<PAGE>
As filed with the Securities and Exchange Commission on August 5, 1998
File No. 333-51373
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM S-3
Amendment No. 1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
KALEIDOSCOPE MEDIA GROUP, INC.
(Exact name of Registrant as specified in its charter)
Delaware 93-0957030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
345 Park Avenue South
New York, New York 10010
(212)779-6600
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
HENRY SIEGEL, Chief Executive Officer
345 Park Avenue South
New York, New York 10010
(212)779-6600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------
Copies to:
MICHAEL D. DiGIOVANNA, Esq.
PARKER DURYEE ROSOFF & HAFT
529 Fifth Avenue
New York, New York 10017
(212) 599-0500
Approximate date of proposed sale to the public: From time to time after
the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
<PAGE>
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================================
Title of Each Class of Amount to be Proposed Proposed Maximum Amount of
Securities to be Registered (1) Maximum Aggregate Offering Registration
Registered Offering Price Price Fee
Per Share
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par 2,600,000 shs. $.985 $2,600,000 $776.06
value $.001 per share
=======================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based upon the average of the bid and asked
prices of the Common Stock on the OTC Bulletin Board on July 28, 1998.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
2,600,000 Shares
KALEIDOSCOPE MEDIA GROUP, INC.
Common Stock
This Prospectus relates to 2,600,000 shares of Common Stock, par
value $0.001 per share (the "Common Stock"), of Kaleidoscope Media Group, Inc.
(the "Company"), which shares are being offered for sale by the persons named
herein under the caption "Selling Stockholders" (the "Selling Stockholders").
Such shares of Common Stock are comprised of 1,100,000 shares which are
currently issued and outstanding and 1,500,000 shares which may be issued
subsequent hereto upon exercise of certain outstanding warrants. The Company
will not receive any of the proceeds from the sale of shares by the Selling
Stockholders. See "Selling Stockholders."
See "Risk Factors" commencing on page 7.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Company has agreed to pay all expenses of registration in
connection with this offering but will not receive any of the proceeds from
the sale of the Shares being offered hereby. All brokerage commissions and
other similar expenses incurred by the Selling Stockholders will be borne by
the Selling Stockholders. The aggregate proceeds to the Selling Stockholders
from the sale of the Shares will be the purchase price of the Shares sold,
less the aggregate brokerage commissions and underwriters' discounts, if any,
and other expenses of issuance and distribution not borne by the Company.
The Common Stock being offered hereby by the Selling Stockholders has
not been registered for sale under the securities laws of any state or
jurisdiction as of the date of this Prospectus. Brokers or dealers effecting
transactions in the Common Stock should confirm the registration thereof under
the securities law of the state in which such transactions occur, or the
existence of any exemption from registration.
The Common Stock is quoted on the OTC Bulletin Board. On July 28,
1998 the closing bid price of the Common Stock was $.92 per share.
The date of this Prospectus is August 5, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
Available Information....................................................2
Incorporation of Certain Documents by Reference..........................3
The Company..............................................................4
Risk Factors.............................................................7
Selling Stockholders....................................................10
Plan of Distribution....................................................11
Description of Securities...............................................12
Legal Matters...........................................................15
Experts ................................................................15
No dealer, salesperson or other person has been authorized to give
any information or to make any representations not contained in this
Prospectus or incorporated by reference to this Prospectus, and, if given or
made, such information or representations must not be relied upon as having
been authorized by the Company. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, the securities offered hereby
in any jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. The delivery of this Prospectus at any time
does not imply that the information contained herein is correct as of any time
subsequent to its date.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In
accordance therewith, the Company files reports and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Regional
Offices of the Commission at 7 World Trade Center, New York, New York 10048
and Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois
60621. Copies of such material may be obtained from the Public Reference
Section of the Commission at prescribed rates by writing to the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549. In addition, the Commission
maintains a Web site on the Internet at http://www.sec.gov that contains
reports, proxy and information statements and other information of issuers
that file electronically with the Commission. The Company has filed with the
Commission a Registration Statement on Form S-3 under the Securities Act, with
respect to the Common Stock offered hereby. This Prospectus does not contain
all the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, copies of which can be obtained
2
<PAGE>
from the Public Reference Section of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of the fees prescribed by
the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference are the following documents filed by
the Company with the Commission (File No. 0-17591) under the Exchange Act:
(a) The Company's Annual Report on Form 10-KSB for its fiscal year
ended December 31, 1997.
(b) The Company's Quarterly Report on Form 10QSB for the fiscal quarter
ended March 31, 1998.
(c) The Company's Report on Form 8-K filed with the Securities and
Exchange Commission on February 13, 1998.
(d) The Company's Report on Form 8-K filed with the Securities and
Exchange Commission on March 5, 1998.
All documents filed by the Company with the Commission pursuant to
Sections 13, and 14 and 15(d) of the Exchange Act subsequent hereto, but prior
to the termination of this offering, shall be deemed to be incorporated herein
by reference and to be a part hereof from their respective dates of filing.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement which also is
or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written and oral request of any such
person, a copy of any or all of the documents referred to above which have
been incorporated into this Prospectus by reference (other than the exhibits
to such documents). Requests for such copies should be directed to:
Irving Greenman, Chief Financial Officer
Kaleidoscope Media Group. Inc.
345 Park Avenue South
New York, New York 10010
Telephone Number: (212) 779-6600
3
<PAGE>
THE COMPANY
General
The Company is a diversified entertainment, sports and direct
marketing company that operates, through subsidiaries, under three divisions.
The Entertainment Division (primarily consisting of the activities of the
Company's SeaGull Entertainment Subsidiary ("SeaGull")) is primarily engaged
in the business of developing, producing and distributing (domestically and
internationally) entertainment properties and exploiting the related licensing
and merchandising opportunities. It also provides consulting services in the
development of specialty television programming and is involved in the
acquisition and distribution of entertainment library properties.
In 1997 the Entertainment Division began production of its new
made-for-television movie "Merlin: The Magic Begins" based on that legendary
character. The title role has been cast with Jason Connery (son of Sean
Connery) and Deborah Moore (daughter of Roger Moore). This movie was delivered
in March 1998 and was fully financed by the Company. This movie was released
in Europe by the Company during the quarter ended March 31, 1998. The Company
is in the process of developing a series of one hour episodes based on Merlin.
In 1997, the Company began pre-production on its "Team Xtreme"
series, which represents a multi-national co-production with partners in
France, Germany and Canada. "Team Xtreme" is a weekly one-hour dramatic action
series with an ensemble cast of youthful extreme sports enthusiasts that lead
the audience through engaging plots complete with danger, drama, intrigue and
passion, all against a backdrop of extreme sports such as skysurfing, mountain
climbing and snow boarding. The Company expects the principal photography for
a two hour feature pilot of "Team Xtreme" to begin in the late summer of 1998
followed by distribution in 1998 of the movie and in 1999 of the series, in
partnership with French broadcaster M-6.
The Company is also participating in the development of a series
"Spies Among Us" to be produced by Anthony Potter, an Emmy-award winning
television producer, examining intelligence activity that shaped many of the
most dramatic events of the cold war era.
4
<PAGE>
The Company recently acquired the rights to a new children's
television property and toy line entitled "Micronauts." The Company expects
the television property to be introduced in the fall of 1999 as a two-hour movie
and/or five half-hour mini-series. The Company also expects that the toy line
will begin limited distribution in the fall of 1999 and worldwide distribution
in 2000. The movie and series are based on the popular 1970's Marvel comic book
and toy line of the same name.
In 1996 SeaGull entered into a joint venture agreement with Keller
Entertainment, Inc. under the name Keller Siegel Entertainment (the "Joint
Venture"). The Joint Venture produced and distributed a two-hour movie pilot
and 20 episodes of the "Tarzan: The Epic Adventures" syndicated television
series domestically in 1996 and internationally in 1997. Beginning in the Fall
of 1997, the "Tarzan: The Epic Adventures" series was renewed for another
season without any new production, but previously produced half-hours (made
into hours) were syndicated for the U.S. market only. The Joint Venture
continues to maintain the license from Edgar Rice Burroughs for the
"live-action" rights to "Tarzan." The Joint Venture intends to produce and
distribute a new program entitled "The New Adventures of Young Tarzan" via a
movie pilot in 1998 and a series in 1999.
In March 1997, the Company, through its Sports Division, and Sports
Marketing, Inc. reached an agreement to create a joint venture to develop,
produce and distribute boxing tournaments both domestically and
internationally. The two companies collaborated on "Boxcino", a series of
round robin boxing matches featuring fighters from eight Latin American
countries. The quarter- and semi-finals aired on ESPN2 in May and July 1997,
respectively, and the finals in each weight class aired on ESPN in September
1997. The Company expects to continue this franchise as well as to stage other
boxing matches in 1998. As a result, the joint venture has signed contracts
with the winners and finalists in each weight category making eight new boxers
ranked in the top 10 nationally.
The Company also has the worldwide distribution rights to two daily
fitness series ("Crunch" and "Cyberfit") currently being broadcast on ESPN2
and available for distribution in territories outside the United States. The
Company believes that "Crunch" and "Cyberfit" are two of ESPN2's highest rated
fitness series because of their high energy and employment of state of the art
fitness techniques.
In December 1997, the Company, through its Entertainment Division,
obtained rights from the Beachport Entertainment Corp. to distribute ice
skating specials. The "Ice Fantasies Collection" consists of six specials with
an all-star cast of world-class skaters such as Brian Boitano, Oksana Baiul,
Elvis Stojko, Michelle Kwan, Viktor Petrenko, Nancy Kerrigan and others.
In December 1997, the Company obtained the worldwide distribution
rights to a new 22 one-hour dramatic action TV series entitled "D.R.E.A.M.
Team." The Company expects that a two hour movie pilot will be delivered in the
fall of 1998. Three agents, all supermodels, are part of a covert group --
code name D.R.E.A.M. -- whose sole purpose is to infiltrate and diffuse volatile
situations, from counter-espionage to international criminals and terrorists.
Under the cover of their photo-shoots, the supermodels work together with an
ex-CIA agent whose intelligence and espionage background set the stage for
action and adventure.
In February 1998, the Company acquired Redrock Management's Library
for worldwide distribution of a package of specials, documentaries, movies and
mini-series. These programs enhance and expand the Company's current library
of series and specials programming.
The Sports Division retained from its sale of certain sports
properties to Kaleidoscope Sports and Entertainment LLC ("KS&E") its sports
franchise in boxing ("Boxcino") and fitness ("Crunch" and "Cyberfit") as well
as distribution rights to golf, air racing and other properties developed by
the Sports Division. KS&E and the Company have reached an agreement in
principle to form a joint venture to develop sports properties as well as the
creation of ad sales operations.
5
<PAGE>
The Direct Marketing Division was initiated in January 1997 when the
Company entered into a joint venture agreement with HSN Direct to form
Hollywood Connection LLC ("HC LLC"). HC LLC produced and distributed
"Hollywood Discoveries," a one-hour daily shopping program, which was
broadcast in the United States by over-the-air broadcasters and cable and
satellite systems. "Hollywood Discoveries" is designed to provide home
shopping programming using stage, screen, television, music and sports
personalities to market merchandise via taped programming in the domestic and
international markets. The program met with moderate success in the United
States. The current plan for the international market, which is expected to
launch in 1998, is to offer a weekly "best of" episode(s) and/or format rights
to broadcast entities, with product fulfillment to be handled by the various
international companies associated with HSN Direct.
As start-ups, both "Boxcino" and "Hollywood Discoveries" required
significant investments in Company resources and the Company anticipates that
they will not generate profits until 1998 and 1999.
The principal executive offices of the Company are located at
345 Park Avenue South, New York, New York and its telephone number is
(212) 779-6601.
Recent Securities Developments
In June 1998, the Company entered into a Release and Settlement
Agreement with Celebrity Enterprises, Inc. ("Celebrity") pursuant to which the
Company agreed to issue 300,000 shares of the Company's Common Stock in
consideration for the irrevocable and unconditional release of the Company by
Celebrity, its officers, directors and shareholders, from any claims,
liabilities, causes of action, covenants or obligations of any kind growing
out of Celebrity's unsubstantiated allegations. The 300,000 shares issued to
Celebrity are included in this Registration Statement.
In July 1998, the Company issued Warrants to purchase up to 500,000
shares of Common Stock of the Company at a purchase price of $.25 per share to
each of Broadford Limited, Coastal Provinces Limited and Rowlett Enterprises
in consideration for their respective forgiveness of interest on loans and
expenses. The 1,500,000 shares underlying those Warrants in the aggregate, are
included in this Registration Statement.
In July 1998, the Company issued Warrants to purchase up to 800,000
shares of Common Stock of the Company at a purchase price of $.25 per share to
Globe Media AG ("Globe"). Globe had previouly entered into an agreement with
the Company to provide shareholder relation and financial consulting services
to the Company. The Warrants were issued as additional consideration for such
services. Globe exercised its rights under the Warrants and made an $800 cash
payment and issued a promissory note for $199,200 in consideration for the
issuance of the 800,000 shares underlying the Warrants. Until the Company
receives full payment of the amount evidenced by the note, the shares shall
remain in escrow subject to restriction. Those 800,000 shares are included in
this Registration Statement.
6
<PAGE>
RISK FACTORS
Each prospective investor should carefully consider the following
risk factors, as well as all other information set forth elsewhere in this
Prospectus and the documents incorporated by reference.
This Prospectus and the documents incorporated by reference contain
certain forward-looking statements. Actual results could differ materially
from those projected in the forward-looking statements as a result of the
factors set forth below and elsewhere in this Prospectus and the documents
incorporated by reference, including, but not limited to, (i) general economic
conditions; (ii) competitive market influence; (iii) audience appeal and
cultural reviews of its television programs; and (iv) the ability to identify,
acquire the rights to, and to develop quality properties.
Risk Factors Relating to the Company
Reduction in Revenues. Net revenues for the First Quarter 1998
totaled $1,027,634 compared with net revenues of $1,216,581 for the First
Quarter of 1997. Gross profits also decreased by $267,024 to $628,426 for the
First Quarter 1998 from $895,450 for the First Quarter 1997.
Unpredictability of Business. The entertainment and sports industry
is highly speculative and historically has involved a substantial degree of
risk. Audience appeal and profitability depend upon factors which cannot be
ascertained reliably in advance and over which the Company may have no or very
limited control, including, among other things, the unpredictability of
critical reviews and changing public tastes. Furthermore, even a production
involving highly experienced and respected talent may not be necessarily
successful. The ultimate profitability to the Company of properties and
ventures in which it has or may acquire an interest will depend upon many
factors including those over which the Company will have little or no control.
Dependence on New Products. The Company's growth will be dependent on
its ability to identify, acquire the rights to, and develop quality properties
which can be produced and sold at acceptable profit margins. It will also be
dependent on the Company's ability to negotiate in its production contracts
the necessary rights to oversee and generate revenue from the development,
production, distribution and sale of ancillary products related to the
project. There can be no assurance that the Company will be successful in
identifying, acquiring the rights to and developing quality properties that
will be successfully produced, distributed and marketed to the public. There
also can be no assurances that in its production contracts, the Company will
be able to negotiate and maintain the rights to such produced projects to
generate revenue from the sale of ancillary products. A failure to identify,
acquire and develop new properties for production, distribution and marketing
to the public or a failure to retain sufficient rights to generate revenue
from the sale of ancillary products would have an adverse impact on the
Company's future performance.
Possible Loss of Project Development Costs. Although the Company has
participated in creating and producing many projects, the Company has had to
forego retaining substantial equity
7
<PAGE>
and control of distribution rights in return for the total funding of its
productions. To increase equity positions in projects, the Company, prior to
production, will be required to make larger financial commitments for
acquisition of film rights in various properties and to bear the risk of loss
of the cost of these film rights if the acquired or developed property is not
sold or produced. There can be no assurances, however, that the Company will
be able to recover all development costs or maintain significant equity
positions or distribution rights in these productions.
Need for Additional Financing and Financing Arrangements. In order to
realize its objectives, the Company may have a need for additional capital in
the future. If so, the Company intends to seek such capital through public or
private borrowing or equity financings. Any additional equity financings may
be dilutive to stockholders, and debt financing, if available, may involve
restrictions on dividends. Adequate funds, whether obtained through financial
markets or other arrangements with corporate partners or other sources, may
not be available when needed or on terms acceptable to the Company.
Insufficient funds may require the Company to delay, scale back or eliminate
some or all of its development projects, with an adverse effect on the
Company's future performance.
The Company from time to time has obtained additional financing from
the sale of its securities and may do so in the future. The Company has also
issued warrants in connection with loans and advances to it and may do so in
the future. Finally, the Company is contemplating forming one or more limited
liability corporations to finance its projects. See, Recent Developments.
Competition. Competition in the television production industry and
multimedia industries is intense since there are numerous suppliers of
product. In the television production business the Company will compete for
the acquisition of artistic properties and the services of creative and
technical personnel with major entertainment companies that are engaged in the
television production business. The Company will also be competing for
available production financing and favorable television arrangements, and for
the public's interest in, and acceptance of, its creative products. However,
as the Company attempts to expand its product base, it expects to face greater
competition from larger, better financed and more experienced entities.
Labor Considerations in the Entertainment Industry. The cost of
producing and distributing entertainment programming has increased
substantially in recent years due to, among other things, the increasing
demands of creative talent and industry-wide collective bargaining agreements.
Most scriptwriters, performers, directors and technical personnel involved in
the Company's productions are members of guilds or unions that bargain
collectively on an industry-wide basis from time to time. Action by these
guilds or other unions can significantly disrupt production and have a
material adverse effect on the Company.
Protection of Propriety Rights. Although the Company plans to take
what management believes are appropriate and reasonable measures to secure,
protect and maintain or obtain agreements to secure protect and maintain
copyright and other protections for all of its properties under the laws of
applicable jurisdictions, no assurance can be given that it will be successful
in
8
<PAGE>
implementing these actions or that others will not infringe upon the Company's
proprietary rights, in which event, the Company may not have sufficient
resources to enforce or defend these rights.
Regulation of Television and Motion Picture Industry. United States
television stations and networks, as well as foreign governments, impose
restrictions on the content of its programs. The Code and Ratings
Administration of the Motion Picture Association of America, an industry trade
association, decides ratings for age group suitability for domestic theatrical
distribution of its programs. Although it is unlikely that any of the
Company's present productions would fail to meet the criteria established for
domestic and foreign broadcast, to the extent that the Company's projects do
not comply with such standards and practices, they may be required to be
edited before exhibition on applicable television stations, networks and in
foreign territories.
Retention of Key Personnel. The Company's operations are dependent
upon the services of Henry Siegel and Paul Siegel. The loss of Henry Siegel or
Paul Siegel could have a material adverse effect on the Company's business.
The Company's success also depends upon its ability to attract and retain
highly-skilled management and other personnel. Competition for such personnel
is intense, and the inability to attract and retain additional qualified
employees or the loss of current key employees could materially and adversely
affect the Company's business, operating results and financial condition.
Preferred Stock. The Company's Certificate of Incorporation
authorizes the issuance of 15,000,000 shares of Preferred Stock with
designation, rights and preferences determined from time to time by its Board
of Directors. Accordingly, the Company's Board of Directors is empowered,
without stockholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting or other rights that could adversely affect
the voting power or other rights of the holders of the Common Stock. In the
event of issuance, the Preferred Stock could be used, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company.
Risks Relating to this Offering
Volatility of Common Stock. There has been volatility in the market
price of securities of entertainment companies. Future announcements
concerning the Company or its competitors, including variations in financial
results, changes in general market conditions, governmental regulations or
other developments may have a significant impact on the market price of the
Company's Common Stock and could cause the market price of the Company's
Common Stock to fluctuate significantly. In addition, broad market
fluctuations and general economic or political conditions may adversely affect
the market price of each of the Company's securities, regardless of the
Company's actual performance.
No Assurance of Active Market. The Common Stock is quoted on the OTC
Bulletin Board and traded on the Frankfurt and Berlin Stock Exchanges. There
can be no assurance that an active
9
<PAGE>
market in the Common Stock will develop. In the absence of an active public
trading market, an investor may be unable to liquidate his or her investment.
Nonpayment of Dividends. The Company has never declared or paid a
cash dividend on its Common Stock and does not expect to pay cash dividends in
the foreseeable future.
Dilutive Effect of Options, Warrants and Convertible Securities. As
of the date hereof, there were options and warrants outstanding to purchase an
aggregate of 4,518,866 shares of Common Stock, with exercise prices ranging
from $.25 to $1.10 per share and which will expire on various dates through
July 2, 2001. The foregoing is exclusive of incentive options exercisable
pursuant to the Company's Employee Stock Option Plan. If the outstanding
options and warrants are exercised, the percentage of capital stock then held
by the existing stockholders will be reduced. Furthermore, the outstanding
options and warrants can be expected to be exercised at a time when the
Company would be able to obtain funds from the sale of Common Stock or other
securities at a price higher than the exercise prices thereof.
SELLING STOCKHOLDERS
The following table sets forth certain information as of July 22,
1998 with respect to the Selling Stockholders. The number of Shares that may
actually be sold by the Selling Stockholders will be determined by the Selling
Stockholders, which may depend upon a number of factors, including, among
other things, the market price of the Common Stock.
<TABLE>
<CAPTION>
Number of Shares of Number of Shares Shares of Common Stock
Common Stock Owned of Common Stock Owned After Sale of
Name of Stockholder Before Offering (1) (4 Being Offered All Shares (2) (4)
- ------------------- ------------------------ ----------------- --------------------------------
Number Percent
------ -------
<S> <C> <C> <C> <C>
Globe Media AG 800,000 800,000 -0- *
Broadford Limited 500,000 500,000 (3) -0- *
Coastal Provinces Limited 500,000 500,000 (3) -0- *
Rowlett Enterprises 500,000 500,000 (3) -0- *
Celebrity Enterprises, Inc. 300,000 300,000 -0- *
----------- -----------
Total 2 ,600,000 2,600,000
</TABLE>
- ---------
* Less than one percent.
(1) Represents those shares of Common Stock held by the Selling
Stockholders, if any, together with those shares that such Selling
Stockholders have the right to acquire within 60 days from the date
of this Prospectus.
(2) Assumes all of the Shares being offered will be sold. Because the
Selling Stockholders may sell all, some or none of the Shares that
he, she or it holds, and because the offering contemplated by this
Prospectus is not now a "firm commitment" underwritten offering, the
10
<PAGE>
actual number of Shares that will be held by the Selling Stockholders upon
or prior to termination of this offering may vary. See "Plan of
Distribution."
(3) The number of shares represents shares issuable upon exercise of
warrants.
(4) Does not include unrestricted shares held by unaffiliated shareholders,
the amount of such shares varies from time to time as the holders
purchase and sell such shares periodically.
The Selling Stockholders may have sold, transferred or otherwise
disposed of all or a portion of their Shares since the date on which they
provided the information regarding their Common Stock in transactions exempt
from the registration requirements of the Securities Act. Additional
information concerning the Selling Stockholders may be set forth from time to
time in prospectus supplements to this Prospectus. See "Plan of Distribution.
PLAN OF DISTRIBUTION
Sales of the Shares may be made from time to time by the Selling
Stockholders, or, subject to applicable law, by pledgees, donees,
distributees, transferees or other successors in interest. Such sales may be
made on the over-the-counter market or foreign securities exchange (any of
which may involve crosses and block transactions), in privately negotiated
transactions or otherwise or in a combination of such transactions at prices
and at terms then prevailing or at prices related to the then current market
price, or at privately negotiated prices. In addition, any Shares covered by
this Prospectus which qualify for sale pursuant to Section 4(1) of the
Securities Act or Rule 144 promulgated thereunder may be sold under such
provisions rather than pursuant to this Prospectus. Without limiting the
generality of the foregoing, the Shares may be sold in one or more of the
following types of transactions: (a) a block trade in which the broker-dealer
so engaged will attempt to sell the Shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction; (b)
purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (c) an exchange
distribution in accordance with the rules of such exchange; (d) ordinary
brokerage transactions and transactions in which the broker solicits
purchasers; and (e) face-to-face transactions between sellers and purchasers
without a broker-dealer. In effecting sales, brokers or dealers engaged by the
Selling Stockholders may arrange for other brokers or dealers to participate
in the resales.
In connection with distributions of the Shares or otherwise, the
Selling Stockholders may enter into hedging transactions with broker-dealers.
In connection with such transactions, broker-dealers may engage in short sales
of the Shares registered hereunder in the course of hedging the positions they
assume with the Selling Stockholders. The Selling Stockholders may also sell
Shares short and deliver the Shares to close out such short positions. The
Selling Stockholders may also enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of the Shares
registered hereunder, which the broker-dealer may resell pursuant to this
11
<PAGE>
Prospectus. The Selling Stockholders may also pledge the Shares registered
hereunder to a broker or dealer and upon a default, the broker or dealer may
effect sales of the pledged Shares pursuant to this Prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Stockholders in amounts
to be negotiated in connection with the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with such sales and any
such commission, discount or concession may be deemed to be underwriting
discounts or commissions under the Securities Act.
Information as to whether underwriters who may be selected by the
Selling Stockholders, or any other broker-dealer, is acting as principal or
agent for the Selling Stockholders, the compensation to be received by
underwriters who may be selected by the Selling Stockholders, or any
broker-dealer, acting as principal or agent for the Selling Stockholders and
the compensation to be received by other broker-dealers, in the event the
compensation of such other broker-dealers is in excess of usual and customary
commissions, will, to the extent required, be set forth in a supplement to
this Prospectus (the "Prospectus Supplement"). Any dealer or broker
participating in any distribution of the Shares may be required to deliver a
copy of this Prospectus, including the Prospectus Supplement, if any, to any
person who purchases any of the Shares from or through such dealer or broker.
The Company has advised the Selling Stockholders that during such
time as they may be engaged in a distribution of the Shares included herein
they are required to comply with Regulation M promulgated under the Exchange
Act. In general, Regulation M precludes the Selling Stockholders, any
affiliated purchasers and any broker-dealer or other person who participates
in such distribution from bidding for or purchasing, or attempting to induce
any person to bid for or purchase any security which is the subject of the
distribution until the entire distribution is complete. A "distribution" is
defined in the rules as an offering of securities that is distinguished from
ordinary trading activities and depends on the "magnitude of the offering and
the presence of special selling efforts and selling methods." Regulation M
also prohibits any bids or purchases made in order to stabilize the price of a
security in connection with the distribution of that security.
It is anticipated that the Selling Stockholders will offer all of the
Shares for sale. Further, because it is possible that a significant number of
Shares could be sold at the same time hereunder, such sales, or the
possibility thereof, may have a depressive effect on the market price of the
Common Stock.
DESCRIPTION OF SECURITIES
The following descriptions of the Company's securities are qualified
in all respects by reference to the Certificate of Incorporation and By-laws
of the Company. The Certificate of
12
<PAGE>
Incorporation authorizes the Company to issue 100,000,000 shares of Common
Stock, $.001 par value, and 15,000,000 shares of "blank check" Preferred
Stock, $.001 par value (the "Preferred Stock").
Common Stock
As of the date hereof, there were 32,153,092 shares of Common Stock
outstanding. The holders of Common Stock are entitled to one vote for each
share held of record on all matters submitted to a vote of the stockholders.
Subject to preferential rights with respect to future outstanding Preferred
Stock, holders of Common Stock are entitled to receive ratably such dividends
as may be declared by the Board of Directors out of funds legally available
therefor. In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and satisfaction of preferential rights
and have no rights to convert their Common Stock into any other securities.
All shares of Common Stock have equal, non-cumulative voting rights, and have
no preference, exchange, preemptive or redemption rights.
Preferred Stock
As of the date hereof, there were no shares of Preferred Stock
outstanding. The Company's Certificate of Incorporation authorizes the
issuance of the Preferred Stock with designations, rights and preferences
determined from time to time by its Board of Directors. The Preferred Stock
may be issued in series, and the Preferred Stock of each series will have such
rights and preferences as are fixed by the Board of Directors in the
resolutions authorizing the issuance of that particular series. In designating
any series of the Preferred Stock, the Board of Directors may fix the number
of shares of the Preferred Stock constituting that series and fix the dividend
rights, dividend rate, conversion rights, voting rights (which may be greater
or lesser than the voting rights of the Common Stock), rights and terms of
redemption (including any sinking fund provisions) and the liquidation
preferences of the series of the Preferred Stock. It is possible, without any
action of the stockholders of the Company, that the holders of any series of
the Preferred Stock, when and if issued, will have priority claims to
dividends and to any distributions upon liquidation of the Company and that
they may have other preferences over the holders of the Common Stock. The
Board of Directors may issue series of the Preferred Stock without action of
the stockholders of the Company.
The issuance of the Preferred Stock may be used as an anti-takeover
device without further action on the part of the stockholders. Furthermore,
the issuance of the Preferred Stock may dilute the voting power of holders of
the Common Stock (such as by issuing Preferred Stock with super-voting rights)
and may render more difficult the removal of current management, even if such
removal may be in the stockholders' best interests. The Company has no current
plans to issue any of the Preferred Stock.
13
<PAGE>
Delaware Law and Certain Charter Provisions
The Company will be subject to Section 203 of the Delaware General
Corporation Law, which prohibits a Delaware corporation from engaging in a
wide range of specified transactions with any interested stockholder, defined
to include, among others, any person or entity who in the previous three years
obtained 15% or more of any class or series of stock entitled to vote in the
election of directors, unless, among other exceptions, the transaction is
approved by (i) the Board of Directors prior to the date the interested
stockholder obtained such status or (ii) the holders of two-thirds of the
outstanding shares of each class or series owned by the interested
stockholder. The Company's Certificate of Incorporation and By-laws contain
certain additional provisions which may have the effect of delaying or
preventing a change in control of the Company. Such provisions include blank
check preferred stock (the terms of which may be fixed by the Board of
Directors without stockholder approval). Accordingly, the Company's Board of
Directors is empowered, without stockholder approval, to issue Preferred Stock
with dividend, liquidation, conversion, voting or other rights that could
adversely affect the voting power or other rights of the holders of the Common
Stock. In the event of issuance, the Preferred Stock could be used, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of the Company.
Transfer and Warrant Agent
The transfer agent for the Common Stock is Holladay Stock Transfer, Inc.
14
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the securities being offered
hereby will be passed upon for the Company by Parker Duryee Rosoff & Haft, New
York, New York 10017.
EXPERTS
The consolidated financial statements of the Company, included in the
Company's annual report on Form 10-KSB for the fiscal year ended December 31,
1997, which annual report has been incorporated herein by reference, have been
audited by Paneth, Haber & Zimmerman LLP, independent certified public
accountants, as indicated in their report with respect thereto, and are
incorporated herein by reference in reliance upon the report of said firm
given upon their authority as experts in accounting and auditing.
No dealer, salesperson or other person has been authorized to give
any information or to make any representations not contained in this
Prospectus or incorporated by reference to this Prospectus, and, if given or
made, such information or representations must not be relied upon as having
been authorized by the Company. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, the securities offered hereby
in any jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. The delivery of this Prospectus at any time
does not imply that the information contained herein is correct as of any time
subsequent to its date.
15
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the Company's estimates of the
expenses to be incurred by it in connection with the Common Stock being
offered hereby:
SEC Registration Fee............................................. $ 776.06
Printing expenses................................................ 2,500.00*
Legal fees and expenses.......................................... 7,500.00*
Accounting fees and expenses..................................... 250.00*
Blue Sky expenses................................................ 250.00*
Miscellaneous expenses........................................... 3,723.94*
TOTAL.................................................. $15,000.00*
- ------------
* Estimated
Item 15. Indemnification of Directors and Officers.
Article Sixth of the Certificate of Incorporation of Kaleidoscope
Media Group, Inc. (the "Company") provides that no director shall be liable to
the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director, except with respect to (1) a breach of the director's duty
of loyalty to the Company or its stockholders, (2) acts or omissions not in
good faith which involve intentional misconduct or a knowing violation of law,
(3) liability under Section 174 of the Delaware General Corporation Law or (4)
a transaction from which the director derived an improper personal benefit.
Article Sixth also provides that the Company shall indemnify, to the fullest
extent permitted by Sections 102(b)(7) and 145 of the Delaware General
Corporation Law, as amended
16
<PAGE>
from time to time, any and all persons whom it shall have power to indemnify
under such sections, including officers of the Company acting in such
capacity.
Item 16. Exhibits and Financial Statement Schedules.
4.1 * Specimen Certificate representing the Common Stock, par value $.01
per share (1)
4.2 Form of Warrant to purchase 500,000 shares of the Company's Common
Stock at $.25 per share.
5.1 Opinion of Parker Duryee Rosoff & Haft A Professional Corporation
23.1 * Consent of Paneth, Haber & Zimmerman LLP
23.2 Consent of Parker Duryee Rosoff & Haft (included in Exhibit 5.1)
24.1 * Power of Attorney (included on the signature page of Part II of this
Registration
- -----------------
* Previously filed.
(1) Denotes document filed as an exhibit to the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1997 and incorporated
herein by reference.
17
<PAGE>
Item 17. Undertakings.
The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended (the "Securities Act"), each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Company's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, that is
incorporated by reference in the Registration Statement, shall be deemed to be
a new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Company pursuant to Item 15 of Part II of the Registration
Statement, or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
18
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
the Company certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on
August 5, 1998.
KALEIDOSCOPE MEDIA GROUP INC.
By: /s/ Henry Siegel
------------------------------
Henry Siegel
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Henry Siegel and Paul Siegel, and each
of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities to sign
any and all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto, and
the documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
In accordance with the requirements of the Securities Act of 1933,
this Registration Statement was signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
Signatures Capacity Date
---------- ---------- ------
<S> <C> <C>
- ---------------------- Chief Executive Officer, Director August 5, 1998
Henry Siegel (Principal Executive Officer)
- ---------------------- President, Director August 5, 1998
Paul Siegel
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Chief Financial Officer (Principal Financial August 5, 1998
- ------------------------ Officer and Principal Accounting Officer)
Irving Greenman
----------------------- Director August 5, 1998
Ray Volpe
- ------------------------ Director August 5, 1998
Martin Miller
- ------------------------ Director August 5, 1998
Jean Chalopin
- ------------------------ Director August 5, 1998
Martin Gloor
</TABLE>
20
<PAGE>
EXHIBIT INDEX
4.1* Specimen Certificate representing the Common Stock, par value $.001 per
share (1)
4.2 Form of Warrant to purchase 500,000 shares of the Company's Common Stock
at $.25 per share.
5.1 Opinion of Parker Duryee Rosoff & Haft A Professional Corporation
23.1* Consent of Paneth, Haber & Zimmerman LLP
23.2 Consent of Parker Duryee Rosoff & Haft (included in Exhibit 5.1)
24.1* Power of Attorney (included on the signature page of Part II of this
Registration
- ---------
* Previously filed.
(1) Denotes document filed as an exhibit to the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1997 and incorporated herein
by reference.
21
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of our report dated April 14 1998 which
appears on page F-2 of the annual report on Form 10-KSB of Kaleidoscope Media
Group Inc. for the year ended December 31, 1997 and to the reference to our
firm under the caption "Experts" in the prospectus.
- --------------------------------
Paneth, Haber & Zimmerman LLP
New York, New York
August 5, 1998
22
<PAGE>
FORM OF WARRANT
---------------
THIS WARRANT AND THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), (ii) TO
THE EXTENT APPLICABLE, RULE 144 UNDER THE SECURITIES ACT (OR ANY SIMILAR RULE
UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION
OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR
THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS
AVAILABLE.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, JULY 2, 2001
No. W- 500,000 Warrants
WARRANT
This Warrant certifies that ___________ or registered assigns, is the
registered holder of 500,000 Warrants to purchase initially, at any time from
July 1, 1998 until 5:30 P.M. New York time on July 2, 2001 ("Expiration
Date"), up to 500,000 shares (the "Shares") of Common Stock, of Kaleidoscope
Media Group, Inc., a Delaware corporation (the "Company"), at the initial
exercise price, subject to adjustment in certain events (the "Exercise
Price"), of $.25 per Share upon surrender of this Warrant and payment of the
Exercise Price at the principal offices of the Company (presently located at
245 Park Avenue South, New York, New York 10010). Payment of the Exercise
Price shall be made by certified or official bank check in New York Clearing
House funds payable to the order of the Company.
No Warrant may be exercised after 5:30 p.m., New York time,
on the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
Upon surrender of this Warrant with the annexed Form of
Election to Purchase duly executed, together with payment of the Exercise
Price for the Shares, the registered holder of this Warrant ("Holder") shall
be entitled to receive a certificate or certificates for the shares of Common
Stock. The purchase rights represented by each Warrant are exercisable at the
option of the Holder thereof, in whole or in part (but not as to fractional
shares of Common Stock). In case of the purchase of less than all of the
securities purchasable under this Warrant, the Company shall cancel this
Warrant upon the surrender thereof and shall execute and deliver a new Warrant
of like tenor for the balance of the securities purchasable thereunder.
1
<PAGE>
For the purpose of this Warrant, the term "Common Stock"
shall mean (i) the class of stock designated as Common Stock in the
Certificate of Incorporation of the Company as it may be amended as of the
date hereof, or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value.
Upon the exercise of the Warrants, the issuance of
certificates evidencing the shares of Common Stock or other securities,
properties or rights underlying such Warrants shall be made forthwith without
charge to the Holder thereof including, without limitation, any tax which may
be payable in respect of the issuance thereof, and such certificates shall
(subject to the provisions set forth below) be issued in the name of, or in
such names as may be directed by, the Holder thereof; provided, however, that
the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any such
certificates in a name other than that of the Holder and the Company shall not
be required to issue or deliver such certificates unless or until the person
or persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
The term "Exercise Price" herein shall mean the initial
exercise price or the adjusted exercise price, depending upon the context. In
case the Company shall at any time subdivide or combine the outstanding shares
of Common Stock, the Exercise Price shall forthwith be proportionately
decreased in the case of subdivision or increased in the case of combination.
Upon each adjustment of the Exercise Price, the number of Shares issuable upon
the exercise of each Warrant shall be adjusted to the nearest full amount by
multiplying a number equal to the Exercise Price in effect immediately prior
to such adjustment by the number of Shares issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
In case of any consolidation of the Company with, or merger
of the Company with, or merger of the Company into, another corporation (other
than a consolidation or merger which does not result in any reclassification
or change of the outstanding Common Stock), the corporation formed by such
consolidation or merger shall execute and deliver to the Holder a supplemental
warrant providing that the Holder of each Warrant then outstanding or to be
outstanding shall have the right thereafter (until the expiration of such
Warrant) to receive, upon exercise of such Warrant, the kind and amount of
shares of Common Stock and other securities and property receivable upon such
consolidation or merger, by a holder of the number of shares of Common Stock
of the Company for which such warrant might have been exercised immediately
prior to such consolidation, merger, sale or transfer. Such supplemental
warrant shall provide for adjustments which shall be identical to the
adjustments provided herein. The provisions of this paragraph shall similarly
apply to successive consolidations or mergers.
2
<PAGE>
Each Warrant Certificate is exchangeable without expense,
upon the surrender thereof by the registered Holder at the principal offices
of the Company, for a new Warrant of like tenor and date representing in the
aggregate the right to purchase the same number of Shares in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrants, if mutilated, the Company will make and deliver a new Warrant of
like tenor, in lieu thereof.
The Company shall not be required to issue certificates
representing fractions of shares of Common Stock upon the exercise of the
Warrants, nor shall it be required to issue scrip or pay cash in lieu of
fractional interests, it being the intent of the parties that all fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of shares of Common Stock or other securities, properties or rights as
the case may be.
The Company shall at all times reserve and keep available
out of its authorized shares of Common Stock, solely for the purpose of
issuance upon the exercise of the Warrants.
Nothing contained in this Warrant shall be construed as
conferring upon the Holders the right to vote or to consent or to receive
notice as a stockholder in respect of any meetings of stockholders for the
election of directors or any other matter, or as having any rights whatsoever
as a stockholder of the Company. If, however, at any time prior to the
expiration of the Warrants and their exercise, any of the following events
shall occur:
(a) the Company shall take a record of the holders
of its shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the
books of the Company; or
(b) the Company shall offer to all the holders of
its Common Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an entirety
shall be proposed;
3
<PAGE>
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of closing the transfer books, as the
case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend, or the issuance of any convertible or
exchangeable securities, or subscription rights, options or warrants, or any
proposed dissolution, liquidation, winding up or sale.
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt
requested:
(a) If to the registered Holder of the Warrants, to
the address of such Holder as shown on the books of the Company; or
(b) If to the Company, to 345 Park South, 2nd
Floor, New York, New York 10010 or to such other address as the Company may
designate by notice to the Holders.
The Company and the Holders representing a majority of the
Shares underlying the outstanding Warrants may from time to time supplement or
amend this Warrant.
All the covenants and provisions of this Warrant shall be
binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
This Warrant shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws. The Company and the Holders hereby
agree that any action, proceeding or claim against it arising out of, or
relating in any way to, this Agreement shall be brought and enforced in the
courts of the State of New York or of the United States District Court for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company and the Holders hereby
irrevocably waive any objection to such exclusive jurisdiction or inconvenient
forum. Any such process or summons to be served upon any of the Company and
the Holders (at the option of the party bringing such action, proceeding or
claim) may be served by transmitting a copy thereof, by registered or
certified mail, return receipt requested, postage prepaid, addressed to it at
the address set forth above. Such mailing shall be deemed personal service and
shall be legal and binding upon the party so served in any action, proceeding
or claim. The Company and the Holders agree that the prevailing party(ies) in
any such action or proceeding shall be entitled to recover from the other
4
<PAGE>
part(ies) all of its/their reasonable legal costs and expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefor.
This Warrant contains the entire understanding between the
parties hereto with respect to the subject matter hereof and may not be
modified or amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
If any provision of this Warrant shall be held to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any
other provision of this Warrant.
Nothing in this Warrant shall be construed to give to any
person or corporation other than the Company and the registered Holder of this
Warrant or the securities purchasable thereunder any legal or equitable right,
remedy or claim under this Warrant; and this Warrant shall be for the sole and
exclusive benefit of the Company and the Holder of this Warrant or the
securities purchasable thereunder.
The Company may deem and treat the registered holder(s)
hereof as the absolute owner(s) of this Warrant (notwithstanding any notation
of ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
IN WITNESS WHEREOF, the Company has caused this Warrant to
be duly executed under its corporate seal.
Dated as of July 1, 1998
KALEIDOSCOPE MEDIA GROUP, INC.
By:
--------------------------------
Name:
Title:
Attest:
- ----------------------------
________________, Secretary
5
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant, to purchase __________ shares of Common
Stock of Kaleidoscope Media Group, Inc. and herewith tenders in payment for
such securities a certified or official bank check payable in New York
Clearing House Funds to the order of _______________________ in the amount of
$___________, all in accordance with the terms hereof. The undersigned
requests that each of the certificates evidencing such securities be
registered in the name of _________________ whose address is
__________________________ and that such certificates be delivered to
___________________ whose address is ____________________________.
Dated: Signature:__________________________________________________
(Signature must conform in all respects to name of holder as
specified on the face of the Warrant.)
(Insert Social Security or Other Identifying Number of Holder)
<PAGE>
[FORM OF ASSIGNMENT]
(To be exercised by the registered holder if such holder
desires to transfer the Warrant.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Warrant, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _______________________ Attorney, to
transfer the within Warrant on the books of the within-named Company, and full
power of substitution.
Dated: Signature:__________________________________________________
(Signature must conform in all respects to name of holder as
specified on the face of the Warrant.)
(Insert Social Security or Other Identifying Number of Assignee)
<PAGE>
Exhibit 5.1
[Letterhead of Parker Duryee Rosoff & Haft]
August 5, 1998
Kaleidoscope Media Group, Inc.
345 Park Avenue South
New York, New York 10010
Re: Registration Statement on Form S-3 under the Securities Act of 1933
-------------------------------------------------------------------
Ladies and Gentlemen:
In our capacity as counsel to Kaleidoscope Media Group, Inc., a
Delaware Corporation (the "Company"), we have been asked to render this
opinion in connection with a Registration Statement on Form S-3, being filed
contemporaneously herewith by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Registration
Statement"), covering an aggregate of 2,600,000 shares of Common Stock, $0.001
par value (the "Common Stock"), which has been included in the Registration
Statement for the respective accounts of the several persons identified in the
Registration Statement as Selling Stockholders.
In that connection, we have examined the Certificate of Incorporation
and the ByLaws of the Company, both as amended to date, the Registration
Statement, corporate proceedings of the Company relating to the issuance of
the Common Stock and such other instruments and documents as we have deemed
relevant under the circumstances.
In making the aforesaid examinations, we have assumed the genuineness
of all signatures and the conformity to original documents of all copies
furnished to us as original or photostatic copies. We have also assumed that
the corporate records furnished to us by the Company include all corporate
proceedings taken by the Company to date. In connection with those shares of
Common Stock issuable upon the exercise of warrants, we have also assumed that
such warrants will be duly exercised and the shares issuable thereunder shall
be fully paid for in accordance with the terms of such warrants.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware.
<PAGE>
Kaleidoscope Media Group, Inc.
August 3, 1998
Page 2
2. The Common Stock issuable independent of warrants has been duly
and validly authorized and issued and is fully paid and non-assessable, and
that the Common Stock to be issued pursuant to the due exercise of warrants
shall be duly issued, fully paid and non-assessable upon such exercise.
We hereby consent to the use of our opinion as herein set forth as an
exhibit to the Registration Statement and to the use of our name under the
caption "Legal Matters" in the prospectus forming a part of the Registration
Statement.
Very truly yours,
PARKER DURYEE ROSOFF & HAFT
By: /s/ Michael D. DiGiovanna
----------------------------
A Member of the Firm
