SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1996
Commission File No. 0-25680
Channel i Inc.
(Name of small business issuer in its charter)
NEVADA 33-0264030
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
700-555 West Hastings Street
Vancouver, British Columbia, Canada V6B 4N5
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 604-482-1211
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock par value $.001
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES x NO____
Indicate by check mark if disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
YES xx NO____
State issuer's revenues for its most recent fiscal year. $21,500
State the aggregate market value of the voting stock held by
non-affiliates of the registrant was approximately $ 2,323,931 as of March 28,
1997 (based on the average bid and asked prices of such stock as of March 28,
1997 the last date for which such information was available).
As of March 31, 1997, there were 7,477,559 shares of the registrant's
common stock, par value $.001 per share, outstanding.
<PAGE>
TABLE OF CONTENTS
PART I Page
Item 1 Business 3
Item 2. Description of Property 7
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Security Holders 8
PART II
Item 5. Market for Common Equity and Related Stockholder Matters 8
Item 6. Management's Discussion and Analysis or Plan of Operation 9
Item 7. Financial Statements 10
Item 8. Changes in and Disagreements with Accountants on Accounting 10
and Financial Disclosure
PART III
Item 9. Directors and Executive Officers , Promoters and Control Persons,
Compliance with Section 16(a) of the Exchange Act 10
Item 10. Executive Compensation 12
Item 11. Security Ownership of Certain Beneficial Owners
and Management 13
Item 12. Certain Relationships and Related Transactions 13
PART IV
Item 13. Exhibits and Reports on Form 8-K 14
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Background
Channel i Inc. ("Channel i" or the "Company"), formerly Athena Ventures,
Inc., was incorporated under the laws of the State of Nevada on August 6, 1987.
In October 1993, the Company changed its name to Channel i, Limited and then to
Channel i, Inc. in January 1995. The Company's offices currently are located at
700-555 West Hastings Street, Vancouver V6B 4N5, British Columbia, Canada. It's
telephone number is (604) 482-1211.
Forward Looking Statements
This report contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of its management as well
as assumptions made by and information currently available to its management.
When used in this report, the words "anticipate", "believe", "estimate",
"expect", "intend", "plan" and similar expressions, as they relate to the
Company or its management, are intended to identify forward-looking statements.
These statements reflect management's current view of the company with respect
to future events and are subject to certain risks, uncertainties and
assumptions. Should any of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in this report as anticipated, estimated or expected. The
Company's realization of its business aims will depend in the near future
principally on the successful completion of its acquisition of operations as
discussed below.
CURRENT BUSINESS
Overview
During much of 1996, the Company was essentially moribund, lacking the
capital to pursue the exploitation of its proprietary "Channel i" technology
described below under "Discontinued Business." As the current year dawned, the
Company found itself with debts it was unable to pay and with no cash, and no
prospect of raising cash, in order to pursue any business or acquire a business.
Moreover, the Company's officers and directors, being unable to move forward
with any business plan of the Company and lacking access to cash for salaries or
operating capital. As noted below, the Company determined in 1996 to discontinue
all attempts to develop and exploit the "Channel i" technology and to
discontinue all operations in England.
On January 27, 1997, directors Ray Hoag and Jeremy Renton resigned and
Robert G. Clarke and Walter J. K. Pickering were elected to the Board of
Directors. Mr. Clarke was elected President and Mr. Pickering was elected
Secretary of the Company.
Proposed Acquisition of Major Wireless
The Board of Directors hopes to complete a restructuring of the Company
in which the Company will issue its stock to acquire all of the issued and
outstanding shares of capital stock of Major Wireless Communications
Incorporated ("MCWI" or "Major Wireless"), a British Columbia, Canada,
corporation organized in September 1996. Major Wireless is a development stage
company with no revenues which has developed certain proprietary technologies as
described below. Although no definitive agreement has yet been signed, the
Company has reached a tentative agreement with Major Wireless on the terms of
the proposed acquisition, and the Company expects to sign a definitive agreement
regarding the acquisition before the 10th of May, 1997. The Company anticipates
that it will issue convertible preferred stock in exchange for all of the
outstanding capital stock of Major Wireless and that the preferred stock issued
in the exchange will be convertible into an aggregate of 40,000,000 common
shares of the Company.
<PAGE>
There can be no assurance that the proposed acquisition of Major
Wireless will be completed, but the Company anticipates completing a binding,
definitive agreement with Major Wireless and its four shareholders no later than
May 10, 1997.
Business of Major Wireless
Major Wireless was founded to design, develop, and distribute more
effective, efficient and cost effective network communications between Internet
users and Internet service providers (ISP's). The Company believes this
objective can be achieved by combining and designing a variety of unique
communication links between Internet users and ISPs. Major Wireless is a high
technology start-up company with proprietary technologies at the stage of
developing prototype communication units to thoroughly test the initial model.
Major Wireless is subject to all of the risks inherent in a start-up company
developing an unproven technology, and no assurance can be made that it will be
successful. In particular, Major Wireless will be dependent upon the Company's
ability to raise the necessary funds for research and development, manufacturing
and operating capital. While the Company believes it can raise the funds needed,
there can be no assurance that the funding will be available.
The Major Wireless WaveRiderTM Technology
The Major Wireless WaveRiderTM communication technology under
development utilizes spread spectrum modems as a cost effective, reliable
alternative to local loops and dedicated lines provided by the existing public
switched telephone network (PSTN). WaveRiderTM will provide a disaster-resistant
communications link in the 902 to 928 MHz band. Spread spectrum initially was
established for military purposes, as compared to wire and fiber optic cable
which are susceptible to disruption due to a variety of reasons. The WaveRiderTM
technology is resistant to jamming and interference, detection and interception
and has the capability for encryption. Currently the Feveral Communications
Commission (FCC) requires no license for the use of this means of communication
in the 902 - 928 MHz band, so long as FCC guidelines are followed.
The WaveRiderTM technology is being designed so that each 'customer'
will have a unique serial number encrypted into the hardware component that is
linked to the customer's computer. The unit will see only data addressed to
itself. Through the use of a proprietary data packet format, each unit will
transact with an access point only when requested to do so. Custom designed
verification and encryption/decryption hardware and software ensures that each
packet can only be read by its intended receiver.
Communications signals can be greatly increased in bandwidth by factors
of 10 to 10,000 by combining them with binary sequences using several
techniques. Conventional signals such as narrow-band FM, SSB and CW are
rejected, as are other spread-spectrum signals not bearing the desired coding
sequence. The result is a type of private channel, one in which the only
spread-spectrum signal using the same pseudo-noise sequence will be accepted by
the end-user receiver.
A beneficial effect of the signal spreading process is that the
receiver can reject strong undesired signals, even those much stronger than the
desired spread-spectrum signal power density. The spread-spectrum signal is
below the noise floor of a conventional receiver and thus invisible to it, while
it can clearly be received with a spread-spectrum receiver. The use of different
binary sequences allows several spread-spectrum systems to operate independently
of each other within the same band. This technology reduces the communication
costs of an ISP and provides a customer with a more cost effective, more
reliable and faster Internet access service (communication link).
Markets for the WaveRiderTM Technology
Currently, market topology for Internet and network access may be
broken down into three specific areas.
I. low-speed home user access via analog telephone services;
<PAGE>
II. midrange end-user/small business access via ISDN or switch 56 services;
and
III. highspeed business and educational access supplied by fractional T1
over hyperstream/frame relay or ATM networks.
Each of the above markets have their inherent problems. Virtually all
dialup access currently is limited to a maximum of 33.6kbs. There are
restrictions and bottlenecks imposed at the network access point due to issues
such as limited dial-in services or compatibility- related problems between
modems produced by different manufacturers. Midrange services via ISDN or
similar circuits also display inherent problems due to limited provisions at the
network access center, and in many cases, the cost of these circuits make them
an unattractive option. Finally, highspeed business access via fractional T-1
lines has been primarily reserved for the ISP and larger corporations strictly
due to the costs of engineering and maintaining these circuits.
The WaveRiderTM technology lends itself to accommodate all three areas
without changing the basic technology or structure of the network. Specifically,
the WaveRiderTM technology offers solutions to meet every aspect of today's
market, from low speed Internet access (33.6kbs) straight through to the
equivalent of multiple T-1 lines, without changing the hardware involved. This
allows Major Wireless to provide a flexible, upgradeable network where the end
user, be it home user, small business, or large corporation, has the option to
pick the "flavour" of network access best suited to the user's environment.
Finally, due to the secure nature of the technology utilized, the WaveRiderTM
technology permits Secure Private Virtual Networking services which other
platforms cannot provide without the addition of expensive equipment.
Other Anticipated Changes
The Board of Directors has, as permitted by Nevada law, approved a 1-for-5
reverse split of the Company's common stock, which will affect all issued and
outstanding shares, as well as all outstanding options and warrants. This
reverse split is not yet in effect. The Company also intends to seek a change in
its corporate name to WaveRiderTM COMMUNICATIONS, INC.
Employees
The Company currently has no full-time employees other than its
officers. Once and assuming the Company's anticipated acquistion of Major
Wireless is completed, the Company expects that Major Wireless will add full
time employees knowledgeable in wireless communications technology, Internet
access and services, engineers, marketing and sales persons and support staff.
The Company and Major Wireless will use consultants and non-employee experts on
an as-needed basis. The Company's future success will be substantially dependent
on its ability to attract and retain highly qualified technical and managerial
personnel for Major Wireless and the performance of such persons. Competition
for such personnel is intense and there can be no assurance that Major Wireless
will be able to attract and retain qualified technical and managerial personnel.
Subsidiaries
The Company has discontinued all operations in London and is
contemplating the sale of Channel i, PLC, its wholly owned subsidiary.
Sunburst M.C. Ltd. License Agreement
In August 1996, The Company entered into a licensing agreement with
Sunburst M.C. Ltd., a corporation incorporated under the laws of the Province of
Ontario, Canada, permitting the use in Canada of the "Channel i" name and logo.
The agreement specifies a cash payment for use of the name and logo for a period
of 10 years for Canada and all French-speaking countries. The Company received a
total of $20,000 during the third and fourth quarters of 1996 as licensing fees.
This agreement is not expected to result in significant revenues to the Company
in the future.
<PAGE>
DISCONTINUED BUSINESS
PRIOR ACQUISITION OF TECHNOLOGY. On November 4, 1993, the Company
entered into an Agreement of Sale and Purchase, pursuant to which it issued
400,000 shares of its authorized but unissued common stock in exchange for all
of the issued and outstanding shares of CHANNEL i PLC, a public limited company
incorporated under the laws of England and Wales ("PLC"). This transaction
resulted in PLC becoming a wholly owned subsidiary of the Company.
The "Channel i" technology is an interactive communications and retail
service developed by PLC that PLC proposed to make available through electronic
point-of-purchase electronic machines (kiosks) in such locations as shopping
centers, travel terminals, post offices, service stations, shops, hotels and
restaurants. Each kiosk was intended to present a computer-managed program that
looks and sounds like television, but allowing the user to quickly and
comfortably navigate through the information offered on screen. A "touch" screen
would enable the user to select a choice from the on-screen menu merely by
touching the screen, enabling the user to select and buy products and services,
paying for them on the spot in cash or by credit card.
LONDON UNDERGROUND CONTRACT. On June 21, 1994, the Company entered into
an agreement with the London Transport Authority's, London Underground Limited
("LUL") transit authority to install a minimum of 100 multimedia kiosks
containing a router and advertising at selected, heavily trafficked stations.
The Company's plan was to perform the operations in the United Kingdom through a
wholly owned subsidiary, Channel i, Plc. The Plc was charged to establish an
interactive multimedia kiosk network that would have provided consumers with
convenient access to an array of products and services offered thereon. The
Company expected to derive income from advertising, sponsorships, third party
product sales, local retail and "special offer" services all processed through
the kiosk network.
Attempts had been made to raise the large capital sums that would have
been required to implement the existing Company plan of providing a system of
kiosks interlinked to a central processing unit. Because of limited financial
resources , an agreement was entered into with an Irish software house in which
they would design and provide the first five machines. The software for the
router development was heavily behind schedule and work performed did not
produce a system satisfactory to London Transport. To complete the contract on a
timely basis and because of lack of adequate funding, an agreement was signed
with Logica, a leading British software company to have them take over the
contract. Logica agreed to assume the disputed liabilities owed the LUL and
Barcrest in return for the transfer of the Company's rights to the contract and
LUL signing a new contract with Logica. As of March 31, 1997, the contract
between Logica and LUL has not been signed. The contract between LUL and the
Company has expired, and the Company does not plan to pursue dealings with LUL.
The Company was invoiced in 1996 for $41,830 ((pound)26,479.39) by the
London Transport for work claimed to have performed by their employees and an
additional $14,914 ((pound)9,439.83) for other work. Also, the Company was
invoiced by Barcrest in 1996 for kiosk development work of $3,160 ((pound)1,974)
allegedly performed. The Company disputes these invoices and does not believe
the amount is owed. Other than rendering the invoices, no attempts have been
made by LUL or Barcrest to collect the invoiced amounts.
Although the Company still owns the "Channel i" technology, there are
no current plans to further develop, exploit or otherwise utilize the
technology. The Company will entertain offers to purchase, license or joint
venture the technology, should any such offers be received. No such offers have
been made. It is uncertain whether the technology has any commercial value, and
the "Channel I" technology is not assigned any value on the balance sheet.
TRANSEUROPE CONTRACTS. During 1995, the Company attempted to diversify
into the newly deregulated and rapidly expanding European telecommunications
industry. The Company believed that it had a strategic advantage due to the
location of its subsidiary, Channel i Plc, in London, England, the main
communications hub for transatlantic connections to North and South America. To
this end, the Company began developing relationships with leading European
Public Telephone and Telegraph Companies (PTT), their
<PAGE>
suppliers and competitors. The plan was to offer long-distance voice and
facsimile services throughout Europe to North America through London.
The Company developed a relationship with TransEurope Communications,
Limited ("TransEurope"), a company that claimed to be a licensed PTT in Finland
and claimed to have expertise in the industry, strong financial resources and
significant business relationships with other international major PTTs. As a
PTT, TransEurope represented to the Company that it had the lowest possible
access cost to telephone call switching equipment, leased lines, and long
distance resellers. Through a licensing agreement, the Company paid for and was
granted an exclusive right to utilize TransEurope's services in the United
States, Mexico, Canada and selected European countries. The license agreements
with TransEurope proved to be unsatisfactory, and it is the Company's belief
that TransEurope did not fulfill their written and verbal promises. TransEurope
did not have the equipment, leased lines nor ongoing volume of business it
claimed. Furthermore, the PTT license in Finland was in the name of a similar
named company owned by other individuals.
The Company later discovered that TransEurope had simultaneously
granted an exclusive license for the United States to another company, Ace
International Investments, Limited ("Ace"). Ace and the Company filed a joint
lawsuit against TransEurope, as disclosed below under Item 3. The Company has
discontinued all dealings with TransEurope and repudiated its TransEurope
contracts. The Company does not believe it will recover any of the sums paid to
TransEurope and does not at this time intend to pursue any recovery.
ITEM 2. DESCRIPTION OF PROPERTY
The Company owns no real estate or other properties. The current
offices in Vancouver, British Columbia, are leased at less than $1,000 per month
from a non-affiliated party. These offices are less than 500 square feet but the
lease permits usage of conference room and other facilities as needed and are
adequate for the Company's needs at its current level of activity. Upon
completion of the Company's anticipated acquisition of Major Wireless, the
Company intends to lease larger executive offices in the Vancouver area.
ITEM 3. LEGAL PROCEEDINGS
Lawsuit Against TransEurope Communications
On November 13, 1995, the Company joined Ace International Investments,
Ltd. ("ACE"), as co-plaintiffs in a lawsuit filed against TransEurope
Communications Limited, an English company ("TransEurope"). The civil action,
Channel i, Inc. & Ace International Investments Limited v. TransEurope
Communications Limited and Another, was filed in the Central Office of the High
Court of Justice Queen's Bench Division in London, England, Action No:
1995-A-No: 2371.
The civil suit alleges that fraudulent acts and statements were made by
the defendant, TransEurope, which induced the Company to pay $140,000
((pound)90,000) in fees for telecommunications licenses and access to telephone
equipment and intercontinental leased telephone lines. The Company was misled in
believing that TransEurope was a licensed Public Telephone and Telegraph Company
licensed by the country of Finland, was operating a telecommunications system
throughout Europe and had important expertise, financial resources and business
relationships, none of which was true. The Company had anticipated that its
relationship with TransEurope, together with TransEurope's relationships with
major telephone companies, would have enabled the Company to offer international
telecommunication services, at rates that were competitive with those charged by
other telecommunication service providers.
ACE, the co-plaintiff, had also acquired the rights to offer
telecommunication services in certain parts of the world from TransEurope.
Although the Company had paid $140,000 ((pound)90,000) to acquire the right to
offer telecommunications services within the United States, ACE asserted a
competing claim to the same right and license and alleged misrepresentation by
TransEurope. On September 12, 1995, a settlement agreement was reached between
ACE and the Company pursuant to which, among other things, it was agreed that
ACE would
<PAGE>
pay the Company out of the first revenues from active operations that it or any
of its assignees received, and that a joint suit would be commenced against
TransEurope. During the discovery phase of the civil action, it was learned that
ACE was not a legal entity and as such could not enter into a civil suit.
Defendant TransEurope filed a counter claim to eliminate ACE as a plaintiff and
for defense costs and was awarded $8,000 ((pound)5,000) against the Company and
ACE jointly. Defendant TransEurope has not made and is not expected to make any
attempt to collect the $8,000 ((pound)5,000) award.
The Company could pursue its civil claim against TransEurope by
depositing with the court all estimated court costs and defendant's legal costs.
Based on the Company's investigation, however, it appears that TransEurope does
not have sufficient assets to satisfy a judgment, should the Company prevail on
the merits in the civil action. In view of the costs to the Company of pursuing
the civil action and any necessary appeals or related action, management has
determined to abandon the action.
Securities and Exchange Commission Investigation
The staff of the Securities and Exchange Commission ("SEC") in 1994
commenced a private investigation into, among other things, certain past equity
offerings made by the Company. This is a civil, not a criminal, investigation.
The current executive officers and directors of the Company had no involvement
in the transactions which are the subject of the investigation. If the SEC staff
concludes that the Company, or affiliated persons, violated United States
securities laws, it is possible that the staff will recommend enforcement action
to the SEC, which in that event might initiate one or more of several possible
actions against the Company and such persons. The potential actions which could
be taken include a civil action for damages or for injunctive or other relief,
or the commencement of administrative proceedings by the Commission itself,
against the Company and any affiliated individuals believed to have engaged in
wrongdoing. the Company cannot at this time predict what action, if any, the SEC
staff or the SEC itself may later take or what money damages or other relief it
might seek, nor can the effect upon the Company be predicted. Based on facts
known to management, however, the Company does not believe that it or any
affiliated persons engaged in violations of United States laws or rules or
regulations thereunder. The Company has cooperated and intends to continue to
cooperate with the SEC staff in regard to this investigation, should its
cooperation be requested. The Company has had no communication from the SEC
staff for over a year and believes the investigation has, as a practical matter,
ended, but no assurance exists that the SEC will not pursue the investigation or
recommend enforcement action to the SEC.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the shareholders during 1996.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common shares are quoted under the symbol "CHLI" on the
OTC (over-the-counter) Electronic Bulletin Board operated by the National
Association of Securities Dealers, Inc. ("NASD") and are traded in the
non-Nasdaq segment of the United States over-the-counter market. The trading
market in the Company's shares historically has been sporadic, and no active
trading market has existed. The following table sets forth the closing high and
low bid prices of the Common Stock for the periods indicated, as reported by the
NASD. These prices are believed to be representative inter-dealer quotations,
without retail mark-up, markdown or commissions and may not represent prices at
which actual transactions occurred.
<PAGE>
<TABLE>
1994 Bid 1995 Bid 1996 Bid
-------- -------- --------
High Low High Low High Low
---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
First Quarter $ 5.00 $3.13 $5.75 $2.00 $0.63 $0.38
Second Quarter $ 5.75 $4.25 $6.50 $3.50 $0.42 $0.12
Third Quarter $ 6.25 $5.00 $5.00 $0.50 $0.38 $0.06
Fourth Quarter $ 5.25 $5.00 $0.63 $0.38 $0.38 $0.06
</TABLE>
Holders
The Company has approximately 860 shareholders of record as of March
31, 1997. This number does not include shareholders whose shares are held in
street or nominee names.
Dividends
The Company does not expect to pay a cash dividend on its capital stock
in the foreseeable future. Payment of dividends in the future will depend on the
Company's earnings (if any) and cash requirements.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Liquidity and Capital Resources
The Company has funded its operations to date exclusively through the
sale of shares and by cash advances and advances of expenses made by its
officers. The Company raised minimal capital in 1996, all of which has been
utilized. The Company does not at this time have a line of credit or similar
credit facility available to it. As of December 31, 1996, the Company had
accumulated a deficit of $2,597,199 and had available cash of approximately
$1,809 and current liabilities of $131,841. To date, the Company has had scant
revenues and has not earned income from operations. The report of the Company's
independent auditors for the year ended December 31, 1996, expressed concern
whether the Company will be able to continue as a going concern unless it begins
to generate revenues or acquires a revenue-generating business.
Subsequent to the 1996 year end, however, the Company conducted two
offerings of securities in reliance upon Regulation S under the Securities Act
of 1933 and raised a total of approximately $283,000 in equity capital from the
sale of 1,785,000 shares of its common stock and from the sale of 298,125 shares
of its Series A Voting Convertible Preferred Stock, each share of which is
convertible into ten (10) shares of common stock. The Company has issued the
following warrants:
1. 7,140,000 Class A Common Stock Purchase Warrants, each entitling the
holder to purchase one share of the Company's common stock until August 3, 1997,
at a price of US$0.0625 per share.
2. 2,981,250 Class B Common Stock Purchase Warrants, each entitling the
holder to purchase one share of the Company's common stock until February 6,
1998, at a price of US$0.085 per share.
3. 2,981,250 Class C Common Stock Purchase Warrants, each entitling the
holder to purchase one share of the Company's common stock until February 6,
1998, at a price of US$0.105 per share.
4. 2,981,250 Class D Common Stock Purchase Warrants, each entitling the
holder to purchase one share of the Company's common stock until February 6,
1998, at a price of US$0.125 per share.
<PAGE>
The Company would realize proceeds of approximately $1,385,000 if all
Class A, Class B , Class C and Class D warrants are exercised. There can be no
assurance, however, that all or any of such warrants will be exercised.
Results of Operations - 1996
The Company realized an operating loss in 1996 of $121,776. The Company
did not generate revenues from operations but generated revenue of $20,000 for
the licensing and use of the "Channel i" name and logo in Canada. Activities
during 1996 were principally limited to attempts to raise additional operating
capital through stock sales and to acquire or generate a going business. During
the year, the company paid out $77,227 in administrative costs and $31,913 in
consulting fees. The Company received $43,484 in proceeds from an offering of
its common shares commenced in 1995.
Results of Operations - 1995
The Company realized an operating loss of $1,054,085 for the year
ending December 31, 1995. The Company paid $470,865 in consulting fees in
attempting to create the network for the kiosk system pursuant to an agreement
between a subsidiary of the Company and the London Underground system to install
interactive kiosks. During the year, $372,000 was paid out in in administrative
costs and $107,000 in salaries. During the period August, 1995, to December 31,
1995, the Company realized proceeds in the amount of $455,105 from the sale of
securities in a Regulation S offering to investors outside the United States.
Plan of Operation
During the next 12 months the Company intends to complete its proposed
acquisition of Major Wireless, raise additional capital for research and
development, operations and overhead, and commence an aggressive marketing
program of the Major Wireless WaveRiderTM technology. Should this acquisition
not occur, the Company will seek another company or assets to acquire.
ITEM 7. FINANCIAL STATEMENTS
The information required hereunder in this report as set forth in the
"Index to Financial Statements on page F1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Directors and Executive Officers
At the December 15, 1995 Annual Meeting of the Shareholders, Messrs. Ray
Hoag, Phil McGrane and Charlie Rodriguez, were elected to serve as directors for
the Company. No annual meeting of the shareholders has been held since then,
although current management plans to hold a shareholder meeting in the summer of
1997. At the Annual Meeting of the Board of Directors on January 22, 1996, Mr.
Charlie Rodriguez was elected President and Chief Executive Officer. On January
22, 1996, Mr. Jeremy Renton and Mr. Robert Shipman were elected to serve on the
Board of Directors, and Mr. Renton was elected Chairman. Mr. Robert Shipman
resigned on June 3,1996.
<PAGE>
On January 27, 1997, directors Ray Hoag and Jeremy Renton resigned and
Mr. Robert G. Clarke and Walter J. K. Pickering were elected to the Board of
Directors. Mr. Clarke was elected President and Mr. Pickering was elected
Secretary of the Company. The directors and executive officers as of March 31,
1997, of the Company and their ages and positions held in the Company are listed
below. Each director will serve until the next annual meeting of stockholders,
or until his successor has been elected and duly qualified. Directors serve one
year terms and officers hold office at the pleasure of the Board of Directors,
subject to employment agreements. There are no family relationships between or
among directors or executive officers.
NAME AGE POSITION
Robert G. Clarke 52 President and Chief Executive Officer; Director
Walter J. K. Pickering 47 Vice President, Director
Charlie Rodriguez 52 Director
Biographical Information
The following describes the business experience of the Company's
directors and executive officers including, for each director, other
directorships held in reporting companies and naming each Company.
ROBERT G. CLARKE, age 52, is an experienced management professional who
has worked with large multi-disciplinary consulting firms including (PA
International, Peat Marwick Consulting Organization and more recently has
operated his own consulting practice. With PA International, one of the largest
international management consulting organizations, he completed management
consulting assignments in New Zealand, Australia, Indonesia, Malaysia and
Singapore. Assignments for Peat Marwick were carried out in Western Canada, the
United States, Europe, Brazil and the Middle East. In 1982, following two years
as a partner in a regional consulting firm, Mr. Clarke founded Axon Management,
Inc. a management services firm focusing on new and emerging companies. Mr.
Clarke's expertise in Public Financial Markets and Regulatory management has
enabled him to prepare Business Assessment Reports and Business Plans for
emerging companies and companies seeking public financing.
WALTER J. K. PICKERING, age 47, has been the President of Tundra Technical
Services, Ltd. and Corporate Information Group, Ltd since 1986. The companies
are management consultants designing business strategies and marketing plans for
emerging technologies. Recent projects have been for the National Research
Council, the Science Council of British Columbia, the University of British
Columbia and engineering companies. Mr. Pickering currently completed various
Market Assessment for Research and Technology (MART) studies for the Science
Council of British Columbia on Systems and Equipment, Biotechnology and
Environmental Technologies. Mr. Pickering also developed Strategic Business
plans for various companies in the Environmental Industries, Computer Software
and Hardware Development, and Consumer Products. Previously, Mr. Pickering was
Principal and Chief Financial Officer of Procon Builders, Ltd.
CHARLIE RODRIGUEZ, age 52, has served as the President and Chief
Financial Officer of the Company since January 1996. Previously, Mr. Rodriguez
was Treasurer of International Telcom Services, Inc. and its subsidiary, Bullet
Cougar Golf, Inc., a leading manufacturer and distributor of golf equipment. He
was a Director of Business Services at Thomas-Davis Medical Centers, a 190
physician clinic. Mr. Rodriguez created an infrastructure that enabled the
clinic and all of its subsidiaries, including the second largest HMO in Arizona,
to be sold for 660 million Dollars. As a past Director of the Tucson Business
Coalition, a non profit entity consisting of over 300 small to medium
businesses, he provided ongoing consultations to members on strategic planning,
financing, taxation, corporate and employee benefits. As Chief Operating and
Financial Officer for National Refuse Equipment, Inc. a $25 million dollar,
multi-state steel fabrication company, Mr. Rodriguez's responsibilities included
improving all operations inventory control, resource planning and pricing,
negotiating and completing of all purchases and contract bids.
<PAGE>
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), requires officers, directors and persons who beneficially own more
than 10% of a class of the Company's equity securities registered under the
Exchange Act to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Based solely on a review of the forms it has
received and on representation from certain reporting persons, the Company
believes to the best of its knowledge that, during the year ended December 31,
1996, all Section 16(a) filing requirements applicable to its officers,
directors and 10% beneficial owners were complied with by such persons.
ITEM 10. EXECUTIVE COMPENSATION
The table below sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company for the
fiscal year ended December 31, 1996 of those persons who were, at December 31,
1996: (i) the chief executive officer and (ii) the other four most highly
compensated executive officers of the Company (the "Named Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------- ----------------------
Name and Principal Position Year Salary Other Annual Securities LTIP Payouts All Other
Compensation Underlying Compensation
Stock Options
<S> <C> <C> <C> <C> <C> <C>
Phil McGrane, Director (now 1996 6,000 - - -- -
resigned) (1)
Charlie Rodriguez, President, 1996 $0 - 317,000 -
Chief Executive Officer and
Director (2)
Jeremy Renton, Director (now 1996 $0 - 250,000 -
resigned) (3) -
Dr. Ray Hoag, Vice President and 1996 $0 - 50,000 -
Director (now resigned) (4)
<FN>
(1) Mr. McGrane's salary for the fiscal year ended December 31, 1996, was based
on an annualized salary of $62,400. Mr. McGrane was not re-elected
President by the Board of Directors. He resigned as a director and
consultant of the Company effective January 24, 1996.
(2) Mr. Rodriguez became the Company's President and Chief Executive Officer on
January 22, 1996. His full time salary for the fiscal year ended December
31, 1996, was based on an averaged annualized salary of $84,000. He was not
paid any consulting fees for 1996 but was paid for 1995 fees in arrears.
(3) Mr. Renton resigned as a Director effective on January 27, 1997. Mr.
Renton's salary for the fiscal year ended December 31, 1996, was based on
an annualized salary of $64,260. He was not paid consulting fees for 1996
but was paid for 1995 fees in arrears.
(4) Dr. Hoag resigned as the Company's Vice President on February 2, 1996 and
remained as a Director until January 27, 1997. He received no salary or
consulting fees during 1996.
</FN>
</TABLE>
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1997, the stock
ownership of each officer and director of the Company, of all officers and
directors of the Company as a group, and of each person known by the Company to
be a beneficial owner of 5% or more of its Common Stock, $.001 par value per
share. Except as otherwise noted, each person listed below is the sole
beneficial owner of the shares and has sole investment and voting power as such
shares. No person listed below has any option, warrant or other right to acquire
additional securities of the Company, except as may otherwise be noted. The
Company had 7,477,559 common shares issued and outstanding as of such date,
which number does not include any options or warrants.
<TABLE>
<CAPTION>
Amount of
Name and Address of Common Stock Owned Percent of Common
of Beneficial Owner Beneficially Stock Outstanding
------------------- ------------ -----------------
<S> <C> <C>
*Robert G. Clarke ................................................ -0- -0-
1489 Marine Drive, Suite 616
West Vancouver, B.C., Canada
*Walter J.K. Pickering ........................................... -0- -0-
8026 Modesto Drive
Delta, B.C., Canada
*Charlie Rodriguez ............................................... 625,000 8.3 (1)
1720 W. Placita de Santos
Tucson, Arizona 85704
Richard Elliot-Square ............................................ 387,499 5.2 (2)
38 Thames Quay
Chelsea Harbour
London SW101PB England
*All directors and executive
officers (3 persons) ................................... 625,000 8.3%
<FN>
(1) Includes 317,000 shares subject to unexercised options which are
exercisable at any time until January 22, 2000.
(2) Includes 193,812 shares standing in the name of Al Zahra International,
Inc., the beneficial ownership of which Mr. Elliot-Square has
acknowledged to the Company.
</FN>
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no transactions, or series of transactions, for the fiscal
year ended December 31, 1996, to which the Company is a party, in which the
amount exceeds $60,000 and in which to the knowledge of the Company, any
director, executive officer, nominee, five percent or greater stockholder, or
any member of the immediate family of any of the foregoing persons, have or will
have any direct or indirect material interest. Certain transactions occurring
subsequent to the year end are discussed below.
The Company had acquired $27,712 of office furniture and equipment
necessary for use of its leased space and business operations. On February 2,
1997, the Company exchanged the remaining depreciable assets for past services
rendered by the Mr. Jeremy Renton and Mr. Ray Hoag, former officers of the
Company.
<PAGE>
On January 22, 1997, 308,000 shares of common stock were issued to Mr.
Charlie Rodriguez, a director of the Company, in lieu of reimbursement for
expenses incurred during 1996 and 1997 totaling $19,250. For services rendered
as officers and directors, Mr Rodriguez was awarded options to purchase 317,000
shares of the Company, Mr. Ray Hoag was awarded options to purchase 50,000
shares of the Company, and Mr. Jeremy Renton was awarded options to purchase
250,000 shares of the Company, all at $0.0625 per share.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The exhibits below marked with an asterisk (*) are
included with and filed as part of this report. Other exhibits have previously
been filed with the Securities and Exchange Commission and are incorporated by
reference to another report, registration statement or form. References to the
"Company" below mean Channel i Inc.
Exhib.
No. Description
3.1 Articles of Incorporation of the Company, incorporated by
reference to Exhibit 3.1 registration statement on Form S-18,
File No. 33-25889-LA.
* 3.2 Bylaws of the Company
3.3 Certificate of Amendment to the Articles of Incorporation of
the Company filed with the Nevada Secretary of State on
October 8, 1993, incorporated by reference to Exhibit 3.3 to
quarterly report on Form 10-QSB for the period ended September
30, 1994.
3.4 Certificate of Amendment to the Articles of Incorporation of
the Company filed with the Nevada Secretary of State on
October 25, 1993, incorporated by reference to Exhibit 2(d) to
registration statement on Form 8-A, File No. 0-25680.
3.5 Certificate of Amendment to the Articles of Incorporation of
the Company filed with the Nevada Secretary of State on March
25, 1995, incorporated by reference to Exhibit 2(e) to
registration statement on Form 8-A, File No. 0-25680.
* 3.6 Certificate of Amendment to the Articles of Incorporation
of the Company designating the Series A Voting Convertible
Preferred Stock, filed with the Nevada Secretary of State on
March 24, 1997.
4.1 Specimen common stock certificate, incorporated by reference
to Exhibit 4.1 to registration statement on Form S-18, File
No. 33-25889-LA.
* 4.2 Specimen Class A Common Stock Purchase Warrant Certificate
* 4.3 Specimen Class B Common Stock Purchase Warrant Certificate
* 4.4 Specimen Class C Common Stock Purchase Warrant Certificate
* 4.5 Specimen Class D Common Stock Purchase Warrant Certificate
* 4.6 Warrant Terms dated February 10, 1997, relating to the Class
A, Class B, Class C and Class D Common Stock Purchase Warrants
<PAGE>
10.1 1994 Employee Stock Compensation Plan of the Company,
incorporated by reference to Exhibit 10.19 to the Company's
Form 10-KSB for the year ended December 31, 1994.
10.2 1994 Compensatory Stock Option Plan of the Company,
incorporated by reference to Exhibit 10.02 to the Company's
Form 10-KSB for the year ended December 31, 1994.
10.3 Employment and Stock Option Agreement dated January 1, 1994,
between the Company and Dr. Joel Burke, incorporated by
reference to Exhibit 10.1 to the Company's Form 10-KSB for the
year ended December 31, 1993.
10.4 Employment and Stock Option Agreement dated January 1, 1994,
between the Company and Dr. Ray Hoag, incorporated by
reference to Exhibit 10.2 to the Company's annual report on
Form 10-KSB for the year ended December 31, 1993.
10.5 Consulting and Stock Option Agreement dated January 1, 1994,
between the Company and Al Zahra International, Inc.,
incorporated by reference to Exhibit 10.4 to the Company's
annual report on Form 10-KSB for the year ended December 31,
1993.
10.6 Consulting and Stock Option Agreement dated July 4, 1994,
between the Company and Philip McGrane, incorporated by
reference to Exhibit 10.1 to the Company's quarterly report on
Form 10-QSB for the period ended June 30, 1994.
10.7 Letter Agreement dated July 20, 1994, between the Company and
Dr. Joel Burke, incorporated by reference to Exhibit 10.2 to
the Company's annual report on Form 10-KSB for the year ended
December 31, 1994.
10.8 Letter Agreement dated July 20, 1994, between the Company and
Dr. Ray Hoag, incorporated by reference to Exhibit 10.5 to the
Company's annual report on Form 10-KSB for the year ended
December 31, 1994.
10.9 Agreement for provision of Customer Information kiosks dated
June 21, 1994, between the Company and London Underground
Limited, incorporated by reference to Exhibit 10.0 to the
Company's quarterly report on Form 10-QSB for the period ended
June 30, 1994.
10.10 Cancellation Agreement dated February 24, 1995, between the
Company and Dr. Joel Burke, incorporated by reference to
Exhibit 10.3 to the Company's annual report on Form 10-KSB for
the year ended December 31, 1994.
10.11 Cancellation Agreement dated February 24, 1995, between the
Company and Dr. Ray Hoag, incorporated by reference to Exhibit
10.6 to the Company's annual report on Form 10-KSB for the
year ended December 31, 1994.
10.12 Employment Agreement dated November 1, 1994, between the
Company and Charlie Rodriguez, incorporated by reference to
Exhibit 10.17 to the Company's annual report on Form 10-KSB
for the year ended December 31, 1994.
10.13 European Associate Agreement between the Company and
TransEurope Communication Ltd. dated August 18, 1995, for the
provision of voice and facsimile communication from the zone
of Poland, incorporated by reference to Exhibit 10.1 to the
Company's quarterly report on Form 10-QSB for the year ended
September 30, 1995.
<PAGE>
10.14 European Associate Agreement between the Company and
TransEurope Communication Ltd. dated August 18, 1995, for the
provision of voice and facsimile communication from the zone
of Slovakin, incorporated by reference to Exhibit 10.2 to the
Company's quarterly report on Form 10-QSB for the year ended
September 30, 1995.
10.15 European Associate Agreement between the Company and
TransEurope Communication Ltd. dated August 18, 1995, for the
provision of voice and facsimile communication from the zone
of Mexico, incorporated by reference to Exhibit 10.3 to the
Company's quarterly report on Form 10-QSB for the year ended
September 30, 1995.
10.16 European Associate Agreement between the Company and
TransEurope Communication Ltd. dated August 18, 1995, for the
provision of voice and facsimile communication from the zone
of Canada, incorporated by reference to Exhibit 10.4 to the
Company's quarterly report on Form 10-QSB for the year ended
September 30, 1995.
10.17 European Associate Agreement between the Company and
TransEurope Communication Ltd. dated August 18, 1995, for the
provision of voice and facsimile communication from the zone
of Slovenia, incorporated by reference to Exhibit 10.5 to the
Company's quarterly report on Form 10-QSB for the year ended
September 30, 1995.
10.18 European Associate Agreement between the Company and
TransEurope Communication Ltd. dated August 18, 1995, for the
provision of voice and facsimile communication from the zone
of Belgium, incorporated by reference to Exhibit 10.6 to the
Company's quarterly report on Form 10-QSB for the year ended
September 30, 1995.
10.19 Letter of Understanding dated January 15, 1996, between the
Company and J. Robert Shipman, incorporated by reference to
Exhibit 10.13 to the Company's annual report on Form 10-KSB
for the year ended December 31, 1995.
* 10.20 Agreement dated February 2, 1997, between Ray Hoag and the
Company.
* 10.21 Agreement dated February 2, 1997, between C. Jeremy Renton and
the Company.
* 10.22 Stock Option Agreement dated January 22, 1997, between the
Company and Charlie Rodriguez.
* 10.23 Stock Option Agreement dated January 22, 1997, between the
Company and C. Jeremy Renton.
* 10.24 Stock Option Agreement dated January 22, 1997, between the
Company and Ray Hoag.
(b) Reports on Form 8-K.
No reports on Form 8K were filed in the 4th quarter of 1996.
<PAGE>
CHANNEL i INC.
FINANCIAL STATEMENTS
December 31, 1996 and 1995
<PAGE>
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Balance Sheets 2
Statements of Operations 3
Statements of Cash Flows 4
Statement of Stockholders' Equity 5 - 6
Notes to Financial Statements 7 - 11
<PAGE>
Johnson, Holscher & Company, P.C.
Certified Public Accountants
(Letterhead)
Stockholders and Board of Directors
Channel i Inc.
INDEPENDENT AUDITORS' REPORT
We have audited the consolidated balance sheets of Channel i Inc., (formerly
Channel i Limited and Athena Ventures, Inc.) as of December 31, 1996 and 1995,
and the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits. We did not
audit the financial statements of Channel i PLC, a wholly-owned subsidiary,
which statements reflect total assets of $130 and $66,593 as of December 31,
1996 and 1995, respectively, and total revenues of $0 for the years then ended.
The December 31, 1996 statements were not audited. The December 31, 1995
statements were audited by other auditors, on a going concern basis using
accounting principles generally accepted in England and Wales, whose reports
have been furnished to us, and our opinion, insofar as it relates to the amounts
included for Channel i PLC, is based solely on the reports of the other
auditors. The financial statements of Channel i Limited as of December 31, 1993
and the period from inception (August 6, 1987) to December 31, 1993, were
audited by other auditors whose report dated March 31, 1994, expressed an
unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Channel i Inc. as of December 31,
1996 and 1995, and the results of its operations and its cash flows for the
years then ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 8 to the
financial statements, the Company has not generated revenues from operations
which raises substantial doubt about its ability to continue as a going concern.
Management's plan in regard to these matters are also described in Note 8. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Johnson, Holscher & Company, P.C.
- -------------------------------------
Johnson, Holscher & Company, P.C.
April 4, 1997
<PAGE>
<TABLE>
<CAPTION>
CHANNEL i INC.
(Formerly Channel i Limited)
(A Development Stage Company)
Balance Sheets
December 31, December 31,
1996 1995
(Audited) (Audited)
--------- ---------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,809 $ 12,158
Deposits - 5,500
Trade Name 22,189 22,189
Other (1,452) 28,726
------ ------
Total Current Assets 22,546 68,573
------ ------
EQUIPMENT
Equipment and fixtures 27,712 99,927
Less accumulated depreciation (13,857) (43,367)
------- -------
Net Equipment 13,855 56,560
------ ------
OTHER
Deferred tax asset, net of valuation allowance - -
------ ------
Total Assets $ 36,401 $ 125,133
====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable - trade $ 73,602 $104,904
Accrued liabilities 58,239 21,730
Loan payable - Affiliate - 2,657
Advance on sale of stock - 455,057
Capitalized leases payable - current - 5,985
------ -----
Total Current Liabilities 131,841 5901,333
LONG-TERM LIABILITIES
Capitalized leases payable - 7,005
------ -----
Total Liabilities 131,841 597,338
------- -------
STOCKHOLDERS' EQUITY
Preferred stock, $.00001 par value; authorized
5,000,000 shares; issued and outstanding
0 shares at December 31, 1996 and December 31, 1995 - -
Common stock $. 001 par value; authorized
50,000,000 shares; issued and outstanding
5,184,559 and 4,606,061 shares at December 31, 1996 and
December 31, 1995, respectively 5,185 4,606
Paid - in capital 2,496,574 1,998,612
Accumulated deficit through development stage (2,597,199) (2,475,423)
Subscribed shares - -
------- -------
Total Stockholders' Equity (95,440) (472,205)
------- --------
Total Liabilities and Stockholders' Equity $ 36,401 125,133
======== =======
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
<CAPTION>
CHANNEL i INC.
(Formerly Channel i Limited)
(A Development Stage Company)
Statements of Operations
Inception
(August 6,
Year Ended December 31, 1987) to
--------------------------------------- December 31,
1996 1995 1994 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Administrative services $20,000 $1,366 $3,938 $25,304
Interest income - 8,405 4,702 14,452
Other income - 3,812 -- 3,812
----- ----- ------ -----
Total Revenues 20,000 13,583 8,640 43,568
------ ------ ----- ------
EXPENSES
Salaries and benefits 1,239 107,859 201,300 327,706
Professional fees 26,176 80,152 112,872 234,000
Interest - 3,885 5,601 9,564
Consulting fees 31,913 470,865 348,345 938,624
Research & development - 7,800 77,898 85,698
Administrative costs 77,227 372,000 442,679 977,318
Depreciation 5,221 25,107 35,521 67,857
----- ------ ------ ------
Total Expenses 141,776 1,067,668 1,224,216 2,640,767
------- --------- --------- ---------
Net (Loss) $(121,776) $(1,054,085) $(1,215,576) $(2,597,199)
========= =========== =========== ===========
Income (Loss) per Share $ (0.02) $ (0.23) $ (0.41) $ (1.84)
========= ========= ========== ===========
Weighted Average Number of
Common Shares Outstanding 5,113,041 4,568,321 2,972,659 1,411,732
========= ========= ========= =========
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
CHANNEL i INC.
(Formerly Channel i Limited)
(A Development Stage Company)
Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
Inception
(August 6,
Year Ended December 31, 1987) to
--------------------------------------- December 31,
1996 1995 1994 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net (loss) $(121,776) $ (1,054,085) $ (1,215,576) $ (2,597,199)
Adjustments to reconcile net (loss) to cash
Depreciation 5,221 25,107 35,521 67,857
Loss on sale of fixed assets 1,596 44,502 1,663 77,761
Changes 'in Assets and Liabilities
Deposits 5,500 10,000 (10,500) -
Trade name - - (22,189) (22,199)
Other assets 30,178 6,101 (31,074) 1,452
Accounts payable (31,302) 29,811 11,597 81,102
Accrued liabilities 36,509 (1,113) 1,928 58,239
------ ------ ----- ------
Net Cash Flows Used for Operating Activities (44,074) (939,677) (1,228,630) (2,332,977)
------- -------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of equipment - (3,643) (130,172) (164,326)
Organizational Costs - - - (1,035)
------- ------- ------- ------
Net Cash Flows Used for Investing Activities - (3,643) (130,172) (165,361)
------- ------ -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from Affiliate - - - 12,456
Payment of loans from Affiliate - (28) (9,771) (9,799)
Proceeds from lease obligations - - 42,449 58,820
Payments on lease obligations (9,759) (29,459) (16,371) (55,589)
Advance on sale of stock - 455,057 - 455,057
Sale of stock, net of offering costs 43,484 200,000 1,667,642 2,039,202
------ ------- --------- ---------
Net Cash Flows Provided by Financing Activities 33,725 625,570 1,683,949 2,500,147
------ ------- --------- ---------
Net increase in cash (10,349) (317,750) 325,147 1,809
Cash and cash equivalents - Beginning of period 12,158 329,908 4,761 -
------ ------- ----- -------
Cash and cash equivalents - End of period $1,809 $12,158 $329,908 $ 1,809
====== ======= ======== ==========
NON-CASH ACTIVITIES
60,800 shares of common stock have been issued for services performed since
inception. During 1995, the Company gave equipment with a cost of $22,324 to a
former director as compensation.
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
<CAPTION>
CHANNEL i INC.
(Formerly Channel i Limited)
(A Development Stage Company)
Statements of Stockholders' Equity
Deficit
Accumulated
Common Stock During
------------------ Paid - in Development
Shares Amount Capital Stage Total
------ ------ ------- ----- -----
<S> <C> <C> <C> <C> <C>
Issued to organizers of corporation
for cash ($.0025 per share) 4,000,000 $4,000 6,000 $ - 10,000
Net income, August 6, 1987
(inception) to December 31, 1987 - - - 56 56
Balance, December 31, 1987 4,000,000 4,000 6,000 56 10,056
Issued to various stockholders for
cash ($.0025 per share) 2,100,000 2,100 3,150 - 5,250
Issued for services performed
($.0025 per share) 680,000 680 1,020 - 1,700
Net loss, Year ended December 31,
1988 - - - (5,380) (5,380)
Balance, December 31, 1988 6,780,000 6,780 10,170 (5,324) 11,626
Public offering, November 10, 1989 2,008,000 2,008 48,192 - 50,200
Deferred costs of public offering - - (28,574) - (28,574)
Not loss, Year ended December 31,
1989 - - - (5,112) (5,112)
Balance, December 31, 1989 8,788,000 9,788 29,788 (10,436) 28,140
Offering costs - - (10,500) - (10,500)
Net loss, Year ended December 31,
1990 - - - (17,640) (17,640)
Balance, December 31, 1990 8,788,000 8,788 19,288 (28,076) -
Net loss, Year ended December 31,
1991 - - - - -
Balance, December 31, 1991 8,788,000 8,788 19,288 (28,076) -
Net loss, Year ended December 31,
1992 - - - - -
Balance, December 31, 1992 8,788,000 8,788 19,288 (28,076) -
(Continued)
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
CHANNEL i INC.
(Formerly Channel i Limited)
(A Development Stage Company)
Statements of Stockholders' Equity
(Continued)
Deficit
Accumulated
Common Stock During
------------------ Subscribed Paid - in Development
Shares Amount Shares Capital Stage Total
------ ------ -------- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
everse stock split of one
share for 100 shares (8,700,120) (8,700) - 8,700 - -
Issued shares for acquisition
of Channel i PLC 400,000 400 - 2,100 - 2,500
Issued shares for services 800,000 800 - 4,200 - 5,000
Subscribed shares - - 100,000 - - 100,000
Net loss, Year ended
December 3 1, 1993 - - - - (177,686) (177,686)
---------- ------ ------ ---------- ----------- --------
Balance, December 31,1993 1,287,880 1,288 100,000 34,288 (205,762) (70,186)
Public Offering, February
1994 ($.525 per share) 500,000 500 - 262,000 - 262,500
Public Offering, August
1994 ($.55 per share) 1,818,181 1,818 - 998,182 - 1,000,000
Public Offering, November
1994 ($.60 per share) 900,000 900 504,242 - 505,142
Subscribed Shares - - (100,000) - - (100,000)
Net loss, Year ended
December 31, 1994 - - - - (1,215,576) (1,215,576)
---------- ------ ------ ---------- ----------- --------
Balance. December 31, 1994 4,506,061 4,506 - 1,798,712 (1,421,338) 381,880
Public Offering, April, 1995
($2.00 per share) 100,000 100 - 199,900 - 200,000
Net loss, Year ended
December 31, 1995 - - - - (1,054,085) (1,054,085)
---------- ------ ------ ---------- ----------- --------
Balance, December 31, 1995 4,606,061 4,606 - 1,998,612 (2,475,423) (472,205)
Cancellation of shares (50,002) (50) - - - (50)
Public Offering, February, 1996
($2.50 per share) 140,000 140 - 349,860 - 350,000
($.28 per share) 484,000 484 - 134,607 - 135,091
($3,00 Per share) 4,500 5 - 13,495 - 13,500
Net loss, Year ended
December 31, 1996 - - - - (121,776) (121,776)
---------- ------ ------ ---------- ----------- --------
Balance, December 31, 1996 $5,184,559 $5,185 $ - $2,496,574 $(2,597,199) (95,440)
========== ====== ====== ========== =========== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
CHANNEL i INC.
(Formerly Channel i Limited)
Notes to Financial Statements
December 31, 1996 and 1995
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Channel i Inc. (formerly Channel i Limited and Athena
Ventures, Inc.) (the Company) was incorporated on August 6,
1987 under the laws of the State of Nevada. The Company is a
development stage company. On November 4, 1993, the Company
acquired 100 percent of the issued and outstanding shares of
Channel i PLC (PLC), a public limited company incorporated
under the laws of England and Wales which resulted in PLC
being a wholly owned subsidiary of the Company.
Basis of Accounting
The Company utilizes the accrual basis of accounting. PLC
financial statements have been prepared using accounting
principles generally accepted in England and Wales.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could
differ from those estimates.
Equipment
Depreciation on equipment, furniture and fixtures is provided
on the straight-line method with asset lives of five to seven
years for the assets placed in service. Depreciation expense
for the years ended December 31, 1996 and 1995 was $5,221 and
$25,107, respectively.
Principles of Consolidation
The consolidated financial statements for the years ended
December 31, 1996 and 1995 include the accounts of Channel i
Inc. and Channel i PLC. All significant intercompany
transactions and account balances have been eliminated.
Research and Development Costs
Research and development costs are expensed as incurred.
Foreign Currency Translation
Assets and liabilities denominated in foreign currencies are
translated into United States dollars using the average rate
of exchange in effect at December 31, 1996 and 1995.
F-7
<PAGE>
CHANNEL i INC.
(Formerly Channel i Limited)
Notes to Financial Statements
December 31, 1996 and 1995
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Foreign Currency Translation (Continued)
Revenue and expense transaction gains and losses are recorded
at the exchange rates prevailing at the time the transaction
took place. Currency transaction gains and losses are included
in general and administrative expenses.
Cash Equivalents
For purposes of the Statement of Cash Flows, cash equivalents
are defined as investments with maturities of three months or
less.
NOTE 2: ACQUISITION
On November 4, 1993, the Company acquired 100 percent of the
1,000,000 shares of common stock outstanding of PLC in
exchange for the Company issuing 400,000 shares of common
stock valued at $2,500. The transaction was accounted for as a
purchase under Accounting Principles Board Opinion No. 16. As
part of the transaction, the parties agreed to place the
400,000 shares of common stock into an escrow account, whereby
the escrowed shares would be released over a period of time
based upon performance. During 1994, 349,998 of the escrowed
shares were released. The remaining 50,002 shares were
canceled in 1996 because the relevant conditions of the escrow
agreement were not met.
NOTE 3: LOAN PAYABLE - AFFILIATE
Loan Payable - Affiliate represents the amount of unsecured
loans outstanding to the directors of PLC. As of December 31,
1996 and 1995, loans payable totaled $0 and $2,657,
respectively.
NOTE 4: CAPITALIZED LEASES PAYABLE
At December 31, 1995, PLC had the following capitalized lease
obligations:
1995
Total leases payable $12,990
Less current maturities 5,985
Long-term portion $ 7,005
F-8
<PAGE>
CHANNEL i INC.
(Formerly Channel i Limited)
Notes to Financial Statements
December 31, 1996 and 1995
NOTE 5: STOCKHOLDERS' EQUITY
Common Stock
On November 4, 1993, the Company issued 800,000 shares of
common stock valued at $5,000 to officers for prior services.
On November 15, 1993, the Company entered into a private
placement agreement to raise at least $250,000 through the
sale of 500,000 shares of its common stock.
During the year ended December 31, 1994, the Company issued
3,218,181 shares of common stock through three private
placements in exchange for $1,667,642, net of issuance costs
of $34,858.
During the year ended December 31, 1995, the Company raised
$200,000 through a private placement of 100,000 shares of its
common stock. In addition, cash was received in advance of
stock sales totaling $455,057.
During the year ended December 31, 1996, the Company raised
$43,484, in addition to the previous advance, through a
private placement of 628,500 shares of its common stock.
Preferred Stock
In December, 1994, the Company authorized for issuance
5,000,000 shares of 9% Cumulative Convertible Preferred Stock.
At December 31, 1996 and 1995, no preferred shares were
issued.
NOTE 6: COMMITMENTS
Leases
The Company was obligated under a non-cancelable operating
lease for office space which expired December 31, 1995. Under
this lease, the Company was responsible for base rental
payments of $6,714 plus certain other basic costs for the year
ended December 31, 1995. The Company entered into a sublease
agreement for this office space effective January 1, 1995 to
December 31, 1995 for monthly payments of $900.
In addition, the Company entered into an operating lease for
office and lodging space which expired November 14, 1995.
F-9
<PAGE>
CHANNEL i INC.
(Formerly Channel i Limited)
Notes to Financial Statements
December 31, 1996 and 1995
NOTE 6: COMMITMENTS (Continued)
Leases (Continued)
Rent expense charged to operations for the years ended
December 31, 1996 and 1995 was $8,402 and $46,643,
respectively.
Agreements
The Company has entered into employment and consulting
agreements with various parties. Under these agreements, the
parties currently own options to purchase 967,000 shares of
the Company's common stock at $.0625 per share. Option shares
are exercisable until January 22, 2000. In addition, in
January and February, 1997, the Company issued 408,000 shares
of common stock for services rendered.
Stock Sales
In February, 1997, the Company offered for sale 1,785,000
shares of common stock units, with four warrants attached and
596,250 preferred stock units, with three common stock
warrants attached.
NOTE 7: INCOME TAXES
Channel i Inc. incurred an operating loss for the years
ended December 31, 1996 and 1995 of $121,776 and $316,312,
respectively. During the year ended December 31, 1993, the
Company adopted FASB No. 109.
As of December 31, 1996 and 1995, the Company had net
operating loss carryforwards of $1,460,089 and $1,338,313,
respectively, which expire between the years 2005 - 2011. The
deferred tax assets resulting from these carryforwards were as
follows:
1996 1995
Deferred tax assets $481,829 $441,643
Less valuation of net assets (481,829) (441,643)
$ - $ -
F-10
<PAGE>
CHANNEL i INC.
(Formerly Channel i Limited)
Notes to Financial Statements
December 31, 1996 and 1995
NOTE 8: GOING CONCERN AND DISCONTINUED OPERATIONS
At December 31, 1996 and 1995, the Company has not generated
revenues from operations. Management plans to merge the
remaining assets with an existing company during 1997.
During 1997, management is discontinuing the operations of
Channel i PLC, a wholly owned English subsidiary. No assets or
gains are anticipated to be realized from the discontinued
operations.
F-11
<PAGE>
Exhibit 3.6
BYLAWS
of
CHANNEL i INC.
ARTICLE I
General
1.01 Applicability. These Bylaws provide rules for conducting the
business of this corporation (the "Company"). Every shareholder and person who
subsequently becomes a shareholder, the Board of Directors, Committees and
Officers of the Company shall comply with these Bylaws, as amended from time to
time. All bylaws and resolutions heretofore adopted by the Board of Directors
are hereby repealed, to the extent in conflict with the provisions of these
Bylaws.
1.02 Offices. The principal office of the Company shall be selected by
the Board of Directors from time to time and may be within or without the State
of Nevada. The Company may have such other offices, within or without the State
of Nevada, as the Board of Directors may, from time to time, determine. The
registered office of the Company required by the General Corporation Law of
Nevada to be maintained in Nevada may be, but need not be, identical with the
principal office if in Nevada, and the address of the registered office may be
changed from time to time by the Board of Directors.
1.03 Definition of Terms. Terms defined in the Company's Certifcate of
Incorporation, as amended and restated from time to time (the "Charter"), shall
have the same meanings when used in these Bylaws.
ARTICLE II
Stock Certificates
2.01 Stock Certificates. The shares of the Company's capital stock
shall be represented by consecutively numbered certificates signed by the
President or a Vice President and the Secretary or Assistant Secretary of the
Company, and sealed with the seal of the Company, or a facsimile thereof. If
certificates are signed by a transfer agent and registrar other than the Company
or an employee thereof, the signatures of the officers of the Company may be
facsimile. In case any officer who has signed (by real or facsimile signature) a
certificate shall have ceased to hold such office before the certificate is
issued, it may be issued by the Company with the same effect as if he continued
to hold such office on the date of issue. Each certificate representing shares
shall state upon the face thereof: (i) that the Company is organized under the
laws of the State of Nevada; (ii) the name of the person to whom issued; (iii)
the number, class and series (if any) of shares which such certificate
represents; and (iv) the par value, if any, of the shares represented by such
certificate, or a statement that the shares have no par value.
If any class or series of shares is subject to special powers,
designations, preferences or relative, participating or other special rights,
then such (together with all qualifications, limitations or restrictions of such
preferences or rights) shall be set forth in full or summarized on the
certificate representing such class or series. Moreover, each certificate shall
state that the Company will furnish, without charge, to the registered holder of
the shares represented by such certificate who so requests a statement setting
forth such information in full. Each certificate also shall set forth
restrictions upon transfer, if any, or a reference thereto, as shall be adopted
by the Board of Directors or by the shareholders, or as may be contained in this
Article II. Any shares issued without registration under the Securities Act of
1933, as amended, shall bear a legend restricting transfer unless such shares
are registered under such act or an exemption from registration is available for
a proposed transfer.
2.02 Consideration for Shares. Shares of the Company shall be issued,
and treasury shares may be disposed of, for such consideration or considerations
as shall be fixed from time to time by the Board of Directors. No shares shall
be issued for less than the par value thereof. The consideration for the
issuance of shares may be paid, in whole or in part, in money, in other
property, tangible or intangible, or in labor or services actually performed for
the Company, or as permitted in the Charter.
1
<PAGE>
2.03 Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Company alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, and the Board of Directors when authorizing
such issue of a new certificate or certificates may in its discretion, and as a
condition precedent to the issuance thereof, require the owner of such lost or
destroyed certificate or certificates or his legal representative to advertise
the same in such manner as it shall require, and/or furnish to the Company a
bond in such sum as it may direct, as indemnity against any claim that may be
made against the Company. Except as hereinabove in this section provided, no new
certificate or certificates evidencing shares of stock shall be issued unless
and until the old certificate or certificates, in lieu of which the new
certificate or certificates are issued, shall be surrendered for cancellation.
2.04 Registered Holder as Owner. The Company shall be entitled to treat
the registered holder of any shares of the Company as the owner of such shares,
and shall not be bound to recognize any equitable or other claim to, or interest
in, such shares or rights deriving from such shares, unless and until such
purchaser, assignee, transferee or other person becomes the registered holder of
such shares, whether or not the Company shall have either actual or constructive
notice of the interests of such purchaser, assignee, or transferee or other
person. The purchaser, assignee, or transferee of any of the shares of the
Company shall not be entitled: to receive notice of the meetings of the
shareholders; to vote at such meetings; to examine a list of the shareholders;
to be paid dividends or other sums payable to shareholders; or to own, enjoy and
exercise any other property or rights deriving from such shares against the
Company, until such purchaser, assignee, or transferee has become the registered
holder of such shares.
2.05 Reversions. Cash, property or share dividends, shares issuable to
shareholders in connection with a reclassification of stock, and the redemption
price of redeemed shares, which are not claimed by the shareholders entitled
thereto within TWO years after the dividend or redemption price became payable
or the shares became issuable, despite reasonable efforts by the Company to pay
the dividend or redemption price or deliver the certificate(s) for the shares to
such shareholders within such time shall, at the expiration of such time, revert
in full ownership to the Company, and the Company's obligation to pay any such
dividend or redemption price or issue such shares, as the case may be, shall
thereupon cease; provided, that the Board of Directors may at any time and for
any reason satisfactory to it, but need not, authorize (i) payment of the amount
of cash or property dividend or (ii) issuance of any shares, ownership of which
has reverted to the Company pursuant to this Section of Article II, to the
person or entity who or which would be entitled thereto had such reversion not
occurred.
2.06 Returned Certificates. All certificates for shares changed or
returned to the Company for transfer shall be marked by the Secretary
"CANCELLED," with the date of cancellation, and the transaction shall be
immediately recorded in the certificate book opposite the memorandum of their
issue. The returned certificate may be inserted in the certificate book.
2.07 Transfer of Shares. Upon surrender to the Company or to a transfer
agent of the Company of a certificate of stock endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, and such
documentary stamps as may be required by law, it shall be the duty of the
Company to issue a new certificate, upon payment by the transferee of such
nominal charge therefor as the Company or its transfer agent may impose. Each
such transfer of stock shall be entered on the stock book of the Company.
Respecting any securities issued in reliance upon Rule 903 of Regulation S of
the Securities and Exchange Commission at any time when the Company is not a
"reporting issuer" as defined in Regulation S, no transfer of such securities
shall be registered unless made in accordance with the provisions of Regulation
S. At any time when the Company has appointed a transfer agent for its shares,
the remainder of this paragraph shall apply. A transfer of shares evidenced by a
certificate bearing a standard form of legend which restricts transfer of the
shares (except in the event of registration or the availability of an exemption
under the Securities Act of 1933) shall not require the Company's consent if the
shares to be sold are proposed to be sold in compliance with either Rule 144,
Rule 701 or Rule 904 of Regulation S of the Securities and Exchange Commission
and the transfer is accompanied by an opinion of counsel (which need not be the
Company's counsel) which states that the proposed transfer will comply with the
applicable rule or regulation being relied upon for transfer. In view of
potential liability to the Company and its officers and directors for
interfering without firm and clear legal grounds in the making of, or delaying,
any sale of the Company's shares pursuant to Rules 144, 701 or 904, it is
2
<PAGE>
declared to be the Company's policy not to interfere with or hinder any transfer
proposed to be made pursuant to any of such rules, if accompanied by an opinion
of counsel satisfactory to the Company and its counsel in light of surrounding
facts.
2.08 Transfer Agent. The Board of Directors shall have power to appoint
one or more transfer agents and registrars for the transfer and registration of
certificates of stock of any class, and may require that stock certificates
shall be countersigned and registered by one or more of such transfer agents and
registrars. Any powers or duties with respect to the transfer and registration
of certificates may be delegated to the transfer agent and registrar.
ARTICLE III
Meetings of the Shareholders
3.01 Annual Meeting. The annual meeting of the shareholders shall be
held between the 90th and 180th day after the tax year end, at such date and
time and at such place, within or without the State of Nevada, as is designated
from time to time by the Board of Directors and stated in the notice of the
meeting. At each annual meeting the shareholders shall elect a Board of
Directors in accordance with the Charter and shall transact such other business
as may properly be brought before the meeting.
3.02 Special Meetings. Unless otherwise proscribed by law, the Charter
or these Bylaws, special meetings of the shareholders may be called by the
Chairman of the Board, the President, or a majority of the Board of Directors.
The President shall call a special meeting upon the Secretary's receipt of
written demand therefor by the holders of not less than ten percent (10%) of the
total voting power. Requests for special meetings shall state the purpose or
purposes of the proposed meeting.
3.03 Notice of Meetings. Except as otherwise provided by law, the
Charter or these Bylaws, written notice of any annual or special meeting of the
shareholders shall state the place, date, and time thereof and, in the case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be given to each shareholder of record entitled to vote at such meeting not
fewer than 10 nor more than 60 days prior to the meeting by any means permitted
in Section 8.01 hereof. No business other than that specified in the notice of a
special meeting shall be transacted at any such special meeting.
3.04 Record Date. In order that the Company may determine shareholders
of record who are entitled (i) to notice of or to vote at any shareholders
meeting or adjournment thereof, (ii) to express written consent to corporate
action in lieu of a meeting, (iii) to receive payment of any dividend or other
distribution, or (iv) to allotment of any rights or to exercise any rights in
respect of any change, conversion or exchange of stock, or in order that the
Company may make a determination of shareholders of record for any other lawful
purpose, the Board of Directors may fix in advance a date as the record date for
any such determination. Such date shall not be more than 60 days, and in case of
a meeting of shareholders, not less than 10 days prior to the date on which the
particular action, requiring such determination of shareholders, is to be taken,
and in no event may the record date precede the date upon which the Directors
adopt a resolution fixing the record date.
If no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is given (as defined in Section 8.01 hereof) or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of the
shareholders. 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 for the adjournment. The record date for
determining shareholders entitled to consent to corporate actions without a
meeting shall be fixed as provided in Section 3.12 hereof.
3.05 Voting List. At least 10 days but nor more than 60 days before any
meeting of shareholders, the officer or transfer agent in charge of the
Company's stock transfer books shall prepare a complete alphabetical list of the
shareholders entitled to vote at such meeting, which list shows the address of
3
<PAGE>
each shareholder and the number of shares registered in his or her name. The
list so prepared shall be maintained at the corporate offices of the Company and
shall be open to inspection by any shareholder, for any purpose germane to the
meeting, at any time during usual business hours during a period of no fewer
than 10 days prior to the meeting. The list shall also be produced and kept open
at any shareholders meeting and, except as otherwise provided by law, may be
inspected by any shareholder or proxy of a shareholder who is present in person
at the meeting. The original stock transfer books shall be prima facie evidence
as to who are the shareholders entitled to examine the list of shareholders and
to vote at any meeting of shareholders.
3.06 Quorum; Adjournments. (a) The holders of a majority of the total
voting power at any shareholders meeting present in person or by proxy shall be
necessary to and shall constitute a quorum for the transaction of business at
all shareholders meetings, except as otherwise provided by law or by the
Articles.
(b) If a quorum is not present in person or by proxy at any
shareholders meeting, a majority of the voting shares present or represented
shall have the power to adjourn the meeting from time to time to the same or
another place within 30 days thereof and no further notice of such adjourned
meeting need be given if the time and place thereof are announced at the meeting
at which the adjournment is taken.
(c) Even if a quorum is present in person or by proxy at any
shareholders meeting, a majority of the voting shares present or represented
shall have the power to adjourn the meeting from time to time, for good cause,
without notice of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjourment is taken, until a new date
which is not more than 30 days after the date of the original meeting.
(d) Any business which might have been transacted at a shareholders
meeting as originally called may be transacted at any meeting held after
adjournment as provided in this Section 3.06 at which reconvened meeting a
quorum is present in person or by proxy. Anything in paragraph (b) of this
Section to the contrary notwithstanding, if an adjournment is for more than 30
days, or if after an adjournment a new record date is fixed for the adjourned
meeting, notice of the adjourned meeting shall be given to each shareholder of
record entitled to vote thereat.
(e) The shareholders present at a duly called meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
3.07 Proxies. At all meetings of shareholders, a shareholder may vote
by proxy, executed in writing by the shareholder or by his duly authorized
attorney in fact. Any proxyholder shall be authorized to sign, on the
shareholder's behalf, any written consent for shareholder action taken in lieu
of a meeting. Such proxy shall be filed with the Secretary of the Company before
or at the time of the meeting. No proxy shall be valid after the expiration of
six (6) months from the date of its execution, unless coupled with an interest,
or unless the person executing it specifies therein the length of time for which
it is to continue in force, which in no case shall exceed three (3) years from
the date of its execution.
3.08 Voting of Shares. At any shareholders meeting every shareholder
having the right to vote shall be entitled to vote in person or by proxy. Except
as otherwise provided by law, by the Articles or in the Board resolution
authorizing the issuance of shares, each shareholder of record shall be entitled
to one vote (on each matter submitted to a vote) for each share of capital stock
registered in his, her or its name on the Company's books. Except as otherwise
provided by law or by the Articles, all matters submitted to the shareholders
for approval shall be determined by a majority of the votes cast (not counting
abstentions) at a legal meeting commenced with a quorum.
3.09 Voting of Shares by Certain Holders. Neither treasury shares, nor
shares of its own stock held by the Company in a fiduciary capacity, nor shares
held by another corporation if the majority of the shares entitled to vote for
the election of directors of such other corporation is held by the Company,
shall be voted at any meeting or counted in determining the total number of
outstanding shares at any given time.
Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the bylaws of such
corporation may prescribe, or, in the absence of such provision, as the board of
directors of such corporation may determine.
4
<PAGE>
Shares held by an administrator, executor, personal representative,
guardian, or conservator may be voted by him, either in person or by proxy,
without a transfer of such shares into his name. Shares standing in the name of
a trustee may be voted by him, either in person or by proxy, but no trustee
shall be entitled to vote shares held by him without a transfer of such shares
into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority to do so
be contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
3.10 Chairman. The Chairman of the Board of Directors of the Company,
if there is one, or in his absence, the President, shall act as chairman at all
meetings of shareholders.
3.11 Manner of Shareholder Voting. Voting at any shareholders' meeting
shall be oral or by show of hands; provided, however, that voting shall be by
written ballot if such demand is made by any shareholder present in person or by
proxy and entitled to vote.
3.12 Informal Action by Shareholders; Record Date. Any action required
or permitted to be taken at a meeting of the shareholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by a majority of the total
voting power; provided, that where an action requires a greater proportion of
the total voting power, then the consent shall be signed by such greater
proportion. No written consent will be effective unless written consents, signed
by a sufficient proportion of shareholders to take action, are delivered to the
Company within sixty (60) days of the date of the earliest such consent. Such
consent shall have the same force and effect as a vote of the shareholders, and
may be stated as such in any document filed with the Secretary of State of
Nevada under the General Corporation Law of Nevada. Prompt notice of such action
by written consent of less than all shareholders entitled to vote shall be given
to all shareholders who have not consented in writing to the action taken.
The record date for determining shareholders entitled to consent to
corporate actions in writing without a meeting (the "consent record date") shall
not precede, and shall not be more than ten (10) days after, the date upon which
the resolution fixing the record date was adopted. However, if no consent record
date is fixed, the consent record date shall be, respectively, (i) if prior
action by the Board of Directors is required under the General Corporation Law
of Nevada for the consent to be validly taken, the close of business on the day
on which the Board of Directors adopts the resolution taking such prior action;
and (ii) if prior action by the Board of Directors is not required, the first
date on which a properly signed and dated consent setting forth the action taken
or proposed to be taken is delivered as required above.
3.13 Presiding Officers; Order of Business. (a) Shareholders meetings
shall be presided over by the Chairman of the Board; or if the Chairman (and
Vice Chairman) is not present, by the President; or if the President is not
present, by a Vice President; or if a Vice President is not present, by such
person chosen by the Board of Directors; or if none, by a chairperson to be
chosen at the meeting by shareholders present in person or by proxy who own a
majority of the voting power present. The Secretary of a shareholders meeting
shall be the Secretary of the Company; or if the Secretary is not present, an
Assistant Secretary; or if an Assistant Secretary is not present, such person as
may be chosen by the Board of Directors; or if none, by such person who is
chosen by the chairperson at the meeting.
(b) The following order of business, unless otherwise ordered at the
shareholders meeting by the chairperson thereof, shall be observed as far as
practicable and consistent with the purposes of the meeting:
1. Calling of the shareholders' meeting to order.
5
<PAGE>
2. Presentation of proof of mailing of the notice of the meeting
and, if a special meeting, the call thereof.
3. Presentation of proxies.
4. Determination and announcement that a quorum is present.
5. Reading and approval (or waiver thereof) of the minutes of the
previous meeting of shareholders.
6. Reports, if any, of officers.
7. Election of directors, if the meeting is an annual meeting or
a meeting called for such purpose.
8. Consideration of the specific purpose or purposes for which
the meeting has been called, other than election of directors.
9. Transaction of such other business as may properly come before
the meeting.
10. Adjournment.
3.14 Annual Report. The President of the Company shall prepare an
annual report which will set forth a statement of affairs of the Company as of
the end of its last fiscal year, including a balance sheet, an income statement
and a statement of changes in financial position, which need not be audited, and
present them at the annual meeting of shareholders. Failure to prepare or
present an annual report shall not affect the validity of any shareholder
meeting. No such report need be prepared or presented for any fiscal year in
which the Company was inactive. This Section shall not apply as to any fiscal
year if the Company (i) was at the year end subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, and
subsequently furnishes to the shareholders an annual report or report on Form
10-K under such Act covering such fiscal year, or (ii) furnishes to shareholders
an Information Statement which conforms to the requirements of Rule 15c2-11 of
the Securities and Exchange Commission.
ARTICLE IV
Directors, Powers and Meetings
4.01 General Powers. All corporate powers shall be exercised, and the
Company's business and affairs shall be managed, by or under the authority of
its Board of Directors, except as otherwise provided in the General Corporation
Law of Nevada or the Charter.
4.02 Number, Tenure and Qualifications. The Company's Board of
Directors shall consist of not less than three (3) and not more than seven (7)
Directors, as resolved from time to time by the Board of Directors. If such
number is not so fixed, the Company shall have THREE Directors, except that if
the Company at any time has less than three shareholders of record, there need
only be as many Directors as there are shareholders. Directors shall be elected
at each annual meeting of shareholders, except as otherwise provided below. Each
Director shall hold office until the next annual meeting of shareholders and
thereafter until his successor shall have been elected and duly qualified.
Directors need not be residents of Nevada or shareholders of the Company.
Directors shall be elected by plurality vote. At least one-fourth in number of
the Directors must be elected annually. No decrease in the number of Directors
shall shorten the term of any incumbent Director.
4.03 Vacancies; Resignation. (a) Any vacancy occurring in the Board of
Directors, except resulting from an increase in the number of directors, may be
filled by the affirmative vote of a majority of the remaining Directors, though
less than a quorum, or by a sole remaining Director. A Director elected to fill
a vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
Directors shall be filled by the affirmative vote of a majority of the entire
board or by a majority of the total voting power at any annual meeting or at a
special meeting of shareholders called for that purpose, or by means of written
6
<PAGE>
shareholder consents taken in lieu of a meeting. Every director chosen to fill a
vacancy as provided in this Section shall hold office until the next annual
meeting of shareholders or until his successor has been elected and qualified.
(b) Any Director may resign at any time by giving written notice to the
Board, the Chairman of the Board, the President or the Secretary of the Company.
Unless otherwise specified in such written notice, a resignation shall take
effect upon delivery to the Board or the designated officer. A resignation need
not be accepted in order for it to be effective.
4.04 Removal of Directors. Any Director may be removed only by the
shareholders in the manner provided in the Company's Charter and, if no such
provision appears therein, then as provided by law. Such action may be taken at
any special meeting called for that purpose or by means of written shareholder
consents. In case any vacancy so created shall not be filled by the shareholders
at such meeting or in the written consent effecting removal, such vacancy may be
filled by a majority of the Board of Directors.
4.05 Place of Meetings. The Board of Directors may hold both regular
and special meetings either within or without the State of Nevada, at such place
as the Board of Directors from time to time deems advisable.
4.06 Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than these Bylaws 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; provided, that any Director
not present when any such resolution is passed is given notice of the
resolution.
4.07 Special Meetings. A special meeting of the Board of Directors
shall be held without other notice than these Bylaws immediately after and at
the same place as every special meeting of shareholders. Special meetings of the
Board of Directors also may be called by or at the request of the Chairman of
the Board, the President, or any two Directors upon two days' notice to each
director if such notice is delivered personally or sent by telegram, or upon
five days' notice if sent by mail.
4.08 Telephonic Meetings. One or more 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. All participants in any meeting of Directors, by
virtue of their participation and without further action on their part, shall be
deemed to have consented to the recording of such meeting by electronic device
or otherwise, and to the making of a written transcript thereof, in order that
minutes thereof shall be available for the Company's records.
4.09 Notice. Except as otherwise provided above, notice of the time,
date and place, of every special meeting of Directors or any committee thereof
shall be given. 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,
except where a Director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
4.10 Quorum; Adjournments. A majority of the number of directors then
in office, present in person or by means of conference telephone or similar
equipment, shall constitute a quorum for the transaction of business at every
Board meeting, and 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, except
as may otherwise specifically be provided by law, the Charter or these Bylaws.
If a quorum is not present at any Board meeting, the directors present may
adjourn the meeting, from time to time, without notice other than announcement
of the meeting, until a quorum is present.
7
<PAGE>
4.11 Compensation. Directors shall be entitled to such compensation for
their services as directors as from time to time may be fixed by the Board and
shall be entitled to reimbursement of all reasonable expenses incurred by them
in attending Board meetings. A director may waive compensation for any Board
meeting. No director who receives compensation as a director shall be barred
from serving the Company in any other capacity or from receiving compensation
and reimbursement of reasonable expenses for any or all such other services.
4.12 Presumption of Assent. A Director of the Company 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 his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof, or shall forward such dissent by
registered or certified mail, first class, postage prepaid, to the Secretary of
the Company, provided such mailing is postmarked within ten calendar days after
the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
4.13 Action by Directors Without Meeting. Any action required to be
taken at a meeting of the Directors of the Company or of a committee of
Directors or any action which may be taken at such a meeting, may be taken
without a meeting if a consent 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 therof. A consent shall be sufficient for this Section if it is
executed in counterparts, in which event all of such counterparts, when taken
together, shall constitute one and the same consent.
4.14 Bank Accounts, etc. Anything herein to the contrary
notwithstanding, the Board of Directors may, except as may otherwise be required
by law, authorize any officer or officers, agent or agents, in the name of and
on behalf of the Company, to sign checks, drafts, or other orders for the
payment of money or notes or other evidences of indebtedness, to endorse for
deposit, deposit to the credit of the Company at any bank or trust company or
banking institution in which the Company may maintain an account or to cash
checks, notes, drafts, or other bankable securities or instruments, and such
authority may be general or confined to specific instances, as the Board of
Directors may elect.
4.15 Inspection of Records. Every Director shall have the absolute
right at any reasonable time to inspect all books, records, documents of every
kind, and the physical properties, of the Company and of its subsidiaries. Such
inspection may be made personally or by an agent and includes the right to make
copies and extracts.
4.16 Executive Committee. (a) The Board of Directors may, by resolution
adopted by a majority of the whole Board, appoint two or more of its members to
constitute an Executive Committee. One of such directors shall be designated as
Chairman of the Executive Committee. Each member of the Executive Committee
shall continue as a member thereof until the expiration of his term as a
director, or until his earlier resignation from the Executive Committee, in
either case unless sooner removed as a director or member of the Executive
Committee by any means authorized by the Charter or herein.
(b) The Executive Committee shall have and may exercise, to the extent
provided in such resolution and except as prohibited by law, all of the rights,
power and authority of the Board of Directors.
(c) The Executive Committee shall fix its own rules of procedure and
shall meet at such times and at such place or places as may be provided by its
rules. The Chairman of the Executive Committee, or in the absence of the
Chairman, a member of the Executive Committee chosen by a majority of the
members present, shall preside at all meetings of the Executive Committee, and
another member thereof chosen by the Executive Committee shall act as Secretary.
A majority of the Executive Committee shall constitute a quorum for the
transaction of business, and the affirmative vote of a majority of the members
thereof shall be required for any action of the Executive Committee. The
Executive Committee shall keep minutes of its meetings and deliver such minutes
to the Board of Directors.
8
<PAGE>
4.17 Other Committees. The Board of Directors may, by resolution duly
adopted by a majority of directors at a meeting at which a quorum is present,
appoint an audit committee, compensation committee, and such other committee or
committees as it shall deem advisable and with such limited authority as the
Board of Directors shall from time to time determine.
4.18 Other Provisions Regarding Committees. (a) The Board of Directors
shall have the power at any time to fill vacancies in, change the membership of,
or discharge any committee. The members of any committee present at any meeting
of a committee, whether or not they constitute a quorum, may appoint a director
to act in the place of an absent member.
(b) Members of any committee shall be entitled to such compensation for
their services as such as from time to time may be fixed by the Board of
Directors and in any event shall be entitled to reimbursement of all reasonable
expenses incurred in attending committee meetings. Any member of a committee may
waive compensation for any meeting. No member of a committee who receives
compensation as a member of one or more committees shall be barred from serving
the Company in any other capacity or from receiving compensation and
reimbursement of reasonable expenses for any or all such other services.
(c) Unless otherwise prohibited by law, the provisions above concerning
action by written consent of directors and meetings of directors by telephonic
or similar means shall apply to all committees from time to time created by the
Board of Directors.
ARTICLE V
Officers and Agents
5.01 Positions. The Company's officers generally shall be chosen by the
Board of Directors and shall consist of a Chairman of the Board, a President,
one or more Vice Presidents if desired, a Secretary and a Treasurer. The Board
of Directors may appoint one or more other officers, assistant officers and
agents as it from time to time deems necessary or appropriate, 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 Board may delegate to the Chairman of the Board the authority to
appoint any officer or agent of the Company and to fill a vacancy other than the
Chairman of the Board or President. Any two or more offices may be held by the
same person, except that no person may simultaneously hold the offices of
President and Secretary and of President and Vice President. In all cases where
the duties of any officer, agent or employee are not prescribed by these bylaws
or by the Board of Directors, such officer, agent or employee shall follow the
orders and instructions of the President.
5.02 Term of Office; Removal. Each officer of the Company shall hold
office at the pleasure of the Board and any officer may be removed, with or
without cause, at any time by the affirmative vote of a majority of the
directors then in office; provided, that any officer appointed by the Chairman
of the Board pursuant to authority delegated by the Board may be removed, with
or without cause, at any time by the Chairman whenever the Chairman in his or
her absolute discretion shall consider that the Company's best interests shall
be served by such removal. Removal of an officer by the Board (or the Chairman,
as the case may be) shall not prejudice 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.
5.03 Vacancies. A vacancy in any office, however occurring, may be
filled by the Board or the Executive Committee, for the unexpired portion of the
term by majority vote of its members, or by the Chairman of the Board in the
case of a vacancy occurring in an office to which the Chairman has been
delegated authority to make appointments.
5.04 Compensation. The salaries of all officers of the Company shall be
fixed from time to time by the Board, and no officer shall be prevented from
receiving a salary by reason of the fact that he also receives compensation from
the Company in any other capacity.
9
<PAGE>
5.05 Chairman of the Board. The Chairman of the Board ("Chairman"), if
such officer shall be chosen by the Board of Directors, shall preside at all
meetings of the Board of Directors and meetings of shareholders at which he is
present and shall exercise general supervision and direction over the
implementation of Board policy affecting the affairs of the Company. Any act
which may be performed by the Chief Executive Officer or President may be
performed by the Chairman.
5.06 Chief Executive Officer; Chief Operating Officer. The Chairman of
the Board shall, unless the Board determines otherwise, serve as the Chief
Executive Officer ("CEO") of the Company. If the Chairman is not designated the
CEO, then the President shall serve as CEO. The Board may, from time to time,
designate from among the executive officers of the Company an officer to serve
as Chief Operating Officer ("COO") of the Company. If the Chairman serves as the
CEO, then the President shall serve as COO. If the President is designated CEO,
then the Executive Vice President (or if there is none, then the next most
senior Vice President) shall serve as COO. A person designated to serve in the
capacity of CEO or COO shall serve at the pleasure of the Board.
A person designated Chief Executive Officer (CEO) shall have primary
responsibility for and active charge of the management and supervision of the
Company's business and affairs. The CEO may execute in the name of the Company
authorized corporate obligations and other instruments, shall perform such other
duties as may be prescribed by the Board (or Chairman, as the case may be) from
time to time and, in the absence or disability of the President, shall exercise
all of the duties and powers of the President. In the event that the President
is not the CEO, then the CEO shall supervise the performance of the President
and shall be responsible for the execution of the policies and directives of the
Board. The CEO shall report directly to the Board. The CEO shall perform such
other duties as may be assigned by the Board (or Chairman, as the case may be).
The CEO may perform any act which might be performed by the President.
A person designated Chief Operating Officer (COO) shall be responsible
for the day-to-day management of the Company's operations, subject to the
authority of the CEO. The COO shall report directly to the CEO of the Company
and shall consult with the CEO on all matters of corporate policy and material
business activities of the Company. The COO shall perform such other duties as
may be assigned by the Board or the CEO.
5.07 President. The President shall have general active management of
the business of the Company, subject to the authority of the Chief Executive
Officer if the President is not designated as such, and general supervision of
its officers, agents and employees. In the absence of the Chairman and Chief
Executive Officer, he shall preside at all meetings of the shareholders and of
the Board. In the absence of a designated Chief Executive Officer he shall see
that all policies and directives of the Board are carried into effect.
He shall, unless otherwise directed by the Board of Directors, attend
in person or by substitute appointed by him, or shall execute in behalf of the
Company written instruments appointing a proxy or proxies to represent the
Company, at all meetings of the stockholders of any other company in which the
Company shall hold any stock. He may, on behalf of the Company, 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 substitute or proxy as aforesaid, may vote the stock so held by
the Company and may execute written consent and other instruments and power
incident to the ownership of said stock, subject however to the instructions, if
any, of the Chairman or the Board of Directors. The President shall have custody
of the Treasurer's bond, if any.
5.08 Executive Vice President. The Executive Vice President shall
assist the President in the discharge of surpervisory, managerial and executive
duties and functions. In the absence of the President or in the event of his
death, or inability or refusal to act, the Executive Vice President shall
perform the duties of the President and when so acting shall have the duties and
powers of the President. He shall perform such other duties as from time to time
may be assigned to him by the President, Chairman or Board of directors.
10
<PAGE>
5.08 Vice Presidents. The Vice Presidents, if any, shall assist the
President and Executive Vice President and shall perform such duties as may be
prescribed by the Board, the Chairman or the President. Vice Presidents in the
order of their seniority shall, in the absence or disability of the Chairman and
President, exercise all of the duties and powers of such officers. The Executive
Vice President, if any, shall be the most senior of Vice Presidents, and the
Senior Vice President, if any, shall be the next most senior of Vice Presidents.
In regard to other Vice Presidents, they shall have the respective ranks
designated by the Board of Directors, or if none has been so designated, as
designated by the Chairman, or if none has been so designated by the Chairman,
they shall rank in the order of their respective elections to such office. The
execution of any instrument on the Company's behalf by a Vice President shall be
conclusive evidence, as to third parties, of his authority to act in the stead
of the President and Executive Vice President.
5.09 Secretary. The Secretary shall: (i) keep the minutes of the
proceedings of the shareholders and the Board of Directors and record all votes
and proceedings thereof in a book kept for that purpose; (ii) see that all
notices are duly given in accordance with the provisions of these Bylaws or as
required by law; (iii) be custodian of the corporate records and of the seal of
the Company and affix the seal to all documents when authorized by the Board of
Directors; (iv) 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 Company's transfer agent or registrar;
(v) sign with the President, or a Vice President, certificates for shares of the
Company, the issuance of which shall have been authorized by resolution of the
Board of Directors; (vi) have general charge of the stock transfer books of the
Company, unless the Company has a transfer agent; and (vii) 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 the Board of Directors.
The Board of Directors may give general authority to officers other than the
Secretary or any Assistant Secretary to affix the Company's seal and to attest
the fixing thereof by his or her signature.
5.10 Assistant Secretary. The Assistant Secretary, if any (or if there
is more than one, the Assistant Secretaries in the order designated, or in the
absence of any designation, in the order of their appointment), in the absence
or disability of the Secretary, shall perform the duties and exercise the powers
of the Secretary. The Assistant Secretary(ies) shall perform such other duties
and have such other powers as from time to time may be prescribed by the Board,
the Chairman or the Chief Executive Officer. The Chairman may appoint one or
more Assistant Secretary(ies) to office.
5.11 Treasurer. The Treasurer shall, unless the Board otherwise
resolves, be the principal financial officer and principal accounting officer of
the Company and shall have the care and custody of all funds, securities,
evidence of indebtedness and other valuable effects of the Company, shall keep
full and accurate accounts of receipts and disburesments in books belonging to
the Company and shall deposit all money and other valuable effects of the
Company in the name and to the credit of the Company in such depositories as
from time to time may be designated by the Board. The Treasurer shall disburse
the funds of the Company in such manner as may be ordered by the Board from time
to time and shall render to the Chairman of the Board, the President and the
Board, at regular Board meetings or whenever any of them may so require, an
account of all transactions and of the Company's financial condition.
5.12 Assistant Treasurer. The Assistant Treasurer, if any (or if there
is more than one, the Assistant Treasurers in the order designated, or in the
absence of any designation, in the order of their appointment), in the absence
or disability of the Treasurer, shall perform the duties and exercise the powers
of the Treasurer. The Assistant Treasurer(s) shall perform such other duties and
have such other powers as from time to time may be prescribed by the Board, the
Chairman or the Chief Executive Officer. The Chairman may appoint one or more
Assistant Treasurer(s) to office.
5.13 Resignations. Any officer may resign at any time by giving written
notice to the Board or to the Chairman. Such resignation shall take effect at
the time specified therein and, unless specified therein, no acceptance of the
resignation shall be required for the resignation to be effective.
5.14 Delegation of Duties. In the event of the absence or disability of
any officer of the Company, or for any other reason the Board shall deem
sufficient, the Board may temporarily designate the powers and duties, or
particular powers and duties, of such officer to any other officer, or to any
director.
11
<PAGE>
5.13 Fidelity Bonds. The Board of Directors shall have the power, to
the extent permitted by law, to require any officer, agent or employee of the
Company to give bond for the faithful discharge of his duties in such form and
with such surety or sureties as the Board deems advisable.
ARTICLE VI
Indemnification
Every Director, officer, employee and agent of the Company, and every
person serving at the Company's request as a director, officer (or in a position
functionally equivalent to that of officer or director), employee or agent of
another corporation, partnership, joint venture, trust or other entity, shall be
indemnified to the extent and in the manner provided by the Company's Charter,
as it may be amended, and in the absence of any such provision therein, in
accordance with Nevada law.
ARTICLE VII
Miscellaneous
7.01 Declaration of Dividends. The Board of Directors at any regular or
special meeting may declare dividends payable, whenever in the exercise of its
discretion it may deem such declaration advisable and such is permitted by law.
Such dividends may be paid in cash, property, or shares of the Company.
7.02 Benefit Programs. Directors shall have the power to install and
authorize any pension, profit sharing, stock option, insurance, welfare,
educational, bonus, health and accident or other benefit program which the Board
deems to be in the interest of the Company, at the expense of the Company, and
to amend or revoke any plan so adopted.
7.03 Seal. The corporate seal of the Company shall be circular in form
and shall contain the name of the Company, the year incorporated and the words
"Seal, Nevada".
7.04 Fiscal Year. The Board of Directors shall have the power to fix,
and from time to time change, the fiscal year of the Company. Any such adoption
of or change in a fiscal year shall not constitute or require an amendment to
these Bylaws.
7.05 Amendment of Bylaws. These Bylaws may be amended or repealed in
the manner provided for in the Charter, or if none is there provided: by
majority vote of the Board of Directors, taken at any meeting or by written
consent, subject to the shareholders' right to change or repeal any Bylaws so
made or adopt new Bylaws by vote of at least a majority of the total voting
power. Bylaws amendments may be proposed by any Director or shareholder. Any
action duly taken by the Board or the shareholders which conflicts or is
inconsistent with these Bylaws (as they may be amended) shall constitute an
amendment of the Bylaws, if the action was taken by such number of directors or
shares voting as would be sufficient for amendment of the Bylaws.
ARTICLE VIII
Notices
8.01 Giving of Notice. Exept as otherwise provided by the General
Corporation Law of Nevada, these Bylaws, the Charter or resolution of the Board
of Directors, every meeting notice or other notice, demand, bill, statement or
other communication (collectively, "Notice") to or from the Company from or to a
Director, Officer or shareholder shall be duly given if it is written or printed
and is (i) sent by first class or express mail, postage prepaid, (ii) sent by
any commercial overnight air courier service, such as DHL, Federal Express,
Emery, Airborne, UPS or similar service, (iii) sent by telegraph, cablegram,
telex, telecopier, facsimile or similar transmission, (iv) delivered by any
commercial messenger service which regularly retains its receipts, or (v)
personally delivered, provided a receipt is obtained reflecting the date of
delivery. Notice shall not be duly given unless all delivery or postage charges
are prepaid. Notice shall be given to an addressee's most recent address as it
appears on the Company's records or to such other address as has been provided
in writing to the Secretary. A Notice shall be deemed "given" when dispatched
12
<PAGE>
for delivery, when personally delivered, when transmitted electronically, or if
mailed, on the date postmarked. This Section shall not have the effect of
shortening any notice period provided for in these Bylaws.
8.02 Waiver of Notice. Any Notice required or permitted by the General
Corporation Law of Nevada, the Charter or these Bylaws may be waived in writing
at any time by the person entitled to the Notice, and such waiver shall be
equivalent to the giving of notice. Notice of any shareholders' meeting shall be
waived by attendance, in person or by proxy, at the meeting, unless any question
of lack of or defect in a Notice is raised prior to conclusion of the meeting. A
waiver of Notice of a special meeting of shareholders shall state the purpose
for which the meeting was called or the business to be transacted thereat.
APPROVED AND ADOPTED by the Board of Directors as of September 16,
1993.
13
<PAGE>
Exhibit 4.2 to Form 10-KSB for Year Ended December 31, 1996
The warrants evidenced by this certificate and the common
shares issuable upon warrant exercise have not been registered under the U.S.
Securities Act of 1933 ("Act"). Transfer of these securities is prohibited
except in accordance with the provisions of Regulation S under the Act. This
warrant may not be exercised, in whole or part, by or on behalf of any "U.S.
Person" (as defined in Regulation S) unless the shares to be acquired have been
registered under the Act or an exemption from registration is available.
CHANNEL i INC.
Organized under the laws of the State of Nevada
CLASS A COMMON STOCK PURCHASE WARRANT
WARRANTS TO PURCHASE
No. WA -
COMMON SHARES
THIS CERTIFIES that, for value received
or registered assigns ("Warrantholder") is entitled to purchase from CHANNEL i
INC., a Nevada corporation ("Company"), at any time from the date of issuance
and during the period (the "Exercise Period") expiring on August 3, 1997 (the
"Expiration Date"), unless extended, the number of fully paid, nonassessable
shares shown above of the Company's common stock, $.001 par value (the "Common
Shares"), in the manner stated below, at the purchase price of US$0.0625 (six
and one-fourth cents) per Common Share (the "Exercise Price").
EXERCISE. Subject to the Warrant Terms, this Class A Warrant may be
exercised in whole or in part at any time during the Exercise Period for a whole
number of shares, by surrendering it with the Exercise Form on the reverse side
duly completed at the offices of the Company, and by paying in full the Exercise
Price for all Common Shares being purchased, together with all transfer fees and
transfer taxes and other governmental charges due, if any. Payment shall be made
in lawful money of the United States of America, in cash or by bank check,
cashier's check, certified check, or postal or express money order made payable
to the order of the Company. Upon partial exercise hereof, a new Class A Warrant
of like tenor shall be issued to the registered holder hereof evidencing the
number of Common Shares not purchased. No fractional shares or scrip certificate
evidencing fractional shares will be issued upon exercise hereof, nor will any
cash be paid in lieu of any fractional share not issued. In order to exercise
this warrant, the registered holder must at the time of exercise complete and
sign the Exercise form on the reverse side of this certificate, which contains a
representation that the exercising registered holder is not a U.S. Person and
that exercise is not being made for or on behalf of a U.S. Person.
ASSIGNMENT. This Class A Warrant may be assigned or transferred by the
registered holder or by attorney duly authorized in writing, in whole or in
part, at the offices of the Company with the Assignment form on the reverse side
duly completed, upon payment of the applicable transfer fee and any transfer tax
or other governmental charges due, if any. Upon any such assignment or transfer,
a new Class A Warrant Certificate or certificates of like tenor and representing
in the aggregate the right to purchase a like number of Common Shares, subject
to any adjustments made in accordance with the provisions of the Warrant Terms,
will be issued in accordance with the registered holder's lawful instructions.
EXCHANGE. This Class A Warrant Certificate may at any time be exchanged
for one or more Class A Warrant Certificates of like tenor and representing in
the aggregate the right to purchase a like number of Common Shares, subject to
any adjustments made in accordance with the provisions of the Warrant Terms,
upon presentation therefor at the offices of the Company and upon payment of the
requisite fees.
TRANSFER AND ASSIGNMENT FEES. Whenever this Class A Warrant Certificate
is exercised for Common Shares, is assigned or transferred, or is exchanged for
one or more like certificates, there shall be paid to the Company's transfer
agent therewith a fee for every Class A Warrant Certificate or Common Share
certificate to be issued, in accordance with the transfer agent's fee schedule.
ADJUSTMENTS. Under the Warrant Terms, the Exercise Price is subject to
adjustment if the Company effects any stock split or combination (reverse stock
split) or recapitalization with respect to the Common Shares and in certain
other circumstances. Any adjustment of the Exercise Price probably will result
in a corresponding adjustment of the number of Common Shares purchasable
hereunder. Further, the Exercise Price may be reduced, irrespective of whether a
stock split, combination or other adjustment is effected, and the Expiration
Date may be extended one or more times, from time to time, for an indefinite
period at the Company's discretion upon giving at least two days' notice thereof
to the registered holders of the Class A Warrants.
STATUS OF HOLDER. The Company may deem and treat the registered holder
of this Class A Warrant Certificate as the absolute owner hereof for all
purposes, notwithstanding any notation of ownership or other writing made hereon
by any person, and neither the Company nor the Warrant Agent shall be affected
by any notice to the contrary. No registered holder of Class A Warrants, as
such, shall have any rights as a shareholder of the Company, either at law or at
equity, and the rights of each such registered holder, as such, are limited to
those expressly provided in the Warrant Terms and this Certificate.
WITNESS the facsimile seal of the Company and the facsimile signatures
of its duly authorized officers.
DATED: CHANNEL i INC.
(SEAL)
President Secretary
<PAGE>
CHANNEL i INC.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIFORM GIFTS TO MINORS ACT -
TEN ENT - as tenants by the entireties
_______________Custodian__________
JT TEN - as joint tenants with right of (Custodian) (Minor)
survivorship and not as tenants in
common and not as community property under the Uniform Gifts to Minors
Act of the State of _______________
EXERCISE
I or we hereby irrevocably elect to exercise the right of
purchase represented by this certificate to purchase _______________ Common
Shares of the Company and hereby make payment of $_____________ (number of
shares purchased multiplied by US$0.0625) payable to the order of CHANNEL i INC.
in payment of the exercise price for such shares, and request that certificates
for the Common Shares shall be issued in the name of:
Please insert social security or EIN number Name and address, including zip
code: or other identifying number:
and, if such number of Common Shares shall not be all of the shares purchasable
hereunder, that a new Class A Warrant Certificate of like tenor for the balance
of the remaining Common Shares purchasable hereunder be delivered to the
undersigned at the address above. I hereby certify that I am not a "U.S. Person"
as defined in Regulation S of the United States Securities and Exchange
Commission and that I am not exercising this Class A Warrant to purchase shares
for or on behalf of any U.S. Person. I understand that the term "U.S. Person"
includes, among other persons, an individual resident in the United States, any
corporation, partnership or other entity organized under United States law, any
agency or branch of a corporation, partnership or other entity organized under
the laws of a country other than the United States which is located in the
United States, any trust or estate of which any trustee, administrator or
executor is a U.S. Person, and any account held for the benefit of a U.S.
Person.
IMPORTANT: The name of the person exercising this warrant must
correspond with the name of the Warrantholder written on the face of this
Certificate in every particular, without alteration or any change whatever,
unless it has been assigned by completing the Assignment form below.
DATED: ______________________, 19_____
X.................................
Signature of Warrantholder(s)
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
Please insert social security or EIN number Name and address, including zip
code:
or other identifying number:
the right to purchase ________________ Common Shares of the Company evidenced by
this Class A Warrant, and does hereby irrevocably constitute and appoint any
officer of the Company or its transfer agent and registrar as lawful Attorney to
transfer such right on the books of the Company with full power of substitution
in the premises. I hereby certify that, to the best of my knowledge, the person
or persons to whom these Class A Warrants are being assigned is NOT a "U.S.
Person" as defined in Regulation S of the U.S. Securities and Exchange
Commission.
DATED: ______________________, 19_____
X...............................
Signature of Warrantholder(s)
IMPORTANT: Every registered owner of this Certificate must sign it to
assign or otherwise transfer Class A Warrants. The above signature or signatures
must correspond with the name or names written on the face of this Certificate
in every particular, without alteration, enlargement or any change whatever.
Each signature should be "medallion" guaranteed by an eligible guarantor
institution (Banks, Stockbrokers, Savings and Loan Associations and Credit
Unions) with membership in an approved signature guarantee Medallion Program
pursuant to Rule 17Ad-15 of the Securities and Exchange Commission.
SIGNATURE GUARANTEED:
<PAGE>
Exhibit 4.3 to Form 10-KSB for Year Ended December 31, 1996
The warrants evidenced by this certificate and the common shares issuable
upon warrant exercise have not been registered under the U.S. Securities Act of
1933 ("Act"). Transfer of these securities is prohibited except in accordance
with the provisions of Regulation S under the Act. This warrant may not be
exercised, in whole or part, by or on behalf of any "U.S. Person" (as defined in
Regulation S) unless the shares to be acquired have been registered under the
Act or an exemption from registration is available.
CHANNEL i INC.
Organized under the laws of the State of Nevada
CLASS B COMMON STOCK PURCHASE WARRANT
WARRANTS TO PURCHASE
No. WB -
COMMON SHARES
THIS CERTIFIES that, for value received
or registered assigns ("Warrantholder") is entitled to purchase from CHANNEL i
INC., a Nevada corporation ("Company"), at any time from the date of issuance
and during the period (the "Exercise Period") expiring on February 5, 1998 (the
"Expiration Date"), unless extended, the number of fully paid, nonassessable
shares shown above of the Company's common stock, $.001 par value (the "Common
Shares"), in the manner stated below, at the purchase price of US$0.085 (eight
and one-half cents) per Common Share (the "Exercise Price").
EXERCISE. Subject to the Warrant Terms, this Class B Warrant may be
exercised in whole or in part at any time during the Exercise Period for a whole
number of shares, by surrendering it with the Exercise Form on the reverse side
duly completed at the offices of the Company, and by paying in full the Exercise
Price for all Common Shares being purchased, together with all transfer fees and
transfer taxes and other governmental charges due, if any. Payment shall be made
in lawful money of the United States of America, in cash or by bank check,
cashier's check, certified check, or postal or express money order made payable
to the order of the Company. Upon partial exercise hereof, a new Class B Warrant
of like tenor shall be issued to the registered holder hereof evidencing the
number of Common Shares not purchased. No fractional shares or scrip certificate
evidencing fractional shares will be issued upon exercise hereof, nor will any
cash be paid in lieu of any fractional share not issued. In order to exercise
this warrant, the registered holder must at the time of exercise complete and
sign the Exercise form on the reverse side of this certificate, which contains a
representation that the exercising registered holder is not a U.S. Person and
that exercise is not being made for or on behalf of a U.S. Person.
ASSIGNMENT. This Class B Warrant may be assigned or transferred by the
registered holder or by attorney duly authorized in writing, in whole or in
part, at the offices of the Company with the Assignment form on the reverse side
duly completed, upon payment of the applicable transfer fee and any transfer tax
or other governmental charges due, if any. Upon any such assignment or transfer,
a new Class B Warrant Certificate or certificates of like tenor and representing
in the aggregate the right to purchase a like number of Common Shares, subject
to any adjustments made in accordance with the provisions of the Warrant Terms,
will be issued in accordance with the registered holder's lawful instructions.
EXCHANGE. This Class B Warrant Certificate may at any time be exchanged
for one or more Class B Warrant Certificates of like tenor and representing in
the aggregate the right to purchase a like number of Common Shares, subject to
any adjustments made in accordance with the provisions of the Warrant Terms,
upon presentation therefor at the offices of the Company and upon payment of the
requisite fees.
TRANSFER AND ASSIGNMENT FEES. Whenever this Class B Warrant Certificate
is exercised for Common Shares, is assigned or transferred, or is exchanged for
one or more like certificates, there shall be paid to the Company's transfer
agent therewith a fee for every Class B Warrant Certificate or Common Share
certificate to be issued, in accordance with the transfer agent's fee schedule.
ADJUSTMENTS. Under the Warrant Terms, the Exercise Price is subject to
adjustment if the Company effects any stock split or combination (reverse stock
split) or recapitalization with respect to the Common Shares and in certain
other circumstances. Any adjustment of the Exercise Price probably will result
in a corresponding adjustment of the number of Common Shares purchasable
hereunder. Further, the Exercise Price may be reduced, irrespective of whether a
stock split, combination or other adjustment is effected, and the Expiration
Date may be extended one or more times, from time to time, for an indefinite
period at the Company's discretion upon giving at least two days' notice thereof
to the registered holders of the Class B Warrants.
STATUS OF HOLDER. The Company may deem and treat the registered holder
of this Class B Warrant Certificate as the absolute owner hereof for all
purposes, notwithstanding any notation of ownership or other writing made hereon
by any person, and neither the Company nor the Warrant Agent shall be affected
by any notice to the contrary. No registered holder of Class B Warrants, as
such, shall have any rights as a shareholder of the Company, either at law or at
equity, and the rights of each such registered holder, as such, are limited to
those expressly provided in the Warrant Terms and this Certificate.
WITNESS the facsimile seal of the Company and the facsimile signatures
of its duly authorized officers.
DATED: CHANNEL i INC.
(SEAL)
President Secretary
<PAGE>
CHANNEL i INC.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIFORM GIFTS TO MINORS ACT -
TEN ENT - as tenants by the entireties
_____________Custodian______________
JT TEN - as joint tenants with right of (Custodian) (Minor)
survivorship and not as tenants in
common and not as community property under the Uniform Gifts to Minors
Act of the State of ________________
EXERCISE
I or we hereby irrevocably elect to exercise the right of
purchase represented by this certificate to purchase _______________ Common
Shares of the Company and hereby make payment of $_____________ (number of
shares purchased multiplied by US$0.085) payable to the order of CHANNEL i INC.
in payment of the exercise price for such shares, and request that certificates
for the Common Shares shall be issued in the name of:
Please insert social security or EIN number Name and address, including zip
code: or other identifying number:
and, if such number of Common Shares shall not be all of the shares purchasable
hereunder, that a new Class B Warrant Certificate of like tenor for the balance
of the remaining Common Shares purchasable hereunder be delivered to the
undersigned at the address above. I hereby certify that I am not a "U.S. Person"
as defined in Regulation S of the United States Securities and Exchange
Commission and that I am not exercising this Class B Warrant to purchase shares
for or on behalf of any U.S. Person. I understand that the term "U.S. Person"
includes, among other persons, an individual resident in the United States, any
corporation, partnership or other entity organized under United States law, any
agency or branch of a corporation, partnership or other entity organized under
the laws of a country other than the United States which is located in the
United States, any trust or estate of which any trustee, administrator or
executor is a U.S. Person, and any account held for the benefit of a U.S.
Person.
IMPORTANT: The name of the person exercising this warrant must
correspond with the name of the Warrantholder written on the face of this
Certificate in every particular, without alteration or any change whatever,
unless it has been assigned by completing the Assignment form below.
DATED: ______________________, 19_____
X..........................
Signature of Warrantholder(s)
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
Please insert social security or EIN number Name and address, including zip
code:
or other identifying number:
the right to purchase ________________ Common Shares of the Company evidenced by
this Class B Warrant, and does hereby irrevocably constitute and appoint any
officer of the Company or its transfer agent and registrar as lawful Attorney to
transfer such right on the books of the Company with full power of substitution
in the premises. I hereby certify that, to the best of my knowledge, the person
or persons to whom these Class B Warrants are being assigned is NOT a "U.S.
Person" as defined in Regulation S of the U.S. Securities and Exchange
Commission.
DATED: ______________________, 19_____
X.............................
Signature of Warrantholder(s)
IMPORTANT: Every registered owner of this Certificate must sign it to
assign or otherwise transfer Class B Warrants. The above signature or signatures
must correspond with the name or names written on the face of this Certificate
in every particular, without alteration, enlargement or any change whatever.
Each signature should be "medallion" guaranteed by an eligible guarantor
institution (Banks, Stockbrokers, Savings and Loan Associations and Credit
Unions) with membership in an approved signature guarantee Medallion Program
pursuant to Rule 17Ad-15 of the Securities and Exchange Commission.
SIGNATURE GUARANTEED:
<PAGE>
Exhibit 4.4 to Form 10-KSB for Year Ended December 31, 1996
The warrants evidenced by this certificate and the common
shares issuable upon warrant exercise have not been registered under the U.S.
Securities Act of 1933 ("Act"). Transfer of these securities is prohibited
except in accordance with the provisions of Regulation S under the Act. This
warrant may not be exercised, in whole or part, by or on behalf of any "U.S.
Person" (as defined in Regulation S) unless the shares to be acquired have been
registered under the Act or an exemption from registration is available.
CHANNEL i INC.
Organized under the laws of the State of Nevada
CLASS C COMMON STOCK PURCHASE WARRANT
WARRANTS TO PURCHASE
No. WC -
COMMON SHARES
THIS CERTIFIES that, for value received
or registered assigns ("Warrantholder") is entitled to purchase from CHANNEL i
INC., a Nevada corporation ("Company"), at any time from the date of issuance
and during the period (the "Exercise Period") expiring on February 5, 1998 (the
"Expiration Date"), unless extended, the number of fully paid, nonassessable
shares shown above of the Company's common stock, $.001 par value (the "Common
Shares"), in the manner stated below, at the purchase price of US$0.105 (ten and
one-half cents) per Common Share (the "Exercise Price").
EXERCISE. Subject to the Warrant Terms, this Class C Warrant may be
exercised in whole or in part at any time during the Exercise Period for a whole
number of shares, by surrendering it with the Exercise Form on the reverse side
duly completed at the offices of the Company, and by paying in full the Exercise
Price for all Common Shares being purchased, together with all transfer fees and
transfer taxes and other governmental charges due, if any. Payment shall be made
in lawful money of the United States of America, in cash or by bank check,
cashier's check, certified check, or postal or express money order made payable
to the order of the Company. Upon partial exercise hereof, a new Class C Warrant
of like tenor shall be issued to the registered holder hereof evidencing the
number of Common Shares not purchased. No fractional shares or scrip certificate
evidencing fractional shares will be issued upon exercise hereof, nor will any
cash be paid in lieu of any fractional share not issued. In order to exercise
this warrant, the registered holder must at the time of exercise complete and
sign the Exercise form on the reverse side of this certificate, which contains a
representation that the exercising registered holder is not a U.S. Person and
that exercise is not being made for or on behalf of a U.S. Person.
ASSIGNMENT. This Class C Warrant may be assigned or transferred by the
registered holder or by attorney duly authorized in writing, in whole or in
part, at the offices of the Company with the Assignment form on the reverse side
duly completed, upon payment of the applicable transfer fee and any transfer tax
or other governmental charges due, if any. Upon any such assignment or transfer,
a new Class C Warrant Certificate or certificates of like tenor and representing
in the aggregate the right to purchase a like number of Common Shares, subject
to any adjustments made in accordance with the provisions of the Warrant Terms,
will be issued in accordance with the registered holder's lawful instructions.
EXCHANGE. This Class C Warrant Certificate may at any time be exchanged
for one or more Class C Warrant Certificates of like tenor and representing in
the aggregate the right to purchase a like number of Common Shares, subject to
any adjustments made in accordance with the provisions of the Warrant Terms,
upon presentation therefor at the offices of the Company and upon payment of the
requisite fees.
TRANSFER AND ASSIGNMENT FEES. Whenever this Class C Warrant Certificate
is exercised for Common Shares, is assigned or transferred, or is exchanged for
one or more like certificates, there shall be paid to the Company's transfer
agent therewith a fee for every Class C Warrant Certificate or Common Share
certificate to be issued, in accordance with the transfer agent's fee schedule.
ADJUSTMENTS. Under the Warrant Terms, the Exercise Price is subject to
adjustment if the Company effects any stock split or combination (reverse stock
split) or recapitalization with respect to the Common Shares and in certain
other circumstances. Any adjustment of the Exercise Price probably will result
in a corresponding adjustment of the number of Common Shares purchasable
hereunder. Further, the Exercise Price may be reduced, irrespective of whether a
stock split, combination or other adjustment is effected, and the Expiration
Date may be extended one or more times, from time to time, for an indefinite
period at the Company's discretion upon giving at least two days' notice thereof
to the registered holders of the Class C Warrants.
STATUS OF HOLDER. The Company may deem and treat the registered holder
of this Class C Warrant Certificate as the absolute owner hereof for all
purposes, notwithstanding any notation of ownership or other writing made hereon
by any person, and neither the Company nor the Warrant Agent shall be affected
by any notice to the contrary. No registered holder of Class C Warrants, as
such, shall have any rights as a shareholder of the Company, either at law or at
equity, and the rights of each such registered holder, as such, are limited to
those expressly provided in the Warrant Terms and this Certificate.
WITNESS the facsimile seal of the Company and the facsimile signatures
of its duly authorized officers.
DATED: CHANNEL i INC.
(SEAL)
President Secretary
<PAGE>
CHANNEL i INC.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIFORM GIFTS TO MINORS ACT -
TEN ENT - as tenants by the entireties
_____________Custodian______________
JT TEN - as joint tenants with right of (Custodian) (Minor)
survivorship and not as tenants in
common and not as community property under the Uniform Gifts to Minors
Act of the State of ________________
EXERCISE
I or we hereby irrevocably elect to exercise the right of
purchase represented by this certificate to purchase _______________ Common
Shares of the Company and hereby make payment of $_____________ (number of
shares purchased multiplied by US$0.105) payable to the order of CHANNEL i INC.
in payment of the exercise price for such shares, and request that certificates
for the Common Shares shall be issued in the name of:
Please insert social security or EIN number Name and address, including zip
code: or other identifying number:
and, if such number of Common Shares shall not be all of the shares purchasable
hereunder, that a new Class C Warrant Certificate of like tenor for the balance
of the remaining Common Shares purchasable hereunder be delivered to the
undersigned at the address above. I hereby certify that I am not a "U.S. Person"
as defined in Regulation S of the United States Securities and Exchange
Commission and that I am not exercising this Class C Warrant to purchase shares
for or on behalf of any U.S. Person. I understand that the term "U.S. Person"
includes, among other persons, an individual resident in the United States, any
corporation, partnership or other entity organized under United States law, any
agency or branch of a corporation, partnership or other entity organized under
the laws of a country other than the United States which is located in the
United States, any trust or estate of which any trustee, administrator or
executor is a U.S. Person, and any account held for the benefit of a U.S.
Person.
IMPORTANT: The name of the person exercising this warrant must
correspond with the name of the Warrantholder written on the face of this
Certificate in every particular, without alteration or any change whatever,
unless it has been assigned by completing the Assignment form below.
DATED: ______________________, 19_____
X.............................
Signature of Warrantholder(s)
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
Please insert social security or EIN number Name and address, including zip
code: or other identifying number:
the right to purchase ________________ Common Shares of the Company evidenced by
this Class C Warrant, and does hereby irrevocably constitute and appoint any
officer of the Company or its transfer agent and registrar as lawful Attorney to
transfer such right on the books of the Company with full power of substitution
in the premises. I hereby certify that, to the best of my knowledge, the person
or persons to whom these Class C Warrants are being assigned is NOT a "U.S.
Person" as defined in Regulation S of the U.S. Securities and Exchange
Commission.
DATED: ______________________, 19_____
X..............................
Signature of Warrantholder(s)
IMPORTANT: Every registered owner of this Certificate must sign it to
assign or otherwise transfer Class C Warrants. The above signature or signatures
must correspond with the name or names written on the face of this Certificate
in every particular, without alteration, enlargement or any change whatever.
Each signature should be "medallion" guaranteed by an eligible guarantor
institution (Banks, Stockbrokers, Savings and Loan Associations and Credit
Unions) with membership in an approved signature guarantee Medallion Program
pursuant to Rule 17Ad-15 of the Securities and Exchange Commission.
SIGNATURE GUARANTEED:
<PAGE>
Exhibit 4.5 to Form 10-KSB for Year Ended December 31, 1996
The warrants evidenced by this certificate and the common
shares issuable upon warrant exercise have not been registered under the U.S.
Securities Act of 1933 ("Act"). Transfer of these securities is prohibited
except in accordance with the provisions of Regulation S under the Act. This
warrant may not be exercised, in whole or part, by or on behalf of any "U.S.
Person" (as defined in Regulation S) unless the shares to be acquired have been
registered under the Act or an exemption from registration is available.
CHANNEL i INC.
Organized under the laws of the State of Nevada
CLASS D COMMON STOCK PURCHASE WARRANT
WARRANTS TO PURCHASE
No. WD -
COMMON SHARES
THIS CERTIFIES that, for value received
or registered assigns ("Warrantholder") is entitled to purchase from CHANNEL i
INC., a Nevada corporation ("Company"), at any time from the date of issuance
and during the period (the "Exercise Period") expiring on February 5, 1998 (the
"Expiration Date"), unless extended, the number of fully paid, nonassessable
shares shown above of the Company's common stock, $.001 par value (the "Common
Shares"), in the manner stated below, at the purchase price of US$0.125 (twelve
and one-half cents) per Common Share (the "Exercise Price").
EXERCISE. Subject to the Warrant Terms, this Class D Warrant may be
exercised in whole or in part at any time during the Exercise Period for a whole
number of shares, by surrendering it with the Exercise Form on the reverse side
duly completed at the offices of the Company, and by paying in full the Exercise
Price for all Common Shares being purchased, together with all transfer fees and
transfer taxes and other governmental charges due, if any. Payment shall be made
in lawful money of the United States of America, in cash or by bank check,
cashier's check, certified check, or postal or express money order made payable
to the order of the Company. Upon partial exercise hereof, a new Class D Warrant
of like tenor shall be issued to the registered holder hereof evidencing the
number of Common Shares not purchased. No fractional shares or scrip certificate
evidencing fractional shares will be issued upon exercise hereof, nor will any
cash be paid in lieu of any fractional share not issued. In order to exercise
this warrant, the registered holder must at the time of exercise complete and
sign the Exercise form on the reverse side of this certificate, which contains a
representation that the exercising registered holder is not a U.S. Person and
that exercise is not being made for or on behalf of a U.S. Person.
ASSIGNMENT. This Class D Warrant may be assigned or transferred by the
registered holder or by attorney duly authorized in writing, in whole or in
part, at the offices of the Company with the Assignment form on the reverse side
duly completed, upon payment of the applicable transfer fee and any transfer tax
or other governmental charges due, if any. Upon any such assignment or transfer,
a new Class D Warrant Certificate or certificates of like tenor and representing
in the aggregate the right to purchase a like number of Common Shares, subject
to any adjustments made in accordance with the provisions of the Warrant Terms,
will be issued in accordance with the registered holder's lawful instructions.
EXCHANGE. This Class D Warrant Certificate may at any time be exchanged
for one or more Class D Warrant Certificates of like tenor and representing in
the aggregate the right to purchase a like number of Common Shares, subject to
any adjustments made in accordance with the provisions of the Warrant Terms,
upon presentation therefor at the offices of the Company and upon payment of the
requisite fees.
TRANSFER AND ASSIGNMENT FEES. Whenever this Class D Warrant Certificate
is exercised for Common Shares, is assigned or transferred, or is exchanged for
one or more like certificates, there shall be paid to the Company's transfer
agent therewith a fee for every Class D Warrant Certificate or Common Share
certificate to be issued, in accordance with the transfer agent's fee schedule.
ADJUSTMENTS. Under the Warrant Terms, the Exercise Price is subject to
adjustment if the Company effects any stock split or combination (reverse stock
split) or recapitalization with respect to the Common Shares and in certain
other circumstances. Any adjustment of the Exercise Price probably will result
in a corresponding adjustment of the number of Common Shares purchasable
hereunder. Further, the Exercise Price may be reduced, irrespective of whether a
stock split, combination or other adjustment is effected, and the Expiration
Date may be extended one or more times, from time to time, for an indefinite
period at the Company's discretion upon giving at least two days' notice thereof
to the registered holders of the Class D Warrants.
STATUS OF HOLDER. The Company may deem and treat the registered holder
of this Class D Warrant Certificate as the absolute owner hereof for all
purposes, notwithstanding any notation of ownership or other writing made hereon
by any person, and neither the Company nor the Warrant Agent shall be affected
by any notice to the contrary. No registered holder of Class D Warrants, as
such, shall have any rights as a shareholder of the Company, either at law or at
equity, and the rights of each such registered holder, as such, are limited to
those expressly provided in the Warrant Terms and this Certificate.
WITNESS the facsimile seal of the Company and the facsimile signatures
of its duly authorized officers.
DATED: CHANNEL i INC.
President Secretary
<PAGE>
CHANNEL i INC.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIFORM GIFTS TO MINORS ACT -
TEN ENT - as tenants by the entireties
______________Custodian_____________
JT TEN - as joint tenants with right of Custodian) (Minor)
survivorship and not as tenants in
common and not as community property under the Uniform Gifts to Minors
Act of the State of ________________
EXERCISE
I or we hereby irrevocably elect to exercise the right of
purchase represented by this certificate to purchase _______________ Common
Shares of the Company and hereby make payment of $_____________ (number of
shares purchased multiplied by US$0.125) payable to the order of CHANNEL i INC.
in payment of the exercise price for such shares, and request that certificates
for the Common Shares shall be issued in the name of:
Please insert social security or EIN number Name and address, including zip
code:
or other identifying number:
and, if such number of Common Shares shall not be all of the shares purchasable
hereunder, that a new Class D Warrant Certificate of like tenor for the balance
of the remaining Common Shares purchasable hereunder be delivered to the
undersigned at the address above. I hereby certify that I am not a "U.S. Person"
as defined in Regulation S of the United States Securities and Exchange
Commission and that I am not exercising this Class D Warrant to purchase shares
for or on behalf of any U.S. Person. I understand that the term "U.S. Person"
includes, among other persons, an individual resident in the United States, any
corporation, partnership or other entity organized under United States law, any
agency or branch of a corporation, partnership or other entity organized under
the laws of a country other than the United States which is located in the
United States, any trust or estate of which any trustee, administrator or
executor is a U.S. Person, and any account held for the benefit of a U.S.
Person.
IMPORTANT: The name of the person exercising this warrant must
correspond with the name of the Warrantholder written on the face of this
Certificate in every particular, without alteration or any change whatever,
unless it has been assigned by completing the Assignment form below.
DATED: ______________________, 19_____
X.............................
Signature of Warrantholder(s)
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
Please insert social security or EIN number Name and address, including zip
code:
or other identifying number:
the right to purchase ________________ Common Shares of the Company evidenced by
this Class D Warrant, and does hereby irrevocably constitute and appoint any
officer of the Company or its transfer agent and registrar as lawful Attorney to
transfer such right on the books of the Company with full power of substitution
in the premises. I hereby certify that, to the best of my knowledge, the person
or persons to whom these Class D Warrants are being assigned is NOT a "U.S.
Person" as defined in Regulation S of the U.S. Securities and Exchange
Commission.
DATED: ______________________, 19_____
X.............................
Signature of Warrantholder(s)
IMPORTANT: Every registered owner of this Certificate must sign it to
assign or otherwise transfer Class D Warrants. The above signature or signatures
must correspond with the name or names written on the face of this Certificate
in every particular, without alteration, enlargement or any change whatever.
Each signature should be "medallion" guaranteed by an eligible guarantor
institution (Banks, Stockbrokers, Savings and Loan Associations and Credit
Unions) with membership in an approved signature guarantee Medallion Program
pursuant to Rule 17Ad-15 of the Securities and Exchange Commission.
SIGNATURE GUARANTEED:
<PAGE>
Exhibit 4.6 to Form 10-KSB for Year Ended December 31, 1996
W A R R A N T T E R M S
WARRANT TERMS established this 10th day of February, 1997, by
CHANNEL i INC., a corporation organized under the laws of the State of Nevada
(the "Company"), for the benefit of the holders of the Company's Class A, Class
B, Class C and Class D Common Stock Purchase Warrants.
R E C I T A L S:
A. The Company has completed a "best efforts" offering of its securities,
which includes the following common stock purchase warrants:
1. 7,140,000 Class A Common Stock Purchase Warrants, each
entitling the holder to purchase one share of the Company's common
stock until August 3, 1997, at a price of US$0.0625 per share (the
"Class A Warrants").
2. 2,981,250 Class B Common Stock Purchase Warrants, each
entitling the holder to purchase one share of the Company's common
stock until February 6, 1998, at a price of US$0.085 per share (the
"Class B Warrants").
3. 2,981,250 Class C Common Stock Purchase Warrants, each
entitling the holder to purchase one share of the Company's common
stock until February 6, 1998, at a price of US$0.105 per share (the
"Class C Warrants").
4. 2,981,250 Class D Common Stock Purchase Warrants, each
entitling the holder to purchase one share of the Company's common
stock until February 6, 1998, at a price of US$0.125 per share (the
"Class D Warrants").
B. The Company proposes to offer and sell such warrants in reliance upon
Regulation S of the Securities and Exchange Commission ("Commission") under
the Securities Act of 1933, as amended ("Act").
NOW, THEREFORE, for the purpose of defining the terms and
provisions of the Class A, Class B, Class C and Class D Warrants (collectively,
the "Warrants") and the certificates representing the Warrants and the
respective rights and obligations thereunder of the Company and the holders of
certificates representing the Warrants, the Company hereby establishes the
following terms of the Warrants, by which all holders of Warrants shall be bound
and which they shall be presumed to be aware of and have accepted:
SECTION 1. DEFINITIONS. As used herein, the following terms shall
have the meanings respectively given them below, unless the context shall
otherwise require:
(a) "Common Stock" shall mean common stock of the Company of any
class, whether now or hereafter authorized, which has the right to participate
in the distribution of earnings and assets of the Company without limit as to
amount or percentage, which at the date hereof consists of 45,000,000 shares of
authorized Common Stock, $.001 par value per share.
(b) "Class A Warrant Expiration Date" shall mean 5 p.m. (Pacific
Time) on August 3, 1997, or if such a date shall in the State of Nevada be a
holiday or a day on which banks are authorized to close, then 5 P.M. (Pacific
Time) on the next following day which in the State of Nevada is not a holiday or
a day on which banks are authorized to close. The Class A Warrant Expiration
Date may be extended from time to time for an indefinite period, by action of
the Company, upon giving two (2) or more days' prior notice to the holders
thereof. Unless exercised during the exercise period, the Class A Warrants will
thereafter automatically expire.
1
<PAGE>
(c) "Class B Warrant Expiration Date" shall mean 5 p.m. (Pacific
Time) on February 6, 1998, or, if such date shall in the State of Nevada be a
holiday or a day on which banks are authorized to close, then 5:00 p.m. (Pacific
Time) on the next following date which in the State of Nevada is not a holiday
or a day on which banks are authorized to close. The Class B Warrant Expiration
Date may be extended from time to time for an indefinite period, by action of
the Company, upon giving two (2) or more days' prior notice to the holders
thereof. Unless exercised during the exercise period, the Class B Warrants will
thereafter automatically expire.
(d) "Class C Warrant Expiration Date" shall mean 5 p.m. (Pacific
Time) on February 6, 1998, or, if such date shall in the State of Nevada be a
holiday or a day on which banks are authorized to close, then 5:00 p.m. (Pacific
Time) on the next following date which in the State of Nevada is not a holiday
or a day on which banks are authorized to close. The Class C Warrant Expiration
Date may be extended from time to time for an indefinite period, by action of
the Company, upon giving two (2) or more days' prior notice to the holders
thereof. Unless exercised during the exercise period, the Class C Warrants will
thereafter automatically expire.
(e) "Class D Warrant Expiration Date" shall mean 5 p.m. (Pacific
Time) on February 6, 1998, or, if such date shall in the State of Nevada be a
holiday or a day on which banks are authorized to close, then 5:00 p.m. (Pacific
Time) on the next following date which in the State of Nevada is not a holiday
or a day on which banks are authorized to close. The Class D Warrant Expiration
Date may be extended from time to time for an indefinite period, by action of
the Company, upon giving two (2) or more days' prior notice to the holders
thereof. Unless exercised during the exercise period, the Class D Warrants will
thereafter automatically expire.
(f) "Class A Warrant Exercise Period" shall mean from the date of
issuance until the Class A Warrant Expiration Date defined above.
(g) "Class B Warrant Exercise Period" shall mean from the date of
issuance until the Class B Warrant Expiration Date defined above.
(h) "Class C Warrant Exercise Period" shall mean from the date of
issuance until the Class C Warrant Expiration Date defined above.
(i) "Class D Warrant Exercise Period" shall mean from the date of
issuance until the Class D Warrant Expiration Date defined above.
(j) "Corporate Office" shall mean the office of the Company where
its principal business is conducted, currently located at 700-555 Hastings
Street, Vancouver V6B 4N5, British Columbia, Canada.
(k) "Exercise Date" shall mean the date a certificate representing
a Warrant is surrendered for exercise. "Surrender" for purposes hereof shall
mean, in the event of (i) personal delivery by a Registered Holder, the date it
is received by the Company, (ii) mailing, the postmark date, and (iii) delivery
by a messenger, courier or similar service, the date of dispatch, as reflected
on the delivery receipt.
(l) "Class A Exercise Price" shall mean US$0.0625 per share of
Common Stock, unless reduced as hereinafter provided. The Company may, in its
sole discretion, reduce the Exercise Price upon giving two (2) or more days'
prior written notice to each person who is a Registered Holder as of the notice
date. Each Class A Warrant is exercisable at any time from the commencement of
its exercise period until the Class A Warrant Expiration Date.
(m) "Class B Exercise Price" shall mean US$0.085 per share of
Common Stock, unless reduced as hereinafter provided. The Company may, in its
sole discretion, reduce the Exercise Price upon giving two (2) or more days'
prior written notice to each person who is a Registered Holder as of the notice
date. Each Class B Warrant is exercisable at any time from the commencement of
its exercise period until the Class B Warrant Expiration Date.
2
<PAGE>
(n) "Class C Exercise Price" shall mean US$0.105 per share of
Common Stock, unless reduced as hereinafter provided. The Company may, in its
sole discretion, reduce the Exercise Price upon giving two (2) or more days'
prior written notice to each person who is a Registered Holder as of the notice
date. Each Class C Warrant is exercisable at any time from the commencement of
its exercise period until the Class C Warrant Expiration Date.
(o) "Class D Exercise Price" shall mean US$0.085 per share of
Common Stock, unless reduced as hereinafter provided. The Company may, in its
sole discretion, reduce the Exercise Price upon giving two (2) or more days'
prior written notice to each person who is a Registered Holder as of the notice
date. Each Class D Warrant is exercisable at any time from the commencement of
its exercise period until the Class D Warrant Expiration Date.
(p) "Registered Holder" shall mean the person or persons in whose
name or names any certificate representing Warrants shall be registered from
time to time on the books maintained by the Company.
(q) "Class A Warrant Certificate" shall mean a certificate
representing Class A Warrants.
(r) "Class B Warrant Certificate" shall mean a certificate
representing Class B Warrants.
(s) "Class C Warrant Certificate" shall mean a certificate
representing Class C Warrants.
(t) "Class D Warrant Certificate" shall mean a certificate
representing Class D Warrants.
(u) "Warrant Shares" shall mean and include (i) the shares of
Common Stock initially reserved for issuance upon exercise of Warrants, and (ii)
any additional Common Shares or other property which may hereafter be issuable
or deliverable on exercise of Warrants.
(v) "Regulation S" shall mean Rules 901 through 904 promulgated
by the Commission under the Securities Act of 1933, as amended.
(w) "United States" (and US and USA) shall mean the United States
of America, including its territories and possessions, the fifty states, and the
District of Columbia.
(x) "U.S. Person" shall have the meaning set forth on Schedule 1
to these Warrant Terms.
SECTION 2. WARRANTS AND ISSUANCE OF CERTIFICATES.
(a) Class A Warrants. Each Class A Warrant shall entitle the
Registered Holder thereof to purchase ONE (1) share of Common Stock upon its
exercise. The Class A Warrants will be transferable immediately upon issuance in
accordance with the limitations and provisions of Regulation S. As appropriate,
the Company shall:
(i) From time to time, up to the Class A Warrant Expiration Date,
plus such additional time as may reasonably be required to perform, accomplish
and complete necessary administrative functions connected with the exercise of
the Class A Warrants, the Company shall countersign and deliver stock
certificates representing an aggregate of not more than 7,140,000 Warrant Shares
upon the exercise of the Class A Warrants pursuant to the terms hereof.
(ii) From time to time, up to the Class A Warrant Expiration Date,
the Company shall countersign and deliver Class A Warrant Certificates in
required whole number denominations to the persons entitled thereto in
connection with any transfer or exchange permitted under these Warrant Terms.
Except in the case of loss, mutilation, theft or destruction, no Class A Warrant
Certificates shall be issued except (i) Class A Warrant Certificates initially
issued hereunder, (ii) Class A Warrant Certificates issued upon the exercise of
any Class A Warrants, to evidence the unexercised Class A Warrants held by the
exercising Registered Holder, and (iii) Class A Warrant Certificates issued upon
any transfer or exchange of Class A Warrants.
3
<PAGE>
(b) Class B Warrants. Each Class B Warrant shall entitle the
Registered Holder thereof to purchase ONE (1) share of Common Stock upon its
exercise. The Class B Warrants will be transferable immediately upon issuance in
accordance with the limitations and provisions of Regulation S. As appropriate,
the Company shall:
(i) From time to time, up to the Class B Warrant Expiration Date,
plus such additional time as may reasonably be required to perform, accomplish
and complete necessary administrative functions connected with the exercise of
the Class B Warrants, the Company shall countersign and deliver stock
certificates representing an aggregate of not more than 2,981,250 Warrant Shares
upon the exercise of the Class B Warrants pursuant to the terms hereof.
(ii) From time to time, up to the Class B Warrant Expiration Date,
the Company shall countersign and deliver Class B Warrant Certificates in
required whole number denominations to the persons entitled thereto in
connection with any transfer or exchange permitted under these Warrant Terms.
Except in the case of loss, theft, mutilation or destruction, no Class B Warrant
Certificates shall be issued except (i) Class B Warrant Certificates initially
issued hereunder, (ii) Class B Warrant Certificates issued upon the exercise of
any Class B Warrants, to evidence the unexercised Class B Warrants held by the
exercising Registered Holder, and (iii) Class B Warrant Certificates issued upon
any transfer or exchange of Class B Warrants.
(c) Class C Warrants. Each Class C Warrant shall entitle the
Registered Holder thereof to purchase ONE (1) share of Common Stock upon its
exercise. The Class C Warrants will be transferable immediately upon issuance in
accordance with the limitations and provisions of Regulation S. As appropriate,
the Company shall:
(i) From time to time, up to the Class C Warrant Expiration Date,
plus such additional time as may reasonably be required to perform, accomplish
and complete necessary administrative functions connected with the exercise of
the Class C Warrants, the Company shall countersign and deliver stock
certificates representing an aggregate of not more than 2,981,250 Warrant Shares
upon the exercise of the Class C Warrants pursuant to the terms hereof.
(ii) From time to time, up to the Class C Warrant Expiration Date,
the Company shall countersign and deliver Class C Warrant Certificates in
required whole number denominations to the persons entitled thereto in
connection with any transfer or exchange permitted under these Warrant Terms.
Except in the case of loss, theft, mutilation or destruction, no Class C Warrant
Certificates shall be issued except (i) Class C Warrant Certificates initially
issued hereunder, (ii) Class C Warrant Certificates issued upon the exercise of
any Class C Warrants, to evidence the unexercised Class C Warrants held by the
exercising Registered Holder, and (iii) Class C Warrant Certificates issued upon
any transfer or exchange of Class C Warrants.
(d) Class D Warrants. Each Class D Warrant shall entitle the
Registered Holder thereof to purchase ONE (1) share of Common Stock upon its
exercise. The Class D Warrants will be transferable immediately upon issuance in
accordance with the limitations and provisions of Regulation S. As appropriate,
the Company shall:
(i) From time to time, up to the Class D Warrant Expiration Date,
plus such additional time as may reasonably be required to perform, accomplish
and complete necessary administrative functions connected with the exercise of
the Class D Warrants, the Company shall countersign and deliver stock
certificates representing an aggregate of not more than 2,981,250 Warrant Shares
upon the exercise of the Class D Warrants pursuant to the terms hereof.
(ii) From time to time, up to the Class D Warrant Expiration Date,
the Company shall countersign and deliver Class D Warrant Certificates in
required whole number denominations to the persons entitled thereto in
connection with any transfer or exchange permitted under these Warrant Terms.
Except in the case of loss, theft, mutilation or destruction, no Class D Warrant
Certificates shall be issued except (i) Class D Warrant Certificates initially
issued hereunder, (ii) Class D Warrant Certificates issued upon the exercise of
any Class D Warrants, to evidence the unexercised Class D Warrants held by the
exercising Registered Holder, and (iii) Class D Warrant Certificates issued upon
any transfer or exchange of Class D Warrants.
4
<PAGE>
SECTION 3. RESTRICTIVE LEGENDS AND TRANSFER RESTRICTIONS. The
Warrants have been and the Warrant Shares will be offered and sold by the
Company and issued in reliance with Rule 903(c)(2) of Regulation S under the
Act, and subsequent transfers and assignments of Warrants and Warrant Shares,
and each exercise of a Warrant, must comply with the provisions of Regulation S.
The Warrants and the Warrant Shares will be subject to certain restrictions on
transfer pursuant to Regulation S (described below) for a period of 40 days
following the completion of the distribution of the Units, as certified to the
Company by the Selling Agent for the offering of Units (the "Restricted
Period").
The Warrants and Warrant Shares obtained upon exercise of Warrants
may not be sold, assigned or otherwise transferred to any U.S. Person or to any
person in the United States during the Restricted Period. A transfer will be
deemed made to a "person in the United States" if the securities are to be
delivered to a United States address. However, a transfer to a person in the
United States during the restricted period is permissible in the sole instance
that the transferee certifies in writing to the Company that it is a
professional fiduciary and that the acquisition by the fiduciary is on behalf of
a discretionary account which is held for the benefit of a person (other than an
estate or trust) which is not a U.S. Person.
SECTION 4. FORM AND EXECUTION OF WARRANT CERTIFICATES. The Warrant
Certificates shall be substantially in the form annexed hereto as Exhibit A (the
provisions of which are hereby incorporated herein) and may have such letters,
numbers or other marks of identification or designation and such legends,
summaries or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
these Warrant Terms, or as may be required to comply with any law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Warrants may be listed, or to conform to usage. The
Warrant Certificates shall be dated the date of issuance thereof (whether upon
initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen or
destroyed Warrant Certificates).
Warrant Certificates shall be executed on behalf of the Company by
its Chief Executive Officer, President or any Vice President and its Treasurer
or an Assistant Treasurer or its Secretary or an Assistant Secretary, by manual
signatures or by facsimile signatures printed thereon, and shall have imprinted
thereon a facsimile of the Company's seal. In case any officer of the Company
who shall have signed any of the Warrant Certificates shall cease to hold such
office with the Company before the date of issuance of the Warrant Certificates
and issue and delivery thereof, such Warrant Certificates nevertheless may be
issued and delivered with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be such officer of the
Company.
SECTION 5. EXERCISE OF THE WARRANTS. Each Warrant may be exercised
during the applicable Class A, Class B, Class C or Class D Warrant Exercise
Period, upon the terms and subject to the conditions set forth herein. A Warrant
shall be deemed to have been exercised immediately prior to the close of
business on the applicable Exercise Date, provided that the Warrant Certificate
representing such Warrant, with the appropriate exercise form thereon duly
executed by the Registered Holder thereof or his or her attorney duly authorized
in writing, together with payment in cash, or by bank check, cashier's check or
certified, or postal or express money order check made payable to the order of
Company, of an amount equal to the applicable Exercise Price has been timely
received by the Company. Payment must be made in United States dollars and may
be paid by wire transfer to the Company's account.
Restrictions upon Exercise. Each exercise of Warrants is subject to
the requirements imposed by Rule 902(m) of Regulation S. During the respective
exercise periods of the Warrants (whether within or after the Restricted
Period), including all extensions thereof, each person exercising a Warrant
shall be required to either (i) execute the Certification of Status" on the
reverse side of the Warrants that he, she or it is not a U.S. Person and that
the Warrant is not being exercised for on behalf of a U.S. Person, OR (ii)
furnish to the Company a written opinion of counsel admitted to practice in the
United States to the effect that the Warrant and the Warrant Shares deliverable
upon exercise thereof have been registered under the Securities Act of 1933 or
are exempt from registration thereunder. The written certification or opinion of
counsel shall be required upon every exercise of a Warrant.
5
<PAGE>
No person may exercise a Warrant registered in the name of another
person. In addition to the requirement that each person exercising a Warrant
execute the written certification or furnish an opinion of counsel, the Company
shall not permit the exercise of a Warrant by any person within the United
States, nor deliver Warrant Shares within the United States. However, exercise
of a Warrant and delivery of the corresponding Warrant Shares to a person in the
United States is permissible in the sole instance that such person certifies in
writing to the Company that (1) it is a professional fiduciary, and (2) that the
acquisition by the fiduciary is on behalf of a discretionary account (3) which
is held for the benefit of a person (other than an estate or trust) which is not
a U.S. Person.
The person entitled to receive the securities deliverable upon such
exercise shall be treated for all purposes as the holder of such securities as
of the close of business on the Exercise Date. The Company shall not be
obligated to issue any fractional share interests or fractional warrant
interests upon the exercise of any Warrant. As soon as practicable on or after
the Exercise Date and in any event within 30 days after such date, the Company
shall cause to be issued and delivered to the person or persons entitled to
receive the same a certificate or certificates for the Warrant Shares purchased.
No adjustment shall be made in respect of cash dividends on any Warrant Shares
delivered upon exercise of any Warrant.
SECTION 6. RESERVATION OF SHARES; LISTING; PAYMENT OF TAXES; ETC.
The Company shall at all times reserve and keep available out of its authorized
Common Stock, solely for the purpose of issue upon exercise of Warrants, such
number of shares of Common Stock as shall then be issuable upon the exercise of
all outstanding Warrants. All shares of Common Stock which shall be issuable
upon exercise of Warrants shall be duly and validly issued and fully paid,
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and that upon issuance such shares shall be listed on each
national securities exchange or quotation medium, if any, on which the other
shares of outstanding Common Stock of the Company are then listed or quoted. The
Company shall pay all documentary, stamp or similar taxes and other governmental
charges that may be imposed with respect to the issuance of Warrants, or the
issuance or delivery of any shares upon exercise of Warrants; provided, however,
that no such delivery shall be made unless the person requesting the same has
paid to the Company the amount of transfer taxes or charges incident thereto, if
any.
SECTION 7. EXCHANGE AND REGISTRATION OF TRANSFER. The Company shall
register Warrant Certificates and the exchange and transfer thereof. Warrant
Certificates may be exchanged for other Warrant Certificates representing an
equal aggregate number of Warrants or may be transferred in whole or in part.
Warrant Certificates to be so exchanged shall be surrendered to the Company at
its Corporate Office, accompanied by an Assignment, when necessary, and the
Company shall execute, issue and deliver in exchange therefor the Warrant
Certificate(s) which the Registered Holder shall be entitled to receive. Upon
any exchange of Warrants, the certificates to be issued must be issued in the
name of the Registered Holder, otherwise the "exchange" shall be treated as a
transfer and rules relating to transfers shall apply in that event.
Upon due presentment for registration of transfer of any Warrant
Certificate at the Corporate Office, the Company shall execute, issue and
deliver to the transferee or transferees a new Warrant Certificate or
Certificates representing an equal aggregate number of Warrants, provided the
requirements of Section 3 are satisfied. The Company may in its sole discretion
require that the signature of a Registered Holder assigning Warrants be
guaranteed by a bank, trust company or other eligible guarantor institution that
is a member of an approved signature guarantee medallion program pursuant to
Securities and Exchange Commission Rule 17Ad-15.
With respect to all Warrant Certificates presented for registration
or transfer, or for exchange or exercise, the subscription form on the reverse
thereof shall be duly endorsed, or be accompanied by a written instrument or
instruments of transfer and subscription, in form satisfactory to the Company,
duly executed by the Registered Holder thereof or his or her attorney duly
authorized in writing.
A transfer fee of $10.00 shall be paid by the Registered Holder for
any exchange, registration or transfer of Warrant Certificates. In addition, the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed thereon.
6
<PAGE>
Prior to due presentment for registration of transfer thereof the
Company may deem and treat the Registered Holder of any Warrant Certificate as
the absolute owner thereof and of each Warrant represented thereby
(notwithstanding any notations of ownership or writing thereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary.
SECTION 8. LOSS OR MUTILATION, ETC. Upon receipt by the Company of
evidence satisfactory to it of the ownership of and the loss, theft, destruction
or mutilation of any Warrant Certificate and (in the case of loss, theft or
destruction) of indemnity satisfactory to the Company, and (in the case of
mutilation) upon surrender and cancellation thereof, the Company shall execute,
issue and deliver in lieu thereof a new Warrant Certificate representing an
equal aggregate number of Warrants. Applicants for a substitute Warrant
Certificate shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company may prescribe.
SECTION 9. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
(a) In the event that, prior to expiration of the Warrants, the
Company shall issue any of its Common Shares as a stock dividend or shall
subdivide the number of outstanding Common Shares into a greater number of
shares (forward split), then, in either such event the respective Exercise
Prices in effect at the time of such action shall be reduced proportionately and
the number of Warrant Shares purchasable shall be increased proportionately.
Conversely, in the event that the Company shall reduce the number of its
outstanding Common Shares by combining such shares into a smaller number of
shares (reverse split), then, in such event the respective Exercise Prices in
effect at the time of such action shall be increased proportionately and the
number of Warrant Shares purchasable pursuant to the Warrants shall be decreased
proportionately. Any dividend paid or distributed on the Common Shares in shares
of any other class of the Company or in securities convertible into Common
Shares shall be treated as a dividend paid in Common Shares to the extent Common
Shares are issuable upon the payment or conversion thereof.
(b) In the event that, prior to expiration of the Warrants, the
Company is merged into or consolidated with another corporation, or consummates
a plan of exchange or reorganization, pursuant to which shareholders of the
Company receive any shares of stock or other securities in exchange for their
Common Shares, there shall be substituted for the Warrant Shares underlying the
then-unexercised Warrants an appropriate number of shares of each class of stock
or other securities which were distributed to the Company's shareholders
pursuant to any such transaction. The written agreement which sets forth the
terms of such merger, consolidation, or plan of exchange or reorganization shall
make provision for substitution as herein provided, on a fair and equitable
basis.
(c) An adjustment made pursuant to this subsection shall become
effective immediately after the record date in the case of a stock dividend and
shall become effective immediately after the effective date in the case of a
subdivision (stock split), combination (reverse stock split), or transaction
contemplated in subsection (b) of this Section. If, as a result of an adjustment
made pursuant to this subsection, the Registered Holder of any Warrant
thereafter exercised shall become entitled to receive shares of two or more
classes of capital stock of the Company, the Board of Directors (whose
determination shall be conclusive) shall determine the allocation of the
adjusted Exercise Price between or among shares of such classes of capital
stock.
(d) No adjustment in an Exercise Price shall be required to be made
unless such adjustment would require an increase or decrease of at least $.01;
provided, however, that any adjustments which by reason of this subsection are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section shall be made to the
nearest one-hundredth of a share, but in no event shall the Company be obligated
to issue fractional shares upon Warrant exercise.
(e) The Company shall give prompt written notice to Registered
Holders of the effect of any action above, which shall state the adjustments
caused to the respective Warrant Exercise Prices or to the number of Warrant
Shares purchasable upon exercise. Thereafter, if the Company does not print new
Warrant Certificates reflecting the adjustments so caused, and during the period
after such an adjustment but prior to printing of new certificates, then
7
<PAGE>
the Company shall cause a copy of the notice to be delivered to each person who
thereafter acquires Warrants along with the Warrant Certificates delivered to
such persons.
(f) No adjustment in the respective Warrant Exercise Prices or in
the number of Warrant Shares purchasable upon exercise of the Warrants shall be
made in the event of the (i) reclassification of the Common Shares into shares
without par value or changing the par value of the Common Shares, (ii) merger of
another corporation into the Company which does not result in any
reclassification of the then outstanding Common Shares (iii) issuance of
additional Common Shares incident to any transaction in which the Company issues
such Common Shares in exchange for assets or outstanding capital stock (or other
equity ownership interest) of another corporation or other entity, (iv)
establishment of any incentive stock option, employee stock option plan or
similar plan for officers, directors or employees of the Company or any
Subsidiary, or the modification, renewal or extension of any such plan, or the
issuance of Common Shares pursuant to any such plan, (v) issuance of additional
warrants, options or similar securities entitling the holders thereof to
purchase Common Shares or the issuance of Common Shares pursuant to any such
securities, (vi) issuance of notes, bonds, debentures or other evidences of
indebtedness, or of preferred stock, which is or are convertible into Common
Shares or the issuance of Common Shares pursuant to conversion of any such
securities or debt instruments, (vii) the issuance of Common Shares in
connection with any compensation arrangements for officers, directors or
employees of the Company or any Subsidiary thereof, (viii) issuance of Common
Shares, or securities convertible or exchangeable into Common Shares, for cash,
property, labor or services (or any combination thereof), either upon direct
sale or upon the exercise of warrants, options or similar rights or the
conversion or exchange of other securities of the Company, (ix) Company's sale
of all or substantially all of its property, or liquidation and winding-up its
affairs, or (x) sale by the Company to its shareholders or other persons of
Common Shares at a price below the then market value of its Common Shares.
(g) On exercise of Warrants, the Company shall not be required to
deliver fractional Common Shares. In lieu thereof, the Company shall make an
appropriate adjustment in the Exercise Price payable by the Registered Holder in
respect of any Common Shares not delivered and pay such amount to the Registered
Holder.
(h) The Warrants shall not entitle any Registered Holder thereof to
any rights of shareholders of the Company or to any dividend declared on the
Common Shares, unless a Warrant has been exercised and the Warrant Shares
purchased prior to the record date fixed by the Board of Directors for the
determination of shareholders entitled to such dividend or other right.
(i) In addition to making the adjustments provided for above in
this Section, the Company may in its sole discretion one or more times reduce
the Exercise Price of any one or more classes of Warrants, upon giving at least
two (2) days' notice thereof to Registered Holders affected.
SECTION 10. MODIFICATION OF WARRANT TERMS. The the Company may by
supplement make any changes or corrections in these Warrant Terms that it deems
(i) appropriate to cure any ambiguity or to correct any defective or
inconsistent provision or manifest mistake or error herein contained, or (ii)
necessary or desirable and which do not adversely affect the interests of the
holders of Warrant Certificates.
SECTION 11. NOTICES. All notices, requests, consents and other
communications required or permitted to be given by the Company to a Registered
Holder, or by a Registered Holder to the Company, shall be in writing and shall
be deemed to have been made when received by the party to whom it is addressed.
Notice to the Company shall be sent to the Corporate Office. Notice to a
Registered Holder shall be sent to the most recent address furnished in writing
to the Company.
SECTION 12. GOVERNING LAW. The Warrants shall be governed by and
construed in accordance with the laws of the State of Nevada. Section headings
in these Warrant Terms appear for convenience of reference only and shall not be
used in any interpretation of these Warrant Terms.
8
<PAGE>
SECTION 13. EFFECT OF WARRANT TERMS. Every Registered Holder shall
be presumed to have read and to be aware of these Warrant Terms and, by
accepting a Warrant Certificate, to have assented to these Warrant Terms, which
shall constitute a contract between the Company and the Registered Holders. The
provisions of these Warrant Terms shall be binding upon every Registered Holder
and every successor, assign, heir, legatee and legal representative of a
Registered Holder to the same extent as if such person(s) was a party hereto.
These Warrant Terms are effective as of the date first written above.
SECTION 14. SEVERABILITY. If any provision of these Warrant Terms
shall be held or declared invalid or unenforceable for any reason by any court
of competent jurisdiction, government authority or otherwise, such holding or
declaration shall not adversely affect any other provisions hereof, and the
effect of any such holding or declaration shall be limited to the territory or
jurisdiction in which made.
IN WITNESS WHEREOF, the Company has caused these Warrant Terms to
be duly executed as of this date first above written.
CHANNEL i INC.
/s/ Robert G. Clarke
By..............................
Robert G. Clarke, President
9
<PAGE>
SCHEDULE 1
As used in the foregoing Warrant Terms established by CHANNEL i
INC., the term "U.S. Person" shall mean:
1. Any individual (natural person) resident in the United States;
2. Any partnership, corporation, or other entity organized or incorporated
under the laws of the United States. [However, an agency or branch of a
U.S. Person located outside the United States will not be considered a U.S.
Person if the agency or branch operates for valid business reasons in the
business of insurance or banking and is subject to substantive insurance or
banking regulation in the jurisdiction where located.]
3. Any estate of which any executor or administrator is a U.S. Person.
[However, an estate will not be considered a U.S. Person if an executor or
administrator who is not a U.S. Person has sole or shared investment
discretion with respect to the estate's assets and the estate is governed
by foreign law.]
4. Any trust of which any trustee is a U.S. Person. [However, a trust will not
be considered a U.S. Person if a trustee who is not a U.S. Person has sole
or shared investment discretion with respect to the trust's assets, and no
beneficiary of the trust (and no settlor, if the trust is revocable) is a
U.S. Person.]
5 Any agency or branch of a foreign entity located in the United States.
6. Any discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary for the benefit or account of a
U.S. Person or held by a dealer or other fiduciary organized, incorporated
or (if an individual) resident in the United States. [However, such an
account will not be considered a U.S. Person if held for the account or
benefit of a non-U.S. Person (other than an estate or trust) by a dealer or
other professional fiduciary organized, incorporated or (if an individual)
resident in the United States.]
7. Any foreign partnership or corporation (one organized or incorporated under
the laws of any non- United States jurisdiction) if formed by one or more
U. S. Persons for the purpose of investing in securities not registered
under the Securities Act. [However, such an entity will not be considered a
U. S. Person if it has been organized and is owned solely by "accredited
investors" as defined in Regulation D of the Commission.]
10
<PAGE>
EXHIBIT A to WARRANT TERMS
The warrants evidenced by this certificate and the common shares
issuable upon warrant exercise have not been registered under the U.S.
Securities Act of 1933 ("Act"). Transfer of these securities is prohibited
except in accordance with the provisions of Regulation S under the Act. This
warrant may not be exercised, in whole or part, by or on behalf of any "U.S.
Person" (as defined in Regulation S) unless the shares to be acquired have been
registered under the Act or an exemption from registration is available.
CHANNEL i INC.
Organized under the laws of the State of Nevada
CLASS A COMMON STOCK PURCHASE WARRANT
WARRANTS TO PURCHASE
No. WA -
COMMON SHARES
THIS CERTIFIES that, for value received
or registered assigns ("Warrantholder") is entitled to purchase from CHANNEL i
INC., a Nevada corporation ("Company"), at any time from the date of issuance
and during the period (the "Exercise Period") expiring on August 3, 1997 (the
"Expiration Date"), unless extended, the number of fully paid, nonassessable
shares shown above of the Company's common stock, $.001 par value (the "Common
Shares"), in the manner stated below, at the purchase price of US$0.0625 (six
and one-fourth cents) per Common Share (the "Exercise Price").
EXERCISE. Subject to the Warrant Terms, this Class A Warrant may be
exercised in whole or in part at any time during the Exercise Period for a whole
number of shares, by surrendering it with the Exercise Form on the reverse side
duly completed at the offices of the Company, and by paying in full the Exercise
Price for all Common Shares being purchased, together with all transfer fees and
transfer taxes and other governmental charges due, if any. Payment shall be made
in lawful money of the United States of America, in cash or by bank check,
cashier's check, certified check, or postal or express money order made payable
to the order of the Company. Upon partial exercise hereof, a new Class A Warrant
of like tenor shall be issued to the registered holder hereof evidencing the
number of Common Shares not purchased. No fractional shares or scrip certificate
evidencing fractional shares will be issued upon exercise hereof, nor will any
cash be paid in lieu of any fractional share not issued. In order to exercise
this warrant, the registered holder must at the time of exercise complete and
sign the Exercise form on the reverse side of this certificate, which contains a
representation that the exercising registered holder is not a U.S. Person and
that exercise is not being made for or on behalf of a U.S. Person.
ASSIGNMENT. This Class A Warrant may be assigned or transferred by the
registered holder or by attorney duly authorized in writing, in whole or in
part, at the offices of the Company with the Assignment form on the reverse side
duly completed, upon payment of the applicable transfer fee and any transfer tax
or other governmental charges due, if any. Upon any such assignment or transfer,
a new Class A Warrant Certificate or certificates of like tenor and representing
in the aggregate the right to purchase a like number of Common Shares, subject
to any adjustments made in accordance with the provisions of the Warrant Terms,
will be issued in accordance with the registered holder's lawful instructions.
EXCHANGE. This Class A Warrant Certificate may at any time be exchanged
for one or more Class A Warrant Certificates of like tenor and representing in
the aggregate the right to purchase a like number of Common Shares, subject to
any adjustments made in accordance with the provisions of the Warrant Terms,
upon presentation therefor at the offices of the Company and upon payment of the
requisite fees.
TRANSFER AND ASSIGNMENT FEES. Whenever this Class A Warrant Certificate is
exercised for Common Shares, is assigned or transferred, or is exchanged for one
or more like certificates, there shall be paid to the Company's transfer agent
therewith a fee for every Class A Warrant Certificate or Common Share
certificate to be issued, in accordance with the transfer agent's fee schedule.
ADJUSTMENTS. Under the Warrant Terms, the Exercise Price is subject to
adjustment if the Company effects any stock split or combination (reverse stock
split) or recapitalization with respect to the Common Shares and in certain
other circumstances. Any adjustment of the Exercise Price probably will result
in a corresponding adjustment of the number of Common Shares purchasable
hereunder. Further, the Exercise Price may be reduced, irrespective of whether a
stock split, combination or other adjustment is effected, and the Expiration
Date may be extended one or more times, from time to time, for an indefinite
period at the Company's discretion upon giving at least two days' notice thereof
to the registered holders of the Class A Warrants.
STATUS OF HOLDER. The Company may deem and treat the registered holder of
this Class A Warrant Certificate as the absolute owner hereof for all purposes,
notwithstanding any notation of ownership or other writing made hereon by any
person, and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary. No registered holder of Class A Warrants, as such, shall
have any rights as a shareholder of the Company, either at law or at equity, and
the rights of each such registered holder, as such, are limited to those
expressly provided in the Warrant Terms and this Certificate.
WITNESS the facsimile seal of the Company and the facsimile signatures of
its duly authorized officers.
DATED: CHANNEL i INC.
(SEAL)
President Secretary
11
<PAGE>
CHANNEL i INC.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIFORM GIFTS TO MINORS ACT -
TEN ENT - as tenants by the entireties
____________Custodian______________
JT TEN - as joint tenants with right of (Custodian) (Minor)
survivorship and not as tenants in
common and not as community property under the Uniform Gifts to Minors
Act of the State of ________________
EXERCISE
I or we hereby irrevocably elect to exercise the right of
purchase represented by this certificate to purchase _______________ Common
Shares of the Company and hereby make payment of $_____________ (number of
shares purchased multiplied by US$0.0625) payable to the order of CHANNEL i INC.
in payment of the exercise price for such shares, and request that certificates
for the Common Shares shall be issued in the name of:
Please insert social security or EIN number Name and address, including zip
code: or other identifying number:
and, if such number of Common Shares shall not be all of the shares purchasable
hereunder, that a new Class A Warrant Certificate of like tenor for the balance
of the remaining Common Shares purchasable hereunder be delivered to the
undersigned at the address above. I hereby certify that I am not a "U.S. Person"
as defined in Regulation S of the United States Securities and Exchange
Commission and that I am not exercising this Class A Warrant to purchase shares
for or on behalf of any U.S. Person. I understand that the term "U.S. Person"
includes, among other persons, an individual resident in the United States, any
corporation, partnership or other entity organized under United States law, any
agency or branch of a corporation, partnership or other entity organized under
the laws of a country other than the United States which is located in the
United States, any trust or estate of which any trustee, administrator or
executor is a U.S. Person, and any account held for the benefit of a U.S.
Person.
IMPORTANT: The name of the person exercising this warrant must correspond
with the name of the Warrantholder written on the face of this Certificate in
every particular, without alteration or any change whatever, unless it has been
assigned by completing the Assignment form below.
DATED: ______________________, 19_____
X..............................
Signature of Warrantholder(s)
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
Please insert social security or EIN number Name and address, including zip
code: or other identifying number:
the right to purchase ________________ Common Shares of the Company evidenced by
this Class A Warrant, and does hereby irrevocably constitute and appoint any
officer of the Company or its transfer agent and registrar as lawful Attorney to
transfer such right on the books of the Company with full power of substitution
in the premises. I hereby certify that, to the best of my knowledge, the person
or persons to whom these Class A Warrants are being assigned is NOT a "U.S.
Person" as defined in Regulation S of the U.S. Securities and Exchange
Commission.
DATED: ______________________, 19_____
X..............................
Signature of Warrantholder(s)
IMPORTANT: Every registered owner of this Certificate must sign it to
assign or otherwise transfer Class A Warrants. The above signature or signatures
must correspond with the name or names written on the face of this Certificate
in every particular, without alteration, enlargement or any change whatever.
Each signature should be "medallion" guaranteed by an eligible guarantor
institution (Banks, Stockbrokers, Savings and Loan Associations and Credit
Unions) with membership in an approved signature guarantee Medallion Program
pursuant to Rule 17Ad-15 of the Securities and Exchange Commission.
SIGNATURE GUARANTEED:
12
<PAGE>
Exhibit 10.20
RESIGNATION AND RELEASE AGREEMENT
This resignation and release is made the 2nd day of February between Channel i,
Inc. a Nevada corporation ("Corporation") and Ray Hoag ("Hoag") an individual
who is currently a Director of the Corporation. As used in this agreement
Corporation is to include its subsidiary directors, officers, employees, legal
representatives, and other agents.
RECITALS
Whereas, the Corporation and Hoag have a mutual desire to end the director
relationship, and to establish the terms and conditions satisfactory to both the
Corporation and Hoag upon which they will do so.
1. Release and Covenant
Hoag and his successors and assigns for any and all others claiming
through Hoag and on his behalf, in consideration of the acts and promises of the
Corporation set forth in this Agreement, hereby releases, acquits and forever
discharges the Corporation of and from any and all actions, causes of action,
claims, demands, damages, liabilities or costs of whatever kind or nature, known
or unknown, arising out of their actions, and the cancellation thereof,
including but now limited to any action or claim under federal, state, or local
statute or regulation or under any common law principals. Hoag further covenants
and agrees never to join in or commence any action suit or proceeding in law or
equity or before any administrative agency or any other forum against the
Corporation, in any way pertaining to or arising out of Hoag's relationship with
the Corporation or this agreement
2. Consideration
Hoag agrees to accept as sole consideration for all services performed
on Corporation's behalf, for the resignation as Director of Channel i, Inc.,
50,000 options on shares of Channel i, Inc. at $.0625 (US Dollars), (per
separate option agreement), all the equipment located in Grand Rapids, Michigan,
owned by the Corporation, and detailed on attached bill of sale.
3. Resignation
Hoag agrees that his resignation is absolute as a Director of Channel i,
Inc. and that he does not have any disagreements with management or any plan
currently being negotiated.
4 Other Acts.
This agreement shall be governed by and construed in accordance with
the laws of the state of Nevada with regard to any conflict of law principals.
In the event that any portion of the agreement is found to be unenforceable for
any reason, whatsoever, the unenforceable provision shall be considered to be
severable and the remainder the agreement shall continue in full force and
affect.
Dated this 2nd day of February, 1997
Ray Hoag Channel i, Inc.
/s/ Ray Hoag /s/ Charlie Rodriguez
- ------------------------ -------------------------
Ray Hoag Charlie Rodriguez
<PAGE>
BILL OF SALE
Channel i, Inc. ("Seller"), a Nevada corporation, in consideration for services
performed and potential liability owed, (detailed in the Resignation agreement),
hereby sells and warrants to Ray Hoag, ("Buyer'), an individual, the following
items of equipment (hereinafter "Equipment"):
(See Attached List)
Seller warrants title to the Equipment and further warrants:
1. the Equipment is free and clear of all security interests, liens, and
encumbrances;
2. the transfer of the Equipment does not constitute a bulk sale under
any relevant statues;
3. It has executed this bill of sale with full knowledge of the facts,
and it has the full rights to sell and transfer the Equipment;
4. the Equipment is sold and transferred in good faith for the actual and
adequate consideration set forth above;
5. no judgments are outstanding against the Equipment in any state or
federal court;
6. no attachments executions or other writs or processes have been issued
against the Equipment;
7. no bankruptcy proceedings have been commenced against the Corporation;
8. the Corporation has not filed a petition in bankruptcy;
9. the Corporation has not been adjudicated bankrupt
The Equipment is sold without any express or implied warranties, except the
warranties specifically stated above. The Equipment is used, and Buyer has had
ample opportunity to inspect it. Seller makes no representations about the
condition, performance, or safety of the Equipment as it exists now or at the
time of delivery. SELLER MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE AND SHALL NOT BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES.
Seller has executed this bill of sale effective February 2, 1997.
Witness SELLER
Channel i, Inc.
/s/ Barbara Rodriguez /s/ Charlie Rodriguez
- ----------------------------- ----------------------------
Barbara Rodriguez Charlie Rodriguez, President
<PAGE>
Exhibit 10.21
RESIGNATION AND RELEASE AGREEMENT
This resignation and release is made the 2nd day of February between Channel i,
Inc. a Nevada corporation ("Corporation") and H. Jeremy Renton ("Renton") an
individual who is currently a Director of the Corporation. As used in this
agreement Corporation is to include its subsidiary directors, officers,
employees, legal representatives, and other agents.
RECITALS
Whereas, the Corporation and Renton have a mutual desire to end the Chairman and
director relationship, and to establish the terms and conditions satisfactory to
both the Corporation and Renton upon which they will do so.
1. Release and Covenant
Renton and his successors and assigns for any and all others claiming
through the Renton and on his behalf, in consideration of the acts and promises
of the Corporation set forth in this Agreement, hereby releases, acquits and
forever discharges the Corporation of and from any and all actions, causes of
action, claims, demands, damages, liabilities or costs of whatever kind or
nature, known or unknown, arising out of their actions, and the cancellation
thereof, including but now limited to any action or claim under federal, state,
or local statute or regulation or under any common law principals. Renton
further covenant and agrees never to join in or commence any action suit or
proceeding in law or equity or before any administrative agency or any other
forum against the Corporation, in any way pertaining to or arising out of
Renton's relationship with the Corporation or this agreement
2. Consideration
Renton agrees to accept as sole consideration for all services
performed on Corporation's behalf, for the resignation as Chairman and Director
of Channel i, Inc., 250,000 options on shares of Channel i, Inc. at $.0625 (US
Dollars), (per separate option agreement), all the equipment located in London,
England, owned by the Corporation, and detailed on attached bill of sale, and a
payment by him of Three Thousand Pounds Sterling ((pound)3,000) into the Channel
i, Plc. account.
3. Resignation
Renton agrees that his resignation is absolute as a Director of Channel
i, Inc. and that he does not have any disagreements with management or any plan
currently being negotiated.
4. Other Acts.
This agreement shall be governed by and construed in accordance with
the laws of the state of Nevada with regard to any conflict of law principals.
In the event that any portion of the agreement is found to be unenforceable for
any reason, whatsoever, the unenforceable provision shall be considered to be
severable and the remainder the agreement shall continue in full force and
affect.
Dated this 2nd day of February, 1997
H. Jeremy Renton Channel i, Inc.
/s/ Jeremy Renton /s/ Charlie Rodriguez
- ------------------------- ---------------------------
Jeremy Renton Charlie Rodriguez
<PAGE>
BILL OF SALE
Channel i, Inc. ("Seller"),a Nevada corporation, in consideration for services
performed. liability owed, (detailed in the Resignation agreement) and the
receipt of Three Thousand Pounds Sterling ((pound)3,000), (the receipt which is
acknowledged and deposited into the Channel i, Plc. bank account,) hereby sells
and warrants to H. Jeremy Renton, ("Buyer'), an individual, the following items
of equipment (hereinafter "Equipment"):
(See Attached List)
Seller warrants title to the Equipment and further warrants:
1. the Equipment is free and clear of all security interests, liens, and
encumbrances;
2. the transfer of the Equipment does not constitute a bulk sale under
any relevant statues;
3. It has executed this bill of sale with full knowledge of the facts,
and it has the full rights to sell and transfer the Equipment;
4. the Equipment is sold and transferred in good faith for the actual and
adequate consideration set forth above;
5. no judgments are outstanding against the Equipment in any state or
federal court;
6. no attachments executions or other writs or processes have been issued
against the Equipment;
7. no bankruptcy proceedings have been commenced against the Corporation;
8. the Corporation has not filed a petition in bankruptcy;
9. the Corporation has not been adjudicated bankrupt
The Equipment is sold without any express or implied warranties, except the
warranties specifically stated above. The Equipment is used, and Buyers has had
ample opportunity to inspect it. Seller makes no representations about the
condition, performance , or safety of the Equipment as it exists now or at the
time of delivery. SELLER MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE AND SHALL NOT BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES.
Seller has executed this bill of sale effective February 2, 1997.
Witness SELLER
Channel i, Inc.
/s/ Barbara Rodriguez /s/ Charlie Rodriguez
- ----------------------------- ----------------------------
Barbara Rodriguez Charlie Rodriguez, President
<PAGE>
Exhibit 10.22
Channel i, Inc.
Compensatory
STOCK OPTION
Under the Channel i, Inc.1994 Compensatory Stock Option Plan
THIS COMPENSATORY STOCK OPTION, dated as of January 22, 1997 (the "Date of
Grant"), is granted by Channel i, Inc., a Nevada corporation ("Company"), to
Charlie Rodriguez (the "Optionee"), whose status under the Company's 1994
Compensatory Stock Option plan is described on the Signature Page hereof.
WHEREAS, the Optionee is now an employee or director of the Company or a
parent or subsidiary thereof, or an attorney, consultant, adviser or other
provider of services to the Company or parent or subsidiary thereof and the
Company desires to have the Optionee remain in its employ or service and desires
to encourage stock ownership by the Optionee and to increase the Optionee's
proprietary interest in the Company;'s success; and as an inducement thereto has
determined to grant to the Optionee the option herein provided for, so that the
Optionee may thereby be assisted in obtaining an interest, or an increased
interest, as the case may be, in the stock ownership of the Company;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. Grant. Pursuant to its 1994 Compensatory Stock Option Plan (the "Plan"),
the Company hereby grants to the Optionee an option (the "Option") to purchase
317,000 shares of the Company's common stock, $.001 par value per share (the
"Option Shares") at the price of $0.0625 per share (the 'Purchase Price" or
"Exercise Price"), Both the Purchase Price and the number of Option Shares
purchasable may be adjusted pursuant to Paragraph 9 hereof.
2. Term and Vesting. The Option granted herein is fully vested on the
date of grant and is exercisable in whole or from time to time in part during
the period beginning on the Date of Grant, January 22, 1997 for three years,
ending at 5:00 o'clock p.m. (Pacific Time) on January 22, 2000, except as
provided in Paragraph 7 hereof.
1
<PAGE>
3. Exercise of Option. During the Optionee's life, this Option may only be
exercised by him or her. This Option may only be exercised by presentation at
the principal offices of the Company of written notice to the Company's
Secretary advising the Company of the Optionee's election to purchase Option
Shares, specifying the number of Option Shares being purchased, accompanied by
payment. No Option Shares shall be issued until full payment is made therefor.
Payment shall be made either (i) in cash, represented by bank or cashier's
check, certified check or money order, (ii) by delivering shares of the
company's Common Stock of the same class as the Option Shares, which have been
beneficially owned by the Optionee, the Optionee's spouse, or both of them for a
period of at least six (6) months prior to the time of exercise (the "Delivered
Stock"), in a number equal to the number of shares of Stock being purchased upon
exercise of this Option, or (iii) by delivery of shares of corporate stock
registered in the Optionee's name, endorsed in blank or accompanied by an
executed stock power with signature guaranteed in either case, which are freely
tradeable without restriction and are part of a class of securities which has
been listed for trading on the NASDAQ system or a national securities exchange,
with an aggregate fair market value equal to or greater than the total purchase
price of the Option Shares being purchased hereunder, or a combination of cash,
Delivered Stock or other corporate shares, or (iv) by advising the Company, at
the time the Option is exercised, to withhold from exercise under the Option the
appropriate number of Option Shares, the aggregate market value of which on the
date of exercise of the Option is equal to the aggregate cash purchase price of
the Option Shares being exercised and purchased under the Option, and such
withholding shall constitute full payment for the non-withheld Option Shares
issued upon exercise.
The Board of Directors (or by its designation, the Compensation Committee)
shall have the authority to determine whether any corporate shares offered by
the Optionee in payment of the exercise price of Option Shares are acceptable to
the Company, and the Board's (or Committee's) discretion in this regard shall be
absolute.
4. Issuance of Option Shares; Restrictive Legend.
Upon proper exercise of this Option, the company shall mail or deliver to
the Optionee, as promptly as practicable, a stock certificate or certificates
representing the Option Shares purchased. The Company shall not be required to
sell or issue any shares under the Option if the issuance of such shares shall
constitute a violation of any applicable law or regulation or of any
requirements of any national securities exchange upon which the Company's common
stock may be listed.
2
<PAGE>
If the Option Shares purchasable have not been registered under the
Securities Act of 1933, as amended (the "Act"), under cover of Form S-8 at the
time the Optionee desires to make any exercise thereof, then the Company agrees
that it will and shall be obligated to register the Option Shares promptly under
the Act, on Form S-8, at the Company's sole expense. If for any reason Form S-8
is not then available for the registration of the Option Shares, then (i) the
Company agrees that it will at its expense take such steps as may be required to
be eligible to use Form S-8, including if necessary the filing of an appropriate
registration statement under Section 12(g) of the Securities Exchange Act of
1934, as amended, at the Company's sole expense, and (ii) the term during which
this Option may be exercised shall be automatically extended for the period of
time from the Optionee's first request for exercise of the Option through the
date the registration statement on Form S-8 becomes effective. If Form S-8 has
been withdrawn and no similar form then is available, then the Company shall be
required to exercise the Option Shares at its sole expense under cover of a
difference available registration statement. The Optionee's right to obtain
registration of the Option Shares under cover of Form S-8 or other appropriate
form is judicially enforceable, and the Company shall bear and reimburse all of
Optionee's expenses, including actual attorneys' fees, incurred in judicially
enforcing this right.
5. Transfer or Encumbrance of this Option Prohibited. This Option may not
be transferred or assigned in any manner by the Optionee, except by will or
trust upon the Optionee's death or by operation of law under the laws of descent
and distribution or pursuant to a "qualified domestic relations order" as
defined in the rules of the Securities & Exchange Commission. The same
restriction on transfer or assignment shall apply to any heirs, devisees,
beneficiaries or other persons acquiring this Option or an interest herein under
such an instrument or by operation of law. Further, this Option shall not be
pledged, hypothecated or otherwise encumbered, by operation of law or otherwise,
nor shall it be subject to execution, attachment or similar process.
6. Change in Control of the Company. If there shall occur a change in
control of the Company while any Option Shares remain subject to this Option,
then this Option shall become immediately exercisable, notwithstanding Paragraph
2 hereof, and such exercisability shall terminate only upon the termination date
set forth in Paragraph 2 hereof, notwithstanding the provisions of Paragraph 7
hereof concerning acceleration of the termination date. For purposes of this
Agreement, a "change in control" of the Company shall mean a change in control
of a nature that would be required to be reported in response to Item 5(f) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934 (the "Exchange Act") as in effect on the date hereof; provided, that,
without limitation, such a change in control shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the
3
<PAGE>
Exchange Act) becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities, of if (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company cease for any reason to
constitute at least a majority thereof.
7. No Rights as Stockholder. The Optionee shall have no rights as a
stockholder with respect to Option Shares until the date of issuance of a stock
certificate for such shares. No adjustment for dividends, or otherwise, except
as provided in Paragraph 10, shall be made if the record date therefor is prior
to the date of exercise of such Option.
8. Changes in the Company's Capital Structure. The existence of this Option
shall not limit or affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Option
Shares or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
However,
a. If, prior to the Company's delivery of all the Option Shares subject
to this Option, the Company shall: (i) effect a subdivision (split) or
combination (reverse split) of shares of other capital readjustment,
the payment of a common stock dividend, or other increase or reduction
of the number of shares of common stock outstanding, without receiving
compensation therefor in money, services or property, then (A) in the
event of an increase in the number of such shares outstanding, the
Purchase Price shall be proportionately reduced and the number of
Option Shares then still purchasable shall be proportionately
increased; and (B) in the event of a reduction in the number of such
shares outstanding, the Purchase Price payable per share shall be
proportionately increased and the number of Option Shares then still
purchasable shall be proportionately reduced or (ii) effect any
changes in the nature of a recapitalization which changes the class or
type of shares of the Company herein defined as "Option Shares" into a
different class or type of shares, then this Option shall thereafter
permit the purchase of such number of the different class or type of
shares as is equal to the number of Option Shares purchasable, as it
may be adjustable for any subdivision or combination.
b. If while this Option remains outstanding the Company is reorganized,
merged, consolidated or party to a plan of share exchange with another
corporation, or if the Company sells or otherwise disposes of all or
substantially all its property or assets to another corporation, then
4
<PAGE>
subject to the provisions of clause (ii) below, (i) after the
effective date of such reorganization, merger, consolidation, exchange
or sale, as the case may be, the Optionee shall be entitled, upon
exercise of this Option, to receive, in lieu of the Option Shares, the
number and class of shares of such stock, other securities, cash and
other property or rights as the holders of shares of the Company's
common stock received pursuant to the terms of the reorganization,
merger, consolidation, exchange or sale and to which he would have
been entitled if, immediately prior to such reorganization, merger,
consolidation, exchange or sale, he had been the holder of record of a
number of shares of common stock equal to the number of Option Shares
as to which this Option shall be so exercised; and (ii) this Option
may be canceled by the Board of Directors of the Company as of the
effective date of any such reorganization, merger, consolidation,
exchange or sale; provided that (x) such reorganization, merger,
consolidation, exchange or sale results in a change in control of the
Company rather than a mere change of form or domicile of the Company,
(y) written notice of such cancellation is given to the Optionee or
other holder of this Option not less than 45 days prior to such
effective date, and (z) the Optionee or other holder shall have the
right to exercise the Option in full during such 45-day period
preceding the effective date of such reorganization, merger,
consolidation, exchange or sale.
C. In case the Company shall determine to offer to the holders of its
common stock to subscribe pro rata for any new or additional shares of
common stock, or any securities convertible into common stock, then
the Optionee shall be entitled to participate in such pro rata
offering in the manner and to the same extent as if this Option had
been exercised at the Purchase Price then i n effect and the number of
Option Shares then purchasable upon exercise hereof had been issued to
the Optionee pursuant to the terms hereof.
d. Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of
stock of any class, for cash or property, or for labor or services
either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect
to, the Purchase Price or the number of Option Shares then subject to
this Option.
9. Withholding Taxes. Pursuant to applicable federal and state laws, the
Company may be required to collect withholding taxes upon any exercise of this
Option. The Company may require, as a condition to any exercise of this Option,
that the Optionee concurrently pay to the Company the entire amount or a portion
of any taxes which the Company is required to withhold by reason of such
exercise, in such amount as the Board of Directors or Compensation Committee of
the Board in its discretion may determine. In lieu of part or all of any such
5
<PAGE>
payment, the Optionee may elect, with the consent of the Board of Directors or
Compensation Committee, to have the Company withhold from the Option Shares
to be issued upon exercise of this Option that number of shares having a fair
market value equal to the amount which the Company is required to withhold.
10. Notices, etc. Any notice hereunder by the Optionee shall be given
to the Company in writing, and such notice and any payment by the Optionee
hereunder shall be deemed duly given or made only upon receipt thereof at the
Company's office at 1720 W. Placita de Santos, Tucson, Arizona, 85704, or at
such other address as the Company may designate by notice to the Optionee. Any
notice or other communication to the Optionee hereunder shall be in writing and
shall be deemed duly given or made if mailed or delivered to the Optionee at the
last address as the Optionee may have on file with the Company's Secretary. This
Option shall be governed under and construed in accordance with the laws of the
State of Nevada (or applicable successor law if the Company should redomicile).
This address shall be binding on the Company and the Optionee and all
successors, assigns, heirs, devisees and personal representatives thereof.
NOTE: This Option must match the Control copy maintained by the
Company, in all particulars.
IN WITNESS WHEREOF, the parties have executed this Stock Option as of
the date first above written.
CHANNEL i, INC.
By: /s/ Charlie Rodriguez
--------------------------------
Authorized Officer
ATTEST:
By: /s/ Ray Hoag
--------------------------------
Secretary or Assistant Secretary
Charlie Rodriguez, Director
OPTIONEE NAME AND STATUS
6
<PAGE>
Exhibit 10.23
CHANNEL i, INC.
Compensatory
STOCK OPTION
Under the Channel i, Inc. 1994 Compensatory Stock Option Plan
THIS COMPENSATORY STOCK OPTION, dated as of January 22, 1997 (the "Date
of Grant"), is granted by Channel i, Inc., a Nevada corporation ("Company"), to
H. Jeremy Renton (the "Optionee"), whose status under the Company's 1994
Compensatory Stock Option plan is described on the Signature Page hereof.
WHEREAS, the Optionee is now an employee or director of the Company or
a parent or subsidiary thereof, or an attorney, consultant, adviser or other
provider of services to the Company or parent or subsidiary thereof and the
Company desires to have the Optionee remain in its employ or service and desires
to encourage stock ownership by the Optionee and to increase the Optionee's
proprietary interest in the Company;'s success; and as an inducement thereto has
determined to grant to the Optionee the option herein provided for, so that the
Optionee may thereby be assisted in obtaining an interest, or an increased
interest, as the case may be, in the stock ownership of the Company;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. Grant. Pursuant to its 1994 Compensatory Stock Option Plan (the "Plan"),
the Company hereby grants to the Optionee an option (the "Option") to purchase
250,000 shares of the Company's common stock, $.001 par value per share (the
"Option Shares") at the price of $0.0625 per share (the "Purchase Price" or
"Exercise Price"). Both the Purchase Price and the number of Option Shares
purchasable may be adjusted pursuant to Paragraph 9 hereof.
2. Term and Vesting. The Option granted herein is fully vested on the date
of grant and is exercisable in whole or from time to time in part during the
period beginning on the Date of Grant, January 22, 1997 for three years, ending
at 5:00 o'clock p.m. (Pacific Time) on January 22, 2000, except as provided in
Paragraph 7 hereof.
1
<PAGE>
3. Exercise of Option. During the Optionee's life, this Option may only be
exercised by him or her. This Option may only be exercised by presentation at
the principal offices of the Company of written notice to the Company's
Secretary advising the Company of the Optionee's election to purchase Option
Shares, specifying the number of Option Shares being purchased, accompanied by
payment. No Option Shares shall be issued until full payment is made therefor.
Payment shall be made either (i) in cash, represented by bank or cashier's
check, certified check or money order, (ii) by delivering shares of the
company's Common Stock of the same class as the Option Shares, which have been
beneficially owned by the Optionee, the Optionee's spouse, or both of them for a
period of at least six (6) months prior to the time of exercise (the "Delivered
Stock"), in a number equal to the number of shares of Stock being purchased upon
exercise of this Option, or (iii) by delivery of shares of corporate stock
registered in the Optionee's name, endorsed in blank or accompanied by an
executed stock power with signature guaranteed in either case, which are freely
tradeable without restriction and are part of a class of securities which has
been listed for trading on the NASDAQ system or a national securities exchange,
with an aggregate fair market value equal to or greater than the total purchase
price of the Option Shares being purchased hereunder, or a combination of cash,
Delivered Stock or other corporate shares, or (iv) by advising the Company, at
the time the Option is exercised, to withhold from exercise under the Option the
appropriate number of Option Shares, the aggregate market value of which on the
date of exercise of the Option is equal to the aggregate cash purchase price of
the Option Shares being exercised and purchased under the Option, and such
withholding shall constitute full payment for the non-withheld Option Shares
issued upon exercise.
The Board of Directors (or by its designation, the Compensation Committee)
shall have the authority to determine whether any corporate shares offered by
the Optionee in payment of the exercise price of Option Shares are acceptable to
the Company, and the Board's (or Committee's) discretion in this regard shall be
absolute.
4. Issuance of Option Shares; Restrictive Legend.
Upon proper exercise of this Option, the company shall mail or deliver to
the Optionee, as promptly as practicable, a stock certificate or certificates
representing the Option Shares purchased. The Company shall not be required to
sell or issue any shares under the Option if the issuance of such shares shall
constitute a violation of any applicable law or regulation or of any
requirements of any national securities exchange upon which the Company's common
stock may be listed.
2
<PAGE>
If the Option Shares purchasable have not been registered under the
Securities Act of 1933, as amended (the "Act"), under cover of Form S-8 at the
time the Optionee desires to make any exercise thereof, then the Company agrees
that it will and shall be obligated to register the Option Shares promptly under
the Act, on Form S-8, at the Company's sole expense. If for any reason Form S-8
is not then available for the registration of the Option Shares, then (i) the
Company agrees that it will at its expense take such steps as may be required to
be eligible to use Form S-8, including if necessary the filing of an appropriate
registration statement under Section 12(g) of the Securities Exchange Act of
1934, as amended, at the Company's sole expense, and (ii) the term during which
this Option may be exercised shall be automatically extended for the period of
time from the Optionee's first request for exercise of the Option through the
date the registration statement on Form S-8 becomes effective. If Form S-8 has
been withdrawn and no similar form then is available, then the Company shall be
required to exercise the Option Shares at its sole expense under cover of a
difference available registration statement. The Optionee's right to obtain
registration of the Option Shares under cover of Form S-8 or other appropriate
form is judicially enforceable, and the Company shall bear and reimburse all of
Optionee's expenses, including actual attorneys' fees, incurred in judicially
enforcing this right.
5. Transfer or Encumbrance of this Option Prohibited. This Option may not
be transferred or assigned in any manner by the Optionee, except by will or
trust upon the Optionee's death or by operation of law under the laws of descent
and distribution or pursuant to a "qualified domestic relations order" as
defined in the rules of the Securities & Exchange Commission. The same
restriction on transfer or assignment shall apply to any heirs, devisees,
beneficiaries or other persons acquiring this Option or an interest herein under
such an instrument or by operation of law. Further, this Option shall not be
pledged, hypothecated or otherwise encumbered, by operation of law or otherwise,
nor shall it be subject to execution, attachment or similar process.
6. Change in Control of the Company. If there shall occur a change in
control of the Company while any Option Shares remain subject to this Option,
then this Option shall become immediately exercisable, notwithstanding Paragraph
2 hereof, and such exercisability shall terminate only upon the termination date
set forth in Paragraph 2 hereof, notwithstanding the provisions of Paragraph 7
hereof concerning acceleration of the termination date. For purposes of this
Agreement, a 11 change in control" of the Company shall mean a change in control
of a nature that would be required to be reported in response to Item 5(f) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934 (the "Exchange Act") as in effect on the date hereof; provided, that,
without limitation, such a change in control shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the
3
<PAGE>
Exchange Act) becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities, of if (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company cease for any reason to
constitute at least a majority thereof.
7. No Rights as Stockholder. The Optionee shall have no rights as a
stockholder with respect to Option Shares until the date of issuance of a stock
certificate for such shares. No adjustment for dividends, or otherwise, except
as provided in Paragraph 10, shall be made if the record date therefor is prior
to the date of exercise of such Option.
8. Changes in the Company's Capital Structure. The existence of this Option
shall not limit or affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Option
Shares or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
However,
a. If, prior to the Company's delivery of all the Option Shares subject
to this Option, the Company shall: (i) effect a subdivision (split) or
combination (reverse split) of shares of other capital readjustment,
the payment of a common stock dividend, or other increase or reduction
of the number of shares of common stock outstanding, without receiving
compensation therefor in money, services or property, then (A) in the
event of an increase in the number of such shares outstanding, the
Purchase Price shall be proportionately reduced and the number of
Option Shares then still purchasable shall be proportionately
increased; and (B) in the event of a reduction in the number of such
shares outstanding, the Purchase Price payable per share shall be
proportionately increased and the number of Option Shares then still
purchasable shall be proportionately reduced or (ii) effect any
changes in the nature of a recapitalization which changes the class or
type of shares of the Company herein defined as "Option Shares" into a
different class or type of shares, then this Option shall thereafter
permit the purchase of such number of the different class or type of
shares as is equal to the number of Option Shares purchasable, as it
may be adjustable for any subdivision or combination.
b. If while this Option remains outstanding the Company is reorganized,
merged, consolidated or party to a plan of share exchange with another
corporation, or if the Company sells or otherwise disposes of all or
substantially all its property or assets to another corporation, then
4
<PAGE>
subject to the provisions of clause (ii) below, (i) after the
effective date of such reorganization, merger, consolidation, exchange
or sale, as the case may be, the Optionee shall be entitled, upon
exercise of this Option, to receive, in lieu of the Option Shares, the
number and class of shares of such stock, other securities, cash and
other property or rights as the holders of shares of the Company's
common stock received pursuant to the terms of the reorganization,
merger, consolidation, exchange or sale and to which he would have
been entitled if, immediately prior to such reorganization, merger,
consolidation, exchange or sale, he had been the holder of record of a
number of shares of common stock equal to the number of Option Shares
as to which this Option shall be so exercised; and (ii) this Option
may be canceled by the Board of Directors of the Company as of the
effective date of any such reorganization, merger, consolidation,
exchange or sale; provided that (x) such reorganization, merger,
consolidation, exchange or sale results in a change in control of the
Company rather than a mere change of form or domicile of the Company,
(y) written notice of such cancellation is given to the Optionee or
other holder of this Option not less than 45 days prior to such
effective date, and (z) the Optionee or other holder shall have the
right to exercise the Option in full during such 45-day period
preceding the effective date of such reorganization, merger,
consolidation, exchange or sale.
C. In case the Company shall determine to offer to the holders of its
common stock to subscribe pro rata for any new or additional shares of
common stock, or any securities convertible into common stock, then
the Optionee shall be entitled to participate in such pro rata
offering in the manner and to the same extent as if this Option had
been exercised at the Purchase Price then i n effect and the number of
Option Shares then purchasable upon exercise hereof had been issued to
the Optionee pursuant to the terms hereof.
d. Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of
stock of any class, for cash or property, or for labor or services
either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect
to, the Purchase Price or the number of Option Shares then subject to
this Option.
9. Withholding Taxes. Pursuant to applicable federal and state laws, the
Company may be required to collect withholding taxes upon any exercise of this
Option. The Company may require, as a condition to any exercise of this Option,
that the Optionee concurrently pay to the Company the entire amount or a portion
of any taxes which the Company is required to withhold by reason of such
exercise, in such amount as the Board of Directors or Compensation Committee of
the Board in its discretion may determine. In lieu of part or all of any such
5
<PAGE>
payment, the Optionee may elect, with the consent of the Board of Directors
or Compensation Committee, to have the Company withhold from the Option Shares
to be issued upon exercise of this Option that number of shares having a fair
market value equal to the amount which the Company is required to withhold.
10. Notices, etc. Any notice hereunder by the Optionee shall be given to
the Company in writing, and such notice and any payment by the Optionee
hereunder shall be deemed duly given or made only upon receipt thereof at the
Company's office at 1720 W. Placita de Santos, Tucson, Arizona, 85704, or at
such other address as the Company may designate by notice to the Optionee. Any
notice or other communication to the Optionee hereunder shall be in writing and
shall be deemed duly given or made if mailed or delivered to the Optionee at the
last address as the Optionee may have on file with the Company's Secretary. This
Option shall be governed under and construed in accordance with the laws of the
State of Nevada (or applicable successor law if the Company should redomicile),
This address shall be binding on the Company and the Optionee and all
successors, assigns, heirs, devisees and personal representatives thereof.
NOTE: This Option must match the Control copy maintained by the Company, in
all particulars.
IN WITNESS WHEREOF, the parties have executed this Stock Option as of the
date first above written.
CHANNEL i, INC.
By: /s/ Charlie Rodriguez
--------------------------------------
Authorized Officer
ATTEST:
By: /s/ Ray Hoag
--------------------------------------
Secretary or Assistant Secretary
H. Jeremy Renton, Director
OPTIONEE NAME AND STATUS
6
<PAGE>
Exhibit 10.24
CHANNEL i, INC.
Compensatory
STOCK OPTION
Under the Channel i, Inc. 1994 Compensatory Stock Option Plan
THIS COMPENSATORY STOCK OPTION, dated as of January 22, 1997 (the "Date of
Grant"), is granted by Channel i, Inc., a Nevada corporation ("Company"), to Ray
Hoag (the "Optionee"), whose status under the Company's 1994 Compensatory Stock
Option plan is described on the Signature Page hereof.
WHEREAS, the Optionee is now an employee or director of the Company or a
parent or subsidiary thereof, or an attorney, consultant, adviser or other
provider of services to the Company or parent or subsidiary thereof and the
Company desires to have the Optionee remain in its employ or service and desires
to encourage stock ownership by the Optionee and to increase the Optionee's
proprietary interest in the Company;'s success; and as an inducement thereto has
determined to grant to the Optionee the option herein provided for, so that the
Optionee may thereby be assisted in obtaining an interest, or an increased
interest, as the case may be, in the stock ownership of the Company;
NOW, THEREFORE,, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. Grant. Pursuant to its 1994 Compensatory Stock Option Plan (the "Plan"),
the Company hereby grants to the Optionee an option (the "Option") to purchase
50,000 shares of the Company's common stock, $.001 par value per share (the
"Option Shares") at the price of $0.0625 per share (the "Purchase Price" or
"Exercise Price"). Both the Purchase Price and the number of Option Shares
purchasable may be adjusted pursuant to Paragraph 9 hereof.
2. Term and Vesting. The Option granted herein is fully vested on the date
of grant and is exercisable in whole or from time to time in part during the
period beginning on the Date of Grant, January 22, 1997 for three years, ending
at 5:00 o'clock p.m. (Pacific Time) on January 22, 2000, except as provided in
Paragraph 7 hereof.
1
<PAGE>
3. Exercise of Option. During the Optionee's life, this Option may only be
exercised by him or her. This Option may only be exercised by presentation at
the principal offices of the Company of written notice to the Company's
Secretary advising the Company of the Optionee's election to purchase Option
Shares, specifying the number of Option Shares being purchased, accompanied by
payment. No Option Shares shall be issued until full payment is made therefor.
Payment shall be made either (i) in cash, represented by bank or cashier's
check, certified check or money order, (ii) by delivering shares of the
company's Common Stock of the same class as the Option Shares, which have been
beneficially owned by the Optionee, the Optionee's spouse, or both of them for a
period of at least six (6) months prior to the time of exercise (the "Delivered
Stock"), in a number equal to the number of shares of Stock being purchased upon
exercise of this Option, or (iii) by delivery of shares of corporate stock
registered in the Optionee's name, endorsed in blank or accompanied by an
executed stock power with signature guaranteed in either case, which are freely
tradeable without restriction and are part of a class of securities which has
been listed for trading on the NASDAQ system or a national securities exchange,
with an aggregate fair market value equal to or greater than the total purchase
price of the Option Shares being purchased hereunder, or a combination of cash,
Delivered Stock or other corporate shares, or (iv) by advising the Company, at
the time the Option is exercised, to withhold from exercise under the Option the
appropriate number of Option Shares, the aggregate market value of which on the
date of exercise of the Option is equal to the aggregate cash purchase price of
the Option Shares being exercised and purchased under the Option, and such
withholding shall constitute full payment for the non-withheld Option Shares
issued upon exercise.
The Board of Directors (or by its designation, the Compensation Committee)
shall have the authority to determine whether any corporate shares offered by
the Optionee in payment of the exercise price of Option Shares are acceptable to
the Company, and the Board's (or Committee's) discretion in this regard shall be
absolute.
4. issuance of Option Shares; Restrictive Legend.
Upon proper exercise of this Option, the company shall mail or deliver to
the Optionee, as promptly as practicable, a stock certificate or certificates
representing the Option Shares purchased. The Company shall not be required to
sell or issue any shares under the Option if the issuance of such shares shall
constitute a violation of any applicable law or regulation or of any
requirements of any national securities exchange upon which the Company's common
stock may be listed.
2
<PAGE>
If the Option Shares purchasable have not been registered under the
Securities Act of 1933, as amended (the "Act"), under cover of Form S-8 at the
time the Optionee desires to make any exercise thereof, then the Company agrees
that it will and shall be obligated to register the Option Shares promptly under
the Act, on Form S-8, at the Company's sole expense. If for any reason Form S-8
is not then available for the registration of the Option Shares, then (i) the
Company agrees that it will at its expense take such steps as may be required to
be eligible to use Form S-8, including if necessary the filing of an appropriate
registration statement under Section 12(g) of the Securities Exchange Act of
1934, as amended, at the Company's sole expense, and (ii) the term during which
this Option may be exercised shall be automatically extended for the period of
time from the Optionee's first request for exercise of the Option through the
date the registration statement on Form S-8 becomes effective. If Form S-8 has
been withdrawn and no similar form then is available, then the Company shall be
required to exercise the Option Shares at its sole expense under cover of a
difference available registration statement. The Optionee's right to obtain
registration of the Option Shares under cover of Form S-8 or other appropriate
form is judicially enforceable, and the Company shall bear and reimburse all of
Optionee's expenses, including actual attorneys' fees, incurred in judicially
enforcing this right.
5. Transfer or Encumbrance of this Option Prohibited. This Option may not
be transferred or assigned in any manner by the Optionee, except by will or
trust upon the Optionee's death or by operation of law under the laws of descent
and distribution or pursuant to a "qualified domestic relations order" as
defined in the rules of the Securities & Exchange Commission. The same
restriction on transfer or assignment shall apply to any heirs, devisees,
beneficiaries or other persons acquiring this Option or an interest herein under
such an instrument or by operation of law. Further, this Option shall not be
pledged, hypothecated or otherwise encumbered, by operation of law or otherwise,
nor shall it be subject to execution, attachment or similar process.
6. Change in Control of the Company. If there shall occur a change in
control of the Company while any Option Shares remain subject to this Option,
then this Option shall become immediately exercisable, notwithstanding Paragraph
2 hereof, and such exercisability shall terminate only upon the termination date
set forth in Paragraph 2 hereof, notwithstanding the provisions of Paragraph 7
hereof concerning acceleration of the termination date. For purposes of this
Agreement, a "change in control" of the Company shall mean a change in control
of a nature that would be required to be reported in response to Item 5(f) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934 (the "Exchange Act") as in effect on the date hereof; provided, that,
without limitation, such a change in control shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the
3
<PAGE>
Exchange Act) becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities, of if (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company cease for any reason to
constitute at least a majority thereof.
7. No Rights as Stockholder. The Optionee shall have no rights as a
stockholder with respect to Option Shares until the date of issuance of a stock
certificate for such shares. No adjustment for dividends, or otherwise, except
as provided in Paragraph 10, shall be made if the record date therefor is prior
to the date of exercise of such Option.
8. Changes in the Company's Capital Structure. The existence of this Option
shall not limit or affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Option
Shares or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
However,
a. If, prior to the Company's delivery of all the Option Shares subject
to this Option, the Company shall.- (i) effect a subdivision (split)
or combination (reverse split) of shares of other capital
readjustment, the payment of a common stock dividend, or other
increase or reduction of the number of shares of common stock
outstanding, without receiving compensation therefor in money,
services or property, then (A) in the event of an increase in the
number of such shares outstanding, the Purchase Price shall be
proportionately reduced and the number of Option Shares then still
purchasable shall be proportionately increased; and (B) in the event
of a reduction in the number of such shares outstanding, the Purchase
Price payable per share shall be proportionately increased and the
number of Option Shares then still purchasable shall be
proportionately reduced or (ii) effect any changes in the nature of a
recapitalization which changes the class or type of shares of the
Company herein defined as "Option Shares" into a different class or
type of shares, then this Option shall thereafter permit the purchase
of such number of the different class or type of shares as is equal to
the number of Option Shares purchasable, as it may be adjustable for
any subdivision or combination.
b. If while this Option remains outstanding the Company is reorganized,
merged, consolidated or party to a plan of share exchange with another
corporation, or if the Company sells or otherwise disposes of all or
substantially all its property or assets to another corporation, then
4
<PAGE>
subject to the provisions of clause (ii) below, (i) after the
effective date of such reorganization, merger, consolidation, exchange
or sale, as the case may be, the Optionee shall be entitled, upon
exercise of this Option, to receive, in lieu of the Option Shares, the
number and class of shares of such stock, other securities, cash and
other property or rights as the holders of shares of the Company's
common stock received pursuant to the terms of the reorganization,
merger, consolidation, exchange or sale and to which he would have
been entitled if, immediately prior to such reorganization, merger,
consolidation, exchange or sale, he had been the holder of record of a
number of shares of common stock equal to the number of Option Shares
as to which this Option shall be so exercised; and (ii) this Option
may be canceled by the Board of Directors of the Company as of the
effective date of any such reorganization, merger, consolidation,
exchange or sale; provided that (x) such reorganization, merger,
consolidation, exchange or sale results in a change in control of the
Company rather than a mere change of form or domicile of the Company,
(y) written notice of such cancellation is given to the Optionee or
other holder of this Option not less than 45 days prior to such
effective date, and (z) the Optionee or other holder shall have the
right to exercise the Option in full during such 45-day period
preceding the effective date of such reorganization, merger,
consolidation, exchange or sale.
C. In case the Company shall determine to offer to the holders of its
common stock to subscribe pro rata for any new or additional shares of
common stock, or any securities convertible into common stock, then
the Optionee shall be entitled to participate in such pro rata
offering in the manner and to the same extent as if this Option had
been exercised at the Purchase Price then i n effect and the number of
Option Shares then purchasable upon exercise hereof had been issued to
the Optionee pursuant to the terms hereof.
d. Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of
stock of any class, for cash or property, or for labor or services
either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect
to, the Purchase Price or the number of Option Shares then subject to
this Option.
9. Withholding Taxes. Pursuant to applicable federal and state laws, the
Company may be required to collect withholding taxes upon any exercise of this
Option. The Company may require, as a condition to any exercise of this Option,
that the Optionee concurrently pay to the Company the entire amount or a portion
of any taxes which the Company is required to withhold by reason of such
exercise, in such amount as the Board of Directors or Compensation Committee of
the Board in its discretion may determine. In lieu of part or all of any such
5
<PAGE>
payment, the Optionee may elect, with the consent of the Board of Directors
or Compensation Committee, to have the Company withhold from the Option Shares
to be issued upon exercise of this Option that number of shares having a fair
market value equal to the amount which the Company is required to withhold.
10, Notices, etc. Any notice hereunder by the Optionee shall be given to
the Company in writing, and such notice and any payment by the Optionee
hereunder shall be deemed duly given or made only upon receipt thereof at the
Company's office at 1720 W. Placita de Santos, Tucson, Arizona, 85704, or at
such other address as the Company may designate by notice to the Optionee. Any
notice or other communication to the Optionee hereunder shall be in writing and
shall be deemed duly given or made if mailed or delivered to the Optionee at the
last address as the Optionee may have on file with the Company's Secretary, This
Option shall be governed under and construed in accordance with the laws of the
State of Nevada (or applicable successor law if the Company should redomicile).
This address shall be binding on the Company and the Optionee and all
successors, assigns, heirs, devisees and personal representatives thereof
NOTE: This Option must match the Control copy maintained by the Company, in
all particulars.
IN WITNESS WHEREOF, the parties have executed this Stock Option as of the
date first above written.
CHANNEL i, INC.
By /s/ Charlie Rodriguez
---------------------------------
Authorized Officer
ATTEST:
By /s/ Ray Hoag
----------------------------------
Secretary or Assistant Secretary
Ray Hoag, Director
OPTIONEE NAME AND STATUS
6
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: April __, 1997 CHANNEL i INC.
By /s/ Robert G. Clarke
-----------------------------------
Robert G. Clarke, President, Chief
Executive and Chief Financial Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Company and in the capacities and on
the dates indicated.
Name Title Date
/s/ Robert G. Clarke
........................... President, Chief Executive 04/28/97
Robert G. Clarke Officer, Chief Financial Officer,
Director
/s/ Walter J.K. Pickering
............................Vice President, Director 04/28/97
Walter J.K. Pickering
/s/ Charlie Rodriguez
........................... Director 04/28/97
Charlie Rodriguez
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000844053
<NAME> Channel i, Inc,
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1.000
<CASH> 1089
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 22,541
<PP&E> 27,721
<DEPRECIATION> 13,857
<TOTAL-ASSETS> 36,401
<CURRENT-LIABILITIES> 131,841
<BONDS> 0
0
0
<COMMON> 5,185
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 36,401
<SALES> 0
<TOTAL-REVENUES> 20,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 141,776
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (121,776)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
