the consummation of
which would result in the beneficial ownership by a person or group of
affiliated or associated persons of fifteen (15%) percent of such
outstanding Shares; (iii) ten (10) days after a person or group of
affiliated or associated persons has (x) become the owner of at least ten
(10%) percent of the Shares or has filed a Schedule 13D or 13G with the
Securities and Exchange Commission and (y) whose ownership interest is
deemed by the Board to cause a material adverse impact on the business or
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the prospects of the Company; or (iv) a change in the composition of a
majority of the Board.
14.7. Notice and Date of Termination. Any termination pursuant to Sections
------------------------------
14.1 through 14.6, herein shall be communicated by written notice of termination
to the other party (herein referred to as the "Notice of Termination"). The
date of termination of the Employment hereunder (herein the "Date of
Termination") shall be:
(a) the date of the Executive's death, if his Employment is terminated
for Death; or
(b) the date on which a Notice of Termination is given or made
effective, if the Employment is terminated by the Company for Disability, Cause
or On Notice, respectively; or
(c) the date on which a Notice of Termination is given or made
effective, if the Employment is terminated by the Executive on Executive's
Notice or by the Executive With Reason.
15. Compensation and Effects Following Termination.
15.1. If the Employment is terminated For Death, Disability, On the
Company's Notice, or By Executive With Reason, the Executive, or his successors
or dependents (collectively in this Section: the "Executive") shall be entitled
to the following compensation:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) The base salary and all benefits and bonuses hereunder at the
rate prevailing at the time of Termination for the remainder of the first
year of the Term, if the Termination is effective prior to twelve (12)
months following the date hereof, and thereafter for a period of one (1)
year;
(c) A severance payment in a lump sum equivalent to the base salary
and bonuses equivalent to one (1) year for each year of prior employment
with the Company (whether during the initial Term of employment or
thereafter), plus a pro-rated amount for each portion of a year of prior
employment with the Company;
(d) Any options granted to Executive which have not, by the term
thereof vested, shall be deemed to have vested at the termination, and
shall thereafter be exercisable for the maximum period of time allowed for
exercise thereof under the terms of the option(s); and
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(e) The Company's (and Executive's and his dependents') participation
in any and all medical, dental and disability insurance plans shall be
continued, or equivalent benefits provided to him or them by the Company at
no cost to him or them, for a period of two (2) years from the date of
Termination.
15.2. If the Employment is terminated at the expiration of the Term of
employment or by the Executive on the Executive's Notice, the Executive shall be
entitled as follows:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) A severance payment in a lump sum equivalent to the base salary
and Bonuses equivalent to one half (1/2) year for each year of prior
employment with the Company (whether during the initial Term of employment
or thereafter), plus a pro-rated amount for each portion of a year of prior
employment with the Company;
(c) Any options granted to Executive which have not, by the term
thereof vested, shall be deemed to have vested at the termination, and
shall thereafter be exercisable for the maximum period of time allowed for
exercise thereof under the terms of the option(s); and
(d) The Company's (and Executive's and his dependents') participation
in any and all medical, dental and disability insurance plans shall be
continued, or equivalent benefits provided to him or them by the Company at
no cost to him or them, for a period of one (1) year from the date of
Termination.
15.3. If the Employment is terminated by the Company for Cause, the
Executive shall be entitled as follows:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) to the extent medical insurance or other benefits are required by
law to be extended or offered for a longer period, the Company shall comply
with such requirements; and
(c) Any options granted to Executive which have vested, shall
thereafter be exercisable for the minimum period of time allowed for
exercise thereof under the terms of the option(s). Any options granted to
Executive which have not yet vested, at the date of Termination, shall
expire upon Termination.
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15.4. Any extension of benefits following the termination of employment
provided for herein shall be deemed to be in addition to and not in lieu of, any
period for benefits continuation provided for by law at the Company's or
Executive's expense.
16. Non-Competition.
16.1. During the period of the Employment hereunder and during the
applicable post-termination non-competition period as specified in Section 16.2,
herein, the Executive shall not own any interest, or provide any financing for,
or perform any service for, any business organization which directly or
indirectly engages in competition with the Company within the principal
geographic areas where the Company is or has during the term of this Agreement
developed substantial plans to commence doing business (herein the "Territory");
or, as a sole proprietor, director, officer, shareholder, employee, manager,
consultant, independent contractor, advisor or otherwise, engage directly or
indirectly in competition in the Territory with, any business conducted by the
Company or by its respective affiliates or any business which the Company or any
of its respective affiliates had developed substantial plans to enter into
during the employment with the Company pursuant to this Agreement or prior
hereto. Any business organization whose principal business is conducted on or
through the Internet shall be deemed as competing with the Company in the
Territory; provided, however, that the non-competition provisions of this
Section shall not apply (a) to paid or voluntary work for nonprofit Internet
projects, provided they do not directly compete with foreignTV.com; (b) paid or
voluntary work for a local community-based Internet venture (e.g. northsalem.com
community news and information Web site); and (c) freelance writing and
interviewing. Anything to the contrary notwithstanding, the Executive's
employment by and activities in and relating to the Center shall not be deemed
to be in contravention of this Section 16.1.
16.2. Post-termination non-competition period.
(a) In the case of Termination of the employment for Cause or by the
Executive on Notice, the applicable post-termination non-competition period
shall be the period ending two (2) years following the Termination of the
employment hereunder.
(b) In the case of Termination of the employment for Disability, the
applicable post-termination non-competition period shall be the period
ending one (1) year following the Termination of the employment hereunder.
(c) In the case of Termination of the employment on the Company's
Notice or by the Executive for Reason, there shall
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be no applicable post-termination non-competition period hereunder.
16.3. If a court of competent jurisdiction shall determine that the any of
provisions of Section 16.2 transcend or contravene the provisions of applicable
law, ipso facto this section shall be deemed revised to comply with applicable
----------
law and shall be construed in such a manner as to render this Section as so
revised enforceable under such law.
17. Nondisclosure of Confidential Information.
17.1. The Executive shall not, except as authorized or required by the
Company, in any manner, directly or indirectly, reveal, divulge, disclose or
otherwise communicate or make available to any person, firm, corporation or
entity any information concerning any matters affecting or relating to the
Company, its affiliates and/or any customers of the Company, their business,
affairs, manner of operation, plans or policies, the prices they charge or any
other information, except such information that is already in the public domain
due to no fault of the Executive.
17.2. The provisions of this Section shall survive the term of this
Agreement.
18. Noninterference.
During and after the Term of this Agreement, the Employee shall not in any
manner, directly or indirectly, affect to the detriment of the Company or any of
its affiliates any relationship of the Company, or any of its affiliates, or any
of their respective officers, employees and agents with any customer, supplier
or employee the Company or any affiliate, or cause any customer or supplier to
refrain from doing business with the Company or any affiliate thereof. Nothing
in this Section 18 shall be deemed to prevent Employee from competing with the
Company after the expiration of the applicable post-termination non-competition
period, even if such competition may have the effect of detrimentally affecting
the business of the Company.
19. Specific Enforcement.
The Executive acknowledges and agrees that the Company would be irreparably
harmed and could not be made whole by monetary damages in the event any of the
terms and provisions of this Agreement were not performed by him in accordance
with its terms. Accordingly, the Executive agrees that, in addition to any other
remedy to which the Company may be entitled, the Company shall be
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entitled to an injunction or injunctions to prevent breaches of, and to obtain
specific performance of, any or all of the terms and provisions hereof and shall
be entitled to other equitable relief.
20. Severability.
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions will remain in
full force and effect and will in no way be affected, impaired or invalidated.
It is hereby stipulated and declared to be the intention of the parties that
they would have executed such remaining terms, provisions, covenants and
restrictions without including any of such as may be hereafter declared invalid,
void or unenforceable.
21. Entire Agreement and Amendment.
This Agreement contains the entire understanding of the parties with
respect to its subject matter. There are no restrictions, agreements, promises,
representations, warranties, covenants or undertakings other than those
expressly set forth herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may not be amended, modified or supplemented except upon the execution
and delivery of a written agreement executed by the parties hereto.
22. Assignment.
This Agreement shall not be assignable by any party hereto, except that it
shall be assignable by the Company to any companies that are or may become
affiliated to it but no such assignment shall release to the assigning party
from its financial obligations hereunder. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the heirs, personal
representatives, successors and permitted assigns of the parties hereto.
23. Waiver of Compliance.
Any failure of one of the parties hereto to comply with any obligation,
covenant, agreement or condition herein may be waived by the other party only by
a written instrument signed by the party granting such waiver, but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
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24. Descriptive Headings.
Descriptive headings are for convenience only and shall not control or
affect the meaning or construction of any provision of the Agreement.
25. Affiliate.
As used in this Agreement, the term "affiliate" means a person or entity
controlled by, controlling, or under common control with the Company.
26. Counterparts.
For the convenience of the parties, any number of counterparts of this
Agreement may be executed by one or more parties hereto and each such executed
counterpart shall be, and shall be deemed to be, an original instrument.
27. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, dispatched by way of recognized
courier service, such as Federal Express, by facsimile transmission (with a
confirmation copy mailed), or mailed (registered or certified mail, postage
prepaid, return receipt requested) to the respective parties at the following
addresses:
To the Executive:
Jonathan Braun
24 Hollyhill Lane
Katona, N.Y. 10536
Telephone: 914 232 0358
facimile: 914 232 5662
With a copy to:
Esq.
To the Company:
foreignTV.com, Inc.
162 Fifth Avenue, Suit 1005A
New York, N.Y. 10010
Attention: Mr. Albert T. Primo
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with copies to:
Marc D. Leve, Esq.
264 Lexington Ave., #2A
New York, N.Y. 10016
or to such other address as any party hereto may, from time to time, designate
in a written notice given in a like manner.
28. Law Governing.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within such State, without reference to any rules of
conflicts of laws.
29. Arbitration.
All disputes, controversies or claims with respect to any of the terms or
conditions of, or the performance of the parties under, or termination of, this
Employment Agreement which cannot be settled amicably by the parties, whether or
not such disputes, controversy(ies) or claim(s) are arbitrable under applicable
law, shall be finally settled by arbitration in accordance with the Employment
Commercial Arbitration Rules of the American Arbitration Association in New York
City. The arbitration proceedings shall be conducted in New York City in the
English Language before one (1) arbitrator. The award of the arbitrator shall
be final and binding upon the parties and judgment upon such award may be
entered in any court having jurisdiction or application may be made to such a
court for a judicial acceptance of such award and judgment or order of
enforcement, as the case may be.
IN WITNESS THEREOF THE PARTIES have executed this Agreement as of the date
first herein written.
THE COMPANY: THE EXECUTIVE
foreignTV.com, Inc.
By: ______________________ ___________________
Name: Jonathan Braun
Title:
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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
--------------------
PRIMO - foreignTV.com, INC.
CONTENTS
Page
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1. Employment......................................................... 1
2. Employment Term.................................................... 1
3. Position and Duties................................................ 1
4. Authority.......................................................... 3
5. Best Efforts of the Executive...................................... 3
6. Representations of the Executive................................... 3
7. Representations of the Company..................................... 4
8. Liability and Insurance............................................ 4
9. Compensation....................................................... 4
10. Sick Leave......................................................... 6
11. Medical Insurance.................................................. 6
12. Expenses........................................................... 6
13. Payment of Taxes .................................................. 6
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14. Termination......................................................... 7
15. Compensation and Effects Following Termination...................... 9
16. Non-Competition..................................................... 11
17. Nondisclosure of Confidential Information........................... 12
18. Noninterference..................................................... 12
19. Specific Enforcement................................................ 12
20. Severability........................................................ 13
21. Entire Agreement and Amendment...................................... 13
22. Assignment.......................................................... 13
23. Waiver of Compliance................................................ 13
24. Descriptive Headings................................................ 14
25. Affiliate........................................................... 14
26. Counterparts........................................................ 14
27. Notices............................................................. 14
28. Law Governing....................................................... 15
29. Arbitration......................................................... 15
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Employment Agreement
--------------------
This Agreement made as of _______________, 1999, by and between
Albert T. Primo (the "Executive") and foreignTV.com, Inc., a Delaware
corporation, (the "Company") (hereinafter collectively: the "Parties")
WHEREAS, the Company wishes to hire the Executive to work for it as its
President with duties and responsibilities as set forth in this Agreement below;
and
WHEREAS, the Company and the Executive wish to set forth in writing the
terms and conditions pursuant to which the Executive shall be employed by the
Company.
NOW, THEREFORE, In consideration of the mutual representations, covenants,
agreements and stipulations contained herein, the parties intending to be
legally bound agree as follows:
1. Employment.
1.1. The Company hereby employs the Executive as its President, and the
Executive hereby accepts and agrees to such hiring, engagement and employment,
for the Term of the employment (as defined below) and all on the terms and
conditions hereafter set forth.
1.2. The Executive shall have the duties and rights set forth and provided
in this Agreement, and the Parties agree that all terms and conditions of
Executive's employment with the Company shall be governed solely by this
Agreement except where expressly stated otherwise.
2. Employment Term.
The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to such employment, subject to the terms and conditions set forth herein,
for a term for five years, commencing on ____________, 1999 and continuing
through December 31, 2004 (the "Term"), unless sooner terminated as herein set
forth.
3. Position and Duties.
3.1. As President, the Executive shall also serve as an officer or as a
director of any of the corporations or entities affiliated with the Company, as
may be requested of him by the Board of Directors of the Company (the "Board").
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3.2. The Executive shall serve in the capacities of and perform the
obligations and duties of the office of President as set forth in the
Certificate of Incorporation and By-Laws of the Company as amended from time to
time.
3.3. Executive's employment hereunder shall be subject to the general
supervision, orders, advice and direction of the Company, as determined by the
Board. Executive shall perform such duties which are customarily performed by a
person holding a similar position with other employers engaged in the same or
similar business.
3.4. The Executive shall report and be directly responsible to the Board
of Directors of the Company and shall also have such other powers and duties as
may from time to time be prescribed by the Board.
3.5. The Executive shall devote his full working time and efforts to the
business and affairs of the Company and its subsidiaries and affiliates. It is
understood and agreed that the pursuit of personal investments and activities
which are not violative of the non-competition provisions of this Agreement and
which do not materially impair or detract from Employee's performance of his
duties to the Company shall not be in contravention of this Section 3.5. It is
expressly agreed that the Executive's employment by and activities in and
relating to the not-for-profit corporation, the Center For Contemporary
Diplomacy, Inc. (the "Center"), shall not be deemed to be in contravention of
this Section 3.5.
3.6. Subject to the terms of this Agreement, the Executive shall be
responsible for the general management of the Company's affairs and the day-to-
day managing, operating and administration of the Company's business, and
generally do all things reasonably deemed necessary or desirable by the Board
for the proper management, operation and administration of the Company's
business, with requisite authority to carry out his duties.
3.7. The Company shall not require the Executive to be employed in any
location other than metropolitan New York City unless he consents in writing to
such location.
3.8. During the Term of his employment, Executive shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; he shall be provided with the perquisites customarily
associated with the position of a senior executive and President of a company.
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4. Authority.
4.1. The Company authorizes the Executive, for the Company's account and
on its behalf, to perform any act or do anything necessary or desirable in order
to carry out the Executive's duties as set forth in this agreement and
everything done by the Executive under the provisions of shall be done as agent
of the Company, and all obligations or expenses incurred hereunder shall be at
the expense of Company.
4.2. All obligations or expenses incurred hereunder shall be for the
account of, on behalf of, and at the expense of the Company except as otherwise
specifically provided for in this Agreement, provided, however that the Company
-------- -------
shall not be obligated to reimburse the Executive for any expenses incurred in
entering this Agreement or in payment for any legal, accounting, or other
professional counsel, advice, or services sought or received by Executive in
connection with the negotiation and consummation of this terms of this
Agreement.
5. Best Efforts of the Executive.
The Executive shall use his best efforts in performing his duties
hereunder, and in furthering the interests of the Company and its business. The
Executive shall render his services in a faithful, responsible and competent
manner, all in accordance with the terms and conditions of this Agreement and
the Company's policies and procedures.
6. Representations of the Executive.
The Executive represents and warrants to the Company that:
6.1. He has the expertise, experience and capability to perform the duties
assigned to him hereunder;
6.2. He is not suffering from any physical or mental condition which may
impair his capability to perform the duties assigned to him hereunder;
6.3. He is familiar and/or will familiarize himself with the Company's
policies and procedures, will fully adhere to them during his employment
hereunder, and will refrain from any act or communication that may reflect
unfavorably upon the Company, its business or its affiliates; and
6.4. He has carefully read and understood this Agreement, and is entering
into it of his own free will.
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7. Representations of the Company.
The Company represents and warrants that it is relying on the Executive's
representations in entering into this Agreement, and that it is willing to
employ the Executive subject to the terms and conditions of this Agreement and
to perform its obligations hereunder.
8. Liability and Insurance.
8.1. The Executive shall not be liable to the Company for any loss or
damage not caused by the Executive's own gross negligence or intentional failure
to comply with his obligations hereunder.
8.2. The Company will indemnify the Executive against and hold the
Executive harmless from (a) any liability, damages, costs and expenses
(including reasonable attorneys' fees) sustained or incurred for injury to any
person or property in, about and in connection with the Company's business, from
any cause whatsoever, unless such injury shall be caused by the Executive's own
(i) illegal or unlawful act of a nature involving moral turpitude, (ii) gross
negligence, or (iii) repeated failure to comply with his obligations which
remained uncured after notice by the Board, hereunder; and (b) any liability
damages, penalties, costs and expenses, statutory or otherwise, for all acts
properly performed by the Executive pursuant to the instruction of the Board;
provided, in each of the foregoing instances, that the Executive promptly
advises the Board of its receipt of information concerning any such injury and
the amount of any such liability, damages, penalties, costs and expenses. The
Company shall pay all expenses, including any and all attorney's fees, actually
incurred by Executive in connection with the investigation of any such matter,
the defense of any such action ,suit or proceeding and in connection with any
appeal thereon, including the cost of any settlements. The indemnification
under this Section 8.2 shall be deemed as adding to any other obligation of the
Company to indemnify the Executive as an officer or director of the Company, to
the maximum extent permitted by applicable law.
8.3. The Company shall carry sufficient liability insurance, workmen's
compensation and will deliver, upon Executive's demand, a copy of such liability
insurance to the Executive or a certificate evidencing the same.
9. Compensation.
9.1. Base Salary.
-----------
(a) During the Term of employment, the Company shall pay the Executive
an annual base salary of $150,000, payable in substantially equal
installments that shall be weekly, bi-weekly, semi-monthly or monthly,
depending on the policy that
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the Company adopts for payment of base salary to its senior officers.
(b) The Executive's base salary will be subject to review at least
once at the end of each calendar year, provided that upon each review the
annual increase shall be no less than 10% of the Base for the immediately
preceding year.
9.2. Incentive Compensation.
----------------------
(a) The Company, if determined desirable and if conditions so allow,
at the determination and discretion of the Board, grant the Executive a
bonus based on Executive's achievements, it being acknowledged and agreed
that the Company will be under no obligation to grant such a bonus.
(b) When the Company achieves a positive net operating income, as
determined by independent auditors, in any fiscal year, the Executive shall
be automatically entitled to a one-time bonus of $25,000.
9.3. Withholding. The Company shall be entitled to withhold such amounts
-----------
from compensation and other payments as are necessary to comply with federal,
state and local withholding laws.
9.4. Benefits.
--------
(a) During the Term of employment hereunder, the Executive shall be
entitled to participate in and receive all benefits under all of the
benefit plans and arrangements of the Company currently or hereafter made
available by the Company to its Executives, senior officers, or in lieu of
any of such plans and arrangements of the Company, plans and arrangements
agreed to by the Board and the Executive.
Nothing provided for in this Section 9.4 (a), shall be
interpreted to limit or in any way affect to the Company's right to amend
or terminate any of its benefit plans and arrangements with respect to its
senior officers, or other employees, whether or not the Executive is then
participating in such plan or arrangement.
(b) In addition to the provisions of Section 9.4(a), and subject to
the directives of the Board, the Executive shall have a commuting allowance
of up to $300 per month.
(c) If employee is insurable at regular rates the Company shall
purchase a disability insurance policy providing for a net after tax income
substantially equivalent to what Executive's net after tax income would be
on his base salary, such payments to begin after Executive is disabled for
60 days. If Executive is insurable at rates in excess of
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"regular rates", if Executive pays such excess, Company will pay the
balance of the premium.
9.5. Vacations. The Executive shall be entitled to five (5) weeks, or
---------
twenty five (25) business days, paid vacation in each calendar year.
10. Sick Leave; Personal Days.
In case of illness, the Executive shall be entitled to up to fourteen (14)
days of sick leave per year and up to seven (7) personal per year. During
authorized sick leave, the Executive's salary and other benefits shall continue
to be paid or accrued. Unused sick days may be carried over from year to year
but are not reimbursable upon the termination of this Agreement.
11. Medical Insurance.
The Executive, his spouse and children under 18 living with him, shall be
covered by the Company's group medical insurance policy, dental and long term
disability insurance, at no cost to the Executive, throughout the Term of his
employment.
12. Expenses.
The Executive shall receive reimbursement on a monthly basis for reasonable
business expenses incurred by him in connection with the performance of his
duties hereunder. Executive shall provide the Company with proper documentation
for each expense. If the Company reimburses the Executive for expenses later
determined to be non-deductible for federal income tax purposes, all such
amounts shall be treated as additional compensation to him.
13. Payment of Taxes
13.1. To the extent required by prevailing law, the Company shall deduct
from the salary payable to the Executive under this Agreement all social
security, federal, state and local taxes and charges as may now be in effect or
which may hereafter be enacted or required by applicable law as charges on the
compensation of the Executive.
13.2. To the extent required by prevailing law, the Company shall pay such
social security, disability, unemployment and workmen's compensation charges
imposed upon the Company by virtue of its employment of the Executive.
13.3. The Executive shall notify the Company of any change in his place of
residence or status which may affect his tax liability.
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14. Termination. The Executive's employment (herein the "Employment")
hereunder shall terminate only at the expiration of the Term, or prior thereto
upon the occurrence of one of the following:
14.1. Death. The Executive's employment hereunder shall terminate upon his
-----
death ("Death").
14.2. Disability.
----------
(a) The Company may terminate the Employment hereunder if he becomes
physically or mentally incapacitated and by reason thereof becomes unable to
perform his duties hereunder for a period of 60 or more days during any period
of twelve consecutive months; and
(b) The Executive may terminate his employment hereunder if, in the
judgment of a physician selected by him and in the concurrent judgment of a
physician of the Company's selection, the Executive's health has become impaired
to an extent that makes the continued performance of his duties hereunder
hazardous to his physical or mental health or his life (such reason for
termination by the Company or by the Executive is hereinbelow referred to as
"Disability").
The Company may waive its right to seek concurrent judgment of a
physician of its selection. If the Company exercises said right, and if the
respective judgments of the physician selected by the Executive and the
physician selected by the Company do not concur, the judgment of a third
physician to be chosen by the Executive and the Company's physicians shall be
controlling.
14.3. Cause. The Company may terminate the Employment hereunder for cause
-----
(herein "Cause"). The Company will have Cause to terminate the Employment
hereunder upon:
(a) any willful or intentional and gross act or conduct by the
Executive having the effect of materially injuring the Company or its
affiliates;
(b) the Executive's conviction of a crime (including conviction
pursuant to a plea of nolo contendere) involving, in the judgment of the Board
fraud, dishonesty or moral turpitude; or
(c) any material, recurring and ongoing defaults, material
nonperformance or material violations by the Executive of the material terms of
this Agreement, which, despite specific written notice by the Board, remain
uncured after an unreasonable period of time, which such period shall be no less
than sixty (60) days.
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14.4. On Company's Notice. The Company may terminate the Employment with
-------------------
no reason or cause whatsoever (herein termination "On the Company's Notice").
14.5. By Executive Without Reason. The Executive may terminate the
---------------------------
Employment (herein termination "On the Executive's Notice").
14.6. By Executive With Reason. The Executive may terminate the Employment
------------------------
at any time for "good reason" (herein termination "By Executive With Reason"),
upon one or more of the following:
(a) The failure to elect or appoint, or re-elect or re-appoint the
Executive to, or removal or improperly attempted removal of Executive from,
his position as President of the Company, except in connection with the
proper termination of Executive's employment by reason of Cause, Death or
Disability as provided herein;
(b) A reduction in Executive's overall compensation other than his
discretionary bonus under Section 9.3(a), or an adverse change in the
nature or scope of the authorities, powers, functions or duties normally
attached to Executive's position with the Company;
(c) The Company's failure or refusal to perform any obligations
required to be performed in accordance with this Agreement after reasonable
notice an opportunity to cure same; and
(d) A change in control of the company occurs. As used in this
Section 14(d), a "Change in Control" shall be deemed to have occurred upon
the passage of (i) ten (10) days following a public announcement that a
person or group of affiliated or associated persons have acquired, or
obtained the right to acquire, beneficial ownership of fifteen (15%)
percent of the outstanding Common Stock of the Company (the "Shares"); or
(ii) ten (10) days following the commencement of, or announcement of an
intention to make a tender offer or exchange offer, the consummation of
which would result in the beneficial ownership by a person or group of
affiliated or associated persons of fifteen (15%) percent of such
outstanding Shares; (iii) ten (10) days after a person or group of
affiliated or associated persons has (x) become the owner of at least ten
(10%) percent of the Shares or has filed a Schedule 13D or 13G with the
Securities and Exchange Commission and (y) whose ownership interest is
deemed by the Board to cause a material adverse impact on the business or
the prospects of the Company; or (iv) a change in the composition of a
majority of the Board.
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14.7. Notice and Date of Termination. Any termination pursuant to Sections
------------------------------
14.1 through 14.6, herein shall be communicated by written notice of termination
to the other party (herein referred to as the "Notice of Termination"). The
date of termination of the Employment hereunder (herein the "Date of
Termination") shall be:
(a) the date of the Executive's death, if his Employment is terminated
for Death; or
(b) the date on which a Notice of Termination is given or made
effective, if the Employment is terminated by the Company for Disability, Cause
or On Notice, respectively; or
(c) the date on which a Notice of Termination is given or made
effective, if the Employment is terminated by the Executive on Executive's
Notice or by the Executive With Reason.
15. Compensation and Effects Following Termination.
15.1. If the Employment is terminated For Death, Disability, On the
Company's Notice, or By Executive With Reason, the Executive, or his successors
or dependents (collectively in this Section: the "Executive") shall be entitled
to the following compensation:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) The base salary and all benefits and bonuses hereunder at the
rate prevailing at the time of Termination for the remainder of the first
year of the Term, if the Termination is effective prior to twelve (12)
months following the date hereof, and thereafter for a period of one (1)
year;
(c) A severance payment in a lump sum equivalent to the base salary
and bonuses equivalent to one (1) year for each year of prior employment
with the Company (whether during the initial Term of employment or
thereafter), plus a pro-rated amount for each portion of a year of prior
employment with the Company;
(d) Any options granted to Executive which have not, by the term
thereof vested, shall be deemed to have vested at the termination, and
shall thereafter be exercisable for the maximum period of time allowed for
exercise thereof under the terms of the option(s); and
(e) The Company's (and Executive's and his dependents') participation
in any and all medical, dental and disability insurance plans shall be
continued, or equivalent benefits
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provided to him or them by the Company at no cost to him or them, for a
period of two (2) years from the date of Termination.
15.2. If the Employment is terminated at the expiration of the Term of
employment or by the Executive On the Executive's Notice, the Executive shall be
entitled as follows:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) A severance payment in a lump sum equivalent to the base salary
and Bonuses equivalent to one half (1/2) year for each year of prior
employment with the Company (whether during the initial Term of employment
or thereafter), plus a pro-rated amount for each portion of a year of prior
employment with the Company;
(c) Any options granted to Executive which have not, by the term
thereof vested, shall be deemed to have vested at the termination, and
shall thereafter be exercisable for the maximum period of time allowed for
exercise thereof under the terms of the option(s); and
(d) The Company's (and Executive's and his dependents') participation
in any and all medical, dental and disability insurance plans shall be
continued, or equivalent benefits provided to him or them by the Company at
no cost to him or them, for a period of one (1) year from the date of
Termination.
15.3. If the Employment is terminated by the Company for Cause, the
Executive shall be entitled as follows:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) to the extent medical insurance or other benefits are required by
law to be extended or offered for a longer period, the Company shall comply
with such requirements; and
(c) Any options granted to Executive which have vested, shall
thereafter be exercisable for the minimum period of time allowed for
exercise thereof under the terms of the option(s). Any options granted to
Executive which have not yet vested, at the date of Termination, shall
expire upon Termination.
15.4. Any extension of benefits following the termination of employment
provided for herein shall be deemed to be in addition
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to and not in lieu of, any period for benefits continuation provided for by law
at the Company's or Executive's expense.
16. Non-Competition.
16.1. During the period of the Employment hereunder and during the
applicable post-termination non-competition period as specified in Section 16.2,
herein, the Executive shall not own any interest, or provide any financing for,
or perform any service for, any business organization which directly or
indirectly engages in competition with the Company within the principal
geographic areas where the Company is or has during the term of this Agreement
developed substantial plans to commence doing business (herein the "Territory");
or, as a sole proprietor, director, officer, shareholder, employee, manager,
consultant, independent contractor, advisor or otherwise, engage directly or
indirectly in competition in the Territory with, any business conducted by the
Company or by its respective affiliates or any business which the Company or any
of its respective affiliates had developed substantial plans to enter into
during the employment with the Company pursuant to this Agreement or prior
hereto. Any business organization whose principal business is conducted on or
through the Internet shall be deemed as competing with the Company in the
Territory; provided, however, that the non-competition provisions of this
Section shall not apply (a) to paid or voluntary work for nonprofit Internet
projects, provided they do not directly compete with foreignTV.com; (b) paid or
voluntary work for a local community-based Internet venture (e.g. northsalem.com
community news and information Web site); and (c) freelance writing and
interviewing. Anything to the contrary notwithstanding, the Executive's
employment by and activities in and relating to the Center shall not be deemed
to be in contravention of this Section 16.1.
16.2. Post-termination non-competition period.
(a) In the case of Termination of the employment for Cause or by the
Executive on Notice, the applicable post-termination non-competition period
shall be the period ending two (2) years following the Termination of the
employment hereunder.
(b) In the case of Termination of the employment for Disability, the
applicable post-termination non-competition period shall be the period
ending one (1) year following the Termination of the employment hereunder.
(c) In the case of Termination of the employment on the Company's
Notice or by the Executive for Reason, there shall be no applicable post-
termination non-competition period hereunder.
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16.3. If a court of competent jurisdiction shall determine that the any of
provisions of Section 16.2 transcend or contravene the provisions of applicable
law, ipso facto this section shall be deemed revised to comply with applicable
----------
law and shall be construed in such a manner as to render this Section as so
revised enforceable under such law.
17. Nondisclosure of Confidential Information.
17.1. The Executive shall not, except as authorized or required by the
Company, in any manner, directly or indirectly, reveal, divulge, disclose or
otherwise communicate or make available to any person, firm, corporation or
entity any information concerning any matters affecting or relating to the
Company, its affiliates and/or any customers of the Company, their business,
affairs, manner of operation, plans or policies, the prices they charge or any
other information, except such information that is already in the public domain
due to no fault of the Executive.
17.2. The provisions of this Section shall survive the term of this
Agreement.
18. Noninterference.
During and after the Term of this Agreement, the Employee shall not in any
manner, directly or indirectly, affect to the detriment of the Company or any of
its affiliates any relationship of the Company, or any of its affiliates, or any
of their respective officers, employees and agents with any customer, supplier
or employee the Company or any affiliate, or cause any customer or supplier to
refrain from doing business with the Company or any affiliate thereof. Nothing
in this Section 18 shall be deemed to prevent Employee from competing with the
Company after the expiration of the applicable post-termination non-competition
period, even if such competition may have the effect of detrimentally affecting
the business of the Company.
19. Specific Enforcement.
The Executive acknowledges and agrees that the Company would be irreparably
harmed and could not be made whole by monetary damages in the event any of the
terms and provisions of this Agreement were not performed by him in accordance
with its terms. Accordingly, the Executive agrees that, in addition to any other
remedy to which the Company may be entitled, the Company shall be entitled to an
injunction or injunctions to prevent breaches of, and to obtain specific
performance of, any or all of the terms and provisions hereof and shall be
entitled to other equitable relief.
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20. Severability.
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions will remain in
full force and effect and will in no way be affected, impaired or invalidated.
It is hereby stipulated and declared to be the intention of the parties that
they would have executed such remaining terms, provisions, covenants and
restrictions without including any of such as may be hereafter declared invalid,
void or unenforceable.
21. Entire Agreement and Amendment.
This Agreement contains the entire understanding of the parties with
respect to its subject matter. There are no restrictions, agreements, promises,
representations, warranties, covenants or undertakings other than those
expressly set forth herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may not be amended, modified or supplemented except upon the execution
and delivery of a written agreement executed by the parties hereto.
22. Assignment.
This Agreement shall not be assignable by any party hereto, except that it
shall be assignable by the Company to any companies that are or may become
affiliated to it but no such assignment shall release to the assigning party
from its financial obligations hereunder. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the heirs, personal
representatives, successors and permitted assigns of the parties hereto.
23. Waiver of Compliance.
Any failure of one of the parties hereto to comply with any obligation,
covenant, agreement or condition herein may be waived by the other party only by
a written instrument signed by the party granting such waiver, but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
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24. Descriptive Headings.
Descriptive headings are for convenience only and shall not control or
affect the meaning or construction of any provision of the Agreement.
25. Affiliate.
As used in this Agreement, the term "affiliate" means a person or entity
controlled by, controlling, or under common control with the Company.
26. Counterparts.
For the convenience of the parties, any number of counterparts of this
Agreement may be executed by one or more parties hereto and each such executed
counterpart shall be, and shall be deemed to be, an original instrument.
27. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, dispatched by way of recognized
courier service, such as Federal Express, by facsimile transmission (with a
confirmation copy mailed), or mailed (registered or certified mail, postage
prepaid, return receipt requested) to the respective parties at the following
addresses:
To the Executive:
Albert T. Primo
182 Sound Beach Avenue
Old Greenwich, Conn 06870
telephone: (203) 637 0044
facsimile: (203) 698 0812
Esq.
To the Company:
foreignTV.com, Inc.
162 Fifth Avenue, Suit 1005A
New York, N.Y. 10010
Attention: Mr. Jonathan Braun
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with copies to:
Marc D. Leve, Esq.
264 Lexington Ave., #2A
New York, N.Y. 10016
or to such other address as any party hereto may, from time to time, designate
in a written notice given in a like manner.
28. Law Governing.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within such State, without reference to any rules of
conflicts of laws.
29. Arbitration.
All disputes, controversies or claims with respect to any of the terms or
conditions of, or the performance of the parties under, or termination of, this
Employment Agreement which cannot be settled amicably by the parties, whether or
not such disputes, controversy(ies) or claim(s) are arbitrable under applicable
law, shall be finally settled by arbitration in accordance with the Employment
Commercial Arbitration Rules of the American Arbitration Association in New York
City. The arbitration proceedings shall be conducted in New York City in the
English Language before one (1) arbitrator. The award of the arbitrator shall
be final and binding upon the parties and judgment upon such award may be
entered in any court having jurisdiction or application may be made to such a
court for a judicial acceptance of such award and judgment or order of
enforcement, as the case may be.
IN WITNESS THEREOF THE PARTIES have executed this Agreement as of the date
first herein written.
THE COMPANY: THE EXECUTIVE
foreignTV.com, Inc.
By: ______________________ ___________________
Name: Albert T. Primo
Title:
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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
--------------------
FINEL - foreignTV.com, INC.
CONTENTS
Page
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1. Employment........................................................... 1
2. Employment Term...................................................... 1
3. Position and Duties.................................................. 1
4. Authority............................................................ 3
5. Best Efforts of the Executive........................................ 3
6. Representations of the Executive..................................... 3
7. Representations of the Company....................................... 4
8. Liability and Insurance.............................................. 4
9. Compensation......................................................... 4
10. Sick Leave........................................................... 6
11. Medical Insurance.................................................... 6
12. Expenses............................................................. 6
13. Payment of Taxes..................................................... 6
<PAGE>
14. Termination.......................................................... 6
15. Compensation and Effects Following Termination....................... 9
16. Non-Competition...................................................... 11
17. Nondisclosure of Confidential Information............................ 12
18. Noninterference...................................................... 12
19. Specific Enforcement................................................. 12
20. Severability......................................................... 13
21. Entire Agreement and Amendment....................................... 13
22. Assignment........................................................... 13
23. Waiver of Compliance................................................. 13
24. Descriptive Headings................................................. 14
25. Affiliate............................................................ 14
26. Counterparts......................................................... 14
27. Notices.............................................................. 14
28. Law Governing........................................................ 15
29. Arbitration.......................................................... 15
<PAGE>
Employment Agreement
--------------------
This Agreement made as of _____________, 1999, by and between
Bruno Finel (the "Executive") and foreignTV.com, Inc., a Delaware corporation,
(the "Company") (hereinafter collectively: the "Parties")
WHEREAS, the Company wishes to hire the Executive to work for it as its
Senior Vice President - European Operations with duties and responsibilities as
set forth in this Agreement below; and
WHEREAS, the Company and the Executive wish to set forth in writing the
terms and conditions pursuant to which the Executive shall be employed by the
Company.
NOW, THEREFORE, In consideration of the mutual representations, covenants,
agreements and stipulations contained herein, the parties intending to be
legally bound agree as follows:
1. Employment.
1.1. The Company hereby employs the Executive as its Senior Vice President
- - European Operations, and the Executive hereby accepts and agrees to such
hiring, engagement and employment, for the Term of the employment (as defined
below) and all on the terms and conditions hereafter set forth.
1.2. The Executive shall have the duties and rights set forth and provided
in this Agreement, and the Parties agree that all terms and conditions of
Executive's employment with the Company shall be governed solely by this
Agreement except where expressly stated otherwise.
2. Employment Term.
The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to such employment, subject to the terms and conditions set forth herein,
for a term for five years, commencing on __________, 1999 and continuing through
December 31, 2004 (the "Term"), unless sooner terminated as herein set forth.
3. Position and Duties.
3.1. As Senior Vice President - European Operations, the Executive shall
also serve as an officer or as a director of any of the corporations or entities
affiliated with the Company, as may be requested of him by the Board of
Directors of the Company (the "Board").
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3.2. The Executive shall serve in the capacities of and perform the
obligations and duties of the office of a Senior Vice President, as set forth in
the Certificate of Incorporation and By-Laws of the Company as amended from time
to time.
3.3. Executive's employment hereunder shall be subject to the general
supervision, orders, advice and direction of the Company, as determined by the
Board. Executive shall perform such duties which are customarily performed by a
person holding a similar position with other employers engaged in the same or
similar business.
3.4. The Executive shall report and be directly responsible to the Board
of Directors of the Company and shall also have such other powers and duties as
may from time to time be prescribed by the Board.
3.5. The Executive shall devote his full working time and efforts to the
business and affairs of the Company and its subsidiaries and affiliates. It is
understood and agreed that the pursuit of personal investments and activities
which are not violative of the non-competition provisions of this Agreement and
which do not materially impair or detract from Employee's performance of his
duties to the Company shall not be in contravention of this Section 3.5. It is
expressly agreed that the Executive's employment by and activities in and
relating to the not-for-profit corporation, the Center For Contemporary
Diplomacy, Inc. (the "Center"), shall not be deemed to be in contravention of
this Section 3.5.
3.6. Subject to the terms of this Agreement, the Executive shall be
responsible for the general management of the Company's affairs and the day-to-
day managing, operating and administration of the Company's business in Europe,
and generally do all things reasonably deemed necessary or desirable by the
Board for the proper management, operation and administration of the Company's
business in Europe, with requisite authority to carry out his duties.
3.7. The Company shall not require the Executive to be employed in any
location other than metropolitan New York City unless he consents in writing to
such location.
3.8. During the Term of his employment, Executive shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; he shall be provided with the perquisites customarily
associated with the position of a senior executive and a Senior Vice President
of a company.
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4. Authority.
4.1. The Company authorizes the Executive, for the Company's account and
on its behalf, to perform any act or do anything necessary or desirable in order
to carry out the Executive's duties as set forth in this agreement and
everything done by the Executive under the provisions of shall be done as agent
of the Company, and all obligations or expenses incurred hereunder shall be at
the expense of Company.
4.2. All obligations or expenses incurred hereunder shall be for the
account of, on behalf of, and at the expense of the Company except as otherwise
specifically provided for in this Agreement, provided, however that the Company
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shall not be obligated to reimburse the Executive for any expenses incurred in
entering this Agreement or in payment for any legal, accounting, or other
professional counsel, advice, or services sought or received by Executive in
connection with the negotiation and consummation of this terms of this
Agreement.
5. Best Efforts of the Executive.
The Executive shall use his best efforts in performing his duties
hereunder, and in furthering the interests of the Company and its business. The
Executive shall render his services in a faithful, responsible and competent
manner, all in accordance with the terms and conditions of this Agreement and
the Company's policies and procedures.
6. Representations of the Executive.
The Executive represents and warrants to the Company that:
6.1. He has the expertise, experience and capability to perform the duties
assigned to him hereunder;
6.2. He is not suffering from any physical or mental condition which may
impair his capability to perform the duties assigned to him hereunder;
6.3. He is familiar and/or will familiarize himself with the Company's
policies and procedures, will fully adhere to them during his employment
hereunder, and will refrain from any act or communication that may reflect
unfavorably upon the Company, its business or its affiliates; and
6.4. He has carefully read and understood this Agreement, and is entering
into it of his own free will.
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7. Representations of the Company.
The Company represents and warrants that it is relying on the Executive's
representations in entering into this Agreement, and that it is willing to
employ the Executive subject to the terms and conditions of this Agreement and
to perform its obligations hereunder.
8. Liability and Insurance.
8.1. The Executive shall not be liable to the Company for any loss or
damage not caused by the Executive's own gross negligence or intentional failure
to comply with his obligations hereunder.
8.2. The Company will indemnify the Executive against and hold the
Executive harmless from (a) any liability, damages, costs and expenses
(including reasonable attorneys' fees) sustained or incurred for injury to any
person or property in, about and in connection with the Company's business, from
any cause whatsoever, unless such injury shall be caused by the Executive's own
(i) illegal or unlawful act of a nature involving moral turpitude, (ii) gross
negligence, or (iii) repeated failure to comply with his obligations which
remained uncured after notice by the Board, hereunder; and (b) any liability
damages, penalties, costs and expenses, statutory or otherwise, for all acts
properly performed by the Executive pursuant to the instruction of the Board;
provided, in each of the foregoing instances, that the Executive promptly
advises the Board of its receipt of information concerning any such injury and
the amount of any such liability, damages, penalties, costs and expenses. The
Company shall pay all expenses, including any and all attorney's fees, actually
incurred by Executive in connection with the investigation of any such matter,
the defense of any such action ,suit or proceeding and in connection with any
appeal thereon, including the cost of any settlements. The indemnification
under this Section 8.2 shall be deemed as adding to any other obligation of the
Company to indemnify the Executive as an officer or director of the Company, to
the maximum extent permitted by applicable law.
8.3. The Company shall carry sufficient liability insurance, workmen's
compensation and will deliver, upon Executive's demand, a copy of such liability
insurance to the Executive or a certificate evidencing the same.
9. Compensation.
9.1. Base Salary.
-----------
(a) During the Term of employment, the Company shall pay the Executive
an annual base salary of $150,000, payable in substantially equal
installments that shall be weekly, bi-weekly, semi-monthly or monthly,
depending on the policy that
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the Company adopts for payment of base salary to its senior officers.
(b) The Executive's base salary will be subject to review at least
once at the end of each calendar year, provided that upon each review the
annual increase shall be no less than 10% of the Base for the immediately
preceding year.
9.2. Incentive Compensation.
----------------------
(a) The Company, if determined desirable and if conditions so allow,
at the determination and discretion of the Board, grant the Executive a
bonus based on Executive's achievements, it being acknowledged and agreed
that the Company will be under no obligation to grant such a bonus.
(b) When the Company achieves a positive net operating income, as
determined by independent auditors, in any fiscal year, the Executive shall
be automatically entitled to a one-time bonus of $25,000.
9.3. Withholding. The Company shall be entitled to withhold such amounts
-----------
from compensation and other payments as are necessary to comply with federal,
state and local withholding laws.
9.4. Benefits.
--------
(a) During the Term of employment hereunder, the Executive shall be
entitled to participate in and receive all benefits under all of the
benefit plans and arrangements of the Company currently or hereafter made
available by the Company to its Executives, senior officers, or in lieu of
any of such plans and arrangements of the Company, plans and arrangements
agreed to by the Board and the Executive.
Nothing provided for in this Section 9.4 (a), shall be
interpreted to limit or in any way affect to the Company's right to amend
or terminate any of its benefit plans and arrangements with respect to its
senior officers, or other employees, whether or not the Executive is then
participating in such plan or arrangement.
(b) If employee is insurable at regular rates the Company shall
purchase a disability insurance policy providing for a net after tax income
substantially equivalent to what Executive's net after tax income would be
on his base salary, such payments to begin after Executive is disabled for
60 days. If Executive is insurable at rates in excess of "regular rates",
if Executive pays such excess, Company will pay the balance of the premium.
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9.5. Vacations. The Executive shall be entitled to five (5) weeks, or
---------
twenty five (25) business days, paid vacation in each calendar year.
10. Sick Leave; Personal Days.
In case of illness, the Executive shall be entitled to up to fourteen (14)
days of sick leave per year and up to seven (7) personal per year. During
authorized sick leave, the Executive's salary and other benefits shall continue
to be paid or accrued. Unused sick days may be carried over from year to year
but are not reimbursable upon the termination of this Agreement.
11. Medical Insurance.
The Executive, his spouse and children under 18 living with him, shall be
covered by the Company's group medical insurance policy, dental and long term
disability insurance, at no cost to the Executive, throughout the Term of his
employment.
12. Expenses.
The Executive shall receive reimbursement on a monthly basis for reasonable
business expenses incurred by him in connection with the performance of his
duties hereunder. Executive shall provide the Company with proper documentation
for each expense. If the Company reimburses the Executive for expenses later
determined to be non-deductible for federal income tax purposes, all such
amounts shall be treated as additional compensation to him.
13. Payment of Taxes
13.1. To the extent required by prevailing law, the Company shall deduct
from the salary payable to the Executive under this Agreement all social
security, federal, state and local taxes and charges as may now be in effect or
which may hereafter be enacted or required by applicable law as charges on the
compensation of the Executive.
13.2. To the extent required by prevailing law, the Company shall pay such
social security, disability, unemployment and workmen's compensation charges
imposed upon the Company by virtue of its employment of the Executive.
13.3. The Executive shall notify the Company of any change in his place of
residence or status which may affect his tax liability.
14. Termination. The Executive's employment (herein the "Employment")
hereunder shall terminate only at the expiration of the Term, or prior thereto
upon the occurrence of one of the following:
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14.1. Death. The Executive's employment hereunder shall terminate upon his
-----
death ("Death").
14.2. Disability.
----------
(a) The Company may terminate the Employment hereunder if he becomes
physically or mentally incapacitated and by reason thereof becomes unable to
perform his duties hereunder for a period of 60 or more days during any period
of twelve consecutive months; and
(b) The Executive may terminate his employment hereunder if, in the
judgment of a physician selected by him and in the concurrent judgment of a
physician of the Company's selection, the Executive's health has become impaired
to an extent that makes the continued performance of his duties hereunder
hazardous to his physical or mental health or his life (such reason for
termination by the Company or by the Executive is hereinbelow referred to as
"Disability").
The Company may waive its right to seek concurrent judgment of a
physician of its selection. If the Company exercises said right, and if the
respective judgments of the physician selected by the Executive and the
physician selected by the Company do not concur, the judgment of a third
physician to be chosen by the Executive and the Company's physicians shall be
controlling.
14.3. Cause. The Company may terminate the Employment hereunder for cause
-----
(herein "Cause"). The Company will have Cause to terminate the Employment
hereunder upon:
(a) any willful or intentional and gross act or conduct by the
Executive having the effect of materially injuring the Company or its
affiliates;
(b) the Executive's conviction of a crime (including conviction
pursuant to a plea of nolo contendere) involving, in the judgment of the Board
fraud, dishonesty or moral turpitude; or
(c) any material, recurring and ongoing defaults, material
nonperformance or material violations by the Executive of the material terms of
this Agreement, which, despite specific written notice by the Board, remain
uncured after an unreasonable period of time, which such period shall be no less
than sixty (60) days.
14.4. On Company's Notice. The Company may terminate the Employment with
-------------------
no reason or cause whatsoever (herein termination "On the Company's Notice").
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14.5. By Executive Without Reason. The Executive may terminate the
---------------------------
Employment (herein termination "On the Executive's Notice").
14.6. By Executive With Reason. The Executive may terminate the Employment
------------------------
at any time for "good reason" (herein termination "By Executive With Reason"),
upon one or more of the following:
(a) The failure to elect or appoint, or re-elect or re-appoint the
Executive to, or removal or improperly attempted removal of Executive from,
his position as Senior President -European Operations of the Company,
except in connection with the proper termination of Executive's employment
by reason of Cause, Death or Disability as provided herein;
(b) A reduction in Executive's overall compensation other than his
discretionary bonus under Section 9.3(a), or an adverse change in the
nature or scope of the authorities, powers, functions or duties normally
attached to Executive's position with the Company;
(c) The Company's failure or refusal to perform any obligations
required to be performed in accordance with this Agreement after reasonable
notice an opportunity to cure same; and
(d) A change in control of the company occurs. As used in this
Section 14(d), a "Change in Control" shall be deemed to have occurred upon
the passage of (i) ten (10) days following a public announcement that a
person or group of affiliated or associated persons have acquired, or
obtained the right to acquire, beneficial ownership of fifteen (15%)
percent of the outstanding Common Stock of the Company (the "Shares"); or
(ii) ten (10) days following the commencement of, or announcement of an
intention to make a tender offer or exchange offer, the consummation of
which would result in the beneficial ownership by a person or group of
affiliated or associated persons of fifteen (15%) percent of such
outstanding Shares; (iii) ten (10) days after a person or group of
affiliated or associated persons has (x) become the owner of at least ten
(10%) percent of the Shares or has filed a Schedule 13D or 13G with the
Securities and Exchange Commission and (y) whose ownership interest is
deemed by the Board to cause a material adverse impact on the business or
the prospects of the Company; or (iv) a change in the composition of a
majority of the Board.
14.7. Notice and Date of Termination. Any termination pursuant to Sections
------------------------------
14.1 through 14.6, herein shall be communicated by written notice of termination
to the other party (herein referred to as the "Notice of Termination"). The
date of
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termination of the Employment hereunder (herein the "Date of Termination") shall
be:
(a) the date of the Executive's death, if his Employment is terminated
for Death; or
(b) the date on which a Notice of Termination is given or made
effective, if the Employment is terminated by the Company for Disability, Cause
or On Notice, respectively; or
(c) the date on which a Notice of Termination is given or made
effective, if the Employment is terminated by the Executive on Executive's
Notice or by the Executive With Reason.
15. Compensation and Effects Following Termination.
15.1. If the Employment is terminated For Death, Disability, On the
Company's Notice, or By Executive With Reason, the Executive, or his successors
or dependents (collectively in this Section: the "Executive") shall be entitled
to the following compensation:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) The base salary and all benefits and bonuses hereunder at the
rate prevailing at the time of Termination for the remainder of the first
year of the Term, if the Termination is effective prior to twelve (12)
months following the date hereof, and thereafter for a period of one (1)
year;
(c) A severance payment in a lump sum equivalent to the base salary
and bonuses equivalent to one (1) year for each year of prior employment
with the Company (whether during the initial Term of employment or
thereafter), plus a pro-rated amount for each portion of a year of prior
employment with the Company;
(d) Any options granted to Executive which have not, by the term
thereof vested, shall be deemed to have vested at the termination, and
shall thereafter be exercisable for the maximum period of time allowed for
exercise thereof under the terms of the option(s); and
(e) The Company's (and Executive's and his dependents') participation
in any and all medical, dental and disability insurance plans shall be
continued, or equivalent benefits provided to him or them by the Company at
no cost to him or them, for a period of two (2) years from the date of
Termination.
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15.2. If the Employment is terminated at the expiration of the Term of
employment or by the Executive On the Executive's Notice, the Executive shall be
entitled as follows:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) A severance payment in a lump sum equivalent to the base salary
and Bonuses equivalent to one half (1/2) year for each year of prior
employment with the Company (whether during the initial Term of employment
or thereafter), plus a pro-rated amount for each portion of a year of prior
employment with the Company;
(c) Any options granted to Executive which have not, by the term
thereof vested, shall be deemed to have vested at the termination, and
shall thereafter be exercisable for the maximum period of time allowed for
exercise thereof under the terms of the option(s); and
(d) The Company's (and Executive's and his dependents') participation
in any and all medical, dental and disability insurance plans shall be
continued, or equivalent benefits provided to him or them by the Company at
no cost to him or them, for a period of one (1) year from the date of
Termination.
15.3. If the Employment is terminated by the Company for Cause, the
Executive shall be entitled as follows:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) to the extent medical insurance or other benefits are required by
law to be extended or offered for a longer period, the Company shall comply
with such requirements; and
(c) Any options granted to Executive which have vested, shall
thereafter be exercisable for the minimum period of time allowed for
exercise thereof under the terms of the option(s). Any options granted to
Executive which have not yet vested, at the date of Termination, shall
expire upon Termination.
15.4. Any extension of benefits following the termination of employment
provided for herein shall be deemed to be in addition to and not in lieu of, any
period for benefits continuation provided for by law at the Company's or
Executive's expense.
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16. Non-Competition.
16.1. During the period of the Employment hereunder and during the
applicable post-termination non-competition period as specified in Section 16.2,
herein, the Executive shall not own any interest, or provide any financing for,
or perform any service for, any business organization which directly or
indirectly engages in competition with the Company within the principal
geographic areas where the Company is or has during the term of this Agreement
developed substantial plans to commence doing business (herein the "Territory");
or, as a sole proprietor, director, officer, shareholder, employee, manager,
consultant, independent contractor, advisor or otherwise, engage directly or
indirectly in competition in the Territory with, any business conducted by the
Company or by its respective affiliates or any business which the Company or any
of its respective affiliates had developed substantial plans to enter into
during the employment with the Company pursuant to this Agreement or prior
hereto. Any business organization whose principal business is conducted on or
through the Internet shall be deemed as competing with the Company in the
Territory; provided, however, that the non-competition provisions of this
Section shall not apply (a) to paid or voluntary work for nonprofit Internet
projects, provided they do not directly compete with foreignTV.com; (b) paid or
voluntary work for a local community-based Internet venture (e.g. northsalem.com
community news and information Web site); and (c) freelance writing and
interviewing. Anything to the contrary notwithstanding, the Executive's
employment by and activities in and relating to the Center shall not be deemed
to be in contravention of this Section 16.1.
16.2. Post-termination non-competition period.
(a) In the case of Termination of the employment for Cause or by the
Executive on Notice, the applicable post-termination non-competition period
shall be the period ending two (2) years following the Termination of the
employment hereunder.
(b) In the case of Termination of the employment for Disability, the
applicable post-termination non-competition period shall be the period
ending one (1) year following the Termination of the employment hereunder.
(c) In the case of Termination of the employment on the Company's
Notice or by the Executive for Reason, there shall be no applicable post-
termination non-competition period hereunder.
16.3. If a court of competent jurisdiction shall determine that the any of
provisions of Section 16.2 transcend or contravene the provisions of applicable
law, ipso facto this section shall be deemed revised to comply with applicable
----------
law and shall be construed
11
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in such a manner as to render this Section as so revised enforceable under such
law.
17. Nondisclosure of Confidential Information.
17.1. The Executive shall not, except as authorized or required by the
Company, in any manner, directly or indirectly, reveal, divulge, disclose or
otherwise communicate or make available to any person, firm, corporation or
entity any information concerning any matters affecting or relating to the
Company, its affiliates and/or any customers of the Company, their business,
affairs, manner of operation, plans or policies, the prices they charge or any
other information, except such information that is already in the public domain
due to no fault of the Executive.
17.2. The provisions of this Section shall survive the term of this
Agreement.
18. Noninterference.
During and after the Term of this Agreement, the Employee shall not in any
manner, directly or indirectly, affect to the detriment of the Company or any of
its affiliates any relationship of the Company, or any of its affiliates, or any
of their respective officers, employees and agents with any customer, supplier
or employee the Company or any affiliate, or cause any customer or supplier to
refrain from doing business with the Company or any affiliate thereof. Nothing
in this Section 18 shall be deemed to prevent Employee from competing with the
Company after the expiration of the applicable post-termination non-competition
period, even if such competition may have the effect of detrimentally affecting
the business of the Company.
19. Specific Enforcement.
The Executive acknowledges and agrees that the Company would be irreparably
harmed and could not be made whole by monetary damages in the event any of the
terms and provisions of this Agreement were not performed by him in accordance
with its terms. Accordingly, the Executive agrees that, in addition to any other
remedy to which the Company may be entitled, the Company shall be entitled to an
injunction or injunctions to prevent breaches of, and to obtain specific
performance of, any or all of the terms and provisions hereof and shall be
entitled to other equitable relief.
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20. Severability.
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions will remain in
full force and effect and will in no way be affected, impaired or invalidated.
It is hereby stipulated and declared to be the intention of the parties that
they would have executed such remaining terms, provisions, covenants and
restrictions without including any of such as may be hereafter declared invalid,
void or unenforceable.
21. Entire Agreement and Amendment.
This Agreement contains the entire understanding of the parties with
respect to its subject matter. There are no restrictions, agreements, promises,
representations, warranties, covenants or undertakings other than those
expressly set forth herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may not be amended, modified or supplemented except upon the execution
and delivery of a written agreement executed by the parties hereto.
22. Assignment.
This Agreement shall not be assignable by any party hereto, except that it
shall be assignable by the Company to any companies that are or may become
affiliated to it but no such assignment shall release to the assigning party
from its financial obligations hereunder. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the heirs, personal
representatives, successors and permitted assigns of the parties hereto.
23. Waiver of Compliance.
Any failure of one of the parties hereto to comply with any obligation,
covenant, agreement or condition herein may be waived by the other party only by
a written instrument signed by the party granting such waiver, but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
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24. Descriptive Headings.
Descriptive headings are for convenience only and shall not control or
affect the meaning or construction of any provision of the Agreement.
25. Affiliate.
As used in this Agreement, the term "affiliate" means a person or entity
controlled by, controlling, or under common control with the Company.
26. Counterparts.
For the convenience of the parties, any number of counterparts of this
Agreement may be executed by one or more parties hereto and each such executed
counterpart shall be, and shall be deemed to be, an original instrument.
27. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, dispatched by way of recognized
courier service, such as Federal Express, by facsimile transmission (with a
confirmation copy mailed), or mailed (registered or certified mail, postage
prepaid, return receipt requested) to the respective parties at the following
addresses:
To the Executive:
Bruno Finel
Cablevision
15, rue Ambroise Thomas
75009 Paris
France
telephone: 33 1 48 000 603
facsimile: 33 1 480 00 829
Esq.
To the Company:
foreignTV.com, Inc.
162 Fifth Avenue, Suit 1005A
New York, N.Y. 10010
Attention: Mr. Jonathan Braun
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with copies to:
Marc D. Leve, Esq.
264 Lexington Ave., #2A
New York, N.Y. 10016
or to such other address as any party hereto may, from time to time, designate
in a written notice given in a like manner.
28. Law Governing.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within such State, without reference to any rules of
conflicts of laws.
29. Arbitration.
All disputes, controversies or claims with respect to any of the terms or
conditions of, or the performance of the parties under, or termination of, this
Employment Agreement which cannot be settled amicably by the parties, whether or
not such disputes, controversy(ies) or claim(s) are arbitrable under applicable
law, shall be finally settled by arbitration in accordance with the Employment
Commercial Arbitration Rules of the American Arbitration Association in New York
City. The arbitration proceedings shall be conducted in New York City in the
English Language before one (1) arbitrator. The award of the arbitrator shall
be final and binding upon the parties and judgment upon such award may be
entered in any court having jurisdiction or application may be made to such a
court for a judicial acceptance of such award and judgment or order of
enforcement, as the case may be.
IN WITNESS THEREOF THE PARTIES have executed this Agreement as of the date
first herein written.
THE COMPANY: THE EXECUTIVE
foreignTV.com, Inc.
By: ______________________ ___________________
Name: Bruno Finel
Title:
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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
--------------------
LEVE - foreignTV.com, INC.
CONTENTS
Page
----
1. Employment....................................................... 1
2. Employment Term.................................................. 1
3. Position and Duties.............................................. 1
4. Authority........................................................ 3
5. Best Efforts of the Executive.................................... 3
6. Representations of the Executive................................. 3
7. Representations of the Company................................... 4
8. Liability and Insurance.......................................... 4
9. Compensation..................................................... 4
10. Sick Leave....................................................... 6
11. Medical Insurance................................................ 6
12. Expenses......................................................... 6
13. Payment of Taxes................................................. 6
<PAGE>
14. Termination..................................................... 6
15. Compensation and Effects Following Termination.................. 9
16. Non-Competition................................................. 11
17. Nondisclosure of Confidential Information....................... 12
18. Noninterference................................................. 12
19. Specific Enforcement............................................ 12
20. Severability.................................................... 13
21. Entire Agreement and Amendment.................................. 13
22. Assignment...................................................... 13
23. Waiver of Compliance............................................ 13
24. Descriptive Headings............................................ 14
25. Affiliate....................................................... 14
26. Counterparts.................................................... 14
27. Notices......................................................... 14
28. Law Governing................................................... 15
29. Arbitration..................................................... 15
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Employment Agreement
--------------------
This Agreement made as of ______________, 1999, by and between
Marc D. Leve (the "Executive") and foreignTV.com, Inc., a Delaware corporation,
(the "Company") (hereinafter collectively: the "Parties")
WHEREAS, the Company wishes to hire the Executive to work for it as its
Vice President - Legal Affairs and General Counsel, with duties and
responsibilities as set forth in this Agreement below; and
WHEREAS, the Company and the Executive wish to set forth in writing the
terms and conditions pursuant to which the Executive shall be employed by the
Company.
NOW, THEREFORE, In consideration of the mutual representations, covenants,
agreements and stipulations contained herein, the parties intending to be
legally bound agree as follows:
1. Employment.
1.1. The Company hereby employs the Executive as its Vice President -
Legal Affairs and General Counsel, and the Executive hereby accepts and agrees
to such hiring, engagement and employment, for the Term of the employment (as
defined below) and all on the terms and conditions hereafter set forth.
1.2. The Executive shall have the duties and rights set forth and provided
in this Agreement, and the Parties agree that all terms and conditions of
Executive's employment with the Company shall be governed solely by this
Agreement except where expressly stated otherwise.
2. Employment Term.
The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to such employment, subject to the terms and conditions set forth herein,
for a term for five years, commencing on __________, 1999 and continuing through
December 31, 2004 (the "Term"), unless sooner terminated as herein set forth.
3. Position and Duties.
3.1. As Vice President - Legal Affairs and General Counsel, the Executive
shall also serve as an officer of any of the corporations or entities affiliated
with the Company, as may be requested of him by the Board of Directors of the
Company (the "Board").
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3.2. The Executive shall serve in the capacities of and perform the
obligations and duties of the office of a Vice President and as the Secretary,
as set forth in the Certificate of Incorporation and By-Laws of the Company as
amended from time to time.
3.3. Executive's employment hereunder shall be subject to the general
supervision, orders, advice and direction of the Company, as determined by the
Board. Executive shall perform such duties which are customarily performed by a
person holding a similar position with other employers engaged in the same or
similar business.
3.4. The Executive shall report and be directly responsible to the Board
of Directors of the Company and shall also have such other powers and duties as
may from time to time be prescribed by the Board.
3.5. The Executive shall devote his full working time and efforts to the
business and affairs of the Company and its subsidiaries and affiliates. It is
understood and agreed that the pursuit of personal investments and activities
which are not violative of the non-competition provisions of this Agreement and
which do not materially impair or detract from Employee's performance of his
duties to the Company shall not be in contravention of this Section 3.5. It is
expressly agreed that the Executive's employment by and activities in and
relating to the not-for-profit corporation, the Center For Contemporary
Diplomacy, Inc. (the "Center"), and non-competing and non-conflicting handling
of clients in a law practice shall not be deemed to be in contravention of this
Section 3.5.
3.6. Subject to the terms of this Agreement, the Executive shall be
responsible for the general management and supervision of the legal affairs of
the Company, including day-to-day review and drafting of agreements, reports,
returns and other legal documents relating to the management, operation and
administration of the Company's business and affairs, and generally do all
things reasonably deemed necessary or desirable by the Board for the proper
management, operation and administration of the Company's legal affairs with
requisite authority to carry out his duties.
3.7. The Company shall not require the Executive to be employed in any
location other than metropolitan New York City unless he consents in writing to
such location.
3.8. During the Term of his employment, Executive shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; he shall be provided with the perquisites customarily
associated with the position of a senior executive and Vice President and
General Counsel of a company.
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4. Authority.
4.1. The Company authorizes the Executive, for the Company's account and
on its behalf, to perform any act or do anything necessary or desirable in order
to carry out the Executive's duties as set forth in this agreement and
everything done by the Executive under the provisions of shall be done as agent
of the Company, and all obligations or expenses incurred hereunder shall be at
the expense of Company.
4.2. All obligations or expenses incurred hereunder shall be for the
account of, on behalf of, and at the expense of the Company except as otherwise
specifically provided for in this Agreement, provided, however that the Company
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shall not be obligated to reimburse the Executive for any expenses incurred in
entering this Agreement or in payment for any legal, accounting, or other
professional counsel, advice, or services sought or received by Executive in
connection with the negotiation and consummation of this terms of this
Agreement.
5. Best Efforts of the Executive.
The Executive shall use his best efforts in performing his duties
hereunder, and in furthering the interests of the Company and its business. The
Executive shall render his services in a faithful, responsible and competent
manner, all in accordance with the terms and conditions of this Agreement and
the Company's policies and procedures.
6. Representations of the Executive.
The Executive represents and warrants to the Company that:
6.1. He has the expertise, experience and capability to perform the duties
assigned to him hereunder;
6.2. He is not suffering from any physical or mental condition which may
impair his capability to perform the duties assigned to him hereunder;
6.3. He is familiar and/or will familiarize himself with the Company's
policies and procedures, will fully adhere to them during his employment
hereunder, and will refrain from any act or communication that may reflect
unfavorably upon the Company, its business or its affiliates; and
6.4. He has carefully read and understood this Agreement, and is entering
into it of his own free will.
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7. Representations of the Company.
The Company represents and warrants that it is relying on the Executive's
representations in entering into this Agreement, and that it is willing to
employ the Executive subject to the terms and conditions of this Agreement and
to perform its obligations hereunder.
8. Liability and Insurance.
8.1. The Executive shall not be liable to the Company for any loss or
damage not caused by the Executive's own gross negligence or intentional failure
to comply with his obligations hereunder.
8.2. The Company will indemnify the Executive against and hold the
Executive harmless from (a) any liability, damages, costs and expenses
(including reasonable attorneys' fees) sustained or incurred for injury to any
person or property in, about and in connection with the Company's business, from
any cause whatsoever, unless such injury shall be caused by the Executive's own
(i) illegal or unlawful act of a nature involving moral turpitude, (ii) gross
negligence, or (iii) repeated failure to comply with his obligations which
remained uncured after notice by the Board, hereunder; and (b) any liability
damages, penalties, costs and expenses, statutory or otherwise, for all acts
properly performed by the Executive pursuant to the instruction of the Board;
provided, in each of the foregoing instances, that the Executive promptly
advises the Board of its receipt of information concerning any such injury and
the amount of any such liability, damages, penalties, costs and expenses. The
Company shall pay all expenses, including any and all attorney's fees, actually
incurred by Executive in connection with the investigation of any such matter,
the defense of any such action ,suit or proceeding and in connection with any
appeal thereon, including the cost of any settlements. The indemnification
under this Section 8.2 shall be deemed as adding to any other obligation of the
Company to indemnify the Executive as an officer or director of the Company, to
the maximum extent permitted by applicable law.
8.3. The Company shall carry sufficient liability insurance, workmen's
compensation and will deliver, upon Executive's demand, a copy of such liability
insurance to the Executive or a certificate evidencing the same.
9. Compensation.
9.1. Base Salary.
-----------
(a) During the Term of employment, the Company shall pay the Executive
an annual base salary of $100,000, payable in substantially equal
installments that shall be weekly, bi-weekly, semi-monthly or monthly,
depending on the policy that
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the Company adopts for payment of base salary to its senior officers.
(b) The Executive's base salary will be subject to review at least
once at the end of each calendar year, provided that upon each review the
annual increase shall be no less than 10% of the Base for the immediately
preceding year.
9.2. Incentive Compensation.
----------------------
(a) The Company, if determined desirable and if conditions so allow,
at the determination and discretion of the Board, grant the Executive a
bonus based on Executive's achievements, it being acknowledged and agreed
that the Company will be under no obligation to grant such a bonus.
(b) When the Company achieves a positive net operating income, as
determined by independent auditors, in any fiscal year, the Executive shall
be automatically entitled to a one-time bonus of $25,000.
9.3. Withholding. The Company shall be entitled to withhold such amounts
-----------
from compensation and other payments as are necessary to comply with federal,
state and local withholding laws.
9.4. Benefits.
--------
(a) During the Term of employment hereunder, the Executive shall be
entitled to participate in and receive all benefits under all of the
benefit plans and arrangements of the Company currently or hereafter made
available by the Company to its Executives, senior officers, or in lieu of
any of such plans and arrangements of the Company, plans and arrangements
agreed to by the Board and the Executive.
Nothing provided for in this Section 9.4 (a), shall be
interpreted to limit or in any way affect to the Company's right to amend
or terminate any of its benefit plans and arrangements with respect to its
senior officers, or other employees, whether or not the Executive is then
participating in such plan or arrangement.
(b) If employee is insurable at regular rates the Company shall
purchase a disability insurance policy providing for a net after tax income
substantially equivalent to what Executive's net after tax income would be
on his base salary, such payments to begin after Executive is disabled for
60 days. If Executive is insurable at rates in excess of "regular rates",
if Executive pays such excess, Company will pay the balance of the premium.
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9.5. Vacations. The Executive shall be entitled to five (5) weeks, or
---------
twenty five (25) business days, paid vacation in each calendar year.
10. Sick Leave; Personal Days.
In case of illness, the Executive shall be entitled to up to fourteen (14)
days of sick leave per year and up to seven (7) personal per year. During
authorized sick leave, the Executive's salary and other benefits shall continue
to be paid or accrued. Unused sick days may be carried over from year to year
but are not reimbursable upon the termination of this Agreement.
11. Medical Insurance.
The Executive, his spouse and children under 18 living with him, shall be
covered by the Company's group medical insurance policy, dental and long term
disability insurance, at no cost to the Executive, throughout the Term of his
employment.
12. Expenses.
The Executive shall receive reimbursement on a monthly basis for reasonable
business expenses incurred by him in connection with the performance of his
duties hereunder. Executive shall provide the Company with proper documentation
for each expense. If the Company reimburses the Executive for expenses later
determined to be non-deductible for federal income tax purposes, all such
amounts shall be treated as additional compensation to him.
13. Payment of Taxes
13.1. To the extent required by prevailing law, the Company shall deduct
from the salary payable to the Executive under this Agreement all social
security, federal, state and local taxes and charges as may now be in effect or
which may hereafter be enacted or required by applicable law as charges on the
compensation of the Executive.
13.2. To the extent required by prevailing law, the Company shall pay such
social security, disability, unemployment and workmen's compensation charges
imposed upon the Company by virtue of its employment of the Executive.
13.3. The Executive shall notify the Company of any change in his place of
residence or status which may affect his tax liability.
14. Termination. The Executive's employment (herein the "Employment")
hereunder shall terminate only at the expiration of the Term, or prior thereto
upon the occurrence of one of the following:
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14.1. Death. The Executive's employment hereunder shall terminate upon his
-----
death ("Death").
14.2. Disability.
----------
(a) The Company may terminate the Employment hereunder if he becomes
physically or mentally incapacitated and by reason thereof becomes unable to
perform his duties hereunder for a period of 60 or more days during any period
of twelve consecutive months; and
(b) The Executive may terminate his employment hereunder if, in the
judgment of a physician selected by him and in the concurrent judgment of a
physician of the Company's selection, the Executive's health has become impaired
to an extent that makes the continued performance of his duties hereunder
hazardous to his physical or mental health or his life (such reason for
termination by the Company or by the Executive is hereinbelow referred to as
"Disability").
The Company may waive its right to seek concurrent judgment of a
physician of its selection. If the Company exercises said right, and if the
respective judgments of the physician selected by the Executive and the
physician selected by the Company do not concur, the judgment of a third
physician to be chosen by the Executive and the Company's physicians shall be
controlling.
14.3. Cause. The Company may terminate the Employment hereunder for cause
-----
(herein "Cause"). The Company will have Cause to terminate the Employment
hereunder upon:
(a) any willful or intentional and gross act or conduct by the
Executive having the effect of materially injuring the Company or its
affiliates;
(b) the Executive's conviction of a crime (including conviction
pursuant to a plea of nolo contendere) involving, in the judgment of the Board
fraud, dishonesty or moral turpitude; or
(c) any material, recurring and ongoing defaults, material
nonperformance or material violations by the Executive of the material terms of
this Agreement, which, despite specific written notice by the Board, remain
uncured after an unreasonable period of time, which such period shall be no less
than sixty (60) days.
14.4. On Company's Notice. The Company may terminate the Employment with
-------------------
no reason or cause whatsoever (herein termination "On the Company's Notice").
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14.5. By Executive Without Reason. The Executive may terminate the
---------------------------
Employment (herein termination "On the Executive's Notice").
14.6. By Executive With Reason. The Executive may terminate the Employment
------------------------
at any time for "good reason" (herein termination "By Executive With Reason"),
upon one or more of the following:
(a) The failure to elect or appoint, or re-elect or re-appoint the
Executive to, or removal or improperly attempted removal of Executive from,
his position as Vice President - Legal Affairs and General Counsel of the
Company, except in connection with the proper termination of Executive's
employment by reason of Cause, Death or Disability as provided herein;
(b) A reduction in Executive's overall compensation other than his
discretionary bonus under Section 9.3(a), or an adverse change in the
nature or scope of the authorities, powers, functions or duties normally
attached to Executive's position with the Company;
(c) The Company's failure or refusal to perform any obligations
required to be performed in accordance with this Agreement after reasonable
notice an opportunity to cure same; and
(d) A change in control of the company occurs. As used in this
Section 14(d), a "Change in Control" shall be deemed to have occurred upon
the passage of (i) ten (10) days following a public announcement that a
person or group of affiliated or associated persons have acquired, or
obtained the right to acquire, beneficial ownership of fifteen (15%)
percent of the outstanding Common Stock of the Company (the "Shares"); or
(ii) ten (10) days following the commencement of, or announcement of an
intention to make a tender offer or exchange offer, the consummation of
which would result in the beneficial ownership by a person or group of
affiliated or associated persons of fifteen (15%) percent of such
outstanding Shares; (iii) ten (10) days after a person or group of
affiliated or associated persons has (x) become the owner of at least ten
(10%) percent of the Shares or has filed a Schedule 13D or 13G with the
Securities and Exchange Commission and (y) whose ownership interest is
deemed by the Board to cause a material adverse impact on the business or
the prospects of the Company; or (iv) a change in the composition of a
majority of the Board
14.7. Notice and Date of Termination. Any termination pursuant to Sections
------------------------------
14.1 through 14.6, herein shall be communicated by written notice of termination
to the other party (herein referred to as the "Notice of Termination"). The
date of
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termination of the Employment hereunder (herein the "Date of Termination") shall
be:
(a) the date of the Executive's death, if his Employment is terminated
for Death; or
(b) the date on which a Notice of Termination is given or made
effective, if the Employment is terminated by the Company for Disability, Cause
or On Notice, respectively; or
(c) the date on which a Notice of Termination is given or made
effective, if the Employment is terminated by the Executive on Executive's
Notice or by the Executive With Reason.
15. Compensation and Effects Following Termination.
15.1. If the Employment is terminated For Death, Disability, On the
Company's Notice, or by the Executive With Reason, the Executive, or his
successors or dependents (collectively in this Section: the "Executive") shall
be entitled to the following compensation:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) The base salary and all benefits and bonuses hereunder at the
rate prevailing at the time of Termination for the remainder of the first
year of the Term, if the Termination is effective prior to twelve (12)
months following the date hereof, and thereafter for a period of one (1)
year;
(c) A severance payment in a lump sum equivalent to the base salary
and bonuses equivalent to one (1) year for each year of prior employment
with the Company (whether during the initial Term of employment or
thereafter), plus a pro-rated amount for each portion of a year of prior
employment with the Company;
(d) Any options granted to Executive which have not, by the term
thereof vested, shall be deemed to have vested at the termination, and
shall thereafter be exercisable for the maximum period of time allowed for
exercise thereof under the terms of the option(s); and
(e) The Company's (and Executive's and his dependents') participation
in any and all medical, dental and disability insurance plans shall be
continued, or equivalent benefits provided to him or them by the Company at
no cost to him or them, for a period of two (2) years from the date of
Termination.
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15.2. If the Employment is terminated at the expiration of the Term of
employment or by the Executive On the Executive's Notice, the Executive shall be
entitled as follows:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) A severance payment in a lump sum equivalent to the base salary
and Bonuses equivalent to one half (1/2) year for each year of prior
employment with the Company (whether during the initial Term of employment
or thereafter), plus a pro-rated amount for each portion of a year of prior
employment with the Company;
(c) Any options granted to Executive which have not, by the term
thereof vested, shall be deemed to have vested at the termination, and
shall thereafter be exercisable for the maximum period of time allowed for
exercise thereof under the terms of the option(s); and
(d) The Company's (and Executive's and his dependents') participation
in any and all medical, dental and disability insurance plans shall be
continued, or equivalent benefits provided to him or them by the Company at
no cost to him or them, for a period of one (1) year from the date of
Termination.
15.3. If the Employment is terminated by the Company for Cause, the
Executive shall be entitled as follows:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) to the extent medical insurance or other benefits are required by
law to be extended or offered for a longer period, the Company shall comply
with such requirements; and
(c) Any options granted to Executive which have vested, shall
thereafter be exercisable for the minimum period of time allowed for
exercise thereof under the terms of the option(s). Any options granted to
Executive which have not yet vested, at the date of Termination, shall
expire upon Termination.
15.4. Any extension of benefits following the termination of employment
provided for herein shall be deemed to be in addition to and not in lieu of, any
period for benefits continuation provided for by law at the Company's or
Executive's expense.
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16. Non-Competition.
16.1. During the period of the Employment hereunder and during the
applicable post-termination non-competition period as specified in Section 16.2,
herein, the Executive shall not own any interest, or provide any financing for,
or perform any service for, any business organization which directly or
indirectly engages in competition with the Company within the principal
geographic areas where the Company is or has during the term of this Agreement
developed substantial plans to commence doing business (herein the "Territory");
or, as a sole proprietor, director, officer, shareholder, employee, manager,
consultant, independent contractor, advisor or otherwise, engage directly or
indirectly in competition in the Territory with, any business conducted by the
Company or by its respective affiliates or any business which the Company or any
of its respective affiliates had developed substantial plans to enter into
during the employment with the Company pursuant to this Agreement or prior
hereto. Any business organization whose principal business is conducted on or
through the Internet shall be deemed as competing with the Company in the
Territory; provided, however, that the non-competition provisions of this
Section shall not apply (a) to paid or voluntary work for nonprofit Internet
projects, provided they do not directly compete with foreignTV.com; (b) paid or
voluntary work for a local community-based Internet venture (e.g. northsalem.com
community news and information Web site); and (c) freelance writing and
interviewing. Anything to the contrary notwithstanding, the Executive's
employment by and activities in and relating to the Center shall not be deemed
to be in contravention of this Section 16.1.
16.2. Post-termination non-competition period.
(a) In the case of Termination of the employment for Cause or by the
Executive on Notice, the applicable post-termination non-competition period
shall be the period ending two (2) years following the Termination of the
employment hereunder.
(b) In the case of Termination of the employment for Disability, the
applicable post-termination non-competition period shall be the period
ending one (1) year following the Termination of the employment hereunder.
(c) In the case of Termination of the employment on the Company's
Notice or by the Executive for Reason, there shall be no applicable post-
termination non-competition period hereunder.
16.3. If a court of competent jurisdiction shall determine that the any of
provisions of Section 16.2 transcend or contravene the provisions of applicable
law, ipso facto this section shall be deemed revised to comply with applicable
----------
law and shall be construed
11
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in such a manner as to render this Section as so revised enforceable under such
law.
17. Nondisclosure of Confidential Information.
17.1. The Executive shall not, except as authorized or required by the
Company, in any manner, directly or indirectly, reveal, divulge, disclose or
otherwise communicate or make available to any person, firm, corporation or
entity any information concerning any matters affecting or relating to the
Company, its affiliates and/or any customers of the Company, their business,
affairs, manner of operation, plans or policies, the prices they charge or any
other information, except such information that is already in the public domain
due to no fault of the Executive.
17.2. The provisions of this Section shall survive the term of this
Agreement.
18. Noninterference.
During and after the Term of this Agreement, the Employee shall not in any
manner, directly or indirectly, affect to the detriment of the Company or any of
its affiliates any relationship of the Company, or any of its affiliates, or any
of their respective officers, employees and agents with any customer, supplier
or employee the Company or any affiliate, or cause any customer or supplier to
refrain from doing business with the Company or any affiliate thereof. Nothing
in this Section 18 shall be deemed to prevent Employee from competing with the
Company after the expiration of the applicable post-termination non-competition
period, even if such competition may have the effect of detrimentally affecting
the business of the Company.
19. Specific Enforcement.
The Executive acknowledges and agrees that the Company would be irreparably
harmed and could not be made whole by monetary damages in the event any of the
terms and provisions of this Agreement were not performed by him in accordance
with its terms. Accordingly, the Executive agrees that, in addition to any other
remedy to which the Company may be entitled, the Company shall be entitled to an
injunction or injunctions to prevent breaches of, and to obtain specific
performance of, any or all of the terms and provisions hereof and shall be
entitled to other equitable relief.
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20. Severability.
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions will remain in
full force and effect and will in no way be affected, impaired or invalidated.
It is hereby stipulated and declared to be the intention of the parties that
they would have executed such remaining terms, provisions, covenants and
restrictions without including any of such as may be hereafter declared invalid,
void or unenforceable.
21. Entire Agreement and Amendment.
This Agreement contains the entire understanding of the parties with
respect to its subject matter. There are no restrictions, agreements, promises,
representations, warranties, covenants or undertakings other than those
expressly set forth herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may not be amended, modified or supplemented except upon the execution
and delivery of a written agreement executed by the parties hereto.
22. Assignment.
This Agreement shall not be assignable by any party hereto, except that it
shall be assignable by the Company to any companies that are or may become
affiliated to it but no such assignment shall release to the assigning party
from its financial obligations hereunder. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the heirs, personal
representatives, successors and permitted assigns of the parties hereto.
23. Waiver of Compliance.
Any failure of one of the parties hereto to comply with any obligation,
covenant, agreement or condition herein may be waived by the other party only by
a written instrument signed by the party granting such waiver, but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
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24. Descriptive Headings.
Descriptive headings are for convenience only and shall not control or
affect the meaning or construction of any provision of the Agreement.
25. Affiliate.
As used in this Agreement, the term "affiliate" means a person or entity
controlled by, controlling, or under common control with the Company.
26. Counterparts.
For the convenience of the parties, any number of counterparts of this
Agreement may be executed by one or more parties hereto and each such executed
counterpart shall be, and shall be deemed to be, an original instrument.
27. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, dispatched by way of recognized
courier service, such as Federal Express, by facsimile transmission (with a
confirmation copy mailed), or mailed (registered or certified mail, postage
prepaid, return receipt requested) to the respective parties at the following
addresses:
To the Executive:
Marc D. Leve
264 Lexington Ave., #2A
New York, N.Y. 10016
Telephone: (212) 889-4486
Facsimile: (212) 889-4486
To the Company:
foreignTV.com, Inc.
162 Fifth Avenue, Suite 1005A
New York, N.Y. 10010
Attention: Mr. Jonathan Braun
with a copy to:
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Cooperman Levitt Winikoff
Lester & Newman, P.C.
800 Third Avenue
New York, New York 10022
Telephone: (212) 688-7000
Facsimile: (212) 755-2839
Attn: Ira I. Roxland, Esq.
or to such other address as any party hereto may, from time to time, designate
in a written notice given in a like manner.
28. Law Governing.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within such State, without reference to any rules of
conflicts of laws.
29. Arbitration.
All disputes, controversies or claims with respect to any of the terms or
conditions of, or the performance of the parties under, or termination of, this
Employment Agreement which cannot be settled amicably by the parties, whether or
not such disputes, controversy(ies) or claim(s) are arbitrable under applicable
law, shall be finally settled by arbitration in accordance with the Employment
Commercial Arbitration Rules of the American Arbitration Association in New York
City. The arbitration proceedings shall be conducted in New York City in the
English Language before one (1) arbitrator. The award of the arbitrator shall
be final and binding upon the parties and judgment upon such award may be
entered in any court having jurisdiction or application may be made to such a
court for a judicial acceptance of such award and judgment or order of
enforcement, as the case may be.
IN WITNESS THEREOF THE PARTIES have executed this Agreement as of the date
first herein written.
THE COMPANY: THE EXECUTIVE
foreignTV.com, Inc.
By: ______________________ ___________________
Name: Marc D. Leve
Title:
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EXHIBIT 10.9
EMPLOYMENT AGREEMENT
--------------------
HONG - foreignTV.com, INC.
CONTENTS
Page
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1. Employment........................................................... 1
2. Employment Term...................................................... 1
3. Position and Duties.................................................. 1
4. Authority............................................................ 3
5. Best Efforts of the Executive........................................ 3
6. Representations of the Executive..................................... 3
7. Representations of the Company....................................... 4
8. Liability and Insurance............................................... 4
9. Compensation.......................................................... 4
10. Sick Leave............................................................ 6
11. Medical Insurance..................................................... 6
12. Expenses.............................................................. 6
13. Payment of Taxes...................................................... 6
<PAGE>
14. Termination.......................................................... 6
15. Compensation and Effects Following Termination....................... 9
16. Non-Competition...................................................... 11
17. Nondisclosure of Confidential Information............................ 12
18. Noninterference...................................................... 12
19. Specific Enforcement................................................. 12
20. Severability......................................................... 13
21. Entire Agreement and Amendment....................................... 13
22. Assignment........................................................... 13
23. Waiver of Compliance................................................. 13
24. Descriptive Headings................................................. 14
25. Affiliate............................................................ 14
26. Counterparts......................................................... 14
27. Notices.............................................................. 14
28. Law Governing........................................................ 15
29. Arbitration.......................................................... 15
<PAGE>
Employment Agreement
--------------------
This Agreement made as of ____________,1999, by and between
Yeon Hong (the "Executive") and foreignTV.com, Inc., a Delaware corporation,
(the "Company") (hereinafter collectively: the "Parties")
WHEREAS, the Company wishes to hire the Executive to work for it as its
Vice President - Creative Director with duties and responsibilities as set forth
in this Agreement below; and
WHEREAS, the Company and the Executive wish to set forth in writing the
terms and conditions pursuant to which the Executive shall be employed by the
Company.
NOW, THEREFORE, In consideration of the mutual representations, covenants,
agreements and stipulations contained herein, the parties intending to be
legally bound agree as follows:
1. Employment.
1.1. The Company hereby employs the Executive as its Vice President -
Creative Director, and the Executive hereby accepts and agrees to such hiring,
engagement and employment, for the Term of the employment (as defined below) and
all on the terms and conditions hereafter set forth.
1.2. The Executive shall have the duties and rights set forth and provided
in this Agreement, and the Parties agree that all terms and conditions of
Executive's employment with the Company shall be governed solely by this
Agreement except where expressly stated otherwise.
2. Employment Term.
The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to such employment, subject to the terms and conditions set forth herein,
for a term for five years, commencing on ___________,1999 and continuing through
December 31, 2004 (the "Term"), unless sooner terminated as herein set forth.
3. Position and Duties.
3.1. As Vice President - Creative Director, the Executive shall also serve
as an officer of any of the corporations or entities affiliated with the
Company, as may be requested of him by the Board of Directors of the Company
(the "Board").
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3.2. The Executive shall serve in the capacities of and perform the
obligations and duties of the office of a Vice President, as set forth in the
Certificate of Incorporation and By-Laws of the Company as amended from time to
time.
3.3. Executive's employment hereunder shall be subject to the general
supervision, orders, advice and direction of the Company, as determined by the
Board. Executive shall perform such duties which are customarily performed by a
person holding a similar position with other employers engaged in the same or
similar business.
3.4. The Executive shall report and be directly responsible to the Board
of Directors of the Company and shall also have such other powers and duties as
may from time to time be prescribed by the Board.
3.5. The Executive shall devote his full working time and efforts to the
business and affairs of the Company and its subsidiaries and affiliates. It is
understood and agreed that the pursuit of personal investments and activities
which are not violative of the non-competition provisions of this Agreement and
which do not materially impair or detract from Employee's performance of his
duties to the Company shall not be in contravention of this Section 3.5. It is
expressly agreed that the Executive's employment by and activities in and
relating to the not-for-profit corporation, the Center For Contemporary
Diplomacy, Inc. (the "Center"), shall not be deemed to be in contravention of
this Section 3.5.
3.6. Subject to the terms of this Agreement, the Executive shall be
responsible for the general management of the creative department of the
Company, and the day-to-day managing, operating and administration of the
Company's creative design, internet technologies, and operations, and the
Company's computer system(s), and generally do all things reasonably deemed
necessary or desirable by the Board for the proper management, operation and
administration of the Company's creative department with requisite authority to
carry out his duties.
3.7. The Company shall not require the Executive to be employed in any
location other than metropolitan New York City unless he consents in writing to
such location.
3.8. During the Term of his employment, Executive shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; he shall be provided with the perquisites customarily
associated with the position of a senior executive and Vice President of a
company.
2
<PAGE>
4. Authority.
4.1. The Company authorizes the Executive, for the Company's account and
on its behalf, to perform any act or do anything necessary or desirable in order
to carry out the Executive's duties as set forth in this agreement and
everything done by the Executive under the provisions of shall be done as agent
of the Company, and all obligations or expenses incurred hereunder shall be at
the expense of Company.
4.2. All obligations or expenses incurred hereunder shall be for the
account of, on behalf of, and at the expense of the Company except as otherwise
specifically provided for in this Agreement, provided, however that the Company
-------- -------
shall not be obligated to reimburse the Executive for any expenses incurred in
entering this Agreement or in payment for any legal, accounting, or other
professional counsel, advice, or services sought or received by Executive in
connection with the negotiation and consummation of this terms of this
Agreement.
5. Best Efforts of the Executive.
The Executive shall use his best efforts in performing his duties
hereunder, and in furthering the interests of the Company and its business. The
Executive shall render his services in a faithful, responsible and competent
manner, all in accordance with the terms and conditions of this Agreement and
the Company's policies and procedures.
6. Representations of the Executive.
The Executive represents and warrants to the Company that:
6.1. He has the expertise, experience and capability to perform the duties
assigned to him hereunder;
6.2. He is not suffering from any physical or mental condition which may
impair his capability to perform the duties assigned to him hereunder;
6.3. He is familiar and/or will familiarize himself with the Company's
policies and procedures, will fully adhere to them during his employment
hereunder, and will refrain from any act or communication that may reflect
unfavorably upon the Company, its business or its affiliates; and
6.4. He has carefully read and understood this Agreement, and is entering
into it of his own free will.
3
<PAGE>
7. Representations of the Company.
The Company represents and warrants that it is relying on the Executive's
representations in entering into this Agreement, and that it is willing to
employ the Executive subject to the terms and conditions of this Agreement and
to perform its obligations hereunder.
8. Liability and Insurance.
8.1. The Executive shall not be liable to the Company for any loss or
damage not caused by the Executive's own gross negligence or intentional failure
to comply with his obligations hereunder.
8.2. The Company will indemnify the Executive against and hold the
Executive harmless from (a) any liability, damages, costs and expenses
(including reasonable attorneys' fees) sustained or incurred for injury to any
person or property in, about and in connection with the Company's business, from
any cause whatsoever, unless such injury shall be caused by the Executive's own
(i) illegal or unlawful act of a nature involving moral turpitude, (ii) gross
negligence, or (iii) repeated failure to comply with his obligations which
remained uncured after notice by the Board, hereunder; and (b) any liability
damages, penalties, costs and expenses, statutory or otherwise, for all acts
properly performed by the Executive pursuant to the instruction of the Board;
provided, in each of the foregoing instances, that the Executive promptly
advises the Board of its receipt of information concerning any such injury and
the amount of any such liability, damages, penalties, costs and expenses. The
Company shall pay all expenses, including any and all attorney's fees, actually
incurred by Executive in connection with the investigation of any such matter,
the defense of any such action ,suit or proceeding and in connection with any
appeal thereon, including the cost of any settlements. The indemnification
under this Section 8.2 shall be deemed as adding to any other obligation of the
Company to indemnify the Executive as an officer or director of the Company, to
the maximum extent permitted by applicable law.
8.3. The Company shall carry sufficient liability insurance, workmen's
compensation and will deliver, upon Executive's demand, a copy of such liability
insurance to the Executive or a certificate evidencing the same.
9. Compensation.
9.1. Base Salary.
-----------
(a) During the Term of employment, the Company shall pay the Executive
an annual base salary of $100,000, payable in substantially equal
installments that shall be weekly, bi-weekly, semi-monthly or monthly,
depending on the policy that
4
<PAGE>
the Company adopts for payment of base salary to its senior officers.
(b) The Executive's base salary will be subject to review at least
once at the end of each calendar year, provided that upon each review the
annual increase shall be no less than 10% of the Base for the immediately
preceding year.
9.2. Incentive Compensation.
----------------------
(a) The Company, if determined desirable and if conditions so allow,
at the determination and discretion of the Board, grant the Executive a
bonus based on Executive's achievements, it being acknowledged and agreed
that the Company will be under no obligation to grant such a bonus.
(b) When the Company achieves a positive net operating income, as
determined by independent auditors, in any fiscal year, the Executive shall
be automatically entitled to a one-time bonus of $25,000.
9.3. Withholding. The Company shall be entitled to withhold such amounts
-----------
from compensation and other payments as are necessary to comply with federal,
state and local withholding laws.
9.4. Benefits.
--------
(a) During the Term of employment hereunder, the Executive shall be
entitled to participate in and receive all benefits under all of the
benefit plans and arrangements of the Company currently or hereafter made
available by the Company to its Executives, senior officers, or in lieu of
any of such plans and arrangements of the Company, plans and arrangements
agreed to by the Board and the Executive.
Nothing provided for in this Section 9.4 (a), shall be
interpreted to limit or in any way affect to the Company's right to amend
or terminate any of its benefit plans and arrangements with respect to its
senior officers, or other employees, whether or not the Executive is then
participating in such plan or arrangement.
(b) If employee is insurable at regular rates the Company shall
purchase a disability insurance policy providing for a net after tax income
substantially equivalent to what Executive's net after tax income would be
on his base salary, such payments to begin after Executive is disabled for
60 days. If Executive is insurable at rates in excess of "regular rates",
if Executive pays such excess, Company will pay the balance of the premium.
5
<PAGE>
9.5. Vacations. The Executive shall be entitled to five (5) weeks, or
---------
twenty five (25) business days, paid vacation in each calendar year.
10. Sick Leave; Personal Days.
In case of illness, the Executive shall be entitled to up to fourteen (14)
days of sick leave per year and up to seven (7) personal per year. During
authorized sick leave, the Executive's salary and other benefits shall continue
to be paid or accrued. Unused sick days may be carried over from year to year
but are not reimbursable upon the termination of this Agreement.
11. Medical Insurance.
The Executive, his spouse and children under 18 living with him, shall be
covered by the Company's group medical insurance policy, dental and long term
disability insurance, at no cost to the Executive, throughout the Term of his
employment.
12. Expenses.
The Executive shall receive reimbursement on a monthly basis for reasonable
business expenses incurred by him in connection with the performance of his
duties hereunder. Executive shall provide the Company with proper documentation
for each expense. If the Company reimburses the Executive for expenses later
determined to be non-deductible for federal income tax purposes, all such
amounts shall be treated as additional compensation to him.
13. Payment of Taxes
13.1. To the extent required by prevailing law, the Company shall deduct
from the salary payable to the Executive under this Agreement all social
security, federal, state and local taxes and charges as may now be in effect or
which may hereafter be enacted or required by applicable law as charges on the
compensation of the Executive.
13.2. To the extent required by prevailing law, the Company shall pay such
social security, disability, unemployment and workmen's compensation charges
imposed upon the Company by virtue of its employment of the Executive.
13.3. The Executive shall notify the Company of any change in his place of
residence or status which may affect his tax liability.
14. Termination. The Executive's employment (herein the "Employment")
hereunder shall terminate only at the expiration of the Term, or prior thereto
upon the occurrence of one of the following:
6
<PAGE>
14.1. Death. The Executive's employment hereunder shall terminate upon his
-----
death ("Death").
14.2. Disability.
----------
(a) The Company may terminate the Employment hereunder if he becomes
physically or mentally incapacitated and by reason thereof becomes unable to
perform his duties hereunder for a period of 60 or more days during any period
of twelve consecutive months; and
(b) The Executive may terminate his employment hereunder if, in the
judgment of a physician selected by him and in the concurrent judgment of a
physician of the Company's selection, the Executive's health has become impaired
to an extent that makes the continued performance of his duties hereunder
hazardous to his physical or mental health or his life (such reason for
termination by the Company or by the Executive is hereinbelow referred to as
"Disability").
The Company may waive its right to seek concurrent judgment of a
physician of its selection. If the Company exercises said right, and if the
respective judgments of the physician selected by the Executive and the
physician selected by the Company do not concur, the judgment of a third
physician to be chosen by the Executive and the Company's physicians shall be
controlling.
14.3. Cause. The Company may terminate the Employment hereunder for cause
-----
(herein "Cause"). The Company will have Cause to terminate the Employment
hereunder upon:
(a) any willful or intentional and gross act or conduct by the
Executive having the effect of materially injuring the Company or its
affiliates;
(b) the Executive's conviction of a crime (including conviction
pursuant to a plea of nolo contendere) involving, in the judgment of the Board
fraud, dishonesty or moral turpitude; or
(c) any material, recurring and ongoing defaults, material
nonperformance or material violations by the Executive of the material terms of
this Agreement, which, despite specific written notice by the Board, remain
uncured after an unreasonable period of time, which such period shall be no less
than sixty (60) days.
14.4. On Company's Notice. The Company may terminate the Employment with
-------------------
no reason or cause whatsoever (herein termination "On the Company's Notice").
7
<PAGE>
14.5. By Executive Without Reason. The Executive may terminate the
---------------------------
Employment (herein termination "On the Executive's Notice").
14.6. By Executive With Reason. The Executive may terminate the Employment
------------------------
at any time for "good reason" (herein termination "By Executive With Reason"),
upon one or more of the following:
(a) The failure to elect or appoint, or re-elect or re-appoint the
Executive to, or removal or improperly attempted removal of Executive from,
his position as Vice President - Creative Director of the Company, except
in connection with the proper termination of Executive's employment by
reason of Cause, Death or Disability as provided herein;
(b) A reduction in Executive's overall compensation other than his
discretionary bonus under Section 9.3(a), or an adverse change in the
nature or scope of the authorities, powers, functions or duties normally
attached to Executive's position with the Company;
(c) The Company's failure or refusal to perform any obligations
required to be performed in accordance with this Agreement after reasonable
notice an opportunity to cure same; and
(d) A change in control of the company occurs. As used in this
Section 14(d), a "Change in Control" shall be deemed to have occurred upon
the passage of (i) ten (10) days following a public announcement that a
person or group of affiliated or associated persons have acquired, or
obtained the right to acquire, beneficial ownership of fifteen (15%)
percent of the outstanding Common Stock of the Company (the "Shares"); or
(ii) ten (10) days following the commencement of, or announcement of an
intention to make a tender offer or exchange offer, the consummation of
which would result in the beneficial ownership by a person or group of
affiliated or associated persons of fifteen (15%) percent of such
outstanding Shares; (iii) ten (10) days after a person or group of
affiliated or associated persons has (x) become the owner of at least ten
(10%) percent of the Shares or has filed a Schedule 13D or 13G with the
Securities and Exchange Commission and (y) whose ownership interest is
deemed by the Board to cause a material adverse impact on the business or
the prospects of the Company; or (iv) a change in the composition of a
majority of the Board.
14.7. Notice and Date of Termination. Any termination pursuant to Sections
------------------------------
14.1 through 14.6, herein shall be communicated by written notice of termination
to the other party (herein referred to as the "Notice of Termination"). The
date of
8
<PAGE>
termination of the Employment hereunder (herein the "Date of Termination") shall
be:
(a) the date of the Executive's death, if his Employment is terminated
for Death; or
(b) the date on which a Notice of Termination is given or made
effective, if the Employment is terminated by the Company for Disability, Cause
or On Notice, respectively; or
(c) the date on which a Notice of Termination is given or made
effective, if the Employment is terminated by the Executive on Executive's
Notice or by the Executive With Reason.
15. Compensation and Effects Following Termination.
15.1. If the Employment is terminated For Death, Disability, On the
Company's Notice, or By Executive With Reason, the Executive, or his successors
or dependents (collectively in this Section: the "Executive") shall be entitled
to the following compensation:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) The base salary and all benefits and bonuses hereunder at the
rate prevailing at the time of Termination for the remainder of the first
year of the Term, if the Termination is effective prior to twelve (12)
months following the date hereof, and thereafter for a period of one (1)
year;
(c) A severance payment in a lump sum equivalent to the base salary
and bonuses equivalent to one (1) year for each year of prior employment
with the Company (whether during the initial Term of employment or
thereafter), plus a pro-rated amount for each portion of a year of prior
employment with the Company;
(d) Any options granted to Executive which have not, by the term
thereof vested, shall be deemed to have vested at the termination, and
shall thereafter be exercisable for the maximum period of time allowed for
exercise thereof under the terms of the option(s); and
(e) The Company's (and Executive's and his dependents') participation
in any and all medical, dental and disability insurance plans shall be
continued, or equivalent benefits provided to him or them by the Company at
no cost to him or them, for a period of two (2) years from the date of
Termination.
9
<PAGE>
15.2. If the Employment is terminated at the expiration of the Term of
employment or by the Executive On the Executive's Notice, the Executive shall be
entitled as follows:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) A severance payment in a lump sum equivalent to the base salary
and Bonuses equivalent to one half (1/2) year for each year of prior
employment with the Company (whether during the initial Term of employment
or thereafter), plus a pro-rated amount for each portion of a year of prior
employment with the Company;
(c) Any options granted to Executive which have not, by the term
thereof vested, shall be deemed to have vested at the termination, and
shall thereafter be exercisable for the maximum period of time allowed for
exercise thereof under the terms of the option(s); and
(d) The Company's (and Executive's and his dependents') participation
in any and all medical, dental and disability insurance plans shall be
continued, or equivalent benefits provided to him or them by the Company at
no cost to him or them, for a period of one (1) year from the date of
Termination.
15.3. If the Employment is terminated by the Company for Cause, the
Executive shall be entitled as follows:
(a) All unpaid amounts due on account of Executive's base salary and
all benefits and bonuses until the date of Termination;
(b) to the extent medical insurance or other benefits are required by
law to be extended or offered for a longer period, the Company shall comply
with such requirements; and
(c) Any options granted to Executive which have vested, shall
thereafter be exercisable for the minimum period of time allowed for
exercise thereof under the terms of the option(s). Any options granted to
Executive which have not yet vested, at the date of Termination, shall
expire upon Termination.
15.4. Any extension of benefits following the termination of employment
provided for herein shall be deemed to be in addition to and not in lieu of, any
period for benefits continuation provided for by law at the Company's or
Executive's expense.
10
<PAGE>
16. Non-Competition.
16.1. During the period of the Employment hereunder and during the
applicable post-termination non-competition period as specified in Section 16.2,
herein, the Executive shall not own any interest, or provide any financing for,
or perform any service for, any business organization which directly or
indirectly engages in competition with the Company within the principal
geographic areas where the Company is or has during the term of this Agreement
developed substantial plans to commence doing business (herein the "Territory");
or, as a sole proprietor, director, officer, shareholder, employee, manager,
consultant, independent contractor, advisor or otherwise, engage directly or
indirectly in competition in the Territory with, any business conducted by the
Company or by its respective affiliates or any business which the Company or any
of its respective affiliates had developed substantial plans to enter into
during the employment with the Company pursuant to this Agreement or prior
hereto. Any business organization whose principal business is conducted on or
through the Internet shall be deemed as competing with the Company in the
Territory; provided, however, that the non-competition provisions of this
Section shall not apply (a) to paid or voluntary work for nonprofit Internet
projects, provided they do not directly compete with foreignTV.com; (b) paid or
voluntary work for a local community-based Internet venture (e.g. northsalem.com
community news and information Web site); and (c) freelance writing and
interviewing. Anything to the contrary notwithstanding, the Executive's
employment by and activities in and relating to the Center shall not be deemed
to be in contravention of this Section 16.1.
16.2. Post-termination non-competition period.
(a) In the case of Termination of the employment for Cause or by the
Executive on Notice, the applicable post-termination non-competition period
shall be the period ending two (2) years following the Termination of the
employment hereunder.
(b) In the case of Termination of the employment for Disability, the
applicable post-termination non-competition period shall be the period
ending one (1) year following the Termination of the employment hereunder.
(c) In the case of Termination of the employment on the Company's
Notice or by the Executive for Reason, there shall be no applicable post-
termination non-competition period hereunder.
16.3. If a court of competent jurisdiction shall determine that the any of
provisions of Section 16.2 transcend or contravene the provisions of applicable
law, ipso facto this section shall be deemed revised to comply with applicable
----------
law and shall be construed
11
<PAGE>
in such a manner as to render this Section as so revised enforceable under such
law.
17. Nondisclosure of Confidential Information.
17.1. The Executive shall not, except as authorized or required by the
Company, in any manner, directly or indirectly, reveal, divulge, disclose or
otherwise communicate or make available to any person, firm, corporation or
entity any information concerning any matters affecting or relating to the
Company, its affiliates and/or any customers of the Company, their business,
affairs, manner of operation, plans or policies, the prices they charge or any
other information, except such information that is already in the public domain
due to no fault of the Executive.
17.2. The provisions of this Section shall survive the term of this
Agreement.
18. Noninterference.
During and after the Term of this Agreement, the Employee shall not in any
manner, directly or indirectly, affect to the detriment of the Company or any of
its affiliates any relationship of the Company, or any of its affiliates, or any
of their respective officers, employees and agents with any customer, supplier
or employee the Company or any affiliate, or cause any customer or supplier to
refrain from doing business with the Company or any affiliate thereof. Nothing
in this Section 18 shall be deemed to prevent Employee from competing with the
Company after the expiration of the applicable post-termination non-competition
period, even if such competition may have the effect of detrimentally affecting
the business of the Company.
19. Specific Enforcement.
The Executive acknowledges and agrees that the Company would be irreparably
harmed and could not be made whole by monetary damages in the event any of the
terms and provisions of this Agreement were not performed by him in accordance
with its terms. Accordingly, the Executive agrees that, in addition to any other
remedy to which the Company may be entitled, the Company shall be entitled to an
injunction or injunctions to prevent breaches of, and to obtain specific
performance of, any or all of the terms and provisions hereof and shall be
entitled to other equitable relief.
12
<PAGE>
20. Severability.
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions will remain in
full force and effect and will in no way be affected, impaired or invalidated.
It is hereby stipulated and declared to be the intention of the parties that
they would have executed such remaining terms, provisions, covenants and
restrictions without including any of such as may be hereafter declared invalid,
void or unenforceable.
21. Entire Agreement and Amendment.
This Agreement contains the entire understanding of the parties with
respect to its subject matter. There are no restrictions, agreements, promises,
representations, warranties, covenants or undertakings other than those
expressly set forth herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may not be amended, modified or supplemented except upon the execution
and delivery of a written agreement executed by the parties hereto.
22. Assignment.
This Agreement shall not be assignable by any party hereto, except that it
shall be assignable by the Company to any companies that are or may become
affiliated to it but no such assignment shall release to the assigning party
from its financial obligations hereunder. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the heirs, personal
representatives, successors and permitted assigns of the parties hereto.
23. Waiver of Compliance.
Any failure of one of the parties hereto to comply with any obligation,
covenant, agreement or condition herein may be waived by the other party only by
a written instrument signed by the party granting such waiver, but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
13
<PAGE>
24. Descriptive Headings.
Descriptive headings are for convenience only and shall not control or
affect the meaning or construction of any provision of the Agreement.
25. Affiliate.
As used in this Agreement, the term "affiliate" means a person or entity
controlled by, controlling, or under common control with the Company.
26. Counterparts.
For the convenience of the parties, any number of counterparts of this
Agreement may be executed by one or more parties hereto and each such executed
counterpart shall be, and shall be deemed to be, an original instrument.
27. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, dispatched by way of recognized
courier service, such as Federal Express, by facsimile transmission (with a
confirmation copy mailed), or mailed (registered or certified mail, postage
prepaid, return receipt requested) to the respective parties at the following
addresses:
To the Executive:
Yeon Hong
622A Bruce Street
Ridgefield, N.J. 07657
telephone: (201) 943 0297
facsimile:
Esq.
To the Company:
foreignTV.com, Inc.
162 Fifth Avenue, Suit 1005A
New York, N.Y. 10010
Attention: Mr. Jonathan Braun
14
<PAGE>
with copies to:
Marc D. Leve, Esq.
264 Lexington Ave., #2A
New York, N.Y. 10016
or to such other address as any party hereto may, from time to time, designate
in a written notice given in a like manner.
28. Law Governing.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within such State, without reference to any rules of
conflicts of laws.
29. Arbitration.
All disputes, controversies or claims with respect to any of the terms or
conditions of, or the performance of the parties under, or termination of, this
Employment Agreement which cannot be settled amicably by the parties, whether or
not such disputes, controversy(ies) or claim(s) are arbitrable under applicable
law, shall be finally settled by arbitration in accordance with the Employment
Commercial Arbitration Rules of the American Arbitration Association in New York
City. The arbitration proceedings shall be conducted in New York City in the
English Language before one (1) arbitrator. The award of the arbitrator shall
be final and binding upon the parties and judgment upon such award may be
entered in any court having jurisdiction or application may be made to such a
court for a judicial acceptance of such award and judgment or order of
enforcement, as the case may be.
IN WITNESS THEREOF THE PARTIES have executed this Agreement as of the date
first herein written.
THE COMPANY: THE EXECUTIVE
foreignTV.com, Inc.
By: ______________________ ___________________
Name: Yeon Hong
Title:
15
<PAGE>
ADDENDUM TO EMPLOYMENT AGREEMENT
--------------------------------
This Addendum (the "Addendum") to the Employment Agreement (the "Employment
Agreement"), by and between Yeon Hong (the "Executive") and foreignTV.com, Inc.,
a Delaware corporation, (the "Company"), dated as of ____________,1999.
1. Anything to the contrary in the Employment Agreement notwithstanding, it is
agreed that until the Company commences actual payments of the Executive's
base salary under the Employment Agreement, the Executive shall be entitled
to continue operating his business, Y Design, Ltd. ("Y Design"), provided
that he is not in violation of the non-competition provisions of Section 16
of the Employment Agreement.
2. Upon receipt of his first payment on account of his base salary, the
Executive shall devote all of his working time to the Company, as provided
in Section 3.5, except for such activities required for the winding up and
closing down of Y Design.
3. It is agreed that in addition to the base salary and benefits to which the
Executive is entitled under the Employment Agreement, the Company, during
the period between ____________, 1999 and August 31, 1999, will pay the
Executive the following:
a. An amount equivalent to the rent and utilities that are actually paid
by Y Design in connection with the premises located at 162 Fifth
Avenue, Suit 1005A, New York, N.Y. 10010.
b. Such reasonable expenses for closing down the business of Y Design, as
the Company, in its sole absolute discretion shall deem necessary and
appropriate.
4. Except as provided in this Addendum, the Employment Agreement remains in
full force and effect and without any modification.
5. Unless agreed otherwise by the parties hereto, this Addendum shall expire
on August 31, 1999.
IN WITNESS THEREOF THE PARTIES have executed this Agreement as of the date
first herein written.
THE COMPANY: THE EXECUTIVE
foreignTV.com, Inc. ___________________
Yeon Hong
By: ______________________
Name:
Title:
16
<PAGE>
Exhibit 23.1
Consent of Independent Public Accountant
As Independent Certified Public Accountant, I hereby consent to the use of my
report (and to all references to myself) included in or made a part of this
Registration Statement.
/s/ Martin A. Weiselberg
-------------------------
Martin A. Weiselberg
New York, New York
February 2, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,670
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,670
<CURRENT-LIABILITIES> 6,670
<BONDS> 0
0
0
<COMMON> 83,000
<OTHER-SE> (83,000)
<TOTAL-LIABILITY-AND-EQUITY> 6,670
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
