U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
NOSTRAD TELECOMMUNICATIONS, INC.
(Name of Small Business Issuer in its Charter)
Nevada 88-0306460
(State of Incorporation) (IRS Employee Identification No.)
Suite 2482, 650 West Hastings Street
Vancouver, British Columbia Canada V6B 4N8
(Address of Principal executive Offices)
(604) 893-8778
(Issuer's Telephone Number:)
Common Stock, $.001 par value per share
(Securities to be Registered Under Section 12(g) of the Act)
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TABLE OF CONTENTS
PART I
Page
Item 1. Description of Business 3
Item 2. Management's Discussion and Analysis or Plan of Operation 36
Item 3. Description of Property 39
Item 4. Security Ownership of Certain Beneficial Owners and Management 41
Item 5. Directors, Executive Officers, Promoters and Control Persons 42
Item 6. Executive Compensation 46
Item 7. Certain Relationships and Related Transactions 47
Item 8. Legal Proceedings 47
Item 9. Market for Common Equity and Related Shareholder Matters 47
Item 10. Recent Sales of Unregistered Securities 47
Item 11. Description of Securities 48
Item 12. Indemnification of Directors and Officers 49
Item 13. Financial Statements 50
Item 14. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosures 76
Item 15. Financial Statement and Exhibits 76
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Item 1. Description of Business
A. The Company
1. Corporate Information
Nostrad Telecommunications, Inc. (the "Company" or "NTC") is a corporation
organized under the laws of the State of Nevada on September 24, 1993, as Cave
Productions, Inc. The Company changed its corporate name to Nostrad
Telecommunications, Inc. effective as of October 8th, 1997, in anticipation of
its acquisition of Nostrad Media Pte. Ltd. a Singapore company ("Nostrad Media")
and Omni Vision Africa Ltd., a British Virgin Island company ("Omni Vision").
Please refer to "Item 1. Description of Business - The Company - Corporate
History."
The Company maintains its corporate offices at Suite 2482, 650 West Georgia
Street, Vancouver, British Columbia V6B 4N8. Its telephone number is (604)
893-8778 and, its facsimile number is (604) 893-8768.
The Company maintains offices as follows: Vancouver, Canada, Singapore,
Ulanbaatar, Mongolia, Kampala, Uganda, and Rabat, Morocco. Please refer to "Item
3. Description of Property."
2. Corporate Structure
The following chart sets out the Company's corporate structure and
ownership interest in its various subsidiaries:
[GRAPHIC OMITTED]
3. Corporate History
The Company was organized for the purpose of creating a vehicle to locate
and acquire an operating business entity which management believed would be a
suitable and viable acquisition candidate. The Company had limited operating
activities from inception to September 30, 1997 when it effected the
Acquisition.
By Agreement dated February 25, 1998 with Nostrad Telecommunications Pte.
Ltd.. a privately held
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Singapore company ("Nostrad Singapore"), the Company agreed to purchase (the
"Acquisition") from Nostrad Singapore all of the issued and outstanding capital
stock of each of Nostrad Media and OmniVision in exchange for 3,700,000 shares
of the Company's common stock (on a post split basis) and a $300,000 promissory
note.
In furtherance of the Acquisition, a restructuring (the "Restructuring")
consisting of the following was effected:
1. Name Change. The name of Cave Productions was changed to Nostrad
Telecommunications, Inc.
2. Stock Split. On September 29, 1997 the then Board of Directors of the
Company approved a 5,000 for 1 stock split, which stock split was effective upon
filing on September 30, 1997 of a certificate of amendment to the Company's
certificate of incorporation.
The effect of the Stock Split was to increase the number of shares of the
Company's common stock $.001 par value per share, issued and outstanding from
600 to 3,000,000. The number of shareholders remained constant at eleven; being
the same eleven persons (the "Selling Shareholders") who acquired the 600 shares
on March 1, 1994. The Company believes that only one of the Selling Shareholders
was an affiliate of the Company at the time of the Acquisition.
3. Private Transactions. As an adjunct to and in order to facilitate the
Acquisition, the Selling Shareholders sold and transferred (the "Private
Transaction") to certain unaffiliated persons 2,840,000 shares of common stock
representing approximately 94.6% of the then issued and outstanding shares of
the Company's common stock.
As at September 30, 1999, the Company had 11,100,000 shares issued and
outstanding.
B. The Business of the Company
The Company is focused on developing, acquiring and managing media and
telecommunication operations in emerging markets of Asia, Africa and at a later
stage, Latin America. Todate, the Company has obtained Subscription Pay
Television licenses in Morocco, Uganda, and Tanzania, as well as obtained ISP
(Internet Service Provider) and RO (receive only) VSAT licenses in Morocco. The
DTH Subscription Pay-TV services in Morocco have been implemented with a launch
of Showtime (a subsidiary of Viacom) programming in June 1999. In addition,
Nostrad has obtained nation-wide paging licenses in Uganda and is currently
implementing alphanumeric and voice paging services in Kampala.
In order to implement the business of the Company, in each country in which
the Company operates, the Company requires various operating permits, licenses,
and allocation of specific frequency and channels by the appropriate government
Ministry in each county. The Company's current operations include:
A. Morocco Operations. Omni Vision Maroc, a 65% owned subsidiary, is licensed
to distribute Satellite DTH Subscription TV programming. The subsidiary has
entered into an agreement with Showtime, a Viacom company, to distribute
Showtime's direct to home (DTH) programming package throughout Morocco.
B. Ghana MMDS Pay TV Operations. Omni Vision Ghana, an 80% owned subsidiary,
holds through a joint venture, an interest in frequencies and licenses to
operate a six-channel MMDS Subscription TV system in Ghana. The Company,
until the number of frequencies allows for an increase to, at least,
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a twelve-station MMDS Subscription TV system in Ghana, may allow its
interest to lapse in Ghana.
C. Tanzania MMDS Pay TV Operations. Omni Vision Tanzania, an 80% owned
subsidiary holds exclusive frequencies and licenses to operate a
seven-channel MMDS Subscription TV system in Tanzania
D. Uganda MMDS Pay TV Operations. Omni Vision Uganda, an 100% owned subsidiary
holds exclusive frequencies and licenses to operate a 24-channel MMDS
system in Uganda.
E. Uganda Paging Operations. Omni Vision Uganda also holds licenses to operate
5 paging channels. The system is currently being implemented and is
expected to become operational by the Year-end 1999.
F. Mongolia Paging Operations. Mongolia Omni Vision, an 80% owned subsidiary
holds licenses to operate 5 paging channels. The system currently has 2
channels in operation capable of providing service to 4,000 subscribers.
G. Mongolia MMDS Pay TV Operations. Mongolia Omni Vision also holds exclusive
frequencies and licenses to operate a 29-channel MMDS system.
The Company has executed a Sales & Marketing Management agreement dated
October 20, 1998 with Asia Learning World Pte. Ltd. Ltd. ("ALW") which plans to
telecast two new learning channels throughout the Asia-Pacific Region via
digital satellite and cable transmission systems. ALW will fill a need in the
Asia market for both Pay-TV with substantive knowledge programming and for
students who seek international quality degrees and other training
opportunities.
Television provides an important window to the world of entertainment,
knowledge and information while telecommunications is a gateway for human
interaction. The need and demand for these services are well documented. NTC
intends to provide these services to its chosen markets in emerging economies,
where market potential is significant and initial competition from larger
international corporations is limited or even non-existent,
For its Pay TV operations, NTC has chosen to deploy wireless MMDS
technology as it is proven in over 60 countries worldwide as the most cost
effective signal delivery solution that allows low-cost entry and quick service
roll-out. It enables the Company to provide appealing and price-competitive
programming to its subscribers in the targeted markets. The targeted countries
were selected based on their market potential, relative political stability and
governmental commitment to economic reforms and development. Based on the
licenses in hand, the favorable demographics, and high population densities, NTC
Pay-TV Networks will pass over 5.4 million households.
In the paging business, Nostrad, guided by its corporate philosophy of
providing appealing and cost competitive solutions to its customers, is
implementing alphanumeric and voice paging services in the two countries that it
has paging licenses. Alphanumeric and voice paging were selected as the
appropriate solutions for these emerging markets because access to public
telephones, and telephones in general, is rather limited.
Overall, the media and telecommunications markets in the targeted countries
are relatively undeveloped with demonstrable pent-up demand and limited
competition, thus, offering the opportunities of smaller scale starts and rapid
market growth as their economics develop. With the current developments in the
applied
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technologies, NTC envisages and believes that it will be able to expand into
multimedia services through the integration of other convergent technologies in
the future.
NTC has assembled a management and technical team with over 150 years of
cumulative experience in implementation, management and operation of cable TV,
hardwire and wireless telecommunication systems in developed and developing
countries. The team will focus on building NTC's subscriber base, with the goal
of generating positive cash flows at low subscriber levels and endeavor to
retain customers through quality on-going services and marketing programs.
Over the longer term, the Company expects to expand through internal
growth, acquisitions and joint ventures. Its also intends to enhance growth
through strategic alliances with international players, should the opportunities
arise, with the view of maximizing the intrinsic value of the business and
operations, and thus maximizing the long-term value for its shareholders.
Industry and Competitive Environment
Today, about 170 wireless cable systems provide service to over 750,000
subscribers in the United States, according to the Wireless Cable Association.
Another 2.9 million subscribers receive the service outside the U.S. It is
estimated that wireless cable will serve 10 million subscribers worldwide by the
year 2000. Based on an average monthly charge of US$20, this translates to a
market size of US$2.0 billion.
Wireless system technology provides a very low cost and competitive medium
for the transmission of entertainment and information service to customers in
single family homes, multiple dwelling unit properties and commercial
properties. A city-wide wireless system can be quickly implemented in a
relatively short period of time (in less than 7 months, as compared to
conventional cable which may take as long as 3 to 4 years), with substantially
lower initial capital investments. The system can also be maintained at a
fraction of the cost of a conventional cable TV system.
Unlike conventional cable systems, wireless systems do not require
extensive coaxial cable networks, amplifiers and related equipment to meet low
and fairly dispersed initial demand. As a result, capital costs and plant
related operating costs are substantially lower. Hence, NTC anticipates that it
will be able to maintain cost and pricing advantages over conventional hard wire
cable and satellite delivery such as DBS (Direct Broadcast Satellite) or DBH
(direct to the home) technology in the subscription television industry.
NTC will focus on developing wireless cable and telecommunications systems
in emerging markets where the terrain, frequency availability and other
conditions are conducive to the economical transmission of wireless signals. The
Company will target value-conscious consumers in both cabled and non-cabled
areas with its basic and premium programming. NTC will differentiate itself by
using its lower cost structure to offer customers competitive prices for
superior programming with an emphasis on customer service.
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[GRAPHIC OMITTED]
Market Segmentation and Competing Pay-TV Delivery Technologies
Other than the MMDS technology chosen by the Company as its delivery
platform, television signals are replayed by various competing services and
technologies. Details on these and comparisons with MMDS are described in more
detail below.
Cable
In the U.S., cable competes effectively with wireless, only because of
amortized sunk costs in the cabling infrastructure, built out over the last
30-40 years, before the advent of wireless technologies. In addition, the
available MMDS frequencies in North America are limited, hence restricting the
number of channels that can be offered through this platform.
However, capital investment for MMDS is a fraction of conventional cable
television investment. Cable television investment is approximately $25,000 per
mile, as opposed to a total $500,000 for a wireless transmission facility. MMDS
can also serve market areas where it will not be economically viable for cable
operators due to low housing density (cost per subscriber's ratio). Hence, in
markets with little or no cable infrastructure, MMDS will be much more cost
efficient to implement.
The major issue impending explosive development of wireless cable in
developed countries, such as those in North America and Europe, have not been
construction costs, but burdensome frequency licensing procedures and the
problems in obtaining access to the most desirable cable network areas.
Television Receive Only ("TVRO")
TVRO's are used by customers for direct reception of video programming from
various satellites (C-Band), and are generally used to receive free-to-air
programming. They are generally used in markets where subscribers do not have
access to cable or MMDS services. A conventional TVRO system can cost each
subscriber between $1,000 and $3,000 (for the installation and purchase of a
full-size satellite dish), depending on the features of the system, plus a
monthly fee for access to specific programming that are encoded. There is also a
need to re-position the receiver dish to several different satellites for
different programming. However, this positioning can be done via motorized
controls but would entail a higher equipment cost.
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Satellite Master Antenna Television ("SMATV")
SMATV is a multi-channel cable network system service offered to private
landowners of multiple dwelling units. SMATV uses satellite receivers to receive
and compile programming and distributes the multi-channel programming to the
subscribers in multiple dwelling units and large buildings. SMATV is, however,
restricted mainly to free-to-air satellite programs as royalty fees for the
encrypted programming can be very expensive - no economies of scale.
Direct Broadcast Satellite ("DBS")
DBS companies transmit high-powered signals from a satellite directly to a
small dish (about 60-90 cm in diameter) located at subscribers' homes. DBS is
capable of delivering over 200 channels of digital programming. Currently,
receiving equipment plus installation fees can cost each subscriber between $700
and $1,500. Each additional independent outlet requires a separate decoder
device at an additional cost to the subscriber. MMDS enjoys certain advantages
over DBA, specifically DBA's:
* cost for constructing and launching satellites
* receiving equipment is costly for subscriber
* limitation on local programming
In NTC's target market areas, it is not feasible to have local up-linking
of DBS operations for at least the medium term. The high costs of implementation
are much too prohibitive. In the meantime, foreign DBS operators, although high
priced, do present a source of competition. MMDS has a significant advantage
over satellite companies because local terrestrial based companies have the
ability to work alongside regulatory bodies (government) in controlling and
screening transmission signals to subscribers (censorship). For example, Canada,
the U.S., Singapore, Malaysia, Indonesia, China and India have severe
restrictions on DBS programming that originates from foreign soil.
Telephone Companies - Video on Demand
Recently telephone companies in developed countries have been implementing
ADSL technology capable of providing audio/video services over telephone lines.
Such services are at present very costly to implement and restricted to offering
video-on-demand and high speed Internet service. It is as yet uncertain as to
whether the technology may be able to support multi-channel programming. NTC
believes that MMDS will continue to maintain a cost advantage over such video
services for a significant period.
* Recently, the cable industry has developed a service that enable
customers to order and pay for individually selected programs -
Pay-Per-View ("PPV"). PPV has been especially successful for specialty
events carried on a pay-per-event basis, such as sports events. PPV
requires subscribers to have addressable converters, as employed by
NTC, which allow the Company to control what subscribers watch without
having to visit the subscribers' residences. NTC believes that PPV has
the potential for becoming popular as additional exclusive events
become available for distribution.
* Digital compression, currently being developed by several equipment
manufacturers, will allow several programs to be carried on one
bandwidth, as opposed to current technology that allows only one
program per bandwidth. Estimates of compression ratios are between 4:1
and 10:1 (about 150 to 300 channels). Digital technology will also
enable MMDS to transmit high definition television signals. NTC
believes that any compression technology that becomes commercially
available will be beneficial to MMDS operators and will help to
greatly expand the channel capacity available for programming.
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* Currently, franchise cable operators are rebuilding their
infrastructures with fibre optic networks in order to provide their
customers with greater numbers of programming channels and services.
In the past, franchise cable systems have been limited to the number
of programming channels offered to customers by their current analogue
transmission and coaxial cable technologies.
* In addition, wireless technology can now offer broadband interactive
services - namely "fibre optics in the sky".
C. Areas of Operation
[GRAPHIC OMITTED]
Mongolia
Mongolia Homevision is currently holding the following documents:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Date Title of License or Certificate Notes Duration
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mar 28, 1997 Mongolian State Registration Certificate
#21/475
- ----------------------------------------------------------------------------------------------------------------------------
May 17, 1996 License to Employ Radio Frequency 2.3 - 2.99 Ghz May 17, 1996 - May 17, 2006
24 Ghz - 29.9 Ghz
- ----------------------------------------------------------------------------------------------------------------------------
Feb 20, 1997 Foreign Investment Chief Order for Mongolia/Singapore
Mongolia HomeVision HH Joint Venture
- ----------------------------------------------------------------------------------------------------------------------------
Nov 7, 1996 Permi.ssion to use channels to braodcast
television in Ulaanbaatar
- ----------------------------------------------------------------------------------------------------------------------------
Jan 28, 1997 Special License #14 (#800) for provision
of Paging Service, Ulaanbaatar, Darkan, Erdenet
- ----------------------------------------------------------------------------------------------------------------------------
May 16, 1996 Certificate of Enterprise with Foreign May 16, 1996 - May 30, 2006
Investment #800
- ----------------------------------------------------------------------------------------------------------------------------
May 17, 1996 Communication Service License Certificate May 17, 1996 - May 17, 2006
#800 # 32
- ----------------------------------------------------------------------------------------------------------------------------
Aug 26, 1996 Mongolia State Radio, TV & Communications Dept.
Operating License #01/016 Certificate #800/#32
- ----------------------------------------------------------------------------------------------------------------------------
Jan 22, 1997 Special License #06 TV Channel 33
MMDS 2484-2700
- ----------------------------------------------------------------------------------------------------------------------------
Jan 22, 1997 Special License # 01 Frequency 163.1,
155.3, 146.3 Mhz
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOSTRAD Media Pte. Ltd. ("NMPL"), through its subsidiary, HomeVision Mongolia HH
("Mania Delgets Co. Ltd.") obtained a license in Mongolia to establish wireless
broadcast pay-television (license
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granted in June 1996, frequencies of 2.3-2.99 GHz). HomeVision's signals will
pass 120,000+ TV households and penetration rates of over 20% are projected over
a 5-year period.
In line with HomeVision's plan to include telecommunications services in its
offerings, government approval for paging operations, including national
alphanumeric and voice paging, was obtained (frequencies 163.1, 146.300,
147.300, 155.300, and 156.300 MHz) in late 1996. The Company is operating voice,
numeric and alphanumeric paging (under the brand name of "NOSTRAD Paging") in
Ulaanbaatar.
HomeVision has obtained a long-term lease on a 3-storey broadcasting center,
including the use of the existing transmission tower, from the Mongolian Radio
and TV Company. The center houses a production studio, satellite signal
receiving and re-transmission headend, and corporate administration and
currently is the operations and transmission center for the paging network.
HomeVision currently employs over 20 personnel for the paging operations and has
started training of technicians for the installation of subscriber equipment for
the wireless pay TV network, which is scheduled for implementation in the fourth
quarter of 2000.
Competition
There are four cable companies operating in Ulaanbaatar, of which, two are very
small start-ups. Their program offering consists of only free-to-air satellite
programming and does not include any of the encrypted programming, such as HBO,
Cinemax, Star Movies and ESPN, with the exception of Discovery. In addition,
they compile their own movie channel, consisting of pirated movies. Mongolia is
a recent signatory to the Berne Convention and the Mongolian authorities have
begun to take action against blatant copyright violations. The current
subscription rates for such free-to-air programming range from US$2-3/month.
Location, Demographics
Mongolia is completely landlocked between two large neighbors, Russia and China.
It is a vast country nearly three times the size of France and yet with a
population of only 2.4 million people. 85% of the people are Mongol, 7% Turkic,
(Mainly Kazakh), and 4.6% Tungsic. Four million Mongols live outside Mongolia.
The special feature of the Mongolian democratic evolution since 1990 is its very
peaceful and consensual nature. The democratic reforms have radically changed
the social structure, the state ideology, and the mentality of the ordinary
citizen, and these changes have taken place in a comparatively calm and stable
manner. With the collapse of the Soviet Union, the substantial aid, which
Mongolia enjoyed, was abruptly cut off in 1989/90. With the need for economic
reform, the Government raised prices of commodities, coal, and electricity.
Inflation rose dramatically. Expansionary monetary policies continued throughout
1992/93 such that inflation rose to 146% and peaked at 330% in 1993 before
inflationary pressures eased. Inflation in 1995 was 66% falling to 53% in 1996
and the government goal for 1997 is 35%.
With the very positive indicators of the past few years and the steady
improvement in the standard of living for Mongolian households, the opportunity
to develop high quality subscription television system in Ulaanbaatar is
significant. The low level vegetation, the relatively flat composition of the
city, and the absence of severe high-rise and other man-made obstruction
problems supports the evaluation that a Multichannel Multipoint Television
Distribution System, (MMDS), will provide very effective and economic coverage,
likely supporting direct reception by about 85 percent or more of the apartment
blocks and individual reception locations in the target service area.
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Since 1992, the Mongolian leaders have been gradually making the transition from
Soviet-style central planning to a market economy through privatization and
price reform and have been soliciting support from international financial
agencies and foreign investors.
In 1994, the economy showed signs of recovery with the slowdown of decline of
major economi.c indicators and GDP growth of 2.1%. In 1995 the GDP growth was
almost 6% and in 1996 was approaching 5%. Good progress has been made in setting
up market oriented institutions and in creating a legal and regulatory framework
for investment. The Foreign Investment Law protects foreign investors from
expropriation and offers substantial concessions.
Ulaanbaatar, the capital city, is in the central part of Mongolia on the river
Tuul. The population of the city is over 640,000 constituting 25% of Mongolia's
population. It is the largest industrial center and produces most of the total
industrial output. The building industry is active in speculative private
housing, and private offices and hotels are under construction, strengthening
the role of Ulaanbaatar as the country's prime focus for financial and other
services.
Although household income is low, the cost of housing is extremely low such that
the cost of food and similar household essentials accounts for 50% of income.
There is ample evidence that households have a relatively high percentage of
their total income available with which to purchase appliances such as stereos,
TV sets, etc. .Ulaanbaatar has a very young population. A population of over
640,000 divided by an average household size of 4.5 results in an estimate of
over 140,000 households. It is safe to estimate the average family household
consists of two adults and two children, (i.e. when taking into account single
parent families, extended families, etc., an average of 4.5 members per
household).
Foreign Investment
By the end of 1995, more than 520 business entities with foreign investor
participation had been granted licenses to engage in commercial activity in
Mongolia. Businesses and individuals from 39 countries have invested more than
US$100 million between 1990 and 1995. Among the more recognized companies
currently operating in Mongolia are Sumitomo Corporation and KDD of Japan,
Korean Telecom, and Snyder Oil Corporation (SOCO), Nescor and Caterpillar from
the United States.
The World Trade Organization has extended membership to Mongolia, and in
addition, the United States Senate approved a bilateral investment treaty with
Mongolia in June, 1996, thus providing a legal framework for American investors
that expands on Mongolia's Foreign Investment Law. Many other countries have
also signed bilateral trade agreements of a simi.lar nature with Mongolia.
The Foreign Investment Law of 1993 allows foreign investment through the
establishment of a completely foreign enterprise, or the establishment of a
business entity with the participation of a Mongolian investor. Additionally,
foreign investors are permitted to participate in the ongoing privatization of
state-owned property and enterprises. Both the Foreign Investment Law and the
U.S.-Mongolian bilateral investment treaty ensure that foreign investors receive
no less favorable treatment than Mongolian investors.
The Mongolian law specifically states that foreign investors shall be accorded
no less favorable treatment regarding the possession, use, and disposal of their
investments than that accorded to Mongolian investors, and goes on to specify
the right of a foreign investor to possess, use, and dispose of their property;
manage or participate in managing the business entity; and to transfer their
rights and obligations to other persons. Foreign investors have the right to
transfer abroad promptly (1) shares of
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profits and dividends, (2) proceeds from the sales of their assets and
securities, (3) proceeds from the transfer of their property rights to other
persons as well as from their withdrawal from or the dissolution of the business
entity. The U.S.-Mongolian bilateral investment treaty stipulates that transfers
must be made in a freely usable currency at the prevailing rate of exchange on
the date of the transfer.
The Foreign Investment Law explicitly states that foreign investment will not be
nationalized or subject to unlawful expropriation. Investments may be subjected
to expropriation exclusively for the public purposes or interests and only in
accordance with due process of law on a non-discriminatory basis with full
compensation.
Over the last six years, the market economy has firmly taken root in Mongolia,
and the government is moving to reform and strengthen its institutions to
welcome foreign business, secure new investment, and make the legal and
financial environment more predictable. Despite some initial missteps, Mongolia
has made a real commitment to openness and to playing a more visible role in the
international trading system.
Government Regulation and Licensing
Mongolia does not suffer from a shortage of laws and regulations; what it lacks
are experience and enforcement capability. Copies of the laws are readily
available oftentimes in English and officials do try to live up to the spirit
and letter of the legislation as written. The problem is the sheer volume of new
laws that have been enacted in the last few years. Since 1993, new laws or
amendments that impact directly on foreign investment include legislation on
accounting, anti-corruption, banking, bankruptcy, communications, consumer
protection, copyright, currency regulation, customs, deposits, energy, taxes,
foreign investment, labor, mineral, rights of trade unions, etc.
Taxation
Article 20 of the Foreign Investment Law allows tax holidays and reduced
corporate tax for businesses with foreign investment. For basic
telecommunications networks, there is a ten-year tax holiday and provision for a
50% reduction for a further five years. In addition, corporate tax exemptions
and deductions are allowed for businesses involved in the implementation of
introducing advanced technology. Mongolia recently removed import taxes and
customs duties on capital goods brought into the country as part of foreign
investment in new businesses. A uniform 10% sales tax is imposed on all imports,
manufactured goods and some services and covers registered businesses with a
turnover exceeding 5 million Tugs. The sales tax base for domestically produced
goods and services is the selling price of goods, and the charges for performed
work and rendered services.
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[GRAPHIC OMITTED]
Morocco
OmniVision Maroc SARL is currently holding the following documents:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Date of License Title of License or Certificate Notes Duration
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
July 20, 1998 Incorporation Certificte
- -------------------------------------------------------------------------------------------------------------
April 23, 1998 Exclusive Distribution Contract with Soread/OmniVision 5 years
Soread (government Pay-TV distributor) /ShowTime/Gulf/DTH
- -------------------------------------------------------------------------------------------------------------
Jan 14th 1999 Amendment granting OmniVision Maroc with Gulf DTH/ 5 years
Exclusive Distribution Rights for OmniVision
ShowTime channels in Morocco
- -------------------------------------------------------------------------------------------------------------
March 11, 1999 Letter confirming OmniVision's Gulf DTH/ Indefinte
distribution agreement OmniVision
- -------------------------------------------------------------------------------------------------------------
Jan 14th 1999 Amendment to Agreement dated Jan 14 1999 Gulf DTH/ Indefinte
amending various issues. OmniVision
- -------------------------------------------------------------------------------------------------------------
Jan 14th 1999 Master Agreement granting certain Gulf DTH/ Indefinte
Non-Exclusive Rights to distribute OmniVision
ShowTime in Morocco
- -------------------------------------------------------------------------------------------------------------
July 16, 1999 Agreement to develop VSAT Networks, and Globecomm/Omni Indefinte
technical and system integration Vision Maroc
- -------------------------------------------------------------------------------------------------------------
</TABLE>
OmniVision Africa Ltd. ("OVA"), through its subsidiary OmniVision Maroc SARL,
"(OVM") was granted the necessary licenses by the Ministry of Communication to
distribute a DTH ("Direct to Home") subscriber Pay-TV service throughout
Morocco. OVM on January 14th 1999 executed an agreement with Showtime, the
fastest growing multi-channel digital satellite TV network in the Middle East,
to distribute their programming package throughout Morocco. Showtime recently
started uplinking its digital services on NileSat which allows its signals to be
received throughout most of North Africa on a 90 cm dish. NileSat has rapidly
established itself as the single satellite solution for the Middle East and
North Africa delivering the widest possible choice of Western and Arabic
channels. OmniVision's signals will reach over 2.9 million+ TV households
throughout Morocco, and it is projected that the DTH subscriber base will exceed
115,000 by the 5th year of operation.
Competition
There are two local free to air TV channels operating.
Canal+Horizon (20,000 subscribers) offers a 1 channel DTH service, at a cost of
$18 per month, which is being broadcast on HotBird on C Band and is encrypted.
In addition ART (2,000 subscribers) offers 10
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channels and 70 free to air channels, costing from $14-28 per month. In order to
receive the C band signals the subscriber requires a satellite receiver
($150-300), a C Band dish ($90-150), and a decoder ($115-300). There are 3 other
DTH providers all of which are illegal operators. Their prices range from
$700-1000 per year. It is also required to have an address outside of Morocco in
order to obtain signals. The ART signals will also be offered on OmniVision's
decoder, and Showtime is making arrangements for the ART channels to be included
in its lineup.
OmniVision Maroc SARL, "(OVM") has also applied for the necessary licenses by
the Ministry of Communication to distribute terrestrial subscriber Pay-TV and
Internet services throughout Morocco utilising Wireless MMDS technology. OVM has
requested frequency between 2.3 to 2.9 GHz, which would provide for up to 50
channels of programming, with provision for 2 way Internet and data services.
OmniVision's signals will pass 2.9 million+ TV households and it is projected
that the subscriber base will exceed 345,000 by the 5th year of operation. OVM's
Internet Service Provider license there have been approved and the company plans
to launch the service by year-end 1999.
OmniVision Maroc SARL signed an agreement with Globecomm Systems "GSI" (NASDAQ:
GCOM) to provide systems integration and end to end wireless solutions for its
ISP operations in Morocco. As part of the agreement, GSI's subsidiary, NetSat
Express, will provide Satellite Internet Access into the US Internet backbone to
OmniVision. GSI designs, assembles and installs satellite ground segment systems
and networks which support a wide range of satellite communications
applications, including fixed, mobile and direct broadcast services as well as
military applications. NetSat Express provides satellite based Internet access
services, digital media distribution, and integration data, voice and video
communications services. Nostrad plans to use NetSat Express ACCESS PLUS
services to provide a comprehensive variety of Internet services including
internet access, hosting, caching, ip multicasting, ip telephony, multi-media,
broadcasting.
Morocco
Morocco is bounded on the north by the Mediterranean Sea, on the east and
southeast by Algeria, on the south by Western Sahara, and on the west by the
Atlantic Ocean. The area of Morocco is about 446,550 sq. km (about 172,413 sq.
mi.).
Morocco's resources are primarily agricultural, but mineral resources are also
significant. Among the latter, the most important is phosphate rock; other
minerals include coal, iron, lead, manganese, petroleum, silver, tin, and zinc.
The estimated population for 1995 was 28,260,000, giving the country an overall
population density of about 63 persons per sq. km (about 164 per sq.. mi.).
The capital of Morocco is Rabat, with a population (1998 estimate, greater city)
of 1,872,000. Other major urban centers, with their 1998 estimated (greater
city) populations, are Casablanca (5,210,000), the country's largest city and
main seaport; Marrakech (1,817,000) and Fes (1,412,000), both important trade
centers; and Tangier (854,000), a seaport on a bay of the Strait of Gibraltar.
Islam is the established state religion of Morocco. Almost the entire population
is Sunni Muslim. The monarch is the supreme Muslim authority in the country.
About 1 percent of the population is Christian, and less than 0.2 percent is
Jewish.
In 1963 schooling became compulsory in Morocco for children between the ages of
7 and 13, but significantly fewer girls than boys attend classes, and less than
40 percent of secondary-school-age Moroccans actually attend secondary school.
Arabic is the main language of instruction, and French is also used in secondary
schools. In the early 1990s it was estimated that 50 percent of the population
14
<PAGE>
was literate. In the late 1980s more than 2.9 million pupils attended primary or
pre-primary schools, and more than 1.3 million students were enrolled in
secondary and vocational schools.
About 240,000 people were enrolled in schools of higher education in Morocco in
the late 1980s. Higher education of the traditional type is centered in Fes at
Al Qarawiyin University, which was founded in AD 859. Modern higher education is
offered at Mohammed V University (1957), at Rabat; Mohammed Ben Abdellah
University (1974), at Fes; Cadi Ayyad University (1978), at Marrakech; Hassan II
University (1976), at Casablanca; and Mohammed I University (1978), at Oujda.
Rabat also has colleges of fine arts, public administration, agriculture, and
economics, and the School of Native Arts and Crafts (1921) is in Tetouan.
Morocco is primarily an agricultural country, although no more than about 20
percent of the land is cultivated. In the early 1990s gross domestic product
(GDP) was estimated at $28 billion, or about $1,005 per person. The estimated
budget during the same period included revenues of about $7.5 billion and
expenditures of about $7.7 billion.
The principal crops of Morocco are cereals, particularly wheat and barley (3
million metric tons in the early 1990s); potatoes (900,000 metric tons);
tomatoes (900,000metric tons); melons (551,000 metric tons); olives (500,000
metric tons); grapes (294,000 metric tons); pulses (163,000 metric tons); dates
(82,000 metric tons); and sugarcane and sugar beets (3.7 million metric tons).
Many other fruits and vegetables are also grown. Livestock included about 17
million sheep, 5.5 million goats, and 3.3 million head of cattle.
Morocco is a leading producer of phosphate rock; annual output was about 21.4
million metric tons in the early 1990s. Other minerals produced were coal
(526,000 metric tons), iron ore (149,500), lead (95,300 metric tons), manganese
ore (49,400 metric tons), and zinc (40,100 metric tons).
Morocco's manufacturing sector is made up mostly of small-scale enterprises.
Construction materials, chemicals, textiles, footwear, processed food, wine,
refined petroleum, and many other kinds of goods are produced in Morocco.
Artisans produce fabrics, leather goods, ceramics, rugs and carpets, and
woodwork of high quality. Annual production in the early 1990s included about
1.2 million sq. m (about 1.4 million sq. yd) of rugs and carpets, 5.8 million
metric tons of cement, and 1.1 million tons of phosphoric acid.
Morocco's unit of currency is the dirham, consisting of 100 francs (9.651
dirhams equal U.S.$1 in 1998).
Morocco's leading exports are phosphates and phosphoric acid. Other exports
include citrus fruit, wheat, fish, and minerals. Annual exports in the early
1990s earned $3.5 billion. Imports, consisting mainly of industrial equipment,
food products, manufactured goods, and fuels, were valued at $6.5 billion. The
principal trade partners of Morocco are France, Spain, Italy, Germany, the
United States, and the United Arab Emirates. Morocco gains much foreign exchange
from remittances by Moroccans working abroad and from the expenditures of the
large number of tourists who visit the country each year.
Morocco has extensive port facilities, concentrated principally at Casablanca.
Other ports include Agadir, Kenitra, Mohammedia, Safi, and Tangier. In the early
1990s the country had some 1893 km (some 1176 mi.) of railroad track and 59,198
km (36,786 mi.) of roads, some 47 percent of which were hard-surfaced. Morocco
had about 669,637 passenger cars during the same period. Domestic and
international air service is provided by Royal Air Maroc; several major foreign
airlines also serve Morocco.
Radio and television programs are broadcast in several languages in Morocco, and
about 5.4 million radios and 2.9 million television receivers are in use in the
early 1998s. The country has 12 daily
15
<PAGE>
newspapers and numerous periodicals.
Morocco's work force in the mi.d-1980s included some 7.4 million persons.
Approximately 50 percent of the labor force was engaged in agriculture, about 26
percent worked in services, and some 24 percent was employed in manufacturing
and other sectors.
16
<PAGE>
[GRAPHIC OMITTED]
Uganda
OmniVision Uganda Ltd. is currently holding the following documents:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Date of License Title of License or Certificiate Notes Duration
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
June, 4 1997 Certificate of Incorporation
544,490/1619978
- ------------------------------------------------------------------------------------------------------------
May 30, 1997 Joint Venture Agreement Orbitornics/OmniVision 5 years
Africa Joint Venture
- ------------------------------------------------------------------------------------------------------------
Dec 16, 1997 Uganda Communications Commission 2.484 Ghz - 2.716 Ghz Indefinite
Assignment of Frequency
- ------------------------------------------------------------------------------------------------------------
Sept 7, 1999 Uganda Commuincations Commission 2.484 Ghz - 2.716 Ghz Indefinite
Extension of Assignment of Frequency
- ------------------------------------------------------------------------------------------------------------
Oct 19, 1998 Uganda Commuincations Commission
Permi.ssion to Operate TV Broadcasting
Service Through MMDS Techniques
- ------------------------------------------------------------------------------------------------------------
May 7, 1998 Uganda Commuincations Commission 5 years
License to operate a Paging Services
License # TL-98-15
- ------------------------------------------------------------------------------------------------------------
May 19, 1999 Public Notice of OmniVision's licenses MMDS-Broadcasting
to operate by the Uganda Communications & Paging
Commission
- ------------------------------------------------------------------------------------------------------------
</TABLE>
OmniVision Africa Ltd. ("OVA"), through its subsidiary OmniVision Uganda Ltd.,
was granted the necessary licenses by the Ministry of Communication and the
Uganda Investment Authority for undertaking telecommunications activities and to
provide 19 channels of pay TV (employing radio frequencies between 2.484 to
2.716 GHz). OmniVision's signals will pass 200,000+ TV households and it is
projected that the subscriber base will exceed 50,000 by the 5th year of
operation. Additionally, OmniVision was granted approval by the Ministry of
Communications in Uganda to expand its services to include paging services in
Kampala, Jinja and Entebbe. The paging operations are scheduled to be
operational in Kampala by year-end 1999. OmniVision has obtained an agreement to
use the existing transmission tower and site on the top of Kololo Hill in
Kampala for its MMDS and paging transmission headends.
Competition
There are three local free to air TV channels operating. One is run by the local
government called UTV, operating on channel 5 VHF; and the other two, which are
privately owned are Sanyu TV on channel 28
17
<PAGE>
UHF and Channel TV on channel 12 VHF. This last station, however, is not being
received in most of Kampala because of the poor location of its broadcast site.
Multichoice of South Africa offers a M-Net package of three subscription
channels, consisting of channels 7, 11, and 13 VHF, which are being broadcast in
encrypted mode. Their programming is comprised a Movie channel (Movie Magic), a
sport channel (Super Sport), and the M-Net channel showing BBC/Kid TV. Although
this is an adequate choice of programming, given limited alternatives, it is
very expensive. Their fees consist of approximately US$120.00 for the
installation and a monthly fee of about US$45.00. Nevertheless, even with their
expensive pricing, there are approximately 3,500 subscribers to this service.
This indicates the demand for subscription television service.
Uganda
Uganda, a republic in eastern Africa, is bounded on the north by Sudan, on the
east by Kenya, on the south by Tanzania and Rwanda, and on the west by Zaire; it
is a member of the Commonwealth of Nations. Uganda has an area of 241,139 sq. km
(about 93,104 sq. mi.).
Almost all the inhabitants of Uganda are black Africans. About two-thirds of the
people speak the Bantu language; they live in the southern half of the country
and include the Ganda, Soga, Nyoro, Nkole and Toro ethnic groups. Most of the
remaining people speak the Nilotic language; they live in the north and include
the Acholi, Lango, and Karamojong ethnic groups.
The 1995 population estimate was 20,405,000, giving the country an overall
population density of about 85 persons per sq. km (about 219 per sq. mi.).
Uganda's growth rate in the early 1990s was about 3 percent.
Uganda's capital and largest city is Kampala (population, 1997 provisional,
1,373,463), which is located near Lake Victoria. Other cities include Jinja
(90,979), Mbale (53,634), Gulu (42,841), Entebbe (71,638), Soroti (40,602) and
Mbarara (40,383).
The British educational system has been influential in Uganda, and missionary
schools have played an important role in educating the people. In the late
1980's about 2.6 million pupils attended some 7,900 primary schools in Uganda
and some 240,000 students were enrolled in more than 900 secondary, technical
and teacher-training schools. Uganda's leading institutions of higher education
are Makerere University (1922) and Uganda Technical College (1954), both located
in Kampala.
The economy of Uganda has shown a steady recovery since 1987 when the Government
of Uganda put into place an Economic Recovery Program Plan with assistance from
the World Bank and the IMF. As a result of the Government's commitment to
reforms, Uganda's annual Gross Domestic Product (GDP) growth averaged six
percent during fiscal years 1986-1994 and eight percent over the past three
years. GDP growth is expected to average six percent for the next three years.
The growth occurred across the economy, with final 1995/96 figures expected to
show growth of over six percent in agriculture and nearly eighteen percent in
manufacturing. Mining, transport, communications and construction sectors also
grew. The result of this strong economic growth is that the Ugandan economy
almost doubled in size in the past ten years.
There was an increase in industrial production index from 169.2 in December 1992
to 229.2 in December 1993, approximately 19%. Much of this growth resulted from
increased output of drinks and tobacco 25%, food processing 38%, and chemicals,
paint and soap 18%. This development resulted from a number of policy reforms,
including greater control of inflation, liberalization of trade, and improved
investment and exchange regimes. These policies have further improved the
industrial production index to 260.6 in 1994 with an approximate 14% increase
over 1993. The country has significant natural
18
<PAGE>
resources, including ample fertile lands, regular rainfall, and mineral
deposits. The gross national product (GNP) in 1996s was estimated at $6 billion,
or about $300 per capita.
The Government of Uganda is actively liberalizing the economy. In the past few
years, the government has abolished monopolies in coffee, cotton, power
generation and telecommunications. Foreign exchange, based on a
market-determined exchange rate, can be freely purchased. Many public
enterprises have been privatized or are scheduled for privatization. Loss-making
companies are being liquidated, enterprises, which could be managed better by
private companies, are being divested, and other enterprises are being
restructured.
In 1991 the Uganda legislature, the National Resistance Council, enacted a law,
the Investment Code, that provided conditions that are more favorable for
investment in Uganda for both local and foreign investors. Under that same
legislation, the Uganda Investment Authority was established with the major aim
of promoting and facilitating investments in Uganda. The Code came into effect
on 25th January 1991.
During his recent visit to Uganda, President Clinton stressed that the US is
committed to supporting President Musevani in the continued move to increase the
stability and economic growth of Uganda and the surrounding countries.
19
<PAGE>
[GRAPHIC OMITTED]
Tanzania
OmniVision Tanzania Ltd. is currently holding the following documents:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Date of License Title of License or Certiciate Notes Duration
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Oct 29, 1998 Certificate of Incorporation # 35098
- -------------------------------------------------------------------------------------------------------------
Oct 15, 1998 Joint Venture Agreement between Indefinite
CableVision Africa Ltd./OmniVision Africa Ltd.
- -------------------------------------------------------------------------------------------------------------
Sept 10, 1998 Tanzania Broadcasting Commi.ssion 2.532 - 2.635 GHz Indefinite
Allocation of MMDS Frequencies for Pay-TV 5 channels
- -------------------------------------------------------------------------------------------------------------
Aug 13, 1999 Tanzania Broadcasting Commi.ssion 2.509-2.683 Ghz Indefinite
Construction Permi.t for MMDS and Assignment 8 channels
of additional Frequencies for Pay-TV
- -------------------------------------------------------------------------------------------------------------
</TABLE>
OmniVision (Africa) Ltd. ("OMVA"), through its subsidiary OmniVision Tanzania
Ltd., in conjunction with CableVision (Africa) Ltd., the parent Company of Coast
Television Network Ltd. (CTN), has been allocated frequency licenses by the
Ministry of Telecommunications for undertaking telecommunications activities and
to provide, initially, 13 channels (applications for up to 25 channels have been
submitted) of pay TV (employing radio frequencies between 2.5 to 2.58 GHz).
OmniVision's signals will pass 450,000+ TV households and it is projected that
the subscriber base will exceed 76,000 by the 5th year of operation.
OmniVision's local partner has agreed to provide the transmission tower atop
their building and transmission facilities for the MMDS Pay-TV project.
Tanzania
The United Republic of Tanzania is bounded on the north by Kenya and Uganda, on
the east by the Indian Ocean, on the south by Mozambique, Malawi and Zambia, and
on the west by Zaire, Burundi and Rwanda. The country includes the islands of
Zanzibar, Pemba and other offshore islands in the Indian Ocean. The total area
of Tanzania is 945,087 sq. km (364,898 sq. mi.). Dar es Salaam is the capital
and largest city.
The landscape of mainland Tanzania is generally flat and low along the coast,
but a plateau at an average altitude of about 1,200 m (about 4,000 ft)
constitutes the greater part of the country. Isolated mountain groups rise in
the northeast and southwest. The volcanic Kilimanjaro (5,895 m/19,340 ft), the
highest mountain in Africa, is located near the northeastern border. Three of
the great lakes of Africa lie on the borders of the country and partially within
it. Lake Tanganyika is located on the western border, Lake Victoria on the
northwest and Lake Nyasa (Malawi) on the southwest. Lakes Nyasa and Tanganyika
lie in the Great Rift Valley, a tremendous geological fault system extending
from the Middle East to Mozambique.
20
<PAGE>
Zanzibar, separated from the coast of the mainland by a channel some 40 km (some
25 mi.) wide, is about 90 km (about 55 mi.) long and covers an area of 1,658 sq.
km (about 640 sq. mi.). It is the largest coral island off the coast of Africa.
Pemba, some 40 km (some 25 mi.) northwest of Zanzibar, is about 68 km (about 42
mi.) long and has an area of approximately 984 sq. km (380 sq. mi.). Both
Zanzibar and Pemba are mostly low-lying.
Diamonds are by far the most important of the minerals currently being exploited
in Tanzania. Large deposits of coal and iron ore are known to exist in the
southern region. Forestland constitutes one of the most substantial natural
resources of the country. Among the many hardwoods found are mahogany and
camphorwood. The country abounds in wildlife, including antelope, zebra,
elephant, hippopotamus, rhinoceros, giraffe, lion, leopard, cheetah and monkey.
The population of Tanzania (1995 estimate) is about 30,742,000, giving the
country an overall population density of about 33 persons per sq. km (about 84
per sq. mi.). Yet, the population distribution is irregular, with high densities
found near fertile soils around Kilimanjaro and the shores of Lake Nyasa, and
comparatively low density throughout much of the interior of the country. The
government has reversed a policy of resettling people in registered villages
after its effectiveness proved limited.
The largest city and seat of government, Dar es Salaam, has a population (1997)
of 3,260,850. Other major cities are Mwanza (223,013), a port on Lake Victoria,
and Tanga (187,634), an industrial center and seaport. Zanzibar (357,634) is the
largest city on the island. Dodoma (203,833) has been designated as the eventual
capital of Tanzania.
Under the new administration of President Benjamin Mkapa, the Tanzanian
Government has set out to reverse the socialist policies began by former
President Nyerere and to reduce government interference in the economy. As such,
the government has embarked on a policy of selling off government corporations.
This effort has continued over the last twelve months with a number of large
corporations going up for auction. The largest and most notable corporation on
the auctioning block, the Tanzanian Cigarette Company, has been sold to
RJR/Nabisco Corporation.
The economy of Tanzania is primarily agricultural. More than 80% of the
economically active population is engaged in farming and agricultural products
account for about 75% of the annual exports.
The country is the world's largest producer of sisal and cloves. A series of
development plans has stressed growth of the agricultural cash economy and a
reduction in dependence on imports for manufactured goods. GDP (1995): US$ 4.0
bil. Real GDP Growth Rate (1995): 3.9%
The Tanzanian government continues to provide incentives to outside investors
wishing to invest in Tanzania. In 1990, the government created the Investment
Promotion Center (IPC) and charged it with promoting international investment in
Tanzania, assisting potential investors, and providing investment incentives to
individuals and companies wishing to set up shop in Tanzania. In 1995, the
government introduced a uniform tax of 5 percent on imported capital goods,
thereby rationalizing (and encouraging) investment across the board while
reducing the negative effect of excessive special exemptions.
21
<PAGE>
[GRAPHIC OMITTED]
Zimbawbwe
Nostrad telecommunications Inc. current agreements:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Date of License Title of License or Certiciate Notes Duration
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
August 26, 1999 5 year renewable Management Agreement Phluger/Nostrad 5 year renewable
- -------------------------------------------------------------------------------------------------------------
Sept 12, 1999 Procurment agreement for 22 MMDS systems Phluger/Nostrad
and KU Band Uplink for Zimbabwe Broadcasting
Corp. USD43,000,000
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Nostrad entered into an agreement on August 26, 1999 whereby Nostrad was
assigned the rights and obligation to provide Management and Technical Services
as part agreement between Phluger Enterprises LLC and the Zimbabwe Broadcasting
Corporation ("ZBC"). Phluger Enterprises LLC and the Zimbabwe Broadcasting
Corporation entered into a 20 year Management and Technical Services Agreement
on the 16th of December 1998 to provide the management and supply of an MMDS
wireless cable television distribution system in Zimbabwe. This US$ 43 million
dollar MMDS rebroadcasting network will be part of a country wide Pay-TV
distribution network, consisting of a KU band uplink broadcast center in Harare
and 22 MMDS transmission centers in key city's throughout Zimbabwe.
Zimbabwe
Zimbabwe, landlocked republic in southern Africa, bounded on the north by Zambia
and Mozambique, on the east by Mozambique, on the south by South Africa, and on
the southwest and west by Botswana. Formerly the British colony of Southern
Rhodesia, the white government of the territory unilaterally declared itself
independent in 1965 and adopted a republican form of government in 1970. In
1979, as Zimbabwe Rhodesia, the territory installed a transitional coalition
government; the following year a new black majority government was elected and
the country became formally independent as Zimbabwe. The total area of the
country is 390,759 sq. km (150,873 sq. mi.). Harare is its capital and largest
city.
Physiographic Regions
Zimbabwe occupies part of the great plateau of southern Africa. The most
prominent physical feature is a broad ridge that runs southwest to northeast
across the country. It has an elevation of between 1200 and 1500 m (between 4000
and 5000 ft) and is known as the High Veld. On either side of the ridge the land
slopes downward, in the north to the Zambezi River and in the south to the
Limpopo River. These areas have average elevations of about 1070 m (about 3500
ft) and are known as the Middle Veld. Along the eastern border is a mountain
range that rises to a maximum elevation of 2592 m (8504 ft)
22
<PAGE>
at Mount Inyangani. A number of short rivers rise in the High Veld. Of these
rivers the Shangani and Sanyati flow north, and the Save and Lundi flow south.
Lake Kariba, which was formed behind Kariba Dam on the Zambezi River, lies
astride the country's northern boundary.
Mineral Resources
Zimbabwe is rich in mineral resources. Most minerals are found in the Great
Dyke, a geologic formation that stretches roughly north-south across the center
of the country. Minerals found here include chromium, copper, asbestos, nickel,
gold, silver, and iron. Large coal reserves are found in the northwest near
Hwange. Other mineral resources include cobalt, tin, and precious stones. Large
reserves of platinum and kyanite and smaller reserves of zinc and lead have been
located.
Population Characteristics
According to a 1992 census, the population of Zimbabwe was 10,401,767. The
estimate for 1995 is 11,536,000, giving the country an overall population
density of about 30 persons per sq. km (about 76 per sq. mi.). More than
two-thirds of the people live in rural areas. The emigration of whites that
began in the mi.d-1970s continued after independence in 1980.
Principal Cities
Zimbabwe's capital and largest city is Harare (formerly known as Salisbury),
which had a population of 2,884,169 in 1992. Other major cities are Bulawayo
(920,936), an important railroad junction and manufacturing center; Chitungwiza
(574,035), a suburban city near Harare; Mutare (231,808), located in an
agricultural and lumbering region; Gweru (224,735), a mining center; and Kwekwe
(194,982), an industrial and mining center.
Language and Religion
English is the official language of Zimbabwe. The most important Bantu languages
are Shona and Ndebele. About 50 percent of the population practice various
syncretic religions, fusions of traditional African religions and Christianity.
Some 25 percent are Christian, principally Roman Catholic or Anglican Communion,
but also including many Protestant sects. About 24 percent of the people
practice traditional religions, and about 1 percent are Hindu or Muslim.
Education
Primary education in Zimbabwe is free and compulsory between the ages of 7 and
15. In the early 1990s approximately 2.4 million students were enrolled annually
in primary schools and 657,000 in secondary schools. Higher educational
institutions include a number of teachers' colleges and several agricultural and
technical schools. The University of Zimbabwe (1955) at Harare has about 9100
students. About 61,600 students were annually enrolled in higher education in
the early 1990s.
Communications
Zimbabwe has national television broadcasting stations based in Harare, with
secondary studios in Bulawayo. Radio broadcasts are in six African languages and
English. In the early 1990s the country had about 860,000 radios and 270,000
television sets. Three daily newspapers and a wide variety of periodicals are
published.
Agriculture
About one-quarter of Zimbabwe's economically active population is engaged in
agriculture. The principal cash crop is tobacco, which is grown mainly in the
northern and central regions; in the early
23
<PAGE>
1990s annual production totaled about 202,000 metric tons and accounted for more
than one-quarter of export earnings. Other cash crops include cotton, maize,
sugarcane, and coffee. Economic sanctions were responsible for curtailing the
export of tobacco in the 1970s, and since then emphasis has shifted to the
production of maize and other food crops such as cassava, wheat, sorghum, and
millet. Other leading crops include peanuts, potatoes, beans, and oranges.
Livestock raising and dairying are also of major importance. In the early 1990s
the country had about 4.7 million cattle, 2.6 million goats, 580,000 sheep,
290,000 hogs, and 13 million poultry.
Forestry and Fishing.
Zimbabwe's annual roundwood cut in the early 1990s was about 7.9 million cu m
(280 million cu ft). The annual fish catch amounted to 22,100 metric tons.
Mining
Zimbabwe is the world's fifth largest supplier of chromium ore, producing about
560,000 metric tons annually in the early 1990s. The country is also among the
leading nations in the production of gold (583,000 troy ounces), nickel (11,400
metric tons), and asbestos (160,500 metric tons). The number of other minerals
mined in the country is extensive, including copper, silver, emeralds, lithium,
tin, iron ore, cobalt, coal, and diamonds. Other reserves include kyanite,
platinum, zinc, and lead. Although mining employs only about 4 percent of the
workforce, it produces about 30 percent of export revenues.
Manufacturing
Manufacturing grew rapidly in Zimbabwe after World War II (1939-1945).
Zimbabwe's industrial activity benefits from one of the best transportation
systems in Africa, with roads and railroads linking major urban and industrial
centers. Except when curtailed by drought, the country also has sufficient
hydroelectric-generating capacity to meet industrial needs. Much of the
manufacturing activity involves processing food and mineral products. During the
1970s other industry was developed to produce goods no longer available through
import as a result of international sanctions. Leading manufacturing sectors are
food products, metals (primarily ferrochrome, steel, and nickel metal),
chemicals, and textiles.
Energy
Zimbabwe gets most of its electric power, which totaled about 8.2 billion
kilowatt-hours per year in the early 1990s, from the Kariba Dam on the Zambezi
River. A large thermal facility was built in the 1980s near the coalfields of
Hwange in the northwest.
Transportation
Zimbabwe has a road network totaling about 85,780 km (about 53,300 mi.) in
length. The country is also served by 2759 km (1714 mi.) of railroads, with
links to Zambia, Botswana, South Africa, and ports on the Indian Ocean in
Mozambique. Road and rail connections with Zambia and Mozambique were restored
in 1980 following independence. Most of the major towns are served by air
transport.
Currency and Banking
The monetary unit is the Zimbabwe dollar, which is divided into 100 cents (8.38
Zimbabwe dollars equal U.S.$1; 1995). The Reserve Bank of Zimbabwe (1964) is the
central bank and the sole bank of issue.
24
<PAGE>
Foreign Trade
In the early 1990s annual exports totaled about $1.5 billion and imports $1.8
billion. The leading exports were tobacco, ferrochrome, gold, nickel metal,
cotton, steel, and textiles. Chief imports were machinery and transportation
equipment, basic manufactures, chemicals, and fuels. Leading trading partners
for exports are Germany, Great Britain, South Africa, the United States,
Botswana, Japan, Italy, and the Netherlands; chief sources for imports are South
Africa, Great Britain, the United States, Germany, Japan, Botswana, Italy, and
France.
Government
According to the constitution that went into effect in 1980, Zimbabwe is a
sovereign republic and guarantees the fundamental rights and freedoms of the
individual, regardless of race, tribe, or place of origin. Constitutional
amendments approved in 1987 provided for direct election of the president and
abolished reserved seats in parliament for whites. An amendment promulgated in
1990 established a unicameral legislature.
Executive
Executive authority in Zimbabwe is vested in a president, who is elected to a
six-year term by direct popular vote. The president appoints the vice president
and a cabinet.
Legislature
Legislative power in Zimbabwe is vested in the House of Assembly. Of the 150
members of the assembly, 120 members are elected by direct popular vote, 10 are
elected by traditional chiefs (5 from among the Shona and 5 from the Ndebele),
12 are appointed by the country's president, and 8 are provincial governors. The
parliament sits for a maximum of six years.
Judiciary
The Supreme Court, which includes a chief justice and four other justices, has
original jurisdiction over certain constitutional questions and appellate
jurisdiction on all others. The High Court, consisting of 13 judges, has
original jurisdiction in major civil and criminal cases. In addition, there are
regional courts, magistrates' courts, and customary law and local courts.
Local Government
For the purposes of local administration Zimbabwe is divided into eight
provinces, each administered by a commissioner appointed by the central
government.
Political Parties
The two leading political parties were, until December 1987, the ruling Zimbabwe
African National Union-Patriotic Front (ZANU-PF) and the main opposition group,
the Zimbabwe African People's Union (ZAPU). The two parties united under the
name ZANU-PF in 1987 and 1988. Starting in 1989 many political parties were
established, including the Zimbabwe Unity Movement (ZUM), the Forum Party, the
Committee for a Democratic Society, and the Democratic Party.
Health and Welfare
Upon independence in 1980, Zimbabwe had limited government and private social
security systems. The post-independence government expanded the social security
system, although austerity measures adopted in the early 1990s reduced public
expenditure on health care. The estimated average life expectancy in the
mi.d-1990s was 44 years for women and 40 years for men; the infant mortality
rate was 74 per 1000 live births. Acquired Immune Deficiency Syndrome (AIDS) has
reached epidemic proportions in Zimbabwe. In 1995 an estimated 800,000 people
were infected with the virus that causes AIDS, and 20 to 25 percent of the
sexually active population were believed to carry the virus. AIDS is a leading
cause of death for children under five years of age in Zimbabwe.
25
<PAGE>
Defense
In the early 1990s Zimbabwe had armed forces totaling about 48,200, with 47,000
in the army and 1200 in the air force.
Background and Economic Climate
As with a the bulk of developing economies suffering from large fiscal deficits
resultant of excessive foreign borrowing, the direction of economic policy in
Zimbabwe shifted in the late 1980s under the auspices of World Bank and
International Monetary Fund structural adjustments and stabilization programs.
In 1989, the government introduced an Economic Structural Adjustment Program
which resulted in the following measures:
removal of wage and price controls, as well of those on foreign exchange
devaluation of the currency to increaseexports and foreign exchange earnings
liberalization of trade with the goal of replacing qualitative controls with
tariffs by 1995
reduced government spending and subsidies
Although improvements have been made in several areas, Government deficits have
continued to increase contributing to high inflation. From a level of 15.5
percent in 1990, inflation soared to just over 42 percent in 1992 before falling
to roughly 22 percent by 1994. Zimbabwe remains a mixed economy with private
business existing side by side with state owned companies. Currently, public
services, including postal service, railways, airlines and telecommunications
are state owned. Although only approximately 65 companies are listed on the
Harare stock exchange, the number of private firms continues to increase. The
economy of Zimbabwe is becoming increasingly diversified. In 1993, industry
represented over 36 percent of GDP. A great deal of domestic industry is,
however, based upon agriculture and mining, thus these sectors remain vital to
the country's economic well being. Timely and abundant rainfall and favorable
mineral export markets bode well for the Zimbabwe economy in 1996.
Telecom Sector Profile
The Zimbabwe Posts and Telecommunications Corporation (PTC), a wholly
government-owned company, is the only provider and operator of
telecommunications and postal services in the country. The PTC also provides
agency services for the Post Office Savings Bank. Currently, plans are under
development to transform the PTC into a holding company with four subsidiaries.
The subsidiaries will be responsible for postal services, telecommunications
services, equipment manufacturing, cellular mobile telephone services
respectively. This plan was put forth as part two of a three phase World Bank
project. However, because the Government of Zimbabwe did not commit to the
recommendations soon enough, the World Bank cancelled funding for phase three,
the implementations of recommendations. The PTC is controlled by a board of
directors comprised of public and private sector representatives, as well as top
level personnel from the Ministry of Information, Posts and Telecommunications.
Currently, the eight person board is chaired by Dr. M.M. Mhloyi. The PTC
operates virtually all telecommunications services in the country, with control
over all local, domestic long distance and international basic voice services.
Limited competition is permitted in the area of private networks. Although not
licensed or provided by the PTC, Internet connection is available through local
universities. To this point the national operator has not actively pursued
Internet connectivity. Partial competition is permitted in the provision of
certain customer premise equipment, including: telephones, PBXs, fax machines
and modems. Five firms largely dominate the suppliers market in Zimbabwe:
Philips, Ericom Services (formerly Ericcson), GEC Plessey, GL Communications and
WRS Telecommunications.
Network
In 1994, the PTC network encompassed some 135,000 main lines in operation. Rapid
population growth,
26
<PAGE>
on the order of 3.5 percent annually, has thwarted efforts to increase
teledensity. In 1994, only 1.2 main lines were in operation per every 100
inhabitants. The waiting list for telephone service is approximately 107,000.
Unexpressed demand, due to the futility of getting on such a waiting list,
undoubtedly pushes this figure much higher. At the current teledensity growth
rate, it is estimated that some individuals in rural areas may have to wait ten
years for telephone service. In the late 1980s, the PTC launched a network
expansion and digitalization program. Although well behind the original
schedule, progress is being exhibited. The digitalization program is in full
swing in the Midlands province. In Harare and Mutare, fiber optic cable has been
laid and digitalization is almost complete. In addition, some 100,000 digital
lines are planned to be commissioned in the Mashonaland and Manicaland provinces
by 1997. Given past performance of the PTC, however, it is unlikely this
deadline will be met. Zimbabwe's international connections, both regional and
global, are almost entirely via satellite. This is not surprising given that the
country is landlocked. In Mazowe, two Standard A earth stations are utilized to
access INTELSAT spacecraft.
Regulatory and Competitive Developments
Currently, there exists no independent regulatory body in Zimbabwe. Tariff,
licensing and other such decisions all are made by the PTC. The Ministry of
Information, Posts and Telecommunications is kept informed but plays no role in
the decision-making process.
Recently, recommendations were made under the auspices of a World Bank-funded
project to create an independent regulatory body. Building upon the ministerial
framework, the new body would regulate both the telecom and broadcasting
sectors. As with calls for a new holding company, the Government is taking the
recommendation under consideration. As a result of recent developments (see
below), new regulations have been proposed in regard to the cellular sub-sector.
The government has called for the establishment of a "Technical Committee" to
consider and make recommendations for the issuance of cellular licenses. This
committee is to be integrated into the regulatory body if, and when, one is
established. Over the past year, pressure has been mounting within Zimbabwe for
the liberalization of the telecom sector and even the privatization of the PTC.
Retrofit Ltd., a private Zimbabwe-owned and operated company, seized upon this
groundswell and challenged in court the PTC's monopoly on the basis that the
poor and limited services offered infringed upon the peoples freedom of
expression. Following a landmark Supreme Court ruling in favor of Retrofit,
EcoNet, a Retrofit subsidiary, is moving forward with plans to provide GSM-based
cellular services nationwide. Initially, the Retrofit subsidiary plans to offer
services in and around the Harare area. In response to these developments, the
PTC is currently planning to launch its own competing cellular network.
27
<PAGE>
[GRAPHIC OMITTED]
Ghana
OmniVision Ghana Ltd. is currently holding the following documents:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Date of License Title of License or Certificiate Notes Duration
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Apr 23, 1998 Certificate of Incorporation # 79,443
- -------------------------------------------------------------------------------------------------------------
Joint Venture Agreement ESN/OmniVision 30 years
Africa Ltd.
- -------------------------------------------------------------------------------------------------------------
Mar 12, 1998 Confirmation by the Ghana Frequency
Registration and Control Board of provisional
certification of authorisation for frequencies
- -------------------------------------------------------------------------------------------------------------
Nov 21, 1995 Provisional certification of 2.5Ghz-2.588Ghz
authorisation Ghana Frequency 6 channels
Registration and Control Board
- -------------------------------------------------------------------------------------------------------------
Aug 22, 1997 Confirmation letter from authorisation Request for
Ghana Frequency Registration and Control Board additional frequency
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Ghana, a country in western Africa, is bounded on the north and northwest by
Burkina Faso, on the east by Togo, on the south by the Atlantic Ocean and on the
west by Cote d'Ivoire. Formerly a British colony known as the Gold Coast, Ghana
became, in 1957, the first black nation in sub-Saharan Africa to achieve
independence. The country is named after the ancient empire of Ghana, from which
the ancestors of the inhabitants of the present country are thought to have
emigrated. The total area is 238,537 sq. km (92,099 sq. mi.).
Accra is Ghana's capital and largest city.
Ghana is a lowland country, except for a range of hills on the eastern border.
The sandy coastline is backed by a coastal plain that is crossed by several
rivers and streams, generally navigable only by canoe. In the west, the terrain
is broken by heavily forested hills and many streams and rivers. To the north
lies an undulating savanna country that is drained by the Black and White Volta
rivers, which join to form the Volta. The Volta then flows south to the sea
through a narrow gap in the hills. Lake Volta, in the east, is one of the
largest artificial lakes in the world; it was formed by the Akosombo Dam on the
Volta River. No natural harbors exist in the country. Ghana's highest point, in
the eastern hills, is about 900 m (about 2950 ft) above sea level.
The key mineral resources of Ghana are gold, diamonds, manganese ore, and
bauxite. Forest resources are significant and the offshore waters are rich in
fish. Minor resources include petroleum and natural gas.
The population of Ghana is divided into more than 50 ethnic groups. The majority
of the people are agricultural workers who live on farms or in small villages.
28
<PAGE>
The population of Ghana at the 1997 census was 18,296,081, giving the country an
overall population density of about 73 persons per sq. km (about 190 per sq.
mi.). The most densely populated parts of the country are the coastal areas, the
Ashanti region in the south central part of the country, and the two principal
cities, Accra and Kumasi. About 70 percent of the total population live in the
southern half of the country. The most numerous peoples are the coastal Fanti
and the Ashanti, who live in central Ghana, both of whom belong to the Akan
family. The Nzima and the Ahanta live in the southwest. The Accra plains are
inhabited by the Ga. Most of the inhabitants in the northern region belong to
the Moshi-Dagomba group of Volta peoples or to the Gonja group.
Accra, the capital, has a population (1997 estimate) of about 3,153,500. Kumasi
(599,300) is the capital of the Ashanti region. Sekondi (116,500) has an
artificial harbor; it is the first modern port built in Ghana. Other major
cities include Tema (180,600), Tamale (1988 estimate, 151,100), and Cape Coast
(1984, 57,224).
A major thrust of government policy is the privatization of poorly performing
state-owned enterprises, most of which create a substantial drain on official
coffers. Government has asserted that the private sector will be the engine for
economic growth and development. The government has liberalized the economy and,
in so doing, increased the scope by which the private sector, generally, can
operate profitably.
The 1994 enactment of a new investment code has improved significantly the legal
environment for foreign investors in Ghana. The government also offers various
tax incentives in an effort to attract foreign capital.
Ghana has made steady progress in liberalizing its economy since 1983. Overall
growth continued at a rate of approximately 5% in 1995 and 1996, due largely to
increased gold, timber, and cocoa production - major sources of foreign
exchange. The economy, however, continues to revolve around subsistence
agriculture, which accounts for almost half of GDP and employs 55% of the work
force, mainly small landholders. In 1995-96, Ghana has made mixed progress under
a three-year structural adjustment program in cooperation with the IMF. On the
minus side, public sector wage increased, regional peacekeeping commitments and
the containment of internal unrest in the underdeveloped north have led to
continued inflationary deficit financing, depreciation of the cedi, and rising
public discontent with Ghana's austerity program.
GDP: purchasing power parity - $27 billion (1996 est.), GDP - real growth rate:
5% (1996 est.), GDP - per capita: purchasing power parity - $1,530 (1996 est.),
GDP - composition by sector: agriculture: 46% industry: 16% services: 38% (1995
est.) Inflation rate - consumer price index: 36% (1996 est.) Labor force: total
3.7 million, by occupation: agriculture and fishing 54.7%, industry 18.7%, sales
and clerical 15.2%, professional 3.7%, services, transportation and
communications 7.7% Unemployment rate: 10% (1993 est.)
The U.S. and Ghana enjoy a relationship best described as constructive, improved
recently by the visit of President Clinton. There are no major obstacles
disruptive of the bilateral relationship, although the disproportion between the
size and wealth of the two countries contributes frequently to divergent
perspectives regarding global and regional political, military, economic and
trade issues. In the past, Ghana has exercised a position of leadership within
the non-aligned movement and its voice in international forum is most often
heard in support of debt-relief and other issues that tend to have a North-South
orientation. Various African leaders have spent time in their formative years in
Ghana and this reinforces Ghanaian support for pan-Africanism and a populist
brand of African democracy.
29
<PAGE>
[GRAPHIC OMITTED]
Asia Learning World
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Date Description Notes Duration
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
July 10, 1998 Heads of Agreement to establish Asia Between Nostrad and
Learning World Pte. Ltd. Entertainment World Ltd.
- -------------------------------------------------------------------------------------------------------------
Certificate of Incorpration of Asia Government of Singapore
Learning World Pte. Ltd.
- -------------------------------------------------------------------------------------------------------------
Oct 20, 1998 Channel Supply Agreement Entertainment World Ltd. 5 years
and Asia Learning
World Pte. Ltd.
- -------------------------------------------------------------------------------------------------------------
Oct 20, 1998 Sales and Marketing Agreement Nostrad and Asia Learning 5 years
World Pte. Ltd.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Asia Learning Network Pte Ltd. ("LAN") was founded by Entertainment World Ltd.
and Nostrad Telecommunications Inc. to provide two educational television
channels to a projected 18 million Pay-TV subscribers in the Asia Region. These
two new channels will be called the HORIZON Learning Channel and the GATEWAY
Educational Channel, and will be distributed utilizing digital satellite
delivery systems in conjunction with local cable TV operators and DTH (direct to
home satellite distribution).
LAN plans to develop an educational support network of up to 500 franchised
learning centers that will permit students to undertake degree courses
accredited by Universities in Australia, North America and the UK. It is
intended to expand the number of channels to 5 over the next three years.
On July 10, 1998, Nostrad Telecommunications Inc. ("NTCI") executed an Agreement
with Entertainment World Ltd. ("EWL") an ASTL listed company, for the
establishment of Asia Learning World Pte Ltd ("LAN") which will telecast two new
learning channels throughout the Asia-Pacific Region via digital satellite and
cable transmission systems. LAN will fill a need in the Asia market for both
Pay-TV with substance and students who seek an international quality degree and
other training opportunities.
On October 20, 1998 Asia Learning World Pte. Ltd. executed exclusive agreements,
with Entertainment World Ltd. for developing, sourcing, production, acquisition,
and licensing of Programs for ALW. Concurrently, ALW entered into a
comprehensive Sales and Marketing Management agreement with Nostrad
Telecommunications Inc. to provide development and management of marketing,
promotion and distribution of ALW's Channels, network services and related
support for franchising of learning centers by ALW.
The Market
Information based Pay-TV channels such as Discovery (with over 5 million
subscribers) and National
30
<PAGE>
Geographic have proved to be more popular in the Asia region than in North
America, ranking alongside premier movie channels. This thirst for knowledge,
coupled with the intense demand for educational qualifications, represents a
unique business opportunity that cannot presently be filled in the region. The
channels provided by LAN will offer high quality educational programs which are
both entertaining and provide real learning opportunities for the whole family.
LAN will fill a need in the Asia marketplace. Particularly since the dramatic
falls in Asia markets and currencies, are limiting students from studying
abroad. LAN will offer both Pay TV and substance and cater to students who seek
an international-quality degree and other training opportunities.
Education in Asia is a cultural priority. Current demand for higher education
has outpaced the ability of governments to supply access. The current economic
crisis has forced thousands of students to leave foreign universities to return
home and seek placement in local universities. It is estimated that in 1997,
more than 600,000 Asian students (OECD Indicators, 1997) spent in excess of $24b
on overseas education. ALW is targeting to achieve only a 1.2% share of these
students by its fifth year of operation.
In 1998, Pay TV has generated some 102m subscribers, 20% of the TV Households in
Asia, while projections are that by 2002, the number of Pay TV subscribers will
rise to 142.4 million (Baskerville, March, 1998).
31
<PAGE>
D. Risk Factors
1. The Company has had a limited operating history.
The Company has only recently commenced operations and has limited assets.
It has a limited record of commercial production, earnings or sales. The
Company, therefore, must be considered promotional and in its early formative
and development stage.
2. The Company's success is based upon the commercial acceptance of its
products and services.
There is no assurance that the Company's products and services will achieve
commercial acceptance or, if they do, that a functionally equivalent product or
service will not be developed by competitors with access to significantly
greater resources to devote to research, development and marketing. There is
nothing at this time upon which to base an assumption that the Company's
business plan will prove successful, and there is no assurance that the Company
will be able to operate profitably.
3. The Company may need additional funding in order to fully implement
its business plan.
The Company has limited financial resources and does not have any
significant cash flow at this time; accordingly, to the extent that additional
funds are required, the Company will seek to obtain such funds through equity
and/or debt offering. There is no assurance that if additional funding were
needed, it would be available to the Company on terms and conditions acceptable
to it. Failure to obtain such additional financing could result in delay or
indefinite postponement of the process to the market place or the ability to
supply sufficient product to the market place on a continual and profitable
basis.
4. The Company may face competition from larger companies.
The communications industry is intensely competitive and the Company
competes and will compete with companies having greater financial resources and
technical facilities. Therefore to the extent that the Company is able to
establish sales, revenues and property there is no assurance that it would be
able to sustain such sales, revenues and profits. Moreover, although not a major
factor today, if and when the Company begins achieving its objectives, larger,
better financed companies in peripheral businesses may be attracted to the
Company's markets. They may be prepared to spend large sums quickly to develop
competitive products and to mount major marketing campaigns. The Company is
aware of this possibility and hopes to establish itself as an industry leader
early on. Time is of the essence and the Company's financing and marketing
programs are essential to minimize this risk.
5. The Company's success in the countries in which it operates is
dependent on access to adequate labor and key personnel.
The Company will depend upon recruiting and maintaining qualified personnel
to staff its operations. The Company believes that such personnel are currently
available at reasonable salaries and wages. There can be no assurance, however,
that such personnel will always be available in the future. The continuing
development of the process has been almost entirely dependent on the skills of
management and certain key employees of the Company with which the Company has
no employment agreements. Loss of the services of any part of this management
team and key employees could have a material adverse effect upon the Company.
Please refer to "Item 5. Directors, Executive Officers, Promoters and Control
Persons."
32
<PAGE>
6. In the future there may be conflicts of interest between the Company
and other entities affiliated with its officers and directors.
From time to time certain of the directors and executive officers of the
Company may serve as directors or executive officers of other companies and, to
the extent that such other companies participate in the industries in which the
Company may participate, the directors of the Company may have a conflict of
interest. In addition, the Company's dependence on directors and officers who
devote time to other business interests may create conflicts of interest, i.e.
that the fiduciary obligations of an individual to the other company conflict
with the individual fiduciary obligations of the Company and visa versa.
Directors and officers must exercise their judgment to resolve all conflicts of
interest in a manner consistent with their fiduciary duties to the Company. In
the event that such a conflict of interest arises at a meeting of the directors
of the Company, a director who has such a conflict will abstain from voting for
or against the approval of such a participation or such terms. In appropriate
cases, the Company will establish a special committee of independent directors
to review a matter in which several directors, or management, may have a
conflict. The Company is not aware of the existence of any conflict of interest
as described herein.
7. The Company has not paid any dividends nor does it expect to pay any
dividends in the foreseeable future.
Since its inception, the Company has had no earnings and has not paid any
dividends on its Common Stock. Payment of future dividends, if any, will be
determined by the Company's Board of Directors based on conditions then
existing, including the Company's financial condition, capital requirements,
cash flow, profitability, business outlook and other factors. Additionally, the
Company intends for the foreseeable future to follow a policy of retaining all
or substantially all of its earnings, if any, to finance the development and
expansion of its business.
8. The Company is subject to currency risks.
The Company is exposed to currency risk as some of its accounts payable are
denominated in currencies other than the US dollar. The Company earns revenue
and incurs operating expenses predominantly in US dollars. Unfavorable changes
in the applicable exchange rates may result in a decrease or increase in foreign
exchange gain or loss.
The Company does not use derivatives to reduce its exposure to foreign
currency risk.
9. The Company may be subject to credit risks.
Credit risk arises from the possibility that the entities to which the
Company sells products or services may experience financial difficulty and be
unable to fulfill their contractual obligation. This risk is mitigated by
proactive credit management policies that include regular monitoring of the
debtor's payment history and performance, geographic location of the debtor, and
obtaining collateral security where appropriate.
10. The Company may be subject to so-called "Year 2000" risks.
Currently the Company does not rely on any computer programs that will
materially impact the operations of the Company in the event of a Year 2000
disruption. However, like any other Company, advances and changes in available
technology can significantly impact its business and operation. Consequently,
although the Company has not identified any specific year 2000 issue, the "Year
2000" problem creates risk for the Company from unforeseen problems in its own
computer systems and from
33
<PAGE>
third parties, including but not limited to financial institutions, with whom it
transacts business. Such failures of the Company and/or third parties computer
systems could have a material impact on the Company's ability to conduct its
business. Please refer to "Item 2. Management's Discussion and Analysis or Plan
of Operation."
11. The sale or transfer of the shares by shareholders may be subject to
the so-called "Penny Stock Rules."
Under Rule 15g-9 of the Exchange Act, a broker or dealer may not sell a
"penny stock" (as defined in Rule 3a51-1) to or effect the purchase of a penny
stock by any person unless:
(a) such sale or purchase is exempt from Rule 15g-9;
(b) prior to the transaction the broker or dealer has (1) approved the
person's account for transaction in penny stocks in accordance with
Rule 15g-9, and (2) received from the person a written agreement to
the transaction setting forth the identity and quantity of the penny
stock to be purchased; and
(c) the purchaser has been provided an appropriate disclosure statement as
to penny stock investment.
The Commission adopted regulations that generally define a penny stock to
be any equity security other than a security excluded from such definition by
Rule 3a51-1. Such exemptions include, but are not limited to (1) an equity
security issued by an issuer that has (i) net tangible assets of at least
US$2,000,000, if such issuer has been in continuous operations for at least
three years, (ii) net tangible assets of at least US$5,000,000, if such issuer
has been in continuous operation for less than three years, or (iii) average
revenue of at least US$6,000,000 for the preceding three years; (2) except for
purposes of Section 7(b) of the Exchange Act and Rule 419, any security that has
a price of US$5.00 or more; and (3) a security that is authorized or approved
for authorization upon notice of issuance for quotation on the NASDAQ Stock
Market, Inc.'s Automated Quotation System. It is likely that shares of Common
Stock, assuming a market were to develop therefore, will be subject to the
regulations on penny stocks; consequently, the market liquidity for the Common
Stock may be adversely affected by such regulations limiting the ability of
broker/dealers to sell the Company's Common Stock and the ability of
shareholders to sell their securities in the secondary market.
Moreover, the Company's shares may only be sold or transferred by its
shareholders in those jurisdictions in which an exemption for such "secondary
trading" exists or in which the shares may have been registered.
12. Since there is a limited market for the Company's Common Stock,
shareholders may find it difficult to sell their shares.
Although the Common Stock is quoted for trading on the "pink sheets," it is
not quoted on any exchange. Therefore, the market for and the liquidity of the
Common Stock is very limited.
In the absence of a security being quoted on NASDAQ, or the Company having
$2,000.000 in net tangible assets, trading in the Common Stock would be covered
by a Securities and Exchange Commission (the `Commission") rule under which
broker/dealers who recommend such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000jointly with their spouse) must make a
special written agreement to a transaction prior to sale. Securities are also
exempt from the rule if the market price is at least $5.00 per share.
34
<PAGE>
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure related to the market for penny stock and for trades in
any stock defined as a penny stock. The Commission has recently adopted
regulations under such act which defines penny stock to be any non-NASDAQ equity
security that has a market price of less than $5 per share (as defined). Unless
exempt, for any transaction in a penny stock, the new rules require the
delivery, prior to any transaction in a penny stock, of a disclosure schedule
prepared by the Commission explaining important concepts involving the penny
stock market, the nature of such market, terms used in such market, the
broker/dealer/s disciplinary history and the customer's rights and remedies in
case of fraud or abuse in the sale.
Disclosure also has to be made about commissions payable to both the
broker/dealer and the registered representative and current quotations of
securities. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Non-NASDAQ stock would not be covered by the
definitions of penny stock for (i) issuers who have $2,000,000 in tangible
assets ($5,000,000 if the issuer has not been in continuous operations for three
years); (ii) transactions in which the customer is an institutional accredited
investor; and (iii) transactions that are not recommended by the broker/dealer.
13. Shareholders may be subject to dilution through the possible future
issuance of common stock.
The Company is authorized to issue up to 25,000,000 shares of Common Stock.
Presently there are 11,100,000 shares of Common Stock outstanding. Additional
issuances of Common Stock may be required foe raising capital, acquiring stock
or assets of other companies, compensating employees or undertaking other
activities without stockholder approval. These additional issuances of Common
Stock will increase the number of outstanding shares and further dilute
stockholders' interest. Since the Company's Common Stock is currently subject to
the existing rules on penny stocks, the market liquidity for the Company's
securities can be severely adversely affected.
14. The Company is subject to the risks generally associated with
operations in foreign and developing countries.
The Company is subject to risks associated with operating in foreign and
developing countries. These risks may take the form of, but not necessarily
limited to, nationalization, expropriation, or regulated out of existence (this
can be done in whole or in part), riots, and war change in tax rates, or a
freeze on capital repatriation.
The target countries have in place internationally recognized laws to
protect and encourage foreign investment. The low rates of political risk
insurance for the Company's target markets, reflect the low risk of these
occurrences, happening in the short term. The company has contracted for
political risk insurance through Lloyd's of London. Premiums are in the range of
1.35% of the insured value.
15. The Company is subject to general business risks associated with
providing its products and services.
Such risks include:
Pirating of Signals. All MMDS systems in the target markets will have in place
the most up to date encryption technology to reduce pirating of signals.
35
<PAGE>
Bill Collections. In order to minimize collection risk, the Company is
implementing computerized tracking, which will monitor customer payment records
and suspend or cancel service for non-payment. This can be done from the head
office without the need to visit the subscriber premises. As the Company will be
selling instead of leasing out its decoders, loss from non-payment is also
reduced.
Service interruptions due to poor installation. The Company will institute a
quality assurance program in conjunction with on-going training and customer
service monitoring to ensure quality service at a reasonable cost. The
installation of subscriber equipment is a relatively simple task, which requires
basic mechanical skills.
However, no assurance can be given that the Company's efforts to minimize or
eliminate these risks will prove successful.
16. The Company may be subject to certain risks arising from technical
problems associated with providing its products and services.
Such risks include:
Quality of hardware products can cause service problems. All the equipment
manufacturers providing systems for the projects will have installed MMDS
systems throughout the world and have a long service record.
Equipment maintenance problems due to non-availability of parts and timely
delivery. The Company will have back up equipment available on site. In
addition, the main transmitter has redundancy built in to reduce service
interruption.
Satellite Delivery problems. As programming originates, and is downlinked, from
numerous satellites in the region, program providers would be able to switch to
alternative delivery during periods of down time as there is available
transponder space for such switching.
Analog to Digital Conversion. The current engineering design of the systems to
be implemented have the ability to be upgraded to digital in the future. The
customer equipment will also have to be upgraded, however until the price
becomes more affordable the digital conversion will not take place.
However, no assurance can be given that the Company's efforts to minimize or
eliminate these risks will prove to be successful.
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations
NTC is a start up telecommunications company. Expenditures to-date have
been primarily focused on purchasing capital equipment, and for general overhead
in the Company's three international offices. Its only source of operational
revenues at this start-up phase is from its Pay-TV operations in Morocco, and
the paging operations in Mongolia. Consequently, the Company lost $970,000 or
$0.13 per share during the year ended December 31, 1998 ("YE 98") as compared
with experiencing a loss of $327,000 or $0.11 per share during the nine months
ended December 31, 1997 ("YE 97"). The Company's primary focus for the last two
years has been and continues to be MMDS Subscription TV services and is
currently licensed in Kampala, Uganda; and in Dar es Salaam, Tanzania.The
Company is authorized to distribute DTH subscriber Pay-TV in Morocco. The
Company will implement these
36
<PAGE>
licenses as soon as possible and is also endeavoring to obtain MMDS licenses in
areas with great potential for Subscription TV.
Year ended December 31, 1998 compared to the year ended December 31, 1997
During YE 98 the Company commenced implementation of its Pay-TV services in
Morroco, under an exclusive distribution agreement with Showtime (a Viacom
company) and Paging and MMDS operations in Kampala, Uganda. To date, the Company
has completed its construction of its head-end site for the Pay-TV and Paging
systems. The Paging transmitters, terminal and pager inventory are on site and
the Company plans to launch this operation in December. The Company has also
recently completed engineering and systems design for Tanzania and Ghanaand
plans to launch Pay TV services there in 1st Q 2000. Due to the slowdown of the
Asian markets and unresolved programming copyright issues, facilitation of the
Subscription TV roll out in Mongolia has been delayed.
The Company has secured an agreement to distribute "Showtime" programming
package, a Direct to Home (DTH) service. Showtime is a Viacom Company
headquartered in Dubai, UAE and uplinks 12 specialty Pay-TV channels and 25 Free
to Air channels.
During the 3rd quarter, the Company completed a private placement of
1,500,000 shares raising a total of $955,255 net of $19,745 in finder's fees.
Also during the YE 98, the Company closed on its acquisition of the balance
(20%) of OmniVision (U) Ltd. by issuing 500,000 shares; as well as closing on
its 80% owned OmniVision Ghana Ltd. by issuing to Nostrad Singapore 1,200,000
shares. The Company also entered into a Stock Option Plan where it is committed
to issue up to 1,500,000 shares to officers, directors, employees, and
consultants upon exercise of options. The Company has also issued an offering
memorandum to raise $5,000,000 by issuing 50 units of $100,000 each, each unit
consisting of 100,000 shares and 50,000 share purchase warrants exercisable at
$1.00 in year one and $1.50 in year two.
During YE 98, General and administration expenses, net of depreciation and
foreign exchange were $792,000 as compared to $128,000 during the YE 97. The
cause of this increase is due to the opening of the Kampala head office and
increased administration activities.
As at December 31, 1998, the Company's working capital was a $777,000
deficiency, as compared to working capital of $11,000 as at December 31, 1997.
The Company owed $582,000 to certain shareholders. This amount is included in
the working capital deficiency. The Company has no other long-term liabilities.
Quarter ended June 30, 1999 compared to the quarter ended June 30, 1998
During YTD-99 the Company commenced implementation of its Paging and MMDS
operations in Kampala, Uganda. To date, the Company has completed its
construction of its head-end site for the Paging and MMDS systems. The Paging
transmitters, terminal and pager inventory are on site and the Company plans to
launch this operation in October. The Company has also recently completed
engineering and systems design for Tanzania and Ghana and plans to launch Pay TV
services there in 4rd Quarter 1999. Due to the slowdown of the Asian markets and
unresolved programming copyright issues, facilitation of the Subscription TV
roll out in Mongolia has been indefinitely delayed.
During YTD-99, General and administration expenses, net of depreciation and
foreign exchange were $264,000 as compared to $128,000 during the YE 97. The
cause of this increase is due to the opening of the Kampala and Casablanca
offices and increased administration activities.
37
<PAGE>
Liquidity and Capital Resources
As at June 30, 1999, the Company's working capital was a $640,000
deficiency, as compared to working capital of $241,000 as at June 30, 1998. The
Company currently owes $695,000 to its majority shareholders. This amount is
included in the working capital deficiency. The Company has no other long-term
liabilities. Additional working capital is intended to be raised by way private
placement of equity securities and further borrowings from its majority
shareholders.
Plan of Operation
Projects
The Company's operations currently consist of seven separate projects.
o The Morocco DTH project. The Company has commenced marketing ShowTime's DTH
services with the hard launch scheduled for the end of October 1999. The
initial inventory of decoder boxes and receiver dishes have arrived in
country. The initial target is to have 20,000 plus subscribers by the end
of 1999. The Company is obligated to commence marketing the DTH service
immediately. In order to accomplish this the Company will require $75,000.
o The Uganda Pay TV project. It is anticipated that the Company will be able
to roll out the Pay TV project in 3rdQ of 1999. In order to accomplish this
the Company will require an additional $800,000 to cover inventory,
marketing, additional equipment and other startup costs. Subject to
receiving financing, the Company anticipates that the equipment will arrive
in Kampala by the end of October 1999. The Company has completed the
construction of the head-end and entered into a long term lease of tower
space on Kololo Hill.
o The Uganda Pager System. The Company has acquired licenses to provide pager
service throughout Kampala. It is planned to launch the Paging service in
October 1999. The Paging and Pay TV project will be administered and
managed from the same location.
o The Mongolian Pager System. The Company has commenced marketing of its
pager system in Mongolia. To date the Company has approximately 570 pagers
under subscription agreements. The Company has the capacity of 8,000
subscribers with its current equipment. The break even level is
approximately 500 pagers.
o The Mongolian PAY-TV project. The Company has decided to postpone its
launch of Pay TV in Mongolia. The reason for the delay is due to the lack
of regulatory control on hard cable systems, resulting in intense
competition and non-compliance by competitors with programming copyrights,
i.e. they are relaying unauthorized (pirated) signals.
o The Tanzania Pay TV project. The Company has decided to commence roll out
of Pay TV in Dar es Salaam at approximately the same time as Uganda. In
order to accomplish this the Company will require an additional $1,000,000.
The Company plans to co-locate its transmission facilities with its local
partner, Central Television Network (CTN), which operates one of the local
free to air Television stations.
o The Ghana Pay TV project. Subject to the Company getting additional
frequencies in Ghana, the Company plans to launch the Pay TV in Accra
approximately six months after the Uganda and Tanzania launches. In order
to accomplish this the Company will require approximately $1,000,000.
38
<PAGE>
Initial site selection, engineering and systems integration are currently
being performed in Accra and Vancouver.
Funding
To date, the Company has obtained licenses to provide PAY-TV in areas where
over 5,400,000 TV households will be passed by the Company's signals. The
Company must now commence a marketing program and sell its receivers and
subscription to the TV households. If all or parts of the target markets are to
be rolled out, the Company must raise approximately $8.0 million.
Statements in this registration statement that may not be historical facts
and that may be forward-looking statements are subject to a variety of risks and
uncertainties. There are a number of important factors that could cause actual
results to differ materially from those expressed in any forward-looking
statements made by the Company. These factors include, but are not limited to:
(i) the nature of the Pay TV markets, specifically obtaining suitable
programming at a reasonable cost, (ii) the ability of the Company to raise
capital for projects within the context of overall telecommunication capital
market dynamics, (iii) the establishment of a sustainable subscriber base to the
point of economic viability, (iv) the viability of Pay TV projects based on
imperfect demographic analysis, (v) regulatory changes impacting on the nature,
scope and content of projects and operations, throughout the Company's areas of
operations, (vi) other factors detailed from time to time in the Company's
filings with the United States Securities and Exchange Commission, and (vii) or
any other factors. In order to mitigate the political risk in the Company's
target markets, the Company has arranged for political risk insurance provided
through Lloyd's of London, based on a variable valuation of the operating
companies in the nations concerned.
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspect of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers, suppliers, or
other third parties will be fully resolved.
Item 3. Description of Property
Vancouver
The Company maintains an office at Suite 2482-- 650 West Georgia Street,
Vancouver, BC, Canada. It is equipped with the necessary office
telecommunications and equipment to provide the day to day management of the
Company's operations.
Singapore
The Company maintains an office at #14-20/03 Forum, 583 Orchard Road, Singapore.
It is equipped with the necessary office telecommunications and equipment to
provide the day to day management of the Company's operations in Asia.
Ulanbatar Mongolia
39
<PAGE>
Mongolia HomeVision, maintains an operational office and transmission facility
at the Mongolia Broadcasting Station in Ulannbatar. The offices are equipped
with computers, and telecommunication infrastructure. The transmission facility
includes 2 DX and 1 Eagle 250Watt paging transmitters, a Zetron 2000 and a 640A
paging terminal, transmission antennas and pager inventory.
Kampala, Uganda
OmniVision Uganda maintains an operational office at Plot 5 Clemente Road,
Nakasero, Kampala, Uganda. The offices are equipped with computers,
telecommunication infrastructure, a Zetron 2000 paging terminal, pager
inventory, and radio link transmitters to the Company's Kololo Hill transmitter
facility. The transmission facility on Kololo Hill includes, 1 DX 250Watt paging
transmitter and 2 50 Watt ComWave MMDS transmitters, satellite receiving
equipment, power conditioning and electrical distribution infrastructure.
Rabat, Morocco
OmniVision Maroc, maintains an office a repair and distribution center at Villa
Yasmina 31 Ave. Tarik ibn Ziad, Rabat Morocco. The offices are equipped with
computers, telecommunication infrastructure, VSAT receive only satellite dishes
and satellite receiver equipment. The offices also include demonstration
facilities for showing satellite television programs that the Company
distributes. The repair and distribution center includes test installation, and
electronic repair equipment, and Integrated Receiver Decoder, satellite dish and
coaxial cable inventory.
40
<PAGE>
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of September 30, 1999, (i) each
person who is known by the Company to own beneficially more than five percent
(5%) of the Company's outstanding Common Stock; (ii) each of the Company's
directors and officers; and (iii) all directors and officers of the Company as a
group.
<TABLE>
<CAPTION>
===================================================================================================
Shares of Percentage of
Common shares held
Stock
Name and address Beneficially
of Beneficial Owner Owned
===================================================================================================
<S> <C> <C>
Nostrad Telecommunications Pte. Ltd.
(70% Kam Lo Lim, 20% SS Teo, 10% C Farnworth)
14-02-03 Forum 583 Orchard Road, Singapore 238884 5,303,000 48%
Siong Seng Teo
23 Queen Astrid Park, Singapore 266828 554,000 5%
Kam Lo Lim
24 Cornwall Gardens, Singapore 269649 400,000 4%
Cher Lim
437 Southborough Dr., West Vancouver, BC Canada V7S 1M3 100,000 1%
Chris Farnworth
901- 1188 Quebec Street, Vancouver, BC, Canada V6A 4B3 57,173 1%
482130 BC Ltd. (wholly owned Subsidiary of David Alexander)
2555 Keats Road, North Vancouver, BC, Canada, V7H 2M7 67,000 1%
Geco Holdings Ltd. (wholly owned subsidiary of C Farnworth)
901 - 1188 Quebec Street, Vancouver, BC, Canada V6A 4B3 27,000 0%
Directors and Officers as a group 6,509,573 59%
===================================================================================================
</TABLE>
** Related parties to officers and directors which own shares are as follows:
Lim Yok Bien 93,333 shares (President's father), Edwin and Marg Farnworth 22,000
shares (Officer's parents), Myrna Farnworth 18,000 shares (Officer's wife), Kam
Soe Lim 75,000 shares (President's brother), Siew Lee Lim 91,667, President's
sister, Teng Seng Teo 91,667 shares (Chairman's brother) and Tang Wan Tien
98,334 shares (President's mother).
41
<PAGE>
Item 5. Directors, Executive Officers, Promoters and Control Persons
The following persons are the directors and executive officers of the
Company:
<TABLE>
<CAPTION>
===================================================================================================
Name Age Position Held Term
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dr. John Tydeman 53 Chairman of the Board and Director July 1, 1998
Chairman as of
September 27, 1999
- ---------------------------------------------------------------------------------------------------
Lawrence Lim 41 Chief Executive Officer, President and Director September 30, 1997
- ---------------------------------------------------------------------------------------------------
Chris Farmworth 49 Senior Vice President, Business Development and February 1, 1998.
Operations,
Director May 27, 1998
- ---------------------------------------------------------------------------------------------------
David Alexander 48 Chief Financial Officer March 1, 1998
- ---------------------------------------------------------------------------------------------------
Siong Seng Teo 52 Director September 30, 1997
- ---------------------------------------------------------------------------------------------------
Dr. Nabil El-Hag 48 Director July 1, 1998
- ---------------------------------------------------------------------------------------------------
Cher Lim 28 Director September 30, 1997
- ---------------------------------------------------------------------------------------------------
</TABLE>
All directors and officers of the Company are elected annually to serve for
one year or until their successors are duly elected and qualified.
The Company currently has nine full time personnel and is supported to the
extent required by outside experts and consultants. Additional staff will be
recruited as required to support the Company's growth and development. All of
the full time personnel are contracted consultants. Key personnel also have
equity positions and have executed confidentiality and non-competition
agreements. Compensation levels are and will be commensurate with industry
standards with incentive programs extended to the key personnel.
Directors and Officers
DR. JOHN TYDEMAN
Dr. John Tydeman, Chairman of the Board and Director, is the Programming and
Strategic Liaison for the Company. A summary of Dr. Tydeman's employment history
over the last five years is as follows: Dr. Tydeman is a self-employed
consultant to the telecommunications industry specializing in designing, fixing
and implementing pay television and satellite ventures. In 1995, Dr. Tydeman was
Chief Executive Officer for the start-up of ATL (the News Corporation and
Subhash Chandra joint venture - ZEE TV in India, reporting to Rupert Murdoch).
In 1996, Dr. Tydeman was the Chief Executive Officer
42
<PAGE>
for the start up of ShowTime (a Kipco and Viacom joint venture). Dr. Tydeman
currently consults to ATL; ShowTime; the Dolphin Group, a privately held Middle
Eastern, multi-business enterprise; and the Shinawatra Group of Thailand. Dr.
Tydeman holds a Ph.D. in systems engineering, an honors degree in statistics, as
well as a degree in economics.
LAWRENCE LIM
Mr. Lawrence Lim, President and Chief Executive Officer, is a co-founder of the
Company. A summary of Mr. Lim's employment history over the last five years is
as follows: Mr. Lim is the principal shareholder and Managing Director of
Nostrad International Pte. Ltd. ("NI"), a holding company with interests in
trading, distribution, manufacturing, and telecommunications through sixteen
subsidiary companies located in seven countries in Asia. Mr. Lim holds a
Bachelor's degree from the University of British Columbia as well as a Master of
Business Administration degree from the National University of Singapore.
Mr. Lim's responsibilities include directing the overall management and business
development of the Company, as well as serving on the Board of Directors.
CHRISTOPHER FARNWORTH
Mr. Christopher Farnworth, Director and Senior Vice President, Business
Development and Operations, is a co-founder of the Company. A summary of Mr.
Farnworth's employment history over the last five years is as follows: Mr.
Farnworth has supervised the Company's technology selection, identified the
system vendors, and heads the long-term strategic planning for the Company. Mr.
Farnworth commenced his employment with the Company and its predecessor during
1994.
Mr. Farnworth is responsible for the day-to-day operations of the Company
including international business market development and marketing, as well as
sitting on the Board of Directors.
SIONG SENG, TEO
Siong Seng, Teo is a co-founder of the Company. A summary of Mr. Teo's
employment history over the last five years is as follows: Mr. Teo is a
shareholder and the Managing Director of Pacific International Lines Pte. Ltd.
("PIL"), the largest privately held shipping and transportation group in
Southeast Asia. Mr. Teo is also the Chief Executive Officer of Singamas
Container Holdings Limited, a container manufacturing company listed on the Hong
Kong Stock Exchange. Mr. Teo is a member and the chairman of various advisory
committees of the Singapore Trade Development Board and serves as a council
member of the Singapore Chinese Chamber of Commerce and Industry. Mr. Teo holds
a First Class Honors degree in Naval Architecture and Ocean Engineering from the
University of Glasgow.
Mr. Teo's responsibilities include serving as a member of the Board of Directors
and assisting in formulating the long term strategic planning of the Company.
DR. NABIL EL-HAG
Dr. Nabil El-Hag is a Director of the Company. A summary of Dr. El-Hag's
employment history over the last five years is as follows: Dr. El-Hag is a self
employed consultant. From 1992 to 1996, Dr. El-Hag was the President, Partner,
and Principal of Pacific Rim Technologies, Inc. In 1994 - present, Dr. El-Hag
has acted as the President and Director of Shore Capital. In 1996-Present, Dr.
El-Hag founded American Family Brands where is also the President and also acts
as a director. In 1998-President, Dr. El Hag founded Global Biodiversity
Institute, where he continues to act as a director. Dr. El-Hag is a graduate of
the Executive Management Program at Columbia University, holds an MBA from
Fordham University, and has a Ph.D. in Biochemistry, an M.Sc. in Microbiology
from Rutgers University, as well as an
43
<PAGE>
engineering degree from the Cairo University.
Dr. El-Hag is a strategic advisor to the Company and serves a member of the
Board of Directors.
CHER LIM
Cher Lim serves as a member of the Board of Directors. A summary of Ms. Lim's
employment history over the last five years is as follows: Ms. Lim worked for
Eurasia Damac, a major Asian diamond broker, headquartered in Singapore.
DAVID ALEXANDER
David Alexander, CA, is the Chief Financial Officer and Controller for the
Company. A summary of Mr. Alexander's employment history over the last five
years is as follows: Mr. Alexander is a self-employed consultant. Since 1994,
Mr. Alexander has served as chief financial officer of Laminco Resources Inc.
Since 1996, Mr. Alexander has served as a director for Pinewood Resources Inc.
Mr. Alexander became CFO of the Company during 1998. Mr. Alexander has a degree
in commerce from UBC and is an active member of the Institute of Chartered
Accountants of British Columbia.
Mr. Alexander is responsible for providing the administrative support to
operations, as well as regulatory and shareholder reporting and liaison.
Key Employees
MICHAEL DEMAN
Mr. DeMan is the Company's Regional Manager. Mr. DeMan is based in the Company's
Kampala, Uganda office. A summary of Mr. DeMan's employment history over the
last five years is as follows: Mr. DeMan was responsible for the design
construction and operational management of a number MMDS and SMATV networks
while Vice-President of Operations for Cabletel and CableVision in Caracas,
Venezuela since 1991.
Mr. DeMan is responsible for the operations management and subscriber
development for the Company's telecommunications operations in Africa.
ANTON M. VAN WOUW
Mr. Anton M. van Wouw is an independent consultant who is responsible for the
engineering and systems integration for the Company. Mr. van Wouw's employment
history over the last five years is as follows: Mr. van Wouw's major clients
over the last five years are Rogers Cable, Shaw Cable, BC Telephony,
Multi-Vision (Bolivia), and Can Bras (Brazil). Mr. van Wouw has extensive
experience in the implementation of Pay TV and inter-system micowave, covering
all aspects from systems engineering to hands on installations. Mr. van Wouw is
a registered professional engineer (UBC).
Mr. van Wouw is responsible for system design, engineering, and integration.
During the past five years no director, person nominated to become a
director, executive officer, promoter or control person of the Company:
(1) was the subject any bankruptcy petition filed by or against any
business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time;
44
<PAGE>
(2) was convicted in a criminal proceeding or while subject to a pending
crimi.nal proceeding (excluding traffic violations and other minor offenses);
(3) was subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or
(4) was found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law.
45
<PAGE>
Item 6. Executive Compensation
The following table sets forth information concerning the compensation of
the named executive officers from September 30, 1997.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
-------- ---------- --------- ------------------------------------------------
Awards Payments
------------ ---------- ----------------------
Other Securities All
Year Annual Restricted Under- other
or Compen- Stock Lying LTIP Compen-
Name And Period Salary Bonuses sation Award(s) Options/ Payouts sation
Principal Position Ended ($) ($) ($) ($) SARs ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence Lim, President & CEO 12/31/97
----------------------------------------------------------------------------------------------
12/31/98 80,000 200,000
----------------------------------------------------------------------------------------------
8/31/99 64,000
- ------------------------------------------------------------------------------------------------------------------------------
David Alexanader, CFO 12/31/97
----------------------------------------------------------------------------------------------
12/31/98 60,000 150,000
----------------------------------------------------------------------------------------------
8/31/99 48,000
- ------------------------------------------------------------------------------------------------------------------------------
Chris Farnworth, Senior VP 12/31/97
----------------------------------------------------------------------------------------------
12/31/98 60,000 150,000
----------------------------------------------------------------------------------------------
8/31/99 48,000
- ------------------------------------------------------------------------------------------------------------------------------
TOTALS 360,000 500,000
==============================================================================================================================
</TABLE>
The Company anticipates making additional payments aggregating $80,000
through December 1999.
46
<PAGE>
Item 7. Certain Relationships and Related Transactions
The President of the Company, Lawence Lim, together with Vice President, Chris
Farnworth, and Siong Seng Teo, own a Singapore Company, Nostrad
Telecommunications Pte. Ltd. ("Nostrad Singapore"). Nostrad Singapore has
entered into a share purchase agreement with the Company whereby Nostrad
Singapore has had the following shares issued to it for providing pay TV
licenses:
1. Mongolia MMDS licenses 2,000,000 shares September 30, 1997.
2. Uganda MMDS licenses 1,700,000 shares September 30, 1997
3. Ghana MMDS licenses 1,200,000 shares April 20, 1998
4. Tanzania MMDS licenses 1,200,000 shares September 15, 1999
Nostrad Singapore also received pursuant to the September 30, 1997 vend-in a
promissory note for $300,000 from the Company. Nostrad Singapore can, if vended
into the Company before February 25, 2000, earn up to an additional 2,000,000
shares if a Morocco Pay TV license is vended to the Company; and up to an
additional 1,500,000 shares if an Indonesia Pay TV license is vended to the
Company.
On February 1, 1998, the Company entered into five year Confidential Services
Agreements as follows:
1. Mr. Lawrence Lim at $8,000 per month.
2. Mr. Christopher Farnworth at $6,000 per month through his wholly owned
holding company Geco Holdings Ltd.
3. Mr. David Alexander at $6,000 per month through his wholly owned holding
company 482130 BC Ltd.
Item 8. Legal Proceeding
The Company is not a party to any litigation, and has no knowledge of any
threatened or pending litigation against the Company.
Item 9. Market for Common Equity and Related Stockholder Matters
The Common Stock has been quoted on the Pink Sheets since February 1999
under the symbol NSTC. The following table sets forth high and low bid prices
for the Common Stock for the calendar quarters indicated as reported by J
Alexander Securities Inc. These prices represent quotations between dealers
without adjustment for retail markup, markdown or commission and may not
represent actual transactions.
High Low Volume
---- --- ------
Feb. Through March 31, 1999 $1.50 $0.875 16,700
April Through June 30, 1999 1.30 .875 58,900
July Through September 30,1999 1.25 .875 17,000
Item 10. Recent Sales of Unregistered Securities
1 Pursuant to the Acquisition and Restructuring, the Company issued 3,700,000
shares to Nostrad Telecommunications Pte. Ltd. Singapore in reliance on
Section 4(2) of the Securities Act. These shares were issued February 25,
1998.
2 The Company issued 1,500,000 shares on September 15, 1998 to 20 persons in
consideration of an aggregate of $1,000,000.
47
<PAGE>
3 The Company issued 500,000 shares on September 15, 1998 in exchange for an
additional 20% interest in OmniVision (U) Ltd., a Uganda Company.
4 The Company issued 1,200,000 shares on September 15, 1998 to Nostrad
Singapore under a share purchase agreement for obtaining pay TV licenses in
Ghana.
5 The Company issued 1,200,000 shares on September 15,1999 to Nostrad
Singapore under a share purchase agreement for obtaining pay TV licenses in
Tanzania.
The Company believes that all of the issuances of the Common Stock were
exempt from the registration requirements of the Securities Act by virtue of
Section 4(2) thereof, Regulation D and/or S under the Securities Act.
Item 11. Description of Securities
The Company is authorized to issue 25,000,000 shares of the Common Stock of
which 11,100,000 shares were issued and outstanding as of September 30, 1999.
Each outstanding share of the Common Stock entitles the holder to one vote,
either in person or by proxy, on all matters that may be voted upon by the
owners thereof at meetings of the shareholders.
The holders of the Common Stock (i) have equal rights to dividends from
funds legally available therefor, when, and if, declared by the Board of
Directors of the Company; (ii) are entitled to share ratably in all of the
assets of the Company available for distribution to the holders of the Common
Stock upon liquidation, dissolution or winding up of the affairs of the Company;
(iii) do not have preemptive, subscription or conversion rights; and (iv) are
entitled to one non-cumulative vote per share on all matters on which
shareholders may vote at all meetings of shareholders.
The holders of the Common Stock of the Company do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
shares, voting for the election of directors, can elect all directors of the
Company if they so choose and, in such event, the holders of the remaining
shares will not be able to elect any of the Company's directors.
12. Indemnification of Directors and Officers
Except as hereinafter set forth there is no charter provision, bylaw,
contract, arrangement or statute under which any officer or director of the
Company is insured or indemnified in any manner against any liability which he
may incur in his capacity as such.
Article VIII of the Company's By-laws provides in relevant part, that:
"...the corporation shall indemnify any director, officer, employee or
agent of the corporation, or any person serving in any such capacity of any
other entity or enterprise at the request of the corporation, against any and
all legal expenses (including attorney's fees), claims and/or liabilities
arising out of any action, suit or proceeding, except an action by or in the
right of the corporation."
Expenses incurred in defending any action, suit or proceeding may be paid by the
Company in advance of the final disposition, when authorized by the Board of
Directors.
The Company does not have nor does it anticipating obtaining any directors' and
officers' liability insurance.
48
<PAGE>
The Securities and Exchange Commission's Policy on Indemnification.
Insofar as indemnification for liabilities arising under the Act may be
permitted to any of the Company's directors, officers and controlling persons
pursuant to any provisions contained in the Company's certificate of
incorporation, by-laws or otherwise, the Company has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person inconnection with the securities being registered, the Company 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 of whether
indemnification by it is against public policy as expressed in the Act and will
be governed by final adjudication of such issue.
49
<PAGE>
PART F/S
Item 13. Financial Statements
NOSTRAD TELECOMMUNICATIONS INC.
INDEX
A. Audited Page No.
Audited Report Dated May 28, 1999
Consolidated Balance Sheets
December 31, 1998 & 1997
Consolidated Statements of Operations
Years ended December 31, 1998 & 1997
Consolidated Statement of Shareholders Equity
For the year ended December 31, 1998
Consolidated Statement of Cash Flows
Years ended December 31, 1998 & 1997
Notes to Consolidated Financial Statements
B. Unaudited
Consolidated Balance Sheets
June 30, 1999 & 1998 and December 31, 1998
Consolidated Statements of Operations
Six Months & Quarters ended June 30, 1999 & 1998
Consolidated Statement of Shareholders Equity
For the Six Months ended June 30, 1999
Consolidated Statement of Cash Flows
Six Months & Quarters ended June 30, 1999 & 1998
Notes to Consolidated Financial Statements
<PAGE>
INDEPENDENTAUDITORS' REPORT
To the Board of Directors and
Stockholders of Nostrad Telecommunications, Inc.
We have audited the accompanying consolidated balance sheet of Nostrad
Telecommunications, Inc. and subsidiaries (the "Company") as of December 31,
1998, and the related consolidated statements of loss, deficit and cash flows
for each of the two years then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion of these consolidated 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 consolidated financial statements are free of
material misstatement. An audit includes examining, on test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company has suffered significant recurring
net losses, negative operating cash flow, and has uncertainty relative to the
successful exploitation of its assets which raise substantial doubt about its
ability to continue as a going concern. Management's plans regarding those
matters are also described in Note 1 to the financial statements. The financial
statements do not include any adjustments that might arise from these
uncertainties.
"Jay Shapiro"
---------------------------
JAY J. SHAPIRO, C.P.A.
A Professional Corporation
51
<PAGE>
Consolidated Financial Statements
CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
Assets December 31, December 31,
1998 1997
-----------------------------
Current Assets
Cash $ 74,367 $ 2,387
Trade receivables 34,222 25,690
Due from related parties -- --
Inventory 108,114 7,778
Deposits & prepaid expenses 32,120 40,277
- --------------------------------------------------------------------------------
248,823 76,132
Licenses and Development Costs (note 3)
Licenses, net 275,140 141,440
Deferred development costs 386,447 120,734
- --------------------------------------------------------------------------------
661,587 262,174
Fixed Assets (note 4)
Fixed Assets 463,281 204,007
less Accumulated Depreciation (144,730) (54,580)
- --------------------------------------------------------------------------------
318,551 149,427
- --------------------------------------------------------------------------------
$ 1,228,961 $ 487,733
================================================================================
Liabilities
Current Liabilities
Accounts payable (note 7) $ 435,074 $ 61,543
Shareholder loans (note 7) 581,849 74,436
Other 8,867 4,014
- --------------------------------------------------------------------------------
1,025,790 139,993
- --------------------------------------------------------------------------------
Commitments (notes 5, 7, and 8)
Shareholders' Equity
Share Capital (note 5)
Authorized
25,000,000 common shares, par value $0.001
Issued & outstanding - 9,900,000 common
shares (3,000,000 common shares at
December 31, 1997) 9,900 6,700
Additional Paid-in Capital 1,489,695 367,640
Share subscriptions received -- 300,000
Accumulated Deficit (1,296,424) (326,600)
- --------------------------------------------------------------------------------
203,171 347,740
- --------------------------------------------------------------------------------
$ 1,228,961 $ 487,733
================================================================================
The notes to consolidated financial statements are an integral part thereof
52
<PAGE>
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Year ended Year ended
December 30, December 30,
1998 1997
- --------------------------------------------------------------------------------
Revenues
Sales & Service Revenues $ 60,126 $ 15,997
- --------------------------------------------------------------------------------
Cost of Sales
Materials 50,534 14,655
Direct Marketing 13,931 2,458
- --------------------------------------------------------------------------------
64,465 17,113
- --------------------------------------------------------------------------------
Gross Profit (4,339) (1,116)
Expenses
Professional costs 279,047 16,528
Office and administration 270,282 47,318
Travel 127,195 21,680
Depreciation & amortization 90,308 73,932
Salary and benefits 59,376 39,652
Communication costs 37,244 2,631
Investor relations 18,797 --
- --------------------------------------------------------------------------------
882,249 201,741
- --------------------------------------------------------------------------------
Operating Loss (886,588) (202,857)
- --------------------------------------------------------------------------------
Other
Foreign exchange gain (loss) (11,929) 8,257
Deferred Cost write down (71,307) (132,000)
- --------------------------------------------------------------------------------
Net loss ($ 969,824) ($ 326,600)
================================================================================
Average Number of outstanding 7,638,082 3,000,000
shares (note 5)
- --------------------------------------------------------------------------------
Net (loss) per share $ (.013) $ (0.11)
================================================================================
The notes to consolidated financial statements are an integral part thereof
53
<PAGE>
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
December 31, 1998
<TABLE>
<CAPTION>
Common
Subscribed Stock Additional
-------------------- -------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Common stock
split after
January 1, 1997 -- $ -- 3,000,000 $ 3,000 $ -- $ -- $ 3,000
Share
Subscriptions 461,538 300,000 -- -- -- -- 300,000
Reverse
Acquisition by
Nostrad -- -- 3,700,000 3,700 367,640 -- 371,340
Net loss - 1997 -- -- -- -- -- (326,600) (326,600)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance
December 31, 1997 461,538 300,000 6,700,000 6,700 367,640 (326,600) 347,740
- -----------------------------------------------------------------------------------------------------------------------------------
Private
Placement, net
of Subscriptions (461,538) (300,000) 1,500,000 1,500 973,500 -- 675,000
Finders Fees -- -- -- -- (19,745) -- (19,745)
Shares issued for
Licenses -- -- 1,700,000 1,700 168,300 -- 170,000
Net loss - 1998 -- -- -- -- -- (969,824) (969,824)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance
December 31, 1998 -- $ -- 9,900,000 $ 9,900 $ 1,489,695 $(1,296,424) $ 203,171
====================================================================================================================================
</TABLE>
The notes to the consolidated financial statements are an integral part thereof
54
<PAGE>
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
Year ended Year ended
December 30, December 30,
1998 1997
OPERATING ACTIVITIES
Net income (loss) for period $ (969,824) $ (326,600)
Add expense items not involving cash
Development cost write down 71,307 132,000
Depreciation 90,308 73,932
- --------------------------------------------------------------------------------
(808,209) (128,668)
Add changes in non-cash working capital items:
Accounts receivable (8,532) (25,690)
Inventory (100,335) (7,779)
Deposits & prepaid expenses 8,156 (40,277)
Accounts Payable 378,384 65,557
- --------------------------------------------------------------------------------
Net funds (used) by operating activities (530,536) (128,857)
INVESTING ACTIVITIES
Licenses & deferred development costs (300,720) (413,526)
Fixed asset purchases (259,432) (204,007)
- --------------------------------------------------------------------------------
Net funds (used) by investing activities (560,152) (617,533)
FINANCING ACTIVITIES
Shares issued for cash, net 955,255 --
Shares issued in reverse acquisition -- 374,340
Shares subscriptions (300,000) 300,000
Shareholder loans 507,413 74,437
- --------------------------------------------------------------------------------
Net funds provided by financing activities 1,162,668 748,777
- --------------------------------------------------------------------------------
NET INCREASE IN CASH 71,979 2,387
Cash at beginning of period 2,387 --
- --------------------------------------------------------------------------------
CASH AT END OF PERIOD $ 74,366 $ 2,387
================================================================================
The notes to consolidated financial statements are an integral part thereof
Supplemental information:
Interest paid $ -- $ --
----------- ------------
Taxes paid $ -- $ --
----------- ------------
Shares issued for licenses $ 170,000 $ --
----------- ------------
55
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
1. ORGANIZATION AND BASIS OF PRESENTATION
Nostrad Telecommunications Inc. ("Nostrad" or the "Company") was incorporated in
Nevada on September 24, 1993. On September 29, 1997, the Company's name was
changed from Cave Productions, Inc. to Nostrad. Effective September 30, 1997,
Nostrad Telecommunications Pte. Ltd., a private Singapore company ("Nostrad
Singapore") sold its wholly owned subsidiary companies Nostrad Media Pte. Ltd.,
a Singapore company which holds the Company's interests in Asian licenses; and
OmniVision Africa Ltd., a British Virgin Island company, which holds the
Company's interests in African licenses; (collectively as "Nostrad
Subsidiaries") to the Company for 3,700,000 common shares and $300,000 cash or
kind. Nostrad Singapore may also be compensated up to 5,000,000 shares of common
stock for successful performance relative to license issuance in three emerging
countries.
The Company is focused on developing, acquiring and managing media and
telecommunication operations in emerging markets of Asia, Africa and at a later
stage, Latin America. To-date, Nostrad has obtained Subscription Television
licenses in Morocco, Uganda, Ghana and Tanzania. The DTH Subscription TV
services in Morocco have been implemented with a recently commenced soft-launch
in February 1999. Full launch of ShowTime (a subsidiary of Viacom) and ART
programming is expected to be in April 1999. In addition, Nostrad has obtained
nation-wide paging licenses in Uganda and is currently implementing alphanumeric
and voice paging services in Kampala. Apart from the foregoing, the Company is
also actively pursuing licenses for Subscription TV, Internet Service Provision,
Mobile and Fixed Wireless Telephony, and Paging Services in other countries in
Asia and the African sub-continent
A. Morocco Operations. A 65% owned company is licensed to distribute Satellite
DTH Subscription TV programming. The subsidiary has entered into an
agreement with Showtime, a Viacom company, to distribute Showtime's direct
to home (DTH) programming package throughout Morocco. Applications have
been made for operating license and frequencies to provide up to
60-channels of MMDS Subscription TV, Internet Services and Paging
operations.
B. Tanzania MMDS Pay TV Operations. A 80% owned company holds exclusive
frequencies and licenses to operate a seven-channel MMDS Subscription TV
system in Tanzania. Applications have been approved for additional
frequencies to provide up to 15 channels of programming.
C. Ghana MMDS Pay TV Operations. An 80% owned subsidiary holds exclusive
frequencies and licenses to operate a six-channel MMDS Subcription TV
system in Ghana. Applications have been made for additional frequencies to
provide up to 18 channels of programming.
D. Uganda MMDS Pay TV Operations. A 100% owned subsidiary holds exclusive
frequencies and licenses to operate a 19-channel MMDS system in Uganda.
Applications have been made for an additional 8 frequencies.
E. Uganda Paging Operations. A 100% owned subsidiary holds licenses to operate
5 paging channels. The system is currently being implemented.
F. Mongolia Paging Operations. An 80% owned subsidiary holds licenses to
operate 5 paging channels. The system currently has 2 channels in operation
capable of providing service to 4,000 subscribers.
G. Mongolia MMDS Pay TV Operations. An 80% owned subsidiary holds exclusive
frequencies and licenses to operate a 35 channel MMDS system.
56
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
1. ORGANIZATION AND BASIS OF PRESENTATION (continued)
The summary chart of the Company's holdings are as follows:
[GRAPHIC OMITTED]
The Company has executed an Agreement with Entertainment World Ltd. ("EWL") an
Australian Stock Exchange (ASTL) listed company, for the establishment of Asia
Learning World Pte Ltd ("ALW") which plans to telecast two new learning channels
throughout the Asia-Pacific Region via digital satellite and cable transmission
systems. ALW will fill a need in the Asia market for both Pay-TV with
substantive knowledge programming and for students who seek an international
quality degrees and other training opportunities. In addition, the relationship
formed by Nostrad and ALW blends a unique mix of skills that will enable ALW to
possess the requisite experience and credibility to deal with education markets
and Pay-TV operators. Nostrad has entered into a five year agreement to provide
management services to ALW.
As of September 30, 1997, the Company agreed to issue 2,000,000 common shares
and pay $150,000 for 100 per cent of the issued and outstanding common shares of
Nostrad Media Pte. Ltd., and agreed to issue 1,700,000 common shares and to pay
$150,000 for 100 per cent of the issued and outstanding common shares of
OmniVision Africa Ltd. The Company has also agreed to issue performance shares
to be issued within 24 months of September 30, 1997 as outlined on the following
table. To date 1,200,000 shares have been issued for obtaining the Ghana MMDS
license.
57
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
1. ORGANIZATION AND BASIS OF PRESENTATION (Continued)
Country Performance Stock
------- -----------------
Tanzania 1,500,000
Morocco 2,000,000
Indonesia 1,500,000
-------------------
5,000,000
===================
The Company is in the process of establishing an international telecommunication
operation, which includes providing wireless cable, paging, telephone and
internet services. The recoverability of the amounts shown for licenses and
deferred development costs is dependent upon the ability of the Company to
obtain necessary financing to complete the infrastructure required to provide
these services, and to operate on a profitable basis. The Company has completed
a common stock offering of 1,500,000 common shares and has received $955,255 in
net proceeds. The Company, during its startup phase, has experienced a
substantial operating deficit since inception of $1,296,424. Management has been
dependent on financing from related parties, which have invested approximately
$1,000,000 as of December 31, 1998. There is no assurance that related parties
will continue such funding or that the Company can satisfy $1,025,790 in
obligations from the successful exploitation of its assets. These financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and of acquired subsidiary companies: Nostrad Media Pte. Ltd. (100%
owned), Mongolia Home Vision Corporation HH (80% owned by Nostrad Media Pte.
Ltd.), OmniVision Africa Ltd. (100% owned), OmniVision (U) Ltd. (100% owned by
OmniVision Africa Ltd.), OmniVision (Ghana) Ltd. (80% owned by OmniVision Africa
Ltd.), OmniVision (Tanzania) Ltd. (80% owned by OmniVision Africa Ltd. and
OmniVision (Maroc) Ltd. (65% owned by OmniVision Africa Ltd.). All significant
inter-company accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company's management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and related notes to the financial statements.
Cash Equivalents
The Company defines cash equivalents as highly liquid financial instruments
purchased with a maturity of ninety days or less.
58
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Inventory
The Company records inventory at the lower of cost or market.
Licenses and Deferred Development Costs
The Company capitalizes the costs related to obtaining rights to provide paging,
cable television, telephone, and Internet services in specific countries, and
for the rights to broadcast specific channels. Costs incurred are initially
capitalized as Deferred Development Costs. If after a twelve-month period,
rights have not been fully obtained, the Deferred Development Costs will be
expensed. There is no assurance that revenues exceeding these costs will be
realized by the Company.
Fixed Assets
Fixed assets are recorded at cost and are depreciated on a straight line basis
over their estimated useful life as follows:
Years
-----
o Office equipment, furniture & fixtures 3
o Automotive & transportation equipment 3
o Leasehold improvements 3
o Operating Equipment & tools 3
o Transmission Station & Tower 5
Foreign Currency Translation
Transactions recorded are translated into United States dollars, its functional
and reporting currency, as follows:
o Monetary assets and liabilities at the rate prevailing at the balance sheet
date.
o Non-monetary assets and liabilities at historic rates
o Income and expenses at the average rate in effect during the year. Any gain
or loss is reflected on the consolidated statement of operations & deficit.
Earnings per share
Earnings per share are calculated by dividing the earnings before extraordinary
items by the weighted average number of shares outstanding during the period.
The weighted average number of shares is determined by weighting the number of
shares outstanding by the number of days which the shares were outstanding
during the year.
59
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
3. LICENSES AND DEFERRED DEVELOPMENT COSTS
Accumulated costs incurred in obtaining license agreements and deferred
development costs incurred are as follows:
Licenses
Country Amount
---------- ---------
Ghana (a) $ 120,000
Uganda (b) 87,500
Mongolia (c) 106,267
---------
313,767
Amortization (38,627)
---------
$ 275,140
=========
Deferred Development Costs
Country Amount
------- ------
Myanmar $ 11,882
Pakistan 9,902
Asia Learning World (d) 40,354
Democratic Republic of the Congo 5,782
Ghana 36,341**
Morocco (f) 52,094**
Uganda 147,319**
Cote d'Ivorie 42
Kenya 10,986
Tanzania (e) 26,946**
Indonesia 29,382
Tunisia 5,177
Bangladesh 10,241
---------
$ 386,447
=========
(a) Ghana
The licenses granted to the Company by the Government of Ghana (see note 1) give
the Company exclusive rights to certain frequency spectrum. The Company has also
entered into agreements to broadcast certain channels in Ghana. The Company
issued Nostrad Singapore 1,200,000 shares as per agreement (See Note 5).
(b) Uganda
The licenses granted to the Company by the Government of Uganda (see note 1)
give the Company exclusive rights to certain frequency spectrum. The Company has
also entered into exclusive agreements to broadcast certain channels in Uganda.
In November 1997, the Company's interest in its Uganda subsidiary has increased
from 80% to 100%. (See Note 5 (a), Share Capital)
(c) Mongolia
The Company has entered into several agreements in Mongolia (see note 1), which
grant the Company exclusive rights to broadcast under certain frequency
spectrum. During May 1998, the paging system has been upgraded to offer voice
paging, answering services, remote message retrieval, and storage in
Ulaanbaator, Mongolia's capital. Upon completion of beta testing, the Company
will launch its paging services. The Company has also entered into exclusive
agreements to broadcast certain channels in Mongolia. The License granted
expires May 17, 2006.
60
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
3. LICENSES AND DEFERRED DEVELOPMENT COSTS (continued)
(d) Asia Learning World
In order to provide a substantial education component to the Company's broadcast
system, the Company has agreed to enter into a joint venture project with
Entertainment World Ltd. known as the "Asia Learning World".
(e) Tanzania
The licenses granted to the Company by the Government of Tanzania (see note 1)
give the Company exclusive rights to certain frequency spectrum. The Company has
also entered into agreements to broadcast certain channels in Tanzania. The
Company will be issuing Nostrad Singapore up to 1,500,000 shares as per
agreement (See Note 1).
(f) Morocco
The Company has applied for exclusive rights to certain frequency spectrum to
the Government of Morocco. If received, the Company will enter into exclusive
agreement to broadcast certain channels in Morocco. The Company also has certain
rights to market Satellite DTH Subscription TV channels in Morocco. If the
Company is successful to obtaining exclusive rights to certain frequency
spectrum, the Company will be issuing Nostrad Singapore up to 2,000,000 shares
as per agreement.
4. FIXED ASSETS
Fixed assets of the Company consist of the following:
December 31, December 31,
1998 1997
---------------------------
Office equipment, furniture & fixtures $ 85,537 $ 21,081
Transportation equipment 26,000 25,624
Leasehold improvements 22,147 27,435
Transmission station & tower 267,289 100,668
Operating equipment & tools 62,308 29,199
------------------------
463,281 204,007
(144,730) (54,580)
------------------------
$ 318,551 $ 149,427
------------------------
61
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
5. SHARE CAPITAL
a) Common shares issued and outstanding since inception are as follows:
<TABLE>
<CAPTION>
Additional
Fiscal period and consideration received Number of Par value paid-in
shares amount capital
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
March 1, 1993 - cash 3,000,000 $ 3,000 $ --
September 30, 1997
Purchase of Nostrad Media Pte. Ltd. and
OmniVision Africa Ltd. 3,700,000 3,700 367,640
September 15, 1998
Private Placement (b) 1,500,000 1,500 953,755
September 15, 1998
Acquisition of 20% of Uganda License (a) 500,000 500 49.500
Acquisition of 80% of 1,500,000 shares for
Ghana license interests 1,200,000 1,200 118,800
---------------------------------------
9,900,000 $ 9,900 $1,489,695
=======================================
</TABLE>
a) On October 15, 1997, the Company entered into an agreement to purchase the
remaining 20% interest in OmniVision (U) Ltd. for consideration of 500,000
shares of the Company. Shares were issued on September 15, 1998.
b) The Company entered into a Private Placement Offering dated November 27,
1997. Under the terms of this agreement, the Company issued 1,500,000
shares for total proceeds of $975,000. Finders fees of $19,745 were paid.
Nostrad Singapore had agreed to convert a maximum of the $300,000 owed to
shares by participating in the Private Placement Offering. As the Private
Placement Offering was oversubscribed, Nostrad converted $60,693 to acquire
shares.
c) The Company has reserved 5,000,000 shares of common stock for successful
performance by Nostrad Singapore in obtaining licenses in three countries.
As formal agreements have been entered into with Ghana and Tanzania, the
Company has issued 1,200,000 shares to Nostrad Singapore for its 80%
interest in licenses in Ghana.
d) On September 30, 1998, the Company entered into a Stock Option Plan. Under
the terms of this agreement, the Company can issue up to 1,500,000 shares
to officers, directors, consultants and key employees. Stock option
agreements entered into to date agree to issue up to 1,235,000 shares at
$0.65 per share. Each stock option agreement expires on September 30, 2000.
At the time the stock options were issued, there was no market for the
stock. Subsequently, the stock has commenced trading but with little
volume. Consequently, there is no compensation cost for the Company's stock
option plan and application of FASB Statement No. 123, "Accounting for
Stock-Based Compensation" results in the net loss and net loss per common
share remaining unchanged.
6. INCOME TAXES
The Company has incurred losses totaling approximately $1,296,000 that may be
carried forward to reduce taxable income in future years. No deferred asset has
been recognized due to the uncertainty of future realization of any tax benefit.
62
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
7. COMMITMENTS
The Company has an agreement with its officers to provide international
management of its operations. The terms of the contract are for a period of five
years at an annual cost of $240,000. Related party transactions include amounts
in accounts payable due to a director or related company of $286,000 and amounts
due to Nostrad Singapore of $581,849. Both of these amounts carry no interest
and have no terms of repayment.
8. YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspect of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers, suppliers, or
other third parties will be fully resolved.
63
<PAGE>
Consolidated Financial Statements
CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31, June 30,
Assets 1999 1998 1998
-----------------------------------------------
<S> <C> <C> <C>
Current Assets
Cash $ 50,317 $ 74,367 $ 191,083
Trade receivables 86,672 34,222 40,919
Inventory 107,427 108,114 79,862
Deposits & prepaid expenses 37,828 32,120 51,964
- ----------------------------------------------------------------------------------------------------------
282,244 248,823 363,828
Licenses and Development Costs (note 3)
Licenses, net 254,043 275,140 220,096
Deferred development costs 401,006 386,447 236,285
- ----------------------------------------------------------------------------------------------------------
655,049 661,587 456,382
Fixed Assets (note 4)
Fixed Assets 515,405 463,281 263,499
less Accumulated Depreciation (196,067) (144,730) (86,608)
- ----------------------------------------------------------------------------------------------------------
319,339 318,551 176,890
- ----------------------------------------------------------------------------------------------------------
$ 1,256,632 $ 1,228,961 $ 997,100
==========================================================================================================
Liabilities
Current Liabilities
Accounts payable (note 7) $ 775,065 $ 435,074 $ 117,052
Shareholder loans (note 7) 694,593 581,849 120,450
Other 147,563 8,867 22,510
- ----------------------------------------------------------------------------------------------------------
1,617,221 1,025,790 260,012
- ----------------------------------------------------------------------------------------------------------
Commitments (notes 5, 7, and 8)
Shareholders' Equity
Share Capital (note 5)
Authorized
25,000,000 common shares, par value $0.001
Issued & outstanding - 9,900,000 common
shares (6,700,000 common shares at June 30, 1998) 9,900 9,900 6,700
Additional Paid-in Capital 1,489,695 1,489,695 367,640
Subscriptions received -- -- 904,250
Accumulated Deficit (1,860,184) (1,296,424) (541,502)
- ----------------------------------------------------------------------------------------------------------
(360,589) 203,171 737,088
- ----------------------------------------------------------------------------------------------------------
$ 1,256,632 $ 1,228,961 $ 997,100
==========================================================================================================
</TABLE>
The notes to consolidated financial statements are an integral part thereof
64
<PAGE>
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months Six months Quarter Quarter
Ended Ended ended ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Sales & Service Revenues $ 51,568 $ 11,885 $ 30,533 $ 7,429
- -----------------------------------------------------------------------------------------------------
Cost of Sales
Materials 12,482 4,804 7,389 1,063
Direct Marketing 8,973 41 10,114 6,422
- -----------------------------------------------------------------------------------------------------
22,596 13,777 7,430 7,485
- -----------------------------------------------------------------------------------------------------
Gross Profit 28,972 (1,892) 23,103 (56)
Expenses
Professional costs 203,868 49,848 112,798 6,147
Office and administration 185,089 56,739 66,941 29,637
Travel 51,105 40,217 6,327 5,692
Depreciation & amortization 66,086 41,206 16,763 22,609
Salary and benefits 110,179 19,655 64,777 7,785
Communication costs 20,400 13,511 7,460 3,817
Investor relations 6,538 -- 6,177 --
- -----------------------------------------------------------------------------------------------------
643,265 221,176 281,243 75,687
- -----------------------------------------------------------------------------------------------------
Operating Loss (614,293) (223,068) (258,140) (75,743)
Other
Foreign exchange gain (loss) 50,533 8,166 5,853 10,757
- -----------------------------------------------------------------------------------------------------
Net loss (563,760) (214,902) $ (263,993) $ (64,986)
=====================================================================================================
Average Number of outstanding 9,900,000 6,700,000 9,900,000 6,700,000
shares (note 5)
- -----------------------------------------------------------------------------------------------------
Net (loss) per share $ (0.057) $ (.032) $ (0.027) $ (0.010)
=====================================================================================================
</TABLE>
The notes to consolidated financial statements are an integral part thereof
65
<PAGE>
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
June 30, 1999
<TABLE>
<CAPTION>
Subscribed Common Stock Additional
-------------------------- ----------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Common stock split
after
January 1, 1997 -- $ -- 3,000,000 $ 3,000 $ -- $ -- $ 3,000
Share Subscriptions 461,538 300,000 -- -- -- -- 300,000
Reverse
Acquisition by
Nostrad -- -- 3,700,000 3,700 367,640 -- 371,340
Net loss - 1997 -- -- -- -- -- (326,600) (326,600)
- -------------------------------------------------------------------------------------------------------------------------
Balance December
31, 1997 461,538 300,000 6,700,000 6,700 367,640 (326,600) 347,740
- -------------------------------------------------------------------------------------------------------------------------
Private Placement,
net of
Subscriptions (461,538) (300,000) 1,500,000 1,500 973,500 -- 675,000
Finders Fees -- -- -- -- (19,745) -- (19,745)
Shares issued for
Licenses -- -- 1,700,000 1,700 168,300 -- 170,000
Net loss - 1998 -- -- -- -- -- (969,824) (969,824)
- -------------------------------------------------------------------------------------------------------------------------
Balance
December 31, 1998 -- -- 9,900,000 9,900 1,489,695 (1,296,424) 203,171
- -------------------------------------------------------------------------------------------------------------------------
Net loss - 1999 -- -- -- -- -- (563,760) (563,760)
Balance
June 30, 1999 -- $ -- 9,900,00 $ 9,900 $ 1,489,695 $(1,860,184) $ (360,589)
=========================================================================================================================
</TABLE>
The notes to the consolidated financial statements are an integral part thereof
66
<PAGE>
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months Six months Quarter Quarter
Ended Ended ended ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) for period $(563,760) $(214,902) $(263,993) $ (64,986)
Add expense items not involving
cash
Depreciation 66,086 41,206 16,763 22,609
- ------------------------------------------------------------------------------------
(497,675) (173,696) (247,231) (125,119)
Add changes in non-cash working
capital items:
Accounts receivable (52,449) (15,229) (49,126) (10,287)
Inventory 686 (72,083) 775 (22,693)
Deposits & prepaids (5,708) (11,688) 10,950 (39,006)
Accounts Payable 478,687 74,006 275,172 16,953
- ------------------------------------------------------------------------------------
Net funds (used) by operating (76,458) (198,690) (9,459) (97,710)
activities
INVESTING ACTIVITIES
Licenses & deferred development
costs 6,538 (203,386) 4,056 (178,384)
Fixed asset purchases (66,873) (59,492) (11,252) (50,939)
- ------------------------------------------------------------------------------------
Net funds (used) by investing (60,335) (262,878) (7,196) (33,555)
activities
FINANCING ACTIVITIES
Shares issued for cash, net -- 604,250 -- 475,000
Shareholder loans 112,744 46,014 67,763 (20,308)
- ------------------------------------------------------------------------------------
Net funds provided by financing 112,744 650,264 67,763 454,692
activities
- ------------------------------------------------------------------------------------
NET INCREASE IN CASH (24,049) 188,696 51,108 127,960
Cash at beginning of period 74,366 2,387 (791) 63,123
- ------------------------------------------------------------------------------------
CASH AT END OF PERIOD $ 50,317 $ 191,083 $ 50,317 $ 191,083
====================================================================================
</TABLE>
The notes to consolidated financial statements are an integral part thereof
Supplemental information:
Interest paid $ -- $ --
--------- ---------
Taxes paid $ -- $ --
--------- ---------
Shares issued for licenses $ -- $ --
--------- ---------
67
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 1999
1. ORGANIZATION AND BASIS OF PRESENTATION
Nostrad Telecommunications Inc. ("Nostrad" or the "Company") was
incorporated in Nevada on September 24, 1993. On September 29, 1997, the
Company's name was changed from Cave Productions, Inc. to Nostrad. Effective
September 30, 1997, Nostrad Telecommunications Pte. Ltd., a private Singapore
company ("Nostrad Singapore") sold its wholly owned subsidiary companies Nostrad
Media Pte. Ltd., a Singapore company which holds the Company's interests in
Asian licenses; and OmniVision Africa Ltd., a British Virgin Island company,
which holds the Company's interests in African licenses; (collectively as
"Nostrad Subsidiaries") to the Company for 3,700,000 common shares and $300,000
cash or kind. Nostrad Singapore may also be compensated up to 5,000,000 shares
of common stock for successful performance relative to license issuance in three
emerging countries.
The Company is focused on developing, acquiring and managing media and
telecommunication operations in emerging markets of Asia, Africa and at a later
stage, Latin America. To-date, Nostrad has obtained Subscription Television
licenses in Morocco, Uganda, Ghana and Tanzania. The DTH Subscription TV
services in Morocco have been implemented with a recently commenced soft-launch
in February 1999. Full launch of ShowTime (a subsidiary of Viacom) and ART
programming commenced in June 1999. In addition, Nostrad has obtained
nation-wide paging licenses in Uganda and is currently implementing alphanumeric
and voice paging services in Kampala. Apart from the foregoing, the Company is
also actively pursuing licenses for Subscription TV, Internet Service Provision,
Mobile and Fixed Wireless Telephony, and Paging Services in other countries in
Asia and the African sub-continent
A. Morocco Operations. A 65% owned company is licensed to distribute Satellite
DTH Subscription TV programming. The subsidiary has entered into an
agreement with Showtime, a Viacom company, to distribute Showtime's direct
to home (DTH) programming package throughout Morocco. Applications have
been made for operating license and frequencies to provide up to
60-channels of MMDS Subcription TV, Internet Services and Paging
operations.
B. Tanzania MMDS Pay TV Operations. A 80% owned company holds exclusive
frequencies and licenses to operate a seven-channel MMDS Subscription TV
system in Tanzania. Applications have been approved for additional
frequencies to provide up to 15 channels of programming.
C. Ghana MMDS Pay TV Operations. An 80% owned subsidiary holds exclusive
frequencies and licenses to operate a six-channel MMDS Subcription TV
system in Ghana. Applications have been made for additional frequencies to
provide up to 18 channels of programming.
D. Uganda MMDS Pay TV Operations. A 100% owned subsidiary holds exclusive
frequencies and licenses to operate a 19-channel MMDS system in Uganda.
Applications have been made for an additional 8 frequencies.
E. Uganda Paging Operations. A 100% owned subsidiary holds licenses to operate
5 paging channels. The system is currently being implemented.
F. Mongolia Paging Operations. An 80% owned subsidiary holds licenses to
operate 5 paging channels. The system currently has 2 channels in operation
capable of providing service to 4,000 subscribers.
G. Mongolia MMDS Pay TV Operations. An 80% owned subsidiary holds exclusive
frequencies and licenses to operate a 35 channel MMDS system.
68
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 1999
1. ORGANIZATION AND BASIS OF PRESENTATION (continued)
The summary chart of the Company's holdings are as follows:
[GRAPHIC OMITTED]
The Company has executed an Agreement with Entertainment World Ltd. ("EWL") an
Australian Stock Exchange (ASTL) listed company, for the establishment of Asia
Learning World Pte Ltd ("ALW") which plans to telecast two new learning channels
throughout the Asia-Pacific Region via digital satellite and cable transmission
systems. ALW will fill a need in the Asia market for both Pay-TV with
substantive knowledge programming and for students who seek an international
quality degrees and other training opportunities. In addition, the relationship
formed by Nostrad and ALW blends a unique mix of skills that will enable ALW to
possess the requisite experience and credibility to deal with education markets
and Pay-TV operators. Nostrad has entered into a five year agreement to provide
management services to ALW.
As of September 30, 1997, the Company agreed to issue 2,000,000 common
shares and pay $150,000 for 100 per cent of the issued and outstanding common
shares of Nostrad Media Pte. Ltd., and agreed to issue 1,700,000 common shares
and to pay $150,000 for 100 per cent of the issued and outstanding common shares
of OmniVision Africa Ltd. The Company has also agreed to issue performance
shares to be issued within 24 months of September 30, 1997 as outlined on the
following table. To date 1,200,000 shares have been issued for obtaining the
Ghana MMDS license. An additional 1,200,000 shares are in the process of being
issued for obtaining the Tanzania MMDS license.
69
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 1999
1. ORGANIZATION AND BASIS OF PRESENTATION (Continued)
Country Performance Stock
------- -----------------
Tanzania 1,500,000
Morocco 2,000,000
Indonesia 1,500,000
-----------------
5,000,000
=================
The Company is in the process of establishing an international telecommunication
operation, which includes providing wireless cable, paging, telephone and
internet services. The recoverability of the amounts shown for licenses and
deferred development costs is dependent upon the ability of the Company to
obtain necessary financing to complete the infrastructure required to provide
these services, and to operate on a profitable basis. The Company has completed
a common stock offering of 1,500,000 common shares and has received $955,255 in
net proceeds. The Company, during its startup phase, has experienced a
substantial operating deficit since inception of $1,860,184. Management has been
dependent on financing from related parties, which have invested approximately
$1,300,000 as of June 30, 1999. There is no assurance that related parties will
continue such funding or that the Company can satisfy $1,617,221 in obligations
from the successful exploitation of its assets. These financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and of acquired subsidiary companies: Nostrad Media Pte. Ltd. (100%
owned), Mongolia Home Vision Corporation HH (80% owned by Nostrad Media Pte.
Ltd.), OmniVision Africa Ltd. (100% owned), OmniVision (U) Ltd. (100% owned by
OmniVision Africa Ltd.), OmniVision (Ghana) Ltd. (80% owned by OmniVision Africa
Ltd.), OmniVision (Tanzania) Ltd. (80% owned by OmniVision Africa Ltd. and
OmniVision (Maroc) Ltd. (65% owned by OmniVision Africa Ltd.). All significant
inter-company accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company's management to make
estimates and assumptions that affect the amounts reported in the consolidated
financial statements and related notes to the financial statements.
Cash Equivalents
The Company defines cash equivalents as highly liquid financial instruments
purchased with a maturity of ninety days or less.
70
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Inventory
The Company records inventory at the lower of cost or market.
Licenses and Deferred Development Costs
The Company capitalizes the costs related to obtaining rights to provide
paging, cable television, telephone, and Internet services in specific
countries, and for the rights to broadcast specific channels. Costs incurred are
initially capitalized as Deferred Development Costs. If after a twelve-month
period, rights have not been fully obtained, the Deferred Development Costs will
be expensed. There is no assurance that revenues exceeding these costs will be
realized by the Company.
Fixed Assets
Fixed assets are recorded at cost and are depreciated on a straight line
basis over their estimated useful life as follows:
Years
o Office equipment, furniture & fixtures 3
o Automotive & transportation equipment 3
o Leasehold improvements 3
o Operating Equipment & tools 3
o Transmission Station & Tower 5
Foreign Currency Translation
Transactions recorded are translated into United States dollars, its functional
and reporting currency, as follows:
o Monetary assets and liabilities at the rate prevailing at the balance sheet
date.
o Non-monetary assets and liabilities at historic rates
o Income and expenses at the average rate in effect during the year. Any gain
or loss is reflected on the consolidated statement of operations & deficit.
Earnings per share
Earnings per share are calculated by dividing the earnings before extraordinary
items by the weighted average number of shares outstanding during the period.
The weighted average number of shares is determined by weighting the number of
shares outstanding by the number of days which the shares were outstanding
during the year.
71
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 1999
3. LICENSES AND DEFERRED DEVELOPMENT COSTS
Accumulated costs incurred in obtaining license agreements and deferred
development costs incurred are as follows:
Licenses
Country Amount
---------------------------------------------------------------
Ghana (a) $ 120,000
Uganda (b) 87,500
Mongolia (c) 106,267
---------
313,767
Amortization (59,724)
---------
$ 254,043
=========
Deferred Development Costs
Country Amount
---------------------------------------------------------------
Myanmar $ 11,882
Pakistan 23,916
Asia Learning World (d) 40,898
Democratic Republic of the Congo 5,782
Ghana 36,341**
Morocco (f) 52,094**
Uganda 147,319**
Cote d'Ivorie 42
Kenya 10,986
Tanzania (e) 26,946**
Indonesia 29,382
Tunisia 5,177
Bangladesh 10,241
---------
$ 401,006
=========
(a) Ghana
The licenses granted to the Company by the Government of Ghana (see note 1) give
the Company exclusive rights to certain frequency spectrum. The Company has also
entered into agreements to broadcast certain channels in Ghana. The Company
issued Nostrad Singapore 1,200,000 shares as per agreement (See Note 5).
(b) Uganda
The licenses granted to the Company by the Government of Uganda (see note 1)
give the Company exclusive rights to certain frequency spectrum. The Company has
also entered into exclusive agreements to broadcast certain channels in Uganda.
In November 1997, the Company's interest in its Uganda subsidiary has increased
from 80% to 100%. (See Note 5 (a), Share Capital)
(c) Mongolia
The Company has entered into several agreements in Mongolia (see note 1), which
grant the Company exclusive rights to broadcast under certain frequency
spectrum. As of September 1998, the paging system has been implemented to offer
numeric, alpha numeric and voice paging, answering services, remote message
retrieval, and storage in Ulaanbaator, Mongolia's capital. The Company has also
entered into exclusive agreements to broadcast certain channels in Mongolia. The
License granted expires May 17, 2006.
72
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 1999
3. LICENSES AND DEFERRED DEVELOPMENT COSTS (continued)
(d) Asia Learning World
In order to provide a substantial education component to the Company's broadcast
system, the Company has agreed to enter into a joint venture project with
Entertainment World Ltd. known as the "Asia Learning World".
(e) Tanzania
The licenses granted to the Company by the Government of Tanzania (see note 1)
give the Company exclusive rights to certain frequency spectrum. The Company has
also entered into agreements to broadcast certain channels in Tanzania. The
Company is in the process of issuing Nostrad Singapore 1,200,000 shares as per
agreement (See Note 1).
(f) Morocco
The Company has applied for exclusive rights to certain frequency spectrum to
the Government of Morocco. If received, the Company will enter into exclusive
agreement to broadcast certain channels in Morocco. The Company also has certain
rights to market Satellite DTH Subscription TV channels in Morocco. If the
Company is successful to obtaining exclusive rights to certain frequency
spectrum, the Company will be issuing Nostrad Singapore up to 2,000,000 shares
as per agreement.
4. FIXED ASSETS
Fixed assets of the Company consist of the following:
June 30, December 31,
1999 1998
- -----------------------------------------------------------------------------
Office equipment, furniture & fixtures $ 106,409 $ 85,537
Transmission station & tower 309,700 26,000
Transportation equipment 35,437 22,147
Leasehold improvements 22,147 267,289
Operating equipment & tools 41,712 62,308
--------- ---------
515,405 463,281
(196,066) (144,730)
--------- ---------
$ 319,339 $ 318,551
========= =========
73
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 1999
5. SHARE CAPITAL
a) Common shares issued and outstanding since inception are as follows:
<TABLE>
<CAPTION>
Additional
Fiscal period and consideration received Number of Par value paid-in
shares amount capital
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
March 1, 1993 - cash 3,000,000 $ 3,000 $ --
September 30, 1997
Purchase of Nostrad Media Pte. Ltd.
and
OmniVision Africa Ltd. 3,700,000 3,700 367,640
September 15, 1998
Private Placement (b) 1,500,000 1,500 953,755
September 15, 1998
Acquisition of 20% of Uganda License (a) 500,000 500 49.500
Acquisition of 80% of 1,500,000 shares for
Ghana license interests 1,200,000 1,200 118,800
-------------------------------------------
9,900,000 $ 9,900 $1,489,695
===========================================
</TABLE>
a) On October 15, 1997, the Company entered into an agreement to purchase the
remaining 20% interest in OmniVision (U) Ltd. for consideration of 500,000
shares of the Company. Shares were issued on September 15, 1998.
b) The Company entered into a Private Placement Offering dated November 27,
1997. Under the terms of this agreement, the Company issued 1,500,000
shares for total proceeds of $975,000. Finders fees of $19,745 were paid.
Nostrad Singapore had agreed to convert a maximum of the $300,000 owed to
shares by participating in the Private Placement Offering. As the Private
Placement Offering was oversubscribed, Nostrad converted $60,693 to acquire
shares.
c) The Company has reserved 5,000,000 shares of common stock for successful
performance by Nostrad Singapore in obtaining licenses in three countries.
As formal agreements have been entered into with Ghana and Tanzania, the
Company has issued 1,200,000 shares to Nostrad Singapore for its 80%
interest in licenses in Ghana.
d) On September 30, 1998, the Company entered into a Stock Option Plan. Under
the terms of this agreement, the Company can issue up to 1,500,000 shares
to officers, directors, consultants and key employees. Stock option
agreements entered into to date agree to issue up to 1,235,000 shares at
$0.65 per share. Each stock option agreement expires on September 30, 2000.
At the time the stock options were issued, there was no market for the
stock. Subsequently, the stock has commenced trading but with little
volume. Consequently, there is no compensation cost for the Company's stock
option plan and application of FASB Statement No. 123, "Accounting for
Stock-Based Compensation" results in the net loss and net loss per common
share remaining unchanged.
6. INCOME TAXES
The Company has incurred losses totaling approximately $1,860,000 that may be
carried forward to reduce taxable income in future years. No deferred asset has
been recognized due to the uncertainty of future realization of any tax benefit.
74
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 1999
7. COMMITMENTS
The Company has an agreement with its officers to provide international
management of its operations. The terms of the contract are for a period of five
years at an annual cost of $240,000. Related party transactions include amounts
in accounts payable due to a director or related company of $286,000 and amounts
due to Nostrad Singapore of $581,849. Both of these amounts carry no interest
and have no terms of repayment.
8. YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspect of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers, suppliers, or
other third parties will be fully resolved.
75
<PAGE>
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
There have been no changes in or disagreements with the Company's auditors.
Item 15. Financial Statements and Exhibits.
1. Financial Statements:
A. Audited
Audited Report Dated May 28, 1999
Consolidated Balance Sheets at December 31, 1998 and 1997
Consolidated Statements of Operations for the Years ended
December 31,1998 and 1997
Consolidated Statements of Shareholders Equity for the
Years ended December 31, 1998 and 1997
Consolidated Statements of Cash Flows for the Years ended
December 31, 1998 and 1997
Notes to Consolidated Financial Statements
B. Unaudited
Consolidated Balance Sheets at June 30, 1999 and 1998 and at
December 31, 1998
Consolidated Statements of Operations for the six months &
Quarters ended June 30, 1999 and 1998
Consolidated Statements of Shareholders Equity for the six months &
Quarter ended June 30, 1999
Consolidated Statement of Cash Flows for the six months &
Quarters ended June 30, 1999 and 1998
Notes to Consolidated Financial Statements
2. Exhibits
No. Description
3(i).1 Certificate of Incorporation
3(i).2 Certificate of Amendment
3(i).3 Certificate of Good Standing
3(i).4 Certificate of Secretary of State
3(ii) By-Laws
76
<PAGE>
10.1 Agreement dated October 20,1998 between the Company and Asia Learning
World Pte Ltd.
10.2 Memorandum of Understanding between Omnivision Africa Ltd. and
CableVision (Africa) Ltd.
10.3 Agreement dated October 20, 1998 between Asia Learning World Pte Ltd.
and Entertainment World Limited CAN.
10.4 Agreement dated October 20, 1998 between Asia Learning World Pte. Ltd
and Entertainment World Limited CAN
10.5 Agreement between the Company and Entertainment World Limited CAN
10.6 Memorandum of Understanding among Globecommm Systems, NetSat Express
and Omnivision Maroc SARL
10.7 Agreement dated January 4, 1999 between OmniVision Maroc SARL and
GulfDTH Production
10.8 Amending Agreement dated May 27, 1999 between Omnivision Maroc SARL and
GulfDTH Production
10.9 Amendment Agreement dated January 14, 1999 between Omnivision Maroc
SARL and GulfDTH Production
10.10 Lease Agreement dated February 5,1997
10.11 Stock Purchase Agreement dated February 25, 1997
10.12 Joint Venture Agreement dated May 30, 1997
10.13 Agreement dated August 6, 1999 between the Company and Pfluger
Enterprises, L.L.C.
10.14 Distribution Agreement between La Societe d'Etudes et Realisation
audiovisuelles and OmniVision
10.15 Agreement between the government of the Republic of Uganda and M/S
Omnivision (U) Ltd.
10.16 Agreement dated October 20,1998 between the Company and Asia Learning
World Pte Ltd.
10.17 Memorandum of Understanding between Omnivision Africa Ltd. and
CableVision (Africa) Ltd.
10.18 Agreement dated October 20, 1998 between Asia Learning World Pte Ltd.
and Entertainment World Limited CAN.
10.19 Agreement dated October 20, 1998 between Asia Learning World Pte. Ltd
and Entertainment World Limited CAN
10.20 Agreement between the Company and Entertainment World Limited CAN
10.21 Memorandum of Understanding among Globecommm Systems, NetSat Express
and Omnivision Maroc SARL
10.22 Agreement dated January 4, 1999 between OmniVision Maroc SARL and
GulfDTH Production
10.23 Amending Agreement dated May 27, 1999 between Omnivision Maroc SARL and
GulfDTH Production
10.24 Amendment Agreement dated January 14, 1999 between Omnivision Maroc
SARL and GulfDTH Production
10.25 Lease Agreement dated February 5,1997
10.26 Stock Purchase Agreement dated February 25, 1997
10.27 Joint Venture Agreement dated May 30, 1997
10.28 Agreement dated August 6, 1999 between the Company and Pfluger
Enterprises, L.L.C.
10.29 Distribution Agreement between La Societe d'Etudes et Realisation
audiovisuelles and OmniVision
10.30 Agreement between the government of the Republic of Uganda and M/S
Omnivision (U) Ltd.
27 Financial Data Schedule
77
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has caused this registration statement to be signed on its behalf by
the undersigned, thereunder duly authorized.
Dated: October 28, 1999 Nostrad Telecommunications, Inc.
By: /s/ Chris Farnworth
--------------------------------
Chris Farnworth, Vice President
78
<PAGE>
NOSTRAD TELECOMMUNICATIONS, INC.
Registration Statement on Form 10 SB
Index to Exhibits
No. Description
3(i).1 Certificate of Incorporation
3(i).2 Certificate of Amendment
3(i).3 Certificate of Good Standing
3(i).4 Certificate of Secretary of State
3(ii) By-Laws
10.1 Agreement dated October 20,1998 between the Company and Asia Learning
World Pte Ltd.
10.2 Memorandum of Understanding between Omnivision Africa Ltd. and
CableVision (Africa) Ltd.
10.3 Agreement dated October 20, 1998 between Asia Learning World Pte Ltd.
and Entertainment World Limited CAN.
10.4 Agreement dated October 20, 1998 between Asia Learning World Pte. Ltd
and Entertainment World Limited CAN
10.5 Agreement between the Company and Entertainment World Limited CAN
10.6 Memorandum of Understanding among Globecommm Systems, NetSat Express
and Omnivision Maroc SARL
10.7 Agreement dated January 4, 1999 between OmniVision Maroc SARL and
GulfDTH Production
10.8 Amending Agreement dated May 27, 1999 between Omnivision Maroc SARL and
GulfDTH Production
10.9 Amendment Agreement dated January 14, 1999 between Omnivision Maroc
SARL and GulfDTH Production
10.10 Lease Agreement dated February 5,1997
10.11 Stock Purchase Agreement dated February 25, 1997
10.12 Joint Venture Agreement dated May 30, 1997
10.13 Agreement dated August 6, 1999 between the Company and Pfluger
Enterprises, L.L.C.
10.14 Distribution Agreement between La Societe d'Etudes et Realisation
audiovisuelles and OmniVision
10.15 Agreement between the government of the Republic of Uganda and M/S
Omnivision (U) Ltd.
10.16 Agreement dated October 20,1998 between the Company and Asia Learning
World Pte Ltd.
10.17 Memorandum of Understanding between Omnivision Africa Ltd. and
CableVision (Africa) Ltd.
10.18 Agreement dated October 20, 1998 between Asia Learning World Pte Ltd.
and Entertainment World Limited CAN.
10.19 Agreement dated October 20, 1998 between Asia Learning World Pte. Ltd
and Entertainment World Limited CAN
10.20 Agreement between the Company and Entertainment World Limited CAN
10.21 Memorandum of Understanding among Globecommm Systems, NetSat Express
and Omnivision Maroc SARL
10.22 Agreement dated January 4, 1999 between OmniVision Maroc SARL and
GulfDTH Production
10.23 Amending Agreement dated May 27, 1999 between Omnivision Maroc SARL and
GulfDTH Production
10.24 Amendment Agreement dated January 14, 1999 between Omnivision Maroc
SARL and GulfDTH Production
10.25 Lease Agreement dated February 5,1997
10.26 Stock Purchase Agreement dated February 25, 1997
10.27 Joint Venture Agreement dated May 30, 1997
10.28 Agreement dated August 6, 1999 between the Company and Pfluger
Enterprises, L.L.C.
10.29 Distribution Agreement between La Societe d'Etudes et Realisation
audiovisuelles and OmniVision
10.30 Agreement between the government of the Republic of Uganda and M/S
Omnivision (U) Ltd.
27 Financial Data Schedule
79
Exhibit 3(i).1
CERTIFICATE OF INCORPORATION
CAVE PRODUCTIONS, INC.
2 4 1993
The name of the corporation is CAVE PRODUCTIONS, INC.
The Resident Agent of the corporation is CORPORATE SERVICES COMPANY, 516 South
Fourth Street, Las Vegas, Clark County, Nevada 89101 (P. 0. Box 7346, Las Vegas,
NV 89125-7346).
III
This corporation may engage in any lawful activity.
IV
The total authorized capital stock of the corporation is two thousand five
hundred (2,500) shares of common stock of no par value, non-preemptible,
non-assessable.
v
The governing board of the corporation shall consist of not less than one (1)
nor more than nine (9) directors. At all elections of directors each stockholder
is entitled to one vote for each share of his stock for each of the directors to
be elected. He may cast all of his votes for a single director or may distribute
them among the number to be voted for.
VI
No director, officer or stockholder of the corporation shall be held personally
liable for damages for breach of fiduciary duty as a director or officer except
for intentional misconduct, fraud, a knowing violation of law or the payment of
distributions in violation of NRS 78-300.
VII
These articles may be amended by the directors and stockholders in the manner
provided by law.
<PAGE>
VIII
The first director, also the incorporator, is Jo Ann Amick, 516 South Fourth
Street, Las Vegas, Nevada 89101.
Dated: 22 September 1993
Jo Ann Amick
STATE OF NEVADA)
SS.
COUNTY OF CLARK)
On this day 22 September 1993, came before me, JO ANN AMICK, personally known to
me to be the person named in the foregoing certificate. She acknowledged to me
that she executed the same.
Witness my hand and seal.
CERTIFICATE OF ACCEPTANCE OF
APPOINTMENT BY RESIDENT AGENT
I certify that CORPORATE SERVICES COMPANY accepts appointment as Resident Agent
of CAVE PRODUCTIONS, INC.
Dated: 22 September 1993 at Las Vegas, Nevada.
Jo Ann Amick, Vice-President
CORPORATE SERVICES COMPANY
Exhibit 3(i).2
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of stock)
Cave Productions, Inc.
We the undersigned Harry F. Reynolds II and Harry F. Reynolds II of Cave
Productions, Inc. (Cl 1740-93) do hereby certify:
The Board of Directors of said corporation at a meeting duly convened, held on
the 29th day of
September, 1997, adopted a resolution to amend the original articles as follows:
Article I is hereby amended to read as follows:
The name of the corporation is now Nostrad Telecommunications, Inc.
Article IV is hereby amended to read as follows:
The aggregate number of shares which the corporation shall have authority to
issue shall consist of 25,000,000 shares of Common Stock having a $.001 par
value. The Common Stock of the Company may be issued from time to time without
prior approval by the stockholders. The Common Stock may be issued for such
consideration as may be fixed from time to time by the Board of Directors. The
Board of Directors may issue such share of Common Stock in one or more series,
with such voting powers, designations, preferences and rights or qualifications,
limitations or restrictions thereof as shall be stated in the resolution or
resolutions.
The number of shares of the corporation outstanding and entitled to vote on an
amendment to the Articles of Incorporation is 600; that the said change(s) and
amendment have been consented to and approved by a majority vote of the
stockholders holding a least a majority of each class of stock outstanding and
entitled to vote thereon.
Harry F. Reynolds II, President
Harry F. Reynolds II, Secretary
State of Nevada
}ss.
County of Clark
On October 8, 1997, personally appeared before me, a Notary Public, Harry F.
Reynolds II, who acknowledged that he executed the above instrument.
Signature of Notary
(Notary Stamp or Seal)
Exhibit 3(i).3
SECRETARY OF STATE
STATE OF NEVADA
CERTIFICATE OF EXISTENCE
WITH STATUS IN GOOD STANDING
1, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that 1 am, by the laws of said State, the custodian of the
records relating to filings by corporations, limited-liability companies,
limited partnerships, and limited-liability partnerships pursuant to Title 7 of
the Nevada Revised Statutes which are either presently in a status of good
standing or were in good standing for a time period subsequent of 1976 and am
the proper officer to execute this certificate.
1 further certify that the records of the Nevada Secretary of State, at the date
of this certificate, evidence, NOSTRAD TELECOMMUNICATIONS, INC. as a Corporation
duly organized under the laws of Nevada and existing under and by virtue of the
laws of the State of Nevada since September 24, 1993, and is in good standing in
this state.
IN WITNESS WHEREOF, 1 have hereunto set my hand and affixed the Great Seal of
State, at my office, in Las Vegas, Nevada, on October 9. 1997.
Secretary of State
By
Certification Clerk
ary Stamp or Seal)
Exhibit 3(i).4
SECRETARY OF STATE
STATE OF NEVADA
CORPORATE CHARTER
I, CHERYL A. LAU, Secretary of State of the State of Nevada, do hereby certify
that CAVE PRODUCTIONS, INC. did on the TWENTY-FOURTH day of SEPTEMBER, file in
this office the original Articles of Incorporation; that said Articles are now
on file and of record in the office of the Secretary of State of the State of
Nevada, and further, that said Articles contain all the provisions required by
the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal of
State, at my office, in Carson City, Nevada, this TWENTY-FOURTH day of
SEPTEMBER, 1993.
Secretary of State
BY
Deputy
Exhibit 3(ii)
BYLAWS
OF
Cave Productions, Inc.
a Nevada Corporation
ARTICLE I
OFFICES
Section 1.01 Corporate Offices. The principal office of the Corporation in the
State of Nevada shall be located at 3326 Frisco Bay Circle, Las Vegas, Nevada
89117, County of Clark. The Corporation may have such offices, either within the
State of Nevada or any other state, as the Board of Directors may designate or
as the business of the Corporation may require from time to time.
ARTICLE II
STOCKHOLDERS
Section 2.01 Annual Meeting. The annual meeting of the stockholders of the
corporation shall be held on such date and at such time as designated from time
to time for the purpose or electing directors of the corporation and to transact
all business as may properly come before the meeting. If the election of the
directors is not held on the day designated herein for any annual meeting of the
stockholders, or at any adjournment thereof, the president shall cause the
election to be held at a special meeting of the stockholders as soon thereafter
as is convenient.
Section 2.02 Special Meeting. Special meetings of the stockholders may be called
by the president or the Board of Directors and shall be called by the president
at the written request of the holders of not less than 5 1 % of the issued and
outstanding voting shares of the capital stock of the corporation.
All business lawfully to be transacted by the stockholders may be transacted at
any special meeting or at any adjournment thereof. However, no business shall be
acted upon at a special meeting except that referred to in the notice calling
the meeting, unless all of the outstanding capital stock of the corporation is
represented either in person or in proxy. Where all of the capital stock is
represented, any lawful business may be transacted and the meeting shall be
valid for all purposes.
Section 2.03 Place of Meetings. Any meeting of the stockholders of the
corporation may be held at its principal office in the State of Nevada or at
such other place in or our of the United States as the Board of Directors may
designate. A waiver of notice signed by the
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Stockholders entitled to vote may designate any place for the holding of the
meeting.
Section 2.04 Notice of Meetings.
(a) The secretary shall sign and deliver to all stockholders of record written
or printed notice of any meeting at least ten (10) days, but not more than sixty
(60) days, before the date of such meeting; which notice shall state the place,
date, and time of the meeting, the general nature of the business to be
transacted, and, in the case of any meeting at which directors are to be
elected, the names of the nominees, if any, to be presented for election.
(b) In the case of any meeting, any proper business may be presented for action,
except the following items shall be valid only if the general nature of the
proposal is stated in the notice or written waiver of notice:
(1) Action with respect to any contract or transaction between the corporation
and one or more of its directors or officers or another firm, association, or
corporation in which one of its directors or officers has a material financial
interest;
(2) Adoption of amendments to the Articles of Incorporation;
(3) Action with respect to the merger, consolidation, reorganization, partial or
complete liquidation, or dissolution of the corporation.
(c) The notice shall be personally delivered or mailed by first class mail to
each stockholder of record at the last known address thereof, as the same
appears on the books of the corporation, and giving of such notice shall be
deemed delivered the date the same is deposited in the United State mail,
postage prepaid. If the address of any stockholders does not appear upon the
books of the corporation, it will be sufficient to address such notice to such
stockholder at the principal office of the corporation.
(d) The written certificate of the person calling any meeting, duly sworn,
setting forth the substance of the notice, the time and place the notice was
mailed or personally delivered to the stockholders, and the addresses to which
the notice was mailed shall be prima facie evidence of the manner and the fact
of giving such notice.
Section 2.05 Waiver of Notice. If all of the stockholders of the corporation
waive notice of a meeting, no notice shall be required, and, whenever all
stockholders shall meet in person or by proxy, such meeting shall be valid for
all purposes without call or notice, and at such meeting any corporate action
may be taken.
Section 2.06 Determination of Stockholders of Record..
(a) The Board of Directors may at any time fix a future date as a record date
for the determination of the stockholders entitled to notice of any meeting or
to vote or entitled to
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receive payment of any dividend or other distribution or allotment of any rights
or entitled to exercise any rights in respect of any other lawful action. The
record date so fixed shall not be more than sixty (60) days nor less than ten
(10) days prior to the date of such meeting nor more than sixty (60) days nor
less than ten (10) days prior to any other action. When a record date is so
fixed, only stockholders of record on that date are entitled to notice of and to
vote at the meeting or to receive the dividend, distribution or allotment of
rights, or to exercise their rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date.
(b) If no record date is fixed by the Board of Directors, then (I) the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the business day next
preceding the day on which notice is given or, if notice is waived at the close
of business on the next day preceding the day on which the meeting is held; (ii)
the record date for action in writing without a meeting, when no prior action by
the Board of Directors is necessary, shall be the day on which the written
consent is given; and (iii) the record date for determining stockholders for any
other purpose shall be at the close of business on the day in which the Board of
Directors adopts the resolution relating thereto, or the sixtieth (60th) day
prior to the date of such other action, whichever is later.
Section 2.07 Voting.
(a) Each stockholder of record, or such stockholder's duly authorized proxy or
attorney-in-fact shall be entitled to one (1) vote for each share of voting
stock standing registered in such stockholder's name on the books of the
corporation on the record date.
(b) Except as otherwise provided herein, all votes with respect to shares
standing in the name of an individual on that record date (including pledged
shares) shall be cast only by that individual or that individual's duly
authorized proxy or attorney-in-fact/ With respect to shares held by a
representative of the estate of a deceased stockholder, guardian, conservator,
custodian or trustee, votes may be cast by such holder upon proof of capacity,
even though the shares do not stand in the name of such holder. In the case of
shares under the control of a receiver, the receiver may cast in the name of the
receiver provided that the order of the court of competent jurisdiction which
appoints the receiver contains the authority to cast votes carried by such
shares. If shares stand in the name of a minor, votes may be cast only by the
duly appointed guardian of the estate of such minor if such guardian has
provided the corporation with written notice and proof of such appointment.
(c) With respect to shares standing in the name of a corporation on the record
date, votes may be cast by such officer or agent as the bylaws of such
corporation prescribe or, in the absence of an applicable bylaw provision, by
such person as may be appointed by resolution of the Board of Directors of such
corporation. In the event that no person is appointed, such votes of the
corporation may be cast by any person (including the officer making the
authorization) authorized to do so by the Chairman of the Board of Directors,
President, or any VicePresident of any such corporation.
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(d) Notwithstanding anything to the contrary herein contained, no votes may be
cast by shares owned by this corporation or its subsidiaries, if any. If shares
are held by this corporation or its subsidiaries, if any in a fiduciary
capacity, no votes shall be cast with respect thereto on any matter except to
the extent that the beneficial owner thereof possesses and exercises either a
right to vote or to give the corporation holding the same binding instructions
on how to vote.
(e) With respect to shares standing in the name of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, husband
and wife as community property, tenants by the entirety, voting trustees,
persons entitled to vote under a stockholder voting agreement or otherwise and
shares held by two or more persons (including proxy holders) having the same
fiduciary relationship with respect to the same shares, votes may be cast in the
following manner:
(1) If only one person votes, the vote of such person binds all.
(2) If more than one person cast votes, the act of the majority so voting binds
all.
(3) If more than one person votes, but the vote is evenly split on a particular
matter, the votes shall be deemed cast proportionately, as split.
(f) Any holder of shares entitled to vote on any matter may cast a portion of
the votes in favor of such matter and refrain from casting the remaining votes
or cast the same against the proposal, except in the case in the election of
directors. If such holder entitled to vote fails to specify the number of
affirmative votes, it will be conclusively presumed that the holder is casting
affirmative votes with respect to all shares held.
(g) If a quorum is present, the affirmative vote of the holders of a majority of
the voting shares represented at the meeting and entitled to vote on the matter
shall be the act of the stockholders, unless a vote of greater number by classes
is required by the laws of the State of Nevada, the Articles of Incorporation or
these Bylaws.
Section 2.08 Quorum; Adjourned Meetings.
(a) At any meeting of the stockholders, a majority of the issued and outstanding
voting shares of the corporation represented in person or by proxy, shall
constitute a quorum.
(b) If less than a majority of the issued and outstanding voting shares are
represented, a majority of shares so represented may adjourn from time to time
at the meeting, until holders of the amount of stock required to constitute a
quorum shall be in attendance. At
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such adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted as originally called. When a
stockholder's meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced to
the meeting to which the adjournment is taken, unless the adjournment is for
more than ten (10) days in which event notice thereof shall be given.
Section 2.09 Proxies. At any meeting of stockholders, any holder of shares
entitled to vote may authorize another person or persons to vote by proxy with
respect to the shares held by an instrument in writing and subscribed to by the
holder of such shares entitled to vote. No proxy shall be valid after the
expiration of six (6) months from or unless otherwise specified in the proxy. In
no event shall the term of a proxy exceed seven (7) years from the date of its
execution. Every proxy shall continue in full force and effect until expiration
or revocation. Revocation may be effected by filing an instrument revoking the
same or a duly executed proxy bearing a later date with the secretary of the
corporation.
Section 2. 10 Order of Business. At the annual stockholder's meeting, the
regular order of business shall be as follows:
1. Determination of stockholders present and existence of quorum;
2. Reading and approval of the minutes of the previous meeting or meetings;
3. Reports of the Board of Directors, the president, treasurer and secretary
of the corporation, in the order named;
4. Reports of committees;
5. Election of directors;
6. Unfinished business;
7. New business; and
8. Adjournment.
Section 2. 11 Absentees' Consent to Meetings. Transactions of any meetings of
the stockholders are valid as though had at a meeting duly held after regular
call and notice of a quorum is present, either in person or by proxy, and if,
either before or after the meeting, each of the persons entitled to vote, not
present in person or by proxy (and those who, although present, either object at
the beginning of the meeting to the transaction of any business because the
meeting has not been lawfully called or convened or expressly object at the
meeting to consideration of matters not included in the notice which are legally
required to be included there), signs a written waiver of notice and/or consent
to the holding of the meeting or an
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approval of the minutes thereof. All such waivers, consents, and approvals shall
be filed with the corporate records and made a part of the minutes of the
meeting. Attendance of a person/at a meeting shall constitute a waiver of notice
of such meeting, except that when the person objects at the beginning of the
meeting is not lawfully called or convened and except that attendance at the
meeting is not a waiver of any right to object to consideration of matters not
included in the notice is such objection is expressly made at the beginning.
Neither the business to be transacted at nor the purpose of any regular or
special meeting of stockholders need be specified in any written waive of
notice, except as otherwise provided in section 1.04(b) of these bylaws.
Section 2.12 Action Without Meeting. Any action, except the election of
directors, which may be taken by the vote of the stockholders at a meeting, may
be taken without a meeting if consented to by the holders of a majority of the
shares entitled to vote or such greater proportion as may be required by the
laws of the State of Nevada, the Articles of Incorporation, or these Bylaws.
Whenever action is taken by written consent, a meeting of stockholders need not
be called or noticed.
Section 2.13 Telephonic Messages. Meeting of the stockholders may be held
through the use of conference telephone or similar communications equipment as
long as all members participating in such meeting can hear one another at the
time of such meeting. Participation in such meeting constitutes presence in
person at such meeting.
ARTICLE III
DIRECTORS
Section 3.01 Number. Tenure, and Qualification. Except as otherwise provided
herein, the Board of Directors of the corporation shall consist of at least one
(1) persons, who shall be elected at the annual meeting of the stockholders of
the corporation and who shall hold office or one (1) year or until his or her
successor or successors are elected and qualify. If, at any time, the number of
the stockholders of the corporation is greater than twenty (20), the Board of
Directors must consist of at least three(3) persons, but shall never be more
than the number of stockholders. A director need not be a stockholder of the
corporation.
Section 3.02 Resignation. Any director may resign effective upon giving written
notice to the Chairman of the Board of Directors, the president or the secretary
of the corporation, unless the notice specified at a later time for
effectiveness of such resignation. If the Board of Directors accepts the
resignation of a director tendered o take effect at a future date, the Board of
Directors or the stockholders may elect a successor to take office when the
resignation becomes effective.
Section 3.03 Change in Number. Subject to the limitations of the laws of the
State of Nevada, the Articles of Incorporation or Section 2.01 of these Bylaws,
the number of directors may be changed from time to time by resolution adopted
by the Board of Directors.
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(a) The Board of Directors of the corporation, by majority vote, may declare
vacant the office of a director who has been declared incompetent by an order of
a court of competent jurisdiction or convicted of a felony.
(b) Any director may be removed from office, with or without cause, by the vote
or written consent of stockholders representing not less than two-thirds of the
issued and outstanding voting capital stock of the corporation.
Section 3.06 Vacancies.
(a) A vacancy in the Board of Directors because of death, resignation, removal
change in the number of directors, or otherwise may be filled by the
stockholders at any regular or special meeting or any adjourned meeting thereof
(but not by written consent) or the remaining director(s) of the affirmative
vote of a majority thereof. Each successor so elected shall hold office until
the next annual meeting of stockholders or until a successor shall have been
duly elected and qualified.
(b) If, after the filling of any vacancy by the directors, the directors then in
office who have been elected by the stockholders shall constitute less than a
majority of the director., then in office, any holder or holders of an aggregate
of five percent (5%) or more of the total number of shares entitled to vote may
call a special meeting of the stockholders to be held to elect the entire Board
of Directors. The term of office of any director shall terminate upon the
election of a successor.
Section 3.07 Regular Meeting Immediately following the adjournment of, and at
the same place as, the annual meeting of the stockholders, the Board of
Directors, including directors newly elected, shall hold its annual meeting
without notice other than the provision to elect officers of the corporation and
to transact such further business as may be necessary or appropriate. The Board
of Directors may provide by resolution the place, date, and hour for holding
additional regular meetings.
Section 3.08 Special Meeting Special meeting of the Board of Directors may be
called by the Chairman and shall be called by the Chairman upon request of any
two (2) directors or the president of the corporation.
Section 3.09 Place of Meetings. Any meeting of the directors of the corporation
may be held at the corporation's principal office in the State of Nevada or at
such other place in or out o
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the United States as the Board of Directors may designate. A waiver of notice
signed by the directors may designate any place for holding of such meeting.
Section 3. 10 Notice of Meetings. Except as otherwise provided in Section 2.07,
the Chairman shall deliver to all directors written or printed notice of any
special meeting, at least 48 hours before the time of such meeting, by delivery
of such notice personally or mailing such notice first class mail or by
telegram. If mailed, the notice shall be deemed delivered two (2) business days
following the date the same is deposited in the United States mail, postage
prepaid. Any director may waive notice o such a meeting, and the attendance of a
director at such a meeting shall constitute a waiver of notice of such meeting,
unless such attendance is for the express purpose of objecting to the
transaction of business thereat because the meeting is not properly called or
convened.
Section 3.11 Quorum, adjourned Meetings.
(a) A majority of the Board of Directors in office shall constitute a quorum.
(b) At any meeting of the Board of Directors where a quorum is present, a
majority of those present may adjourn, from time to time, until a quorum is
present, and no notice of such adjournment shall be required. At any adjourned
meeting where a quorum is present, any business may be transacted which could
have been transacted at the meeting originally called.
Section 3.12 Action without Meeting. Any action required or permitted to be
taken at any meeting of the Board of Directors or any committee thereof may be
taken without a meeting if a written consent thereto is signed by all of the
members of the Board of Directors or of such committee. Such written consent or
consents shall be filed with the minutes of the proceedings of the Board of
Directors or committee. Such action by written consent shall have the same force
and effect as the unanimous vote of the Board of Directors or committee.
Section 3.13 Telephonic Meetings. Meetings of the Board of Directors may be held
through the use of a conference telephone or similar communications equipment so
long as all members participating in such meeting can hear one another at the
time of such meeting. Participation in such a meeting constitutes presence in
person at such meeting. Each person participating in the meeting shall sign the
minutes thereof which may be in counterparts.
Section 3.14 Board Decisions. The affirmative vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 3,15 Powers and Duties.
(a) Except as otherwise provided in the Articles of Incorporation or the laws of
the State of Nevada, the Board of Directors is invested with complete and
unrestrained authority to manage the affairs of the corporation, and is
authorized to exercise for such purpose as the
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general agent of the corporation, its entire corporate authority in such a
manner as it sees fit. The Board of Directors may delegate any of its authority
to manage, control or conduct the current business of the corporation to any
standing or special committee or to any officer or agent and to appoint any
persons to be agents of the corporation with such powers including the power to
subdelegate, and upon such terms as my be deemed fit.
(b) The Board of Directors shall present to the stockholders at annual meetings
of the stockholders, and when called for by a majority vote of the stockholders
at a special meeting of the stockholders, a full and clear statement of the
condition of the corporation, and shall, at request, furnish each of the
stockholders with a true copy thereof
(c) The Board of Directors, in its discretion, may submit any contract or act
for approval or ratification at any annual meeting of the stockholders or any
special meeting properly called for the purpose of considering any such contract
or act, provide a quorum is preset. the contract or act shall be valid and
binding upon the corporation and upon all stockholders thereof, if approved and
ratified by the affirmative vote of a majority of the stockholders at such
meeting.
Section 3.16 Compensation. The directors shall be allowed and paid all necessary
expenses incurred in attending any meetings of the Board of Directors, and shall
be entitle to receive such compensation for their services as directors as shall
be determined form time to time by the Board of Directors of any committee
thereof
Section 3.17 Board of Directors.
(a) At its annual meeting, the Board of Directors shall elect, from among its
members, a Chairman to preside at meetings of the Board of Directors. The Board
of Directors may also elect such other board officers as it may, from time to
time, determine advisable.
(b) Any vacancy in any board office because of death, resignation, removal or
otherwise may be filled b the Board of Directors for the unexpired portion of
the term of such office.
Section 3.18 Order of Business. The order of business at any meeting of the
Board of Directors shall be as follows:
1. Determination of members present and existence of quorum;
2. Reading and approval of minutes of any previous meeting or meetings;
3. Reports of officers and committeemen;
4. Election of officers (annual meeting),.
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5. Unfinished business;
6. New business; and
7. Adjournment.
ARTICLE IV
OFFICERS
Section 4.01. Election. The Board of Directors, at its first meeting following
the annual meeting of shareholders, shall elect a President, a Secretary and a
Treasurer to hold office for a term of one (1) year and until their successors
are elected and qualified. Any person may hold two or more offices. The Board of
Directors may, from time to time, by resolution, appoint one or more
Vice-Presidents, Assistant Secretaries, Assistant Treasurers and transfer agents
of the corporation as it may deem advisable. prescribe their duties; and fix
their compensation.
Section 4.02. Removal or Resignation. Any officer or agent elected or appointed
by the Board of Directors may be removed by it with or without cause. Any office
may resign at any time upon written notice to the corporation without prejudice
to the rights, if any, of the corporation under contract to which the resigning
officer is a party.
Section 4.03. Vacancies. Any vacancy in any office because of death,
resignation, removal or otherwise may be filled by the Board of Directors for
the unexpired term or such office.
Section 4.04. President. The President shall be deemed the general manager and
executive officer of the corporation, subject to the supervision and control of
the Board of Directors, and shall direct the corporate affairs, with full power
to execute all resolutions and orders of the Board of Directors not especially
entrusted to some other officer of the corporation. The President shall preside
at all meetings of the stockholders and shall perform such other duties as shall
be prescribed by the Board of Directors.
Unless otherwise ordered by the Board of Directors, the President shall have the
full power and authority on behalf of the corporation to attend and to act and
to vote at meetings of the stockholders of any corporation in which the
corporation may hold stock and, at such meetings, shall possess and may exercise
any and all rights and powers incident to the ownership of such stock. The Board
of Directors, by resolution from time to time, may confer like powers on an
person or persons in place of the President to represent the corporation for
these purposes.
Section 4.05 Vice President. The Board of Directors may elect one or more Vice
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Presidents who shall be vested with all the powers and perform all the duties of
the President whenever the President is absent or unable to act, including the
signing of the certificates of stock issued by the corporation, and the Vice
President shall perform such other duties as shall be prescribed by the Board of
Directors.
Section 4.06. Secretary. The Secretary shall keep the minutes of all meetings of
the stockholders and the Board of Directors in books provide for that purpose.
The secretary shall attend to the giving and service of all notices of the
corporation, may sign with the President in the name of the corporation all
contracts authorized by the Board of Directors or appropriate committee, shall
have the custody of the corporate seal, shall affix the corporate seal to all
certificates of stock duly issued by the corporation, shall have charge of stock
certificate books, transfer books and stock ledgers, and such other books and
papers as the Board of Directors or appropriate committee may direct, and shall,
in general, perform all duties incident to the office of the Secretary. All
corporate books kept by the Secretary shall be open for examination by any
director at any reasonable time.
Section 4.07 Assistant Secretary. The Board of Directors may appoint an
Assistant Secretary who shall have such powers and perform such duties as may be
prescribed for him by the Secretary of the corporation or by the Board of
Directors.
Section 4.08. Treasurer. The Treasurer shall be the chief financial officer of
the corporation, subject to the supervision and control of the Board of
Directors, and shall have custody of all the funds and securities of the
corporation. When necessary or proper, the Treasurer shall endorse on behalf of
the corporation for collection checks, notes, and other obligations, and shall
deposit all moneys to the credit of the corporation in such bank or banks or
other depository as the Board of Directors may designate, and shall sign all
receipts and vouchers for payments by the corporation. Unless otherwise
specified by the Board of Directors, the Treasurer shall sign with the President
all bills of exchange and promissory notes of the corporation, shall also have
the care and custody of the stocks, bonds, certificates, vouchers, evidence of
debts, securities, and such other property belonging to the corporation as the
Board of Directors shall designate, and shall sign all papers required by law,
by these Bylaws, or by the Board of Directors to be signed by the Treasurer. The
Treasurer shall enter regularly in the books of the corporation, to be kept for
that purpose, full and accurate accounts of all moneys received and paid on
account of the corporation and, whenever required by the Board of Directors, the
Treasurer shall render a statement of any or all accounts. The Treasurer shall
at all reasonable times exhibit the books of account to any directors of the
corporation and shall perform all acts incident to the position of the Treasurer
subject to the control of the Board of Directors.
The Treasurer shall, if required by the Board of Directors, give bond to the
corporation in such sum and with such security as shall be approved by the Board
of Directors for the faithful performance of all the duties of Treasurer and for
restoration to the corporation, in the event of the Treasurer's death,
resignation, retirement or removal from office, of all books, records, papers,
vouchers, money and other property belonging to the corporation. The expense
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of such bond shall be borne by the corporation.
Section 4.09. Assistant Treasurer. The Board of Directors may appoint an
Assistant Treasurer who shall have such powers and perform such duties as may be
prescribed by the Treasurer of the corporation or by the Board of Directors, and
the Board of Directors may require the Assistant Treasurer to give a bond to the
corporation in such sum and with such security as it may approve, for the
faithful performance of the duties of Assistant Treasurer, and for restoration
to the corporation, in the event of the Assistant Treasurer's death,
resignation, retirement or removal from office, of all books, records, papers,
vouchers, money and other property belonging to the corporation. The expense of
such bond shall be borne by the corporation.
ARTICLE V
CAPITAL STOCK
Section 5.01. Issuance. Shares of capital stock of the corporation shall be
issued in such manner and at such times and upon such conditions as shall be
prescribed by the Board of Directors.
Section 5.02. Certificates. Ownership in the corporation shall be evidenced by
certificates for shares of the stock in such form as shall be prescribed by the
Board of Directors, shall be under the seal of the corporation and shall be
signed by the President or a Vice-President and also by the Secretary or an
Assistant Secretary. Each certificate shall contain the then name of the record
holder, the number, designation, if any, class or series of shares represented,
a statement of summary of any applicable rights, preferences, privileges or
restrictions thereon, and a statement that the shares are assessable, if
applicable. All certificates shall be consecutively numbered. The name, address
and federal tax identification number of the stockholder, the number of shares,
and the date of issue shall be entered on the stock transfer books of the
corporation.
Section 5.03 Surrender, Lost or Destroyed Certificates. All certificates
surrendered to the corporation, except those representing shares of treasury
stock, shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares hall have been cancelled, except
that in case of a lost, stolen, destroyed or mutilated certificate, a new one
may be issued therefore. However, any stockholder applying for the issuance of a
stock certificate in lieu of one alleged to have been lost, stolen, destroyed or
mutilated shall, prior to the issuance of a replacement, provide the corporation
with his, her or its affidavit of the facts surrounding the loss, theft,
destruction or mutilation and if required by the Board of Directors, an
indemnity bond in any amount and upon such terms as the Treasurer, or the Board
of Directors, shall require. In no case shall the bond be in an amount less than
twice the current market value of the stock and it shall indemnify the
corporation against any loss, damage, cost or inconvenience arising as a
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consequence of the issuance of a replacement certificate.
Section 5.04. Replacement Certificate. When the Articles of Incorporation are
amended in any way affecting the statements contained in the certificates for
outstanding shares of capital stock of the corporation or it becomes desirable
for any reason, including, without limitation, the merger or consolidation of
the corporation with another corporation or the reorganization of the
corporation, to cancel any outstanding certificate for shares and issue a new
certificate for shares, the corporation shall issue an order for stockholders of
record, to surrender and exchange the same for new certificates within a
reasonable time to be fixed by the Board of Directors. The order may provide
that a holder of any certificate (s) ordered to be surrendered shall not be
entitled to vote, receive dividends or exercise any other rights of stockholders
until the holder has complied with the order, provided that such order operates
to suspend such rights only after notice and until compliance.
Section 5.05. Transfer of Shares. No transfer of stock shall be valid as against
the corporation except on surrender and cancellation of the certificates
therefore accompanied by an assignment or transfer by the registered owner made
either in person or under assignment.
Whenever any transfer shall be expressly made for collateral security and not
absolutely, the collateral nature of the transfer shall be reflected in the
entry of transfer on the books of the corporation.
Section 5.06. Transfer Agent. The Board of Directors may appoint one or more
transfer agents and registrars of transfer and may require all certificates for
shares of stock to bear the signature of such transfer agent and such registrar
of transfer.
Section 5.07. Stock Transfer Books. The stock transfer books shall be closed for
a period of at least ten (10) days prior to all meetings of the stockholders and
shall be closed for the payment of dividends as provided in Article V hereof and
during such periods as, from time to time, may be fixed by the Board of
Directors, and, during such periods, no stock shall be transferable.
Section 5.08. Miscellaneous. The Board of Directors shall have the power and
authority to make such rules and regulations not inconsistent herewith as it may
deem expedient concerning the issue, transfer, and registration of certificates
for shares of the capital stock of the corporation.
ARTICLE VI
DIVIDENDS
Section 6.01 Dividends. Dividends may be declared, subject to the provisions of
the laws of the State of Nevada and the Articles of Incorporation, by the Board
of Directors at any regular or special meeting and may be paid in cash,
property, shares of the corporation stock, or any other medium. The Board of
Directors may fix in advance a record date, as provided in
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Section 1.06 of these Bylaws, prior to the dividend payment for purpose of
determining stockholders entitled to receive payment of any dividend. The Board
of Directors may close the stock transfer books for such purpose for a period of
not more than ten (10) days prior to the payment date of such dividend.
ARTICLE VII
OFFICES; RECORDS, REPORTS; SEAL AND FINANCIAL MATTERS
Section 7.01 Principal Office. The principal office of the corporation is in the
State of Nevada at 3326 Frisco Bay Circle, Las Vegas, Nevada 89117. The Board of
Directors may from time to time, by resolution, change the location of the
principal office within the State of Nevada or move it to any other state. The
corporation may also maintain an office or offices at such other place or
places, either within or without the State of Nevada, as may be resolved, from
time to time, by the Board of Directors.
Section 7.02 Records. The stock transfer books and a certified copy of the
Bylaws, Articles of Incorporation, any amendments thereto, and the minutes of
the proceedings of stockholders, the Board of Directors, and Committees of the
Board of Directors shall be kept at the principal office of the corporation for
the inspection of all who have the right to see the same and for the transfer of
stock. All other books of the corporation shall be kept at such places as may be
prescribed by the Board of Directors.
Section 7.03 Financial Report on Request. Any stockholder or stockholders
holding at least five percent (5%) of the outstanding shares of any class of
stock may make a written request for an income statement of the corporation for
the three (3) month, six (6) month or nine (9) month period of the current
fiscal year ended more than thirty (30) days prior to the date of the request
and a balance sheet of the corporation as of the end of such period. In
addition, if no annual report of the last fiscal year has been sent to
stockholders, such stockholder or stockholders may make a request for a balance
sheet as of the end of such fiscal year and an income statement and statement of
changes in financial position for such fiscal year. The statements shall be
delivered or mailed to the person making the request within thirty (30) days
thereafter. A copy of the statements shall be kept on file in the principal
office of the corporation for twelve (12) months, and such copies shall be
exhibited at all reasonable times to any stockholder demanding an examination of
them or a copy shall be mailed to each stockholder.
Upon request by any stockholder, there shall be mailed to the stockholder a copy
of the last annual, semiannual or quarterly income statement which it has
prepared and a balance sheet as of the end of the period. The financial
statements referred to in this Section 6.03 shall be accompanied by the report
thereon, if any, of any independent accountants engaged by the corporation or
the certificate of an authorized officer of the corporation that such financial
statements were prepared without audit from the books and records of the
corporation.
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Section 7.04 Right of Inspection.
(a) The accounting and records and minutes of proceedings of the stockholders
and the Board of Directors shall be open to inspection upon the written demand
of any stockholder of a voting trust certificate at any reasonable time during
usual business hours for a purpose reasonably related to such holder's interest
as a stockholder or as the holder of such voting trust certificate. This right
of inspection shall extend to the records of the subsidiaries, if any, of the
corporation. Such inspection may be made in person or by agent or the right of
inspection includes the right to copy and make extracts.
(b) Every director shall have the absolute right at any reasonable time to
inspect all books, records, and documents of every kind and to inspect the
physical properties of the Corporation and/or its subsidiary corporations. Such
inspection may be made in person or by agent or attorney, and the right of
inspection includes the right to copy and make extracts.
Section 7.05 Corporate Seal. The Board of Directors may, by resolution,
authorize a seal, and the seal may be used by causing it, or a facsimile, to be
impressed or affixed or reproduced or otherwise. Except when otherwise
specifically provided herein, any officer of the Corporation shall have the
authority to affix the seal to any document requiring it.
Section 7.06 Fiscal Year-End. The fiscal year-end of the corporation shall be
such date as may be fixed from time to time by resolution by the Board of
Directors.
Section 7.07 Reserves. The Board of Directors may create, by resolution, out of
the earned surplus of the corporation such reserves as the directors may, from
time to time, in their discretion think proper to provide for contingencies, or
to equalize dividends or to repair or maintain any property of the corporation,
or for such other purpose as the Board of Directors may al to the corporation,
and the directors may modify or abolish any such reserves in which they were
created.
Section 7.08 Payments to Officers or Directors. Any payments made to an officer
or director of the corporation, such as salary, commission, bonus, interest,
rent or entertainment expenses which shall be disallowed by the Internal Revenue
Service in whole or in part as a deductible expense by the corporation, shall be
reimbersed by such officer or director to the corporation to the full extent of
such disallowance. It shall be the duty of the Board of Directors to enforce
repayment of each such amount disallowed. In lieu of direct reimbursement by
such officer or director, the Board of Directors may withhold future
compensation to such officer or director until the amount owed to the
corporation has been recovered.
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ARTICLE VIII
INDEMNIFICATION
Section 8.01 In General. Subject to Section 7.02, the corporation shall
indemnify any director, officer, employee or agent of the corporation, or any
person serving in any such capacity of any other entity or enterprise at the
request of the corporation, against any and all legal expenses (including
attorneys' fees), claims andlor liabilities arising out of any action, suit or
proceeding, except an action by or in the right of the corporation.
Section 8.02 Lack of Good Faith, Criminal Conduct. The corporation may, by shall
not be required to, indemnify any person where such person acted in good faith
and in a manner reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, where there was not reasonable cause to believe the conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order
or settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, there was reasonable cause to believe that the conduct was unlawful.
Section 8.03. Successful Defense of Actions. The corporation shall reimburse or
otherwise indemnify any director, officer, employee, or agent against legal
expenses (including attorneys' fees) actually and reasonably incurred in
connection with defense of any action, suit, or proceeding herein above referred
to, to the extent such person is successful on the merits or otherwise.
Section 8.04. Authorization. Indemnification shall be made by the corporation
only when authorized in the specific case and upon a determination that
indemnification is proper by:
(1) The stockholders;
(2) A majority vote of a quorum of the Board of Directors, consisting of
directors who were not parties to the action, suit, or proceeding; or
(3) Independent legal counsel in a written opinion, if a quorum of disinterested
directors so orders or if a quorum of disinterested directors so orders or if a
quorum of disinterested directors cannot be obtained.
Section 8.05. Advancing.Expenses. Expenses incurred in defending any action,
suit, or proceeding may be paid by the corporation in advance of the final
disposition, when authorized by the Board of Directors, upon receipt of an
undertaking by or on behalf of the person defending to repay such advances if
indemnification is not ultimately available under these provisions.
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Section 8.06. Continuing Indemnification. The indemnification provided by these
Bylaws shall continue as to a person who has ceased to be director, officer,
employee, or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
Section 8.07. Insurance. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee, or agent of
the corporation or who is or was serving at the request of the corporation in
any capacity against any liability asserted.
ARTICLE IX
BYLAWS
Section 9.01. Amendment. These Bylaws may be altered, amended or repealed at any
regular meeting of the Board of Directors without prior notice, or at any
special meeting of the Board of Directors if notice of such alteration,
amendment or repeal be contained in the notice of such alteration, amendment or
repeal be contained in the notice of such special meeting. These Bylaws may also
be altered, amended, or repealed at a meeting of the stockholders at which a
quorum is present by the affirmative vote of the holders of 51% of the capital
stock of the corporation entitled to vote or by the consent of the stockholders
in accordance with Section 1. 12 of these Bylaws. The stockholders may provide
by resolution that any Bylaw provision repealed, amended, adopted or altered by
them may not be repealed amended, adopted or altered by the Board of Directors.
CERTIFICATION
I, the undersigned, being the duly elected secretary of the corporation, do
hereby certify that the foregoing Bylaws were adopted by the Board of Directors
the 25th day of September, 1993.
Harry F. Reynolds, Secretary
CORPORATE SEAL
Exhibit 10.1
THIS AGREEMENT is made the 20th day of October, 1998.
BETWEEN*
NOSTRAD TELECOMMUNICATIONS INC. a company incorporated in Nevada and having its
registered office at 683 Orchard Road, # 14-02103. FORUM, Singapore 238884
("Nostrad")
of the one part
AND
ASIA LEARNING WORLD PTE LTD being a company duly incorporated pursuant to the
laws of Singapore and having Its offices situat ed at 583 Orchard Road,
#14-02103, FORUM, Singapore 238884 ("ALW")
of the second part
WHEREAS
A. ALW provides pay Channels to customers in the Asian region.
B. NOSTRAD has expertise In marketing and sales for PAY television channels
including advertising sales, cable company contracting, customer care and
support services, consumer research systems, delivery platforms and
complementary network and technology Integration, and corporate administrative
support.
C. ALW has agreed to appoint NO. STRAD as Its exclusive provider of Services in
relation to the Channel pursuant to the terms a id conditions contained in this
Agreement.
NOW THIS AGREEMENT WITNESSES as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this agreement including the recitals, unless the context otherwise requires:
Agreement means this agreement including all annexures and Schedules;
Channel means the television channel or channels which are within the Territory
which are developed or will be developed by ALW for the purpose of telecasting
the Programs.,
Channel Schedule means the schedule of programs for the Channel for each Quarter
during the Term prepared by NOSTRAD from time to time;
Clause means a clause of this Agreement;
Commencement Date means the date of this agreement;
<PAGE>
Copyright Agencies means copyright owners societies, any performing rights
societies. mechanical rights societies, composers, authors, and music publishers
in any country where the Channel is telecast;
Delivery Platform means delivery of Channel and/or educational contents and
materials by satellite, MM DS, cable, tape or any other means;
Fees means the fees so paid or payable to NOSTRAD in accordance with this
Agreement as set out in Clause 5.1 (a);
Interstitial means the 3 short segments between programs providing for the
opportunity to telecast promotions, logos, station Identifications and
announcements regarding future Programming, contact telephone numbers or any
other promotional or marketing material whether for the benefit of the Channel
or otherwise;
Management Fee means the management fee payable by ALW to NOSTRAD in respect of
each Quarter being thirty-five per cent (35%) of the total of all Fees excluding
costs of Play-Out Facilities and costs of licensing program intellectual
property;
Party means each of A W and NOSTRAD and Parties means them collectively;
Play-Out Facilities means the facilities commonly referred to In the pay
television industry as play-out and up-link which enable television signals to
be telecast, Including the provision o. satellite related services;
Program means a television program related to education or having the purpose of
educating Subscribers of customers of Subscribers;
Programming means the services as defined in Clause 3.1 (b);
Related in relation to a corporation or an entity shall have the same meaning as
is ascribed to that term under s.50 of the Corporations Act 1989 (M)
(Australia);
Quarter means the three (3) calendar months ending 31st March, 30th June, 30th
September and 31st December;
Schedule means a schedule attached to and forming part of this Agreement;
Services means the services to be provided by NOSTRAD to ALW as more fully set
out in Clause 3;
Subscribers means the customers of ALW who have contracted with ALW to supply
them with television vide ) and Information services.,
Technology Integration means adapting and/or merging delivery technologies to
suit the delivery needs of the Channel and/or educational contents and
materials;
Term means the period set out in Clause 6.1 and the period of any renewal of the
Contract under Clause 6.2 or such earlier date on which this Agreement Is
terminated in accordance with Clause 7;
Territory means the whole of Asia including all sovereign nations or part
thereof within Asia: and
Year means a consecutive period of 365 days or In a leap year a consecutive
period of 366 days.
<PAGE>
3
1.2 Interpretation
In this agreement, Including the recitals, unless the context otherwise
requires:
(a) a reference to legislation or to a legislative provision includes all
regulations, orders, proclamations, notices or other requirements under that
legislation or legislative provision. It also Includes any amendments,
modifications or re-enactments of that legislation or legislative provision and
any legislation or legislative provision substituted for, and any statutory
Instrument issued under, that legislation or legislative provision;
(b) a word denoting the singular number Includes the plural number and vice
versa;
(c) a word denoting an Individual or person includes a corporation, firm,
authority, government or governmental authority and vice verse;
(d) a word denoting a gender Includes all genders;
(e) a reference to a recital, clause, schedule or annexure is to a recital,
clause, schedule or annexure of or to this Agreement;
(f) a reference to any deed, agreement, licence, document or other instrument
(including this Agreement includes a reference to that deed, agreement, licence,
document or other instrument as renewed, extended, novated, varied or
substituted from time to time.,
(g) a reference to E, any party to this Agreement or to any other deed,
agreement, licence, document or other instrument required under this Agreement
or for the purposes of this Agreement includes that party's executors,
administrators, substitutes, successors and permitted assigns;
(h) a reference to 'dollar* or "$" is to an amount in the lawful currency of the
United States of America;
(i) a reference to a matter being to the knowledge of a person means that the
matter is to the best of the knowledge and belief of that person after proper
enquiry including enquiry which a reasonable person would be prompted to make by
reason of knowledge of a fact; where under o. pursuant to this Agreement or
anything done under this Agreement the day on or by which any act, matter or
thing is to be done is not a Business Day such act, matter or thing must be done
on the immediately preceding Business Day;
(k) where under or pursuant to this Agreement or anything done under this
Agreement the (lay on or by which any act, matter or thing is to be done is the
29th, 30th or 31st day of any month, in which such a day does not occur, such
act, matter or thing must be done on the last day of that month; references to
clauses are references to clauses of this Agreement;
(m) a reference to winding up or bankruptcy includes bankruptcy, winding up,
liquidation, dissolution, becoming an 'insolvent under administration (as
defined In s.9 of the Corporations Law) and being placed under official
management, and to the circumstances and events giving rise to or contributing
to such condition or matters; and
<PAGE>
4
1.3 Headings and parts of speech
In this Agreement, including the recitals:
(a) headings are for convenience of reference only and do not affect
interpretations: and
(b) where an expression is defined. another part of speech or grammatical form
of that expression has a corresponding meaning.
2 APPOINTMENT OF NOSTRAD
2.1 ALW hereby appoints NOSTRAD exclusively to provide it with the Services
for the Territory during the Term.
2.2 NOSTRAD shall provide the Services exclusively to ALW within the
Territory and to no other party which may be a competitor of ALW unless
otherwise agreed by the parties.
3 PROVISION OF NOSTRAD SERVICE
3.1 In consideration of the payment of the Fees and in further consideration
of the exclusive agency granted to NOSTRAD under Clause 2, NOSTRAD will
provide the following services to ALW:
(a) market development of ALW Channels in the Territory;
(b) development and management of delivery platforms;
(c) development an management of marketing, promotion and distribution of ALW's
Channel:, network services and related support for franchising of learning
centres by ALW:
(d) development and management of customer/student care and support services;
(e) development and where appropriate management of complementary networks and
technology Integration;
(f) marketing and c consumer research systems and procurement of marketing and
consumer research;
(g) development and management of advertising, list, marketing and sponsorship
for ALW network
(h) development and management of ALW Board and corporate administrative support
functions;
(i) development and management of ALW public relations systems
(j) to provide an Annual Sales and Marketing Plan which is approved by ALW, such
approval riot to be unreasonably withheld (for the purpose of this sub-Clause,
approval shall be deemed to be given by ALW within seven (7) days of receipt of
the Annual Sales and Marketing Plan unless otherwise notified to NOSTRAD by
notice in writing).
3.2 Notwithstanding anything else contained herein, NOSTRAD shall not be
required to contribute to any costs of the Channel, whether of a capital
nature or otherwise, unless specifically required herein and ALW shall
indemnify NOSTRAD in respect of any amounts so paid or payable by
NOSTRAD.
4 RESPONSIBILITIES OF ALW
ALW shall, in consideration of the Services provided by NOSTRAD under this
document:
4.1 pay to NOSTRAD all of the Fees in accordance with Clause 5;
4.2 be responsible for all royalty or licence payments in respect of any
intellectual property including technology, computer software, commercial
film footage, music, talent, research and information database used as
part of any ALW Delivery Platform and Technology Integral on, to any
Copyright Agency or any other entity; and
4.3 be responsible for all development, sourcing, production, acquisition and
licensing of programs for the Channels Including all costs associated
with same.
5 FEES
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5.1 In consideration of the p rovision of the Services, ALW shall pay to
NOSTRAD:
(a) all of the costs incurred by NOSTRAD In respect of the provision of the
Services as agreed to by the parties; and
(b) Management Fees.
5.2 The Fees shall be pre-estimated on the basis of the following Items:
(a) quarterly costs of development and management of marketing, promotion and
distribution of ALW's Channels, and the development and management of
advertising, IIA, marketing and sponsorship for ALW network as budgeted by the
parties bi-annually;
(b) quarterly costs of development and management of consumer research systems.
customer services and related support for franchising of learning centres as
budgeted by the parties bi-annually;
(c) quarterly staffing g and overhead costs of NOSTRAD as budgeted by the
parties on a bi-annual basis;
(d) quarterly costs elating to any other Services as budgeted by the parties on
a bi-annual basis, including:
(i) development and management of Delivery Platforms and where appropriate
management of complementary networks and Technology Integration;
(ii) development and support of ALW Board and corporate and administrative
functions; and development and management of ALW public relations programs.
5.3 ALW shall pay to NOSTRAD the pre-estimate of Fees calculated under Clause
5.2 within seven (7) days of the commencement of each Quarter.
5.4 All payments to NOST RAD under this Agreement shall be made by way of a
telegraphic transfer In cleared funds to the account of NOSTRAD at a bank
nominated by NOSTRAD in writing from time to time.
5.5 Within one (1) week after the end of each Quarter:
(a) NOSTRAD shall provide a statement setting out the actual Fees Incurred by it
during the previous Quarter and the Management Fees payable by ALW in respect of
that Quarter (Statement);
(b) the Statement shall include, among other things, copies of all relevant
invoices which support its claims set out in the Statement; and
(c) wherever required for auditing purposes, NOSTRAD shall provide, within
reasonable time, originals of all Invoices which support its claims set out in
the Statement.
5.6 Where the total amount owed to NOSTRAD under the Statement (including the
Management Fees):
(a) exceeds the amount actually paid to NOSTRAD in respect of the relevant
Quarter pursuant to Clause 5.2, then ALW shall pay the balance of the amount
owing to NOSTRAD within one (1) week of the date of the Statement; or
(b) Is less than the amount actually paid to NOSTRAD in respect of the relevant
Quarter pursuant to Clause 5.2, then the parties shall adjust the balance
overpaid to NOSTRAD, against the pre-estimate of Fees payable by ALW pursuant to
Clause 5.2 In respect of the next Quarter.
5.7 Without limiting NOSTRAD's legal rights for any breach of these provisions,
NOSTRAD shall be entitled to Interest payable on demand at the rate of two
per cent (2%) per month or proportionately thereof for any amounts
outstanding to it by ALW calculated 30 days after he date due for payment.
<PAGE>
8
8.2 The restriction contained in Clause 8.1 shall continue to apply after the
termination of this Agreement without limit In point of time but shall
cease to apply to information which may come into the public domain.
8.3 ALW may also obtain during the course of this Agreement, by reason of
this Agreement, knowledge of the trade secrets or other confidential
information of any related entity to NOSTR AD and ALW hereby agrees that
it will at the request of such entity, and at the cost of NOSTRAD, enter
Into a direct agreement or undertaking with any such entity whereby it
will accept restrictions corresponding with the restrictions contained in
this Agreement and the Program as such entity may reasonably require for
the protection of Its legitimate business Interests.
9 INTELLECTUAL PROPERTY RIGHTS
Notwithstanding anything else contained in this Agreement, all intellectual
properly created by virtue or as a result of this Agreement shall vest In and
become the property of ALW unless otherwise agreed to in writing by the parties.
10 GENERAL
10.1 None of the terms or conditions of this Agreement, nor any act, matter or
thing done under or by virtue of. or i n connection with, this Agreement
will operate as a merger of any of the rights and remedies of NOSTRAD or
ALW in or under this Agreement or otherwise. All such rights and remedies
of the NOSTRAD and ALW will continue in full force and effect.
10.2 Unless application Is m mandatory by law, no statute, ordinance,
proclamation, rule, order, regulation, moratorium or decree of any
governmental or other authority, present or future, will apply to this
Agreement so as to abrogate, extinguish, impair, diminish, fetter, delay
or otherwise prejudicially affect any rights, powers, remedies or
discretions given or accruing to NOSTRAD or ALW under this Agreement.
10.3 To the extent permission at law, ALW must Immediately upon demand pay to
NOSTRAD an amount equivalent to any moneys paid by NOSTRAD in respect of
any liability Imposed on ALW under or by virtue of this Agreement,
notwithstanding that any statute. ordinance, proclamation, rule, order,
regulation, moratorium or decree of any governmental or other authority,
present or future, directly or indirectly, imposes such liability upon
NOSTRAD.
10.4 Neither party may assign the benefit of this Agreement to any third party
until that party shall first obtain the written consent of the other
party which consent shall not be unreasonably withheld and in any event
ALW shall remain liable to NOSTRAD for all its obligations hereunder
notwithstanding any such assignment.
<PAGE>
9
10.5 If any provision of this Agreement is, or at any time becomes, prohibited
by, or unlawful under, any applicable law, regulation or other condition
actually applied or otherwise becomes void or unenforceable, it will be
severed from this Agreement and rendered ineffective so far as Is
possible without modifying the remaining provisions of this Agreement and
he remaining provisions will, to the extent permitted by the relevant
law, regulation or other condition, continue In full force and effect.
10.6 Any prohibited, unlawful void or unenforceable provision will be replaced
immediately by an allowable, lawful, effective and enforceable provision
which so far as possible achieves the same economic benefit or burden for
both parties as the prohibited, unlawful, void or unenforceable provision
was intended to achieve.
10.7 All obligations of ALW and NOSTRAD under this Agreement will survive the
expiration or termination of this Agreement to the extent required for
their full observance and performance.
10.8 Neither this Agreement nor any provision of this Agreement may be
amended, modified, waived, discharged or terminated orally.
10.9 No variation, modification or waiver of any provision of this Agreement
nor consent to any departure by any party therefrom, shall in any event
be of any force or effect unless the same shall ha confirmed In writing,
signed by the parties, and then such variation, modification, waiver or
consent shall be effective only to the extent for which it may be made or
given.
10.10 If there is any defect in the execution of this Agreement by the parties.
that party will re-execute or ratify its purported execution. That
re-execution or ratification will relate back to the original purported
execution by that party.
10.11 This Agreement may be executed In any number of counterparts all of
which, when taken together, will constitute one and the same Instrument.
10.12 (a) A notice required or permitted to be given by one party to another
under this Agreement must be In writing and is treated as being duly
given if it is transmitted by facsimile to that other party's facsimile
number.
(b) A notice given by a party in accordance with this Clause is treated
as having been duly giver and received on the day of transmission (if a
business day) or, if not a business day, on the next succeeding business
day (if given by facsimile and sent to the facsimile receiver number of
that party and no intimation having been received that the notice had not
been received, whether that information comes from that party or from the
operation of facsimile machinery or otherwise).
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10
10.13 This Agreement wilt be construed In accordance with the law of the State
of Victoria, Australia, and the law c f the State of Victoria. Australia
will be the proper law of this Agreement. The parties agree to submit to
the non-exclusive jurisdiction of the courts of that State and any courts
which may hear appeals therefrom.
10.14 Each party to this Agreement shall do, sign and execute all deeds,
schedules, acts, documents and things as may reasonably be required by
the other party effectively to carry out and give effect to the terms and
intentions of this Agreement.
10.15 (a) All stamp duty on or in respect of this Agreement or the transfer or
assignment of any property or in respect of any instrument or transaction
contemplated by this Agreement shall be borne and paid by ALW.
(b) Other than the costs referred to above, each party shall be
responsible for its own legal and financial advice relating to this
Agreement.
10.16 A waiver by either party of any of the terms and conditions of this
Agreement in any one Instance shall not be deemed or construed to be a
waiver of such term or condition for the future or of any other or
subsequent breach thereof. All remedies, rights, undertakings,
obligations and agreements contained in this Agreement shall be
cumulative and none of them shall be In limitation of any other remedy,
right, undertaking, obligation or agreement of either party.
10.17 This Agreement contains the entire understanding of the parties hereto
relating to the subject matter herein contained and supersedes all prior
understanding and agreements of the parties hereto. Each party
acknowledges that no representation, inducement, promise or agreement
oral or written with reference to the subject matter hereof have been
made other than as expressly set forth herein. It Is expressly agreed
that save as otherwise provided herein the contract Is an entire contract
and neither party shall be entitled to demand performance until the
performance of their own obligations in their entirety.
10.18 This Agreement may only be varied in writing executed by the parties
hereto or their assigns.
10.19 References to any statutory enactment or code shall be construed as
including references to the enactment or code as amended or modified from
time to time and in the event that the enactment or code is repealed
shall Include references to any enactment or code which replaces the
subject enactment or code and any amendments or modifications thereto
from time to time.
10.20 The relationship between the parties hereto is that of principal and
independent contractor and nothing herein shall or is intended to create
the relationship between or render either party a joint venturer,
employee, partner or otherwise of the other party.
<PAGE>
EXECUTED AS AN AGREEMENT
SIGNED FOR AND ON BEHALF of
ASIA LEARNING WORLD PTE LTD
HARRY A. HILL
representative HARRY A. HILL
in the presence of:
- -------------------
Witness - signature
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Witness - print name
SIGNED FOR AND ON BEHALF of
NOSTRAD TELECOMMUNICATIONS INC
by its authorised representative LAWRENCE LIM I
n the presence of:
LAWRENCE LIM
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Witness - signature
- -------------------
Witness: - print
Exhibit 10.2
MEMORANDUM AND CONTRACT OF UNDERSTANDING
Based upon discussions and correspondence between OmniVision Africa Ltd. of the
British Virgin Islands and Singapore (herein referred to as "OVA") and
CableVision (Africa) Ltd. ( herein referred to as "CVA") of Dar Es Salaam,
Tanzania, the following Memorandum and Contract of Understanding is provided in
order to outline a joint co-operation of a Wireless Cable TV Distribution and
Telecommunications Systems in Tanzania. This Memorandum of Understanding is
formulated under which OVA and CVA (herein referred to as the "Parties") will
enter into the Joint Venture.
1. It is agreed by the parties that OmniVision Tanzania Ltd. ( herein referred
to as "OVT") or other name as may be agreed upon will be incorporated to
establish a Wireless Cable TV Distribution System in Tanzania.
2. It is understood that OVA has a period of sixty (60) days beginning on the
date of the last signature date below, within which to complete a due diligence
and sign a formal agreement (based on the clauses below) with CVA setting out
the parties respective rights and obligations for the joint venture.
3. CVA intends not to engage in any discussions or agreements relating to the
Wireless Cable TV distribution system in Tanzania with any other individuals,
companies, or entities during the ninety day discussion period outlined above.
4. Both parties agree that this agreement and any future agreements will remain
confidential.
5. The parties agree that this agreement and any future agreements between the
parties will incorporate the following terms:
5.1 The parties will incorporate a limited liability company in Tanzania under
the name of OmniVision Tanzania Ltd. or any other name agreed upon for the
purposes of conducting the Joint Venture.
5.2 It is understood that CableVision (Africa) Ltd., being the parent company of
Coast Television Network Ltd. ( herein referred to as " CTN") and SkyVision,
will apply for the necessary licenses from the relevant Tanzanian authorities
and will transfer these relevant licenses to the Joint Venture Company once the
formal Joint Venture Agreement is signed.
5.3 CVA, from time to time, will provide any local facilitation necessary,
pertaining to the above project. Facilitation may include: local transportation,
the procurement of local personnel; the procurement of technical support;
introductions; foreign currency exchange facilitation and assistance in
repatriating profits of OmniVision Tanzania Ltd.
<PAGE>
5.4 CVA will provide OmniVision Tanzania Ltd. access and use of CTN's broadcast
facilities in Dar Es Salaam. This access shall include, but not limited to,
access to the buildings' roof top transmit site.
5.5 15 % ( fifteen percent) of the share capital of the Joint Venture Company
shall be allotted to CVA against payment of a nominal amount in consideration of
the efforts of CVA in obtaining the required licenses and MMDS frequency to
operate 7 channels of Pay TV service from the relevant Tanzanian authorities. An
additional 5% (five percent) shall be allocated to CTN and/or Sumaria Holdings
Ltd. if the frequency allocated by the Tanzania Broadcast Council to the
OmniVision Tanzania Ltd (the Joint Venture Company) comprises the entire MMDS
bandwidth between 2.52 to 2.65 Ghz (representing at least 14 channels of 8 MHz
per channel).
5.6 OVA will provide the equipment, financing, operating capital, management and
management information systems required for the operation of the Wireless Cable
TV Distribution System and subject to feasibility, for the operation of any
other telecommunications related projects in Tanzania. In furtherance of the
objective of this clause, the Board of Directors of OVG will determine the
investment requirements in order to maximize the potential returns to the joint
venture.
5.7 OVA will grant to CVA. or any of its affiliates the option of increasing its
shareholding by an additional maximum amount of 15% (fifteen percent) on a
pro-rata basis in the Joint Venture by providing additional equity above and
beyond the terms and conditions as outlined in the formal Joint Venture
Agreement.
5.8 16% of the shares of the joint venture will be held by Cable Holdings
Tanzania
5.9 In consideration of the programming and operational management services
provided by OVA to OVT. OVT will pay to OVA a fee equal to six (6) percent of
the gross monthly subscription fees received by the OVT from subscribers of the
wireless pay television network.
5.10 The Board of Directors of the Company shall comprise of a maximum of 5
(five) members, two (2) of whom shall be appointed by CVA , one (1) by Cable
Holdings Tanzania and two (2) by OVA.
5.11 The directors shall each receive a monthly remuneration as shall from time
to time be determined by the Board of Directors.
6. Any costs, expenses, or liabilities incurred by either of OVA or CVA as a
result of the negotiation of this Memorandum of Undertaking, it's
implementation, amendment, or expansion
<PAGE>
shall be borne by each company and/or individual separately and individually
other than as set out above. The parties shall not be liable or obligated to
each other for such expenses.
7. For the purposes of this agreement, including the giving of notices in terms
hereof and the serving of legal process, the parties choose as the address at
which they accept delivery of all notices and process as follows:
7.1 OVA.................at: 20 Bideford, #07-01 Wellington Building, Singapore
7.2 CVA ................at: PO Box 3016 Dar Es Salaam, Tanzania
8. A Party may at any time change its address aforesaid by notice in writing.
9. It is understood that upon the signing of this Memorandum of Understanding,
that OVA will provide CVA with the necessary license applications and technical
details in order to assist CVA with the necessary documentation to pursue the
necessary licenses.
9.1 It is understood that the license application has been prepared by OVA and
that the application is being disclosed to CVA for license application purposes
only. CVA agrees that they will not use or exploit the application in any manner
or establish any venture embodying or reflecting such application or its salient
elements unless CVA and OVA have entered into a Joint Venture Agreement setting
forth the manner in which CVA may use the application or its salient elements.
9.2 CVA agrees to hold the application, and all related information and
discussions, in strict confidence, except that CVA may disclose the application
to the relevant government bodies to adequately evaluate the licensing of the
Wireless Pay TV Project.
9.3 CVA agrees that OVA reserves all rights in and to the license application.
No part of the application, any related information and/or discussions thereon
may be reproduced, stored in retrieval, or re-transmitted, in any form or by any
means, electronic, mechanical, photocopied, recorded, or otherwise without prior
express written permission of OVA. CVA agrees to return all originals and all
copies of the license application upon request or upon conclusion of CVA's
review and evaluation thereof.
9.4 CVA acknowledges and agrees that, because of the unique nature of the
business, OVA would be irreparably harmed if CVA were to disclose or use the
application or its business plan in violation to this agreement.
10. It is agreed by both parties that due to the great distances separating the
parties and the time urgency in concluding this agreement, that fax copies shall
be deemed to be acceptable and binding. Fax copies must be sent to the
following:
<PAGE>
10.1 OVA...............at: 1-604-988-2083 and 1-604-488-0991, Vancouver, Canada
10.2 CVA ..............at: 255-51-113113, Dar Es Salaam, Tanzania
SIGNED AND SEALED THIS ________ DAY OF ___________1998 BY THE RESPECTIVE PARTIES
AS FOLLOWS:
_______________________________________________ CORPORATE SEAL
FOR:
OMNIVISION AFRICA LTD
Director, Duly authorized
______________________________________________ CORPORATE SEAL
FOR:
CABLEVISION (AFRICA) LTD.
Director, Duly authorized
Exhibit 10.3
THIS AGREEMENT is made the 20th day of October, 1998.
BETWEEN.
ENTERTAINMENT WORLD LIMITED A.C.N. 006 222 395 being a company duly incorporated
pursuant to the Cowrations Law, the registered office of which is situated at
Suite 2.3. 320 St Kilda Road, St Kilda in the State of Victoria. Australia (EWL)
of the one part
AND
ASIA LEARNING WORLD PTE LTD being a company duly incorporated pursuant to the
laws of Singapore and having its offices situated at No. 14-02/03, FORUM, 583
Orchard Road. Singapore 238884 (ALW)
of the second part
WHEREAS:
A. ALW provides pay Channels to customers in the Asian region.
B. EWL has expertise in developing and managing educational television
channels Including selecting and acquiring programs, scheduling, technical
and distance education operations
C. ALW has agreed to appoint EWL at its exclusive provider of Services in
relation to the Channel pursuant to the terms and conditions contained In
this Agreement.
NOW THIS AGREEMENT WITNESSES as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this agreement including the recitals, unless the context otherwise
requires:
Agreement means this agreement including all annexures and Schedules;
Channel means the television channel or channels which are within the
Territory which are developed or will be developed by ALW for the purpose
of telecasting the Programs;
Channel Schedule means the schedule of programs for the Channel for each
Quarter during the Term prepared by EWL from time to time;
Clause means a clause of his Agreement;
Commencement Date means the date of this agreement;
Copyright Agencies means copyright owners societies, any performing rights
societies, mechanical rights societies composers, authors, and music
publishers in any country where the Channel is telecast;
<PAGE>
Fees means the fees to paid or payable to EWL In accordance with this
Agreement as set out in Clause 5. 1 (a);
Interstitials means the short segments between programs providing for the
opportunity to telecast promotions, logos, station identifications and
announcements regarding future Programming, contact telephone numbers or
any other promotional or marketing material whether for the benefit of the
Channel or otherwise;
Management Fee means be management fee payable by ALW to EWL in respect of
each Quarter being thirty-five per cent (35%) of the total of all Fees
excluding costs of Play-Out Facilities and costs of licensing program
intellectual property;
Party means each of ALW and EWL and Parties means them collectively;
Play-Out Facilities mean; the facilities commonly referred to in the pay
television industry as play-out and up -link which enable television
signals to be telecast, including the provision of satellite related
services;
Program means a television program related to education or having the
purpose of educating Subscribers or customers of Subscribers;
Programming means the services as defined in Clause 3.1 (b);
Quarter means the three (3) calendar months ending 31st March, 30th June,
30th September and 31st December;
Schedule means a schedule attached to and forming part of this Agreement;
Services means the services to be provided by EWL to ALW as more fully set
out in Clause 3;
Subscribers means the customers of ALW who have contracted with ALW to
supply them with television video; and information services;
Term means the period sat out in Clause 6.1 and the period of any renewal
of the Contract under Clause 6.2 or such earlier date on which this
Agreement Is terminated in accordance with Clause 7:
Territory means the whole of Asia Including ail sovereign nations or part
thereof within Asia; and
Year means a consecutive period of 365 days or in a leap year a consecutive
period of 366 days.
1.2
Interpretation In this agreement. including the recitals, unless the
context otherwise requires:
(a) a reference to legislation or to a legislative provision includes all
regulations, orders, proclamations, notices or other requirements
under that legislation or legislative provision. It also Includes any
amendments, modifications or re-enactments of the legislation or
legislative provision and any legislation or legislative provision
substituted for and any statutory instrument issued underthat
legislation or legislative provision;
<PAGE>
3
(b) a word denoting the singular number includes the plural number and
vice versa;
(c) a word denoting an individual or person includes a corporation, firm,
authority, government or governmental authority and vice versa;
(d) a word denoting a gender includes all genders;
(e) a reference to a recital, clause, schedule or annexure is to a
recital, clause, schedule or annexure of or to this Agreement;
(f) a reference to an i deed, agreement. licence, document or other
instrument (including this Agreement) includes a reference to that
deed, agreement, licence, document or other instrument as renewed,
extended, novated, varied or substituted from time to time;
(g) a reference to any party to this Agreement or to any other deed
agreement, licence, document or other instrument required under this
Agreement or for the purposes of this Agreement Includes that party's
executors, administrators, substitutes, successors and permitted
assigns;
(h) a reference to a "related corporation" of a body corporate is a body
corporate which is related to it under s.50 of the Corporations Act
1989 (Cth) (Australia);
(i) a reference to "dollar" or "$" is to an amount in the lawful currency
of the United States of America.,
(j) a reference to a matter being to the knowledge of a person means that
the matter Is to the best of the knowledge and belief of that person
after proper enquiry Including enquiry which a reasonable person would
be prompted to make by reason of knowledge of a fact;
(k) where under or pursuant to this Agreement or anything done under this
Agreement the day on or by which any act, matter or thing Is to be
done is not a Business Day such act, matter or thing must be done on
the immediately preceding Business Day;
(l) where under or pursuant to this Agreement or anything done under this
Agreement the day on or by which any act, matter or thing is to be
done is the 29th, 30th or 31st, lay of any month in which such a day
does not occur, such act, matter or thing, must be done on the last
day of that month;
(m) references to clauses are references to clauses of this Agreement;
(n) a reference to winding up or bankruptcy includes bankruptcy, winding
up, liquidation, dissolution, becoming an insolvent under
administration (as defined in s.9 of the Corporations Law) and being
placed under official management, and to the circumstances and events
giving rise to or contributing to such condition or matters, and
1.3 Headings and parts of speech
In this Agreement, includiriq the recitals:
(a) headings are for convenience of reference only and do not affect
interpretations; and
<PAGE>
4
(b) where an expression is defined, another part of speech or grammatical
form of that expression have, a corresponding meaning.
2 APPOINTMENT OF EWL
2.1 ALW hereby appoints EWL exclusively to provide it with the Services for the
Territory during the Term.
2.2 EWL shall provide the Services exclusively to ALW within the Territory and
to no other party which may be a competitor of ALW unless otherwise agreed
by the parties.
3 PROVISION OF EWL SERVICE
3.1 In consideration of the payment of the Fees and in further consideration of
the exclusive agency granted to EWL under Clause 2, EWL will provide the
following services to AILW
(a) development of the corporate image of the Channel including corporate
and Channel logos and trade marks which shall become the intellectual
property of ALW;
(b) development, sourcing, production, acquisition and licensing of
Programs for the purpose of telecasting same on the Channels,
Including the following services:
(i) dubbing and sub-titling of Programs to be shown on the Channel;
(ii) development of Program contents;
(iii) production of Programs and Interstitials for telecasting during
or between programs,
(iv) developing Program Scheduling and providing hard copies of the
Program Scheduling to meet censorship requirements, if any, in
the Territory, and
(v) provision to ALW, within reasonable time of a written request by
ALW, copies of all release forms, consents, waivers, license,
music cue sheets and all other contracts or authorities required
in order to telecast Programs en the Channel;
(c) negotiating with local and International educational Institutions and
like bodies for the supply of Programs and courses for and on behalf
of ALW;
(d) developing a system of franchised outlets for ALW through which ALW
will provide educational services in the Territory;
<PAGE>
5
(e) provide or procure the provision of Play-Out Facilities;
(f) where ALW Is subject to any litigation or threat of litigation,
whether as plaintiff or defendant then EWL shall provide It with all
assistance reasonably required including the provision of any
documentation in EWL's possession;
(g) provision of ongoing support in conjunction with operating the Channel
Including provision of Information to subscribers of the Channel,
educational institutions and other providers of similar services to
promote the Channel generally except that nothing in this clause
derogates from the obligations of ALW under Clauses 4.2 and 4.3; and
(h) to provide an Annual Program Plan which is approved by ALW, such
approval not to be unreasonably withheld (for the purpose of this
sub-Clause, approval shall be deemed to be given by ALW within seven
(7) days of receipt of the Annual Program Plan unless otherwise
notified to EWL by notice in writing).
3.2 Notwithstanding anything a so contained herein, EWL shall not be required
to contribute to any costs of the Channel, whether of a capital nature or
otherwise, unless specifically required herein and ALW shall indemnify EWL
In respect of any amounts so paid or payable by EWL.
4 RESPONSIBILITIES OF ALW
ALW shall, in consideration of the Services provided by EWL under this document:
4.1 pay to EWL all of the Fees n accordance with Clause 5;
4.2 be responsible for all royalty or licence payments in respect of any
intellectual property including technology, computer software, commercial
film footage, music, talent, research and information database issued as
part of any ALW delivery platform and technology Integration, to any
Copyright Agency or any other entity; and
4.3 be responsible for all marketing, promotion, advertising and publicity of
the Channel and the other Services including all costs associated with
same.
5 FEES
5.1 In consideration of the provision of the Services, ALW shall pay to
EWL:
(a) all of the costs Incurred by EWL in respect of the provision of the
Services as agreed to by the parties; and
(b) Management Fees
<PAGE>
6
5.2 The Fees shall be pre-estimated on the basis of the following items:
(a) quarterly program; acquisition, Programming and licensing fees as
budgeted by the parties bi-annually;
(b) quarterly Play-Out Facility costs of operation as budgeted by the
parties bi-annually.,
(c) quarterly education al support costs of establishing and maintaining a
franchise network of learning centres, maintaining relations with
institutions and other educational providors as budgeted by the
parties bi-annually;
(d) quarterly staffing and overhead costs of EWL as budgeted by the
parties on a bi-annual basis; and
(e) quarterly costs relating to any other Services as budgeted by the
parties on a bi-annual basis.
5.3 ALW shall pay to EWL the pre -"estimate of Fees calculated under Clause 52
within seven (7) days of the commencement of each Quarter.
5.4 All payments to EWL under this Agreement shall be made by way of a
telegraphic transfer in cleared funds o the account of EWL at the ANZ
Banking Group Ltd, Melbourne, details of which will be advised In due
course.
5.5 Within one (1) week after the end of each Quarter:
(a) EWL shall provide a statement setting out the actual Fees Incurred by
it during the previous Quarter and the Management Fees payable by ALW
in respect of that Quarter (Statement);
(b) the Statement shat Include, among other things, copies of all relevant
invoices which support its claims set out in the Statement; and
wherever required or auditing purposes, EWL shall provide, within
reasonable time, originals of at invoices which support its claims set
out in the Statement.
5.6 Where the total amount owl id to EWL under the Statement (including the
Management Fees):
(a) exceeds the amount it actually paid to EWL in respect of the relevant
Quarter pursuant to Clause 5.2, then ALW shall pay the balance of the
amount owing to EWL within one (1) week of the date of the Statement;
or
(b) is less than the amount actually paid to EWL in respect of the
relevant Quarter pursuant to Clause 5.2, then the parties shall adjust
the balance overpaid to EWL against the pi e-estimate of Fees payable
by ALW pursuant to Clause 5.2 In respect of the next Quarter.
<PAGE>
7
5.7 Without limiting EWLs legal rights for any breach of these provisions, EWL
shall be entitled to interest payable on demand at the rate of two per cent
(2%) per month or proportionately thereof for any amounts outstanding to it
by ALW calculated 30 days after the date due for payment.
6 TERM
6.1 The agreement between AL.W and EWL shall commence on the Commencement
Date and unless terminated earlier by agreement between the parties,
shall continue until the date five (5) years after the Channel goes
live to air.
6.2 Subject to termination pursuant to Clause 7, the Agreement shall be
automatically renewed for further successive periods of three (3)
Years at the expiry of the initial term or any renewed term.
7 TERMINATION OF AGREEMENT
7.1 This Agreement shall be terminated:
(a) where either party this Agreement in its absolute discretion gives
written notice of its intention not to renew the Agreement under
Clause 6.2 at least eighteen (18) months prior to the expiry date of
that term, on the expiry date of that term or
(b) where either party fails or neglects to discharge any obligation,
covenant, condition, term, agreement or warranty imposed by this
Agreement or otherwise and is provided written notice of such breach
and fails to remedy the breach within thirty (30) days of the date of
the notice, on the thirtieth day from the date of the notice.
7.2 Termination of this Agreement for any of the reasons set out in Clause 7.1
shall have the following effect:
(a) ALW shall pay to EWL all Fees, Management Fees and payments due under
the Agreement to EWL up to the date of termination; or
(b) EWL shall pay to ALW all surplus Fees, Management Fees and
over-payments due under the Agreement to ALW up to the date of
termination; and
(c) each party will remain entitled to enforce any claims against the
other party arising from any t, each of the Agreement that may have
occurred before termination.
<PAGE>
8
8 CONFIDENTIAL INFORMATION
8.1 ALW shall not. except as authorised or required by this Agreement, reveal
to any person or persons or company or any of them or make use for its own
benefit any of the trade secrets, secret or confidential operations,
processes or dealings or any Information concerning the organisation,
business, finances, transactions or affairs of EWL or any of its related
entities which may come to its knowledge during the term of this Agreement
and shall keep with complete secrecy all confidential information entrusted
to it and shall not use or attempt to use any such Information in any
manner which may Injure or cause loss, either directly or indirectly, to
EWL or its business or may be likely to do so.
8.2 The restriction contained in clause 8.1 shall continue to apply after the
termination of this Agreement without limit in point of time but shall
cease to apply to information which may come into the public domain.
8.3 ALW may also obtain during the course of this Agreement, by reason of this
Agreement, knowledge of the trade secrets or other confidential Information
of any related entity to EWL and ALW hereby agree that it will at the
request of such entity, and at the cost of EWL, enter into a direct
agreement or undertaking with any such entity whereby it will accept
restrictions corresponding with the restrictions contained in this
Agreement and the Program as such entity may reasonably require for the
protection of Its legitimate business Interests.
9 INTELLECTUAL PROPERTY RIGHTS
Notwithstanding anything else combined In this Agreement, all intellectual
property created by virtue or as a result of this Agreement shall vest in and
become the property of ALW unless otherwise agreed to in writing by the parties.
10 GENERAL
10.1 None of the terms or conditions of this Agreement, nor any act. matter or
thing done under or by virtue of, or In connection with, this Agreement
will operate as a merger of any of the rights and remedies of EWL or ALW In
or under this Agreement or otherwise. All such rights and remedies of the
EWL and ALW will continue in full force and effect.
10.2 Unless application is mandatory by taw, no statute, ordinance,
proclamation, rule, order, regulation. moratorium or decree of any
governmental or other authority. present or future, will apply to this
Agreement so as to abrogate, extinguish, impair, diminish, fetter, delay or
otherwise prejudicially affect any rights, powers, remedies or discretions
given or accruing to EWL or ALW under this Agreement.
10.3 To the extent permissible a: law, ALW must immediately upon demand pay to
EWL an amount equivalent to any moneys paid by EWL in respect of any
liability imposed on ALW under or by virtue of this Agreement,
notwithstanding that any statute, ordinance, proclamation, rule, order
regulation, moratorium or decree of any governmental or other authority,
present or future, directly or indirectly, Imposes such liability upon EWL.
10.4 Neither party may assign the benefit of this Agreement to any third party
until that party shall first obtain the written consent of the other party
which consent shall not be unreasonably withheld and in any event ALW shall
remain liable to EWL for all Its obligations hereunder notwithstanding any
such assignment.
10.5 If any provision of this Agreement is, or at any time becomes, prohibited
by, or unlawful under, any applicable law, regulation or other condition
actually applied or otherwise becomes void or unenforceable, it will be
severed from this Agreement and rendered ineffective so far as is possible
without modifying the remaining provisions of this Agreement and the
remaining provisions will, to the extent permitted by the relevant law,
regulation or other condition, continue in full force and effect.
<PAGE>
10.6 Any prohibited, unlawful, void or unenforceable provision will be
replaced immediately by an allowable, lawful, effective and
enforceable provision which so far as possible achieves the same
economic benefit or burden for both parties as the prohibited,
unlawful, void or unenforceable provision was intended to achieve.
10.7 All obligations of ALW and EWL under this Agreement will survive the
expiration or termination of this Agreement to the extent required for
their full observance and performance.
10.8 Neither this Agreement nor any provision of this Agreement may be
amended, modified, waived, discharged or terminated orally.
10.9 No variation, modification or waiver of any provision of this
Agreement nor consent to any departure by any party therefrom, shall
in any event be of any force or effect unless the same shall be
confirmed in writing, signed by the parties, and then such variation,
modification, waiver or consent shall be effective only to the extent
for which it may be made or given.
10.10 If there is any defect in the execution of this Agreement by the
parties, that party will re-execute or ratify its purported execution.
That re-execution or ratification will relate back to the original
purported execution by that party.
10.11 This Agreement may be executed in any number of counterparts all of
which, when taken together, will constitute one and the same
Instrument.
10.12 (a) A notice required or permitted to be given by one party to
another under this Agreement must be in writing and Is treated as
being duly given if It is transmitted by facsimile to that other
party's facsimile number.
(b) A notice given to a party, in accordance with this Clause Is
treated as having been duly given and received on the day of
transmission (9 a business day) or, if not a business day, on the
next succeeding business day (if given by facsimile and sent to
the facsimile receiver number of that party and no Intimation
having been received that the notice had not been received,
whether that intimation comes from that party or from the
operation of facsimile machinery or otherwise).
10.13 This Agreement will be construed in accordance with the law of the
State of Victoria, Australia, and the law of the State of Victoria,
Australia will be the proper law of this Agreement. The parties agree
to submit to the non-exclusive jurisdiction of the courts of that
State and any courts which may hear appeals therefrom.
10.14 Each party to this Agreement shall do, sign and execute all deeds,
schedules, acts, documents and things as may reasonably be required by
the other party effectively to carry out and give effect to the terms
and intentions of this Agreement.
10.15 (a) All stamp duty on or in respect of this Agreement or the transfer
or assignment of any property or in respect of any instrument or
transaction contemplated by this Agreement shall be borne and
paid by ALW
(b) Other than the costs referred to above. each party shall be
responsible for its own legal and financial advice relating to
this Agreement.
10.16 A waiver by either party of any of the terms and conditions of this
Agreement in any one instance shall not be deemed or construed to be a
waiver of such term or condition for the future or of any other or
subsequent breach thereof. All remedies, rights, undertakings,
obligations and agreements contained In this Agreement shall be
cumulative and none of them shall be in limitation of any other
remedy, right, undertaking, obligation or agreement of either party.
10.17 This Agreement contains the entire understanding of the parties hereto
relating to the subject matter herein contained and supersedes all
prior understanding and agreements of the parties hereto. Each party
acknowledges that no representation, inducement, promise or agreement
oral or written with reference to the subject matter hereof have been
made other than as expressly set forth herein. It is expressly agreed
that save as otherwise
<PAGE>
provided herein the contract is an entire contract and neither party
shall be entitled to demand performance until the performance of their
own obligations in their entirety.
10.18 This Agreement may only )a varied in writing executed by the parties
hereto or their assigns.
<PAGE>
11
10.19 References to any statutory enactment or code shall be construed as
including references to the enactment it or code as amended or
modified from time to time and in the event that the enactment or code
Is repeated shall Include references to any enactment or code which
replaces the subject enactment or code and any amendments or
modifications thereto from time to time.
10.20 The relationship between the parties hereto is that of principal and
independent contractor and nothing herein shall or is intended to
create the relationship between or render either party a joint
venturer, employee, partner or otherwise of the other party.
EXECUTED AS AN AGREEMENT
SIGNED FOR AND ON BEHALF of
ENTERTAINMENT WORLD LIMITE D HARRY A. HILL
ACN 006 222 395 its duly authorised
representative HARRY A. HILL
in the presence of:
- -------------------
Witness - signature
.Evan McClegon
Witness - print name
SIGNED FOR AND ON BEHALF OF
ASIA LEARNING WORLD PTE LTD
by its authorised representative LAWRENCE LIM
in the presence of: LAWRENCE LIM
- -------------------
Witness - signature
SHELLY LEONG
Witness - print name
Exhibit 10.4
THIS AGREEMENT is made the 20th day of October, 1998.
BETWEEN.
ENTERTAINMENT WORLD LIMITED A.C.N. 006 222 395 being a company duly incorporated
pursuant to the Cowrations Law, the registered office of which is situated at
Suite 2.3. 320 St Kilda Road, St Kilda in the State of Victoria. Australia (EWL)
of the one part
AND
ASIA LEARNING WORLD PTE LTD being a company duly incorporated pursuant to the
laws of Singapore and having its offices situated at No. 14-02/03, FORUM, 583
Orchard Road. Singapore 238884 (ALW)
of the second part
WHEREAS:
A. ALW provides pay Channels to customers in the Asian region.
B. EWL has expertise in developing and managing educational television
channels Including selecting and acquiring programs, scheduling,
technical and distance education operations
C. ALW has agreed to appoint EWL at its exclusive provider of Services in
relation to the Channel pursuant to the terms and conditions contained In
this Agreement.
NOW THIS AGREEMENT WITNESSES as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this agreement including the recitals, unless the context
otherwise requires:
Agreement means this agreement including all annexures and
Schedules;
Channel means the television channel or channels which are within
the Territory which are developed or will be developed by ALW for
the purpose of telecasting the Programs;
Channel Schedule means the schedule of programs for the Channel
for each Quarter during the Term prepared by EWL from time to
time;
Clause means a clause of his Agreement;
Commencement Date means the date of this agreement;
Copyright Agencies means copyright owners societies, any
performing rights societies, mechanical rights societies
composers, authors, and music publishers in any country where the
Channel is telecast;
<PAGE>
Fees means the fees to paid or payable to EWL In accordance with
this Agreement as set out in Clause 5. 1 (a);
Interstitials means the short segments between programs providing
for the opportunity to telecast promotions, logos, station
identifications and announcements regarding future Programming,
contact telephone numbers or any other promotional or marketing
material whether for the benefit of the Channel or otherwise;
Management Fee means be management fee payable by ALW to EWL in
respect of each Quarter being thirty-five per cent (35%) of the
total of all Fees excluding costs of Play-Out Facilities and costs
of licensing program intellectual property;
Party means each of ALW and EWL and Parties means them
collectively;
Play-Out Facilities mean; the facilities commonly referred to in
the pay television industry as play-out and up -link which enable
television signals to be telecast, including the provision of
satellite related services;
Program means a television program related to education or having
the purpose of educating Subscribers or customers of Subscribers;
Programming means the services as defined in Clause 3.1 (b);
Quarter means the three (3) calendar months ending 31st March,
30th June, 30th September and 31st December;
Schedule means a schedule attached to and forming part of this
Agreement;
Services means the services to be provided by EWL to ALW as more
fully set out in Clause 3;
Subscribers means the customers of ALW who have contracted with
ALW to supply them with television video; and information
services;
Term means the period sat out in Clause 6.1 and the period of any
renewal of the Contract under Clause 6.2 or such earlier date on
which this Agreement Is terminated in accordance with Clause 7:
Territory means the whole of Asia Including ail sovereign nations
or part thereof within Asia; and
Year means a consecutive period of 365 days or in a leap year a
consecutive period of 366 days.
1.2 Interpretation
In this agreement. including the recitals, unless the context otherwise
requires:
(a) a reference to legislation or to a legislative provision includes all
regulations, orders, proclamations, notices or other requirements under
that legislation or legislative provision. It also Includes any
amendments, modifications or re-enactments of the legislation or
legislative provision and any legislation or legislative provision
substituted for and any statutory instrument issued underthat legislation
or legislative provision;
<PAGE>
3
(b) a word denoting the singular number includes the plural number and
vice versa;
(c) a word denoting an individual or person includes a corporation, firm,
authority, government or governmental authority and vice versa;
(d) a word denoting a gender includes all genders;
(e) a reference to a recital, clause, schedule or annexure is to a
recital, clause, schedule or annexure of or to this Agreement;
(f) a reference to an i deed, agreement. licence, document or other
instrument (including this Agreement) includes a reference to that deed,
agreement, licence, document or other instrument as renewed, extended,
novated, varied or substituted from time to time;
(g) a reference to any party to this Agreement or to any other deed
agreement, licence, document or other instrument required under this
Agreement or for the purposes of this Agreement Includes that party's
executors, administrators, substitutes, successors and permitted assigns;
(h) a reference to a "related corporation" of a body corporate is a body
corporate which is related to it under s.50 of the Corporations Act 1989
(Cth) (Australia);
(i) a reference to "dollar" or "$" is to an amount in the lawful currency
of the United States of America.,
(j) a reference to a matter being to the knowledge of a person means that
the matter Is to the best of the knowledge and belief of that person
after proper enquiry Including enquiry which a reasonable person would be
prompted to make by reason of knowledge of a fact;
(k) where under or pursuant to this Agreement or anything done under this
Agreement the day on or by which any act, matter or thing Is to be done
is not a Business Day such act, matter or thing must be done on the
immediately preceding Business Day;
(l) where under or pursuant to this Agreement or anything done under this
Agreement the day on or by which any act, matter or thing is to be done
is the 29th, 30th or 31st, lay of any month in which such a day does not
occur, such act, matter or thing, must be done on the last day of that
month;
(m) references to clauses are references to clauses of this Agreement;
(n) a reference to winding up or bankruptcy includes bankruptcy, winding
up, liquidation, dissolution, becoming an insolvent under administration
(as defined in s.9 of the Corporations Law) and being placed under
official management, and to the circumstances and events giving rise to
or contributing to such condition or matters, and
1.3 Headings and parts of speech
In this Agreement, includiriq the recitals:
(a) headings are for convenience of reference only and do not affect
interpretations; and
<PAGE>
4
(b) where an expression is defined, another part of speech or grammatical
form of that expression have, a corresponding meaning.
2 APPOINTMENT OF EWL
2.1 ALW hereby appoints EWL exclusively to provide it with the Services for
the Territory during the Term.
2.2 EWL shall provide the Services exclusively to ALW within the Territory
and to no other party which may be a competitor of ALW unless otherwise
agreed by the parties.
3 PROVISION OF EWL SERVICE
3.1 In consideration of the payment of the Fees and in further consideration
of the exclusive agency granted to EWL under Clause 2, EWL will provide
the following services to AILW
(a) development of the corporate image of the Channel including corporate
and Channel logos and trade marks which shall become the intellectual
property of ALW;
(b) development, sourcing, production, acquisition and licensing of
Programs for the purpose of telecasting same on the Channels, Including
the following services:
(i) dubbing and sub-titling of Programs to be shown on the
Channel;
(ii) development of Program contents;
(iii) production of Programs and Interstitials for telecasting
during or between programs,
(iv) developing Program Scheduling and providing hard copies of
the Program Scheduling to meet censorship requirements, if
any, in the Territory, and
(v) provision to ALW, within reasonable time of a written
request by ALW, copies of all release forms, consents,
waivers, license, music cue sheets and all other contracts
or authorities required in order to telecast Programs en
the Channel;
(c) negotiating with local and International educational Institutions and
like bodies for the supply of Programs and courses for and on behalf of
ALW;
(d) developing a system of franchised outlets for ALW through which ALW
will provide educational services in the Territory;
<PAGE>
5
(e) provide or procure the provision of Play-Out Facilities;
(f) where ALW Is subject to any litigation or threat of litigation,
whether as plaintiff or defendant then EWL shall provide It with all
assistance reasonably required including the provision of any
documentation in EWL's possession;
(g) provision of ongoing support in conjunction with operating the
Channel Including provision of Information to subscribers of the Channel,
educational institutions and other providers of similar services to
promote the Channel generally except that nothing in this clause
derogates from the obligations of ALW under Clauses 4.2 and 4.3; and
(h) to provide an Annual Program Plan which is approved by ALW, such
approval not to be unreasonably withheld (for the purpose of this
sub-Clause, approval shall be deemed to be given by ALW within seven (7)
days of receipt of the Annual Program Plan unless otherwise notified to
EWL by notice in writing).
3.2 Notwithstanding anything a so contained herein, EWL shall not be required
to contribute to any costs of the Channel, whether of a capital nature or
otherwise, unless specifically required herein and ALW shall indemnify
EWL In respect of any amounts so paid or payable by EWL.
4 RESPONSIBILITIES OF ALW
ALW shall, in consideration of the Services provided by EWL under this document:
4.1 pay to EWL all of the Fees n accordance with Clause 5;
4.2 be responsible for all royalty or licence payments in respect of any
intellectual property including technology, computer software, commercial
film footage, music, talent, research and information database issued as
part of any ALW delivery platform and technology Integration, to any
Copyright Agency or any other entity; and
4.3 be responsible for all marketing, promotion, advertising and publicity of
the Channel and the other Services including all costs associated with
same.
5 FEES
5.1 In consideration of the provision of the Services, ALW shall pay to
EWL:
(a) all of the costs Incurred by EWL in respect of the provision of the
Services as agreed to by the parties; and
(b) Management Fees
<PAGE>
6
5.2 The Fees shall be pre-estimated on the basis of the following items:
(a) quarterly program; acquisition, Programming and licensing fees as
budgeted by the parties bi-annually;
(b) quarterly Play-Out Facility costs of operation as budgeted by the
parties bi-annually.,
(c) quarterly education al support costs of establishing and maintaining
a franchise network of learning centres, maintaining relations with
institutions and other educational providors as budgeted by the parties
bi-annually;
(d) quarterly staffing and overhead costs of EWL as budgeted by the
parties on a bi-annual basis; and
(e) quarterly costs relating to any other Services as budgeted by the
parties on a bi-annual basis.
5.3 ALW shall pay to EWL the pre -"estimate of Fees calculated under Clause
52 within seven (7) days of the commencement of each Quarter.
5.4 All payments to EWL under this Agreement shall be made by way of a
telegraphic transfer in cleared funds o the account of EWL at the ANZ
Banking Group Ltd, Melbourne, details of which will be advised In due
course.
5.5 Within one (1) week after the end of each Quarter:
(a) EWL shall provide a statement setting out the actual Fees Incurred by
it during the previous Quarter and the Management Fees payable by ALW in
respect of that Quarter (Statement);
(b) the Statement shat Include, among other things, copies of all
relevant invoices which support its claims set out in the Statement; and
wherever required or auditing purposes, EWL shall provide, within
reasonable time, originals of at invoices which support its claims set
out in the Statement.
5.6 Where the total amount owl id to EWL under the Statement (including the
Management Fees):
(a) exceeds the amount it actually paid to EWL in respect of the relevant
Quarter pursuant to Clause 5.2, then ALW shall pay the balance of the
amount owing to EWL within one (1) week of the date of the Statement; or
(b) is less than the amount actually paid to EWL in respect of the
relevant Quarter pursuant to Clause 5.2, then the parties shall adjust
the balance overpaid to EWL against the pi e-estimate of Fees payable by
ALW pursuant to Clause 5.2 In respect of the next Quarter.
<PAGE>
7
5.7 Without limiting EWLs legal rights for any breach of these provisions,
EWL shall be entitled to interest payable on demand at the rate of two
per cent (2%) per month or proportionately thereof for any amounts
outstanding to it by ALW calculated 30 days after the date due for
payment.
6 TERM
6.1 The agreement between AL.W and EWL shall commence on the Commencement
Date and unless terminated earlier by agreement between the parties,
shall continue until the date five (5) years after the Channel goes live
to air.
6.2 Subject to termination pursuant to Clause 7, the Agreement shall be
automatically renewed for further successive periods of three (3) Years
at the expiry of the initial term or any renewed term.
7 TERMINATION OF AGREEMENT
7.1 This Agreement shall be terminated:
(a) where either party this Agreement in its absolute discretion gives
written notice of its intention not to renew the Agreement under Clause
6.2 at least eighteen (18) months prior to the expiry date of that term,
on the expiry date of that term or
(b) where either party fails or neglects to discharge any obligation,
covenant, condition, term, agreement or warranty imposed by this
Agreement or otherwise and is provided written notice of such breach and
fails to remedy the breach within thirty (30) days of the date of the
notice, on the thirtieth day from the date of the notice.
7.2 Termination of this Agreement for any of the reasons set out in Clause
7.1 shall have the following effect:
(a) ALW shall pay to EWL all Fees, Management Fees and payments due under
the Agreement to EWL up to the date of termination; or
(b) EWL shall pay to ALW all surplus Fees, Management Fees and
over-payments due under the Agreement to ALW up to the date of
termination; and
(c) each party will remain entitled to enforce any claims against the
other party arising from any t, each of the Agreement that may have
occurred before termination.
<PAGE>
8
8 CONFIDENTIAL INFORMATION
8.1 ALW shall not. except as authorised or required by this Agreement, reveal
to any person or persons or company or any of them or make use for its
own benefit any of the trade secrets, secret or confidential operations,
processes or dealings or any Information concerning the organisation,
business, finances, transactions or affairs of EWL or any of its related
entities which may come to its knowledge during the term of this
Agreement and shall keep with complete secrecy all confidential
information entrusted to it and shall not use or attempt to use any such
Information in any manner which may Injure or cause loss, either directly
or indirectly, to EWL or its business or may be likely to do so.
8.2 The restriction contained in clause 8.1 shall continue to apply after the
termination of this Agreement without limit in point of time but shall
cease to apply to information which may come into the public domain.
8.3 ALW may also obtain during the course of this Agreement, by reason of
this Agreement, knowledge of the trade secrets or other confidential
Information of any related entity to EWL and ALW hereby agree that it
will at the request of such entity, and at the cost of EWL, enter into a
direct agreement or undertaking with any such entity whereby it will
accept restrictions corresponding with the restrictions contained in this
Agreement and the Program as such entity may reasonably require for the
protection of Its legitimate business Interests.
9 INTELLECTUAL PROPERTY RIGHTS
Notwithstanding anything else combined In this Agreement, all intellectual
property created by virtue or as a result of this Agreement shall vest in and
become the property of ALW unless otherwise agreed to in writing by the parties.
10 GENERAL
10.1 None of the terms or conditions of this Agreement, nor any act. matter or
thing done under or by virtue of, or In connection with, this Agreement
will operate as a merger of any of the rights and remedies of EWL or ALW
In or under this Agreement or otherwise. All such rights and remedies of
the EWL and ALW will continue in full force and effect.
10.2 Unless application is mandatory by taw, no statute, ordinance,
proclamation, rule, order, regulation. moratorium or decree of any
governmental or other authority. present or future, will apply to this
Agreement so as to abrogate, extinguish, impair, diminish, fetter, delay
or otherwise prejudicially affect any rights, powers, remedies or
discretions given or accruing to EWL or ALW under this Agreement.
10.3 To the extent permissible a: law, ALW must immediately upon demand pay to
EWL an amount equivalent to any moneys paid by EWL in respect of any
liability imposed on ALW under or by virtue of this Agreement,
notwithstanding that any statute, ordinance, proclamation, rule, order
regulation, moratorium or decree of any governmental or other authority,
present or future, directly or indirectly, Imposes such liability upon
EWL.
10.4 Neither party may assign the benefit of this Agreement to any third party
until that party shall first obtain the written consent of the other
party which consent shall not be unreasonably withheld and in any event
ALW shall remain liable to EWL for all Its obligations hereunder
notwithstanding any such assignment.
10.5 If any provision of this Agreement is, or at any time becomes, prohibited
by, or unlawful under, any applicable law, regulation or other condition
actually applied or otherwise becomes void or unenforceable, it will be
severed from this Agreement and rendered ineffective so far as is
possible without modifying the remaining provisions of this Agreement and
the remaining provisions will, to the extent permitted by the relevant
law, regulation or other condition, continue in full force and effect.
10.6 Any prohibited, unlawful, void or unenforceable provision will be
replaced immediately by an allowable, lawful, effective and enforceable
provision which so far as possible achieves the same economic benefit
<PAGE>
or burden for both parties as the prohibited, unlawful, void or
unenforceable provision was intended to achieve.
10.7 All obligations of ALW and EWL under this Agreement will survive the
expiration or termination of this Agreement to the extent required for
their full observance and performance.
10.8 Neither this Agreement nor any provision of this Agreement may be
amended, modified, waived, discharged or terminated orally.
10.9 No variation, modification or waiver of any provision of this Agreement
nor consent to any departure by any party therefrom, shall in any event
be of any force or effect unless the same shall be confirmed in writing,
signed by the parties, and then such variation, modification, waiver or
consent shall be effective only to the extent for which it may be made or
given.
10.10 If there is any defect in the execution of this Agreement by the parties,
that party will re-execute or ratify its purported execution. That
re-execution or ratification will relate back to the original purported
execution by that party.
10.11 This Agreement may be executed in any number of counterparts all of
which, when taken together, will constitute one and the same Instrument.
10.12 (a) A notice required or permitted to be given by one party to another
under this Agreement must be in writing and Is treated as being duly
given if It is transmitted by facsimile to that other party's facsimile
number.
(b) A notice given to a party, in accordance with this Clause Is treated
as having been duly given and received on the day of transmission (9 a
business day) or, if not a business day, on the next succeeding business
day (if given by facsimile and sent to the facsimile receiver number of
that party and no Intimation having been received that the notice had not
been received, whether that intimation comes from that party or from the
operation of facsimile machinery or otherwise).
10.13 This Agreement will be construed in accordance with the law of the State
of Victoria, Australia, and the law of the State of Victoria, Australia
will be the proper law of this Agreement. The parties agree to submit to
the non-exclusive jurisdiction of the courts of that State and any courts
which may hear appeals therefrom.
10.14 Each party to this Agreement shall do, sign and execute all deeds,
schedules, acts, documents and things as may reasonably be required by
the other party effectively to carry out and give effect to the terms and
intentions of this Agreement.
10.15 (a) All stamp duty on or in respect of this Agreement or the transfer or
assignment of any property or in respect of any instrument or transaction
contemplated by this Agreement shall be borne and paid by ALW
(b) Other than the costs referred to above. each party shall be
responsible for its own legal and financial advice relating to this
Agreement.
10.16 A waiver by either party of any of the terms and conditions of this
Agreement in any one instance shall not be deemed or construed to be a
waiver of such term or condition for the future or of any other or
subsequent breach thereof. All remedies, rights, undertakings,
obligations and agreements contained In this Agreement shall be
cumulative and none of them shall be in limitation of any other remedy,
right, undertaking, obligation or agreement of either party.
10.17 This Agreement contains the entire understanding of the parties hereto
relating to the subject matter herein contained and supersedes all prior
understanding and agreements of the parties hereto. Each party
acknowledges that no representation, inducement, promise or agreement
oral or written with reference to the subject matter hereof have been
made other than as expressly set forth herein. It is expressly agreed
that save as otherwise provided herein the contract is an entire contract
and neither party shall be entitled to demand performance until the
performance of their own obligations in their entirety.
10.18 This Agreement may only )a varied in writing executed by the parties
hereto or their assigns.
<PAGE>
11
10.19 References to any statutory enactment or code shall be construed as
including references to the enactment it or code as amended or modified
from time to time and in the event that the enactment or code Is repeated
shall Include references to any enactment or code which replaces the
subject enactment or code and any amendments or modifications thereto
from time to time.
10.20 The relationship between the parties hereto is that of principal and
independent contractor and nothing herein shall or is intended to create
the relationship between or render either party a joint venturer,
employee, partner or otherwise of the other party.
EXECUTED AS AN AGREEMENT
SIGNED FOR AND ON BEHALF of
ENTERTAINMENT WORLD LIMITE D HARRY A. HILL
ACN 006 222 395 its duly authorised
representative HARRY A. HILL
in the presence of:
- ---------------------------------------------
Witness - signature
Evan McClegon
- ---------------------------------------------
Witness - print name
SIGNED FOR AND ON BEHALF OF
ASIA LEARNING WORLD PTE LTD
by its authorised representative LAWRENCE LIM
in the presence of: LAWRENCE LIM
- ---------------------------------------------
Witness - signature
SHELLY LEONG
- ---------------------------------------------
Witness - print name
Exhibit 10.5
HEADS OF AGREEMENT
THIS AGREEMENT is dated 10
BETWEEN:
ENTERTAINMENT WORLD LIMITED (ACN 006 222 395) a company incorporated in the
State of Victoria and having its registered office situated at Suite 2.3, 320 St
Kilda Road, Melbourne In the State of Victoria("EWL") of the one part
AND
NOSTRAD TELECOMMUNICATIONS INC. a company incorporated in Nevada and having its
principal office at 583 Orchard Road, #14-02103, FORUM, Singapore("Nostrad) of
the other part
RECITALS:
A. EWL (via its wholly owned subsidiaries Educational Media Australia Pty Lid
and Learning Network Pty Lid) is in the business of producing and distributing
educational films and videos, producing learning channels to pay tv operators
and sourcing programming and product acquisition.
B. Nostrad is in the business of marketing, managing and operating Pay TV and
wireless telephony services in Africa and Asia.
C. With the expertise of EWL and Nostrad they propose to establish a new entity
to telecast two educational television channels into the Asian region using
digital satellite and cable transmission ("the Business*).
IT HEREBY AGREED AS FOLLOWS:
1. EWL and Nostrad will incorporate a new business entity in Singapore to be
called "ASIA LEARNING NETWORK PTE LTD", or such other variation as is agreed
between the parties, ("ALN") to undertake the Business.
2. ALN's share capital will be in US dollars and the ordinary fully paid shares
will be US$1.00 for each fully paid ordinary share ("Share").
3. At the time of incorporation of ALN, or soon thereafter, EWL and Nostrad will
each be issued 500,000 Shares in ALN ("the ("the Interest"). The consideration
to be paid by each of EWL and Nostrad for their acquisition of the Interest in
ALN shall be US$500,000 represented by:
3.1 equitisation of each party's accrued capital expenditure on and In relation
to the Business and ALN; and
3.2 an assignment of each party's intellectual property relating to ALN or the
Business, which consideration will be deemed to be paid to ALN at the time of
such allotment. The parties agree that save for this consideration, no further
consideration shall be payable for the shares being allotted to either or both
of EWL or Nostrad above.
4. in addition to, and simultaneously with, the issue of the 500,000 Shares to
both EWL and Nostrad in Clause 3 above, they will each receive 1,500,000 share
options exercisable at US$1.00 per Share ("Options"). The Options will expire
seven (7) years after the date on which they are issued. The Options are
exercisable as follows:
4.1 750,000 Options may be exercised at any time after ALN's first audited
profitable year; and
<PAGE>
4.2 750,000 Options may be exercised at any time after ALN's cumulative returns,
calculated on an EBIT basis, exceed US$8,000,000, provided that all of the
Options may be exercised at any time if a full or partial takeover is made to
the holders of shares in ALN. In these circumstances, ALN must forward a notice
notifying each of EWL and Nostrad of the offer and from the date of such
notification each of them may exercise their unexercised Options at any time up
to completion of the full or partial takeover notwithstanding any other terms
and conditions applicable to the Option.
5. ALN will execute:
5.1 a five (5) year Management Agreement with Nostrad or its nominated
subsidiary for the management and marketing of ALN's products and services
throughout the Asian Region ("Territory"). The Management Agreement will provide
among other things that:
(a) ALN appoints Nostrad or its nominated subsidiary to excl usively
provide it with the following services throughout the Territory..
(i) market development of ALN Channels in the Territory., development of
delivery platforms; development of marketing, promotion and
distribution of ALN's Channels, educational network services and
related franchises;
(iv) development of customer/student care and support services:
(v) development of complementary networks and technology integration;
marketing and consumer research systems: development of advertising,
list, marketing and sponsorship for ALN networks
ALN will, In consideration of the services provided by Nostrad under this
document:
(i) pay to Nostrad on a quarterly basis in advance the budgeted costs
arising out of the provision of the services to ALN including:
(A) Advertising and promotion costs as approved by the Parties bi
annually;
(B) Marketing and consumer research costs as agreed to by the Parties
bi-annually;
(C) All staff and overhead costs of Nostrad as agreed by the Parties on a
bi-annual basis;
(D) Customerlstudent care and support system which include call centre and
service delivery platform development and operating costs,
which fees are to be reconciled against the actual fees for the quarter (backed
by the relevant supporting documentation) within 14 days of the end of the
relevant quarter:
Q 1) pay to Nostrad a management fee in respect of selected cost centres to be
agreed upon at a rate equivalent to thirty-five per cent (35%) of the total
amount of the selected cost centres on a quarterly basis in arrears within 14
days of the end of the relevant quarter;
(iii) make all payments to Nostrad by way of a telegraph transfer in cleared
funds to the bank account nominated by Nostrad;
<PAGE>
3
(c) ALN will be responsible for all royalty or license payments in respect
of any intellectual property including technology, computer software,
commercial film footage, music, talent, research and information
database used as part of any ALN delivery platform, technology
integration as well as all marketing and promotion activities-, and
(d) ALN will be responsible for all channel programming and educational
network products and services provided that Nostrad contributes to
these activities where reasonably required including the provision of
marketing intelligence.
5.2 a five (5) year Channel Supply and Course Licensing Agreement with EWL's
subsidiary Learning Network Pty Ltd ("LNET") in respect to the Horizon
Learning Channel and Gateway Educational Channel and associated courses
which will be the startup learning services to be offered by ALN throughout
the Asian region. The Agreement will include the licensing of programs to
be broadcast, exclusive programming service including the production and
supply of logos and interstitials and the licensing and supply of courses,
texts and ancillary materials. The Channel and Course Licensing Agreement
will provide, among other things, as follows:
(a) ALN appoints LNET exclusively to provide it with the services as set
out in this document for the Territory; and
(b) in consideration of payment of the fees referred to in paragraph (c)
below and in further consideration of the exclusive agency granted to
LNET under paragraph (a) above, LNET will provide the following
services:
(1) developing the corporate image of the Channel including corporate and
Channel logos and trade marks which shall become the intellectual
property of ALN;
(ii) development sourcing, production, acquisition and licensing of
Programs for the purpose of broadcasting same on the Channels,
including the following services:
(A) dubbing and sub-tiding of Programs to be shown on the Channel.
(B) development of Program contents;
(C) production of Interstitials for broadcasting during or between
programs.,
(D) developing Program Scheduling and providing hard copies of the Program
Scheduling to meet censorship requirements, if any, in the Territory;
and
(E) provision to ALN, within reasonable time of a written request by ALN,
copies of all release forms, consents, waivers, license, music cue
sheets and all other contracts or authorities required in order to
broadcast Programs an the Channel;
OR) negotiating with local and international educational institutions and
like bodies for the supply of Programs and courses for and on behalf
of ALN;
(iv) developing a system of franchised outlets for ALN through which it
will provide educational services in the Territory;
(v) provide, develop or procure and manage the provision of facilities,
commonly described within the pay television industry as the
'play-out' and 'up-link', to enable the Channel to be telecast within
the Territory in a suitable location approved by ALN; and
(vi) provision of ongoing support in conjunction with operating the Channel
<PAGE>
4
including provision of information to subscribers of the Channel,
educational institutions and other providers of similar services to
promote the Channel generally.
(c) ALN shall, in consideration of the services provided by LNET under
this document:
(i) pay to LNET on a quarterly basis in advance the budgeted costs arising
out of the provision of the services to ALN including:
(A) program acquisition and programming costs as approved by the parties
bi-annually;
(B) educational support costs of establishing and maintaining a franchise
network of learning centres, maintaining relations with institutions
and other educational providers as agreed to by the parties
bi-annually:
(C) all staffing and overhead costs of LNET as agreed by the parties on a
bi-annual basis, which fees are to be reconciled against the actual
fees for the quarter (backed by the relevant supporting documentation)
within 14 days of the end of the relevant quarter;
(i1) pay to LNET a management fee in respect of selected cost centres to be
agreed upon at a rate equivalent to thirty-five per cent (35%) of the
total amount of the selected cost centres on a quarterly basis in
arrears within 14 days of the end of the relevant quarter;
make all payments to LNET by way of a telegraph transfer in cleared
funds to the bank account nominated by LNET;
(d) ALN will be responsible for all royalty or license payments in respect
of any intellectual property including technology, computer software,
commercial film footage, music, talent research and information
database used as part of any ALN delivery platform, technology
integration as well as all marketing and promotion activities: and
(e) ALN will be responsible for all marketing, promotion, advertising and
publicity of the network provided that LNET contributes to these
activities where reasonably required including the production of
interstitials.
6. Each of EWL and Nostrad will enter into a Shareholders Agreement which will
cover the following issues, among other things:
6.1 the appointment of two (2) directors by each party to the Board of
Directors of ALN and one of them will be appointed chairman:
6.2 the formation of a management committee to develop the Business in
accordance with the Business Plan (which is contained in Annexure A to this
Heads of Agreement ("Business Plan")) and the directions of the Board;
6.3 provision for the remaining shareholders to purchase the share of any share
holder wishing to sell h shares and leave the Business;
6.4 confidentiality provisions:
6.5 allocation of duties, company management and structure,
6.6 borrowing and fundraising by ALN;
67 a prohibition on any shareholder encumbering its shares in ALN without the
prior written
<PAGE>
5
consent of all directors;
6.8 the company policy of ALN;
6.9 a dispute resolution procedure in relation to any dispute between the
parties; and
6.10 such other terms and conditions usual for an agreement of this nature.
7. Irrespective of Clause 6.6 above, It Is the intention of the parties (as
evidenced by the provisions of the Business Plan) to raise approximately
US$16 million ("ALN Funding") on the basis of an investment memorandum
developed and presented by EWL and Nostrad jointly. The ALN Funding will
take the form of equity funding from qualified investors who may each only
subscribe for up to 20% of the equity on offer except with the prior
approval of the Board of ALN.
8. h is the intention of the parties that the Business shall remain in the
ownership of ALN and will not be assigned, sold or transferred to any other
entity without the consent of a simple majority of directors and
shareholders in ALN, any such consent to be evidenced in writing.
9. The parties agree that they will develop and implement the Business in
accordance with the Business Plan. Any substantial amendments, changes, or
additions to the Business Plan must be agreed by a simple majority of the
directors, which agreement must be evidenced in writing.
10. Every dispute, difference, claim or grievance arising between the parties
concerning this Agreement or the duties, powers or liabilities of either
party under this Agreement or with regard to the construction of any clause
or any act or thing to be done in pursuance of any clause or arising out of
anything contained in this Agreement whether during the continuance of this
Agreement or upon or after its termination by act of either party or
otherwise shall be referred.,
10.1 first to a mediator appointed by agreement between the parties and failing
agreement by a mediator appointed by the President for the time being of
the Law Institute of Singapore; and then
10.2 if the matter cannot be resolved with a mediator appointed under Clause
10(a), by a single arbitrator in accordance with the provisions of
International Arbitration.
The costs of the mediator or arbitrator appointed pursuant to this Clause shall
be borne by the parties equally.
11. This Heads of Agreement shall be governed and construed in accordance with
the laws of the State of Victoria, Australia and each of the parties agrees
to submit to the non-exclusive jurisdiction of the Courts of the State of
Victoria, Australia and the Courts having jurisdiction to hear appeals from
that State.
12. The terms of this Heads of Agreement are binding on the parties and, upon
execution by both parties of this Heads of Agreement, the parties will move
to effect the Business Plan.
13. The parties agree that these Heads of Agreement supersede all previous
memorandums, arrangements, agreements and understandings made between them
in relation to its subject matter.
14. A notice required or permitted to be given by one party to another under M
Agreement must be in writing and is treated as being duly given 9 h is
transmitted by facsimile to that other party's facsimile number. A notice
given to a party in accordance with M Clause is treated as having been duly
given and received on the day of transmission (if a business day) or, if
not a business day. on the next succeeding business day (if given by
facsimile and sent to the facsimile receiver number of that party and no
intimation having been received that the notice had not been received,
whether that intimation comes from that party or from the operation of
facsimile machinery or otherwise).
<PAGE>
6
For the purposes of this Clause, the facsimile number of a party is the number
set out below or another number of which that party may from time to time give
notice to each other party:
EWL - +61.3.9699.4522
Attention: Mr Harry Hill
Nostrad - +65.7388.142
Attention: Mr Lawrence Lim
is. No public announcement or communication relating to the negotiations of the
parties or the existence, subject matter or terms of this letter may be made or
authorised by or on behalf of either party without the prior consent of the
other party except that the parties will jointly make such disclosures as are
necessary to comply with any applicable law or requirement of any regulatory
body (including any relevant stock exchange),
EXECUTED AS AN AGREEMENT
SIGNED BY
For and on behalf of ENTERTAINMENT WORLD LTD
SIGNED BY
----------------------------------------------
For and on behalf of NOSTRAD TELECOMMUNICATIONS INC
Exhibit 10.6
MEMORANDUM OF UNDERSTANDING
between
Globecomm Systems Inc.
NetSat Express
and
OmniVision Maroc SARL
a subsidiary of
Nostrad Telecommunications Inc.
1
<PAGE>
Globecomm Systems Inc., hereinafter referred to as the "Globecomm" 45 Oser
Avenue, Hauppauge, New York 11788 and OmniVision Maroc SARL a subsidiary of
Nostrad Telecommunications Inc. hereinafter referred to as the "OVM" located at
Villa Yasmina, 31 Ave. Tarik Inb Ziad, Rabat Morocco;
Considering OVM's interest in developing a VSAT Network and wireless
telecommunications infrastructure in Morocco, it is hereby agreed that
Globecomm/NetSat will provide proposal preparation support, engineering,
technical, project management services and equipment to OVM. These services will
be provided at agreed upon terms and conditions, as the scope of the various
projects' dictates
Term of this Memorandum of Understanding ("MOU");
It is agreed that this MOU shall be in effect for a period of 360 days, or until
a formal long term contract or technical service agreement is approved by the
boards of each of the parties to this agreement, unless a further extension of
the MOU is agreed by the parties. During the term of this MOU it is agreed that
neither party will circumvent or otherwise disrupt the intent of this MOU for
projects that the Parties have agreed to work together on, or OVM has contracted
with Globecomm for provision of services.
ARTICLE 1
The objective of this Memorandum of Understanding ("MOU") shall be for the
parties to this MOU to jointly cooperate in developing and implementing a VSAT
Network and Wireless Telecommunications Infrastructure in Morocco. In addition
for Globecomm to provide to OVM various technical and project management support
services.
ARTICLE II
The OVM will provide Globecomm, with a project overview and other documentation
in order for Globecomm to determine and recommend the most appropriate services
and costing required to serve the needs of projects submitted to Globecomm.
ARTICLE III
The parties anticipate that under this MOU, it may be necessary for either party
to transfer to the other information of a proprietary nature. It is hereby
agreed that the parties will enter into a Non Disclosure Agreement (attached as
Appendix "A" to this agreement) which will remain in effect during the terms of
this agreement. Globecomm further understands that disclosure of this agreement
may be necessary under material fact disclosure under the SEC rules in the
United States.
2
<PAGE>
ARTICLE IV
Inventions shall remain the property of the originating party. In the event of
joint inventions, the parties shall establish their respective rights by
negotiations between themselves. In this regard, it is recognized and agreed
that the parties may be required to and shall grant licenses or rights to each
other with respect to any such inventions.
ARTICLE V
Globecomm understands that in the course of discussions regarding the VSAT
Network with various government officials in Morocco it will be necessary for
OVM to disclose the terms of this MOU. It may also be necessary for OVM to
disclose that Globecomm International is proving services to OVM. It is further
agreed that Globecomm authorizes OVM to use Globecomm's corporate brochures,
outlining telecommunications services, previous project experience and
references in pre qualification submissions, subject to prior approval by
Globecomm.
ARTICLE VI
In the event of disagreements or differences in the defined scope of this MOU,
both parties agree to binding arbitration in New York.
The Memorandum of Understanding shall be effected from the date of its signing
and be valid for the duration of 360 days from the date, and will be renewed by
agreement of both parties to extend the memorandum of understanding.
This Memorandum of Understanding may be terminated by either party by written
notice 120 days in advance. In case the MOU ceases to be in effect on account of
termination thereof, the provisions and Articles herein shall continue to apply
to the extent necessary to secure the implementation of the existing activities
as agreed upon in the Articles herein.
Signed this 16th day of July 1999, in 2 (two) originals, all of the texts being
equally authentic.
For an on behalf of;
Globecomm International Inc. )
)------------------------------
)
For and on behalf of;
OmniVision Maroc SARL )
And )------------------------------
Nostrad Telecommunications Inc. ) Chris Farnworth
) Director/Snr. V.P.
3
Exhibit 10.7
THIS NON-EXCLUSIVE DISTRIBUTION AGREEMENT (the "Agreement") is entered into on
this / 4th day of Jan 1999.
BETWEEN:
(1) GULF DTH PRODUCTION of Fourth Floor, 180 Oxford Street, London, England. W1N
ODS ("Gulf"); and
(2) OnmiVision Maroc SARL located at 31, Avenue Tarik Ibn Ziad, Rabat, Morocco,
(the "Dealer")
WHEREAS:
(A) Gulf is engaged in the business broadcasting international studios movies,
programmes and services, buying rights and rebeaming such programs through
closed T.V. circuits and reselling these programmes to the public or
establishments such as hotels and companies in return for fixed
subscription.
(B) The Dealer desires to obtain the right to distribute, on a non-exclusive
basis, all such products and services that may be provided by Gulf, upon
the terms and subject to the conditions set out below.
1. DEFINITIONS
In this Agreement the following expressions shall have the following meanings
unless the context otherwise requires:
"Advance Payment Period" shall mean 3, 6 and 12 months for the "Showtime"
package.
"Annual Churn" (in percentage) shall mean the number of paying/non-promotional
subscriptions that expire during the respective year and do not renew within 2
(two) months from the date of expiration divided by the total number of paying
non-promotional / subscribers expired contracts.
"CA Module" or "CAM" shall mean Irdeto's proprietary conditional access module
for controlling access to video and audio signals, incorporating a portion of
the Irdeto Technology, which will
<PAGE>
function in conjunction with the IRDs.
"Delivery Date" shall mean any date, which is from time to time specified in the
attached Schedule Three for the supply and/or purchase of IRDs and Smart Cards
"DTH Subscriber" shall mean a person in the Territory who subscribes to and is
equipped and entitled to receive and view either or both of the Programme
Packages in unencrypted format on a direct-to-home basis at the place of
reception
"IRD" shall mean a digital integrated receiver decoder or similar device
manufactured by the Manufacturer which incorporates the CA Module and the Irdeto
Technology and which is used by a DTH Subscriber in conjunction with a Smart
Card for the purpose of decrypting a video and/or audio signal after its
encryption using the Irdeto Technology
"Iredto" shall mean Irdeto BV, a company incorporated in the Netherlands
"Irdeto Technology" shall mean the conditional access and related compressed
digital pay television technology proprietary to Irdeto, comprising, inter alia,
certain controlled components for use in digital broadcasting, over all
distribution delivery systems
"LNB" shall mean Low Noise Block converters as approved and authorised by Gulf
or MCME.
"Manufacturer" shall mean the manufacturer whose product has been approved and
authorised by either Gulf or MCME.
"MCME" shall mean MultiChoice Middle East Inc or other SMS provider at Gulf s
discretion.
"Programme Packages" shall mean the "Showtime" package of programme services
(Full Bouquet and Mini Bouquet) which shall initially comprise the programme
services described in Annex A.
"Purchase Order" shall mean 250 IRDs and 250 Smart Cards, or as agreed to by the
parties.
"SC Unit Price" shall mean the price determined in the attached Schedule Three.
"Smart Card" shall mean a card, token or other device incorporating a
microprocessor chip which
<PAGE>
contains Irdeto's proprietary conditional access application, or such
alternative product as may be specified by Irdeto (which is contained in a
module embedded in the card, token or device) and which is designed, when
inserted into an IRD, to control access to the signal of a television or radio
programme or service encrypted by means of the Irdeto Technology and which
enables the DTH Subscriber to view and/or listen to such programme or service as
the case may be, in unencrypted format
"Term" shall mean the period commencing upon the Commencement Date and ending on
the earlier of (a) the final day of the period of five (5) years commencing upon
the date of the first Delivery Notice given by Gulf pursuant to this Agreement
and (b) the date of any earlier termination of this Agreement. Should the Dealer
request an extension of this agreement for a further five (5) years, Gulf agrees
to not unreasonably withhold such approval of the extension.
2. APPOINTMENT
2.1 Gulf hereby appoints the Dealer as a distributor, and the Dealer accepts
such appointment, to market, sell and distribute within the Territory as defined
in Schedule Two, and during the Term the Products listed in the attached
Schedule One:
2.2 The Dealer agrees that it shall not serve as the agent, sell, promote or
co-operate with any other DTH pay TV channel, package or service without the
express written consent of Gulf. Nothing herein shall prohibit the Dealer from
owning or operating MMDS TV operations.
2.3 Gulf warrants that during the term of this agreement, it shall not appoint
any other dealer, distributor or agent at terms more favourable as those granted
to the Dealer based upon performance.
2.4 The appointment of the Dealer hereunder shall apply only to the sale and
lease of the Products to DTH Subscribers. The appointment shall not apply to or
authorise any such sale or lease to any other type or category of subscriber or
any owner or occupier of any commercial premises or place of multiple occupation
(including but not limited to SMATV, Multiple Dwelling Units (MUDS) or hotels)
unless otherwise stated in the attached Schedule Five. No redistribution of the
Product shall be permitted (included but not limited to MMDS or CATV). Nothing
contained herein shall prohibit the viewing of the Product in Dealer showrooms
approved by Gulf for the explicit purpose of selling the Product.
<PAGE>
2.5 The Dealer shall be entitled to appoint retailers and/or retail outlets
and/or dealers in the Territory as sub-distributors, provided that:
(A) any such appointment shall not relieve the Dealer of its obligations under
this Agreement; and
(B) the Dealer shall require all such sub-distributors to comply with the
provisions of this Agreement (including but not limited to Clauses 6 and 7)
which are applicable to them as if such sub-distributors were parties to
this Agreement; and
(C) the Dealer shall within 14 days after the appointment of each and every
such sub distributor, notify Gulf of the full name and address of such
sub-distributor. Until such notification no sub-distributor is authorised
to distribute or act as distributor of the Products.
3. PURCHASE OF IRDs
The Dealer shall purchase during the Term at the price per IRD's specified in
Clause 1 (the "IRD Unit Price") through Gulf under terms and conditions
specified in the attached Schedule Three upon the following basis;
3.1 not later than fourteen (14) days prior to each Delivery Date, Gulf shall
notify the Dealer in writing (the "IRD Delivery Notice") that Gulf is ready and
able to deliver to the Dealer a number of IRDs which shall, subject to
availability, be specified in such Delivery Notice and consistent with the
contents of Schedule Three;
3.2 within sixty (60) days of such Delivery Date, the Dealer shall pay to Gulf a
sum equal to the IRD Unit Price (currently US$ 335) multiplied by the number of
IRDs specified in such Delivery Notice. If such IRDs are sold to or are in the
possession of a sub-distribut ors or the end consumer, payment shall be made at
the time of sale or movement from the Dealer's storage area to
sub-distributor's;
<PAGE>
3.3 in such other quantities and at such other times as may be necessary in
order to ensure that IRDs are available when required by actual or potential DTH
Subscribers.
Upon delivery of any IRD to the Dealer under this Clause, all risks related to
that IRD shall immediately pass to the Dealer.
4. LEASING SCHEME
For purpose of leasing IRDs, Smart Cards, CAMs and LNBs to DTH subscribers, the
Dealer shall enter into a leasing scheme upon the following basis:
4.1 in accordance with Clause 8.4, IRDs, Smart Cards, CAMs and LN13s (the
"Hardware") shall remain at all times the property of Gulf. The Dealer shall
remain liable at all times for the safe upkeeping of the Hardware including but
not limited to proper storage, providing for all necessary safety measures,
subscribing in a full insurance policy covering the Hardware;
4.2 the Dealer shall remain responsible for collection and payment of the
subscription and lease charges, to be paid by DTH Subscribers, to Gulf. If
defaults are not notified to Gulf on the 7th of every month (for monthly payment
scheme), the Dealer shall be fully liable to Gulf for all such payments;
4.3 in case of default as in Clause 4.2, the Dealer shall take all responsible
steps necessary to retrieve the Hardware from DTH Subscribers. The Dealer shall
keep Gulf informed of any such defaults;
4.4 the Dealer shall be entitled to a commission calculated only on the software
price not including any taxes or fees. Such software price shall be the
applicable programming charges for the same customer contract period if such a
sale were not to include the lease of any hardware. This commission shall not be
calculated on the total price;
4.5 at the end of every month, the Dealer shall inform Gulf of the amount of the
leasing Hardware available at the Dealers locations. Any discrepancy shall
immediately be notified to Gulf; and Gulf will be compensated for such a
discrepancy if it is not resolved within 15 days;
4.6 Gulf shall only activate requests duly completed on "consumer subscription
<PAGE>
contracts/agreements" supplied to the Dealer by Gulf;
4.7 Gulf reserves the right to audit IRD stocks at any time with 2 days notice;
4.8 Gulf shall reimburse dealer for direct and out of pocket costs and expenses,
including but not limited to storage, transportation, customs and insurance of
the hardware.
5. PURCHASE OF SMART CARDS
The Dealer hereby agrees to purchase during the Term at the price per Smart Card
specified in Clause 1 (the "SC Unit Price") and in accordance with Schedule
Three upon the following basis:
5.1 SEQARABESEQARABE not later than fourteen (14) days prior to each Delivery
Date, Gulf shall notify the Dealer in writing (the "Delivery Notice") that Gulf
is ready and able to deliver to the Dealer a number of Smart Cards which shall,
subject to availability, be specified in such Delivery Notice and consistent
with the contents of Schedule Three;
SEQARABESEQARABE
5.2 within sixty (60) days of such Delivery Date, the Dealer shall pay to Gulf a
sum equal to the SC Unit Price currently (US$ 15.00) multiplied by the number of
Smart Cards specified in such Delivery Notice. If such Smart Cards are purchased
without IRDs payment to Gulf shall be required prior to the Delivery Date by
Gulf. If such Smart Cards are sold to or are in the possession of a
sub-distributors or the end consumer, payment shall be made at the time of sale
or movement from the Dealer's storage area to sub-distributor's;
Upon delivery of any Smart Card to the Dealer under this Clause, all risks
related to that Smart Card shall immediately pass to the Dealer.
6. OBLIGATIONS OF THE DEALER
The Dealer shall at its own cost:
6.1 obtain/secure all relevant licenses required by the local authorities in
order to sell and promote the Showtime service in its entirety as well as the
hardware required for the said service. Use all reasonable endeavours to promote
and extend sales of IRDs and Smart Cards in the
<PAGE>
Territory and to obtain orders for such sales by implementing active marketing
strategies. Gulf DTH, agrees to provide at no charge to the Dealer promotional
materials, including but not limited to printed materials (in English, and
Arabic and/or French), video clips (in English & Arabic), other promotional
materials as required, and to do all necessary advertising for the Showtime
package;
6.2 use all reasonable endeavours during the Term to maximise sales of each of
the Programme Packages to DTH Subscribers. Gulf DTH at its own cost will provide
Dealer with an authorised Country sales manager to assist the Dealer with sales
and marketing;
6.3 ensure that each of the Programme Packages shall be marketed under such name
as Gulf may determine from time to time and the Dealer shall not make any
promises, representations, warranties or guarantees with reference to the
programming which may be capable of reception by means of the IRDs without the
prior written authorisation of Gulf;
6.4 co-operate and liase with Gulf regarding the promotion and marketing of the
IRDs and the Programme Packages and participate in marketing schemes arranged by
providers of programme services included in the Programme Packages;
6.5 not charge any price for any IRD or Smart Card which exceeds the maximum
retail selling price of IRDs or Smart Cards agreed between the Dealer and Gulf
from time to time;
6.6 provide such warehouse; inventory control, security and storage space,
services and facilities and such insurance cover may be reasonably required by
Gulf in respect of all IRDs delivered by the Manufacturer to Gulf and prior to
such IRDs being delivered to the Sub Dealer under this Agreement;
6.7 during and after the Term observe, perform and comply with the provisions of
Schedule Four, unless there is an operational authorised service centre in the
respective Territory not run nor owned by the Dealer;
6.8 after the Term use all reasonable endeavours to supply or procure the supply
of spare parts necessary for the repair of IRDs and otherwise to service and
repair IRDs, unless there is an operational authorised service centre in the
respective Territory not run nor owned by the Dealer;
<PAGE>
6.9 guarantee that only Showtime authorised/approved digital IRD's will be sold
or promoted by itself or any of its sub dealers;
6.10 only supply licensed cards into the territory. The licensed cards include
only Showtime cards;
6.11 establish and operate a call centre open minimum 12 hrs per day 6 days/week
to handle new sales and renewal inquiries & customer issues relating to the
installation and repair of hardware needed to receive the service;
6.12 be responsible for unauthorised use of Smart Cards. For each Smart Card
used prior to sale to the subscriber or return to Gulf, the Dealer shall pay the
sum of US$ 45 within thirty (30) days to Gulf.
7. SALES OF THE PROGRAMME PACKAGES
7.1 Gulf shall in its discretion determine from time to time and as in the
attached Schedule Eight and Nine, the monthly subscription price which is to be
charged to DTH Subscribers for each of the Programme Packages. The Dealer shall
not charge any DTH Subscriber a subscription price for either of the Programme
Packages other than that determined by Gulf from time to time upon giving not
less than 30 days' prior written notice to the Dealer. Gulf shall have one
Schedule Eight and Nine for all of the Territory.
7.2 Whenever the dealer sells or leases IRDs, Smart Cards, CAMs and/or LNBs to a
DTH Subscriber, the Dealer shall immediately notify Gulf's incountry
representative in writing by fax:
(A) the name, address and accurate telephone number of the DTH Subscriber;
(B) the serial number of the Smart Card;
(C) the serial number of the CAM;
(D) the brand, model and serial number of the IRD;
<PAGE>
(E) the Programme Package(s) to which the DTH Subscriber has subscribed and the
period of the subscription period;
(F) the total amount of subscription charges which have been paid by the DTH
Subscriber; and
(G) any other information as reasonably requested by Gulf.
Only consumer contracts supplied by Gulf shall be used to duly complete all
accurate information.
Gulf shall not activate any Smart Card before receiving the above data. The
Dealer shall be liable for any prejudice or harm caused to Gulf due to the
Dealer's delay in communicating the above data. Gulf shall be liable for any
prejudice or harm caused to Dealer due to any Gulf s representative's
unreasonable delay in communicating the above data to Gulf or Gulf's activation
of such card.
7.3 Whenever the Dealer sells an IRD and a Smart Card to a DTH Subscriber:
(A) the Dealer shall require that any DTH Subscriber has, at all times during
the period of that DTH Subscriber's subscription, paid the subscription
charges for the relevant Programme Package(s) in advance, for not less than
the number of months specified in Clause 1 above ("the Advance Payment
Period"); and
(B) the Smart Card of that DTH Subscriber will be pre-enabled for a period of
seven (7) days commencing on the date on which it is first inserted into
the IRD of that DTH Subscriber but, if at any time thereafter Gulf shall
not have received in advance the subscription charges for the relevant
Programme Package(s) due from that DTH Subscriber for the entirety of the
Advance Payment Period, the Smart Card of that DTH Subscriber shall be
disabled.
7.4 Whenever the Dealer sells either of the Programme Packages to a DTH
Subscriber, the Dealer shall be entitled to a commission calculated as in the
attached Schedule Six (the "Sales Commission").
<PAGE>
7.5 Whenever the Dealer or Gulf DTH renews either of the Programme Packages to a
DTH Subscriber in the Territory, the Dealer shall be entitled to a commission
calculated as in the attached Schedule Six (the "Renewal Commission").
7.6 During the Term the Dealer shall collect all subscription fees due and
payable from all DTH Subscribers and shall use all reasonable endeavours to
obtain payment of such subscription fees from all DTH Subscribers. All such
subscription fees collected by the Dealer shall be applied by the Dealer in
accordance with Clause 9 below.
8. OBLIGATIONS OF GULF
Gulf Shall:
8.1 (either itself or through any third party designated by Gulf) be solely
responsible for providing subscriber management services in relation to DTH
Subscribers, for enabling and disabling Smart Cards;
8.2 provide the Dealer with reasonable amounts of such advertising, promotional
and marketing materials in Arabic, French and English, for the purpose of
promotion of the Programme Packages in the Territory as may be in the possession
of Gulf and as Gulf may lawfully he able to provide;
8.3 if agreed upon by both parties, be responsible for the advertising of the
Showtime Programme Package in the various mass media, in coordination with
Dealer's promotional efforts;
8.4 spend a minimum of US$ 50,000 by June 30, 1999 and at least an additional
US$ 25,000 by March 31, 2000 to support the marketing of Showtime in Morocco. If
such monies are not spent, the Dealer shall be entitled to a commission of 10%
for all new sales in the first year;
8.5 (subject to availability and to Clause 5) deliver Smart Cards to the Dealer
in accordance with Schedule Three;
8.6 finance the Hardware necessary for the Leasing Scheme specified in Clause 4.
The amount of leasing quantities available shall be at the discretion of Gulf;
<PAGE>
8.7 supply consumer Showtime contracts in Arabic, French and English;
8.8 provide technical support to the Dealer if there are any questions or issues
relating to the reception or delivery of the service;
8.9 provide Dealer with program guides in English and/or French for each DTH
subscriber, with at least 20% extras for marketing purposes, and to endeavour to
ensure that the program guide for Showtime offerings are publicised in the major
newspapers in Morocco.
9. REPORTING, PAYMENT AND AUDIT
9.1 On the first day of each week during the Term the Dealer shall deliver to
Gulf a statement showing the total amount of subscription fees received during
the immediately preceding week from DTH Subscribers. Together with such
statement the Dealer shall remit all such subscription fees to Gulf in full
after deduction only of the Sales Commission in accordance with Clause 9.2.
9.2 The Dealer shall be entitled to deduct the Sales Commission to which the
Dealer is entitled under Clause 7.4 before remitting to Gulf pursuant to Clause
9.1 the subscription fees received by the Dealer from DTH Subscribers.
9.3 The Dealer shall maintain throughout the Term and for a period of twelve
(12) months thereafter full and complete records relating to the numbers and
details of DTH Subscribers and the subscription fees received from such DTH
Subscribers during each month. The Dealer shall allow Gulf (or its duly
authorised representatives), at Gulf s sole expense to visit the premises of the
Dealer during normal business hours to inspect such records.
9.4 If any audit carried out by or on behalf of Gulf pursuant to Clause 9.3
reveals that the Dealer has knowingly under-reported the amount payable to Gulf,
the Dealer shall within fourteen (14) days thereafter make payment to Gulf of
the full amount due together with reimbursement of any costs incurred by Gulf in
carrying out such audit. Interest will be charged on any late payments at a rate
of 1. 5 % per month.
9.5 All billings and payments to Gulf for hardware are to be made in US$.
Billing for programming is to be made in Moroccan Dirhams and to be paid to Gulf
in US$ at the then current exchange
<PAGE>
rate.
10. CONFIDENTIALITY
Each party shall, at all times during the term of this Agreement and after its
termination, keep all information and/or documents, disclosed in confidence to
it by the other party, confidential and secret and shall not disclose such
information and/or documents to any third party, save that any such information
may be disclosed:
10.1 to the extent necessary for such party to perform its obligations under
this Agreement;
10.2 if such information and/or documents becomes public knowledge through no
fault of such party; and
10.3 to any government or other regulatory body if such body requests such
information and/or document and such information and/or documents is required by
law.
11. INDEMNITY
Each party shall indemnify, hold harmless and defend the other party from and
against any and all claims that may be brought or commenced against the other
party and/or the other party's officers and employees arising out of any breach
of this Agreement by it or its officers and employees and any costs, expenses,
damage or loss related thereto.
12. TRADE MARKS
The Dealer expressly acknowledges that Gulf is the legal owner of SHOWTIME (the
"Trademarks") and that this Agreement will not affect any rights, interests and
title of ownership which Gulf has with respect to such Trademarks.
The Dealer or any affiliated company shall not acquire, by reason of this
Agreement, any rights in or under the Trademarks or any trademarks or trade
names, registered or unregistered, which are owned or used by Gulf and agrees
not to contest the validity of any trademarks used or owned by Gulf. The Dealer
shall not have the right to use the trade names, brand names or other insignia
of Gulf or trademarks or tradename confusingly similar to those of Gulf except
with the written consent of Gulf. The Dealer agrees not to register, or maintain
the registration
<PAGE>
of any trademarks or trade names or other insignia of Gulf.
If the Dealer has acquired or at any time by any means acquires any rights in or
under any such aforementioned trademark or trade name, it will promptly, upon
request, assign all such rights to Gulf, this provision to survive the
termination of this Agreement. The Dealer agrees to notify Gulf of any use of
Gulf's trademarks by third parties in the Territory and to assist Gulf in any
legal action against such third parties for trademark infringement. Gulf agrees
that in any such action against third parties the Dealer shall bear none of the
costs involved.
13. DURATION AND TERMINATION
13.1 Either party may by notice in writing to the other party also terminate
this Agreement forthwith:
(A) if the other party is in breach of its obligations under this Agreement and
does not remedy the same (if capable of remedy) within thirty (30) days
after written notice from the other party requiring such remedy; or
(B) if the other party shall become insolvent or enter into a bankruptcy or
make a composition with its creditors or, being a company with limited
liability, shall enter into a voluntary or compulsory liquidation (other
than a voluntary liquidation for the purpose of amalgamation or
reconstruction); or
(C) if either party is unable for a continuous period in excess of thirty (30)
days to perform
any of its obligations under this Agreement as a result of any event or
circumstance of the kind described in Clause 18.1 below.
13.2 Upon the termination of this Agreement for any reason:
(A) the Dealer shall cease to sell any IRDs and Smart Cards and Gulf shall
purchase from the Dealer at the IRD Unit Price and SC Unit Price paid by
the Dealer under Clauses 3 and 5 the Dealer's stocks of IRDs and Smart
Cards, except for such stocks of IRDs and Smart Cards for which it has
accepted orders from DTH Subscribers prior to the date of termination and
for that purpose the provisions of this Agreement shall continue in full
force and effect;
<PAGE>
(B) the Dealer shall cease to promote, market or advertise the Smart Cards and
the IRDs;
(C) subject as otherwise provided herein (including but not limited to in
Clauses 6.7 and 6.8) and to any rights or obligations which have accrued
prior to termination, neither party shall have any further obligation to
the other under this Agreement.
14. ASSIGNMENT
Neither party shall assign its rights or obligations under this Agreement to any
third party without the prior consent in writing of the other party. Such
assignments by either party shall not be unreasonably denied.
15. WAIVER
No delay or failure of either party to exercise any of its powers, rights or
remedies under this Agreement shall in any way be considered to be a waiver of
them, nor shall any single or partial exercise of any such powers, rights or
remedies preclude any other or further exercise of them.
16. ENTIRE AGREEMENT
16.1 It is agreed that all previous understandings, representations, statements,
undertakings and agreements written or otherwise between the parties in relation
to this Agreement are hereby cancelled as from the date of this Agreement. The
parties agree that neither of them have placed any reliance whatsoever on any
such previous understandings, representations, statements and agreement other
than those expressly incorporated in this Agreement.
16.2 This Agreement may not be modified or amended except by an instrument in
writing signed by the duly authorised representatives of both parties.
16.3 Headings in this Agreement are inserted for convenience only and shall have
no bearing on the interpretation of this Agreement
16.4 The Schedules to this Agreement form an integral part of this Agreement.
<PAGE>
17. NOTICES
Any notice or other communication to a party hereto shall be in writing in
English and shall be deemed given when delivered in person or by mail, fax,
postage or other delivery charges prepaid, to the address of such party set
forth above or such substituted address of which such Party shall have been
notified in writing by the other.
18. FORCE MAJEURE AND BLOCKED FUNDS
18.1 Neither party shall be liable to the other party for any damage, delay or
failure of performance resulting directly or indirectly from any circumstance
beyond its reasonable control, including, but not limited to any war, riot,
strikes, Acts of God, fire, flood, prohibition of import, any breach of contract
or failure of supply by a third party, acts or orders of Government or any
agency or department thereof or any law or regulation having force of law which
comes into force after the date hereof.
18.2 If the dealer shall be prohibited or restricted from making payment of any
monies to Gulf at the time when the same are due and payable, by reason of the
laws and/or currency regulations within the Territory the Dealer shall promptly
notify Gulf in writing. The Dealer shall upon Gulf's request deposit any such
blocked funds to the credit of Gulf in a bank in the Territory designated by
Gulf in writing or pay them promptly to such person(s) as Gulf may designate in
writing.
19. LAW
This Agreement shall be construed, interpreted and applied in accordance with
and shall be governed by the laws of England. The parties hereto hereby agree to
submit all disputes arising therefrom to the jurisdictions of English Courts.
20. LANGUAGE
This Agreement has been negotiated and drafted in the English Language. If
reference to an Arabic translation is required, any ambiguity in the Arabic text
or any disagreement concerning the Arabic text shall be resolved by reference to
the English text.
<PAGE>
This agreement may be executed in counterparts.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the day
and year first above written SIGNED by
for and on behalf If of
GULF DTH PRODUCTION
SIGNED by
for and on behalf of
OrnniVision Maroc SARI,
<PAGE>
ANNEX A
Showtime Programme Packages
Full Bouquet:
o The Movie Channel
o Discovery Channel
o MTV
o VH1
o Style
o TV Land
o Nickelodeon
o Paramount Channel
o Bloomberg Television
o Sony Entertainment Television
o Hallmark Entertainment Network
o Music Choice Audio Services
plus any other channels that Gulf may add from time to time.
Mini Bouquet:
o The Movie Channel
plus any other two channels that the DTH Subscriber may choose from the Full
Bouquet.
<PAGE>
SCHEDULE ONE
Products
The Agreement shall cover the following products:
o IRDs
o CAMs
o Smart Cards
o IF Downconverters
o IF Upconverters
<PAGE>
SCHEDULE TWO
Territory
The Agreement shall be applicable to the Nation of Morocco
<PAGE>
SCHEDULE THREE
Supply of IRDs and Smart Cards
This Schedule shall include information on delivery date, quantity and price for
the supply and purchase of IRDs and Smart Cards
Delivery Date Quantity of
IRDs Smart Cards
Prices: IRDs shall be sold to the Dealer at cost per IRD unit currently US$
335 (three hundred and thirty five US Dollars) (delivered ex-Dubai).
Such unit price includes Smart Card and is subject to section 6.12.
Smart Cards not included in IRDs shall be sold to the Dealer at US$
15.00 (Fifteen US Dollars) per unit (delivered CIF Casablanca) subject
to section 6.12.
<PAGE>
SCHEDULE FOUR
Product Warranty
1 The Dealer shall provide IRD purchasers with a twelve (12) months warranty
("Warranty") (commencing from the date of purchase) in respect of the IRDs
against defects in design, materials and workmanship, provided that such
Warranty shall be underpinned by a back-to back warranty by the IRD manufacturer
in favour of the Dealer.
1.1 The dealer will endeavour to conclude an agency / service agreement with the
manufacturer (Galaxis) to function as their service representative in the
region. It is understood that any costs incurred or parts required to fulfil
this agency agreement will be covered by the manufacturer. If such services
agreement is not agreed upon, the Dealer has no obligation to provide such
Warranty.
1.2 On lease IRD's where the manufacturers warranty has expired Gulf DTH will
reimburse OmniVision for all reasonable costs related to the repair of a Gulf
DTH owned lease IRD.
2. The Dealer shall:
2.1 maintain accurate records to monitor the field reliability of the IRDs in
the Territory; and
2.2 within fourteen (14) days after Gulf's request (which may not be made more
than once per calendar month) submit a written report to Gulf, which report
shall:
(A) identify each defective IRD by reference to its serial and batch numbers;
(B) record the causes of failure of each such IRD;
(C) state whether or not the defect occurred during the period when the IRD was
still under Warranty and, if not, how long thereafter the defect occurred;
and
(D) set out any discernible failure patterns in the IRDs.
3. the Dealer or its appointee shall perform all service works and repairs and
attend to all
<PAGE>
Warranty claims and out-of-Warranty claims with due care and diligence, in
accordance with the best standards of engineering and craftsmanship as the
official appointed service agent by the respective manufacturers.
<PAGE>
SCHEDULE FIVE
Other Category of Subscribers
The following category of subscribers shall be included in this Agreement in
accordance of the provisions of Clause 2.2:
o MUDS & SMATV Subscribers - IF distribution systems.
o Hotel (public viewing / areas permitted on a case by case basis with Gulf)
<PAGE>
SCHEDULE SIX
Sales Commissions
New Sales:
Based on Gulf subscription price, Gulf shall pay the Dealer sales commission on
subscriptions based on the following annual targets:
0 - 1499 Subscriptions 9% of the subscription price
1,500 - 1999 Subscriptions 10% of the subscription price
> 2000 and more Subscriptions 11 % of the subscription price
The commission percentage will be paid on the gross subscription price less
applicable taxes or fees;
In the case of 3 and 6 month subscriptions the Dealer will receive the new sale
commission for the V' 12 months. After which time the renewal rate will apply.
The above commission includes DTH Purchase, DTH Lease, and IF Lease
subscriptions.
For purposes of calculating the sales commission, neither Gulf nor the Dealer
shall consider or take into consideration the annual targets achieved in
previous years. The annual targets are not cumulative and the Dealer shall only
be entitled to the above sales commission as and when the above annual targets
are achieved over a period of twelve months. Such first year commission shall
begin on January 1, 1999 and end on March 31, 1999.
If the Annual Chum during a given year exceeds two per cent. (2%) monthly, (24%
annually), then such excess shall be deducted from that year's new subscriptions
for the purpose of calculating the Sales Commission.
Renewals:
Gulf shall pay the dealer a renewal commission on a subscription renewed through
the dealer or Gulf DTH or any of its representatives as follows:
a) Eight percent (8 %) if Dealer makes the renewal;
<PAGE>
b) Gulf reserves the right to renew subscribers who have not renewed through the
Dealer on the following terms and conditions; Gulf will notify the Dealer 30
days prior to the expiry of the subscription, and thereafter keep the Dealer
apprised in writing of the status of the subscription renewal. The Dealer will
notify Gulf on a weekly marketing report of the status of the renewal. Should
the Dealer not be able to renew the subscription within 24 hours prior to the
expiry of the subscription then Gulf may notify the Dealer of its intent to
contact such subscriber. Gulf shall not contact such subscriber earlier than
three (3) days after expiry of the subscription. Gulf will not offer any
incentive to the subscriber on better terms and conditions that is offered to
the Dealer. The Dealer will be entitled to receive four percent (4%) of the
renewal subscription fee if Gulf makes the renewal.
<PAGE>
SCHEDULE EIGHT
Subscription Prices
o Showtime Leasing Subscription Prices:
Full Bouquet Mini Bouquet
US$ 59.00 / month US$ 45.00 / month
o Showtime Purchase Subscription Prices:
Full Bouquet Mini Bouquet
3 Months US$ 154.50 (51.50 / month) US$ 105.00 (35.00 / month)
6 Months US$ 300.00 (50.00 / month) US$ 198.00 (33.00 / month)
12 Months US$ 528.00 (44.00 / month) US$ 348.00 (29.00 / month)
* see Schedule Nine for local currency rates.
<PAGE>
SCHEDULE NINE
Subscription Prices In Moroccan DH
o Showtime Leasing Subscription Prices:
Full Bouquet Mini Bouquet
DH 559 / month DH 429 / month
o Showtime Purchase Subscription Prices:
Full Bouquet Mini Bouquet
3 Months DH 1497 (499 / month) DH 1005 (335 / month)
6 Months DH 2850 (475 / month) DH 1890 (315 / month)
12 Months DH 4980 (415 / month) DH 3300 (275 / month)
Exhibit 10.8
Dated ______________05/27/99
(1) GULF DTH PRODUCTION
(2) OMNIVISION MAROC SARL
------------------------------
AMENDING AGREEMENT
------------------------------
Denton Hall
Five Chancery Lane
Clifford's Inn
London EC4A 1BU
Fax: 0171-404-6087
Tel: 0171-242-1212
<PAGE>
THIS AGREEMENT is made on May 27, 1999-10-27
BETWEEN
(1) GULF DTH PRODUCITON of Fourth Floor, 180 Oxford Street, London, England WIN
ODS ("Gulf") and
(2) OMNIVISION MAROC SARL, of 31 Avenue Tarik Ibn Ziad, Rabat, Morocco, (the
"Dealer")
SUPPLEMENTAL to a Distribution Agreement between Gulf and the Dealer dated
January 14, 1999 (the "Agreement")
RECITAL
Gulf and the Dealer have agreed to amend the terms of the Agreement as set out
in this Amending Agreement.
TERMS
1. INTERPRETATION
1.1. In this Amending Agreement capitalised words and expressions
shall, unless otherwise stated, have the same meaning as in the
Agreement.
1.2. References in the Amending Agreement to clauses, sub-clauses and
schedules shall, unless otherwise specified, be references to
clauses, sub-clauses and schedules of the Agreement.
2. AMENDMENTS TO THE AGREMENT
2.1. Clause 1
2.1.1. The following definition shall be inserted after the definition
for "Smart Card":
"SOREAD Agreement" shall mean the Agreement entered into between
the Dealer and SOREAD dated April 28, 1999.
2.1.2. The definition of "Annual Churn" shall be deleted and replaced
with the following:
"Annual Churn" (expressed as a percentage) shall in each year mean
the total number of paying/non-promotional subscriptions to the
Programme Packages in the Territory that either (a) expired during
that year and were not renewed within two months from the date of
such expiration, or (b) were terminated or otherwise discontinued
in that year, divided by the total number of
paying/non-promotional subscriptions to the Programme Packages in
the Territory which were in force on the final day of that year"
2.2. Clause 2.1
Clause 2.1 shall be deleted and replaced with the following:
"Gulf hereby appoints the Dealer as the Exclusive distributor fo
the Programme Packages in the Territory, and the Dealer accepts
such appointment to market, sell and distribute within the
Territory (as defined in Schedule Two) and during the Term the
Products listed in the attached Schedule One. Gulf and the Dealer
agree that the Dealer's appointment shall be exclusive throughout
the Territory during the term subject to the provisions of Clause
13.4 below:"
2.3. Clause 2.3
Clause 2.3 shall be deleted in its entirety.
2.4. Clause 6.13
A new Clause 6.13 will be inserted as follows:
"The Dealer warrants and represents that it has entered into the SOREAD
Agreement for a term of no less that three years from April 28, 1999 and
that the SOREAD Agreement provides for the Programme Packages to be
marketed and distributed throughout the Territory."
2.5. Clause 6.14
A new Clause 6.14 will be inserted as follows:
2
<PAGE>
"The Dealer undertakes that it will within seven days from the date
hereof provide Gulf with such written proof as Gulf shall require that
the Dealer has entered into the SOREAD Agreement and That the SOREAD
Agreement complies with Clause 6.13 and 13.4."
2.6. Clause 7.1
The following language shall be inserted at the end of Clause 7.1:
"Gulf agrees that it shall consult as soon as possible but in any event
no later that thirty days before making decreases of more than 10% to the
subscription prices applicable under the then current Schedule Eight and
before offering any promotion of greater than two free months on the DTH
Subscription."
2.7. Clause 13.4
A new Clause 13.4 shall be inserted as follows:
"If Gulf is of the opinion that at any time during the Term the Dealer is
not using its best endeavours to achieve maximum sales of the Programme
Packages Gulf shall be entitled in its sole discretion to send written
notification to the Dealer removing the exclusivity of the appointment of
the Dealer pursuant to Clause 2.1 of the Agreement. Accordingly, the
appointment of the Dealer under Clause 2.1 of the Agreement shall become
non-exclusive on the expiration of thirty days from the date of Gulf's
notice unless the Dealer finalises a sales strategy designed to maximise
sales of the Programme Packages which has been approved by Gulf in
writing prior to the expiry of that 30 day period PROVIDED THAT if any
such sales strategy approved by Gulf is not complied with by the Dealer,
Gulf shall be entitled to send written notification to the Dealer
terminating the exclusivity of the appointment of the Dealer under Clause
2.1 of the Agreement with immediate effect. The Dealer will ensure that
the SOREAD Agreement complies with the provisions specified above, in
that, in the event that the exclusivity of the Dealer is terminated by
Gulf for whatever reason, the appointment of SOREAD pursuant to the
SOREAD Agreement will simultaneously cease to be exclusive."
2.8. Schedule Six
2.8.1. The first six lines of schedule Six for the Words "Based on Gulf
subscription price." to "price less applicable taxes or fees"
shall be deleted and replaced with the following:
"With effect from January 1, 1999, Gulf shall pay the Dealer a
sales commission on new subscriptions sold by the Dealer in the
Territory ("New Subscriptions") which shall be a percentage of the
Gulf subscription price based on the following numbers of New
Subscriptions sold in each year
- --------------------------------------------------------------------------------
1-1,999 New Subscriptions sold 10% of the subscription price
in the relevant year (less applicable year taxes or
fees) of all New Subscriptions
sold in the relevant year; OR
- --------------------------------------------------------------------------------
2,000 or more New Subscriptions 11% of the subscription price
sold in the relevant year (less applicable relevant year
taxes or fees) of all New
Subscriptions sold in the
relevant year.
- --------------------------------------------------------------------------------
For these purposes, the first year shall begin on January 1, 1999
and end on May 31, 2000 and each subsequent year shall begin on
June 1 (commencing with June 1, 2000) and end on May 31."
2.8.2. The sentence which reads "Such first year commissions shall begin
on January 1, 1999 and end on March 31, 1999" shall be and hereby
deleted in its entirety.
3. RELATIONSHIP WITH THE AGREEMENT
Subject to the foregoing amendments, the Agreement shall continue in full
force and effect.
SIGNED by
Duly authorized and
On behalf of PETER EINSTEIN
GULF DTH PRODUCTION
3
<PAGE>
SIGNED by
Duly authorized and
On behalf of LAWRENCE LIM
OMNIVISION MAROC SARL
4
Exhibit 10.9
AMENDMENT
This Amendment is made as of 14th JAN 1999 by and between Gulf DTH Production of
Fourth Floor, 180 Oxford Street, London WIN ODS, England ("Gulf") and OmniVision
Maroc SARL located at 31 Avenue Tarik Ibn Ziad, Rabat, Morocco, ("the Dealer")
and amends the Non-Exclusive Distribution Agreement entered into by and between
Gulf and the Dealer on 14 January 1999 ("the Agreement").
All capitalised terms not expressly defined in this Amendment shall have the
same meanings as used in the Agreement.
THE PARTIES AGREE AS FOLLOWS:
1. Definitions
1.1 The definition of "CA Module" or "CAM" in Clause 1 of the Agreement shall
be
amended by the addition of the following words at the end of that definition:
"... or any other conditional access module as may be determined by Gulf from
time to time for controlling access to video and audio signals which will
function in conjunction with the IRDs ".
1.2 The definition of "IRD" in Clause 1 of the Agreement shall deleted and
replaced with
the following:
" 'UD" shall mean a digital integrated receiver decoder or similar device
manufactured by the Manufacturer which incorporates the CA Module and the Irdeto
Technology or such other encryption technology as may be determined by Gulf from
time to time and which is used by a DTH Subscriber in conjunction with a Smart
Card for the purpose of decrypting a video and/or audio signal after its
encryption using the Irdeto Technology or such other encryption technology as
may be determined by Gulf from time to time. "
1.3 The definition of "Smart Card" shall be deleted and replaced with the
following:
" "Smart Card" shall mean a card, token or other device incorporating a
microprocessor chip which contains Irdeto ' s proprietary conditional access
application or such other conditional access application as may be determined by
Gulf from time to time or such alternative product as may be specified Irdeto or
by Gulf (which is contained in a module embedded in the card, token or device)
and which is designed, when inserted into an IRD, to control access to the
signal of a television or radio programme or service encrypted by means of the
Irdeto Technology or such other encryption technology as may be determined by
Gulf from time to time and which enables the DTH Subscriber to view and/or
listen to such programme or service as the case may be, in unencrypted format. "
1.4 The following definitions shall be added to Clause 1 of the Agreement:
"? "Commencement Date" shall mean the date of signature of this Agreement being
14 January 1999. "
<PAGE>
" "Trade Marks" shall mean all trade marks, service marks (whether registered or
unregistered) and logos incorporating the word "Showtime
2. Clause 12 - Trade Marks
The first paragraph of Clause 12 shall be deleted and replaced with the
following:
"The Dealer expressly acknowledges that Gulf is the legal owner of the Trade
Marks and that this Agreement will not affect any rights, title, interest or
ownership which Gulf has in or to the Trade Marks. "
3. This Amendment shall be effective as of the date of execution hereof by the
parties.
4. Except as expressly amended herein, all terms and conditions of the Agreement
shall remain in full force and effect.
Signed
- ------------------------------------------
for and on behalf of Gulf DTH Production
Signed
- ------------------------------------------
for and on behalf of OmniVision Maroc SARL
Exhibit 10.10
Proved by General Director of Mongolian Proved by GENCO Company
Radio and TV Technical Company Director
D. Tsedevsuren Kh. BattuIga
Lease Agreement of Placing Pager Antenna and Transmitter at
the Mongolian T.V Center
February 05, 1997 Ulaanbaatar city
Mongolian Radio and TV Technical Company on the one side as a leasor and "Home
Vision" Company one the other side as a leasee had agreed to maintain following
agreement.
One. Agreement sides confidential representatives official addresses, names and
Bank account numbers
Mongolian Radio and TV Technical "Home Vision" Company
Company Paul Ang
Director D. Tsedevsuren UB-24 P0Box 539
UB - 17. Huvsgalin zam - 3 Phone: 300193
Phone 325802 Fax: 300197
Fax Bank account:
Bank account: Hudaldaa HogjIiin Bank:
Sergeen Bosgolt : 2103005 (Trade and Development)
(Reconstruction)
Two. A. Responsibilities of Radio and T.V Technical Company
1. To install Transmitting equipment in an appropriate place and to provide by
power.
2. To provide a high quality of service for pager communication antenna and
feeding equipment according to the request of leasee.
3. To have a privilege to use pager at the reduced price.
4. To ensure the safe keeping of "Homevision's transmitter at Mongolian Radio
and T.V stations location.
5. To guarantee the installation of the antenna and to be cabling in a good
working order for a period of 2 (two) years.
<PAGE>
B. Responsibilities of "Home Vision" Company
1. To provide required materials and work expenses for the repair of Antenna
and Feeding equipment.
2. To be responsible for Transmitting repair and service.
3. To provide both side agreed number of pagers for the Technical Company use
and to include required payment to lease payment.
4. To pay 3000 USD per a year for lease. Within 7 days after signing on the
agreement have to transmit 1500 USD and to pay rest of lease within
following 6 months. Electricity charge included in this payment. Payment
can be done by Mongol currency according to Mongol Bank USD rate.
C. Possible conflict solution
1. Conflict relating to the pager antenna, transmitting equipment installing,
fixing and providing normal functioning, will be solved on the base of
understanding and respecting both sides needs and difficulties.
2. In case of unfulfilment of its responsibilities, case will be considered by
Technical Company located District Court.
3. If unfulfilment of agreement became the reason of annulling agreement,
complaining side will announce officially one month a head to the other
side about agreement annulling. During, one month both sides have to seek
the ways to solve raising problems. In case of misunderstanding within this
period agreement will be considered as annulled.
Agreement is valid for one year starting from the day of signing the agreement.
If there were no official announcement about annulling agreement within the
agreement valid period document will be considered as valid for the next year
and both sides have to follow its responsibilities.
Agreement printed for 2 copies and signed on ________________ 1977.
Ch. Baatar Paul Ang
CHIEF OF THE MONGOLIAN "HOME VISION"
RADIO AND TV TECHNICAL COMPANY
COMPANY UKV STATION
Exhibit 10.11
Stock Purchase Agreement
This Stock Purchase Agreement (Agreement) is entered into this 25th day of
February, 1998, by and between Nostrad Telecommunications Inc., a Nevada
corporation hereinafter referred to as "Purchaser", and Nostrad
Telecommunications Pte, Ltd., a Singapore corporation, appearing herein through
its duly authorized representative by virtue of a corporate resolution attached
hereto as Exhibit A, hereinafter referred to as "Seller".
WHEREAS, Seller presently owns one hundred percent (100%) of the
outstanding shares of common stock of Nostrad Media Pte. Ltd., a Singapore
corporation, and OmniVision Africa Ltd., a British Virgin Island corporation,
hereinafter referred to as "Targets"; and
WHEREAS, said shares are the only issued and outstanding capital stock of
Targets; and
WHEREAS, Purchaser desires to purchase from Seller and Seller desires to
sell to Purchaser all of the shares of Targets owned by Seller on the terms and
subject to the conditions set forth herein; and
WHEREAS, contemporaneously with the Closing and as a condition precedent to
the closing (as hereinafter defined) Seller will enter into an enforceable
non-competition agreement with Purchaser.
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants herein contained, the parties hereto agree as follows:
I. Purchase of Shares
1.1 Purchase of Shares. Subject to the terms and conditions set forth
herein, at the Closing (as defined below), Seller will sell all of the shares of
Targets owned by Seller, said shares constituting one hundred percent (100%) of
all of the issued and outstanding capital stock of Targets as of the Closing.
More specifically, Seller will sell, assign, transfer and deliver, and Purchaser
will purchase, free and clear of any and all security interests, liens, pledges,
encumbrances and adverse claims, one hundred percent (100%) of the outstanding
capital stock of Targets. This Agreement is predicated upon Purchaser acquiring
one hundred percent (100%) of the outstanding capital stock of Targets, and the
inability of either Seller to transfer all of its shares of Targets, or the
inability of Purchaser to acquire all outstanding shares of Targets shall, at
the option of Purchaser, render its obligation to purchase hereunder null and
void.
1.2 Purchase Price. Purchaser shall pay to Seller the sum of One Hundred
and Fifty Thousand Dollars ($300,000) or up to 461,538 shares pursuant to a
Private Placement Agreement
<PAGE>
Offering Memorandum (dated November 27, 1997) at the option of the Seller and
3,700,000 number of share in Nostrad Telecommunications Inc. for the shares of
capital stock in Targets (hereinafter referred to as the "Purchase Price").
Purchase Price shall be subject to Post-Closing Adjustments.
1.3 Closing
1.3.1 At the Closing, Seller shall deliver the shares to Purchaser,
and Purchaser shall delver the Amount to Seller, pursuant to the
terms of this Agreement and subject to any post-closing
adjustments.
1.3.2 In the event that Purchaser's acquisition of the shares pusuant
to this Agreement is terminated in accordance with Seciton 10 of
this Agrement, Seller shall deliver the shares to the Seller and
Purchaser puruant to the terms of the Escrow Agreement, within
five (5) days of the termination.
1.3.3 Payment of Purchase Price. The Purchase Price shall be paid to
Seller as follows: at Closing the Purchaser shall pay the Seller
the sum of One Hundred and Fifty Thousand Dollars ($300,000),
which shall exclude any pro-rata portion of the Escrow Amount
distributed to Seller at or after Closing. In addition the
Seller will receive 3,700,000 of restricted share in Nostrad
Telecommunications Inc. The Purchase Price shall be paid by wire
transfers to accounts designated by Sellers.
Performance Shares. The Purchaser agrees to compensate the Seller by way of
performance shares in NTCI, for additional licenses that are currently
in negotiation but that have not been issued under the following
conditions;
1.3.4 Performance Shares. The Purchaser agrees to compensate
the Seller by way of shares in NTCI, for additional
licenses that are currently in negotiation but that have
not been issued under the following conditions.
1.3.4.1 Thtat the licenses be issued within two (2) years from
the date of closing.
1.3.4.2 That the Seller transfers any and all rights obligations
or prorietary intersts in these licenses at closing.
1.3.4.3 That the performance stock be issued within sever (7)
days on issuance of frequency and the necessary
operation permits required to carry out the business of
the Company or its designated subsidiary.
1.3.4.4 Issuance of the Performance Shares shall be upon
approval of the Board of Directors.
1.3.4.5 The stock will be allocated as follows:
<PAGE>
Country Performance
------- Stock
-----------
Indonesia 1,500,000
Cambodia 500,000
Vietnam 500,000
Philippines 800,000
Bangladesh 1,500,000
Myanmar 800,000
Ghana 1,500,000
Tanzania 1,500,000
Morocco 2,000,000
Democratic Congo Republic 400,000
Rwanda 250,000
Tunisia 800,000
Zimbabwe 1,000,000
Kenya 800,000
----------
13,850,000
==========
II. Representations and Warranties of the Seller
Except for the specific representations and warranties of Seller made by
Seller or to the best of Seller's knowledge set forth in this Section 2, Seller
represents and warrants that:
2.1 Organization and Corporate Power
2.1.1 Targets: (a) are corporations duly incorporated and validly existing
and in good standing under the laws of their respective durisdictions; (b) has
all the requisite corporate power and authority and all material licenses,
permits and authorizations necessary to own and operate its properties and to
carry on its business as now conducted; and (C) the copies of Targets's Articles
of Incorporation and Bylaws have been furnished to Purchaser's counsel, reflect
all amendments made thereto at any time prior to the date of this Agreement and
are correct and complete.
2.1.2 Seller represents and warrants that: (a) Seller is a corporation duly
incorporated and validly existing and in good standing under the laws of
Singapore; (b) Seller has all requisite corporate power and authority and all
material licenses, permits, and authorizations necessary to own and operate its
properties and to carry on its business as now conducted; and (C) all
authorizations necessary by Targets to sell its shares as proposed in this
Agreement have been obtained.
2.2 Capital Stock and Related Matters. To the best of Seller's knowledge,
no shares owned at any time by Seller have been sold or otherwise transferred to
any person or entity. Targets do not have other outstanding and have not agreed,
orally or in writing, to issue any stock or securities convertible or
exchangeable for any shares of its stock, nor do the Targets have anyoutstanding
nor has it agreed, orally or in writing , to issue any options or rights to
<PAGE>
purchase or wotherwise acquire its stock. Targets are not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its stock. All of the outstanding shares of Targets capital
stock are validly issued, fully paid and non-assessable. Seller represent it
has, and upon puchase thereof pursuant to the terms of this Agreement, Purchase
will have good and marketable title to the shares, free and clear of all
security interest, liens encumbrances, or other restrictions or claims, subject
only to restricitons as to marketability imposed by securities laws. Assuming
that the representations in Section 3.6 are true and correct, neither Seller nor
Targets have violated or will violate any applicable securities laws in
connection with the offer or sale of the shares to Purchaser hereunder.
2.3 Subsidiaries. Targets represents and warrants, and Seller represents
and warrants to the best of Seller's knowledge, that Targets does not own or
hold any rights to acquire any shares of stock or any other security in any
interest in any other corporation or entity.
2.4 Conduct of Business; Liabilities. Except as set forth in Exhibit F, to
the best of Seller's knowledge, Targets is not in default under, and no
condition exists that with notice or lapse of time would constitute a default of
Targets under (i) any mortgage, loan agreement, evidence of indebtedness, or
other instrument evidencing borrowed money to which Targets is a party or by
which Targets or the properties of Targets are bound or (ii) any judgment,
order, or injunction of any court, arbitrator, or governmental agency that would
reasonably be expected to affect materially and adversely the business,
financial condition, or results of operations of Targets taken as a whole.
2.5 Financial Statements. Targets represents and warrants, and Seller
represents and warrants to the best of Seller's knowledge, that Targets has
delivered to Purchaser prior to the date hereof (a) the balance sheets of
Targets as of September 30, 1997 and the related statements of operations,
reported on without qualification by Jay Shapiro, CPA, independent Certified
Public accountants, attached hereto as Exhibit B, C, D.
2.6 No Undisclosed Liabilities. Except for (i) liabilities and obligations
incurred in the ordinary course of business since September 30, 1997, and (ii)
liabilities or obligations described in Exhibit I, neither Targets nor any of
the property of Targets is subject to any material liability or obligation that
was required to be included and adequately reserved against in the September 30,
1997 balance sheet or described in the notes thereto and was not so included,
reserved against and described.
2.7 Absence of Certain Changes. Except as contemplated or permitted by this
Agreement or as described in Exhibit J, since September 30, 1997 there has not
been :
2.7.1 Any material adverse change in the business, financial
condition, operations, or assets of Targets; or
2.7.2 Any damage, destruction or loss, whether covered by insurance or
not, materially adversely affecting the properties or business of the
corporation; or
<PAGE>
2.7.3 Any sale or transfer by Targets of any tangible or intangible
asset other than in the ordinary course of business, any mortgage or pledge
or the creation of any security interest, lien or encumbrance on any such
asset, or any lease of property, including equipment, other than tax liens
with respect to taxes not yet due and contract rights of customers in
inventory; or
2.7.4 Any material transaction not in the ordinary course of business
of Targets; or
2.7.5 The grant of any material increase in the compensation of
officers or contractors (including any such increase pursuant to any bonus,
pension, profit-sharing, or other plan) other than customary increases on a
periodic basis or required by agreement or understanding in the ordinary
course of business and in accordance with past practice; or
2.7.6 The discharge or satisfaction of any material lien or
encumbrance or the payment of any material liability other than current
liabilities in the ordinary course of business; or
2.7.7 The making of any material loan, advance, or guaranty to or for
the benefit of any person except the creation of accounts receivable in the
ordinary course of business; or
2.7.8 Targets represents and warrants, and Seller represents and
warrants to the best of Seller's knowledge, that since September 30
__________, 1997 there has not been any declaration or payment of any
dividends, payment or distribution of any kind to Sellers in their capacity
as shareholders of Targets, or purchase or redemption of any shares; or
2.7.9 Targets represents and warrants, and Seller represents and
warrants to the best of Seller's knowledge, that since September
30__________, 1997 there has not been any change in Targets's outstanding
stock, or in Targets's Articles of Incorporation or Bylaws; or
2.7.10 Any labor problems materially and adversely affecting Targets's
business, financial condition or properties; or
2.7.11 Waiver of any rights of material value; or
2.7.12 Any other event or condition of any character which may
materially and adversely affect Targets's business, financial condition or
properties; or
2.7.13 An agreement to do any of the foregoing.
2.8 Title and Related Matters. Except as set forth in Exhibit K, Targets
has good and marketable title to all of its property, real and personal, and
other assets reflected in the September 30, 1997, Balance Sheet (except
properties and assets sold or otherwise disposed of subsequent to September 30
1997, in the ordinary course of business or as contemplated in this
<PAGE>
Agreement), free and clear of all security interests, mortgages, liens, pledges,
charges, claims or encumbrances of any kind or character, except (i) statutory
liens for property taxes not yet delinquent or payable subsequent to the date of
this Agreement and statutory or common law liens securing the payment or
performance of any obligation of Targets, the payment or performance of which is
not delinquent, or that is payable without interest or penalty subsequent to the
date on which this representation is given, or the validity of which is being
contested in good faith by Targets; (ii) the rights of customers of Targets with
respect to inventory under orders or contracts entered into by Targets in the
ordinary course of business; (iii) claims, easements, liens and other
encumbrances of record pursuant to filings under real property recording
statutes; and (iv) as described in the Unaudited Financial or the notes thereto.
2.9 Litigation. Except as set forth in Exhibit L, there are no material
actions, suits, proceedings, orders, investigations, or claims pending or, to
the best of the knowledge of Targets and Seller, assertable or overtly
threatened against Targets or any property of Targets, at law or in equity, or
before or by any governmental department, commission, board, bureau, agency or
instrumentality; Targets is not the subject to any arbitration proceedings under
collective bargaining agreements or otherwise or, to the best of the knowledge
of Targets or Seller, any governmental investigations or inquiries; and to the
best of the knowledge of Targets and Seller, there is no basis for any of the
foregoing.
2.10 Taxes, Tax Returns and Reports. With respect to Targets, (a) all
reports, returns, statements (including, without limitation, estimated reports,
returns or statements), and other similar filings required to be filed on or
before Closing by Targets (the "Tax Returns") with respect to any Taxes (as
defined in this Section) have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such Tax Returns are
required to be filed, and all such Tax Returns correctly reflect the liability
of Targets for Taxes for the periods, properties or events covered thereby, (b)
all Taxes payable with respect to the Tax Returns, and all Taxes accruable with
respect to events occurring prior to September 30, 1997, whether disputed or
not, and whether or not shown on any Tax Return, will have been paid in full
prior to Closing, or an adequate accrual in accordance with generally accepted
accounting principles is provided with respect thereto on the September 30, 1997
Balance Sheet, no deficiency in respect of any Taxes which has been assessed
against Targets remains unpaid and neither Targets nor Seller has knowledge of
any un-assessed Tax deficiencies or of any audits or investigations pending or
threatened against Targets with respect to any Taxes, (d) there is in effect no
extension for filing of any Tax Return and Targets has not extended or waived
the application of any statute of limitations or any jurisdiction regarding the
assessment or collection of any Tax, (e) no claim has ever been made by a Tax
authority in a jurisdiction in which Targets does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction, (f) there are no liens
for Taxes upon any asset of Targets except for liens for current Taxes not yet
due, (g) no issues have been raised in any examination by any Tax authority with
respect to Targets, by which application of similar principles, reasonably could
be expected to result in a proposed deficiency for any other period not so
examined, (h) Targets is not a party to any Tax allocation or sharing agreement
or otherwise under any obligation to indemnify any person with respect to any
Taxes, (i) Targets is not a party to any joint venture, partnership or other
arrangement that is treated as a partnership for income tax purposes, (j) there
are no accounting method changes or proposed accounting
<PAGE>
method changes of Targets that could give rise to an adjustment under Section
481 of the Internal Revenue Code of 1986, as amended (the "Code"), or any
similar rule or regulation under the Tax laws of any foreign jurisdiction, for
periods after the Closing, (k) there are no requests for rulings in respect of
any Tax pending between Targets and any Taxing authority, and (l) Targets has
timely made all deposits required by law to be made with respect to contractors'
withholding and other employment taxes.
For purposes of this Agreement, "Taxes" means any taxes, duties,
assessments, fees, levies or similar governmental charges, together with any
interest, penalties and additions to tax, imposed by any taxing authority,
wherever located (i.e. whether federal, state, local, municipal or foreign),
including, without limitation, all net income, gross income, gross receipts, net
receipts, sales, transfer, franchise, privilege, profits, social security,
disability, withholding, payroll, unemployment, employment, excise, severance,
property, windfall profits, value added, ad valorem, occupation or any other
similar governmental charge or imposition. Seller's liability for any and all
breaches of this Section (except for a breach which results from a deliberate or
intentional act or omission) shall be limited to that which exceeds the
aggregate sum of Ten Thousand Dollars ($10,000).
2.11 Compliance with Laws. To the best of the knowledge of Targets and
Seller, the Corporation is, in the conduct of its business, in substantial
compliance with all laws, statutes, ordinances, regulations, orders, judgments
or decrees applicable to them, the enforcement of which, if Targets was not in
compliance therewith, would have a materially adverse effect on the business of
Targets, taken as a whole. Neither Seller nor Targets have received any notice
of any asserted present or past failure by Targets to comply with such laws,
statutes, ordinances, regulations, orders, judgments or decrees.
2.12 No Brokers. There are no claims for brokerage commissions, finders'
fees, or similar compensation in connection with the purchase based on any
arrangement or agreement binding upon any of the parties hereto.
2.13 Insurance. No insurance policies have been taken out by any of the
Targets.
2.14 Contractors and Labor Relations Matters. as provided in this
Agreement:
2.14.1 Neither Seller nor Targets is aware that any executive or key
contractor of Targets or any group of contractors of Targets has any plans
to terminate employment with Targets;
2.14.2 To the best of the knowledge of Seller, Targets has
substantially complied in all material respects with all labor and
employment laws, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining, Americans With Disabilities Act,
and the payment of social security and other taxes;
2.14.3 There is no unfair labor practice charge, complaint or other
action against Targets pending or, to the best of the knowledge of Seller,
threatened before the National Labor
<PAGE>
Relations Board or any corresponding body in any foreign jurisdiction, and
Targets is not subject to any order to bargain by the National Labor
Relations Board or any corresponding body in any foreign jurisdiction;
2.14.4 No questions concerning representation have been raised or, to
the best of the knowledge of Seller, are threatened with respect to
contractors of Targets;
2.14.5 No grievance that might have a material adverse effect on
Targets and no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and, to the best of the
knowledge of Seller, no basis exists for any such grievance or arbitration
proceeding; and
2.14.6 To the best of the knowledge of Seller, no contractor of
Targets is subject to any non-competition, nondisclosure, confidentiality,
employment, consulting or similar agreements with persons other than
Targets relating to the present business activities of Targets.
2.15 Disclosure. To the best of the knowledge of Seller, neither this
Agreement nor any of the exhibits, schedules, attachments, written statements,
documents, certificates, or other items prepared or supplied to Purchaser by or
on behalf of Targets or Seller with respect to this purchase contain any untrue
statement of a material fact or omit a material fact necessary to make each
statement contained herein or therein not misleading.
2.16 Power of Attorney. Except as set forth in Exhibit P, no material power
of attorney or similar authorization given by Targets is presently in effect.
2.17 Accounts Receivable. All accounts receivable of Targets reflected in
the September 30, 1997 Balance Sheet represent bona fide sales actually made in
the ordinary course of business. To the best of the knowledge of Seller, all
such accounts receivable are collectible in the amounts shown thereon, except
for the allowance for doubtful accounts reflected thereon.
2.18 Agreements and Commitments. There are no agreements, contracts,
instruments and commitments (including license agreements) outside the ordinary
course of business to which Targets is a party that provides for payments by
Targets in excess of Ten Thousand Dollars ($10,000) per year or whose term is in
excess of one year and is not able to be canceled upon thirty (30) or fewer
days' notice by Targets without any liability, penalty or premium, other than a
nominal cancellation fee or charge (Third Party Agreements).
2.18.1 Targets has no collective bargaining or union contracts
agreement in effect or being negotiated;
2.18.2 There is no labor strike, dispute, request for representation,
slowdown, or stoppage pending or, to the best of the knowledge of Seller,
threatened against Targets;
2.18.3 Targets is not in material default under any Third Party
Agreement, nor, to the best of the knowledge of Seller, does there exist
any event that, with notice or the passage of time or both, would
constitute a material default by Targets under any Third Party Agreement.
<PAGE>
2.18.4 Except for the relationship Targets has with HomeVision,
Mongolia Ltd., OmniVision Uganda Ltd., ESN Ghana, PCI Morocco, Open
Learning Agency, Information Systems Management, Sask Tel International
Ltd., Ernestine LLC, Finline Technologies, Lte., Orbitronics Ltd., IGWT
Ltd., Zulfikar Al Hussein-Jaffer, Kelani Ndo and Genco Ltd. which Seller
has fully disclosed to Purchaser, Targets has no agreements with affiliated
companies, nor ar the Targets in partnership with or in joint venture with
any other person or entity.
2.18.5 Attached hereto as Exhibit R1 and made a part hereof for all
purposes is a true and complete list, as of the date hereof and certified
by the President of Targets, showing the name of each bank in which Targets
has an account or relationship. Included with this Exhibit R1 is a list
showing the names of all persons authorized to draw on any such accounts.
2.18.6 Targets represents and warrants, and Seller represents and
warrants to the best of Seller's knowledge, that as set forth in the letter
dated September 30 ,1997 from Nostrad Telecommunications Pte Ltd. to
Nostrad Telecommunications Inc., the sale contemplated hereunder does not
conflict with any buy-sell agreement or such other similar agreement
executed by the parties.
2.19 Personal Property. Exhibit H contains lists of all material tangible
personal property and assets owned or held by Targets and used or useful in the
conduct of the business of Targets. Targets owns and has good title to such
properties and none of such properties is subject to any security interest,
mortgage, pledge, conditional sales agreement or other lien or encumbrance
(except for liens for current taxes, assessments, charges or other governmental
levies not yet due and payable). To the best of the knowledge of Seller, all
such tangible personal property is in compliance in all material respects with
all applicable statutes, ordinances, rules and regulations. The properties
listed in Exhibit S include all material properties necessary to conduct the
business and operations of Targets as now conducted.
2.20 Real Property. The Targets currently do not own any real property,
Nostrad Media Pte. Ltd., has entered into a rental agreement for premises
located at 20 Bideford Road #07-00 Wellington Building for a montly rent of
SD4,000 on a month to month basis.
2.21 Personnel. Exhibit I sets forth a true and complete list of:
2.21.1 The names, titles and current salaries of all officers of
Targets;
2.21.2 The names of all directors of Targets;
2.21.3 The wage rates (or ranges, if applicable) for each class of
exempt and nonexempt, salaried and hourly contractors of Targets;
2.21.4 All scheduled or contemplated increases in compensation or
bonuses; and
<PAGE>
2.21.5 All scheduled or contemplated contractor promotions.
2.22 Patents, Trademarks, Trade Names, etc. Exhibit J contains an accurate
and complete list of all patents, trademarks, trade names, service marks, and
copyrights, and all applications therefor, presently owned or held subject to
license by Targets and, to the best of the knowledge of Seller, the use thereof
by Targets does not materially infringe on any patents, trademarks, or
copyrights or of any other rights of any person. To the best of the knowledge of
Seller, Targets has not operated and is not operating its business in a manner
that infringes the proprietary rights of any other person in any patents,
trademarks, trade names, service marks, copyrights or confidential information.
III. Representations and Warranties of Purchaser
As a material inducement to Seller to enter into this Agreement and sell
the shares of Targets, Purchaser hereby represents and warrants to Seller as
follows:
3.1 Organization; Power. Purchaser is a corporation duly incorporated and
validly existing under the laws of the State of Nevada, and has all requisite
corporate power and authority to enter into this Agreement and perform its
obligations hereunder.
3.2 Authorization. The execution, delivery, and performance by Purchaser of
this Agreement and all other agreements contemplated hereby to which Purchaser
is a party have been duly and validly authorized by all necessary corporate
action of Purchaser, and this Agreement and each other agreement, when executed
and delivered by the parties thereto, will constitute the legal, valid and
binding obligation of Purchaser enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency and similar statutes affecting creditors' rights generally and
judicial limits on equitable remedies.
3.3 No Conflict with Other Instruments or Agreements. The execution,
delivery and performance by Purchaser of this Agreement and all other agreements
contemplated hereby to which Purchaser is a party will not result in a breach or
violation of, or constitute a default under, its Articles of Incorporation or
Bylaws or any material agreement to which Purchaser is a party or by which
Purchaser is bound.
3.4 Governmental Authorities. (i), Purchaser is not required to submit any
notice, report, or other filing with any governmental or regulatory authority in
connection with the execution and delivery by Purchaser of this Agreement and
the consummation of the purchase and (ii) no consent, approval or authorization
of any governmental or regulatory authority is required to be obtained by
Purchaser or any affiliate in connection with Purchaser's execution, delivery
and performance of this Agreement and the consummation of this purchase.
3.5 Litigation. There are no actions, suits, proceedings or governmental
investigations or inquiries pending or, to the knowledge of Purchaser,
threatened against Purchaser or its
<PAGE>
properties, assets, operations or businesses that might delay, prevent or hinder
the consummation of this purchase.
3.6 Investment Representations.
3.6.1 Purchaser is acquiring the shares of Targets for its own account for
purposes of investment and without expectation, desire or need for resale and
not with the view toward distribution, resale, subdivision or fractionalization
of the shares.
3.6.2 During the course of the negotiation of this Agreement, Purchaser has
reviewed all information provided to it by Targets and has had the opportunity
to ask questions of and receive answers from representatives of Targets
concerning Targets, the securities offered and sold hereby, and this purchase
and to obtain certain additional information requested by Purchaser. Purchaser
has had access to all of the books and records of Targets, to audited and
unaudited statements, to personnel of Targets familiar with its financial and
operational issues and to bankers and accountant familiar with Targets and its
operations.
3.6.3 Purchaser understands that the shares to be purchased have not been
registered under Securities Act of 1933 (1933 Act) or under any state securities
law.
3.6.4 Purchaser understands that the shares cannot be resold in a
transaction to which the 1933 Act and state securities laws apply unless (i)
subsequently registered under the 1933 Act and applicable state securities laws
or (ii) exemptions from such registrations are available. Purchaser is aware of
the provisions of Rule 144 promulgated under the 1933 Act which permit limited
resale of shares purchased in a private transaction subject to the satisfaction
of certain conditions.
3.6.5 Purchaser understands that no public market now exists for the shares
and that it is uncertain that a public market will ever exist for the shares.
3.7 Brokerage. There are no claims for brokerage commissions, finders'
fees, or similar compensation in connection with this purchase based on any
arrangement or agreement entered into by Purchaser and binding upon any of the
parties hereto.
IV. Conduct of Targets's Business Pending the Closing
From the date hereof until the Closing, and except as otherwise consented
to or approved by Purchaser in writing, Seller covenants and agrees with
Purchaser as follows and covenants and agrees with Purchaser that Targets will
not take any action (or cause any action to be taken) which will create a
conflict with any of the following:
4.1 Regular Course of Business. Targets will operate its business in
accordance with the reasonable judgment of its management, diligently and in
good faith, consistent with past management practices, and Targets will continue
to use its reasonable efforts to keep available
<PAGE>
the services of present officers and contractors (other than planned
retirements) and to preserve its present relationships with persons having
business dealings with it.
4.2 Distributions. Targets will not declare, pay or set aside for payment
any dividend or other distribution in respect of its capital stock.
4.3 Capital Changes. Targets will not issue any shares of its stock, or
issue or sell any securities convertible into or exchangeable for its stock, or
options, warrants to purchase, or rights to subscribe to any shares of its
stock, or subdivide or in any way reclassify any shares of its capital stock, or
repurchase, reacquire, cancel or redeem any such shares, except as may be
required by the terms of this Agreement.
4.4 Assets. The assets, property and rights now owned by Targets will be
used, preserved and maintained, as far as practicable, in the ordinary course of
business, to the same extent and in the same condition as said assets, property
and rights are on the date of this Agreement, ordinary wear and tear excepted,
and no unusual or novel methods of manufacture, purchase, sale, management or
operation of said properties or business or accumulation or valuation of
inventory will be made or instituted.
4.5 Insurance. Targets will keep or cause to be kept in effect and
undiminished the insurance now in effect on its various properties and assets.
4.6 Contractors. Targets will not grant to any contractor any promotion,
any increase in compensation or any bonus or other award other than promotions,
increases or awards that are regularly scheduled in the ordinary course of
business or contemplated on the date of this Agreement.
4.7 No Violations. Targets will comply in all material respects with all
statutes, laws, ordinances, rules and regulations applicable to it in the
ordinary course of business.
4.8 Public Announcements. No press release or other announcement to the
contractors, customers or suppliers of Targets related to this Agreement or this
purchase will be issued without the joint approval of the parties, unless
required by law, in which case Purchaser and Seller will consult with each other
regarding the announcement.
V. Covenants of Targets and Seller
Targets and Seller covenant and agree with Purchaser as follows:
5.1 Satisfaction of Conditions. Targets will use reasonable efforts to
obtain as promptly as practicable the satisfaction of the conditions to Closing
set forth in Section 7 and any necessary consents or waivers under or amendments
to agreements by which Targets is bound.
5.2 Supplements to Exhibits. From time to time prior to Closing, Seller and
Targets will promptly supplement or amend the Exhibits with respect to any
matter hereafter arising that, if
<PAGE>
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in any Exhibit and will promptly notify Purchaser of
any breach by either of them that either of them discovers of any
representation, warranty or covenant contained in this Agreement. No supplement
or amendment of any Exhibit made pursuant to this section will be deemed to cure
any breach of any representation or warranty made in this Agreement unless
Purchaser specifically agrees thereto in writing; provided, however, that if
this purchase is closed, Purchaser will be deemed to have waived its rights with
respect to any breach of a representation, warranty, or covenant or any
supplement to any Exhibit of which it shall have been notified pursuant to this
Section.
5.3 No Solicitation. Until the Closing or termination pursuant to Section
10 of this Agreement, Seller shall not, directly or indirectly, encourage,
solicit, initiate or enter into any discussions or negotiations concerning any
disposition of any of the capital stock or all or substantially all of the
assets of Targets (other than pursuant to this Agreement), or any proposal
therefor, or furnish or cause to be furnished any information concerning Targets
to any party in connection with any transaction involving the acquisition of the
capital stock or assets of Targets by any person other than Purchaser. Seller or
Targets will promptly inform Purchaser of any inquiry (including the terms
thereof and the person making such inquiry) received by any responsible officer
or director of Targets or Seller after the date hereof and believed by such
person to be a bona fide, serious inquiry relating to any such proposal.
5.4 Action After the Closing. Upon the reasonable request of any party
hereto after Closing, any other party will take all action and will execute all
documents and instruments necessary or desirable to consummate and give effect
to this purchase. These include, by way of illustration and not by way of
limitation, the following:
5.4.1 Various conditions relating to filing, payment and collecting of
refunds relating to taxes;
5.4.2 Resignations of each of the officers and directors of Targets;
5.4.3 Provisions relating to the delivery of corporate books and
records;
5.4.4 Provisions relating to treatment of confidential, proprietary
information obtained in the acquisition process; and
5.4.5 Non-interference by Seller regarding the post-closing
relationships between Purchaser and its vendors, suppliers, customers and
contractors.
VI. Covenants of Purchaser
6.1 Consummation of Agreement. Purchaser agrees to use its best efforts to
cause the consummation of the transactions contemplated by this Agreement in
accordance with their terms and conditions.
<PAGE>
6.2 Retention of Records. Purchaser shall retain all books and records of
Targets which Purchaser receives from Targets for a period of seven (7) years
from the date of generation thereof or for a period of seven (7) years after
Closing, whichever occurs earlier. After the Closing, Seller and its
representatives shall have reasonable access to all such books and records
during normal business hours for the following purposes: (i) tax or other
regulatory purposes; or (ii) for the purpose of identifying and photocopying
documents related to litigation or administrative matters to which Seller must
respond, either formally or informally.
VII. Conditions Precedent to the Obligations of Purchaser
Each and every obligation of Purchaser under this Agreement is subject to
the satisfaction, at or before the Closing, of each of the following conditions:
7.1 Representations and Warranties; Performance.
7.1.1 Each of the Representations and warranties made by Seller will be
true and correct in all material respects as of the Closing with the same effect
as though made at that time except for changes contemplated, permitted or
required by this Agreement; Seller and Targets will have performed and complied
with all agreements, covenants, and conditions required by this Agreement to be
performed and complied with by them prior to Closing; and Purchaser will have
received, at the Closing, a certificate of Targets and Seller, signed by the
President of Targets and of Seller, stating that each of the representations and
warranties made by Targets herein is true and correct in all material respects
as of the Closing, except for changes contemplated, permitted or required by
this Agreement, and that Seller and Targets have performed and complied with all
agreements, covenants and conditions required by this Agreement to be performed
and complied with by them prior to the Closing.
7.1.2 On or before delivery of the Escrow Amount to the Escrow Agent,
Seller will take all necessary steps and proceedings to enable them to
effectuate at the Closing a valid, indefeasible sale and transfer of the shares
to Purchaser. Among other things, Seller will have obtained all consents,
releases and permissions which may be necessary for the sale of the shares to
Purchaser.
7.2 Litigation. No material action, suit or proceeding before any court,
governmental or regulatory authority will have been threatened or commenced and
be continuing, and no investigation by any governmental or regulatory authority
will have been commenced and be continuing, and no action, investigation, suit
or proceeding will be threatened at the time of Closing against Seller, Targets
or Purchaser or any of their affiliates, associates, officers or directors,
seeking to restrain, prevent or change this purchase, questioning the validity
or legality of this purchase, or seeking damages in connection with this
purchase.
7.3 Material Change. From the date of this Agreement to the Closing,
Targets shall not have suffered any material adverse change (whether or not such
change is referred to or described in any supplement to any Exhibit or Schedule
to this Agreement) in its business prospects,
<PAGE>
financial condition, working capital, assets, liabilities (absolute, accrued,
contingent, or otherwise) or operations.
7.4 Corporate Action. Seller will have furnished to Purchaser:
7.4.1 The Articles of Incorporation and all amendments thereto and
restatements thereof of Targets certified by the official having custody over
corporate records in the jurisdiction of incorporation of the corporation in
question;
7.4.2 The current Bylaws and minutes of all meetings and consents of
shareholders and directors of Targets;
7.4.3 Each certificate of qualification to do business as a foreign
corporation of Targets;
7.4.4 All known existing stock transaction records of Targets; and
7.4.5 A certificate of the Secretary or Assistant Secretary of Targets,
attached hereto as Exhibit X, as to the accuracy, currency and completeness of
each of the above documents, the incumbency and signatures of officers of
Targets, the absence of any amendment to the Articles of Incorporation of
Targets, and the absence of any proceeding for dissolution or liquidation of
Targets.
VIII. Conditions Precedent to the Obligations of Sellers
Each and every obligation of Seller under this Agreement is subject to the
satisfaction, at or before Closing, of each of the following conditions:
8.1 Representations and Warranties; Performance. Each of the
Representations and warranties made by Purchaser will be true and correct in all
material respects as of the Closing with the same effect as though made at that
time except for changes contemplated, permitted or required by this Agreement;
Purchaser will have performed and complied with all agreements, covenants, and
conditions required by this Agreement to be performed and complied with by them
prior to Closing; and Seller will have received, at the Closing, a certificate
of Purchaser, signed by the President of Purchaser, stating that each of the
representations and warranties made by Purchaser herein is true and correct in
all material respects as of the Closing, except for changes contemplated,
permitted or required by this Agreement, and that Purchaser has performed and
complied with all agreements, covenants and conditions required by this
Agreement to be performed and complied with by them prior to the Closing.
8.2 Litigation. No material action, suit or proceeding before any court
(other than suits seeking monetary damages only and in the aggregate sum of less
than $10,000), governmental or regulatory authority will have been threatened or
commenced and be continuing, and no investigation by any governmental or
regulatory authority will have been commenced and be continuing, and no action,
investigation, suit or proceeding will be threatened at the time of
<PAGE>
Closing against Seller, Targets or Purchaser or any of their affiliates,
associates, officers or directors, seeking to restrain, prevent or change this
purchase, questioning the validity or legality of this purchase, or seeking
damages in connection with this purchase.
8.3 Corporate Action. Purchaser will have furnished to Seller a copy,
certified by the Secretary or Assistant Secretary of Purchaser, attached hereto
as Exhibit Y, of the resolutions of Purchaser authorizing the execution,
delivery and performance of this Agreement, together with a certificate of the
Secretary or Assistant Secretary of Purchaser, attached hereto as Exhibit Y1, as
to the accuracy, currency and completeness of such resolutions, the incumbency
and signatures of officers of Purchaser, and the absence of any proceeding for
dissolution or liquidation of Purchaser.
IX. Closing
9.1 Time, Place and Manner of Closing. Unless this Agreement has been
terminated and this purchase has been abandoned pursuant to the provisions of
Section 10, the Closing will be held in _________________________, at the
offices of ___________, whose address is _____________________________, or such
other place as the parties may agree on _________, 1997 or as soon as
practicable after the satisfaction of the various conditions precedent to the
Closing set forth herein, but in no event later than ____________, 199_. At the
Closing, the parties to this Agreement will exchange certificates, notes,
guaranties, and other instruments and documents in order to determine whether
the terms and conditions of this Agreement have been satisfied. Upon the
determination of each party that its conditions to consummate this purchase have
been satisfied or waived, Seller shall deliver to Purchaser the certificate(s)
evidencing the shares, duly endorsed for transfer or with Stock Powers attached,
and Purchaser shall deliver to Seller the consideration set forth in Section
1.2, in a manner to be agreed upon by the parties. After the Closing, Seller, at
Purchaser's cost, will execute, deliver, and acknowledge all such further
instruments of transfer and conveyance and will perform all such other acts as
Purchaser may reasonably request to effectively transfer the shares.
9.2 Consummation of Closing. All acts, deliveries and confirmations
comprising the Closing regardless of chronological sequence shall be deemed to
occur contemporaneously and simultaneously upon the occurrence of the last act,
delivery or confirmation of the Closing and none of such acts, deliveries or
confirmations shall be effective unless and until the last of the same shall
have occurred. The time of the Closing has been scheduled to correspond with the
close of business at the principal office of Targets and, regardless of when the
last act, delivery or confirmation of the Closing shall take place, the transfer
of the shares shall be deemed to occur as of the close of business at the
principal office of Targets on the date of Closing.
9.3 Transfer of Assets at Closing. At Closing, Seller shall cause full
possession and control of all outstanding stock and of all of the assets and
properties of every kind and nature, tangible and intangible, of Targets and of
all other things and matters pertaining to the operation of the business of
Targets to be transferred and delivered to Purchaser; provided, however, that
Seller shall retain, without limitation, any and all correspondence,
communications, drafts of documents, billing memoranda, statements and other
documents or materials of any kind
<PAGE>
whatsoever between Seller, Targets, and their legal counsel related in any way
whatsoever, either directly or indirectly, to the transactions contemplated by
this Agreement.
X. Termination
10.1 Termination for Cause. If, pursuant to the provisions of Sections 7 or
8 of this Agreement, Seller or Purchaser is not obligated at the Closing to
consummate this Agreement, then the party who is not so obligated may terminate
this Agreement.
10.2 Termination Without Cause. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and abandoned at any
time without further obligation or liability on the part of any party in favor
of any other by mutual consent of Purchaser and Seller.
10.3 Termination Procedure. Any party having the right to terminate this
Agreement due to a failure of a condition precedent contained in Sections 7 and
8 hereto may terminate this Agreement prior to Closing by delivering to the
other party written notice of termination, and thereupon, this Agreement will be
terminated without obligation or liability of any party, except as set forth in
the Escrow Agreement.
XI. Indemnification
11.1 Seller's Indemnity. Subject to the terms of this Section, Seller
hereby agrees to indemnify, defend and hold harmless Purchaser and its officers,
directors, agents, attorneys, accountants and affiliates from and against any
and all losses, claims, obligations, demands, assessments, penalties,
liabilities, costs, damages, reasonable attorneys' fees and expenses (Damages)
asserted against or incurred by Purchaser by reason of or resulting from a
breach by Seller or Targets of any representation, warranty or covenant
contained herein, or in any agreement executed pursuant thereto.
11.2 Limitations on Seller's Indemnification Obligations.
11.2.1 Purchaser and its successors and permitted assigns shall not be
entitled to indemnification under this Section unless a claim has been asserted
by written notice delivered to Seller on or prior to the twenty four (24) month
anniversary of the Closing, specifying the details of such alleged breach.
11.2.2 Seller shall have no indemnification obligation under this Section
unless and until the aggregate amount recoverable against Seller exceeds $5,000,
in which event Seller shall be responsible for all amounts recoverable in excess
of said $5,000 aggregate amount up to the individual limits provided for in
Section 11.2.3 below.
11.3 Purchaser's Indemnity. Subject to the terms of this Section, Purchaser
hereby agrees to indemnify, defend and hold harmless Seller and its officers,
directors, agents, attorneys, accountants and affiliates from and against any
and all losses, claims, obligations,
<PAGE>
demands, assessments, penalties, liabilities, costs, damages, reasonable
attorneys' fees and expenses (Damages) asserted against or incurred by Seller by
reason of or resulting from a breach by Purchaser of any representation,
warranty or covenant contained herein, or in any agreement executed pursuant
thereto.
11.4 Conditions of Indemnification. The respective obligations and
liabilities of Seller, Targets and Purchaser (Indemnifying Party) to the other
(Party to be Indemnified) under Sections 11.1, 11.2 and 11.3 hereof, with
respect to claims resulting from the assertion of liability by third parties,
shall be subject to the following terms and conditions:
11.4.1 Within Sixty (60) days (or such earlier time as might be
required to avoid prejudicing the Indemnifying Party's position) after
receipt of notice of commencement of any legal action evidenced by service
of process or other legal pleading, the Party To Be Indemnified shall give
the Indemnifying Party written notice thereof together with a copy of such
claim, process or other legal pleading, and the Indemnifying Party shall
have the right to undertake the defense thereof by representatives of its
own choosing and at its own expense; provided, however, that the Party To
Be Indemnified may participate in the defense with counsel of its own
choice and at its own expense. For all other claims or demands not the
subject of court or regulatory authority or process, the Party To Be
Indemnified shall give the Indemnifying Party written notice thereof
together with a copy of any claim or demand within (10) days after receipt
of the claim or demand. The Indemnifying Party shall then have the right to
respond and undertake the defense thereof by representatives of its own
choosing and at its own expense; provided, however, that the Party To Be
Indemnified may participate in the response and the defense of the claim or
demand with counsel of its own choice and at its own expense.
11.4.2 In the event that the Indemnifying Party, by the Seventh (7th)
day after receipt of notice of any legal action (or, if an answer or other
pleading must be served in order to prevent judgment by default in favor of
the person asserting such claim), does not elect to defend against such
legal action, the Party To Be Indemnified will (upon further notice to the
Indemnifying Party) have the right to undertake the defense, compromise or
settlement of such legal action on behalf of and for the account to the
right of the Indemnifying Party to assume the defense of such claims at any
time prior to settlement, compromise or final determination thereof. For
all other claims not the subject of court or regulatory authority or
process, if the Indemnifying Party, by the Tenth (10th) day after receipt
of notice of the claim or demand does not elect to defend against such
claim or demand, or within Ten (10) days and not prejudiced by lack of
notice of entry of default judgment, the Party To Be Indemnified will (upon
further notice to the Indemnifying Party) have the right to undertake the
defense, compromise or settlement of such legal action on behalf of and for
the account to the right of the Indemnifying Party to assume the defense of
such claims at any time prior to settlement, compromise or final
determination thereof.
11.4.3 Anything in this Section to the contrary notwithstanding, the
Indemnifying Party shall not settle any claim without the consent of the
Party To Be Indemnified unless such settlement involves only the payment of
money and the claimant provides to the Party To Be Indemnified a release,
in a form acceptable to the Party To Be Indemnified, from all liability in
<PAGE>
respect of such claim. If the settlement of the claim involves more than
the payment of money, the Indemnifying Party shall not settle the claim
without the prior consent of the Party To Be Indemnified, which consent
shall not be unreasonably withheld.
11.4.4 The Party To Be Indemnified and the Indemnifying Party will
each cooperate with all reasonable requests of the other.
11.4.5 Anything in this Section to the contrary notwithstanding, the
failure of the Party To Be Indemnified to give notice as required shall not
void the right if indemnity unless the failure to notify materially
prejudices the Indemnifying Party. For the purposes of this Section, the
entry of a default judgment constitutes material prejudice.
11.5 Remedies Not Exclusive. The remedies provided for in this Section
shall not be exclusive of any other rights or remedies available by one party
against the other, either at law or in equity.
XII. Miscellaneous Provisions
12.1 Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by a written agreement signed by
Purchaser and Seller.
12.2 Waiver of Compliance; Consents.
12.2.1 Any failure of any party to comply with any obligation, covenant,
agreement or condition herein may be waived by the party entitled to the
performance of such obligation, covenant or agreement or who has the benefit of
such condition, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, or agreement or condition will not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
12.2.2 Whenever this Agreement requires or permits consent by or on behalf
of any party hereto, such consent will be given in a manner consistent with the
requirements for a waiver of compliance as set forth above.
12.3 Notices. All Notices, requests, demands and other communications
required or permitted hereunder will be in writing and will be deemed to have
been duly given when delivered by (i) hand; (ii) reliable overnight delivery
service; or (iii) facsimile transmission.
If to Purchaser, to: Suite #1005 - 1188 Quebec Street, Vancouver, BC
Canada, V6A 4B3, Fax 604-488-0991
If to Targets, to: 20 Bideford Road, #207-00 Wellington Building, Singapore
229921 Fax: 65-738-8142
If to Seller, to: 20 Bideford Road, #207-00 Wellington Building, Singapore
229921 Fax: 65-738-8142
<PAGE>
12.4 Titles and Captions. All section titles or captions contained in this
Agreement are for convenience only and shall not be deemed part of the context
nor effect the interpretation of this Agreement.
12.5 Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
12.6 Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
12.7 Attorneys' Fees. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or in any
appeal therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
12.8 Computation of Time. In computing any period of time pursuant to this
Agreement, the day of the act, event or default from which the designated period
of time begins to run shall be included, unless it is a Saturday, Sunday or a
legal holiday, in which event the period shall begin to run on the next day that
is not a Saturday, Sunday or legal holiday.
12.9 Pronouns and Plurals. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons may require.
12.10 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEVADA. THE PARTIES AGREE THAT ANY LITIGATION RELATING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT MUST BE BROUGHT BEFORE AND DETERMINED
BY A COURT OF COMPETENT JURISDICTION WITHIN THE STATE OF NEVADA.
12.11 Arbitration. If at any time during the term of this Agreement any
dispute, difference, or disagreement shall arise upon or in respect of this
Agreement, and the meaning and construction hereof, every such dispute,
difference, and disagreement shall be referred to a single arbiter agreed upon
by the parties, or if no single arbiter can be agreed upon, an arbiter or
arbiters shall be selected in accordance with the rules of the American
Arbitration Association and such dispute, difference or disagreement shall be
settled by arbitration in accordance with the then prevailing commercial rules
of the American Arbitration Association, and judgment upon the award rendered by
the arbiter may be entered in any court having jurisdiction thereof.
12.12 Presumption. This Agreement or any Section thereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
<PAGE>
12.13 Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purposes of the Agreement.
12.14 Parties in Interest. Nothing herein shall be construed to be to the
benefit of any third party, nor is it intended that any provision shall be for
the benefit of any third party.
12.15 Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected hereby.
12.16 Confidentiality. The parties shall keep this Agreement and its terms
confidential, but any party may make such disclosures as it reasonably considers
are required by law or necessary to obtain financing. In the event that the
transactions contemplated by this Agreement are not consummated for any reason
whatsoever, the parties hereto agree not to disclose or use any confidential
information they may have concerning the affairs of other parties, except for
information which is required by law to be disclosed. Confidential information
includes, but is not limited to, financial records, surveys, reports, plans,
proposals, financial information, information relating to personnel contracts,
stock ownership, liabilities and litigation.
12.17 Costs, Expenses and Legal Fees. Whether or not the transactions
contemplated hereby are consummated, each party hereto shall bear its own costs
and expenses (including attorneys' fees), except as set forth in the Escrow
Agreement.
12.18 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effecting during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid and unenforceable provision, there shall be added
automatically as part of this Agreement a provision as similar in nature in its
terms to such illegal, invalid or unenforceable provision as may be possible and
be legal, valid and enforceable.
12.19 Counterparts and Facsimile Signatures. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. For purposes of
this Agreement, facsimile signatures shall be treated as originals until such
time that applicable pages bearing non-facsimile signatures are obtained from
the relevant party or parties.
12.20 Continuing Nature. All representations and warranties contained in
this Agreement shall survive the Closing for a period of two (2) years and, if
applicable, all covenants, which, according to their terms are to be performed
after the execution of this Agreement, shall survive
<PAGE>
the Closing for a period of two (2) years. Said two year survival period shall
not apply to any breach by Seller of the representations and warranties in
Section 2.2 hereof; instead, any such breach by Seller shall be limited to
applicable periods provided by law.
IN WITNESS WHEREOF, the parties hereto have set their hands this 25th day
of February, 1998.
NOSTRAD TELECOMMUNICATIONS, INC.
A Nevada Corporation (Purchaser)
by: __________________________________ by:___________________________
NOSTRAD TELECOMMUNICATIONS PTE. LTD.
A Singapore Corporation(Seller)
by: __________________________________ by:___________________________
<PAGE>
Exhibit "A"
Directors Resolutions in Writing Pursuant to
Article 98 of the Company's Articles of Association
RESOLVED: That the officers of the Company are hereby authorized Lawrence Kam Lo
Lim, be the Company's representative in all matters relating to the sale of
Nostrad Media Pte. Ltd. and OmniVision Africa Ltd. to Nostrad Telecommunications
Inc.
There being no further business, this meeting was adjourned.
---------------------------------------
Lawrence Lim, Secretary
ATTEST:
- ---------------------------------- ---------------------------------------
S.S. Teo, Director Chris Farnworth, Director
Dated: December 1, 1997
<PAGE>
Exhibit "B"
Default
Targets is not in default under, and no condition exists that with notice or
lapse of time would constitute a default of Targets under (i) any mortgage, loan
agreement, evidence of indebtedness, or other instrument evidencing borrowed
money to which Targets is a party or by which Targets or the properties of
Targets are bound or (ii) any judgment, order, or injunction of any court,
arbitrator, or governmental agency that would reasonably be expected to affect
materially and adversely the business, financial condition, or results of
operations of Targets taken as a whole.
Certified by:
)
Lawrence Kam Lo Lim ) _____________________ Dated __________ 1998
)
<PAGE>
Exhibit "G:
Audited Financial Statements
<PAGE>
Exhibit "H"
Audited Financial Statement
<PAGE>
Nostrad Telecommunications Inc.
Consolidated Financial Statements
September 30, 1997
<PAGE>
JAY J. SHAPIRO, C.P.A.
A PROFESSIONAL CORPORATION
16501 Ventura Boulevard
Suite 650
Encino, California 91436
Tel: (818) 990-4204 Fax: (818) 990-4944
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Nostrad Telecommunications, Inc.
I have audited the accompanying consolidated balance sheet of Nostrad
Telecommunications, Inc. (the "Company"), as of September 30, 1997 and the
related consolidated statements of operations and deficit, shareholders' equity,
and cash flows for the nine-month period from January 1, 1997 (commencement of
principal business operations) to September 30, 1997. These financial statements
are the responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audits.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Company as of September 30, 1997, and the results of its operations and its
cash flows for the nine-month period ended September 30, 1997, in conformity
with generally accepted accounting principles.
The Company is economically dependent on its present shareholders and their
affilites for the financing of its operations. (See Note 1).
February 17, 1998
JAY J. SHAPIRO, C.P.A.
a professional corporation
<PAGE>
Nostrad Telecommunications Inc.
Consolidated Financial Statements
CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
Assets September 30, 1997
-------------------
Current Assets
Cash $ 5,381
Trade receivables 8,163
Due from related parties 11,681
Inventory 6,940
- -------------------------------------------------------------------------------
32,165
Licenses and Development Costs (note 4)
Licenses, net 152,662
Deferred development costs 153,341
- -------------------------------------------------------------------------------
306,003
Fixed Assets (note 5)
Fixed Assets 193,374
less Accumulated Depreciation (44,373)
- -------------------------------------------------------------------------------
149,001
- -------------------------------------------------------------------------------
$ 487,169
================================================================================
Liabilities
Current Liabilities
Accounts payable $ 33,602
Other 2,110
- -------------------------------------------------------------------------------
35,712
- -------------------------------------------------------------------------------
Commitments (note 7)
Shareholders' Equity
Share Capital (note 6)
Authorized
25,000,000 common shares, par value $0.01
Issued & outstanding - 6,700,000 common shares 6,700
Additional Paid-in Capital 367,640
Share subscriptions received 300,000
Accumulated Deficit (222,883)
- -------------------------------------------------------------------------------
451,457
- -------------------------------------------------------------------------------
$ 487,169
================================================================================
The notes to consolidated financial statements are an integral part thereof
<PAGE>
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
- --------------------------------------------------------------------------------
Nine month
period ended
September 30, 1997
Revenues
Sales & Service Revenues $ 7,775
Other income 165
- -------------------------------------------------------------------------------
7,940
Cost of Sales
Materials 13,105
Direct Marketing 1,532
- -------------------------------------------------------------------------------
14,637
- -------------------------------------------------------------------------------
Gross Profit (6,697)
Expenses
Office costs 20,365
Salary and benefits 9,448
Depreciation & amortization 54,374
- -------------------------------------------------------------------------------
74,187
- -------------------------------------------------------------------------------
Operating Loss (90,884)
Other
Abandoned development costs (132,000)
- -------------------------------------------------------------------------------
Net loss $ (222,883)
================================================================================
Average Number of outstanding shares 3,000,000
- -------------------------------------------------------------------------------
Net income (loss) per share $ (0.07)
================================================================================
The notes to consolidated financial statements are an integral part thereof
<PAGE>
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
September 30, 1997
<TABLE>
<CAPTION>
Subscribed Common Stock Additional
-------------------- -------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Common stock
split after
January 1, 1997
3,000,000 $3,000 $ -- $ -- $3,000
Reverse
Acquisition by
Nostrad 461,568 300,000 3,700,000 3,700 367,640 -- 671,340
Net loss for
period (222,883) (222,883)
- ------------------------------------------------------------------------------------------------------------------------
Balance
September 30, 1997
461,568 $300,000 6,700,000 $6,700 $367,640 $(222,883) $451,457
========================================================================================================================
</TABLE>
The notes to the consolidated financial statements are an integral part thereof
<PAGE>
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF CHANGES IN CASH POSITION
- --------------------------------------------------------------------------------
Nine month
period ended
September 30, 1997
OPERATING ACTIVITIES
Net income (loss) for period $(222,883)
Add expense items not involving cash
Depreciation 54,374
Abandoned development costs 132,000
- -------------------------------------------------------------------------------
(36,509)
Add changes in non-cash working capital items:
Accounts receivable (19,844)
Inventory (6,940)
Accounts Payable 35,712
- -------------------------------------------------------------------------------
Net funds provided (used) by operating activities (27,581)
INVESTING ACTIVITIES
Licenses and deferred development costs (448,003)
Fixed asset purchases (193,375)
- -------------------------------------------------------------------------------
Net funds provided (used) by investing activities (641,378)
FINANCING ACTIVITIES
Shares issued in reverse acquisition 374,340
Share subscriptions received 300,000
- -------------------------------------------------------------------------------
Net funds provided by financing activities 674,340
- -------------------------------------------------------------------------------
NET INCREASE IN CASH 5,381
Cash at January 1, 1997 --
- -------------------------------------------------------------------------------
CASH AT END OF PERIOD $ 5,381
===============================================================================
The notes to consolidated financial statements are an integral part thereof
Supplemental information:
Interest paid $ --
----------
Taxes paid $ --
----------
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
September 30, 1997
1. ORGANIZATION AND BASIS OF PRESENTATION
Nostrad Telecommunications Inc. ("Nostrad" or the "Company") was incorporated in
Nevada on September 24, 1993. On September 29, 1997, the Company's name was
changed from Cave Productions, Inc. to Nostrad. Effective September 30, 1997,
Nostrad Telecommunications Pte. Ltd., a private Singapore company ("Nostrad
Singapore") sold its wholly owned subsidiary companies Nostrad Media Pte. Ltd.,
a Singapore company which holds the Company's Asian licenses; and OmniVision
Africa Ltd., a British Virgin Island company, which holds the Company's African
licenses; (collectively as "Nostrad Subsidiaries") to the Company for 3,700,000
common shares and $300,000 cash. Nostrad Singapore has agreed to convert the
$300,000 cash owed to shares of the company at $0.65 per share or 461,538
shares. Nostrad Singapore may also be compensated up to 13,850,000 shares of
common stock for successful performance relative to license issuance in fourteen
emerging countries.
Nostrad Subsidiaries hold the Company's interest in its Asian and African
licenses for providing telecommunication services including providing wireless
PAY-TV (MMDS), paging, telephony and Internet services.
As of this date the Company, through its Nostrad Subsidiaries has entered into
long term exclusive use of specified frequency spectrum and has commenced
alphanumeric and numeric paging operations in Mongolia. The Nostrad Subsidiaries
has also entered into similar licensing agreements in Uganda.
The accompanying financial statements have been prepared on a basis of
accounting as a reverse acquisition by Nostrad and reflect all transactions on a
historical cost basis since inception. Nostrad Singapore or its affiliates owns
98% of the Company.
All references to the "Company" within the accompanying financial statements and
notes include transactions related to foreign license interests originally
entered into by the Nostrad Subsidiaries, as all such interests previously owned
by Nostrad Singapore have been legally transferred to the Company. The following
chart presents a summary of the Company's significant investments in companies
that hold the licenses required providing telecommunication services.
[GRAPHIC OMITTED]
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
September 30, 1997
1. ORGANIZATION AND BASIS OF PRESENTATION (Continued)
The Company holds its licenses in Mongolia through its 80% owned subsidiary
company, Mongolia Home Vision Corporation HH. A Mongolia corporation, Genco
Company Limited, holds the remaining 20%. Since May 1996 the Company has been
granted several license including the following:
May 16, 1996 Certificate of Enterprise with Foreign Investment
--------------------------------------------------------------
May 17, 1996 Communications Service License (10 years)
------------------------------------------------------
May 17, 1996 License to Employ the Radio Frequency
August 26, 1996 Mongolia State Radio, TV & Communications License
November 7, 1996 Permission to use channels to broadcast TV
January 28, 1997 Special License for the provision of Paging Service
February 20, 1997 Foreign Investment Chief Order
March 28, 1997 Mongolia State Registration Certificate
The Company has subsequently commenced paging operations, has obtained a package
of channels suitable for the Mongolian market, and has completed plans for
implementation of Multi-point, Multi-channel Distribution System ("MMDS") pay
television and paging services. Principal business operations commenced in
January 1997 and sales operations generated the Company's $7,775 in net revenues
for the period.
The Company holds its licenses in Uganda through its 80% owned subsidiary
company, OmniVision (U) Limited. Since April 1997, the Company has been granted
the necessary licenses to provide exclusive use of frequency spectrum required
for implementation of a MMDS pay television and paging operations:
April 23, 1997 Permission to establish wireless cable system
------------------------------------------------------------
May 21, 1997 Permission to simulcast Uganda TV
May 27, 1997 Permission to establish paging system
June 6, 1997 Investment license from Uganda Investment Authority
December 16, 1997 Assignment of MMDS frequency
January 15, 1998 Assignment of Paging frequency
As of September 30, 1997, the Company issued 2,000,000 common shares and agreed
to pay $150,000 for 100 per cent of the issued and outstanding common shares of
Nostrad Media Pte. Ltd., and 1,700,000 common shares and agreed to pay $150,000
for 100 per cent of the issued and outstanding common shares of OmniVision
Africa Ltd. The Company has also agreed to issue performance shares to be issued
within 24 months of September 30, 1997 as outlined on the following table.
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
September 30, 1997
1. ORGANIZATION AND BASIS OF PRESENTATION (Continued)
Country Performance Stock
-------------------------------------------------------------------------
Ghana 1,500,000
Tanzania 1,500,000
Morocco 2,000,000
Democratic Congo Republic 400,000
Rwanda 250,000
Tunisia 800,000
Zimbabwe 1,000,000
Kenya 800,000
Indonesia 1,500,000
Cambodia 500,000
Vietnam 500,000
Philippines 800,000
Bangladesh 1,500,000
Myanmar 800,000
------------
13,850,000
============
The Company is in the process of establishing an international telecommunication
operation, which includes providing wire cable, paging, telephone and Internet
services. The recoverability of the amounts shown for licenses and deferred
development costs is dependent upon the ability of the Company to obtain
necessary financing to complete the infrastructure required to provide these
services, and to operate on a profitable basis.
The Company is contemplating a common stock offering of 1.1 million common
shares and anticipates $529,000 in net proceeds. To date $90,000 has been
raised. However, there is no assurance that such financing will be successful.
Management has been dependent on financing from related parties which has
invested approximately $675,000 as of September 30, 1997. There is no assurance
that related parties will continue such funding. These financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
2. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and of acquired subsidiary companies: Nostrad Media Pte. Ltd. (100%
owned), Mongolia Home Vision Corporation HH (80% owned by Nostrad Media Pte.
Ltd.), OmniVision Africa Ltd. (100% owned), and OmniVision (U) Ltd. (100% owned
by OmniVision Africa Ltd.). All significant inter-company accounts and
transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company's management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and related notes to the financial statements.
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
September 30, 1997
2. SUMMARY O SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash Equivalents
The Company defines cash equivalents as highly liquid financial instruments
purchased with a maturity of ninety days or less.
Inventory
The Company records inventory at the lower of cost or market.
Licenses and Deferred Development Costs
The Company capitalizes the costs related to obtaining rights to provide paging,
cable television, telephone, and Internet services in specific countries, and
for the rights to broadcast specific channels. Costs incurred are initially
capitalized as Deferred Development Costs. If after a twelve-month period,
rights have not been fully obtained, the Deferred Development Costs will be
expensed. There is no assurance that revenues exceeding these costs will be
realized by the Company.
Fixed Assets
Fixed assets are recorded at cost and are depreciated on a straight line basis
over their estimated useful life as follows:
Years
-----
o Office equipment, furniture & fixtures 3
o Automotive & transportation equipment 3
o Leasehold improvements 3
o Operating Equipment & tools 3
o Transmission Station & Tower 5
Foreign Currency Translation
Transactions recorded are translated into United States dollars, its functional
currency, as follows:
o Monetary assets and liabilities at the rate prevailing at the balance sheet
date.
o Non-monetary assets and liabilities at historic rates
o Income and expenses at the average rate in effect during the year.
Any gain or loss is reflected on the consolidated statement of operations &
deficit.
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
September 30, 1997
3. LICENSES AND DEFERRED DEVELOPMENT COSTS
Accumulated costs incurred in obtaining license agreements and deferred
development costs incurred are as follows:
Licenses
Country Amount
------------------------------------------------------------------
Mongolia (a) $ 106,268
Uganda (b) 56,394
---------
162,662
Amortization (10,000)
$ 152,662
=========
Deferred Development Costs
Country Amount
-----------------------------------------------------------------
Philippines $ 42,500
Myanmar 31,400
Knowledge Network (d) 22,600
Indonesia 17,500
Poland 12,000
Malaysia 8,600
Cambodia 7,800
Vietnam 6,800
Bangladesh 4,300
---------
$ 153,500
=========
(a) Mongolia
The Company has entered into several agreements in Mongolia (see note 1), which
grant the Company exclusive rights to broadcast under certain frequency
spectrum. During January 1998, the paging system was upgraded to offer voice
paging, answering services, remote message retrieval, and storage in
Ulaanbaator, Mongolia's capital. The Company has also entered into exclusive
agreements to broadcast certain channels in Mongolia. The License granted
expires May 17, 2006. In order to keep the Licenses granted, the Company must
invest an additional $750,000 in its Mongolian subsidiary. This is approximately
the cost of installing wireless cable equipment in Mongolia. There is no
assurance that such monies can be raised.
(b) Uganda
The licenses granted to the Company by the Government of Uganda (see note 1)
gives the Company exclusive rights to certain frequency spectrum. The Company
has also entered into exclusive agreements to broadcast certain channels in
Uganda. Subsequent to September 30, 1997, the Company's interest in its Uganda
subsidiary has increased from 80% to 100%. (See Note 4 (c), Share Capital)
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
September 30, 1997
3. LICENSES AND DEFERRED DEVELOPMENT COSTS (continued)
(c) Knowledge Network
In order to provide a substantial educational component to the Company's
broadcasting system, the Company is currently reviewing a proposed joint venture
with the Open Learning Agency.
4. FIXED ASSETS
Fixed assets of the Company consist of the following:
Cost
- -------------------------------------------------------------------------------
Office equipment, furniture & fixtures $ 15,761
Transportation equipment 25,624
Leasehold improvements 47,447
Transmission station & tower 80,072
Operating equipment & tools 24,470
---------
193,374
(44,373)
---------
$ 149,001
=========
5. SHARE CAPITAL
a) Common shares issued and outstanding since inception are as follows:
Additional
Fiscal period and consideration received Number of Par value paid-in
shares amount capital
- --------------------------------------------------------------------------------
March 1, 1993 - cash 3,000,000 $ 3,000 $ --
September 30, 1997
Purchase of Nostrad Media Pte. Ltd.
and OmniVision Africa Ltd. 3,700,000 3,700 367,640
-----------------------------------
6,700,000 $ 6,700 $ 367,640
===================================
a) On October 15, 1997, the Company entered into an agreement to purchase the
remaining 20% interest in OmniVision (U) Ltd. (see note1) for consideration
of 500,000 shares of the Company.
b) The Company has entered into a Private Placement Offering dated November
27, 1997. Under the terms of this agreement, the Company may issue up to
1,500,000 shares for total proceeds of $$975,000. Nostrad Singapore has
agreed to convert the $300,000 owed to shares by participating in the
Private Placement Offering. The $300,000 has been disclosed as Share
Subscriptions Received.
c) The Company has reserved 13,850,000 shares of common stock for successful
performance by Nostrad Singapore in obtaining licenses in fourteen
countries.
<PAGE>
Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
September 30, 1997
6. INCOME TAXES
The Company has incurred losses totaling approximately $222,000 that may be
carried forward to reduce taxable income in future years. No deferred asset has
been recognized due to the uncertainty of future realization of any tax benefit.
7. COMMITMENTS
The Company has an agreement with its officers to provide international
management of its operations. The terms of the contract are for a period of two
years at an annual cost of $180,000.
8. SUBSEQUENT EVENTS
A Memorandum and Contract of Understanding between OmniVision Africa Ltd. and
ESN Satellite Cable TV Network ("ESN") of Accra, Ghana was entered into January
15, 1998. Under this Agreement, the Company will own 80% of the subsidiary
company that has been granted licenses for exclusive use of spectrum frequencies
in Ghana wireless pay television services. No cash investment has been made to
date.
The Company has entered into a 90 per cent joint venture for wireless television
in the Democratic Republic of the Congo. No cash investment has been made to
date.
The Company has entered into a Memorandum of Understanding in February 1998 to
provide wireless television in the country of Morocco. The Company will earn a
two-thirds interest in PCI, a Company holding Exclusive License and Frequency
with capability of providing at least 24 channels for a minimum period of ten
years to operate a wireless Cable Pay TV Distribution System. The Company is
obligated to pay US$100,000 over a one-year period for this interest, and will
also grant an option to purchase 20,000 of the Company's shares.
JOINT VENTURE AGREEMENT Page 1
- --------------------------------------------------------------------------------
Exhibit 10.12
JOINT VENTURE AGREEMENT
BETWEEN
ORBITRONICS INVESTMENTS LTD.
AND
OMNIVISION AFRICA LTD
a subsidiary of
NOSTRAD TELECOMMUNICATIONS PTE. LTD.
<PAGE>
JOINT VENTURE AGREEMENT Page 2
- --------------------------------------------------------------------------------
ARTICLE HEADING PAGE
I PARTIES I
2, 3 ,4 & 5 ESTABLISHMENT OF COMPANY 2
6 & 7 PURPOSE AND PRINCIPAL BUSINESS ACTIVITIES 2 - 4
8 DURATION 4
9, 10, 11,
12 & 13 SHARE CAPITAL 5 - 6
14 ADMINISTRATION 7 -
15 BOARD OF DIRECTORS 7
16 MANAGEMENT 9
17 AUDITING BOARD 9
18 LABOUR 9
19 BUSINESS OF THE COMPANY 10
20 RESPONSIBILITIES OF PARTIES 10
21 MANAGEMENT AND TECHNICAL ASSISTANCE 14
22 ACCOUNTING MATTERS AND DMDEND POLICY 14
23 TAXES 16
24 PROMOTION OF COMPANY'S BUSINESS 16
25 CONFIDENTIALITY 17
26 FORCE MAJEURE 17
27 SHARE TRANSFERS 18
28 TERMINATION 19
29 CONSEQUENCES OF NOTICES UNDER ARTICLE 29 20
30 REPRESENTATIONS AND WARRANTIES 22
31 MORE FAVOURABLE LAWS 22
32 SUPREMACY AND COVENANTS 23
33 SUBSEQUENT LAWS 23
34 INVESTMENT GUARANTEE 24
35 OTHER TERMS 24
36 GENERAL 24
37 NOTICES 25
38 ARBITRATION 26
39 LANGUAGE TEXT 27
<PAGE>
JOINT VENTURE AGREEMENT Page 3
- --------------------------------------------------------------------------------
PARTIES
Article 1
This Agreement is made between;
Orbitronics Investments Ltd a registered company in the Bahamas and having and
address at PO Box N-3910, Providence House, East Hill Street, Nassau, the
Bahamas and at Bauman House 2nd floor, Suite 224, PO box 3213 Kampala, Uganda.
And;
OmniVision Africa Ltd. a registered company in the British Virgin Islands, and
with an address at 20 Bideford Road, #07-00 Wellington Building, Singapore
229921.
ESTABLISHMENT OF COMPANY
Article 2
The Company has been formed in accordance with the Foreign Investment Law, the
Law on Economic Entities, the Partnership and Company Law and other relevant
Ugandan laws and regulations.
Article 3
3.1 The name of the Company is OmniVision (U) Uganda Ltd.
3.2 The registered office of the Company is at 4 Muwesi Road, Bugolobi, Kampala,
Uganda.
Article 4
The Company may upon the decision of the Board of Directors change its
registered office and establish branch offices or other places of business in
Uganda or elsewhere as the business of the Company may require from time to
time.
All activities of the Company shall be governed by the laws, decrees and
pertinent rules and regulations of Uganda.
Article 5
The parties shall share the profits and bear the risks and losses in accordance
with the proportions of their respective holdings of shares in the share capital
of the Company.
<PAGE>
JOINT VENTURE AGREEMENT Page 4
- --------------------------------------------------------------------------------
PURPOSE AND PRINCIPAL BUSINESS ACTIVITIES
Article 6
The purpose of the Company shall be to establish, own and operate wireless Pay
Television network, Paging Network, Internet Service Provider and other
Telecommunications services in Uganda and to transact all other business not
prohibited by the laws of Uganda.
Article 7
The principal business activities of the Company shall insofar as they are not
prohibited under the laws of Uganda include the following:
7.1 to distribute subscription television services in Uganda and to provide
marketing, sale, administration, editing and post-production services for
subscriber television services;
7.2 to provide television programme services and sound broadcasting services and
to write, film, record and supply programmes or parts of programmes suitable for
television, video or sound broadcasting whether by the Company or by any other
person, firm, corporation or authority;
7.3 to obtain all necessary permits or licences required for the purpose of
enabling the Company to carry on its business upon such terms and conditions as
may be acceptable to it; including other telecommunications ventures.
7.4 to acquire by purchase, exchange, lease or otherwise any land or building
in, on or from which or in relation to which any production or occurrence in
connection with the making of a television, video or sound broadcasting
programme may take place, or which is otherwise suitable for the business of the
Company;
7.5 to produce, promote, present, organise, arrange and provide every kind of
entertainment, diversion or instruction which may provide suitable material for
inclusion in a television, video or sound broadcasting programme;
7.6 to carry on any and all business and investment as provided for under the
Articles of Association dated the 4th day of June 1997
<PAGE>
JOINT VENTURE AGREEMENT Page 5
- --------------------------------------------------------------------------------
DURATION
Article 8
8.1 The duration of this agreement is for 50 years commencing on May 15 1997.
8.2 Where the parties agree to extend the duration of the Company they shall
take all relevant and necessary steps to procure that the Company applies for
and obtains an extension of the duration of the Company from the relevant
authority.
SHARE CAPITAL
Article 9
The share capital of the Company is USD 100,000 divided into 100,000 shares of
USD1.00 each.
Article 10
The shares subscribed and to be taken by each party in the share capital of the
Company shall be as follows:
10.1 Orbitronics Investments Ltd has subscribed to 2,000 shares of USD1.00 each
which is equal to 20% of the share capital of the Company
10.2 OmniVision has subscribed to 8,000 shares of USD1.00 each which is equal to
80% of the share capital of the Company.
The share capital of the Company may be subscribed and paid by the parties in
cash (freely convertible currency) or by way of contribution of licenses,
frequency spectrum, capital goods or industrial property (such as equipment,
machinery, tools, components, spare parts, materials, technical know/how and or
services) or premises or any combination thereof. The value of any capital goods
or industrial property contributed as share capital by any party shall be agreed
by the parties based on their assessment of international market prices
applicable at the contribution.
Article 11
The share capital of the Company shall be subscribed and paid by the parties in
such instalments at such time and in such manner and for such consideration as
may be stipulated from time to time by resolution of the Board of Directors
having regard to the
<PAGE>
JOINT VENTURE AGREEMENT Page 6
- --------------------------------------------------------------------------------
requirements of the projects and the business of the Company and as may be
determined by law
Article 12
It shall be a precondition to the obligation of OmniVision BVI to make the first
or any subsequent instalment of its subscription to the share capital of or of
any other contribution to the Company that there shall be delivered to
OmniVision BVI the written opinion of a legal counsel agreed by OmniVision BVI
confirming that OmniVision (U) is limited liability company duly constituted and
of good standing under the laws of Uganda, with all corporate powers and
authority and government approvals necessary in order to own or lease property
and that it can carry out the business activities contemplated by the parties
throughout its contemplated duration.
Article 13
13.1 Any further capital or finance which in the opinion of the parties is
required by the Company shall be provided or guaranteed by the parties in the
same proportions as their holdings of shares in the share capital of the
Company. Such further capital or finance shall be provided or guaranteed at the
time and in the manner stipulated by resolution of the Board of Directors.
13.2 The parties agree that to the extent that any of them suffers any loss in
relation to loans made or credit given to the Company or guarantees, indemnities
or security given in respect of the same they shall make contributions one to
the other to the intent and effect that such losses are borne in the same
proportions as their holdings of shares in the share capital of the Company.
13.3 The parties agree that should OmniVision BVI elect to vend-in any or all
its shares into a PUBCO, that Orbitronics Ltd. will have the option to convert
its shares to the PUBCO at the same price as OmniVision.
ADMINISTRATION
Article 14
14.1 Unless otherwise agreed by the Board of Directors:
14.1.1 the company secretary of the Company shall be Christopher Duncan
Farnworth
14.1.2 the first auditors of the Company shall be determined by the parties at a
later date
14.1.3 the bankers of the Company shall be TBA
14.2 the financial year of the Company shall commence on the first day of
January and
<PAGE>
JOINT VENTURE AGREEMENT Page 7
- --------------------------------------------------------------------------------
end on the thirty-first day of December in each year.
<PAGE>
JOINT VENTURE AGREEMENT Page 8
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
Article 15
15.1 At all times while this agreement remains in force that the Board of
Directors shall comprise of 5 persons of whom 3 shall be nominated by OmniVision
BVI and two by Orbitornics. In the event of any change in the proportions of
holdings in the share capital of the Company, as set forth in Article 10, each
party's representation on the Board of Directors shall be adjusted to a number
of directors proportionate to the proportion of holdings of shares held after
such change.
15.2 Any party shall be entitled at any time to remove or substitute any member
or members of the Board of Directors so appointed by it, and to appoint another
member in place of any member so appointed who for any reason ceases to be a
member. Any such removal, substitution or appointment shall be made by notice in
writing to the registered office of the Company with a copy to the other party
and shall take effect at such date as may be specified in the notice. Any party
removing a member of the Board of Directors shall further be responsible for and
shall indemnify the other party and the Company against any claim by such member
for unfair or wrongful dismissal or other compensation arising out of such
removal.
15.3 Subject to the right of a party to remove any member appointed by it, the
term of office of members of the Board of Directors shall be [3] years and may
be renewed Provided that in the event that a member has been removed and
replaced by another member during his term of office, the other member shall
only hold office for the unexpired period of the said term.
15.4 OmniVision BVI shall be entitled to appoint the Chairman of the Board of
Directors and one of the members.
15.5 The Board of Directors shall have the powers sufficient and necessary:
15.5.1 to establish the general policy of the Company;
15.5.2 to do all such acts and things as are not by law or by agreement or the
Articles of Incorporation required to be exercised and done exclusively by the
Company in general meeting; and
15.5.3 to enable its members to promote the best interest of the Company and to
protect the respective interest of the parties.
The Board of Directors shall discharge its responsibilities in accordance with
the provisions of this Agreement and the Articles of Association, the Foreign
Investment Law and the Partnership and Company Law and other relevant laws.
<PAGE>
JOINT VENTURE AGREEMENT Page 9
- --------------------------------------------------------------------------------
MANAGEMENT
Article 16
16.1 The Board of Directors shall appoint an executive director, one or more
deputy executive directors, a company secretary, a general accountant and such
other officers as the Board of Directors considers necessary for the proper
conduct of the business of the Company.
16.2 The officers shall be appointed by the Board of Directors for such term, at
such remuneration and upon such conditions as it may think fit and any officer
so appointed may be removed by the Board of Directors whenever in its judgement
the best interests of the Company will be served thereby.
16.3 All officers of the Company shall have such authority and perform such
duties in the management of the Company as may be provided in the Articles of
Association or as may be determined by the Board of Directors.
AUDITING BOARD
Article 17
The parties shall appoint one or more persons who are members of an
internationally recognised body of accountants and have adequate knowledge and
experience in international accounting principles standards and practices
recognised by the Ministry of Finance of Uganda to, serve as members of the
Auditing Board of the Company to supervise the activities of the Board of
Directors and the financial affairs of the Company.
LABOUR
Article 18
The Company shall be free to recruit, employ, dismiss, pay wages and bonuses and
give other benefits to, and negotiate and sign separate labour contracts with
individual employees subject to the laws of Uganda and in accordance with
policies formulated by the Board of Directors. The policies with respect to the
recruitment, employment, dismissal, resignation, wages, welfare benefits, labour
insurance, labour discipline and other terms and conditions of employment shall
be determined by the Board of Directors in accordance with the laws of Uganda.
The executive director shall be authorised by the Board of Directors to act in
all matters of employment within the scope of such policies.
<PAGE>
JOINT VENTURE AGREEMENT Page 10
- --------------------------------------------------------------------------------
BUSINESS OF THE COMPANY
Article 19
19.1 Except as the parties may otherwise agree in writing or save as otherwise
provided or contemplated in this Agreement or in the annual business plan the
parties shall exercise their powers in relation to the Company so as to ensure
that:
19.1.1 the Company carries on and conducts its business and affairs in a proper
and efficient manner and for its own benefit and in accordance with the annual
business plan.
19.1.2 the Company transacts all its business on arms length terms;
19.1.3 the Company shall not enter into any agreement or arrangement restricting
its competitive freedom to provide and take goods and services by such means and
from and to such persons as it may think fit;
19.1.4 all business of the Company, other than routine day to day business,
shall be undertaken and transacted by the Board of Directors;
19.1.5 subject to the annual business plan, the business of the Company shall be
carried on pursuant to policies laid down from time to time by the Board of
Directors;
19.1.6 the Company shall maintain with a well established and reputable insurer
adequate insurance against all risks usually insured against by companies
carrying on the same or a similar business and (without prejudice to the
generality of the foregoing) for the full replacement or reinstatement value of
all its assets of an insurable nature;
19.1.7 the Company shall not acquire, dispose of, hire, lease, license or
receive licences of any assets, goods, rights or services otherwise than at the
best price reasonably obtainable in the circumstances; and
19.1.8 if the Company requires any approval, consent or licence for the carrying
on of its business in the places and in the manner in which it is from time to
time carried on or proposed to be carried on the Company will use its best
endeavours to maintain the same in full force and effect.
Article 20
The parties shall be respectively responsible for the following matters:
<PAGE>
JOINT VENTURE AGREEMENT Page 11
- --------------------------------------------------------------------------------
20.1 In addition to and without prejudice to Orbitronics contractual
responsibilities specified elsewhere in this Agreement, the Uganda Party's
responsibilities shall be as follows:
20. 1.1 registering the Company with the Taxation Authority, opening in the name
of the Company the foreign currency and local bank accounts.
20.1.3 using its best efforts to obtain any preferential tax, customs, foreign
exchange or other treatment that is or may become available to the Company;
20.1.4 providing the Company with suitable office and control room, studio space
comprising an area of at least 500 square metres at the most favourable rent and
other terms obtainable;
20.1.5 assisting in the selection of Uganda contractors to participate in the
design and construction of the Company's facilities;
20.1.6 applying for all permissions, consents, approvals, licences, certificates
and permits in legally effectual form as may be necessary lawfully to commence
and carry on the erection, assembly, testing, commissioning and initial
operation of the Company's wireless pay television network and
telecommunications business and , assisting OmniVision BVI's personnel Party and
any foreign contractors engaged in connection therewith to obtain any necessary
registrations or licences in Uganda;
20.1.8 applying for any necessary import and export licences (including for
those items imported as part of the contribution to the share capital) and
handling customs formalities on behalf of the Company;
20.1.9 assisting the Company to procure (by purchase, lease or otherwise) within
Uganda stable and adequate supplies of all materials, components, equipment and
of office supplies, water, gas, electricity, and telephone\fax and facsimile
services, and all other items and facilities required for the business of the
Company including connections to public roads, sewage and storm water
facilities), on terms no less favourable than those available to state
enterprises or other domestic business entities;
20.1.10 assisting the Company to handle procedures for transportation within
Uganda of the items mentioned in Articles 20.1.8 and 20.1.9 above;
20.1.11 assisting the Company to recruit Uganda management personnel, staff and
workers on the basis of merit in accordance with the open selection system
specified in Article 18;
20.1.12 assisting foreign personnel (including foreign directors, managers,
technicians, workers, contractors, professional advisers and others engaged on a
full or part-time basis in relation to the operation of the Company, and their
families) to obtain Ugandan visas
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and work permits, and making satisfactory accommodation arrangements for them in
Uganda;
20.1.13 contacting banks and other financial organisations in Uganda as directed
by the board of directors, holding discussions with them in respect to the
raising of finance and provision of guarantees required by the Company, and
obtaining all documents, approvals or registrations required under Ugandan law
in order to make such loans or guarantees effective;
20.1.14 providing the Company with copies of Ugandan laws, regulations, notices
and other relevant information needed by them;
20.1.15 supplying the Company with relevant information on the domestic Ugandan
market (including pricing and distribution information) to facilitate its
operations;
20.1.16 in the event of the issue of any law, regulation or notice within Uganda
that is detrimental to the interests of the Company, or the occurrence of any
other administrative or commercial event that is detrimental to their interests,
liaison with the relevant authorities and using its best endeavours to remove
the detrimental effects of such law, regulation, notice or event; and
20.1.17 handling other matters entrusted to it by the Company.
20.2 In addition to and without prejudice to OmniVision BVI contractual
responsibilities specified elsewhere in this agreement, OmniVision BVI's
responsibilities shall be as follows
20.2.1 supplying the technical know-how required for the establishment,
commissioning, testing and operation of the wireless pay television network;
20.2.2 co-ordinating, superintending and supervising of the erection, assembly
testing, commissioning and initial operation of the Company's wireless pay
television network and generally of the carrying out of the business of the
Company;
20.2.3 making available to the Company an experienced executive director to
manage the business;
20.2.4 providing training in the operation of the wireless pay television
network for local personnel of the Company;
20.2.5 assisting the Company to select foreign contractors to manage the
erection, assembly, testing, commissioning and initial operation of the
Company's wireless pay television network;
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20.2.6 assisting the Company to procure (by purchase, lease or otherwise) from
overseas materials, components, equipment, office supplies, means of transport
and other items at the most favourable prices obtainable;
20.2.7 assisting the Company to handle procedures for transportation to Kampala,
Uganda of the items mentioned in Article 20.2.6 above;
20.2.8 assisting the Company to recruit foreign management personnel and
technicians on the basis of merit in accordance with the open selection system
specified in Article 18;
20.2.9 assisting Uganda personnel (including the Company's directors, managers,
technicians, workers and others engaged on a full or part-time basis, and their
families) to obtain visas and work permits abroad in order to participate in
technical training, board meetings or other work relating to the operation of
the Company;
20.2.10 contacting banks and other financial organisations outside Uganda and
holding discussions with them in respect to the raising of finance and provision
of guarantees required by the Company;
20.2.11 advising on promotional and marketing campaigns for the wireless pay
television network;
20.2.12 assisting the Company to promote its services on the Uganda market by
providing relevant data in its possession on pricing, supply and demand, and the
like in targeted segments of the markets;
20.2.13 providing the Company with information available outside of Uganda which
is required by it to carry out its responsibilities under Article 20.1 above;
and
20.2.14 handling other matters entrusted to it by the Company.
MANAGEMENT AND TECHNICAL ASSISTANCE
Article 21
The parties shall as soon as may be practicable after the registration of the
Company procure that the Company shall enter into a Management and Technical
Assistance Agreement in respect of the Company's business with OmniVision BVI to
provide:
21.1 proprietary technology and know-how on the establishment and operation of
the wireless pay television network in consideration of a technical assistance
fee equal to 3 percent of the gross monthly subscription fees received by the
Company from subscribers of the wireless pay television network; and
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22.2 exclusive programming and operational management services to the Company in
consideration of a management fee equal to 3 percent of the gross monthly
revenues of the Company.
ACCOUNTING MATTERS AND DIVIDEND POLICY
Article 22
22.1 The parties shall procure that:
22.1.1 the Company shall at all times maintain accurate and complete accounting
and other financial records in accordance with the requirements of all
applicable laws and generally accepted accounting principles applicable in
Uganda
22.1.2 quarterly management accounts containing such information as either party
shall reasonably require shall be prepared and despatched by the Company to the
parties within 30 days of the end of the quarter in question
22.1.3 each party and its respective authorised representatives shall be allowed
access at all reasonable times to examine the books and records of the Company
22.1.4 the accounting and other financial records of the Company shall be
audited by an independent international public accounting firm at the end of
each financial year.
22.1.5 the monetary unit to be used in bookkeeping shall be US Dollar and UShs.
22.1.6 all accounts and other records shall be kept in English language.
The Company shall submit an annual financial report (duly audited by the
auditors for the time being of the Company) and an annual management report of
its Board of Directors at the end of each financial year to the relevant
authorities after they have been presented to and approved by the parties in
their annual ordinary general meeting.
22.2 The parties shall procure that the Company shall prepare an annual business
plan which shall include the following:
22.2.1 an estimate of the working capital requirements of the Company
incorporated within a cash flow statement together with an indication of the
amount (if any) which it is consistent prudent to retain out of the previous
financial year's distributable profits to meet such working capital requirements
22.2.2 a projected profit and loss account
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22.2.3 an operating budget (including estimated capital expenditure
requirements) and balance sheet forecast
22.2.4 a review of the projected business
22.2.5 a summary of business objectives
The first annual business plan shall be prepared within [30] days of the date of
the registration of the Company. Annual business plans in respect of subsequent
financial years shall be submitted for approval by the Board of Directors not
later than [60] days before the commencement of the financial year in question].
22.3 Subject to circumstances prevailing at the relevant time including in
particular the working capital requirements of the Company, and such provisions
and transfers to reserve and depreciation as the Board of Directors shall
consider prudent and proper after consulting with the auditors for the time
being of the Company or as may be required by the laws of Ugandan, it is the
intention of the parties that the Company shall distribute by way of cash
dividend in respect of each financial year not less than 30 % of the post-tax
profits of the Company for that financial year. In deciding whether in respect
of any financial year the Company had profits available for distribution the
parties shall procure that the auditors for the time being, Company shall
certify whether such profits are available or not and the amount thereof (if
any). In giving such certificate such auditors shall act as experts and,:
arbitrators and their determination shall be binding on the parties.
Article 23
23.1 The Company shall pay all taxes in accordance with the relevant laws of
Uganda subject to such preferences, relief's, benefits, concessions, exemptions,
incentives and privileges that may have been extended to the Company.
23.2 The Ugandan Party shall use all reasonable endeavours to obtain for the
Company:
23.2.1 the most favourable tax rates and tax preferences, relief's, benefits,
concessions, exemptions, incentives, privileges and reductions available to
business entities with foreign investment capital in Uganda
23.2.2 exemption or the most beneficial reduction from import duties on all
articles, commodities, components, equipment, goods, machinery, materials,
products, materials, spare parts, transport vehicles and other items required to
be imported for the businesses and activities of the Company
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23.3 If the tax laws of Uganda shall be amended to be more favourable, then,
subject to any relevant approval that may be required the Company's tax regime
(or any category of such tax) shall be correspondingly amended.
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PROMOTION OF COMPANY'S BUSINESS
Article 24
24.1 Each of the parties to this Agreement covenants to use its best endeavours
to maintain, promote and develop the business of the Company to the best
advantage and to further the reputation and interests of the Company.
24.2 Each of the parties to this Agreement covenants that for as long as it is a
party to this Agreement and for a period of [24] months thereafter it shall not
and shall procure that no company owned or controlled by it shall be engaged
concerned or interested either directly or indirectly and whether on its own
behalf or on behalf of or in association with others or in any capacity whatever
in carrying on in competition with the Company anywhere within Uganda the
business of providing wireless pay television services or any other business
conducted by the Company.
24.3 Each of the parties to this Agreement covenants that for as long as it is a
party to this Agreement and for a period of [24] months, thereafter it shall not
and shall procure that no company owned or controlled by it and no person on it
or their behalf shall canvass solicit the custom of or endeavour to entice away
from the Company any person firm or company which has at any time during the 12
months before the termination of Agreement been a customer of or in the habit of
dealing with the Company.
24.4 The restrictions contained in respectively Articles 25.2 and 25.3 are
consider reasonable by the parties but in the event that any such restriction
shall be found to be unenforceable but would be valid if some part or parts of
it were deleted or the period or area of application reduced such restriction
shall apply with such modification as may be necessary to make it valid and
effective.
CONFIDENTALITY
Article 25
25.1 Each party shall at all times use its best endeavours to keep confidential
(and to procure that its respective employees and agents shall keep
confidential) any confidential information which it or they may acquire in
relation to the Company or in relation to the clients business or affairs of the
other party to this Agreement or of the Company and shall not use or disclose
such information except with the consent of that other party and/or of the
Company or in accordance with the order of a court of competent jurisdiction or
in the case of information relating to the Company for the advancement of the
business of the Company.
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25.2 The parties to this Agreement shall procure that the Company shall use all
reasonable endeavours to ensure that its officers employees and agents observe a
similar obligation of confidence in favour of the parties.
25.3 The obligations of each of the parties contained in Article 25.1 shall
continue without limit in point of time but shall cease to apply to any
information coming into the public domain otherwise than by breach by any such
party of its said obligations Provided that nothing contained in this Article 25
shall prevent any party from disclosing any such information to the extent
required in or in connection with legal proceedings arising out of this
Agreement or any matter relating to or in connection with the Company.
25.4 For the purposes of this Article 25 the expression 'party' shall include
the subsidiary companies of any party and any other company controlled by such
other party and the employees or agents of that party and of such subsidiary or
controlled companies.
FORCE MAJEURE
Article 26
26.1 In the event that either of the parties ('Relevant Party') to this
Agreement
26.1.1 forthwith notify the other party in writing;
26.1.2 within 14 days thereof provide detailed information of the event and
explaining the reasons for its inability to perform this agreement; and
26.1.3 use and continue diligently to use all reasonable efforts to remove the
cause of the force majeure, then the Relevant Party shall be excused performance
or the punctual performance, as the case may be, as from the date of such notice
for so long as the event of force majeure shall continue.
26.2 For the purposes of this Agreement, 'force majeure' shall mean, in respect
of the party claiming force majeure, any event which:
26.2.1 is beyond the control of the Relevant Party;
26.2.2 is unforeseen, or if foreseen, is unavoidable; and
26.2.3 totally or substantially prevents the performance of any obligation under
this Agreement by the Relevant Party.
Force majeure events shall include but shall not be limited to exceptional
adverse weather conditions, floods, droughts, storms, lightning, high winds,
typhoons, earthquakes,
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natural disasters, aircraft's or aerial objects, explosion, fire, war,
hostilities, insurgencies, terrorism's, civil commotion's, riots, strikes or
lock-outs on a city or industrial scale, industrial disputes, industrial actions
by workmen, shortage of [labour, goods and materials, and (in the case where
OmniVision BVI is the Relevant Party) acts or regulations of government and
political interference's with the activities of the Relevant Party or the
Company.
26.3 Each party undertakes, notwithstanding that it is not the party whose
performance is affected, to co-operate and use its best endeavours to assist in
removing the cause of the force majeure.
SHARE TRANSFERS
Article 27
Save as otherwise expressly provided in this Agreement neither party/ shall be
entitled during the term of this Agreement to sell, transfer, encumber grant
options over or otherwise dispose of any of the shares or any beneficial
interest in any of the shares now owned or to be acquired after the date of this
Agreement by it in the share capital of the Company under or pursuant to this
Agreement or by virtue of its holding of shares in the share capital of the
Company except in compliance with the provisions of the Articles of
Incorporation of the Company.
TERMINATION
Article 28
28.1 This Agreements hall continue in full force and effect until terminated in
accordance with the provisions of this Article.
28.2 Either of the parties to this Agreement shall be entitled to terminate this
Agreement immediately by notice in writing to the other party (but not after 90
days of the event in question first coming to the attention of the party
entitled to give the notice) if any of the events set out below shall occur. The
said events are:
28.2.1 if the other party shall commit any breach of any of its obligations
under this Agreement and shall fail to remedy such breach (if capable of remedy)
within 30 days after being given notice by the first party so to do or
28.2.2 if the other party shall go into liquidation or dissolution whether
compulsory or voluntary (except for the purposes of a bona fide reconstruction
or amalgamation with the consent of the first party such consent not to be
unreasonably withheld) or if the other
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party shall have an administrator appointed or if a receiver administrative
receiver or manager shall be appointed over any part of the assets or
undertaking of the other party
28.2.3 if the accumulated losses of the Company are so great that the Company
cannot carry out its objectives or continue its business activities successfully
28.2.4 if the Company is no longer in a position to pay its debts or becomes
insolvent or ceases to carry on business
28.2.5 if any event of force majeure continues for a period of 6 months
28.2.6 pursuant to Article 38.4 where applicable
28.3 OmniVision BVI shall be entitled to terminate this Agreement immediately by
notice in writing to Orbitronics Party if any of the events set out below shall
occur:
28.3.1 any change in the circumstances or laws of Uganda which affects or is
likely to affect in a material manner:
28.3.1.1 the viability of the business of the Company including that resulting
from an increase in tax payable or the imposition of additional tax;
28.3.1.2 OmniVision BVI's expected returns in terms of capital or profits
including that resulting from an increase in tax payable or the imposition of
additional tax;
28.3.1.3 the rights or interests of OmniVision BVI's in the Company or under
this agreement; or
28.3.1.4 the ability of OmniVision BVI's to repatriate its capital or profits or
the timing in respect thereof
28.3.2 the nationalisation or expropriation of the assets of the Company or the
assets of or investment of OmniVision BVI's in the Company
28.3.3 pursuant to Articles 33 or 38.4 where applicable.
28.4 This Agreement hall terminate if at any time as a result of a transfer of
shares made in accordance with this Agreement and/or the Company's Articles of
Incorporation either party holds no shares in the share capital of the Company
but without prejudice to any rights which either party may have against the
other party arising prior to such termination (including without limit the
provisions of Article 36.1 below).
28.5 This Agreement shall terminate immediately if an effective resolution is
passed to dissolve the Company or if a liquidating commission is otherwise
appointed (but without
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prejudice to any rights either party may have against the other arising prior to
such termination).
CONSEQUENCES OF NOTICES UNDER ARTICLE 28
Article 29
29.1 If either party shall serve a valid notice of termination under Article
28.2 that party, ('the Terminator') shall be entitled by that notice to require
the other party ('the Terminatee') either to purchase all (but not some only) of
the shares in the Company of the Terminator or to sell to the Terminator all
(but not some only) of the shares of the Terminatee in the Company in either
case at a price determined in accordance with the provisions of Article 29.2.
Upon exercise of any such right by the Terrriinator it and the Terrninatee shall
become bound respectively to sell or purchase on the terms set out below. If in
a valid per Truncation notice no such power of sale or purchase is exercised by
the Terminator the parties shall procure that the Company shall be immediately
dissolved.
29.2 The purchase price of the shares to be bought and sold pursuant to Article
29.1 shall be their fair value as agreed between the parties to such sale and
purchase or in default of agreement within 15 days after the service of the
notice of termination such sum as shall be certified (at the request of either
such party) by the auditors for the time being of the Company to be the fair
value of such shares on the date when the termination notice was served. In so
certifying the auditors are irrevocably instructed to value the shares to be
bought and sold as the same proportion of the market value of the Company as a
whole on that date as the relevant shareholding bears to the whole issued share
capital of the Company on that date but otherwise they shall take into account
all such circumstances as shall seem to them relevant. In so acting such
auditors are instructed to act as experts and not as arbitrators and their
decision shall (save in respect of manifest error) be final and binding on the
parties to such sale and purchase for all purposes and their costs shall be
borne in equal shares by such parties.
29.3 Completion of the sale and purchase of shares pursuant to the provisions of
Article 29.1 shall take place at the registered office of the Company at [10.00
am] on the [second] business day after the price payable for such shares has
been agreed or determined in accordance with the provisions of Article 29.2 (or
such other time and/or place as the parties may agree) and in respect of which
the provisions of Articles 29.4, 29.5 and 29.6 shall then have effect.
29.4 At any completion of the sale and purchase of shares pursuant to Article 29
in return for cash (or such other means of payment which is agreed by the
seller) for the full amount of the purchase money for the shares being bought
and sold (determined in accordance with the respective provisions of Article 29
(as applicable)) and such other amounts as are referred to in Article 29.5 the
seller shall deliver to the purchaser duly
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executed share transfers for the shares being sold in favour of the purchaser or
as it may direct together with the relevant share certificate(s) (or an
acceptable indemnity in lieu).
29.5 If any party ('the Outgoing Party') shall elect or become bound to transfer
all its shares in the Company to the other party to this Agreement under or
pursuant to the provisions of Article 29.5 that other party shall upon or
immediately prior to completion of such transfer procure: ,
29.5.1 the immediate release of all guarantees indemnities and similar covenants
(if any) given by the Outgoing Party in favour or for the benefit of the other
Company under or pursuant to Article 13 (and pending such release shall
indemnify and keep the Outgoing Party fully and effectively indemnified from and
against all claims arising under such guarantees indemnities and similar
covenants (if any).
29.5.2 the immediate repayment to the Outgoing Party of all money advanced to
the Company under or pursuant to Article 13.1 that Outgoing Party by way of loan
and then outstanding (if any) together with all interest (if any) down to the
date of actual payment (as well before as after judgement)
29.6 The parties shall exercise all voting and other rights available to them to
ensure the implementation of the preceding provisions of this Article and that
any provisions contained in the Articles of Incorporation of the Company
restricting transfers of shares (including without limit the provisions of
Article 14) shall be waived or suspended to allow such sales and purchases to
proceed as provided above and the parties shall procure the registration of any
transfer of any shares in the Company pursuant to this Agreement accordingly.
REPRESENTATIONS AND WARRANTIES
Article 30
Each of the parties represents and warrants to the other that it has full power
to enter into and perform its obligations under this Agreement and the execution
of this Agreement on its behalf and the performance of its obligations under
this Agreement have been duly authorised by all necessary corporate action, and
the obligations expressed as being assumed by it under this Agreement constitute
its valid, legal and binding obligations enforceable against it in accordance
with their terms.
MORE FAVOURABLE LAWS
Article 31
Should the laws of Uganda relating to participation in such investment as is
contemplated by this Agreement and to the relations established thereby, be
amended to be more
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favourable to either or both of the parties, then, provided neither of the
parties is put at a disadvantage thereby, this Agreement shall be amended to
take advantage of such new legislation.
SUPREMACY
Article 32
32.1 If any provisions of the Articles and Covenants of Incorporation of the
Company at any time conflict with any of the provisions of this Agreement the
provisions of this Agreement shall prevail and the parties shall whenever
necessary exercise all voting and other rights and powers available to them to
procure the amendment of the Articles of Incorporation to the extent necessary
to permit the Company and its affairs to be carried out as provided in this
Agreement.
32.2 Each of the parties shall exercise all voting rights and other powers of
control available to them in relation to the Company so as to procure (so far as
each is respectively able by the exercise of such rights and powers) that at all
times during the term of this Agreement the provisions concerning the structure
and organisation of the Company and the regulation of its affairs set out in
this Agreement are duly observed and given full force and effect and all actions
required of the parties under this Agreement and the Articles of Incorporation
are carried out in a timely manner. Without prejudice to the generality of the
above each party to this Agreement shall procure that (subject to their
fiduciary duties) each of the directors appointed by it under or pursuant to
Article 16.1 shall execute and do all such acts and things and give and confer
all such powers and authorities as they would have been required to execute do
give and/or confer had they been a party to this Agreement and had covenanted in
the same terms as the party which appointed them.
32.3 Each of the parties shall exercise all voting rights and other powers of
control available to them to ensure that any meeting of the Board of Directors
and every general meeting has the necessary quorum throughout.
SUBSEQUENT LAWS
Article 33
Uganda or any governmental agency after the registration of the, no subsequently
enacted laws, ordinances, decrees or regulations of the Government authority or
agency shall have a retroactive effect on this agreement or incorporation, the
Articles of Incorporation and the conduct of the Company's operations and
business in Uganda. Any application of such adverse laws, ordinances, decrees or
regulations to the aforesaid shall entitle the OmniVision BVI to terminate this
Agreement.
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INVESTMENT GUARANTEE
Article 34
The capital and assets invested in the Company by OmniVision Party shall not be
requisitioned or expropriated through administrative measures of the Government
of Uganda and the Company shall not be nationalised by the Government of Uganda.
In the event that the Government of Uganda requisitions, expropriates or
nationalises the capital and assets of OmniVision BVI or of the Company, the
Orbitronics shall use its best efforts to procure by the Government of Uganda
promptly pays full compensation for such capital and assets.
OTHER TERMS
Article 35
All other terms relating to the activities of the Company which are not
stipulated in this Agreement or the Articles of Association shall be implemented
by the parties in accordance with the Foreign Investment Law of Uganda, the Law
on Partnerships and Companies and other relevant laws.
GENERAL
Article 36
36.1 This Agreement shall be binding upon the parties to this Agreement and
their respective successors and permitted assigns Provided that neither of the
parties to this Agreement shall be entitled to assign this Agreement or any of
its rights and obligations under this Agreement except by a transfer of that
party's shares in the Company which is permitted under the express terms of this
Agreement and/or which is made in accordance with the Articles of Incorporation
or which is otherwise approved in writing by the other party to this Agreement
and (in either case) on terms that the transferee shall covenant with that other
party to perform all the obligations of the transferor under this Agreement.
36.2 No exercise or failure to exercise or delay in exercising any right power
or remedy vested in any party under or pursuant to this Agreement shall
constitute a waiver by that party of that or any other right power or remedy.
36.3 Nothing in this Agreement shall be deemed to constitute a partnership
between the parties to this Agreement or constitute any party the agent of the
other party or otherwise entitle any party to have authority to bind the other
party for any purpose.
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36.4 Each party shall bear its own costs of or in connection with the
preparation and execution of this Agreement but all costs, legal fees and other
expenses incurred in the formation of the Company shall be borne and paid by the
Company.
36.5 This Agreement(together with the Articles of Association and all agreements
and documents executed contemporaneously with it or referred to in it)
constitutes the entire agreement between the parties in relation to its subject
matter and supersedes all prior agreements and understandings whether oral or
written with respect to such subject matter and no variation of this Agreement
shall be effective unless reduced to writing and signed by or on behalf of a
duly authorised representative of each of the parties to this Agreement.
36.6 In the event that any term condition or provision of this Agreement is
found or held to be inconsistent or a violation of any applicable law statute or
regulation the same shall be deemed to be deleted from this Agreement and shall
be of no force and effect and this Agreement shall remain in full force and
effect as if such term condition or provision had not originally been contained
in this Agreement. Notwithstanding the above in the event of any such deletion
the parties shall negotiate in good faith in order to agree the terms of a
mutually acceptable and satisfactory alternative provision in place of the
provision so deleted. If an agreement on the alternative provision cannot be
reached by the parties within 30 days of the provision in question being so
found or held to be inconsistent or a violation, an alternative provision
reflecting the economic and legal substance of the provision so deleted as
closely as possible shall be determined by arbitration pursuant to Article 38.
36.7 This Agreement may be executed in any number of counterparts or duplicates
each of which shall be an original but such counterparts or duplicates shall
together constitute but one and the same agreement.
36.8 Time shall be of the essence for the purposes of any provision of this
Agreement.
NOTICES
Article 37
37.1 Any notice to be given by any party to this Agreement shall be, in writing
and shall be deemed duly served if delivered personally or by facsimile
transmission or by prepaid registered post (airmail in the case of an address
for service outside Uganda) to the addressee at the address or (as the case may
the facsimile number of that party set opposite its name below:
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Orbitronics Investments Ltd
PO Box N-3910, Providence House
East Hill Street, Nassau
the Bahamas
and at Bauman House
2nd floor, suite 224
PO box 3213
Kampala, Uganda
Fax 25641-230388
OmniVision East Africa Ltd.
20 Bideford Road
#07-01 Wellington Building
Singapore
Facsimile number: (65) 738-8142
or at such other address (or facsimile number) as the party to be served may
have not been in accordance with the provisions of this Article.
37.2 Any notice sent by facsimile shall be deemed served when despatched and any
notice served by prepaid registered post shall be deemed served [7] days after
posting to an address in Uganda or [14] days after posting to an address outside
Uganda. In proving the service of any notice it will be sufficient to prove in
the case of a letter that such letter was properly stamped addressed and placed
in the post or delivered or left at the current address if delivered personally
and in the case of a facsimile that such facsimile transmission was duly
despatched to the facsimile number of the addressee given above or subsequently
not filed for the purposes of this Agreement.
ARBITRATION
Article 38
38.1 Any dispute arising from the performance or interpretation of this
Agreement or the Articles of Association which cannot be resolved amicably by
the parties, and any other matter specifically referred to arbitration under any
provision of this Agreement or the Articles of Incorporation shall be referred
to arbitration in Singapore before a single arbitrator in accordance with the
Rules of the Singapore International Arbitration Centre. The language to be used
in the arbitration shall be English.
38.2 In reaching a decision, the arbitration body shall:
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JOINT VENTURE AGREEMENT Page 27
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38.2.1 first apply the provisions of this Agreement or the Articles of
Association interpreted in accordance with the plain meaning, of its terms save
to the extent that they are inconsistent, mandatory provision of the laws of
Uganda;
38.2.2 give effect to all mandatory provisions of the laws of Uganda;
38.2.3 apply the laws of Uganda which are specifically referred to and
incorporated in this Agreement and the Articles of Incorporation; and
38.2.4 apply the laws of Singapore if Articles 38.2.1, 38.2.2 and 38.2.3 prove
insufficient for a decision.
38.3 The decision of the arbitrator shall be made and binding upon the parties
and the party liable to carry out a decision or award given in pursuance of this
Article 39 shall abide by and comply with the decision or award within the time
specified for compliance or, if no time is specified, within 30 days after the
communication thereof to the parties. Judgement upon the award rendered may be
entered in any court having jurisdiction or application may be made to such
court for a judicial acceptance of the award without re-examination of the
merits of the case and for an order of enforcement, as the case may be. To this
effect, neither party shall interpose any procedural objection to the
enforcement of any such decision by the other party through any competent court
of law.
38.4 If a party liable to carry out a final decision or award given in
accordance with this Article 39 fails to comply therewith within the time
specified for compliance or, if no time is specified, within 30 days after the
communication thereof to the parties, the party in favour of which the decision
or award has been given, shall be entitled to terminate this Agreement by notice
in writing to the other party.
38.5 During any arbitration, the parties shall continue to perform and observe
all provisions of this Agreement and the Articles of Association to the extent
that the same are not affected by the matter in dispute.
LANGUAGE TEXT
Article 39
This Agreement is made in English.
<PAGE>
JOINT VENTURE AGREEMENT Page 28
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IN WITNESS WHEREOF the authorised representatives of the parties have made and
subscribed this Agreement this 30th day of May 1997.
For and on behalf of:
Orbitronics Investments Ltd )
) : ----------------------------
Mr. Galib Kara, Director
For and on behalf of:
OmniVision Africa Ltd. )
) : ----------------------------
Mr. Chris Farnworth, Director
Exhibit 10.13
SUB-CONTRACT AGREEMENT FOR PROVISION OF MANAGEMENT AND TECHNICAL SERVICES
BETWEEN
NOSTRAD TELECOMMUNICATIONS INC.
AND
PFLUGER ENTERPRISES L.L.C.
<PAGE>
THIS SUB-CONTRACT AGREEMENT FOR PROVISION OF MANAGEMENT AND TECHNICAL SERVICES
("this Agreement") is made and entered into as of this 6th day of August 1999,
between Nostrad Telecommunications Inc. a Pfluger established in Nevada, USA
("the NSTC "), and Pfluger Enterprises, L.L.C., a Texas (IJSA) limited liability
Pfluger ("Pfluger ");
WHEREAS, Pfluger has entered into an Equipment Supply Contract and a
Management and Technical Services Agreement for provision and management of an
MMDS wireless cable television distribution and reception system ("the System")
pursuant to the terms of that certain Comprehensive Supply Contract between with
the Zimbabwe Broadcasting and Pfluger ("the Supply Contract") and ("Management
and Technical Services Agreement") hereto in attached as Exhibit "A" and forms
part of this agreement. For purposes of this Agreement, any and all business,
applications, operations or ancillary applications or uses of any equipment
constituting a part of the System, including the Equipment itself, throughout
the world shall be referred to herein as the "Business";
AND WHEREAS the parties hereto have signed an MOU on August 6 1999 and the
parties now wish to record the terms of their agreement;
AND WHEREAS, Pfluger desires to engage NSTC as its exclusive agent to
operate the Business pursuant to the terms and conditions hereinafter set forth;
NOW, THEREFORE, these presents witness that the parties hereto hereby agree
as follows-
ARTICLE I
APPOINTMENT AND COMPENSATION OF NSTC
1.1 Appointment of the NSTC. Pfluger hereby appoints the NSTC, and the NSTC
hereby accepts appointment, on the terms and conditions set forth herein, to
exclusively manage and operate the Business on Pfluger's behalf from and after
the Effective Date (as hereinafter defined) throughout the world. NSTC shall be
an independent contractor and not an agent of Pfluger, except to the limited
extent and for those limited Purposes specifically set forth in this Agreement.
1.2 Delegations of Authority.
(a) To NSTC. Except as otherwise provided herein, and subject to the
management and operational policies that may be reasonably established from
time to time by ZBC or Pfluger, Pfluger delegates to the NSTC, and the NSTC
hereby assumes, the exclusive right and authority for the proper and
efficient day-to-day operation and management of the Business. Pfluger and
the NSTC agree that each will cooperate with and assist the other in every
reasonable and proper way to permit the NSTC to carry out its duties under
this Agreement or otherwise
<PAGE>
with respect to Business. The Business shall be operated completely
independently of the other operations of Pfluger and Pfluger shall take
such measures as are necessary to ensure that the operations of the
Business are not affected by the other operations of Pfluger, including but
not limited to, any financial responsibility for the other operations of
Pfluger other than as provided herein.
(b) Pfluger's Representatives. Pfluger reserves the right to have a
person appointed to the Board of the Entity as hereinafter defined and to
delegate to any such party the authority to exercise or perform any right,
power, privilege, or duty that Pfluger may have under this Agreement or
otherwise in connection with the Business; provided, however, such
representative shall not interfere with the operations of the Business by
NSTC; nor shall such party have the right to dictate or direct NSTC in
regard to the manner in which NSTC should execute its obligations and/or
operations. NSTC shall cooperate and deal with any such party as to any
matter so delegated just as if Pfluger's representative was Pfluger under
the terms of this Agreement. No delegation by Pfluger to any representative
shall diminish either the authority or the responsibility of the NSTC under
Section 1.2(a) or any other provision of this Agreement.
1.3 Funding. Subject to the provisions hereof regarding the authority for
expenditures by NSTC and within limits established by any approved
budgets, Pfluger through ZBC agrees to pay for all costs of equipping
and operating the Business and to advance any funds necessary for such
purpose; provided, however, NSTC shall have the exclusive right to
collect all funds generated from the Business and to pay all expenses
attendant thereto. To the extent of any shortfall, NSTC shall notify
Pfluger in writing. Notwithstanding anything contained herein, NSTC
shall have the right to deduct all and any expenses incurred by it,
whether or not the funds for which expense or expenses should have
been advanced by Pfluger, from any funds that may be due or to become
due to Pfluger.
1.4 Comprehensive Supply Contract between with the Zimbabwe Broadcasting
and Pfluger: Pfluger hereby agrees to grant NSTC the right of first
refusal to provide equipment and services on a lump sum basis as per
the "Supply Contract" on Terms and Conditions acceptable to both
party's. In this regard Pfluger agrees to provide NSTC with any
engineering studies, specification and bills of materials in order for
NSTC to provide a competitive proposal.
ARTICLE II
DUTIES OF NSTC
2.1 General Statement of NSTC's Duties and Authority. NSTC agrees to manage
and operate the Business in a manner that is consistent with business
<PAGE>
operations similar to the Business of Pfluger and shall use diligent efforts to
operate the Business so as to maximize net operating income to ZBC, consistent
with the support and maintenance of the long-term prospects of the Business.
NSTC will also perform its duties in a reasonable and professional manner and to
minimize expenses and losses to ZBC, consistent with the support and maintenance
of the long-term prospects of the Business. NSTC will make available to ZBC
through Pfluger the full benefit of the judgment, experience and advice of
members of the NSTC's organization and shall be responsible for the operation of
the Business throughout the world. The NSTC will at all times act in good faith
and in a commercially reasonable manner with respect to the proper operation and
protection of and accounting for ZBC's assets. In this connection, and subject
to the terms and conditions of this Agreement, the NSTC shall have the exclusive
right to do the following:
(a) Hire employees and discharge, maintain and supervise an adequate
staff to operate the Business at wages and salary rates for various jobs
from time to time by ZBC.
(b) Recommend and institute appropriate employee benefits.
(c) Design and maintain accounting and any and all other reasonably
necessary or desirable reports. The NSTC shall institute procedures and
file reports and applications under any applicable statutes, regulations or
ordinances.
(d) Maintain accounting and management information systems for the
Business in accordance with generally accepted accounting principles.
(e) Collect all revenue and provide for the orderly payment of bills,
accounts payable, employee payroll, taxes, insurance premiums and other
debts of ZBC, including but not limited to, all Management Fees and all
amounts owed with respect to the loan obtained by Pfluger to purchase the
System (the "Loan"); provided, that the NSTC's responsibility under this
section shall be limited to the exercise of reasonable diligence and care
to apply the funds collected in the operation of the Business to its
obligations in a timely and prudent manner, and the NSTC shall have no
separate liability with respect to any obligation of the Business. It is
recorded for the avoidance of doubt that ZBC under the terms of ZBC's and
Pfluger's Agreements attached as Exhibit "A" is and shall at all times
remain the party liable to repay the Loan and that the NSTC assumes nothing
more than the administrative function of repaying the Loan to the extent
sufficient funds exist. Should there be insufficient funds to effect the
repayment when due of any installment of the Loan, NSTC will advise ZBC and
Pfluger as soon as practicable and ZBC and Pfluger undertakes to provide
NSTC such funds requested immediately upon notification by NSTC.
(f) Advise and assist ZBC in obtaining and maintaining customary
insurance coverage, with ZBC, NSTC and such other persons as requested by
ZBC named as insureds. The NSTC shall advise the ZBC with regard to the
availability, nature and
<PAGE>
desirable policy limits of insurance coverage and shall request and receive
bids for such coverage.
(g) Negotiate with any labor union or other organization lawfully
entitled to represent employees of the Business, provided, however, that
any collective bargaining agreement or labor contract must be submitted to
ZBC for its approval and execution.
(h) Make periodic evaluations of the performance of the Business and
attempt to expand the business beyond the borders of Zimbabwe.
(i) Establish and maintain charts of accounts, accounting systems, and
internal controls.
Design and implement a product and services marketing plan.
(k) Advise and assist ZBC in maintaining all necessary and desirable
licenses and permits.
(1) Supervise the maintenance of the System.
(m) Obtain satellite transponder space in so far as NSTC is able.
(n) Provide all programming to be broadcast on the System.
(o) Obtain and sell all decoders, replacement, and additional
equipment for the System.
(p) Negotiate with other countries for any use of the System.
(q) Negotiate and implement any ancillary use of the System.
(r) To formulate a budget for its obligations in terms of this
Agreement and forward it to Pfluger for its approval before such budget is
implemented.
Except for the purchase of normal quantities or amounts of goods, services
and supplies reasonably required in the ordinary course of Business' normal
operation and maintenance, the NSTC shall not pledge the credit of ZBC or
incur any other liabilities or obligations in ZBC's name without ZBC's
prior written consent. Notwithstanding anything else contained herein,
those of the NSTC's obligations hereunder that require the expenditure of
funds shall be and are conditioned on there being sufficient funds
available therefor in the bank accounts of the Business provided for
herein. In no event shall the NSTC
<PAGE>
be in default for not performing, its obligations hereunder that require
the expenditure of funds if there are not funds available in the accounts
of the Business. In no event or circumstance is NSTC obligated to advance
any funds in order to enable it to perform any of its obligations
hereunder.
2.2 The ZBC's Rights Regarding Management NSTC agrees that its
representatives will consult with and advise ZBC and its representatives with
reasonable frequency, and the NSTC shall make no significant policy changes
without ZBC's prior written consent, The NSTC shall make no decisions of any
substantive or long-term consequence which are not either specifically reflected
in an approved budget or marketing and management plan, which shall be updated
biannually, or otherwise approved in writing by the board of directors of ZBC
(the "Board of Directors"). For purposes of this Agreement, "long-term" shall
mean having an effect over a period of three years or more.
2.3 Access to Records and Facilities. The books and records of the
Business, for which the NSTC is responsible, shall be maintained at the
principal offices of the Business, although the NSTC shall have the right to
maintain copies of such records at its office for the purpose of providing
services under this Agreement. NSTC shall make available to ZBC and Pfluger, its
agents, accountants and attorneys during normal business hours, all books and
records pertaining to the Business subject to ZBC or Pfluger giving NSTC
reasonable written notice of its intention so to do and NSTC shall respond to
any questions of ZBC or Pfluger with respect to such books and records and shall
confer with ZBC and Pfluger at all reasonable times, upon written request,
concerning, operation of the Business, and the NSTC shall assist and cooperate
with ZBC's auditors in the conduct of any audit of the financial condition and
results of operations of the Business. Further, within thirty (30) days of the
expiration of each quarter, NSTC shall provide ZBC and Pfluger financial reports
regarding the operations of the Business.
2.4 Laws Regulations and Licenses.
(a) NSTC shall comply on behalf of ZBC with all material and
applicable laws, rules and regulations relating to the Business and shall
operate the Business so that it shall maintain all necessary and material
licenses, permits, consents and approvals from all Governmental agencies
which have jurisdiction over the operations of the Business.
(b) Neither ZBC/Pfluger nor the NSTC shall knowingly or purposefully
take any action which shall cause any governmental authority having
Jurisdiction over the operation of the Business to institute any proceeding
for the rescission or revocation of any necessary license, permit, consent
or approval.
2.5 Taxes. Any taxes or other governmental obligations lawfully imposed on
the Business are the obligations of ZBC, nor of NSTC, and shall be paid out of
the operating accounts of the Business. With the written consent of ZBC, NSTC
may contest the validity or amount of any such material tax or imposition or the
validity or application of any law, ordinance, rule, ruling, regulation, order
or requirement of any governmental
<PAGE>
agency having jurisdiction by appropriate legal proceedings, diligently
conducted in good faith, in the name of ZBC. ZBC shall cooperate with NSTC with
regard to the contest, and ZBC shall pay the reasonable attorney's fees incurred
with regard to the contest. Counsel for any such contest shall be selected by
NSTC.
2.6 Additional Rights of NSTC. The NSTC shall, in addition to the rights
set forth herein, have the following specific rights:
(a) To market the Business and cause it to be advertised anywhere in
the world;
(b) To market, Sell and install decoders or subscriber packages enable
subscribers and such other equipment as may be necessary to anywhere in
the, world to access programs, information of any other service transmitted
by or through the System;
(c) To negotiate and collect all and any revenue, generated directly
or indirectly from the Business and, in particular, the collection from
subscribers and/or consumers of subscriptions and charges levied by the
NSTC for the use of all or any of the Equipment referred to in the Supply
Contract;
(d) To establish such accounting and/or billing systems as may be
necessary to enable subscriber to be billed for services rendered by the
Business anywhere in the world;
(e) To incorporate or establish such company or companies and/or such
other legal entity (the "Entity") as NSTC deems fit to facilitate the
collection of revenue from subscribers to effect payment of expenses
related to the provision of services of the Business and to carry out all
or any of the functions that NSTC is obligated to perform under and the
terms of this Agreement,
(f) The specific right to delegate all and any of its functions to the
Entity or such other party as NSTC deems fit.
2.7 Ancillary Uses of the System, It is acknowledged by the parties that
the Equipment forming the subject matter of the Supply Contract is capable of
being utilized for functions other than pay television, such as, but not limited
to internet access provider uses and paging and is also capable of transmitting
pay television to countries other than Zimbabwe (hereinafter referred to the
"Ancillary 'Uses"). Pfluger hereby irrevocably appoints NSTC as its agent to
secure subscribers, users and/or operators for the Ancillary Uses and hereby
undertakes to ratify any agreement that the NSTC may conclude with any third
party or parties with respect to such Ancillary Uses; provided, however that the
parties hereto shall thereafter conclude an agreement relating to the additional
revenue realized as a result of the employment of the Ancillary Uses as between
themselves, but pending such agreement it is agreed that
(a) NSTC shall be entitled at all times to be paid directly by such
third party
<PAGE>
or parties all and any dues in terms of any agreement concluded by the NSTC
on behalf of ZBC and such third party or parties-,
(b) NSTC shall be entitled to form such company or companies or other
legal entity for the proper delivery of any service in respect of the
Ancillary uses;
(c) NSTC shall be entitled to no less than thirty (35%) percent of the
Net Profit realized as a result of the employment of the Ancillary Uses by
such third party or parties;
(d) NSTC shall be entitled to retain and utilize all revenue resulting
from the employment of the Ancillary Uses until such time as an agreement
has been concluded between NSTC and ZBC relating to the employment of the
Ancillary Uses.
ARTCLE III
TERM
3.1 Term. Subject to early termination pursuant to any of the provisions of
Article III the initial term of this Agreement shall commence on the Effective
Date and expire at midnight on the twenty (20) year anniversary of the Effective
Date, and unless this Agreement is terminated pursuant to any of the provisions
of Article III, the term of this Agreement shall thereafter automatically be
renewed and extended on each anniversary of the Effective Date for additional
ten (10) year terms, subject to early termination pursuant to any of the
provisions of Article III.
3.2 Termination by Either Party for Cause. In the event of either party
committing a breach of any of the terms of this agreement and failing, to remedy
same within thirty days of the posting of a letter by prepaid registered post
specifically describing the breach, the aggrieved party shall have, in addition
to any other right it may have at law, the right to terminate this Agreement.
3.3 Additional grounds for termination. In any event either party may
terminate this Agreement by written notice of termination if any of the
following occurs to the other party
(a) The other party dissolves or is placed in provisional liquidation
or admits that it is unable to pay its debts as and when they fall due; or
(b) A judgment is entered against the other party or the other party
undergoes a restructuring in terms of which there is a change in control,
shareholding or management of that other party.
3.4 Effect of Termination. The termination of this Agreement for any reason
shall not affect (a) any right, obligation or liability which has accrued under
this Agreement on or before the effective date of such termination, or (b) the
indemnification obligations described in Section 5.5. Upon termination of this
<PAGE>
Agreement for any reason, NSTC shall cooperate with ZBC and Pfluger in an effort
to achieve an efficient transition, and before receiving, final payment of the
Management Fee, shall promptly deliver to ZBC and Pfluger or such other person
or persons as ZBC or Pfluger may direct in accordance with ZBC's instructions,
and take all steps necessary or desirable to ZBC in full control of, all
Business funds, accounts, original contracts, monies, books, insurance policies,
records, file, and folios of every kind and description, whether relating to
past, current or prospective customers, contracts, maintenance, repairs or
otherwise, and all other things, items or information reasonably necessary or
appropriate to the continuing management, operation and maintenance of the
Business.
.). 4 Payment of Management Fee Upon Termination.
(a) If this Agreement is properly terminated by NTSC for cause under
Section 3.2 or 3.3, then:
(1) any accrued unpaid Base Management Fee (as hereinafter
defined) installments with respect to any period prior to the date of
such termination shall be paid as provided in Section 4. 1; and
(2) as soon as the audited financial report is completed for the
fractional fiscal year in which such termination occurs, the
Additional Management Fee (as hereinafter defined) prorated for the
then current year, prorated for the period during which this Agreement
was in effect (collectively, the "Prorated Fee"), shall be paid to
NSTC as provided in Section 4. 1.
(b) If this Agreement is terminated by ZBC for cause in strict
compliance with Section 3.2, then:
(1) unpaid accrued Base Management Fees will be paid;
(2) as soon as the audited financial report is completed for the
fractional fiscal year in which such termination occurs, the
Additional Management Fee, prorated for the period during which this
Agreement was in effect, shall be paid and/or granted to NSTC as
provided in Section 4. 1.
3.5 Break-up Fee Upon Termination.
(a) Notwithstanding anything contained herein if the Agreement between
ZBC and Pfluger herein attached as Exhibit "A" is terminated by ZBC for any
reason other than the natural expiration of the term of this Agreement, in
recognition and in compensation of NSTC for its large capital expenditures
and uncompensated time incurred in connection with the establishment of the
Business, Pfluger shall pay NSTC a break-up fee
<PAGE>
of US $3,000,000 from the proceeds received by Pfluger from ZBC within
seven (7) days from receipt of such funds.
ARTICLE IV
MANAGEMENT FEES
4.1 Management Fees.
(a) Base Management Fee. During the term of this Agreement NSTC shall
pay itself from the revenue generated by the Business as compensation for
performing the duties set forth herein a Base Management Fee ("Base
Management Fee") payable monthly in advance in an amount equal to US
$10,000 per month on the first day of each and every month;
(b) Additional Management Fee. The NSTC shall be entitled to an
additional management fee (the "Additional Management Fee") equal to
fifteen (15%) percent of the Net Profit (as hereinafter defined) generated
by sources within Zimbabwe until all amounts owed with respect to the Loan
have been paid, and thirty (30%) percent thereafter. All Business generated
from Sources outside Zimbabwe shall be subject to separate agreement but in
no event shall NSTC receive less than forty (40%) percent of the Net Profit
from sources outside Zimbabwe. For purposes of this Agreement, Net Profit
shall mean the sum of all revenue of the Business less the actual costs of
operating the Business with generally accepted accounting principles, be
determined once each quarter and shall be payable as soon thereafter as
sufficient funds exist after taking into account adequate reserves for the
operation of the Business. At the time that NSTC pays itself the Additional
Management Fee, it shall pay to ZBC and Pfluger its share of the profits of
the Business.
(c) Notwithstanding anything contained in this agreement, the parties
specifically agree that in defining the Net Profit, NSTC shall be entitled
to first provide for and pay to itself the Base Management Fee, then
provide for and pay all the expenses of the Business and/or the Entity and
only thereafter will NSTC be obliged to account to ZBC and or Pfluger for
any monies; PROVIDED that the NSTC shall be entitled in so accounting to
ZBC and Pfluger to withhold that portion of the net profit that represents
monies due to it by way of the Additional Management Fee or such other
monies that may be due to it by way of the Additional Management for such
monies that may be due.
<PAGE>
ARTICLE V
GENERAL PROVISIONS
5.1 Relationship. NSTC is an independent contractor and not an agent of ZBC
or Pfluger, except to the limited extent and for those limited purposes
specifically set forth herein; accordingly, NSTC shall not have the power to
(and shall not purport to) bind or obligate ZBC or Pfluger except to the extent
and as specifically set forth in this Agreement or as otherwise agreed upon and
approved by ZBC or Pfluger in writing. NSTC shall not be deemed or construed to
be, and shall not be, under any circumstance or for any purpose a partner or
joint venture of or with ZBC or Pfluger by virtue of or under this Agreement or
otherwise in respect of the Business.
5.2 Assignment. This Agreement shall be binding upon Pfluger and NSTC and
their respective successors and permitted assigns and shall inure to the benefit
of Pfluger and NSTC. Save as specifically provided herein, neither Pfluger nor
the NSTC may assign or transfer any of its obligations under this Agreement
without the prior written consent of the other party, which may be withheld
without cause in the other party's sole discretion; provided, however, the NSTC
may assign this Agreement to an affiliate who expressly assumes and agrees to be
bound by the terms of this Agreement and NSTC may subcontract any and all of its
duties hereunder provided NSTC shall in all instances remain liable to Pfluger
for all ditties performed by NSTC or its subcontractors hereunder. This
Agreement is not intended for the benefit of any third party, and no such third
party may enforce any rights or obligations arising under this Agreement against
Pfluger or NSTC as a third party beneficiary.
5.3 Indemnification.
(a) Indemnification of the NSTC. Pfluger agrees to indemnify and hold
the NSTC free and harmless from any loss, liability or cost (including
legal costs) which is not covered by insurance proceeds and which the NSTC
may sustain, incur or assume as a result of, or relative to, any
allegation, claim, civil or criminal action, proceeding, charge or
prosecution (collectively "Claims") which may be alleged, made, instituted
or maintained against the NSTC or Pfluger, jointly or severally, which
results from negligence, fraud or willful misconduct of Pfluger, its
agents, affiliates or employees, The provisions of this paragraph shall not
constitute a release of any rights of Pfluger arising as a result of any
breach or default by the NSTC of a provision of this Agreement and shall
not supersede any right of termination belonging to Pfluger.
(b) Survival. The provisions of this Article shall survive any
Cancellation, termination or expiration of this Agreement for a period of
two (2) years.
5.4 Notice. Any notices required to be given under this Agreement to the
other party shall be in writing and shall be sent to the other party by personal
service or registered or certified mail, postage prepaid, addressed as follows:
If to Pfluger:
Pfluger Enterprises, L.L.C.
250 Park Place
2911 Turtle Creek
Dallas, Texas
Attn: Ronald L. Holmes
Fax: (214) 559-3115 (USA)
<PAGE>
If to the NSTC:
Nostrad Telecommunications Inc.
Suite 2482 650 West Georgia Street
Vancouver, B.C. Canada V6B 4N8
Attn: Chris Farnworth
Fax: (604) 893-8768
Deliveries by fax shall be acceptable. To the extent a party mails its notice,
such notice shall be deemed effective only upon receipt by the other party.
Either party may change its address by notice to the other party.
5.5 Amendments Waiver. None of the covenants, terms of conditions of this
Agreement to be kept and performed by the NSTC or Pfluger may be amended or
modified except by a written instrument signed by both parties. Any consent to
or acquiescence in any breach of this Agreement shall not constitute a waiver of
any other or later breach of the same or of any other covenants, agreements or
conditions thereof
5.6 Severability. In the event any term or provisions of this Agreement or
any application thereto to any person or circumstance shall be declared
prohibited, valid, or unenforceable to any extent in any Jurisdiction, as
determined by a court of competent jurisdiction, such term or provision shall,
in that jurisdiction, be ineffective only to the extent of such prohibition,
invalidity, or unenforceability, or as applied to such persons or circumstances,
without invalidating or rendering unenforceable the remaining terms or
provisions hereof or affecting the validity or enforceability of such ten-n or
provision in- any other jurisdiction or as to other persons or circumstances in
such jurisdiction, unless such would effect a substantial deviation from the
general intent and purpose of the parties or made a significant change in the
economic effect of the Agreement on the party benefited by such term or
provision.
5.7 Force Majeure. Neither party hereto shall be in default for failure to
perform any of its obligations pursuant to this Agreement if and to the extent
that it can establish that such failure was occasioned by circumstance which
were acts of God and beyond control and which by the exercise of reasonable due
diligence and foresight it could not have prevented or overcome,
5.8 Governing Law and Disputes. This Agreement shall be construed and
enforced in accordance with the internal laws of USA without regard to conflict
of law principles. Any dispute arising between the parties to this
<PAGE>
Agreement, whether involving the Entity or not shall be settled in the following
manner:
5.8.1. In the case of a disagreement between ZBC and NSTC acting as an
Agent of Pfluger the aggrieved party in the case of shall refer the dispute to
the Minister of Information, Posts and Telecommunications who shall attempt to
mediate the dispute within 14 days of the referral to him/her of the dispute,
but any decision made by the Minister shall not be binding on the parties;
5.8.2. In the event that the dispute is not mediated within the time period
set out herein above or if either party is dissatisfied with the decision of the
Minister then such dissatisfied party shall have the right to take such action
as it may deem fit in order to enforce and/or safeguard its rights as may be
permitted at law.
5.9 Entire Agreement. This Agreement constitutes all of the understandings
and agreements between the Pfluger and the NSTC with respect to the NSTC's
management, operation and maintenance of the Business and supersedes all prior
understandings and agreements, commitments, representations, and warranties,
whether oral or written, of every kind and description whatsoever and however
characterized.
5.10 Headings. The article, section and paragraph headings contained herein
are for convenience of reference only and are not intended to define, limit, or
describe the scope or intent of any provisions of this Agreement.
5.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
5.12 Confidential Information. The NSTC and the Pfluger's employees shall
use their best efforts to hold Confidential Information in trust and confidence
and, except as may be authorized by Pfluger in writing, shall not disclose any
Confidential Information to any person or party. "Confidential Information"
means the provisions of this Agreement any other agreements or financial,
marketing, or other similar information relating to the Business, as disclosed
to the NSTC by Pfluger, or obtained by NSTC in the performance of its duties and
obligations under this Agreement, which relate to the real estate or business
activities of Pfluger or its affiliates. Without limitation, all contracts
hereunder between NSTC and other persons or parties, which relate to Pfluger or
its Business shall include this provision to insure nondisclosure of
Confidential Information by them.
5.13 Affiliates. The NSTC may employ or otherwise retain or contract with
any affiliate of the NSTC to furnish any goods or services for the Business of
Pfluger without the prior written consent of Pfluger; Provided, however, that
all such goods and services shall be furnished at a fair, reasonable, and
competitive cost, quality, and
<PAGE>
timeliness. Further, in order to protect the liability of Pfluger and NSTC, NSTC
shall have the right to form new companies under the laws of any country in
which it intends to market the System to perform the NSTC's duties hereunder,
the costs and expenses of which shall constitute expenses of the Business.
5.14 Authority/Representations. Pfluger and NSTC warrant and represent, one
to the other, that: (1) all approvals and resolutions necessary to enter into
and perform this Agreement has been obtained as of the execution of this
Agreement, including but not limited to, the approval of all parties within the
Government of Zimbabwe necessary for the execution of this Agreement to
constitute an act of Government of Zimbabwe, (ii) entering into and performing
this Agreement will not violate or breach any other agreement, law or ordinance
to which the party is subject to, and (iii) the person executing this Agreement
on their behalf is fully vested with authority to execute this Agreement. Other
than as stated in this Section 5.14, the parties have not relied on any
representation or warranty of the other, whether written or oral. The
representations and warranties contained in this Section 5.14 shall survive any
cancellation, expiration, or termination of this Agreement for a period of two
(2) years.
WITNESS WHEREOF, NSTC and Pfluger have caused this Agreement to be executed
as of the day and year first above written.
Nostrad Telecommunications Inc. Sealed
By: ______________________
Chris Farnworth, Director & Senior Vice President
WITNESS:
By: ______________________
Name:
Pfluger Enterprises L.L.C. Sealed
By: ______________________
WITNESS:
By: ______________________
Name:
Exhibit 10.14
EXCLUSIVE DISTRIBUTION CONTRACT
Between contractors:
La Societe d'Etudes et de Realisation audiovisuelles (Study and audio-visual
realization company). Limited company, Moroccan law company, with a capital of
302 371 500 Dhs, and a head office in Casablanca, Km 7300, Rabat road, Ain
Sebaa, represented by its Administrator General Director, Mr. BELARBI LARBI.
Bellow called "SOREAD"
On one hand;
And:
"OMNIVISION" limited liability company, located in 31, villa Yasmina, Tarik Ibn
Ziad Avenue, Rabat, represented by its Co-General Director, Mr. EI Khachani
Hmida.
Bellow called "OMNIVISION"
On the other hand.
Preamble
It has been several years that SOREAD operates and exploits the second channel's
network in Morocco. The distribution network is composed of employees with
experience in selling pay TV.
OMNIVISION is a company of Moroccan law that invests in the audio-visual
wireless communication technologies and pay TV.
OMNIVISION is a representative of Showtime. The later is a numerical bouquet of
at least 11 pay TV channels intended to the African continent. Showtime diffuses
its programs by direct satellite reception over Morocco.
The following has been agreed:
Article I-Object
"Importing" means that SOREAD can import the numerical decoders and access cards
into Morocco only with OMNIVISION's agreement.
"Exclusive distributor" means that SOREAD will have exclusivity in distributing
Showtime's bouquet, decoders and access cards in Morocco.
Article II-Mission and Obligations:
a-SOREAD's OBLIGATIONS
OMNIVISION confers on SOREAD the title of exclusive distributor of Showtime's
bouquet in Morocco. SOREAD and OMNIVISION decided to set up a common team which
would train the
1
<PAGE>
agencies employees, and make them familiar with technical and marketing
procedures which are specially elaborated for Showtime products.
SOREAD and OMNIVISION will elaborate a general agenda concerning decoders,
access cards, warranty conditions, promotional material and Showtime's logo.
Decoder and access card sales should be done through SOREAD agencies to
individual and collective subscribers, for servicing one family housing,
residence, Hospitals and Hotels.
SOREAD will weekly inform [summary] OmniVision about the quantity of decoders
and cards sold, and to whom they have been sold with the correspondent addresses
and phone numbers.
b-OMNIVISION's OBLIGATIONS
OMNIVISION declares being appointed by Showtime to exclusively market Showtime's
decoders in Morocco, and to sign every importation and distribution contracts
with SOREAD, exclusive importer and distributor in Morocco. The aforesaid
contract is elaborated with regard to the conditions and obligations on the
distribution contract signed the 14 th of January 1999, for a period of five
years between OMNIVISION and Showtime, a copy of the contract is in the annex.
OMNIVISION engages to:
Exclusively give to SOREAD the right of distributing decoders and access cards
in Morocco, and to make subscribers see Showtime programs by direct satellite
reception, via their numerical decoder.
To provide SOREAD, resubscriptions based on three, six and twelve month periods.
To furnish SOREAD, free decoders and access cards that should be exclusively
used for demonstration of decoder functions and of the Showtime bouquet.
To furnish SOREAD, with free program guides. The magazine's quantity should
equal to the number of subscribers increased by 10%. The sending and stamping
fees will be the responsibility of OMNIVISION.
Declares that any subscriber check payment (for selling or renting a decoder/
subscription or re-subscription) for Showtime product, that is sent back unpaid,
shouldn't be paid by SOREAD to OMNIVISION.
The amount of any decoders not returned by subscribers in the case of leasing
shall be the responsibility of OmniVision
To assure the continuity and quality of Showtime signal 24h/24h (11 channels:
see annex 11). In the case of changes in the diffusion model technology or a
breakdown of Showtime's signal, OMNIVISION should provide subscribers with
appropriate compensation.
To protect SOREAD against any proceeding action that can be taken by any
physical or moral person who directly or indirectly participates in the programs
production, or who claims to have any kind of rights on all or a part of those
programs, andlor on Showtime programs.
o To assert having no restrictions on the rights concerning any person who
has any kind of rights on Showtime programs.
o To be the only one responsible for Showtime program's content, being
understood that diffusion rights have been negotiated for Morocco.
o To protect SOREAD against any claims from Showtime concerning its product's
distribution.
2
<PAGE>
Article Ill-Advertising and Promotion
OMNIVISION should provide SOREAD with promotional material, which will keep it
in a good condition.
Publicity material production costs would exclusively be on OMNIVISION plus
transportation and customs costs and all related taxes. OMNIVISION would be in
charge of all importation authorization.
Transportation and customs costs for publicity material delivery distributed to
the selling points (posters, leaflets, self-adhesive ... ) would be on
OMNIVISION.
OMNIVISION would assure and be in charge of all promotional and advertising
operations costs (buying media like newspapers, magazines, radio, TV ... ) and
include SOREAD's name and phone number andlor address in all inserts.
OMNIVISION will take on all advertising costs. Notably costs related to the
consulting and conception of the promotional and advertising campaigns.
Every promotional or advertising campaign should have the agreement of both
SOREAD and OMNIVISION.
Article IV-Decoders and cards importation
SOREAD can exclusively import Showtime decoders only if Omnivision gives its
agreement.
Article V-Distribution by OMNIVISION
SOREAD confers to OMNIVISION the title of independent distributor on its agency,
which is located in 31, Villa Yasmina, Tarik Ibn Ziad avenue.
A refund of 3% (three percent) should be given by SOREAD to OMNIVISION on each
decoder sold in OMNIVISION Rabat agency, thus on the turnover basis, no tax
included.
Article VI-Price-sales and commissions
Total payment receipts of subscriptions and decoders minus commissions due to
SOREAD by OMNIVISION, should be done during the 45 days following the sale date.
OMNIVISION alone, will afford and be responsible of any notification, payment,
rights, taxes, customs duties, deducting income tax at source, allowances due or
that would be due to Showtime, thus for decoders and access cards importation
and selling in Morocco.
Commissions accorded by OMNIVISION to SOREAD over all the operations done in
Morocco would be as follows:
Decoders: 6% (six percent) over the total turnover, no tax included, on decoders
sales
3
<PAGE>
Subscriptions: 25 Dhs (twenty five Moroccan Dirhams) monthly on every
subscription, for a full bouquet.
18 Dhs (eighteen Moroccan Dirhams ) monthly on every subscription, for a mini
bouquet (03 channels minimum)
Those commissions are calculated on the basis of 10% commission given by
Showtime to OMNIVISION.
Any raise on subscription's commissions (given to OMNIVISION by Showtime) would
be split between both parties, 50% to SOREAD and 50% to OMNIVISION (the
readjustment will be done once a quarter).
Article VII-Duration
The present contract is for a period of three years beginning from the signature
date of the contract. It is renewable by tacit agreement except if one of the
parties wants to terminate the contract. Termination should be done by a
registered letter plus an acknowledgement receipt, three months before the
contract term.
If both parties want to collaborate furthermore, the contract would be renewed
for a two year period. The party that wants to terminate the contract should
give a three months notice to the other party, thus by a recorded delivery
letter and an acknowledgement receipt.
Article VIII-Termination-Breach of contract
The contract can be breached in the case of having no response 30 days after
sending a notice.
Or in the following cases:
o If OMNIVISION doesn't respect its obligation as regards to SOREAD.
o If SOREAD doesn't respect its obligation as regards to OMNIVISION.
o Definitive stopping of Showtime's signal by the satellite owner.
If one of those cases happens, OMNIVISION engages to assure all the judicial
consequences or others that have caused damage to subscribers in Morocco. SOREAD
wouldn't have any responsibility to Showtime subscribers. Decoder's re-buying
price will be calculated on a three years write off of decoders cost.
OMNIVISION will designate a representative of its choice to establish decoders
inventory and to pay SOREAD by check. This payment will be done after receipt of
a pro-forma bill or inventory report signed by the representative or by credit
transfer before OMNIVISION takes back its material.
OMNIVISION engages to assure a continuous broadcasting of Showtime programs in
Morocco, for a minimum of five years.
4
<PAGE>
Article IX-After sale service
OMNIVISION should provide subscribers with a one year warranty on decoders.
Defective decoder will be taken back and a replacement will be provided.
The use of access cards should be explained to subscribers while making the
sale.
The decoder should be sold on its original packaging with the correspondent
cables that link it to the TV, and with directions for use (subscriber guide).
Defective access cards would be given back to OMNIVISION for a free exchange.
SOREAD should weekly furnish OMNIVISION with a report on all exchange operations
made on the agencies network.
The warranty is cancelled on the following cases.. deliberate or accidental
breakage; damages caused by a non conformance of Showtime's directions;
maintenance defect; deliberate or accidental damages or (water damages, fire,
faulty wiring, explosion ... ); abnormal use of decoders or because of lightning
or thunderstorms.
If a subscriber opens its decoder the warranty would also be cancelled.
For every exchange SOREAD should fill in an exchange form, up date the
warranties and regularly provide OMNIVISION with a copy of those documents.
Article X- Confidentiality
Both parties promise to keep the contract clauses confidential with all the
information and documents linked or related to the contract for its conclusion
andlor for its accomplishment.
Any communication andlor disclosure of one party should first require the other
parties express written agreement.
Each party promise to respect and to make all its employees respect this
confidentiality.
SOREAD and OMNIVISION promise to allow the access, of their respective
documents, to only those of their employees who are in directly concerned with
the said documents.
The confidentiality clause of this contract would be applicable even if the
contract is breached whatever the cause is, and that for an unlimited period.
Article Xl- Piracy
It should be specified that the Showtime decoder is to be used by only one
family housing and for private use only. Any collective or public use that is
not authorized jointly by SOREAD and OMNIVISION will be considered as a
violation of the subscription contract.
Both parties promise to mutually inquire on any violations of the contract.
To that end, OMNIVISION is the only one able to start the necessary proceedings
in Morocco. SOREAD should be informed of any proceeding. All costs would be on
OMNIVISION only.
Article XII- Competence- Arbitration
5
<PAGE>
In case of dispute, both parties promise to resolve the eventual conflict by
amicable arrangement or to jointly designate an arbiter who will supremely
decide of the procedures to follow.
If both parties don't agree on an arbiter, the most competent court for solving
the dispute is the Commerce Court of Casablanca.
The arbitration will take place in Casablanca.
Made in Casablanca April 28th, 1999 on three original copies signed by
SOREAD OMNIVISION
LARBI BELARBI HMIDA EL KHACHANI
SHOWTIME as a witness
6
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