As filed with the Securities and
Exchange Commission, February 26, 1996.
Securities Act File No. 33-_________
Exchange Act File No. 0-18034
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________
INDENET, INC.
(Formerly Independent TeleMedia Group, Inc.)
(Exact Name of Registrant as Specified in its Charter)
Delaware 68-0158367
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
1640 North Gower Street
Los Angeles, California 90028
(213) 466-6388
(Address, including Zip Code, and Telephone Number,
including Area Code, of Registrant's Principal Executive
Offices)
_____________________
LEWIS K. EISAGUIRRE, Chief Financial Officer
INDENET, INC.
1640 North Gower Street
Los Angeles, California 90028
(213) 466-6388
(Name, Address, including Zip Code, and Telephone
Number,
including Area Code, of Agent for Service)
____________________
Copies of Communications to:
Roger V. Davidson, Esq.
Cohen Brame & Smith
Professional Corporation
1700 Lincoln Street, Suite 1800
Denver, Colorado 80203
(303) 837-8800
Approximate date of commencement of proposed sale to
public:
As soon as practicable after the registration statement becomes
effective
__________________________
If the only securities being registered on this Form are
being offered pursuant to dividend or interest investment plans,
please check the following box. [ ]
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, check the following box. [X]
Title of each Class of Common Stock, $0.001 par value
Securities being Registered
Amount being 300,000 Shs.
Registered
Proposed $5.50 (1)(2)
Maximum Offering
Price Per Share
Proposed Maximum $1,650,000
Aggregate Offering
Price
Amount of $569.00
Registration Fee
Total. . . . . . . . $569.00
(1) Closing price on the Nasdaq Stock Market on February 21,
1996.
(2) Estimated solely for the purpose of determining the
registration fee and calculated pursuant to Rule 457(a). No
separate registration fee is required for the warrants
pursuant to Rule 457(g).
_____________________
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
PROSPECTUS
SELLING SHAREHOLDER OFFERING
IndeNet, Inc.
$.001 Par Value Common Stock
The Company has registered for offer and sale, on behalf of
certain of its securityholders, a total of 300,000 shares. These
shares underlie outstanding Options. (See: "Selling
Shareholders".) The first 60,000 Options are exercisable at
$2.50, for one share of the Common Stock, par value $0.001 per
share; the second 60,000 Options are exercisable at $2.75, for
one share of the Common Stock, par value $0.001 per share; the
third 60,000 Options are exercisable at $3.00, for one share of
the Common Stock, par value $0.001 per share; the fourth 60,000
Options are exercisable at $3.25, for one share of the Common
Stock, par value $0.001 per share; and the last 60,000 Options
are exercisable at $3.50, for one share of the Common Stock, par
value $0.001 per share, beginning immediately, and terminating
on the later of (i) August 16, 1996, or (ii) the six (6) month
anniversary of the date on which a registration statement
covering the resale by Optionee of all of the Option Shares under
the Securities Act of 1933, as amended, is declared effective by
the Securities and Exchange Commission. The shares offered
hereby are being sold for the accounts of these certain
shareholders (the "Selling Shareholders") and the Company will
not receive any proceeds from the sale of shares by the Selling
Shareholders. (See: "Plan of Distribution".) The Common Stock
is traded on the Nasdaq Stock Market ("Nasdaq") under the trading
symbol "INDE". The reported closing price on Nasdaq on February
21, 1996 was $5.50 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THERE ARE CERTAIN RISKS INVOLVED WITH THE OWNERSHIP OF THE
COMPANY'S SECURITIES, INCLUDING RISKS RELATED TO ITS BUSINESS AND
THE MARKETS FOR ITS SECURITIES. (SEE "RISK FACTORS".)
The Company, pursuant to agreements with the Selling
Shareholders, has agreed to pay substantially all of the
expenses of any offering and sale hereunder (not including
commissions and discounts of underwriters, dealers, or agents),
estimated to be $8,000.
The Securities will be sold directly, through agents,
underwriters, or dealers as designated from time to time, or
through a combination of such methods on terms to be determined
at the time of sale, at market prices obtainable at the time
of sale or otherwise in privately negotiated transactions at
prices determined by negotiation.
The date of this Prospectus is _______, 1996.
No dealer, salesman, or other person has been authorized to
give any information or to make any representation other than
those contained in or incorporated by reference to this
Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized
by the Company, the Selling Shareholders, or any underwriter,
dealer, or agent. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of
the Company since the date hereof. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy
the securities offered hereby by anyone in any jurisdiction in
which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to
do so or to any person to whom it is unlawful to make such offer
or solicitation in such jurisdiction.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other
information concerning the Company may be inspected and copied at
the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; at the
Commission's Regional Office at 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and Seven World Trade Center,
Thirteenth Floor, New York, New York 10048. Copies of such
material can also be obtained upon written request addressed to
the Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, such
material can be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street,
Washington, DC 20006.
The Company has filed with the Commission a registration
statement on Form S-3 (herein, together with all amendments and
exhibits, referred to as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration
Statement which may be inspected and copied in the manner and at
the sources described above. With respect to each such
agreement, instrument, or other document filed as an exhibit to
the Registration Statement, reference is made to the exhibit for
a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the
Commission pursuant to the Exchange Act (file number 0-18034) are
incorporated herein by reference:
(1) Report on Form 8-K for event occurring February 3,
1995.
(2) The Company's Annual Report on Form 10-KSB for the year
ended December 31, 1994, as amended on Form 10-KSB/A-2.
(3) The Company's Quarterly Reports on Form 10-QSB for the
periods ended March 31, 1995 (as amended on Form
10-QSB/A), June 30, 1995, September 30, 1995, and
December 31, 1995.
(4) Report on Form 8-K for event occurring May 12, 1995
relative to change of year end to March 31.
(5) Report on Form 8-K for event occurring October 11,
1995.
(6) Report on Form 8-K for event occurring November 27,
1995.
(7) Report on Form 8-K for event occurring February 7,
1996.
(8) All documents filed by the Company pursuant to Sections
13(a) or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of
the Offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof
from the date of filing of such documents.
(9) The Company's Registration Statement on Form 8-A filed
October 12, 1989 (File No. 0-18034), as amended.
Any statement contained herein or in a document incorporated
or deemed to be incorporated herein by reference shall be deemed
to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained in any subsequently filed
document (which is deemed to be incorporated by reference herein)
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person to
whom a copy of this Prospectus is delivered, on the written or
oral request of such person, a copy of any or all of the
documents incorporated herein by reference (other than exhibits
thereto, unless such exhibits are specifically incorporated by
reference into the information that this Prospectus
incorporates). Written or telephone requests for such copies
should be directed to the Company's principal office: IndeNet,
Inc., 1640 North Gower Street, Los Angeles, California 90028,
(213) 466-6388.
PROSPECTUS SUMMARY
The following information is qualified in its entirety by
the detailed information and financial statements found elsewhere
in the Prospectus, the December 31, 1994 Form 10-KSB/A-2, as well
as the other documents referred to herein under "Incorporation of
Certain Documents by Reference." As used in this Prospectus, the
term "the Company" refers to IndeNet, Inc. and its subsidiaries,
unless otherwise stated or indicated by the context.
The Company
IndeNet, Inc. was originally founded as a Colorado
corporation on April 4, 1988 and was re-organized under the laws
of the State of Delaware on July 17, 1995. The Company's
operations service the media and communications industries.
Effective October 31, 1993, the Registrant sold all of its
operating assets. Management's intent was to transition into a
new line of business utilizing the proceeds from the sale.
Completion of the asset sale resulted in a company with
approximately $5.8 million in cash and notes receivable,
liabilities of approximately $1.5 million, and shareholders'
equity of $4.3 million. At December 31, 1994, the Registrant's
asset base consisted primarily of cash and promissory notes
relating to the aforementioned sale of its operating assets.
Effective February 3, 1995, the Company acquired Mediatech,
Inc., which became the principal operating subsidiary of the
Company. On November 27, 1995, the Company acquired 66.67% of
Channelmatic, Inc. ("Channelmatic") and on February 7, 1996 it
completed the acquisition of Starcom Television Services, Inc.
("Starcom"). The Company continues to seek other business
combinations.
The Offering
Common Shares Outstanding Prior to,
the Offering and the Warrant Exercise . . .11,691,064
Shares Offered by Selling Shareholders . . . . . . . . .300,000
(All Proceeds to Selling Shareholders)
Nasdaq Stock Market Symbol . . . . . . . . . . . . . . . . INDE
RISK FACTORS
Risk Factors Relating to the Company and This Offering
1. Success Dependent on Management. Success of the
Company depends on the active participation of Messrs. Lautz,
Baur, Derham, Walsh and Eisaguirre. While the Company
has employment agreements with all of these persons, the loss of
their services could adversely affect development of the
Company's business and its likelihood of continuing operations.
2. Competition. The Company's operating subsidiaries face
substantial competition from other businesses engaged in similar
businesses with similar products, operations and channels of
distribution, many of which competitors are well established and
have significant financial and other resources.
3. Possible Changes in Technology. Management believes
the technology of the business in which it is engaged may be
subject to change. Although the Company's sales actually
increased in the most recent fiscal year, the Company believes
that being able to deliver commercial messages and programming in
immediate digital format may be important to maintaining sales
and customers in the future.
4. Dependence on a Few Major Customers. While no single
customer represents more than 10% of the Company's annual revenues,
there are certain customer relationships which are of great
importance to the Company. Among these are relationships with
McDonald's Corporation and their agencies - especially Leo
Burnett; Coca Cola and their agencies - especially McCann
Erickson; King World Syndicated Programming and Questar Home
Video. No formal contractual agreements exist with any of these
customers but they represent long term relationships with the
Company and its subsidiaries and have provided a substantial
percentage of its sales over the past several years.
5. Scarcity of and Competition for Merger or Acquisition
Prospects. While INDE has consummated the acquisition of
Mediatech, Channelmatic and Starcom, it continues to seek
additional acquisitions. INDE is and will continue to be an
insignificant participant in the business of seeking mergers with
and acquisitions of small privately financed companies. A large
number of established and well-financed entities, including
venture capital firms, have recently increased their merger and
acquisition activities. Some such entities have significantly
greater financial resources, technical expertise and managerial
capabilities than INDE and, consequently, INDE may be at a
competitive disadvantage in identifying suitable merger or
acquisition candidates and successfully concluding a proposed
merger or acquisition.
6. Possible Change in Control and Management - Additional
Dilution. Management contemplates that a material acquisition or
merger may be completed on terms requiring the issuance of
additional INDE common shares to shareholders of a merger
candidate. While INDE's shareholders may be entitled to vote on
any such proposed merger or acquisition, under Delaware law a
shareholder vote may not be required if INDE is the surviving
corporation and the number of shares of INDE outstanding after
the acquisition/merger does not exceed by 20% the number of
shares outstanding prior to the transaction. While shareholder
approval was required and obtained in order to dispose of the
Company's operating assets in 1993, as a result of the limited
number of new shares issued in the acquisition of Mediatech,
Channelmatic and Starcom shareholder approval of those
transactions was not required. The successful completion of a
merger or acquisition may result in substantial dilution to the
percentage of common shares of INDE held by present and
prospective shareholders and may result in a change of control of
INDE. It is also likely that any such change in control may also
result in the resignation or removal of INDE's present officers
and directors or the terms of a merger agreement may require that
the officers and directors resign.
7. Public Market for INDE's Securities. Although there
presently exists a market for INDE's common stock, there can be
no assurance that such market will continue.
8. Effect of Certain Selling Shareholders' Sales. INDE
has on file an additional effective registration statement in
which it has registered, for offer and sale, 1,187,236 shares of
common stock by selling shareholders, most of whom are or were
officers and directors of INDE. The selling shareholders may
concurrently elect to sell their shares into the public market,
which could have a depressing or overhanging effect on the market
price for the securities offered by this prospectus. Such effect
could impede the exercise of INDE's common stock purchase
warrants, thus (a) depriving INDE from receiving additional
working capital from the exercise of its common stock purchase
warrants at a time when working capital might not otherwise be
available, and (b) depriving the common stock purchase
warrantholders from realizing any economic gain from the sale of
their warrants and/or underlying shares.
9. Dividends. No dividends have been paid on the Common
Stock since INDE's inception and none are contemplated at any
time in the foreseeable future.
USE OF PROCEEDS
All of the proceeds to be realized from this offering will
be paid to the Selling Shareholders. The Company will not
receive any of such proceeds.
Any net proceeds that the Company may realize from the
exercise of the Options will be used for working capital,
including the deployment of a digital distribution network.
SELLING SHAREHOLDERS
The following table shows for the Selling Shareholders, (i)
the number of Shares and Shares underlying the Options of the
Company beneficially owned by them as of February 22, 1996, (ii)
the number of Shares covered by this Prospectus, and (iii) the
number of Shares to be retained after this offering, if any.
Selling
Shareholder Woodrock Partners, Inc.
Shares of
Common Stock
Owned Prior
to the
Offering 300,000
Number of
Common Shares
Covered by This
Prospectus 300,000
Common Shares
Retained
Subsequent to
This Offering -0-
_________________
(1) None of the Selling Shareholders will own in excess of one
(1%) percent of the Company's outstanding shares subsequent
to the offering.
None of the Selling Shareholders named herein are, or have
ever been Officers or Directors of the Company.
Information set forth in the tables regarding the securities
owned by each Selling Shareholder is provided to the best
knowledge of the Company based on information furnished to
the Company by the respective Selling Shareholder and/or
available to the Company through its stock transfer records.
RECENT DEVELOPMENTS
Effective February 7, 1996, the Company completed the
acquisition of Starcom Television Services, Inc. in an all stock
transaction. Under the terms of the agreement, approximately
1,000,000 shares of INDE's common stock are to be exchanged for
100% of Starcom's outstanding shares and for the repayment of
certain debts owed to Starcom shareholders. At closing, INDE
issued 500,000 shares of its common stock with the balance of the
shares to be determined based on Starcom's operating results
during the period commencing January 1, 1996 through March 31,
1996. The balance of the shares will be issued upon the
completion of an audit of the results for this three- month
period and certain other true-up provisions.
Andre Blay, an affiliate of Starcom, will serve on INDE's
board of directors for a period of three years as part of the
acquisition agreement. Additionally, INDE has arranged and
agreed to act as a guarantor on a $2,000,000 asset based credit
facility for Starcom.
Starcom's core business is the delivery of syndicated
television programming and television commercials to television
stations, cable systems and other television providers. Starcom
formerly competed directly with INDE's Chicago-based wholly-owned
subsidiary Mediatech, Inc.
PLAN OF DISTRIBUTION
The Common Shares offered hereby may be sold by the Selling
Shareholders or by pledgees, donees, transferees or other
successors-in-interest (including sales after exercise of options
or warrants). Such sales may be made in the over-the-counter
market through the Nasdaq Stock Market, in privately negotiated
transactions, or otherwise, at prices and at terms then
prevailing, at prices related to the then current market prices
or at negotiated prices. The Common Shares may be sold by one or
more of the following methods: (a) a block trade in which the
broker or dealer so engaged will attempt to sell the stock as
agent but may position and resell a portion of the block as
principal in order to consummate the transaction; (b) a purchase
by a broker or dealer as principal, and the resale by such broker
or dealer for its account pursuant to this Prospectus, including
resale to another broker or dealer; or (c) ordinary brokerage
transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers or dealers engaged by a
Selling Shareholder may arrange for other brokers or dealers to
participate. Any such brokers or dealers will receive
commissions or discounts from a Selling Shareholder in amounts to
be negotiated immediately prior to the sale. Such brokers or
dealers and any other participating brokers or dealers may be
deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended. Any gain realized by such a broker or
dealer on the sale of shares which it purchases as a principal
may be deemed to be compensation to the broker or dealer in
addition to any commission paid to the broker by a Selling
Shareholder.
The securities covered by this Prospectus may in the future
also be sold under Rule 144 instead of under this Prospectus.
Rule 144 provides an exemption from registration for the resale
of securities by persons other than the issuer after the
securities have been held by persons for at least two (2) years
from original issuance, and such securities are sold in strict
compliance with Rule 144 "Manner of Sale" requirements and
maximum number of shares requirements. The Company will not
receive any portion of the proceeds of the securities sold by the
Selling Shareholders, but will receive amounts upon exercise of
Warrants, which funds will be used for working capital. There is
no assurance that the Selling Shareholders will sell any or all
of the Shares offered hereby.
The Selling Shareholders have been advised by the Company
that during the time each is engaged in distribution of the
securities covered by this Prospectus, each must comply with
Rules 10b-5 and 10b-6 under the Securities Exchange Act of 1934,
as amended, and pursuant thereto: (i) each must not engage in
any stabilization activity in connection with the Company's
securities; (ii) each must furnish each broker through which
securities covered by this Prospectus may be offered the number
of copies of this Prospectus which are required by each broker;
and (iii) each must not bid for or purchase any securities of the
Company or attempt to induce any person to purchase any of the
Company's securities other than as permitted under the Securities
Exchange Act of 1934, as amended. Any Selling Shareholders who
may be "affiliated purchasers" of the Company as defined in Rule
10b-6, have been further advised that pursuant to Securities
Exchange Act Release 34-23611 (September 11, 1986), they must
coordinate their sales under this Prospectus with each other and
the Company for purposes of Rule 10b-6.
LEGAL MATTERS
Certain legal matters with respect to the shares offered
hereby have been passed upon for the Company by Cohen Brame &
Smith, Professional Corporation, Denver, Colorado. Roger V.
Davidson, a shareholder of the firm is a former Director of the
Company.
EXPERTS
The consolidated financial statements incorporated by
reference in this Prospectus have been audited by BDO Seidman
LLP, independent certified public accountants, to the extent and
for the periods set forth in their report (which contains an
explanatory paragraph regarding uncertainties as to the outcome
of certain litigation) incorporated herein by reference, and are
incorporated herein in reliance upon such report given upon the
authority of said firm as experts in auditing and accounting.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses of the offering, all of which are to
be borne by the Company, are as follows:
Total
Registration Fee Under Securities Act of 1933. . . . . $ 569.00
Printing and Engraving . . . . . . . . . . . . . . . . 200.00*
Accounting Fees and Expenses . . . . . . . . . . . . . 2,000.00*
Legal Fees and Expenses. . . . . . . . . . . . . . . . 3,000.00*
Blue Sky Fees and Expenses (including related
legal fees). . . . . . . . . . . . . . . . . . . 500.00*
Transfer Agent Fees. . . . . . . . . . . . . . . . . . 100.00*
Miscellaneous. . . . . . . . . . . . . . . . . . . . . 1,631.00
Total. . . . . . . . . . . . . . . . . . . . $ 8,000.00
*Estimated
Item 15. Indemnification of Directors and Officers.
Article X of Company's Certificate of Incorporation provides
that the corporation may indemnify each director, officer, and
any employee or agent of the corporation, his heirs, executors,
and administrators, against expenses reasonably incurred or any
amounts paid by him in connection with any action, suit, or
proceeding to which he may be made a party by reason of his being
or having been a director, officer, employee or agent of the
corporation in the same manner as is provided by the laws of the
State of Delaware as summarized below.
The Delaware General Corporation Law gives each corporation
the power to indemnify against liability any current or former
directors, officers, employees and agents. Del Corp Law section
145. As provided in section 145, a Director must show that (1)
he conducted himself in good faith, (2) that his conduct was not
opposed to the corporation's best interests, or if acting in his
official capacity, that his conduct was in the corporation's best
interests and (3) that in a criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful. The
Delaware General Corporation Law also gives each corporation the
power to eliminate or limit the personal liability of a Director
to the Corporation or its shareholders for monetary damages for
breach of fiduciary duty as a director unless the breach of
fiduciary duty involves breach of loyalty to the corporation or
its shareholders, acts or omissions involving intentional
misconduct or a knowing violation of law, acts specified in
sections 172 and 174 (improper distribution of assets, dividends
or share repurchase) or any transaction whereby the Director
derived an improper personal benefit. Del Corp Law section
102(b)(7).
Item 16. Exhibits
The following Exhibits are filed as part of this Form S-3
Registration Statement pursuant to Item 601 of Regulation SK by
incorporation by reference to other filings:
3.1 IndeNet, Inc. Certificate of Incorporation*
3.2 IndeNet, Inc. Bylaws*
5.1 Opinion of Cohen Brame & Smith Professional
Corporation*
10.1 Mediatech Stock Purchase Agreement*
10.2 Channelmatic Stock Purchase Agreement
(Incorporated by reference to Exhibit 10.1 and
10.2 to Form 8-K dated December 12, 1995).
10.3 Starcom Stock Exchange Agreement (Incorporated by
reference to Exhibit II to the Form 10-QSB
dated December 31, 1995.)
10.4 Robert Lautz Employment Agreement*
10.5 Lewis Eisaguirre Employment Agreement*
22 Subsidiaries of the Registrant*
23.1 Consent of Cohen Brame & Smith, Professional
Corporation* (included in Exhibit 5.1 above)
23.2 Consent of BDO Seidman LLP*
_________________
* Filed herewith.
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. 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 of the Company in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, 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 whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Company hereby undertakes:
(1) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for the purposes of determining any liability
under the Securities Act of 1933, each filing of the Company's
annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchanges Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is
incorporated be reference in the registration statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Company certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3, and
has duly caused this Form S-3 Registration Statement to be signed
on its behalf by the undersigned thereunto duly authorized, in
the City of Los Angeles, State of California on the 23rd day of
February, 1996.
INDENET, INC.
By: /s/ Robert W. Lautz, Jr.
Robert W. Lautz, Jr., President,
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933,
this Form S-3 Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Robert W. Lautz, Jr. President, Chief 2/23/96
Robert W. Lautz, Jr. Executive Officer
and Director
/s/ Thomas H. Baur Chief Executive 2/23/96
Thomas H. Baur Officer of Mediatech,
Inc. and Director
/s/ Lewis K. Eisaguirre Chief Financial and 2/23/96
Lewis K. Eisaguirre Accounting Officer,
Secretary and Director
/s/ William A. Kunkel Director 2/23/96
William A. Kunkel
/s/ Cary S. Fitchey Director 2/23/96
Carey S. Fitchey
William D. Killion Director
Andre Blay Director
SEC File Nos. 33-__________
0-18034
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
INDENET, INC.
(Name of Company as specified in charter)
INDENET, INC.
("INDE")
FORM S-3 REGISTRATION STATEMENT
The following Exhibits are filed as part of the Company's
Form S-3 Registration Statement pursuant to Item 601 of
Regulation S-B.
Exhibit Number
in Amendment
No. 1 to
Form S-3 Description
3.1 IndeNet, Inc. Certificate of
Incorporation
3.2 IndeNet, Inc. Bylaws
5.1 Opinion of Cohen Brame & Smith
Professional Corporation
10.1 Mediatech Stock Purchase Agreement
10.2 Channelmatic Stock Purchase Agreement
(Incorporated by reference to
Exhibit 10.1 and 10.2 to Form 8-K
dated December 12, 1995)
10.3 Starcom Stock Exchange Agreement
(Incorporated by reference to
Exhibit II to the Form 10-QSB dated
December 31, 1995.)
10.4 Robert Lautz Employment Agreement
10.5 Lewis Eisaguirre Employment
Agreement
22 Subsidiaries of the Registrant
23.1 Consent of Cohen Brame & Smith
Professional Corporation
(included in Exhibit 5.1
above)
23.2 Consent of BDO Seidman LLP
EXHIBIT 3.1
INDENET, INC. CERTIFICATE OF INCORPORATION
CERTIFICATE OF INCORPORATION
OF
INDENET, INC.
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned incorporator, being a natural person of
the age of eighteen (18) years or more, and desiring to form a
corporation under the law of the State of Delaware, does hereby
sign, verify and deliver in duplicate to the Division of
Corporations in the Department of State of the State of Delaware
this CERTIFICATE OF INCORPORATION.
ARTICLE I
NAME
The name of the corporation shall be IndeNet, Inc.
ARTICLE II
PERIOD OF DURATION
This corporation shall exist perpetually unless dissolved
according to law.
ARTICLE III
PURPOSE
The purpose for which this corporation is organized is to
transact any lawful business or businesses for which corporations
may be incorporated pursuant to the Delaware General Corporation
Law.
ARTICLE IV
CAPITAL
The aggregate number of shares which this corporation shall
have the authority to issue is One Hundred Million (100,000,000)
shares, with a par value of $.001 per share, which shares shall
be designated common stock. No share shall be issued until it
has been paid for, and it shall thereafter be nonassessable. The
corporation may also issue up to Ten Million (10,000,000) shares
of voting preferred stock at a par value of $.0001 per share.
The preferred stock of the corporation shall be issued in one or
more series as may be determined from time to time by the Board
of Directors. In establishing a series, the Board of Directors
shall give to it a distinctive designation so as to distinguish
it from the shares of all other series and classes, shall fix the
number of shares in such series, and the preferences, rights and
restrictions thereof. All shares in a series shall be alike.
Each series may vary in the following respects: (1) the rate of
dividend; (2) the price at and the terms and conditions on which
shares shall be redeemed; (3) the amount payable upon shares in
the event of involuntary liquidation; (4) the amount payable upon
shares in the event of voluntary liquidation; (5) sinking fund
provisions for the redemption of shares; (6) the terms and
conditions on which shares may be converted if the shares of any
series are issued with the privilege of conversion and (7) voting
powers.
ARTICLE V
PREEMPTIVE RIGHTS
A shareholder of the corporation shall not be entitled to a
preemptive right to purchase, subscribe for, or otherwise acquire
any unissued or treasury shares of stock of the corporation, or
any options or warrants to purchase, subscribe for or otherwise
acquire any such unissued or treasury shares, or any shares,
bonds, notes, debentures, or other securities convertible into or
carrying options or warrants to purchase, subscribe for or
otherwise acquire any such unissued or treasury shares.
ARTICLE VI
CUMULATIVE VOTING
The shareholders shall not be entitled to cumulative voting.
ARTICLE VII
SHARE TRANSFER RESTRICTIONS
The corporation shall have the right to impose restrictions
upon the transfer of any of its authorized shares or any interest
therein. The Board of Directors is hereby authorized on behalf
of the corporation to exercise the corporation's right to so
impose such restrictions.
ARTICLE VIII
REGISTERED OFFICE AND AGENT
The initial registered office of the corporation shall be at
32 Loockerman Square, Suite L-100, County of Kent, City of Dover,
Delaware 19901, and the name of the initial registered agent at
such address is Prentice-Hall Corporation System, Inc. Either
the registered office or the registered agent may be changed in
the manner provided by law.
ARTICLE IX
INITIAL BOARD OF DIRECTORS
The initial Board of Directors of the corporation shall
consist of five (5) directors, and the names and addresses of the
persons who shall serve as directors until the first annual
meeting of shareholders or until their successors are elected and
shall qualify are:
Robert W. Lautz, Jr. 1640 North Gower Street
Los Angeles, California 90028
Thomas H. Baur 1640 North Gower Street
Los Angeles, California 90028
Lewis K. Eisaguirre 1640 North Gower Street
Los Angeles, California 90028
William A. Kunkel 1640 North Gower Street
Los Angeles, California 90028
Cary S. Fitchey 1640 North Gower Street
Los Angeles, California 90028
The number of directors shall be fixed in accordance with
the bylaws.
ARTICLE X
INDEMNIFICATION/LIMITATION OF LIABILITY
1. The corporation shall indemnify its directors,
officers, employees, fiduciaries, and agents to the full extent
permitted by the Delaware General Corporation Law as it may be
amended from time to time.
2. The indemnification provided by this Article shall not
be deemed exclusive of any other rights to which those
indemnified may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise, and any
procedure provided for by any of the foregoing, both as to action
in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who
has ceased to be a director, officer, employee, fiduciary or
agent and shall inure to the benefit of heirs, executors, and
administrators of such a person.
3. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee,
fiduciary or agent of the corporation or who is or was serving at
the request of the corporation as a director, officer, employee,
fiduciary or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability
asserted against him and incurred by him in any such capacity or
arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability
under provisions of this Article.
4. To the maximum extent permitted by Section 102 (b) (7)
of the General Corporation Law of Delaware, a director of this
corporation shall not be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived
an improper personal benefit.
ARTICLE XI
TRANSACTIONS WITH INTERESTED DIRECTORS
No contract or other transaction between the corporation and
one (1) or more of its directors or any other corporation, firm,
association, or entity in which one (1) or more of its directors
are directors or officers are financially interested shall be
either void or voidable solely because of such relationship or
interest, or solely because such directors are present at the
meeting of the Board of Directors or a committee thereof which
authorizes, approves, or ratifies such contract or transaction,
or solely because their votes are counted for such purpose if:
(A) The fact of such relationship or interest is disclosed
or known to the Board of Directors or committee which authorizes,
approves, or ratifies the contract or transaction by a vote or
consent sufficient for the purpose without counting the votes or
consents of such interest directors;
(B) The fact of such relationship or interest is disclosed
or known to the shareholders entitled to vote and they authorize,
approve, or ratify such contract or transaction by vote or
written consent; or
(C) The contract or transaction is fair and reasonable to
the corporation.
Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the Board of Directors
or a committee thereof which authorizes, approves, or ratifies
such contract or transaction.
The officers, directors and other members of management of
this corporation shall be subject to the doctrine of "corporate
opportunities" only insofar as it applies to business
opportunities in which this corporation has expressed an interest
as determined from time to time by this corporation's Board of
Directors as evidenced by resolutions appearing in the
corporation's minutes. Once such areas of interest are
delineated, all such business opportunities within such areas of
interest which come to the attention of the officers, directors,
and other members of management of this corporation shall be
disclosed promptly to this corporation and made available to it.
The Board of Directors may reject any business opportunity
presented to it and thereafter any officer, director or other
member of management may avail himself of such opportunity.
Until such time as this corporation, through its Board of
Directors, has designated an area of interest, the officers,
directors and other members of management of this corporation
shall be free to engage in such areas of interest on their own
and this doctrine shall not limit the rights of any officer,
director or other member of management of this corporation to
continue a business existing prior to the time that such area of
interest is designated by the corporation. This provision shall
not be construed to release any employee of this corporation
(other than an officer, director or member of management) from
any duties which he may have to this corporation.
ARTICLE XII
METHOD OF COMPROMISE OR REORGANIZATION
Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between
the corporation and its stockholders or any class of them, any
court of equitable jurisdiction within the State of Delaware may,
on the application in a summary way of this corporation or of any
creditor or stockholder thereof, or on the application of any
receiver or receivers appointed for this corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on
the application of trustees in dissolution or of any receiver or
receivers appointed for the corporation under the provisions of
Section 279 of Title 8 of the Delaware Code, order a meeting of
the creditors or class of creditors, and/or of the stockholders
or class of stockholders of this corporation, as the case may be,
to be summoned in such manner as the Court directs. If a
majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or
class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement to any reorganization of
this corporation as consequences of such compromise or
arrangement, the compromise or arrangement and the reorganization
shall, if sanctioned by the court to which the application has
been made, be binding on all the creditors or class of creditors,
and/or on all the stockholders or class of stockholders of
this corporation, as the case may be, and also on this
corporation.
ARTICLE XIII
VOTING OF SHAREHOLDERS
With respect to any action to be taken by shareholders of
this corporation, a vote or concurrence of the holders of a
majority of the outstanding shares of the shares entitled to vote
thereon, or of any class or series, shall be required.
ARTICLE XIV
INCORPORATOR
The name and address of the incorporator is as follows:
Roger V. Davidson, Esq., 1375 Walnut, Suite 200, Boulder,
Colorado 80302.
IN WITNESS WHEREOF, the above-named incorporator signed this
Certificate of Incorporation on July 14, 1995.
Roger V. Davidson
EXHIBIT 3.2
INDENET, INC. BYLAWS
BYLAWS
OF
INDENET, INC.
ARTICLE I
Offices
Section 1. Offices. The principal office of the
corporation shall be located in Los Angeles, CA. The corporation
may have such other offices, either within or outside Delaware,
as the board of directors may designate or as the business of the
corporation may require from time to time.
Section 2. Registered Office and Agent. The
registered office of the corporation required by the General
Corporation Law of the State of Delaware to be maintained in
Delaware may be, but need not be, identical with the principal
office if in Delaware. The registered agent or the address of
the registered office, or both, may be changed from time to time
by the board of directors.
ARTICLE II
Shareholders
Section 1. Annual Meeting. The annual meeting of the
shareholders shall be held at such place and at such time as the
board of directors shall determine in compliance with these
bylaws and the Delaware General Corporation Law for the purpose
of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for
the annual meeting shall be a legal holiday in the state where
the meeting is to be held, such meeting shall be held on the next
succeeding business day. If the election of directors shall not
be held on the day designated herein for any annual meeting of
the shareholders, or at any adjournment thereof, the board of
directors shall cause the election to be held at a special
meeting of the shareholders as soon thereafter as conveniently
may be.
Section 2. Special Meetings. Special meetings of the
shareholders, for any purpose, unless otherwise prescribed by
statute, may be called by the president or by the board of
directors, and shall be called by the president at the request of
the holders of not less than one-tenth of all the outstanding
shares of the corporation entitled to vote at the meeting.
Section 3. Place of Meeting. The board of directors
may designate any place as the place for any annual meeting or
for any special meeting called by the board of directors. A
waiver of notice signed by all shareholders entitled to vote at a
meeting may designate any place as the place for such meeting.
If no designation is made, or if a special meeting shall be
called otherwise than by the board, the place of meeting shall be
the registered office of the corporation in Delaware.
Section 4. Notice of Meeting. Written or printed
notice stating the place, day and hour of the meeting, and, in
case of a special meeting or as otherwise required by the General
Corporation Law of Delaware, the purposes for which the meeting
is called, shall be delivered not less than ten nor more than
sixty days before the date of the meeting, either personally or
by mail, private carrier, telegraph, teletype, electronically
transmitted facsimile or other form of wire or wireless
communication, by or at the direction of the president, the
secretary or the officer or persons calling the meeting, to each
shareholder of record entitled to vote at such meeting, except to
the extent that a longer notice period is required by the General
Corporation Law of Delaware. If mailed and in comprehensible
form, such notice shall be deemed to be given and effective when
deposited in the United States mail, addressed to the shareholder
at his address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid. If notice is given
other than by mail, and provided that such notice is in
comprehensible form, the notice is given and effective on the
date received by the shareholder. If requested by the person or
persons lawfully calling such meeting, the secretary shall give
notice thereof at corporate expense. No notice need be sent to
any shareholder of record if three successive letters mailed to
the last known address of such shareholder have been returned as
undeliverable until such time as another address for such
shareholder is made known to the corporation. In order to be
entitled to receive notice of any meeting, a shareholder shall
advise the corporation in writing of any change in such share-
holder's mailing address as shown on the corporation's books and
records.
Section 5. Closing of Transfer Books or Fixing of
Record Date. For the purpose of determining shareholders
entitled to (i) notice of or vote at any meeting of shareholders
or any adjournment thereof, (ii) receive distributions or share
dividends, or (iii) demand a special meeting, or to make a
determination of shareholders for any other proper purpose, the
board of directors may fix a future date as the record date for
any such determination of shareholders, such date in any case to
be not more than sixty days, and, in case of a meeting of
shareholders, not less than ten days, prior to the date on which
the particular action requiring such determination of
shareholders is to be taken. If no record date is fixed by the
directors, the record date shall be the date on which notice of
the meeting is given to shareholders, or the date on which the
resolution of the board of directors providing for a distribution
is adopted, as the case may be. When a determination of
shareholders entitled to vote at any meeting of shareholders has
been made as provided in this section, such determination shall
apply to any adjournment thereof unless the board of directors
fixes a new record date.
Notwithstanding the above, the record date for
determining the shareholders entitled to take action without a
meeting or entitled to be given notice of action so taken shall
be the date a writing upon which the action is taken is first
received by the corporation. The record date for determining
shareholders entitled to demand a special meeting shall be the
date of the earliest of any of the demands pursuant to which the
meeting is called.
Section 6. Shareholders' Lists. The officer or agent
having charge of the stock transfer books for shares of the
corporation shall make, at least ten days before each meeting of
shareholders, a complete list of the shareholders entitled to be
given notice of such meeting, or any adjournment thereof,
arranged by voting groups and within each voting group by class
of series of shares, in alphabetical order within each class or
series, with the address of and the number of shares of each
class or series held by each shareholder. The shareholders' list
shall be available for inspection by any shareholder, beginning
the earlier of ten days before the meeting for which the list was
prepared and continuing through the meeting, and any adjournment
thereof, at the principal office of the corporation, whether
within or outside Delaware, at any time during usual business
hours. Such list shall also be produced and kept open at the time
and place of the meeting and shall be subject to the inspection
of any shareholder or his agent or attorney during the whole time
of the meeting or any adjournment thereof. The original stock
transfer books shall be prima facie evidence as to who are the
shareholders entitled to examine such list or transfer books or
to vote at any meeting of shareholders.
Section 7. Chairman of Meetings. The president shall
call meetings of shareholders to order and act as chairman of
such meetings. In the absence of the president, an appropriate
officer, any shareholder entitled to vote at that meeting or any
proxy of any such shareholder may call the meeting to order and a
chairman shall be elected. In the absence of the secretary and
any assistant secretary of the corporation, any person appointed
by the chairman shall act as secretary of such meetings.
Section 8. Quorum. A majority of the outstanding
shares of the corporation entitled to vote, represented in person
or by proxy, shall constitute a quorum at a meeting of
shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without
further notice, for a period not to exceed thirty days for any
one adjournment. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally
notified. The shareholders present at a duly organized meeting
may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave
less than a quorum, unless the meeting is adjourned and a new
record date is set for the adjourned meeting.
If a quorum exists, action on a matter is approved if
the votes cast within the voting group favoring the action exceed
the votes cast within the voting group opposing the action,
unless a greater number of affirmative votes is required by law
or the Certificate of Incorporation.
Section 9. Proxies. At all meetings of shareholders,
a shareholder may vote by proxy executed in writing by the
shareholder or his duly authorized attorney in fact. Such proxy
shall be filed with the secretary of the corporation before or at
the time of the meeting. No proxy shall be valid after three
years from the date of its execution, unless otherwise provided
in the proxy.
Section 10. Voting of Shares. Each outstanding share,
regardless of class, shall be entitled to one vote and each
fractional share shall be entitled to a corresponding fractional
vote on each matter submitted to a vote at a meeting of share-
holders, except to the extent that the voting rights of the
shares of any class or classes are limited or denied by the
Certificate of Incorporation as permitted by the Delaware General
Corporation Law. Cumulative voting shall not be allowed.
Section 11. Informal Action by Shareholders. Any
action required to be taken at a meeting of the shareholders, or
any other action which may be taken at a meeting of the
shareholders, may be taken without a meeting if a consent (or
counterparts thereof) in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having
not less than a majority of all outstanding shares of the
corporation entitled to vote thereon and shall be delivered to
the corporation by delivery to its registered office in Delaware,
its principal place of business or an officer or agent of the
corporation having custody of the book in which proceedings of
meetings of shareholders are recorded. Every written consent
shall bear the date of signature of each shareholder who signs
the consent and no written consent shall be effective unless
within sixty days of the earliest dated consent delivered in the
manner required by this section to the corporation, written
consents are delivered to the corporation as herein provided.
Delivery made to the corporation's registered office shall be by
hand or by certified or registered mail, return receipt
requested. Prompt notice of the taking of the corporate action
without a meeting by less than a unanimous written consent shall
be given to those shareholders who have not consented in writing.
ARTICLE III
Board of Directors
Section 1. General Powers. The business and affairs
of the corporation shall be managed by its board of directors,
except as otherwise provided in the Delaware General Corporation
Law or the Certificate of Incorporation.
Section 2. Number, Tenure and Qualifications. The
number of directors of the corporation shall be up to seven.
Directors shall be elected at each annual meeting of share-
holders. Each director shall hold office until the next annual
meeting of shareholders and thereafter until his successor shall
have been elected and qualified. Directors need not be residents
of Delaware or shareholders of the corporation. Directors shall
be removable in the manner provided by the statutes of Delaware.
Section 3. Vacancies. Any director may resign at any
time by giving written notice to the president or to the
secretary of the corporation. Such resignation shall take effect
at the time the notice is received by the corporation unless the
notice specifies a later effective date; and, unless otherwise
specified therein, the acceptance of such resignation shall not
be necessary to make it effective. Any vacancy occurring in the
board of directors may be filled by the shareholders or by the
affirmative vote of a majority of the remaining directors though
less than a quorum. If elected by the directors, the director
shall hold office until the next annual shareholders' meeting at
which directors are elected. If elected by the shareholders, the
director shall hold office for the unexpired term of his
predecessor in office; except that if the director's predecessor
was elected by the directors to fill a vacancy, the director
elected by the shareholders shall hold office for the unexpired
term of the last predecessor elected by the shareholders.
Section 4. Regular Meetings. A regular meeting of the
board of directors shall be held without other notice than this
bylaw immediately after and at the same place as the annual
meeting of shareholders. The board of directors may provide by
resolution the time and place for the holding of additional
regular meetings without other notice than such resolution.
Section 5. Special Meetings. Special meetings of the
board of directors may be called by or at the request of the
president or any two directors. The person or persons authorized
to call special meetings of the board of directors may fix any
place as the place for holding any special meeting of the board
of directors called by them.
Section 6. Notice. Notice of any special meeting
shall be given at least two days previously thereto by written
notice either delivered personally or mailed to each director at
his business address, or by notice transmitted by telegraph,
telex, electronically transmitted facsimile or other form of wire
or wireless communication. If mailed, such notice shall be
deemed to be delivered three days after such notice is deposited
in the United States mail so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the
telegraph company. If notice be given by telex, electronically
transmitted facsimile or similar form of wire or wireless
communication, such notice shall be deemed to be given and to be
effective when sent. Any director may waive notice of any
meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting unless at the
beginning of the meeting, or promptly upon his later arrival, the
director objects to holding the meeting or transacting business
at the meeting because of lack of notice or defective notice and
does not thereafter vote for or assent to action taken at the
meeting. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the board of
directors need be specified in the notice or waiver of notice of
such meeting.
Section 7. Quorum. A majority of the number of
directors fixed by Section 2 shall constitute a quorum for the
transaction of business at any meeting of the board of directors,
but if less than such majority is present at a meeting, a
majority of the directors present may adjourn the meeting from
time to time without further notice.
Section 8. Manner of Acting. The act of the majority
of the directors present at a meeting at which a quorum is
present shall be the act of the board of directors.
Section 9. Compensation. By resolution of the board
of directors, any director may be paid any one or more of the
following: his expenses, if any, of attendance at meetings; a
fixed sum for attendance at each meeting; a stated salary as
director; or such other compensation as the corporation and the
director may reasonably agree upon. No such payment shall
preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 10. Presumption of Assent. A director of the
corporation who is present at a meeting of the board of directors
at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless (i) the
director objects at the beginning of the meeting, or promptly
upon his arrival, to the holding of the meeting or the
transaction of business at the meeting and does not thereafter
vote for or assent to any action taken at the meeting, (ii) the
director contemporaneously requests that his or her dissent or
abstention as to any specific action taken be entered in the
minutes of the meeting or (iii) the director shall cause written
notice of his or her dissent or abstention as to any specific
action to be received by the presiding officer of the meeting or
by the corporation promptly after adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in
favor of such action.
Section 11. Removal. The shareholders may, at a
meeting called for the express purpose of removing directors, by
a majority vote of the shares entitled to vote at an election of
directors, remove the entire board of directors or any lesser
number, with or without cause. Notwithstanding the foregoing,
the board of directors, by a majority vote, may remove a direc-
tor, with or without cause, provided that such director was
appointed by the board of directors and not elected or approved
by the shareholders.
Section 12. Executive Committee. The board of
directors, by resolution adopted by a majority of the number of
directors fixed by Section 2 may designate one or more directors
to constitute an executive committee, which shall have and may
exercise all of the authority of the board of directors or such
lesser authority as may be set forth in said resolution, to the
extent permitted by the Delaware General Corporation Law. No
such delegation of authority shall operate to relieve the board
of directors or any member of the board from any responsibility
imposed by law.
Section 13. Other Committees. The board of directors,
by resolution duly adopted, may designate other committees and
appoint members thereof, but no such designation of a committee
shall operate to relieve the board of directors or any members of
the board from any responsibility imposed by law.
Section 14. Informal Action by Directors. Any action
required or permitted to be taken at a meeting of the directors
or any committee designated by the board may be taken without a
meeting if a consent (or counterparts thereof) in writing,
setting forth the action so taken, shall be signed by all of the
directors entitled to vote with respect to the subject matter
thereof. Such consent shall have the same force and effect as a
unanimous vote of the directors. Unless the consent specifies a
different effective date, action taken under this Section 14 is
effective at the time the last director signs a writing
describing the action taken, unless before such time any director
has revoked his consent by a writing signed by the director and
received by the president or secretary of the corporation.
Section 15. Telephonic Meetings. Members of the board
of directors or any committee designated by the board may
participate in a meeting of the board of directors or committee
by means of conference telephone or similar communications
equipment by which all persons participating in the meeting can
hear one another at the same time. Such participation shall
constitute presence in person at the meeting.
ARTICLE IV
Officers and Agents
Section 1. General. The officers of the corporation
shall be a president, one or more vice presidents, a secretary
and a treasurer. The board of directors may appoint such other
officers, assistant officers, committees and agents, including a
chairman of the board, assistant secretaries and assistant
treasurers, as they may consider necessary, who shall be chosen
in such manner and hold their offices for such terms and have
such authority and duties as from time to time may be determined
by the board of directors. The salaries of all the officers of
the corporation shall be fixed by the board of directors. One
person may hold two or more offices. In all cases where the
duties of any officer, agent or employee are not prescribed by
the bylaws or by the board of directors, such officer, agent or
employee shall follow the orders and instructions of the
president.
Section 2. Election and Term of Office. The officers
of the corporation shall be elected by the board of directors
annually at the first meeting of the board held after each annual
meeting of the shareholders. If the election of officers shall
not be held at such meeting, such election shall be held as soon
thereafter as conveniently may be. Each officer shall hold
office until the first of the following to occur: until his
successor shall have been duly elected and shall have qualified;
or until his death; or until he shall resign; or until he shall
have been removed in the manner hereinafter provided.
Section 3. Removal. Any officer or agent may be
removed by the board of directors or by the executive committee
whenever in its judgment the best interests of the corporation
will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall
not in itself create contract rights.
Any officer may resign at any time by giving written
notice thereof to the corporation. Such resignation is effective
when the notice is received by the corporation unless the notice
specifies a later effective date. Unless otherwise stated in the
notice, no acceptance of the resignation shall be necessary to
render such resignation effective.
Section 4. Vacancies. A vacancy in any office,
however occurring, may be filled by the board of directors for
the unexpired portion of the term.
Section 5. President. The president shall, subject to
the direction and supervision of the board of directors, be the
chief executive officer of the corporation and shall have general
and active control of its affairs and business and general
supervision of its officers, agents and employees. He shall,
unless otherwise directed by the board of directors, attend in
person or by substitute appointed by him, or shall execute on
behalf of the corporation written instruments appointing a proxy
or proxies to represent the corporation, at all meetings of the
shareholders of any other corporation in which the corporation
shall hold any stock. He may, on behalf of the corporation, in
person or by substitute or by proxy, execute written waivers of
notice and consents with respect to any such meetings. At all
such meetings and otherwise, the president, in person or by sub-
stitute or proxy as aforesaid, may vote the stock so held by the
corporation and may execute written consents and other
instruments with respect to such stock and may exercise any and
all rights and powers incident to the ownership of said stock,
subject however to the instructions, if any, of the board of
directors. The president shall have custody of the treasurer's
bond, if any.
Section 6. Vice Presidents. The vice presidents shall
assist the president and shall perform such duties as may be
assigned to them by the president or by the board of directors.
In the absence of the president, the vice president, if any (or,
if there be more than one, the vice presidents in the order
designated by the board of directors, or if the board makes no
such designation, then the vice president designated by the
president, or if neither the board nor the president makes any
such designation, the senior vice president as determined by
first election to that office), shall have the powers and perform
the duties of the president.
Section 7. The Secretary. The secretary shall: (a)
keep the minutes of the proceedings of the shareholders,
executive committee and the board of directors; (b) see that all
notices are duly given in accordance with the provisions of these
bylaws or as required by law; (c) be custodian of the corporate
records and of the seal of the corporation and affix the seal to
all documents when authorized by the board of directors; (d) keep
at its registered office or principal place of business within or
outside Delaware a record containing the names and addresses of
all shareholders and the number and class of shares held by each,
unless such a record shall be kept at the office of the
corporation's transfer agent or registrar; (e) sign with the
president, or a vice president, certificates for shares of the
corporation, the issuance of which shall have been authorized by
resolution of the board of directors; (f) have general charge of
the stock transfer books of the corporation, unless the
corporation has a transfer agent; and (g) in general, perform all
duties incident to the office of secretary and such other duties
as from time to time may be assigned to him by the president or
by the board of directors. Assistant secretaries, if any, shall
have the same duties and powers, subject to supervision by the
secretary.
Section 8. Treasurer. The treasurer shall be the
principal financial officer of the corporation, shall have the
care and custody of all funds, securities, evidences of
indebtedness and other personal property of the corporation and
shall deposit the same in accordance with the instructions of the
board of directors. He shall receive and give receipts and
acquittances for money paid in on account of the corporation, and
shall pay out of the funds on hand all bills, payrolls and other
just debts of the corporation of whatever nature upon maturity.
He shall perform all other duties incident to the office of the
treasurer and, upon request of the board, shall make such reports
to it as may be required at any time. He shall, if required by
the board, give the corporation a bond in such sums and with such
sureties as shall be satisfactory to the board, conditioned upon
the faithful performance of his duties and for the restoration to
the corporation of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control
belonging to the corporation. He shall have such other powers
and perform such other duties as may from time to time be
prescribed by the board of directors or the president. The
assistant treasurers, if any, shall have the same powers and
duties, subject to the supervision of the treasurer.
The treasurer shall also be the principal accounting
officer of the corporation. He shall prescribe and maintain the
methods and systems of accounting to be followed, keep complete
books and records of account, prepare and file all local, state
and federal tax returns, prescribe and maintain an adequate
system of internal audit and prepare and furnish to the president
and the board of directors statements of account showing the
financial position of the company and the results of its
operations.
ARTICLE V
Stock
Section 1. Certificates. The board of directors shall
be authorized to issue any of its classes of shares with or
without certificates. The fact that the shares are not
represented by certificates shall have no effect on the rights
and obligations of shareholders. If the shares are represented
by certificates, such certificates shall be consecutively
numbered and signed, either manually or by facsimile, in the name
of the corporation by one or more persons designated by the board
of directors. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall
have ceased to be such officer before such certificate is issued,
it may be issued by the corporation with the same effect as if he
were such officer at the date of its issue. Certificates of
stock shall be in such form consistent with law as shall be
prescribed by the board of directors. If shares are not
represented by certificates, within a reasonable time following
the issue or transfer of such shares, the corporation shall send
the shareholder a complete written statement of all information
required to be provided to holders of uncertificated shares by
the Delaware General Corporation Law. Certificated or
uncertificated shares shall not be issued until the shares
represented thereby are fully paid.
Section 2. Consideration for Shares. Shares shall be
issued for such consideration, expressed in dollars as shall be
fixed from time to time by the board of directors. Such
consideration may consist in whole or in part of money, other
property, tangible or intangible, negotiable, recourse promissory
notes secured by collateral other than the shares being
purchased, or labor or services actually performed for the
corporation. Future services shall not constitute payment or
part payment for shares.
Section 3. Lost Certificates. In case of the alleged
loss, destruction or mutilation of a certificate of stock the
board of directors may direct the issuance of a new certificate
in lieu thereof upon such terms and conditions in conformity with
law as it may prescribe. The board of directors may in its
discretion require a bond in such form and amount and with such
surety as it may determine, before issuing a new certificate.
Section 4. Transfer of Shares. Upon surrender to the
corporation or to a transfer agent of the corporation of a
certificate of stock duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, and
such documentary stamps as may be required by law and evidence of
compliance with applicable securities laws and other
restrictions, the corporation shall issue a new certificate to
the person entitled thereto and cancel the old certificate.
Every such transfer of stock shall be entered on the stock book
of the corporation which shall be kept at its principal office or
by its registrar duly appointed.
The corporation shall be entitled to treat the holder
of record of any share of stock as the holder in fact thereof,
and accordingly shall not be bound to recognize any equitable or
other claim to or interest in such share on the part of any other
person whether or not it shall have express or other notice
thereof, except as may be required by the laws of Delaware or as
otherwise provided in these bylaws.
Section 5. Transfer Agent, Registrars and Paying
Agents. The board may at its discretion appoint one or more
transfer agents, registrars and agents for making payment upon
any class of stock, bond, debenture or other security of the
corporation. Such agents and registrars may be located either
within or outside Delaware. They shall have such rights and
duties and shall be entitled to such compensation as may be
agreed.
ARTICLE VI
Indemnification of Certain Persons
Section 1. Indemnification Against Third Party Claims.
Any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified by the
corporation against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and, in the case of
conduct in his official capacity, in a manner he reasonably
believed to be in the best interests of the corporation or, in
all other cases, in a manner that was at least not opposed to the
corporation's best interests and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
Section 2. Indemnification Against Derivative Claims.
Any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by
or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified by the
corporation against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and,
in the case of conduct in his official capacity, in a manner he
reasonably believed to be in the best interests of the
corporation or, in all other cases, in a manner that was at least
not opposed to the corporation's best interests; but no
indemnification shall be made in connection with a proceeding in
which such person has been adjudged to be liable to the
corporation.
Section 3. Indemnification Against Claims Involving
Improper Personal Benefit. Notwithstanding the provisions of
Sections 1 and 2 of this Article VI, no indemnification shall be
made to any director in connection with any proceeding charging
improper personal benefit to the director, whether or not
involving action in his official capacity, in which he was
adjudged liable on the basis that he or she derived an improper
personal benefit.
Section 4. Rights to Indemnification. To the extent
that a director, officer, employee or agent of the corporation
has been successful on the merits in defense of any action, suit
or proceeding referred to in Section 1, 2 or 3 of this Article VI
or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith without
the necessity of any action being taken by the corporation other
than the determination in good faith that such defense has been
successful. In all other cases, any indemnification under
Section 1, 2 or 3 of this Article VI (unless ordered by a Court)
shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of
conduct set forth in this Article VI. Such determination shall
be made by (a) the board of directors by a majority vote of a
quorum consisting of directors who were not parties to such
action, suit or proceeding, or (b) if a quorum cannot be
obtained, by a majority vote of a committee of the board
designated by the board, which committee shall consist of two or
more directors not parties to the proceeding, except that
directors who are parties to the proceeding may participate in
the designation of directors for the committee, or (c) if the
quorum cannot be obtained or the committee cannot be established
under Subsection (b) of this Section 4 or, even if a quorum is
obtained or a committee designated, if a majority of the
directors constituting such quorum or committee so directs, the
determination required to be made by this Section 4 shall be made
by (i) independent legal counsel selected by a vote of the board
of directors or the committee in the manner specified in
Subsection (b) or (c) of this Section 4 or, if a quorum of the
full board cannot be obtained and a committee cannot be
established, by independent legal counsel selected by a majority
of the full board or (ii) by the shareholders.
Section 5. Indemnification by Court Order. A
director, officer, employee or agent who is or was a party to a
proceeding may apply for indemnification to the court conducting
the proceeding or to another court of competent jurisdiction. On
receipt of an application, the court, after giving any notice the
court considers necessary, may order indemnification in the
following manner: (a) if it determines the person is entitled to
mandatory indemnification under Section 4 of this Article VI, the
court shall order indemnification, in which case the court shall
also order the corporation to pay the person's reasonable
expenses incurred to obtain court-ordered indemnification; or (b)
if it determines that the person is fairly and reasonably
entitled to indemnification in view of all the relevant
circumstances, whether or not he met the standard of conduct set
forth in Section 1 or 2 of this Article VI or was adjudged liable
in the circumstances described in Section 2 or 3 of this Article
VI, the court may order such indemnification as the court deems
proper; except that the indemnification with respect to any
proceeding in which liability shall have been adjudged in the
circumstances described in Section 2 or 3 of this Article VI is
limited to reasonable expenses incurred in connection with the
proceeding and reasonable expenses incurred to obtain
court-ordered indemnification.
Section 6. Effect of Termination of Action. The
termination of any action, suit or proceeding by judgment, order,
settlement or conviction or upon a plea of nolo contendere or its
equivalent shall not of itself create a presumption that the
person seeking indemnification did not act in good faith and in a
manner which he reasonably believed to be in the best interests
of the corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful. Entry of a judgment by consent as part of a settlement
shall not be deemed a final adjudication of liability, nor of any
other issue or matter.
Section 7. Advance of Expenses. Expenses (including
attorneys' fees) incurred in defending a civil or criminal
action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or
proceeding as authorized in Section 4 of this Article VI if: (a)
the director, officer, employee or agent furnishes the
corporation a written affirmation of his good-faith belief that
he has met the standard of conduct described in Sections 1 and 2
of this Article VI, (b) the director, officer, employee or agent
furnishes the corporation a written undertaking, executed
personally or on his behalf, to repay the advance if it is
determined that he did not meet such standard of conduct and (c)
a determination is made that the facts then known to those making
the determination would not preclude indemnification under this
Article VI.
Section 8. Other Indemnification Rights. The
indemnification provided hereby shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under
any bylaw, agreement, vote of shareholders or disinterested
directors, or otherwise, and any procedure provided for by any of
the foregoing, both as to action in his official capacity and as
to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of
heirs, executors and administrators of such a person. However,
the indemnification provisions provided hereby or otherwise
concerning the corporation's indemnification of or advance for
expenses to directors (except for insurance policies) shall be
valid only if and to the extent the provision is consistent with
the provisions of Section 145 of the Delaware General Corporation
Law.
Section 9. Report to Shareholders. Any
indemnification of or advance of expenses to a director in
accordance with this Article VI, if arising out of a proceeding
by or on behalf of the corporation, shall be reported in writing
to the shareholders with or before the notice of the next
shareholders' meeting. If the next shareholder action is taken
without a meeting at the instigation of the board of directors,
such notice shall be given to the shareholders at or before the
time the first shareholder signs a writing consenting to such
action.
ARTICLE VII
Provision of Insurance
By action of the board of directors, notwithstanding
any interest of the directors in the action, the corporation may
purchase and maintain insurance, in such amounts as the board of
directors deems appropriate, on behalf of any person who is or
was a director, officer, employee, fiduciary or agent of the
corporation or who is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee,
fiduciary or agent of another domestic or foreign corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise against any liability asserted against him and
incurred by him in any such capacity or arising out of his status
as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this
Article. Any such insurance may be procured from any insurance
company designated by the board of directors, whether such
insurance company is formed under the laws of Delaware or any
other jurisdiction of the United States or elsewhere, including
any insurance company in which the corporation has an equity or
any other interest through stock ownership or otherwise.
ARTICLE VIII
Miscellaneous
Section 1. Waivers of Notice. Whenever notice is
required by law, by the Articles of Certificate or by these
bylaws, a waiver thereof in writing signed by the director,
shareholder or other person entitled to said notice, whether
before or after the time stated therein, or his appearance at
such meeting in person or (in the case of a shareholders'
meeting) by proxy, shall be equivalent to such notice.
Section 2. Seal. The corporate seal of the cor-
poration shall be circular in form and shall contain the name of
the corporation and the words "Seal, Delaware."
Section 3. Fiscal Year. The fiscal year of the
corporation shall be as established by the board of directors.
Section 4. Amendments. The board of directors shall
have power, to the maximum extent permitted by the Delaware
General Corporation Law, to make, amend and repeal the bylaws of
the corporation at any regular or special meeting of the board
unless the shareholders, in making, amending or repealing a
particular bylaw, expressly provide that the directors may not
amend or repeal such bylaw. The shareholders shall also have the
power to make, amend or repeal the bylaws of the corporation at
any annual meeting or any special meeting called for that
purpose.
Lewis K. Eisaguirre,
Secretary
EXHIBIT 5.1
OPINION OF COHEN BRAME & SMITH PROFESSIONAL CORPORATION
COHEN BRAME & SMITH
Professional Corporation
Attorneys at Law
One Norwest Center Suite 1800
1700 Lincoln Street
Denver, Colorado 80203
February 23, 1996
Robert W. Lautz, Jr., President
IndeNet, Inc.
1640 North Gower Street
Los Angeles, California 90028
RE: Form S-3 Registration Statement relating to shares
of $.001 Par Value Common Stock for Selling
Shareholders
Dear Mr. Lautz:
We have acted as counsel for IndeNet, Inc. ("INDE") in
connection with the Form S-3 Registration Statement to be filed
by INDE with the Securities and Exchange Commission relating to
the shares of INDE $.001 par value Common Stock (the "Common
Stock") being offered for sale by certain selling shareholders.
As such counsel, we have examined and relied upon such records,
documents, certificates and other instruments as in our judgment
are necessary or appropriate to form the basis for the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
(i) INDE is a corporation duly incorporated and validly
existing in good standing under the laws of the State of
Delaware.
(ii) The shares of Common Stock being offered, when sold in
accordance with the terms set forth in the Registration
Statement, will be validly issued and outstanding, fully paid and
nonassessable.
We consent to the filing of this opinion as an Exhibit to
the Registration Statement and to the reference to us under the
caption "Legal Matters" in the Registration Statement.
Very truly yours,
/s/ Roger V. Davidson
Roger V. Davidson
Cohen Brame & Smith,
Professional Corporation
EXHIBIT 10.1
MEDIATECH STOCK PURCHASE AGREEMENT
INDEPENDENT TELEMEDIA GROUP, INC.
AND
THE STOCKHOLDERS OF
MEDIATECH, INC.
STOCK PURCHASE AGREEMENT
INDEPENDENT TELEMEDIA GROUP, INC.
AND
THE STOCKHOLDERS OF
MEDIATECH, INC.
STOCK PURCHASE AGREEMENT
AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 - PLAN OF STOCK PURCHASE . . . . . . . . . . . . . 1
Section 1.1 Share Exchange. . . . . . . . . . . . . . 1
ARTICLE 2 - CLOSING. . . . . . . . . . . . . . . . . . . . . 2
Section 2.1 The Closing and the Closing Date. . . . . 2
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES . . . . . . . . . 2
Section 3.1 Representations and Warranties by
Mediatech . . . . . . . . . . . . . . . . . . . . . 2
Section 3.2 Representations and Warranties by the
Acquiror. . . . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE 4 - ACTIONS AND OBLIGATIONS OF THE ACQUIROR, MEDIATECH
AND THE STOCKHOLDERS BEFORE AND AFTER THE CLOSING AND
SECURITIES ACT MATTERS. . . . . . . . . . . . . . . . 16
Section 4.1 Actions of Mediatech Pending Closing. . . 16
Section 4.2 Actions of Acquiror Pending Closing . . . 18
Section 4.3 Undertakings of Acquiror, Mediatech
and the Stockholders . . . . . . . . . . . . . . . 20
ARTICLE 5 - CONDITIONS PRECEDENT . . . . . . . . . . . . . . 21
Section 5.1 Conditions Precedent to Obligations of Baur
and the Stockholders. . . . . . . . . . . . . . . . 21
Section 5.2 Conditions Precedent to Obligations of
Acquiror . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 6 - POST CLOSING COVENANTS . . . . . . . . . . . . . 26
Section 6.1 Unregistered Securities/Exemption from
Registration . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.2 Lock-Up . . . . . . . . . . . . . . . . . 27
Section 6.3 Reports Under Securities Exchange Act
of 1934 . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.4 Registration Rights . . . . . . . . . . . 28
ARTICLE 7 - NATURE AND SURVIVAL OF REPRESENTATIONS AND
WARRANTIES. . . . . . . . . . . . . . . . . . . . . . 28
Section 7.1 Nature and Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 8 - MISCELLANEOUS. . . . . . . . . . . . . . . . . . 29
Section 8.1 Amendment and Waiver. . . . . . . . . . . 29
Section 8.2 Board of Directors. . . . . . . . . . . . 29
Section 8.3 Covenants Not to Compete. . . . . . . . . 29
Section 8.4 Assignment. . . . . . . . . . . . . . . . 29
Section 8.5 Notices . . . . . . . . . . . . . . . . . 30
Section 8.6 Paragraph and Other Headings. . . . . . . 31
Section 8.7 Severability. . . . . . . . . . . . . . . 31
Section 8.8 Colorado Law to Apply . . . . . . . . . . 31
Section 8.9 Parties in Interest . . . . . . . . . . . 31
Section 8.10Attorneys' Fees . . . . . . . . . . . . . 31
Section 8.11Counterparts. . . . . . . . . . . . . . . 32
Section 8.12Integrated Agreement. . . . . . . . . . . 32
MEDIATECH, INC.
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into in Chicago,
Illinois this 27th day of January, 1995, by and among Independent
TeleMedia Group, Inc., a Colorado corporation (hereinafter
referred to as the "Acquiror"), Thomas H. Baur (hereinafter
referred to as "Baur"), William Scheer (hereinafter referred to
as "Scheer") and Peter Wouters (hereinafter referred to as
"Wouters") (each of Baur, Scheer and Wouters are sometimes
hereinafter referred to individually as "Stockholder" and
collectively as "Stockholders"), owners of all of the shares of
Common Stock of Mediatech, Inc. (hereinafter "Mediatech"), and
with respect to Sections 3.1, 4.1, 7.1 and 8.3, Mediatech.
Acquiror intends to acquire from the Stockholders all or
substantially all of the issued and outstanding Common Stock of
Mediatech, whereby Mediatech becomes a substantially owned or
wholly owned subsidiary of Acquiror.
AGREEMENT
In order to consummate such stock purchase, the parties
hereto, in consideration of the mutual agreements and on the
basis of the representations and warranties hereinafter set
forth, do hereby agree as follows:
ARTICLE 1
PLAN OF STOCK PURCHASE
Section 1.1 Share Exchange. Subject to the terms of this
Stock Purchase Agreement (the "Agreement") at the Closing on the
Closing Date, and in full consideration for the assignment,
transfer, and delivery to the Acquiror by the Stockholders of all
or substantially all of the issued and outstanding shares of
Common Stock of Mediatech ("Mediatech's Common Stock"), the
Stockholders shall receive an aggregate of 900,000 shares of the
$.001 par value per share Common Stock of the Acquiror
("Acquiror's Common Stock"), promissory notes (the "Promissory
Notes") in the aggregate of $6,200,000 less sums attributable to
a calculation (the "Loan Adjustment Calculation") hereinafter
described, and an aggregate of $3,000,000 cash. The cash,
Acquiror's Common Stock, and the Promissory Notes shall be
shared, on a pro rata basis, among the Stockholders of Mediatech
in accordance with their percentage ownership of Mediatech on the
Closing Date. The amount of consideration paid for 100% of the
issued and outstanding shares shall be reduced, on a pro rata
basis, by the number of shares of Mediatech owned by Stockholders
who refuse to participate in this Stock Purchase Agreement (the
"Declining Stockholders"). The Declining Stockholders shall
remain minority stockholders of Mediatech. The number of shares
to be issued to the Stockholders shall be adjusted, as necessary,
to account for any forward or reverse stock splits, stock
dividends, or any other increases or reductions of the number of
Acquiror's shares outstanding without receiving compensation
therefor in money, property, or services. The Promissory Note,
attached hereto as Schedule 1.1, shall require Acquiror,
commencing twelve (12) months from the closing date, to make
payments in quarterly installments of $125,000 per quarter,
including accrued interest at the rate of eight percent (8%) per
annum until the ten year anniversary of the Closing Date at which
time any unpaid principal sum balance and any accrued and unpaid
interest shall be paid in full. The shares of Acquiror's Common
Stock to be issued to the Stockholders shall bear a restrictive
legend, and shall be subject to the lock-up provisions provided
in Section 6.2 hereinafter. The aggregate principal amount of
the Promissory Notes shall be reduced by the Loan Adjustment
Calculation, which is equal to the product of nine hundred
thousand (900,000) times the average closing bid price on Nasdaq
(market price) of the Acquiror's Common Stock for a period of 60
trading days commencing the day following closing. Payments on
the Note(s) may be offset to the extent of liabilities of
Mediatech not disclosed in Mediatech's Financial Statements or in
Schedule 3.1(2)(b).
ARTICLE 2
CLOSING
Section 2.1 The Closing and the Closing Date. The closing
(the "Closing") shall be held at the offices of Wildman, Harrold,
Allen & Dixon at 10:00 a.m., within five (5) days following the
execution of this Agreement (the "Closing Date"). At the Closing
and on the Closing Date, the Stockholders executing the Agreement
shall deliver all of their common shares of Mediatech owned by
them. At the Closing and on the Closing Date, the Stockholders
shall receive in exchange for their shares of Mediatech, their
pro rata portion of the consideration as described in Section
1.1, including the cash, Promissory Note, and shares of
Acquiror's Common Stock. Mediatech shall become a substantially
owned subsidiary of Acquiror.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties by Mediatech.
As a material inducement to the Acquiror to execute and perform
its obligations under this Agreement, Mediatech represents and
warrants to the Acquiror as follows:
(1) Organization and Standing of Mediatech. Mediatech
is a corporation duly organized and validly existing and in
good standing under the laws of the State of Illinois. It
has all requisite corporate power and authority to carry on
its business as now being conducted, to enter into this
Agreement and to carry out and perform the terms and
provisions of this Agreement. Mediatech has no subsidiaries
and, further, has no direct or indirect interest, either by
way of stock ownership or otherwise, in any other firm,
corporation, association, or business other than as
disclosed in Schedule 3.1(1) attached hereto.
(2)(a)Capitalization and Indebtedness for Borrowed
Moneys. Mediatech is duly and lawfully authorized by its
Articles of Incorporation, as amended, to issue 1,000 shares
of Common Stock, no par value per share, of which 197 shares
are validly issued and outstanding on the date of this
Agreement. Mediatech has no treasury stock. Further,
Mediatech has no other authorized series or class of stock.
All the outstanding shares of Mediatech's Common Stock have
been duly authorized and validly issued and are fully paid
and nonassessable.
(b) Mediatech is not presently liable on account of
any indebtedness for borrowed moneys, except as reflected in
the financial statements described in subparagraph (5) ,
below. The borrowed indebtedness as of the Closing Date
will be set forth in Schedule 3.1(2)(b) to be attached
hereto.
(c) There are no outstanding subscriptions, options,
warrants, calls, contracts, demands, commitments,
convertible securities, or other agreements or arrangements
of any character or nature whatever under which Mediatech is
or may be obligated to issue or purchase shares of its
capital stock.
(3) Ownership of Mediatech's Common Stock. To the
best of Mediatech's knowledge , (i) the shares of Common
Stock of Mediatech are held by the persons set forth in
Schedule 3.1(3) of this Agreement, free and clear of all
liens, claims, encumbrances, and restrictions of every kind;
(ii) Schedule 3.1(3) of this Agreement contains a complete
and accurate list of all of the Stockholders of Mediatech
and the shares of its Common Stock held by each; (iii) each
Stockholder has full legal right, power, and authority to
sell, assign, and transfer his shares of Common Stock of
Mediatech; and (iv) the delivery of such shares to the
Acquiror pursuant to the provisions of this Agreement will
transfer valid title thereto, free and clear of all liens,
encumbrances, claims, and restrictions of every kind.
(4) Stockholders' Authority. To the best of
Mediatech's knowledge, this Agreement constitutes a valid
and binding obligation of the Stockholders enforceable in
accordance with its terms (except as limited by bankruptcy,
insolvency, or other laws affecting the enforcement of
creditors' rights). To the best of Mediatech's knowledge,
no provision of any contract to which any of the
stockholders is a party or otherwise bound, prevents any of
the Stockholders from delivering good title to their shares
of such capital stock in the manner contemplated hereunder.
(5) Financial Statements. Mediatech has furnished
the Acquiror with unaudited financial statements of
Mediatech as of December 31, 1994, and audited financial
statements as of December 31, 1991, 1992 and 1993
(hereinafter referred to as "Mediatech's Financial
Statements"). All such financial statements present fairly
the financial condition of Mediatech at such date, and the
results of its operations for the period therein specified,
and the audited Financial Statements were prepared in
accordance with generally accepted accounting principles
applied upon a basis consistent with prior accounting
periods.
Specifically, but not by way of limitation, Mediatech's
Financial Statements disclose all of the debts, liabilities,
and obligations of any nature (whether absolute, accrued,
contingent, or otherwise and whether due or to become due)
of Mediatech at the date thereof and include appropriate
reserves for all taxes and other liabilities accrued
or due at such date, but not yet payable.
(6) Present Status. Other than as described herein
or in the Schedules attached hereto, Mediatech has not,
since December 31, 1994:
(a) Incurred any material obligations or liabilities,
absolute, accrued, contingent, or otherwise and whether due
or to become due, except current liabilities incurred in the
ordinary course of business, none of which materially
adversely affects the business or prospects of Mediatech;
(b) Discharged or satisfied any material liens or
encumbrances, or paid any material obligation or liability,
absolute, accrued, contingent, or otherwise and whether due
or to become due, other than (i) current liabilities shown
on Mediatech's Financial Statements (exclusive of the
borrowed indebtedness specified in Section 3.1(2)(b)) and
current liabilities incurred since the close of business on
the date of Mediatech's Financial Statements, in each case,
in the ordinary course of business and (ii) expenses
incurred in connection with the transactions contemplated by
this Agreement (including, without limitation, reasonable
attorneys' fees and costs);
(c) Declared or made any payment or distribution to
its stockholders or purchased or redeemed, or obligated
itself to purchase or redeem, any of its shares of
Common Stock or other securities;
(d) Mortgaged, pledged, or subjected to lien, or any
other encumbrances or charges, any of its assets, tangible
or intangible;
(e) Sold or transferred any of its assets except for
inventory sold in the ordinary course of business or
canceled any debt or claim;
(f) Suffered any damage, destruction, or loss
(whether or not covered by insurance) affecting the
properties, business, or prospects of Mediatech, or waived
any rights of material value;
(g) Except with respect to this Agreement, entered
into any material transaction other than in the ordinary
course of business;
(h) Encountered any labor difficulties or labor union
organizing activity or loss of key people which will
materially adversely affect the business or prospects of
Mediatech.
(7) Litigation. Except as disclosed in Mediatech's
Financial Statements or Schedule 3.1(7), there are no legal
actions, suits, arbitrations, or other legal or
administrative proceedings pending or threatened against
Mediatech which would materially affect it, its properties,
assets, or business; and Mediatech is not aware of an facts
which to its knowledge might result in any action, suit,
arbitration, or other proceeding which in turn might result
in any material adverse change in the business or condition
(financial or otherwise) of Mediatech or its properties or
assets other than as disclosed in Schedule 3.1(7) attached
hereto. Mediatech is not in default with respect to
any judgment, order, or decree of any court or any
government agency or instrumentality.
(8) Compliance With the Law and other Instruments. To
the best of Mediatech's knowledge, the business operation of
Mediatech has been and is being conducted in material
compliance with all applicable laws, rules, and regulations
of all authorities. Except as otherwise disclosed in
Schedule 3.1(8), Mediatech is not in violation of, or in
default under, any term or provision of its Articles of
Incorporation, as amended, or its Bylaws, as amended, or of
any lien, mortgage, lease, agreement, instrument, order,
judgment, or decree, or subject to any restriction,
contained in any of the foregoing, of any kind or character
which materially adversely affects in any way the business,
properties, assets, or prospects of Mediatech, or which
would prohibit the Stockholders from entering into this
Agreement or prevent consummation of the exchange of
securities contemplated by this Agreement.
(9) Title to Properties and Assets. Mediatech has
good and marketable title to all its properties and assets,
including without limitation those reflected in Mediatech's
Financial Statements and those used or located on property
controlled by Mediatech in its business on December 31, 1994
and acquired thereafter (except assets sold in the ordinary
course of business), subject to no mortgage, pledge, lien,
charge, security interest, encumbrance, or restriction
except those which (a) are disclosed in Mediatech's
Financial Statements as securing specified liabilities; or
(b) do not materially adversely affect the use thereof.
The buildings and equipment of Mediatech are in good
condition and repair, reasonable wear and tear excepted.
Mediatech has not been, to the knowledge of any officer of
Mediatech, threatened with any action or proceeding under
any building or zoning ordinance, regulation, or law.
Except as otherwise provided in Section 8.3 of this
Agreement, Mediatech owns, free and clear of any liens,
claims, encumbrances, royalty interests, or other
restrictions or limitations of any nature whatsoever, any
and all patents, trade secrets, copyrights, procedures,
techniques, business plans, methods of management, or other
information utilized in connection with Mediatech's
business. To the best of Mediatech's knowledge, the
products Mediatech manufactures and/or markets and its plan
of operation do not infringe on the patents, copyrights,
trade secrets, or other proprietary rights of any third
person.
(10) Mediatech Leases. All leases between Baur
(including his affiliates) and Mediatech are at approximate
"market" or below. Any leases which do not so qualify will
be renegotiated by Mediatech to base rates that are so
qualified as may be set by consultation with a mutually
agreed to commercial real estate expert.
(11) Schedules of Leases, Insurance and Assets. Prior
to the Closing Date, Mediatech will have delivered to the
Acquiror, to be attached as Schedule 3.1(11)(a) hereto, a
separate Schedule of Leases, specifically referring to this
paragraph, containing a true and complete description of
each indenture, lease, sublease, or any instrument under
which Mediatech claims or holds a leasehold interest; and a
complete schedule of all fire and other casualty and ability
policies of Mediatech in effect at the time of delivery of
said schedule. Mediatech has good and valid leasehold
interests in such properties and all such instruments are in
effect and enforceable according to their respective terms.
Prior the Closing Date, Mediatech will have delivered to
Acquiror, to be attached as Schedule 3.1(11)(b) hereto, a
copy of an Asset Value Appraisal dated July, 1994, which
appraisal shall contain a description of all machinery and
equipment, shop and material handling facilities, office
furniture and business machines and other items related
thereto at Mediatech's Chicago, Illinois, Niles, Illinois
and New York, New York facilities.
(12) Creditor's Arrangements. Mediatech has not made
any assignment for the benefit of creditors, nor has any
involuntary or voluntary petition in bankruptcy been filed
by or against Mediatech.
(13) Contracts and Other Obligations. Except with
respect to this transaction, Mediatech is not a party to, or
otherwise bound by, any written or oral:
(a) Contract or agreement not made in the ordinary
course of business, except as disclosed on Schedule
3.1(13)(a) hereto;
(b) Employment or consultant contract which is not
terminable at will without cost or other liability to
Mediatech or any successor, except as disclosed on Schedule
3.1(13)(b) hereto;
(c) Contract with any labor union, except as disclosed
on Schedule 3.1(13)(c) hereto;
(d) Bonus, pension, profit-sharing, retirement, share
purchase, stock option, hospitalization, group insurance, or
similar plan providing employee benefits except as disclosed
on Schedule 3.1(13)(d) hereto;
(e) Lease with respect to any property, real or
personal, whether as lessor or lessee, except as disclosed
on Schedule 3.1(13)(e) hereto;
(f) Advertising contract or contract for public
relations services, except as disclosed on Schedule
3.1(13)(f) hereto;
(g) Purchase, supply, or service contracts in excess
of $10,000 each, or in the aggregate of $100,000 for all
such contracts whether below or above $10,000, except as
disclosed on Schedule 3.1(13)(g) hereto;
(h) Deed of trust, mortgage, conditional sales
contract, security agreement, pledge agreement, trust
receipt, or any other agreement or arrangement whereby any
of the assets or properties of Mediatech are subjected to a
lien, encumbrance, charge, or other restriction, except as
disclosed on Schedule 3.1(13)(h) hereto;
(i) Contract or other commitment continuing for a
period of more than thirty days and which is not terminable
without cost or other liability to Mediatech or its
successor, except as disclosed on Schedule 3.1(13)(i) or
other schedules hereto; or
(j) Contract which (i) contains a redetermination of
price or similar type of provision; or (ii) provides for a
fixed price for goods or services sold, except as disclosed
on Schedule 3.1(13)(j) hereto.
Mediatech has in all material respects performed all
obligations required to be performed by it to date and is
not in material default under any of the contracts,
agreements, leases, documents, or other arrangements to
which it is a party or by which it is otherwise bound. To
the best of Mediatech's knowledge, all parties with whom
Mediatech has contractual arrangements are in material
compliance therewith and are not in default thereunder.
(14) Changes in Compensation. Since December 31, 1994,
there has not been any general pay increase to employees or
any change in the rate of compensation, commission, bonus,
or other remuneration payable to any officer, employee,
director, agent, or stockholder of Mediatech other than in
the ordinary course of business.
(15) Inventories. Since December 31, 1994, Mediatech
has continued to replenish its inventories in a normal and
customary manner consistent with prior practice and prudent
practice prevailing in the businesses of Mediatech, and will
continue to do so until the Closing Date.
(16) Records. The books of account, minute books,
stock certificate books, and stock transfer ledgers of
Mediatech are complete and correct, and there have been no
transactions involving the business of Mediatech which
properly should have been set forth in said respective
books, other than those set forth herein.
(17) Brokers or Finders. All negotiations on the part
of Mediatech relative to this Agreement and the transactions
contemplated hereby have been carried on by Mediatech
without the intervention of any person or as the result of
any act of Mediatech in such manner as to give rise to any
valid claim against Mediatech or the Acquiror for a
brokerage commission, finder's fee, or other like payment,
and any such claim shall be a liability of Mediatech and not
the Acquiror or the Stockholders.
(18) Absence of Certain Changes or Events. Since
December 31, 1994, there has not been any material adverse
change in, or event or condition materially and adversely
affecting, the condition (financial or otherwise),
properties, assets, liabilities, or the business of
Mediatech.
(19) Taxes. Mediatech has duly filed all federal,
state, county and local income, franchise, excise, real and
personal property and other tax returns and reports
(including, but not limited to, those relating to social
security, withholding, unemployment insurance, and
occupation (sales) and use taxes) required to have been
filed by Mediatech up to the date hereof. All of the
foregoing returns are true and correct in all material
respects and Mediatech has paid all taxes, interest and
penalties shown on such returns or reports as being due.
Mediatech has paid or made adequate provision in Mediatech's
Financial Statements or its books and records for all taxes
payable in respect of all periods ending on or before the
date hereof. Mediatech has no material liability for any
taxes, interest or penalties of any nature whatsoever,
except for those taxes which may have arisen up to the
Closing Date in the ordinary course of business and are
properly accrued on the books of Mediatech as of the Closing
Date.
(20) Environmental Matters. There are no actions,
proceedings or investigations pending or, to the actual
knowledge of Baur, threatened before any federal or state
environmental regulatory body, or before any federal or
state court, alleging noncompliance by Mediatech with the
Comprehensive Environmental Response, Compensation and
Liability Act of 1990 ("CERCLA") or any other Environmental
Laws. To the actual knowledge of Mediatech: (i) there is
no reasonable basis for the institution of any action,
proceeding or investigation against Mediatech under any
Environmental Law; (ii) Mediatech is not responsible under
any Environmental Law for any release by any person at or in
the vicinity of real property of any hazardous substance (as
defined by CERCLA), caused by the spilling, leaking,
pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or disposing of any
such hazardous substance into the environment; (iii)
Mediatech is not responsible for any costs of any remedial
action required by virtue of any release of any toxic or
hazardous substance, pollutant or contaminant into the
environment including, without limitation, costs arising
from security fencing, alternative water supplies, temporary
evacuation and housing and other emergency assistance
undertaken by any environmental regulatory body; (iv)
Mediatech is in compliance with all applicable Environmental
Laws; and (v) except as disclosed in Schedule 3.1(20), no
real property used, owned, managed or controlled by
Mediatech contains any toxic or hazardous substance
including, without limitation, any asbestos, PCBs or
petroleum products or byproducts in any form, the presence,
location or condition of which (a) violates any
Environmental Law, or (b) otherwise would pose any
significant health or safety risk unless remedial measures
were taken. For purposes of this Agreement, "Environmental
Laws" shall mean any federal, state, local or municipal
statute, ordinance or regulation, or order, ruling or other
decision of any court, administrative agency, or other
governmental authority pertaining to the release of
hazardous substances (as defined in CERCLA) into the
environment.
Section 3.2 Representations and Warranties by the
Acquiror. The Acquiror represents and warrants to Mediatech and
the Stockholders as follows:
(1) Organization and Standing of Acquiror. The
Acquiror is a corporation duly organized and validly
existing and in good standing under the laws of the State of
Colorado. It has all requisite corporate power and
authority to carry on its business as now being conducted,
to enter into this Agreement and to carry out and perform
the terms and provisions of this Agreement. The Acquiror
has no subsidiaries and, further, has no direct or indirect
interest, either by way of stock ownership or otherwise, in
any other firm, corporation, association, or business other
than as disclosed in Schedule 3.2(1) attached hereto.
(2)(a) Capitalization and Indebtedness for Borrowed
Moneys. The Acquiror is duly and lawfully authorized by its
Articles of Incorporation, as amended, to issue 100,000,000
shares of Common Stock, $0.001 par value per share, of which
4,504,823 million shares are issued and outstanding as of
the date hereof and 40,000,000 shares of Preferred Stock,
$0.0001 par value per share, of which no shares are issued
and outstanding. All shares of capital stock of the
Acquiror were issued in compliance with state or federal
securities laws. The Acquiror has no treasury stock and no
other authorized series or class of stock. All the
outstanding shares of the Acquiror's Common Stock have been
duly authorized and validly issued and are fully paid and
nonassessable and free of preemptive rights. All of the
Acquiror's Common Stock to be issued to the Stockholders in
exchange for their shares of Mediatech's Common Stock shall
be duly authorized, validly issued, fully paid,
nonassessable, issued in compliance with state and federal
securities laws and freely tradeable subject to the resale
limitations of Rules 144 and 145 under the Securities Act of
1933, as amended, and the provisions of Section 6.1 of this
Agreement.
(b) The Acquiror is not presently liable on account
of any indebtedness for borrowed moneys, except as reflected
in the financial statements described in subparagraph (4),
below.
(c) There are no outstanding subscriptions, options,
warrants, calls, contracts, demands, commitments,
convertible securities, or other agreements or arrangements
of any character or nature whatever under which the Acquiror
is or may be obligated to issue or purchase shares of its
capital stock other than as disclosed in Schedule 3.2
(2)(c).
(3) Acquiror's Authority. The execution, delivery,
and performance of this Agreement shall have been duly
authorized by all requisite corporate action. This
Agreement constitutes a valid and binding obligation of the
Acquiror enforceable in accordance with its terms (except as
limited by bankruptcy, insolvency, or other laws affecting
the enforcement of creditors' rights). No provision of the
Articles of Incorporation and any amendments thereto, Bylaws
and any amendments thereto, minutes or share certificates of
the Acquiror, or of any contract to which the Acquiror is a
party or otherwise bound, prevents the Acquiror from
delivering good title to its shares of such capital stock in
the manner contemplated hereunder.
(4) Financial Statements. The Acquiror has furnished
Mediatech and the Shareholders with unaudited financial
statements of the Acquiror as of December 31, 1994, and
audited Financial Statements as of December 31, 1993, 1992
and 1991 (hereinafter referred to as the "Acquiror's
Financial Statements"). All such financial statements
present fairly the financial condition of the Acquiror at
such date, and the results of its operations for the period
therein specified, and were prepared in accordance with
generally accepted accounting principles applied upon a
basis consistent with prior accounting periods.
Specifically, but not by way of limitation, the
Acquiror's Financial Statements disclose all of the debts,
liabilities, and obligations of any nature (whether
absolute, accrued, contingent, or otherwise and whether due
or to become due) of the Acquiror at the date thereof and
include appropriate reserves for all taxes and other
liabilities accrued or due at such date, but not yet
payable. The Acquiror owes no taxes based upon income of
all taxable years and the Acquiror's Financial Statements
reflect liability for taxes based upon income for the
current year. All existing accounts and notes receivable on
Acquiror's Financial Statements represent valid obligations
of parties obligated to Acquiror arising from bona fide
transactions, are current and there is no reason to believe
that they will not be collected in full (without any
counterclaim or set off) on or before the date such
receivables are due.
(5) Present Status. The Acquiror has not, since
December 31, 1994:
(a) Incurred any obligations or liabilities,
absolute, accrued, contingent, or otherwise and whether due
or to become due, except current liabilities incurred in the
ordinary course of business, none of which adversely affects
the business or prospects of the Acquiror;
(b) Discharged or satisfied any liens or
encumbrances, or paid any obligation or liability, absolute,
accrued, contingent, or otherwise and whether due or to
become due, other than current liabilities shown on the
Acquiror's Financial Statements and current liabilities
incurred since the close of business on the date of the
Acquiror's Financial Statements, in each case, in the
ordinary course of business;
(c) Declared or made any payment or distribution to
its stockholders or purchased or redeemed, or obligated
itself to purchase or redeem, any of its shares of Common
Stock or other securities;
(d) Mortgaged, pledged, or subjected to lien, or any
other encumbrances or charges, any of its assets, tangible
or intangible;
(e) Sold or transferred any of its assets except for
inventory sold in the ordinary course of business or
canceled any debt or claim;
(f) Suffered any damage, destruction, or loss
(whether or not covered by insurance) affecting the
properties, business, or prospects of the Acquiror, or
waived any rights of substantial value;
(g) Except with respect to this Agreement, entered
into any transaction other than in the ordinary course of
business;
(h) Encountered any labor difficulties or labor union
organizing activity or loss of key people which will
adversely affect the business or prospects of the Acquiror.
(6) Litigation. Except as disclosed in the
Acquiror's Financial Statements or Schedule 3.2(6), there
are no legal actions, suits, arbitrations, or other legal or
administrative proceedings pending or threatened against the
Acquiror which would affect it, its properties, assets, or
business; and the Acquiror is not aware of any facts which
to its knowledge might result in any action, suit,
arbitration, or other proceeding which in turn might result
in any material adverse change in the business or condition
(financial or otherwise) of the Acquiror or its properties
or assets other than as disclosed in Schedule 3.2(6)
attached hereto. Any description of any such litigation in
the Acquiror's Financial Statements is true and accurate in
all material respects and discloses all material facts
necessary in order to make the statements therein not
misleading. The Acquiror is not in default with respect to
any judgment, order, or decree, of any court or any
government agency or instrumentality.
(7) Compliance With the Law and Other Instruments.
To the best of Acquiror's knowledge, the business operation
of the Acquiror has been and is being conducted in
accordance with all applicable laws, rules, and regulations
of all authorities. The Acquiror is not in violation of, or
in default under, any term or provision of its Articles of
Incorporation, as amended, or its Bylaws, as amended, or of
any lien, mortgage, lease, agreement, instrument, order,
judgment, or decree, or subject to any restriction,
contained in any of the foregoing, of any kind or character
which materially adversely affects in any way the business,
properties, assets, or prospects of the Acquiror, or which
would prohibit the Acquiror from entering into this
Agreement or prevent consummation of the exchange of
securities contemplated by this Agreement.
(8) Title to Properties and Assets. The Acquiror has
good and marketable title to all its properties and assets,
including without limitation those reflected in the
Acquiror's Financial Statements and those used or located
on property controlled by the Acquiror in its business on
December 31, 1994 and acquired thereafter (except assets
sold in the ordinary course of business), subject to no
mortgage, pledge, lien, charge, security interest,
encumbrance, or restriction except those which (a) are
disclosed in the Acquiror's Financial Statements as securing
specified liabilities; or (b) do not materially adversely
affect the use thereof. The buildings and equipment of the
Acquiror are in good condition and repair, reasonable wear
and tear excepted. The Acquiror has not been, to the
knowledge of any officer of Acquiror, threatened with any
action or proceeding under any building or zoning ordinance,
regulation, or law. The Acquiror does not currently, nor
has it in the past, owned fee simple title to any real
property. The Acquiror owns, free and clear of any liens,
claims, encumbrances, royalty interests, or other
restrictions or limitations of any nature whatsoever, any
and all patents, trade secrets, copyrights, procedures,
techniques, business plans, methods of management, or other
information utilized in connection with Acquiror's business.
To the best knowledge of Acquiror, the products it
manufactures and/or markets and its plan of operation do not
infringe on the patents, copyrights, trade secrets, or other
proprietary rights of any third person.
(9) Schedule of Leases . Prior to the Closing Date,
the Acquiror will have delivered to Mediatech, to be
attached as Schedule 3.2(9) hereto, a separate Schedule of
Leases , specifically referring to this paragraph,
containing a true and complete description of each
indenture, lease, sublease, or any instrument under which
the Acquiror claims or holds such leasehold interest. The
Acquiror has good and valid leasehold interests in such
properties and all such instruments are in effect and
enforceable according to their respective terms.
(10) Creditor's Arrangements. The Acquiror has not
made any assignment for the benefit of creditors, nor has
any involuntary or voluntary petition in bankruptcy been
filed by or against the Acquiror.
(11) Contracts and Other Obligations. The Acquiror is
not a party to or otherwise bound by, any written or oral:
(a) Contract or agreement not made in the ordinary
course of business;
(b) Employment or consultant contract which is not
terminable at will without cost or other liability to
the Acquiror or any successor, except as disclosed on
Schedule 3.2(11)(b) hereto;
(c) Contract with any labor union;
(d) Bonus, pension, profit-sharing, retirement, share
purchase, stock option, hospitalization, group insurance, or
similar plan providing employee benefits, except as
disclosed in its filings with the Securities and Exchange
Commission;
(e) Lease with respect to any property, real or
personal, whether as lessor or lessee;
(f) Advertising contract or contract for public
relations services;
(g) Purchase, supply, or service contracts in excess
of $1,000 each, or in the aggregate of $10,000 for all such
contracts whether below or above $1,000;
(h) Deed of trust, mortgage, conditional sales
contract, security agreement, pledge agreement, trust
receipt, or any other agreement or arrangement whereby any
of the assets or properties of the Acquiror are subjected to
a lien, encumbrance, charge, or other restriction, except as
disclosed on Schedule 3.2(11)(h) thereto;
(i) Contract or other commitment continuing for a
period of more then thirty days and which is not terminable
without cost or other liability to the Acquiror or its
successor; or
(j) Contract which (i) contains a redetermination of
price or similar type of provision; or (ii) provides for a
fixed price for goods or services sold.
(k) Contract or arrangement which will result in an
excess parachute payment under Code Section 280G.
The Acquiror has in all material respects performed all
obligations required to be performed by it to date and is
not in material default under any of the contracts,
agreements, leases, documents, or other arrangements to
which it is a party or by which it is otherwise bound. To
the best of Acquiror's knowledge, all parties with whom the
Acquiror has contractual arrangements are in compliance
therewith and are not in default thereunder.
(12) Changes in Compensation. Since December 31,
1994, there has not been any general pay increase to
employees or any change in the rate of compensation,
commission, bonus, or other remuneration payable to any
officer, employee, director, agent, or stockholder of the
Acquiror.
(13) Inventories. Since December 31, 1994, the
Acquiror has continued to replenish its inventories in a
normal and customary manner consistent with prior practice
and prudent practice prevailing in the businesses of the
Acquiror, and will continue to do so until the Closing Date.
(14) Records. The books of account, minute books,
stock certificate books, and stock transfer ledgers of the
Acquiror are complete and correct, and there have been no
transactions involving the business of the Acquiror which
properly should have been set forth in said respective
books, other than those set forth therein.
(15) Brokers or Finders. All negotiations on the part
of the Acquiror relative to this Agreement and the
transactions contemplated hereby have been carried on by
Acquiror without the intervention of any person or as the
result of any act of the Acquiror in such manner as to give
rise to any valid claim against the Stockholders or
Mediatech for a brokerage commission, finder's fee, or other
like payment, and any such claim shall be a liability of the
Acquiror and not the Stockholders or Mediatech.
(16) Absence of Certain Changes or Events. Since
December 31, 1994, there has not been any material adverse
change in, or event or condition materially and adversely
affecting, the condition (financial or otherwise),
properties, assets, liabilities or, to the knowledge of
Acquiror, the business or prospects of the Acquiror.
(17) Taxes. The Acquiror has duly filed all federal,
state, county and local income, franchise, excise, real and
personal property and other tax returns and reports
(including, but not limited to, those relating to social
security, withholding, unemployment insurance, and
occupation (sales) and use taxes) required to have been
filed by the Acquiror up to the date hereof. All of the
foregoing returns are true and correct in all material
respects and the Acquiror has paid all taxes, interest and
penalties shown on such returns or reports as being due.
The Acquiror has paid or made adequate provision in the
Acquiror's Financial Statements or its books and records for
all taxes payable in respect of all periods ending on or
before the date hereof. Except for the Los Angeles business
license sales tax for the period 1992-1993 for which the
Acquiror has accrued the estimated liability, the Acquiror
has no material liability for any taxes, interest or
penalties of any nature whatsoever, except for those taxes
which may have arisen up to the Closing Date in the ordinary
course of business and are properly accrued on the books of
the Acquiror as of the Closing Date.
(18) Environmental Matters. There are no actions,
proceedings or investigations pending or, to the actual
knowledge of the Acquiror, threatened before any federal or
state environmental regulatory body, or before any federal
or state court, alleging noncompliance by the Acquiror with
CERCLA or any other Environmental Laws. To the actual
knowledge of the Acquiror: (i) there is no reasonable basis
for the institution of any action, proceeding or
investigation against the Acquiror under any Environmental
Law; (ii) the Acquiror is not responsible under any
Environmental Law for any release by any person at or in the
vicinity of real property of any hazardous substance (as
defined by CERCLA), caused by the spilling, leaking,
pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or disposing of any
such hazardous substance into the environment; (iii) the
Acquiror is not responsible for any costs of any remedial
action required by virtue of any release of any toxic or
hazardous substance, pollutant or contaminant into the
environment including, without limitation, costs arising
from security fencing, alternative water supplies, temporary
evacuation and housing and other emergency assistance
undertaken by any environmental regulatory body; (iv) the
Acquiror is in compliance with all applicable Environmental
Laws; and (v) no real property used, owned, managed or
controlled by the Acquiror contains any toxic or hazardous
substance including, without limitation, any asbestos, PCBs
or petroleum products or byproducts in any form, the
presence, location or condition of which (a) violates any
Environmental Law, or (b) otherwise would pose any
significant health or safety risk unless remedial measures
were taken.
(19) SEC Filings. The Acquiror has filed with the SEC
all reports and other documents required to be filed by the
Acquiror pursuant to the Securities Act of 1933, as amended
(the "Act"), the Securities Exchange Act of 1934, as amended
(the "34 Act"), and the applicable rules and regulations
thereunder. As of their respective dates, each of such
reports and other documents (including, without limitation
proxy statements) complied in all material respects with the
requirements of the Act and the 1934 Act and the applicable
rules and regulations thereunder, and such reports and other
documents contained, as of their respective dates, no untrue
statements of any material facts nor omitted to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(20) NASD Filings. The Acquiror has filed with the
National Association of Securities Dealers ("NASD") all
reports and other documents required to be filed by the
Acquiror pursuant to applicable NASD rules and regulations
governing corporate financings and the designation of
securities for trading on the Nasdaq National Market System.
(21) Indemnification Liabilities. Other than claims
by Robert Lautz, Jr., a current officer and director, and
Michael Avatar, a former officer and director, relating to
the litigation described in the Acquiror's Financial
Statements, there are no existing liabilities or facts known
to Acquiror which would require Acquiror to indemnify its
officers or directors for acts or omissions by such persons
acting on behalf of Acquiror.
ARTICLE 4
ACTIONS AND OBLIGATIONS OF THE ACQUIROR,
MEDIATECH AND THE STOCKHOLDERS BEFORE AND
AFTER THE CLOSING AND SECURITIES ACT MATTERS
Section 4.1 Actions of Mediatech Pending Closing.
Mediatech and the Stockholders covenant with the Acquiror that
from the date hereof to and including the Closing Date:
(1) Correct as of Closing. Each representation and
warranty of Baur and Mediatech set forth in Paragraph 3.1 of
this Agreement shall be true and correct on and as of the
Closing Date.
(2) Operations. Except with the prior written
consent of the Acquiror to the contrary, which consent shall
not be unreasonably withheld or delayed, Mediatech will:
(a) Conduct its affairs and business only in the
ordinary course of business;
(b) Not create or incur any material liabilities
other than current liabilities incurred in the ordinary
course of business;
(c) Not create or incur, or suffer to exist, any
mortgage, lien, pledge, hypothecation, charge, encumbrance,
or restriction of any kind which is not otherwise disclosed
in this Agreement;
(d) Not make any capital expenditures, or capital
additions or betterment, except as many be involved in
ordinary repairs, maintenance, and replacement;
(e) Not enter into any contract or commitment, except
in the ordinary course of business, pursuant to which it
will be obligated to expend, or entitled to receive, in
excess of $100,000 annually;
(f) Maintain its assets and properties in good
condition and repair, and not sell, or otherwise dispose of,
any of its material assets or properties, except sales out
of inventory in the ordinary course of business;
(g) Not declare or pay any dividend on, or make any
other distribution upon, or purchase, retire, or redeem, any
shares of its Common Stock, or set aside any funds for any
such purpose;
(h) Not issue or sell, or obligate itself to issue or
sell any additional shares of its Common Stock, whether or
not such shares have been previously authorized or issued,
or issue or sell any warrants, rights, or options to acquire
any such shares, or acquire any stock of any corporation, or
any interest in any business enterprise; provided, however,
that Mediatech may, without the prior written consent of
Acquiror, issue additional shares of its Common Stock to
Baur in satisfaction of its indebtedness to Baur;
(i) Not amend its Articles of Incorporation or
Bylaws;
(j) Except for payments made pursuant to Mediatech's
Profit Participation and Executive Bonus Programs and
contributions to Mediatech's 401(k) plan, not pay, or agree
to pay, conditionally or otherwise, any bonus, extra
compensation, pension, or severance pay to any director,
stockholder, officer, consultant, agent, or employee under
any pension plan or otherwise, or increase the compensation
paid by it at December 31, 1994 to any officer, director,
agent, consultant, or employee (except normal and customary
increases);
(k) Not discharge or satisfy any material lien,
charge, or encumbrance, nor pay any obligation or liability,
absolute or contingent, except (i) current liabilities shown
on Mediatech's Financial Statements dated December 31, 1994
(exclusive of the borrowed indebtedness specified in Section
3.1(2)(b)), or current liabilities incurred since said date
in the ordinary course of business, and (ii) expenses
incurred in connection with the transactions contemplated by
this Agreement (including, without limitation, reasonable
attorneys' fees and costs);
(l) Except with respect to this transaction, not
merge or consolidate, or obligate itself to do so, with, or
into any other entity;
(m) Not enter into any transactions, or take any acts
which if effected or performed prior to the date of this
Agreement, would constitute a breach of the representations,
warranties, and agreements contained herein; and
(n) Not institute, settle, or agree to settle any
action or proceeding before any court or governmental body.
(3) Access to Records. Baur and Mediatech will
afford the Acquiror, its representatives, counsel, agents,
and employees, at all reasonable times, and in a manner and
under circumstances which will not cause unreasonable
interference with the operation of Mediatech's business,
access to all of the properties of Mediatech, and its books,
files, records, insurance policies, and other corporate
books and records, for the purpose of audit, inspection, and
examination thereof, and will do, and cause Mediatech to do,
everything reasonably necessary to enable the Acquiror to
make a complete examination of the assets and properties of
Mediatech, and the condition thereof. No such examination,
however, shall constitute a waiver or relinquishment, on the
part of the Acquiror, of its right to rely upon the
covenants, representations, and warranties made by Mediatech
and the Stockholders in the provisions of this Agreement.
(4) Consultation. Baur and Mediatech will endeavor
to keep the Acquiror apprised with respect to the operation
and conduct of Mediatech's business prior to the Closing
Date.
Section 4.2 Actions of Acquiror Pending Closing. The
Acquiror covenants with Mediatech that from the date hereof to and
including the Closing Date:
(1) Correct as of Closing. Each representation and
warranty of the Acquiror set forth in Paragraph 3.2 of this
Agreement shall be true and correct on and as of the Closing
Date.
(2) Operations. Except with the prior written
consent of the Stockholders to the contrary, the Acquiror
will:
(a) Conduct its affairs and business only in the
ordinary course of business;
(b) Not create or incur any liabilities other than
current liabilities incurred in the ordinary course of
business;
(c) Not create or incur, or suffer to exist, any
mortgage, lien, pledge, hypothecation, charge, encumbrance,
or restriction of any kind;
(d) Not make or become a party to any contract or
commitment, or renew, extend, amend, or modify any contract
or commitment, except in the ordinary course of business, or
with the express written consent of the Stockholders;
(e) Not make any capital expenditures or capital
additions or betterment except as many be involved in
ordinary repairs, maintenance, and replacement;
(f) Not enter into any contract or commitment, except
in the ordinary course of business, pursuant to which it
will be obligated to expend, or entitled to receive, in
excess of $25,000 in amount;
(g) Maintain its assets and properties in good
condition and repair, and not sell or otherwise dispose of
any of its assets or properties, except sales out of
inventory in the ordinary course of business;
(h) Not declare or pay any dividend on or make any
other distribution upon, or purchase, retire or redeem, any
shares of its Common Stock, or set aside any funds for any
such purpose;
(i) Not issue or sell or obligate itself to issue or
sell any additional shares of its Common Stock (other than
as identified on Schedule 3.2(2)), whether or not such
shares have been previously authorized or issued, or, except
as otherwise provided in Section 5.2(11), issue or sell any
warrants, rights, or options to acquire any such shares, or
acquire any stock of any corporation or any interest in any
business enterprise;
(j) Not amend its Articles of Incorporation or
Bylaws;
(k) Not pay or agree to pay, conditionally or
otherwise, any bonus, extra compensation, pension, or
severance pay to any director, stockholder, offer,
consultant, agent, or employee under any pension plan or
otherwise, or increase the compensation paid by it at
December 31, 1994 (other than as identified on Schedule
3.2(2)) to any officer, director, agent, consultant, or
employee;
(l) Not discharge or satisfy any lien, charge or
encumbrance, nor pay any obligation or liability, absolute
or contingent, except (i) current liabilities shown on the
Financial Statements dated December 31, 1994 (exclusive of
the borrowed indebtedness specified in Section 3.2(2)(b)) or
current liabilities incurred since said date in the ordinary
course of business and (ii) expenses incurred in connection
with the transactions contemplated by this Agreement
(including, without limitation, reasonable attorneys' fees
and costs);
(m) Use reasonable commercial efforts to preserve its
business organization intact;
(n) Use reasonable commercial efforts to preserve the
goodwill of its suppliers, customers, and those having
business relations with it;
(o) Keep its insurable properties and assets insured
in accordance with present practice;
(p) Maintain, keep, and preserve all of its
properties and assets in a good condition and state of
repair;
(q) Not merge or consolidate, or obligate itself to
do so, with or into any other entity;
(r) Not enter into any transactions or take any acts
which if effected or performed prior to the date of this
Agreement, would constitute a breach of the representations,
warranties, and agreements contained herein; and
(s) Not institute, settle, or agree to settle any
action or proceeding before any court or governmental body
for money damages requiring payment by Acquiror in excess of
$200,000.
(3) Access to Records. The Acquiror will afford the
Stockholders , their representatives, counsel, agents, and
employees, at all reasonable times and in a manner and under
circumstances which will not cause unreasonable interference
with the operation of the Acquiror's business, access to all
of the properties of the Acquiror and its books, files,
records, insurance policies, and other corporate books and
records, for the purpose of audit, inspection, and
examination thereof, and will do, and cause the Acquiror to
do, everything reasonable necessary to enable the Acquiror
to make a complete examination of the assets and properties
of the Acquiror and the condition thereof. No such
examination, however, shall constitute a waiver or
relinquishment on the part of the Acquiror of its right to
rely upon the covenants, representations, and warranties
made by the Acquiror in the provisions of this Agreement.
(4) Consultation. The Acquiror will endeavor to
keep Mediatech apprised with respect to the operation and
conduct of the Acquiror's business prior to the Closing
Date.
Section 4.3 Undertakings of Acquiror, Mediatech and the
Stockholders.
(1) The Acquiror, Mediatech and the Stockholders each
will hold, and will cause its respective officers,
directors, employees, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by
judicial or administrative process or by other requirements
of law, all confidential documents and information
concerning the parties furnished to any other party in
connection with the transactions contemplated by this
Agreement, except to the extent that such information can be
shown to have been (i) previously known on a
non-confidential basis by the disclosing party; (ii) in the
public domain; or (iii) later lawfully acquired by the
closing party from sources other than as a result of the
transactions contemplated herein; provided that each party
may disclose such information to its officers, directors,
employees, consultants, advisors and agents in connection
with the transactions contemplated by this Agreement, so
long as such persons are informed of the confidential nature
of such information and are directed to treat such
information confidentially in accordance herewith. Each
party's obligation to hold any such information in
confidence shall be satisfied if it exercises the same care
with respect to such information as it would take to
preserve the confidentiality of its own similar information.
Subject to the foregoing and Section 4.3(2) below, each
party shall keep confidential the terms of this Agreement
and of the transactions contemplated hereby except to the
extent such information is legally required to be disclosed.
If this Agreement is terminated, such confidence shall be
maintained and each party will, and will use its best
efforts to cause its officers, directors, employees,
consultants, advisors and agents to, destroy or deliver to
each other party, upon request, all documents and other
materials, and all copies thereof, obtained by such party in
connection with this Agreement, that are subject to such
confidence. The parties obligations under this Section
4.3(1) shall terminate on the Closing Date.
(2) No press release or other public disclosure of
matters related to this Agreement or any of the transactions
contemplated hereby shall be made by the Acquiror, or the
Stockholders unless the other parties shall have provided
their consent to the form and substance thereof; provided,
however, that nothing herein shall be deemed to prohibit any
party hereto from making any disclosure which its counsel
deems necessary or advisable in order to fulfill such
party's disclosure obligations imposed by law.
(3) Each party shall provide the others with adequate
opportunity to conduct such reviews and examinations of the
business, properties and conditions (financial and
otherwise) of the others as each party shall deem prudent,
provided that such investigations shall not interfere
unreasonably with the normal operations of the party being
reviewed.
ARTICLE 5
CONDITIONS PRECEDENT
Section 5.1 Conditions Precedent to Obligations of Baur and
the Stockholders. Except as may be waived in writing by Baur and
the Stockholders, the obligations of the Stockholders are
subject to the fulfillment, prior to or at the Closing on the
Closing Date, of each of the following conditions:
(1) No Material Errors. The representations and
warranties of the Acquiror in Paragraph 3.2 hereof shall be
true and correct in all material respects as of the Closing
Date, subject to any changes contemplated by this Agreement.
(2) Opinion of Acquiror's Counsel. The Acquiror
shall have delivered to the Stockholders or representative
of the Stockholders the opinion, dated the Closing Date, of
Acquiror's counsel, Davidson & Associates, P.C., in form
attached hereto as Schedule 5.1(2).
(3) Directors' Approval. Consummation of the
transactions contemplated herein shall have been approved by
the Board of Directors of Acquiror at special meetings of
the Board of Directors to be held for the purpose of
obtaining such approvals.
(4) Third-Party Consents. On or before the Closing
Date, all material consents or approvals by any third party,
including, without limitation, the consent of American
National Bank and Trust Company of Chicago, Mediatech's
lender, which are required to be obtained by Acquiror in
connection with the execution, delivery or performance of
this Agreement or the consummation of the transactions
contemplated herein shall have been obtained.
(5) Release of Baur Guarantees. On or before the
Closing Date, Baur shall be released from all liability,
whether direct or indirect, primary or secondary, as a
guarantor of any indebtedness of Mediatech specified in
Schedule 5.1(5)(A) attached hereto (the "Baur Guarantees"),
or other acceptable arrangements shall have been agreed to.
Should the creditors listed in Schedule 5.1(5)(A)
refuse to release the Baur Guarantees then the Acquiror
shall seek alternative sources of financing which shall be
in place on or before Closing Date. Should alternative
sources of financing be unavailable, and assuming the
creditors do not otherwise accelerate the indebtedness, then
Baur agrees to remain liable on the Baur Guarantees and
continue the financing in place as listed on Schedule
5.1(5)(A) for up to one (1) year after Closing except that
the Acquiror shall indemnify and hold Baur harmless from and
against any liability, loss, or damage suffered as a result
of action pursuant to the Baur Guarantees and shall secure
said indemnification agreement with the escrow of shares of
Acquiror's Common Stock equal to 150% of the indebtedness
listed on Schedule 5.1(5)(A) based on the average closing
market price of the Acquiror's Common Stock for the 60
trading days subsequent to the Closing Date. These
additional shares of Acquiror's Common Stock shall have
demand registration rights. The shares of Acquiror's Common
Stock to be deposited in escrow shall be issued in the name
of Acquiror and shall be treasury shares until and unless
such escrowed shares are sold as hereinafter set forth. The
Acquiror shall also deposit into escrow duly executed stock
powers as necessary to assign such shares out of escrow if
necessary to release the Baur Guarantees.
The number of shares to be set aside in escrow as
security for the indemnification pursuant to this Section
5.1(5) shall initially be the number of shares as calculated
in the preceding paragraph. Should Baur so demand, at the
end of any month when the number of shares set aside in
escrow does not to meet or exceed total market value of 150%
of the balance of the debt listed on said Schedule 5.1(5)(A)
then the Acquiror shall deposit a number of additional
shares of Acquiror's Common Stock as necessary to satisfy
the minimum coverage requirement.
At the end of any month when the number of shares set
aside as back-up exceeds the minimum coverage requirement
for the indemnification rights by ten percent (10%) or more
either as a result of the reduction of the amount of debt
remaining from said Schedule 5.1(5)(A) or as a result of an
increase in the market value of the Acquiror's Common Stock,
then the number of shares in escrow shall be reduced by a
number equal to the number of shares necessary to reduce the
coverage to a total of 150% of the then outstanding debt.
Acquiror and Baur shall execute joint instructions to the
escrow holder as set forth in Schedule 5.1(5)(C) to deposit
additional shares and remove from escrow shares in excess of
the minimum coverage in accordance with this Section 5.1(5).
Not later than one (1) year after closing, Acquiror
must unconditionally release the Baur Guarantees by
providing a substitute guarantor, by refinancing the
indebtedness listed in Schedule 5.1(5)(A) without the Baur
Guarantees or by paying off all indebtedness listed on
Schedule 5.1(5)(A). Should the Baur Guarantees not be
released within one (1) year after Closing, the Acquiror
shall, within ninety (90) days of the expiration of such one
(1) year period, arrange for the sale of an adequate number
of escrowed shares to pay off the Baur Guarantees. If at
the end of said period, the Baur Guarantees have not been
paid off and the failure did not result from mismanagement
of Mediatech thereby causing the market conditions for
Acquiror's Common Stock to deteriorate, then the escrow
holder shall deliver out of escrow to Baur the number of
shares of Acquiror's Common Stock necessary to increase
Baur's ownership in Acquiror to fifty-one percent (51%).
Upon delivery of such shares to Baur, the escrow shall
terminate and the balance of the escrowed shares, if any,
shall be returned to INDE. If there are insufficient shares
of Acquiror's Common Stock in escrow to provide Baur with a
fifty-one percent (51%) ownership interest, Acquiror shall
issue to Baur such additional shares of Acquiror's Common
Stock to raise Baur's ownership of Acquiror's Common Stock
to fifty-one percent (51%).
The obligation of the Acquiror pursuant to this Section
5.1(5) shall be evidenced by separate indemnification and
escrow agreements in the forms attached as Schedules
5.1(5)(B) and 5.1(5)(C). The provisions of this Section
5.1(5) shall survive the Closing Date until such time as the
Baur Guarantees are fully released.
(6) Cancellation of Baur Loans. Prior to the Closing
Date, Baur and Mediatech will cancel all debt and loans due
to Baur from Mediatech as further specified in Mediatech's
Financial Statements, except for accrued rental payments
owed by Mediatech to Baur and/or the development companies
which own the real estate which Mediatech is presently
leasing, and will issue additional shares of Mediatech
Common Stock to Baur in full satisfaction of such
indebtedness due Baur.
(7) Compliance with Agreements. The Acquiror shall
have performed and complied with all agreements or
conditions required by this Agreement to be performed and
complied with by it prior to or on the Closing Date.
(8) Certificate of Officers. The Acquiror shall have
delivered to the Stockholders a certificate dated the
Closing Date, executed in its corporate name by, and
verified by, the oath of its President or any Vice President
and its Secretary or an Assistant Secretary, certifying to
the fulfillment of the conditions specified in this Section
5.1.
(9) No Restraining Action. No action or proceeding
by any governmental body or agency shall have been
threatened, asserted, or instituted to restrain or prohibit
the carrying out of the transactions contemplated by this
Agreement.
(10) No Contracts Terminated. The Acquiror shall not
have had any contract or contracts, which in the aggregate
would materially affect their respective businesses,
terminated prior to the Closing Date.
(11) No Damage to Assets. At the Closing Date, the
machinery, equipment, inventory, or other tangible property
of the Acquiror shall not have suffered loss or damage on
account of fire, flood, accident, act of war, civil
commotion, or any other cause or event beyond the reasonable
power and control of the Acquiror (whether or not similar to
the foregoing), to an extent which substantially affects the
value of the properties and assets of the Acquiror. Loss or
damage shall be considered to affect substantially the value
of said properties and assets within the meaning of this
paragraph if the book value of such properties and assets so
lost or damaged exceeds five percent (5%) in book value of
all such tangible properties and assets.
(12) Amendments to the Acquiror's 1992 Stock Option
Plan. Subsequent to the Closing, Acquiror shall take
whatever action is necessary to amend its 1992 Stock Option
Plan to provide (i) for the issuance of the stock options to
Thomas H. Baur and Robert E. Derham as provided in Section
5.2(11) and (ii) that employees of the Acquiror's wholly
owned subsidiaries are eligible participants under the plan.
(13) Schedules Delivered. All schedules and exhibits
to this Agreement and all outstanding due diligence
documents to be delivered by each party shall have been
delivered in a form and substance reasonably satisfactory to
each party and such schedules shall not disclose a material
adverse change from the Acquiror's most recent Annual Report
of Form 10-KSB and Quarterly Report on Form 10-QSB or
Mediatech's Financial Statements.
Section 5.2 Conditions Precedent to Obligations of Acquiror.
Except as may be waived in writing by the Acquiror, all of the
obligations of the Acquiror under this Agreement are subject to
fulfillment, prior to or at the Closing on the Closing Date, of
each of the following conditions:
(1) No Material Errors. The representations and
warranties of Mediatech in Paragraph 3.1 hereof shall be
true and correct as of the Closing Date, subject to any
changes contemplated by this Agreement.
(2) Third-Party Consents. On or before the Closing
Date, all material consents or approvals by any third party,
if any, which are required to be obtained by the
Stockholders or Mediatech in connection with the execution,
delivery or performance of this Agreement or the
consummation of the transactions contemplated herein shall
have been obtained.
(3) Dissenter's Rights. Declining Stockholders shall
not have dissenter's rights.
(4) Compliance With Agreement. Each Stockholder
shall have performed and complied with all agreements or
conditions required by this Agreement to be performed and
complied with by them prior to or on the Closing Date.
(5) Stockholders' Common Stock. No Stockholder will
create or incur, or suffer to exist, any mortgage, lien,
pledge, hypothecation, charge, encumbrance, or restriction
of any kind on the shares of Mediatech's Common Stock which
will be assigned, transferred, and delivered to the Acquiror
at the Closing on the Closing Date.
(6) Certificate of Baur . Baur shall have delivered
to the Acquiror a certificate, dated the Closing Date,
certifying to the fulfillment of the conditions specified in
this Section 5.2.
(7) Stockholders' Certificate. At Closing, each
non-Declining Stockholder shall deliver a certificate to the
Acquiror substantially in the form of Schedule 5.2(7).
(8) Opinion of Baur's and Mediatech's Counsel. Baur
shall have delivered to the Acquiror an opinion of Wildman,
Harrold, Allen & Dixon, counsel for Baur and Mediatech dated
the Closing Date, in the form attached hereto as Schedule
5.2(8).
(9) All of Mediatech's Common Stock. The aggregate
number of shares of Mediatech's Common Stock held by the
non-Declining Stockholders at the Closing on the Closing
Date shall constitute at least 93% of all of the issued and
outstanding Common Stock of Mediatech, and, except as
provided in Sections 4.1(2)(h) and 5.1(6), no additional
shares will be issued before the Closing Date.
(10) No Restraining Action. No action or proceeding
by any governmental body or agency shall have been
threatened, asserted, or instituted to restrain or prohibit
the carrying out of the transactions contemplated by this
Agreement.
(11) No Contracts Terminated. Mediatech shall not
have had any contract or contracts, which in the aggregate
would materially affect its business, terminated prior to
the Closing Date.
(12) No Damage to Assets. At the Closing Date the
machinery, equipment, inventory, or other tangible property
of Mediatech shall not have suffered loss or damage on
account of fire, flood, accident, act of war, civil
commotion, or any other cause or event beyond the reasonable
power and control of Mediatech or the Stockholders (whether
or not similar to the foregoing), to an extent which
substantially affects the value of the properties and assets
of Mediatech. Loss or damage shall be considered to affect
substantially the value of said properties and assets within
the meaning of this paragraph if the book value of such
properties and assets so lost or damaged exceeds five
percent (5%) in book value of all such tangible properties
and assets.
(13) Employment Agreements. Thomas H. Baur and Robert
E. Derham shall both be living on the Closing Date, shall
not be incapacitated so as to render them unavailable for
employment by the Acquiror and shall execute or assign to
the Acquiror on the Closing Date, Employment Agreements in
the form mutually acceptable to the Acquiror, Baur and
Derham.
ARTICLE 6
POST CLOSING COVENANTS
Section 6.1 Unregistered Securities/Exemption from
Registration: In order to induce the Acquiror to issue
Acquiror's Common Stock to the Stockholders:
(1) Each Stockholder acknowledges that the shares of
the Acquiror's capital stock to be delivered to it pursuant
to this Agreement have not and are not being registered
under the Securities Act of 1933, hereinafter referred to as
the 1933 Act, as amended, and that accordingly such stock is
not fully transferable except as permitted under various
exemptions contained in the 1933 Act and the rules of the
Securities and Exchange Commission interpreting said Act.
The provisions contained in this Section 6.1 are intended to
ensure compliance with the 1933 Act.
(2) Each Stockholder covenants, warrants, and
represents that the shares of the Acquiror's capital stock
that will be issued to him pursuant to this Agreement, will
not be offered, sold, assigned, pledged, hypothecated,
transferred, or otherwise disposed of except after full
compliance with all of the applicable provisions of the 1933
Act and the rules and regulations of the Securities and
Exchange Commission thereunder.
(3) Each Stockholder represents and warrants to the
Acquiror that he is acquiring the shares of the Acquiror's
capital stock to be issued to him under this Agreement for
his own account, for investment, and not with a view to the
resale or other distribution thereof; that he presently has
no intention of selling, transferring, hypothecating, or
otherwise disposing of all or any part of such shares at any
particular time, for any particular price, or upon the
happening of any particular event or circumstance; and that
the Acquiror is relying upon the truth and accuracy of these
covenants, warranties, and representations in issuing said
shares without first registering the same under the 1933
Act.
(4) Each Stockholder agrees not to sell, transfer,
hypothecate, or otherwise dispose of any of the shares of
the Acquiror's capital stock he receives pursuant to this
Agreement unless and until he (a) shall have presented the
Acquiror with a written legal opinion in form and substance
satisfactory to counsel for the Acquiror to the effect that
said disposition is permissible under the terms of the 1933
Act and regulations interpreting said Act; (b) shall have
complied with the registration and prospectus requirements
of the 1933 Act relating to such disposition; or (c) shall
have presented the Acquiror satisfactory evidence that such
transfer will comply with Rule 144 under the Securities Act
of 1933 and therefore will be exempt from registration under
Section 4(1) of such Act. Each Stockholder further agrees
that the certificates evidencing the shares he will receive
shall contain the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, HAVE
BEEN TAKEN FOR INVESTMENT, AND MAY NOT BE SOLD OR
OFFERED FOR SALE UNLESS A REGISTRATION STATEMENT UNDER
THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED WITH
RESPECT TO SUCH SHARES, IS THEN IN EFFECT OR ANY
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT IS THEN IN FACT APPLICABLE TO SUCH OFFER OR SALE.
The Acquiror shall also place a "stop transfer" order
against transfer of the shares until one of the conditions set
forth above has been met.
(5) If at any time in the future any of the
Stockholders should offer, sell, assign, pledge,
hypothecate, transfer, or otherwise dispose of any of such
shares of capital stock without registration under the 1933
Act, as amended, or such similar federal statute as may then
be in effect, such Stockholder does hereby agree to
indemnify and hold harmless the Acquiror against and from
any and all claims, liabilities, penalties, costs, and
expenses that may be asserted against or suffered by the
Acquiror as a result of such disposition.
Section 6.2 Lock-Up. The Stockholders agree that they will
not sell, directly or indirectly, any Common Stock received
pursuant to Section 1.1 for a period of one (1) year from the
Closing Date. After the expiration of the one (1) year lock-up
period, the Stockholders agree that they will jointly limit any
sales of Common Stock to $183,000 per calendar month until the
date which is three years after the Closing Date. The
Stockholders shall determine by mutual agreement what proportion
of each Stockholder's shares of Common Stock shall be included in
sales permitted by this Section 6.1. In the event the
Stockholders cannot agree, the number of shares of Common Stock
permitted to be sold by the Stockholders hereunder shall be based
upon their proportionate interests in Acquiror on the Closing
Date. The Stockholders may jointly elect to defer sales in any
given calendar month for up to a maximum of three calendar
months. During subsequent months, deferred sales may be added to
current sales, but not in excess of an amount equal to the
equivalent of an additional $183,000 each month until the
deferrals have been caught up. After the date which is three (3)
years after the Closing Date, the Stockholders are free to sell
any number of the remaining shares of Common Stock without
restriction. The provisions of this Section 6.1 are exclusive of
any sales of Common Stock by the Stockholders made pursuant to
the piggyback registration rights which are granted as part of
Section 6.4 of this Agreement. This lock-up provision will
automatically terminate for any Stockholder whose employment with
Mediatech or Acquiror is terminated without cause (as defined in
such Stockholder's employment agreement) after the Closing Date.
Section 6.3 Reports Under Securities Exchange Act of 1934.
With a view to making available to the Stockholders the benefits
of Rule 144 and 145 promulgated under the Act and any other rule
or regulation of the SEC that may at any time permit a
Stockholder to sell securities of the Acquiror to the public
without registration or pursuant to a registration on Form S-3,
the Acquiror agrees to:
(1) make and keep public information available, as
those terms are understood and defined in Rule 144;
(2) file with the SEC in a timely manner all reports
and other documents required of the Acquiror under the Act
and the 1934 Act; and
(3) furnish to any Stockholder, so long as the
Stockholder owns any Common Stock, forthwith upon request
(i) a written statement by the Acquiror that it has complied
with the reporting requirements of Rule 144, the Act and the
1934 Act, or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Acquiror and such other
reports and documents so filed by the Acquiror, and (iii)
such other information as may be reasonably requested in
availing any Stockholder of any rule or regulation of the
SEC which permits the selling of any such securities without
registration or pursuant to such form.
Section 6.4 Registration Rights. The Company shall have
entered into the registration rights agreement substantially in
the form attached hereto as Schedule 6.4(1).
ARTICLE 7
NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 7.1 Nature and Survival of Representations and
Warranties. All statements of fact contained herein, any
certificate or schedule delivered by or on behalf of Mediatech or
Acquiror pursuant to the terms hereof, shall be deemed
representations and warranties made by Mediatech and the
Acquiror, respectively, to each other under this Agreement. For
purposes of this Paragraph 7.1 only, any party or other person
seeking to enforce, or claiming the benefit of, any
representation and warranty hereunder is called a Claimant, and
any party or other person against which right is claimed is
called a Defendant. All representations and warranties of the
parties shall survive the Closing and all inspections,
examinations, or audits on behalf of the parties; provided,
however, that all representations and warranties shall terminate
and expire, and be without further force and effect whatever from
and after two years from the date of closing, hereinafter
referred to as the Expiration Date, and neither party hereto
shall have liability whatsoever on account of any inaccurate
representation or warranty or for any breach of warranty, unless
Claimant shall on or prior to said date, serve written notice on
Defendant, with a copy to Defendant's counsel herein, setting
forth in reasonable detail any claims (and to the extent possible
an estimate of the damages) which Claimant may have under this
Agreement.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Amendment and Waiver. This Agreement may be
amended or modified at any time and in all respects by an
instrument in writing executed by Baur and the Presidents of
Acquiror and Mediatech and the Stockholders as follows:
(1) Extension of Time. To extend the time for the
performance of any of the obligations of the Acquiror, Baur,
or the Stockholders.
(2) Waiving Inaccuracies. To waive any inaccuracies
and representations by the Acquiror, Baur, or the
Stockholders contained in this Agreement or any document
delivered pursuant hereto.
(3) Waiving Compliance With Covenants. To waive the
fulfillment of any condition that is precedent to the
performance by the Acquiror, Baur, or the Stockholders so
waiving of any of its obligations under this Agreement.
Section 8.2 Board of Directors. At the Closing Date the
Board of Directors of the Acquiror ("Directors") will appoint one
(1) person to its Board as directed by Baur until the next
meeting of shareholders. The Directors agree to nominate the
appointee on their proposed slate of directors, for shareholder
approval, for a period of three (3) years. The Acquiror shall
procure on or before the Closing Date, a directors' or officers'
liability insurance policy in the amount of not less than
$1,000,000, if such insurance can be obtained at a reasonable
cost as determined by the Acquiror, and shall maintain the same
for as long as Mediatech's designees remain on the Board of
Directors.
Section 8.3 Covenants Not to Compete. Except for the
research and development activities related to a venture known as
Advanced Media Technologies, which activities have been and are
continued to be funded by Baur, Mediatech and Baur represent and
warrant that all research and business development activities
related to Mediatech's business have been conducted by Mediatech,
are currently owned by Mediatech, have been disclosed to the
Acquiror and are listed on Schedule 8.3 or specified elsewhere in
this Agreement. Furthermore, upon termination of their
employment pursuant to the Employment Agreements specified in
Section 5.2(11), Mr. Baur and Mr. Derham agree to a two (2) year
covenant not to compete pursuant to the terms set forth in their
Employment Agreements.
Section 8.4 Assignment. Neither this Agreement nor any
right created hereby shall be assignable by Baur, Mediatech, or
the Stockholders (or their successors in interest) or the
Acquiror without the prior written consent of the others, except
by the laws of succession. Nothing in this Agreement, express or
implied, is intended to confer upon any person, other than the
parties hereto and their respective successors, assigns, heirs,
executors, administrators, or personal representations, any
rights or remedies under or by reason of this Agreement.
Section 8.5 Notices. Any notice, communication, request,
reply, or advice, hereinafter severally and collectively called
"notice," in this Agreement provided or permitted to be given,
made, or accepted by either party to the other must be in writing
and may be given or be served by depositing the same in the
United States mail, addressed to the party to be notified,
postage prepaid and registered or certified with return receipt
requested, or by delivering the same in person to an officer of
such party. Notice deposited in the mail in the manner
hereinabove described shall be effective only if an when received
by the parties to be notified. For purposes of notice the
addresses of the parties shall, until changed as hereinafter
provided, be as follows:
(1) If to Acquiror:
Attn: Lewis K. Eisaguirre
Independent TeleMedia Group, Inc.
15303 Ventura Boulevard, Suite 1095
Sherman Oaks, CA 91403
with a copy to:
Davidson & Associates, P.C.
Attn: Roger V. Davidson
1375 Walnut, Suite 200
Boulder, CO 80302
(2) If to Baur or Mediatech:
Mediatech, Inc.
110 West Hubbard
Chicago, IL 60610
Attn: Thomas H. Baur and Robert E. Derham
with a copy to:
Mark W. Hianik
Wildman, Harrold, Allen & Dixon
225 West Wacker Drive
Chicago, IL 60606-1229
(3) If to Scheer:
William Scheer
2633 N. Southport
Chicago, IL 60614
with a copy to:
Michael B. Fischer
Rudnick & Wolf
Suite 1800
203 N. LaSalle Street
Chicago, IL 60601
(4) If to Wouters:
Peter Wouters
Mediatech, Inc.
6343 Gross Point Road
Niles, IL 60714
with a copy to:
__________________
__________________
__________________
or at such other addresses as any party may have advised the
others in writing.
Section 8.6 Paragraph and Other Headings. Paragraph and
other headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.7 Severability. In the event that any one or more
of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall
not affect other provisions of this Agreement, but this Agreement
shall be constructed as if such invalid, illegal, or
unenforceable provisions had never been contained therein.
Section 8.8 Colorado Law to Apply. This Agreement shall be
construed under and in accordance with the laws of the State of
Colorado.
Section 8.9 Parties in Interest. This Agreement shall be
binding on and inure to the benefit of and be enforceable by the
stockholders and the Acquiror, their respective heirs,
executors, administrators, legal representatives, successors, and
assigns except as otherwise expressly provided herein.
Section 8.10 Attorneys' Fees. If any action at law or
inequity, including an action declaratory relief, is brought to
enforce or interpret the provisions of this Agreement, the
prevailing party shall be entitled to recover reasonable
attorney's fees from the other party, which fees may be set by
the court in the trial of such on or may be enforced in a
separate action brought for that purpose, and which fees shall be
in addition to any other relief which may be awarded.
Section 8.11 Counterparts. This Agreement and all other
copies of this Agreement insofar as they relate to the rights,
duties, and remedies of parties, shall be deemed to be one
agreement. This Agreement may be executed concurrently in one or
more counterparts, each which shall be deemed an original, but
all which together shall constitute one and the same instrument.
Facsimile signatures shall be treated as original until replaced
by the original copy which shall then be substituted.
Section 8.12 Integrated Agreement. This Agreement
constitutes the entire agreement between the parties hereto, and
there are no agreements, understandings, restrictions,
warranties, or representations between the parties other than
those set forth herein or herein provided for.
IN WITNESS WHEREOF, this Stock Purchase Agreement has been
executed the day and year set forth above.
ACQUIROR:
INDEPENDENT TELEMEDIA GROUP, INC.
By:
Its:
Attest:
____________________________________
Its:
THE STOCKHOLDERS:
Thomas H. Baur
William Scheer
Peter Wouters
For purposes of Sections 3.1, 4.1,
7.1 and 8.3 only:
MEDIATECH, INC.
By:
Robert E. Derham, Managing
Director
SCHEDULE 3.1(3)
TO
INDEPENDENT TELEMEDIA GROUP, INC.
&
MEDIATECH, INC.
PLAN AND AGREEMENT OF REORGANIZATION
MEDIATECH, INC. STOCKHOLDERS LIST
NAME, ADDRESS AND SOCIAL NUMBER OF SHARES
SECURITY NO. OF SHAREHOLDER OF MEDIATECH, INC.
Thomas H. Baur 183*
Mediatech, Inc.
110 West Hubbard Street
Chicago, Illinois 60610
Peter Wouters 10
Mediatech, Inc.
6343 Gross Point Road
Niles, Illinois 60714
William Scheer 4
2633 N. Southport
Chicago, Illinois 60614
*Additional shares to be issued to Mr. Baur in satisfaction of
his outstanding loans to the company.
EXHIBIT 10.4
LAUTZ EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
AGREEMENT effective April 1, 1995 by and between Independent
Telemedia Group ("Corporation"), and Robert W. Lautz
("Employee").
Corporation desires to employ Employee to devote full time to
the business of the Corporation, and Employee desires to be so
employed.
The parties agree as follows:
1. Employment. Corporation agrees to employ Employee, and
Employee agrees to be so employed, in the capacity of
Chief Executive Officer. Employment shall be for a
term of three years effective as of April 1, 1995 and
terminating March 31, 1998.
2. Time and efforts. Employee shall diligently and
conscientiously devote his full and exclusive time and
attention and best efforts in discharging his duties as
the Corporation's Chief Executive Officer.
3. Board of Directors. Employee shall at all times
discharge his duties in consultation with and under the
supervision of the Corporation's Board of Directors. In
the performance of his duties, Employee shall make his
principal office in such place as the Corporation's
Board of Directors and Employee may from time to time
agree. Employee shall serve on the Company's Board of
Directors and shall be entitled to any compensation
awarded to other insiders.
4. Compensation.
(a) First year. During the Corporation's fiscal year
beginning April 1, 1995, Corporation shall pay to
Employee as compensation for his services the sum
of $120,000. This amount shall be paid in equal
installments monthly.
EMPLOYMENT AGREEMENT
PAGE TWO
(b) Second year. During the Corporation's fiscal year
1996, Corporation shall pay to Employee as
compensation for his services the sum of $120,000
plus a percent raise between 5 and 20% as approved
by the Executive Compensation Committee of the
Board of Directors. This amount shall be paid in
equal installments monthly.
(c) Third year. During the Corporation's fiscal year
1997, Corporation shall pay to Employee as
compensation for his services the sum of the
amount pursuant to subparagraph (b) plus a percent
raise between 5% and 20% as approved by the Board
of Directors under the supervision of the Executive
Compensation Committee. This amount shall be paid in
equal installments monthly.
5. Expenses
(a) Reimbursement. The Corporation shall reimburse
Employee for all reasonable and necessary expenses
incurred in carrying out his duties under this
Agreement. Employee shall present to the
Corporation from time to time an itemized account
of such expenses in any form required by the
Corporation.
(b) Automobile. The Corporation recognizes the
Employee's need for an automobile for business
purposes. It, therefore, shall provide the
Employee with an automobile allowance of $750.00
per month.
6. Profit Sharing Bonus: Employee will participate in the
corporation's executive profit sharing plan which
provides for the payment of additional compensation to
key executives of the company as determined by the
Board of Directors or a committee so designated by
them, with employee's share to be up to $37,500.
7. Stock Options. Employee will participate in the
corporation's employee stock option plan with the
exercise price equal to the following amounts per share
and the following amounts vesting immediately upon
execution of this agreement.
EMPLOYMENT AGREEMENT
PAGE THREE
135,000 Shares $1.375
The options expire on March 31, 1998.
8. Termination without cause. The Employer may without
cause terminate this Agreement at any time by giving 30
days' written notice to the Employee. In that event,
the Employee, if requested by the Employer, shall
continue to render his services, and shall be paid his
regular compensation up to the date of termination.
In addition, the Employee shall be paid on the date of
termination a severance allowance equal to 12 months of
service at the then effective rate plus any bonus due
for the period pursuant to paragraph 6. Additionally,
Company acknowledges that Employee forgave $45,000 of
compensation due him from his previous Employment
Agreement. Company therefore, agrees that in the event
Employee leaves Company for any reason during the first
two (2) years of the term of this agreement, that the
$45,000 will be immediately due and payable.
9. Disability. In the event any illness or accident
renders Employee totally disabled, Corporation's
obligations under this Agreement shall terminate 13
weeks after the determination of total disability.
10. Arbitration. Any controversy or claim arising out of,
or relating to this Agreement, or its breach, shall be
settled by arbitration in the City of Los Angeles in
accordance with the then governing rules of the
American Arbitration Association. Judgment upon the
award rendered may be entered and enforced in any court
of competent jurisdiction.
11. Notices. All notices required or permitted to be given
under this Agreement shall be given by certified mail,
return receipt requested, to the party at the following
address or to such other addresses as either may
designate in writing to the other party;
EMPLOYMENT AGREEMENT
PAGE FOUR
Independent Telemedia Group
15303 Ventura Boulevard, Suite 1095
Sherman Oaks, California 91403
12. Vacations. Pursuant to the corporation's current
policy, the Employee shall be entitled each year to
vacation during which time his compensation shall be
paid in full.
13. Health Insurance. The Employee shall be entitled to
paid health insurance coverage for family pursuant to
the Company's insurance coverage.
14. Governing law. This Agreement shall be construed and
enforced in accordance with the laws of the State of
California.
15. Entire contract. This Agreement constitutes the entire
understanding and agreement between the Corporation and
Employee with regard to all matters herein. There are
no other agreements, conditions or representations,
oral or written, express or implied, with regard
thereto. This Agreement may be amended only in
writing, signed by both parties.
16. Non-waiver. A delay or failure by either party to
exercise a right under this Agreement, or a partial or
single exercise of that right, shall not constitute a
waiver of that or any other right.
17. Headings. Headings in this Agreement are for convenience
only and shall not be used to interpret or construe its
provisions.
18. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an
original but all of which together shall constitute one
and the same agreement.
19. Binding effect. The provisions of this Agreement shall
be binding upon and inure to the benefit of both
parties and their respective successors and assigns.
In witness whereof Corporation has by its appropriate officers,
signed and affixed its seal and Employee has signed and sealed
this Agreement.
Attest: Independent Telemedia
Group
______________________ By_______________________
Witness: Employee
______________________ _________________________
LE/lj
EXHIBIT 10.5
LEWIS EISAGUIRRE EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
AGREEMENT effective April 1, 1995 by and between Independent
Telemedia Group ("Corporation"), and Lewis K. Eisaguirre
("Employee").
Corporation desires to employ Employee to devote full time to
the business of the Corporation, and Employee desires to be so
employed.
The parties agree as follows:
1. Employment. Corporation agrees to employ Employee, and
Employee agrees to be so employed, in the capacity of
Chief Financial Officer. Employment shall be for a
term of three years effective as of April 1, 1995 and
terminating March 31, 1998.
2. Time and efforts. Employee shall diligently and
conscientiously devote his full and exclusive time and
attention and best efforts in discharging his duties as
the Corporation's Chief Financial Officer and Corporate
Secretary.
3. Board of Directors. Employee shall at all times
discharge his duties in consultation with and under the
supervision of the Corporation's Chief Executive
Officer. In the performance of his duties, Employee
shall make his principal office in such place as the
Corporation's executive offices. Employee will also
function as Corporate Secretary and as a member of the
Board of Directors. The Employee will be entitled to
receive benefits and compensation awarded other
insiders serving on the Board of Directors.
4. Compensation.
(a) First year. During the Corporation's fiscal year
beginning April 1, 1995, Corporation shall pay to
Employee as compensation for his services the sum
of $120,000. This amount shall be paid in equal
installments twice per month.
EMPLOYMENT AGREEMENT
PAGE TWO
(b) Second year. During the Corporation's fiscal year
1996, Corporation shall pay to Employee as
compensation for his services the sum of $120,000
plus a percent raise between 5 and 20% as approved
by the Executive Compensation Committee of the
Board of Directors. This amount shall be paid in
equal installments twice per month.
(c) Third year. During the Corporation's fiscal year
1997, Corporation shall pay to Employee as
compensation for his services the sum of the
amount pursuant to subparagraph (b) plus a percent
raise between 5% and 20% as approved by the Chief
Executive Officer under the supervision of the
Executive Compensation Committee. This amount
shall be paid in equal installments twice per
month.
5. Expenses
(a) Reimbursement. The Corporation shall reimburse
Employee for all reasonable and necessary expenses
incurred in carrying out his duties under this
Agreement. Employee shall present to the
Corporation from time to time an itemized account
of such expenses in any form required by the
Corporation.
(b) Automobile. The Corporation recognizes the
Employee's need for an automobile for business
purposes. It, therefore, shall provide the
Employee with an automobile allowance of $750.00
per month.
6. Profit Sharing Bonus: Employee will participate in the
corporation's executive profit sharing plan which
provides for the payment of additional compensation to
key executives of the company as determined by the
Board of Directors or a committee so designated by
them, with employee's share to be up to $37,500.
7. Stock Options. Employee will participate in the
corporation's employee stock option plan with the
exercise price equal to the following amounts per share
and the following amounts vesting immediately upon
execution of this agreement.
EMPLOYMENT AGREEMENT
PAGE THREE
135,000 Shares $1.375
The options expire on March 31, 1998.
8. Termination without cause. The Employer may without
cause terminate this Agreement at any time by giving 30
days' written notice to the Employee. In that event,
the Employee, if requested by the Employer, shall
continue to render his services, and shall be paid his
regular compensation up to the date of termination. In
addition, the Employee shall be paid on the date of
termination a severance allowance equal to 12 months of
service at the then effective rate plus any bonus due
for the period pursuant to paragraph 6.
9. Disability. In the event any illness or accident
renders Employee totally disabled, Corporation's
obligations under this Agreement shall terminate 13
weeks after the determination of total disability.
10. Arbitration. Any controversy or claim arising out of,
or relating to this Agreement, or its breach, shall be
settled by arbitration in the City of Los Angeles in
accordance with the then governing rules of the
American Arbitration Association. Judgment upon the
award rendered may be entered and enforced in any court
of competent jurisdiction.
11. Notices. All notices required or permitted to be given
under this Agreement shall be given by certified mail,
return receipt requested, to the party at the following
address or to such other addresses as either may
designate in writing to the other party;
Independent Telemedia Group
15303 Ventura Boulevard, Suite 1095
Sherman Oaks, California 91403
12. Vacations. Pursuant to the corporation's current
policy, the Employee shall be entitled each year to
vacation during which time his compensation shall be
paid in full.
13. Health Insurance. The Employee shall be entitled to
paid health insurance coverage for family pursuant to
the Company's insurance coverage.
EMPLOYMENT AGREEMENT
PAGE FOUR
14. Governing law. This Agreement shall be construed and
enforced in accordance with the laws of the State of
California.
15. Entire contract. This Agreement constitutes the entire
understanding and agreement between the Corporation and
Employee with regard to all matters herein. There are
no other agreements, conditions or representations,
oral or written, express or implied, with regard
thereto. This Agreement may be amended only in
writing, signed by both parties.
16. Non-waiver. A delay or failure by either party to
exercise a right under this Agreement, or a partial or
single exercise of that right, shall not constitute a
waiver of that or any other right.
17. Headings. Headings in this Agreement are for
convenience only and shall not be used to interpret or
construe its provisions.
18. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an
original but all of which together shall constitute one
and the same agreement.
19. Binding effect. The provisions of this Agreement shall
be binding upon and inure to the benefit of both
parties and their respective successors and assigns.
In witness whereof Corporation has by its appropriate officers,
signed and affixed its seal and Employee has signed and sealed
this Agreement.
Attest: Independent Telemedia
Group
_____________________ By_______________________
EMPLOYMENT AGREEMENT
PAGE FIVE
Witness: Employee
____________________ _________________________
LE/lj
EXHIBIT 22
SUBSIDIARIES OF THE REGISTRANT
SUBSIDIARIES OF
INDENET, INC.
1. MediaTech, Inc., incorporated in the State of Illinois
2. Channelmatic, Inc. (f/k/a Inde Acquisitions, Inc.),
incorporated in the State of Delaware
3. Starcom Television Services, Inc., incorporated in the State
of Delaware
EXHIBIT 23.2
CONSENT OF BDO SEIDMAN LLP
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Independent TeleMedia Group, Inc.
Los Angeles, California
We hereby consent to the incorporation by reference in the
Prospectus constituting a part of the Registration Statement on
Form S-3 of our report dated January 30, 1995, except for Note K,
as to which the date is June 6, 1995, which contains an
explanatory paragraph regarding uncertainties as to the outcome
of a lawsuit and another matter relating to the consolidated
financial statements of Independent TeleMedia Group, Inc.
appearing in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1994.
We also consent to the reference to us under the caption
"Experts" in the Prospectus.
/s/ BDO SEIDMAN, LLP
Los Angeles, California
February 26, 1996
