As filed with the Securities and Exchange Commission on May , 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
under the
SECURITIES ACT OF 1933
Streamedia Communications, Inc.
(Name of small business issuer in its charter)
Delaware 7375
(State or jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
22-3622272
(I.R.S. Employer
Identification Number)
James Douglas Rupp
Streamedia Communications, Inc.
9 East 45th street
New York, NY 10017
(212) 883-0299
(Address and telephone number of principal
executive offices and principal place of business)
James Douglas Rupp
Streamedia Communications, Inc.
9 East 45th street
New York, NY 10017
(212) 883-0299
(Name, address and telephone number of agent for service)
Copies of all communications to:
Louis E. Taubman, Esq Bruce A. Cheatham, Esq.
Kogan & Taubman, L.L.C. Winstead Sechrest & Minick P.C.
30 Broadway, Suite 2704 5400 Renaissance Tower
New York, NY 10006 1201 Elm Street
(212) 425-8200 Dallas, Texas 75270
(212) 482-8104 (214) 745-5400
(214) 745-5390 FAX
Approximate date of proposed sale to public: As soon as practicable after the
effective date of the Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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 delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.
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>
(Registration Statement cover page cont'd)
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 per Unit Aggregate Offering Price Registration Fee
(1) (1) (1)
<S> <C> <C> <C> <C>
Units 1,150,000 $8.50 $9,775,000 $2,717
Common Stck, par
value$0.001 (2) 1,150,000 (2) (2) (2)
Redeemable Common Stock
Purchase Warrants (2) 1,150,000 (2) (2) (2)
Common Stock, par
value $0.001 (3)(4) 1,150,000 $12.75 $14,662,500 $4,076
Underwriter's Warrants (5) 100,000 $ 0.001 $100 $1
Units Underlying the
Underwriter's Warrants 100,000 $10.20 $1,020,000 $284
Common Stock, par
value $0.001 (4)(6) 100,000 (6) (6) (6)
Redeemable Common Stock
Purchase Warrants (6) 100,000 (6 (6) (6)
Common Stock, par
value $0.001 (4)(7) 100,000 $12.75 $1,275,000 $354
Total $26,732,600 $7,432
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Included in the Units. No additional registration fee is required.
(3) Issuable upon the exercise of the Redeemable Common Stock Purchase
Warrants.
(4) Pursuant to Rule 416 there are also registered an indeterminate number
of shares of Common Stock which may be issued pursuant to the
antidilution provisions applicable to the Redeemable Common Stock
Purchase Warrants, the Underwriter's Warrants and the Redeemable
Common Stock Purchase Warrants
issuable under the Underwriters Warrants.
(5) Underwriters Warrants to purchase up to 100,000 Units, consisting
of an aggregate of 100,000 shares of
Common Stock and 100,000 Redeemable Common Stock Purchase Warrants.
(6) Included in the Units underlying the Underwriters' Warrants. No
additional registration fees are required.
(7) Issuable upon exercise of Redeemable Common Stock Purchase
Warrants underlying the Underwriters' Units.
<PAGE>
3
SUBJECT TO COMPLETION DATED MAY 1999
1,000,000 Units
Consisting of 1,000,000 Shares of 986728420Common Stock and
1,000,000 Redeemable Common Stock Purchase Warrants.
STREAMEDIA COMMUNICATIONS, INC.
This is an initial public offering of 1,000,000 units each unit consists of one
share of common stock and one warrant. Each warrant entitles the holder to
purchase one share of common stock at a price of $12.75 per share until
____________, 2004 (five years from the date of this prospectus) Currently,
there is no public market for our common stock.
The underwriters have an option to purchase an additional 150,000 units to cover
over-allotments if any. This is an initial public offering of 1,000,000 units
each unit consists of one share of common stock and one warrant. Each warrant
entitles the holder to purchase one share of common stock at a price of $12.75
per share until ____________, 2004 (five years from the date of this prospectus)
Currently, there is no public market for our common stock.
The underwriters have an option to purchase an additional 150,000 units to
cover over-allotments if any. Streamedia Communications,
Inc.4521984hspNext1149fLine0
9 East 45th Street
New York, NY 10017
Streamedia Communications, Inc.
9 East 45th Street
New York, NY 10017
The Offering:
Per unit Total
Public Offering Price $8.50 $8,500,000
Underwriting discounts $0.85 $ 850,000
Proceeds to Streamedia $ 7.65 $ 7,650,000
The Offering:
Per unit Total
Public Offering Price $8.50 $8,500,000
Underwriting discounts $0.85 $ 850,000
Proceeds to Streamedia $ 7.65 $ 7,650,000
Proposed Trading Symbol
Nasdaq SmallCap Market " "
-----------------------
This investment involves a high degree of risk. See "Risk Factors" beginning on
page 7.
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. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the Registration Statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
------------------------------
REDSTONE SECURITIES, INC.
Prospectus dated May 14 , 1999
------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE 986734129OF CONTENTS
Page
<S> <C>
Prospectus Summary.............................................................................3
Selected Financial Information.................................................................6
Risk Factors...................................................................................7
Limited Operating History.................................................................7
Unpredictability of Future Revenues.......................................................7
Reliance on Key Personnel.................................................................8
Competition...............................................................................8
Uncertain Acceptance of the Internet as an Advertising Medium.............................8
Dependence on Continued Growth in Use of the Internet.....................................9
Risk of Technological Change..............................................................9
Government Regulation and Legal Liability.................................................9
Immediate Substantial Dilution............................................................9
Influence on Voting by Principal Shareholders.............................................10
Absence of Prior Public Market............................................................10
Arbitrary Determination of Offering Price.................................................10
Payment of Dividends......................................................................10
Shares Eligible for Future Sale...........................................................10
Effect of Underwriter's Warrants............................................. .... ..11
Underwriter's Influence on the Market........................................ .. ........11
Use of Proceeds................................................................................12
Dividend Policy................................................................................12
Dilution.......................................................................................13
Capitalization.................................................................................14
Management's Discussion and Analysis
of Financial Condition and Results Of Operations .........................................14
Business.......................................................................................18
Additional Information.........................................................................20
Management.....................................................................................28
Certain Relationships and Related Transactions.................................................31
Principal Shareholders.........................................................................32
Certain Federal Income Tax Matters.............................................................32
Description of Capital Stock...................................................................33
Shares Eligible For Future Sale................................................................34
Plan of Distribution...........................................................................35
Legal Matters..................................................................................37
Experts........................................................................................37
Glossary.......................................................................................38
Index to Financial Statements..................................................................43
</TABLE>
<PAGE>
PROSPECTUS SUMMARY
<PAGE>
The following summary is qualified in its entirety by the more detailed
information and financial statements including notes appearing elsewhere in this
prospectus. Unless otherwise indicated, the information in this prospectus
assumes the underwriters' over-allotment option and the underwriters' warrants
are not exercised. The units offered involve a high degree of risk. Investors
should carefully consider the information set forth under "Risk Factors."
<PAGE>
32
shapeType202fFlipH0fFlipV0lTxidWe9arehapNmultimedia amcontent generator,
enabler, and aggregator. Our Webcast Technologies(TM) business will be divided
among four vertically-integrated divisions: Streamedia Webcast Streamedia
Broadcast; Streamedia Networks; Streamedia Webcast Technologies(TM)
Technologies; and Streamedia Publishing. Each center of activity will be
shapeType202fFlipH0fFlipV0lTxiddevelopedNearoundSmultipleasources of potential
revenue. Text, as well as Broadcasting & audio and video broadcasts that we
develop or distribute, will be Streamedia Networks accessible via the Internet,
primarily free to end users. Our goal is to Streamedia Broadcasting & capture
the maximum possible Internet audience. No special hardware or Streamedia
Networks software will be required to experience our basic content beyond that
of shapeType202fFlipH0fFlipV0lTxidthe28standard12mediafiplayers and browsers
routinely supplied by computer of Streamedia manufacturers. Communications'
Business Activities We will syndicate our broadcast content across a suite of
proprietary Profile of Streamedia multimedia networks, which will be aggregated
Internet broadcast Communications' Business mini-portals. Visitors to our
networks will experience live and on-demand Activities video and audio
programming in an environment similar to that of cable
broadcasters but offering a greater scope of
programming choices, enhanced interactive
elements, convenient access to retail
opportunities, and numerous sources of pertinent,
supplementary news and information. Our networks
will generate revenues through content
syndication, e-Commerce relationships,
advertising, and channel licensing fees.
Streamedia Broadcast will:
Create and own networks and channels and,
like network television, license other
channels to station affiliates, which will
integrate our content and advertising into
their own programming.
Multiply opportunities for Streamedia
Webcast Technologies(TM) to market broadcast
enabling services.
Create and market "rich" or multimedia
advertising as well as banner advertising
and sponsorships across its suite of
networks.
Syndicate its proprietary and licensed content to other websites and the
traditional broadcast industry. o Produce continuously streaming, seamless
"live" channels, which will include, in some situations, uniquely "anchored"
broadcasts.
Streamedia Webcast Technologies will provide or
arrange for media delivery and broadcast-enabling
solutions to the Streamedia Networks, their
channels, and other potential clients. It will
generate revenue by marketing Internet broadcast
services, equipment, tools, and talent.
Webcast Technologies will:
Market internet and intranet broadcasting
services and solutions to businesses,
associations, publishers, and traditional
broadcasters.
Downlink traditional broadcast signals via
leading satellite communications facilities
and encode the data for streaming via the
Web.
Syndicate proprietary programming via
leading fiber optic video switching hubs,
satellite uplink, and Web-powered networks.
Deliver multimedia and print content
through push and subscription systems.
Establish alert and notification systems for end users.
Provide specific information regarding site audiences to content
providers and advertisers.
Integrate 'e-Commerce' or merchandizing
programs into Streamedia Networks and
channels.
Build chatrooms, bulletin boards, personal
webcast stations and other interactive
elements into network and channel vehicles.
Streamedia Publishing will focus on the
development of StreamWire, which will aggregate
and deliver leading sources of news and
information appropriate to each of our Networks
and their sub-channels, and to non-affiliated
sites. It will also publish a series of
proprietary news, premium press release and
announcement wires, each of which will be
distributed across a variety of websites, through
various push, pull, and convergence mechanisms,
as well as archived for future retreaval.
Streamedia Publishing will:
Create marketable archives of print and
multimedia content appropriate to each
network.
Aggregate news and information resources at
each network site to enhance or broadcast
content.
Publish a series of focused, edited news
and information products under the
StreamWire News(TM) brand, such as wires
devoted to NASDAQ or Amex-listed companies,
or specific topic areas.
Launch a fee-based press release and
product announcement wire service,
StreamWire(TM).
Publish programming guides and network
schedules.
We have conceived StreamWire as a standalone
product, to supplement our broadcast content, and
to provide complementary promotional support for
our multimedia networks. We expect the Publishing
division to provide the Company with numerous
revenue sources, such as advertising,
sponsorships, design services, and fees for
information distribution. We expect the Broadcast
division to generate revenue through sales of
programming, produced in house, to other web
sites, as well as to traditional broadcast media,
such as radio and cable. We have conceived each
area of activity to augment the revenue potential
of the other areas.
shapeType202fFlipH0fFlipV0lTxid458752hspNext1207Streamedia
Publishing
Streamedia Publishing
shapeType202fFlipH0fFlipV0lTxidWe3believeeour2strategyswill vault our
networks into a leadership position Strategy in the rapidly developing internet
broadcast industry. We intend to:
Business Strategy
Exploit our proximity to sources of both
new and traditional forms of broadcast
content, major venues, and cultural centers.
"Think like a broadcaster," and recruit appropriate personnel from the
broadcast industry.
Build comprehensive, yet focused networks.
Uniquely syndicate our 'bundled' multimedia
networks and publications to other web
sites, multiplying our distribution outlets,
which will enhance corporate branding and
generate opportunities for greater
advertising revenues.
Enable print content generators and other
businesses without broadcast backbones to
participate in the emergence of a global
broadcast medium.
Syndicate web-originated content to
traditional media outlets, as well as
syndicate traditional media outlets via the
web.
Support the two leading media player
platforms from RealNetworks and Microsoft,
as well as emerging technologies and formats
such as MP3.
Become recognized as a 'one-stop' enabling
shop for media and information distribution.
Partner with recognized broadcast leaders
to carry their programs across the
Streamedia Networks.
Pursue strategic acquisitions to drive
revenue growth and product development, as
well as leverage cross-marketing
opportunities.
Capitalize on the retail e-commerce
opportunities unique to Internet
broadcasters.
Enhance our networks with a sense of
"community" by incorporating
state-of-the-art interactive components
lacking in traditional broadcast media.
Create the preeminent venue for rich
in-line media advertising by enabling
traditional broadcast advertisers to exploit
emerging online formats.
shapeType202fFlipH0fFlipV0lTxidOur6principal1executiveeoffices are located
at 9 East 45th Street, New Corporate Offices and York, NY, 10017. Our general
corporate contacts are at 212-883-0299, and Contacts [email protected]. Our
Investor Relations contacts are 1-800-511-4216, Streamedia's Corporate or by
email to [email protected]. Offices and Contacts
<PAGE>
The Offering
<TABLE>
<CAPTION>
<S> <C>
Units to be offered......................... 1,000,000 units, each unit consisting of one share of common
stock and one warrant, each warrant entitling the holder to
purchase one share of common stock at a price of $12.75 until
(May __, 2004).
Description of warrants..................... The warrants are not immediately exercisable and are not
transferable separate from the shares until (November ___,
2001). The warrants are redeemable by the Company at $0.05 per
Warrant under certain conditions. "
Common Stock to be outstanding
after the Offering........................ 4,025,000 shares (1)
Warrants to be outstanding after
the Offering................................ 1,000,000 (2)
Use of Proceeds............................. Strategic acquisitions, working capital and other general
corporate purposes. See "Use of Proceeds."
Risk Factors................................ The units offered are speculative and involve a high degree of
risk and should not be purchased by investors who cannot afford
the loss of their entire investment. See "Risk Factors."
Proposed NASDAQ Symbols
Units....................................... ""
Common stock................................ ""
Warrants.................................... ""
</TABLE>
- -----------------
(1) Does not include:
Up to 1,000,000 shares issuable upon the exercise of the
warrants, and
Up to 150,000 shares to be issued upon exercise of the
underwriters' over-allotment option, and the
warrants thereunder, and
100,000 shares to be issued upon exercise of the underwriters'
warrants, and the warrants thereunder.
Does not include the 233,500 shares issued in the private
placement pursuant to rule 506 of Regulation D promulgated under
the securities act of 1933 as amended.
(2) Does not include:
Up to 150,000 warrants issuable upon the exercise of the
over-allotment option, and
100,000 warrants underlying the underwriters' warrants.
<PAGE>
SELECTED FINANCIAL INFORMATION
The following selected financial data has been derived from and should
be read in conjunction with our financial statements and the related notes,
included elsewhere in this prospectus, as of and for the period frm April 29,
1998 (date of inception) to December 31, 1998 See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Period from April 29, 1998
(date of inception) to December 31, 1998
Operating Data:
Revenues $ -
Cost of Revenues $ -
Gross Profit $ -
Operating Expenses $ 296,760
----------
Net loss $(296,760)
Basic and diluted loss per common share $ (0.10)
December 31, 1998
Balance Sheet Data:
Working capital (deficit) $ (137,460)
Current assets $ 1,225
Total assets $ 77,425
Current liabilities $ 138,685
Total liabilities $ 138,685
Stockholders' equity (deficit) $ (61,260)
Common shares outstanding 3,025,000
- ------------
<PAGE>
RISK FACTORS
<PAGE>
Investing in our securities involves a high degree of risk. Prospective
investors should consider the following factors in addition to other information
set forth in the prospectus before purchasing the units. You should note that
this prospectus contains certain "forward-looking statements," including without
limitation, statements containing the words "believes," "anticipates,"
"expects," "intends," "plans," "should," "seeks to," and similar words. You are
cautioned that such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties. Actual results may differ
materially from those in the forward-looking statements as a result of various
factors, including but not limited to, the risk factors set forth in this
prospectus. The accompanying information contained in this prospectus identifies
important factors that could cause such differences.
<PAGE>
Streamedia was formed on April 29,
1998, and is in development stage.
Streamedia was formed on April 29, 1998, and is in development stage.
Streamedia is currently in development stage. To date, we have not generated any
revenues. We anticipate that our upcoming launches of websites currently in the
development stage will transition Streamedia to operating status. However, you
should consider Streamedia and our prospects in light of the risks, difficulties
and uncertainties frequently encountered by companies in an early stage of
development. To achieve and sustain profitability, we believe that Streamedia
must, among other things:
Provide compelling and unique
content and technologies to Internet
users.
Successfully market and sell our
business services
Effectively develop new
relationships, and maintain existing
relationships, with advertisers,
content providers, business
customers and advertising agencies.
Continue to develop and upgrade our
technology and network
infrastructure and respond to our
competitors.
Successfully improve our existing
products and services to address new
technologies and standards.
Attract, retain and motivate
qualified personnel.
xt0lineWidth38100lineStyle1fLine1We
can not accurately predict future revenues due to the lack of past revenues. We
can not accurately predict future revenues due to the lack of past revenues.
Because of Streamedia's limited operating history and the emerging nature of the
markets in which we compete, we are unable to forecast our revenues with
certainty and precision. Streamedia's operating results are also dependent on
factors outside of the control of Streamedia, such as the availability of
compelling content and the development of broadband networks that support
multimedia streaming. There can be no assurance that we will succeed in
addressing these risks, and failure to do so could have a material adverse
effect on Streamedia's business, results of operations and financial condition.
The market for Streamedia's business services and the long-term acceptance of
Web-based advertising are uncertain. We currently intend to increase our
operating expenses in order to:
Expand our distribution network
capacity Increase sales and
marketing activities Acquire
additional content Develop and
upgrade technology and
proprietary content Purchase
equipment for its operations
Complete potential acquisitions
While we believe that these activities will
increase our opportunity for profitability,
there can be no assurance that Streamedia
will be profitable.
loss of our President or other key personnel could adversely affect our business
and decrease the value of your investment.
The loss of our President or other key personnel could adversely affect our
business and decrease the value of your investment.
Streamedia depends on the efforts of certain members of senior management,
particularly James Rupp (President and Chief Executive Officer), Gayle Essary
(Vice President of Strategic Development), and Nicholas Malino (Chief Financial
Officer). The loss of one or more of these individuals could adversely affect
Streamedia's business operations or prospects. These individuals have entered
into employment agreements, but Streamedia cannot guarantee that any of these
individuals will continue to serve in his current capacity or for what time
period this service might continue.
ToText0lineWidth38100lineStyle1The
intense competition in our markets may lead to reduced revenue and increased
losses. The intense competition in our markets may lead to reduced revenue and
increased losses.
Although we believe our approaches to establishing Streamedia as an emerging
leader in its fields reduces the threat of competition, the market for internet
broadcasting and news distribution services is highly competitive.
Streamedia expects that competition will continue to increase. We compete with:
o Other Web sites, Internet portals, dialup
software applications and Internet
broadcasters to acquire and provide
content and act as a gateway to attract
users.
o Videoconferencing companies, audio
conferencing companies and Internet
business services broadcasters.
o Online 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.
o Other news aggregators and content generators.
o Other press release distributors.
There can be no assurance that Streamedia
will be able to compete successfully or that
the competitive pressures will not have a
material adverse effect on Streamedia's
business, results of operations and
financial condition. Competition among Web
sites that provide compelling content,
including streaming media content, is
intense, and we expect competition to
increase significantly in the future.
Traditional media may expend resources to
establish a more significant Internet
presence in the future. These companies have
significantly greater brand recognition and
financial, technical, marketing and other
resources than Streamedia. We also compete
with other content providers for the time
and attention of users and for advertising
revenues.
Our
success depends on the acceptance of the Internet as an advertising medium.
Our success depends on the acceptance of the Internet as an advertising medium.
The market for Internet advertising has only recently begun to develop. This
market is rapidly evolving and is characterized by an increasing number of
market entrants. As is typical in the case of a new and rapidly evolving
industry, demand and market acceptance new products and services are uncertain.
Streamedia's ability to generate advertising revenue will depend on, among other
factors:
The development of the Internet as an
advertising medium.
Pricing of advertising on other Web
sites.
The amount of traffic on Streamedia's
Web sites.
Streamedia's ability to achieve and
demonstrate user and member demographic
characteristics that are attractive to
advertisers.
Establishing and maintaining desirable
advertising sales agency relationships.
Streamedia's business, results of
operations and financial condition could
be materially adversely affected if
widespread commercial use of the
Internet does not develop, or if the
Internet does not develop as an
effective and measurable medium for
advertising, See "Business."
hapeToText0lineWidth38100lineStyle1Our
success depends on continued use and expansion of the Internet.
Our success depends on continued use and expansion of the Internet.
Rapid growth in use of and interest in the Internet is a recent phenomenon.
There can be no assurance that acceptance and use of the Internet will continue
to develop or that a sufficient base of users will emerge to support
Streamedia's business. Future revenues of Streamedia will depend largely on the
widespread acceptance and use of the Internet as a source of multimedia
information and entertainment and as a vehicle for commerce in goods and
services. Streamedia's business, results of operations and financial condition
could be materially adversely affected if:
use of the Internet does not continue to grow or grows more slowly than
expected, the Internet infrastructure does not effectively support the growth
that may occur, or the evolution of broadband connectivity is slower or less
widespread than anticipated.
8fFitShapeToText0lineWidth38100lineStyle1We
may not be able to develop acceptable new products at the rate required by our
rapidly changing market. We may not be able to develop acceptable new products
at the rate required by our rapidly changing market. The market for Internet
broadcast services experiences rapid technological developments, frequent new
product introductions and evolving industry standards. Therefore, Streamedia
must:
effectively use leading technologies,
continue to develop technological expertise, and
enhance our current services and
continue to improve the performance,
features and reliability of our network
infrastructure.
Also, the widespread adoption of new
Internet technologies or standards could
require substantial expenditures by
Streamedia to modify our Web sites and
services. A failure by the Streamedia to
rapidly respond to technological
developments could have a material adverse
effect on Streamedia's business, results of
operations and financial condition.
peToText0lineWidth38100lineStyle1Evolving
regulation of the Internet may affect us adversely.
Evolving regulation of the Internet may affect us adversely.
Although there are currently few laws and regulations directly applicable to the
Internet, new laws and regulations will likely be adopted in the United States
and elsewhere. These laws and regulations could cover issues such as broadcast
license fees, copyrights, privacy, pricing, sales taxes and characteristics and
quality of Internet services. The adoption of restrictive laws or regulations
could slow Internet growth or expose Streamedia to significant liabilities
associated with content available on our Web sites. The application of existing
laws and regulations governing Internet issues such as property ownership, libel
and personal privacy is also subject to substantial uncertainty. There can be no
assurance that current or new government laws and regulations, or the
application of existing laws and regulations will not expose Streamedia to
significant liabilities, significantly slow Internet growth or otherwise cause a
material adverse effect on Streamedia's business, results of operations or
financial condition.
shapeType202fFlipH0fFlipV0lTxid216268
e1You
will incur immediate and substantial dilution by purchasing securities in this
offering. You will incur immediate and substantial dilution by purchasing
securities in this offering. Our current shareholders acquired their shares at a
cost per share substantially below the price in this offering. After the
offering, the current shareholders will experience a substantial increase in the
value of their holdings. Also, the public offering price of the units will be
substantially higher than the current book value per share. Therefore, you will
incur an immediate and substantial dilution of your investment as it relates to
the book value of the shares after completion of this offering. See "Dilution."
shapeType202fFlipH0fFlipV0lTxid104
0lineStyle1Principal
shareholders will own 63.9% of the shares outstanding, and you will have minimal
influence on shareholder decisions.
Principal shareholders will own 63.9% of the shares outstanding, and you will
have minimal influence on shareholder decisions.
Our officers and directors will own approximately 63.9% of the outstanding
shares after this offering. These shareholders will be able to control the vote
on election of directors and to substantially impact the vote on other matters
submitted to shareholders. If these shareholders act together they will be able
to substantially impact any vote of the stockholders and exert considerable
influence over our affairs. You and the other investors will have minimal
influence on shareholder actions. See "Principal Shareholders."
168fFitShapeToText0lineWidth38100lineStyle1You
may not have the benefit of an active trading market for your shares. You may
not have the benefit of an active trading market for your shares.
Prior to this offering, there was no public market for the units or the common
stock. Streamedia intends to apply for listing of the units, shares, and
warrants on The Nasdaq SmallCap Market. We cannot assure you that our listing
application will be approved. Even if such listing is approved, there may not be
a meaningful, sustained market for the units. Streamedia cannot assure that an
active trading market for the units will develop or continue. Therefore, you may
be unable to sell your units at a favorable price.
peToText0lineWidth38100lineStyle1The
offering price for the units is not based on the value of Streamedia.
The offering price for the units is not based on the value of Streamedia.
The offering price for the units was determined by negotiation between
Streamedia and the underwriters. You should not assume that the offering price
bears any relationship to asset value, net worth or other generally accepted
measure of value. Recent history relating to the market prices of newly public
companies indicates that the market price of the units following this offering
may be highly volatile. See "Plan of Distribution."
shapeType202fFlip
xtToShape0fFilled1fHitTestFill1fill
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nstrainRotation1fc3DRotationCen
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do not anticipate paying dividends.
We do not anticipate paying dividends.
Streamedia has never paid cash dividends on the common stock, and we do not
anticipate that we will pay cash dividends in the near future. The payment of
dividends will depend on earnings, financial condition and other factors the
Board of Directors may consider relevant. We currently plan to retain any
earnings to provide for development and growth of Streamedia. See "Dividend
Policy."
spNext1180fFitShapeToText0lineWidth38100lineStyle1Future
non-public sales of our securities may be on terms more favorable than the terms
of this offering.
Future non-public sales of our securities may be on terms more favorable than
the terms of this offering.
In order to raise additional working capital, Streamedia could make a limited
number of offers and sales of its common stock or other securities to investors
in transactions exempt from registration under the securities laws. These
purchasers may acquire our securities on terms more favorable than offered to
you. The price may not relate to any accepted measure of value, including the
prevailing market price. Streamedia may make sales of its securities at a lower
price than that of the units.
of shares by the current shareholders may adversely affect the market price.
Sales of shares by the current shareholders may adversely affect the market
price.
After this offering, our current shareholders will own 75.2% of the total
shares. If these shareholders sell a significant amount of shares by in the
public market after this offering, the market price of the shares could decrease
substantially. The current shareholders have agreed with the underwriters that
they will not sell or otherwise dispose of their shares for a period of one year
after the date of this prospectus without the prior written consent of the
underwriters.
Style1The
market prices for our securities, like those of other technology issues, may be
volatile
The market prices for our securities, like those of other technology issues,
may
be volatile
The value of your investment in Streamedia could decline from the impact of any
of the following factors:
changes in market valuations
of Internet companies,
variations in our actual and
anticipated operating results,
changes in our earnings
estimates by analysts, our
failure to meet analysts'
performance expectations, and
lack of liquidity.
The stock markets have, in general, and with
respect to Internet companies in particular,
recently experienced stock price and volume
volatility that has affected companies'
stock prices. The stock markets may continue
to experience volatility that may adversely
affect the market price of our securities.
Stock prices for many companies in the
technology and emerging growth sector have
experienced wide fluctuations that have
often been unrelated to the operating
performance of those companies. Fluctuations
such as these may affect the market prices
of our securities.
spNext1171fFitShapeToText0lineWidth38100lineStyle1The
warrants to be issued to the underwriters may adversely affect Streamedia
in the future.
The warrants to be issued to the underwriters may adversely affect Streamedia in
the future.
The holders of the underwriters' warrants will have four years starting one year
from the effective date of this offering to profit from a rise in the market
price of the units. The exercise of the underwriters' warrants will cause
dilution in the interests of the other shareholders. Further, the terms on which
Streamedia might obtain additional financing during that period may be adversely
affected by the existence of the underwriters' warrants. The holders of the
underwriters' warrants may exercise their warrants at a time when Streamedia
might be able to obtain additional capital through a new offering of shares on
terms more favorable than those in this offering. Streamedia has agreed that,
under certain circumstances, we will register under the securities laws the
shares to be issued upon exercise of the underwriters' warrants. Exercise of
these registration rights could involve expense at a time when we could not
afford the expenditures and may adversely affect the terms upon which we may
obtain financing. See "Plan of Distribution."
Next1172fFitShapeToText0lineWidth38100lineStyle1The
underwriters will have a dominating influence on the market.
The underwriters will have a dominating influence on the market.
A significant amount of the units offered may be sold to customers of the
underwriters. Subsequently, these customers may purchase or sell these units
through or with the underwriters. If they participate in the market, the
underwriters may exert a dominating influence on the market, if one develops,
for the units. The price and the liquidity of the units may be significantly
affected by the degree of the underwriters' participation in the market. See
"Plan of Distribution."
0hspNext1208fFitShapeToText0lineWidth38100lineStyle1Our
accountantants have determined that there are doubts about our ability to
continue as a going concern..
Our accountantants have determined that there are doubts about our ability to
continue as a going concern..
As a result of Streamedia's current financial condition, our independent
certified public accountants have modified their report on our financial
statementsas of end for the period from April 29, 1998 (date of inception) to
December 31, 1998. Our independent certified public accountants' report on the
financial statements includes an ex[planitory paragraph stating that
Streamedia's existinse is dependent upon their abbility to obtain additional
capital, amoung other things, raises substantial doubt about
our ability to continue as going concern.
shapeType202fFlipH0fFlipV
ext0lineWidth38100lineStyle1You
should not rely on our forward looking statements.
You should not rely on our forward looking statements.
This prospectus contains forward-looking statements that involve risks and
uncertainties. When used in this prospectus, the words "believes," "intends,"
"plans," "anticipates," "expects," and similar expressions are intended to
identify forward-looking statements. Forward-looking statements are subject to a
number of risks and uncertainties. Actual results could differ materially from
those described in the forward-looking statements as a result of the risk
factors set forth in this section and the information provided in this
prospectus generally. We do not intend to update any forward-looking statements.
<PAGE>
USE OF PROCEEDS
We expect to receive approximately $7,225,000 from the proceeds of this
offering, or $8,372,500 if the over-allotment option is exercised in full. This
assumes an initial public offering price of $8.50 per unit after deducting the
underwriters' discount and $425,000 of expenses relating to the offering. The
anticipated use the net proceeds is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Amount %
-------------------- ------------
Working Capital $ 2,475,000 35%
Strategic Acquisitions (1) 2,000,000 28%
Content License & Acquisition 1,250,000 17%
Sales, Marketing, and Promotion 750,000 10%
Capital Equipment and Infrastructure 750,000 10%
==================== ============
$ 7,225,000 100.0%
==================== ============
---------
</TABLE>
(1) We have no present plans or commitments and are not currently engaged
in any negotiations with respect to strategic acquisitions. However, we
may, when and if the opportunity arises, use an unspecified portion of
the net proceeds to acquire of invest in complementary businesses,
products and technologies.
<PAGE>
DIVIDEND POLICY
<PAGE>
We have never paid cash or other dividends on the common stock and we do not
anticipate that we will pay cash dividends in the foreseeable future. The Board
of Directors plans to retain future earnings for the development and expansion
of business. Any future determination as to the payment of dividends will be at
the discretion of the Board of Directors and will depend on a number of factors,
including future earnings, capital requirements, financial condition, and any
other factors that the Board of Directors may deem relevant.
<PAGE>
DILUTION
<PAGE>
As of December 31, 1998, Streamedia's net tangible book value was a negative
$(61,260) or $(0.02) per share based on 3,025,000 shares outstanding. The net
tangible book value is the aggregate amount of its tangible assets less its
total liabilities. The net tangible book value per share represents the total
tangible assets, less total liabilities, divided by the number of shares
outstanding. After giving effect to (i) the sale of 1,000,000 units at an
assumed offering price of $8.50 per unit, and (ii) the application of the
estimated net proceeds, the pro forma net tangible book value would increase to
$7,163,740 or $1.78 per share. This represents an immediate increase in net
tangible book value of $1.80 per share to current shareholders and an immediate
dilution of $6.72 per share to new investors or 79.1% as illustrated in the
following table:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Public offering price per Share $8.50
Net tangible book value per Share before this offering $(0.02)
Increase per share attributable to new investors
$1.80
-------------
Adjusted net tangible book value per share after this $1.78
offering
---------------
Dilution per share to new investors $6.72
---------------
Percentage dilution 79.1%
</TABLE>
<PAGE>
The following table sets forth as of December 31, 1998, (i) the number of shares
of common stock purchased by the current shareholders, the total consideration
paid, and the average price per share paid by the current shareholders, and
(ii) the number of shares of common stock included in the units to be purchased
in this offering and total consideration to be paid by new investors, before
deducting underwriting discounts and other estimated expenses at an assumed
offering price of $8.50 per unit.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Shares Purchased Total Consideration Average Price
-------------------------------- ---------------------------------- -----------------
--------------- ----- ---------- -- -------------------- ---------- -----------------
Number Percent Amount Percent Per Share
--------------- -- ----------
--------------- ---------- ---------------- ---------- ----------- ----
Current Shareholders 3,025,000 75.2% $ 5,500 0.0% $0.00
(1) (1)
New investors 1,000,000 24.8% 8,500,000 100.0% $8.50
-----
(2)
--------------- ---------- ---------------- ----------
=============== ========== ================ ==========
Total 4,025,000 100.0% $8,505,500 100.0%
(3) (2)
=============== ========== ================ ==========
--------
</TABLE>
<PAGE>
(1) Does not reflect 233,500 shares of common stock that we issued in a private
placement subsequent to December 31, 1998.
(2) Upon exercise of the over-allotment option, the number of shares held by new
investors would increase to 1,150,000 or 27.5% of the total number of shares
to be outstanding after the offering and the total consideration paid by new
investors will increase to $9,775,000.
(3) Does not include (i) up to 1,000,000 shares issuable upon the exercise of
the warrants, (ii) up to 150,000 shares to be issued upon exercise of the
underwriters' over-allotment option, and the warrants thereunder, and (iii)
100,000 shares to be issued upon exercise of the underwriters' warrants,
and the warrants thereunder. To the extent that the over allotment option
and warrants are exercised, there will be further share dilution to new
investors.
<PAGE>
(1)
<PAGE>
CAPITALIZATION
The following table sets forth Streamedia's capitalization (i) as of December
31, 1998 and (ii) on a pro forma as adjusted basis to give effect to the sale of
1,000,000 units and the application of the estimated net proceeds. See "Use of
Proceeds."
<TABLE>
<CAPTION>
<S> <C> <C>
December 31, 1998
--------------------------------------------
------------------ ---- --------------------
(Actual) (As Adjusted)
------------------ --------------------
------------------ --------------------
Liabilities:
Total Liabilities $138,685 $138,685
------------------ --------------------
Stockholders' equity (deficit)
Preferred Stock, $.001 par value, 100,000 shares authorized; - -
no shares issued actual or adjusted
common stock, $.001 par value 3,025 4,025
20,000,000 shares authorized, 3,025,000 shares issued and outstanding, actual
4,025,000 as adjusted (1)
Additional paid in capital $ 232,475 7,456,475
Deficit accumulated during developmental stage $(296,760) $(296,760)
------------------ --------------------
------------------ --------------------
Total stockholders' equity (deficit) $ (61,260) $7,163,740
------------------ --------------------
------------------ --------------------
Total capitalization $ 77,425 $7,302,425
------------------ --------------------
- -----------
</TABLE>
(1) Does not include:
Up to 1,000,000 shares issuable upon the exercise of the
warrants, and
Up to 150,000 shares to be issued upon exercise of the
underwriters' over-allotment
option, and the warrants thereunder, and
100,000 shares to be issued upon exercise of the underwriters'
warrants, and the warrants thereunder.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read Streamedia's Financial Statements, related notes and other
financial information included in this prospectus in conjunction with this
discussion of our operations. The following discussion contains
forward-looking statements. Streamedia's actual results may differ
significantly from those projected in the forward-looking statements.
Factors that might cause future results to differ materially from those
projected in the forward looking statements include, but are not limited
to, those discussed in "Risk Factors" and elsewhere in this prospectus.
OVERVIEW
Streamedia will aggregate and broadcast streaming media programming via the
World Wide Web . By combining in-house and outsourced capacities, we expect
to deliver high volumes of simultaneous live and on-demand audio and video
programs. OurWeb sites, in particular the Streamedia Networks(TM) and our
proprietary channels,have been conceived to offer an expansive selection of
multimedia programming, including, but not limited to, such broad
categories as news, music, history, talk, sports, women's issues, business
activities, movies, education, television, and children's interests. We
will deliver our programming via software applications which already
account for over 100 million desktop installations, thus minimizing a
user's need to download any further software. Initial offerings will be
provided free to all audiences, although we are is considering pay-per-view
and subscription based services for some classes of content at a future
date.
We believe ourapproach to streaming media delivery is differentiated by our
focus on bundled delivery of multimedia and text, and a plan for suite of
focused, searchable, aggregated broadcast content sites. Ourplans will
provide our audience with a convenient way to select a diverse range of
broadcasts and supplementary information from an integrated network of
mini-portals.
Our revenues will primarily stem from sited, rich media, and traditional
media advertising sales, webcast services sales, and fees for content
distribution. We also anticipate thatwe willgenerate additional revenue
streams through ad-free program charges and charges for premium content,
multiple e-commerceinitiatives, as well as licensing and Intranet sales.
There is no assurance that the wewill in fact generate revenues from all or
any of these potential sources at any time in the future.
Our revenues will be directly related to a number of factors, including the
volume of advertisers, the rates charged for the various types of
advertising, the extent of the traffic to ourWeb sites, and the costs of
bandwidth and other services required to deliver content, and number of
clients we can attract for business services offered by our WebCast
Technologies division. We believe that by increasing the number and
frequency of visitors to our sites, and to those sites via which we
distribute content, we will experience greater revenue growth across all
our product and service offerings. For this reason, we expect to devote a
significant portion of the net proceeds of this offering to marketing and
promotional efforts as well as to acquire and licensing Internet broadcast
rights to a wide range of appealing, unique, high-quality broadcast
content.
<PAGE>
We intend to use the net proceeds of This
offering to, among other activities, develop
our broadcast technology backbone; launch,
over time, more than 100 web sites at the
nearly 200 registered URLs we currently own,
and aggregate them into focused broadcast
Network 'mini-portals'; initiate a broadcast
enabling, or 'StreamStation(TM)" affiliate
program, to whose members we will syndicate
both proprietary and licensed programming
from numerous sources. We believesuch
syndication could provide uswith a
substantial number of further distribution
outlets, which may generate increased
advertising revenues for content we produce
or distribute We expect expenditures to rise
significantly across all expense categories
as we attempt toincrease our advertising
inventory; expand our streaming content
catalog; develop and launch The Streamedia
Networks(TM) sites and numerous 'channel'
sites, as well as our news and information
site and service, StreamWire(TM); and create
proprietary event production and digital
processing facilities.
Plan of Operations
Text0lineWidth38100lineStyle1
Plan of Operations
Re
eWidth38100lineStyle1
Recent Developments
Weare in the early stages of our transition to an operating Company. We have
been developing our network and channel structure; identifying staffing
requirements and interviewing prospective employees in sales, marketing,
traditional broadcasting, editorial, design, and technology; devising a media
strategy and evaluating media relations firms; reviewing potential acquisitions
in such areas as multimedia production, web hosting services, and original
content generation; establishing relationships for studios, bandwidth and
broadcast content, as well as information, news and data feeds. We have leased
office space at 9 E. 45th Street in midtown Manhattan, in a building linked by
fiber optic cable at zero mileage to the largest broadcast signal switching hub
in Manhattan. This hub serves all of the major cable and television networks in
the New York area as well as key industry companies. To accommodate our planned
expansion, we havenegotiated for additional midtown Manhattan facilities. We are
contracting to lay additional fiber to the new facilities. Each location will
then have low-mileage, diverse digital fiber connectivity to multiple broadcast
switching hubs and major metropolitan New York broadcast teleports, connections
we believe will present us with unique broadcast marketing opportunities. To
assist us as we position to become a leader in the streaming content delivery
industry, and syndication via the internet as well as traditional broadcast
outlets, we recruited and elected two key players in the advancement of the
cable industry to our Board of Directors. We believe that this will give us an
advantage over our competitors in the acquisition of quality content.
<PAGE>
RESULTS OF OPERATIONS
The inception date of Streamedia was April 29, 1998, and as such there are no
prior operations. During the period from April 29, 1998 to December 31, 1998, we
were engaged in organizational activities, developing the conceptual framework
of the enterprise, and establishing networking and partnering relationship that
needed to be developed prior to the commencement of operations..
<TABLE>
<CAPTION>
<S> <C> <C>
Operating Data: 12/31/98
===================================================== =====================================
Revenues $ 0
Cost of revenues $ 0
Gross profit $ 0
Operating expenses $ 296,760
Net loss $ (296,760)
Basic and diluted Net loss per common share $ (0.10)
Weighted average common shares outstanding 2,922,409
</TABLE>
We are a development stage enterprise engaged in providing internet-based media
programming and content on the Web. During the period from April 29, 1998 (date
of inception) to December 31, 1998, we were engaged in organizational and
pre-operating activities. These activities included:
research and development efforts
initial planning and development of our Web sites and operations
refinement of our broadcast strategy
building market awareness
planning our network infrastructure
developing a network of partners to help carry out our income-producing
activities
securing funding to finance these activities.
Streamedia was originally organized as a limited liability company on December
21, 1998, the limited liability company was merged into the Streamedia corporate
entity, with the corporate entity continuing as the surviving entity.
<PAGE>
Liquidity and Capital Resources
We have financed capital requirements through the issuance of common stock in a
private placement. As of March 31, 1999 wesold 233,500 shares of common stock,
pursuant to Rule 506 of Regulation D under the Securities Act of 1933, as
amended, and raised $467,000 from this private placement. The proceeds of the
private placement have and will be used for cost of this offering, purchase of
capital assets such as equipment and domain names. We believe that the net
proceeds of this offering will be sufficient to fund our operations for at least
the next 12 months. We do notcurrently believe that, during this period, it will
be necessary to raise additional funds to execute our basic plans for
operations. There can be no assurance, however, that we will not determine that
additional financing would be advantageous to further develop and execute our
plans for operation or acquisitions, or that such future additional financing
will be available on terms attractive to us. The proceeds of this offering,
together with the remaining proceeds of our private placement, are the only
sources of capital currently available to us. We anticipate that we will make
significant ongoing investments in research and development for future
generation products and services. We also expect tomake significant expenditures
in sales, marketing, and content acquisition in order to attract customers to
our numerous planned Web sites. There is no assurance that ours analysis of our
capital requirements will be accurate: we arepositioning in a new business in
the midst of a rapidly evolving, yet burgeoning, market, the potential
attractiveness of which will, in our opnion, attract intense competition. Our
future expenditures and capital requirements will depend on a number of factors
including the development and implementation of next-generation technologies,
technological developments on the Internet, potential acquisitions, and the
regulatory and competitive environment for Internet based products and services.
As the Year 2000 approaches, industry
experts expect issues to arise related to
the programming code in legacy computer
systems. The "Year 2000 problem" is regarded
by many as an omnipresent problem, as most
if not all computer operations will be
impacted to some extent by the rollover of
the two digit year value to 00. Systems that
do not properly recognize such information
could generate erroneous data or cause a
system to fail. We have evaluated our
current systems, and believes that our
current hardware and software is Year 2000
compliant. Since we have only purchased
hardware and software dating from 1998
forward, and the overwhelming majority of
our software and capital expenditures will
occur from 1999 forward, and involve
newly-manufactured equipment, which is
routinely designated as Year 2000 compliant,
and intend to outsource projects only to
high-quality, third party media delivery
systems which attest that they are Year 2000
compliant, we do not anticipate that the
Year 2000 problem will have a material
impact on our business or operations.
However, any Year 2000 compliance problem of
either we, our users, suppliers, customers
or advertisers could have a material adverse
effect on our business, results of
operations, and financial condition.
Year 200 dth38100lineStyle1
Year 2000 Compliance
BUSINESS
We are positioning ourselves as a multimedia content generator, enabler, and
aggregator. We will divide our business activity among four
vertically-integrated divisions: Streamedia Broadcast, Streamedia Networks,
Streamedia Webcast Technologies, and Streamedia Publishing. We intend to develop
each center of activity around multiple sources of potential revenue. Text, as
well as audio and video broadcasts which we develop or distribute, will be
globally accessible via the Internet, primarily free at all times to end users
with the goal of capturing the maximum possible Internet audience. Users will
require neither special hardware nor software to experience basic Streamedia
content beyond that of standard media players and browsers routinely supplied by
computer manufacturers.
We will focus on establishing Streamedia as a broadcaster. Our content will be
syndicated across a suite of proprietary multimedia networks (the "Streamedia
Networks"). Visitors to the Streamedia Networks will experience live and
on-demand video and audio programming in an environment similar to that of cable
broadcasts, but offering greater scope of programming choices, enhanced
interactive elements, convenient access to retail opportunities, and numerous
sources of pertinent, supplementary news and information. Much like cable and
network television, we will aggregate and distribute content in various
categories, including finance, lifestyles, entertainment, comedy, movies,
history, music, education, shopping, sports, news, and children's programming.
We believe that by co-venturing with a wide variety of content partners,
including recognized industry leaders, the overall quality and quantity of
streaming content may eventually surpass what any single Internet broadcaster,
and even traditional broadcasters, could possibly offer. Our networks will
generate revenues through content syndication, e-Commerce relationships,
advertising, and channel licensing fees.
Streamedia Webcast Technologies will provide or arrange for media delivery and
broadcast-enabling solutions to the Streamedia Networks, their channels, and
other potential clients. It will generate revenue by marketing Internet
broadcast services, equipment, tools, and talent. Streamedia Publishing will
focus on the development of StreamWire(TM), which will aggregate and deliver
leading sources of news and information appropriate to each Streamedia Network
and sub-channel, and will also supply third-party sites. It will also publish a
series of news and premium press release wires, each of which will be
distributed to websites, through various push, subscription, and convergence
mechanisms. StreamWire will also develop a searchable database. We conceived
StreamWire to work as a standalone product, to supplement our broadcast content,
and provide complementary promotional support for the Company's multimedia
networks. We expect the Publishing Division to provide us with numerous revenue
sources, such as advertising, sponsorships, design services, and fees for
information distribution. We expect the Broadcast Division to generate revenue
through sales of programming, produced in house, to other web sites, as well as
to traditional broadcast media, such as radio and cable. We have conceived each
area of activity to augment the revenue potential of the other areas.
The StreamWire(TM) series of sited and streaming text has been conceived to
aggregate leading sources of high-quality information and entertainment. Each
StreamWire will focus on a specific topic category. StreamWire will also publish
a series of proprietary newswires, premium press release distribution wires,
alert services and product announcement wires, each of which will be distributed
throughout the Streamedia "family" of web sites and syndicate stations.
Industry Background
The rise in the raw number of households and users online has been dramatic, and
the trend is expected to continue. The Computer Industry Almanac reports that by
the year 2000, 327 million people will have Internet access. Surveys conducted
by Arbitron and Edison Media Research show that audiences listening to radio
broadcasts via the Internet doubled during a recent 6-month period. Rapid and
dramatic improvements continue to be made on the hardware, software, and
infrastructure required to support and transmit streaming media. Industry
experts believe that technological advances projected for the future of the
Internet, such as widespread multicast capacity and markedly faster connect
rates, will improve the quality of streaming broadcasts.
The media players for the Internet that have been developed by Microsoft and
RealNetworks allow for enjoyable experience of streaming video at connect speeds
as low as 28.8; users, however, are connecting at significantly faster speeds on
an increasingly frequent basis, and enjoying correspondingly higher quality
broadcast reception. The latest versions of the software can take advantage of
higher speed access that is expected to be provided by xDSL, cable modems and
other emerging broadband and multicast technologies. These players have combined
installed bases estimated to be approaching 100 million users.We have chosen to
support both technologies in order to capture the widest possible audience,
since the greater our audience, the more attractive the Streamedia Networks will
be to potential content partners, advertisers, distribution clients, business
services clients, and station licensees, all of which will promote revenue
generating business for all four primary Corporate divisions.
Traditional broadcasters have limited capacity to measure or identify in real
time their listeners or viewers. Internet broadcasters, however, can provide
highly specific information about a program's audience to content providers and
advertisers. Internet broadcasters have an ability to precisely target
advertising that television and cable broadcasters do not. The Internet has
become increasingly accepted as a business tool. This has created economic
opportunities in Web-based advertising and business service offerings, including
audio conferencing, e-commerce, and video transmission.
We recognize that streaming media on the World Wide Web provides business
opportunities that traditional broadcast media does not. Television, radio, and
cable broadcasters have relative, if not severe, geographic restrictions of
their reach. The Internet, by contrast, is a both a local and global medium. It
can penetrate the workplace on a more consistent basis than television or
radios, as the use of radios and televisions is often discouraged or disallowed
at work. Targeted streaming media content can be economically broadcast to a
geographically dispersed audience. Internet users can interact with the
broadcast content by responding to online surveys and voting in polls. They can
easily obtain additional information on subjects related to the programming, and
even click through directly to retailers to purchase merchandise. Among the more
striking advantages of Internet versus traditional broadcasting is the power to
shift the schedule of the programming, to experience favorite choices "on
demand," and replay segments or whole programs at will.
The Market
While current industry leaders such as Broadcast.com have been very successful
in attracting large audiences, we believe that current leaders in the industry
have barely scratched the surface of content capable of appealing to niche and
mass audiences alike. Broadcast.com already attracts over 1 million unique users
per day, proving that despite lower levels of quality than traditional broadcast
mediums, Internet broadcasters can attract large audiences. Although the number
of radio webcasters on the Internet continues to rise, recent figures published
by the National Association of Broadcasters show that only 2200 of the 12,512
stations broadcast via the Internet. Broadcast.com hosts less than one-sixth of
these stations. The Radio Advertising Bureau (RAB) reports that in 1997, radio's
revenue grew to a record $13.6 billion. There were 1587 television stations
licensed as of March 31, 1999. The Television Advertising Bureau (TVB) reported
TV revenue at $44.5 billion in 1997. Only a handful of television stations have
committed to Internet broadcasts of their content. Current trends and statistics
indicate audience interest in Web-based programming is growing in such areas as
movies, club shows, tradeshows, concerts, documentaries, education, cartoons,
independent films, reruns, true crime, interactive instructional programming,
literature, auctions, awards shows, fashion shows, political events, health
concerns, scientific advancements, local programming, travel programming, and
hobby videos. However, current industry leaders have made only small inroads to
the development of a catalog of readily available program material. The market,
therefore, remains almost completely open at this time, even as the overall
medium of the Internet persists in a rapid escalation in terms of users.
<PAGE>
Streamedia's Strategy
We believe that our strategy can vault our networks into a leadership position
in the rapidly developing Internet broadcast industry. We will address what we
see as deficiencies in current Internet offerings and have devised our products
accordingly. We believe that we can aggregate content; generate comprehensive,
yet focused networks; integrate each network so that all other topical networks
are accessible from any given network; and syndicate the content of the
networks, via licensing agreements, to other sites interested in offering their
users multimedia programming. As a result, we will be able to multiply
exponentially the number of 'entry' paths to any given network or channel. We
project that traffic will increase accordingly, and not be tied to visits to any
single proprietary site. We have secured approximately 200 subject-oriented
Internet domains for use by our network and channel partners, and intend to
build out well over 100 Company-owned sites.
Our strategy is to become as pervasive as possible by permitting our content to
be broadcast from multiple locations, both company-owned and, like Network
Television broadcasters, from affiliated 'stations.' We expect the tactic to
multiply our distribution outlets. At the same time, this will enhance corporate
branding, and generate opportunities for greater advertising revenues. We will
pursue the syndication of web-propagated content to traditional media outlets,
in addition to syndicating traditional media outlets via the web.
We hope to directly benefit from our ability to secure traditional,
broadcast-quality studios in Midtown Manhattan, which facilitate, in some cases,
fiber optic and satellite transmissions of live broadcasts via the largest
video-switching hub on the East Coast. Our facilities are directly connected to
adjacent professional television 'live shot' broadcast studios and the
video-switching hub, as well as leading metropolitan area teleports. Content
generators who partner with us will obtain a new distribution outlet within a
unique, leading-edge multimedia venue. We will enable print content generators
and other businesses without broadcast backbones to participate in the rise to
prominence of a new medium. Studies by The Yankee Group suggest that Internet
broadcasts are already drawing viewers away from cable and broadcast networks.
Between the Streamedia Networks, Streamedia Broadcast, Streamedia Webcast
Technologies, and Streamedia Publishing, featuring StreamWire, we believe that
we can earn a reputation as a 'one-stop' enabling shop for media and information
distribution. We intend to develop our own quality programming in numerous
subject areas, as well as partner with recognized industry leaders to
co-develop, feature, or carry their content across and throughout the Streamedia
Networks and authorized remote StreamStations(TM) --licensed programming
distribution outlets. In addition, we intend to aggressively pursue strategic
acquisitions to drive revenue growth and product development, as well as
leverage cross-marketing opportunities.
Streamedia Broadcast and the Streamedia Networks
Through the Streamedia Broadcast and Networks divisions, we intend to create a
unique suite of categorized broadcast networks to deliver live and on-demand
audio and video programming over the Internet. Additionally, we intend to
acquire and produce content of sufficient interest and quality to market to
traditional broadcasters in the radio, network television and cable industries.
Our Network sites will offer programming in categories such as business, sports,
women's issues, parenting, travel, education, religion, politics, health, teen
and children's interests, shopping, real estate, music, technology, personal
fitness, movies, entertainment, and lifestyles. We have chosen to launch a
financial network as one of our initial offerings, to capitalize on the,
significant revenue-generating opportunities of financial- and
investment-related programming. According to an industry source, the market for
all online business information services was $24.8 billion in 1997 and is
projected to grow to $39.8 billion in 2002. NFO Interactive has found that 5
million Americans invest their money online. Further network launches are
planned for the remainder of 1999 and 2000. We may aggregate content from that
which is developed in house; licensed from other Internet as well as traditional
radio, television, and multimedia content developers; and generated by channel
and "StreamStation" licensees. The Broadcast and Networks divisions are,
together, expected to generate revenue through sales and syndication of
programming to other web sites, as well as to traditional broadcast media, such
as radio and cable, and also develop significant lines of advertising,
e-commerce, premium distribution, and program sponsorship revenues.
Streamedia Networks
We intend to create our own network sites, as well as numerous channels, but
license other channels for development by third parties. We expect the
relationships to be reciprocal on numerous levels. The Networks division could
thereby multiply opportunities for Streamedia Webcast Technologies(TM) to
generate revenue by marketing broadcast services to parties lacking broadcast
backbones. We expect to soon uniquely produce seamlessly streaming, 'live'
channels, which will, in some situations, include actual anchored broadcasts. We
intend to offer the following categories of programming. The list is
representative, not exhaustive:
<PAGE>
New Product Launches
Concerts
Comedy Routines
Video and Audio Press Releases M & A Announcements Investor Conferences Medical
Symposia Emergency Communications Analyst and Broker Presentations Club &
Association Meetings Road Show Presentations Sales Training Seminars Distance
Learning Sessions Full length movies FM radio stations Short films Stockholder
Meetings US & International News Talk and call-in shows College and Pro Sports
Executive Interviews Quarterly Conference Calls Corporate Video Profiles
Infomercials Trade Shows Celebrity interviews Awards Ceremonies Educational
Videos Political Programming Religious programming
<PAGE>
Streamedia Webcast Technologies(TM)
Through Streamedia Webcast Technologies(TM) we will market Internet and intranet
broadcasting and interactive technology services and solutions to a wide
spectrum of enterprises, such as, businesses, associations, electronic
publishers, web sites lacking in streaming content, and 'off-line' media
generators such as newspapers who wish to obtain an Internet broadcast presence.
Through this division we will attempt to deliver multimedia and text through a
variety of push, poll, and proprietary subscription mechanisms. We intend to
establish alert and notification systems for end users regarding news and
information items published on our sites as well as on behalf of other
distribution clients, and about upcoming events to be broadcast on our Networks.
This division will provide specific information regarding site audiences to
content providers and advertisers; integrate 'E-Commerce' or merchandizing
programs into Streamedia Networks and channels; construct chatrooms, bulletin
boards, personal webcast stations and other interactive elements, and integrate
them into network and channel vehicles. All such business services will generate
revenue to foster further content development.
Streamedia Webcast Technologies can provide or arrange for the following
representative types of business services and equipment:
<PAGE>
Live Event Webcasting
On Demand Broadcasts
File Hosting and Serving
Push Technologies
Voice-Overs
Synchronized Multimedia
Event 'Ticketing' & Reservations Film and Sound Crews Satellite Up and Downlinks
Restricted Intranet Broadcasts Feeds To Broadcast Video Hubs A/V Equipment
Bulletin Boards and Forums Web Page Creation Home Page Integration Virtual Q & A
Sessions New York or Remote Studios Event Production and Consultation A/V
Bookmarking & Indexing Event Transcripts Programming Reminders Media Conversions
and Encoding Mailing List Distributions Live Chats and Instant Messaging
Broadcast Archival Searchable Databases On Air Talent Web Bots and Intelligent
Agents
<PAGE>
Streamedia Publishing
The focus of the Streamedia Publishing division will be upon our
StreamWire(TM) content. StreamWire shall consist of a series of edited news
and information products, such as wires devoted to NASDAQ or Amex-listed
companies, or space exploration, or medical issues. We intend that each
newswire developed by the Streamedia Publishing division will have its
broadcast network correlative. Our Broadcast and Publishing divisions have
been devised to integrate vertically to create bundled, truly multimedia
Internet networks. We project that through our Publishing division will
produce a series of "webcast guides" and schedules for each of the Streamedia
Networks. In addition, through StreamWire, we will endeavor to ramp up our
fee-based press release distribution and product announcement wire services to
serve the interests of public companies, government agencies, trade
associations, the entertainment industry, and numerous other areas. Still
other projects include the creation of focused, marketable archives and
indexes of print and multimedia content appropriate to each network.
StreamWire may thus aggregate and integrate news and information resources at
each network site to support our network broadcast content and, in so doing,
synergize each network's content offerings. Each site will become more
"sticky," and retain greater numbers of users for longer periods of time-- a
trait not lost on advertisers and content generators interested in furthering
their own distribution points.
Emerging and Developing Revenue Opportunities
We believe that the proliferation of broadband and multicast connectivity
technologies and infrastructure will greatly increase end user demand for
streaming multimedia content. We expect that, as demand increases, the same
revenue sources available to traditional broadcast media will become
increasingly realistic profit centers for Internet broadcasters, aggregators,
and syndicators. We are positioning Streamedia to benefit from any possible
growth in traditional sources of broadcast revenues, such as various forms of
advertising, but also from the unique opportunities presented to it as a
member of the internet community, such as e-commerce relationships with
internet retailers of items such as books, videos, movies, tickets, CD's,
gifts, memorabilia, and apparel. We intend to participate in the trend towards
referring sites commanding a percentage of gross sales generated as a result
of their users 'clicking-through' to retailer's sites. We intend to resell or
provide production, encoding, and other broadcast-enabling services to content
generators seeking representation at one or more of the Streamedia Networks or
channels, as well as to Intranets requiring multimedia service bureaus.
Advertising
In addition to licensing and syndication fees, technology and production
services, premium distribution services, and e-commerce opportunities, we
expect to derive a significant portion of our revenues from the emerging
business of multimedia advertising. The Web has proven an attractive medium
for advertising because it is interactive, flexible, and precisely
quantifiable. Advertisers can mine user profile data to help them either
reach broad audiences with a 'branding' approach or choose to 'target' data
to people displaying similar demographic characteristics or interests. The
interactive nature of the Web enables advertisers to determine customer
preferences and profiles, and use this data to develop commercial
relationships with potential customers. Advertisers can easily change their
advertising messages frequently and at relatively low cost. We intend to
engage in the emerging business of creating and marketing 'rich' or
multimedia advertising; banner and interstitial advertising; and network
and channel sponsorships across our suite of networks. We will insert
advertisements at the beginning of audio or video segments, as well as
during shows, much like commercials in traditional broadcast media. Jupiter
Communications projects that online ad spending will rise from $3 billion
in 1999 to almost $8 billion in 2002.
We intend to make increasing use of the Synchronized Multimedia Integration
Language, or SMIL. SMIL offers developers the ability to synchronize text,
images, audio and video over the Web. Each element of a multimedia
presentation can be sewn together using simple HTML-like coding. The
results have many possible applications, such as the creation of streaming
graphic 'commercials' played during streaming audio broadcasts, or
streaming text advertisements running in subtitles below a video
presentation, or slim banners that can stream below a video presentation.
StreamWire may add the extra dimension of email sponsorships and
text-banners to the Streamedia arsenal of placement offerings.
As traffic to network sites increases, we believe that we may be able to
charge a premium for multimedia ads versus basic banner ads, due to their
richer content, flexible placements, and our ability to charge for focused
advertising related to a specific content channel. We expect to derive a
significant percentage of our revenue from advertising on our network
sites, and by revenue splits with operators of sites to which we syndicate
our content. We will target traditional advertisers, such as consumer
product and service companies, manufacturers and automobile companies, as
well as other Internet sites and products as advertisers on our Web sites.
We expect to derive advertising revenue principally from short-term
advertising contracts on a per impression basis or for a fixed fee based on
a minimum number of impressions. Rich media ads price higher than graphic
and text banners per impression. We will supply our advertiser clients with
statistics detailing impressions, click-through rates, and other factors,
which should allow them to monitor the totals of their ad playbacks or
visual impressions, and thus track their effectiveness.
<PAGE>
ADDITIONAL INFORMATION
<PAGE>
Streamedia has not previously been subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended. Streamedia has filed with
the Securities and Exchange Commission (the "Commission") a Registration
Statement on Form SB-2 under the Securities Act with respect to the units
offered. This prospectus does not contain all of the information, exhibits,
and schedules contained in the Registration Statement. For further
information about Streamedia and the units, you should read the
Registration Statement. Statements made in this prospectus regarding the
contents of any contract or document filed as an exhibit to the
Registration Statement are not necessarily complete. Therefore, you should
read the Registration Statement. Each such statement is qualified in its
entirety by such reference. The Registration Statement, the exhibits, and
the schedules filed with the Commission may be inspected, without charge,
at the Commission's public reference facilities. These facilities are
located at:
Room 1024, Judiciary Plaza, 450 Fifth Street, NW, Washington, D.C.
20549, Northwestern Atrium Center, 500 West Madison Street, Room 1400,
Chicago, Illinois 60661; and Suite 1300, Seven World Trade Center, New
York, New York 10048.
Copies of the materials may also be obtained at prescribed rates by writing
to the Commission, Public Reference Section, 450 Fifth Street, NW,
Washington, D.C. 20549. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the Commission at http://www.sec.gov.
As a result of this offering, Streamedia will become subject to the
reporting requirements of the Exchange Act. Therefore, we will file
periodic reports, proxy statements, and other information with the
Commission. Following the end of each calendar year, we will furnish our
shareholders with annual reports containing audited financial statements
certified by independent public accountants and proxy statements. For the
first three-quarters of each calendar year, we will provide quarterly
reports containing unaudited consolidated financial information.
Streamedia intends to apply for listing of the units on the Nasdaq SmallCap
Market. We cannot assure that our shares will be accepted for listing. Our
reports, proxy statements, and other information will be available for
inspection at the principal office of The Nasdaq Stock Market, Inc. at 1735
K Street, Washington, D.C. 20006-1500.
<PAGE>
MANAGEMENT
Directors and Executive Officers
Our directors and executive officers as of February 10, 1999 are identified
below:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name Age Position
James D. Rupp 38 President, Chief Executive Officer & Director
Gayle Essary 58 Vice President & Director
Nicholas Malino 48 Chief Financial Officer & Director
David Simonetti 29 Director
Henry Siegel 56 Director
Robert Wussler 60 Director
</TABLE>
Our directors are elected at each
annual meeting of shareholders. The officers
are elected annually by the Board of
Directors. Officers and directors hold
office until their respective successors are
elected and qualified or until their earlier
resignation or removal.
James D. Rupp is one of the founders
of Streamedia and has served as Chief
Executive Officer, President and Director
since Streamedia's inception. From July 1997
to September 1998 Mr. Rupp served as
President, Chairman and Chief Executive
Officer of Capital Markets Communications
Corporation, an editor and publisher of a
series of electronic newsletters, including
StreetSignals(TM), TradeSignals(TM),
PowerSignals(TM), AmexWire(TM), and the
Waaco Kid's Forum(TM). Mr. Rupp continues as
Capital Markets' Chairman. Mr. Rupp
organized Web2Ventures, LLC, a company
formed in February, 1998 to incubate,
capitalize, and invest in emerging Internet
firms. Since its inception, Mr. Rupp has
served as the Manager of Web2Ventures. From
1990 to 1996 Mr. Rupp served as General
Manager of a restaurant management concern
in New York City. Mr. Rupp holds a Bachelor
of Arts degree from the State University of
New York at Binghamton and has pursued
graduate studies in information sciences and
literature at the Universities of Delaware
and Maryland.
Gayle Essary is one of the founders of
Streamedia and has served as Chairman of the
Board of Directors and Vice
President-Strategic Development since its
inception. From September 1996 to the
present, Mr. Essary has served as Chairman
of the Board of Directors of IRI, Inc. a
publicly-held company in the investment data
and information industry. He has also served
as IRI's Chief Executive Officer from July
1997 to the present. From 1995 to 1997, Mr.
Essary was founder of StreetLevel which has
since merged into Capital Markets
Communications Corporation and publisher of
its electronic products. From 1988 to 1997,
Mr. Essary was a Principal of New York
Management Group, which provided consulting
and support services to various firms and
organizations, including The Thomson
Corporation. From 1981 to 1988, Mr. Essary
was Managing Director of the Media Financial
Group and The Media Center, both companies
engaged in consulting for media properties.
From 1973 to 1980, Mr. Essary was President
of ESCO Publishing Co., Inc., and
Huthig-ESCO Publishing, Inc., which
published two international dental business
magazines, one of which led its field in
distribution and advertising revenues. Mr.
Essary studied journalism at The University
of Texas.
Nicholas Malino has served as Streamedia's
Chief Financial Officer since November of
1998. Previously, he served as President and
Chief Executive Officer of ATC Group
Services, Inc., a $160 million national
business services firm, providing
specialized technical and project management
services to Fortune 500 companies and
federal, state, and local government
agencies. During his tenure, he completed 16
acquisitions, ranging in size from $1
million to $85 million in gross revenues,
during which time the company achieved the
second highest price/earnings ratio in its
sector. ATC Group Services also led its
sector in profitability for 12 consecutive
quarters. Mr. Malino has a Masters of
Business Administration degree in Finance,
and Master and Bachelor of Science degrees
in Biology from the University of
Bridgeport.
David J. Simonetti has served as a Director of Streamedia since September
of 1998. Since October of 1998, Mr. Simonetti has served as Co-Chairman and
Chief Executive Officer of VentureNow, Inc., a private venture capital concern.
From August 1997 to December 1998, Mr. Simonetti was Chief Executive Officer of
Invoke Distribution, LLC, a marketing and advertising company. From February
1997 to October 1998, Mr. Simonetti was Chief Executive Officer of Projix
Corporation, an Internet software company. From October 1994 through February
1997, Mr. Simonetti served as Vice President and Chief Operating Officer of
Edmar, Inc., a construction management company. Mr. Simonetti also serves on the
Board of Directors of NuOncology Labs, Inc., a publicly-held company. Mr.
Simonetti holds a Bachelor of Arts degree from Marlboro College, Vermont.
Henry Siegel has served as a Director of
Streamedia since February, 1999. From 1995
to the present, Mr. Siegel has been the
Chairman and Chief Executive Officer of
Kaleidoscope Media Group, a publicly-held
company. Kaleidescope is a worldwide
distributor of television and home video
programming including the ESPY Awards Show.
Mr. Siegel began his career at Grey
Advertising and in 1974 where he was placed
in charge of its media operation, managing
all areas of media planning, research and
execution. In 1976, Mr. Siegel founded
Lexington Broadcasting Services (LBS), where
he pioneered the concept of barter
syndication (advertiser-supported
television). As Chairman and Chief Executive
Officer of LBS, Mr. Siegel developed
numerous successful television series,
including Fame and Baywatch. Mr. Siegel has
been named by Advertising Age Magazine as
one of the pioneers of the first 50 years of
television.
Robert J. Wussler has served as a Director
of Streamedia since February, 1999. Mr.
Wussler is the Chairman of the Board of
Directors of US Digital Communications,
Inc., a publicly-held company. From 1992 to
the present he has served as the President
and Chief Executive Officer of the Wussler
Group, a media consulting firm. From 1994 to
the present, Mr. Wussler has served as the
President and Chief Executive Officer of
Affiliate Enterprises, Inc., a company
formed by ABC Television affiliates to
pursue new business opportunities, including
emerging technology applications. From 1989
to 1992 Mr. Wussler was the President and
CEO of COMSAT Video Enterprises, a major
supplier of satellite entertainment to the
nation's lodging industry. Between 1980 and
1989, Mr. Wussler served as Senior Vice
President, Corporate Executive Vice
President, and President of Turner
Broadcasting's Superstation, WTBS. During
his 10 years at Turner, Mr. Wussler
co-founded and organized CNN, Headline News,
and became a key player in the development
of WTBS and the formation of TNT. Prior to
joining Turner, Mr. Wussler served as
President of CBS Sports
<PAGE>
and the CBS Television Network. Mr. Wussler is a past Chairman of the
National Academy of Television Arts and Sciences, and recipient of five Emmy
Awards. Mr. Wussler also serves on the Board of Directors of Ednet, Inc., a
publicly held company which develops and markets integrated digital
communications systems for the entertainment industry, and the Board of
Directors of The Cousteau Society.
Directors
Outside Directors
We will nominate for election one director who is not an officer, employee, or
5% shareholder upon conclusion of the offering as designated by the
representative of the underwriters. We may also appoint advisors to the Board of
Directors from time to time.
n
of Directors
Compensation of Directors
Directors who are also employees will not receive any remuneration in their
capacity as directors. Outside directors will be paid $1,000 monthly, travel
expense reimbursement and $500 per meeting attended.
Executive Compensation
The following table sets forth the current compensation awarded to, earned by,
or paid to each of our executive officers.
Summary Compensation Table
<TABLE>
<S> <C> <C> <C>
Name and Annual Compensation All Other
--------------------------------
Principal Position Salary Bonus Compensation
- --------------------------- --------------- -------------- ---------------------
James D. Rupp - President $ 104,000 -- --
& CEO
- --------------------------- --------------- -------------- ---------------------
Gayle Essary - Vice 84,000 -- --
President
- --------------------------- --------------- -------------- ---------------------
Nicholas Malino - CFO 84,000 100,000(1)
- --------------------------- --------------- -------------- ---------------------
(1) Mr. Malino will receive the $100,000 bonus upon completion
of this pending initial public offering.
</TABLE>
Agreements
Employment Agreements
We have obtained employment agreements with the above employees.
Compensation Plan
Stock Compensation Plan
There is no stock compensation plan currently in place. We intend to implement
a Stock Compensation Plan during 1999. No committee has yet been formed for the
task.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1998 and 1999, and since the inception of Streamedia, certain e-mail
distribution systems owned and/or administered by one or both of two of our
major shareholders, IRI, Inc. ("IRI"), and Capital Markets Communications,
Inc. ("CapMark"), were provided to us for our StreamWire division and its
predecessor at no cost. The three companies foresee continuing synergies in
the mutual development of opt-in distributions which may benefit any or all
of the companies, and their respective separate business activities. We
also anticipate that the two companies will become customers of StreamWire
for the distribution of press releases and announcements. Also, IRI and to
some extent, CapMark are expected to continue to provide marketing and
promotion support for Streamedia, and to utilize the streaming broadcast
distributions of Streamedia Broadcast and Streamedia Networks whenever
possible for themselves and their respective clients.
During 1998, we issued 25,000 shares of common stock to our legal counsel,
Kogan & Taubman, L.L.C., as partial consideration for services to be
rendered in connection with this offering.
PRIOR OFFERINGS
In the first quarter of 1999, we sold 233,500 shares of common stock,
pursuant to rule 506 of regulation D under the Securities Act of 1933, as
amended. We raised $467,000 from this private placemnt in order to provide
bridge financing for this offering. In addition, we have issued securities
to officers, directors, and consultants as compensation for services
rendered to us.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table identifies the beneficial ownership of the common stock as
of December 31, 1998 by:
Each beneficial owner of more than 5% of the outstanding shares of
common stock; Each of our directors ; Each of our executive officers;
and All directors and executive officers as a group
Unless noted each beneficial owner has sole investment and voting power for the
shares beneficially owned.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Shares Owned
-------------------------------------------------------------------------
Prior to Offering After Offering
---------------------------------- -- -----------------------------------
Name and Address of Owner Number Percent Number Percent
- --------------------------------------------- --------------- -------------- ---------------- --------------
James D. Rupp (1) 1,155,000 38.2% 1,155,000 28.7%
200 Walter Avenue, Hasbrouck Heights, NJ
07604
Gayle Essary (2) 890,000 29.4% 890,000 22.1%
5605 Woodview, Austin, Texas 78756
Capital Markets Communications, Inc.(3) 300,000 9.9% 300,000 7.5%
Nicholas Malino 150,000 5.0% 150,000 3.7%
250 W. 90th Street, # PH2A, New York, NY
10024
David Simonetti (4) 75,000 2.5% 75,000 1.9%
1845 Mintwood Place, # 104, Washington, DC
20009
Henry Siegel 0 - 0 0
Robert Wussler 0 - 0 -
--------------- -------------- ---------------- --------------
--------------- -------------- ---------------- --------------
All Executive Officers and Directors as a 2,570,000 85.0% 2,570,000 63.9%
group (6 persons)
--------------- -------------- ---------------- --------------
- -----------
</TABLE>
(1) Mr. Rupp's shares are owned through two companies in which Mr. Rupp is the
owner. (2) In addition to Mr. Essary's direct holdings (590,000 shares), the
balance are owned by a company
in which Mr. Essary is the principle shareholder.
(3) This company is controlled by certain executive officers and directors of
Streamedia. (4) Mr. Simonetti's shares are owned through a company in which Mr.
Simonetti is the owner.
<PAGE>
DESCRIPTION OF CAPITAL STOCK
n
Stock
Common Stock
We are authorized to issue 20,000,000 shares of common stock, $0.001 par value.
As of December 31, 1998, there were 3,025,000 shares of common stock issued and
held by 46 holders of record. Shareholders are entitled to share ratably in any
dividends paid on the common stock when, as and if declared by the Board of
Directors. Each share of common stock is entitled to one vote. Cumulative voting
is denied. There are no preemptive or redemption rights available to
shareholders of common stock. Upon liquidation, dissolution or winding up of
Streamedia, the holders of common stock are entitled to share ratably in the net
assets legally available for distribution. All outstanding shares of common
stock and the units (and shares underlying these units) to be issued in this
offering will be fully paid and non-assessable.
Stock
Preferred Stock
The Board of Directors, without further action by the shareholders, is
authorized to issue up to 100,000 shares of preferred stock, $0.001 par value.
The preferred shares may be issued in one or more series. The terms as to any
series, as relates to any and all of the relative rights and preferences of
shares, including without limitation, preferences, limitations or relative
rights with respect to redemption rights, conversion rights, voting rights,
dividend rights and preferences on liquidation will be determined by the Board
of Directors. The issuance of preferred stock with voting and conversion rights
could have an adverse affect on the voting power of the holders of the common
stock. The issuance of preferred stock could also decrease the amount of
earnings and assets available for distribution to holders of the common stock.
In addition, the issuance of preferred stock may have the effect of delaying,
deferring or preventing a change in control. We have no plans or commitments to
issue any shares of preferred stock.
Agent and Registrar
Transfer Agent and Registrar
The Transfer Agent and Registrar for the common stock will be American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York 10005.
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
<PAGE>
Upon completion of this offering, we will have 4,258,500 shares of common stock
outstanding. If the underwriters over allotment option is exercised in full,
4,408,500 shares of common stock will be outstanding. Of these shares, the
1,000,000 shares sold in this offering or 1,150,000 shares if the over-allotment
option is exercised in full will be freely tradeable in the market without
restriction under the Securities Act, by persons other than "affiliates" of
Streamedia (as that term is defined in the Securities Act of 1933, as amended,
without restriction or further registration. The remaining 3,258,000 shares will
be "restricted securities" within the meaning of the Securities Act. Restricted
securities cannot be publicly sold unless registered under the Securities Act or
sold in accordance with an exemption from registration, such as that provided by
Rule 144 under the Securities Act. In general, under Rule 144, as currently in
effect, a person (or persons whose shares are aggregated) is entitled to sell
restricted securities if at least one year has passed since the later of the
date such shares were acquired from Streamedia or any affiliate of Streamedia.
Rule 144 provides, however, that within any three-month period such person may
only sell up to the greater of 1% of the then outstanding shares of common stock
(approximately 42,585 shares following the completion of this offering) or the
average weekly trading volume during the four calendar weeks immediately
preceding the date on which the notice of the sale is filed with the Commission.
Sales pursuant to Rule 144 also are subject to certain other requirements
relating to manner of sale, notice of sale and availability of current public
information. Anyone who has not been an affiliate for a period of at least 90
days is entitled to sell restricted securities under Rule 144 without regard to
the limitations if at least two years have passed since the date such shares
were acquired from us or any of our affiliates. Any affiliate is subject to such
volume limitations regardless of how long the shares have been owned or how they
were acquired. After this offering, the executive officers and directors will
own 2,570,000 shares of the common stock, which will represent (63.9% of the
total shares outstanding. Our officers, directors and certain shareholders
directors will enter into an agreement with the underwriters agreeing not to
sell or otherwise dispose of any shares for one year after the date of this
prospectus without the prior written consent of the underwriters. The Company
cannot predict the effect, if any, that offer or sale of these shares would have
on the market price. Nevertheless, sales of significant amounts of restricted
securities in the public markets could adversely affect the fair market price of
the shares, as well as impair our ability to raise capital through the issuance
of additional equity shares.
<PAGE>
37
PLAN OF DISTRIBUTION
t0lineWidth38100lineStyle1Underwriters
Underwriters
Under the terms and conditions of the Underwriting Agreement, we have agreed to
sell to the underwriters named below, and each of the underwriters, for whom
Redstone Securities, Inc. is acting as the "representative", have agreed to
purchase the number of units set forth opposite its name in the following table.
Underwriters Number of Units
Redstone Securities, Inc.
===========================
Total 1,000,000
=========================
The underwriters have advised us
that they propose to offer the units to the
public at the initial public offering price
per unit set forth on the cover page of this
prospectus and to certain dealers at such
price less a concession of not more than
$___ per unit. These dealers may re-allow
$____ to other dealers. The representative
will not reduce the public offering price,
concession and re-allowance to dealers until
after the offering is completed. Regardless
of any reduction, the Company will receive
the amount of proceeds set forth on the
cover page of this prospectus.
Streamedia and certain selling
shareholders have granted to underwriters an
option, exercisable during the 45-day period
after the date of this prospectus, to
purchase up to 150,000 additional units to
cover over-allotments, if any. The option
purchase price is the same price per unit we
will receive for the 1,000,000 units that
the underwriters have agreed to purchase. If
the underwriters exercise the over-allotment
option in full, the selling shareholders
will sell 30,000 shares of common stock to
the underwriters. None of the selling
shareholders are officers, directors or
affiliates of Streamedia. If the
underwriters exercise such option, each of
the underwriters will purchase its pro-rata
portion of such additional units. The
underwriters will sell the additional units
on the same terms as those on which the
1,000,000 units are being sold.
The underwriters can only offer the
units through licensed securities dealers in
the united States who are members of the
National Association of Securities Dealers,
Inc. and may allow the dealers any portion
of its ten (10%) percent commission.
The underwriters will not confirm
sales to any discretionary accounts without
the prior written consent of their
customers.
Under the terms of the Underwriting
Agreement, the holders of the 3,025,000
shares of common stock that are restricted
securities have agreed that, for one year
after the date of this prospectus and
subject to certain limited exceptions,
without the prior written consent of the
representative, they will not sell, contract
to sell, or otherwise dispose of any shares,
any options to purchase shares, or any
securities convertible into, exercisable
for, or exchangeable for shares.
Substantially all of such shares would be
eligible for immediate public sale following
expiration of the lock-up periods, and
subject to the provisions of Rule 144.
We have agreed to pay the
Representative a non-accountable expense
allowance of 2.% of the gross amount of the
units sold at the closing of the offering.
This expense allowance will total $170,000
based on the sale of the units offered. The
Representative will pay the underwriters'
expenses in excess of the 2% allowance. If
the expenses of underwriting are less than
the 2% allowance, the excess shall be
additional compensation to the underwriters.
If this offering is terminated before its
successful completion, we may be obligated
to pay the Representative a maximum of
$50,000 on an accountable basis for expenses
incurred by the underwriters in connection
with this offering. In addition to the
non-accountable expense allowance, the
management estimates that the Company will
incur other costs of approximately $200,000
for legal, accounting, listing, printing and
filing fees.
We have agreed that, for a period of five
years from the closing of the sale of the
units, we will nominate for election as a
director a person designated by the
Representative. If the Representative has
not exercised that right, the Representative
shall have the right to designate an
observer, who shall be entitled to attend
all meetings of the Board and receive all
correspondence and communications sent by us
to the members of the Board. The
Representative has not yet identified the
person who is to be nominated for election
as a director or designated as an observer.
The Underwriting Agreement provides
for indemnification among Streamedia and the
underwriters against certain civil
liabilities, including liabilities under the
Securities Act. In addition, the
underwriters' warrants provide for
indemnification among Streamedia and the
holders of the underwriters' warrants and
underlying shares against certain civil
liabilities, including liabilities under the
Securities Act, and the Exchange Act.
We have been advised that it is the position
of the Securities and Exchange Commission
that insofar as indemnification for
liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to
directors, officers and controlling persons
of Streamedia pursuant to the foregoing
provisions, or otherwise, such
indemnification is against public policy as
expressed in the Securities Act and is
therefore unenforceable.
Warrants
Underwriters' Warrants
Upon the closing of this offering, we have agreed to sell to the underwriters
for nominal consideration, the underwriters' warrants to purchase shares of
common stock. The underwriters' warrants are exercisable at 120% of the public
offering price for a four-year period starting one year from the effective date
of this offering. The underwriters' warrants may not be sold, transferred,
assigned or hypothecated for a period of one year from the date of this offering
except to the officers of the underwriters and their successors and dealers
participating in the offering and/or their partners or officers. The
underwriters' warrants will contain anti-dilution provisions providing for
appropriate adjustment of the number of shares subject to the warrants under
certain circumstances. The holders of the underwriters' warrants have no voting,
dividend or other rights as shareholders of Streamedia with respect to shares
underlying the underwriters' warrants until the underwriters' warrants have been
exercised. For four years from the one year anniversary of this offering, we
have agreed to give advance notice to the holders of the underwriters' warrants
or underlying shares of our intention to file a registration statement, other
than in connection with employee stock options, mergers, or acquisitions. The
holders of the underwriters' warrants and underlying shares shall have the right
to require us, subject to certain conditions to include their shares in such
registration statement at our expense.
For the term of the underwriters' warrants, the holders of the warrants will be
given the opportunity to profit from a rise in the market value of the shares,
with a resulting dilution in the interest of other shareholders. The holders of
the underwriters' warrants can be expected to exercise the underwriters'
warrants at a time when we would, in all likelihood, be able to obtain needed
capital by an offering of its unissued shares on terms more favorable than those
provided by the underwriters' warrants. This could adversely affect the terms on
which we could obtain additional financing. Any profit realized by the
underwriters on the sale of the underwriters' warrants or shares issuable upon
exercise of the underwriters' warrants will be additional underwriting
compensation.
of Offering Price
Determination of Offering Price
The initial public offering price was determined by negotiations between the
representative and Streamedia. The factors considered in determining the public
offering price include:
The industry in which we operate,
Our business potential and earning
prospects, and The general
condition of the securities markets
at the time
of the offering.
The offering price does not bear any
relationship to our assets, book value, net
worth or other recognized objective criteria
of value.
Prior to this offering, there was no public
market for the units, and we cannot assure
that an active market will develop.
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE UNITS, INCLUDING
OVERALLOTMENT, ENTERING STABILIZATION BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS, AND IMPOSING PENALTY BIDS.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS MAY ENGAGE IN PASSIVE
MARKET MAKING TRANSACTIONS IN THE UNITS ON NASDAQ ACCORDANCE WITH RULE 103 OF
REGULATION M.
SmallCap Market
Nasdaq SmallCap Market
We will apply for listing of the units, common stock, and warrants on the Nasdaq
SmallCap Market under the trading symbols "." The listing is contingent, among
other things, upon our obtaining 400 shareholders.
LEGAL MATTERS
Kogan & Taubman, L.L.C., New York, New York,
will pass on the validity of the issuance of
the shares. Winstead, Sechrest & Minick,
P.C. Dallas, Texas, will pass on certain
legal matters for the underwriters in
connection with the sale of the shares.
EXPERTS
Our financial statements as of December 31,
1998 and for the period from April 29, 1998
(date of inception) to December 31, 1998
included in this prospectus have been
included in reliance on the report of Grant
Thornton LLP, independent certified public
accountants, given on the authority of Grant
Thornton, LLP as experts in auditing and
accounting.
<PAGE>
GLOSSARY
Bandwidth The measure of transmission capacity through wires and
cables, over fiber optic lines, or via satellite. The
general rule of thumb is that as bandwidth is increased,
data can be transferred quicker. Streaming media is
bandwidth-intensive; its quality improves when users
connect at higher speeds--that is, via higher bandwidth
connections.
Broadband A type of data transmission in which a single medium
(such as a wire) can carry several channels at once.
Cable TV is a broadband transmission.
Broadcast A method of transmission of audio, video, or other formats of
information. Specifically, 'broadcast' refers to a mode within which one source
sends the same data or programming to all users at the same time. Contrast:
"narrowcast."
Browser The software application that enables a user to see pages on the World
Wide Web.
Channel On television and cable systems, the term refers to,
usually, the numerical location, as on a dial or LED
readout, of a broadcast station's varied content.
Example: in New York City, NBC can be seen on Channel 4.
On the Internet, the term 'channel' also refers to a
location for a given set of programming, but often refers
to a generic category of content, such as a 'basketball
channel,' or to a highly specific source of programming,
such as the "New York Knicks" channel, or even the
"Patrick Ewing" channel.
Convergence A blur of the distinctions between entertainment,
information, telecommunications, computers, television,
print, and cable.
Downlink The transmission of radio frequency signals from a satellite to an
earth station.
Download Transferring a file from a server to a client, such as your
computer. Downloading files enables you to see and hear content on the web. See:
"streaming."
Enabling Providing the tools, talent, and equipment, and resources
to assist an individual or organization to become a
broadcaster. Prior to the advent of streaming media
technologies and applications, becoming a global
broadcaster was difficult and costly.
Intranet A set of computers linked to one another outside the
public Internet. Often, large corporations build
Intranets to facilitate internal communications.
Multimedia content can be streamed across an Intranet to,
for example, enable geographically dispersed divisions of
a company to attend an address by its CEO, or demonstrate
the proper use of on a new product prior to its
commercial launch.
Mini-portal A focused, subject-oriented portal. See "portal."
Multicast A means by which several users can connect to one data
stream simultaneously. Thus, multicasting can accommodate
larger audiences with greater efficiency than unicasting
(see: unicasting). Multiple users could, for example,
watch the same streaming video file at once, rather than
requiring the server to send one stream per user.
Multimedia The use of computers to present integrated text, graphics, video,
animation, and audio.
Narrowcast To send data to a specific list of recipients. Cable
television is the ultimate example of narrowcasting.
Cable signals are sent only to homes that have subscribed
to the cable service. Network TV, by contrast, is a true
broadcast model. It sends out data. Everyone close enough
with an antenna can receive the signals. On the Internet,
narrowcasting has also come to refer to programming
developed for 'niche' interest groups.
On demand The power to 'time-shift,' or access programming
when you want it, as distinct from the time a broadcaster
wants to send it.
Player A software application, such as those developed by
RealNetworks and Microsoft, among others, that 'plays'
the video and audio clips on your computer.
Portal Originally, a site or online service, such as AOL, that
offered a range of information, entertainment, and
services such as email, forums, chatrooms, and search
engines. Increasingly, however, sites are launched to
become 'portals' to a specific category of content, as in
a 'financial portal.'
Push The mechanisms which deliver data to one's desktop,
usually on a subscription basis. Email is a simple push
service; PointCast is an elaborate push service. The data
is delivered to you automatically.
Rich Commonly used in reference to 'rich media' and,
specifically, to 'rich media advertising.' Rich media
advertising is distinguished from commonplace banner ads
with static graphics; rich media ads are animated, and
often streamed, so that they appear more like television
commercials. Indeed, some are repurposed television
commercials. They can be embedded in web pages as well as
inserted into or between video clips, or, using SMIL,
they can be streamed concurrent to audio programming.
Seamless Streaming a pre-programmed series of multimedia content
segments in succession, without requiring the audience to
select a new program to see or hear. The effect is
similar to watching one television channel for an
extended period of time. One content segment flows into
the next.
SMIL See Synchronized Multimedia Integration Language.
Streaming A stream is a continuous digital signal, which delivers
audio and/or video to an end user. Streaming refers to
the manner by which a stream is sent. Streaming does not
require that a user download an entire large file to his
computer before he can watch or listen to it. Rather, the
streaming process sends out the digital signal in
continuous, tiny packets of data, and buffering enough of
the data so that user can experience the programming
seamlessly, while downloading the next segment in the
background.
StreamStation(TM) Streamedia Communications' trademarked term for the
non-proprietary sites it will license to carry its
programming and information feeds. In concept, it is
similar to the relationship between network television
broadcasters and their local affiliate stations.
StreamStations will be a means by which the Company
syndicates its content across web sites it does not own,
thereby enhancing its market penetration.
Switching hub A broadcast signal pool feed that enables port to
port redirection of data. Any system connected to a port
on the network can be 'switched' to receive or transmit
to another port on that network. Rather than rebroadcast
all data to every port, switching hubs forward data only
to the required recipient.
Synchronized A markup language that enables a programmer to combine formats in
one production, such as Multimedia an audio stream with images and text. In this
way, an internet broadcaster can stream a Integration radio station signal,
while showing advertising imagery, and scrolling information in Language print,
all in the same media player.
Teleport A teleport or "telecommunications port" is a hub that
provides its users with fast, convenient, cost-effective
access to advanced and high-bandwidth services. Teleports
are high-bandwidth communication gateways for satellite,
optical fiber and microwave transmission. Teleports feed
video, data and voice to the world's constellation of
satellites and network of optical fiber. They deliver
television and radio programming to audiences around the
globe.
Traffic A total of users to a site or file. Traffic is measured
in various ways, such as hits, impressions, page views,
and unique users.
Unicast Each user connects to a separate stream of an audio or video file.
Contrast: "multicast."
Uplink The transmission of radio frequency signals to a satellite from an earth
station.
URL Uniform Resource Locator. An Internet URL is like an electronic street
address. Example: http://www.streamedia.net
Videoconferencing Conducting a conference between two or more participants
in different locations by using computer networks to
transmit audio and video data. Multipoint
videoconferencing allows three or more participants to
sit in a "virtual" conference room and communicate as if
they were sitting right next to each other.
Webcast A broadcast or narrowcast of audio or video over on the
World Wide Web. Using a streaming protocol, servers
deliver audio and/or video, in real time (live), or on a
delayed basis (on demand.)
INDEX TO FINANCIAL STATEMENTS
STREAMEDIA COMMUNICATIONS, INC.
<TABLE>
<S> <C>
Page
Report of Independent Certified Public Accountants F-1
Financial Statements
Balance Sheet - December 31, 1998 F-2
Statement of Operations for the Period from April 29, 1998 F-3
(date of inception) to December 31, 1998
Statement of Stockholders' Equity (Deficit) for the Period from F-4 April
29, 1998 (date of inception) to December 31, 1998
Statement of Cash Flows for the Period from August 29, 1998 F-5
(date of inception) to December 31, 1998
Notes to Financial Statements for the Period from April 29, 1998 F-6 - F-10
(date of inception) to December 31, 1998
</TABLE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Streamedia Communications, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Streamedia Communications,
Inc. (the "Company") (a development stage company) as of December 31, 1998, and
the related statements of operations, stockholders' equity (deficit) and cash
flows for the period from April 29, 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 Streamedia Communications, Inc.
(a development stage company) as of December 31, 1998, and the results of its
operations and its cash flows for the period from April 29, 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. The Company is a development stage
enterprise engaged in providing internet-based media programming and content on
the Web. To date, the Company has engaged in organizational and pre-operating
activities and needs to secure additional capital and customers to continue
operations. As discussed in Note A to the financial statements, the Company's
existence is dependent upon its ability to obtain additional capital, among
other things, which raises substantial doubt about its ability to continue as a
going concern. Management's plans concerning these matters are also described in
Note A. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
GRANT THORNTON LLP
Melville, New York
March 9, 1999
<PAGE>
Streamedia Communications, Inc.
(A Development Stage Company)
BALANCE SHEET
December 31, 1998
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
Cash $ 1,225
----------
Total current assets 1,225
COMPUTER EQUIPMENT 1,802
Less accumulated depreciation 602
1,200
DEFERRED OFFERING COSTS 75,000
Total assets $ 77,425
=========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accrued payroll $ 59,000
Accrued offering costs 25,000
Accrued professional fees 12,000
Accrued consulting fees 38,500
Accounts payable and other accrued liabilities 4,185
---------
Total current liabilities 138,685
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.001 par value; authorized - 100,000
shares; none issued and outstanding -
Common stock, $.001 par value; authorized - 20,000,000
shares; issued and outstanding - 3,025,000 shares 3,025
Additional paid-in capital 232,475
Deficit accumulated during development stage (296,760)
--------
Total stockholders' equity (deficit) (61,260)
Total liabilities and stockholders' equity (deficit) $ 77,425
=========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Streamedia Communications, Inc.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Period from April 29, 1998 (date of inception) to December 31, 1998
<TABLE>
<S> <C>
Revenue $ -
-------
Operating expenses
Payroll and related expenses 239,000
General and administrative expenses 57,760
NET LOSS $(296,760)
Basic and diluted loss per common share $(.10)
====
Shares used in computing basic and diluted loss
per share 2,922,409
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Streamedia Communications, Inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Period from April 29, 1998 (date of inception) to December 31, 1998
<TABLE>
<CAPTION>
Deficit
accumulated
Additional during
Preferred stock Common stock paid-in evelopment
Shares Amount Shares Amount capital stage Total
----------- ---------- --------- ------- -------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock 2,910,000 $2,910 $ 2,590 $ 5,500
Issuance of common stock
for services 115,000 115 229,885 230,000
Net loss for the period $(296,760) (296,760)
----------------------- -------- --------
Balance at December 31, 1998 - - 3,025,000 $3,025 $232,475 $(296,760) $ (61,260)
=========== =========== ========= ===== ======= ======= ==========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Streamedia Communications, Inc.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Period from April 29, 1998 (date of inception) to December 31, 1998
<TABLE>
<S> <C>
Cash flows from operating activities
Net loss $(296,760)
Adjustments to reconcile net loss to net cash used in
operating activities
Common stock issued for services 180,000
Depreciation 602
Changes in operating assets and liabilities
Accrued payroll 59,000
Accrued professional fees 12,000
Accrued consulting fee 38,500
Accounts payable and other accrued liabilities 4,185
----------
Net cash used in operating activities (2,473)
Cash flow used in investing activities
Purchase of fixed assets (1,802)
Cash flows provided by financing activities
Issuance of common stock 5,500
Cash at December 31, 1998 $ 1,225
==========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Streamedia Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE A - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Nature of Operations
Streamedia Communications, Inc. (the "Company") was incorporated in the
State of Delaware and is positioning itself as a vertically-integrated New
Media content generator, enabler and aggregator. The Company's three
divisions are Streamedia Broadcast(TM), Streamedia Webcast
Technologies(TM), and Streamedia Publishing.
Streamedia Broadcast(TM) intends to create a suite of topical broadcast
networks to deliver or "stream" live and on-demand audio and video
programming. Network sites intend to offer programming in areas such as,
but not limited to, business, sports, women's issues, parenting, travel,
education, religion, politics, health, teen and children's interests,
shopping, real estate, music, technology, personal fitness, movies,
entertainment and lifestyles. The Company has chosen BusinessBroadcast.com
(pursuant to a joint venture agreement - Note B) as its initial network
launch, to capitalize on the projected, revenue-generating opportunities of
financial and investment related programming.
Streamedia Webcast Technologies(TM) will market internet and intranet
broadcasting services to a wide spectrum of enterprises, such as, but not
limited to, businesses, associations, electronic publishers and "off-line"
media generators, who are attempting to obtain an internet broadcast
presence. The division will attempt to deliver multimedia and text through
a variety of push, poll and proprietary electronic mail mechanisms.
The Streamedia Publishing division will focus upon its StreamWire(TM)
content. StreamWire(TM) will consist of a series of focused,
subject-oriented, edited news and information products, such as wires
devoted to NASDAQ or Amex-listed companies. It is intended that each
newswire developed by the Streamedia Publishing division will have its
broadcast network correlative. The Broadcast and Publishing divisions have
been devised to integrate vertically to create bundled, multimedia Internet
networks.
The Company's operations are subject to certain risks and uncertainties,
including actual and potential competition by entities with greater
financial resources, experience and market presence, risks associated with
the development of the Internet market, risks associated with consolidation
in the industry, the need to manage growth and expansion, certain
technology and regulatory risks and dependence upon sole and limited
suppliers.
<PAGE>
Streamedia Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1998
NOTE A (continued)
Basis of Presentation
The accompanying financial statements have been prepared on the basis that
the Company will continue as a going concern which assumes the realization
of assets and settlement of liabilities in the normal course of business.
Since its inception, the Company has been engaged in organizational and
pre-operating activities. Further, the Company has generated no revenues
and incurred losses. Continuation of the Company's existence is dependent
upon its ability to obtain additional capital, secure and execute strategic
alliances to develop news and information content and sustain profitable
operations. The uncertainty related to these conditions raises substantial
doubt about the Company's ability to continue as a going concern. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Management's plans include the completion of a private placement offering
(the "Private Placement") and the filing of a registration statement
relating to an initial public offering ("IPO") of shares of common stock
should market conditions permit.
The Private Placement includes the sale of up to 500,000 shares of the
Company's common stock at a price of $2.00 per share for gross proceeds of
$1,000,000. The proceeds will be used to provide working capital to the
Company. Subsequent to December 31, 1998, the Company sold 233,250 shares
of its common stock through the Private Placement for gross aggregate
proceeds of $466,500 through March 1999.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Company's significant accounting
policies:
Depreciation
Computer equipment is depreciated on a straight-line basis over its
estimated useful life of three years.
<PAGE>
Streamedia Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1998
NOTE B (continued)
Fair Value of Financial Instruments
The fair values of the Company's accounts payable and accrued liabilities
approximate the related carrying values due to the short maturities of
these instruments.
Income Taxes
The Company records income taxes using the asset and liability method,
which requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of temporary differences between the
financial reporting basis and tax basis of assets and liabilities. A
valuation allowance is recognized to the extent a portion or all of a
deferred tax asset may not be realizable.
Deferred Offering Costs
Costs incurred in connection with an equity offering are deferred until the
transaction is consummated or, in the event the offering is unsuccessful,
against operations in the period in which the offering is aborted.
Loss Per Share
Basic loss per share is computed using the weighted average number of
shares of common stock outstanding during the period. Diluted loss per
share is computed using the weighted average number of shares of common
stock, adjusted for the dilutive effect of potential common shares issued
or issuable pursuant to stock options and stock appreciation rights. The
Company has no potential common shares outstanding at December 31, 1998.
Investment in Joint Venture
The Company accounts for its 50% investment in its joint venture,
Businessbroadcast.com, under the equity method, that is, at cost increased
or decreased by the Company's share of earnings or losses, less dividends
and distributions.
<PAGE>
Streamedia Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1998
NOTE B (continued)
In accordance with the joint venture agreement, each party shares equally
in the distribution of profits and operational costs. Each party may
increase their ownership percentage through capital contributions. The
formation of the joint venture did not require any initial capital
contribution by the Company. The joint venture did not generate any
revenues or incur any operational costs through December 31, 1998.
Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required 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 revenues and expenses during the reporting
period. Actual results may differ from those estimates.
NOTE C - STOCKHOLDERS' EQUITY (DEFICIT)
The Company was originally organized as a New Jersey limited liability
company ("LLC"). On December 21, 1998, pursuant to a Plan and Agreement of
Merger, the LLC was merged into the Company, with the Company continuing as
the surviving entity. Each membership unit of the LLC was converted into
30,000 shares of common stock of the Company.
In connection with an employment agreement, the Company granted 135,000
shares of the Company's common stock to an officer, of which 90,000 shares
had been issued in December 1998 and the remaining 45,000 shares will be
earned upon the achievement of certain business objectives to be
determined. The Company recorded compensation expense of $180,000
representing the fair value of the 90,000 shares issued at such date.
Compensation expense will be recorded for the fair value of the 45,000
shares on the date the specified objectives are met.
In December 1998, the Company issued 25,000 shares of common stock for
legal services to be provided in connection with the Company's IPO (Note
A). The Company recorded $50,000 of deferred offering costs representing
the fair value of the common stock at the date of issuance.
Subsequent to December 31, 1998, through March 1999, the Company sold
233,250 shares of its common stock for aggregate gross proceeds of
approximately $466,500 (Note A).
<PAGE>
Streamedia Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1998
NOTE D - INCOME TAXES
The Company generated a taxable loss of approximately $58,000 for the
period April 29, 1998 (date of inception) to December 31, 1998, which
carryforward expires in 2018.
A deferred tax asset of approximately $20,000 arises from the Company's net
operating loss carryforward at December 31, 1998. The Company has provided
a deferred tax asset valuation allowance since realization of these
benefits cannot be reasonably assured.
NOTE E - COMMITMENTS AND CONTINGENCIES
Office Lease
In January and February 1999, the Company entered into one year
noncancelable operating lease agreements (one of which is with its joint
venture partner) for office space. An aggregate security deposit of $4,200
was required as a condition of such leases. The minimum lease payments
under the noncancelable leases are summarized as follows:
1999 $29,025
2000 2,175
-------
$31,200
Employment Agreements
The Company maintains employment agreements with certain executive
officers. These agreements provide for monthly base salaries and benefits
(when annualized, aggregating $272,000 in executive compensation) and are
cancelable by either party upon written notice. In addition, the Company's
employment contracts contemplate the issuance of common stock and common
stock options to the executives based upon achievements to be established.
In connection with the successful completion of an IPO, the Company is
required to compensate its chief financial officer with a $100,000 bonus.
<PAGE>
II-2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Delaware General Corporation Law
Section 145(a) of the Delaware General Corporation Law (the "DGCL")
provides that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 145(b) of the DGCL provides that a corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 145(c) of the DGCL provides that to the extent that a present
or former director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b) of Section 145, or in defense
of any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
Section 145(d) of the DGCL provides that any indemnification under
subsections (a) and (b) of Section 145 (unless ordered by a court) shall be made
by the corporation only as authorized in the specific case upon a determination
that indemnification of the present or former director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in subsections (a) and (b) of Section 145. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) by a committee of such directors designated by
majority vote of such directors, even though less than a quorum, or (3) if there
are no such directors, or if such directors so direct, by independent legal
counsel in a written opinion, or (4) by the stockholders.
Section 145(e) of the DGCL provides that expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the corporation as authorized in
Section 145. Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so paid upon such
terms and conditions, if any, as the corporation deems appropriate.
Item 25. Other Expenses of Issuance and Distribution
Estimated expenses in connection with the public offering by the Company
of the securities offered hereunder are as follows:
Securities and Exchange Commission Filing Fee $6,945
NASD Filing Fee* 7,000
NASDAQ Small Cap Market Application and Listing Fee* 20,000
Accounting Fees and Expenses* 40,000
Legal Fees and Expenses* 120,000
Printing* 40,000
Fees of Transfer Agent and Registrar* 5,000
Underwriters' Non-Accountable Expense Allowance 170,000
Miscellaneous* 16,055
Total* $425,000
- ----------------
* Estimated.
Item 26. Recent Sales of Unregistered Securities
In the first quarter of 1999, the Company sold 233,500 shares of common
stock, pursuant to Rule 506 of Regulation D under the Securities Act of 1933, as
amended. The Company raised $467,000 from this private placement in order to
provide bridge financing for this offering.
Item 27. Exhibits
Exhibit No Item
Exhibit 1.1 Form of Underwriting Agreement.(2)
Exhibit 1.2 Form of Underwriters' Warrant Agreement.(2)
Exhibit 3.1 Certificate of Incorporation of the Registrant. (1)
Exhibit 3.2 Bylaws of the Registrant (1)
Exhibit 3.3 Amended Bylaws(1)
Exhibit 5.1 Opinion of Kogan & Taubman, L.L.C..(1)
Exhibit 10.1 Employment Agreement between Streamedia and James D. Rupp
(1) Exhibit 10.2 Employment Agreement between Streamedia and Gayle
Essary (1) Exhibit 10.3 Employment Agreement between Streamedia and
Nicholas J. Malino (1) Exhibit 10.4 Indemnification Agreement between
Streamedia and Directors (1) Exhibit 10.5 Consulting Agreement between
Streamedia and IC Enterprises (1). Exhibit 23.1 Consent of Grant
Thornton LLP, Certified Public Accountants.(1)
Exhibit 23.2 Consent of Kogan & Taubman, L.L.C. is contained in the
opinion filed as Exhibit 5.1 to this registration statement.(1)
Exhibit 27 Financial Data Schedule (1)
--------------
(1) Filed herewith
(2) To be filed by amendment
<PAGE>
Item 28. Undertakings
The undersigned registrant hereby undertakes as follows:
(1) To provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
(2) For the purpose of determining any liability under the
Securities Act, treat each post-effective amendment that
contains a form of prospectus as 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 of those securities.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised
that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy, as
expressed in the Act and is, therefore, unenforceable.
(4) In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
shares of the securities being registered, the 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 Act and will be governed by the final adjudication of such
issue.
(5) For the purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of a registration statement in
reliance upon Rule 430A and contained in the form of
prospectus filed by the 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.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorizes this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hasbrouck Heights, State of New Jersey on May 14,
1999.
Streamedia Communications, Inc.
By: /s/ Gayle Essary
Gayle Essary, Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below constitutes and appoints Gayle Essary and James Douglas
Rupp, and each for them, his true and lawful attorney-in-fact and agent, with
full power of substitution and re-substitution, for him and in his name, place
and stead, in any and all capacities (until revoked in writing), to sign any and
all further amendments to this Registration Statement (including post-effective
amendments), and to file same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
such attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person thereby ratifying and confirming all that said
attorneys-in-fact and agents, and each of them, or their 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.
<TABLE>
<S> <C> <C>
Signature Title Date
/s/ Gayle Essary Chairman of the Board May 14, 1999
- --------------------
Gayle Essary (Principal Executive Officer)
/s/ James Douglas Rupp President and CEO, Director May 14, 1999
- -----------------------
James Douglas Rupp (Principal Operating Officer)
/s/ Nicholas J. Malino Chief Financial Officer and Director May 14, 1999
- ----------------------
Nicholas J. Malino (Principal Financial Officer)
/s/ David J. Simonetti Director May 14, 1999
- ----------------------
David J. Simonetti
</TABLE>
CERTIFICATE OF INCORPORATION
OF
STREAMEDIA COMMUNICATIONS, INC.
* * * * *
1. The name of the corporations is STREAMEDIA COMMUNICATIONS,INC..
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purpose to be conducted or promoted
is:
To engage in any lawful act or activity for which corporations may be
organized under the General Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is: Twenty Million One Hundred Thousand (20,100,000) of which
stock Twenty Million (20,000,000) share of the par value of $.001 each,
amounting in the aggregate to Twenty Thousand Dollars ($20,000) shall be Common
stock and of which One Hundred Thousand (100,000) shares of the par value of
$.001 each, amounting in the aggregate to One Hundred Dollars ($100) shall be
Preferred stock.
5. The name and mailing address of each incorporator is as follows:
NAME MAILING ADDRESS
Louis Taubman Suite 2704, 39 Broadway, NY, NY 10006
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
To designate one or more committees, each committee to consist of one
or more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. The by-laws may provide
that in the absence or disqualification of a member of a committee, the member
or members present at any meeting and not disqualified from voting, whether or
not such member or members constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of any such
absent or disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, or in the by-laws of the corporation,
shall have and may exercise all the powers and authority of the board of
directors in the management of the business an affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to the following matters: (i) approving or adopting, or recommending to the
stockholders, any action or matter expressly required by the Delaware General
Corporation Law to be submitted to stockholders for approval or (ii) adopting,
amending or repealing any by-laws of the corporation.
When and as authorized by the stockholders in accordance with law, to
sell, lease or exchange all or substantially all of the property and assets of
the corporation, including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property including shares of stock in, and/or other
securities of, any other corporation or corporations, as its board of directors
shall deem expedient and for the best interests of the corporation.
8. Elections of directors need not be by written ballot unless the
by-laws of the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statues) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation.
9. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
10. A director of the corporation shall be personally 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 the corporation or stockholder, (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, or (iv)
for any transaction from which the director derived any improper personal
benefit.
THE UNDERSIGHNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, does make this Certificate, hereby declaring and
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set our hands this Seventh day of December, 1998.
/s/ Louis E. Taubman_
Louis Taubman
BYLAWS
OF
STREAMEDIA COMMUNICATIONS, INC.
ARTICLE I
SHAREHOLDERS
1. Annual Meeting
A meeting of the shareholders shall be held annually for the election of
directors and the transaction of other business on such date in each year as may
be determined by the Board of Directors, but in no event later than 100 days
after the anniversary of the date of incorporation of the Corporation.
2. Special Meetings
Special meetings of the shareholders may be called by the
Board of Directors, Chairman of the Board or President and shall be called by
the Board upon the written request of the holders of record of a majority of the
outstanding shares of the Corporation entitled to vote at the meeting requested
to be called. Such request shall state the purpose or purposes of the proposed
meeting. At such special meetings the only business which may be transacted is
that relating to the purpose or purposes set forth in the notice thereof.
3. Place of Meetings
Meetings of the shareholders shall be held at such place
within or outside of the State of Delaware as may be fixed by the Board of
Directors. If no place is so fixed, such meetings shall be held at the principal
office of the Corporation.
4. Notice of Meetings
Notice of each meeting of the shareholders shall be given in
writing and shall state the place, date and hour of the meeting and the purpose
or purposes for which the meeting is called. Notice of a special meeting shall
indicate that it is being issued by or at the direction of the person or persons
calling or requesting the meeting.
<PAGE>
5
If, at any meeting, action is proposed to be taken which, if
taken, would entitle objecting shareholders to receive payment for their shares,
the notice shall include a statement of that purpose and to that effect.
A copy of the notice of each meeting shall be given,
personally or by first class mail, not less than ten nor more than fifty days
before the date of the meeting, to each shareholder entitled to vote at such
meeting. If mailed, such notice shall be deemed to have been given when
deposited in the United States mail, with postage thereon prepaid, directed to
the shareholder at his address as it appears on the record of the shareholders,
or, if he shall have filed with the Secretary of the Corporation a written
request that notices to him or her be mailed to some other address, then
directed to him at such other address.
When a meeting is adjourned to another time or place, 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. At the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
However, if after the adjournment the Board of Directors fixes a new record date
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each shareholder of record on the new record date entitled to notice under this
Section 4.
5. Waiver of Notice
Notice of a meeting need not be given to any shareholder who
submits a signed waiver of notice, in person or by proxy, whether before or
after the meeting. The attendance of any shareholder at a meeting, in person or
by proxy, without protesting prior to the conclusion of the meeting the lack of
notice of such meeting, shall constitute a waiver of notice by him or her.
6. Inspectors of Election
The Board of Directors, in advance of any shareholders'
meeting, may appoint one or more inspectors to act at the meeting or any
adjournment thereof. If inspectors are not so appointed, the person presiding at
a shareholders' meeting may, and on the request of any shareholder entitled to
vote thereat shall, appoint two inspectors. In case any person appointed fails
to appear or act, the vacancy may be filled by appointment in advance of the
meeting by the Board or at the meeting by the person presiding thereat. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of such inspector at such meeting with
strict impartiality and according to the best of his ability.
<PAGE>
The inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, and the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote at the meeting, count and
tabulate all votes, ballots or consents, determine the result thereof, and do
such acts as are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting, or of any
shareholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, question or matter determined by them and shall
execute a certificate of any fact found by them. Any report or certificate made
by them shall be prima facie evidence of the facts stated and of any vote
certified by them.
7. List of Shareholders at Meetings
A list of the shareholders as of the record date, certified by
the Secretary or any Assistant Secretary or by a transfer agent, shall be
produced at any meeting of the shareholders upon the request thereat or prior
thereto of any shareholder. If the right to vote at any meeting is challenged,
the inspectors of election, or the person presiding thereat, shall require such
list of the shareholders to be produced as evidence of the right of the persons
challenged to vote at such meeting, and all persons who appear from such list to
be shareholders entitled to vote thereat may vote at such meeting.
8. Qualification of Voters
Unless otherwise provided in the Certificate of Incorporation,
every shareholder of record shall be entitled at every meeting of the
shareholders to one vote for every share standing in its name on the record of
the shareholders.
Treasury shares as of the record date and shares held as of
the record date by another domestic or foreign corporation of any kind, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held as of the record date by the Corporation, shall not be
shares entitled to vote or to be counted in determining the total number of
outstanding shares.
Shares held by an administrator, executor, guardian,
conservator, committee or other fiduciary, other than a trustee, may be voted by
such fiduciary, either in person or by proxy, without the transfer of such
shares into the name of such fiduciary. Shares held by a trustee may be voted by
him or her, either in person or by proxy, only after the shares have been
transferred into his name as trustee or into the name of his nominee.
Shares standing in the name of another domestic or foreign
corporation of any type or kind may be voted by such officer, agent or proxy as
the bylaws of such corporation may provide, or, in the absence of such
provision, as the board of directors of such corporation may determine.
No shareholder shall sell his vote, or issue a proxy to vote,
to any person for any sum of money or anything of value except as permitted by
law.
<PAGE>
9. Quorum of Shareholders
The holders of a majority of the shares of the Corporation
issued and outstanding and entitled to vote at any meeting of the shareholders
shall constitute a quorum at such meeting for the transaction of any business,
provided that when a specified item of business is required to be voted on by a
class or series, voting as a class, the holders of a majority of the shares of
such class or series shall constitute a quorum for the transaction of such
specified item of business.
When a quorum is once present to organize a meeting, it is not
broken by the subsequent withdrawal of any shareholders.
The shareholders who are present in person or by proxy and who
are entitled to vote may, by a majority of votes cast, adjourn the meeting
despite the absence of a quorum.
10. Proxies
Every shareholder entitled to vote at a meeting of the
shareholders, or to express consent or dissent without a meeting, may authorize
another person or persons to act for him by proxy.
Every proxy must be signed by the shareholder or its attorney.
No proxy shall be valid after the expiration of eleven months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the shareholder executing it, except as otherwise provided by
law.
The authority of the holder of a proxy to act shall not be
revoked by the incompetence or death of the shareholder who executed the proxy,
unless before the authority is exercised written notice of an adjudication of
such incompetence or of such death is received by the Secretary or any Assistant
Secretary.
11. Vote or Consent of Shareholders
Directors, except as otherwise required by law, shall be
elected by a plurality of the votes cast at a meeting of shareholders by the
holders of shares entitled to vote in the election.
Whenever any corporate action, other than the election of
directors, is to be taken by vote of the shareholders, it shall, except as
otherwise required by law, be authorized by a majority of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote thereon.
<PAGE>
Whenever shareholders are required or permitted to take any
action by vote, such action may be taken without a meeting on written consent,
setting forth the action so taken, signed by the holders of all outstanding
shares entitled to vote thereon. Written consent thus given by the holders of
all outstanding shares entitled to vote shall have the same effect as an
unanimous vote of shareholders.
12. Fixing The Record Date
For the purpose of determining the shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment thereof,
or to express consent to or dissent from any proposal without a meeting, or for
the purpose of determining shareholders entitled to receive payment of any
dividend or the allotment of any rights, or for the purpose of any other action,
the Board of Directors may fix, in advance, a date as the record date for any
such determination of shareholders. Such date shall not be less than ten nor
more than fifty days before the date of such meeting, nor more than fifty days
prior to any other action.
When a determination of shareholders of record entitled to
notice of or to vote at any meeting of shareholders has been made as provided in
this Section, such determination shall apply to any adjournment thereof, unless
the Board of Directors fixes a new record date for the adjourned meeting.
ARTICLE II
BOARD OF DIRECTORS
1. Power of Board and Qualification of Directors
The business of the Corporation shall be managed by the Board
of Directors. Each director shall be at least eighteen years of age.
2. Number of Directors
The number of directors constituting the entire Board of
Directors shall be the number, not less than three nor more than ten, fixed from
time to time by a majority of the total number of directors which the
Corporation would have, prior to any increase or decrease, if there were no
vacancies, provided, however, that no decrease shall shorten the term of an
incumbent director, and provided further that if all of the shares of the
Corporation are owned beneficially and of record by less than three
shareholders, the number of directors may be less than three but not less than
the number of shareholders. Until otherwise fixed by the directors, the number
of directors constituting the entire Board shall be two.
<PAGE>
3. Election and Term of Directors
At each annual meeting of shareholders, directors shall be
elected to hold office until the next annual meeting and until their successors
have been elected and qualified or until their death, resignation or removal in
the manner hereinafter provided.
4. Quorum of Directors and Action by the Board
A majority of the entire Board of Directors shall constitute a
quorum for the transaction of business, and, except where otherwise provided
herein, the vote of a majority of the directors present at a meeting at the time
of such vote, if a quorum is then present, shall be the act of the Board.
Any action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a meeting if all members
of the Board or the committee consent in writing to the adoption of a resolution
authorizing the action. The resolution and the written consent thereto by the
members of the Board or committee shall be filed with the minutes of the
proceedings of the Board or committee.
5. Meetings of the Board
An annual meeting of the Board of Directors shall be held in
each year directly after the annual meeting of shareholders. Regular meetings of
the Board shall be held at such times as may be fixed by the Board. Special
meetings of the Board may be held at any time upon the call of the President or
any two directors.
Meetings of the Board of Directors shall be held at such
places as may be fixed by the Board for annual and regular meetings and in the
notice of meeting for special meetings. If no place is so fixed, meetings of the
Board shall be held at the principal office of the Corporation. Any one or more
members of the Board of Directors may participate in meetings by means of a
conference telephone or similar communications equipment.
No notice need be given of annual or regular meetings of the
Board of Directors. Notice of each special meeting of the Board shall be given
to each director either by mail not later than noon, Delaware time, on the third
day prior to the meeting or by telegram, written message or orally not later
than noon, Delaware time, on the day prior to the meeting. Notices are deemed to
have been properly given if given: by mail, when deposited in the United States
mail; by telegram at the time of filing; or by messenger at the time of
delivery. Notices by mail, telegram or messenger shall be sent to each director
at the address designated by him for that purpose, or, if none has been so
designated, at his last known residence or business address.
<PAGE>
Notice of a meeting of the Board of Directors need not be
given to any director who submits a signed waiver of 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 any director.
A notice, or waiver of notice, need not specify the purpose of
any meeting of the Board of Directors.
A majority of the directors present, whether or not a quorum
is present, may adjourn any meeting to another time and place. Notice of any
adjournment of a meeting to another time or place shall be given, in the manner
described above, to the directors who were not present at the time of the
adjournment and, unless such time and place are announced at the meeting, to the
other directors.
6. Resignations
Any director of the Corporation may resign at any time by
giving written notice to the Board of Directors or to the President or to 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.
7. Removal of Directors
Any one or more of the directors may be removed for cause by
action of the Board of Directors. Any or all of the directors may be removed
with or without cause by vote of the shareholders.
8. 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 shareholders may be filled by vote of
a majority of the directors then in office, although less than a quorum exists.
Vacancies occurring as a result of the removal of directors by shareholders
shall be filled by the shareholder. A director elected to fill a vacancy shall
be elected to hold office for the unexpired term of his predecessor.
<PAGE>
9. Executive and Other Committees 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 three or more directors and each of
which, to the extent provided in the resolution, shall have all the authority of
the Board, except that no such committee shall have authority as to the
following matters: (a) the submission to shareholders of any action that needs
shareholders' approval; (b) the filling of vacancies in the Board or in any
committee; (c) the fixing of compensation of the directors for serving on the
Board or on any committee; (d) the amendment or repeal of the bylaws, or the
adoption of new bylaws; (e) the amendment or repeal of any resolution of the
Board which, by its term, shall not be so amendable or repealable; or (f) the
removal or indemnification of directors.
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.
Unless a greater proportion is required by the resolution
designating a committee, a majority of the entire authorized number of members
of such committee shall constitute a quorum for the transaction of business, and
the vote of a majority of the members present at a meeting at the time of such
vote, if a quorum is then present, shall be the act of such committee.
Each such committee shall serve at the pleasure of the Board
of Directors.
10. Compensation of Directors
The Board of Directors shall have authority to fix the
compensation of directors for services in any capacity.
11. Interest of Directors in a Transaction
<PAGE>
Unless shown to be unfair and unreasonable as to the
Corporation, no contract or other transaction between the Corporation and one or
more of its directors, or between the Corporation and any other corporation,
firm association or other entity in which one or more of the directors are
directors or officers, or are financially interested, shall be either void or
voidable, irrespective of whether such interested director or directors are
present at a meeting of the Board of Directors, or of a committee thereof, which
authorizes such contract or transaction and irrespective of whether his or their
votes are counted for such purpose. In the absence of fraud any such contract
and transaction conclusively may be authorized or approved as fair and
reasonable by: (a) the Board of Directors or a duly empowered committee thereof,
by a vote sufficient for such purpose without counting the vote or votes of such
interested director or directors (although such interested director or directors
may be counted in determining the presence of a quorum at the meeting which
authorizes such contract or transaction), if the fact of such common
directorship, officership or financial interest is disclosed or known to the
Board or committee, as the case may be; or (b) the shareholders entitled to vote
for the election of directors, if such common directorship, officership or
financial interest is disclosed or know to such shareholders.
Notwithstanding the foregoing, no loan, except advances in
connection with indemnification, shall be made by the Corporation to any
director unless it is authorized by vote of the shareholders without counting
any shares of the director who would be the borrower or unless the director who
would be the borrower is the sole shareholder of the Corporation.
<PAGE>
ARTICLE III
OFFICERS
1. Election of Officers
The Board of Directors, as soon as may be practicable after
the annual election of directors, shall elect a President, a Secretary, and a
Treasurer, and from time to time may elect or appoint such other officers as it
may determine. Any two or more offices may be held by the same person, except
that the same person may not hold the offices of President and Secretary unless
the person is the sole shareholder of the Corporation and holding of said
offices of President and Secretary by such person is permitted under applicable
law. The Board of Directors may also elect one or more Vice Presidents,
Assistant Secretaries and Assistant Treasurers.
2. Other Officers
The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board.
3. Compensation
The salaries of all officers and agents of the Corporation
shall be fixed by the Board of Directors.
<PAGE>
4. Term of Office and Removal
Each officer shall hold office for the term for which he is
elected or appointed, and until his successor has been elected or appointed and
qualified. Unless otherwise provided in the resolution of the Board of Directors
electing or appointing an officer, his term of office shall extend to and expire
at the meeting of the Board following the next annual meeting of shareholders.
Any officer may be removed by the Board with or without cause, at any time.
Removal of an officer without cause shall be without prejudice to his contract
rights, if any, and the election or appointment of an officer shall not of
itself create contract rights.
5. President
The President shall be the chief executive officer of the
Corporation, shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall also preside at all
meetings of the shareholders and the Board of Directors.
The President shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the Corporation.
6. Vice Presidents
The Vice Presidents, in the order designated by the Board of
Directors, or in the absence of any designation, then in the order of their
election, during the absence or disability of or refusal to act by the
President, shall perform the duties and exercise the powers of the President and
shall perform such other duties as the Board of Directors shall prescribe.
7. Secretary and Assistant Secretaries
<PAGE>
The Secretary shall attend all meetings of the Board of
Directors and all meetings of the shareholders and record all the proceedings of
the meetings of the Corporation and of the Board of Directors in a book to be
kept for that purpose, and shall perform like duties for the standing committees
when required. The Secretary shall give or cause to be given, notice of all
meetings of the shareholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or President, under whose supervision the Secretary shall be. The Secretary
shall have custody of the corporate seal of the Corporation and the Secretary,
or an Assistant Secretary, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the
Secretary's signature or by the signature of such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the seal
of the Corporation and to attest the affixing by his signature.
The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the order designated by the Board of Directors, or in
the absence of such designation then in the order of their election, in the
absence of the Secretary or in the event of the Secretary's inability or refusal
to act, shall perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
8. Treasurer and Assistant Treasurers
The Treasurer shall have the custody of the corporate funds
and securities; shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation; and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the President and the Board of Directors, at its regular meetings, or
when the Board of Directors so requires, an account of all his transactions as
Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, the Treasurer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance of
the duties of the office of Treasurer, and for the restoration to the
Corporation, in the case of the Treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in the possession or under the control of the Treasurer belonging
to the Corporation.
The Assistant Treasurer, or if there shall be more than one,
the Assistant Treasurers in the order designated by the Board of Directors, or
in the absence of such designation, then in the order of their election, in the
absence of the Treasurer or in the event of the Treasurer's inability or refusal
to act, shall perform the duties and exercise the powers of the Treasurer and
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
9. Books and Records
<PAGE>
The Corporation shall keep: (a) correct and complete books and
records of account; (b) minutes of the proceedings of the shareholders, Board of
Directors and any committees of directors; and (c) a current list of the
directors and officers and their residence addresses. The Corporation shall also
keep at its office in the State of Delaware or at the office of its transfer
agent or registrar in the State of Delaware, if any, a record containing the
names and addresses of all shareholders, the number and class of shares held by
each and the dates when they respectively became the owners of record thereof.
The Board of Directors may determine whether and to what
extent and at what times and places and under what conditions and regulations
any accounts, books, records or other documents of the Corporation shall be open
to inspection, and no creditor, security holder or other person shall have any
right to inspect any accounts, books, records or other documents of the
Corporation except as conferred by statute or as so authorized by the Board.
10. Checks, Notes, etc.
All checks and drafts on, and withdrawals from the
Corporation's accounts with banks or other financial institutions, and all bills
of exchange, notes and other instruments for the payment of money, drawn, made,
endorsed, or accepted by the Corporation, shall be signed on its behalf by the
person or persons thereunto authorized by, or pursuant to resolution of, the
Board of Directors.
ARTICLE IV
CERTIFICATES AND TRANSFERS OF SHARES
1. Forms of Share Certificates
The share of the Corporation shall be represented by
certificates, in such forms as the Board of Directors may prescribe, signed by
the President or a Vice President and the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer. The shares may 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 employee.
In case any 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.
Each certificate representing shares issued by the Corporation
shall set forth upon the face or back of the certificate, or shall state that
the Corporation will furnish to any shareholder upon request and without charge,
a full statement of the designation, relative rights, preferences and
limitations of the shares of each class of shares, if more than one, authorized
to be issued and the designation, relative rights, preferences and limitations
of each series of any class of preferred shares authorized to be issued so far
as the same have been fixed, and the authority of the Board of Directors to
designate and fix the relative rights, preferences and limitations of other
series.
<PAGE>
Each certificate representing shares shall state upon the face
thereof: (a) that the Corporation is formed under the laws of the State of
Delaware; (b) the name of the person or persons to whom issues; and (c) the
number and class of shares, and the designation of the series, if any, which
such certificate represents.
2. Transfers of Shares
Shares of the Corporation shall be transferable on the record
of shareholders upon presentment to the Corporation of a transfer agent of a
certificate or certificates representing the shares requested to be transferred,
with proper endorsement on the certificate or on a separate accompanying
document, together with such evidence of the payment of transfer taxes and
compliance with other provisions of law as the Corporation or its transfer agent
may require.
3. Lost, Stolen or Destroyed Share Certificates
No certificate for shares of the Corporation shall be issued
in place of any certificate alleged to have been lost, destroyed or wrongfully
taken, except, if and to the extent required by the Board of Directors upon: (a)
production of evidence of loss, destruction or wrongful taking; (b) delivery of
a bond indemnifying the Corporation and its agents against any claim that may be
made against it or them on account of the alleged loss, destruction or wrongful
taking of the replaced certificate or the issuance of the new certificate; (c)
payment of the expenses of the Corporation and its agents incurred in connection
with the issuance of the new certificate; and (d) compliance with other such
reasonable requirements as may be imposed.
ARTICLE V
OTHER MATTERS
1. Corporate Seal
The Board of Directors may adopt a corporate seal, alter such
seal at pleasure, and authorize it to be used by causing it or a facsimile to be
affixed or impressed or reproduced in any other manner.
2. Fiscal Year
The fiscal year of the Corporation shall be the twelve months
ending December 31st, or such other period as may be fixed by the Board of
Directors.
3. Amendments
Bylaws of the Corporation may be adopted, amended or repealed
by vote of the holders of the shares at the time entitled to vote in the
election of any directors. Bylaws may also be adopted, amended or repealed by
the Board of Directors, but any bylaws adopted by the Board may be amended or
repealed by the shareholders entitled to vote thereon as hereinabove provided.
If any bylaw regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set forth
in the notice of the next meeting of shareholders for the election of directors
the bylaw so adopted, amended or repealed, together with a concise statement of
the changes made.
AMENDED AND RESTATED BYLAWS
OF
STREAMEDIA COMMUNICATIONS, INC.
ARTICLE I
SHAREHOLDERS
1. Annual Meeting
A meeting of the shareholders shall be held annually for the
election of directors and the transaction of other business on such date in each
year as may be determined by the Board of Directors, but in no event later than
100 days after the anniversary of the date of incorporation of the Corporation.
2. Special Meetings
Special meetings of the shareholders may be called by the
Board of Directors, Chairman of the Board or President and shall be called by
the Board upon the written request of the holders of record of a majority of the
outstanding shares of the Corporation entitled to vote at the meeting requested
to be called. Such request shall state the purpose or purposes of the proposed
meeting. At such special meetings the only business which may be transacted is
that relating to the purpose or purposes set forth in the notice thereof.
3. Place of Meetings
Meetings of the shareholders shall be held at such place
within or outside of the State of Delaware as may be fixed by the Board of
Directors. If no place is so fixed, such meetings shall be held at the principal
office of the Corporation.
4. Notice of Meetings
Notice of each meeting of the shareholders shall be given in
writing and shall state the place, date and hour of the meeting and the purpose
or purposes for which the meeting is called. Notice of a special meeting shall
indicate that it is being issued by or at the direction of the person or persons
calling or requesting the meeting.
<PAGE>
10
If, at any meeting, action is proposed to be taken which, if
taken, would entitle objecting shareholders to receive payment for their shares,
the notice shall include a statement of that purpose and to that effect.
A copy of the notice of each meeting shall be given,
personally or by first class mail, not less than ten nor more than fifty days
before the date of the meeting, to each shareholder entitled to vote at such
meeting. If mailed, such notice shall be deemed to have been given when
deposited in the United States mail, with postage thereon prepaid, directed to
the shareholder at his address as it appears on the record of the shareholders,
or, if he shall have filed with the Secretary of the Corporation a written
request that notices to him or her be mailed to some other address, then
directed to him at such other address.
When a meeting is adjourned to another time or place, 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. At the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
However, if after the adjournment the Board of Directors fixes a new record date
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each shareholder of record on the new record date entitled to notice under this
Section 4.
5. Waiver of Notice
Notice of a meeting need not be given to any shareholder who
submits a signed waiver of notice, in person or by proxy, whether before or
after the meeting. The attendance of any shareholder at a meeting, in person or
by proxy, without protesting prior to the conclusion of the meeting the lack of
notice of such meeting, shall constitute a waiver of notice by him or her.
6. Inspectors of Election
The Board of Directors, in advance of any shareholders'
meeting, may appoint one or more inspectors to act at the meeting or any
adjournment thereof. If inspectors are not so appointed, the person presiding at
a shareholders' meeting may, and on the request of any shareholder entitled to
vote thereat shall, appoint two inspectors. In case any person appointed fails
to appear or act, the vacancy may be filled by appointment in advance of the
meeting by the Board or at the meeting by the person presiding thereat. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of such inspector at such meeting with
strict impartiality and according to the best of his ability.
<PAGE>
The inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, and the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote at the meeting, count and
tabulate all votes, ballots or consents, determine the result thereof, and do
such acts as are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting, or of any
shareholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, question or matter determined by them and shall
execute a certificate of any fact found by them. Any report or certificate made
by them shall be prima facie evidence of the facts stated and of any vote
certified by them.
7. List of Shareholders at Meetings
A list of the shareholders as of the record date, certified by
the Secretary or any Assistant Secretary or by a transfer agent, shall be
produced at any meeting of the shareholders upon the request thereat or prior
thereto of any shareholder. If the right to vote at any meeting is challenged,
the inspectors of election, or the person presiding thereat, shall require such
list of the shareholders to be produced as evidence of the right of the persons
challenged to vote at such meeting, and all persons who appear from such list to
be shareholders entitled to vote thereat may vote at such meeting.
8. Qualification of Voters
Unless otherwise provided in the Certificate of Incorporation,
every shareholder of record shall be entitled at every meeting of the
shareholders to one vote for every share standing in its name on the record of
the shareholders.
Treasury shares as of the record date and shares held as of
the record date by another domestic or foreign corporation of any kind, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held as of the record date by the Corporation, shall not be
shares entitled to vote or to be counted in determining the total number of
outstanding shares.
Shares held by an administrator, executor, guardian,
conservator, committee or other fiduciary, other than a trustee, may be voted by
such fiduciary, either in person or by proxy, without the transfer of such
shares into the name of such fiduciary. Shares held by a trustee may be voted by
him or her, either in person or by proxy, only after the shares have been
transferred into his name as trustee or into the name of his nominee.
Shares standing in the name of another domestic or foreign
corporation of any type or kind may be voted by such officer, agent or proxy as
the bylaws of such corporation may provide, or, in the absence of such
provision, as the board of directors of such corporation may determine.
No shareholder shall sell his vote, or issue a proxy to vote,
to any person for any sum of money or anything of value except as permitted by
law.
<PAGE>
9. Quorum of Shareholders
The holders of a majority of the shares of the Corporation
issued and outstanding and entitled to vote at any meeting of the shareholders
shall constitute a quorum at such meeting for the transaction of any business,
provided that when a specified item of business is required to be voted on by a
class or series, voting as a class, the holders of a majority of the shares of
such class or series shall constitute a quorum for the transaction of such
specified item of business.
When a quorum is once present to organize a meeting, it is not
broken by the subsequent withdrawal of any shareholders.
The shareholders who are present in person or by proxy and who
are entitled to vote may, by a majority of votes cast, adjourn the meeting
despite the absence of a quorum.
10. Proxies
Every shareholder entitled to vote at a meeting of the
shareholders, or to express consent or dissent without a meeting, may authorize
another person or persons to act for him by proxy.
Every proxy must be signed by the shareholder or its attorney.
No proxy shall be valid after the expiration of eleven months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the shareholder executing it, except as otherwise provided by
law.
The authority of the holder of a proxy to act shall not be
revoked by the incompetence or death of the shareholder who executed the proxy,
unless before the authority is exercised written notice of an adjudication of
such incompetence or of such death is received by the Secretary or any Assistant
Secretary.
11. Vote or Consent of Shareholders
Directors, except as otherwise required by law, shall be
elected by a plurality of the votes cast at a meeting of shareholders by the
holders of shares entitled to vote in the election.
Whenever any corporate action, other than the election of
directors, is to be taken by vote of the shareholders, it shall, except as
otherwise required by law, be authorized by a majority of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote thereon.
<PAGE>
Whenever shareholders are required or permitted to take any
action by vote, such action may be taken without a meeting on written consent,
setting forth the action so taken, signed by the holders of all outstanding
shares entitled to vote thereon. Written consent thus given by the holders of
all outstanding shares entitled to vote shall have the same effect as an
unanimous vote of shareholders.
12. Fixing The Record Date
For the purpose of determining the shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment thereof,
or to express consent to or dissent from any proposal without a meeting, or for
the purpose of determining shareholders entitled to receive payment of any
dividend or the allotment of any rights, or for the purpose of any other action,
the Board of Directors may fix, in advance, a date as the record date for any
such determination of shareholders. Such date shall not be less than ten nor
more than fifty days before the date of such meeting, nor more than fifty days
prior to any other action.
When a determination of shareholders of record entitled to
notice of or to vote at any meeting of shareholders has been made as provided in
this Section, such determination shall apply to any adjournment thereof, unless
the Board of Directors fixes a new record date for the adjourned meeting.
ARTICLE II
BOARD OF DIRECTORS
1. Power of Board and Qualification of Directors
The business of the Corporation shall be managed by the Board
of Directors. Each director shall be at least eighteen years of age.
2. Number of Directors
The number of directors constituting the entire Board of
Directors shall be the number, not less than three nor more than ten, fixed from
time to time by a majority of the total number of directors which the
Corporation would have, prior to any increase or decrease, if there were no
vacancies, provided, however, that no decrease shall shorten the term of an
incumbent director, and provided further that if all of the shares of the
Corporation are owned beneficially and of record by less than three
shareholders, the number of directors may be less than three but not less than
the number of shareholders. Until otherwise fixed by the directors, the number
of directors constituting the entire Board shall be two.
3. Election and Term of Directors
At each annual meeting of shareholders, directors shall be
elected to hold office until the next annual meeting and until their successors
have been elected and qualified or until their death, resignation or removal in
the manner hereinafter provided.
4. Quorum of Directors and Action by the Board
A majority of the entire Board of Directors shall constitute a
quorum for the transaction of business, and, except where otherwise provided
herein, the vote of a majority of the directors present at a meeting at the time
of such vote, if a quorum is then present, shall be the act of the Board.
Any action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a meeting if all members
of the Board or the committee consent in writing to the adoption of a resolution
authorizing the action. The resolution and the written consent thereto by the
members of the Board or committee shall be filed with the minutes of the
proceedings of the Board or committee.
5. Meetings of the Board
An annual meeting of the Board of Directors shall be held in
each year directly after the annual meeting of shareholders. Regular meetings of
the Board shall be held at such times as may be fixed by the Board. Special
meetings of the Board may be held at any time upon the call of the President or
any two directors.
Meetings of the Board of Directors shall be held at such
places as may be fixed by the Board for annual and regular meetings and in the
notice of meeting for special meetings. If no place is so fixed, meetings of the
Board shall be held at the principal office of the Corporation. Any one or more
members of the Board of Directors may participate in meetings by means of a
conference telephone or similar communications equipment.
No notice need be given of annual or regular meetings of the
Board of Directors. Notice of each special meeting of the Board shall be given
to each director either by mail not later than noon, Delaware time, on the third
day prior to the meeting or by telegram, written message or orally not later
than noon, Delaware time, on the day prior to the meeting. Notices are deemed to
have been properly given if given: by mail, when deposited in the United States
mail; by telegram at the time of filing; or by messenger at the time of
delivery. Notices by mail, telegram or messenger shall be sent to each director
at the address designated by him for that purpose, or, if none has been so
designated, at his last known residence or business address.
Notice of a meeting of the Board of Directors need not be
given to any director who submits a signed waiver of 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 any director.
A notice, or waiver of notice, need not specify the purpose of
any meeting of the Board of Directors.
A majority of the directors present, whether or not a quorum
is present, may adjourn any meeting to another time and place. Notice of any
adjournment of a meeting to another time or place shall be given, in the manner
described above, to the directors who were not present at the time of the
adjournment and, unless such time and place are announced at the meeting, to the
other directors.
6. Resignations
Any director of the Corporation may resign at any time by
giving written notice to the Board of Directors or to the President or to 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.
7. Removal of Directors
Any one or more of the directors may be removed for cause by
action of the Board of Directors. Any or all of the directors may be removed
with or without cause by vote of the shareholders.
8. 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 shareholders may be filled by vote of
a majority of the directors then in office, although less than a quorum exists.
Vacancies occurring as a result of the removal of directors by shareholders
shall be filled by the shareholder. A director elected to fill a vacancy shall
be elected to hold office for the unexpired term of his predecessor.
9. Executive and Other Committees 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 three or more directors and each of
which, to the extent provided in the resolution, shall have all the authority of
the Board, except that no such committee shall have authority as to the
following matters: (a) the submission to shareholders of any action that needs
shareholders' approval; (b) the filling of vacancies in the Board or in any
committee; (c) the fixing of compensation of the directors for serving on the
Board or on any committee; (d) the amendment or repeal of the bylaws, or the
adoption of new bylaws; (e) the amendment or repeal of any resolution of the
Board which, by its term, shall not be so amendable or repealable; or (f) the
removal or indemnification of directors.
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.
Unless a greater proportion is required by the resolution
designating a committee, a majority of the entire authorized number of members
of such committee shall constitute a quorum for the transaction of business, and
the vote of a majority of the members present at a meeting at the time of such
vote, if a quorum is then present, shall be the act of such committee.
Each such committee shall serve at the pleasure of the Board
of Directors.
10. Compensation of Directors
The Board of Directors shall have authority to fix the
compensation of directors for services in any capacity.
11. Interest of Directors in a Transaction
Unless shown to be unfair and unreasonable as to the
Corporation, no contract or other transaction between the Corporation and one or
more of its directors, or between the Corporation and any other corporation,
firm association or other entity in which one or more of the directors are
directors or officers, or are financially interested, shall be either void or
voidable, irrespective of whether such interested director or directors are
present at a meeting of the Board of Directors, or of a committee thereof, which
authorizes such contract or transaction and irrespective of whether his or their
votes are counted for such purpose. In the absence of fraud any such contract
and transaction conclusively may be authorized or approved as fair and
reasonable by: (a) the Board of Directors or a duly empowered committee thereof,
by a vote sufficient for such purpose without counting the vote or votes of such
interested director or directors (although such interested director or directors
may be counted in determining the presence of a quorum at the meeting which
authorizes such contract or transaction), if the fact of such common
directorship, officership or financial interest is disclosed or known to the
Board or committee, as the case may be; or (b) the shareholders entitled to vote
for the election of directors, if such common directorship, officership or
financial interest is disclosed or know to such shareholders.
Notwithstanding the foregoing, no loan, except advances in
connection with indemnification, shall be made by the Corporation to any
director unless it is authorized by vote of the shareholders without counting
any shares of the director who would be the borrower or unless the director who
would be the borrower is the sole shareholder of the Corporation.
ARTICLE III
OFFICERS
1. Election of Officers
The Board of Directors, as soon as may be practicable after
the annual election of directors, shall elect a President, a Secretary, and a
Treasurer, and from time to time may elect or appoint such other officers as it
may determine. Any two or more offices may be held by the same person, except
that the same person may not hold the offices of President and Secretary unless
the person is the sole shareholder of the Corporation and holding of said
offices of President and Secretary by such person is permitted under applicable
law. The Board of Directors may also elect one or more Vice Presidents,
Assistant Secretaries and Assistant Treasurers.
2. Other Officers
The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board.
3. Compensation
The salaries of all officers and agents of the Corporation
shall be fixed by the Board of Directors.
<PAGE>
4. Term of Office and Removal
Each officer shall hold office for the term for which he is
elected or appointed, and until his successor has been elected or appointed and
qualified. Unless otherwise provided in the resolution of the Board of Directors
electing or appointing an officer, his term of office shall extend to and expire
at the meeting of the Board following the next annual meeting of shareholders.
Any officer may be removed by the Board with or without cause, at any time.
Removal of an officer without cause shall be without prejudice to his contract
rights, if any, and the election or appointment of an officer shall not of
itself create contract rights.
5. President
The President shall be the chief executive officer of the
Corporation, shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall also preside at all
meetings of the shareholders and the Board of Directors.
The President shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the Corporation.
6. Vice Presidents
The Vice Presidents, in the order designated by the Board of
Directors, or in the absence of any designation, then in the order of their
election, during the absence or disability of or refusal to act by the
President, shall perform the duties and exercise the powers of the President and
shall perform such other duties as the Board of Directors shall prescribe.
7. Secretary and Assistant Secretaries
The Secretary shall attend all meetings of the Board of
Directors and all meetings of the shareholders and record all the proceedings of
the meetings of the Corporation and of the Board of Directors in a book to be
kept for that purpose, and shall perform like duties for the standing committees
when required. The Secretary shall give or cause to be given, notice of all
meetings of the shareholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or President, under whose supervision the Secretary shall be. The Secretary
shall have custody of the corporate seal of the Corporation and the Secretary,
or an Assistant Secretary, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the
Secretary's signature or by the signature of such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the seal
of the Corporation and to attest the affixing by his signature.
The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the order designated by the Board of Directors, or in
the absence of such designation then in the order of their election, in the
absence of the Secretary or in the event of the Secretary's inability or refusal
to act, shall perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
8. Treasurer and Assistant Treasurers
The Treasurer shall have the custody of the corporate funds
and securities; shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation; and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the President and the Board of Directors, at its regular meetings, or
when the Board of Directors so requires, an account of all his transactions as
Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, the Treasurer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance of
the duties of the office of Treasurer, and for the restoration to the
Corporation, in the case of the Treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in the possession or under the control of the Treasurer belonging
to the Corporation.
The Assistant Treasurer, or if there shall be more than one,
the Assistant Treasurers in the order designated by the Board of Directors, or
in the absence of such designation, then in the order of their election, in the
absence of the Treasurer or in the event of the Treasurer's inability or refusal
to act, shall perform the duties and exercise the powers of the Treasurer and
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
9. Books and Records
The Corporation shall keep: (a) correct and complete books and
records of account; (b) minutes of the proceedings of the shareholders, Board of
Directors and any committees of directors; and (c) a current list of the
directors and officers and their residence addresses. The Corporation shall also
keep at its office in the State of Delaware or at the office of its transfer
agent or registrar in the State of Delaware, if any, a record containing the
names and addresses of all shareholders, the number and class of shares held by
each and the dates when they respectively became the owners of record thereof.
The Board of Directors may determine whether and to what
extent and at what times and places and under what conditions and regulations
any accounts, books, records or other documents of the Corporation shall be open
to inspection, and no creditor, security holder or other person shall have any
right to inspect any accounts, books, records or other documents of the
Corporation except as conferred by statute or as so authorized by the Board.
10. Checks, Notes, etc.
All checks and drafts on, and withdrawals from the
Corporation's accounts with banks or other financial institutions, and all bills
of exchange, notes and other instruments for the payment of money, drawn, made,
endorsed, or accepted by the Corporation, shall be signed on its behalf by the
person or persons thereunto authorized by, or pursuant to resolution of, the
Board of Directors.
ARTICLE IV
CERTIFICATES AND TRANSFERS OF SHARES
1. Forms of Share Certificates
The share of the Corporation shall be represented by
certificates, in such forms as the Board of Directors may prescribe, signed by
the President or a Vice President and the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer. The shares may 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 employee.
In case any 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.
Each certificate representing shares issued by the Corporation
shall set forth upon the face or back of the certificate, or shall state that
the Corporation will furnish to any shareholder upon request and without charge,
a full statement of the designation, relative rights, preferences and
limitations of the shares of each class of shares, if more than one, authorized
to be issued and the designation, relative rights, preferences and limitations
of each series of any class of preferred shares authorized to be issued so far
as the same have been fixed, and the authority of the Board of Directors to
designate and fix the relative rights, preferences and limitations of other
series.
Each certificate representing shares shall state upon the face
thereof: (a) that the Corporation is formed under the laws of the State of
Delaware; (b) the name of the person or persons to whom issues; and (c) the
number and class of shares, and the designation of the series, if any, which
such certificate represents.
2. Transfers of Shares
Shares of the Corporation shall be transferable on the record
of shareholders upon presentment to the Corporation of a transfer agent of a
certificate or certificates representing the shares requested to be transferred,
with proper endorsement on the certificate or on a separate accompanying
document, together with such evidence of the payment of transfer taxes and
compliance with other provisions of law as the Corporation or its transfer agent
may require.
3. Lost, Stolen or Destroyed Share Certificates
No certificate for shares of the Corporation shall be issued
in place of any certificate alleged to have been lost, destroyed or wrongfully
taken, except, if and to the extent required by the Board of Directors upon: (a)
production of evidence of loss, destruction or wrongful taking; (b) delivery of
a bond indemnifying the Corporation and its agents against any claim that may be
made against it or them on account of the alleged loss, destruction or wrongful
taking of the replaced certificate or the issuance of the new certificate; (c)
payment of the expenses of the Corporation and its agents incurred in connection
with the issuance of the new certificate; and (d) compliance with other such
reasonable requirements as may be imposed.
<PAGE>
ARTICLE V
OTHER MATTERS
1. Corporate Seal
The Board of Directors may adopt a corporate seal, alter such
seal at pleasure, and authorize it to be used by causing it or a facsimile to be
affixed or impressed or reproduced in any other manner.
2. Fiscal Year
The fiscal year of the Corporation shall be the twelve months
ending December 31st, or such other period as may be fixed by the Board of
Directors.
3. Amendments
Bylaws of the Corporation may be adopted, amended or repealed
by vote of the holders of the shares at the time entitled to vote in the
election of any directors. Bylaws may also be adopted, amended or repealed by
the Board of Directors, but any bylaws adopted by the Board may be amended or
repealed by the shareholders entitled to vote thereon as hereinabove provided.
If any bylaw regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set forth
in the notice of the next meeting of shareholders for the election of directors
the bylaw so adopted, amended or repealed, together with a concise statement of
the changes made.
4. Indemnification of Directors and Officers
Each director and officer of the Corporation now or hereafter
serving as such, shall be indemnified by the Corporation against any and all
claims and liabilities to which he or she has or shall become subject by reason
of serving or having served as such director or officer, or by reason of any
action alleged to have been taken, omitted, or neglected by him or her as such
director or officer; and the Corporation shall reimburse each such person for
all legal expenses reasonably incurred by him or her in connection with any such
claim or liability, provided, however, that no such person shall be indemnified
against, or be reimbursed for any expense incurred in connection with, any claim
or liability arising out of his or her own wilful misconduct or gross
negligence.
The amount paid to any officer or director by way of
indemnification shall not exceed his or her actual, reasonable, and necessary
expenses incurred in connection with the matter involved, and such additional
amount as may be fixed by a committee of not less than three nor more than seven
persons selected by the Board of Directors, who shall be shareholders of the
Corporation, but not officers or directors. Any determination so made shall be
prima facie evidence of the reasonableness of the amount fixed and binding on
the indemnified officer or director.
The right of indemnification hereinabove provided for shall
not be exclusive of any rights to which any director or officer of the
corporation may otherwise be entitled by law.
Streamedia Communications, Inc.
May 14, 1999
Page 2
KOGAN & TAUBMAN, LLC
Attorneys at Law
39 Broadway, Suite 2704
New York, New York 10006
Telephone (212) 425-8200
Facsimile (212) 482-8104
May 14, 1999
Streamedia Communications, Inc.
9 East 45th Street
New York, NY 10017
Re: Registration Statement on Form SB-2
Offering of 1,000,000 Units
Gentlemen:
I have acted as counsel to Streamedia Communications, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, (the "Securities Act"), of 1,000,000 units
(the "Units"), each consisting of one share of common stock $.001 par value (the
"Common Stock") and one warrant entitling the holder to purchase one share of
common stock at $12.75 per share (the "Warrants"), to be offered to the public
by the Company in a firm commitment underwriting by Redstone Securities, Inc.
The Registration Statement (defined below) also includes 150,000 additional
Units to cover over-allotments, if any.
A registration statement on Form SB-2 is being filed herewith. In
connection with rendering this opinion, I have examined executed copies of the
Registration Statement and all exhibits thereto. I have also examined and relied
upon the original, or copies certified to my satisfaction, of (i) the Articles
of Incorporation and By-laws of the Company, (ii) minutes and records of the
corporate proceedings of the Company with respect to the issuance of the Units
to be offered and related matters, and (iii) such other agreements and
instruments relating to the Company as I deemed necessary or appropriate for
purposes of the opinion expressed herein. In rendering such opinion, I have made
such further investigation and inquiries relevant to the transaction
contemplated by the Registration Statement as I have deemed necessary for the
opinion expressed herein, and I have relied, to the extent I deemed reasonable,
on certificates and certain other information provided to me by officers of the
Company and public officials as to matters of fact of which the maker of such
certificate or the person providing such other information had knowledge.
Furthermore, in rendering my opinion, I have assumed that the
signatures on all documents examined by me are genuine, that all documents and
corporate record books submitted to me as originals are accurate and complete,
and that all documents submitted to me are true, correct and complete copies of
the originals thereof.
Based upon the foregoing, I am of the opinion that the Units, and the
Common Stock and Warrants of which they are comprised, to be issued and sold by
the Company as described in the Registration Statement have been duly authorized
for issuance and sale and when issued by the Company against payment of the
consideration therefor pursuant to the terms of the Underwriting Agreement, will
be legally issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Kogan & Taubman,
L.L.C.
By /s/ Louis E. Taubman_
Louis E. Taubman
Streamedia Communications
39 Broadway, Suite 2704
NY, NY 10006
Re: OFFER OF EMPLOYMENT
Chief Executive Officer
Dear James Rupp:
It is our pleasure to extend an offer of full-time employment as Chief Executive
Officer of Streamedia Communications Inc. ("Streamedia"). In this capacity you
will report to Streamedia's Board of Directors. You will be stationed, and split
working hours as appropriate, between our New Jersey and New York City corporate
offices. Your start date as an employee will be September 19, 1998, and your
appointment as Chief Executive Officer will effective on September 19, 1998.
A. Compensation
In consideration of your providing your best managerial, accounting and
financial efforts, Streamedia will provide you:
1. A biweekly baseline salary (based upon 26 pay periods per year) of
$4000.00. Payroll will be distributed bi-weekly in the week following
the end of the pay period.
2. Provisions for daycare expenses of $150.00 per week, to commence no
later than 30 days following the completion of Streamedia's first round
of financing, and to be paid in a manner to be mutually determined no
later than 30 days following the completion of the first round of
financing. Retroactive reimbursements will, upon approval, be
authorized.
3. Company health, life, dental, holiday, vacation and other benefits and
benefit options on the same terms provided to all employees.
4. Option to participate in the 401K plan, executive option plans, and
other employee benefit plans in accordance with the terms and
conditions of those plans.
5. Streamedia Communications, Inc. incentive common stock options in accordance
with Streamedia's incentive stock option plan, pursuant to its expected
implementation during the 1Q of FY99, and an additional quantity of incentive
common stock options upon completion and implementation of all administration
and operational issues set forth hereunder (those which are detailed in Section
B-1), valued at the market value of Streamedia's common stock on the date of the
grant. The precise terms of the Streamedia incentive stock option plans will be
set by an Executive Compensation Committee authorized by the Streamedia Board of
Directors for such purpose. . In no case shall the aggregate value of the
initial grant of incentive stock options on the date of the grant represent less
than $100,000.00 worth of Streamedia stock priced at market value on the date of
the grant.
6. Participation in an executive-level goals and objectives bonus program
following your first year of employment. The exact circumstances if
this bonus program will be mutually determined during the first fiscal
quarter of 1999.
7. An allowance for personal financial planning and accounting to be
mutually determined within 60 days following the completion of the
initial round of corporate financing. Retroactive reimbursements will,
upon approval, be authorized.
8. A non-accountable expense allotment of $250.00 per month.
B. Duties and Responsibilities
You will have full responsibility for:
1. Implementing policies established by the Board of Directors.
2. General supervision of day-to-day corporate affairs.
3. Overall direction, coordination, and evaluation of all company units.
Responsibilities include interviewing, hiring, and training employees;
planning, assigning, and directing work; appraising performance;
rewarding and disciplining employees; addressing complaints and
resolving problems; determination of employees' salaries within salary
guidelines approved by the board; for organizational structures;
staffing within approved budgets; approving expense reports.
4. Supervising the preparation of all Streamedia budgets, submission of
these budgets to the board of directors for approval, and to monitor
expenditures against the budget. You will direct the development of and
approve standards and procedures. You will be responsible for
development of Streamedia personnel policies and obtaining approvals
from the board of directors. You will provide the Board of Directors,
when requested, with monthly status reports.
5. Represent Streamedia in negotiations with representatives of
government, business, and other organizations; holds press conferences,
deliver speeches, and appear before industry or legislative bodies to
present Streamedia's products, technologies, and viewpoints and
encourage the acceptance of same; interact with members of the
investment community.
6. Performing such other work as Streamedia's Board of Directors shall direct.
B-1 Following are several specific projects which have been identified as
requiring somewhat immediate attention. It may be practical to begin some of
these projects prior to commencement of your formal role of Chief Executive
Officer. Beginning these important projects during your initial stages of
employment may be helpful not only to get these projects underway promptly, but
to gain a familiarity with the processes and procedures which are currently in
place, and to serve as a efficient vehicle for their evaluation.
1. The launch of BusinessBroadcast.com, and its subsequent development as
a revenue producing facet of Streamedia.
2. Coordination of all aspects of corporate formation to facilitate an
expected initial public offering, targeted to occur during 2Q FY99.
3. Establishment of Broadcast Facilities and Operating Offices in New York City.
4. Hiring experienced administrative, web development, and marketing personnel.
5. Develop detailed intermediate and long term business plans.
C. AUTHORITY
The Chief Executive Officer shall have authority to:
1. Hire and fire corporate administrative, collections, marketing,
development, technical, editorial, and financial personnel within
budgeted levels and in compliance with corporate human resources
policies.
2. Review and provide recommendations for operating budget for all Streamedia
operations. 3. Establish prices and review contracts for all branch services,
both those performed in-house and those
subcontracted.
4. To sign contracts with clients for services to be performed by the
operations and with vendors for products or services to the utilized by
the company or to otherwise commit company resources up to levels
specified by company policy.
5. To sign off on all financial data required to be reported to regulatory
agencies and client organization requiring authorization of the
company's President and/or Chief Executive Officer.
D. EXPENSES
Your expenses associated with business travel, entertainment and other proper
business purposes will be reimbursed in accordance with company expense
reimbursement procedures and policies. A cellular, digital, or other such phone
service shall be provided for your exclusive corporate use.
E. EXEMPT POSITION
Streamedia's regular office hours are 8:00 a.m. to 5:00 p.m. Monday through
Friday. . You will be able to participate in a flextime program to meet the
demands of your position. As a salaried administrative, executive and
professional position, Streamedia considers this position a high-level executive
exempt position, and you are not authorized to work overtime hours and you will
not be entitled to overtime pay. If you have questions concerning this or any
other term of this offer, we urge you to contact an attorney and to immediately
notify Streamedia so that appropriate adjustments can be made.
F. NON DISCLOSURE/NON SOLICITATION
While you are employed by Streamedia or its affiliates and for a period of one
(1) year after your employment ends for any reason, you agree not to use for
your personal benefit, or disclose, communicate or divulge to, or use for the
direct or indirect benefit of, any person, firm, association or company other
than Streamedia or its affiliates, any information regarding the business
methods, business policies, procedures, techniques, research or development
projects or
results, trade secrets, customers or clients or any other confidential
information relating to or dealing with the business operations of Streamedia
made known to you or learned or acquired by you while employed by Streamedia.
You further agree that, while you are employed by Streamedia and for a period of
one (1) year after your employment ends for any reason: (1) you will neither
hire nor directly induce or attempt to influence any employee of Streamedia or
its affiliates to terminate such employment; and (2) within any geographical
area in which you have actively and substantially provided services for
Streamedia, you will not, directly or indirectly on behalf of yourself or any
third party, make any sales contact with, or solicit or accept business from any
customers of Streamedia or its affiliates who were customers of Streamedia or
its affiliates during the term of your employment, provided however, that this
restriction shall apply only to products or services which are competitive with
those of Streamedia of its affiliates.
G. TERM OF EMPLOYMENT
Following the first 90 days after the start of this agreement, this agreement is
cancelable by you following a 30-day written notice. Following the first 90 days
after the start of this agreement, this agreement is only cancelable by
Streamedia for due cause. Due cause shall consist of a failure to carry out
Board or Supervisor directives, or fiscal misfeasance.
We look forward to your joining us here at Streamedia and the contributions you
will make. We expect this to be a mutually rewarding relationship. If this offer
is acceptable, please sign and return the original to me.
Sincerely,
Streamedia Communications, Inc. ACCEPTED BY:
___________________________
Date Date
Chairman
Streamedia Communications
39 Broadway, Suite 2704
NY, NY 10006
Re: OFFER OF EMPLOYMENT
VP -- Strategic Development
Dear Gayle Essary:
It is our pleasure to extend an offer of full-time employment as Vice President
of Strategic Development for Streamedia Communications Inc. ("Streamedia"). In
this capacity you will report to Streamedia's Chief Executive Officer. You will
be stationed, and split working hours as appropriate, between our several New
York area corporate offices. Your start date as an employee will be September
19, 1998, and your appointment as Vice President of Strategic Development will
be effective on September 19, 1998.
A. Compensation
In consideration of your providing your best managerial, planning and financial
efforts, Streamedia will provide you:
1. A monthly baseline salary of $7000.00. Payroll will be distributed
semi-monthly in the week following the end of the pay period.
2. Company health, life, dental, holiday, vacation and other benefits and
benefit options on the same terms provided to all employees.
3. Option to participate in the 401K plan, executive option plans, and
other employee benefit plans in accordance with the terms and
conditions of those plans.
4. Streamedia Communications, Inc. incentive common stock options in
accordance with Streamedia's incentive stock option plan, pursuant to its
expected implementation during the 1Q of FY99, and an additional quantity of
incentive common stock options upon completion and implementation of all
administration and operational issues set forth hereunder (those which are
detailed in Section B-1), valued at the market value of Streamedia's common
stock on the date of the grant. The precise terms of the Streamedia incentive
stock option plans will be set by an Executive Compensation Committee authorized
by the Streamedia Board of Directors for such purpose. In no case shall the
aggregate value of the initial grant of incentive stock options on the date of
the grant represent less than $100,000.00 worth of Streamedia stock priced at
market value on the date of the grant.
5. Participation in an executive-level goals and objectives bonus program
following your first year of employment. The exact circumstances if
this bonus program will be mutually determined during the first fiscal
quarter of 1999.
6. An allowance for personal financial planning and accounting to be
mutually determined within 60 days following the completion of the
initial round of corporate financing. Retroactive reimbursements will,
upon approval, be authorized.
7. An automobile allowance to be mutually determined no later than 60 days
following the completion of the initial round of corporate financing.
Retroactive reimbursements will, upon approval, be authorized.
8. A non-accountable expense allotment of $250.00 per month.
B. Duties and Responsibilities
You will have responsibility for:
1. Participation in the establishment of strategic marketing plans to achieve
corporate objectives for products and services by performing activities
personally or through subordinate supervisors.
2. Directing, planning, and coordinating activities of one or more
departments, as assigned, and assisting the Chief Executive Officer in
formulating and administering organization policies.
3. Building partnerships and business relationships with other content and
technology providers in order to acquire multimedia content.
4. Assisting the CEO in the evaluation of Corporate Acquisition Strategies.
5. Identifying and researching acquisition and strategic partnership
candidates. Coordinating the implementation of any such initiatives as may
develop by assisting the Chief Executive Officer and Chief Financial
Officer during negotiation processes.
6. Research, analysis, and the monitoring of financial, technological, and
demographic factors to capitalize on market opportunities and minimize
effects of competitive activity.
7. Assisting in the planning and oversight of advertising and promotion
activities including print, online, electronic media, and direct mail.
8. Evaluating and recommending distribution channel development programs.
9. Develop and recommend product positioning and pricing strategy to produce
the highest possible long-term market share and profitability.
10. Establishing and maintaining relationships with influential industry
personalities and newsmakers, and key community and strategic partners.
11. Editing proposals, or writing proposals for original publication and
program concepts, and submitting proposals for review of publications,
programming, financial, and other departmental personnel.
12. Participating in selection of new employees; researchers, consultants,
producers, and on-air personalities to facilitate development of program
ideas.
13. Participating in the development of intermediate and long range planning
sessions with other members of Executive committees.
14. Performing other such work as Streamedia's CEO may direct.
B-1 Following are several specific projects which have been identified as
requiring somewhat immediate attention. Beginning these important projects
during your initial stages of employment may be helpful not only to get these
projects underway promptly, but to gain a familiarity with the processes and
procedures which are currently in place, and to serve as a efficient vehicle for
their evaluation.
1. The launch of BusinessBroadcast.com, and its subsequent development as
a revenue producing facet of Streamedia.
2. Establishment of Broadcast Facilities in New York City.
3. The development and launch of the eWireNews web site and direct
delivery systems, and the transition from an operating facet of
Streamedia to a revenue-producing facet of Streamedia.
4. Assisting in Executive and staff-development planning and talent searches.
5. Identifying, researching, and strategizing the development of a third
broad center of Streamedia revenue, such as, but not limited to, an
additional broadcast website, per corporate plans to develop a
horizontally-integrated suite of focused broadcast and information
portals.
6. Assist in the negotiation of agreements with representatives of other
organizations for exchange of mailing lists, information, and
cooperative programs.
C. AUTHORITY
The Vice President of Strategic Development shall have authority to:
1. Review and provide recommendations for operating budget for all
Streamedia operations.
2. Establish prices and review contracts for all branch services, both
those performed in-house and those
subcontracted.
3. Direct subordinates across the enterprise.
4. Represent Streamedia's President as directed, or in his incapacity.
D. EXPENSES
Your expenses associated with business travel, entertainment and other proper
business purposes will be reimbursed in accordance with company expense
reimbursement procedures and policies. A cellular, digital, or other such phone
service shall, at your request, be provided for your exclusive corporate use.
E. EXEMPT POSITION
Streamedia's regular office hours are 8:00 a.m. to 5:00 p.m. Monday through
Friday. You will be able to participate in a flextime program to meet the
demands of your position. As a salaried administrative, executive and
professional position, Streamedia considers this position a high-level executive
exempt position, and you are not authorized to work overtime hours and you will
not be entitled to overtime pay. If you have questions concerning this or any
other term of this offer, we urge you to contact an attorney and to immediately
notify Streamedia so that appropriate adjustments can be made.
F. NON DISCLOSURE/NON SOLICITATION
While you are employed by Streamedia or its affiliates and for a period of one
(1) year after your employment ends for any reason, you agree not to use for
your personal benefit, or disclose, communicate or divulge to, or use for the
direct or indirect benefit of, any person, firm, association or company other
than Streamedia or its affiliates, any information regarding the business
methods, business policies, procedures, techniques, research or development
projects or results, trade secrets, customers or clients or any other
confidential information relating to or dealing with the business operations of
Streamedia made known to you or learned or acquired by you while employed by
Streamedia.
You further agree that, while you are employed by Streamedia and for a period of
one (1) year after your employment ends for any reason: (1) you will neither
hire nor directly induce or attempt to influence any employee of Streamedia or
its affiliates to terminate such employment; and (2) within any geographical
area in which you have actively and substantially provided services for
Streamedia, you will not, directly or indirectly on behalf of yourself or any
third party, make any sales contact with, or solicit or accept business from any
customers of Streamedia or its affiliates who were customers of Streamedia or
its affiliates during the term of your employment, provided however, that this
restriction shall apply only to products or services which are competitive with
those of Streamedia of its affiliates.
G. TERM OF EMPLOYMENT
Following the first 90 days after the start of this agreement, this agreement is
cancelable by you following a 30-day written notice. Following the first 90 days
after the start of this agreement, this agreement is only cancelable by
Streamedia for due cause. Due cause shall consist of a failure to carry out
Board or Supervisor directives, or fiscal misfeasance.
We look forward to your joining us here at Streamedia and the contributions you
will make. We expect this to be a mutually rewarding relationship. If this offer
is acceptable, please sign and return the original to me.
Sincerely,
Streamedia Communications, Inc. ACCEPTED BY:
___________________________
Date Date
James Rupp, CEO
Nicholas J. Malino
November 30, 1998
Page 4
Streamedia Communications, Inc.
Employer's Copy Printed 01/24/99 4:00 PM
P.O. 750471, Forest Hills, NY 11375-0471 / 718-523-1822 / Fax 718-523-2137
P.O. 222, Hasbrouck Heights, NJ 07604 / 201-288-0751 / Fax 201-462-0193
E-Mail: [email protected] / http://www.ewirenews.com /
http://www.businessbroadcast.com
November 30, 1998
Mr. Nicholas J. Malino
250 West 90th Street
New York, New York 10024
Re: OFFER OF EMPLOYMENT
Chief Financial Officer
Dear Mr. Malino:
It is our pleasure to extend an offer of employment as Chief Financial Officer,
of Streamedia Inc. ("STREAMEDIA"). In this capacity you will report to James
Rupp, STREAMEDIA's President and Chief Executive Officer. Your start date as an
employee will be December 1, 1998.
This position is considered to be a Regular Part Time Position, as defined in
the Streamedia Communications, Inc. Employee Manual.
A. Compensation
In consideration of your providing your best managerial, accounting and
financial efforts, STREAMEDIA will provide you:
1. A monthly salary of Seven Thousand Dollars ($7,000.00). All such
compensation will be deferred until the first phase of financing is
completed, but in no case to exceed thirty (30) days from the date of
this agreement. Company health, life, dental, holiday, vacation and
other benefits and benefit options on the same terms provided to all
employees.
2. Option to participate in 401K plan, option plans, and other employee
benefit plans in accordance with the terms and conditions of those
plans.
3. That number of common shares of Streamedia representing 4 1/2% of the
Company's total shares issued and outstanding. These shares will be
issued prior to January 1, 1999. That number of shares representing 3%
of the Company's total shares issued and outstanding will be vested
immediately upon their issuance and the remainder shall vest upon
completion of certain short-term objectives.
4. Participation in an executive-level goals and objectives bonus program.
The exact circumstances of this bonus program will be mutually determined during
the first 120 days of employment, but shall consist, however, of at least
$100,000 payable upon the successful completion of the initial public offering
of Streamedia common stock. In addition, certain amounts, which shall be agreed
by Company and you during the first 30 days of employment to be paid upon
completion of certain mergers and acquisitions as outlined in the Streamedia
business plan, but not limited to these specific acquisitions and upon
completion of capital fundings of any kind subsequent to the initial public
offering.
5. A non-accountable expense allotment of $250.00 per month.
B. Duties and Responsibilities
Streamedia will provide all requisite support and you will have full
responsibility for:
1. The Chief Financial Officer's services will include an evaluation of the
Company's strategic financial alternatives as they relate to the disposition of
some portion of the stock of the Company or the achievement of other strategic
objectives of the Company and its management. Chief Financial Officer will
advise and assist the Company in identifying potential buyers and will, on
behalf of the Company, contact such potential buyers as the Company may
designate. If Chief Financial Officer and the Company believe it to be
advisable, Chief Financial Officer will assist the Company in preparing a
memorandum for distribution to potential buyers or joint venture partners,
describing the Company and its business, operations, properties, financial
conditions and prospects and will, if requested by the Company, participate on
the Company's behalf in negotiations concerning the Transaction. Chief Financial
Officer will assist in implementing the determinations of the Company's Board of
Directors with respect to
these matters.
2. Participate in the financial aspects of the development of a long term
business plan. 3. Overall financial management of all corporate accounting and
collections activities, and
production of financial reports for the Company and two affiliates.
4. To effectively interact and maintain positive relationships with primary and
secondary
lending institutions, investors and other credit facilities. Advising
the President of Streamedia of the status in relation to financial
covenants with these institutions.
5. To maintain the current status of all U.S. Securities and Exchange
Commission requirements for documentation and reporting. Responsible
for maintaining current knowledge and familiarity with SEC regulations
and requirements and for interacting with the Company's SEC attorney
for this purpose.
6. Interaction with the investment community including investors and
analysts at the direction of the President of Streamedia Inc.
7. The development of projections and forecasts for future performance to
be implemented as the company's financial objectives.
8. Analyzing, investigating and providing operational and financial
opinions related to prospective acquisitions, joint ventures,
divestitures or any other type of investment or venture undertaken by
Streamedia or its affiliates.
9. Integrating all acquisitions into the Streamedia organization on a
financial basis and then providing support on financial matters on an
on-going basis.
10. Participating in audits and financial status reviews conducted by
external auditors, corporate or otherwise, or regulatory agencies.
11. Performing such other work as Streamedia's President or Board of Directors
shall direct
C. EXPENSES
Your expenses associated with business travel, entertainment and other proper
business purposes will be reimbursed.
D. TERM OF EMPLOYMENT
Following the first ninety days after the start date of this agreement, this
agreement is cancelable by either party following a thirty-day written notice.
We look forward to your joining us here at STREAMEDIA and the contributions you
will make. We expect this to be a mutually rewarding relationship. If this offer
is acceptable, please sign and return the original to me.
Sincerely,
STREAMEDIA Communications Inc. ACCEPTED BY:
___________________________
James Rupp Date Nicholas J. Malino
Date
President
Indemnification Agreement
This Agreement is made between Streamedia Communications, Inc., Delaware
corporation ("Corporation") and _________________ ("Director").
Recitals
A. Director is a member of the Board of Directors of Corporation and in that
capacity is performing a valuable service for Corporation; and
B. The bylaws of the Corporation (the "Bylaws") provide for the
indemnification of the officers, directors and employees of Corporation to the
maximum extent authorized under law; and
C. The Delaware General Corporation Law (the "State Statute")
specifically provides that it is not exclusive, and contemplates that contracts
may be entered into between Corporation and the members of its Board of
Directors with respect to indemnification of the directors; and
D. In order to induce Director to continue to serve as a member of the
Board of Directors of Corporation, Corporation has determined and agreed to
enter into this Agreement with Director;
Therefore, in consideration of Director's continued service as a
Director after the date of this Agreement, the parties agree as follows:
1. Indemnity of Director. Corporation agrees to hold harmless and
indemnify Director, his or her heirs, successors and estate to the full extent
authorized or permitted by the provisions of the State Statute, or by any
amendment of it or other statutory provisions authorizing or permitting such
indemnification which is adopted after the date of this Agreement.
2. Additional Indemnity. Without limiting the generality of Section 1
hereof, and subject only to the exclusions set forth in Section 3 hereof,
Corporation further agrees to hold harmless and indemnify Director, his or her
heirs, successors and estate:
(a) Against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Director, his or her heirs, successors and estate in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including an action by or in the
right of the Corporation) to which Director is, was or at any time becomes, or
his or her heirs, successors and estate are, were, or at any time become, a
party, or is threatened to be made a party, by reason of the fact that Director
is, was or at any time becomes a director, officer, employee or agent of
Corporation, or is or was serving or at any time serves at the request of
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, if he or she acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of Corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful;
and
(b) Otherwise to the fullest extent as may be provided to Director by
Corporation under the nonexclusivity provisions of the State Statute.
3. Limitations of Indemnity. No indemnity pursuant to Section 2 hereof
shall be paid by Corporation:
(a) In respect of the amount of such losses for which the Director is
indemnified either pursuant to Section 1 hereof or pursuant to any D & O
Insurance purchased and maintained by the Corporation;
(b) In respect to remuneration paid to Director if it shall be
determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(c) On account of any suit in which judgment is rendered against
Director for an accounting of profits made from the purchase or sale by Director
of securities of Corporation pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934 and its amendments or similar provisions of any
federal, state or local statutory law;
(d) For any breach of Director's duty of loyalty to Corporation or its
stockholders;
(e) For acts or omissions of Director not in good faith or which
involve intentional misconduct or a knowing violation of law;
(f) For any transaction from which Director derived improper personal
benefit;
(g) For any unlawful payment of dividends or unlawful stock purchase or
redemption as provided pursuant to the State Statute;
(h) With respect to any claim, issue or matter as to which Director
shall have been adjudged to be liable to Corporation, unless and to the extent
that a court of competent jurisdiction deems Director to be entitled to
indemnification despite such adjudication of liability; or
(i) If a final decision by a Court having jurisdiction in the matter
shall determine that such indemnification is not lawful.
4. Continuation of Indemnity. All agreements and obligations of
Corporation contained herein shall continue during the period Director is a
director, officer, employee or agent of Corporation (or is or was serving at the
request of Corporation as a director, office, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Director shall be subject to any possible claim
or threatened, pending or completed action, suit or proceeding, whether, civil,
criminal or investigative, by reason of the fact that Director was a director of
Corporation or serving in any other capacity referred to herein.
5. Notification and Defense of Claim. Promptly after receipt by
Director of notice of the commencement of any action, suit or proceeding,
Director will, if a claim in respect thereof is to be made against Corporation
under this Agreement, notify Corporation of such commencement; but the omission
so to notify Corporation will not relieve it from any liability which it may
have to Director otherwise than under this Agreement. With respect to any such
action, suit or proceeding as to which Director notifies Corporation of its
commencement:
(a) Corporation will be entitled to participate in it at its own expense;
(b) Except as otherwise provided below, to the extent that it may wish,
Corporation jointly with any other indemnifying party similarly notified will be
entitled to assume the defense of it, with counsel satisfactory to Director.
After notice from Corporation to Director of its election so to assume the
defense of it, Corporation will not be liable to Director under this Agreement
for any legal or other expenses subsequently incurred by Director in connection
with the defense thereof other than reasonable costs of investigation or as
otherwise provided below. Director shall have the right to employ its counsel in
such action, suit or proceeding but the fees and expenses of such counsel
incurred after notice from Corporation of its assumption of the defense thereof
shall be at the expense of Director unless (i) the employment of counsel by
Director has been authorized by Corporation, (ii) Director shall have reasonably
concluded that there may be a conflict of interest between Corporation and
Director in the conduct of the defense of such action or (iii) Corporation shall
not in fact have employed counsel to assume the defense of such action, in each
of which cases the fees and expenses of counsel shall be at the expense of
Corporation. Corporation shall not be entitled to assume the defense of any
action, suit or proceeding brought by or on behalf of Corporation or as to which
Director shall have made the conclusion provided for in this Section 5(b)(ii);
(c) Corporation shall not be liable to indemnify Director under this
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent. Corporation shall not settle any action or claim in
any manner which would impose any penalty or limitation on Director without
Director's written consent. Neither Corporation nor Director will unreasonably
withhold their consent to any proposed settlement.
6. Repayment of Expenses. Director agrees that Director will reimburse
Corporation for all reasonable expenses paid by Corporation in defending any
civil or criminal action, suit or proceeding against Director in the event and
only to the extent that it shall be ultimately determined that Director is not
entitled to be indemnified by Corporation for such expenses under the provisions
of the State Statute, the Bylaws, this Agreement or otherwise.
7. Enforcement.
(a) Corporation expressly confirms and agrees that it has entered into
this Agreement and assumed the obligations imposed on Corporation hereby in
order to induce Director to continue as a director of Corporation, and
acknowledges that Director is relying on this Agreement in continuing in such
capacity.
(b) In the event Director is required to bring any action to enforce
rights or to collect moneys due under this Agreement and is successful in such
action, Corporation shall reimburse Director for all of Director's reasonable
fees and expenses in bringing and pursuing such action.
8. Separability. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
shall be held to be invalid or unenforceable for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions.
9. Governing Law; Binding Effect; Amendment and Termination.
(a) This Agreement shall be interpreted and enforced in accordance with
the laws of the State of Delaware.
(b) This Agreement shall be binding on Director and on Corporation, its
successors and assigns, and shall inure to the benefit of Director, his or her
heirs, personal representatives and assigns and to the benefit of Corporation,
its successors and assigns.
(c) No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by both parties hereto.
In Witness whereof, the parties have executed This Agreement on and as
of the date first above written.
Streamedia Communications, Inc.
By:_________________________
James Rupp
President & CEO
- ----------------------------
,Director
IC Enterprises, LLC
Consulting Agreement
This Agreement is made as of this 1st day of October, 1998, by and between
Streamedia Communications, LLC, a private corporation ("Company" or
"Streamedia") with its principal offices at 9 East 45th , and IC Enterprises,
LLC, a Maryland, USA Limited Liability Company ("ICE") with its principal
offices at 15245 Shady Grove Road, Suite 400 Rockville, Maryland 20850.
Witnesseth
WHEREAS, the Company requires expertise in the areas of business development and
finance to support it's business and growth and desires to engage ICE to provide
such services and specifically to seek potential merger candidates and/or
introduce the Company to investors who may be interested in providing financing
to the Company; and
WHEREAS, ICE, through its principals, agents and employees, has certain
expertise in the areas business development and finance, as well as expertise in
the evaluation of potential business opportunities and the implementation of
various projects of the nature and type contemplated by the Company in its
future expansion and development which ICE has agreed to provide to the Company;
NOW, THEREFORE, in consideration of the premise and the mutual promises and
covenants contained herein and subject specifically to the conditions hereof,
and intending to be legally bound thereby, the parties agree as follows:
1. Appointment of ICE
The Company hereby appoints ICE, and ICE agrees to represent the Company, as a
non-exclusive consultant to assist the Company in identifying entities or
individuals who may wish to provide financing for the Company, to assist the
Company in identifying possible merger candidates for the Company, and to assist
in the contemplated marketing and development of the Company. ICE shall have the
right during the term of this agreement to represent to the public that it is a
consultant to the Company.
2. ICE's Rights and Duties
(a) ICE shall use its best efforts to introduce the Company to entities or
individuals who may be interested in providing financing to the Company, as well
as possible merger candidates. Thereafter, ICE shall use its best efforts to
assist the Company in structuring and effecting financing, merger, acquisition
or such other transaction as is agreed to by the Company and ICE.
(b) To perform its duties hereunder, ICE may perform valuation analyses of the
Company, all required due diligence, and to make presentations regarding the
Company to potential merger candidates, lenders, investors and underwriters,
coordinate visits of potential merger candidates, lenders, investors and
underwriters with the Company and assist the Company in negotiations with such
parties as are necessary.
3. Company Information
In connection with ICE's performance of its duties hereunder, the Company shall
(i) provide ICE, on a timely basis, all information reasonably requested by ICE,
and (ii) make its officers and professionals available to ICE and such third
parties as ICE shall designate at reasonable times and upon reasonable notice.
4. Confidential Information
ICE acknowledges that, in the course of performing its duties hereunder, it may
obtain information relating to the Company which the Company has marked as
confidential or otherwise identified in writing as confidential ("Confidential
Information"). ICE shall hold at all times, both during the term of this
agreement and at all times thereafter, such Confidential Information in the
strictest confidence, and shall not use such Confidential Information for any
purpose, other than as may be reasonably necessary for the performance of its
duties pursuant to this agreement, without the Company's prior written consent.
ICE shall not disclose any Confidential Information to any person or entity,
other than to ICE's employees or consultants as may be reasonably necessary for
purposes of performing its duties hereunder, without the Company's prior written
consent. The foregoing notwithstanding, the term "Confidential Information"
shall not include information which (i) becomes generally available to the
public, other than as a result of a breach hereof, (ii) was available on a
non-confidential basis prior to its disclosure to ICE by the Company, or (iii)
becomes available to ICE on a non-confidential basis from a source other than
the Company, provided that such source is not bound by a confidentiality
agreement with respect to such information. The foregoing notwithstanding, ICE
may disclose Confidential Information to the extent required by law or
regulation, including but not limited to court orders, subpoenas, civil
investigative demands and interrogatories.
5. Compensation
6. (a) In consideration for ICE's services hereunder, the Company agrees to pay
ICE a fee of $26,500. In addition, the Company agrees to issue 6,000 common
shares of the Company to ICE. The Company agrees to issue to ICE common shares
and/or options of the Company on the date of closing that are non-restricted and
free trading, except as they are restricted by SEC rules.
For the purposes of this Agreement, a party shall be considered to have
been "introduced to the Company through ICE" if such a party was introduced to
the Company in writing either directly or indirectly by ICE, its agents or
employees.
6. Expense Reimbursement
Regardless of whether an equity financing, debt financing, merger, acquisition
or similar transaction occurs, the Company shall reimburse ICE periodically for
its reasonable out-of-pocket expenses (excluding compensation to ICE's
employees), including the fees and disbursements of ICE's attorneys arising from
ICE's performance hereunder. ICE will seek written authorization from the
Company prior to incurring any expense over $250.00
7. Mutual Indemnification for Securities Law Violations
The Company warrants that during the term of this Agreement the Company will not
make, any untrue statement of any material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in connection with any memoranda, prospectus or any other public
filing or documents to be provided to potential merger candidates, investors or
underwriters. ICE warrants that during the term of this Agreement, it will not
make any untrue statements of a material fact or omit to state a material fact
required to be stated or necessary to make any statement made not misleading in
connection with any memoranda, prospectus or any other public filing or
documents to be provided to potential merger candidates, investors or
underwriters. Each party hereto will indemnify and hold harmless the other party
(including each of its directors, officers, employees, partners and agents) with
respect to any liability (and actions in respect thereof) incurred by such other
party by virtue of the indemnifying party's breach of the foregoing warranties
and shall reimburse each indemnified party for any legal or other expenses
reasonably incurred in connection with investigating or defending any such
liability or action, provided that the indemnifying party shall have the right
to control the defense of any claim giving rise to such liability and no such
claim shall be settled without the consent of the indemnifying party. The
foregoing provisions shall survive termination of this Agreement and any
investigation with respect thereto by any party hereto.
8. Other Engagements
The Company acknowledges that ICE is and will be acting as a consultant to other
business enterprises seeking services normally provided by ICE and agrees that
ICE's provision of services to such enterprises shall not constitute a breach
hereof or of any duty owed to the Company by virtue of this agreement.
9. Term
This agreement is effective upon execution by the Company as provided below and
shall continue in effect until terminated by either party.
10. Termination
Either party may terminate this agreement at any time and for any reason, with
or without cause, upon the giving 30 days written notice of termination to the
other party; provided, however, that ICE shall be entitled to full compensation
as determined pursuant to Section 5 for any equity financing, debt financing,
merger, acquisition or other transaction completed with any party introduced to
the Company in writing, either directly or indirectly by ICE, its agents or
employees, that occurs within two (2) years from the termination date,
regardless of the reason for the termination.
11. General Provisions
(a) This agreement shall be governed by and under the laws of the State of
Maryland, USA without giving effect to conflicts of law principles. If any
provision hereof is found invalid or unenforceable, that part shall be amended
to achieve as nearly as possible the same effect as the original provision and
the remainder of this agreement shall remain in full force and effect.
(b) Any dispute arising under or in any way related to this agreement shall be
submitted to binding arbitration by the American Arbitration Association in
accordance with the Association's commercial rules then in effect. The
arbitration shall be conducted in Rockville, Maryland. The arbitration shall be
binding on the parties and the arbitration award may be confirmed by any court
of competent jurisdiction.
(c) This agreement constitutes the entire agreement and final understanding of
the parties with respect to the subject matter hereof and supersedes and
terminates all prior and/or contemporaneous understandings and/or discussions
between the parties, whether written or verbal, express or implied, relating in
any way to the subject matter hereof. This agreement may not be altered,
amended, modified or otherwise changed in any way except by a written agreement,
signed by both parties.
(d) Any notice or other communication pursuant hereto shall be given to a party
at its address first set forth above by (i) personal delivery, (ii) commercial
overnight courier with written verification of receipt, or (iii) registered or
certified mail. If so mailed or delivered, a notice shall be deemed given on the
earlier of the date of actual receipt or three (3) days after the date of
authorized delivery.
(e) This agreement may be executed in counterparts, each one of which shall
constitute an original and all of which taken together shall constitute one
document.
12. Independent Contractor
In providing Services to the Company under this Agreement, ICE shall be an
independent contractor, and no party to this Agreement shall make any
representations or statements indicating or suggesting that any joint venture,
partnership, or other such relationship exist between the ICE and the Company.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed as of the date first written above.
IC Enterprises, LLC
By:_____________________________
Mark Elenowitz
Managing Director
Streamedia Communications, LLC
By:_____________________________
James Rupp
CEO & President (Seal)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUTANTS
We have issued our report dated March 9, 1999, accompanying the financial
statements of Streamedia Communications, Inc. contained in the Registration
Statement and Prospectus.
We consent to the use of
the aforementioned report in the Registration Statement and Prospectus,
and to the use of our name as it
appears under the caption "Experts."
GRANT THORNTON LLP
Melville, New York
May 14, 1999
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