EXHIBIT 10.1
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (this "Agreement") is made as of this
30th day of October, 2000 (the "Effective Date"), by and between FMiTV Networks,
Inc., a Delaware corporation ("FMiTV"), and Entertainment Boulevard, Inc., a
Nevada corporation ("Entertainment Boulevard").
WHEREAS, FMiTV operates an online entertainment network of websites
accessible at xxxx://xxx.XXxXX.xxx;
WHEREAS, Entertainment Boulevard operates internet websites accessible at
xxxx://xxx.xxxxxx.xxx; and
WHEREAS, FMiTV desires to provide to Entertainment Boulevard, and
Entertainment Boulevard desires to receive from FMiTV, under the terms and
conditions of this Agreement, management services for all aspects of
Entertainment Boulevard internet sites to expand the ability of both parties to
generate advertising and merchandise offerings and syndicated content in the
United States and abroad.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following capitalized terms shall have the
following meanings ascribed to such terms:
"Advertising" shall be defined to mean any advertisements including, but
not limited to, banner advertisements on the FMiTV Site (except advertising
appearing on third party channels), and ad tags on messages featuring
Entertainment Boulevard Content.
"Budget" means the budget prepared by FMiTV and attached hereto as Exhibit
"A" reflecting operating expenses and projected revenues in connection with the
Entertainment Boulevard Channel. FMiTV may revise the Budget quarterly as
specified in Section 2.7 herein.
"Channel" means one or more areas on the FMiTV Network dedicated to or
using specific Content.
"Closing" means the consummation of the transactions contemplated in this
Agreement.
"Content" means text, graphics, photographs, animation, characters,
illustrations, features, recordings, video, audio, CD-ROMS, proprietary software
packages, tools and systems, and/or other data or information relating to any
subject, including, without limitation, data or information relating to
subscribers.
"Contracts" of a Person shall mean all contracts, agreements, warranties,
guaranties, indentures, bonds, options, leases, subleases, easements, mortgages,
plans, collective bargaining agreements, licenses, commitments or binding
arrangements of any nature whatsoever, express or implied, written or unwritten,
and all amendments thereto, entered into or binding upon that Person or to which
any property of that Person may be subject.
"Entertainment Boulevard Channel" means the area on the FMiTV Network
dedicated to Entertainment Boulevard Content established and operated pursuant
to Section 2.1.
"Entertainment Boulevard Content" means Content of Entertainment Boulevard
delivered to FMiTV pursuant to Section 4.1 as such content may be modified,
deleted, enhanced or added to pursuant to Section 2.1.
"Entertainment Boulevard Representative" means a representative of
Entertainment Boulevard designated by Entertainment Boulevard to FMiTV.
"Entertainment Boulevard Shares" means the shares of Entertainment
Boulevard Series B Preferred Stock issuable to FMiTV under the terms and
conditions contained herein.
"FMiTV Network" means all Channels and programming services supported by
FMiTV, including the Entertainment Boulevard Channel.
"Gross Revenue" shall mean the moneys actually received by FMiTV
specifically attributable to the Entertainment Boulevard Channel including, but
not limited to, such moneys received from advertising, net profits or
commissions from product sales and subscription fees.
"Intellectual Property Rights" means all inventions, discoveries,
trademarks, service marks, patents, domain names, URLs, trade names, copyrights,
moral rights, jingles, know-how, intellectual property, software, shop rights,
licenses, developments, research data, designs, technology, trade secrets, test
procedures, processes, route lists, customer lists, computer programs, computer
discs, computer tapes, literature, reports and other confidential information,
intellectual and similar intangible property rights, whether or not patentable
or copyrightable (or otherwise subject to legally enforceable restrictions or
protections against unauthorized third party usage), and any and all
applications for, registrations of and extensions, divisions, renewals and
reissuance of, any of the foregoing, and rights therein, including without
limitation (a) rights under any royalty or licensing agreements, and (b)
programming and programming rights, on any distribution medium (i.e. audio,
video, film, digital).
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"Knowledge" shall mean, with respect to Entertainment Boulevard, the actual
knowledge of each of its directors, executive officers and key employees, the
knowledge that each such person would have acquired upon reasonable inquiry and
the knowledge that is imputed to each such person and/or Entertainment Boulevard
by operation of applicable law.
"Lien" shall mean any lien, encumbrance, pledge, mortgage, security
interest, lease, charge, conditional sales contract, option, restriction,
reversionary interest, right of first refusal, voting trust arrangement,
preemptive right, claim under bailment or storage contract, easement or any
other adverse claim or right whatsoever.
"Material Adverse Change" or "Material Adverse Effect" or other similar
phrase including the word "material" with respect to the condition (financial or
otherwise), assets, liabilities, business, operations or prospects of
Entertainment Boulevard shall mean any adverse change or effect or potential
adverse change or effect, or any series thereof, involving more than Twenty-Five
Thousand Dollars ($25,000) in the aggregate.
"Material Contracts" means, collectively, the Contracts of Entertainment
Boulevard which are set forth in Schedule 3.3.
"Net Revenue" shall mean Gross Revenue less Operating Expenses.
"Operating Expenses" means those expenses of FMiTV attributable to the
Entertainment Boulevard Channel and that are actually paid (in cash or in kind).
"Permitted Liens" shall mean (i) Liens for taxes or governmental
assessments, charges or claims the payment of which is not yet due, or for taxes
the validity of which are being contested in good faith by appropriate
proceedings; (ii) statutory Liens of landlords and Liens of laboratories,
carriers, warehousemen, mechanics, materialmen and other similar Persons and
other Liens imposed by applicable law incurred in the ordinary course of
business for sums not yet delinquent or being contested in good faith; (iii)
Liens relating to deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security or to secure the performance of leases, trade contracts or other
similar agreements; (iv) Liens securing executory obligations under any lease
that constitutes an "operating lease" under GAAP; and (v) customary Liens, which
Liens, if enforced, in the aggregate would not have a Material Adverse Effect
upon the condition (financial or otherwise), assets, liabilities, business,
operations or prospects of Entertainment Boulevard.
"Person" means any natural person, legal entity, or other organized group
of persons or entities. (All pronouns whether personal or impersonal, which
refer to a person include natural persons and other persons.)
"Required Contractual Consents" shall mean those consents required to
consummate the transaction.
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"Site" means any on-line presence including, but not limited to, those
using WWW, MMM, or any other new technologies that allow for the dissemination
of information via the Internet, owned, operated or affiliated with an
organization.
ARTICLE II
PROVISION OF SERVICES
2.1 CONTENT. FMiTV will establish, operate and integrate into the FMiTV
Network a separate Channel for the delivery of Entertainment Boulevard Content.
The overall structure of the initial launch of the Entertainment Boulevard
Channel, including the design, look, feel and navigation therein, shall be
submitted by FMiTV to Entertainment Boulevard for its approval, which approval
shall not be unreasonably withheld or delayed. Thereafter, upon reasonably
detailed informational notice to an Entertainment Boulevard Representative,
FMiTV shall have the right (i) to determine the Content and all other elements
that will be displayed on the Entertainment Boulevard Channel, (ii) to add to,
delete, modify or enhance the Entertainment Boulevard Content, and (iii) to
redesign or modify the organization, structure, look, feel and functionality,
navigation and other elements of the Entertainment Boulevard Channel.
2.2 PROMOTION; SUBSCRIPTION AND ADVERTISING TRACKING. FMiTV will use
reasonable commercial efforts to promote the Entertainment Boulevard Channel and
will deliver to Entertainment Boulevard tracking and reporting information
describing the number of advertisements sold and other subscription information
within forty-five (45) days after the end of months one, two and three of the
Term (as hereinafter defined) and within thirty (30) days after the end of each
month thereafter.
a. ALLOCATION OF ADVERTISING. FMiTV shall have the right to allocate
FMiTV Network Advertising over the Channel in its sole and absolute discretion
upon notice to an Entertainment Boulevard Representative.
b. ACKNOWLEDGMENT. Entertainment Boulevard acknowledges and agrees
that any and all Entertainment Boulevard Advertising shall be in FMiTV's sole
and absolute discretion, and that FMiTV shall have no obligation to provide or
allocate advertising or to generate any advertising revenue in connection with
this Agreement.
2.3 ALLOCATION OF REVENUE AND EXPENSES. In the event that a subscriber
subscribes to the Entertainment Boulevard Channel concurrently with one or more
other Channels on the FMiTV Network then Entertainment Boulevard shall receive a
fair and reasonable allocation of such revenue generated therefrom to be
determined in FMiTV's reasonable and good faith discretion after consultation
with Entertainment Boulevard. Further, to the extent that any expenses are
attributable to more than one Channel on the FMiTV Network, FMiTV shall, in its
reasonable and good faith discretion after consultation with Entertainment
Boulevard, allocate such expenses to all of the Channels to which the expense
applies.
2.4 TECHNICAL SUPPORT. FMiTV will provide data and systems services for
the maintenance of the Entertainment Boulevard Channel.
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2.5 CONTENT AND DISTRIBUTION AGREEMENTS. FMiTV shall have the right
subject to the approval of Entertainment Boulevard, which approval shall not be
unreasonably withheld or delayed, to (i) re-negotiate Material Contracts (within
the re-negotiation parameters projected by FMiTV and approved by Entertainment
Boulevard, which approval shall not be unreasonably withheld or delayed), and
(ii) on behalf and in the name of Entertainment Boulevard, enter into new
content and distribution alliances not otherwise provided for in the Budget
which FMiTV determines in good faith to be in the best interests of
Entertainment Boulevard Channel. FMiTV shall have the right without the need for
any additional approval of Entertainment Boulevard to enter into new content and
distribution alliances provided for in the Budget. To facilitate the
re-negotiation of Material Contracts, Entertainment Boulevard shall execute one
or more powers of attorney appointing FMiTV its agent, in a form satisfactory to
FMiTV.
2.6 KIIS-FM PAYABLES. Within sixty (60) days of the Closing, FMiTV will
render all reasonable assistance to Entertainment Boulevard in obtaining
approval from KIIS-FM to convert all existing payables owed to KIIS-FM into
Entertainment Boulevard common stock using a valuation of $0.13 per share,
although no assurance is given as to whether KIIS-FM will agree to convert on
the terms hereof.
2.7 NO REPRESENTATION. FMiTV makes no representation or warranty
concerning the amount of Gross Revenues to be generated for the Entertainment
Boulevard Channel.
2.8 REVISION TO BUDGET. Upon notice to Entertainment Boulevard, FMiTV
shall have the right in consultation with an Entertainment Boulevard
Representative to revise the Budget on a quarterly basis, provided that any
increase in the Budget greater than 25% of the Budget in the previous quarter
shall require the approval of Entertainment Boulevard, which approval shall not
be unreasonably withheld or delayed.
ARTICLE III
PAYMENTS, REVENUES AND EXPENSES
3.1 BANK ACCOUNT. A separate bank account ("Bank Account") shall be
established exclusively for the payment and receipt of all monies in connection
with the Entertainment Boulevard Channel at a bank to be agreed upon by both
parties. The Bank Account shall be managed by FMiTV and be owned by FMiTV
subject to the rights of Entertainment Boulevard to receive payment under this
Agreement. All Gross Revenues shall be deposited into, and all Operating
Expenses shall be withdrawn from, the Bank Account. FMiTV shall provide
Entertainment Boulevard with copies of monthly statements and cancelled checks
within ten (10) days of receipt.
3.2 INITIAL CONTRIBUTION TO EXPENSES.
a. ENTERTAINMENT BOULEVARD ADVANCE. Entertainment Boulevard shall
deposit into the Bank Account a $400,000 advance (the "Entertainment Boulevard
Advance") in equal installments of $133,333 during the first three months of
this Agreement in order to cover Budget expenses in connection with the
Entertainment
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Boulevard Channel. The installment due with respect to the first month shall be
paid on the last day of that month, with the balance of the installments due on
the first day of each successive month. The Entertainment Boulevard Advance
shall be returned as set forth in Section 6.2.
b. FMITV ADVANCE. At the start of each month during the Term
(subject to early termination pursuant to Section 6.1), FMiTV shall deposit into
the Bank Account that amount of money equal to the difference between the Budget
(as may be revised under this Agreement) for that month and the amount in the
Bank Account (the "FMiTV Advance"), except with respect to the first month where
such FMiTV Advance shall not be due until Entertainment Boulevard has completed
the deliveries set forth in Section 7.2. The FMiTV Advance shall be returned as
set forth in Section 6.2.
c. SHORTFALL. To the extent that Entertainment Boulevard fails to
pay the full amount of the Entertainment Boulevard Advance, such shortfall (the
"Shortfall") shall be paid into the Bank Account by FMiTV if and to the extent
necessary. Solely in the event of a Shortfall, Entertainment Boulevard shall
issue to FMiTV additional shares of Entertainment Boulevard Common Stock (the
"Shortfall Shares") in an amount equal to twice the Shortfall paid divided by
70% of the market price of the Entertainment Boulevard Common Stock as of the
date on which Entertainment Boulevard failed to make such payment. As used
herein, "market price" shall mean the average of the closing bid price of the
shares of Entertainment Boulevard Common Stock for the five trading days
preceding the applicable date.
3.3 ISSUANCE OF ENTERTAINMENT BOULEVARD SHARES TO FMITV. As partial
consideration for FMiTV's services hereunder, Entertainment Boulevard shall
issue Entertainment Boulevard Shares as set forth in this Section 3.3 and
Section 7.2(d)(i). It is the understanding and agreement of the parties that if
all of the milestones have been achieved as provided herein, FMiTV shall be
entitled to receive such number of Entertainment Boulevard Shares which upon
conversion (inclusive of the Entertainment Boulevard Shares issuable pursuant to
Section 7.2(d)(i)) shall entitle FMiTV to receive a percentage (the "Target
Percentage") of the outstanding shares of the common stock of Entertainment
Boulevard equal to 20% plus that percentage of the outstanding shares of
Entertainment Boulevard Common Stock represented by the Shortfall Shares (the
"Shortfall Percentage"). The Target Percentage shall be determined as follows:
(.20 + Shortfall Percentage) x A-(1,000,000 x B)
-----------------
A
where A equals the aggregate number of shares issuable pursuant to this Section
3.3 (assuming the milestones have been achieved) and Section 7.2(d)(i) and B is
the number of milestones not yet achieved. In the event that at any time during
the term of this Agreement, Entertainment Boulevard issues any shares of Common
Stock or shares of Preferred Stock (with or without consideration), it shall
promptly notify FMiTV and, as soon as practicable, but not later than within
fifteen (15) business days, issue to FMiTV such additional Entertainment
Boulevard Shares so that upon conversion thereof, FMiTV will retain the Target
Percentage as such Percentage may be adjusted as provided above. When the Target
Percentage is revised to reflect the achievement of one or more
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milestones or a Shortfall, Entertainment Boulevard shall issue such additional
shares as would be required to maintain the then Target Percentage.
The terms, rights and preferences of the Entertainment Boulevard Shares
shall be set forth in a certificate of designation to be filed with the
Secretary of State of Nevada (the "Certificate"). The Certificate shall be
subject to the reasonable approval of FMiTV but shall contain such conversion
rights and antidilution provisions consistent with the foregoing and, in
addition, a provision that without the approval of the holders of the
Entertainment Boulevard Shares, Entertainment Boulevard may not issue a series
of Preferred Stock containing terms which are more favorable than terms of the
Entertainment Boulevard Shares.
Each Entertainment Boulevard Share shall be convertible into not fewer than
1,000 shares of common stock (adjusted for stock splits, reverse stock splits,
stock dividends).
As provided for in Section 7.2(d)(ii), Entertainment Boulevard shall issue
to FMiTV one thousand (1,000) Entertainment Boulevard Shares, subject to the
representations and warranties contained herein. Further, Entertainment
Boulevard shall issue to FMiTV an additional one thousand (1,000) Entertainment
Boulevard Shares upon the achievement of each of the following:
a. the re-negotiation of one or more Material Contract(s) set forth
on Exhibit 3.3; provided, however, that no more than 1,000 Entertainment
Boulevard Shares shall be issued under this subparagraph a.;
b. the receipt of cumulative Gross Revenues of at least $800,000
during the Term;
c. the receipt of cumulative Gross Revenues of at least $2,200,000
during the Term.
d. NET REVENUE. After retaining twenty percent (20%) of Net Revenues
generated during the quarter as a reserve ("Reserve") for future Operating
Expenses and paying to FMiTV an amount equal to the dollar amount, if any, by
which the FMiTV Advance exceeds $400,000 to the extent not previously recouped,
the balance of the Net Revenues for such quarter, if any, shall be distributed
within thirty (30) days from the end of each calendar quarter in which such Net
revenues are generated, one-half to FMiTV (as its management fee) and one-half
to Entertainment Boulevard.
e. BARTER. To the extent FMiTV receives or provides any goods and/or
services on a barter basis as compensation, the value of such goods and/or
services shall be considered Gross Revenue or Operating Expense, respectively,
which shall be allocated to Entertainment Boulevard as agreed by the parties.
f. POST-TERMINATION RECEIPT OF GROSS REVENUE. To the extent any Net
Revenues pursuant to Section 3.4(b) above are paid subsequent to the termination
or expiration of this Agreement with respect to operation of the Entertainment
Boulevard
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Channel for periods prior to termination, FMiTV shall pay such Net Revenues less
FMiTV's 50% management fee to Entertainment Boulevard within fifteen (15)
business days after FMiTV's receipt of Gross Revenues which caused such Net
Revenues to become payable. FMiTV shall maintain the Bank Account for a
reasonable period of time subsequent to the termination or expiration of this
Agreement in order to comply with this Section 3.4(d).
g. STATEMENTS. All payments of Net Revenues hereunder shall be
accompanied by a statement reflecting the sources of Gross Revenues and
deductions for Operating Expenses and the Reserve. Within fifteen (15) days
after the end of each month, FMiTV shall provide Entertainment Boulevard with a
report of Gross Revenues generated during such month.
ARTICLE IV
OBLIGATIONS OF ENTERTAINMENT BOULEVARD
4.1 DELIVERY OF CONTENT. Entertainment Boulevard will deliver all Content
to FMiTV pursuant to Section 7.2(a) below.
4.2 EMPLOYEES. FMiTV may hire such former employees of Entertainment
Boulevard as it shall choose on such terms as it and the employee shall
determine. Such employees shall be referred to herein as "Transferred
Employees." Entertainment Boulevard shall have terminated the employment of all
the Transferred Employees on or before the Closing and shall have paid, at the
time of such termination, all salaries, benefits, and all other amounts accruing
or owing through and as of the Closing to such employees. Entertainment
Boulevard agrees that FMiTV shall have no responsibility to provide continuation
of health coverage, commonly known as COBRA, to any Terminated Employee who is
eligible for COBRA on or after the Closing.
4.3 CONSENTS. Entertainment Boulevard will use its best efforts to obtain
any necessary consents required by the transactions contemplated herein under
all Material Contracts.
4.4 ARTWORK. Entertainment Boulevard will deliver to FMiTV all
Entertainment Boulevard artwork in its possession relating to the Entertainment
Boulevard Channel (the "Artwork") pursuant to Section 7.2(b).
4.5 HARDWARE. Entertainment Boulevard will deliver that equipment related
to the operation of the Entertainment Boulevard Site (the "Hardware") pursuant
to Section 7.2(c).
4.6 REQUIRED APPROVALS. To the extent that the exercise of any rights of
FMiTV herein require the approval of Entertainment Boulevard pursuant to notice
given by FMiTV, the failure of Entertainment Boulevard to respond within ten
(10) days after receipt of such notice shall be deemed an approval with respect
to the exercise of the particular right by FMiTV.
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ARTICLE V
LICENSES
5.1 ENTERTAINMENT BOULEVARD LIMITED LICENSE.
a. SCOPE. During the Term (as defined herein), FMiTV shall be an
exclusive distributor for delivery of Entertainment Boulevard Content.
x. XXXXX. Subject to the terms and conditions of this Agreement,
including, but not limited to, the provisions of Article XI hereof,
Entertainment Boulevard hereby grants to FMiTV during the Term hereof, an
exclusive, non-transferable, limited license to use, reproduce, modify and
display the Entertainment Boulevard trademarks and logos provided by
Entertainment Boulevard to FMiTV hereunder (the "Entertainment Boulevard
Trademarks") and the Entertainment Boulevard Content in connection with the use
and display of the Entertainment Boulevard Content on the Entertainment
Boulevard Channel or any other Channel, the delivery of messages featuring
Entertainment Boulevard Content to subscribers and the promotion of the
Entertainment Boulevard Channel. FMiTV shall have the right, upon notice to and
approval by Entertainment Boulevard, which approval shall not to be unreasonably
withheld or delayed, to change the name and logo attributable to the
Entertainment Boulevard Channel and such revised names and logos shall be the
property of Entertainment Boulevard.
ARTICLE VI
TERM; TERMINATION; RENEWAL
6.1 TERM AND RENEWAL. The term of this Agreement shall commence on the
date hereof and shall continue for a period of two (2) years unless earlier
terminated as provided in clauses (a), (b) or (c) below (the "Initial Term").
FMiTV shall have the option upon written notice to Entertainment Boulevard at
least forty-five (45) days prior to the end of the Initial Term to renew this
Agreement for an additional one year term if there have been Gross Revenues of
at least $5,000,000 for the second year of the Term (the Initial Term and any
renewal term are referred to herein as the "Term").
a. FIRST YEAR GROSS REVENUES. Either party may terminate this
Agreement upon delivery of written notice to the other party within thirty (30)
business days after the end of the first year of the Initial Term in the event
that annual Gross Revenues for such year are less than $2,500,000.
b. MATERIAL BREACH. Either party may terminate this Agreement upon
delivery of written notice of termination to the other party in the event such
other party materially breaches any representation, covenant or agreement made
by it hereunder or otherwise fails to perform any of its material obligations
hereunder, provided that such breach or failure has not been cured within thirty
(30) days after delivery of written notice of such breach.
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c. BANKRUPTCY. In the event that either party hereto shall make an
assignment for the benefit of its creditors, or shall file a petition under any
chapter of the Federal Bankruptcy Code or any similar law, now or hereafter
existing, or shall in any involuntary bankruptcy case commenced against it file
an answer admitting insolvency or inability to pay its debts as they become due,
or shall fail to obtain a dismissal of such case within thirty (30) calendar
days after its commencement or convert the case from one chapter of the Federal
Bankruptcy Code to another chapter, or be the subject of an order for relief in
such bankruptcy case, or be adjudged a bankrupt or insolvent, or shall have a
custodian, trustee, or receiver appointed for, or have any court take
jurisdiction of, its properties, or any part thereof, in any voluntary or
involuntary proceeding, including, but not limited to, those for the purpose of
reorganization, arrangement, dissolution, or liquidation, and such custodian,
trustee, or receiver shall not be discharged, or such jurisdiction shall not be
relinquished, vacated, or stayed within thirty (30) days after the appointment,
then the other party hereto may, by giving written notice thereof to such party,
terminate this Agreement as of a date specified in such notice of termination.
6.2 RETURN OF PROPERTY. Except as otherwise limited or restricted by the
terms and provisions of existing contractual obligations, upon the effective
date of termination or expiration of this Agreement, (i) FMiTV shall promptly
return all Entertainment Boulevard Trademarks, Intellectual Property Rights,
Entertainment Boulevard Content, Artwork (including any new name and logo for
the Entertainment Boulevard Channel), and Hardware (in the same condition as
delivered, reasonable wear and tear excepted, and as the configuration thereof
may be modified as needed for operation of the Channel) delivered to FMiTV by
Entertainment Boulevard and FMiTV shall have no rights in and to the Original
Content and Intellectual Property Rights and shall cease to use and return to
Entertainment Boulevard any such Original Content and Intellectual Property
Rights in its possession or under its control; (ii) FMiTV shall immediately
cease to use any of Entertainment Boulevard's Trademarks and Content and shall
immediately remove all Entertainment Boulevard Content and the Entertainment
Boulevard Channel from the FMiTV Network; (iii) as soon as practicable, to the
extent not previously recouped, FMiTV shall distribute to itself the FMiTV
Advance and to Entertainment Boulevard the Entertainment Boulevard Advance and a
fair allocation to the parties of equipment purchased for the Entertainment
Boulevard Channel and any amounts remaining after reserving for anticipated
obligations and expenses; (iv) if, during the term of this Agreement and out of
Operating Expenses, FMiTV develops any new site, Content, and/or Channel using
Entertainment Boulevard Content or Intellectual Property Rights ("New Content
and Intellectual Property Rights") that New Content and Intellectual Property
Rights shall be owned by FMiTV and Entertainment Boulevard shall have no rights
in and to the New Content and Intellectual Property Rights and shall cease to
use and return to FMiTV any such New Content and Intellectual Property Rights in
its possession or under its control; and (v) the rights and obligations of each
party hereunder shall terminate; provided, however, that notwithstanding the
foregoing, the rights and obligations of the parties hereto under Article XI
hereof, and FMiTV's obligations to pay Entertainment Boulevard pursuant this
Section 6.2 hereof shall survive such expiration and termination.
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ARTICLE VII
CLOSING
7.1 TIME AND PLACE. The Closing shall take place at the offices of Loeb &
Loeb LLP, 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, at 10:00 a.m.
on October 30, 2000 ("Closing") or such other place or date as the parties may
agree in writing.
7.2 CLOSING TRANSACTIONS. Within ten (10) days of the Closing, the
following shall occur:
a. DELIVERY OF CONTENT. Entertainment Boulevard will deliver all
Content to FMiTV to the extent FMiTV reasonably deems necessary for FMiTV to
perform its services as contemplated hereunder or otherwise use its best efforts
to make available such Content.
b. ARTWORK. Entertainment Boulevard will deliver the Entertainment
Boulevard Artwork, which shall include a logo(s) for use by FMiTV in connection
with the delivery of Entertainment Boulevard Content on certain designated pages
of FMiTV internet sites or the delivery of messages featuring Entertainment
Boulevard Content to subscribers as provided for herein.
c. HARDWARE. Entertainment Boulevard will deliver to the FMiTV
offices the Hardware.
d. ENTERTAINMENT BOULEVARD PREFERRED STOCK.
(i) CONVERSION OF EXISTING DEBT. FMiTV will convert the existing
debt of $407,000 owed by Entertainment Boulevard to FMiTV into the number of
shares of Entertainment Boulevard Shares equal to 407,000 divided by the lesser
of $0.13 or the five day average of the closing price of Entertainment Boulevard
common stock at the Closing, and shall deliver a stock certificate therefor.
(ii) Entertainment Boulevard will issue one thousand (1,000)
Entertainment Boulevard Shares to FMiTV containing terms and provisions approved
by FMiTV, and shall deliver stock certificates therefor, in accordance with
Section 3.3 hereof.
e. FMITV COMMON STOCK. The parties acknowledge that FMiTV is
currently conducting a private placement of shares of common stock at a price of
$5.00 per share. For a period of eighteen (18) months Entertainment Boulevard
shall have the option (the "Option") to purchase up to 400,000 shares of FMiTV
common stock at the private placement price. In the event that Entertainment
Boulevard elects to exercise the Option, Entertainment Boulevard shall execute
and deliver to FMiTV during such period a subscription agreement in the form
used in the private placement; provided, however, that Entertainment Boulevard
shall receive the same registration rights as other investors in the private
placement. In the event that the shares subject to the Option are changed into
or exchanged for a different number or kind of shares of FMiTV or other
securities
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of FMiTV by reason of recapitalization, reclassification, stock split, stock
dividend or combination of shares, an appropriate and equitable adjustment in
the number and kind of shares subject to the Option shall be made so that
Entertainment Boulevard's proportionate interest shall be maintained as before
the occurrence of any such event.
f. POWER OF ATTORNEY. Entertainment Boulevard shall deliver to FMiTV
one or more powers of attorney appointing FMiTV as Entertainment Boulevard's
agent, in a form as FMiTV and its counsel may reasonably request.
g. DELIVERY OF ADDITIONAL DOCUMENTS. Entertainment Boulevard shall
deliver to FMiTV any and all security agreements, financing statements,
assignments, documents, instruments and conveyances reasonably requested by
FMiTV to effect the consummation of the transactions contemplated by this
Agreement, to evidence FMiTV's interest in and title to the Entertainment
Boulevard Shares, and to perfect FMiTV's security interest in and to the Bank
Account and the contents thereof.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF ENTERTAINMENT BOULEVARD
Entertainment Boulevard represents and warrants to FMiTV that:
8.1 ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER. Entertainment
Boulevard is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and is duly
licensed or qualified to transact business as a foreign corporation and is in
good standing in each jurisdiction in which the nature of the business
transacted by it or the character of the properties owned or leased by it
requires such licensing or qualification. Entertainment Boulevard has the
corporate power and authority to own and hold its properties and to carry on its
business as now conducted and as proposed to be conducted, to execute, deliver
the Entertainment Boulevard Shares.
8.2 AUTHORIZATION OF AGREEMENTS, ETC. The execution and delivery by
Entertainment Boulevard of this Agreement and the performance by Entertainment
Boulevard of its respective obligations hereunder, and the issuance, sale and
delivery of the Entertainment Boulevard Shares, as defined in Article I, have
been duly authorized by all requisite corporate action and will not violate any
provision of law, any order of any court or other agency of government, the
Certificates of Incorporation of Entertainment Boulevard or the By-laws of
Entertainment Boulevard, or any provision of any indenture, agreement or other
instrument to which Entertainment Boulevard or any of its respective properties
or assets are bound, or conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any such indenture,
agreement or other instrument, or result in the creation or imposition of any
lien, charge, restriction, claim or encumbrance of any nature whatsoever upon
any assets of Entertainment Boulevard.
8.3 CAPITALIZATION. Immediately prior to the Closing, the entire
authorized capital stock of Entertainment Boulevard will consist of 250,000,000
shares of common
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stock, par value .001 per share, of which no more than 25,000,000 shares will be
issued and outstanding and 1,000,000 shares of Preferred Stock, none of which
will be issued and outstanding. All of the issued and outstanding shares of
common stock of Entertainment Boulevard are duly authorized, validly issued,
fully paid and nonassessable. When issued in accordance with the terms of this
Agreement, the Entertainment Boulevard Shares shall be duly authorized, validly
issued, fully paid and nonassessable. Other than the approximately 15,000,000
stock options and/or warrants issued and outstanding, none of which is
exercisable for less than $0.38 per share, there are no outstanding warrants,
options or other rights to purchase or acquire from Entertainment Boulevard, or
exchangeable for or convertible into, any securities of Entertainment Boulevard.
The issuance, sale and delivery of the Entertainment Boulevard Shares are not
subject to any preemptive right of stockholders of Entertainment Boulevard, or
to any right of first refusal or other right in favor of any person.
8.4 LITIGATION. Except as set forth on Schedule 8.4, there is not any
action, suit, proceeding or investigation pending or, to the best knowledge of
Entertainment Boulevard, threatened against Entertainment Boulevard which
questions the right of Entertainment Boulevard to consummate the transactions
contemplated hereby or which would relate in any way to the Entertainment
Boulevard Content delivered pursuant to Section 4.1.
8.5 TITLE TO PROPERTIES. Other than any lien in respect to current taxes
not yet due and payable, Entertainment Boulevard has good and marketable title
to (i) all properties (other than leased properties) and assets necessary to its
business as presently conducted and as proposed to be conducted; and (ii) all of
its properties and assets, free and clear of all mortgages, security interests,
liens, restrictions or encumbrances.
8.6 CONTENT. Entertainment Boulevard is the owner of all right, title and
interest in and to or duly authorized and licensed to use each item of
Entertainment Boulevard Content, free and clear of all Liens, other than
Permitted Liens.
8.7 SECURITIES LAWS. The offer, issuance and sale to FMiTV of the
Entertainment Boulevard Shares by Entertainment Boulevard are, and will be as of
each such subsequent issuance as described herein, exempt from the registration
and prospectus delivery requirements of the Securities Act (as defined
hereafter) and will be, as of each such subsequent issuance as described herein,
exempt from registration and qualification under the registration, permit or
qualification requirements of all applicable state blue sky and securities laws.
8.8 HARDWARE. Entertainment Boulevard is the owner of all right, title and
interest in and to the Hardware, free and clear of all Liens, other than
Permitted Liens.
8.9 BANK ACCOUNT. Entertainment Boulevard does not have outstanding any
debt instruments which are secured by Entertainment Boulevard's cash, cash
equivalents or accounts, and at the Closing and thereafter FMiTV will have a
first priority security interest in and to the Bank Account and the content
thereof.
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8.10 VALIDITY. This Agreement has been duly executed and delivered by
Entertainment Boulevard and constitutes the legal, valid and binding obligation
of Entertainment Boulevard, enforceable in accordance with its terms.
8.11 MATERIAL CONTRACTS. Schedule 3.3 contains a true, accurate and
complete list of all of Entertainment Boulevard's Material Contracts and each of
the copies of the Material Contracts which Entertainment Boulevard provided
FMiTV are true and correct copies of the execution versions of such Material
Contracts.
8.12 NECESSARY CONSENTS. The use by FMiTV of the Entertainment Boulevard
Trademarks in the manner contemplated by this Agreement will not violate the
rights of any third party and will not give rise to any claim of such
violations, including without limitation, claims of trademark infringement.
8.13 INTELLECTUAL PROPERTY. Except as set forth on Schedule 8.13, as of the
date hereof:
a. Entertainment Boulevard is the owner of all right, title and
interest in and to each item of its Intellectual Property, free and clear of all
Liens, other than Permitted Liens;
b. all patents, copyrights and other state and federal registrations
and all applications therefor listed in the Entertainment Boulevard Disclosure
Schedule are valid and in full force and effect and are not subject to any
Taxes, maintenance fees or actions falling due within 90 days after the date
hereof;
c. there are no pending claims, actions, judicial or other adversary
proceedings, disputes or disagreements involving Entertainment Boulevard
concerning any item of its Intellectual Property, and, to the Knowledge of
Entertainment Boulevard, no such action, proceeding, dispute or disagreement is
threatened;
d. Entertainment Boulevard has the right and authority to use each
item of its Intellectual Property in perpetuity in connection with the conduct
of its business; such use did not and will not conflict with, infringe upon, or
violate any patent or other proprietary right of any other person, and
Entertainment Boulevard has not infringed and is not now infringing any
proprietary right belonging to any other Person;
e. with respect to each trade secret comprising a part of the
Intellectual Property of Entertainment Boulevard, such trade secret is valid and
protectable, and such trade secret's documentation is current, accurate and
sufficient in detail and content to identify and explain it, and to allow its
full and proper use without reliance on the special knowledge or memory of
others;
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f. Entertainment Boulevard has taken all reasonable security
measures to protect the secrecy, confidentiality and value of its trade secrets;
and
g. all trade secrets of Entertainment Boulevard are presently valid
and protectable, and are not part of the public knowledge or literature, nor to
the Knowledge of Entertainment Boulevard have they been used, divulged or
appropriated for the benefit of any Person other than Entertainment Boulevard.
8.14 AGREEMENTS. As of the date hereof:
a. except with respect to any breach or default by Entertainment
Boulevard thereunder, each Material Contract is the valid and binding obligation
of the other contracting party enforceable in all material respects in
accordance with its terms against the other contracting party and is in full
force and effect; and all rights of Entertainment Boulevard thereunder are owned
free and clear of any Liens, other than Permitted Liens; and
b. Entertainment Boulevard is not a party to, nor bound by, any
Contract, or any provision of its Certificate of Incorporation or bylaws which
(i) restricts the conduct of its business anywhere in the world or (ii) contains
any unusual or burdensome provisions which could reasonably be expected to have
a Material Adverse Effect upon its condition (financial or otherwise), assets,
liabilities, business, operations or prospects.
8.15 FULL DISCLOSURE. All documents and other materials delivered to FMiTV
by or on behalf of Entertainment Boulevard in connection with this Agreement and
the transactions contemplated herein are accurate, complete and authentic.
Furthermore, the information furnished to FMiTV by or on behalf of Entertainment
Boulevard in connection with this Agreement and the transactions contemplated
herein does not contain any untrue statement of a material fact and does not
omit to state any material fact necessary to make the statements made, in the
context in which they are made, not false or misleading. No investigation by
FMiTV shall, however, diminish or obviate in any way, or affect FMiTV's right to
rely upon, any of the representations, warranties, covenants or agreements of
Entertainment Boulevard or FMiTV contained in this Agreement or in any other
Entertainment Boulevard Document.
8.16 SECURITIES FILINGS. None of the filings made by Entertainment
Boulevard under the Securities Act or the Exchange Act make any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements made, in light of the circumstances under which they were made,
not misleading.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF FMITV
FMiTV represents and warrants to Entertainment Boulevard that:
9.1 Organization; Authority; Due Authorization.
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a. FMiTV is an "accredited investor" within the meaning of Rule 501
under the Securities Act of 1933, as amended (the "Securities Act").
b. FMiTV has sufficient knowledge and experience in investing in
companies similar to Entertainment Boulevard in terms of Entertainment
Boulevard's stage of development so as to be able to evaluate the risks and
merits of FMiTV's investment in Entertainment Boulevard and is able financially
to bear the risks thereof.
c. FMiTV has had an opportunity to discuss Entertainment Boulevard's
business, management and financial affairs with Entertainment Boulevard's
management.
d. The Entertainment Boulevard Shares are being acquired by FMiTV
for its own account for the purpose of investment and not with a view to or for
sale in connection with any distribution thereof.
e. The consummation of the transactions contemplated in this
Agreement will not conflict with or result in a breach of or default under the
terms, conditions or provisions of any judgment, order, injunction or decree, or
of any contract or agreement, to which FMiTV is a party or by which FMiTV may be
bound.
f. FMiTV understands that (i) the Entertainment Boulevard Shares
have not been registered under the Securities Act by reason of its issuance in a
transaction exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) thereof or Rule 506 promulgated under the Securities
Act, (ii) the Entertainment Boulevard Shares must be held indefinitely unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from such registration, and (iii) the Entertainment Boulevard Shares will
bear a legend to such effect.
ARTICLE X
REGISTRATION RIGHTS
10.1 If, within three (3) years from the date hereof, Entertainment
Boulevard shall propose to file a registration statement (other than on Form S-8
or Form S-4) with respect to any shares of its common stock on a form suitable
for a secondary offering, it will give notice in writing to such effect to FMiTV
or its transferee or assignee ("Holder") at least ten (10) days prior to such
filing, and, at the written request of any such registered Holder made within
five (5) days after the receipt of such notice, will include therein at
Entertainment Boulevard's cost and expense such of the shares of Entertainment
Boulevard Common Stock issued or issuable upon conversion of the Entertainment
Boulevard Shares (the "Registrable Shares") as such Holder(s) shall request;
provided, however, that if the offering being registered by Entertainment
Boulevard is underwritten and if the representative of the underwriters
certifies in writing that the inclusion therein of such Registrable Shares would
materially and adversely affect the sale of the securities to be sold by
Entertainment Boulevard thereunder, then Entertainment Boulevard shall be
required to include in the offering only that number of securities, including
such Registrable Shares, which the underwriters determine in their
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reasonable discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among all selling stockholders
according to the total amount of securities entitled to be included therein
owned by each selling stockholder, but in no event shall the percentage of
Registrable Shares included in the offering be less than the percentage of
securities included in the offering by any other single selling stockholder).
10.2 Whenever Entertainment Boulevard undertakes to effect the registration
of any of the Registrable Shares, Entertainment Boulevard shall, as
expeditiously as reasonably possible:
10.3 Prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement covering such Registrable Shares and use
its best efforts to cause such registration statement to be declared effective
by the Commission as expeditiously as possible and to keep such registration
effective until the earlier of (A) the date when all Registrable Shares covered
by the registration statement have been sold or (B) two hundred seventy (270)
days from the effective date of the registration statement; provided, that
before filing a registration statement or prospectus or any amendment or
supplements thereto, Entertainment Boulevard will furnish to each Holder of
Registrable Shares covered by such registration statement and the underwriters,
if any, copies of all such documents proposed to be filed (excluding exhibits,
unless any such person shall specifically request exhibits), which documents
will be subject to the review of such Holders and underwriters, and
Entertainment Boulevard will not file such registration statement or any
amendment thereto or any amendment thereto or any prospectus or any supplement
thereto (including any documents incorporated by reference therein) with the
Commission if (A) the underwriters, if any, shall reasonably object to such
filing or (B) if information in such registration statement or prospectus
concerning a particular selling Holder has changed and such Holder or the
underwriters, if any, shall reasonably object.
10.4 Prepare and file with the Commission such amendments and
post-effective amendments to such registration statement as may be necessary to
keep such registration statement effective during the period referred to in
Section 10.3 and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement, and cause the prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed with the Commission
pursuant to Rule 424 under the Securities Act.
10.5 Furnish to the selling Holder(s) such numbers of copies of such
registration statement, each amendment thereto, the prospectus included in such
registration statement (including each preliminary prospectus), each supplement
thereto and such other documents as they may reasonably request in order to
facilitate the disposition of the Registrable Shares owned by them.
10.6 Use its best efforts to register and qualify under such other
securities laws of such jurisdictions as shall be reasonably requested by any
selling Holder and do any and all other acts and things which may be reasonably
necessary or advisable to enable
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such selling Holder to consummate the disposition of the Registrable Shares
owned by such Holder, in such jurisdictions; provided, however, that
Entertainment Boulevard shall not be required in connection therewith or as a
condition thereto to qualify to transact business or to file a general consent
to service of process in any such states or jurisdictions.
10.7 Promptly notify each selling Holder of the happening of any event as a
result of which the prospectus included in such registration statement contains
an untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading and, at the request of any such Holder,
Entertainment Boulevard will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Shares, such prospectus will not contain any untrue statement of a
material fact or omit to state any fact necessary to make the statements therein
not misleading.
10.8 Provide a transfer agent and registrar for all such Registrable Shares
not later than the effective date of such registration statement.
10.9 Enter into such customary agreements (including underwriting
agreements in customary form for a primary offering) and take all such other
actions as the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Shares (including, without
limitation, effecting a stock split or a combination of shares).
10.10 Make available for inspection by any selling Holder or any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
selling Holder or underwriter, all financial and other records, pertinent
corporate documents and properties of Entertainment Boulevard, and cause the
officers, directors, employees and independent accountants of Entertainment
Boulevard to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement.
10.11 Promptly notify the selling Holder(s) and the underwriters, if any,
of the following events and (if requested by any such person) confirm such
notification in writing: (A) the filing of the prospectus or any prospectus
supplement and the registration statement and any amendment or post-effective
amendment thereto and, with respect to the registration statement or any
post-effective amendment thereto, the declaration of the effectiveness of such
documents, (B) any requests by the Commission for amendments or supplements to
the registration statement or the prospectus or for additional information, (C)
the issuance or threat of issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the initiation of
any proceedings for that purpose and (D) the receipt by Entertainment Boulevard
of any notification with respect to the suspension of the qualification of the
Registrable Shares for sale in any jurisdiction or the initiation or threat of
initiation of any proceeding for such purposes.
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10.12 Make every reasonable effort to prevent the entry of any order
suspending the effectiveness of the registration statement and obtain at the
earliest possible moment the withdrawal of any such order, if entered.
10.13 Cooperate with the selling Holder(s) and the underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing the
Registrable Shares to be sold and not bearing any restrictive legends, and
enable such Registrable Shares to be in such lots and registered in such names
as the underwriters may request at least two (2) business days prior to any
delivery of the Registrable Shares to the underwriters.
10.14 Provide a CUSIP number for all the Registrable Shares not later than
the effective date of the registration statement.
10.15 Prior to the effectiveness of the registration statement and any
post-effective amendment thereto and at each closing of an underwritten
offering, (A) make such representations and warranties to the selling Holder(s)
and the underwriters, if any, with respect to the Registrable Shares and the
registration statement as are customarily made by issues in primary underwritten
offerings; (B) use its best efforts to obtain "cold comfort" letters and updates
thereof from Entertainment Boulevard's independent certified public accountants
addressed to the selling Holders and the underwriters, if any, such letters to
be in customary form and covering matters of the type customarily covered in
"cold comfort" letters by underwriters in connection with primary underwritten
offerings; (C) deliver such documents and certificates as may be reasonably
requested (1) by the holders of a majority of the Registrable Shares being sold,
and (2) by the underwriters, if any, to evidence compliance with clause (A)
above and with any customary conditions contained in the underwriting agreement
or other agreement entered into by Entertainment Boulevard; and (D) obtain
opinions of counsel to Entertainment Boulevard and updates thereof (which
counsel and which opinions shall be reasonably satisfactory to the underwriters,
if any, covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
the selling Holders and underwriters or their counsel. Such counsel shall also
state that no facts have come to the attention of such counsel which cause them
to believe that such registration statement, the prospectus contained therein,
or any amendment or supplement thereto, as of their respective effective or
issue dates, contains any untrue statement of any material fact or omits to
state any material fact necessary to make the statements therein not misleading
(except that no statement need be made with respect to any financial statements,
notes thereto or other financial data or other expertized material contained
therein). If for any reason Entertainment Boulevard's counsel is unable to give
such opinion, Entertainment Boulevard shall so notify the Holders of the
Registrable Shares and shall use its best efforts to remove expeditiously all
impediments to the rendering of such opinion.
10.16 Otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make generally available to its security
Holders earnings statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than forty-five (45) days after the end of any
twelve-month period (or ninety (90)
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days, if such period is a fiscal year) (A) commencing at the end of any fiscal
quarter in which the Registrable Shares are sold to underwriters in a firm or
best efforts underwritten offering, or (B) if not sold to underwriters by such
an offering; beginning with the first month of the first fiscal quarter of
Entertainment Boulevard commencing after the effective date of the registration
statement, which statements shall cover such twelve-month periods.
10.17 After the date hereof, Entertainment Boulevard shall not grant to any
holder of securities of Entertainment Boulevard any registration rights which
would otherwise have a priority greater than those granted to holders pursuant
to this Agreement without first revising the registration rights granted to
holders pursuant to this Agreement to provide such holder with equal priority.
10.18 Entertainment Boulevard's obligations under Section 10.1 above with
respect to each holder of Registrable Shares are expressly conditioned upon such
holders furnishing to Entertainment Boulevard in writing such information
concerning such holder and the terms of such holder's proposed offering as
Entertainment Boulevard shall reasonably request for inclusion in the
registration statement and entering into such customary underwriting agreements
and lock-up agreements in customary form in the event of underwritten offerings.
If any registration statement including any of the Registrable Shares is filed,
then Entertainment Boulevard shall indemnify each holder thereof (and each
underwriter for such holder and each person, if any, who controls such
underwriter within the meaning of the Securities Act) from any loss, claim,
damage or liability arising out of, based upon or in any way relating to any
untrue statement of a material fact contained in such registration statement or
any omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except for any such
statement or omission based on information furnished in writing by such holder
of the Registrable Shares expressly for use in connection with such registration
statement; and such holder shall indemnify: Entertainment Boulevard (and each of
its officers and directors who has signed such registration statement, each
director, each person, if any, who controls Entertainment Boulevard within the
meaning of the Securities Act, each underwriter for Entertainment Boulevard and
each person, if any, who controls such underwriter within the meaning of the
Securities Act) and each other such holder against any loss, claim, damage or
liability arising from any such statement or omission which was made in reliance
upon information furnished in writing to Entertainment Boulevard by such holder
of the Registrable Shares expressly for inclusion in such registration
statement.
ARTICLE XI
ADDITIONAL RIGHTS OF FMITV
11.1 Until the later of (i) the termination of this Agreement, or (ii) the
date on which FMiTV owns less than ten percent (10%) (on an as-converted basis)
of the common stock of Entertainment Boulevard, FMiTV shall have the right to
designate an observer to the Board of Directors of Entertainment Boulevard, and
Entertainment Boulevard shall have the obligation to appoint such designee as an
observer to the Board of Directors.
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11.2 In the event Entertainment Boulevard receives a bona fide third-party
offer for the sale of the Entertainment Boulevard Channel during the Term,
Entertainment Boulevard shall deliver to FMiTV a written notice (the
"Disposition Notice") stating the price and basic terms and conditions of the
offer, including the identity of the third-party offeror. The Disposition Notice
shall certify that Entertainment Boulevard has received a firm offer from the
third party offeror and in good faith believes a binding agreement for the
transfer is obtainable on the terms set forth in the Disposition Notice. The
Disposition Notice shall also include a copy of any written proposal, term sheet
or letter of intent or other agreement relating to the proposed transfer. Within
fifteen (15) days of the Disposition Notice, however, FMiTV shall have the first
right, but not the obligation, to purchase the Entertainment Boulevard Channel
at the price, and on the basic terms and conditions stated in the Disposition
Notice. If FMiTV, within such fifteen (15) day period, elects to exercise its
option to purchase the Entertainment Boulevard Channel, it shall give written
notice of such election to Entertainment Boulevard. Should FMiTV fail to
purchase the Entertainment Boulevard Channel within said fifteen (15) day
period, Entertainment Boulevard shall be permitted to sell the Entertainment
Boulevard Channel to the buyer specified in the Disposition Notice subject to
FMiTV's request to participate in such sale; provided, however, that such sale
shall not be at a price, or any other basic terms and conditions, less favorable
to Entertainment Boulevard than as specified in the Disposition Notice.
ARTICLE XII
ASSIGNMENT
Neither party may assign this Agreement, or any of its rights hereunder, or
delegate any of its duties under this Agreement without the prior written
consent of the other party which consent shall not be unreasonably withheld or
delayed; provided, however, that FMiTV may assign its rights and delegate its
duties to any of its affiliates.
ARTICLE XIII
INTELLECTUAL PROPERTY OWNERSHIP
Each party hereby covenants and agrees that the Intellectual Property
Rights of the other party are and shall remain the sole and exclusive property
of that party, and that neither party shall hold itself out as having any
ownership rights with respect thereto or, except as specifically granted
hereunder, any other rights therein. In addition, except as expressly permitted
hereunder, each party hereby covenants and agrees that it will make no use of
the Intellectual Property Rights of the other party. Any and all goodwill
associated with any such Intellectual Property Rights shall inure directly and
exclusively to the benefit of the owner thereof.
ARTICLE XIV
INDEMNIFICATION
14.1 INDEMNIFICATION BY ENTERTAINMENT BOULEVARD. Entertainment Boulevard
will indemnify and hold FMiTV and its directors, officers and shareholders,
harmless against any and all claims, actions, demands, liabilities, losses,
damages, judgments,
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settlements, reasonable costs and expenses (including reasonable attorneys'
fees) (any or all of the foregoing hereinafter referred to as "Losses") insofar
as such Losses (or actions in respect thereof) arise out of or are based on a
claim from a third party relating to or arising out of (i) any breach by
Entertainment Boulevard of any covenant or any representation or warranty made
in this Agreement, (ii) FMiTV's use of Entertainment Boulevard trademarks,
Content as delivered by Entertainment Boulevard and any third party intellectual
property rights licensed to Entertainment Boulevard, including any infringement
of any third party's intellectual property rights with respect thereto, (iii)
any claims or disputes from Employees of Entertainment Boulevard who are not
Transferred Employees, or (iv) any claims arising from the operation of the
Entertainment Boulevard business brought by any third party, including any
shareholder of Entertainment Boulevard arising from any matter related to
Entertainment Boulevard occurring prior to or during the term of this Agreement
except for claims exclusively based upon the fulfillment of the obligations of
FMiTV pursuant to this Agreement. Any payment hereunder shall be subject to
setoff against any amounts owed by FMiTV under Article II.
14.2 INDEMNIFICATION BY FMITV. FMiTV will indemnify and hold Entertainment
Boulevard and its directors, officers and shareholders, harmless against any and
all Losses insofar as such Losses (or actions in respect thereof) arise out of
or are based on a claim from a third party relating to or arising out of (i) any
breach by FMiTV of any covenant or any representation or warranty made in this
Agreement, or (ii) any willful misconduct or gross negligence by FMiTV in
connection with its operation of the Entertainment Boulevard Channel.
ARTICLE XV
DISCLAIMERS
FMiTV makes no representation that the operation of its Site will be
uninterrupted or error free, and such party will not be liable for the
consequences of any interruptions or errors.
ARTICLE XVI
MISCELLANEOUS
16.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
the conflict of law principles thereof.
16.2 CHOICE OF VENUE. The parties hereto (i) agree that any legal suit,
action or proceeding arising out of or relating to this Agreement shall be
instituted in a state or federal court of competent jurisdiction in the County
of Los Angeles, State of California, (ii) waive any objection which they may
have now or hereafter to the laying of venue of (a) any such suit, action or
proceeding in a court of competent jurisdiction in the County of Los Angeles,
State of California or (b) in the case of an arbitration, the arbitration in
said county, and hereby consent to the jurisdiction (both in personal and
subject matter) of said court and /or such arbitration panel, and (iii)
irrevocably submit to the exclusive
22
jurisdiction of (x) the United States District of California or of any court of
the State of California located in the county of Los Angeles, in any suit,
action or proceeding or (y) in the case of an arbitration, the arbitration in
said county.
16.3 ARBITRATION. The exclusive method for resolving any disputes,
controversies or claims of any nature, including those arising out of or
relating to this Agreement, or the making, validity, interpretation, performance
or breach of this Agreement, shall be arbitration in Los Angeles, California,
under the commercial arbitration rules of the American Arbitration Association.
The single arbitrator shall have the power to award any and all remedies and
relief whatsoever that is deemed appropriate under the circumstances, including,
without limitation, money damages and equitable relief. The award shall be
final, binding and enforceable, and may be enforced by any court of competent
jurisdiction. The procedure whereby the evidence (oral and/or written) relating
to the matter is presented in the arbitration shall be as agreed to by the
parties, and in the absence of such agreement, shall be as determined by the
arbitrator; provided, that each party shall have the right to discovery, to call
witnesses and to cross-examine (either through legal counsel, expert witnesses
or both). The decision of the arbitrator shall be rendered within thirty (30)
days following the conclusion of the arbitration proceeding, but in the event
that the arbitrator does not render an award within such period the arbitrator
shall nonetheless retain jurisdiction of the matter for the purpose of making
and award as soon as reasonably possible. Such arbitration proceedings shall be
the exclusive means to resolve any disputes, controversies or claims between the
parties; provided, however, that either party shall have the right to seek
temporary and/or preliminary injunctive relief in any court of competent
jurisdiction to enjoin violations of this Agreement pending final resolution of
the controversy in arbitration. Pending receipt of the arbitrator's decision,
this Agreement shall remain in full force and effect and the parties hereto
shall continue to perform their respective obligations hereunder.
16.4 ATTORNEYS' FEES. In any action or proceeding in connection herewith
(at law or at equity), the court in such action shall award a reasonable sum as
attorneys' and accounting fees and costs to the prevailing party.
16.5 FURTHER ASSURANCES. Each party shall execute and deliver to any other
party such other agreements, instruments and documents, and shall take such
other acts or actions, as reasonably may be requested by such other party, in
order to effectuate fully the transactions contemplated by this Agreement,
promptly upon request therefor.
16.6 PARTIAL INVALIDITY. In the event that any portion of this Agreement
shall be declared invalid by order, decree or judgment of a court, this
Agreement shall be construed as if such portion had not been inserted herein,
except where such construction would result in an undue hardship upon a party
hereto or constitute a substantial diversion from the general intent and purpose
of the parties as reflected in this Agreement.
16.7 INDEPENDENT CONTRACTOR. In performing its obligations hereunder, FMiTV
shall be acting as an independent contractor and not as an employee or agent of
Entertainment Boulevard. Nothing contained herein shall constitute a partnership
or joint venture between the parties hereto.
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16.8 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes any
and all prior agreement, written and oral, with respect thereto. No change,
amendment or modification of any provision of this Agreement shall be valid
unless set forth in a written instrument signed by both parties.
16.9 NOTICES. Any and all notices and other communications to either party
hereunder shall be in writing and deemed delivered (i) upon receipt if by hand,
overnight courier or telecopy (provided that in the event of a telecopy,
concurrently therewith a copy is mailed in accordance with clause (ii) hereof)
and (ii) three days after mailing by first class, certified mail, postage
prepaid, return receipt requested (1) if to Entertainment Boulevard to Xxxxxx
Xxxxxx, c/o Xxxxxxxxxx, 0000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxxxxxxxx
00000, telecopier No.: (000) 000-0000, with a copy to Richman, Mann, Chizever,
Xxxxxxxx & Xxxxxx, 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx
00000, Attention: Xxxxxx X. Xxxxxxxx, Esq., telecopier No.: (000) 000-0000, and
(2) if to FMiTV, 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxxxx Xxxxxxx, telecopy no (000) 000-0000, with a copy to Loeb &
Loeb LLP, 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx,
00000-0000, Attention: Xxxxx Xxxxxxxx, Esq., telecopier number: (000) 000-0000,
or to such other address for a party as shall be specified by like notice.
16.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and together which shall
constitute one and the same instrument.
16.11 SEVERABILITY. Each provision of this Agreement shall be considered
severable and if, for any reason, any provision hereof is determined to be
invalid and contrary to, or in conflict with, any existing or future law or
regulation by any court or agency having valid jurisdiction, such provision
shall be given the maximum permissible effect, and such invalidity or illegality
shall not impair the operation or affect the remaining provisions of this
Agreement; and the latter shall continue to be given full force and effect and
bind the parties hereto and such invalid provisions shall be deemed not to be a
part of this Agreement.
16.12 FORCE MAJEURE. Neither party shall be liable to fulfill its
obligations hereunder, or for delays in performance, due to causes beyond its
reasonable control, including, but not limited to, acts of God, acts or
omissions of civil or military authority, fires, strikes, floods, epidemics,
riots or acts of war.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
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ENTERTAINMENT BOULEVARD, INC.
a Nevada corporation
By:
------------------------------------
Name:
Title: President
FMiTV NETWORKS, INC.
a Delaware corporation
By:
------------------------------------
Name:
Title: President
25
