SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 13, 1996
THE NOSTALGIA NETWORK, INC.
(Exact name of Registrant as specified in its charter)
State or other jurisdiction of incorporation: Delaware
Commission File No.: 0-13102
I.R.S. Employer Identification No.: 84-0923659
Address of principal executive offices: 650 Massachusetts Avenue, N.W.
Washington, D.C. 20001
Registrant's telephone number, including area code: (202) 289-6633
Former name or former address, if changed since last report:
Not applicable
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- 2-
ITEM 5. OTHER EVENTS.
On May 13, 1996, the registrant and Squire Rushnell entered
into an Employment Agreement pursuant to which Mr. Rushnell was
employed as President and Chief Executive Officer of registrant
on May 13, 1996. The registrant issued a press release
announcing this event. A copy of the press release, employment
agreement and related stock option agreement are attached hereto
as Exhibits 99.1, 10(a) and 10(b) respectively, and incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits.
10 Material Contracts
(a) Employment Agreement dated May 13, 1996
between The Nostalgia Network, Inc. and Squire
Rushnell
(b) Stock Option Agreement dated May 13, 1996
between The Nostalgia Network, Inc. and Squire
Rushnell.
99.1 Additional Exhibits
(a)Press release dated May 16, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
The Nostalgia Network, Inc.
By: /s/Daniel C. Holdgreiwe
________________________
Daniel C. Holdgreiwe
Secretary and General Counsel
Dated: May 29, 1996
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
10
(a) Employment Agreement dated May 13, 1996
between The Nostalgia Network, Inc. and
Squire Rushnell
(b) Stock Option Agreement dated May 13, 1996
between The Nostalgia Network, Inc. and
Squire Rushnell
99.1 Press release dated May 16, 1996
Exhibit 99.1
Nostalgia Taps Former ABC Exec To Head Network
- Squire Rushnell Named President/CEO -
Washington, D.C., May 16, 1996. Nostalgia Television announces
the appointment of ABC programming veteran Squire Rushnell as
head of the only 24-hour basic cable television network that
offers broad based entertainment programming for today's fastest
growing audience -- post-49 adults. Effective immediately,
Rushnell and retiring CEO Jack Heim will be working together
during a transition period.
Jack Heim comments, "Two years ago we identified programming as
one of the greatest areas of opportunity for Nostalgia, and our
investment in viewer research, original programming and marketing
has paid off by doubling our total day and primetime ratings over
the past year. I am extremely pleased to turn over the helm of
the network to a programming visionary such as Squire in order to
continue the success we've experienced in this area. I am
confident that Squire Rushnell, with his programming expertise
and knowledge of our audience, will take the network to even
greater levels of viewer success and consumer appeal."
Rushnell is best known for his 20 years as a top programming
executive at the ABC Television Network where he led Good Morning
America record-setting ratings and profits. He was also Vice
President, ABC Late Night Programming and Long Range Planning for
the ABC Entertainment Division. As Vice President for ABC
children's Programming, Rushnell was responsible for more number
one schedules in the children's daypart than anyone in network
history, and his programs such as ABC Schoolhouse Rock and the
ABC Afterschool Specials won more than 75 Emmys. In 1995
Rushnell launched 'Our Time Television' a cable enterprise
targeted to the post-49 age group.
Squire Rushnell remarks, "There is a vast opportunity within the
television industry to galvanize post-49 viewers, the most
disenfranchised of all audiences. It's remarkable to think that
Nostalgia is the only network on the air dedicated to serving
this post-49 segment, even though it's the fastest growing
demographic of all." He continues, "While the term 'nostalgia'
warmly reflects on where we have been, for Nostalgia Television,
it is where America is going. After all, 'baby boomers' are
racing across the line of 49 -- one every seven and a half
seconds!"
Ambassador Phillip Sanchez, Publisher, Notlclas del Munda and
Chairman of Nostalgia's Board of Directors, comments, "Nostalgia
Television has -- embarked upon a path of excellence and the
appointment of Squire Rushnell will further realize our quest to
bring this all-important post-49 market the highest caliber of
television programming. We are very excited about the future of
Nostalgia and are looking forward to the contribution of Squire
Rushnell's experience and talents towards bringing Nostalgia into
every cable home."
Nostalgia Television currently serves approximately 9 million
subscribers in approximately 790 cable systems across the United
States. Nostalgia is the only 24-hour basic cable television
network that offers broadbased entertainment programming for
today's fastest growing audience -- post-49 adults. The Nostalgia
Network, Inc., which operates Nostalgia Television, is publicly
traded and quoted on NASDAQ under the symbol "NNET".
Exhibit 10(a)
Squire Rushnell
Employment Agreement
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made
effective for all purposes and in all respects as of the 13th day
of May, 1996, by and between (i) THE NOSTALGIA NETWORK, INC., a
Delaware corporation (hereinafter referred to as "Employer"),
(ii) SQUIRE RUSHNELL (hereinafter referred to as "Employee").
WHEREAS, Employer desires to employ Employee, as its
President and Chief Executive Officer;
WHEREAS, Employee desires to be employed by Employer in the
aforesaid capacity;
WHEREAS, Employer and Employee desire to set forth in
writing the terms and conditions of their agreements and
understandings.
NOW, THEREFORE, in consideration of the foregoing, of the
mutual promises herein contained, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending legally to be bound,
hereby agree as follows:
1. Term of Agreement. The term (the "Term") of employment
under this Agreement shall be the three (3) year period
commencing on May 13, 1996 (the "Effective Date") and ending on
May 12, 1999. As used in this Agreement, "Contract Year" shall
mean the twelve-month period during the Term beginning on each
May 13 and ending on the following May 12.
2. Duties of Employee.
A. Duties and Responsibilities. Subject to the
provisions of this Agreement, during the Term, Employer shall
employ Employee and Employee shall serve Employer as President
and Chief Executive Officer of Employer. During the Term,
Employee shall discharge the obligations and responsibilities
normally associated with such office and shall perform such other
duties and responsibilities as the Board of Directors of Employer
(the "Board") or the Executive Committee of the Board shall
determine from time to time that are consistent with Employee's
position and the terms of this Agreement. Employee agrees to
perform such duties faithfully and to the best of his ability.
During the Term, all employees of Employer shall report to
Employee or the persons he designates and Employee shall report
only to the Board and to its Executive Committee.
B. Full-Time Efforts. Employee covenants and agrees
that, at all times during the Term, Employee shall devote his
full-time efforts to his duties as an employee of Employer.
Employee further covenants and agrees that he will not, directly
or indirectly, engage or participate in any activities at any
time during the Term which conflict with the business of
Employer, unless consented to in writing by Employer.
<PAGE>
C. Hiring of Management. Employee shall consult with
and advise the Board or the Executive Committee of the Board with
respect to hiring of all senior management personnel; provided,
however, that the Board or the Executive Committee of the Board
shall have the authority to veto the hiring of any prospective
member of senior management who Employee desires to hire. For
purposes of this Agreement, "senior management" is deemed to
include any person serving in an executive capacity who reports
directly to the President of Employer.
3. Compensation. As compensation for the services to be
rendered to Employer by Employee under this Agreement, Employee
shall be paid a base salary ("Base Salary") of Two Hundred
Thousand Dollars ($200,000) per annum for the first Contract
Year, a minimum of Two Hundred and Ten Thousand Dollars
($210,000) for the second Contract Year, and a minimum of Two
Hundred and Twenty Thousand Five Hundred Dollars ($220,500) for
the third Contract Year, such Base Salary to be paid in
accordance with Employer's standard pay policies. On the first
day of each Contract Year, Employee's Base Salary shall be
increased based upon the results of an annual merit review by the
Board or the Executive Committee of the Board, but in no case
shall the Base Salary for such years be less than the minimum set
forth in the preceding sentence.
4. Additional Benefits. In addition to the compensation
referred to in Section 3 hereof, Employee shall be entitled to
receive the following additional benefits during the Term:
A. Benchmark Bonus. Employee shall be entitled to a
bonus of $50,000 per Contract Year (the "Benchmark Bonus"). The
Benchmark Bonus for the first Contract Year shall be paid in
advance, on the date Employee's tenure as President and Chief
Executive Officer of Employer commences. The Benchmark Bonus for
the second and third Contract Years shall be payable in equal
quarterly installments, on May 13, August 13, November 13 and
February 13 of each such Contract Year (the "Benchmark Bonus
Payment Dates"). After the first payment under this Section 4A,
each quarterly payment shall be conditioned on Employer having
satisfied the requirement that for the immediately preceding
quarter ending March 31 (in the case of a payment due on May 13),
June 30 (in the case of a payment due on August 13), September 30
(in the case of a payment due on November 13) and December 31 (in
the case of a payment due on February 13) the deficit shall have
been no more than 110% of the amount set forth in the budget
approved by the Board for such quarter. The deficit for a
quarter shall be measured as the net loss for the quarter, as set
forth in Employer's regular monthly financial statements, which
shall be prepared in accordance with generally accepted
accounting principles applied in a manner consistent with past
practice. As an additional incentive for Employee, if a
Benchmark Bonus is not payable on a Benchmark Bonus Payment Date
because the foregoing condition is not satisfied, but on a
cumulative basis the deficit for the preceding quarter and all
other preceding quarters in the same Benchmark Bonus Year (the
years ending December 31, 1997 and December 31, 1998) shall have
been no more than 110% of the cumulative amount set forth in the
budget approved by the Board for such quarters), then the
Benchmark Bonus shall nonetheless be paid on such Benchmark Bonus
Payment Date. As a further additional incentive for Employee, if
a Benchmark Bonus is not payable on a Benchmark Bonus Payment
Date because the foregoing condition is not satisfied, but on a
subsequent Benchmark Bonus Payment
<PAGE>
Date relating to a quarter in the same Benchmark Bonus Year as
the preceding quarter, the cumulative deficit for such quarter
and all other preceding quarters in such Benchmark Bonus Year
shall have been no more than 110% of the cumulative amount set
forth in the budget approved by the Board for such quarters, then
such unpaid Benchmark Bonus shall be payable on such subsequent
Benchmark Bonus Payment Date. Employee shall not reduce the
deficit by reducing expenses in a manner that is inconsistent
with budgets and business plans approved by the Board; expense
reduction shall be consistent with good faith, prudent and
reasonable efforts to achieve Employer's budgetary and strategic
goals.
B. Deficit Reduction Bonus. (i) For each of the
eight month period ending December 31, 1997, the twelve month
periods ending December 31, 1997 and December 31, 1998, and the
four month period ending April 30, 1999, Employer shall receive
an amount equal to 10% of the deficit reduction (computed as
described below) for that period as a bonus (the "Deficit
Reduction Bonus"). (ii) The Deficit Reduction Bonus shall be
payable (1) on or before April 15, 1997 for the eight month
period ending December 31, 1996 (the "1996 period"), (2) on or
before April 15, 1998 for the twelve month period ending on or
before December 31, 1997 (the "1997 period"), (3) on or before
April 15, 1999 for the twelve month period ending December 31,
1998 (the 1998 period"), and (4) on or before July 31, 1999 for
the four month period ending April 30, 1999 (the "1999 period"),
notwithstanding the prior termination of the Term. (iii) The
amount of the deficit reduction for the 1996 period shall be
measured as the difference between the net loss for the eight
month period ending on December 31, 1996 and the same eight month
period in 1995. The amount of the deficit reduction for the 1997
period shall be measured as the difference between the net loss
for calendar year 1997 and the net loss for calendar year 1996.
The amount of the deficit reduction for the 1998 period shall be
measured by the difference between the net loss for calendar year
1998 and the net loss for calendar year 1997. The amount of the
net loss for the 1999 period shall be measured as the difference
between the net loss for the four month period ending April 30,
1999 and the same four month period in 1998. The net loss for a
calendar year shall be as set forth in Employer's audited
financial statements for that year, which shall be prepared in
accordance with generally accepted accounting principles applied
in a manner consistent with past practice. The net losses for
the four month periods ending April 30, 1999 and April 30, 1998,
and the eight month periods ending December 31, 1996 and December
31, 1995 shall be as set forth in Employer's regular monthly
financial statements, which shall be prepared in accordance with
generally accepted accounting principles applied in a manner
consistent with past practice. If Employer has net profits
during any period, and had net losses during the preceding
period, such profits shall be taken into account in computing the
amount of the deficit reduction. If Employer has net profits
during a period, and also had net profits in the preceding
period, Employee shall be entitled to a bonus equal to 10 percent
of the profit increase, computed generally as described in this
Section 4B. (iv) If the deficit is not reduced during the
relevant period no Deficit Reduction Bonus shall be payable with
respect to that period. In each case, the deficit shall be
adjusted for certain items. Specifically, any Board-approved
capital expenditures made to upgrade and scramble Employer's
broadcast signal shall not be taken into account in determining
the deficit or the amount of deficit reduction. Additional
adjustments shall be made to the extent reasonably necessary to
account for other extraordinary increases in expenditures
approved by the Board. If the weekly average number of hours of
infomercial and home shopping programming in a period
<PAGE>
is higher than the weekly average number of hours of infomercial
and home shopping programming during the same period in the
previous year, then in computing the deficit for such period, the
amount of the deficit shall be increased by an amount equal to
the additional revenues attributable to such additional
infomercial and home shopping programming minus the additional
direct out-of-pocket expenses attributable to such additional
infomercial and home shopping programming. The additional
revenues and additional direct out-of-pocket expenses shall be
computed as total revenues and total direct out-of-pocket
expenses attributable to infomercial and home shopping,
respectively, multiplied by a fraction the numerator of which is
the additional number of hours of infomercial and home shopping
programming and the denominator of which is the total number of
hours of infomercial and home shopping programming in the
preceding period. Employee shall not reduce the deficit by
reducing expenses in a manner that is inconsistent with budgets
and business plans approved by the Board; expense reduction shall
be consistent with good faith, prudent and reasonable efforts to
achieve Employer's budgetary and strategic goals.
C. Health Insurance. Employer agrees to provide
Employee with health care insurance providing coverage equivalent
to the health care insurance Employee now holds. Alternatively,
Employee may continue to purchase health insurance for Employee
through the entity owned by Employee that currently provides such
coverage and Employer shall reimburse such entity for such
expense.
D. Automobile. Employer shall provide to Employee a
payment of Six Hundred Dollars ($600) per month during the Term
for the purpose of obtaining and maintaining an automobile.
Employer shall also be responsible for paying the insurance on
such automobile. Employer shall provide a parking space at its
offices at 650 Massachusetts Avenue, N.W., Washington, D.C. at no
expense to Employee.
E. Vacation. For each Contract Year during the Term,
Employee shall be entitled to three (3) weeks of paid vacation,
plus normal company holidays and three (3) personal days.
Vacation time and personal days shall not "carry over" from one
year to the next, and unused vacation time and personal days
shall be forfeited as of the end of each year during the Term.
Employee shall receive no compensation for vacation days unused.
If Employee resigns before the end of a Contract Year, Company
shall receive no compensation for vacation unused in that
Contract Year.
F. Business Expenses. Employee shall be entitled to
reimbursement by Employer of customary and reasonable business
expenses subject to the condition that these expenses may not
exceed the amount provided for such expenses in Employee's budget
approved by the Board.
G. Stock Options. By separate Stock Option Agreement
(the "Option Agreement") of even date herewith, Employer shall
grant to Employee the option to purchase up to eight hundred
thirty-nine thousand (839,000) shares of Employer's Common stock
at an exercise price of $0.35 per share, which number of shares
currently represents approximately four percent (4%) of the fully
diluted number of shares of Employer's Common Stock as of the
<PAGE>
Effective Date. Employee's option shall be subject to a vesting
schedule as set forth in the Option Agreement, which shall
provide that the options shall vest in equal one-quarter (1/4)
installments every ninth (9th) month during the Term.
H. Moving and Related Expenses. Employer agrees to
reimburse Employee for all reasonable out-of-pocket expenses
incurred by Employee in connection with Employee moving from his
Connecticut and New York residences to the Washington, D.C.
Metropolitan Area up to a maximum of $10,000.
I. Interim Living Expenses. Employer agrees to pay,
for a period not to exceed six (6) months, the actual and
reasonable costs of interim lodging for Employee in the
Washington, D.C. Metropolitan Area and the cost of one round trip
train ticket per week for travel by Employee between New York
City and Washington D.C. during such interim period, subject to a
maximum of $5,000 per month.
J. Bridge Loan. To facilitate Employee's relocation
to the Washington D.C. Metropolitan Area, Employer agrees to lend
(or arrange for an affiliated entity to lend) to Employee a
portion of the purchase price of a residence in the Washington
D.C. Metropolitan Area up to a maximum of $100,000 on the
following terms: (i) such loan will bear interest at the prime
rate published in the Wall Street Journal, as such rate changes
from time to time; (ii) the loan will be secured by mortgages on
all of Employee's residential properties; (iii) Employer will not
charge any loan fees or points in connection with the loan, but
Employee will bear any mortgage recording costs, or other costs
and expenses reasonably incurred in connection with such loan;
(iv) such loan will be prepayable at any time without penalty;
and (v) such loan will be due and payable twelve months after the
termination of Employee's services, unless Employee resigns other
than for good reason as described in Section 5E or Employee is
terminated for Cause as described in Section 5A, in which case
the loan will be due and payable in full immediately following
the resignation or termination.
K. Life Insurance. Subject to Employee qualifying
for coverage at standard rates, Employer agrees to purchase and
maintain during the Term a term life insurance policy insuring
Employee's life on which Employee's designee is the named
beneficiary, substantially equivalent to any life insurance
policies purchased for other members of Employer's senior
management. Employee agrees, from time to time, to submit to any
physical examinations required to obtain or maintain such
coverage.
L. Disability Insurance. Subject to Employee
qualifying for coverage at standard rates, Employer agrees to
purchase and maintain during the Term long term disability
insurance for the benefit of Employee substantially equivalent to
any disability insurance purchased for other members of
Employer's senior management. Employee agrees, from time to
time, to submit to any physical examinations required to obtain
or maintain such coverage.
<PAGE>
5. Termination. Employee's employment hereunder may be
terminated prior to the expiration of the Term hereof (as the
Term may have been extended) upon the first to occur of the
following:
A. Termination for Cause. Employee's employment
hereunder and all of Employer's obligations hereunder (except as
hereinafter provided) may be terminated by Employer immediately
for Cause (as hereinafter defined) by giving written notice of
such termination to Employee. For purposes of this Agreement,
"Cause" shall mean: (i) Employee's willful misconduct, (ii)
Employee's willful disregard of lawful instructions of the Board
or the Executive Committee of the Board consistent with
Employee's position relating to the business of Employer or his
material neglect of duties or material failure to act, (iii)
Employee's commission of an act constituting common law fraud,
embezzlement or a felony criminal act, (iv) Employee's abuse of
alcohol or other drugs or controlled substances, or conviction of
a crime involving moral turpitude, or (v) Employee's material
breach of this Agreement. A termination for Cause pursuant to
Section 5A(i), (ii), (iv) (other than as a result of a conviction
of a crime involving moral turpitude), or (v) shall take effect
fifteen (15) days after the giving of the written notice
contemplated hereby; provided however, that Employee shall not be
terminated if Employer determines in the exercise of its
reasonable discretion that the actions giving rise to the
termination notice are capable of cure, and Employee effects a
cure within the 15 day notice period (or if a cure cannot be
completed within 15 days, if employee promptly commences and
diligently continues to effect a cure). A termination for Cause
pursuant to Section 5A(iii) or (iv) (as a result of a conviction
of a crime involving moral turpitude only) shall take effect
immediately upon the giving of the notice contemplated hereby.
Upon termination for Cause, Employee will not be entitled to
payments in respect of Base Salary or the Benchmark Bonus except
to the extent already due and owing. In addition, the Employee
will not be entitled to a Deficit Reduction Bonus for the period
during which the termination occurred. Upon termination,
Employee will not be entitled to any other benefits described
hereunder.
B. Death and Disability. Except as otherwise
provided in this Section 5B, Employee's employment hereunder and
all of Employer's obligations hereunder (except as hereinafter
provided) shall be terminated by the death of Employee and also
may be terminated by the Board or the Executive Committee of the
Board by giving written notice of such termination to Employee if
Employee shall be rendered incapable by illness or any physical
or mental disability from substantially complying with the terms,
conditions and provisions on his part to be observed and
performed for a period in excess of ninety (90) consecutive or
one hundred twenty (120) non-consecutive days during any twelve
(12) months during the Term (individually, a "disability"). Any
notice of termination by reason of disability hereunder must be
given while Employee is disabled. Upon the death or disability
of Employee, Employee or his estate, as relevant, will be
entitled to payment of a portion of the Deficit Reduction Bonus
and the Benchmark Bonus, prorated to the date of termination.
This payment shall be made in a lump sum, with no discount, no
later than 45 days after termination. Upon termination, Employee
will not be entitled to any other benefits described hereunder.
C. Termination Without Cause. Employee's employment
hereunder may be terminated immediately other than for Cause by
Employer by giving written notice of such
<PAGE>
termination to Employee. In the event of a termination of
Employee's employment pursuant to this Section 5C, Employer shall
make a severance payment to Employee equal to (i) one hundred
percent (100%) of Base Salary plus $50,000, if the termination
occurs during the First Contract Year, (ii) seventy five percent
(75%) of Base Salary plus $50,000, if the termination occurs
during the Second Contract Year, and (iii) the lesser of fifty
percent (50%) of Base Salary plus $50,000 or the amount of Base
Salary that would have been due until the end of the Term, plus
the full amount of the Benchmark Bonuses that would have been due
through the end of the Term (assuming Employee would have
qualified to receive all Benchmark Bonuses), if the termination
occurs during the Third Contract Year. Employer shall also pay
Employee a portion of the Incentive Bonus and the Benchmark Bonus
prorated to the date of termination. This payment shall be made
in a lump sum, with no discount, no later than 45 days after
termination. Upon termination, Employee will not be entitled to
any further benefits hereunder.
D. Change in Control. If, within three months
following a transaction or series of transactions, the result of
which is that Concept Communications, Inc. no longer directly or
indirectly owns shares of capital stock representing more than
50% of the total voting power of the issued and outstanding
shares of Employer (a "Change in Control"), and within one year
of that Change in Control Employee is removed as President and
CEO of Employer or resigns because he is prevented from
performing his duties as President and CEO of Employer, Employee
will be entitled to receive a severance payment equal to (i) one
hundred percent (100%) of Base Salary plus $50,000, if the
termination occurs during the First Contract Year, (ii) seventy-
five percent (75%) of Base Salary plus $50,000, if the
termination occurs during the Second Contract Year, and (iii) the
lesser of fifty percent (50%) of Base Salary plus $50,000, or the
Base Salary that would have been due until the end of the Term
plus the full amount of the Benchmark Bonuses that would have
been due through the end of the Term (assuming Employee would
have qualified to receive all Benchmark Bonuses), if the
termination occurs during the Third Contract Year. This payment
shall be made in a lump sum, with no discount, no later than 45
days after termination. Upon resignation, Employee will not be
entitled to any further benefits hereunder. Nothing herein
constitutes a limitation of Employee's rights under Section 5E.
E. Termination for Good Reason. Employee shall have
the right to terminate this Agreement on 15 days' notice to
Employer if (i) the Board takes action that prevents Employee
from performing his duties as President and Chief Executive
Officer and such action continues for a period of 15 days or
Employer materially breaches this Agreement (unless such breach
is cured within the 15 day notice period, or if the breach is not
capable of cure within 15 days, unless Employer promptly
commences and diligently continues to effect a cure), or (ii) if,
as a result of a strategic alliance entered into by Employer,
Employee ceases to effectively have the authority to manage and
conduct the operations of Employer. Any termination pursuant to
Section 5E will entitle Employee to severance payments due
pursuant to Section 5C and for all other purposes of this
Agreement shall be deemed a termination of Employee's services,
by Employer without Cause.
<PAGE>
F. Resignation. If Employee voluntarily terminates
this Agreement (other than for good reason as defined in Section
5E), he will have no further right to payment under Sections 3,
4A and 4B of this Agreement and benefits from and after the date
of termination.
G. Payments Already Due. Any payments already due
and payable at the time of resignation or termination shall be
paid upon resignation or termination, anything in this Agreement
to the contrary notwithstanding.
6. Director/Officer Liability. Employer agrees to
indemnify Employee in connection with Employee's serving as an
officer of Employer, in a manner consistent with Employer's
Certificate of Incorporation and Bylaws as in effect on the
Effective Date.
7. No Competing Employment; Secrecy; Injunctive Relief.
A. No Competing Employment. Upon Employee's
voluntary resignation (other than for good reason as defined in
Section 5E) or Termination for Cause and for six months
thereafter (such period being referred to hereinafter as the
"Restricted Period"), Employee shall not, unless he receives the
prior written consent of the Board, directly or indirectly,
whether as owner, consultant, employee, partner, venture, agent,
through stock ownership, investment of capital, lending of money
or property, rendering of services, or otherwise, compete with
Employer in the Business (as defined below), or assist, become
interested in, or be connected with, any corporation, firm,
partnership, joint venture, sole proprietorship or other entity
which so competes with the Business. For purposes of this
Agreement, "Business" shall mean any television broadcasting,
television cable or television network business that targets as
its primary audience the 50+ age group.
B. Restriction on Passive Investments. Any other
provision in this Agreement to the contrary notwithstanding,
Employee shall not make a Passive Investment (as defined below)
which results in Employee beneficially owning, with the meaning
of Section 13(d) of the Securities Exchanges Act of 1934, as
amended, a greater than five percent (5%) interest in any class
of securities of any company or business entity which has any
class of securities listed on a national securities exchange or
quoted on the automated quotation system of the National
Association of Securities Dealers, Inc. (a "Public Company")
which engages in the Business, or any interest in a company or
business entity which is not a Public Company and which engages
in the Business, unless Employee shall have received the prior
written approval for such investment from the Board. Nothing in
this Section 7B shall be construed as prohibiting Employee from
making any Passive Investment in any company or business entity
which is not a Public Company and which does not engage in the
Business; provided, however, nothing contained in this Section 7B
shall be construed to permit Employee to undertake any investment
which would result in a violation of the provisions of Section 2B
of this Agreement. For purposes of this Agreement, (i) the
phrase "engage(s) in the Business" shall refer not only to the
activities of such Public Company or such other company or
business entity, as the case may be, but shall also refer to the
activities of any subsidiary, affiliate or joint venture thereof
and (ii) the term "business entity" shall included, without
limitation, individuals, sole proprietorships, partnerships and
corporations. For purposes of this Agreement, a "Passive
Investment" shall
<PAGE>
mean an investment in a business or entity which does not require
Employee to render any services in the operations or affairs of
such business or entity and which does not materially adversely
affect or interfere with the performance of Employee's duties and
obligations to Employer or any of its subsidiaries or affiliates.
Notwithstanding anything to the contrary in this Agreement,
Employee shall have the right to maintain his ownership interest
in, and to consult with the co-owners of, those programs which
are listed on Schedule A annexed hereto, provided that no such
consultations by Employee shall materially interfere with his
full-time efforts on behalf of Employer, and provided, further,
that Employer shall have the right of first refusal (to the
extent within Employee's control) for such programming on terms
to be negotiated on an arm's length basis, between Employer and
Employee.
C. No Interference. During the Restricted Period
Employee shall not, whether for his own account or for the
account of any other individual, partnership, firm, corporation
or other business organization or entity (other than Employer),
intentionally solicit, endeavor to entice away from Employer or
any of its affiliates or subsidiaries or otherwise interfere with
the relationship of Employer or any of its affiliates or
subsidiaries with any employee of Employer or any of its
affiliates or subsidiaries or any person employed by Employer or
any of its affiliates or subsidiaries who holds a position with
duties and responsibilities substantially equivalent to those of
an officer, whether or not such person has the title of an
officer of any such business entity.
D. Confidential Information. Employee recognizes
that the services to be performed by him hereunder are special,
unique and extraordinary and that, by reason of his employment
hereunder, he may acquire confidential or proprietary information
and trade secrets concerning the operations of Employer. Such
information includes but is not limited to information in
whatever documentary or oral form concerning financial condition;
business structure, plans, operations or strategies; business
concepts; customer information; research plans or results;
litigation or administrative proceedings; information regarding
employees, agents, shareholders or affiliates; and list of
advertisers. Accordingly, Employee agrees that he will not,
except with the prior written consent of the Board, or as may be
required by law, directly or indirectly, disclose during the Term
or any time thereafter any proprietary, secret or confidential
information that he has learned by reason of his association with
Employer or use any such information to the detriment of
Employer.
Employee also acknowledges that he may become privy to
confidential information about Employer's directors, officers,
agents, employees, affiliates and shareholders and agrees that
all such information shall be deemed confidential. Employee
agrees that he shall not at any time during or following the
terms of his employment hereunder, directly or indirectly divulge
or disclose for any purpose confidential information, shall not
act or omit to do any act which shall damage Employer, its
shareholders or affiliates and shall not to make derogatory
statements about Employer, or its shareholders or affiliates. In
the event that Employee is terminated, resigns, plans to resign,
or is considering resigning, Employee shall not make statements
about his departure or possible departure from the Employer
without Employer's approval.
<PAGE>
E. Injunctive Relief; Survival of Agreement.
Employer shall be entitled, in addition to any other rights or
remedies it may have, to seek an injunction enjoining or
restraining Employee from any violation or threatened violation
of this Section 7. Employee's agreement as set forth in this
Section 7 shall survive the termination of Employee's employment
under this Agreement.
8. Tax Withholding. Payments to Employee of all
compensation contemplated under this Agreement shall be subject
to all applicable legal requirements with respect to the
withholding of taxes.
9. Amendment; Waiver. This Agreement may not be modified,
amended or waived in any manner except by an instrument in
writing signed by the parties hereto. The waiver by either party
of compliance with any provision of this Agreement by the other
party shall not operate or be construed as a waiver of any
provision of this Agreement, or of any subsequent breach by such
party of a provision of this Agreement.
10. Governing Law. In view of the fact that the principal
office of Employer is located in the District of Columbia, it is
understood and agreed that the construction and interpretation of
this Agreement shall at all times and in all respects be governed
by the laws of the District of Columbia.
11. Severability. The provisions of this Agreement
(including particularly, but not limited to, the provisions of
Section 7 hereof) shall be deemed severable, and the invalidity
or unenforceability of any one or more of the provisions hereof
shall not affect the validity and enforceability of the other
provisions hereof. Employee agrees that the breach or alleged
breach by Employer of (i) any covenant contained in another
agreement between Employer and Employee or (ii) any obligation
owed to Employee by Employer, shall not affect the validity and
enforceability of the covenants and agreements of Employee set
forth in Sections 7C and 7D hereof.
12. Arbitration. Any controversy or claim arising out of
or relating to this Agreement or the breach of this Agreement
which cannot be resolved by Employee and Employer within thirty
(30) days after one party delivers to the other party written
notice of such controversy or claim shall be submitted to
arbitration in accordance with District of Columbia law and the
rules and procedures of the American Arbitration Association.
Such arbitration shall be conducted by a single arbitrator. The
determination of the arbitrator shall be conclusive and binding
on Employer and Employee. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The parties
agree to keep the fact of the arbitration and all details
relating thereto confidential, except as otherwise required by
law or as necessary to enforce or defend against the enforcement
of any award of the arbitrator.
13. Notices. Any notice required to be given hereunder
shall be sufficient if in writing, and sent by courier service
(with proof of service), facsimile transmission, hand delivery or
certified or registered mail (return receipt requested and first-
class postage prepaid), to his residence in the case of Employee
(with a copy to Daniel Wasser, Esq., Franklin, Weinrib,
<PAGE>
Rudell & Vassallo, P.C., 488 Madison Avenue, New York, New York
10022, telecopier: 212-308-0642), and to its principal office in
the case of Employer.
14. Entire Agreement. This Agreement, together with the
Option Agreement (which incorporates by reference certain
provisions of The Nostalgia Network, Inc. 1996 Stock Option
Plan), contains the entire agreement and understanding by and
between Employer and Employee with respect to the employment
herein referred to, and no representations, promises, agreements
or understandings, written or oral, not contained herein or
therein shall be of any force or effect.
<PAGE> IN WITNESS WHEREOF, Employer and Employee have duly
executed this Agreement as of the day and year first above
written.
NOSTALGIA:
THE NOSTALGIA NETWORK, INC.,
a Delaware corporation
By: /s/ Dong Moon Joo
_______________________
Dong Moon Joo
EMPLOYEE
/s/ Squire Rushnell
__________________________
Squire Rushnell
Exhibit 10(b)
SQUIRE RUSHNELL
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is effective
as of the 13th day of May, 1996 by and between (i) THE NOSTALGIA
NETWORK, INC. (the "Corporation"), a Delaware corporation, and
(ii) SQUIRE RUSHNELL ("Employee"), President and Chief Executive
Officer of the Corporation.
WHEREAS, in connection with Employee being engaged as the
Corporation's President and Chief Executive Officer pursuant to
that certain Agreement of even date herewith between the
Corporation and Employee (the "Employment Agreement"), the
Corporation has decided to grant to Employee an option to
purchase shares of the Corporation's Common Stock.
NOW, THEREFORE, in consideration of the foregoing, of the
mutual promises hereinafter set forth and of other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally
bound, do hereby agree as follows:
1. Grant of Option. Subject to the terms and conditions
hereinafter set forth, the Corporation hereby grants to Employee
the right to purchase, during the period specified in Article 2
hereof, eight hundred thirty-nine thousand eight hundred forty
(839,840) shares of Common Stock (such shares of Common Stock
being hereinafter referred to as the "Shares") at a price of
$0.35 per Share (the "Exercise Price"), in accordance with the
terms of this Agreement (such right being hereinafter referred to
as the "Option"). This Option is not granted pursuant to The
Nostalgia Network, Inc. 1996 Stock Option Plan (the "Option
Plan"). As indicated in this Agreement, however, certain rights
of Participant hereunder are defined by reference to and are
identical to the rights of participants in the Option Plan.
2. Duration of Option. The Option shall be effective
during the period commencing as of the date it is approved by the
Company's stockholders and ending on the earliest of (a) the date
all of the Shares are purchased pursuant to the terms of this
Agreement or are surrendered to the Corporation pursuant to
Section 3E hereof, (b) ninety (90) days after the date of the
termination of Employee's employment under Section 5A or 5F of
the Employment Agreement (but if shareholder approval has not
been received on the termination date, such period shall commence
on the date approval is received), (c) one year after the date of
the termination of Employee's employment under Section 5B, 5C, 5D
or 5E of the Employment Agreement (but if shareholder approval
has not been received on the termination date, such period shall
commence on the date approval is received) or (d) May 12, 2006 at
5:00 P.M. The Option shall vest in full automatically upon
termination of Employee's employment under Section 5C or 5E of
the Employment Agreement or upon a Change in Control as defined
in the Option Plan. Employee's rights upon a Change in Control
shall be identical to those set forth in Section 7.4 of the
Option Plan, and shall include the right to surrender the Option
for cancellation and to receive payment therefore in accord with
the second sentence of said Section 7.4. Upon any expiration of
the
<PAGE>
Option, the Option shall have no further force or effect, and
Employee shall have no further rights in or under the Option or
to the Shares which shall not have been purchased by such time
pursuant to the Option. The noneffectiveness of this Option
pending stockholder approval shall not nullify the grant of the
Option or any of Employee's rights hereunder, all of which shall
subsist pending stockholder approval.
3. Exercise of Option.
A. Subject to the provisions of Article 2 hereof
regarding the duration of the Option and the acceleration of
vesting, the Option may be exercised by Employee as follows:
(i) A total of twenty-five percent (25%) of the Shares may be
purchased after February 12, 1997, (ii) an additional twenty-five
percent (25%) of the Shares may be purchased after November 12,
1997; (iii) an additional twenty-five percent (25%) of the Shares
may be purchased after August 12, 1998 and (iv) an additional
twenty-five percent (25%) of the Shares may be purchased on or
after May 12, 1999. Subject to the terms of Article 2 hereof,
any portion of the Option eligible to be exercised by Employee
and not previously exercised may be exercised up to May 12, 2006
at 5:00 p.m. Notwithstanding anything contained in this
Agreement to the contrary, the Option may be exercised only in
amounts of one thousand (1000) Shares or whole multiples thereof;
provided, however, that such restriction shall not apply to the
purchase by Employee of all Shares which are the subject of the
Option which have not previously been purchased by Employee and
which Employee shall be otherwise entitled to purchase. The
Option may be exercised only if compliance with all applicable
Federal and state securities laws can be effected and only by
Employee's completion, execution and delivery to the Corporation
of a notice of exercise and "investment letter" (if required by
the Corporation) as supplied by the Corporation, and the payment
to the Corporation, as provided in Section 3C hereof, of an
amount equal to the amount obtained by multiplying the Exercise
Price by the number of Shares being purchased pursuant to such
exercise, as shall be specified by Employee in such notice of
exercise. Except in the event of the death of Employee, in which
event Employee's estate, executors or administrators, or personal
or legal representatives may exercise the Option in accordance
with the terms of Section 3B hereof, the Option or any of the
rights thereunder may be exercised by Employee only, and may not
be transferred or assigned, in whole or in part, whether
voluntarily, involuntarily or by operation of law (including,
without limitation, the laws of bankruptcy, intestacy, descent
and distribution and succession) or on an absolute or contingent
basis, unless consented to in writing by the Corporation.
B. In the event of the death of Employee at such time
that Employee shall possess an Option pursuant to the terms of
this Agreement, Employee's estate, executors or administrators,
or personal or legal representatives shall be entitled, for a
period of one year following the date of Employee's death, to
exercise the Option, but only to the extent that Employee was
entitled to exercise the Option on the date of death. Any person
so desiring to exercise Employee's Option shall be required, as a
condition to the exercise of the Option, to furnish to the
Corporation such documentation as the Corporation reasonably
shall deem satisfactory to evidence the authority of such person
to exercise the Option on behalf of Employee. In the event of
the exercise of such Option by Employee's estate, executors or
administrators, or personal or legal representatives, all
references herein to Employee shall, to the
<PAGE>
extent applicable, be deemed to refer to and include such estate,
executors or administrators, or personal or legal
representatives, as the case may be.
C. Payment of the amount determined pursuant to
Section 3A hereof shall be made by good check payable to the
Corporation.
D. Upon the exercise of the Option by Employee, or as
soon thereafter as is practicable, the Corporation shall issue
and deliver to Employee a certificate or certificates evidencing
such number of Shares as Employee has so elected to purchase.
Such certificate or certificates shall be registered in the name
of Employee and, if applicable, shall bear an appropriate
investment warranty legend and any legend required by any Federal
or state securities law, rule or regulation. Upon the exercise
of the Option and the issuance and delivery of such certificate
or certificates, Employee shall have all the rights of a
stockholder with respect to such Shares and to receive all
dividends or other distribution paid or made with respect
thereto.
E. The Board of Directors of the Corporation may,
upon such terms and conditions as it deems appropriate, accept
the surrender by Employee and Employee's right to exercise the
Option, in whole or in part, and authorize a payment in
consideration therefor of an amount equal to the difference
obtained by subtracting the Exercise Price of the Shares which
are the subject of such surrendered Option from the fair market
value of the Shares which are the subject of such surrendered
Option on the date of such surrender (such amount not to be less
than zero), such payment to be in cash.
4. Additional Grant of Options. If on any date set forth
in Section 3A(i)-(iv) hereof, inclusive (any such date being
referred to herein as a "Vesting Date"), the number of Options
first becoming exercisable on such Vesting Date pursuant to
Section 3A hereof represent less than one percent (1%) of the
number of shares of Common Stock actually outstanding on such
date (assuming the conversions of all outstanding shares of the
Corporation's Preferred Stock into shares of Common Stock and the
exercise of all of the Corporation's outstanding options and
warrants which are "in-the-money" as of such Vesting Date)
(collectively, the "Outstanding Shares"), the Corporation shall
issue to Employee on such Vesting Date new options, which shall
be fully vested and immediately exercisable (subject to the terms
of Section 3A hereof) in such number as shall be equal to the
amount by which one percent (1%) of the Outstanding Shares
exceeds the number of Options first vesting on such date pursuant
to Section 3A hereof. The exercise price of such additional
options shall be the average of the bid and asked prices of a
share of Common Stock on the last thirty (30) trading days prior
to the applicable Vesting Date.
Example: If on a Vesting Date the
Corporation has thirty million (30,000,000)
Outstanding Shares and the number of Options
first vesting on such Vesting Date pursuant
to Section 3A hereof is two hundred twenty
thousand (220,00), the Corporation shall
grant to Employee on such Vesting Date
options to purchase an additional eighty
thousand shares of Common Stock [30,000,000 x
.01) - 220,000] at the average closing bid
and asked prices of a share of
<PAGE>
Common Stock for the thirty (30) trading days
prior to such Vesting Date.
To the extent applicable, any reference in this Agreement to the
term "Option" shall include any options granted by the
Corporation pursuant to this Article 4, any reference in this
Agreement to the term "Shares" shall include any shares of Common
Stock underlying any options granted pursuant to Article 4 and
any reference in this Agreement to the term "Exercise Price"
shall include the exercise price of any additional options
granted pursuant to this Article 4.
5. Changes in Capital Structure of the Corporation. In
the event of a Change in Capitalization, as defined in the Option
Plan, the number of shares of Common Stock subject to this
Agreement as well as the Exercise Price of any Shares not yet
purchased by Employee shall be as provided in Section 9 of the
Option Plan.
6. Rights Prior to Exercise. Employee shall have no
equity interest in the Corporation or any voting, dividend,
liquidation or dissolution rights with respect to any capital
stock of the Corporation solely by reason of having an Option or
having executed this Agreement. Furthermore, prior to the
exercise of all or a portion of the Option, as set forth in
Section 3A hereof, and the issuance and delivery of a certificate
or certificates evidencing the Shares purchased pursuant to the
exercise of all or a portion of such Option, Employee shall have
no interest in, or any voting, dividend, liquidation or
dissolution rights with respect to, the Shares, except to the
extent that Employee has exercised all or a portion of such
Option and has been issued and received delivery of a certificate
or certificates evidencing the Shares purchased pursuant to such
exercise. The Corporation agrees to issue and deliver within
thirty (30) days following any valid exercise of any portion of
this Agreement, a certificate evidencing Shares so purchased and,
the event of the failure of the Corporation to do so within such
period, Employee may seek a mandatory injunction against the
Corporation requiring it to issue and deliver to Employee such
certificate.
<PAGE>
7. Registration Rights Regarding Shares.
A. Subject to Employee's compliance with the terms of
this Agreement, the Corporation shall use reasonable efforts to
prepare, file with the Securities and Exchange Commission (the
"SEC") and have become effective prior to the date on which any
portion of the Option first may be exercised pursuant to Section
3A hereof a registration statement on Form S-8 (or any successor
or other form of registration statement applicable to securities
issued under an employee benefit plan or in connection with any
employment arrangement) covering the Shares, which shall include
an reoffer prospectus covering any resale or reoffer of any or
all of the Shares by Employee in brokers' transactions or
private, negotiated transactions (in accordance with General
Instruction C of Form S-8). The Corporation shall use reasonable
efforts to keep such registration statement in effect and
promptly to update or revise such reoffer prospectus as necessary
to permit Employee to resell in accordance therewith, from time
to time, any and all Shares until the earliest of (i) two (2)
years after the date that the Option is fully exercised, (ii) the
date that Employee has sold or transferred all of the Shares or
(iii) as to any Option which has expired, the date on which the
Option expires, as provided in Article 2 hereof.
B. In the event that the Corporation cannot or does
not prepare, file, have become effective and maintain the
effectiveness of such registration statement on Form S-8 with
reoffer prospectus, as provided in Section 7A hereof, the
Corporation shall use reasonable efforts, subject to Employee's
compliance with the terms of this Agreement, to prepare, file
with the SEC and have become effective on or before the date on
which Employee exercises any portion of the Option a registration
statement on Form S-3 (or any successor form of registration
statement most analogous thereto covering secondary offerings by
affiliates) covering resales of any or all of the Shares by
Employee in brokers' transactions or private, negotiated
transactions. The Corporation shall use reasonable efforts to
keep such registration statement in effect and promptly to update
or revise any portion thereof as necessary to permit Employee to
resell in accordance therewith, from time to time, any Shares
acquired upon exercise of the Option until the earliest of (i)
two (2) years after the date that the Option is fully exercised,
(ii) the date that Employee has sold or transferred all of the
Shares or (iii) as to any Option which has expired, the date on
which the Option expires, as provided in Article 2 hereof.
C. In connection with the registration under the
Securities Act of 1933 of the issuance or resale of any or all of
the Shares by or for the account of Employee pursuant to
Sections 7A or 7B hereof, the Corporation shall file on a timely
basis appropriate applications or other instruments to register,
qualify or obtain exemptions from registration requirements for
the issuance and/or resale under such state securities or blue
sky laws as the Corporation shall determine to be reasonably
appropriate for the issuance and/or resale of such securities;
provided, however, that the Corporation shall not be required, in
connection with any such registration, qualification or
application for exemption to qualify to do business, to file a
general consent to service of process, to register as a broker or
dealer or to cause any officer or employee of the Corporation to
register as a dealer, broker, agent, salesman or in any similar
capacity. Following such registration, qualification or
application for exemption, the Corporation shall take reasonable
actions to maintain the effectiveness thereof during the period
that the corporation is required to maintain and amend the
registration statement filed with the SEC under Sections 7A or 7B
hereof. All expenses incurred by the Corporation in connection
with preparation, filing and amendment or other revision of any
registration statement and/or reoffer prospectus pursuant to this
Article 7 and in connection with all related state securities or
blue sky applications or other instruments, including without
limitation all registration, filing and qualification fees,
printing expenses, fees and disbursements of counsel for the
Corporation and fees and expenses of accountants incidental to
such registration statement or state securities or blue sky
applications or other instruments shall be borne by the
Corporation; provided, however, that if any state or jurisdiction
in which the securities covered by such registration statement
are registered or qualified imposes a non-waivable requirement
that expenses incurred in connection with the qualification of
the securities for resale or reoffer be borne by selling
stockholders, such expenses shall be payable pro rata by Employee
and any other selling stockholders so identified in the
registration statement and/or reoffer prospectus prepared under
Sections 7A or 7B hereof.
D. As a condition precedent to the obligations of the
Corporation under this Article 7, Employee (i) shall promptly
furnish to the Corporation such information regarding Employee
and the resale of any and all Shares proposed by Employee as may
be required for inclusion in the registration statement and/or
reoffer prospectus or any related state securities or
<PAGE>
blue sky applications or other instruments, as may be necessary
to provide supplemental information to the SEC, the National
Association of Securities Dealers, Inc. or any administrator of
any state securities or blue sky law, or as the Corporation may
reasonably request and (ii) shall agree in a manner acceptable to
the Corporation that, in selling the Shares, Employee will comply
with all applicable laws and regulations and shall sell any or
all of the Shares only in strict conformance with the procedures
described in such registration statement and/or reoffer
prospectus or state securities or blue sky applications or other
instruments.
E. In connection with any registration statement or
reoffer prospectus or state securities or blue sky application or
other instrument prepared and filed pursuant to this Article 7,
the Corporation shall indemnify and hold Employee harmless from
and against any and all losses, claims, damages and liabilities
caused by (i) any untrue statements or alleged untrue statement
of a material fact contained in the registration statement,
reoffer prospectus or state securities or blue sky application or
other instrument or caused by any omission or alleged omission to
state therein any material fact required to be stated or
necessary to make the statements which are made not misleading,
except insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or alleged untrue statement or
omission or alleged omission based upon information furnished to
the Corporation by Employee for use in the registration
statement, reoffer prospectus or state securities or blue sky
application or other instrument and (ii) any violation by the
Corporation of any provision of applicable Federal or state
securities law or any implementing rule or regulation required of
the Corporation in connection with any such registration,
qualification, exemption, issuance or distribution; provided,
however,. that the indemnity contained herein shall not apply to
amounts paid in settlement of any claim, loss, damage, liability
or action if settlement of any claim, loss, damage, liability or
action if settlement is effected without the consent of the
Corporation (which consent shall not unreasonably be withheld).
Employee shall indemnify the Corporation, its directors, each
officer signing such registration statement, each other person
whose securities are included in such registration statement,
each person, if any, who controls the Corporation and any
officers, directors or controlling persons of such other person
from and against any and all losses, claims, damages and
liabilities caused by (i) any untrue statement or alleged untrue
statement of a material fact contained in the registration
statement, reoffer prospectus or state securities or blue sky
application or other instrument or caused by any omission or
alleged omission to state therein any material fact required to
be stated or necessary to make the statements which are made not
misleading, insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or alleged untrue
statement or omission or alleged omission based upon information
furnished by Employee for use in the registration statement,
reoffer prospectus or state securities or blue sky application or
other instrument and (ii) any violation by Employee of any
provision of applicable Federal or state securities law or any
implementing rule or regulation applicable to Employee and
relating to action or inaction required of Employee in connection
with any such registration, qualification, exemption, resale or
distribution; provided, however, that the indemnity contained
herein shall not apply to amounts paid in settlement of any
claim, loss, damage, liability or action if settlement is
effected without the consent of Employee (which consent shall not
unreasonably be withheld). The indemnification provided for in
this Section 7E shall be independent of and in addition to any
other indemnity agreement by or between the Corporation and
Employee. If the indemnification provided in this Section 7E is
unavailable to
<PAGE>
or insufficient to hold harmless the party indemnified hereunder
with respect of any losses, claims, damages, liabilities or
expenses referred to hereinabove, the party herein obligated to
provide such indemnification, in lieu of indemnifying the other
party, shall contribute to the amount paid or payable as a
result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the
parties in connection with the statements, omissions, actions or
inactions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The amount paid or payable by a party as a
result of any losses, claims, damages and liabilities referred to
hereinabove shall be deemed to include any legal or other fees or
expenses reasonably incurred by the other party in connection
with investigating or defending any such claim. In no event will
Employee's liability, however, exceed the amount by which the
proceeds to Employee from the sale of Shares exceed the purchase
price of such Shares.
F. Notwithstanding anything contained in this Article
7 to the contrary, in the event that the Corporation has not
caused Employee's resale of the Shares to be registered under the
Securities Act of 1933 and applicable state securities or blue
sky laws, which registration is effective prior to the date that
Employee elects to sell all of the Shares owed by Employee, then
Employee, in the event that he desires to sell any or all of the
Shares then owned by him, may, by written notice to the
Corporation, elect to cause the Corporation to repurchase such
Shares at a price per share equal to the average of the closing
bid and asked prices of a share of Common Stock on the thirty
(30) trading days prior to the date Employee sends the
Corporation written notice of the exercise of its election
pursuant to this Section 7F. In the event of such election by
Employee, the Corporation shall purchase all such Shares, at such
price, within ninety (90) days after its receipt of written
notice from Employee of his election to cause the Corporation to
repurchase such Shares. Alternatively, Employee may give notice
to the Corporation of his desire to simultaneously exercise the
Option and sell the Shares, and if no registration statement is
in effect to permit Employee to publicly sell the Shares
immediately upon exercise of the Option, then, within (90) days
of such notice the Corporation will either (i) take the necessary
steps to permit such sale or (ii) purchase the Shares and pay to
the Employee the difference between the Option Exercise Price and
the last reported sale price (or if none, the average of the last
reported bid and asked price) of the Shares on the day of
Employee's notice or the day of the Corporation's payment,
whichever is greater. Notwithstanding anything in Paragraph 2
of this Agreement to the contrary, the Option shall be deemed to
have been timely exercised by Employee if he gives the aforesaid
notice within the periods specified in Paragraph 2 hereof.
Employee's rights under this Section 7F shall terminate upon the
earliest to occur of (i) two (2) years after the date that the
Option is fully exercised, (ii) the date that Employee has sold
or transferred all of the Shares or (iii) as to any Option which
has expired, the date on which the Option expires, as provided in
Article 2 hereof. Employee may not elect to exercise his rights
under this Section 7F more than twice during any calendar year.
G. The registration rights and other rights granted
in this Article 7 are not assignable, in whole or in part,
without the prior written consent of the Corporation.
<PAGE>
8. Genders. The use of any gender herein shall be deemed
to be or include the other genders and the use of the singular
herein shall be deemed to be or include the plural (and vice
versa), wherever appropriate.
9. Headings. The headings and other captions contained in
this Agreement are for convenience of reference only and shall
not be used in interpreting, construing or enforcing any of any
provisions of this Agreement.
10. Entire Agreement. This Agreement, which incorporates
by reference certain provisions of the Option Plan, together with
the Employment Agreement, sets forth all of the promises,
agreements, conditions, understandings, warranties and
representations between the parties hereto with respect to the
Option and the Shares, and there are no promises, agreements,
conditions, understandings, warranties or representations, oral
or written, express or implied, between them with respect to the
Option or the Shares other than as set forth herein or therein.
In the event of any conflict between the terms of the Employment
Agreement and this Agreement or the Option Plan regarding the
Option or the Shares, the terms of this Agreement and the Option
Plan shall control. The grant of the Option is subject to
shareholder approval. The Corporation shall submit this
Agreement and the Option to its shareholders for their approval
no later than the 1997 annual meeting of shareholders. If this
Agreement and the Option is not approved by the shareholders at
or prior to the 1997 annual meeting, the parties will make such
amendments as are necessary to accord Employee all of the
benefits hereof. In the event of any conflict between the terms
of this Agreement and the Option Plan regarding the Option or the
Shares, the terms of this Agreement shall control. Any and all
prior agreements between the parties hereto with respect to any
stock purchase rights or stock option rights regarding the Shares
or the Option are hereby revoked.
11. Notices. Any and all notices provided for herein shall
be sufficient if in writing, and sent by hand delivery or by
certified or registered mail (return receipt requested and first-
class postage prepaid), in the case of the Corporation, to its
principal office, and, in the case of Employee, to Employee's
address as shown on the Corporation's records.
12. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Delaware.
13. Modifications. No change or modification of this
Agreement shall be valid unless the same is in writing and signed
by the parties hereto.
14. Arbitration. Any controversy or claim arising out of
or relating to this Agreement or the breach of this Agreement
which cannot be resolved by Employee and the Corporation within
thirty (30) days after one party delivers to the other party
written notice of such controversy or claim shall be submitted to
arbitration in accordance with District of Columbia law and the
rules and procedures of the American Arbitration Association.
Such arbitration shall be conducted by an arbitrator. The
determination of the arbitrator shall be conclusive and binding
on the Corporation and Employee. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. The parties
agree to keep the fact of the arbitration and all details
relating thereto confidential, except as otherwise required by
law or as necessary to enforce or defend against the enforcement
of any award of the arbitrator.
<PAGE>
15. Withholding. To the extent that the Corporation is
required to withhold any amounts as a result of the exercise by
Employee of any of the Options, the Corporation may, and on
Participant's request shall, withhold from Employee a sufficient
number of Shares as shall be necessary to satisfy such
withholding obligation or may take such other actions as the
Corporation deems appropriate to satisfy such withholding
obligation.
<PAGE>
IN WITNESS WHEREOF, the Corporation and Employee have
executed this Agreement as of the day and year first above
written.
CORPORATION:
THE NOSTALGIA NETWORK, INC. a
Delaware corporation
By: /s/ Dong Moon Joo
_______________________
Dong Moon Joo
EMPLOYEE:
/s/ Squire Rushnell
_______________________
Squire Rushnell
