Issuer CIK | 0000841533 |
Issuer CCC | XXXXXXXX |
DOS File Number | |
Offering File Number | |
Is this a LIVE or TEST Filing? | ☒ LIVE ☐ TEST |
Would you like a Return Copy? | ☐ |
Notify via Filing Website only? | ☐ |
Since Last Filing? | ☐ |
Name | |
Phone | |
E-Mail Address |
Exact name of issuer as specified in the issuer's charter | SADDLE RANCH MEDIA, INC. |
Jurisdiction of Incorporation / Organization |
UTAH
|
Year of Incorporation | 1988 |
CIK | 0000841533 |
Primary Standard Industrial Classification Code | SERVICES-MISCELLANEOUS BUSINESS SERVICES |
I.R.S. Employer Identification Number | 87-0461653 |
Total number of full-time employees | 2 |
Total number of part-time employees | 0 |
Address 1 | 5020 Campus Drive |
Address 2 | |
City | Newport Beach |
State/Country |
CALIFORNIA
|
Mailing Zip/ Postal Code | 92660 |
Phone | 949-296-7004 |
Name | John E. Lux, Esq. |
Address 1 | |
Address 2 | |
City | |
State/Country | |
Mailing Zip/ Postal Code | |
Phone |
Industry Group (select one) | ☐ Banking ☐ Insurance ☒ Other |
Cash and Cash Equivalents |
$
1319.00 |
Investment Securities |
$
0.00 |
Total Investments |
$
|
Accounts and Notes Receivable |
$
0.00 |
Loans |
$
|
Property, Plant and Equipment (PP&E): |
$
0.00 |
Property and Equipment |
$
|
Total Assets |
$
4124828.00 |
Accounts Payable and Accrued Liabilities |
$
450309.00 |
Policy Liabilities and Accruals |
$
|
Deposits |
$
|
Long Term Debt |
$
1164969.00 |
Total Liabilities |
$
1845926.00 |
Total Stockholders' Equity |
$
2278902.00 |
Total Liabilities and Equity |
$
4124828.00 |
Total Revenues |
$
14274.00 |
Total Interest Income |
$
|
Costs and Expenses Applicable to Revenues |
$
-6374.00 |
Total Interest Expenses |
$
|
Depreciation and Amortization |
$
0.00 |
Net Income |
$
-321499.00 |
Earnings Per Share - Basic |
$
0.00 |
Earnings Per Share - Diluted |
$
0.00 |
Name of Auditor (if any) |
Name of Class (if any) Common Equity | Common Stock |
Common Equity Units Outstanding | 1948238976 |
Common Equity CUSIP (if any): | 786239103 |
Common Equity Units Name of Trading Center or Quotation Medium (if any) | OTCMarkets, Pink Open Market |
Preferred Equity Name of Class (if any) | Series B preferred stock |
Preferred Equity Units Outstanding | 1000000 |
Preferred Equity CUSIP (if any) | 0000000na |
Preferred Equity Name of Trading Center or Quotation Medium (if any) | na |
Debt Securities Name of Class (if any) | none |
Debt Securities Units Outstanding | 0 |
Debt Securities CUSIP (if any): | 0000000na |
Debt Securities Name of Trading Center or Quotation Medium (if any) | na |
Check this box to certify that all of the following statements are true for the issuer(s)
☒
Check this box to certify that, as of the time of this filing, each person described in Rule 262 of Regulation A is either not disqualified under that rule or is disqualified but has received a waiver of such disqualification.
☒
Check this box if "bad actor" disclosure under Rule 262(d) is provided in Part II of the offering statement.
☐
Check the appropriate box to indicate whether you are conducting a Tier 1 or Tier 2 offering | ☒ Tier1 ☐ Tier2 |
Check the appropriate box to indicate whether the financial statements have been audited | ☒ Unaudited ☐ Audited |
Types of Securities Offered in this Offering Statement (select all that apply) |
☒Equity (common or preferred stock) |
Does the issuer intend to offer the securities on a delayed or continuous basis pursuant to Rule 251(d)(3)? | ☒ Yes ☐ No |
Does the issuer intend this offering to last more than one year? | ☐ Yes ☒ No |
Does the issuer intend to price this offering after qualification pursuant to Rule 253(b)? | ☒ Yes ☐ No |
Will the issuer be conducting a best efforts offering? | ☐ Yes ☒ No |
Has the issuer used solicitation of interest communications in connection with the proposed offering? | ☐ Yes ☒ No |
Does the proposed offering involve the resale of securities by affiliates of the issuer? | ☐ Yes ☒ No |
Number of securities offered | 1000000000 |
Number of securities of that class outstanding | 1948238976 |
Price per security |
$
0.0025 |
The portion of the aggregate offering price attributable to securities being offered on behalf of the issuer |
$
2500000.00 |
The portion of the aggregate offering price attributable to securities being offered on behalf of selling securityholders |
$
0.00 |
The portion of the aggregate offering price attributable to all the securities of the issuer sold pursuant to a qualified offering statement within the 12 months before the qualification of this offering statement |
$
0.00 |
The estimated portion of aggregate sales attributable to securities that may be sold pursuant to any other qualified offering statement concurrently with securities being sold under this offering statement |
$
0.00 |
Total (the sum of the aggregate offering price and aggregate sales in the four preceding paragraphs) |
$
2500000.00 |
Underwriters - Name of Service Provider | Underwriters - Fees |
$
| |
Sales Commissions - Name of Service Provider | Sales Commissions - Fee |
$
| |
Finders' Fees - Name of Service Provider | Finders' Fees - Fees |
$
| |
Audit - Name of Service Provider | Audit - Fees |
$
| |
Legal - Name of Service Provider | John E. Lux, Esq. | Legal - Fees |
$
25000.00 |
Promoters - Name of Service Provider | Promoters - Fees |
$
| |
Blue Sky Compliance - Name of Service Provider | Various States | Blue Sky Compliance - Fees |
$
2500.00 |
CRD Number of any broker or dealer listed: | |
Estimated net proceeds to the issuer |
$
2500000.00 |
Clarification of responses (if necessary) |
Selected States and Jurisdictions |
COLORADO
NEW YORK
|
None | ☒ |
Same as the jurisdictions in which the issuer intends to offer the securities | ☐ |
Selected States and Jurisdictions |
None ☐
As to any unregistered securities issued by the issuer of any of its predecessors or affiliated issuers within one year before the filing of this Form 1-A, state:
(a)Name of such issuer | Saddle Ranch Media, Inc. |
(b)(1) Title of securities issued | Common Stock, $0.0001 par value |
(2) Total Amount of such securities issued | 403149000 |
(3) Amount of such securities sold by or for the account of any person who at the time was a director, officer, promoter or principal securityholder of the issuer of such securities, or was an underwriter of any securities of such issuer. | 0 |
(c)(1) Aggregate consideration for which the securities were issued and basis for computing the amount thereof. | 683,489 |
(2) Aggregate consideration for which the securities listed in (b)(3) of this item (if any) were issued and the basis for computing the amount thereof (if different from the basis described in (c)(1)). |
(e) Indicate the section of the Securities Act or Commission rule or regulation relied upon for exemption from the registration requirements of such Act and state briefly the facts relied upon for such exemption | Exempt from registration under Section 3(a)(10) of the Securities Act and Rules promulgated thereunder. |
PART II — INFORMATION REQUIRED IN OFFERING CIRCULAR
Preliminary Offering Circular dated July __, 2018
An Offering Statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission. Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the Offering Statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the Offering Statement in which such Final Offering Circular was filed may be obtained.
SADDLE RANCH MEDIA, INC.
$2,500,000
1,000,000,000 SHARES OF COMMON STOCK
$0.0025 PER SHARE
This is the public offering of securities of Saddle Ranch Media, Inc., a Utah corporation. We are offering 1,000,000,000 shares of our common stock, par value $0.0001 (“Common Stock”), at an offering price of $0.0025 per share (the “Offered Shares”) by the Company. This Offering will terminate on twelve months from the day the Offering is qualified or the date on which the maximum offering amount is sold (such earlier date, the “Termination Date”). The minimum purchase requirement per investor is 400,000 Offered Shares ($1,000); however, we can waive the minimum purchase requirement on a case-by-case basis in our sole discretion.
These securities are speculative securities. Investment in the Company’s stock involves significant risk. You should purchase these securities only if you can afford a complete loss of your investment. See the “Risk Factors” section on page 4 of this Offering Circular.
The Company intends to change its corporate name from Saddle Ranch Media, Inc. to Skyfidelity, Inc. The Company has not yet filed to make this name change.
No Escrow
The proceeds of this offering will not be placed into an escrow account. We will offer our Common Stock on a best efforts basis. As there is no minimum offering, upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds.
Subscriptions are irrevocable and the purchase price is non-refundable as expressly stated in this Offering Circular. All proceeds received by the Company from subscribers for this Offering will be available for use by the Company upon acceptance of subscriptions for the Securities by the Company.
The Company, by determination of the Board of Directors, in its sole discretion, may issue the Securities under this Offering for cash, promissory notes, services, and/or other consideration without notice to subscribers. The aggregate offering price is be based on the price at which the securities are offered for cash. Any portion of the aggregate offering price or aggregate sales attributable to cash received in a foreign currency will be translated into United States currency at a currency exchange rate in effect on, or at a reasonable time before, the date of the sale of the securities. If securities are not sold for cash, the aggregate offering price or aggregate sales will be based on the value of the consideration as established by bona fide sales of that consideration made within a reasonable time, or, in the absence of sales, on the fair value as determined by an accepted standard. Valuations of non-cash consideration will be reasonable at the time made.
Sale of these shares will commence within two calendar days of the qualification date and it will be a continuous Offering pursuant to Rule 251(d)(3)(i)(F).
This Offering will be conducted on a “best-efforts” basis, which means our Officers will use their commercially reasonable best efforts in an attempt to offer and sell the Shares. Our Officers will not receive any commission or any other remuneration for these sales. In offering the securities on our behalf, the Officers will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934, as amended.
This Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sales of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful, prior to registration or qualification under the laws of any such state.
Shares will be offered on a continuous basis until either (1) the maximum number of Shares or sold; (2) 90 days from the date of qualification by the Commission, (3) if Company in its sole discretion extends the offering beyond 90 days from the date of qualification by the Commission, or (4) the Company in its sole discretion withdraws this Offering.
Our Common Stock is traded in the OTCMarket Pink Open Market under the stock symbol “SRMX.”
Investing in our Common Stock involves a high degree of risk. See “Risk Factors“ beginning on page 4 for a discussion of certain risks that you should consider in connection with an investment in our Common Stock.
Per
|
Total
|
||
Public Offering Price (1)(2) |
$0.0025 |
$2,500,000 |
|
Underwriting Discounts and Commissions (3) |
$0.00 |
$0 |
|
Proceeds to Company |
$0.0025 |
$2,500,000 |
(1) We are offering shares on a continuous basis. See “Distribution – Continuous Offering.
(2) This is a “best efforts” offering. The proceeds of this offering will not be placed into an escrow account. We will offer our Common Stock on a best efforts basis primarily through an online platform. As there is no minimum offering, upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds. See “How to Subscribe.”
(3) We are offering these securities without an underwriter.
(4) Excludes estimated total offering expenses, including underwriting discount and commissions, will be approximately $250,000 assuming the maximum offering amount is sold.
Our Board of Directors used its business judgment in setting a value of $0.0025 per share to the Company as consideration for the stock to be issued under the Offering. The sales price per share bears no relationship to our book value or any other measure of our current value or worth.
THE U.S. SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.
The date of this Offering Circular is July __, 2018.
We are offering to sell, and seeking offers to buy, our securities only in jurisdictions where such offers and sales are permitted. You should rely only on the information contained in this Offering Circular. We have not authorized anyone to provide you with any information other than the information contained in this Offering Circular. The information contained in this Offering Circular is accurate only as of its date, regardless of the time of its delivery or of any sale or delivery of our securities. Neither the delivery of this Offering Circular nor any sale or delivery of our securities shall, under any circumstances, imply that there has been no change in our affairs since the date of this Offering Circular. This Offering Circular will be updated and made available for delivery to the extent required by the federal securities laws.
In this Offering Circular, unless the context indicates otherwise, references to “Saddle Ranch Media”, “we”, the “Company”, “our” and “us” refer to the activities of and the assets and liabilities of the business and operations of Saddle Ranch Media, Inc.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under “Summary”, “Risk Factors”, “Management's Discussion and Analysis of Financial Condition and Results of Operations”, “Our Business” and elsewhere in this Offering Circular constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “potential”, “should”, “will” and “would” or the negatives of these terms or other comparable terminology.
You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Offering Circular, including in “Risk Factors” and elsewhere, identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:
· | The speculative nature of the business we intend to develop; |
· | Our reliance on suppliers and customers; |
· | Our dependence upon external sources for the financing of our operations, particularly given that there are concerns about our ability to continue as a “going concern;” |
· | Our ability to effectively execute our business plan; |
· | Our ability to manage our expansion, growth and operating expenses; |
· | Our ability to finance our businesses; |
· | Our ability to promote our businesses; |
· | Our ability to compete and succeed in highly competitive and evolving businesses; |
· | Our ability to respond and adapt to changes in technology and customer behavior; and |
· | Our ability to protect our intellectual property and to develop, maintain and enhance strong brands. |
Although the forward-looking statements in this Offering Circular are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. We undertake no obligation, other than as maybe be required by law, to re-issue this Offering Circular or otherwise make public statements updating our forward-looking statements.
This summary highlights selected information contained elsewhere in this Offering Circular. This summary is not complete and does not contain all the information that you should consider before deciding whether to invest in our Common Stock. You should carefully read the entire Offering Circular, including the risks associated with an investment in the company discussed in the “Risk Factors” section of this Offering Circular, before making an investment decision. Some of the statements in this Offering Circular are forward-looking statements. See the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”
Company Information
The Company, sometimes referred to herein as “we,” “us,” “our,” and the “Company” and/or “Saddle Ranch Media” was incorporated in the State of Utah on October 7, 1988. Our fiscal year-end date is December 31.
Saddle Ranch Media, Inc. offices are located at 5020 Campus Drive Newport Beach, CA 92660. Our telephone number is 551-486-3980 and our Email address is Max.li@tricascadeinc.com.
1 |
We are focused in become a world-class global multi-division technology company with four operating divisions: (1) Cloud Managed Services (IoT), (2) Solar Power Solutions, (3) Satellite Broadband, and (4) WiFi Camera Security Surveillance (see www.skyfidelityinc.com and www.tricascade.com).
History
The Company was originally formed in the State of Utah on October 7, 1988, as Port City Corporation. In October 1990, the name of the Company was changed to Interline Resources Corporation (“Interline”) which operated in the oil and gas industry in east-central Wyoming and eastern Utah. On October 15, 2009, Interline filed a Form 15 terminating its registration as a 12(g) company and choosing to adopt an alternative-reporting standard for the filing of its subsequent (unaudited) financial reports.
On November 20, 2014, the Company changed its corporate name to Automated-X, Inc. when the company entered the video kiosk distribution business through QUICKflickUSA, Inc
On August 15, 2015, the Company entered into a Securities Exchange and Acquisition Agreement with Saddle Ranch Pictures, Inc. (“SRPI”) wherein the Company acquired SRPI in a cashless exchange of stock. Prior to closing the SRPI acquisition, the Company approved the transfer of 100% of its ownership in its wholly-owned subsidiary, QUICKflickUSA, Inc., to two of the Company’s major shareholders.
The name of the Company was changed with the state of Utah on September 9, 2015 from Automated-X, Inc. to Saddle Ranch Media, Inc. The Company’s trading symbol was also changed with FINRA from “AUTX” to “SRMX” effective October 6, 2015.
On February 28, 2017 Philip M. Cohen resigned as Chairman and CEO, and in consideration for the Spin-Out of both Saddle Ranch Pictures, Inc and certain digital programming assets representing the “African American Medical Network” to Mr. Cohen, he surrendered 40,000,000 common shares back to the Company’s Treasury. Also on February 28, 2017 Mr. Cohen sold his holding of 1,000,000 “super voting” Series B preferred shares in a private transaction to The Shamrock Investment Trust, Timothy P. Peabody, Esq., Trustee.
The Company closed on an acquisition of Skyfidelity, Inc. (together with its wholly-owned subsidiary Tricascade, Inc.) as of April 1, 2017 and issued 100,000,000 of its restricted common shares against the cashless exchange of 100,000,000 common shares of Skyfidelity, Inc. (being all of the issued and outstanding shares of Skyfidelity, Inc.). Following the acquisition of Skyfidelity, Inc. the Company recognized the need to restructure certain past due accounts payable previously incurred by TriCasade, Inc. relating to the development of TriCascade’s new i-Bright single outlet wi-fi IoT wall- plug platform product, under an Original Design Manufacturing (“ODM”) Agreement with a Taiwanese technology company dated as of April 12, 2016 for which the Company had assumed financial responsibility. The Company entered into Settlement Agreements with Northbridge Financial, Inc.(“NCI”) on July 18, 2017, October 3, 2017 and November 28, 2017 to settle the first three installments of $102,000, $175,000 and $100,000 respectively payable under the ODM (plus financing costs of $37,000) due to NCI arising from NCI’s purchase of this accounts payable debt.
The financing by NCI enabled development and production of the new TriCascade product to commence. The settlements by the Company with NCI were made via the issuance of unrestricted common stock to NCI at a 50% discount to market pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”). The fairness of the Settlement Agreements was approved by Orders granted by the Twelfth Judicial Circuit Court for Sarasota County, Florida on July 19, on October 4, 2017 and on November 29, 2017 respectively. Following this approval, the Company issued the following: (1) 78,985,000 unrestricted common shares issued to NCI over the period July 24, 2017 through and including September 20, 2017 in settlement of the initial tranche of $102,000 in past due accounts payable and financing costs of $12,000; (2) 173,164,000 unrestricted common shares issued to NCI over the period October 11, 2017 through and November 11, 2017 in settlement of the second tranche of $175,000 in past due accounts payable and financing costs of $15,000; and (3) 151,000,000 unrestricted common shares issued to NCI over the period December 4, 2017 through and including December 18, 2017 in partial settlement of $52,900 toward the third tranche of $100,000 in past due accounts payable and financing costs of $10,000.
On December 1, 2017 the following restricted common shares (totaling 92,062,375 common shares) were surrendered to the Company’s Treasury: (1) Timothy Peabody surrendered his entire holding of 62,500,000 common shares; (2) Max Chin Li, our President, surrendered his entire holding of 25,000,000 common shares; and (3) An unaffiliated shareholder surrendered its entire holding of 4,562,375 common shares.
On December 21, 2017 the Company increased its authorized share capital from 500,000,000 common shares to 2,500,000,000 common shares. (There was no change to the 3,000,000 authorized Series “B” preferred shares). Then on December 29, 2017 the Board of Directors approved an Amendment to the Company’s Articles of Incorporation whereby the par value of the Company’s common stock was reduced from $0.005 to $0.0001.
2 |
Section 15(g) of the Securities Exchange Act of 1934
Our shares are covered by section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser's written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as bid and offer quotes, a dealers spread and broker/dealer compensation; the broker/dealer compensation, the broker/dealers’ duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers’ rights and remedies in cases of fraud in penny stock transactions; and, the FINRA’s toll free telephone number and the central number of the North American Securities Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.
Dividends
The Company has not declared or paid a cash dividend to stockholders since it was organized and does not intend to pay dividends in the foreseeable future. The board of directors presently intends to retain any earnings to finance our operations and does not expect to authorize cash dividends in the foreseeable future. Any payment of cash dividends in the future will depend upon the Company's earnings, capital requirements and other factors.
Trading Market
Our Common Stock trades in the OTCMarket Pink Open Market Sheets under the symbol SRMX.
______
Issuer: | Saddle Ranch Media, Inc. | |
Securities offered: | A maximum of 1,000,000,000 shares of our common stock, par value $0.0001 (“Common Stock”) at an offering price of $0.0025 per share (the “Offered Shares”). (See “Distribution.”) | |
Number of shares of Common Stock outstanding before the offering | 1,948,238,976 issued and outstanding as of May 31, 2018 | |
Number of shares of Common Stock to be outstanding after the offering | 2,948,238,976 shares, if the maximum amount of Offered Shares are sold | |
Price per share: | $0.0025 | |
Maximum offering amount: | 1,000,000,000 shares at $0.0025 per share, or $2,500,000 (See “Distribution.”) | |
Trading Market: | Our Common Stock is trading on the OTC Markets Pink Open Market Sheets division under the symbol “SRMX.” | |
Use of proceeds: | If we sell all of the shares being offered, our net proceeds (after our estimated offering expenses) will be $250,000. We will use these net proceeds for working capital and other general corporate purposes. | |
Risk factors: |
Investing in our Common Stock involves a high degree of risk,
including:
Immediate and substantial dilution.
|
3 |
______
The following is only a brief summary of the risks involved in investing in our Company. Investment in our Securities involves risks. You should carefully consider the following risk factors in addition to other information contained in this Disclosure Document. The occurrence of any of the following risks might cause you to lose all or part of your investment. Some statements in this Document, including statements in the following risk factors, constitute “Forward-Looking Statements.”
The price of our common stock may continue to be volatile.
The trading price of our common stock has been and is likely to remain highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control or unrelated to our operating performance. In addition to the factors discussed in this “Risk Factors” section and elsewhere, these factors include: the operating performance of similar companies; the overall performance of the equity markets; the announcements by us or our competitors of acquisitions, business plans, or commercial relationships; threatened or actual litigation; changes in laws or regulations relating to the our business; any major change in our board of directors or management; publication of research reports or news stories about us, our competitors, or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; large volumes of sales of our shares of common stock by existing stockholders; and general political and economic conditions.
In addition, the stock market in general, and the market for developmental related companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies securities. This litigation, if instituted against us, could result in very substantial costs; divert our management’s attention and resources; and harm our business, operating results, and financial condition.
There are doubt about our ability to continue as a going concern.
The Company is a development stage enterprise and has not commenced planned principal operations. The Company had revenues of $14,274 for the year ended December 31, 2017 and $4,701 for the year ended December 31, 2016, and has incurred losses of $321,499 for the year ended December 31, 2017 and $367,469 for the year ended December 31, 2016. In addition, the Company incurred losses of $1,962,222 for the period since inception through December 31, 2017. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources, such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations, or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company’s existing stockholders.
The Company intends to overcome the circumstances that impact its ability to remain a going concern through a combination of the commencement of revenues, with interim cash flow deficiencies being addressed through additional equity and debt financing. The Company anticipates raising additional funds through public or private financing, strategic relationships or other arrangements in the near future to support its business operations; however, the Company may not have commitments from third parties for a sufficient amount of additional capital. The Company cannot be certain that any such financing will be available on acceptable terms, or at all, and its failure to raise capital when needed could limit its ability to continue its operations. The Company’s ability to obtain additional funding will determine its ability to continue as a going concern. Failure to secure additional financing in a timely manner and on favorable terms would have a material adverse effect on the Company’s financial performance, results of operations and stock price and require it to curtail or cease operations, sell off its assets, seek protection from its creditors through bankruptcy proceedings, or otherwise. Furthermore, additional equity financing may be dilutive to the holders of the Company’s common stock, and debt financing, if available, may involve restrictive covenants, and strategic relationships, if necessary to raise additional funds, and may require that the Company relinquish valuable rights. Please see Financial Statements – Note 1. Operations and Basis of Presentation – Going Concern for further information.
4 |
Risks Relating to Our Financial Condition
Our financials are not independently audited, which could result in errors and/or omissions in our financial statements if proper standards are not applied.
Although the Company is confident with its accounting firm, we are not required to have our financials audited by a certified Public Company Accounting Oversight Board (“PCAOB”). As such, our accountants do not have a third party reviewing the accounting. Our accountants may also not be up to date with all publications and releases put out by the PCAOB regarding accounting standards and treatments. This could mean that our unaudited financials may not properly reflect up to date standards and treatments resulting misstated financials statements.
Our management has a limited experience operating a public company and are subject to the risks commonly encountered by early-stage companies.
Although management of Saddle Ranch Media, Inc. has experience in operating small companies, current management has not had to manage expansion while being a public company. Many investors may treat us as an early-stage company. In addition, management has not overseen a company with large growth. Because we have a limited operating history, our operating prospects should be considered in light of the risks and uncertainties frequently encountered by early-stage companies in rapidly evolving markets. These risks include:
· | risks that we may not have sufficient capital to achieve our growth strategy; |
· | risks that we may not develop our product and service offerings in a manner that enables us to be profitable and meet our customers’ requirements; |
· | risks that our growth strategy may not be successful; and |
· | risks that fluctuations in our operating results will be significant relative to our revenues. |
These risks are described in more detail below. Our future growth will depend substantially on our ability to address these and the other risks described in this section. If we do not successfully address these risks, our business could be significantly harmed.
We have limited operational history in an emerging industry, making it difficult to accurately predict and forecast business operations.
As we have limited operations in our business and have yet to generate revenue, it is extremely difficult to make accurate predictions and forecasts on our finances. This is compounded by the fact that we operate in rapidly transforming industries. There is no guarantee that our products or services will remain attractive to potential and current users as these industries undergo rapid change, or that potential customers will utilize our services.
As a growing company, we have yet to achieve a profit and may not achieve a profit in the near future, if at all.
We have not yet produced a net profit and may not in the near future, if at all. While we expect our revenue to grow, we have not achieved profitability and cannot be certain that we will be able to sustain our current growth rate or realize sufficient revenue to achieve profitability. Further, many of our competitors in the IoT field have a significantly larger user base and revenue stream, but have yet to achieve profitability. Our ability to continue as a going concern may be dependent upon raising capital from financing transactions, increasing revenue throughout the year and keeping operating expenses below our revenue levels in order to achieve positive cash flows, none of which can be assured.
We will require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.
We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to improve our operating infrastructure or acquire complementary businesses and technologies. Accordingly, we will need to engage in continued equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of our common stock. Any debt financing we secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be impaired, and our business may be harmed.
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We are highly dependent on the services of our key executives, the loss of whom could materially harm our business and our strategic direction. If we lose key management or significant personnel, cannot recruit qualified employees, directors, officers, or other personnel or experience increases in our compensation costs, our business may materially suffer.
We are highly dependent on our management, specifically Max Chin Li and Alan, J. Bailey. We have employment agreements in place with these key employees. If we lose key employees, our business may suffer. Furthermore, our future success will also depend in part on the continued service of our management personnel and our ability to identify, hire, and retain additional key personnel. We do not carry “key-man” life insurance on the lives of any of our executives, employees or advisors. We experience intense competition for qualified personnel and may be unable to attract and retain the personnel necessary for the development of our business. Because of this competition, our compensation costs may increase significantly.
Our key employees have very limited experience in our business.
Our key employees, Max Chin Li and Alan, J. Bailey have very limited experience in our business and the Internet of Things (IoT). For this reason, they may have difficulty in establishing and running our businesses.
We may be unable to manage growth, which may impact our potential profitability.
Successful implementation of our business strategy requires us to manage our growth. Growth could place an increasing strain on our management and financial resources. To manage growth effectively, we will need to:
· | Establish definitive business strategies, goals and objectives; |
· | Maintain a system of management controls; and |
· | Attract and retain qualified personnel, as well as develop, train, and manage management-level and other employees. |
If we fail to manage our growth effectively, our business, financial condition, or operating results could be materially harmed, and our stock price may decline.
We operate in a highly competitive environment, and if we are unable to compete with our competitors, our business, financial condition, results of operations, cash flows and prospects could be materially adversely affected.
We operate in a highly competitive environment. Our competition includes all other companies that are in the business of the Internet of Things or other related technologies. A highly competitive environment could materially adversely affect our business, financial condition, results of operations, cash flows and prospects.
We may not be able to compete successfully with other established companies offering the same or similar services and, as a result, we may not achieve our projected revenue and user targets.
If we are unable to compete successfully with other businesses in our existing market, we may not achieve our projected revenue and/or customer targets. We compete with both start-up and established technology companies. Compared to our business, some of our competitors may have greater financial and other resources, have been in business longer, have greater name recognition and be better established in technological markets.
Our lack of adequate D&O insurance may also make it difficult for us to retain and attract talented and skilled directors and officers.
In the future we may be subject to additional litigation, including potential class action and stockholder derivative actions. Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant periods of time. To date, we have not obtained directors and officers liability (“D&O”) insurance. Without adequate D&O insurance, the amounts we would pay to indemnify our officers and directors should they be subject to legal action based on their service to the Company could have a material adverse effect on our financial condition, results of operations and liquidity. Furthermore, our lack of adequate D&O insurance may make it difficult for us to retain and attract talented and skilled directors and officers, which could adversely affect our business.
We expect to incur substantial expenses to meet our reporting obligations as a public company. In addition, failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting and could harm our ability to manage our expenses.
We estimate that it will cost approximately $50,000 annually to maintain the proper management and financial controls for our filings required as a public reporting company. In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to accurately report our financial performance on a timely basis, which could cause a decline in our stock price and adversely affect our ability to raise capital.
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Risks Relating to our Common Stock and Offering
The Common Stock is thinly traded, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.
The Common Stock has historically been sporadically traded on the OTC Pink Sheets, meaning that the number of persons interested in purchasing our shares at, or near ask prices at any given time, may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer, which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common shares will develop or be sustained, or that current trading levels will be sustained.
The market price for the common stock is particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, limited operating history, and lack of revenue, which could lead to wide fluctuations in our share price. The price at which you purchase our shares may not be indicative of the price that will prevail in the trading market. You may be unable to sell your common shares at or above your purchase price, which may result in substantial losses to you.
The market for our shares of common stock is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors. First, as noted above, our shares are sporadically traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our shares is sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative investment due to, among other matters, our limited operating history and lack of revenue or profit to date, and the uncertainty of future market acceptance for our potential products. As a consequence of this enhanced risk, more risk-averse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the securities of a seasoned issuer. The following factors may add to the volatility in the price of our shares: actual or anticipated variations in our quarterly or annual operating results; acceptance of our inventory of games; government regulations, announcements of significant acquisitions, strategic partnerships or joint ventures; our capital commitments and additions or departures of our key personnel. Many of these factors are beyond our control and may decrease the market price of our shares regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our shares will be at any time, including as to whether our shares will sustain their current market prices, or as to what effect the sale of shares or the availability of shares for sale at any time will have on the prevailing market price.
Shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The possible occurrence of these patterns or practices could increase the volatility of our share price.
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The market price of our common stock may be volatile and adversely affected by several factors.
The market price of our common stock could fluctuate significantly in response to various factors and events, including, but not limited to:
· | our ability to integrate operations, technology, products and services; |
· | our ability to execute our business plan; |
· | operating results below expectations; |
· | our issuance of additional securities, including debt or equity or a combination thereof; |
· | announcements of technological innovations or new products by us or our competitors; |
· | loss of any strategic relationship; |
· | industry developments, including, without limitation, changes in competition or practices; |
· | economic and other external factors; |
· | period-to-period fluctuations in our financial results; and |
· | whether an active trading market in our common stock develops and is maintained. |
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock. Issuers using the Alternative Reporting standard for filing financial reports with OTC Markets are often subject to large volatility unrelated to the fundamentals of the company.
Natural disasters and geo-political events could adversely affect our business.
Natural disasters, including hurricanes, cyclones, typhoons, tropical storms, floods, earthquakes and tsunamis, weather conditions, including winter storms, droughts and tornadoes, whether as a result of climate change or otherwise, and geo-political events, including civil unrest or terrorist attacks, that affect us, or other service providers, could adversely affect our business.
We do not expect to pay dividends in the future; any return on investment may be limited to the value of our common stock.
We do not currently anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. Our current intention is to apply net earnings, if any, in the foreseeable future to increasing our capital base and development and marketing efforts. There can be no assurance that the Company will ever have sufficient earnings to declare and pay dividends to the holders of our common stock, and in any event, a decision to declare and pay dividends is at the sole discretion of our board of directors. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if its stock price appreciates.
Our issuance of additional shares of Common Stock, or options or warrants to purchase those shares, would dilute your proportionate ownership and voting rights.
We are entitled under our articles of incorporation to issue up to 5,000,000,000 shares of common stock. We have issued and outstanding, as of May 31, 2018, 1,948,238,976 shares of common stock. In addition, we are entitled under our Articles of Incorporation to issue “blank check” preferred stock. Our board may generally issue shares of common stock, preferred stock, options, or warrants to purchase those shares, without further approval by our shareholders based upon such factors as our board of directors may deem relevant at that time. It is likely that we will be required to issue a large amount of additional securities to raise capital to further our development. It is also likely that we will issue a large amount of additional securities to directors, officers, employees and consultants as compensatory grants in connection with their services, both in the form of stand-alone grants or under our stock plans. We cannot give you any assurance that we will not issue additional shares of common stock, or options or warrants to purchase those shares, under circumstances we may deem appropriate at the time.
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The elimination of monetary liability against our directors, officers and employees under our Articles of Incorporation and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees.
Our Articles of Incorporation contains provisions that eliminate the liability of our directors for monetary damages to our company and shareholders. Our bylaws also require us to indemnify our officers and directors. We may also have contractual indemnification obligations under our agreements with our directors, officers and employees. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers and employees that we may be unable to recoup. These provisions and resulting costs may also discourage our company from bringing a lawsuit against directors, officers and employees for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors, officers and employees even though such actions, if successful, might otherwise benefit our company and shareholders.
We may become involved in securities class action litigation that could divert management’s attention and harm our business.
The stock market in general, and the shares of early stage companies in particular, have experienced extreme price and volume fluctuations. These fluctuations have often been unrelated or disproportionate to the operating performance of the companies involved. If these fluctuations occur in the future, the market price of our shares could fall regardless of our operating performance. In the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company. If the market price or volume of our shares suffers extreme fluctuations, then we may become involved in this type of litigation, which would be expensive and divert management’s attention and resources from managing our business.
As a public company, we may also from time to time make forward-looking statements about future operating results and provide some financial guidance to the public markets. Our management has limited experience as a management team in a public company and as a result, projections may not be made timely or set at expected performance levels and could materially affect the price of our shares. Any failure to meet published forward-looking statements that adversely affect the stock price could result in losses to investors, stockholder lawsuits or other litigation, sanctions or restrictions issued by the SEC.
Our common stock is currently deemed a “penny stock,” which makes it more difficult for our investors to sell their shares.
The SEC has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a person’s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination, and that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock if and when such shares are eligible for sale and may cause a decline in the market value of its stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading, and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities, and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
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As an issuer of a “penny stock,” the protection provided by the federal securities laws relating to forward-looking statements does not apply to us.
Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading. Such an action could hurt our financial condition.
As an issuer not required to make reports to the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, holders of restricted shares may not be able to sell shares into the open market as Rule 144 exemptions may not apply.
Under Rule 144 of the Securities Act of 1933, holders of restricted shares may avail themselves of certain exemptions from registration if the holder and the issuer meet certain requirements. As a company that is not required to file reports under Section 13 or 15(d) of the Securities Exchange Act, referred to as a non-reporting company, we may not, in the future, meet the requirements for an issuer under 144 that would allow a holder to qualify for Rule 144 exemptions. In such an event, holders of restricted stock would have to utilize another exemption from registration or rely on a registration statement to be filed by the Company registering the restricted stock. Although the Company currently plans to file either a form 10 or S-1 with the Commission upon the conclusion of the Regulation A offering, there can be no guarantee that the Company will be able to fulfill one of these registration statements, which could have an adverse effect on our shareholders.
Securities analysts may elect not to report on our common stock or may issue negative reports that adversely affect the stock price.
At this time, no securities analysts provide research coverage of our common stock, and securities analysts may not elect to provide such coverage in the future. It may remain difficult for our company, with its small market capitalization, to attract independent financial analysts that will cover our common stock. If securities analysts do not cover our common stock, the lack of research coverage may adversely affect the stock’s actual and potential market price. The trading market for our common stock may be affected in part by the research and reports that industry or financial analysts publish about our business. If one or more analysts elect to cover our company and then downgrade the stock, the stock price would likely decline rapidly. If one or more of these analysts cease coverage of our company, we could lose visibility in the market, which, in turn, could cause our stock price to decline. This could have a negative effect on the market price of our common stock.
A reverse stock split may decrease the liquidity of the shares of our common stock.
The liquidity of the shares of our common stock may be adversely affected by a reverse stock split given the reduced number of shares that will be outstanding following a reverse stock split, especially if the market price of our common stock does not increase as a result of the reverse stock split.
Following a reverse stock split, the resulting market price of our common stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common stock may not improve.
Although we believe that a higher market price of our common stock may help generate greater or broader investor interest, we cannot assure you that a reverse stock split will result in a share price that will attract new investors.
Because directors and officers currently and for the foreseeable future will continue to control Saddle Ranch Media, Inc., it is not likely that you will be able to elect directors or have any say in the policies of Saddle Ranch Media, Inc.
Our shareholders are not entitled to cumulative voting rights. Consequently, the election of directors and all other matters requiring shareholder approval will be decided by majority vote. The directors, officers and affiliates of Saddle Ranch Media, Inc. beneficially own a majority of our outstanding common stock voting rights. Due to such significant ownership position held by our insiders, new investors may not be able to affect a change in our business or management, and therefore, shareholders would have no recourse as a result of decisions made by management.
In addition, sales of significant amounts of shares held by our directors, officers or affiliates, or the prospect of these sales, could adversely affect the market price of our common stock. Management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
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Risks Relating to Our Company and Industry
The following risks relate to our proposed business and the effects upon us assuming we obtain financing in a sufficient amount.
A loss of confidence in our security system, or a breach of our security system, may adversely affect us and the value of an investment in us.
We will take measures to protect us and our system from unauthorized access, damage or theft; however, it is possible that the security system may not prevent the improper access to, or damage or theft of our information. A security breach could harm our reputation or result in the loss of some or all of our information. A resulting perception that our measures do not adequately protect our systems could result in a loss of current or potential shareholders, reducing demand for our Common Stock and causing our shares to decrease in value.
Intellectual property rights claims may adversely affect an investment in us.
We are not aware of any intellectual property claims that may prevent us from operating; however, third parties may assert intellectual property claims relating to our operation. Regardless of the merit of an intellectual property or other legal action, any legal expenses to defend or payments to settle such claims would be extremely expensive. As a result, an intellectual property claim against us could adversely affect an investment in us.
Our industry is highly competitive and as an emerging growth company with an new brand we may be at a disadvantage to our competitors.
Our industry is highly competitive in general. We are an emerging growth company with limited financial resources and a new brand with limited recognition. Our competitors, both established and future unknown competitors, have better brand recognition and, in most cases, substantially greater financial resources than we have. Our ability to successfully compete in our industry depends on a number of factors, both within and outside our control. These factors include the following:
· | our success in designing and developing new or enhanced products; | |
· | our ability to address the changing needs and desires of retailers and consumers; | |
· | the pricing, quality, performance, reliability, features, ease of installation and use, and diversity of our products; | |
· | the quality of our customer service; | |
· | product or technology introductions by our competitors; and | |
· | the ability of our contract manufacturing to deliver on time, on price, and with acceptable quality. |
If we are unable to effectively compete on a continuing basis or unforeseen competitive pressures arise, such inability to compete could have a material adverse effect on our business, results of operations, and overall financial condition.
Our products may not achieve market acceptance thereby reducing the chance for success.
We are only in the early stages of selling our first products, It is unclear whether these product and their features or other unanticipated events may result in lower sales than anticipated, which could force us to limit our expenditures on research and development, advertising, and general company requirements for improving and expanding our product offerings. We cannot guarantee consumer demand or interest in our current or future product offerings, which could have a material adverse effect on our business, results of operations, and overall financial condition.
If the market chooses to buy competitive products and services, we may fail.
Although we believe that ours product offerings will be commercially viable, there is no verification by the marketplace that its products will be accepted by or purchased by customers. If the market chooses to buy our competitors products, it may be more difficult for us to ever become profitable which would substantially harm our business and, possibly, cause it to fail whereby you could lose your entire investment.
Consumer trends, seasons fluctuations, and general global economic conditions and outlook may cause unpredictable operating results.
Our operating results may fluctuate significantly from period to period as a result of a variety of factors, including purchasing patterns of customers, competitive pricing, and general economic conditions. There is no assurance that we will be successful in marketing our product, or that the revenues from the sale of our products will be significant. Consequently, our revenues may vary significantly by quarter, and our operating results may experience significant fluctuations making it difficult to value our business and could lead to extreme volatility in our share price.
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We may be unable to protect our proprietary rights.
Our future success depends in part on our proprietary technology, technical know-how and other intellectual property. We rely on intellectual property laws, confidentiality procedures and contractual provisions, such as nondisclosure terms, to protect our intellectual property. Others may independently develop similar technology, duplicate our products, or design around our intellectual property rights. In addition, unauthorized parties may attempt to copy aspects of our products and technologies or to obtain and use information that we regard as proprietary. Any of these events could significantly harm our business, financial condition and operating results.
We also rely on technologies that we acquire from others. We may rely on third parties for further required technologies. We may purchase a computer’s logic component or other technological devices from outside sources and will need to pay annual fees to enable us to get updates/upgrades and technical support to the logic portion of the system or device. We may find it necessary or desirable in the future to obtain licenses or other rights relating to one or more if our products or to current or future technologies. These licenses or other rights may not be available on commercially reasonable terms or at all. The inability to obtain certain licenses or other rights or to obtain such licenses or rights on favorable terms, or the need to engage in litigation regarding these matters, could have a material adverse effect on our business, financial condition and operating results. Moreover, the use of intellectual property licensed from third parties may limit our ability to protect the proprietary rights in our products.
While no current lawsuits are filed against us, the possibility exists that a claim of some kind may be made in the future.
While no current lawsuits are filed against us, the possibility exists that a claim of some kind may be made in the future. We currently have no plan to purchase liability insurance.
We may depend on contract manufacturers who may not have adequate capacity to fulfill our needs or may not meet our quality and delivery objectives and timetables.
We do not own our production lines or manufacturing facilities. We manufacture our products in the United States through third-party contract manufacturers. Our reliance on these third-party contract manufacturers involves significant risks, including reduced control over quality and logistics management, the potential lack of adequate capacity, and discontinuance of the contractors’ assembly processes. Potential financial instability at our contractor manufacturers could result in us having to find new suppliers, which could increase our costs and delay our product and installation deliveries. These contractor manufacturers may also choose to discontinue contracting to build our products for a variety of reasons. Consequently, we may experience delays in the timeliness, quality and adequacy in product and installation deliveries, any of which could have a material adverse effect on our business, results of operations, and overall financial condition.
We have limited experience with our current product offerings, which makes it difficult to predict our future operating results.
The success of our new product offerings will depend on many factors, including timely and successful research and development, pricing, market and consumer acceptance of such new products and the product offerings of our competitors. If new product offerings are not successful, our revenue growth will suffer and our results of operations may be harmed. Further, we do not have significant experience in these offerings and cannot be assured that our investments in the development of our offerings will result in increased revenue.
We will require additional funding to develop and commercialize our services, products, and software. If we are unable to secure additional financing on acceptable terms, or at all, we may be forced to modify our current business plan or to curtail or cease our planned operations.
We anticipate incurring significant operating losses and using significant funds for product development and operating activities. Our existing cash resources are insufficient to finance even our immediate operations. Accordingly, we will need to secure additional sources of capital to develop our business and product candidates, as planned. We intend to seek substantial additional financing through public and/or private financing, which may include equity and/or debt financings, and through other arrangements, including collaborative arrangements. As part of such efforts, we may seek loans from certain of our executive officers, directors and/or current shareholders.
If we are unable to secure additional financing in the near term, we may be forced to
· | curtail or abandon our existing business plans; | |
· | default on any debt obligations; | |
· | file for bankruptcy; | |
· | seek to sell some or all of our assets; and/or | |
· | cease our operations. |
If we are forced to take any of these steps our common stock may be worthless.
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Revenue derived from large orders could adversely affect our gross margin and could lead to greater variability in our quarterly results.
Large orders may be more sensitive to changes in the global industrial economy, may be subject to greater discount variability, lower gross margins, and may contract at a faster pace during an economic downturn compared to smaller orders. To the extent that the amount of our net sales derived from large orders increases in future periods, either in absolute dollars or as a percentage of our overall business, our gross margins could decline, and we could experience greater volatility and see a greater negative impact from future downturns in the global industrial economy. This dynamic may also have an impact on the historical seasonal pattern of our net sales and our results of operations. These types of orders also make managing inventory levels more difficult as we have in the past and may have to in the future build large quantities of inventory in anticipation of future demand that may not materialize.
We intend to make significant investments in new products that may not be successful or achieve expected returns.
We plan to continue to make significant investments in research, development, and marketing for new and existing products and technologies. These investments involve a number of risks as the commercial success of such efforts depend on many factors, including our ability to anticipate and respond to innovation, achieve the desired technological fit, and be effective with our marketing and distribution efforts. If our existing or potential customers do not perceive our latest product offerings as providing significant new functionality or value, or if we are late to market with a new product or technology, we may not achieve our expected return on our investments or be able recover the costs expended to develop new product offerings, which could have a material adverse effect on our operating results. Even if our new products are profitable, our operating margins for new products may not be as high as the margins we have experienced historically.
Our success depends on new product introductions and market acceptance of our products.
The market for our products is characterized by rapid technological change, evolving industry standards, changes in customer needs and frequent new product introductions, and is therefore highly dependent upon timely product innovation. Our success is dependent on our ability to successfully develop and introduce new and enhanced products on a timely basis to replace declining revenues from older products, and on increasing penetration in domestic and international markets. As has occurred in the past and as may be expected to occur in the future, we have experienced significant delays between the announcement and the commercial availability of new products. Any significant delay in releasing new products could have a material adverse effect on the ultimate success of a product and other related products and could impede continued sales of predecessor products, any of which could have a material adverse effect on our operating results. There can be no assurance that we will be able to introduce new products in accordance with announced release dates, that our new products will achieve market acceptance or that any such acceptance will be sustained for any significant period. Failure of our new products to achieve or sustain market acceptance could have a material adverse effect on our operating results.
We may experience component shortages that may adversely affect our business and result of operations.
We have experienced difficulty in securing certain types of high power connectors for one of our projects and anticipate that supply shortages of components used in our products, including limited source components, can result in significant additional costs and inefficiencies in manufacturing. If we are unsuccessful in resolving any such component shortages in a timely manner, we will experience a significant impact on the timing of revenue, a possible loss of revenue, or an increase in manufacturing costs, any of which would have a material adverse impact on our operating results.
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We rely on management information systems. interruptions in our information technology systems or cyber-attacks on our systems could adversely affect our business.
We rely on the efficient and uninterrupted operation of complex information technology systems and networks to operate our business. We rely on a primary global center for our management information systems and on multiple systems in branches not covered by our global center. As with any information system, unforeseen issues may arise that could affect our ability to receive adequate, accurate and timely financial information, which in turn could inhibit effective and timely decisions. Furthermore, it is possible that our global center for information systems or our branch operations could experience a complete or partial shutdown. A significant system or network disruption could be the result of new system implementations, computer viruses, cyber-attacks, security breaches, facility issues or energy blackouts. Threats to our information technology security can take a variety of forms and individuals or groups of hackers or sophisticated organizations including state-sponsored organizations, may take steps that pose threats to our customers and our infrastructure. If we were to experience a shutdown, disruption or attack, it would adversely impact our product shipments and net sales, as order processing and product distribution are heavily dependent on our management information systems. Such an interruption could also result in a loss of our intellectual property or the release of sensitive competitive information or partner, customer or employee personal data. Any loss of such information could harm our competitive position, result in a loss of customer confidence, and cause us to incur significant costs to remedy the damages caused by the disruptions or security breaches. In addition, changing laws and regulations governing our responsibility to safeguard private data could result in a significant increase in operating or capital expenditures needed to comply with these new laws or regulations. Accordingly, our operating results in such periods would be adversely impacted.
We are continually working to maintain reliable systems to control costs and improve our ability to deliver our products in our markets worldwide. Our efforts include, but are not limited to the following: firewalls, antivirus protection, patches, log monitors, routine backups with offsite retention of storage media, system audits, data partitioning and routine password modifications. Our internal information technology systems environment continues to evolve and our business policies and internal security controls may not keep pace as new threats emerge. No assurance can be given that our efforts to continue to enhance our systems will be successful.
We are subject to risks associated with our website.
We devote significant resources to maintaining our website as a key marketing, sales and support tool and expect to continue to do so in the future. Failure to properly maintain our Website may interrupt normal operations, including our ability to provide quotes, process orders, ship products, provide services and support to our customers, bill and track our customers, fulfill contractual obligations and otherwise run our business which would have a material adverse effect on our results of operations. We host our Website internally. Any failure to successfully maintain our Website or any significant downtime or outages affecting our Website could have a material adverse impact on our operating results.
Our products are complex and may contain bugs or errors.
As has occurred in the past and as may be expected to occur in the future, our new software products or new operating systems of third parties on which our products are based often contain bugs or errors that can result in reduced sales or cause our support costs to increase, either of which could have a material adverse impact on our operating results.
We are subject to the risk of product liability claims.
Our products are designed to provide information upon which users may rely. Our products are also used in “real time” applications requiring extremely rapid and continuous processing and constant feedback. Such applications give rise to the risk that a failure or interruption of the system or application could result in economic damage, bodily harm or property damage. We attempt to assure the quality and accuracy of the processes contained in our products, and to limit our product liability exposure through contractual limitations on liability, limited warranties, express disclaimers and warnings as well as disclaimers contained in our “shrink wrap” and electronically displayed license agreements with end-users. If our products contain errors that produce incorrect results on which users rely or cause failure or interruption of systems or processes, customer acceptance of our products could be adversely affected. Further, we could be subject to liability claims that could have a material adverse effect on our operating results or financial position. Although we maintain liability insurance for product liability matters, there can be no assurance that such insurance or the contractual limitations used by us to limit our liability will be sufficient to cover or limit any claims which may occur.
Each of our current product candidates and services is in an early stage of development and we may never succeed in developing and/or commercializing them. If we are unable to commercialize our services, products, or software, or if we experience significant delays in doing so, our business may fail.
We intend to invest a significant portion of our efforts and financial resources in our software and we will depend heavily on its success. This software is currently in the beta stage of development. We need to devote significant additional research and development, financial resources and personnel to develop additional commercially viable products, establish intellectual property rights, if necessary, and establish a sales and marketing infrastructure. We are likely to encounter hurdles and unexpected issues as we proceed in the development of our software and our other product candidates. There are many reasons that we may not succeed in our efforts to develop our product candidates, including the possibility that our product candidates will be deemed undesirable; our product candidates will be too expensive to develop or market or will not achieve broad market acceptance; others will hold proprietary rights that will prevent us from marketing our product candidates; or our competitors will market products that are perceived as equivalent or superior.
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We depend on third parties to assist us in the development of our software and other product candidates, and any failure of those parties to fulfill their obligations could result in costs and delays and prevent us from successfully commercializing our software and product candidates on a timely basis, if at all.
We may engage consultants and other third parties to help our software and product candidates. We may face delays in our commercialization efforts if these parties do not perform their obligations in a timely or competent fashion or if we are forced to change service providers. Any third parties that we hire may also provide services to our competitors, which could compromise the performance of their obligations to us. If these third parties do not successfully carry out their duties or meet expected deadlines, the commercialization of our software and product candidates may be extended, delayed or terminated or may otherwise prove to be unsuccessful. Any delays or failures as a result of the failure to perform by third parties would cause our development costs to increase, and we may not be able to commercialize our product candidates. In addition, we may not be able to establish or maintain relationships with these third parties on favorable terms, if at all. If we need to enter into replacement arrangements because a third party is not performing in accordance with our expectations, we may not be able to do so without undue delays or considerable expenditures or at all.
If we are not able to protect and control our unpatented trade secrets, know-how and other technological innovation, we may suffer competitive harm.
We rely on unpatented technology, trade secrets, confidential information and proprietary know-how to protect our technology and maintain any future competitive position, especially when we do not believe that patent protection is appropriate or can be obtained. Trade secrets are difficult to protect. In order to protect proprietary technology and processes, we rely in part on confidentiality and intellectual property assignment agreements with our employees, consultants and others. These agreements generally provide that the individual must keep confidential and not disclose to other parties any confidential information developed or learned by the individual during the course of the individual’s relationship with us except in limited circumstances. These agreements generally also provide that we shall own all inventions conceived by the individual in the course of rendering services to us. These agreements may not effectively prevent disclosure of confidential information or result in the effective assignment to us of intellectual property, and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information or other breaches of the agreements. In addition, others may independently discover trade secrets and proprietary information that have been licensed to us or that we own, and in such case we could not assert any trade secret rights against such party.
Enforcing a claim that a party illegally obtained and is using trade secrets that have been licensed to us or that we own is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. Costly and time-consuming litigation could be necessary to seek to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could have a material adverse effect on our business. Moreover, some of our academic institution licensors, collaborators and scientific advisors have rights to publish data and information to which we have rights. If we cannot maintain the confidentiality of our technologies and other confidential information in connection with our collaborations, our ability to protect our proprietary information or obtain patent protection in the future may be impaired, which could have a material adverse effect on our business.
Our future growth is dependent upon our ability to keep pace with rapid technological and industry changes in order to develop or acquire new technologies for our products and service introductions that achieve market acceptance with acceptable margins.
Our business operates in markets that are characterized by rapidly changing technologies, evolving industry standards, potential new entrants, and changes in customer needs and expectations. Accordingly, our future success depends in part on our ability to accomplish the following: identify emerging technological trends in our target end-markets; develop, acquire, and maintain competitive products and services that capitalize on existing and emerging trends; enhance our existing products and services by adding innovative features on a timely and cost-effective basis that differentiates us from our competitors; sufficiently capture intellectual property rights in new inventions and other innovations; and develop or acquire and bring products and services, including enhancements, to market quickly and cost-effectively. Our ability to develop or acquire new products and services that are technologically innovative requires the investment of significant resources and can affect our competitive position. These acquisition and development efforts divert resources from other potential investments in our businesses, and they may not lead to the development of new commercially successful technologies, products, or services on a timely basis. Moreover, as we introduce new products and services, we may be unable to detect and correct defects in the product or in its installation, which could result in loss of sales or delays in market acceptance. New or enhanced products and services may not satisfy customer preferences and potential product failures may cause customers to reject our products. As a result, these products and services may not achieve market acceptance and our brand image could suffer. In addition, our competitors may introduce superior products or business strategies, impairing our brand and the desirability of our products and services, which may cause customers to defer or forego purchases of our products and services, and impacting our ability to charge monthly service fees. If our competitors implement new technologies before we are able to implement them, those competitors may be able to provide more effective products than ours, possibly at lower prices. Any delay or failure in the introduction of new or enhanced solutions could harm our business, results of operations and financial condition. In addition, the markets for our products and services may not develop or grow as we anticipate. The failure of our technology, products, or services to gain market acceptance, the potential for product defects, or the obsolescence of our products and services could significantly reduce our revenue, increase our operating costs, or otherwise materially adversely affect our business, financial condition, results of operations and cash flows.
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In addition to developing and acquiring new technologies and introducing new offerings, we may need, from time to time, to phase out outdated and unsuitable technologies and services. If we are unable to do so on a cost-effective basis, we could experience reduced profits.
We sell our products and services in highly competitive markets, including the home automation market, which may result in pressure on our profit margins and limit our ability to maintain or increase the market share of our products and services.
Our industry is highly fragmented and subject to significant competition and pricing pressures. We experience significant competitive pricing pressures on installation, monitoring, and service fees.
In many cases, we face competition for direct sales from our independent, third-party authorized dealers, who may offer installation for considerably less than we do in particular markets. We believe that the monitoring and service fees we offer are generally competitive with rates offered by other security service providers. We face competition from other providers such as cable and telecommunications companies that may have existing access to and relationship with subscribers and highly recognized brands, which may drive increased awareness of their security/automation offerings relative to ours, have access to greater capital and resources than us, and may spend significantly more on advertising, marketing, and promotional resources, any of which could have a material adverse effect on our ability to drive awareness and demand for our products and services. In particular, these companies may be able to offer subscribers a lower price by bundling their services. It is possible that one or more of our competitors could develop a significant technological advantage over us that allows them to provide additional service or better quality service or to lower their price, which could put us at a competitive disadvantage. Continued pricing pressure, improvements in technology, and shifts in customer preferences towards self-monitoring or DIY could adversely impact our customer base and/or pricing structure and have a material adverse effect on our business, financial condition, results of operations, and cash flows.
We rely on a significant number of our customers remaining with us as customers for long periods of time.
We operate our business with the goal of retaining customers for long periods of time in order to recoup our initial investment in new customers, and we generally achieve cash flow break-even in less than three years. Accordingly, our long-term profitability is dependent on long customer tenure. This requires that we minimize our rate of customer disconnects, or attrition. One reason for disconnects is when customers relocate and do not reconnect. Customer relocations are impacted by changes in the housing market. We are susceptible to changes in the business economy, housing market, and business and consumer discretionary income, which may inhibit our ability to sustain customer base growth rates and impact our results of operations. Other factors that can increase disconnects include problems experienced with our product or service quality, customer service, customer non-pay, unfavorable general economic conditions, and the preference for lower pricing of competitors’ products and services over ours. If we fail to keep our customers for a sufficiently long period of time, our profitability, business, financial condition, results of operations and cash flows could be materially adversely affected.
If we experience significantly higher rates of customer revenue attrition than we anticipate, we may be required to change the estimated useful lives and/or the accelerated method of depreciation and amortization related to accounts associated with our security monitoring customers, increasing our depreciation and amortization expense or causing asset impairment.
We amortize the costs of our acquired and dealer-generated contracts and related customer relationships based on the estimated life of the customer relationships. We similarly depreciate the cost of our direct channel subscriber system assets and deferred subscriber acquisition costs. If attrition rates rise significantly, we may be required to accelerate the amortization of expenses related to such contracts and the depreciation/amortization of our subscriber system assets/deferred subscriber acquisition costs or to impair such assets, which could cause a material adverse effect on our business, financial condition and results of operations.
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Our reputation as a service provider of high quality offerings may be materially adversely affected by product defects or shortfalls in customer service.
Our business depends on our reputation and ability to maintain good relationships with our subscribers, dealers and local regulators, among others. Our reputation may be harmed either through product defects, such as the failure of one or more of our subscribers’ alarm systems, or shortfalls in customer service. Subscribers generally judge our performance through their interactions with the staff at the monitoring and customer care centers, dealers, and technicians who perform on-site maintenance services. Any failure to meet subscribers’ expectations in such customer service areas could cause an increase in attrition rates or make it difficult to recruit new subscribers. Any harm to our reputation or subscriber relationships caused by the actions of our dealers, personnel, or third-party service providers or any other factors could have a material adverse effect on our business, financial condition, and results of operations.
General economic conditions can affect our business, and we are susceptible to changes in the business economy, housing market, and business and consumer discretionary income, which may inhibit our ability to sustain customer base growth rates and impact our results of operations.
Demand for alarm monitoring services and home automation systems is affected by the general economy, the business environment, and the turnover in the housing market, among other things. Downturns in the rate of the sale of new and existing homes, which we believe drives a substantial portion of our new customer volume in any given year, would reduce opportunities to make sales of new security and home automation systems and services and reduce opportunities to take over existing security and home automation systems. Recoveries in the housing market increase the occurrence of relocations, which may lead to customers disconnecting service and not contracting with us in their new homes.
Further, the alarm monitoring business is dependent, in part, on national, regional, and local economic conditions. In particular, where disposable income available for discretionary spending is reduced (such as by higher housing, energy, interest or other costs, or where the actual or perceived wealth of customers has decreased because of circumstances such as lower residential real estate values, increased foreclosure rates, inflation, increased tax rates or other economic disruptions), the alarm monitoring business could experience increased attrition rates and reduced customer demand. No assurance can be given that we will be able to continue acquiring quality alarm monitoring contracts or that we will not experience higher attrition rates. Changes in individualized economic circumstances could cause current security alarm and home automation customers to disconnect our services in an effort to reduce their monthly spending, or such customers could default on their remaining contractual obligations to us.
Our long-term revenue growth rate depends on installations and new contracts exceeding disconnects. If customer disconnects and defaults increase, our business, financial condition, results of operations, and cash flows could be materially adversely affected. See “—We rely on a significant number of our customers remaining with us as customers for long periods of time.”
Failure to successfully upgrade and maintain the security of our information and technology networks, including personally identifiable information and other data, could materially adversely affect us.
We are dependent on information technology networks and systems, including Internet and Internet-based or “cloud” computing services, to collect, process, transmit, and store electronic information. We are currently implementing modifications and upgrades to these information technology systems, including making changes to legacy systems, replacing legacy systems with successor systems with new functionality, and implementing new systems. There are inherent costs and risks associated with replacing and changing these systems and implementing new systems, including potential disruption of our sales, operations and customer service functions, potential disruption of our internal control structure, substantial capital expenditures, additional administration and operating expenses, retention of sufficiently skilled personnel to implement and operate the new systems, demands on management time, and other risks and costs of delays or difficulties in transitioning to new systems or of integrating new systems into our current systems. In addition, our information technology system implementations may not result in productivity improvements at a level that outweighs the costs of implementation, or at all. The implementation of new information technology systems may also cause disruptions in our business operations and have a material adverse effect on our business, cash flows, and results of operations.
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Due to the ever-changing threat landscape, our products may be subject to potential vulnerabilities of wireless and IoT devices and our services may be subject to certain risks, including hacking or other unauthorized access to control or view systems and obtain private information.
Companies that collect and retain sensitive and confidential information are under increasing attack by cyber-criminals around the world. While we implement security measures within our products, services, operations and systems, those measures may not prevent cybersecurity breaches, the access, capture or alteration of information by criminals, the exposure or exploitation of potential security vulnerabilities, distributed denial of service attacks, the installation of malware or ransomware, acts of vandalism, computer viruses, misplaced data or data loss that could be detrimental to our reputation, business, financial condition, and results of operations. Third parties, including our partners and vendors, could also be a source of security risk to us in the event of a failure of their own products, components, networks, security systems, and infrastructure. In addition, we cannot be certain that advances in criminal capabilities, new discoveries in the field of cryptography, or other developments will not compromise or breach the technology protecting the networks that access our products and services.
A significant actual or perceived (whether or not valid) theft, loss, fraudulent use or misuse of customer, employee, or other personally identifiable data, whether by us, our partners and vendors, or other third parties, or as a result of employee error or malfeasance or otherwise, non-compliance with applicable industry standards or our contractual or other legal obligations regarding such data, or a violation of our privacy and information security policies with respect to such data, could result in costs, fines, litigation, or regulatory actions against us. Such an event could additionally result in unfavorable publicity and therefore materially and adversely affect the market’s perception of the security and reliability of our services and our credibility and reputation with our customers, which may lead to customer dissatisfaction and could result in lost sales and increased customer revenue attrition.
In addition, we depend on our information technology infrastructure for business-to-business and business-to-consumer electronic commerce. Security breaches of, or sustained attacks against, this infrastructure could create system disruptions and shutdowns that could negatively impact our operations. Increasingly, our products and services are accessed through the Internet, and security breaches in connection with the delivery of our services via the Internet may affect us and could be detrimental to our reputation, business, operating results, and financial condition. We continue to invest in new and emerging technology and other solutions to protect our network and information systems, but there can be no assurance that these investments and solutions will prevent any of the risks described above. While we maintain cyber liability insurance that provides both third-party liability and first-party insurance coverages, our insurance may not be sufficient to protect against all of our losses from any future disruptions or breaches of our systems or other event as described above.
We depend on third-party providers and suppliers for components of our security and automation systems, third-party software licenses for our products and services, and third-party providers to transmit signals to our monitoring facilities and provide other services to our subscribers. Any failure or interruption in products or services provided by these third parties could harm our ability to operate our business.
The components for the security and automation systems that we install are manufactured by third parties. We are therefore susceptible to interruptions in supply and to the receipt of components that do not meet our standards. Any financial or other difficulties our providers face may have negative effects on our business. We exercise little control over our suppliers, which increases our vulnerability to problems with the products and services they provide. While we strive to utilize dual-sourcing methods to allow similar hardware components for our security systems to be interchangeable in order to minimize the risk of a disruption from a single supplier, any interruption in supply could cause delays in installations and repairs and the loss of current and potential customers. Also, if a previously installed component were found to be defective, we might not be able to recover the costs associated with its repair or replacement across our installed customer base, and the diversion of technical personnel to address the defect could materially adversely affect our business, financial condition, results of operations, and cash flows.
We rely on third-party software for key automation features in certain of our offerings, and on the interoperation of that software with our own, such as our mobile applications and related platform. We could experience service disruptions if customer usage patterns for such offerings exceed, or are otherwise outside of, design parameters for the system and the ability for us or our third-party provider to make corrections. Such interruptions in the provision of services could result in our inability to meet customer demand, damage our reputation and customer relationships, and materially and adversely affect our business. We also rely on certain software technology that we license from third parties and use in our products and services to perform key functions and provide critical functionality. For example, we license the software platform for our monitoring operations from third parties. Because a number of our products and services incorporate technology developed and maintained by third parties, we are, to a certain extent, dependent upon such third parties’ ability to update, maintain, or enhance their current products and services, to ensure that their products are free of defects or security vulnerabilities, to develop new products and services on a timely and cost-effective basis, and to respond to emerging industry standards, customer preferences, and other technological changes. Further, these third-party technology licenses may not always be available to us on commercially reasonable terms, or at all. If our agreements with third-party vendors are not renewed or the third-party software becomes obsolete, is incompatible with future versions of our products or services, or otherwise fails to address our needs, we cannot provide assurance that we would be able to replace the functionality provided by the third-party software with technology from alternative providers. Furthermore, even if we obtain licenses to alternative software products or services that provide the functionality we need, we may be required to replace hardware installed at our monitoring centers and at our customers’ sites, including security system control panels and peripherals, in order to execute our integration of or migration to alternative software products. Any of these factors could materially adversely affect our business, financial condition, results of operations, and cash flows.
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We also rely on various third-party telecommunications providers and signal processing centers to transmit and communicate signals to our monitoring facility in a timely and consistent manner. These telecommunications providers and signal processing centers could fail to transmit or communicate these signals to the monitoring facility for many reasons, including disruptions from fire, natural disasters, weather, transmission interruption, malicious acts, or terrorism. The failure of one or more of these telecommunications providers or signal processing centers to transmit and communicate signals to the monitoring facility in a timely manner could affect our ability to provide alarm monitoring, home automation, and interactive services to our subscribers. We also rely on third-party technology companies to provide home automation and interactive services to our subscribers. These technology companies could fail to provide these services consistently, or at all, which could result in our inability to meet customer demand and damage our reputation. There can be no assurance that third-party telecommunications providers, signal processing centers, and other technology companies will continue to transmit and communicate signals to the monitoring facility or provide home automation and interactive services to subscribers without disruption. Any such disruption, particularly one of a prolonged duration, could have a material adverse effect on our business. See also “—Shifts in our customers’ choice of, or telecommunications providers’ support for, telecommunications services and equipment could materially adversely affect our business and require significant capital expenditures” with respect to risks associated with changes in signal transmissions.
Internal system or service failures could disrupt our business and impair our ability to effectively provide our services and products to our customers, which could damage our reputation and adversely affect our revenues and profitability.
Any system or service disruptions, on our hosted Cloud infrastructure or those caused by ongoing projects to improve our information technology systems and the delivery of services, if not anticipated and appropriately mitigated, could have a material adverse effect on our business including, among other things, an adverse effect on our ability to bill our customers for work performed on our contracts, collect the amounts that have been billed and produce accurate financial statements in a timely manner. We are also subject to systems failures, including network, software or hardware failures, whether caused by us, third-party service providers, cyber security threats, natural disasters, power shortages, terrorist attacks or other events, which could cause loss of data and interruptions or delays in our business, cause us to incur remediation costs, subject us to claims and damage our reputation. In addition, the failure or disruption of our communications or utilities could cause us to interrupt or suspend our operations or otherwise adversely affect our business. Our property and business interruption insurance may be inadequate to compensate us for all losses that may occur as a result of any system or operational failure or disruption and, as a result, our future results could be adversely affected.
Customer systems failures could damage our reputation and adversely affect our revenues and profitability.
Many of the systems and networks that we develop, install and maintain for our customers on premise or host on our infrastructure involve managing and protecting personal information and information relating to national security and other sensitive government functions. While we have programs designed to comply with relevant privacy and security laws and restrictions, if a system or network that we develop, install or maintain were to fail or experience a security breach or service interruption, whether caused by us, third-party service providers, cyber security threats or other events, we may experience loss of revenue, remediation costs or face claims for damages or contract termination. Any such event could cause serious harm to our reputation and prevent us from having access to or being eligible for further work on such systems and networks. Our errors and omissions liability insurance may be inadequate to compensate us for all of the damages that we may incur and, as a result, our future results could be adversely affected.
We have limited operational history in an emerging industry, making it difficult to accurately predict and forecast business operations.
As we have limited operations in our business and have yet to generate revenue, it is extremely difficult to make accurate predictions and forecasts on our finances. This is compounded by the fact that we operate in the technology industry, which is rapidly transforming. There is no guarantee that our products or services will remain attractive to potential and current users as these industries undergo rapid change, or that potential customers will utilize our services.
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As a growing company, we have yet to achieve a profit and may not achieve a profit in the near future, if at all.
We have not yet produced a net profit and may not in the near future, if at all. While we expect our revenue to grow, we have not achieved profitability and cannot be certain that we will be able to sustain our current growth rate or realize sufficient revenue to achieve profitability. Further, many of our competitors have a significantly larger user base and revenue stream, but have yet to achieve profitability. Our ability to continue as a going concern may be dependent upon raising capital from financing transactions, increasing revenue throughout the year and keeping operating expenses below our revenue levels in order to achieve positive cash flows, none of which can be assured.
We will require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.
We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to update existing bitcoin mining hardware, improve our operating infrastructure or acquire complementary businesses and technologies. Accordingly, we will need to engage in continued equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of our common stock. Any debt financing we secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be impaired, and our business may be harmed.
We may be unable to manage growth, which may impact our potential profitability.
Successful implementation of our business strategy requires us to manage our growth. Growth could place an increasing strain on our management and financial resources. To manage growth effectively, we will need to:
· | Establish definitive business strategies, goals and objectives; |
· | Maintain a system of management controls; and |
· | Attract and retain qualified personnel, as well as develop, train, and manage management-level and other employees. |
If we fail to manage our growth effectively, our business, financial condition, or operating results could be materially harmed, and our stock price may decline.
We operate in a highly competitive environment, and if we are unable to compete with our competitors, our business, financial condition, results of operations, cash flows and prospects could be materially adversely affected.
We operate in a highly competitive environment. Our competition includes all other companies that are in the business of bitcoin mining or other blockchain related technologies. A highly competitive environment could materially adversely affect our business, financial condition, results of operations, cash flows and prospects.
Natural disasters and geo-political events could adversely affect our business.
Natural disasters, including hurricanes, cyclones, typhoons, tropical storms, floods, earthquakes and tsunamis, weather conditions, including winter storms, droughts and tornadoes, whether as a result of climate change or otherwise, and geo-political events, including civil unrest or terrorist attacks, that affect us, or other service providers could adversely affect our business.
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Statements Regarding Forward-looking Statements
This Disclosure Statement contains various “forward-looking statements.” You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “would,” “could,” “should,” “seeks,” “approximately,” “intends,” “plans,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. These statements may be impacted by a number of risks and uncertainties.
The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our Securities. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled “Risk Factors.”
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If we sell all of the shares being offered, our net proceeds (after our estimated offering expenses of $250,000) will be $2,250,000. We will use these net proceeds for the following.
Percentage of Offering Sold | 30% | 40% | 60% | 80% | 100% | |||||||||||||||
Offering Proceeds | $ | 750,000 | $ | 1,000,000 | $ | 1,500,000 | $ | 2,000,000 | $ | 2,500,000 | ||||||||||
Issuance costs | 75,000 | 100,000 | $ | 150,000 | $ | 200,000 | $ | 250,000 | ||||||||||||
Product development | 250,000 | 300,000 | 500,000 | 600,000 | 800,000 | |||||||||||||||
Manufacturing inventory for resale | 250,000 | 300,000 | 500,000 | 600,000 | 800,000 | |||||||||||||||
Marketing and sales | 75,000 | 175,000 | 200,000 | 450,000 | 500,000 | |||||||||||||||
Operating overhead | 75,000 | 100,000 | 125,000 | 125,000 | 125,000 | |||||||||||||||
Website enhancements and App development | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | |||||||||||||||
TOTAL | $ | 750,000 | $ | 1,000,000 | $ | 1,500,000 | $ | 2,000,000 | $ | 2,500,000 |
The Company reserves the right to change the use of proceeds set out herein based on the needs of the ongoing business of the Company and the discretion of the Company's management. The Company may reallocate the estimated use of proceeds among the various categories or for other uses if management deems such a reallocation to be appropriate. The precise amounts that we will devote to each of the foregoing items, and the timing of expenditures, will vary depending on numerous factors.
The expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve and change. The amounts and timing of our actual expenditures, specifically with respect to working capital, may vary significantly depending on numerous factors. The precise amounts that we will devote to each of the foregoing items, and the timing of expenditures, will vary depending on numerous factors. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering.
In the event we do not sell all of the shares being offered, we may seek additional financing from other sources in order to support the intended use of proceeds indicated above. If we secure additional equity funding, investors in this offering would be diluted. In all events, there can be no assurance that additional financing would be available to us when wanted or needed and, if available, on terms acceptable to us.
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If you purchase shares in this offering, your ownership interest in our Common Stock will be diluted immediately, to the extent of the difference between the price to the public charged for each share in this offering and the net tangible book value per share of our Common Stock after this offering.
Our historical net tangible book value as of December 31, 2017 was $2,278.902 or $0.0022 per then-outstanding share of our Common Stock. Historical net tangible book value per share equals the amount of our total tangible assets less total liabilities, divided by the total number of shares of our Common Stock outstanding, all as of the date specified.
The following table illustrates the per share dilution to new investors discussed above, assuming the sale of, respectively, 100%, 75%, 50% and 25% of the shares offered for sale in this offering (after deducting estimated offering expenses of $400,000, $300,000, $200,000 and $100,000, respectively):
Percentage of shares offered that are sold | 100% | 75% | 50% | 25% | ||||||||||||
Price to the public charged for each share in this offering | $ | 0.0025 | $ | 0.0025 | $ | 0.0025 | $ | 0.0025 | ||||||||
Historical net tangible book value per share as of December 31, 2017 (1) | 0.0016 | 0.0016 | 0.0016 | 0.0016 | ||||||||||||
Increase in net tangible book value per share attributable to new investors in this offering (2) | (0.0001 | ) | (0.0000 | ) | 0.0001 | 0.0001 | ||||||||||
Net tangible book value per share, after this offering | 0.0022 | 0.0022 | 0.0022 | 0.0022 | ||||||||||||
Dilution per share to new investors | 0.0003 | 0.0003 | 0.0003 | 0.0003 |
(1) | Based on net tangible book value as of December 31, 2017 of $2,278,902 and 1,948,238,976 outstanding shares of Common stock as of May 31, 2018, |
(2) | After deducting estimated offering expenses of $400,000, $300,000, $200,000 and $100,000, respectively. |
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This Offering Circular is part of an Offering Statement that we filed with the SEC, using a continuous offering process. Periodically, as we have material developments, we will provide an Offering Circular supplement that may add, update or change information contained in this Offering Circular. Any statement that we make in this Offering Circular will be modified or superseded by any inconsistent statement made by us in a subsequent Offering Circular supplement. The Offering Statement we filed with the SEC includes exhibits that provide more detailed descriptions of the matters discussed in this Offering Circular. You should read this Offering Circular and the related exhibits filed with the SEC and any Offering Circular supplement, together with additional information contained in our annual reports, semi-annual reports and other reports and information statements that we will file periodically with the SEC. See the section entitled “Additional Information” below for more details.
Pricing of the Offering
Prior to the Offering, there has been a limited public market for the Offered Shares. The initial public offering price was determined by negotiation between us and the Underwriter. The principal factors considered in determining the initial public offering price include:
· | the information set forth in this Offering Circular and otherwise available; |
· | our history and prospects and the history of and prospects for the industry in which we compete; |
· | our past and present financial performance; |
· | our prospects for future earnings and the present state of our development; |
· | the general condition of the securities markets at the time of this Offering; |
· |
the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and |
· | other factors deemed relevant by us. |
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Offering Period and Expiration Date
This Offering will start on or after the Qualification Date and will terminate when the maximum offering is reached or, if it is reached, on the Termination Date.
Procedures for Subscribing
When you decide to subscribe for Offered Shares in this Offering, you should:
Go to www.minivest.com, click on the “Invest Now” button and follow the procedures as described.
1. Electronically receive, review, execute and deliver to us a subscription agreement; and
2. Deliver funds directly by wire or electronic funds transfer via ACH to the specified account maintained by us.
Any potential investor will have ample time to review the subscription agreement, along with their counsel, prior to making any final investment decision. We shall only deliver such subscription agreement upon request after a potential investor has had ample opportunity to review this Offering Circular.
Right to Reject Subscriptions. After we receive your complete, executed subscription agreement and the funds required under the subscription agreement have been transferred to the escrow account, we have the right to review and accept or reject your subscription in whole or in part, for any reason or for no reason. We will return all monies from rejected subscriptions immediately to you, without interest or deduction.
Acceptance of Subscriptions. Upon our acceptance of a subscription agreement, we will countersign the subscription agreement and issue the shares subscribed at closing. Once you submit the subscription agreement and it is accepted, you may not revoke or change your subscription or request your subscription funds. All accepted subscription agreements are irrevocable.
No Escrow
The proceeds of this offering will not be placed into an escrow account. We will offer our Common Stock on a best efforts basis primarily through an online platform. As there is no minimum offering, upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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You should read the following discussion and analysis of our financial condition and results of our operations together with our financial statements and related notes appearing at the end of this Offering Circular. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled "Risk Factors" and elsewhere in this Offering Circular.
Forward-looking Statements
This section contains certain statements that may include "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects," "anticipate," "optimistic," "intend," "will" or other similar expressions. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with OTCMarkets and available on its website at http://www.otcmarkets.com. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under applicable securities laws, the Company does not assume a duty to update these forward-looking statements.
Results of Operations
For the Year Ended December 31, 2017 and for the Year Ended December 31, 2016
Revenue. Total revenue for the year ended December 31, 2017 was $14,274 as compared to $4,701 for the year ended December 31, 2016.
Operating Expenses. Operating expenses for the year ended December 31, 2017 were $296,720 as compared to $388,294 for the year ended December 31, 2016.
Net Loss. Net loss for the year ended December 31, 2017 was ($321,499) as compared to a net loss of ($367,659) for the year ended December 31, 2016. Currently operating costs exceed revenue because as the Company is still in the development stage. We cannot assure when or if revenue will exceed operating costs.
Liquidity and Capital Resources
We had net cash of $1,319 at December 31, 2017.
During the year ended December 31, 2017, we used $254,647 of cash for operating activities. A portion of the funds was used to pay general and administrative costs, accounting fees, professional fees, and product development.
Net cash from financing activities during the year ended December 31, 2017 was $242,963 due to an increase in loans payable and accrued interest.
Plan of Operations
Our plan of operation for the 12 months following the commencement of this Offering is as follows:
1, Setup operation for retail business in the United States including sales, marketing, finance, logistic and customer service
2, Expand the development on SKIQ 4G/LTE,Wi-Fi 11ac Ultimate Home Gateway with high speed home networking road map with AT&T.
3, Initiate the development of Release-II of BIGHTconnect Cloud platform (Premium) with Microsoft IoT Suite and Machine Learning Technologies plus Android/Windows mobile App development. The Premium Account will charged with $9.99 annual licensing fee per each device for three years of data storage and management.
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Our initial revenue will be primary generated from the sales of i-BRIGHT IoT powered devices and its Cloud platform 4G/LTE high speed networking devices.
In our opinion, the proceeds from this Offering will not satisfy our cash requirements and we anticipate it will be necessary to raise additional funds in the next twelve months to implement the plan of operations. We also anticipate that we will have additional capital requirements after the next twelve months and throughout 2018. During that time frame, we do not expect to be able to satisfy our cash requirements through sales and the proceeds from this Offering alone, and therefore we anticipate we may attempt to raise additional capital through the sale of additional securities in additional offerings, or through other methods of obtaining financing such as through loans or other debt. We cannot assure that we will have sufficient capital to finance our growth and business operations or that such capital will be available on terms that are favorable to us or at all. We are currently incurring operating deficits that are expected to continue for the foreseeable future.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies
We have identified the policies outlined below as critical to our business operations and an understanding of our results of operations. The list is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management's judgment in their application. The impact and any associated risks related to these policies on our business operations is discussed throughout Management's Discussion and Analysis of Financial Condition and Results of Operation where such policies affect our reported and expected financial results. Note that our preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.
Income taxes are one such critical accounting policy. Income taxes are recorded on an accrual basis of accounting based on tax positions taken or expected to be taken in a tax return. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all or some portion, of such assets will more than likely not be realized. Should they occur, our policy is to classify interest and penalties related to tax positions as income tax expense. Since our inception, no such interest or penalties have been incurred.
Revenue Recognition
Revenue is recognized when reported and remitted by Amazon, presently the primary distributor of the Company’s products.
Additional Company Matters
On January 23, 2018 Saddle Ranch Media, Inc., a Utah corporation 'The Company" entered into a settlement agreement and stipulation (“the settlement agreement”) with Northbridge Financial Inc. Delaware corporation Northbridge") pursuant to which the company agreed to issue, common stock to Northbridge in exchange for settlement of certain outstanding debts of the Company agreed to issue in the principal and interest amount $110,000 ("the settlement amount") of past due obligations and accounts payable of the company. Northbridge purchase the obligations and accounts payable from certain vendors of the company as described below. On January 24, 2018 in the Circuit Court of the 12th Judicial District in and for Sarasota County, Florida ('The District Court") entered an order ("The Northbridge Order") approving among other things fairness of the terms and conditions of the exchange pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended (the "Securities Act") in accordance with the stipulation of settlement, pursuant to the Settlement Agreement between the Company and Northbridge, in the matter in entitled Northbridge Financial Inc., a Delaware corporation vs. Saddle Ranch Media Inc. a Utah corporation ('The Northbridge Action") Northridge commenced the Northbridge action against the company to recover certain past due obligations and accounts payable of a company in a principal and interest amount of $110,000.00 ("The Northbridge Claim") which Northbridge had purchased from certain vendors of the company pursuant to the terms of separate receivable purchase agreement between Northbridge and such vendors. The Northbridge order provides for a full and final settlement of the Northbridge Claim and The Northbridge Action. The Settlement Agreement became effective and binding upon the company and Northbridge upon execution of the Northbridge order by the district court on January 24, 2018. Pursuant to the terms of the settlement agreement approved by the Northbridge order on January 24, 2018 the Company agreed to issue to Northbridge settlement shares of the Company stock in one more tranches necessary to satisfy the Northbridge Settlement Amount through the issuance of freely trading securities issued pursuant to Section 3(a)(10) of the Securities Act of 1933.
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The Company is not presently involved in any other legal proceedings material to the business or financial condition of the Company. The Company does not anticipate any material reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business, in the next 12 months.
We are focused in become a world-class global multi-division technology company with four operating divisions: (1) Cloud Managed Services (IoT), (2) Solar Power Solutions, (3) Satellite Broadband, and (4) WiFi Camera Security Surveillance (see www.skyfidelityinc.com and www.tricascade.com).
Effective April 1, 2017, the Company closed on its acquisition of Skyfidelity, Inc (together with its wholly-owned subsidiary, TriCasade, Inc.) through a cashless exchange of stock. With its change in management, the Company is now focused in become a world-class global multi-division technology company with its four operating divisions: Cloud Managed Services (IoT), Solar Power Solutions, Satellite Broadband, and WiFi Camera Security Surveillance (see www.skyfidelityinc.com and www.tricascade.com).
Founded in May 2010, TriCascade, Inc. is committed to developing innovative Internet of Things (IoT) convergent technologies and products to reduce energy costs and empower the end user for smarter and safer living.
Leveraging its extensive experience in energy management, wireless networking, and home and B2B automation and device control systems, Tri Cascade focuses on bringing leading edge Wi-Fi and machine-to-machine wireless innovations for smart energy management to both residential and commercial markets. TriCascade aims to use the Internet of Things to make cities dynamic and responsive to energy demands and sudden energy spikes.
TriCascade's first product release is the i-BRIGHT™7x Smart Surge Protector, a Wi-Fi-enabled home energy management tool embedded with online scheduling and power consumption metering on the Microsoft® Cloud. With the advent of publicity regarding international forums for the preservation of our planet and the reduction in carbon dioxide emissions, TriCascade, Inc. continues to pioneer efforts to provide consumers with choices regarding their energy consumption. TriCascade, Inc was the first company in the U.S. to create an energy efficient consumer electronics device that communicates with TriCascade's proprietary Microsoft Cloud Based Energy Management System. i-BRIGHT7x is the first product of its kind, allowing consumers to more closely monitor and manage their energy usage while eliminating standby (phantom) power consumption when not using a device. The Company expects seeing an upsurge in sales of this product as consumers become aware that technology exists that will greatly lower their energy costs as well as decrease harmful carbon dioxide (CO2) emissions. Management expects that Tri Cascade's i-BRIGHT7x Smart Surge Protector will change the way we use our electronic devices. For the first time, consumers can gain insight in to how their behaviors impact their energy costs and affect the environment through the use of the Tri Cascade i- BRIGHT7x Smart Surge Protector. By tracking benchmark reports, consumers can take notice of changes that need to be made in order to reduce costs and better predict energy needs based on their schedule patterns.
The suggested retail price for Tri Cascade's i-BRIGHT7x Smart Surge Protector starts at $89.00 USD. The product is currently available for purchase at Amazon.com.
Tri Cascade, Inc. has also created a 4G/LTE Gateway Hub that provides consumers with the ability to access the internet directly from a SIM-based 4G/LTE Super Router called the SkiQ. The Company has designed this innovative communication device that will disrupt the traditional communications hardware industry, making routers, modems, satellite dishes, set-top boxes and media boxes obsolete. By taking advantage of the ability to connect simultaneously from both a fiber/cable internet connection as well as 4G/LTE, the Gateway Hub will replace the need for satellite internet (HughesNet), Cable Internet (COX, Time Warner, Comcast) and ADSL Internet at a fraction of the cost, while supporting future expansion of 5G networks.
Features & Benefits
· | All in One: 4G/LTE Modem/802.11ac Router |
· | Capable of Supporting 175 MPS in 4G/LTE |
· | Simplified Installation (No Additional Costs) |
· | Establish a Wi-Fi Eco System Smart Home |
· | Able to Extend to 5G |
· | First Completely Portable Router |
· | Provides Redundant Internet Connection with Fiber/Cable internet connection as well as 4G/5G |
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Market Opportunities
· | Tri Cascade intends to partner with major Telecom providers to offer a fixed broad band service using 4G/LTE network as a replacement for cable users. SKiQ's target audience includes over 147 million wireless customers and 15.6 million internet connections in service. Nearly 400 million people in U.S. and Mexico will be able to access the internet via SKiQ's 4G/LTE network. |
· | Over 40 million people in the U.S. lack access to the internet due to the absence of a cable or fiber service. SkiQ has the capability to be the sole non-satellite provider of internet using its proprietary 4G/LTE technology. |
· | Tri Cascade's proprietary SKiQ Networking capabilities will offer Satellite Television Providers with replacement delivery solutions to dish mounted satellite delivery of television content. No installation required and satellite service could be relocated at no additional costs. Lower customer acquisition costs (currently $3,500 per customer) would provide Satellite Television Providers with lower cost market penetration with better pricing. The US Market alone could provide over 46 million SkiQ customers. |
· | SKiQ is the only portable router capable of providing high speed internet via 4G/LTE to Recreational Vehicle (RV) users, Campsites and Boat owners who lack access to terrestrial internet connections. With over 25 million people participating annually in RV, Camping and Boating activities in the U.S., SKiQ's dominant technology should deliver millions of customers from this sector alone. |
On August 30, 2017 the Company announced that TriCascade, Inc. had successfully renewed its international technology patents relating to TriCascade's Proprietary Energy Metering/WiFi devices. In 2010, Tri Cascade Inc. began developing and filing for patents in the United States as well as China on various proprietary and customized energy management + technological advancements and user interfaces (UI's) utilizing the Microsoft Azure's Cloud computing systems.
Recently, TriCascade started the process of renewing its international patent protection relating to US Patent Numbers 8,849,596 B2; 8,781,639 B2; US 2013/0178996 (US pending); US 2014/0054977 (US pending); US 2014/0002057 (US pending); US 2015/0073613 (US pending). TriCascade's Energy Metering/Wifi Device Patents:
Features & Benefits
· | Creating the First Smart Home Energy Metering Applications and Solutions |
· | Calculating and Recording Energy Usage (Kilowatts) from wall outlet receptacles |
· | Measuring power consumption from individual outlet receptacles through a wireless system |
· | Providing automatic power breaking safety protection from overload of electrical appliances |
· | Using an RFID wireless identification technique to identify and manage energy use |
· | Creating WiFi outlet receptacles controlled by Mobile Apps to control energy usage |
· | Creating first of its kind Smart Surge Protection for wall outlets |
· | Communicating Energy Usage from Wall Outlets with Microsoft Cloud Based Energy Metering Software |
Market Opportunities
Green homes red-hot: 17% of New US Construction Seeks Smart Energy Devices: The home building industry is struggling, but one sector is booming: green homes. The number of homes winning the government's Energy Star designation since the program began in 1995 has crossed the 1 million mark. Despite an overall housing slump, 75,000 have been added so far this year for a total of 1,024,200.
Last year, Energy Star homes accounted for nearly 17% of all single-family homes built, up from 12% in 2015. The Energy Star label means a house is at least 20% more energy-efficient than other new homes.
Existing homes are going green, too: 68% of people surveyed by USA TODAY took steps this year to make their homes more energy-efficient. Of those who did, 71% said it was "mostly to save money" and 26% "mostly to save the environment."
· | 74% of Americans are likely to change their energy use to save money on their utility bills if they were given a new technology solution. |
· | The average U.S. household spends ~$0.1186 per kilowatt hour on electricity. |
· | The Intel Wipro's study shows that the Intelligent Home Energy Management will allow consumers to reduce their power consumption by 31%. |
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TriCascade is in talks to build Smart Home At University of California-Irvine.
TriCascade's proprietary Smart Home Energy Devices provide a sophisticated and highly-detailed consumption data and pattern-usage behavior experience. This technology's revolutionary information allows extensive and intuitive profiling scenarios for such purposes as self-defined alerts, direct marketing, or very specific and predictive analysis of energy consumption.
TriCascade is negotiating to build an Artificial Intelligence (AI) joint project for deep home machine learning with Microsoft facial and voice recognition in collaboration with UCI's California Institute for Telecommunications and Information Technology. The new "AI-house" will be installed at the UCI campus with self-learning systems installed using TriCascade's Smart Surge Outlet; Smart Thermostat and I-Bright technology systems which will provide data for lifestyle behavioral analysis data stored in the Cloud.
In conjunction with this shift in business focus, the Company is seeking approval to change the its name and the trading symbol to better reflect its new business plan.
On October 31, 2017 TriCasade Inc. received a formal invitation from the organizers of the CES (Consumer Electronics Show) to showcase the following during CES (January 9-12, 2018) at the Westgate Resort, Las Vegas:
· | The SKIQ – 4G/150 Mbps A T & T 3X3 Dual Band Smart Gateway |
· | The IoT Smart Home Eco-System – a combination IoT Thermostat, Light Dimmer, MENA 15R duplex Receptacle, Wall Plug, IoT Cam, Smart Garage |
· | A preview of KEL – A T & T CAT/M IoT HUB |
· | Microsoft Windows Azure IoT suite |
On November 9, 2017 the Company announced that it had created the first of its kind Smart Wall Plug - an Internet of Things (IoT) device that will be introduced at the Consumer Electronics Show (CES) in January, 2018.The Smart Wall Plug is one of a kind. Its patented technology completely transcends the market for overload/surge protection. There are wall plugs that provide mobile app based "on-off" features-but none with provide overload protection. Finally, there are no devices in the marketplace that perform the "triple play": (1) surge protection/load management alerts/ child proof safety outlet protection; (2) WIFI extender/router functions; and (3) energy management metering in the cloud.
· | The Company has designed this innovative Smart Wall Plug technology to complement its SmartOutlet device which will create a total “before and after-market” product cycle providing homes, apartments, condos and office buildings with overload/surge protection. |
· | The Company has created a Mobile App-based software platform that will allow all of its devices to connect with and be controlled through Alexa-Equipped voice commands. |
· | The Smart Wall Plug and Smart Outlet Technologies will provide the foundation for the final stages of the Smart Home: Energy Management. Tri Cascade’s i-BRIGHT programmable 15/20 AMP and GFCI Duplex Receptacles built-in with patented overload safety protection technology, and Smart Light Switch/Dimmers are the fundamental components for the BRIGHTconnect™ IoT ECO-Cloud Platform by enabling energy efficiency through a 802.11n Wi-Fi Mesh network of interconnected nodes allowing real time power consumption metering and user-friendly Sell-Learning Schedule System. |
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IoT Ultimate SMART WALL PLUG PROTECTION-- Features & Benefits
· | Alexa-Equipped Mobile App-based Technology. |
· | 1080 Joule surge energy rating provides maximum protection of all your sensitive electronic devices |
· | * Overload safety alert notification via Mobile App |
· | * Intelligent behavior leaning system (Machine Learning Mechanism) |
· | * 802.1 1n Wi-Fi Extender |
· | * Internet of Things Smart Home Cloud energy management |
· | * Duplex real-time power consumption metering |
· | * 24/7 ON/OFF schedule |
· | * Mobile App control |
· | * NEMA 15-R duplex 110v |
· | * FCC/ETL certified |
Market Opportunities
· | Between 2010 and 2014, U.S. municipal fire departments responded to an average of 45,210 home structure fires involving electrical failure or malfunction. These fires caused annual averages of 420 civilian deaths, 1,370 civilian injuries, and $1.4 billion in direct property damage. Thirty-nine percent of home electrical fires involve outlets and receptacles, and other electrical wiring. The installation of the Smart Wall Plug in these residences could prevent these losses. |
· | TriCascade intends to partner with major home builders as well as retail partners, such as Home Depot and Lowes, to offer consumers SmartHome Energy Management devices that will protect homes, apartments and commercial buildings from surge and overload issues while providing a SmartGrid mobile app to monitor energy usage. |
· | The Smart Wall Plug as well as the Smart Outlet will be marketed to the 130 million households and 7+ millions of business in the U.S. that currently do not report any Energy Management capability. Statistically, 74% of Americans are likely to change their energy use to save money on their utility bills if they were given a new technology solution. |
· | Tri Cascade will introduce the latest smart energy efficiency technologies faster than competitors due to its strategic partnership with Microsoft and Freescale. Tri Cascade will also have access to its partners’ superior marketing data and marketing vendors. |
· | TriCascade’s proprietary Smart Wall Plug and Smart Outlet capabilities will either complement or replace currently deployed wall outlets in homes, apartments and commercial buildings which offer none of the functionality of the SMARTSURGE Outlet: Surge/Overload protection; Energy Management; and WiFI extension. |
On November 14, 2017 the Company announced that TriCascade has retained SAVIANT Consulting to create a new Microsoft IoT Suite software platform which will allow TriCascade to expand its customer reach in the area of Energy Consumption management as well as data analytic communications (IoT) between TriCascade customers and the Microsoft IoT Suite Cloud Platform.
Saviant has proven its expertise in developing green-field solutions around Cloud, IoT, Data Analytics and Enterprise Mobility to solve Utility specific business problems. Saviant has developed a Smart Analytics solution that is helping Water utilities to save Billions of Gallons of water every year. It is a recognized leader in the creation of data analytic and data gathering software for Cloud Managed Services. TriCascade recognizes that the entire Internet of Things (IoT) business is better managed through the Microsoft IoT Suite Cloud Platform. As a result, TriCascade believes that the partnership with Saviant will be one of the most critical elements in TriCascade’s development of a Smart Home Application Network (HuB) that will deliver SIM-based IoT communications to the Cloud.
This SIM-based communications (IoT) network being developed by TriCascade in connection with its primary telecom partners will replace the necessity of Internet based WiFi networks for low bandwidth communication in Smart Home applications.
Saviant is a Microsoft Gold Partner for Cloud Platform and Data Analytics. Their expertise and working relationship with the Microsoft IoT Suite will enable TriCascade to become a world leader in IoT device communications.
On December 5, 2017 the Company announced that TriCascade has created a Smart Thermostat device, the “THERMORING” which will allow consumers to use voice activated commands to control residential temperatures. The THERMORING offers next generation technology that will incorporate voice commands that can be made throughout the home to manage temperatures in single and two story homes.
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By taking advantage of the ability to provide both mobile app and voice activated controls, the THERMORING provides and improved consumer experience over the NEST thermostat and other WiFi enabled devices. The THERMORING will also introduce a Kilowatt Management feature which will provide consumers with updated daily kilowatt usage through LED images located on the thermostat device.
Leveraging upon our voice activated software technologies already included in the Smart Wall Plug and other devices, the THERMORING will provide consumers with an improved thermostat technology that provides for mobile app and voice controls. Google’s purchase of NEST for $3.2 Billion demonstrates the high price being paid for consumer thermostat technologies. We believe the THERMORING will far surpass the technologies currently being used in other thermostat devices.
IoT Ultimate Thermostat Features & Benefits
· | Smart Energy Thermostat |
· | Real Time Energy Consumption LED monitor |
· | Simplified Installation (No Additional Costs) |
· | 7 Day Home Energy Management System |
· | Home Sleep Away Activation Control |
· | Outdoor Weather Information |
· | Voice Activated Control using Alexa or Cortana |
Market Opportunities
· | TriCascade intends to partner with major Home Builders and Retailers to sell the THERMORING. THERMORING’S target audience includes over 100 million residential homes as well as commercial locations throughout the United States. |
· | Every home needs a thermostat. Why not the only SmartThermostat that offers Voice Activated Commands, Real Time Energy Consumption Monitoring and WiFi enable mobile app controls? |
· | The THERMORING will use TriCascade’s proprietary Energy Management Systems to provide consumers with real time energy consumption. |
· | According to the new research report "Smart Home Market by Product (Lighting Control, Security & Access Control, HVAC, Entertainment & Other Control, Home Healthcare, Smart Kitchen, and Home Appliances), Software & Service (Behavioral, Proactive), and Geography - Global Forecast to 2023", the smart home market is expected to be valued at USD 137.91 Billion by 2023, growing at a CAGR of 13.61% between 2017 and 2023. |
· | Devices that allow Consumers to monitor their energy consumption are the hottest consumer technologies in the marketplace in 2017. Smart meters enable end users to calculate their real-time energy consumption levels on a daily basis. They provide information regarding the use of energy at different times during the day, enabling them to take appropriate steps to cut down their energy costs. Thus, smart meters are expected to hold a major share of the smart home market by 2023. |
Skyfidelity/TriCascade officially participated in the Consumer Electronic Show (CES) from January 8-12, 2018 at Las Vegas, Nevada. Our participation consisted of joining one of our strategic manufacturing partners, Acelink Technologies, at their display suite. TriCascade demonstrated the SKiQ to the public, as well as to several potential customers, at the CES show.
The SKiQ device, as well as the other SmartHome devices demonstrated at the show (including the Smart Thermostat/Smart Outlet/Smart Light Switch) were well received and the Company expects to obtain sales orders based upon this event.
The Company is very excited about bringing to consumers some of the most sophisticated and compelling Smart Home devices in the marketplace in 2018:
· | the SKiQ—the first super router that will provide 4G/5G/LTE to consumers; |
· | the ThermoRing-the first voice activated thermostat that will wirelessly communicate with the home’s HVAD system via cloud communication; |
· | the SmartOutlet; and |
· | the SmartDimmer and other related SmartEnergy devices that will change the way consumers view and manage their electrical and energy consumption. |
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Seasonality
We do not expect significant seasonality in our business.
Facilities
The Company’s principal corporate office is located at 5020 Campus Drive, Newport Beach, CA 92660.
Employees
As of March 31, 2018, we had ten employees, including officers and directors. We believe that we have been successful in attracting experienced and capable personnel. All our employees have entered agreements with us requiring them not to compete or disclose our proprietary information. Our employees are not represented by any labor union. We believe that relations with our employees are excellent.
Intellectual Property
We may rely on a combination of patent, trademark, copyright, and trade secret laws in the United States as well as confidentiality procedures and contractual provisions to protect our proprietary technology, databases, and our brand. Despite these reliances, we believe the following factors are more essential to establishing and maintaining a competitive advantage:
· | the statistical and technological skills of our service operations and research and development teams; |
· | the expertise and knowledge of our service operations and research and development teams; |
· | the real-time connectivity of our service offerings; |
· | the continued expansion of our proprietary technology; and |
· | a continued focus on the improved financial results of our clients. |
We have a policy of requiring key employees and consultants to execute confidentiality agreements upon the commencement of an employment or consulting relationship with us. Our employee agreements also require relevant employees to assign to us all rights to any inventions made or conceived during their employment with us. In addition, we have a policy of requiring individuals and entities with which we discuss potential business relationships to sign non-disclosure agreements. Our agreements with clients include confidentiality and non-disclosure provisions.
Legal Proceedings
We may from time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to our business. These matters may include product liability, intellectual property, employment, personal injury cause by our employees, and other general claims. We are not presently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
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The following table sets forth information regarding our executive officers, directors and significant employees, including their ages as of December 31, 2017:
Name and Principal Position | Age | Term of Office |
Approximate hours per week for part-time employees |
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Max Chin Li, President and Director | 62 | Since March 7, 2018 | 40 | |||
Alan J. Bailey, Secretary and Director | 72 | Since August 15, 2015 | 5 |
Max Chin Li, President and Director
From 2010 to the present, Mr. Li has been President, CEO and a director of Tri Cascade, Inc. of Newport Beach, California where he developed Board level strategic plan to advance the company's mission also promote revenue, profitability, and growth as an organization, oversee company operations to ensure operation efficiency and quality, plan, develop, and implement strategies for generating resources and/or revenues for the company, identify investment, acquisition and merger opportunities and oversees and structures fundraising strategic plan with Board and implementation, including identifying resource requirements, researching funding sources, establishing strategies to approach funders, submitting proposals and administrating fundraising records and documentation.
From 2008 to 2010 he was President of Silverpac, Inc. of Newport Beach, California. He established strong embedded product development team and principle Gold Partnership with Microsoft, developed advanced smart energy and home automation management program, established alliance business development partnership with AT&T, and created the “evolution 5500” the advanced Universal Remote Control has received the 2010 CES (Consumer Electronic Show) Innovation Design and Engineering Award in the Home Theater Accessories Product Category.
Mr. Li has a B.S. Degree in Engineering & Management from Aletheia University, Taipei, Taiwan.
Alan, J. Bailey, Secretary and Director
From September 2009 to the present time, Mr. Bailey was founder and CEO of Dynamic Media International Inc, Century City, CA (multi-media company), CFO of Green Automotive Company (“GACR”), Global Entertainment Holdings, Inc. (“GBHL”), Rotate Black, Inc; (“ROBK”), Hollywood Entertainment EDU Holding,Inc., and Automated- X, Inc (“AUTX”)
From August, 1980 to September, 2009, Mr. Bailey was Senior Vice President & Treasurer, Paramount Pictures, New York and Los Angeles, responsible for Paramount’s global cash management and control; internal audit and compliance; business continuity/disaster recovery; cash planning and forecasting; individual and film slate financing and investor reporting/compliance; corporate finance (including receivable financing), international financial reporting; and tax planning, corporate structuring and compliance.
Mr. Bailey is qualified as a Fellow of the Institute of Chartered Accountants and was educated at the Bushey Grammar School, Bushey, Hertfordshire, England.
None of our officers or directors in the last five years has been the subject of any conviction in a criminal proceeding or named as a defendant in a pending criminal proceeding (excluding traffic violations and other minor offenses), the entry of an order, judgment, or decree, not subsequently reversed, suspended or vacated, by a court of competent jurisdiction that permanently or temporarily enjoined, barred, suspended or otherwise limited such person’s involvement in any type of business, securities, commodities, or banking activities; a finding or judgment by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission, the Commodity Futures Trading Commission, or a state securities regulator of a violation of federal or state securities or commodities law, which finding or judgment has not been reversed, suspended, or vacated; or the entry of an order by a self-regulatory organization that permanently or temporarily barred, suspended or otherwise limited such person’s involvement in any type of business or securities activities.
There are no family relationships among and between our directors, officers, persons nominated or chosen by the Company to become directors or officers, or beneficial owners of more than five percent (5%) of the any class of the Company’s equity securities.
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Employment Agreements
Messrs. Li and Bailey have entered into employment agreements with the Company for a term of five years. Pursuant to their employment agreements, they have agreed to devote a substantial portion of their business and professional time and efforts to our business. The employment agreements provide that each employee shall receive a salary determined by the Board of Directors commensurate with the development of the Company. They may be entitled to receive, at the sole discretion of our Board of Directors or a committee thereof, bonuses based on the achievement (in whole or in part) by the Company of our business plan and achievement by the employee of fixed personal performance objectives.
The following table represents information regarding the total compensation our officers and directors of the Company for the period ended December 31, 2017:
Name and Principal Position | Cash Compensation | Annual Bonus Available | Other Compensation | Total Compensation | ||||||||||||
Max Chin Li, President and Director | $ | 120,000.00 | 0 | 0 | $ | 120,000.00 | ||||||||||
Alan J. Bailey, CFO, Treasurer, Secretary, Director | 0 | 0 | 0 | |||||||||||||
Total | $ | 120,000.00 | 0 | 0 | $ | 120,000.00 |
Our board of directors currently consists of three directors. None of our directors are "independent" as defined in Rule 4200 of FINRA's listing standards. We may appoint additional independent directors to our board of directors in the future, particularly to serve on committees should they be established.
Committees of the Board of Directors
We may establish an audit committee, compensation committee, a nominating and governance committee and other committees to our Board of Directors in the future, but have not done so as of the date of this Offering Circular. Until such committees are established, matters that would otherwise be addressed by such committees will be acted upon by the Board of Directors.
Director Compensation
We currently do not pay our directors any compensation for their services as board members, with the exception of reimbursing and board related expenses. In the future, we may compensate directors, particularly those who are not also employees and who act as independent board members, on either a per meeting or fixed compensation basis.
Limitation of Liability and Indemnification of Officers and Directors
Our Bylaws limit the liability of directors and officers of the Company to the maximum extent permitted by Utah law. The Bylaws state that the Company shall indemnify and hold harmless each person who was or is a party or is threatened to be made a party to, or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or an officer of the Company or such director or officer is or was serving at the request of the Company as a director, officer, partner, member, manager, trustee, employee or agent of another company or of a partnership, limited liability company, joint venture, trust or other enterprise.
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The Company believes that indemnification under our Bylaws covers at least negligence and gross negligence on the part of indemnified parties. The Company also may secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in connection with their services to us, regardless of whether our Bylaws permit such indemnification.
The Company may also enter into separate indemnification agreements with its directors and officers, in addition to the indemnification provided for in our Bylaws. These agreements, among other things, may provide that we will indemnify our directors and officers for certain expenses (including attorneys' fees), judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of such person's services as one of our directors or officers, or rendering services at our request, to any of its subsidiaries or any other company or enterprise. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and officers.
There is no pending litigation or proceeding involving any of our directors or officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.
For additional information on indemnification and limitations on liability of our directors and officers, please review the Company's Bylaws, which are attached to this Offering Circular.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
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During the last two full fiscal years and the current fiscal year or any currently proposed transaction, there is no transaction involving the Company, in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for its last three fiscal years.
Disclosure of Conflicts of Interest
There are no conflicts of interest between the Company and any of its officers or directors
Stock Options
The Company's stockholders have approved a 2018 Stock Option Plan, as previously adopted by our Board of Directors (the “Plan”). Under this Plan, our officers, directors, and/or key employees and/or consultants can receive incentive stock options and non-qualified stock options to purchase shares of our Common Stock. To date, no options have been issued.
With respect to incentive stock options, the Plan provides that the exercise price of each such option must be at least equal to 100% of the fair market value of the Common Stock on the date that such option is granted. The Plan requires that all such options have an expiration date not later than that date which is one day before the tenth anniversary of the date of the grant of such options (or the fifth anniversary of the date of grant in the case of 10% stockholders). However, with certain limited exceptions, in the event that the option holder ceases to be associated with the Company, or engages in or is involved with any business similar to ours, such option holder's incentive options immediately terminate.
Pursuant to the provisions of the Plan, the aggregate fair market value, determined as of the date(s) of grant, for which incentive stock options are first exercisable by an option holder during any one calendar year cannot exceed $100,000. No such options have yet been issued.
Bonus Plan for Executive Officers
The Company's Board of Directors has established an annual Bonus Plan for Executive Officers (the “Bonus Plan.”) Under the Bonus Plan, a Committee of the Board of Directors sets performance targets for key employees who are or may become executive officers. Such executives are eligible for a bonus only if they meet the performance standards set in advance by the Committee. Aggregate bonuses may not exceed ten percent of income before taxes and bonuses may not exceed $1 million per employee.
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Management Stock Bonus Plan
Our Management Stock Bonus Plan provides that the Company shall establish a reserve of shares of Common Stock to be awarded to eligible salaried officers and directors. The Management Stock Bonus Plan Committee, composed of not less than three members, administers the Plan. The Board of Directors must review actions of the Committee. The Plan awards restricted stock to key executives. During the restricted period, the owner of the stock may not transfer the stock without first offering the Company the opportunity to buy back the stock at its issue price. In the first year of the restriction period, the Company has the right to buy back all of the awarded stock. In the second year, the Company has the right to buy back 75% of the awarded stock. After two years and until the end of the restriction period, a maximum of three years, the Company has the right to buy back 50% of the awarded stock. No shares have been issued under the plan.
Indemnification Agreements
We have entered into indemnification agreements with each of our directors, executive officers and other key employees. The indemnification agreements and our amended and restated By-Laws will require us to indemnify our directors to the fullest extent permitted by Utah law.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the Securities Act), may be permitted to directors, executive officers or persons controlling us, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Review, Approval or Ratification of Transactions with Related Parties
We have adopted a related-party transactions policy under which our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of any class of our Common Stock, and any members of the immediate family of any of the foregoing persons are not permitted to enter into a related-party transaction with us without the consent of our audit committee. If the related party is, or is associated with, a member of our audit committee, the transaction must be reviewed and approved by another independent body of our Board of Directors, such as our governance committee. Any request for us to enter into a transaction with a related party in which the amount involved exceeds $120,000 and such party would have a direct or indirect interest must first be presented to our audit committee for review, consideration and approval. If advance approval of a related-party transaction was not feasible or was not obtained, the related-party transaction must be submitted to the audit committee as soon as reasonably practicable, at which time the audit committee shall consider whether to ratify and continue, amend and ratify, or terminate or rescind such related-party transaction. All of the transactions described above were reviewed and considered by, and were entered into with the approval of, or ratification by, our Board of Directors.
During the last two full fiscal years and the current fiscal year or any currently proposed transaction, there are transactions involving the issuer, in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the issuer’s total assets at year-end for its last three fiscal years, except compensation awarded to executives.
Disclosure of Conflicts of Interest
There are no conflicts of interest between the Company and any of its officers or directors.
Legal/Disciplinary History
None of Saddle Ranch Media, Inc.’s Officers or Directors have been the subject of any criminal proceeding or named as a defendant in a pending criminal proceeding (excluding traffic violations and other minor offenses);
None of Saddle Ranch Media, Inc.’s Officers or Directors have been the subject of any entry of an order, judgment, or decree, not subsequently reversed, suspended or vacated, by a court of competent jurisdiction that permanently or temporarily enjoined, barred, suspended or otherwise limited such person’s involvement in any type of business, securities, commodities, or banking activities;
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None of Saddle Ranch Media, Inc.’s Officers or Directors have been the subject of any finding or judgment by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission, the Commodity Futures Trading Commission, or a state securities regulator of a violation of federal or state securities or commodities law, which finding or judgment has not been reversed, suspended, or vacated; or
None of Saddle Ranch Media, Inc.’s Officers or Directors has been the subject of any entry of an order by a self-regulatory organization that permanently or temporarily barred, suspended or otherwise limited such person’s involvement in any type of business or securities activities.
Board Composition
Our board of directors currently consists of one member. Each director of the Company serves until the next annual meeting of stockholders and until his successor is elected and duly qualified, or until his earlier death, resignation or removal. Our board is authorized to appoint persons to the offices of Chairman of the Board of Directors, President, Chief Executive Officer, one or more vice presidents, a Treasurer or Chief Financial Officer and a Secretary and such other offices as may be determined by the board.
We have no formal policy regarding board diversity. In selecting board candidates, we seek individuals who will further the interests of our stockholders through an established record of professional accomplishment, the ability to contribute positively to our collaborative culture, knowledge of our business and understanding of our prospective markets.
Board Leadership Structure and Risk Oversight
The board of directors oversees our business and considers the risks associated with our business strategy and decisions. The board currently implements its risk oversight function as a whole. Each of the board committees when established will also provide risk oversight in respect of its areas of concentration and reports material risks to the board for further consideration.
Code of Business Conduct and Ethics
Prior to one year from the date of this Offering's qualification, we will be adopting a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. We will post on our website a current copy of the code and all disclosures that are required by law or market rules in regard to any amendments to, or waivers from, any provision of the code.
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The following table sets forth certain information known to us regarding beneficial ownership of our capital stock as of December 31, 2017 for (i) all executive officers and directors as a group and (ii) each person, or group of affiliated persons, known by us to be the beneficial owner of more than ten percent (10%) of our capital stock. The percentage of beneficial ownership in the table below is based on 487,693,986 shares of common stock deemed to be outstanding as of January 31, 2018.
Unless otherwise indicated and subject to applicable community property laws, to our knowledge, each Shareholder named in the following table possesses sole voting and investment power over their Shares of Common Stock. Percentage of beneficial ownership before the offering is based on 1,948,138,976 shares of Common Stock outstanding as of May 29, 2018.
Name | Common Shares Beneficially Owned Prior to Offering | Percentage of Class Outstanding | Shares Beneficially Owned After Offering | |||||||||
Max Chin Li | 100,000,000 | 5.13 | 100,000,000 | |||||||||
Alan J. Bailey | 5,000,000 | 0.26 | 5,000,000 | |||||||||
Timothy Peabody | 250,000 | 0.10 | 250,000 | |||||||||
Total | 105,250,000 | 5.40 | 105,250,000 |
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Unless otherwise indicated and subject to applicable community property laws, to our knowledge, each Shareholder named in the following table possesses sole voting and investment power over their Shares of Preferred Stock.
Name | Series B Preferred Stock Beneficially Owned | Percentage of Class Outstanding | ||||||
The Shamrock Investment Trust, Timothy Peabody, Trustee | 1,000,000 | 100.00% |
(1) The Series B Preferred Stock has the right to vote 80% of the votes on any mater requiring the vote of shareholders. The 1,000,000 Series B represents all of the issued and outstanding class of this preferred stock.
(2) Timothy Peabody is considered the beneficial owner of the 1,000,000 Series B Preferred Stock, which is held in the name of The Shamrock Investment Trust, Timothy Peabody, Trustee. Timothy Peabody is the only shareholder beneficially owning greater than 9.99% of the shares of any class.
Capitalization
Class of Stock | Par Value | Authorized |
Outstanding as of December 31, 2017 |
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Preferred Stock, Series A | 0.00001 | 10 | 10 | |||||||||
Preferred Stock, Series B | 0.00001 | 200,000,000 | 177,672 | |||||||||
Common Stock | 0.00001 | 5,000,000,000 | 450,874,858 |
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The Common Stock
We are authorized to issue 5,000,000,000 shares of Common Stock, $0.0001 par value. The holders of Common Stock are entitled to equal dividends and distributions, with respect to the Common Stock when, as, and if declared by the Board of Directors from funds legally available for such dividends. No holder of Common Stock has any preemptive right to subscribe for any of our stock nor are any shares subject to redemption. Upon our liquidation, dissolution or winding up, and after payment of creditors and any amounts payable to senior securities, the assets will be divided pro rata on a share-for-share basis among the holders of the shares of Common Stock. All shares of Common Stock now outstanding upon completion of this Offering and conversion of any Preferred Stock, are, and will be, fully paid, validly issued and non-assessable.
Holders of our Common Stock do not have cumulative voting rights, so that the holders of more than 50% of the shares voting for the election of directors will be able to elect 100% of the directors if they choose to do so, and in that event, the holders of the remaining shares will not be able to elect any members to the Board of Directors.
The Company has never paid any dividends to shareholders of our Common Stock. The declaration in the future of any cash or stock dividends will depend upon our capital requirements and financial position, general economic conditions, and other pertinent factors. We presently intend not to pay any cash or stock dividends in the foreseeable future. Management intends to reinvest earnings, if any, in the development and expansion of our business. No dividend may be paid on the Common Stock until all Preferred Stock dividends are paid in full.
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Preferred Stock
We are authorized by our Articles of Incorporation to issue a maximum of 3,000,000,000 shares of Preferred Stock. This Preferred Stock may be in one or more series and containing such rights, privileges and limitations, including voting rights, conversion privileges and/or redemption rights, as may, from time to time, be determined by our Board of Directors. Preferred stock may be issued in the future in connection with acquisitions, financings or such other matters as the Board of Directors deems to be appropriate. In the event that any such shares of Preferred Stock shall be issued, a Certificate of Designation, setting forth the series of such Preferred Stock and the relative rights, privileges and limitations with respect thereto, shall be filed. The effect of such Preferred Stock is that our Board of Directors alone, within the bounds and subject to the federal securities laws and the Utah Law, may be able to authorize the issuance of Preferred Stock which could have the effect of delaying, deferring or preventing a change in control of our Company without further action by the stockholders and might adversely affect the voting and other rights of holders of Common Stock. The issuance of Preferred Stock with voting and conversion rights also may adversely affect the voting power of the holders of Common Stock, including the loss of voting control to others.
The Company has no current plans to issue additional shares of any class of preferred stock other than those currently outstanding.
The Board of Directors is expressly vested with the authority to divide any or all of the Preferred Stock into series and to fix and determine the relative rights and preferences of the shares of each series so established, provided, however, that the rights and preferences of the various series may vary only with respect to: (a) the rate of dividend; (b) whether the shares may be called and, if so, the call price and the terms and conditions of call; (c) the amount payable upon the shares in the event of voluntary and involuntary liquidation; (d) sinking fund provisions, if any for the call or redemption of the shares; (e) the terms and conditions, if any, on which the shares may be converted; (f) voting rights; and (g) whether the shares will be cumulative, noncumulative or partially cumulative as to dividends and the dates from which any cumulative dividends are to accumulate.
The Board of Directors shall exercise the foregoing authority by adopting a resolution setting forth the designation of each series and the number of shares therein, and fixing and determining the relative rights and preferences thereof. The Board of Directors may make any change in the designations, terms, limitations or relative rights or preferences of any series in the same manner, so long as no shares of such series are outstanding at such time.
Within the limits and restrictions, if any, stated in any resolution of the Board of Directors originally fixing the number of shares constituting any series, the Board of Directors is authorized to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series subsequent to the issue of shares of such series. In case the number of shares of any series shall be so decreased, the share constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.
Existing Preferred Stock
Designations, Preferences. Rights And Limitations Of Series A Preferred Stock
Ten shares of Series A Preferred Stock have been authorized with a $0.0001 par value per share.
Conversion Rights. If at least one share of Series A Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series A Preferred Stock at any given time, regardless of their number, shall be convertible into the number of shares of Common Stock which equals four times the sum of: i) the total number of shares of Common Stock which are issued and outstanding and outstanding at the time of conversion, plus ii) the total number of shares of Series B and Series C Preferred Stocks which are issued and outstanding at the time of conversion.
Each individual share of Series A Preferred Stock shall be convertible into the number of shares of Common Stock equal to four times the sum of: all shares of Common Stock issued and outstanding at time of conversion plus all shares of Series B and Series C Preferred Stocks issued and outstanding at time of conversion, divided by the number of shares of Series A Preferred Stock issued and outstanding at the time of conversion.
Issuance. Shares of Preferred Stock may only be issued in exchange for the partial or full retirement of debt held by management, employees or consultants, or a as directed by a majority vote of the Board of Directors. The number of Shares of Preferred Stock to be issued to each qualified person (member of management, employee or consultant) holding a Note shall be determined by the following formula:
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For retirement of debt, the number or shares of Series A Preferred Stock to be issued shall be the sum of the discreet notes and other obligations owed lender (holder) which are being retired.
Voting Rights. a. If at least one share of Series A Preferred. Stock is issued and outstanding, then the total aggregate issued shares of Series A Preferred Stock at any given time, regardless of their number shall have voting rights equal to four times the sum of: i) the total number of shares of Common Stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of Series B and Series C Preferred Stocks which are issued and outstanding at the time of voting.
Each individual share of Series A Preferred Stock share have the voting rights equal to: four times the sum of all shares of Common Stock issued and outstanding at time of voting + all shares of Series B and Series C Preferred Stock issued and outstanding at time of voting, divided by the number of shares of Series A Preferred Stock issued and outstanding at the time of voting.
Designations, Preferences, Rights And Limitations Of Series B Preferred Stock
Designation And Number Of Shares. 200,000,000 shares of Series B Preferred Stock par value $0.001 per share (the “Preferred Stock”), are authorized (the “Series B Preferred Stock” or “Series B Preferred Shares “).
Dividends. The holders of Series B Preferred Stock shall be entitled to receive dividends when, as, and if declared by the Board of Directors, in its sole discretion.
Liquidation Rights. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary' or involuntary before any distribution or payment shall be made to the holders of any stock ranking junior to the Series B Preferred Stock. the holders of the Series B Preferred Stock shall be entitled to be paid out of the assets of the Corporation an amount equal to $1.00 per share or in the event of an aggregate subscription by a single subscriber for Series B Preferred Stock in excess of $100,000, $0.997 per share (as adjusted for any stock dividends, combination splits, recapitalizations, and the like with respect to such shares) (the “Preference Value”), plus all declared but unpaid dividends, for each share of Series B Preferred Stock held by them. After the payment of the full applicable Preference Value of each share of the Series B Preferred Stock as set forth herein, the remaining assets of the Corporation legally available for distribution, if any, shall be distributed ratably to holders of the Corporation's Common Stock.
Conversion and Anti-Dilution. Each share of Series B Preferred Stock shall be convertible at par value $0.001 per share (the ''Series B Preferred''), at any time, and/or from time to time, into the number of shares of the Corporation's common stock, par value $0.0001 per share (the “Common Stock”) equal to the price of the Series B Preferred Stock:, divided by the par value of the Series B Preferred, subject to adjustment as may be determined by the Board of Directors from time to time (the “Conversion Rate”). for example, assuming a $2.50 price per share of Series B Preferred Stock, and a par value of $0.0001 per share for Series B Preferred each share of Series B Preferred Stock would be convertible into 2,500 shares of Common Stock. Such conversion shall be deemed to be effective on the business day (the “Conversion Date”) following the receipt by the Corporation of written notice from the holder of the Series B Preferred Stock of the holder's intention to convert the shares of Series B Stock, together with the holder's stock certificate or certificates evidencing the Series B Preferred Stock. to be converted.
Promptly after the Conversion Date, the Corporation shall issue and deliver to such holder a certificate or certificates for the number of full shares of Common Stock issuable to the holder pursuant to the holder's conversion of Series B Preferred Shares in accordance with the provisions of this Section. The stock certificate(s) evidencing the Common Stock shall be issued with a restrictive legend indicating that it was issued in a transaction exempt from registration under the Securities Act of 1933. as amended (the “Securities Act”), and that it cannot be transferred unless it is so registered, or an exemption from registration is available, in the opinion of counsel to the Corporation. The Common Stock shall be issued in the name of the person who is the holder of the Series B Preferred Stock unless, the opinion of counsel to the Corporation, such transfer can be made in compliance with applicable securities law. The person in whose name the certificate(s) of Common Stock are so registered shall be treated as a holder of shares of Common Stock of the Corporation on the date the Common Stock certificates(s) are so issued.
All shares of Common Stock delivered upon conversion of the Series B Preferred Shares as provided herein shall be duly and validly issued and fully paid and non-assessable. Effective as of the Conversion Date, such converted Series B Preferred Shares shall no longer be deemed to be outstanding and all rights of the holder with respect to such shares shall immediately terminate except. the right to receive the shares of Common Stock issuable upon such conversion.
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The Corporation covenants that within 30 days of receipt of a conversion notice from any holder of shares of Series B Preferred Stock wherein which such conversion would create more shares of Common Stock than is authorized by the Corporation will increase the authorized number of shares of Common Stock sufficient to satisfy such holder of shares of Series B submitting such conversion notice.
Shares of Series B Preferred Stock anti-dilutive to reverse splits, and therefore in the case of a reverse split. are convertible to the number of Common Shares after the reverse split as would have been equal to ratio established in Section 3.8(a) prior to the reverse split. The conversion ratio of shares of Series B Preferred Stock, however, would increase proportionally in the case of forward splits, and may not be diluted by in reverse split. following a forward split.
Voting Rights. Each share of Series B Preferred Stock shall have ten (10) votes for any election or other vote placed before the shareholders of the Company.
Price. The initial price of each share of Series B Preferred Stock shall be $2.50. The price of each share of Series B Preferred Stock may he changed either through a majority vote of the Board of Directors through a resolution at a meeting of the Board, or through a resolution passed at in Action Without Meeting of the unanimous Board, until such time as a listed secondary and/or listed public market develops for the shares.
Lock-Up Restrictions On Conversion. Shares of Series B Preferred Stock may be converted into shares of Common Stock for a period of; a) six (6) months after purchase, if the Company voluntarily or involuntarily files public reports pursuant to Section 12 or 15 of the Securities Exchange Act of 1934; or b) twelve (12) months if the Company does not file such public reports.
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We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings for use in the operation of our business and do not intend to declare or pay any cash dividends in the foreseeable future. Any further determination to pay dividends on our capital stock will be at the discretion of our Board of Directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions, and other factors that our Board of Directors considers relevant.
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Current Offering
Saddle Ranch Media, Inc. (“Saddle Ranch Media, Inc.,” “We,” or the “Company”) is offering up to $2,500,000 total of Securities, consisting of Common Stock, $0.0001 par value (the “Common Stock” or collectively the “Securities”).
The Common Stock
We are authorized to issue 5,000,000,000 shares of Common Stock, $0.0001 par value. The holders of Common Stock are entitled to equal dividends and distributions, with respect to the Common Stock when, as, and if declared by the Board of Directors from funds legally available for such dividends. No holder of Common Stock has any preemptive right to subscribe for any of our stock nor are any shares subject to redemption. Upon our liquidation, dissolution or winding up, and after payment of creditors and senior securities, the assets will be divided pro rata on a share-for-share basis among the holders of the shares of Common Stock. All shares of Common Stock now outstanding upon completion of this Offering are, and will be, fully paid, validly issued and non-assessable.
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Holders of our Common Stock do not have cumulative voting rights, so that the holders of more than 50% of the shares voting for the election of directors will be able to elect 100% of the directors if they choose to do so. In that event, the holders of the remaining shares will not be able to elect any members to the Board of Directors.
There were 1,948,238,976 issued and outstanding as of May 31, 2018.
Preferred Stock
There were 3,000,000 shares of Series B Preferred shares authorized as of December 31, 2017 with a total of 1,000,000 shares issued and outstanding as of December 31, 2017.
The Series B Preferred Stock has the right to vote 80% of the votes on any matter requiring the vote of shareholders.
Transfer Agent
Our transfer agent is Transfer Online, Inc. 512 E. Salmon Street Portland, OR 97214 503-227-2950 The transfer agent is registered under the Exchange Act and operates under the regulatory authority of the SEC.
SHARES ELIGIBLE FOR FUTURE SALE
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Prior to this Offering, there has been a limited market for our Common Stock. Future sales of substantial amounts of our Common Stock, or securities or instruments convertible into our Common Stock, in the public market, or the perception that such sales may occur, could adversely affect the market price of our Common Stock prevailing from time to time. Furthermore, because there will be limits on the number of shares available for resale shortly after this Offering due to contractual and legal restrictions described below, there may be resales of substantial amounts of our Common Stock in the public market after those restrictions lapse. This could adversely affect the market price of our Common Stock prevailing at that time.
Rule 144
In general, a person who has beneficially owned restricted shares of our Common Stock for at least twelve months, in the event we are a reporting company under Regulation A, or at least six months, in the event we have been a reporting company under the Exchange Act for at least 90 days before the sale, would be entitled to sell such securities, provided that such person is not deemed to be an affiliate of ours at the time of sale or to have been an affiliate of ours at any time during the 90 days preceding the sale. A person who is an affiliate of ours at such time would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of shares that does not exceed the greater of the following:
· | 1% of the number of shares of our Common Stock then outstanding; or |
· | the average weekly trading volume of our Common Stock during the four calendar weeks preceding the filing by such person of a notice on Form 144 with respect to the sale; |
provided that, in each case, we are subject to the periodic reporting requirements of the Exchange Act for at least 90 days before the sale. Rule 144 trades must also comply with the manner of sale, notice and other provisions of Rule 144, to the extent applicable.
_____
Certain legal matters with respect to the shares of common stock offered hereby will be passed upon by John E. Lux, Esq. of Washington, D.C.
41 |
______
The consolidated financial statements of the Company appearing elsewhere in this Offering Circular have been prepared by management and have not been reviewed by an independent accountant.
WHERE YOU CAN FIND MORE INFORMATION
______
We have filed with the SEC a Regulation A Offering Statement on Form 1-A under the Securities Act with respect to the shares of common stock offered hereby. This Offering Circular, which constitutes a part of the Offering Statement, does not contain all of the information set forth in the Offering Statement or the exhibits and schedules filed therewith. For further information about us and the common stock offered hereby, we refer you to the Offering Statement and the exhibits and schedules filed therewith. Statements contained in this Offering Circular regarding the contents of any contract or other document that is filed as an exhibit to the Offering Statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the Offering Statement. Upon the completion of this Offering, we will be required to file periodic reports, proxy statements, and other information with the SEC pursuant to the Securities Exchange Act of 1934. You may read and copy this information at the SEC's Public Reference Room, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, including us, that file electronically with the SEC. The address of this site is www.sec.gov.
42 |
CONSOLIDATED FINANCIAL STATEMENTS
Contents
The Accompanying Unaudited Consolidated Financial Statements for the 12 months ended December 31, 2017 have been prepared from the books and records of the Company and have not been subject to independent review and audit. The financials reflect all adjustments known to management necessary to fairly reflect the results of operations and financial position of the Company for the periods presented.
Following the acquisition of SkyFidelity, Inc (with its wholly-owned subsidiary, TriCascade, Inc) which closed as of April 1, 2017 through the exchange of stock, for accounting purposes the consolidated results of SkyFideliity, Inc, and TriCascade, Inc. are treated as the continuing reporting entity from that date. Accordingly, these consolidated financial reports have been prepared as if the combined results of SkyFidelity, Inc. and TriCascade, Inc. are the successors regarding the Company’s reporting obligations as of the date of the acquisition.
Therefore, these consolidated financial statements reflect the restated historical financial condition, results of operations and cash flows of SkyFidelity, Inc. and TriCasade, Inc. for all periods presented through and including December 31, 2017 and all subsequent reporting periods.
F-1 |
SADDLE RANCH MEDIA, INC.
(Unaudited)
December 31, 2017 | December 31, 2016 | |||||||
(Restated – see page 5) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash | $ | 1,319 | $ | 13,003 | ||||
Trade accounts receivable | – | 4,618 | ||||||
Inventory | 35,200 | 41,574 | ||||||
Total current assets | 36,519 | 59,195 | ||||||
Fixed assets | ||||||||
Equipment, software, furniture, at cost | 61,070 | 61,070 | ||||||
Less: accumulated depreciation | (61,070 | ) | (59,993 | ) | ||||
– | 1,077 | |||||||
Other non-current assets | ||||||||
Product development | 487,000 | 487,000 | ||||||
Goodwill | 3,600,535 | 1,655,574 | ||||||
Security deposits | 774 | 774 | ||||||
4,088,309 | 2,143,348 | |||||||
Total assets | $ | 4,124,828 | $ | 2,203,620 | ||||
Liabilities and shareholders’ equity | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued expenses | $ | 450,309 | $ | 471,801 | ||||
Due to related party | 230,648 | 146,412 | ||||||
Non-current liabilities | 680,957 | 618,213 | ||||||
Loans payable, including accrued interest | 1,007,869 | 764,906 | ||||||
Amount due to product developer | 157,100 | 487,000 | ||||||
1,164,969 | 1,251,906 | |||||||
Total liabilities | 1,845,926 | 1,870,119 | ||||||
Shareholders’ equity | ||||||||
Series B preferred stock, no par value, 3,000,000 authorized; 1,000,000 issued & outstanding | – | – | ||||||
Common stock, $0.0001 par value, 2,500,000,000 authorized; 464,029,176 and 92,942,551 issued and outstanding at December 31, 2017 and December 31, 2016, respectively | 46,403 | 9,294 | ||||||
Additional paid in capital | 3,031,515 | 814,930 | ||||||
Treasury stock | 1,163,206 | 1,150,000 | ||||||
Accumulated deficit | (1,962,222 | ) | (1,640,723 | ) | ||||
2,278.902 | 333,501 | |||||||
Total liabilities and shareholders’ equity | $ | 4,124,828 | $ | 2,203,620 |
The accompanying notes are an integral part of these consolidated financial statements
F-2 |
SADDLE RANCH MEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the 12 Months Ended December 31, | ||||||||
2017 | 2016* | |||||||
Sales | $ | 14,274 | $ | 4,701 | ||||
Cost of sales | (6,374 | ) | (796 | ) | ||||
Gross margin | 7,900 | 3,905 | ||||||
Operating expenses | (296,720 | ) | (388,294 | ) | ||||
Net operating loss | (288,820 | ) | (384,389 | ) | ||||
Other income | ||||||||
Interest | – | 17,011 | ||||||
Other expense | ||||||||
Interest on loans payable | (32,679 | ) | (281 | ) | ||||
Net loss | $ | (321,499 | ) | $ | (367,659 | ) |
(*Restated, see Page 5)
The accompanying notes are an integral part of the consolidated financial statements
F-3 |
SADDLE RANCH MEDIA, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
12 Months Ended December 31, 2017
(Unaudited)
PREFERRED SHARES | COMMON SHARES | ADDITIONAL PAID IN | TREASURY | ACCUMULATED EARNINGS | SHAREHOLDERS’ | |||||||||||||||||||||||||||
NUMBER | AMOUNT | NUMBER | AMOUNT |
CAPITAL |
STOCK |
(DEFICIT) |
EQUITY |
|||||||||||||||||||||||||
January 1, 2017* | 1,000,000 | – | 92,942,551 | $ | 9,294 | $ | 814,930 | $ | 1,150,000 | $ | (1,640,723 | ) | $ | 333,501 | ||||||||||||||||||
February 28, 2017
Surrender of common shares to Treasury |
(40,000,000 | ) | (4,000 | ) | 4,000 | – | ||||||||||||||||||||||||||
April 1, 2017
Acquisition of SkyFidelity, Inc. |
100,000,000 | 10,000 | 1,890,000 | 1,900,000 | ||||||||||||||||||||||||||||
July 24- December 31, 2017 Issuance of stock in Section
3(a) (10) Settlement (including finance fees) |
403,149,000 | 40,315 | 326,585 | 366,900 | ||||||||||||||||||||||||||||
December 1, 2017
Surrender of common shares to Treasury |
(92,062,375 | ) | (9,206 | ) | 9,206 | – | ||||||||||||||||||||||||||
Loss for 12 months
ended December 31, 2017 |
(321,499 | ) | (321,499 | ) | ||||||||||||||||||||||||||||
December 31, 2017 | 1,000,000 | – | 464,029,176 | $ | 46,403 | $ | 3,031,515 | $ | 1,163,206 | $ | (1,962,222 | ) | $ | 2,278,902 |
(* opening balances restated – see Page 5. In addition, the value of issued common shares has been retroactively changed from $0.005 to $0.0001)
The accompanying notes are an integral part of the financial statements
F-4 |
SADDLE RANCH MEDIA, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the 12 Months Ended December 31, 2017
(Unaudited)
Net cash from (used in) operating activities: | ||||
Net loss | $ | (321,499 | ) | |
Adjustments to reconcile net loss to cash: | ||||
Depreciation of fixed assets | 1,077 | |||
Decrease in trade accounts receivable | 4,618 | |||
Decrease in inventory | 6,374 | |||
Decrease in accounts payable and accrued expenses | (29,453 | ) | ||
Increase in amount due to related party | 84,236 | |||
Net cash from (used in) operating activities | (254,647 | ) | ||
Net cash from financing activities | ||||
Increase in loans payable and accrued interest | 242,963 | |||
Net decrease in cash | (11,684 | ) | ||
Cash - beginning of period | 13,003 | |||
Cash - end of period | $ | 1,319 | ||
Supplemental information not involving cash activity: | ||||
Increase in goodwill | $ | 1,900,000 | ||
Decrease in amount due to product developer | 329,900 | |||
Financing fees paid through issuance of stock | 37,000 | |||
Increase in issued common shares | (37,109 | ) | ||
Increase in additional paid in capital | (2,216,585 | ) | ||
Increase in treasury stock | (13,206 | ) | ||
$ | – |
The accompanying notes are an integral part of the financial statements
F-5 |
SADDLE RANCH MEDIA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR 12 MONTHS ENDED DECEMBER 31, 2017
(Unaudited)
1. | The Company’s Organization and Current Operations |
The Company was originally formed in the State of Utah on October 7, 1988, as Port City Corporation. In October 1990, the name of the Company was changed to Interline Resources Corporation (“Interline”) which operated in the oil and gas industry in east-central Wyoming and eastern Utah. On October 15, 2009, Interline filed a Form 15 terminating its registration as a 12(g) company and choosing to adopt an alternative-reporting standard for the filing of its subsequent (unaudited) financial reports.
On November 20, 2014, the Company changed its corporate name to Automated-X, Inc. when the company entered the video kiosk distribution business through QUICKflickUSA, Inc
On August 15, 2015, the Company entered into a Securities Exchange and Acquisition Agreement with Saddle Ranch Pictures, Inc. (“SRPI”) wherein the Company acquired SRPI in a cashless exchange of stock. Prior to closing the SRPI acquisition, the Company approved the transfer of 100% of its ownership in its wholly-owned subsidiary, QUICKflickUSA, Inc., to two of the Company’s major shareholders. The name of the Company was changed with the state of Utah on September 9, 2015 from Automated-X, Inc. to Saddle Ranch Media, Inc. The Company’s trading symbol was also changed with FINRA from “AUTX” to “SRMX” effective October 6, 2015.
On February 28, 2017 Philip M. Cohen resigned as Chairman and CEO, and in consideration for the Spin-Out of both Saddle Ranch Pictures, Inc. and certain digital programming assets representing the “African American Medical Network” to Mr. Cohen, he surrendered 40,000,000 common shares back to the Company’s Treasury. Also on February 28, 2017 Mr. Cohen sold his holding of 1,000,000 “super voting” Series B preferred shares in a private transaction to The Shamrock Investment Trust, Timothy P. Peabody, Esq., trustee.
Mr. Peabody was appointed the Company’s Chairman and CEO on February 28, 2017.
The Company closed on an acquisition of Skyfidelity, Inc. (together with its wholly- owned subsidiary Tricascade, Inc.) as of April 1, 2017 and issued 100,000,000 of its restricted common shares against the cashless exchange of 100,000,000 common shares of Skyfidelity, Inc. (being all of the issued and outstanding shares of Skyfidelity, Inc.). Following the acquisition of Skyfidelity, Inc. the Company recognized the need to restructure certain past due accounts payable previously incurred by TriCasade, Inc. relating to the development of TriCascade’s new i-Bright single outlet wi-fi IoT wall- plug platform product, under an Original Design Manufacturing (“ODM”) Agreement with a Taiwanese technology company dated as of April 12, 2016 for which the Company had assumed financial responsibility. The Company entered into Settlement Agreements with Northbridge Financial, Inc.(“NCI”) on July 18, 2017, October 3, 2017 and November 28, 2017 to settle the first three installments of $102,000, $175,000 and $100,000 respectively payable under the ODM (plus financing costs of $37,000) due to NCI arising from NCI’s purchase of this accounts payable debt.
F-6 |
The financing by NCI enabled development and production of the new TriCascade product to commence. The Settlements by the Company with NCI were made via the issuance of unrestricted common stock to NCI at a 50% discount to market pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”). The fairness of the Settlement Agreements was approved by Orders granted by the Twelfth Judicial Circuit Court for Sarasota County, Florida on July 19, on October 4, 2017 and on November 29, 2017 respectively. Following this approval, the Company issued the following:
- 78,985,000 unrestricted common shares issued to NCI over the period July 24, 2017 through and including September 20, 2017 in settlement of the initial tranche of $102,000 in past due accounts payable and financing costs of $12,000;
- 173,164,000 unrestricted common shares issued to NCI over the period October 11, 2017 through and November 11, 2017 in settlement of the second tranche of $175,000 in past due accounts payable and financing costs of $15,000; and
- 151,000,000 unrestricted common shares issued to NCI over the period December 4, 2017 through and including December 18, 2017 in partial settlement of $52,900 toward the third tranche of $100,000 in past due accounts payable and financing costs of $10,000.
On December 1, 2017 the following restricted common shares (totaling 92,062,375 common shares) were surrendered to the Company’s Treasury:
- Timothy Peabody, our Chairman and CEO, surrendered his entire holding of 62,500,000 common shares;
- Max Chin Li, our President, surrendered his entire holding of 25,000,000 common shares;
and
- An unaffiliated shareholder surrendered its entire holding of 4,562,375 common shares.
On December 21, 2017 the Company increased its authorized share capital from 500,000,000 common shares to 2,500,000,000 common shares. (There was no change to the 3,000,000 authorized Series “B” preferred shares). Then on December 29, 2017 the Board of Directors approved an Amendment to the Company’s Articles of Incorporation whereby the par value of the Company’s common stock was reduced from $0.005 to $0.0001.
Summary of Significant Accounting Policies:
Accounting Treatment Following the Acquisition of SkyFidelity, Inc. (and its wholly-owned subsidiary, TriCascade, Inc.)
Following the acquisition of SkyFidelity, Inc. (with its wholly-owned subsidiary, TriCascade, Inc.), which closed as of April 1, 2017 through the cashless exchange of stock, for accounting purposes the consolidated results of SkyFidelity, Inc. and TriCascade, Inc. are being treated as the continuing reporting entity and the prior comparative financial results have been restated accordingly. Accordingly, these consolidated financial reports and been prepared as if SkyFidelity, Inc./TriCascade, Inc. are the successor entities regarding the Company’s reporting obligations. Therefore, the consolidated financial statements filed subsequent to this transaction include the historical financial condition, results of operations and cash flows of SkyFidelity, Inc./TriCascade, Inc. for all periods presented through and including December 31, 2017 and all subsequent reporting periods.
Non-current Assets
Product Development $487,000 - this represents the cost to develop TriCascade’s new i-Bright single outlet wi-fi IoT wall-plug platform product under an Original Design Manufacturing (“ODM”) Agreement with a Taiwanese technology company dated as of April 12, 2016.
Goodwill $3,600,535 – this represents the excess of the cost to acquire SkyFidelity Inc./TriCascade, Inc. over the book value of the net assets acquired.
F-7 |
Revenue recognition
Revenue is recognized when reported and remitted by Amazon – presently the primary distributor of the Company’s products.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions (if any) that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Provision for Income Taxes
At this time, because of the Company’s cumulative net operating losses no provision for the payment of federal income taxes is required on the results of the Company’s operations through December 31, 2017.
Liabilities
At December 31, 2017 the Company’s liabilities include:
Accounts payable and accrued expenses – due on US payables | $ | 191.372 | ||
– due on Taiwan payables | $ | 258,937 | ||
Accrued compensation and loan due Max Chin Li, President | $ | 230,648 | ||
Current liabilities | $ | 680,957 | ||
Accumulated loans and accrued interest thereon (at 10% per annum) due Monarch Capital Investment Fund, LLC | $ | 570,303 | ||
Loans from Taiwanese shareholders and investors | $ | 435,066 | ||
Other shareholder loan | $ | 2,500 | ||
Total non-current loans | $ | 1,007.869 | ||
Due to Taiwanese product manufacturer | $ | 157,100 | ||
Non-current liabilities | $ | 1,164,969 |
2. Subsequent Events
Between January 1, 2018 and January 11, 2018 a total of 132,000,000 unrestricted common shares were issued to NCI in partial settlement of an additional $39,600 toward the third tranche of $100,000 in past due accounts payable. Accordingly, at the date of this filing, there were 596,029,176 common shares issued and outstanding, and 1,000,000 Series “B” preferred shares issued and outstanding,
F-8 |
PART III—EXHIBITS
Index to Exhibits
III-1 |
SIGNATURES
Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Newport Beach, California, on July 9, 2018.
Saddle Ranch Media, Inc.
This offering statement has been signed by the following persons in the capacities and on the dates indicated.
By: /s/ Alan J. Bailey
Alan J. Bailey
Chief Financial Officer and Director July 9, 2018
By: /s/ Max Chin Li
Max Chin Li
President and Director July 9, 2018
ACKNOWLEDGEMENT ADOPTING TYPED SIGNATURES
The undersigned hereby authenticate, acknowledge and otherwise adopt the typed signatures above and as otherwise appear in this filing and Offering.
By: /s/Alan J. Bailey
Alan J. Bailey
Chief Financial Officer and Director July 9, 2018
By: /s/ Max Chin Li
Max Chin Li
President and Director July 9, 2018
Exhibit 2.1
ARTICLES OF INCORPORATION FROM INCEPTION OF THE COMPANY (AS PORT CITY CORPORATION), TO CHANGE OF NAME TO INTERLINE RESOURCES CORPORATION, TO CHANGE OF NAME TO AUTOMATED-X, INC.
ARTICLES OF INCORPORATION
OF
PORT CITY CORPORATION
We, the undersigned, natural persons over the age of eighteen (18) years or more, acting as incorporators of the Corporation under the Utah Business Corporation Act, adopt the following Articles of Incorporation for such Corporation.
ARTICLE I
CORPORATE NAME
The name of the Corporation is PORT CITY CORPORATION.
ARTICLE II
DURATION
The duration of the Corporation shall be perpetual.
ARTICLE III
GENERAL PURPOSES
This Corporation is organized for the following purposes:
A. | To purchase, sell, and invest in new products, technologies, and businesses of any and all types and kinds. |
B. | To acquire or merge into existing businesses. |
C. | To buy, sell, mortgage, exchange, lease, hold for investment, or otherwise operate real and personal property of all kinds and any interest therein. |
D. | For any other purposes allowed by law. |
E. | The provisions of this Article shall be construed as purposes and powers and each as an independent purpose and power. The enumeration of specific purposes and powers shall not be held to limit or restrict in any manner the purposes and powers of the Corporation, and the purposes and powers therein specified shall not be limited or restricted by reference to, or inference from, the terms of any provisions of this or any other article hereof. |
1 |
ARTICLE IV
AUTHORIZED SHARES
The aggregate number of shares the Corporation shall have authority to issue is TWO HUNDRED MILLION (200,000,000) shares with a par value of ONE TENTH OF ONE CENT ($.001) per share. All stock of this Corporation shall be of the same class which shall be designated common stock.
ARTICLE V
COMMENCEMENT OF BUSINESS
The Corporation will not commence business until at least ONE THOUSAND DOLLARS ($1,000) in cash or property has been received by it as consideration for the issuance of its shares.
ARTICLE VI
REGISTERED OFFICE AND AGENT
The post office address of the Corporation's initial registered office is 420 East South Temple, Suite 334 Salt Lake City, Utah 84111, and the name of its initial registered agent at such address is A. 0. Headman, Jr.
ARTICLE VII
PRE-EMPTIVE RIGHTS
The shareholders shall have no pre-emptive rights to acquire any securities of this Corporation.
2 |
ARTICLE VIII
DIRECTORS
The number of directors constituting the initial Board of Directors of the Corporation is three (3) and the names and addresses of the persons who are to serve as directors until their successors are elected and shall qualify are:
Brad K. Buchi
Lissa P. Buchi
John S. Williams |
1580
Bainbridge Road
1580
Bainbridge Road
9864
Sandridge Drive
|
ARTICLE IX
INCORPORATORS
The names and addresses of the incorporators are:
Brad K. Buchi
Lissa P. Buchi
John S. Williams |
1580
Bainbridge Road
1580
Bainbridge Road
9864
Sandridge Drive
|
ARTICLE X
NON-ASSESSABILITY
Shares of the Corporation shall not be subject to assessment for payment of the debts of the Corporation.
3 |
ARTICLE XI
EXEMPTION FROM CORPORATE DEBTS
The private property of the shareholders shall not be subject to the payment of any corporate debts to any extent whatsoever.
ARTICLE XII
COMMON DIRECTORS - TRANSACTIONS BETWEEN CORPORATIONS
No contract or other transaction between this Corporation and any one or more of its directors of any other corporation, firm, association, or entity in which one or more of its directors or officers are financially interested, shall be either void or voidable because of such relationship or interest, or because such director or directors are present at the meeting of the Board of Directors, or a committee thereof, which authorizes, approves, or ratifies such contract or transaction, or because his or their votes are counted for such purpose if: (a) the fact of such relationship or interest is disclosed or known to the Board of Directors or committee which authorizes, approves, or ratifies the contract or transaction by vote or consent sufficient for the purpose without counting the votes or consents of such interested directors; or (b) the fact of such relationship or interest is disclosed or known to the shareholders entitled to vote and they authorize, approve, or ratify such contract or transaction by vote or written consent, or (c) the contract or transaction is fair and reasonable to the Corporation.
DATED this 7th day of October, 1988.
/s/ Brad K. Buchi | |
Brad K. Buchi | |
/s/ John S. Williams | |
John S. Williams | |
/s/ Lissa Buchi | |
Lissa Buchi |
4 |
A. 0. Headman, Jr., hereby accepts the appointment as registered agent for Port City Corporation.
/s/ A.O. Headman | |
Registered Agent |
STATE OF UTAH | ) | |
) | ss. | |
COUNTY OF SALT LAKE | ) |
On the 7TH day of October 1988, personally appeared before me Brad K. Buchi, who being by me first duly sworn, declared that he is the person who signed the foregoing document as an incorporator and that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 7th day of October, 1988.
/s/ A.O. Headman | |
NOTARY PUBLIC | |
Residing at Sale Lake |
My Commission expires:
3/20/92
5 |
STATE OF UTAH | ) | |
) | ss. | |
COUNTY OF SALT LAKE | ) |
On the 6TH day of October 1988, personally appeared before me John S. Williams, who being by me first duly sworn, declared that he is the person who signed the foregoing document as an incorporator and that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 6th day of October, 1988.
/s/ Steven Baxter | |
NOTARY PUBLIC | |
Residing at Sale Lake |
My Commission expires:
September 8, 1991
STATE OF UTAH | ) | |
) | ss. | |
COUNTY OF SALT LAKE | ) |
On the 7TH day of October 1988, personally appeared before me A.O. Headman, who being by me first duly sworn, declared that he is the person who signed the foregoing document as an incorporator and that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 7th day of October, 1988.
/s/ Kristin Brown | |
NOTARY PUBLIC | |
Residing at Sale Lake |
My Commission expires:
11/91
6 |
Pursuant to the provision of Section 16-10-57 of the Utah Business Corporation Act, the undersigned corporation hereby adopts the following Articles of Amendment to its Articles of Incorporation.
FIRST: The name of the corporation is Port City Corporation.
SECOND: The following amendment to the Articles of Incorporation of Port City Corporation were duly adopted by the shareholders of the corporation at a meeting held October 22, 1990, in the manner prescribed by the Utah Business Corporation Act, to Wit:
Article I - Name
The name of this corporation is INTERLINE RESOURCES CORPORATION.
ARTICLE IV - Capital Stock Classes
The total number of shares of all classes of capital stock which the Corporation has the authority to issue is 125,000,000 shares which are divided into two classes as follows:
25,000,000 shares of Preferred Stock (Preferred Stock) $.01 par value per share, and
100,000,000 shares of Common Stock (Common Stock) $.005 par value per share.
The designations, voting powers, preferences and relative, participating, optional or other special rights, and qualification, limitations or restrictions of the above classes of stock are as follows:
Preferred Stock
1. Issuance in Series. Shares of Preferred Stock may be issued in one or_ more series at such time or times, and for such consideration or considerations as the Board of Directors may determine All shares of any one series of Preferred Stock will be identical with each other in all respects, except that shares of one series issued at different times may differ as to dates from which dividends thereon may be cumulative. All series will rank equally and be identical in all respects, except as permitted by the following provisions of paragraph 2.
7 |
2. Authority of the Board with Respect to Series. The Board of Directors is authorized, at any time and from time to time, to provide for the issuance of shares of Preferred Stock in one or more series with such designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as are stated and expressed in the resolution or resolutions providing for the issue thereof adopted by the Board of Directors, and as are not stated and expressed in these Articles of Incorporation or any amendment thereto including, but not limited to, determination of any of the following:
(a) the distinctive serial designation and the number of shares constituting a series;
(b) the dividend rate or rates, whether dividends are cumulative and, if so, from which date, the payment date or dates for dividends, and the participating or other special rights, if any, with respect to dividends;
(c) the voting powers, full or limited, if any, of the shares of the series;
(d) whether the shares are redeemable and, if so, the price or prices at which, and the terms and conditions on which, the shares may be redeemed;
(e) the amount or amounts payable upon the shares in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation prior to any payment or distribution of the assets of the Corporation to any class or classes of stock of the Corporation ranking junior to the Preferred Stock;
(f) whether the shares are entitled to the benefit of a sinking or retirement fund to applied to the purchase or redemption of shares of a series and, if so entitled, the amount of the fund and the manner of its application, including the price or prices at which the shares may be redeemed or purchased through the application of the fund;
(g) whether the shares are convertible into, or exchangeable for, shares of any other class or classes of stock of the Corporation and, if so convertible or exchangeable,- the conversion price or prices, or the rates of exchange, and the adjustments thereof, if any, at which the conversion or exchange may be made, and any other terms and conditions of the conversion or exchange; and
8 |
(h) any other preferences, privileges and powers, and relating participating, optional or other special rights, and qualifications, limitations or restrictions of a series, as the Board of Directors may deem advisable and as are not inconsistent with the provisions of this Certificate of Incorporation.
3. Dividends. Before any dividends on any class or classes of stock of the Corporation ranking junior to the Preferred Stock (other than dividends payable in shares of any class or classes of stock of the corporation ranking junior to the Preferred Stock) may be declared or paid or set apart for payment, the holders of shares of Preferred Stock of each series are entitled to such cash dividends, but only when and as declared by the Board of Directors out of funds legally available therefor, as they may be adopted by the Board of Directors providing for the issue of the series, payable on such dates in each year as may be fixed in the resolution or resolutions. The term "class or classes of stock of the Corporation ranking junior to the Preferred Stock" means the Common Stock and any other class or classes of stock of the Corporation hereafter authorized which rank junior to the Preferred Stock as to dividends or upon liquidation.
4. Reacquired Shares. Shares of Preferred Stock which have been issued and reacquired in any manner by the Corporation (excluding, until the corporation elects to retire them, shares which are held as treasury shares but including shares redeemed, shares purchased and retired and shares which have been converted into shares of Common Stock) will have the status of authorized and unissued shares of Preferred Stock and may be reissued.
5. Voting Rights. Unless and except to the extent otherwise required by law or provided in the resolution or resolutions of the Board of Directors creating any series of Preferred Stock the holders of the Preferred Stock shall have no voting power with respect to any matter whatsoever.
Common Stock
1. Dividends. Subject to the preferential rights of the Preferred Stock, the holders of the Common Stock are entitled to receive, to the extent permitted by law, such dividends as may be declared from time to time by the Board of Directors.
2. Liquidation. In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of Preferred Stock, holders of Common Stock shall be entitled to receive all of the remaining assets of the Corporation of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively. The Board of Directors may distribute in kind to the holders of Common Stock such remaining assets of the Corporation or may sell, transfer or otherwise dispose of all or any part of such remaining assets to any other corporation, trust of other entity and receive payment therefor in cash, stock or obligations of such other corporation, trust or other entity or any combination thereof, and may sell all or any part of the consideration so received and distribute any balance thereof in kind to holders of Common Stock. The merger or consolidation of the Corporation into or upon any other corporation, or the merger or any other corporation into it, or any purchase or redemption of shares of stock of the Corporation of any class, shall not be deemed to be a dissolution, liquidation or winding up of the corporation for the purposes of this paragraph.
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3. Voting Rights. Except as may be otherwise required by law or this Restated Certificate of Incorporation, each holder of Common Stock has one vote in respect of each share of stock held by him of record on the books of the Corporation on all matters voted upon by the Stockholders.
Other Provisions
1. Pre-emptive Rights. No stockholder shall have any preemptive right to subscribe to an additional issue of stock of any class or series or to any securities of the Corporation convertible into such stock.
2. Changes in Authorized Capital Stock. Subject to the protective conditions and restrictions of any outstanding Preferred Stock, any amendment to this Restated Certificate of Incorporation which increases or decreases the authorized capital stock of any class or classes may be adopted by the affirmative vote of the holders of a majority of the outstanding shares of the voting stock of the Corporation.
THIRD: The number of shares of the Corporation outstanding at the time of the adoption of such amendments was 17,538,000 and the number entitled to vote thereon was 17,538,000.
FOURTH: The designation and number of outstanding shares of each class entitled to vote thereon as a class were as follows, to-wit:
Class | Number of Shares: |
Common | 17,538,000 |
10 |
FIFTH: The number of shares voted for such amendments was 10,903,100, with -0- opposing and -0- abstaining.
SIXTH: These amendments do not provide for any exchange, reclassification or cancellation of issued shares.
SEVENTH: These amendments do effect a change in the stated capital of the corporation as set forth above.
IN WITNESS WHEREOF, the undersigned president and secretary, having been thereunto duly authorized, have executed the foregoing Articles of Amendment for the corporation this 22nd day of October, 1990.
PORT CITY CORPORATION | |
By: /s/ Michael R. Williams | |
Michael R. Williams, President |
Attest:
/s/ Timothy G. Williams
Timothy G. Williams, Secretary
STATE OF Utah | ) | |
) | ss. | |
COUNTY OF Salt Lake | ) |
Subscribed and sworn to before me this 22nd day of October, 1990, by Michael R. Williams, President and Timothy G. Williams,Secretary of Port City Corporation.
/s/ A.O. Headman | |
Notary Public | |
My Commission expires: 3/21/91
Residing at Salt Lake County
11 |
Received 11/13/2014
EXPEDITE
AMENDMENT
State of Utah
DEPARTMENT OF COMMERCE
Division of Corporations & Commercial Code
Articles of Amendment to Articles of Incorporation (Profit)
Entity Number: 1013424-0142
Non-Refundable Processing Fee: $37.00
Pursuant to UCA §16-10a part 10, the individual named below causes this Amendment to the Articles of Incorporation to be delivered to the Utah Division of Corporations for filing, and states as follows:
1. The name of the corporation is: INTERLINE RESOURCES CORPORATION
2. The date the following amendment(s) was adopted: November 12, 2014
3. If changing the corporation name, the new name of the corporation is:
AUTOMATED-X, INC.
4. The text of each amendment adopted (include attachment if additional space needed):
Name Change
5. If providing for an exchange, reclassification or cancellation of issued shares, provisions for implementing the amendment if not contained in the amendment itself:
____________________________________________________________________________________________
6. Indicate the manner in which the amendment(s) was adopted (mark only one):
___X___ Adopted by Incorporators or Board of Directors – Shareholder action not required.
______ Adopted by Shareholders – Number of votes cast for amendment was sufficient for approval.
7. Delayed effective date (if not to be effective upon filing (not to exceed 90 days)
Under penalties of perjury, I declare that this Amendment of Articles of Incorporation has been examined by me and is, to the best of my knowledge and belief, true, correct and complete.
By: ____________________________________
Title: Vice President & Secretary
Date: 11-12-14
Under GRAMA {63-2-201}, all registration information maintained by the Division is classified as public record. For confidentiality purposes, you may use the business entity physical address rather than the residential or private address of any individual affiliated with the entity.
Mailing/Faxing Information:www.corporations.utah.gov/contactus.htrnl Division's Website:www.corporations.utah.gov
State of Utah
Department of Commerce
Division of Corporations and Commercial Code
I hereby certified that the foregoing has been filed
and approved on this 13 day of Nov, 2014
In this office of this Division and hereby issued
This Certificate hereof.
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ARTICLES OF INCORPORATION FOR CHANGE OF NAME FROM AUTOMATED-X, INC. TO SADDLE RANCH MEDIA, INC.
13 |
Received SEP 09 2015 - Utah Div. of Corp. & Comm.Code
EXPEDITE
AMENDMENT
State of Utah
DEPARTMENT OF COMMERCE
Division of Corporations & Commercial Code
Articles of Amendment to Articles of Incorporation (Profit)
Entity Number: 1013424-0142
Non-Refundable Processing Fee: $37.00
Pursuant to UCA §16-10a part 10, the individual named below causes this Amendment to the Articles of Incorporation to be delivered to the Utah Division of Corporations for filing, and states as follows:
1. The name of the corporation is: AUTOMATED-X, INC.
2. The date the following amendment(s) was adopted: August 31, 2015
3. If changing the corporation name, the new name of the corporation is:
SADDLE RANCH MEDIA, INC.
4. The text of each amendment adopted (include attachment if additional space needed):
The text of Article I was amended and replaced in its entirety with the following:
“ARTICLE I
CORPORATE NAME
The name of the corporation is Saddle Ranch Media,Inc.”
5. If providing for an exchange, reclassification or cancellation of issued shares, provisions for implementing the amendment if not contained in the amendment itself:
____________________________________________________________________________________________
6. Indicate the manner in which the amendment(s) was adopted (mark only one):
______ Adopted by Incorporators or Board of Directors – Shareholder action not required.
___X___ Adopted by Shareholders – Number of votes cast for amendment was sufficient for approval.
7. Delayed effective date (if not to be effective upon filing (not to exceed 90 days)
Under penalties of perjury, I declare that this Amendment of Articles of Incorporation has been examined by me and is, to the best of my knowledge and belief, true, correct and complete.
By: /s/ Phillip M. Cohen
Title: Phillip M. Cohen
Date: 09-08-15
Under GRAMA {63-2-201}, all registration information maintained by the Division is classified as public record. For confidentiality purposes, you may use the business entity physical address rather than the residential or private address of any individual affiliated with the entity.
Mailing/Faxing Information:www.corporations.utah.gov/contactus.htrnl Division's Website:www.corporations.utah.gov
State of Utah
Department of Commerce
Division of Corporations and Commercial Code
I hereby certified that the foregoing has been filed
and approved on this 09 day of Sep, 2015
In this office of this Division and hereby issued
This Certificate hereof.
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Exhibit 2.2
Received April 23, 1991
STATEMENT OF DESIGNATION OF
PREFERENCES, RIGHTS AND LIMITATIONS
OF
SERIES “A” PREFERRED STOCK
OF
INTERLINE RESOURCES CORPORATION
INTERLINE RESOURCES CORPORATION (hereinafter referred to as the "Company"), a corporation organized and existing under the laws of the State of Utah, does hereby certify:
That, pursuant to authority conferred upon the Board of Directors, by the Articles of Incorporation, as amended, of the Company, and pursuant to the provisions of Section 16-10-15, Utah Code Ann., said Board of Directors, by unanimous written consent effective as of April 9, 1991, duly adopted a resolution providing for the designation of a series of 1,000,000 shares of Series "A" Preferred Stock, $.01 par value, which resolution is as follows:
RESOLVED, that pursuant to the authority expressly granted and invested in the Board of Directors of this Company in accordance with the provisions of its Articles of Incorporation, as amended, a series of preferred stock of the Company be and hereby is given the distinctive designation of "Series "A" Preferred Stock", (hereafter referred to as the "Series "A" Preferred Stock"), said series to consist of 1,000,000 shares of the par value $.01 per share preferred stock, of which the preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof shall be as follows:
1. Cash Dividends on Series "A" Preferred Stock.
(a) The holders of the Series "A" Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds for the Company legally available therefore, cumulative cash dividends at the annual rate equalling 11% of the purchase price paid to the Company for such Series "A" Preferred Stock. The Series "A" Preferred Stock shall be sold at $1.00 per share and shall have a stated value of $1.00 per share. Such dividends shall be payable annually commencing one year from the date of issuance.. If the dividend on the Series "A" Preferred Stock for any dividend period shall not have been paid or set apart in full for such Series "A" Preferred Stock, the aggregate deficiency shall be cumulative and shall be fully paid or set apart for payment before any dividend shall be paid or set apart for payment of any class of common stock of the Company. Accumulation of dividends of the Series "A" Preferred Stock shall not bear interest.
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(b) Cash dividends for the Series "A" Preferred Stock shall commence to accrue upon issuance of such shares of Series "A" Preferred Stock.
2. Conversion of Series "A" Preferred Stock into Common Stock.
(a) Conversion Prior to Third Anniversary Date of Issuance. Prior to the expiration of three years from the date a share of Series "A" Preferred Stock is issued, the holder of record of such share of Series "A" Preferred Stock shall have the right, at his or her option, to convert one of said shares of Series "A" Preferred Stock into one fully paid and non-assessable share of the Company's $.001 par value Common Stock.
(b) Conversion Subsequent to Third Anniversary Date of Issuance. Subsequent to the expiration of three years from the date a share of Series "A" Preferred Stock is issued, the holder of record of such share of Series "A" Preferred Stock shall have the right, at his or her option, to convert such share of Series "A" Preferred Stock into the Company's $.001 par value common stock on the following basis:
(i) In the event the "bid" price of the Common Stock is $1.00 or greater at the time of conversion, one share of Series "A" Preferred Stock shall be converted into one fully paid and non-assessable share of the Company's $.001 par value Common Stock.
(ii) In the event, the "bid" price of the Common Stock is less than $1.00 per share at the time of conversion, then and in that event the Company shall issue to such converting holder of Series "A" Preferred Stock such number of shares of Common Stock as are necessary to provide such converting holder with a minimum Common Stock value of $1.00 per share for each share of Series "A" Preferred Stock so converted.
(iii) For purposes of determining Common Stock value in connection with the conversion of Series "A" Preferred Stock, the conversion price shall be the highest "bid" price of the Common Stock as quoted on NASDAQ, or if the Company's Common Stock is not quoted on NASDAQ the "bid" price on whatever medium or exchange the Company's Common Stock is quoted on, on the day immediately prior to the date of notice of intent to convert is given to the Company.
(iv) The effects of this Section 2(b) are illustrated by the following example:
If, subsequent to the third anniversary date of the issuance of Series "A" Preferred Stock, a holder of 500,000 shares of Series "A" Preferred Stock gives notice of his or her intent to convert such stock into Common Stock, and the highest "bid" price of the Common Stock on the day immediately prior to the date such notice is given is $.50 per share, the total number of shares of Common Stock to be issued in the conversion shall be 1,000,000.
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(c) Any holder of a share or shares of Series "A" Preferred Stock desiring to convert such Series "A" Preferred Stock into Common Stock shall give notice of his or her intent to convert such stock by surrendering the certificate or certificates representing the share or shares of Series "A" Preferred Stock to be converted, duly endorsed to the Company or in blank, at the principal office of the Company (or such other place as may be designated by the Company) and shall give written notice to the Company at said office that the holder elects to convert same, setting for the name or names (with the address or addresses) in which the shares of Common Stock are to be issued.
(d) Conversion of the Series "A" Preferred Stock shall be subject to the following additional terms and provisions.
(i) As promptly as practicable after the surrender for conversion of any certificate representing Series "A" Preferred Stock, the Company shall deliver certificates representing the shares of Common Stock issuable upon the conversion, issued in such name or names as such holder may direct. Shares of the Series "A" Preferred Stock shall be deemed to have been converted as of the close of business on the date of surrender of the Series "A" Preferred Stock for conversion as provided above, and the rights of the holders of such Series "A" Preferred Stock shall cease at such time, and the person or persons in whose name or names the certificates for such shares are to be issued shall be treated for all purposes as having become the record holder or holders of such Common Stock at such time.
(ii) The Company shall at the time of such conversion pay to the holder of record of any share or shares of such Series "A" Preferred Stock any accrued but unpaid dividends on such said Series "A" Preferred Stock so surrendered for conversion, except that no payment or adjustment shall be made for any accrued or unpaid dividends for the then current annual dividend.
(iii) The Company shall not be required to issue any fractions of shares of Common Stock or script upon the conversion of Series "A" Preferred Stock. If any interest in a fractional share of Common Stock would be otherwise be delivered upon the conversion of any Series "A" Preferred Stock, the Company shall make adjustment for such fractional share by payment of an amount in cash equal to the same fraction of the market value of a full share of Common Stock of the Company. For purposes of calculating market value hereunder, the market value of a share of Common Stock shall be determined in accordance with Section 2(b)(iii) above.
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(iv) In the event that the Company shall at any time subdivide or combine in a greater or lesser number of outstanding shares of Common Stock, the number of shares of Common Stock issuable upon conversion of the Series "A" Preferred Stock shall be proportionately increased in the case of subdivision or decreased in the case of combination, effective in either case at the close of business on the date when such subdivision or combination shall become effective.
(v) In the event that the Company shall be recapitalized, consolidated or merged into any other corporation, provisions shall be made as part of the terms of such recapitalization, consolidation or merger so that any holder of Series "A" Preferred Stock shall be distributed such proportionate share of securities as may be distributable upon such recapitalization, consolidation or merger which the holder would be entitled to if such holder had converted his or her Series "A" Preferred Stock immediately prior to the effective date of such recapitalization, consolidation or merger.
(vi) In the event that the Company shall at any time pay any dividend or make any other distribution on its Common Stock in property, other than in cash or in Common Stock of the Company, then provisions shall be made as part of the terms of such dividend or distributions so that the holder of any Series "A" Preferred Stock surrendered for conversion after the record date for determination of holders of Common Stock in account of such dividend or distribution shall be entitled to receive the same kind and the same proportionate share of such property which he would have been entitled to receive had such Series "A" Preferred Stock been converted immediately prior to such record date.
(vii) No adjustment of the conversion ratio shall be made by reason of:
(A) the payment of any cash dividend on the Common Stock or any other classes of capital stock of the Company; or
(B) the purchase, acquisition, redemption or retirement by the Company of any shares of Common Stock or any other class of the capital stock of the Company, except as provided in subdivision (iv) of this subsection (d); or
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(C) except as provided for in subdivision (iv) and (v) of this subsection (d), no adjustment in the conversion ratio shall be made by reason of the issuance of any shares of Common Stock or of any securities convertible into shares of Common Stock, or due to the issuance of any rights, warrants or options to subscribe for or purchase shares of the Common Stock or other securities of the Company. However in the event the Company offers to its Common Stock Owners any securities or any rights, warrants or options to subscribe for or purchase any securities, then the Company shall mail written notice of such offer to holders of the Series "A" Preferred Stock so that such holders may consider whether it would be advantageous to convert their Series "A" Preferred Stock into Common stock at such time in order to participate in such offer; or
(D) Any offer by the Company to redeem or acquire shares of the Common Stock by paying or exchanging therefore stock of another corporation the carrying out by the Company of the transactions contemplated by such offer, provided that at least 20 days prior to the expiration of any such offer the Company shall mail written notice of such offer to the holders of the Series "A" Preferred Stock then of record; or
(e) The Company shall at all times reserve and keep available solely for the purpose of issue upon conversion of the Series "A" Preferred Stock, as herein provided, such number of shares of Common Stock as shall be issuable upon the conversion of all outstanding Series "A" Preferred Stock.
3. Redemption of Series "A" Preferred Stock.
(a) No share of Series "A" Preferred Stock may be redeemed by the Company prior to the third anniversary date of issuance. Subsequent to the third anniversary date of issuance, the Company may redeem shares of Series "A" Preferred Stock only in the event the highest "bid" price of the Common Stock has been at $1.50 per share or greater for a period of 60 consecutive calendar days.
(b) Subject to subsection 3(a) above, the Series "A" Preferred Stock shall be redeemable, in whole or in part, at the option of the Company by resolution of its Board of Directors, at any time and from time to time at the purchase price paid to the Company upon the original issuance of such shares of Series "A" Preferred Stock, plus all dividends accrued and unpaid on such Series "A" Preferred Stock up to the date fixed for redemption, upon giving the notice hereinafter provided.
(c) In the event that less than the entire amount of Series "A" Preferred Stock outstanding is redeemed at any one time, the shares to be redeemed shall be selected by lot in a manner to be determined by the Board of Directors of the Company. Not less than 30 nor more than 60 days prior to the date fixed for redemption of the Series "A" Preferred Stock or any part thereof, a notice specifying the time and place thereof shall be given by mail to the holders of record of the shares of Series "A" Preferred Stock selected for redemption at the respective addresses as the same shall appear on the stock records of the Company, but no failure to mail such notice or any defect therein or in the mailing thereof shall effect the validity of the proceedings for redemption. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the holder receives the notice.
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(d) Upon such redemption date, or such earlier date as the Board of Directors shall designate for payment of the redemption price (unless the Company shall default on the payment of the redemption price set forth in such notice), the holders of the shares of Series "A" Preferred Stock, selected for redemption and to whom notice has been duly given shall cease to the stockholders with respect to such shares and shall have no interest in or claim against the Company by virtue thereof and shall have no right with respect to such shares except the right to convert such shares within the time hereinabove set forth and except the right to receive the monies payable upon such redemption from the Company or otherwise, without interest thereon, upon surrender and endorsement, if required by the Company, of the certificates, and the shares represented thereby shall no longer deem to be outstanding. Upon redemption or conversion of the Series "A" Preferred Stock in the manner set out herein, or upon purchase of Series "A" Preferred Stock by the Company, the Series "A" Preferred Stock so acquired by the Company shall be cancelable and shall not be reissued.
(e) After giving any notice of redemption and prior to the close of business on the date prior to the redemption date, has hereinbefore provided, the holders of the Series "A" Preferred Stock so called for redemption may convert such stock into Common Stock of the Company in accordance with the conversion privileges set forth in section 2 hereof.
4. Voting Rights. Except as provided by law, the holders of Series "A" Preferred Stock shall have no voting rights.
5. Priority of Series "A" Preferred Stock in the Event of a Dissolution. In the event of any liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or otherwise, after payment or provision for payment of debts and the liabilities of the Company, the holders of Series "A" Preferred Stock shall be entitled to receive, out of the net assets of the Company, the amount of $1.00 per share in cash for each share of Series "A" Preferred Stock, plus an amount equal to all dividends accrued and unpaid on each such share up to the date fixed for distribution, before any distribution shall be made to the holders of any class of Common Stock of the Company.
IN WITNESS WHEREOF, the undersigned have caused its corporate seal to be affixed and this Certificate to be executed by its President and Secretary as of the 16 day of April, 1991.
Attest: | INTERLINE RESOURCES CORPORATION |
/s/ Timothy G. Williams | /s/ Michael R. Williams |
Timothy G. Williams | Michael R. Williams |
Secretary | President |
STATE OF UTAH )
)SS:
COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me this 16 day of April, 1991, by Michael R. Williams, president and Timothy G. Williams, secretary of Interline Resources Corporation, a Utah corporation, on behalf of the Company.
/s/ Fred Hammond | |
Notary Public |
State of Utah | |
6 |
Exhibit 2.3
Received 01/27/14 - Utah Div. of Corp. & Comm. Code
EXPEDITE
AMENDMENT
State of Utah
DEPARTMENT OF COMMERCE
Division of Corporations & Commercial Code
Articles of Amendment to Articles of Incorporation (Profit)
Entity Number: 1013424-0142
Non-Refundable Processing Fee: $37.00
Pursuant to UCA §16-10a part 10, the individual named below causes this Amendment to the Articles of Incorporation to be delivered to the Utah Division of Corporations for filing, and states as follows:
1. The name of the corporation is: Interline Resources Corporation
2. The date the following amendment(s) was adopted: January 22, 2014
3. If changing the corporation name, the new name of the corporation is:
4. The text of each amendment adopted (include attachment if additional space needed):
RESOLVED, that of the 25,000,000 shares of preferred stock authorized to be issued by the Corporation, 1,000,000 shares are hereby designated as Series B Preferred Stock, no par value (the "Series B Preferred"), and the Corporation hereby fixes the powers, designations, preferences and sights, and the qualifications, limitations or restrictions of the Series B Preferred as follows:
*****See Attached Designation*****
5. If providing for an exchange, reclassification or cancellation of issued shares, provisions for implementing the amendment if not contained in the amendment itself:
____________________________________________________________________________________________
6. Indicate the manner in which the amendment(s) was adopted (mark only one):
___X___ Adopted by Incorporators or Board of Directors – Shareholder action not required.
______ Adopted by Shareholders – Number of votes cast for amendment was sufficient for approval.
7. Delayed effective date (if not to be effective upon filing (not to exceed 90 days)
Under penalties of perjury, I declare that this Amendment of Articles of Incorporation has been examined by me and is, to the best of my knowledge and belief, true, correct and complete.
By: /s/ Ron Gaineous
Title: Ron Gaineous
Date: 1/24/2014
Under GRAMA {63-2-201}, all registration information maintained by the Division is classified as public record. For confidentiality purposes, you may use the business entity physical address rather than the residential or private address of any individual affiliated with the entity.
Mailing/Faxing Information:www.corporations.utah.gov/contactus.htrnl Division's Website:www.corporations.utah.gov
State of Utah
Department of Commerce
Division of Corporations and Commercial Code
I hereby certified that the foregoing has been filed
and approved on this 24th day of Jan, 2014
In this office of this Division and hereby issued
This Certificate hereof.
CERTIFICATE
OF DESIGNATION
OF
SERIES B PREFERRED STOCK
OF
INTERLINE RESOURCES CORP.
Interline Resources Corp., it Utah corporation (the "Corporation"), hereby certifies, pursuant to its Articles of Incorporation, as amended, that the Corporation's board of directors has duly adopted the following resolution creating a series of 1,000,000 shares of Series B preferred stock designated "Series B Preferred Stock":
RESOLVED, that of the 25,000,000 shares of preferred stock authorized to be issued by the Corporation, 1,000,000 shares are hereby designated as Series B Preferred Stock, no par value (the "Series B Preferred"), and the Corporation hereby fixes the powers, designations, preferences and rights, and the qualifications, limitations or restrictions of the Series B Preferred as follows:
Section 1. Designation and Amount.
There shall be a series of the voting preferred stock of the Company which shall be designated as the "Series B Preferred Stock," no par value, and the number of shares constituting such series shall be One Million (1,000,000). Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, however, that no decrease shall reduce the number of shares of Series B Preferred Stock to a number less than that of the shares then outstanding plus the number of shares issuable upon exercise of outstanding rights, options or warrants or upon conversion of outstanding securities issued by the Company.
Section 2. Dividends and Distributions.
The holders of shares of Series B Preferred Stock, in preference to the holders of shares of common stock, (the "Common Stock"), of the Company and of any other senior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, dividends payable on the same basis of the Common Stock. That is, the Company shall declare a dividend or distribution on the Series B Preferred Stock simultaneously when it declares a dividend or distribution on the Common Stock.
Section 3. Voting Rights.
The holders of shares of Series B Preferred Stock shall have the following voting rights;
(a) Each share of Series B Preferred Stock shall entitle the holder thereof to 2,000 votes on all matters submitted to a vote of the stockholders of the Company. In the event that such votes do not total at least 80% of all votes, then regardless of the provisions of this paragraph, in any such case, the votes cast by Series B Preferred Stock shall be equal to 80% of all votes cast at any meeting of shareholders, or any issue put to the shareholders for voting and the Company may state that any such action was had by majority vote of all shareholders.
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(b) Except as otherwise provided herein, in the Company's Certificate of Incorporation or by law, the holders of shares of Series B Preferred Stock, the holders of shares of Common Stock, and the holders of shares of any other capital stock of the Company having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Company.
(c) Except as otherwise set forth herein (2,000 votes for every share) or in the Company's Certificate of Incorporation, end except as otherwise provided by law, holders of Series B Preferred Stock shall have: no special voting rights, and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.
Section 4. Reacquired Shares.
Any shares of Series B Preferred Stock purchased or otherwise acquired by the Company in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. The Company shall cause all such shares upon their cancellation to be authorized but unissued shares of Preferred Stock which may be reissued: as part of a new series of Preferred Stock, subject to the conditions and restrictions on issuance set forth herein.
Section 5. Ranking.
The Series B Preferred Stock shall rank senior to all other series of the Company's Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise.
Section 6. Conversion
The holders of the Series B Preferred Stock shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to convert. Each share of Series B Preferred Stock shall 'be convertible, at the option of the holder thereof, at any time after the date of issuance of such share at the Office of the corporation or any transfer agent for such. Series B Preferred Stock. Each share of Series B Preferred Stock shall, be -convertible into five hundred (500) shares of Common Stock (the "Initial Conversion Price"). In the event that the Company has not maintained sufficient common stock to allow for the conversion, at the time of a, conversion election, the Company agrees to forthwith take necessary steps to amend its, articles of Incorporation to provide the sufficient authorized common stock to allow for conversion.
(b) Mechanics of Conversion. Before holder of Series B Preferred Stock shall be entitled to convert the same into full shares of Common Stock, it shall surrender the certificate or certificates therefore, duly endorsed at the office of the Company or of any transfer agent for the: Series B Preferred Stock and shall give written notice to the Company at such office that it elects to convert the same. The Company shall as soon as practicable thereafter, issue and deliver at such office to such holder of Series B Preferred Stock a certificate or certificates, registered in such names as specified by the holder, for, the number of shares of Common Stock to which such holder shell be entitled as aforesaid and a check payable to the holder in the amount of any cash amounts payable as the result of a conversion into fractional shares of Common Stock, and any accrued and unpaid dividends on the converted Series B Preferred Stock, Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Series B Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common ,Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date.
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(c) Adjustments to Conversion Price. Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend or otherwise) one or more classes of its outstanding shares of common stock into a greater number of shares, the conversion price in effect immediately prior to such subdivision shall be proportionately reduced, and if the Company at any time combines (by reverse stock split or otherwise) one or more classes of its outstanding shares of common stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination shall be proportionately increased.
THE UNDERSIGNED, being an authorized officer of the Corporation, for the purpose of amending the Corporation's Articles of Incorporation, does make this Certificate of Designation of Series B Preferred, hereby acknowledging, declaring, and certifying that the foregoing amendment of the Corporation’s Articles of Incorporation by this Certificate of Designation of Series B Preferred Stock is the' act and deed of the Corporation and that the facts herein stated are true and have accordingly hereunto set my hand this 22 day of January, 2014.
By: /s/Ronald Gaineous
Name: Ronald Gaineous
Title: President and Chief Executive Officer
I, Ronald Gaineous, Secretary of Interline Resources Corp. hereby acknowledge on behalf of Interline Resources Corp. that the foregoing Certificate of Designation of Series B Preferred Stock is the corporate act of such corporation and all amendments contained herein were duly adopted by the board of directors of such corporation on on January 22, 2014. The number of votes cast for the amendments were sufficient for approval and they were duly approved, adopted and confirmed in all respects:
Date: January 22, 2014
/s/ Ronald Gaineous | |
Ronald Gaineous | |
Secretary |
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Exhibit 2.4
STATE OF UTAH | ) | CERTIFIED |
) ss. | COPY OF | |
COUNTY OF UTAH | ) | CHARTER AND BYLAWS |
The undersigned, Timothy G. Williams, as the duly elected and acting Secretary of Interline Resources Corporation, a corporation incorporated under the laws of the State of Utah (the "Corporation"), does hereby certify that the attached are true, correct, and complete copies of the Articles of Incorporation Of Interline Resources Corporation, as amended and Bylaws of Interline Resources Corporation, as amended.
IN WITNESS WHEREOF, I have hereunto affixed my signature and the seal of the Corporation this 23 day of May, 1994.
/s/Timothy G. Williams | |
Timothy G. Williams | |
Secretary |
SEAL
BYLAWS
OF
INTERLINE RESOURCES CORPORATION
TABLE OF CONTENTS
ARTICLE 1 - Shareholders | 4 |
1.1 Place of Meetings | 4 |
1.2 Annual Meetings | 4 |
1.3 Special Meetings | 4 |
1.4 Notice of Meetings | 4 |
1.5 Voting List | 4 |
1.6 Quorum | 4 |
1.7 Adjournments | 5 |
1.8 Voting and Proxies | 5 |
1.9 Action at Meeting | 5 |
1.10 Action Without Meeting | 5 |
ARTICLE 2 - DIRECTORS | 6 |
2.1 General Powers | 6 |
2.2 Number; Election and Qualification | 6 |
2.3. Enlargement of the Board | 6 |
2.4 Tenure | 6 |
2.5 Vacancies | 6 |
2.6 Resignation | 7 |
2.7 Regular Meetings | 7 |
2.8 Special Meetings | 7 |
2.9 Notice of Special Meetings | 7 |
2.10 Meetings by Telephone Conference Calls | 7 |
2.11 Quorum | 7 |
2.12 Action at Meeting | 8 |
2.13 Action by Consent | 8 |
2.14 Removal | 8 |
2.15 Committees | 8 |
2.16 Compensation of Directors | 9 |
ARTICLE 3 - OFFICERS | 9 |
3.1 General | 9 |
3.2 Election | 9 |
3.3 Qualification | 9 |
3.4 Tenure | 9 |
3.5 Resignation and Removal | 9 |
3.6 Vacancies | 10 |
3.7 Chairman of the Board and Vice Chairman of the Board | 10 |
3.8 President | 10 |
3.9 Vice Presidents | 11 |
3.10 Secretary and Assistant Secretaries | 11 |
3.11 Treasurer and Assistant Treasurers | 11 |
3.12 Salaries | 12 |
ARTICLE 4 - CAPITAL STOCK | |
4.1 Issuance of Stock | |
4.2 Certificates of Stock | |
4.3 Transfers |
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4.4 Lost, Stolen, or Destroyed Certificates | 13 |
4.5 Record Date | 13 |
ARTICLE 5 - INDEMNIFICATION | 14 |
ARTICLE 6 - GENERAL PROVISIONS | 14 |
6.1 Fiscal Year | 14 |
6.2 Corporate Seal | 14 |
6.3 Written Notice of Meetings | 14 |
6.4 Waiver of Notice | 15 |
6.5 Voting of Securities | 15 |
6.6 Evidence of Authority | 15 |
6.7 Articles of Incorporation | 15 |
6.8 Transactions with Interested Parties | 15 |
6.9 Severability | 16 |
6.10 Pronouns | 16 |
ARTICLE 7 - AMENDMENTS | 16 |
7.1 By the Board of Directors | 16 |
7.2 By the Shareholders | 16 |
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BYLAWS
OF
INTERLINE
RESOURCES CORPORATION
ARTICLE 1 - SHAREHOLDERS
1.1 Place of Meetings. All meetings of shareholders shall be held at such place within or without the State of Utah as may be designated from time to time by the Board of Directors or the president or, if not so designated, at the registered office of the Corporation.
1.2 Annual Meetings. The annual meeting of shareholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting, shall be held each year at such date, time and place as may be specified by the Board of Directors.
1.3 Special Meetings. Special meetings of shareholders may be called at any time by the chairman of the Board of Directors, by the Board of Directors, by the President or by the holders of not less than one-fourth (1/4) of all the shares entitled to vote at the meeting. Business transacted at any special meeting of shareholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.
1.4 Notice of meetings. Except as otherwise provided by law, written notice of each meeting of shareholders, whether annual or special, shall be given not less than 10 nor more than 50 days before the date of the meeting to each stockholder entitled to vote at such meeting. The notices of all meetings shall state the place, date, and hour of the meeting. The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called.
1.5 Voting List. The officer who has charge of the stock ledger of the Corporation shall prepare, at least 10 days before every meeting of shareholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder.
1.6 Quorum. Except as otherwise provided by law, the Articles of Incorporation, or these Bylaws, the holders of a majority of the shares of the capital stock of the Corporation issued and outstanding are entitled to vote at the meeting, present in person,or represented by proxy, shall constitute a quorum for the transaction of business.
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1.7 Adjournments. Any meeting of shareholders may be adjourned to any other time and to any other place at which a meeting of shareholders may be held under these Bylaws by the shareholders present or represented at the meeting and entitled to vote, although less than a quorum, or, if no stockholder is present, by any officer entitled to preside at or to act as secretary of such meeting. If the adjournment is for more than 30 days, or if after the adjournment, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting.
1.8 Voting and Proxies. Each stockholder shall have one vote for each share of stock entitled to vote held of record by such stockholder and a proportionate vote for each fractional share so held, unless otherwise provided in the Articles of Incorporation. Each stockholder of record entitled to vote at a meeting of shareholders, or to express consent or dissent to corporate action in writing without a meeting, may vote or express such consent or dissent in person or may authorize another person or persons to vote or act for him by written proxy executed by the stockholder or his authorized agent and delivered to the secretary of the Corporation. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. No proxy shall be voted or acted upon after eleven (11) months from the date of its execution, unless the proxy expressly provides for a longer period.
1.9 Action at Meeting. When a quorum is present at any meeting, the holders of a majority of the stock present or represented and voting on a matter (or if there are two or mare classes of stock entitled to vote as separate classes, then in the case of each such class, the holders of a majority of the stock of that class present cr represented and voting on a matter) shall decide any matter to be voted upon by the stock- holders at such meeting, except when a different vote is required by express provision of law, the Articles of Incorporation or these Bylaws. Any election by shareholders shall be determined by a plurality of the votes cast the shareholders entitled to vote at the election.
1.10 Action Without Meeting. Any action required or permitted to be taken at any annual or special meeting of stock- holders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote on such action were present and voted. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those shareholders who have not consented in writing.
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ARTICLE 2 - DIRECTORS
2.1 General Powers. The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors who may exercise all of the powers of the Corporation except as otherwise provided by law, the Articles of Incorporation,or these Bylaws. In the event of a vacancy on the Board of Directors, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board of Directors until the vacancy is filled.
2.2 Number, Election and qualification. The number of directors which shall constitute the whole Board of Directors shall be determined by resolution of the shareholders or the Board of Directors, but in no event shall be less than three. The number of directors may be decreased at any time and from time to time either by the shareholders or by a majority of the directors then in office, but only to eliminate vacancies existing by reason of the death, resignation, removal, or expiration of the term of one or more directors. The directors shall be elected at the annual meeting of shareholders by such shareholders as have the right to vote in such election. Directors need not be shareholders of the corporation.
2.3. Enlargement of the Board. The number of directors may be increased at any time and from time to time by the shareholders or by a majority of the directors then in office.
2.4 Tenure. Each director shall hold office until the next annual meeting and until such time as his successor is elected and qualified, or until his earlier death, resignation, or removal.
2.5 Vacancies. Unless and until filled by the stockholders, any vacancy in the board of Directors, however occurring, including a vacancy resulting from an increase in the number of directors, may he filled by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office, and a director chosen to fill a position resulting from an increase in the number of directors shall hold office until the next annual meeting of shareholders and until his successor is elected and qualified, or until his earlier death, resignation, or removal.
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2.6 Resignation. Any director may resign by delivering his written resignation to the Corporation at its principal office or to the secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.
2.7 Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place, either within or without the State of Utah, as shall be determined from time to time by the Board of Directors, provided that any director who is absent when such a determination is made shall be given notice of the determination. A regular meeting of the Board of Directors may be held without notice immediately after and at the same place as the annual meeting of stock- holders.
2.8 Special Meetings. Special meetings of the Board of Directors may be held at any time and place, within or without the State of Utah, designated in a call by the chairman of the Board, president, or by two or more directors, or by one director in the event that there is only a single director in office.
2.9 Notice of Special Meetings. Notice of any special meeting of directors shall be given to each director by the secretary or by one of the directors calling the meeting. Notice shall be duly given to each director (i) by giving notice to such director in person or by telephone at least 48 hours in advance of the meeting, (ii) by sending a telegram, telecopy or telex, or delivering written notice by hand to his or her last known business or home address at least 48 hours in advance of the meeting, or (iii) by mailing written notice to his last known business or home address at least 72 hours in advance of the meeting. A notice or waiver of notice of a meeting of the Board of Directors need not specify the purpose of the meeting.
2.10 Meetings by Telephone Conference Calls. Directors or any members of any committee designated by the directors may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting.
2.11 Quorum. A majority of the whole Board of Directors shall constitute a quorum at all meetings of the Board of Directors. In the event one or more of the directors shall be disqualified to vote at any meeting, then the required quorum shall be reduced by one for each such director so disqualified; provided, however, that in no case shall less than one-third (1/1) of the whole Board of Directors constitute a quorum. In the absence of a quorum at any such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present.
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2.12 Action at Meeting. At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of those present shall be sufficient to take any action, unless a different vote is specified by law, the Certificate of Incorporation, or these Bylaws.
2.13 Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee of the Board of Directors may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent to the action in writing, and the written consents are filed with the minutes of proceedings of the Board of Directors or committee.
2.14 Removal. At a meeting called expressly for that purpose, any one or more or all of the directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, except that (i) the directors elected by the holders of a particular class or series of stock may be removed without cause only by vote of the holders of a majority of the outstanding shares of such class or series and (ii) in the case of a corporation having cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire Board of Directors.
2.15 Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one cr more directors as alternate members of any committee, who may replace any absent or disqualified member of any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members of the committee present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors and subject to the provisions of the Corporation Law of the State of Utah, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Articles of Incorporation, adopting an agreement of merger or consolidation, recommending to the shareholders the sale, lease, or exchange of all or substantially all of the corporation's property and assets, recommending to the shareholders a dissolution of the Corporation or a revocation of a dissolution, or amending the Bylaws of the Corporation; and, unless the resolution, Bylaws, or Articles of Incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger. Each such committee shall keep minutes and make such reports as the Board of Directors may from time to time request. Except as the Board of Directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the directors or in such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these Bylaws for the Board of Directors.
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2.16 Compensation of Directors. Directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board of Directors may from time to time determine. No such payment shall preclude any director from serving the Corporation or any of its parent or subsidiary corporations in any other capacity and receiving compensation for such service.
ARTICLE 3 - OFFICERS
3.1 General. The officers of the Corporation shall consist of a chairman of the board, a president, a secretary, a treasurer, and such other officers with such other titles as the Board of Directors may determine, including a vice chairman of the board, and one or more vice presidents, assistant treasurers, and assistant secretaries. The Board of Directors may appoint such other officers with such other powers and duties as it may deem appropriate.
3.2 Election. The chairman of the Board, president, treasurer, and secretary shall be elected annually by the Board of Directors at its first meeting following the annual meeting of shareholders. Other officers may be appointed by the Board of Directors at such meeting or at any other meeting.
3.3 Qualification. No officer need be a stockholder. Any two or more offices may be held by the same person.
3.4 Tenure. Except as otherwise provided by law, by the Articles of Incorporation, or by these Bylaws, each officer shall hold office until his successor is elected and qualified, unless a different term is specified in the vote choosing or appointing him, or until his earlier death, resignation, or removal.
3.5 Resignation and Removal. Any officer may resign by delivering his written resignation to the Corporation at its principal office or to the president or secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.
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Any officer may be removed at any time, with or without cause, by vote of a majority of the entire number of directors then in office.
Except as the Board of Directors may otherwise determine, no officer who resigns or is removed shall have any right to any compensation as an officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month or by the year or otherwise, unless such compensation is expressly provided in a duly authorized written agreement with the Corporation.
3.6 Vacancies. The Board of Directors may fill any vacancy occurring in any office for any reason and may, in its discretion, leave unfilled for such period as it may determine any offices other than those of president, treasurer, and secretary. Each such successor shall hold office for the unexpired term of his predecessor and until his successor is elected and qualified, or until his earlier death, resignation, or removal.
3.7 Chairman of the Board and Vice Chairman of the Board. The chairman of the Board of Directors shall be the chief executive officer of the Corporation. Subject to the direction of the Board of Directors, the chairman of the Board of Directors shall have general charge and supervision of the business of the Corporation, and shall have full authority to take all lawful actions necessary to implement corporate and business policy established by the Board of Directors. In addition, the chairman of the Board of Directors shall perform such duties and possess such other powers as are assigned to him by the Board of Directors. Unless otherwise provided by the Board of Directors, the chairman of the Board of Directors shall preside at all meetings of the shareholders and the Board of Directors. The Board of Directors may appoint a vice chairman of the Board of Directors who may, in the absence or disability of the chairman, perform the duties and exercise the powers of the chairman and perform such other duties and possess such other powers as from time to time are authorized by the Board of Directors.
3.8 President. The president shall be the chief operating officer of the Corporation and shall have charge and supervision of the day to day business operations of the Corporation, subject to the authority of the chairman of the Board of Directors and of the Board of Directors. Unless the Board of Directors or chairman of the Board of Directors shall otherwise direct, all executive officers of the Corporation shall report, directly or through their immediate superior officers, to the president. The president shall perform such other duties and shall have such other powers as the Board of Directors may from time to time prescribe.
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3.9 Vice Presidents. The vice president shall perform such duties and shall have such powers as the Board of Directors, chairman of the Board of Directors, or the president may from time to time prescribe. The vice president shall discharge the duties of the president when the president, for any reason, cannot discharge the duties of his office. He shall have such other powers and perform such other duties as shall be prescribed by the directors.
Any assistant vice presidents shall perform such duties and possess such powers as the Board of Directors, the chairman of the Board of Directors, the president, or the vice president may from time to time prescribe.
3.10 Secretary and Assistant Secretaries. The secretary shall perform such duties and shall have such powers as the Board of Directors, chairman of the Board of Directors, or the president may from time to time prescribe. In addition, the secretary shall perform such duties and have such powers as are incident to the office of the secretary, including without limitation, the duty and power to give notices of all meetings of shareholders and special meetings of the Board of Directors, to attend all meetings of shareholders and the Board of Directors and keep a record of the proceedings, to maintain a stock ledger and prepare lists of shareholders and their addresses as required, to be custodian of corporate records and the corporate seal, if any, and to affix and attest to the same on documents.
Any assistant secretary shall perform such duties and possess such powers as the Board of Directors, the chairman of the Board of Directors, the president, or the secretary may from time to time prescribe. In the event of the absence, inability, or refusal to act of the secretary, the assistant secretary (or if there be more than one, the assistant secretaries in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the secretary.
In the absence of the secretary or any assistant secretary at any meeting of shareholders or directors, the person presiding at the meeting shall designate a temporary secretary to keep a record of the meeting.
3.11 Treasurer and Assistant Treasurers. The treasurer shall perform such duties and shall have such powers as from time to time be assigned to him by the Board of Directors, the chairman of the Board of Directors, or the president. In addition, the treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation the duty and power to keep and be responsible for all funds and securities of the Corporation, to deposit funds of the Corporation in depositories selected in accordance with these Bylaws, to disburse such funds as ordered by the Board of Directors, the chairman of the Board of Directors, the president, or any vice president of the Corporation so authorized to act by specific authorization of the Board of Directors or chairman of the Directors, to make proper accounts of such funds, and to render, as required by the Board of Directors, chairman of the Board of Directors or president, statements of all such transactions and of the financial condition of the Corporation.
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The assistant treasurers shall perform such duties and possess such powers as the Board of Directors, the chairman of the Board of Directors, the president, or the treasurer may from time to time prescribe. In the event of the absence, inability, or refusal to act of the treasurer, the assistant treasurer (or if there shall be more than one, the assistant treasurers in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the treasurer.
3.12 Salaries. Officers of the Corporation shall be entitled to such salaries, compensation, or reimbursement as shall be fixed or allowed from time to time by the Board of Directors.
ARTICLE 4 - CAPITAL STOCK
4.1 Issuance of Stock. Unless otherwise voted by the shareholders and subject to the provisions of the Articles of Incorporation, the whole or any part of any unissued balance of the authorized capital stock of the Corporation or the whole or any part of any unissued balance of the authorized capital stock of the Corporation held in its treasury may be issued, sold, transferred, or otherwise disposed of by vote of the Board of Directors in such manner, for such consideration and on such terms as the Board of Directors may determine.
4.2 Certificates of Stock. Every holder of stock of the Corporation shall be entitled to have a certificate, in such form as may be prescribed by law and by the Board of Directors, certifying the number and class of shares owned by him in the Corporation. Each such certificate shall be signed by, or in the name of the Corporation by the chairman or vice chairman, if any, of the Board of Directors, or the president or a vice president, and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the Corporation. Any or all of the signatures on the certificate may be a facsimile.
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Each certificate for shares of stock which are subject to any restriction on transfer pursuant to the Articles of Incorporation, the Bylaws, applicable securities laws, or any agreement among any number of shareholders or among such holders and the Corporation shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction.
4.3 Transfers. Except as otherwise established by rules and regulations adopted by the Board of Directors, and subject to applicable laws, shares of stock may be transferred on the books of the Corporation by the surrender to the Corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signature as the Corporation or its transfer agent may reasonable require. Except as may be otherwise required by law, by the Articles of Incorporation, or by these Bylaws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to such stock, regardless of any transfer, pledge, or other disposition of such stock until the shares have been transferred on the books of the Corporation in accordance with the requirements of these Bylaws.
4.4 Lost, Stolen, or Destroyed Certificates. The Corporation may issue a new certificate of stock in place of any previously issued certificate alleged to have been lost, stolen, or destroyed, upon such terms and conditions as the Board of Directors may prescribe, including the presentation of reasonable evidence of such loss, theft, or destruction and the giving such indemnity as the Board of Directors may require for the protection of the Corporation or any transfer agent or registrar.
4.5 Record Date. The Board of Directors may fix in advance a date as a record date for the determination of the shareholders entitled to notice of or to vote at any meeting of shareholders or to express consent (or dissent) to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights in respect of any change, conversion, or exchange of stock, or for the purpose of any other lawful action. Such record date shall not be more than 50 days prior to any other action to which such record date relates.
If no record date is fixed, the record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day before the day on which notice is given, or, if notice is waived, at the close of business on the day before the day on which the meeting is held. The record date for determining shareholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent is expressed. The record date for determining shareholders for any other purpose shall be at the close of business on the date on which the Board of Directors adopts the resolution relating to such purpose.
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A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
ARTICLE 5 - INDEMNIFICATION
The Corporation shall, to the fullest extent permitted by the Corporation Law of the State of Utah, indemnify any director, officer, or trustee which it shall have power to indemnify under applicable law against any expenses, liabilities, or other matters referred to in or covered by applicable law. The indemnification provided for in this Article (i) shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any Bylaw, agreement, or vote of stock- holders or disinterested directors or otherwise, both as to action in their official capacities and as to action in another capacity while holding such office, (ii) shall continue as to a person who has ceased to be a director, officer, or trustee, and (iii) shall inure to the benefit of the heirs, executors, and administrators of such a person. The Corporation's obligation to provide indemnification under this Article shall be offset to the extent of any other source of indemnification or any otherwise applicable insurance coverage under a policy maintained by the Corporation or any other person.
ARTICLE 6 - GENERAL PROVISIONS
6.1 Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors.
6.2 Corporate Seal. The corporate seal, if any, shall be in such form as shall be approved by the Board of Directors.
6.3 Written Notice of Meetings. Whenever written notice is required to be given to any person pursuant to law, the Articles of Incorporation, or these Bylaws, it may be given to such person, either personally or by sending a copy thereof by first class mail, or by telegram, charges prepaid, to his address appearing on the books of the Corporation, or to his business or other address supplied by him to the Corporation for the purpose of notice. If the notice is sent by first class mail or by telegraph, it shall be deemed to have been given to the person entitled thereto when deposited in the United States mail or with a telegraph office for transmission to such person. Such notice shall specify the place, day, and hour of the meeting and, in case of a special meeting of the shareholders, the general nature of the business to be transacted.
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6.4 Waiver of Notice. Whenever any notice whatsoever is required to be given by law, by the Articles of Incorporation, or by these Bylaws, a waiver of such notice either in writing signed by the person entitled to such notice or such person's duly authorized attorney, or by telegraph, cable, or any other available method, whether before, at, or after the time stated in such waiver, or the appearance of such person or persons at such meeting in person or by proxy, shall be deemed equivalent to such notice.
6.5 Voting of Securities. Except as the directors may otherwise designate, the president or treasurer may waive notice of, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact for this Corporation (with or without power of substitution) at any meeting of shareholders or shareholders of any other Corporation or organization, the securities of which may be held by this Corporation.
6.6 Evidence of Authority. A certificate by the secretary or an assistant secretary or a temporary secretary as to any action taken by the shareholders, directors, a committee, or any officer or representative of the Corporation, shall as to all persons who rely on the certificate in good faith, be conclusive evidence of such action.
6.7 Articles of Incorporation. All references in these Bylaws to the Articles of Incorporation shall be deemed to refer to the Certificate of Incorporation of the Corporation, as amended and in effect from time to time.
6.8 Transactions with Interested Parties. No contract or transaction between the Corporation and one or more of the directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of the directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or a committee of the Board of Directors which authorizes the contract or transaction or solely because his or their votes are counted for such purpose, if:
(1) The material facts as to his relationship or interest as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorized the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum;
(2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareholders; or
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(3) The contract or transaction is fair as to the Corporation as of the time it is authorized, approved, or ratified by the Board of Directors, a committee of the Board of Directors, or the shareholders,
Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.
6.9 Severability. Any determination that any provision of these Bylaws is for any reason inapplicable, illegal, or ineffective, shall not affect or invalidate any other provision of these Bylaws.
6.10 Pronouns. All pronouns used in these Bylaws shall be deemed to refer to the masculine, feminine, or neuter, singular or plural, as the identity of the person or persons may require.
ARTICLE 7 - AMENDMENTS
7.1 By the Board of Directors. These Bylaws may be altered, amended, or repealed or new Bylaws may be adopted by an affirmative vote of a majority of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present.
7.2 By the Shareholders. These Bylaws may be altered, amended, or repealed or new Bylaws may be adopted by the affirmative vote of the holders of a majority of the shares of the capital stock of the corporation issued and outstanding and entitled to vote at any regular meeting of shareholders, or at any special meeting of shareholders, provided notice of such alternation, amendment, repeal, or adoption of new Bylaws shall have been stated in the notice of such special meeting.
ADOPTED THIS 25 day of April, 1991.
/s/ Michael R. Williams | |
President |
ATTEST:
/s/ Timothy G.Williams
Secretary
Exhibit 4.1
SADDLE RANCH MEDIA, INC.
SUBSCRIPTION AGREEMENT
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. FURTHERMORE, INVESTORS MUST UNDERSTAND THAT SUCH INVESTMENT IS ILLIQUID AND IS EXPECTED TO CONTINUE TO BE ILLIQUID FOR AN INDEFINITE PERIOD OF TIME. NO PUBLIC MARKET EXISTS FOR THE SECURITIES, AND NO PUBLIC MARKET IS EXPECTED TO DEVELOP FOLLOWING THIS OFFERING.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND STATE SECURITIES OR BLUE SKY LAWS. ALTHOUGH AN OFFERING STATEMENT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), THAT OFFERING STATEMENT DOES NOT INCLUDE THE SAME INFORMATION THAT WOULD BE INCLUDED IN A REGISTRATION STATEMENT UNDER THE ACT. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THE SUBSCRIPTION AGREEMENT OR ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO SUBSCRIBER IN CONNECTION WITH THIS OFFERING THROUGH THE WEBSITE MAINTAINED BY THE COMPANY OR THROUGH WEALTHFORGE SECURITIES, LLC (THE “BROKER”). ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
INVESTORS WHO ARE NOT “ACCREDITED INVESTORS” (AS THAT TERM IS DEFINED IN SECTION 501 OF REGULATION D PROMULGATED UNDER THE ACT) ARE SUBJECT TO LIMITATIONS ON THE AMOUNT THEY MAY INVEST, AS SET OUT IN SECTION 4. THE COMPANY IS RELYING ON THE REPRESENTATIONS AND WARRANTIES SET FORTH BY EACH SUBSCRIBER IN THIS SUBSCRIPTION AGREEMENT AND THE OTHER INFORMATION PROVIDED BY SUBSCRIBER IN CONNECTION WITH THIS OFFERING TO DETERMINE THE APPLICABILITY TO THIS OFFERING OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT.
PROSPECTIVE INVESTORS MAY NOT TREAT THE CONTENTS OF THE SUBSCRIPTION AGREEMENT, THE OFFERING CIRCULAR OR ANY OF THE OTHER MATERIALS RELATING TO THE OFFERING AND PRESENTED TO INVESTORS ON THE COMPANY’S WEBSITE OR PROVIDED BY THE BROKER (COLLECTIVELY, THE “OFFERING MATERIALS”) OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY OR ANY OF ITS OFFICERS, EMPLOYEES OR AGENTS (INCLUDING “TESTING THE WATERS” MATERIALS) AS INVESTMENT, LEGAL OR TAX ADVICE. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND THE RISKS INVOLVED. EACH PROSPECTIVE INVESTOR SHOULD CONSULT THE INVESTOR’S OWN COUNSEL, ACCOUNTANT AND OTHER PROFESSIONAL ADVISOR AS TO INVESTMENT, LEGAL, TAX AND OTHER RELATED MATTERS CONCERNING THE INVESTOR’S PROPOSED INVESTMENT.
THE OFFERING MATERIALS MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
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THE COMPANY MAY NOT BE OFFERING THE SECURITIES IN EVERY STATE. THE OFFERING MATERIALS DO NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR JURISDICTION IN WHICH THE SECURITIES ARE NOT BEING OFFERED.
THE INFORMATION PRESENTED IN THE OFFERING MATERIALS WAS PREPARED BY THE COMPANY SOLELY FOR THE USE BY PROSPECTIVE INVESTORS IN CONNECTION WITH THIS OFFERING. NO REPRESENTATIONS OR WARRANTIES ARE MADE AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN ANY OFFERING MATERIALS, AND NOTHING CONTAINED IN THE OFFERING MATERIALS IS OR SHOULD BE RELIED UPON AS A PROMISE OR REPRESENTATION AS TO THE FUTURE PERFORMANCE OF THE COMPANY.
THE COMPANY RESERVES THE RIGHT IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING AND/OR ACCEPT OR REJECT IN WHOLE OR IN PART ANY PROSPECTIVE INVESTMENT IN THE SECURITIES OR TO ALLOT TO ANY PROSPECTIVE INVESTOR LESS THAN THE AMOUNT OF SECURITIES SUCH INVESTOR DESIRES TO PURCHASE. EXCEPT AS OTHERWISE INDICATED, THE OFFERING MATERIALS SPEAK AS OF THEIR DATE. NEITHER THE DELIVERY NOR THE PURCHASE OF THE SECURITIES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.
Ladies and Gentlemen:
1. Subscription.
(a) The undersigned (“Subscriber”) hereby irrevocably subscribes for and agrees to purchase Common Stock (the “Securities”), of Saddle Ranch Media, Inc., a Utah corporation (the “Company”), at a purchase price of $0.0025 per share of Common Stock (the “Per Security Price”), upon the terms and conditions set forth herein.
(b) Subscriber understands that the Securities are being offered pursuant to an offering circular (the “Offering Circular”) filed with the SEC as part of the Offering Statement. By executing this Subscription Agreement, Subscriber acknowledges that Subscriber has received this Subscription Agreement, copies of the Offering Circular and Offering Statement, including exhibits thereto, and any other information required by the Subscriber to make an investment decision.
(c) The Subscriber’s subscription may be accepted or rejected in whole or in part, at any time prior to a Closing Date (as hereinafter defined), by the Company at its sole discretion. In addition, the Company, at its sole discretion, may allocate to Subscriber only a portion of the number of Securities Subscriber has subscribed for. The Company will notify Subscriber whether this subscription is accepted (whether in whole or in part) or rejected. If Subscriber’s subscription is rejected, Subscriber’s payment (or portion thereof if partially rejected) will be returned to Subscriber without interest and all of Subscriber’s obligations hereunder shall terminate.
(d) The aggregate number of Securities sold shall not exceed 1,000,000,000 shares (the “Maximum Offering”). The Company may accept subscriptions until the termination date given in the Offering Circular, unless otherwise extended by the Company in its sole discretion in accordance with applicable SEC regulations for such other period required to sell the Maximum Offering (the “Termination Date”). The Company may elect at any time to close all or any portion of this offering, on various dates at or prior to the Termination Date (each a “Closing Date”).
(e) In the event of rejection of this subscription in its entirety, or in the event the sale of the Securities (or any portion thereof) is not consummated for any reason, this Subscription Agreement shall have no force or effect, except for Section 5 hereof, which shall remain in force and effect.
2. Purchase Procedure.
(a) Payment. The purchase price for the Securities shall be paid simultaneously with the execution and delivery to the Company of the signature page of this Subscription Agreement. Subscriber shall deliver a signed copy of this Subscription Agreement (which may be executed and delivered electronically), along with payment for the aggregate purchase price of the Securities by ACH electronic transfer or wire transfer to an account designated by the Company, or by any combination of such methods.
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(b) No Escrow. The proceeds of this offering will not be placed into an escrow account. As there is no minimum offering, upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds.
3. Representations and Warranties of the Company.
The Company represents and warrants to Subscriber that the following representations and warranties are true and complete in all material respects as of the date of each Closing Date, except as otherwise indicated. For purposes of this Agreement, an individual shall be deemed to have “knowledge” of a particular fact or other matter if such individual is actually aware of such fact. The Company will be deemed to have “knowledge” of a particular fact or other matter if one of the Company’s current officers has, or at any time had, actual knowledge of such fact or other matter.
(a) Organization and Standing. The Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Utah. The Company has all requisite power and authority to own and operate its properties and assets, to execute and deliver this Subscription Agreement and any other agreements or instruments required hereunder. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.
(b) Issuance of the Securities. The issuance, sale and delivery of the Securities in accordance with this Subscription Agreement have been duly authorized by all necessary corporate action on the part of the Company. The Securities, when so issued, sold and delivered against payment therefor in accordance with the provisions of this Subscription Agreement, will be duly and validly issued, fully paid and non-assessable.
(c) Authority for Agreement. The execution and delivery by the Company of this Subscription Agreement and the consummation of the transactions contemplated hereby (including the issuance, sale and delivery of the Securities) are within the Company’s powers and have been duly authorized by all necessary corporate action on the part of the Company. Upon full execution hereof, this Subscription Agreement shall constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies and (iii) with respect to provisions relating to indemnification and contribution, as limited by considerations of public policy and by federal or state securities laws.
(d) No filings . Assuming the accuracy of the Subscriber’s representations and warranties set forth in Section 4 hereof, no order, license, consent, authorization or approval of, or exemption by, or action by or in respect of, or notice to, or filing or registration with, any governmental body, agency or official is required by or with respect to the Company in connection with the execution, delivery and performance by the Company of this Subscription Agreement except (i) for such filings as may be required under Regulation A or under any applicable state securities laws, (ii) for such other filings and approvals as have been made or obtained, or (iii) where the failure to obtain any such order, license, consent, authorization, approval or exemption or give any such notice or make any filing or registration would not have a material adverse effect on the ability of the Company to perform its obligations hereunder.
(e) Capitalization. The authorized and outstanding securities of the Company immediately prior to the initial investment in the Securities is as set forth in “Securities Being Offered” in the Offering Circular. Except as set forth in the Offering Circular, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), or agreements of any kind (oral or written) for the purchase or acquisition from the Company of any of its securities.
(f) Financial statements. Complete copies of the Company’s financial statements consisting of the balance sheets of the Company given in the Offering Circular and the related statements of income, stockholders’ equity and cash flows for the two-year period then ended (the “Financial Statements”) have been made available to the Subscriber and appear in the Offering Circular. The Financial Statements are based on the books and records of the Company and fairly present in all material respects the financial condition of the Company as of the respective dates they were prepared and the results of the operations and cash flows of the Company for the periods indicated.
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(g) Proceeds. The Company shall use the proceeds from the issuance and sale of the Securities as set forth in “Use of Proceeds to issuer” in the Offering Circular.
(h) Litigation. There is no pending action, suit, proceeding, arbitration, mediation, complaint, claim, charge or investigation before any court, arbitrator, mediator or governmental body, or to the Company’s knowledge, currently threatened in writing (a) against the Company or (b) against any consultant, officer, manager, director or key employee of the Company arising out of his or her consulting, employment or board relationship with the Company or that could otherwise materially impact the Company.
4. Representations and Warranties of Subscriber. By executing this Subscription Agreement, Subscriber (and, if Subscriber is purchasing the Securities subscribed for hereby in a fiduciary capacity, the person or persons for whom Subscriber is so purchasing) represents and warrants, which representations and warranties are true and complete in all material respects as of such Subscriber’s respective Closing Date(s):
(a) Requisite Power and Authority. Such Subscriber has all necessary power and authority under all applicable provisions of law to execute and deliver this Subscription Agreement and other agreements required hereunder and to carry out their provisions. All action on Subscriber’s part required for the lawful execution and delivery of this Subscription Agreement and other agreements required hereunder have been or will be effectively taken prior to the Closing Date. Upon their execution and delivery, this Subscription Agreement and other agreements required hereunder will be valid and binding obligations of Subscriber, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (b) as limited by general principles of equity that restrict the availability of equitable remedies.
(b) Investment Representations. Subscriber understands that the Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”). Subscriber also understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Subscriber’s representations contained in this Subscription Agreement.
(c) Illiquidity and Continued Economic Risk. Subscriber acknowledges and agrees that there is a limited public market for the Securities and that there is no guarantee that a market for their resale will ever exist. Subscriber must bear the economic risk of this investment indefinitely and the Company has no obligation to list the Securities on any market or take any steps (including registration under the Securities Act or the Securities Exchange Act of 1934, as amended) with respect to facilitating trading or resale of the Securities. Subscriber acknowledges that Subscriber is able to bear the economic risk of losing Subscriber’s entire investment in the Securities. Subscriber also understands that an investment in the Company involves significant risks and has taken full cognizance of and understands all of the risk factors relating to the purchase of Securities.
(d) Company Information. Subscriber understands that the Company is subject to all the risks that apply to early-stage companies, whether or not those risks are explicitly set out in the Offering Circular. Subscriber has had such opportunity as it deems necessary (which opportunity may have presented through online chat or commentary functions) to discuss the Company’s business, management and financial affairs with managers, officers and management of the Company and has had the opportunity to review the Company’s operations and facilities. Subscriber has also had the opportunity to ask questions of and receive answers from the Company and its management regarding the terms and conditions of this investment. Subscriber acknowledges that except as set forth herein, no representations or warranties have been made to Subscriber, or to Subscriber’s advisors or representative, by the Company or others with respect to the business or prospects of the Company or its financial condition.
(e) Valuation. The Subscriber acknowledges that the price of the Securities was set by the Company on the basis of the Company’s internal valuation and no warranties are made as to value. The Subscriber further acknowledges that future offerings of Securities may be made at lower valuations, with the result that the Subscriber’s investment will bear a lower valuation.
(f) Domicile. Subscriber maintains Subscriber’s domicile (and is not a transient or temporary resident) at the address shown on the signature page.
(g) No Brokerage Fees. There are no claims for brokerage commission, finders’ fees or similar compensation in connection with the transactions contemplated by this Subscription Agreement or related documents based on any arrangement or agreement binding upon Subscriber.
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(h) Issuer-Directed Offering; No Underwriter. Subscriber understands that the offering is being conducted by the Company directly (issuer-directed) and the Company has not engaged a selling agent such as an underwriter or placement agent.
(j) Foreign Investors. If Subscriber is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), Subscriber hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Securities or any use of this Subscription Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities. Subscriber’s subscription and payment for and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of the Subscriber’s jurisdiction.
5. Survival of Representations. The representations, warranties and covenants made by the Subscriber herein shall survive the Termination Date of this Agreement.
7. Governing Law; Jurisdiction. This Subscription Agreement shall be governed and construed in accordance with the laws of the State of California.
EACH OF THE SUBSCRIBER AND THE COMPANY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION LOCATED WITHIN MARYLAND AND NO OTHER PLACE AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS SUBSCRIPTION AGREEMENT MAY BE LITIGATED IN SUCH COURTS. EACH OF SUBSCRIBER AND THE COMPANY ACCEPTS FOR ITSELF AND HIMSELF AND IN CONNECTION WITH ITS AND HIS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS SUBSCRIPTION AGREEMENT. EACH OF SUBSCRIBER AND THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN THE MANNER AND IN THE ADDRESS SPECIFIED IN SECTION 8 AND THE SIGNATURE PAGE OF THIS SUBSCRIPTION AGREEMENT.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS SUBSCRIPTION AGREEMENT OR THE ACTIONS OF EITHER PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF, EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF SUCH PARTY. EACH OF THE PARTIES HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS SUBSCRIPTION AGREEMENT. IN THE EVENT OF LITIGATION, THIS SUBSCRIPTION AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
8. Notices. Notice, requests, demands and other communications relating to this Subscription Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when (a) delivered personally, on the date of such delivery; or (b) mailed by registered or certified mail, postage prepaid, return receipt requested, in the third day after the posting thereof; or (c) emailed, telecopied or cabled, on the date of such delivery to the address of the respective parties as follows:
If to the Company, to: Saddle Ranch Media, Inc. 5020 Campus Drive Newport Beach, CA 92660 |
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If to a Subscriber, to Subscriber’s address as shown on the signature page hereto or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice. Any notices, requests, demands or other communications by telecopy or cable shall be confirmed by letter given in accordance with (a) or (b) above.
9. Miscellaneous.
(a) All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require.
(b) This Subscription Agreement is not transferable or assignable by Subscriber.
(c) The representations, warranties and agreements contained herein shall be deemed to be made by and be binding upon Subscriber and its heirs, executors, administrators and successors and shall inure to the benefit of the Company and its successors and assigns.
(d) None of the provisions of this Subscription Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and Subscriber.
(e) In the event any part of this Subscription Agreement is found to be void or unenforceable, the remaining provisions are intended to be separable and binding with the same effect as if the void or unenforceable part were never the subject of agreement.
(f) The invalidity, illegality or unenforceability of one or more of the provisions of this Subscription Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Subscription Agreement in such jurisdiction or the validity, legality or enforceability of this Subscription Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
(g) This Subscription Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof.
(h) The terms and provisions of this Subscription Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer, and no provision hereof shall confer, third-party beneficiary rights upon any other person.
(i) The headings used in this Subscription Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.
(j) This Subscription Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
(k) If any recapitalization or other transaction affecting the stock of the Company is effected, then any new, substituted or additional securities or other property which is distributed with respect to the Securities shall be immediately subject to this Subscription Agreement, to the same extent that the Securities, immediately prior thereto, shall have been covered by this Subscription Agreement.
(l) No failure or delay by any party in exercising any right, power or privilege under this Subscription Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
[SIGNATURE PAGE FOLLOWS]
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Saddle Ranch Media, Inc.
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
The undersigned, desiring to purchase Common Stock of Saddle Ranch Media, Inc., by executing this signature page, hereby executes, adopts and agrees to all terms, conditions and representations of the Subscription Agreement.
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Exhibit 6.1
Saddle Ranch Media, Inc.
INCENTIVE STOCK OPTION PLAN
Plan Summary
______
The plan provides that an aggregate of up to ___,000,000 shares of the Company's Common Stock may be optioned to officers and other key employees. The plan provides authority for a Stock Option Plan Committee to select the employees of the Company, and its subsidiaries, to whom incentive stock options will be granted. No person may be granted any option unless he agrees to remain an employee of the Company for at least two years. There are approximately three officers and directors of the Company plus other key employees eligible to receive options under the plan. All officers may participate in the plan.
Following the statutory requirements of new Code 422A, the plan provides that the Committee may establish the purchase price of the stock at the time the option is granted. However, the purchase price may not be less than 100 percent of the fair market value of the Company's Common Stock. The aggregate fair market value of the stock for which any employee may be granted options in any calendar year shall not exceed $100,000 plus any unused limit carried over (as defined in Plan 3(d)) to such year from any prior calendar year beginning on or after April 1, 2018 .
The plan terminates ten years from its effective date. All new options to be granted are nontransferable. The Company is to receive no cash consideration for granting options under the plan. However, when an option is exercise, the holder is required to pay the option price, in cash or certified bank check, shares of the Company's Common Stock or in any combination of the above, for the number of shares of stock to be issued on exercise of the option unless the holder elects to receive cash or stock by exercise of stock appreciation rights.
Under the plan, a Stock Appreciation Right (SAR) permits the holder of an option to elect to receive cash or a lesser amount of stock without payment, upon exercise of an option. The amount of cash receivable is the difference between the option price stated in the option and the fair market value of the Common Stock on the date of the exercise. The lesser number of shares receivable is the number of shares which could be purchased with the cash receivable. An important distinction between the exercise of an incentive stock option and the exercise of a SAR is that, upon the exercise of an SAR, the option holder need not pay the option price in cash. The shares or cash received by an optionee upon exercising an SAR, however, are subject to tax under Section 83.
1. Purpose of the Plan
This Incentive Stock Option Plan (hereinafter called the "Plan") for Prize Poker Tournaments (hereinafter called the "Company") is intended to advance the interests of the Company by providing officers and other key employees who have substantial responsibility for the direction and management of the Company with additional incentive to promote the success of the business, to increase their proprietary interest in the success of the Company, and to encourage them to remain in its employ. The above aims will be effectuated through the granting of certain stock options. It is intended that options issued under the Plan and designated by the Committee under Section 3(b) will qualify as Incentive Stock Options (hereinafter called "ISOs") under Section 422A of the Internal Revenue Code and the terms of the Plan shall be interpreted in accordance with this intention.
2. Administration of the Plan
The Board of Directors shall appoint a Stock Option Plan Committee (hereinafter called the "Committee") which shall consist of not less than three (3) members, at least one of whom shall be a Director of the Company. Subject to the provisions of the Plan, the Committee shall have plenary authority, in its discretion: (a) to determine the employees of the Company and its subsidiaries (from among the class of employees eligible under Section 3 to receive options under the Plan) to whom options shall be granted; (b) to determine the time or times at which options shall be granted; (c) to determine the option price of the shares subject to each option, which price shall not be less than the minimum specified in Section 5; (d) to determine (subject to Section 7) the time or times when each option shall become exercisable and the duration of the exercise period; and (e) to interpret the Plan and to prescribe, amend, and rescind rules and regulations relating to it. The Board may from time to time appoint members of the Committee in substitution for members previously appointed and may fill vacancies, however caused, in the Committee; provided, however, that at all times at least one member shall be a Director of the Company. The Committee shall select one of its members as its Chairman and shall hold its meetings at such times and places as it shall deem advisable. All action of the Committee shall be taken by unanimous vote of its members. Any action may be taken by a written instrument signed by all the members of the Committee, and action so taken shall be fully as effective as if it had been taken by a unanimous vote of the members at a meeting duly called and held. The Committee may appoint a secretary to keep minutes of its meetings and shall make rules and regulations for the conduct of its business, as it shall deem advisable.
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3. Eligibility and Limitations on Options Granted Under the Plan
(a) Options will be granted only to persons who are key employees of the Company or a subsidiary corporation of the Company who agree, in writing, to remain in the employ of, and render services to, the Company or a subsidiary corporation of the Company for a period of at least two (2) years from the date of the granting of the option. The term "key employees" shall include officers, directors, executives, and supervisory personnel, as well as other employees of the Company or a subsidiary corporation of the Company. The term “Subsidiary Corporation” shall, for the purposes of this Plan be defined in the same manner as such term is defined in Section 425 (f) of the Internal Revenue Code.
(b) At the time of the grant of each option under this Plan, the Committee shall determine whether such option is to be designated as an ISO. If an option is to be so designated as an ISO, then the provisions of Section 7(d) of this Plan shall be made applicable to such option. In addition, no option granted to any employee, who at the time of such grant, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or any of its subsidiaries, may be designated as an ISO, unless at the time of such grant, the option price is fixed at not less than 110 percent of the fair market value of the stock subject to the option, and exercise of such option is prohibited by its terms after the expiration of five (5) years from the date such is granted.
(c) The aggregate fair market value of the stock for which any employee may be granted options designated as ISOs in any calendar year (under this or any other stock option plan established by the Company or a subsidiary corporation of the Company) shall not exceed $100,000 plus any unused limit carryover (as defined in 3(d) hereof) to such year from any prior calendar year beginning on or after April 1, 2018.
(d) The unused limit carryover from any such calendar year shall be one-half of any excess of $100,000 over the aggregate fair market value of the stock for which an employee was granted options that qualify (whether from their issuance or as a result of subsequent amendment and election by the Company) as ISOs in any such calendar year (under this and all other stock option plans established by the Company or a subsidiary corporation of the Company). The unused limit for any calendar year shall be carried forward for three (3) years. ISOs granted in any year shall be applied against the current year limitation first and then against the remaining unused limit carryovers to such year in the order of the calendar year in which the carryovers arose.
4. Shares of Stock Subject to the Plan
There will be reserved for use upon the exercise or options to be granted from time to time under the Plan (subject to the provisions of Section 12) an aggregate of __,000,000 shares of the Common Stock of the $.0.0001 par value common stock (hereinafter called the "Common Stock") of the Company, which shares may be in whole or in part, as the Board of Directors of the Company (hereinafter called the "Board") shall from time to time determine, authorized but unissued shares of the Common Stock or issued shares of the Common Stock which shall have been reacquired by the Company. Any shares subject to an option under the Plan, which option for any reason expires or is terminated unexercised as to such shares, may again be subject to an option under the Plan.
5. Option Price
The purchase price under each option issued shall be determined by the Committee at the time the option is granted, but in no event shall such purchase price be less than 100 percent of the fair market value of the Company's Common Stock on the date of grant.
The term "fair market value" shall be defined as either the average of the highest offer and lowest bid market price of said Common Stock on any public market if the stock of the Company is publicly traded, as of the date of the grant of the option, or, if there be no sales on such date, on the most recent date upon which such stock was traded, or if there is no market for the Common Stock of the Company, the book value of the Common Stock as of the end of the most recent preceding month as given on the books of the Company applying generally accepted accounting principles on a consistent basis giving effect to all accruals.
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6. Dilutions or Other Agreement
In the event that additional shares of Common Stock are issued pursuant to a stock split or a stock dividend, the number of shares of Common Stock then covered by each outstanding option granted hereunder shall be increased proportionately with no increase in the total purchase price of the shares then so covered, and the number of shares of Common Stock reserved for the purpose of the Plan shall be increased by the same proportion. In the event that the shares of Common Stock of the Company from time to time issued and outstanding are reduced by a combination of shares, the number of shares of Common Stock then covered by each outstanding option granted hereunder shall be reduced proportionately with no reduction in the total price of the shares then so covered, and the number of shares of Common Stock reserved for the purposes of the Plan shall be reduced by the same proportion. In the event that the Company should transfer assets to another corporation and distribute the stock of such other corporation without the surrender of Common Stock of the Company, and if such distribution is not taxable as a dividend and no gain or loss is recognized by reason of Section 355 of the Internal Revenue Code of 1954, or some similar section, then the total purchase price of the shares covered by each outstanding option shall be reduced by an amount which bears the same ratio to the total purchase price then in effect as the market value of the stock distributed in respect of a share of the Common Stock of the Company, immediately following the distribution, bears to the aggregate of the market value at such time of a share of the Common Stock of the Company and the stock distributed in respect thereof. All such adjustments shall be made by the Committee, whose determination upon the same shall be final and binding upon the optionees. No fractional shares shall be issued, and any fractional shares resulting from the computations pursuant to this Section 6 shall be eliminated from the respective option. No adjustment shall be made for cash dividends or the issuance to stockholders of rights to subscribe for additional Common Stock or other securities.
7. Period of Option and Certain Limitations on Right to Exercise
(a) All options issued under the Plan shall be for such period, as the Committee shall determine, but for not more than ten (10) years from the date of grant thereof.
(b) The period of the option, once it is granted, may be reduced only as provided for in Section 9 in connection with the termination of employment or death of the optionee or in Section 7(c) in the case of less than satisfactory performance.
(c) Each option granted under this Plan shall become exercisable only after two (2) years continued employment of the optionee with the Company or a subsidiary corporation of the Company immediately following the date the option is granted. Any option designated as an ISO shall be exercisable in full, or as to any part thereof, at any time after the expiration of two (2) years following the date such option is granted, but only if the optionee chooses to exercise such option and to pay for such option in the manner set forth in Section 7(e) hereof (i.e., in cash or certified check or shares of the Company's Common Stock, or any combination of the foregoing in an amount equal to the full option price of the shares being purchased). Any option not designated as an ISO and any option designated as an ISO that the optionee chooses to exercise in any manner other than that permitted in the preceding sentence, shall be exercisable only to the extent of one-fifth of the total number of optioned shares after the expiration of two (2) years following the date the option is granted only to the extent of two-fifths of the total number of optioned shares after the expiration of three (3) years following the date the option is granted, only to the extent of three-fifths of the total number of optioned shares after the expiration of four (4) years following the date the option is granted, only to the extent of four-fifths of the total number of optioned shares after the expiration of five (5) years following the date the option is granted, and in full only after the expiration of six (6) years following the date the option is granted, such limitations being calculated, in the case of any resulting fraction, to the nearest lower number of shares.
Notwithstanding the foregoing, the Committee may, in its sole discretion, (i) prescribe longer time periods and additional requirements with respect to the exercise of an option and (ii) terminate in whole or in part such portion of any option as has yet become exercisable at the time of termination if it determines that the optionee is not performing satisfactorily the duties to which he was assigned on the date the option was granted or duties of at least equal responsibility. No option may be exercised unless the optionee is at the time of such exercise in the employ of the Company or of a subsidiary corporation of the Company and shall have been continuously so employed since the grant of his option. Absence or leave approved by the management of the Company shall not be considered an interruption of employment for any purpose under the Plan.
(d) No option granted by the Committee as an ISO may be exercised while there is outstanding in the hands of the optionee any ISO (whether granted under this Plan or any other stock option plan established by the Company or a subsidiary of the Company) which was granted before the granting of the ISO hereunder sought to be exercised. For purposes of this Section 7(d), any ISO shall be treated as outstanding until exercised in full or expired.
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(e) Subject to the alternative settlement methods set forth in Section 7(h) hereof, the exercise of any option shall also be contingent upon receipt by the Company of cash or certified check to its order, shares of the Company's Common Stock, or any combination of the foregoing in an amount equal to the full option price of the shares being purchased. For purposes of this paragraph, shares of the Company's Common Stock that are delivered in payment of the option price shall be valued at their fair market value determined under the method set forth in Section 5 of this Plan applied as of the date of the exercise of the option. However, in order to facilitate the accumulation of funds to enable employees to exercise their option, they will have the right, if they so elect, to direct the Company or a subsidiary corporation of the Company to withhold from their compensation regular amounts to be applied toward the exercise of the options. Funds credited to the stock option accounts will be under the control of the Company until applied to the payment of the option price at the direction of the employee or returned to the employee in the event the amount is not used for purchase of shares under option, and all funds received or held by the Company under the Plan may be used for any corporate purpose, and no interest shall be payable to a participant on account of any amount held. Such amounts may be withdrawn by the participant at any time, in whole or in part, for any purpose.
(f) No optionee or his legal representative or distributees, as the case may be, will be deemed to be a holder of any share subject to an option unless and until certificates for such shares are issued to him or them under the terms of the Plan. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.
(g) In no event may an option be exercised after the expiration of its term.
(h) As an alternative to payment in full by the optionee for the number of shares of Common Stock in respect of which an option is exercised, the Committee may provide alternative settlement methods as follows:
(i) The Committee, in its discretion, may provide in the initial grant of any option, that the optionee may elect either of the alternative settlement methods set forth in subsection (ii) below.
(ii) The alternative settlement methods are for the optionee, upon exercise of the option, to receive from the Company: (1) cash in an amount equal to the excess of the value of one share over the option price times the number of shares as to which the option is exercised; or (2) the number of whole shares of Common Stock having an aggregate value not greater than the cash amount calculated under Section 7(h)(ii)(1). For purposes of determining an alternative settlement, the value per share shall be the "Fair market value" determined under the method set forth in Section 5 hereof, applied as of the date of the exercise of the option, or such other price as the Committee shall determine to be the fair market value of the Common Stock on the date of exercise.
(i) An election of any of the alternative settlement methods provided for under Section 7 (h)(ii) shall be binding on the optionee, when made. The optionee may elect to what extent the alternative settlement method elected shall be paid in cash, in Common Stock, or partially in Common Stock, provided that the aggregate value of the payments shall not be greater than the cash amount calculated under Section 7 (h)(ii)(1). No fractional shares of Common Stock shall be issued, and the Committee shall determine whether cash shall be paid in lieu of such fractional share interest or whether such fractional share interest shall be eliminated.
(j) The alternative settlement methods provided above in Section 7(h)(ii) shall not be available unless the cash amount calculated thereunder shall be positive, i.e. when the value of one share shall exceed the option price per share.
(k) Exercise of an option in any manner, including an exercise involving an election of an alternative settlement method with respect to an option, shall result in a decrease in the manner of shares of Common Stock which thereafter may be available under the Plan by the number of shares as to which the option is exercised.
(1) To the extent that the exercise of options by one of the alternative settlement methods provided for in Section (h)(ii) results in compensation income to the optionee, the Company will withhold from the amount due to the optionee utilizing such alternative settlement method, an appropriate amount for federal, state and local taxes.
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8. Assignability
Each option granted under this Plan shall be transferable only by will or the laws of descent and distribution and shall be exercisable, during his lifetime, only by the employee to whom the option is granted. Except as permitted by the preceding sentence, no option granted under the Plan or any of the rights and privileges thereby conferred shall be transferred, assigned, pledged, or hypothecated in any way (whether by operation of law or otherwise), and no such option, right, or privilege shall be subject to execution, attachment, or similar process. Upon any attempt to so transfer, assign, pledge, hypothecate, or otherwise dispose of the option, or of the right or privilege conferred thereby, contrary to the provisions hereof, or upon the levy of any attachment or similar process upon such option, right of privilege, the option and such rights and privileges shall immediately become null and void.
9. Effect of Termination of Employment. Death or Disability
(a) In the event of the termination of employment if an optionee during the two (2) year period after the date of issuance of an option to him either by reason of (i) a discharge for cause or (ii) voluntary separation on the part of the optionee and without consent of his employing company or companies, any option or options theretofore granted to him under this Plan to the extent not theretofore exercised by him shall forthwith terminate.
(b) In the event of the termination of employment of an optionee (otherwise than by reason of death or retirement of the optionee at his Retirement Date by the Company or by any subsidiary corporation of the Company employing the optionee at such time), any option or options granted to him under the Plan to the extent not theretofore exercised shall be deemed cancelled and terminated forthwith, except that, subject to the provisions of section (a) of this Section, such optionee may exercise any options theretofore granted to him, which have not then expired and which are otherwise exercisable within the provisions of Section 7(c) hereof, within three (3) months after such termination. If the employment of an optionee shall be terminated by reason of the optionee's retirement at his Retirement Date by the Company or by any subsidiary corporation of the Company employing the optionee at such time, the optionee shall have the right to exercise such option or options held by him to the extent that such options have not expired, at any time within three (3) months after such retirement. The provisions of Section 7(c) to the contrary notwithstanding, upon retirement, all options held by an optionee shall be immediately exercisable in full. The transfer of an optionee from the employ of the Company to a subsidiary corporation of the Company or vice versa, or from one subsidiary corporation of the Company to another, shall not be deemed to constitute a termination of employment for purposes of this Plan.
(c) In the event that an optionee shall die while employed by the Company or any subsidiary corporation of the Company or shall die within three (3) months after retirement at his Retirement Date (by the Company or by any subsidiary corporation of the Company) any option or options granted to him under this Plan and not theretofore exercised by him or expired shall be exercisable by the estate of the optionee or by any person who acquired such option by bequest or inheritance at any time within one (1) year after the death of the optionee. References hereinabove to the optionee shall be deemed to include any person entitled to exercise the option after the death of the optionee under the terms of this Section.
(d) In the event of the termination of employment of an optionee by reason of the optionee's disability, the optionee shall have the right, notwithstanding the provisions of Section 7(c) hereof, to exercise all options held by him, to the extent that options have not previously expired or been exercised, at any time within one (1) year after such termination. The term "disability" shall, for the purposes of this Plan, be defined in the same manner as such term is defined in Section 105(d)(4) of the Internal Revenue Code of 1954.
(e) For the purposes of this Plan, "Retirement Date" shall mean any date an employee is otherwise entitled to retire under the Company's retirement plans, if any, and shall include normal retirement at age 65, early retirement at age 62, and retirement at age 60 after 30 years of service.
10. Listing and Registration of Shares
Each option shall be subject to the requirement that if at any time the Stock Option Committee shall determine, in its discretion, that the listing, registration, or qualification of the shares covered thereby upon any securities exchange or under any state or federal law or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such option or the issue or purchase of shares thereunder, such option may not be exercised in whole or in part unless and until such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.
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11. Expiration and Termination of the Plan
Options may be granted under the Plan at any time or from time to time as long as the total number of shares optioned or purchased under this Plan does not exceed ___,000,000 shares of Common Stock. The Plan may be abandoned or terminated at any time by the Board of Directors of the Company except with respect to any options then outstanding under the Plan. No option shall be granted pursuant to the Plan after ten (10) years from the effective date of the Plan.
12. Amendment of Plan
The Board of Directors may at any time and from time to time modify and amend the Plan (including such form of option agreement) in any respect; provided, however, that no such amendment shall: (a) increase (except in accordance with Section 6) the maximum number of shares for which options may be granted under the Plan either in the aggregate or to an individual employee; or (b) reduce (except in accordance with Section 6) the minimum option prices which may be established under the Plan; or (c) extend the period or periods during which options may be granted or exercised; or (d) change the provisions relating to the determination of employees to whom options shall be granted and the number of shares to be covered by such options; or (e) change the provisions relating to adjustments to be made upon changes in capitalization; or (f) change the method for selection of the Committee as provided by Section 2 hereof. The termination or any modification or amendment of the Plan shall not, without the consent of an employee, affect his rights under an option theretofore granted to him.
13. Applicability of Plan to Outstanding Stock Options
The Plan shall not affect the terms and conditions of any non-qualified stock options heretofore granted to any employee of the Company or a subsidiary corporation of the Company under any other plan relating to non-qualified stock options; nor shall it affect any of the rights of any employee to whom such a non-qualified stock option was granted.
14. Effective Date of Plan
This Plan shall become effective on the date of its adoption by the Board of Directors or the Company or its approval by the vote of the shareholders of a majority of the outstanding shares of the Company's common stock. This Plan shall not become effective unless such shareholder approval shall be obtained within twelve (12) months before or after the adoption of the Plan by the Directors.
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Saddle Ranch Media, Inc.
PRESIDENT'S LETTER TO STOCKHOLDERS
Dear Stockholder:
I am enclosing this letter with the notice of call of a special meeting of the stockholders of the Corporation as a means of explaining briefly the purpose of the meeting. Your Board of Directors has unanimously recommended that the Corporation adopt a stock option plan allowing the purchase of a limited number of the Corporation's shares of common stock by key management employees of the Corporation. This proposal has been adopted by the Board of Directors, subject to the approval of the holders of the Corporation's common stock, and I have been directed to set forth to you the reasons for their action.
In the past several years, plans or programs offering stock participation opportunities to management personnel have become widespread among American businesses. This meaningful trend has come about in response to a realization that the best efforts of the best executives are more surely secured when the executives have a personal stake in the fortunes of their corporate employers. I might add that a number of our major competitors have instituted stock acquisition programs of one type or another for their executive employees, and we in charge of the Corporation are aware of the importance of such programs in attracting and holding employees of the caliber we want in our Corporation.
In judgment of the Directors, your Corporation can best be assured of success in enlisting and retaining top management employees only if these employees are given the opportunity to acquire a proprietary stake in the success of the Corporation. Consequently, the Directors have examined methods of achieving this goal, and have determined that the best approach for the Corporation is that of offering certain stock options known as "Incentive Stock Options," which satisfy the tests imposed by the Internal Revenue Code for such designation. Specifically, the Directors' proposal is that a total of _________,000 unissued shares of the value common stock of the Corporation be sold to executive employees under options that fix the purchase price at percent of the market price on the date such an option is granted. The particular employees to be given these options, and the number of shares covered by each option, would be left to the decision of the Board of Directors or of a special committee chosen from the Board. However, in no event would the total number of shares placed under option exceed the total of __,000,000 which would be somewhat less than 10 percent of the total number of common shares to be outstanding once these optioned shares are issued on a fully diluted basis.
The Directors wish to take this step only after full information has been given to all the stockholders affected, and their understanding and approval of this plan has been expressed. For this reason, though I have set forth in this letter what I believe to be a proper summary of the principal points involved, I have instructed the Secretary of the Corporation to mail a copy of the full stock plan and of the relevant Directors' resolutions to any stockholder requesting it.
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Saddle Ranch Media, Inc.
NOTICE OF EXERCISE OF STOCK OPTION AND
RECORD OF STOCK TRANSFER
I hereby exercise my Incentive Stock Option granted by Saddle Ranch Media, Inc., subject to all the terms and provisions thereof and of the Employee Stock Option Plan referred to therein, and notify you of my desire to purchase shares of Common Stock of the Company which were offered to me pursuant to said Option. Enclosed is my check in the sum of in full payment for such shares.
I hereby represent that the __________ shares of Common Stock to be delivered to me pursuant to the above-mentioned exercise of the Option granted to me on are being acquired by me as an investment and not with a view to, or for sale in connection with, the distribution of any thereof.
DATED: , 20__.
_________________________
Employee's Signature
Receipt is hereby acknowledged of the delivery to me by Saddle Ranch Media, Inc. on of stock certificates for shares of Common Stock purchased by me pursuant to the terms and conditions of the Employee Stock Option Plan referred to above, which shares were transferred to me on the Company's stock record books on.
_________________________
Employee
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Saddle Ranch Media, Inc.
NOTICE OF GRANT OF INCENTIVE STOCK OPTION
[date]
[name of employee]
Dear ______:
At the direction of the Board of Directors of the Corporation, you are hereby notified that the Board has granted to you an option, pursuant to the Employee Stock Option Plan adopted by the Corporation on June ____, 2018 , and ratified and approved by the stockholders of the Corporation on June ___, 2018.
The option granted to you is to purchase ____________ Hundred Thousand (__00,000) shares of the $.0.0001 par Common Stock of the Corporation at the price of per share. The date of grant of this option is the date of this notice, and it is the determination of the Board of Directors that on this date the fair market value of the Corporation's no par common stock was $0.20 per share.
I enclosed a certified copy of the Incentive Stock Option Plan governing the option granted to you and your attention is invited to all the provisions of the Plan. You will observe that the Plan does not require that you exercise this option as to any particular number of shares at one time, but this option must be exercised, if at all and to the extent exercised, by no later than years from the date of this notice.
Your stock option is in all respects limited and conditioned as provided in the Employee Stock Option Plan, including, but not limited to, the following:
a. Your option may be exercised by you, but only by you, at any time during your lifetime prior to the three months following termination of your employment;
b. Your option is nontransferable, otherwise than as may be occasioned by your death, and then only to your estate or according to the terms of your Will or the provision of applicable laws of descent and distribution;
c. In the event that the right to exercise your option is passed to your estate, or to a person to whom such right devolves by reason of your death, then your option shall be nontransferable in the hands of your executor or administrator or of such person, except that your option may be distributed by your executor or administrator to the distributees of your estate as a part of your estate.
At the time or times when you wish to exercise this option, in whole or in part, please refer to the provisions of the Stock Option Plan dealing with methods and formalities of exercise of your option.
________________________
Secretary
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Exhibit 6.2
Saddle Ranch Media, Inc.
Management Stock Bonus Plan
__________
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Saddle Ranch Media, Inc.
Management Stock Bonus Plan
__________
Purpose
This Plan’s purpose is to keep personnel of experience and ability in the employ of Saddle Ranch Media, Inc.(“Saddle Ranch Media, Inc.”) and its subsidiaries and to compensate them for their contributions to the growth and profits of Saddle Ranch Media, Inc. and its subsidiaries and thereby induce them to continue to make such contributions in the future.
1. Definitions
For the purpose of this Plan, the following terms will have the definitions set forth below:
(a) Company – Saddle Ranch Media, Inc.
(b) Subsidiary or Subsidiaries – A corporation or corporations or other entity of which Saddle Ranch Media, Inc. owns, directly or indirectly, shares having a majority of the ordinary voting power for the election of directors.
(c) Board – Saddle Ranch Media, Inc. board of directors.
(d) Committee – The Management Stock Bonus Plan Committee as appointed from time to time by the Board, consisting of not less than three members. No member of the Committee shall be eligible for selection as a person to whom shares may be allocated pursuant to the Plan or to whom stock options may be granted pursuant to any other Plan of the Company or any of its affiliates, at any time while he is serving on the Committee.
(e) Date of Issuance – This term shall have the meaning supplied by Section 6(c) below.
(f) Plan – The Saddle Ranch Media, Inc. Management Stock Bonus Plan.
(g) Bonus Share – The shares of Common Stock of Saddle Ranch Media, Inc. reserved pursuant to Section 3 hereof and any such shares issued to a Recipient pursuant to this Plan.
(h) Recipient – An employee of Saddle Ranch Media, Inc. or a subsidiary to whom shares are allocated under this Plan, or such individual’s designated beneficiary, surviving spouse, estate, or legal representative. For this purpose, however, any such beneficiary, spouse, estate, or legal representative shall be considered as one person with the employee.
(i) Restricted Period – This phrase shall have the meaning supplied by Section 7(e) below.
2. Bonus Share Reserve.
(a) Bonus Share Reserve. Saddle Ranch Media, Inc. will establish a Bonus Share Reserve to which will be credited _____________ Million (___,000,000) shares of the Common Stock of Saddle Ranch Media, Inc., par value $.0.0001 per share. Should the shares of the Company’s Common Stock, due to a stock split or dividend or combination of shares or any other change, or exchange for any other securities, by reclassification, merger, consolidation, recapitalization, or otherwise, be increased or decreased, or changed into, or exchanged for, a different number or kind of shares of stock or other securities of Saddle Ranch Media, Inc. or of another corporation or entity, the number of shares then remaining in the Bonus Share Reserve shall be appropriately adjusted to reflect such action. If any such adjustment results in a fractional share, the fraction shall be disregarded.
(b) Adjustments to Reserve. Upon the allocation of shares hereunder, the reserve will be reduced by the number of shares to be allocated and, upon the failure to make the required payment on the issuance of any Bonus Shares pursuant to Section 6(a) or upon the repurchase thereof pursuant to Section 7(d)(i) or (ii), Section 8 or Section 10 hereof, the reserve shall be increased by such number of shares, and such Bonus Shares may again be the subject of allocation hereunder.
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(c ) Distributions of Bonus Shares. Distributions of Bonus Shares, as the Board shall, in its sole discretion, determine, may be made from authorized but unissued shares or from treasury shares. All authorized and unissued shares issued as Bonus Shares in accordance with the Plan shall be fully paid and non-assessable shares free from preemptive rights.
2. Eligibility and Making of Allocations.
(a) Eligible Employees. Any salaried executive employee of Saddle Ranch Media, Inc. or any Subsidiary (including officers and, except for person serving as directors only) shall be eligible to receive an allocation of Bonus Shares.
(b) Selection by the Committee. From the employees eligible to receive allocations pursuant to the Plan, the Committee may from time to time select those employees to whom it recommends that the Board make allocations. Such recommendations shall include a recommendation as to the number of Bonus Shares that should be allocated and in determining the number of Bonus Shares it wishes to recommend, the Committee shall consider the position and responsibilities of the eligible employees, the value of their services to Saddle Ranch Media, Inc. and its subsidiaries and such factors as the Committee deems pertinent.
(c) Review by the Board of Committee’s Recommendations. As promptly as practicable after the Committee recommends making allocations pursuant to (b) above, the Board will review the Committee’s recommendations and, in the Board’s discretion, allocate to the employees the Board selects from those employees recommended by the Committee a number of Bonus Shares not in excess of the number recommended for each employee by the Committee. The date of such action by the Board shall be the “date of allocation,” as that term is used in this Plan.
(d) Participation in Other Stock Option Plans. A person who has received options to purchase stock under any stock option plan of Saddle Ranch Media, Inc. or any subsidiary may exercise the same in accordance with their terms, and will not by reason thereof be ineligible to receive Bonus Shares under this Plan. A person who has received Bonus Shares under this Plan shall not, for a period of three years from the date of Issuance thereto of such Bonus Shares, be eligible to, and may not, be granted any option or other rights to purchase Common Stock pursuant to any stock option or stock purchase plan of Saddle Ranch Media, Inc. presently in effect or hereafter adopted, nor shall he or she be eligible during such period to receive any additional allocation of Bonus Shares under this Plan or under any similar plan of Saddle Ranch Media, Inc..
(e) Limit on Number of Shares. The total number of Bonus Shares, which may be allocated pursuant to this Plan, will not exceed the amount of available therefore in the Bonus Share reserve.
3. Form of Allocation.
(a) Number Specified. Each allocation shall specify the number of Bonus Shares subject thereto, subject to the provisions of Section 4.
(b) Notice. When an allocation is made, the Board shall advise the Recipient and Saddle Ranch Media, Inc. thereof by delivery of written notice in the Form of Exhibit A hereto attached.
(c) Public Listing of Stock. Saddle Ranch Media, Inc. shall take such action as shall be necessary to cause any Bonus Shares issued pursuant to this Plan and not previously listed to be listed on a public stock market or exchange on which shares of the same s the Bonus Shares are then listed, if any.
4. Payment Required of Recipients.
(a) Acceptance of Allocation. Within 15 days from the date of allocation, the Recipient shall, if he desires to accept the allocation, pay to Saddle Ranch Media, Inc. an amount equal to the par value of the Bonus Shares so allocated, in cash, buy certified or bank cashier’s check, or by money order at the office of the Treasurer.
(b) Investment Purpose. Saddle Ranch Media, Inc. may require that in acquiring any Bonus Shares, the Recipient agree with, and represent to, Saddle Ranch Media, Inc. that the Recipient is acquiring such Bonus Shares for the purpose of investment and with no present intent to transfer, sell or otherwise dispose of such shares except for such distribution by a legal representative as shall be required by will or the laws of any jurisdiction in winding up the estate of any Recipient. Such shares shall be transferable thereafter only if the proposed transfer is permitted under the Plan and if, in the opinion of counsel (who shall be satisfactory to Saddle Ranch Media, Inc.), such transfer at such time complies with applicable securities laws.
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(c) Written Agreement/Date of Issuance. Concurrently with making payment of the par value of the Bonus Shares pursuant to Section 6(a) the Recipient shall deliver to Saddle Ranch Media, Inc., in duplicate, an agreement in writing, signed by the Recipient, in form and substance as set forth in Exhibit B, below, and Saddle Ranch Media, Inc. will promptly acknowledge the receipt thereof. The date of such delivery and receipt shall be deemed the “Date of Issuance,” as that phrase is used in this Plan, of the Bonus Shares to which the shares relate. The failure to make such payment and delivery within 15 days from the date of allocation shall terminate the allocation of such shares to the Recipient.
5. Restrictions.
(a) Transfer/Issuance. Bonus Shares, after the making of the payment and representations, etc. required by Section 6, will be promptly issued or transferred and a certificate or certificates for such shares shall be issued in the Recipient’s name. As such, the Recipient shall have all of the rights of a shareholder with respect to such shares, including the right to vote them and to receive all dividends and other distributions (subject to Section 7(b)) paid with respect to them, provided, however, that the shares shall be subject to the restrictions in Section 7(d). Stock certificates representing Bonus Shares will be imprinted with a legend stating that the shares represented thereby may not be sold, exchanged, transferred, pledged, hypothecated, or otherwise disposed of except in accordance with this Plan’s terms, and each transfer agent for the Common Stock shall be instructed to like effect in respect of such shares. In aid of such restrictions, the Recipient shall immediately upon receipt of the certificate for such shares, deposit such certificate(s), together with a stock power or other instrument of transfer, appropriately endorsed in blank, with an escrow agent designated by the Committee, under a deposit agreement containing such terms and conditions as the Committee shall approve, the expenses of such escrow to be borne by Saddle Ranch Media, Inc..
(b) Stock Splits, Stock Dividends, Etc. If, due to a stock split, stock dividend, combination of shares, or any other change or exchange for other securities, by reclassification, reorganization, merger, consolidation, recapitalization, or otherwise, the Recipient, as the owner of the Bonus Shares subject to restrictions hereunder, shall be entitled to new, additional, or different shares of stock or securities, the certificate or certificates for, or other evidences of, such new, additional, or different shares or securities, together with a stock power or other instrument of transfer appropriately endorsed, which shares also shall be imprinted with a legend as provided in Section 7(a) and deposited by the Recipient under the above-mentioned deposit agreement. When the event(s) described in the preceding sentence occur, all Plan provisions relating to restrictions and lapse of restrictions will apply to such new, additional or different shares or securities to the extent applicable to the shares with respect to which they were distributed, provided, however, that if the Recipient shall receive rights, warrants or fractional interests in respect of any such Bonus Shares, such rights or warrants may be held, exercised, sold or otherwise disposed of, and such fractional interests may be settled, by the Recipient free and clear of the restrictions hereafter set forth.
(c) Restricted Period. The term “Restricted Period” with respect to restricted Bonus Shares (after with restrictions shall lapse) means a period starting on the Date of Issuance of such shares to the Recipient and ending on such date not less than three (3) years after the Date of Issuance, as the Committee may establish as the time of allocation of shares hereunder.
(d) Restrictions on Bonus Shares. The restrictions to which restricted Bonus Shares shall be subject are:
(i) During the Restricted Period to such shares and except as otherwise specifically provided in the Plan, none of such shares shall be sold, exchanged, transferred, pledged, hypothecated, or otherwise disposed of unless they first, by written notice have been offered to Saddle Ranch Media, Inc. for repurchase, for the same amount as was paid therefore under Section 6, with appropriate adjustment for any change in the Bonus Shares of the nature described in Section 7(b). If Saddle Ranch Media, Inc. shall not within 30 days following such offer have so repurchased the shares and made payment in full for such shares, unless such purchase is otherwise prohibited by the laws of the State of Nevada currently in effect at the time of an offer of Bonus Shares to Saddle Ranch Media, Inc. for repurchase pursuant to the terms of the Plan, Saddle Ranch Media, Inc. shall repurchase said shares and make payment in full for such shares within thirty (30) days following such offer.
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(ii) If a Recipient’s employment is terminated for any reason, including such Recipient’s death or disability, at any time before the Restricted Period ends, Saddle Ranch Media, Inc. shall so notify the escrow agent appointed under Section 7(a). Such termination shall be deemed an offer to Saddle Ranch Media, Inc. as described in Section 7(d)(i) as to:
(A) All such shares issued to the Recipient, if such termination occurs within one year from the Date of Issuance;
(B) 75% of the total number of such shares originally issued (including any other or additional securities issued in respect thereof, as contemplated by Section 7(b) to such Recipient, if such termination occurs more than one year after the Date of Issuance but prior to two years after that date;
(C) 50% of the total number of such shares originally issued (including any other or additional securities issued in respect thereof, as contemplated by Section 7(b) to such Recipient, if such termination occurs on or after two years after the Date of Issuance but prior to the end of the Restricted Period.
(e) Lapse of Restricted Period. The restriction set forth in Section 7(d) hereof, with respect to the Bonus Shares to which such Restricted Period was applicable, will lapse
(i) As to such shares in accordance with the time(s) and number(s) of shares as to which the Retracted Period expires, as described in Section 7(d)(ii), or
(ii) As to any shares which Saddle Ranch Media, Inc. will fail to purchase when they are offered to Saddle Ranch Media, Inc., as described in Section 7(d)(i) upon Saddle Ranch Media, Inc.’s failure to so repurchase.
(f) Transfers Upon Death of Recipient. Nothing in this Plan will preclude the transfer of restricted Bonus Shares on the Recipient’s death, to the Recipient’s legal representatives or estate, or preclude such representatives from transferring any of such shares to the person(s) entitled thereto by will or the laws of descent and distribution; provided, however, that any shares so transferred as to which such restrictions have not lapsed will remain subject to all restrictions and obligations imposed on them by this Plan.
(g) Delivery of Written Notice. All notices in writing required pursuant to this Section 7 will be sufficient only if actually delivered or if sent via registered or certified mail, postage prepaid, to Saddle Ranch Media, Inc., attention Treasurer, and/or escrow agent at its principal office within the City of Newport Beach, California, and will be conclusively deemed given on the date of delivery, if delivered before or on the date first business day following the date of such mailing, if mailed.
6. Finality of Determination.
The Committee will administer this Plan and construe its provisions. Any determination by the Committee (except insofar as it will make recommendations only) in carrying out, administering, or constructing this Plan will be final and binding for all purposes and upon all interested persons and their heirs, successors and personal representatives.
7. Limitations.
(a) No Right to Allocation. No person will at any time have any prior right to receive an allocation of Bonus Shares hereunder, and no person will have authority to enter into an agreement for the making of an allocation, or any prior right or to make any representation or warranty with respect thereto.
(b) Rights of Recipients. Recipients of allocations will have no rights in respect thereof other than those set forth in this Plan. Except as provided in Section 6(b) or 7(f), such rights may not be assigned or transferred except by will or by the laws of descent or distribution. If any attempt is made to sell, exchange, transfer, pledge, hypothecate, or otherwise dispose of any Bonus Shares held by the Recipient under restrictions which have not yet lapsed, the shares that are the subject of such attempted disposition will be deemed offered to Saddle Ranch Media, Inc. for repurchase, and Saddle Ranch Media, Inc. will repurchase them, as described in Section 7(d)(i) when Saddle Ranch Media, Inc. receives actual notice of such attempted distribution. Before issuance of Bonus Shares, no such shares will be earmarked for the Recipient’s accounts nor will such Recipients have any rights as stockholders with respect to such shares.
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(c) No Right to Continued Employment. Neither Saddle Ranch Media, Inc.’s actions in establishing the Plan, nor any action taken by it or by the Board or the Committee under the Plan, nor any provision of the Plan, will be construed as giving to any person the right to be in the employ of Saddle Ranch Media, Inc. or any Subsidiary.
(d) Limitation on Actions. Every right of action by or on behalf of Saddle Ranch Media, Inc. or by any shareholder against any past, present or future member of the Board, the Committee or any officer or employee of Saddle Ranch Media, Inc. arising out of or in connection with this Plan shall, regardless of the place where the action may be brought and regardless of the place of residence of any such director, committee member, officer or employee, cease and be barred by the expiration of three years from the later of:
(i)The date of the act or omission in respect of which such right of action arises;
(ii) The first date upon which there has been made generally available to shareholders an annual report of Saddle Ranch Media, Inc. and a proxy statement for the annual meeting of shareholders following the issuance of such annual report, which annual report and proxy statement alone or together set forth, for the related period, the amount of the allocation.
In addition, any and all right of action by any employee (past, present or future) against Saddle Ranch Media, Inc. or any member of the Committee arising out of or in connection with this Plan will, regardless of the place where action may be brought and regardless of the place of residence of any Committee member, cease and be barred by the expiration of three years from the date of the act or omission in respect of which such right of action arises.
8. Amendment, Suspension or Termination of Plan.
The Board may amend, suspend or terminate the Plan in whole or in part at any time; provided that such amendment will not affect adversely the rights or obligations with respect to allocations previously made; and provided further, that no modifications of the Plan by the Board without approval by the stockholders will (i) increase the maximum number of Bonus Shares reserved pursuant to Section 3; (ii) alter the provisions of Section 4 with respect to the total number of Bonus Shares that may be allocated under the Plan, or (iii) render any member of the Committee eligible to receive an allocation at any time while he is serving on the Committee.
9. Governing Laws.
This Plan will be governed by the laws of the State of California.
10. Expenses of Administration.
All costs and expenses incurred in the operation and administration of this Plan will be borne by the Company.
11. Registration of Bonus Shares.
(a) Registration Requirement. If Saddle Ranch Media, Inc. determines at any time to register any of its securities under the Securities Act of 1933 (or similar statute then in effect) Saddle Ranch Media, Inc., at its expense, will include among the securities which it then registers all Bonus Shares or other stock or securities issued in respect thereof, or in replacement thereof as to which the Restricted Period has expired. The requirement of the preceding sentence, however, will not apply to the extent that any Recipient at that time has no present intent to sell or distribute the relevant shares. Also, in the case of stock or securities not of Saddle Ranch Media, Inc., Saddle Ranch Media, Inc.’s obligation under this Section 13 will be limited to using its best efforts to effect such registration and shall not be required to register such shares if, in the opinion of Saddle Ranch Media, Inc.’s investment banker, such registration would materially limit the marketability of other securities registered or to be registered by Saddle Ranch Media, Inc..
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(b) Written Notification. As to each registration pursuant to this Section 13, Saddle Ranch Media, Inc. will keep the Recipients advised in writing as to their initiation of proceedings for such registration and as to the completion thereof, and at its expense will keep such registration effective for a period of nine months, or until all sales and distributions contemplated in connection therewith are completed, whichever period is shorter. Each Recipient will at his own expense furnish to Saddle Ranch Media, Inc. such information regarding the Recipient and the Recipient’s ownership of Bonus Shares (or other stock or securities) as Saddle Ranch Media, Inc. may reasonably request in writing in connection with any such registration.
(c) Prospectus, Indemnification. Saddle Ranch Media, Inc., at its expense, will furnish to each Recipient such number of prospectuses incident to any such registration as such Recipient from time to time reasonably may request. In addition, Saddle Ranch Media, Inc. will indemnify each such Recipient against all claims, losses, damages, and liabilities caused by any untrue statement of a material fact contained in such prospectus (or in any related registration statement) or by any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same may have been caused by an untrue statement or omission based upon information furnished in writing to Saddle Ranch Media, Inc. by such Recipient expressly for use therein. Further, as a condition precedent to the obligations of Saddle Ranch Media, Inc. pursuant to Section 1, each Recipient will agree in writing to indemnify Saddle Ranch Media, Inc. against all claims, losses, damages, and liabilities caused by an untrue statement or omission based upon information furnished to Saddle Ranch Media, Inc. by such Recipient expressly for use therein.
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Exhibit I
Saddle Ranch Media, Inc.
Date:
To: , Recipient
From: Treasurer, Saddle Ranch Media, Inc.
This is to advise you that Saddle Ranch Media, Inc.’s Board of Directors has on the date of this Notice allocated to the Recipient above named a total of
Bonus Shares under and pursuant to the Management Stock Bonus Plan.
For these shares to be issued, the Recipient must make payment of $
And deliver to the Treasurer of Saddle Ranch Media, Inc. an agreement in duplicate, in the form of Exhibit II hereto, within 15 days of the date of this Notice.
_______________
For the Board
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Exhibit II
Saddle Ranch Media, Inc.
Management Stock Bonus Plan
To: Treasurer,
Saddle Ranch Media, Inc.
Enclosed is the sum of $
Being equal to the par value of
Bonus Shares allocated to and purchased by me pursuant to Saddle Ranch Media, Inc.’s Management Stock Bonus Plan. Upon receipt of these Bonus Shares, I will deposit them together with a stock power duly endorsed in blank with an escrow agent appointed pursuant to Section 7(a) of this Plan.
I represent and agree that I am acquiring these Bonus Shares for investment and that I have no present intention to transfer, sell or otherwise dispose of such shares, except as permitted pursuant to the Plan and in compliance with applicable securities laws. I agree further that I am acquiring these shares in accordance with, and subject to, the terms, provisions, and conditions of said Plan, to all of which I hereby expressly consent. These agreements will bind and inure to the benefit of my heirs, legal representatives, successors and assigns.
My address of record is:
My social security number is:
Receipt of the above, together with the payment referred to, is hereby acknowledged.
Saddle Ranch Media, Inc.
By: ____________________
Date:
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Exhibit 6.3
Saddle Ranch Media, Inc.
ANNUAL BONUS PERFORMANCE PLAN
FOR EXECUTIVE OFFICERS
_____
June ___, 2018
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SADDLE RANCH MEDIA, INC.
ANNUAL BONUS PERFORMANCE PLAN
FOR EXECUTIVE OFFICERS
______
SECTION 1. PURPOSE OF PLAN
The purpose of the Plan is to promote the success of the Company by providing to participating executives bonus incentives that qualify as performance-based compensation within the meaning of Section 162(m) of the Code.
SECTION 2. DEFINITIONS AND TERMS
2.1 Accounting Terms. Except as otherwise expressly provided or the context otherwise requires, financial and accounting terms are used as defined for purposes of, and shall be determined in accordance with, generally accepted accounting principles, as from time to time in effect, as applied and reflected in the consolidated financial statements of the Comp any, prepared in the ordinary course of business.
2.2 Specific Terms. The following words and phrases as used herein shall have the following meanings unless a different meaning is plainly required by the context:
"Bonus" means a cash payment or a payment opportunity as the context requires.
"Bonus Pool" means the total aggregate of cash payments or payment opportunities in any Year that may be allowed under the Plan.
"Business Criteria" means any one or any combination of Income before Taxes, Net Income, Return on Equity, Return on Assets, Pre-tax Margin, Free Cash Flow, Valuation or EPS.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Committee" means the Performance Plan Subcommittee which has been established to administer the Plan in accordance with Section 3.1 and Section 162(m) of the Code.
"Company" means Saddle Ranch Media, Inc. and any successor, whether by merger, ownership of all or substantially all of its assets, or otherwise.
"EBITDA" for any Year means the consolidated earnings before interest, tax, depreciation, and amortization as reported in the financial statements of the Company for the Year.
"EPS" for any Year means earnings per share of the Company, as reported in the Company's Consolidated Statement of Income set forth in the financial statements of the Company for the Year.
"Executive" means a key employee (including any officer) of the Company who is (or in the opinion of the Committee may during the applicable Performance Period become) an "executive officer" as defined in Rule 3b-7 under the Securities Exchange Act of 1934.
"Free Cash Flow" for any Year means the Consolidated Net Income plus the sum of the decrease in working capital and depreciation and amortization less the sum of capital expenditures, mandatory debt payments and the increase in working capital as reported in the financial statements of the Company for the Year.
"Income before Taxes" for any Year means the consolidated income before taxes of the Company, as reported in the financial statements of the Company for the Year.
"Net Income" for any Year means the consolidated net income of the Company, as reported in the financial statements of the Company for the Year.
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"Participant" means an Executive selected to participate in the Plan by the Committee.
"Performance Period" means the Year or Years with respect to which the Performance Targets are set by the Committee.
"Performance Target(s)" means the specific objective goal or goals (which may be cumulative and/or alternative) that are timely set in writing by the Committee for each Executive for the Performance Period in respect of any one or more of the Business Criteria.
"Plan" means this Annual Bonus Performance Plan for Executive Officers of the Company, as amended from time to time.
"Pre-tax Margin" for any Year means the Income before Taxes of the Company divided by Consolidated Sales of the Company, as reported in the financial statements of the Company for the Year.
"Return on Assets" means Net Income divided by the average of the total assets of the Company at the end of the four fiscal quarters of the Year, as reported by the Company in its consolidated financial statements.
"Return on Equity" means the Net Income divided by the average of the common stockholders equity of the Company at the end of each of the four fiscal quarters of the Year, as reported by the Company in its consolidated financial statements.
"Section 162(m)" means Section 162(m) of the Code, and the regulations promulgated thereunder, all as amended from time to time.
"Shares" means shares of common stock of the Company or any securities or property, including rights into which the same may be converted by operation of law or otherwise.
"Valuation" for any Year means the product of consolidated EBIDA, as reported in the financial statements of the Company for the Year, and six.
"Working Capital" for any Year means the consolidated current assets of the Company less the consolidated current liabilities of the Company, as reported in the financial statements of the Company for the Year.
"Year" means any one or more fiscal years of the Company commencing on or after January 1, 2018 that represent(s) the applicable Performance Period and end(s) no later than December 31, 2026.
SECTION 3. ADMINISTRATION OF THE PLAN
3.1 The Committee. The Plan shall be administered by a Committee consisting of at least one member of the Board of Directors of the Company, duly authorized by the Board of Directors of the Company to administer the Plan, who (i)are not eligible to participate in the Plan and (ii)are "outside directors" within the meaning of Section 162(m).
3.2 Powers of the Committee. The Committee shall have the sole authority to establish and administer the Performance Target(s) and the responsibility of determining from among the Executives those persons who will participate in and receive Bonuses under the Plan and, subject to Sections 4 and 5 of the Plan, the amount of such Bonuses, and the time or times at which and the form and manner in which Bonuses will be paid (which may include elective or mandatory deferral alternatives) and shall otherwise be responsible for the administration of the Plan, in accordance with its terms. The Committee shall have the authority to construe and interpret the Plan (except as otherwise provided herein) and any agreement or other document relating to any Bonus under the Plan, may adopt rules and regulations governing the administration of the Plan, and shall exercise all other duties and powers conferred on it by the Plan, or which are incidental or ancillary thereto. For each Performance Period, the Committee shall determine, at the time the Business Criteria and the Performance Target(s) are set, those Executives who are selected as Participants in the Plan.
3.3 Requisite Action. A majority of the members of the Committee shall constitute a quorum. The vote of a majority of those present at a meeting at which a quorum is present or the unanimous written consent of the Committee shall constitute action by the Committee.
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3.4 Express Authority (and Limitations on Authority) to Change Terms and Conditions of Bonus; Acceleration or Deferral of Payment. Without limiting the Committee's authority under other provisions of the Plan, but subject to any express limitations of the Plan and Section 5.8, the Committee shall have the authority to accelerate a Bonus (after the attainment of the applicable Performance Target(s)) and to waive restrictive conditions for a Bonus (including any forfeiture conditions, but not Performance Target(s)), in such circumstances as the Committee deems appropriate. In the case of any acceleration of a Bonus after the attainment of the applicable Performance Target(s), the amount payable shall be discounted to its present value using an interest rate equal to Moody's Average Corporate Bond Yield for the month preceding the month in which such acceleration occurs. Any deferred payment shall be subject to Section 4.9 and, if applicable, Section 4.10.
SECTION 4. BONUS PROVISIONS.
4.1 Maximum Total Bonus. In any Year the aggregate amount of bonuses awarded by the Company to all Participants may not exceed the Bonus Pool. In any year the bonus Pool is the product of 10% and Income before Taxes.
4.2 Provision for Bonus. Each Participant may receive a Bonus if and only if the Performance Target(s) established by the Committee, relative to the applicable Business Criteria, are attained. The applicable Performance Period and Performance Target(s) shall be determined by the Committee consistent with the terms of the Plan and Section 162(m). Notwithstanding the fact that the Performance Target(s) have been attained, the Company may pay a Bonus of less than the amount determined by the formula or standard established pursuant to Section 4.2 or may pay no Bonus at all, unless the Committee otherwise expressly provides by written contract or other written commitment.
4.3 Selection of Performance Target(s). The specific Performance Target(s) with respect to the Business Criteria must be established by the Committee in advance of the deadlines applicable under Section 162(m) and while the performance relating to the Performance Target(s) remains substantially uncertain within the meaning of Section 162(m). At the time the Performance Target(s) are selected, the Committee shall provide, in terms of an objective formula or standard for each Participant, and for any person who may become a Participant after the Performance Target(s) are set, the method of computing the specific amount that will represent the maximum amount of Bonus payable to the Participant if the Performance Target(s) are attained, subject to Sections 4.1, 4.2, 4.3, 4.8, 5.1 and 5.8.
4.4 Maximum Individual Bonus. Notwithstanding any other provision hereof, no Executive shall receive a Bonus under the Plan for the Year in excess of $1 million. No Executive shall receive aggregate bonuses under this Plan for the Year in excess of $1 million.
4.5 Selection of Participants. For each Performance Period, the Committee shall determine, at the time the Business Criteria and the Performance Target(s) are set, those Executives who will participate in the Plan.
4.6 Effect of Mid-Year Commencement of Service. To the extent compatible with Sections 4.3 and 5.8, if services as an Executive commence after the adoption of the Plan and the Performance Target(s) are established for a Performance Period, the Committee may grant a Bonus that is proportionately adjusted based on the period of actual service during the Year; the amount of any Bonus paid to such person shall not exceed that proportionate amount of the applicable maximum individual bonus under Section 4.1 and 4.4.
4.7 Changes Resulting From Accounting Changes. Subject to Section 5.8, if, after the Performance Target(s) are established for a Performance Period, a change occurs in the applicable accounting principles or practices, the amount of the Bonuses paid under this Plan for such Performance Period shall be determined without regard to such change.
4.8 Committee Discretion to Determine Bonuses. The Committee has the sole discretion to determine the standard or formula pursuant to which each Participant's Bonus shall be calculated (in accordance with Section 4.3), whether all or any portion of the amount so calculated will be paid, and the specific amount (if any) to be paid to each Participant, subject in all cases to the terms, conditions and limits of the Plan and of any other written commitment authorized by the Committee. To this same extent, the Committee may at any time establish additional conditions and terms of payment of Bonuses (including but not limited to the achievement of other financial, strategic or individual goals, which may be objective or subjective) as it may deem desirable in carrying out the purposes of the Plan and may take into account such other factors as it deems appropriate in administering any aspect of the Plan. The Committee may not, however, increase the maximum amount permitted to be paid to any individual under Section 4.3 or 4.4 of the Plan or award a Bonus under this Plan if the applicable Performance Target(s) have not been satisfied.
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4.9 Committee Certification. No Executive shall receive any payment under the Plan unless the Committee has certified, by resolution or other appropriate action in writing, that the amount thereof has been accurately determined in accordance with the terms, conditions and limits of the Plan and that the Performance Target(s) and any other material terms previously established by the Committee or set forth in the Plan were in fact satisfied.
4.10 Time of Payment; Deferred Amounts. Any Bonuses granted by the Committee under the Plan shall be paid as soon as practicable following the Committee's determinations under this Section 4 and the certification of the Committee's findings under Section 4.9. Any such payment shall be in cash or cash equivalent or in such other form of equal value on such payment date as the Committee may approve or require. Notwithstanding the foregoing, the Committee may, in its sole discretion (but subject to any prior written commitments and to any conditions consistent with Sections 3.4, 4.1, 4.4 and 5.8 that it deems appropriate), defer the payout or vesting of any Bonus and/or provide to Participants the opportunity to elect to defer the payment of any Bonus under a nonqualified deferred compensation plan. In the case of any deferred payment of a Bonus after the attainment of the applicable Performance Target(s), any amount in excess of the amount otherwise payable shall be based on either Moody's Average Corporate Bond Yield over the deferral period or one or more predetermined actual investments (including Shares) such that the amount payable at the later date will be based upon actual returns, including any decrease or increase in the value of the investment(s), unless the alternative deferred payment is otherwise exempt from the limitations under Section 162(m).
SECTION 5. GENERAL PROVISIONS
5.1 No Right to Bonus or Continued Employment. Neither the establishment of the Plan nor the provision for or payment of any amounts hereunder nor any action of the Company (including, for purposes of this Section 5.1, any predecessor or subsidiary), the Board of Directors of the Company or the Committee in respect of the Plan, shall be held or construed to confer upon any person any legal right to receive, or any interest in, a Bonus or any other benefit under the Plan, or any legal right to be continued in the employ of the Company. The Company expressly reserves any and all rights to discharge an Executive in its sole discretion, without liability of any person, entity or governing body under the Plan or otherwise. Notwithstanding any other provision hereof and notwithstanding the fact that the Performance Target(s) have been attained and/or the individual maximum amounts pursuant to Section 4.2 have been calculated, the Company shall have no obligation to pay any Bonus hereunder nor to pay the maximum amount so calculated or any prorated amount based on service during the period, unless the Committee otherwise expressly provides by written contract or other written commitment.
5.2 Discretion of Company, Board of Directors and Committee. Any decision made or action taken by the Company or by the Board of Directors of the Company or by the Committee arising out of or in connection with the creation, amendment, construction, administration, interpretation and effect of the Plan shall be within the absolute discretion of such entity and shall be conclusive and binding upon all persons. No member of the Committee shall have any liability for actions taken or omitted under the Plan by the member or any other person.
5.3 Absence of Liability. A member of the Board of Directors of the Company or a member of the Committee of the Company or any officer of the Company shall not be liable for any act or inaction hereunder, whether of commission or omission.
5.4 No Funding of Plan. The Company shall not be required to fund or otherwise segregate any cash or any other assets which may at any time be paid to Participants under the Plan. The Plan shall constitute an "unfunded" plan of the Company. The Company shall not, by any provisions of the Plan, be deemed to be a trustee of any property, and any obligations of the Company to any Participant under the Plan shall be those of a debtor and any rights of any participant or former Participant shall be no greater than those of a general unsecured creditor.
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5.5 Non-Transferability of Benefits and Interests. Except as expressly provided by the Committee, no benefit payable under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any such attempted action be void and no such benefit shall be in any manner liable for or subject to debts, contracts, liabilities, engagements or torts of any Participant or former Participant. This Section 5.5 shall not apply to an assignment of a contingency or payment due after the death of the Executive to the deceased Executive's legal representative or beneficiary.
5.6 Law to Govern. All questions pertaining to the construction, regulation, validity and effect of the provisions of the Plan shall be determined in accordance with the laws of the State of California.
5.7 Non-Exclusivity. Subject to Section 5.8, the Plan does not limit the authority of the Company, the Board or the Committee, or any subsidiary of the Company to grant awards or authorize any other compensation under any other plan or authority, including, without limitation, awards or other compensation based on the same Performance Target(s) used under the Plan. In addition, Executives not selected to participate in the Plan may participate in other plans of the Company.
5.8 Section 162(m) Conditions; Bifurcation of Plan. It is the intent of the Company that the Plan and Bonuses paid hereunder satisfy and be interpreted in a manner, that, in the case of Participants who are or may be persons whose compensation is subject to Section 162(m), satisfies any applicable requirements as performance-based compensation. Any provision, application or interpretation of the Plan inconsistent with this intent to satisfy the standards in Section 162(m) of the Code shall be disregarded. Notwithstanding anything to the contrary in the Plan, the provisions of the Plan may at any time be bifurcated by the Board or the Committee in any manner so that certain provisions of the Plan or any Bonus intended (or required in order) to satisfy the applicable requirements of Section 162(m) are only applicable to persons whose compensation is subject to Section 162(m).
SECTION 6. AMENDMENTS, SUSPENSION
OR TERMINATION OF PLAN
The Board of Directors or the Committee may from time to time amend, suspend or terminate in whole or in part, and if suspended or terminated, may reinstate, any or all of the provisions of the Plan. Notwithstanding the foregoing, no amendment may be effective without Board of Directors and/or shareholder approval if such approval is necessary to comply with the applicable rules of Section 162(m) of the Code.
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CERTIFICATION
The undersigned Secretary of the Company certifies that the foregoing constitutes a complete and correct copy of the Plan as amended on June ____, 2018 by the Board of Directors of Saddle Ranch Media, Inc.
_________________________
Secretary
Date: June ____, 2018
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Exhibit 6.4
SAVIANT CONSULTING SERVICES AGREEMENT
This Services Agreement ("Agreement"), is made effective on this 27th Day of September, 2017 (the "Effective Date"), by Saviant Technology Consulting & Software Development Pvt Ltd, organized under the laws of India, at Office #202, Kapil Zenith IT Park, Bavdhan, Pune 411021 ("Saviant"), and the "Client", as specified below:
Name: Tri Cascade, Inc
Address: 5020 Campus Drive, Newport Beach, CA 92660
Saviant provides software programming, design, and consulting services; Client wishes to engage Saviant to provide such services. The parties therefore memorialize the terms of such arrangement by entering into this Agreement.
1.0 Description of Work. Saviant will provide software programming, design and consulting services as mutually agreed ("Services"), in consideration of Client's payment of the fees specified in section 7.0 below. Such Services may include provision of "Deliverables", defined as software, websites, or other materials as Saviant may deliver to Client pursuant to the performance of Services. Deliverables may include or require the use of software, designs, data or information provided by Client ("Client Materials"). Client retains all right, title and interest in Client Materials but hereby grants to Saviant the right to use such Client Materials, solely in furtherance of Saviant's provision of Services, solely and exclusively for the work with Client.
2.0 Cooperation. Saviant’s ability to successfully provide Services depends on Client's reasonable and necessary cooperation. Client is responsible for procuring any necessary software licenses or tools as may be required for delivery or use of the Services. Client will have the primary responsibility of defining the scope of work and getting its correct progress reviewed on weekly basis. Client may appoint a single point of contact to liaise with Saviant personnel in the ongoing provision of Services; Saviant is entitled to rely on the instructions and statements of such contact as binding on Client. Saviant shall perform services under the general direction of Client as to the results of such activity, however Saviant may determine, in its sole discretion, the manner and means by which the services of Saviant are accomplished.
3.0 Term. This Agreement commences on the Effective Date and continues until terminated, whichever is earlier. Either party may terminate this Agreement for any or no reason on two weeks written notice to the other party. Client will remain obligated to pay Services fees as set forth in section 7.0 through the effective date of termination. Upon termination, Client will pay to Saviant any outstanding Services fees owed at the time of termination, and each party will promptly destroy all copies of the other party's Confidential Information (as defined in section 8.0 below). Sections 5.0 through 17.0 survive termination of this Agreement for any reason.
4.0 Assignment. Except as permitted by this Agreement, this Agreement may not be assigned or transferred, or its rights or obligations assigned or delegated, by either party, in whole or in part, without the prior written consent of the other party. Any purported assignment in violation of this section will be void.
5.0 Saviant Staff. Client acknowledges that Saviant expends considerable time and resources identifying, hiring and training staff assigned to provide Services. Client will not directly or indirectly recruit or hire any Saviant staff that is involved in the provision of Services, for as long as this Agreement is in effect and for two years thereafter. Similarly, Saviant acknowledges that Client expends considerable time and resources identifying, hiring and training its staff. Saviant will not directly or indirectly recruit or hire any Client staff, for as long as this Agreement is in effect and for two years thereafter.
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6.0 Ownership. As between the parties, Client is and will be the sole and exclusive owner of the Deliverables and all associated intellectual property rights. Deliverables are works made for hire under applicable copyright law, and/or are hereby assigned by Saviant to Client, at no additional cost. With respect to any pre-existing or independently developed software, works or material in the Deliverables, Saviant hereby grants to Client at no additional charge, to the fullest extent of Saviant's rights to such works and materials, a perpetual and irrevocable license to use, copy, reproduce, distribute and exploit such works or material. This section 6.0 does not apply to any third party software, works or material included in the Deliverables as required by the project; such third party retains all rights in same.
7.0 Payments. Consultants and Programmers will be assigned to client project, as per the agreed scope, dates & duration involved. The fees for Projects under scope will be specified & agreed as per detailed SoW, as specified in Appendix A. Saviant will provide the Client a weekly Time sheet & weekly Invoices. Any additional resources that may be required during the Project will be discussed with client and accordingly added to project team for that duration.
Payments under this Agreement are nonrefundable, not tied to acceptance of Deliverables and are due within Ten business days of Client's receipt of Saviant's invoice. Saviant may on notice terminate or suspend Services if Client is delinquent in the payment of any invoice from Saviant for a period in excess of ten business days. Saviant may enforce payment obligations of this Agreement in any court of competent jurisdiction, notwithstanding section 16.0 of this Agreement.
8.0 Confidentiality. Neither party may use, except in furtherance and for the purposes of receiving and providing Services, or disclose, the other party's "Confidential Information", defined as any confidential or proprietary written or oral information or materials disclosed or revealed during the Services and originating from one party (the "disclosing party") to the other party ("receiving party"). Client's Confidential Information will include the Client Materials and Deliverables. Saviant's Confidential Information will include the pricing and other terms of this Agreement and any information or knowledge regarding Saviant's staff, including personal information. Receiving party will protect the confidentiality of disclosing party's Confidential Information to the same degree of care, but no less than reasonable care, as such party uses to protect its own confidential information. The obligations of this section 8.0will not apply to any portion of Confidential Information that: (a) is now, or hereafter through no violation of this Agreement, becomes generally known; (b) is independently developed by the receiving party without any use of Confidential Information; (c) is hereafter rightfully furnished to the receiving party by a third party without restriction on disclosure; (d) was rightfully known to or lawfully in the possession of the receiving party at the time of disclosure; (e) is authorized to be released by the disclosing party; or (f) is hereafter required to be disclosed pursuant to a legal proceeding or otherwise required by law, provided reasonable prior notice is given to disclosing party with sufficient opportunity to contest or limit such disclosure.
9.0 Disclaimer of Warranties. Deliverables and Services are provided as is. ALL EXPRESS OR IMPLIED REPRESENTATIONS AND WARRANTIES, INCLUDING ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, DESIGN, TITLE OR NON-INFRINGEMENT, OR ARISING FROM COURSE OF DEALING, COURSE OF PERFORMANCE OR TRADE PRACTICE, ARE HEREBY DISCLAIMED.
10.0 Limitation of Liability. Notwithstanding any other provision of this Agreement, Saviant's maximum aggregate liability for all claims, liabilities or obligations arising under or relating to this Agreement, the Services or Deliverables, regardless of the theory of liability, whether for breach of this Agreement, including breach of warranty, or in tort or otherwise, will in no event exceed all amounts paid by Client to Saviant under this Agreement (for the particular Service giving rise to the claim, if any), for the three month period preceding the occurrence of the claim. In no event will Saviant be liable for any indirect, punitive, special, incidental or consequential damages in connection with, related to or arising out of this Agreement, the Services or Deliverables (including interruption of business, loss of profits, revenues, savings, opportunities, use, data, or other economic advantage), regardless of the theory of
liability, whether for breach of this Agreement, including breach of warranty, or in tort or otherwise, even if Saviant has been previously advised of the possibility of such damages. Liability for damages will be so limited and excluded, regardless of the validity or efficacy of any remedy and even if any remedy fails of its essential purpose. Client has voluntarily agreed to define the parties’ rights, liabilities and obligations respecting this Agreement, the Services or Deliverables exclusively in contract pursuant to the terms of this Agreement, and Client disclaims that Client is owed any duties or is entitled to any remedies not expressly set forth in this Agreement.
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11.0 Indemnity. Client will defend, indemnify and hold harmless Saviant, its affiliates, subsidiaries and related entities, any successor and assigns of any of the foregoing, and any employees, officers, directors, and agents of any of the foregoing, from and against any and all harms, losses, and liabilities, and any and all claims, demands, judgments, awards and penalties, fines, interest, costs, and expenses related thereto (including court costs and reasonable fees of attorneys and other professionals), arising out of or related to the provision of Services or the use of Deliverables.
12.0 Relationship. This Agreement is not intended to create a relationship such as a partnership, franchise, joint venture, agency, or employment relationship. There are other specific agreements for above mentioned relationships (viz partnership, franchise, joint venture, agency, or employment) and will be signed appropriately, if needed. Neither party may act in a manner that expresses or implies a relationship other than that of independent contractor, nor bind the other party. Client may guide Saviant project team towards desired performance of services, however client will have no right to control the means, manner or method by which Saviant performs Services. Saviant has sole discretion over assignment and replacement of Saviant personnel involved in provision of Services. Saviant reserves the right at its discretion to subcontract Services. No exclusivity is provided by Saviant hereunder, and nothing in this Agreement will be construed as preventing Saviant from working with other clients on projects that may be similar to or competitive with the project that is the subject of the Services hereunder. Notwithstanding any other provision herein: (a) Saviant and its staff may freely utilize general knowledge, experience, skills and know-how acquired during the performance of the Services; and (b) Saviant will have the same rights as members of the general public with respect to public domain or uncopyrightable content contained within the Deliverables.
13.0 Promotion. With prior written permission from Client, Client authorizes Saviant to include Client, and the projects in which Saviant was engaged, in Saviant marketing materials.
14.0 Force Majeure. Except for obligations to pay money hereunder, no delay, failure or omission by either party to carry out or observe any of its obligations hereunder will give rise to any claim against such party or be deemed to be a breach of this Agreement if and for as long as such failure or omission arises from any cause beyond the reasonable control of that party.
15.0 Choice of Law; Prevailing Party. This Agreement and all related disputes will be governed by the laws of California, US. The choice of law rules of any jurisdiction will not apply. A party prevailing in any litigation or arbitration related to this Agreement, the Services or Deliverables will be entitled, in addition to such other relief as may be granted, to an award of reasonable attorneys' fees.
16.0 Dispute Resolution. Any disputes between or claims brought by on party against the other party arising out of or related to this Agreement, Services or Deliverables (including tort as well as contract claims, and whether pre- contractual or extra-contractual, as well as the arbitrability of any disputes) will be referred to and finally settled by binding arbitration before the International Chamber of Commerce in accordance with its commercial rules of arbitration in effect at the time of arbitration except as inconsistent with this section. The arbitration will be conducted by telephone, on-line and/or based solely upon written submissions where no in-person appearance is required. If in-person appearance is required, required hearings will be held in California, US. The arbitrator will apply the law specified in section 15.0 above. The arbitral proceedings will be conducted in the English language. All awards may if necessary be enforced by any court having jurisdiction. The existence of any dispute, the existence or details of the arbitration proceeding, and all related documents, materials, evidence, judgments and awards therein, must be kept confidential. Except as required by law, no party will make any public announcements with respect to the proceeding or the award, except as required to enforce same. The parties hereby waive the right to a trial by jury and agree to only bring claims in an individual capacity and not as a plaintiff or class member in any purported class or representative proceeding (whether in arbitration or any judicial forum). All claims between the parties must be resolved using single-plaintiff arbitration in accordance with this section. Should either party file an action contrary to this section, the other party may recover lawyers' fees and costs incurred in enforcing this section, provided that the party seeking the award has notified the other party in writing of the improperly filed claim, and the other party has failed to withdraw the claim in a timely fashion.
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17.0 Construction. This Agreement will be fairly interpreted in accordance with its terms and without any strict construction in favor of or against either party. The terms "includes" and "including" will not be construed to imply any limitation. Except as expressly noted herein, this Agreement confers no third party rights and creates no third party beneficiaries of any kind. This Agreement is in the English language only, which language will be controlling in all respects, and all versions of this Agreement in any other language will be for accommodation only and will not be binding on the parties. This Agreement is the parties' entire agreement relating to its subject matter, and supersedes all prior or contemporaneous oral or written communications, proposals, negotiations, understandings, representations and warranties and prevails over any conflicting or additional terms of any quote, order or other communication between the parties relating to its subject matter. This Agreement may only be modified by a writing signed by both parties' authorized representatives. Any express waiver or failure to exercise promptly any right under this Agreement will not create a continuing waiver or any expectation of non-enforcement. If any of the provisions of this Agreement are held to be in violation of applicable law, void, or unenforceable in any jurisdiction, then such provisions are waived, amended or reformed to the extent necessary for the Agreement to be otherwise enforceable in such jurisdiction.
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Exhibit 6.5
INDEMNIFICATION AGREEMENT
_____
by and between
Saddle Ranch Media, Inc.
and
Max Chin Li
indemnitee
______
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INDEMNIFICATION AGREEMENT
_____
THIS AGREEMENT is entered into, effective as June __, 2018 of by and between Saddle Ranch Media, Inc., a Utah corporation (the “Company”), and Max Chin Li, INDEMNITEE (“Indemnitee”).
WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims currently being asserted against directors and officers of corporations;
WHEREAS, the Certificate of Incorporation and Bylaws of the Company require the Company to indemnify and advance expenses to its directors and officers to the fullest extent permitted under Nevada law, and the Indemnitee has been serving and continues to serve as a director and/or officer of the Company in part in reliance on the Company’s Certificate of Incorporation and Bylaws; and
WHEREAS, in recognition of Indemnitee’s need for (i) substantial protection against personal liability based on Indemnitee’s reliance on the aforesaid Certificate of Incorporation and Bylaws, (ii) specific contractual assurance that the protection promised by the Certificate of Incorporation and Bylaws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of the Certificate of Incorporation and Bylaws or any change in the composition of the Company’s Board of Directors or acquisition transaction relating to the Company), and (iii) an inducement to provide effective services to the Company as a director and/or officer, the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent (whether partial or complete) permitted under Nevada law and as set forth in this Agreement, and, to the extent insurance is maintained, to provide for the continued coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies.
NOW, THEREFORE, in consideration of the above premises and of Indemnitee continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties agree as follows:
1. Certain Definitions:
(a) Board: the Board of Directors of the Company.
(b) Affiliate: any corporation or other person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified.
(c) Change in Control: shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, and other than any person holding shares of the Company on the date that the Company first registers under the Act or any transferee of such individual if such transferee is a spouse or lineal descendant of the transferee or a trust for the benefit of the individual, his spouse or lineal descendants), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the total voting power represented by the Company’s then outstanding Voting Securities, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other entity, other than a merger or consolidation that would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of transactions) of all or substantially all of the Company’s assets.
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(d) Expenses: any expense, liability, or loss, including attorneys’ fees, judgments, fines, ERISA excise taxes and penalties, amounts paid or to be paid in settlement, any interest, assessments, or other charges imposed thereon, any federal, state, local, or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this A greement, and all other costs and obligations, paid or incurred in connection with investigating, defending, being a witness in, participating in (including on appeal), or preparing for any of the foregoing in, any Proceeding relating to any Indemnifiable Event.
(e) Indemnifiable Event: any event or occurrence that takes place either prior to or after the execution of this Agreement, related to the fact that Indemnitee is or was a director or officer of the Company, or while a director or officer is or was serving at the request of the Company as a director, officer, employee, trustee, agent, or fiduciary of another foreign or domestic corporation, partnership, joint venture, employee benefit plan, trust, or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic corporation that was a predecessor corporation of the Company or of another enterprise at the request of such predecessor corporation, or related to anything done or not done by Indemnitee in any such capacity, whether or not the basis of the Proceeding is alleged action in an official capacity as a director, officer, employee, or agent or in any other capacity while serving as a director, officer, employee, or agent of the
Company, as described above.
(f) Independent Counsel: the person or body appointed in connection with Section 3.
(g) Proceeding: any threatened, pending, or completed action, suit, or proceeding or any alternative dispute resolution mechanism (including an action by or in the right of the Company), or any inquiry, hearing, or investigation, whether conducted by the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit, or proceeding, whether civil, criminal, administrative, investigative, or other.
(h) Reviewing Party: the person or body appointed in accordance with Section 3.
(i) Voting Securities: any securities of the Company that vote generally in the election of directors.
2. Agreement to Indemnify.
(a) General Agreement. In the event Indemnitee was, is, or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Proceeding by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee from and against any and all Expenses to the fullest extent permitted by law, as the same exists or may hereafter be amended or interpreted (but in the case of any such amendment or interpretation, only to the extent that such amendment or interpretation permits the Company to provide broader indemnification rights than were permitted prior thereto). The parties hereto intend that this Agreement shall provide for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Company’s Certificate of Incorporation, its Bylaws, vote of its shareholders or disinterested directors, or applicable law.
(b) Initiation of Proceeding. Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Proceeding initiated by Indemnitee against the Company or any director or officer of the Company unless (i) the Company has joined in or the Board has consented to the initiation of such Proceeding; (ii) the Proceeding is one to enforce indemnification rights under Section 5; or (iii) the Proceeding is instituted after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) and Independent Counsel has approved its initiation.
(c) Expense Advances. If so requested by Indemnitee, the Company shall advance (within ten business days of such request) any and all Expenses to Indemnitee (an “Expense Advance”). The Indemnitee shall qualify for such Expense Advances upon the execution and delivery to the Company of this Agreement which shall constitute an undertaking providing that the Indemnitee undertakes to repay such Expense Advances if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by the Company. Indemnitee’s obligation to reimburse the Company for Expense Advances shall be unsecured and no interest shall be charged thereon.
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(d) Mandatory Indemnification. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred in connection therewith.
(e) Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled.
(f) Prohibited Indemnification. No indemnification pursuant to this Agreement shall be paid by the Company on account of any Proceeding in which judgment is rendered against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of any federal, state, or local laws.
3. Reviewing Party. Prior to any Change in Control, the Reviewing Party shall be any appropriate person or body consisting of a member or members of the Board or any other person or body appointed by the Board who is not a party to the particular Proceeding with respect to which Indemnitee is seeking indemnification; after a Change in Control, the Independent Counsel referred to below shall become the Reviewing Party. With respect to all matters arising after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or under applicable law or the Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, the Company shall seek legal advice only from Independent Counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company or the Indemnitee (other than in connection with indemnification matters) within the last five years. The Independent Counsel shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent the Indemnitee should be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the Independent Counsel and to indemnify fully such counsel against any and all expenses (including attorneys’ fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the engagement of Independent Counsel pursuant hereto.
4. Indemnification Process and Appeal.
(a) Indemnification Payment. Indemnitee shall be entitled to indemnification of Expenses, and shall receive payment thereof, from the Company in accordance with this Agreement as soon as practicable after Indemnitee has made written demand on the Company for indemnification, unless the Reviewing Party has given a written opinion to the Company that Indemnitee is not entitled to indemnification under applicable law.
(b) Suit to Enforce Rights. Regardless of any action by the Reviewing Party, if Indemnitee has not received full indemnification within thirty days after making a demand in accordance with Section 4(a), Indemnitee shall have the right to enforce its indemnification rights under this Agreement by commencing litigation in any court in the State of California or the State of Nevada having subject matter jurisdiction thereof seeking an initial determination by the court or challenging any determination by the Reviewing Party or any aspect thereof. The Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party not challenged by the Indemnitee shall be binding on the Company and Indemnitee. The remedy provided for in this Section 4 shall be in addition to any other remedies available to Indemnitee at law or in equity.
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(c) Defense to Indemnification, Burden of Proof, and Presumptions. It shall be a defense to any action brought by Indemnitee against the Company to enforce this Agreement (other than an action brought to enforce a claim for Expenses incurred in defending a Proceeding in advance of its final disposition) that it is not permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. In connection with any such action or any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proving such a defense or determination shall be on the Company. Neither the failure of the Reviewing Party or the Company (including its Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action by Indemnitee that indemnification of the claimant is proper under the circumstances because Indemnitee has met the standard of conduct set forth in applicable law, nor an actual determination by the Reviewing Party or Company (including its Board, independent legal counsel, or its stockholders) that the Indemnitee had not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. For purposes of this Agreement, the termination of any claim, action, suit, or proceeding, by judgment, order, settlement (whether with or without court approval), conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law.
5. Indemnification for Expenses Incurred in Enforcing Rights. The Company shall indemnify Indemnitee against any and all Expenses that are incurred by Indemnitee in connection with any action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or under applicable law or the Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, and/or (ii) recovery under directors’ and officers’ liability insurance policies maintained by the Company, but only in the event that Indemnitee ultimately is determined to be entitled to such indemnification or insurance recovery, as the case may be. In addition, the Company shall, if so requested by Indemnitee, advance the foregoing Expenses to Indemnitee, subject to and in accordance with Section 2(c).
6. Notification and Defense of Proceeding.
(a) Notice. Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission so to notify the Company will not relieve the Company from any liability that it may have to Indemnitee, except as provided in Section 6(c).
(b) Defense. With respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof, the Company will be entitled to participate in the Proceeding at its own expense and except as otherwise provided below, to the extent the Company so wishes, it may assume the defense thereof with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee of its election to assume the defense of any Proceeding, the Company shall not be liable to Indemnitee under this Agreement or otherwise for any Expenses subsequently incurred by Indemnitee in connection with the defense of such Proceeding other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ legal counsel in such Proceeding, but all Expenses related thereto incurred after notice from the Company of its assumption of the defense shall be at Indemnitee’s expense unless: (i) the employment of legal counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee has reasonably determined that there may be a conflict of interest between Indemnitee and the Company in the defense of the Proceeding, (iii) after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control), the employment of counsel by Indemnitee has been approved by the Independent Counsel, or (iv) the Company shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which cases all Expenses of the Proceeding shall be borne by the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which Indemnitee shall have made the determination provided for in (ii), (iii) and (iv) above.
(c) Settlement of Claims. The Company shall not be liable to indemnify Indemnitee under this Agreement or otherwise for any amounts paid in settlement of any Proceeding effected without the Company’s written consent, such consent not to be unreasonably withheld; provided, however, that if a Change in Control has occurred (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control), the Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if the Independent Counsel has approved the settlement. The Company shall not settle any Proceeding in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent. The Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial award if the Company was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action; the Company’s liability hereunder shall not be excused if participation in the Proceeding by the Company was barred by this Agreement.
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7. Establishment of Trust. In the event of a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) the Company shall, upon written request by Indemnitee, create a Trust for the benefit of the Indemnitee and from time to time upon written request of Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for, participating in, and/or defending any Proceeding relating to an Indemnifiable Event. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by the Independent Counsel. The terms of the Trust shall provide that (i) the Trust shall not be revoked or the principal thereof invaded without the written consent of the Indemnitee, (ii) the Trustee shall advance, within ten business days of a request by the Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust under the same circumstances for which the Indemnitee would be required to reimburse the Company under Section 2(c) of this Agreement), (iii) the Trust shall continue to be funded by the Company in accordance with the funding obligation set forth above, (iv) the Trustee shall promptly pay to the Indemnitee all amounts for which the Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise, and (v) all unexpended funds in the Trust shall revert to the Company upon a final determination by the Independent Counsel or a court of competent jurisdiction, as the case may be, that the Indemnitee has been fully indemnified under the terms of this Agreement. The Trustee shall be chosen by the Indemnitee. Nothing in this Section 7 shall relieve the Company of any of its obligations under this Agreement. All income earned on the assets held in the Trust shall be reported as income by the Company for federal, state, local, and foreign tax purposes. The Company shall pay all costs of establishing and maintaining the Trust and shall indemnify the Trustee against any and all expenses (including attorneys’ fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the establishment and maintenance of the Trust.
8. Non-Exclusivity. The rights of Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company’s Certificate of Incorporation, Bylaws, applicable law, or otherwise; provided, however, that this Agreement shall supersede any prior indemnification agreement between the Company and the Indemnitee. To the extent that a change in applicable law (whether by statute or judicial decision) permits greater indemnification than would be afforded currently under the Company’s Certificate of Incorporation, Bylaws, applicable law, or this Agreement, it is the intent of the parties that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change.
9. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing general and/or directors’ and officers’ liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director or officer.
10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any Affiliate of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors, or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, or such longer period as may be required by state law under the circumstances. Any claim or cause of action of the Company or its Affiliate shall be extinguished and deemed released unless asserted by the timely filing and notice of a legal action within such period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, the shorter period shall govern.
11. Amendment of this Agreement. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed by the party against whom enforcement of the waiver is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.
12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.
13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise received payment (under any insurance policy, Bylaw, or otherwise) of the amounts otherwise indemnifiable hereunder.
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14. Binding Effect. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation, or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity pertaining to an Indemnifiable Event even though he may have ceased to serve in such capacity at the time of any Proceeding.
15. Severability. If any provision (or portion thereof) of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of this Agreement containing any provision held to be invalid, void, or otherwise unenforceable, that is not itself invalid, void, or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, void, or unenforceable.
16. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California applicable to contracts made and to be performed in such State without giving effect to its principles of conflicts of laws.
17. Notices. All notices, demands, and other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed, postage prepaid, certified or registered mail, return receipt requested, and addressed to the Company at:
Saddle Ranch Media, Inc.
5020 Campus Drive
Newport Beach, CA 92660
and to Indemnitee at:
Max Chin Li
5020 Campus Drive
Newport Beach, CA 92660
Notice of change of address shall be effective only when given in accordance with this Section. All notices complying with this Section shall be deemed to have been received on the date of hand delivery or on the third business day after mailing.
18. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day specified above.
Company
Saddle Ranch Media, Inc.
By:________________________
Indemnitee
___________________________
Max Chin Li
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Exhibit 6.6
INDEMNIFICATION AGREEMENT
_____
by and between
Saddle Ranch Media, Inc.
and
Alan J. Bailey
indemnitee
______
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INDEMNIFICATION AGREEMENT
_____
THIS AGREEMENT is entered into, effective as June __, 2018 of by and between Saddle Ranch Media, Inc., a Utah corporation (the “Company”), and Alan J. Bailey, INDEMNITEE (“Indemnitee”).
WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims currently being asserted against directors and officers of corporations;
WHEREAS, the Certificate of Incorporation and Bylaws of the Company require the Company to indemnify and advance expenses to its directors and officers to the fullest extent permitted under Utah law, and the Indemnitee has been serving and continues to serve as a director and/or officer of the Company in part in reliance on the Company’s Certificate of Incorporation and Bylaws; and
WHEREAS, in recognition of Indemnitee’s need for (i) substantial protection against personal liability based on Indemnitee’s reliance on the aforesaid Certificate of Incorporation and Bylaws, (ii) specific contractual assurance that the protection promised by the Certificate of Incorporation and Bylaws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of the Certificate of Incorporation and Bylaws or any change in the composition of the Company’s Board of Directors or acquisition transaction relating to the Company), and (iii) an inducement to provide effective services to the Company as a director and/or officer, the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent (whether partial or complete) permitted under Utah law and as set forth in this Agreement, and, to the extent insurance is maintained, to provide for the continued coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies.
NOW, THEREFORE, in consideration of the above premises and of Indemnitee continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties agree as follows:
1. Certain Definitions:
(a) Board: the Board of Directors of the Company.
(b) Affiliate: any corporation or other person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified.
(c) Change in Control: shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, and other than any person holding shares of the Company on the date that the Company first registers under the Act or any transferee of such individual if such transferee is a spouse or lineal descendant of the transferee or a trust for the benefit of the individual, his spouse or lineal descendants), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the total voting power represented by the Company’s then outstanding Voting Securities, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other entity, other than a merger or consolidation that would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of transactions) of all or substantially all of the Company’s assets.
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(d) Expenses: any expense, liability, or loss, including attorneys’ fees, judgments, fines, ERISA excise taxes and penalties, amounts paid or to be paid in settlement, any interest, assessments, or other charges imposed thereon, any federal, state, local, or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this A greement, and all other costs and obligations, paid or incurred in connection with investigating, defending, being a witness in, participating in (including on appeal), or preparing for any of the foregoing in, any Proceeding relating to any Indemnifiable Event.
(e) Indemnifiable Event: any event or occurrence that takes place either prior to or after the execution of this Agreement, related to the fact that Indemnitee is or was a director or officer of the Company, or while a director or officer is or was serving at the request of the Company as a director, officer, employee, trustee, agent, or fiduciary of another foreign or domestic corporation, partnership, joint venture, employee benefit plan, trust, or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic corporation that was a predecessor corporation of the Company or of another enterprise at the request of such predecessor corporation, or related to anything done or not done by Indemnitee in any such capacity, whether or not the basis of the Proceeding is alleged action in an official capacity as a director, officer, employee, or agent or in any other capacity while serving as a director, officer, employee, or agent of the
Company, as described above.
(f) Independent Counsel: the person or body appointed in connection with Section 3.
(g) Proceeding: any threatened, pending, or completed action, suit, or proceeding or any alternative dispute resolution mechanism (including an action by or in the right of the Company), or any inquiry, hearing, or investigation, whether conducted by the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit, or proceeding, whether civil, criminal, administrative, investigative, or other.
(h) Reviewing Party: the person or body appointed in accordance with Section 3.
(i) Voting Securities: any securities of the Company that vote generally in the election of directors.
2. Agreement to Indemnify.
(a) General Agreement. In the event Indemnitee was, is, or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Proceeding by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee from and against any and all Expenses to the fullest extent permitted by law, as the same exists or may hereafter be amended or interpreted (but in the case of any such amendment or interpretation, only to the extent that such amendment or interpretation permits the Company to provide broader indemnification rights than were permitted prior thereto). The parties hereto intend that this Agreement shall provide for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Company’s Certificate of Incorporation, its Bylaws, vote of its shareholders or disinterested directors, or applicable law.
(b) Initiation of Proceeding. Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Proceeding initiated by Indemnitee against the Company or any director or officer of the Company unless (i) the Company has joined in or the Board has consented to the initiation of such Proceeding; (ii) the Proceeding is one to enforce indemnification rights under Section 5; or (iii) the Proceeding is instituted after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) and Independent Counsel has approved its initiation.
(c) Expense Advances. If so requested by Indemnitee, the Company shall advance (within ten business days of such request) any and all Expenses to Indemnitee (an “Expense Advance”). The Indemnitee shall qualify for such Expense Advances upon the execution and delivery to the Company of this Agreement which shall constitute an undertaking providing that the Indemnitee undertakes to repay such Expense Advances if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by the Company. Indemnitee’s obligation to reimburse the Company for Expense Advances shall be unsecured and no interest shall be charged thereon.
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(d) Mandatory Indemnification. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred in connection therewith.
(e) Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled.
(f) Prohibited Indemnification. No indemnification pursuant to this Agreement shall be paid by the Company on account of any Proceeding in which judgment is rendered against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of any federal, state, or local laws.
3. Reviewing Party. Prior to any Change in Control, the Reviewing Party shall be any appropriate person or body consisting of a member or members of the Board or any other person or body appointed by the Board who is not a party to the particular Proceeding with respect to which Indemnitee is seeking indemnification; after a Change in Control, the Independent Counsel referred to below shall become the Reviewing Party. With respect to all matters arising after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or under applicable law or the Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, the Company shall seek legal advice only from Independent Counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company or the Indemnitee (other than in connection with indemnification matters) within the last five years. The Independent Counsel shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent the Indemnitee should be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the Independent Counsel and to indemnify fully such counsel against any and all expenses (including attorneys’ fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the engagement of Independent Counsel pursuant hereto.
4. Indemnification Process and Appeal.
(a) Indemnification Payment. Indemnitee shall be entitled to indemnification of Expenses, and shall receive payment thereof, from the Company in accordance with this Agreement as soon as practicable after Indemnitee has made written demand on the Company for indemnification, unless the Reviewing Party has given a written opinion to the Company that Indemnitee is not entitled to indemnification under applicable law.
(b) Suit to Enforce Rights. Regardless of any action by the Reviewing Party, if Indemnitee has not received full indemnification within thirty days after making a demand in accordance with Section 4(a), Indemnitee shall have the right to enforce its indemnification rights under this Agreement by commencing litigation in any court in the State of California or the State of Utah having subject matter jurisdiction thereof seeking an initial determination by the court or challenging any determination by the Reviewing Party or any aspect thereof. The Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party not challenged by the Indemnitee shall be binding on the Company and Indemnitee. The remedy provided for in this Section 4 shall be in addition to any other remedies available to Indemnitee at law or in equity.
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(c) Defense to Indemnification, Burden of Proof, and Presumptions. It shall be a defense to any action brought by Indemnitee against the Company to enforce this Agreement (other than an action brought to enforce a claim for Expenses incurred in defending a Proceeding in advance of its final disposition) that it is not permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. In connection with any such action or any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proving such a defense or determination shall be on the Company. Neither the failure of the Reviewing Party or the Company (including its Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action by Indemnitee that indemnification of the claimant is proper under the circumstances because Indemnitee has met the standard of conduct set forth in applicable law, nor an actual determination by the Reviewing Party or Company (including its Board, independent legal counsel, or its stockholders) that the Indemnitee had not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. For purposes of this Agreement, the termination of any claim, action, suit, or proceeding, by judgment, order, settlement (whether with or without court approval), conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law.
5. Indemnification for Expenses Incurred in Enforcing Rights. The Company shall indemnify Indemnitee against any and all Expenses that are incurred by Indemnitee in connection with any action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or under applicable law or the Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, and/or (ii) recovery under directors’ and officers’ liability insurance policies maintained by the Company, but only in the event that Indemnitee ultimately is determined to be entitled to such indemnification or insurance recovery, as the case may be. In addition, the Company shall, if so requested by Indemnitee, advance the foregoing Expenses to Indemnitee, subject to and in accordance with Section 2(c).
6. Notification and Defense of Proceeding.
(a) Notice. Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission so to notify the Company will not relieve the Company from any liability that it may have to Indemnitee, except as provided in Section 6(c).
(b) Defense. With respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof, the Company will be entitled to participate in the Proceeding at its own expense and except as otherwise provided below, to the extent the Company so wishes, it may assume the defense thereof with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee of its election to assume the defense of any Proceeding, the Company shall not be liable to Indemnitee under this Agreement or otherwise for any Expenses subsequently incurred by Indemnitee in connection with the defense of such Proceeding other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ legal counsel in such Proceeding, but all Expenses related thereto incurred after notice from the Company of its assumption of the defense shall be at Indemnitee’s expense unless: (i) the employment of legal counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee has reasonably determined that there may be a conflict of interest between Indemnitee and the Company in the defense of the Proceeding, (iii) after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control), the employment of counsel by Indemnitee has been approved by the Independent Counsel, or (iv) the Company shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which cases all Expenses of the Proceeding shall be borne by the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which Indemnitee shall have made the determination provided for in (ii), (iii) and (iv) above.
(c) Settlement of Claims. The Company shall not be liable to indemnify Indemnitee under this Agreement or otherwise for any amounts paid in settlement of any Proceeding effected without the Company’s written consent, such consent not to be unreasonably withheld; provided, however, that if a Change in Control has occurred (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control), the Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if the Independent Counsel has approved the settlement. The Company shall not settle any Proceeding in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent. The Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial award if the Company was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action; the Company’s liability hereunder shall not be excused if participation in the Proceeding by the Company was barred by this Agreement.
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7. Establishment of Trust. In the event of a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) the Company shall, upon written request by Indemnitee, create a Trust for the benefit of the Indemnitee and from time to time upon written request of Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for, participating in, and/or defending any Proceeding relating to an Indemnifiable Event. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by the Independent Counsel. The terms of the Trust shall provide that (i) the Trust shall not be revoked or the principal thereof invaded without the written consent of the Indemnitee, (ii) the Trustee shall advance, within ten business days of a request by the Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust under the same circumstances for which the Indemnitee would be required to reimburse the Company under Section 2(c) of this Agreement), (iii) the Trust shall continue to be funded by the Company in accordance with the funding obligation set forth above, (iv) the Trustee shall promptly pay to the Indemnitee all amounts for which the Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise, and (v) all unexpended funds in the Trust shall revert to the Company upon a final determination by the Independent Counsel or a court of competent jurisdiction, as the case may be, that the Indemnitee has been fully indemnified under the terms of this Agreement. The Trustee shall be chosen by the Indemnitee. Nothing in this Section 7 shall relieve the Company of any of its obligations under this Agreement. All income earned on the assets held in the Trust shall be reported as income by the Company for federal, state, local, and foreign tax purposes. The Company shall pay all costs of establishing and maintaining the Trust and shall indemnify the Trustee against any and all expenses (including attorneys’ fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the establishment and maintenance of the Trust.
8. Non-Exclusivity. The rights of Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company’s Certificate of Incorporation, Bylaws, applicable law, or otherwise; provided, however, that this Agreement shall supersede any prior indemnification agreement between the Company and the Indemnitee. To the extent that a change in applicable law (whether by statute or judicial decision) permits greater indemnification than would be afforded currently under the Company’s Certificate of Incorporation, Bylaws, applicable law, or this Agreement, it is the intent of the parties that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change.
9. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing general and/or directors’ and officers’ liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director or officer.
10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any Affiliate of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors, or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, or such longer period as may be required by state law under the circumstances. Any claim or cause of action of the Company or its Affiliate shall be extinguished and deemed released unless asserted by the timely filing and notice of a legal action within such period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, the shorter period shall govern.
11. Amendment of this Agreement. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed by the party against whom enforcement of the waiver is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.
12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.
13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise received payment (under any insurance policy, Bylaw, or otherwise) of the amounts otherwise indemnifiable hereunder.
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14. Binding Effect. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation, or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity pertaining to an Indemnifiable Event even though he may have ceased to serve in such capacity at the time of any Proceeding.
15. Severability. If any provision (or portion thereof) of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of this Agreement containing any provision held to be invalid, void, or otherwise unenforceable, that is not itself invalid, void, or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, void, or unenforceable.
16. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California applicable to contracts made and to be performed in such State without giving effect to its principles of conflicts of laws.
17. Notices. All notices, demands, and other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed, postage prepaid, certified or registered mail, return receipt requested, and addressed to the Company at:
Saddle Ranch Media, Inc.
5020 Campus Drive
Newport Beach, CA 92660
and to Indemnitee at:
Alan J. Bailey
5020 Campus Drive
Newport Beach, CA 92660
Notice of change of address shall be effective only when given in accordance with this Section. All notices complying with this Section shall be deemed to have been received on the date of hand delivery or on the third business day after mailing.
18. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day specified above.
Company
Saddle Ranch Media, Inc.
By:________________________
Indemnitee
___________________________
Alan J. Bailey
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Exhibit 6.7
__________
Saddle Ranch Media, Inc.
EMPLOYMENT AGREEMENT
__________
Timothy Peabody – President
__________
1 |
THIS EMPLOYMENT AGREEMENT (this "Agreement"), effective as of the Effective Date (as defined below), is entered into by and between Saddle Ranch Media, Inc., a Nevada corporation (the "Company"), and Timothy Peabody (the “Executive”).
WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying the terms of such employment; and
WHEREAS, the Executive desires to accept employment with the Company, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. Subject to the provisions for earlier termination hereinafter provided, the Executive's employment hereunder shall be for a term (the "Employment Period") commencing on the Effective Date and ending on the fifth anniversary of the Effective Date (the "Initial Termination Date"); provided, however, that this Agreement shall be automatically extended for one additional year on the Initial Termination Date and on each subsequent anniversary of the Initial Termination Date, unless either the Executive or the Company elects not to so extend the term of the Agreement by notifying the other party, in writing, of such election not less than sixty (60) days prior to the last day of the term as then in effect. For purposes of this Agreement, "Effective Date" shall mean the date written below.
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the Executive shall serve as Chairman and President of the Company and shall perform such employment duties as are usual and customary for such positions. At the Company's request, the Executive shall serve the Company and/or its subsidiaries and affiliates in other offices and capacities in addition to the foregoing. In the event that the Executive, during the Employment Period, serves in any one or more of such additional capacities, the Executive's compensation shall not be increased beyond that specified in Section 2(b) of this Agreement. In addition, in the event the Executive's service in one or more of such additional capacities is terminated, the Executive's compensation, as specified in Section 2(b) of this Agreement, shall not be diminished or reduced in any manner as a result of such termination for so long as the Executive otherwise remains employed under the terms of this Agreement.
(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote appropriate attention and time during normal business hours to the business and affairs of the Company. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) fulfill limited teaching, speaking and writing engagements or (C) manage his personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement and (D) undertake other business responsibilities. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to Company; provided that no such activity that violates any written non-competition agreement between the parties shall be permitted.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall receive a base salary (the "Base Salary") as determined by the Board of Directors from time to time with due regard for the state of development of the Company, as the same may be increased thereafter pursuant to the Company's normal practices for its executives. The Base Salary shall be paid at such intervals as the Company pays executive salaries generally. During the Employment Period, the Base Salary shall be reviewed at least annually for possible increase in the Company's discretion. Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. The Base Salary shall not be reduced after any such increase and the term "Base Salary" as utilized in this Agreement shall refer to Base Salary as so increased.
(ii) Annual Bonus. In addition to the Base Salary, the Executive shall be eligible to earn, for each fiscal year of the Company ending during the Employment Period, an annual cash performance bonus annual Bonus") under the Company's bonus plan or plans applicable to senior executives. The amount of the Annual Bonus and the target performance goals applicable to the Annual Bonus shall be determined in accordance with the terms and conditions of such bonus plan as in effect from time to time.
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(iii) Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all other incentive plans, practices, policies and programs, and all savings and retirement plans, practices, policies and programs, in each case that are applicable generally to senior executives of the Company.
(iv) Welfare Benefit Plans. During the Employment Period, the Executive and the Executive's eligible family members shall be eligible for participation in the welfare benefit plans, practices, policies and programs (including, if applicable, medical, dental, disability, employee life, group life and accidental death insurance plans and programs) maintained by the Company for its senior executives.
(v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable business expenses incurred by the Executive in accordance with the policies, practices and procedures of the Company provided to senior executives of the Company.
(vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled to such fringe benefits and perquisites as are provided by the Company to its senior executives from time to time, in accordance with the policies, practices and procedures of the Company, and shall receive such additional fringe benefits and perquisites as the Company may, in its discretion, from time-to-time provide.
(vii) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the plans, policies, programs and practices of the Company applicable to its senior executives.
(viii) Additional Payments. The amount of compensation payable to Executive pursuant to Sections 2(b)(i) and (ii) above shall be "grossed up" as necessary (on an after-tax basis) to compensate for any additional social security withholding taxes due as a result of Executive's shared employment by any subsidiary and/or affiliate of the Company, the Company, if applicable.
3. Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death or Disability during the Employment Period. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Executive's duties with the Company on a full-time basis for 90 consecutive days or on a total of 180 days in any 12-month period, in either case as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment during the Employment Period for Cause or without Cause. For purposes of this Agreement, "Cause" shall mean the occurrence of any one or more of the following events unless the Executive fully corrects the circumstances constituting Cause within a reasonable period of time after receipt of the Notice of Termination (as defined below):
(i) the Executive's willful and continued failure to substantially perform his duties with the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure after his issuance of a Notice of Termination for Good Reason), after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed his duties;
(ii) the Executive's willful commission of an act of fraud or dishonesty resulting in economic or financial injury to the Company;
(iii) the Executive's conviction of, or entry by the Executive of a guilty plea to the commission of a felony or a crime involving moral turpitude;
(iv) a willful breach by the Executive of his fiduciary duty to the Company which results in economic or other injury to the Company; or
(v) the Executive's willful and material breach of the Executive's covenants set forth in Section 9 hereof.
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For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel for the Executive, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of any of the conduct described in Section 3(b), and specifying the particulars thereof in detail; provided, that if the Executive is a member of the Board, the Executive shall not vote on such resolution nor shall the Executive be counted in determining the "entire membership" of the Board.
(c) Good Reason. The Executive's employment may be terminated by the Executive for Good Reason or by the Executive without Good Reason. For purposes of this Agreement, "Good Reason" shall mean the occurrence of any one or more of the following events without the Executive's prior written consent, unless the Company fully corrects the circumstances constituting Good Reason (provided such circumstances are capable of correction) prior to the Date of Termination (as defined below):
(i) the assignment to the Executive of any duties materially inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 2 of this Agreement, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;
(ii) the Company's reduction of the Executive's annual base salary or bonus opportunity, each as in effect on the date hereof or as the same may be increased from time to time;
(iii) the relocation of the Company's offices at which the Executive is principally employed (the "Principal Location") to a location more than thirty (30) miles from such location, or the Company's requiring the Executive to be based at a location more than thirty (30) miles from the Principal Location, except for required travel on the Company's business to an extent substantially consistent with the Executive's present business travel obligations;
(iv) the Company's failure to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 10 hereof; or
(v) the Company's failure to cure a material breach of its obligations under the Agreement after written notice is delivered to the Board by the Executive which specifically identifies the manner in which the Executive believes that the Company has breached its obligations under the Agreement and the Company is given a reasonable opportunity to cure any such breach.
(d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other parties hereto given in accordance with Section 12(c) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder.
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(e) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein (which date shall not be more than 30 days after the giving of such notice), as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination, (iii) if the Executive's employment is terminated by the Executive without Good Reason, the Date of Termination shall be the tenth day after the date on which the Executive notifies the Company of such termination, unless otherwise agreed by the Company and the Executive, and (iv) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death or Disability of the Executive, as the case may be.
4. Obligations of the Company upon Termination.
(a) Without Cause or For Good Reason. If, during the Employment Period, the Company shall terminate the Executive's employment without Cause or the Executive shall terminate his employment for Good Reason:
(i) The Executive shall be paid, in a single lump sum payment within 60 days after the Date of Termination, the aggregate amount of (A) the Executive's earned but unpaid Base Salary and accrued vacation pay through the Date of Termination, and any Annual bonus required to be paid to the Executive pursuant to Section 2(b)(ii) above for any fiscal year of the Company that ends on or before the Date of Termination to the extent not previously paid (the "Accrued Obligations"), and (B) two (the "Severance Multiple") times the sum of (x) the annual Base Salary in effect on the Termination Date plus (y) the average Annual Bonus received by the Executive for the three complete fiscal years (or such lesser number of years as the Executive has been employed by the Company) of the Company immediately prior to the Termination Date (the "Severance Amount");
(ii) At the time when annual bonuses are paid to the Company's other senior executives for the fiscal year of the Company in which the Date of Termination occurs, the Executive shall be paid an Annual Bonus in an amount equal to the product of (x) the amount of the Annual Bonus to which the Executive would have been entitled if the Executive's employment had not been terminated, and (y) a fraction, the numerator of which is the number of days in such fiscal year through the Date of Termination and the denominator of which is the total number of days in such fiscal year (a "Pro-Rated Annual Bonus");
(iii) For a period of years equal to the Severance Multiple, the Company shall continue to provide the Executive and the Executive's eligible family members with group health insurance coverage at least equal to that which would have been provided to them if the Executive's employment had not been terminated; provided, however, that if the Executive becomes re-employed with another employer and is eligible to receive group health insurance coverage under another employer's plans, the Company's obligations under this Section 4(a)(iii) shall be reduced to the extent comparable coverage is actually provided to the Executive and the Executive's eligible family members, and any such coverage shall be reported by the Executive to the Company.
(iv) The Company shall, at its sole expense and on an as-incurred basis, provide the Executive with outplacement services the scope and provider of which shall be reasonable and consistent with industry practice for similarly situated executives; and
(v) To the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any vested benefits and other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliates (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits").
Notwithstanding the foregoing, it shall be a condition to the Executive's right to receive the amounts provided for in Sections 4(a)(i)(B) and 4(a)(ii), (iii) and (iv) above that the Executive execute, deliver to the Company and not revoke a release of claims in substantially the form attached hereto as Exhibit A.
(b) For Cause or Without Good Reason. If the Executive's employment shall be terminated by the Company for Cause or by the Executive without Good Reason during the Employment Period, the Company shall have no further obligations to the Executive under this Agreement other than pursuant to Sections 7 and 8 hereof, and the obligation to pay to the Executive the Accrued Obligations in cash within 30 days after the Date of Termination and to provide the Other Benefits.
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(c) Death or Disability. If the Executive's employment is terminated by reason of the Executive's death or Disability during the Employment Period:
(i) The Accrued Obligations shall be paid to the Executive's estate or beneficiaries or to the Executive, as applicable, in cash within 30 days of the Date of Termination;
(ii) 100% of the Executive's annual Base Salary, as in effect on the Date of Termination, shall be paid to the Executive's estate or beneficiaries or to the Executive, as applicable, in cash within 30 days following the Date of Termination;
(iii) The Pro-Rated Annual Bonus shall be paid to the Executive's estate or beneficiaries or to the Executive, as applicable, at the time when annual bonuses are paid to the Company's other senior executives for the fiscal year of the Company in which the Date of Termination occurs;
(iv) For a period of twelve months following the Date of Termination, the Executive and the Executive's eligible family members shall continue to be provided with group health insurance coverage at least equal to that which would have been provided to them if the Executive's employment had not been terminated; provided, however, that if the Executive becomes re-employed with another employer and is eligible to receive group health insurance coverage under another employer's plans, the Company's obligations under this Section 4(d)(iv) shall be reduced to the extent comparable coverage is actually provided to the Executive and the Executive's eligible family members, and any such coverage shall be reported by the Executive to the Company; and
(v) The Other Benefits shall be paid or provided to the Executive on a timely basis.
5. Termination Upon a Change in Control. If a Change in Control (as defined herein) occurs during the Employment Period and the Executive's employment is terminated (a) by the Company without Cause or by the Executive for Good Reason, in each case within two (2) years after the effective date of the Change in Control or (b) by the Executive for any reason on or within 30 days after the one year anniversary of the effective date of the Change in Control, then the Executive shall be entitled to the payments and benefits provided in Section 4(a), subject to the terms and conditions thereof, except that for purposes of this Section 5, the Severance Multiple shall equal three (3). In addition, in the event of such a termination of the Executive's employment, all outstanding stock options, restricted stock and other equity awards granted to the Executive under any of the Company's equity incentive plans (or awards substituted therefore covering the securities of a successor company) shall become immediately vested and exercisable in full. For purposes of this Agreement, "Change in Control" shall mean the occurrence of any of the following events:
(i) the acquisition, directly or indirectly, by any "person" or "group" (as those terms are defined in Sections 3(a)(9), 13(d), and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") and the rules thereunder) of "beneficial ownership" (as determined pursuant to Rule 13d-3 under the Exchange Act) of securities entitled to vote generally in the election of directors ("voting securities") of the Company that represent 35% or more of the combined voting power of the Company's then outstanding voting securities, other than
(A) an acquisition of securities by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company or by any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company, or
(B) an acquisition of securities by the Company or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company, or
(C) an acquisition of securities pursuant to a transaction described in clause (iii) below that would not be a Change in Control under clause (iii), or
(D) any direct or indirect acquisition of securities by the Executive or his family, or any entity controlled thereby;
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Notwithstanding the foregoing, the following event shall not constitute an "acquisition" by any person or group for purposes of this clause (i): an acquisition of the Company's securities by the Company which causes the Company's voting securities beneficially owned by a person or group to represent 35% or more of the combined voting power of the Company's then outstanding voting securities; provided, however, that if a person or group shall become the beneficial owner of 35% or more of the combined voting power of the Company's then outstanding voting securities by reason of share acquisitions by the Company as described above and shall, after such share acquisitions by the Company, become the beneficial owner of any additional voting securities of the Company, then such acquisition shall constitute a Change in Control;
(ii) individuals who, as of the Effective Date, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election by the Company's shareholders, or nomination for election by the Board, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an election contest with respect to the election or removal of directors or other solicitation of proxies or consents by or on behalf of a person other than the Board;
(iii) the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company's assets or (z) the acquisition of assets or stock of another entity, in each case, other than a transaction
(A) which results in the Company's voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company's assets or otherwise succeeds to the business of the Company (the Company or such person, the "Successor Entity")) directly or indirectly, at least 50% of the combined voting power of the Successor Entity's outstanding voting securities immediately after the transaction, and
(B) after which no person or group beneficially owns voting securities representing 35% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (B) as beneficially owning 35% or more of combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; or
(iv) approval by the Company's shareholders of a liquidation or dissolution of the Company.
For purposes of clause (i) above, the calculation of voting power shall be made as if the date of the acquisition were a record date for a vote of the Company's shareholders, and for purposes of clause (iii) above, the calculation of voting power shall be made as if the date of the consummation of the transaction were a record date for a vote of the Company's shareholders.
6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy or practice provided by the Company and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.
7. Full Settlement. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and except as expressly provided, such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay as incurred (within 30 days following the Company's receipt of an invoice from the Executive), to the full extent permitted by law, all reasonable legal fees and expenses which the Executive or his beneficiaries may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive or his beneficiaries about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code. The preceding sentence shall not apply with respect to any such contest if the court having jurisdiction over such contest determines that the Executive's claim in such contest is frivolous or maintained in bad faith.
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8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment (the "Excise Tax Gross-Up Payment") in an amount such that, after payment by the Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Excise Tax Gross-Up Payment, the Executive retains an amount of the Excise Tax Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 8(a), if it shall be determined that the Executive is entitled to the Excise Tax Gross-Up Payment, but that the Parachute Value of all Payments does not exceed 110% of the Safe Harbor Amount, then no Excise Tax Gross-Up Payment shall be made to the Executive and the amounts payable under this Agreement shall be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable, shall be made by first reducing the payments under Section 4(a)(i), unless an alternative method of reduction is elected by the Executive, and in any event shall be made in such a manner as to maximize the Value of all Payments actually made to the Executive. For purposes of reducing the Payments to the Safe Harbor Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amount payable under this Agreement would not result in a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no amounts payable under the Agreement shall be reduced pursuant to this Section 8(a). The Company's obligation to make Excise Tax Gross-Up Payments under this Section 8 shall not be conditioned upon the Executive's termination of employment.
(b) Subject to the provisions of Section 8(c), all determinations required to be made under this Section 8, including whether and when an Excise Tax Gross-Up Payment is required, the amount of such Excise Tax Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by such nationally recognized accounting firm as may be selected by the Company and reasonably acceptable to the Executive (the "Accounting Firm"); provided, that the Accounting Firm's determination shall be made based upon "substantial authority" within the meaning of Section 6662 of the Code. The Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Excise Tax Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive, unless the Company obtains an opinion of outside legal counsel, based upon at least "substantial authority" within the meaning of Section 6662 of the Code, reaching a different determination, in which event such legal opinion shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Excise Tax Gross-Up Payments that will not have been made by the Company should have been made (the "Underpayment"), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies pursuant to Section 8(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Excise Tax Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 10 business days after the Executive is informed in writing of such claim. The Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which the Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that the Company desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the Company relating to such claim,
(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,
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(iii) cooperate with the Company in good faith in order effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 8(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that, if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties) imposed with respect to such advance or with respect to any imputed income in connection with such advance; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which the Excise Tax Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an Excise Tax Gross-Up Payment or an amount advanced by the Company pursuant to Section 8(c), the Executive becomes entitled to receive any refund with respect to the Excise Tax to which such Excise Tax Gross-Up Payment relates or with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of Section 8(c), if applicable) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 8(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Excise Tax Gross-Up Payment required to be paid.
(e) Notwithstanding any other provision of this Section 8, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Executive, all or any portion of any Excise Tax Gross-Up Payment, and the Executive hereby consents to such withholding.
(f) Any other liability for unpaid or unwithheld Excise Taxes shall be borne exclusively by the Company, in accordance with Section 3403 of the Code. The foregoing sentence shall not in any manner relieve the Company of any of its obligations under this Employment Agreement.
(g) Definitions. The following terms shall have the following meanings for poses of this Section 8:
(i) "Excise Tax" shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.
(ii) "Parachute Value" of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a "parachute payment" under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.
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(iii) A "Payment" shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.
(iv) The "Safe Harbor Amount" shall mean 2.99 times the Executive's "base amount," within the meaning of Section 280G(b)(3) of the Code.
(v) "Value" of a Payment shall mean the economic present value of a Payment as of the date of the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code.
9. Confidential Information and Non-Solicitation.
(a) In no event shall an asserted violation of the provisions of this Section 9 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. However, in recognition of the facts that irreparable injury will result to the Company in the event of a breach by the Executive of his obligations under Sections 9(a) and (b) of this Agreement, that monetary damages for such breach would not be readily calculable, and that the Company would not have an adequate remedy at law therefor, the Executive acknowledges, consents and agrees that in the event of such breach, or the threat thereof, the Company shall be entitled, in addition to any other legal remedies and damages available, to specific performance thereof and to temporary and permanent injunctive relief (without the necessity of posting a bond) to restrain the violation or threatened violation of such obligations by the Executive.
(b) The Employee shall, at all times during and subsequent to the Term, keep secret and retain in strictest confidence all confidential matters of the Company, and the "know-how", trade secrets, technical processes, inventions, equipment specifications, equipment designs, plans, drawings, research projects, confidential client lists, details of client, subcontractor or consultant contracts, pricing policies, operational methods, marketing plans and strategies, project development, acquisition and bidding techniques and plans, business acquisition plans, and new personnel acquisition plans of the Company and its subsidiaries and divisions (whether now known or hereafter learned by the Employee), except to the extent that (i) such information is generally available to the public without restriction, (ii) the Employee obtains confidentiality agreements with respect to such confidential information, (iii) the Employee is requested by the Board of Directors of the Company or a Committee thereof, or by the Chairman of the Company, to disclose such confidential information, (iv) such information is provided to a customer of the Company pursuant to a request received from such customer in the ordinary course of business, or (v) the Employee is under compulsion of either a court order or a governmental agency's or authority's inquiry, order or request to so disclose such information.
(c) Property of the Company.
(i) Except as otherwise provided herein, all lists, records and other non-personal documents or papers (and all copies thereof) relating to the Company and/or any of its subsidiaries or divisions, including such items stored in computer memories, on microfiche or by any other means, made or compiled by or on behalf of the Employee, or made available to the Employee, are and shall be the property of the Company, and shall be delivered to the Company on the date of termination of the Employee's employment with the Company, or sooner upon request of the Company at any time or from time to time.
(ii) All inventions, including any procedures, formulas, methods, processes, uses, apparatuses, patterns, designs, plans, drawings, devices or configurations of any kind, any and all improvements to them which are developed, discovered, made or produced, and all trade secrets and information used by the Company and/or its subsidiaries and divisions (including, without limitation, any such matters created or developed by the Employee during the term of this Agreement), shall be the exclusive property of the Company or the subject subsidiary, and shall be delivered to the Company or the subject subsidiary (without the Employee retaining any copies, components or records thereof) on the date of termination of the Employee's employment with the Company; provided, however, that nothing herein contained shall be deemed to grant to the Company any property rights in any inventions or other intellectual property which may at any time be developed by the Employee which is wholly unrelated to any business then engaged in or under development by the Company.
(d) The Employee shall not, at any time (whether during the term of this Agreement or at any time thereafter), directly or indirectly, for or on behalf of any business enterprise other than the Company and/or its subsidiaries and affiliates, solicit any employee of the Company or any of its subsidiaries to leave his or her employment with the Company or such subsidiary, or encourage any such employee to leave such employment, without the prior written approval of the Company in each instance.
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(e) Non-Competition. For so long as the Employee shall be receiving any compensation or remuneration under this Agreement, and for a further period of one (1) year thereafter, the Employee shall not, directly or indirectly, whether individually or as an employee, stockholder (other than the passive ownership of up to 5% of the capital stock of a publicly traded corporation), partner, joint venturer, agent or other representative of any other person, firm or corporation, engage or have any interest in any business (other than the Company or any of its subsidiaries or affiliates) which, in any country in which the Company or any of its subsidiaries or divisions does or solicits business during the Term, is engaged in or derives any revenues from performing any functionally equivalent services or marketing any functionally equivalent products as those services provided and products marketed by the Company or any of its subsidiaries or divisions during the Term.
(f) Severability of Covenants. The Employee acknowledges and agrees that the provisions of this Section 9 of this Agreement are (a) made in consideration of the premises and undertakings of the Company set forth herein, (b) made for good, valuable and adequate consideration received and to be received by the Employee, and (c) reasonable and necessary, in terms of the time, geographic scope and nature of the restrictions, for the protection of the Company and the business and good will thereof. It is intended that the provisions of this Section 9 be fully severable, and in the event that any of the foregoing restrictions, or any portion of the foregoing restrictions, shall be deemed contrary to law, invalid or unenforceable in any respect by any court or tribunal of competent jurisdiction, then such restrictions shall be deemed to be amended, modified and reduced in scope and effect, as to duration and/or geographic area, only to that extent necessary to render same valid and enforceable (and in such reduced form, such provisions shall then be enforceable), and any other of the foregoing restrictions shall be unaffected and shall remain in full force and effect.
(g) Equitable Remedies. The parties hereby acknowledge that, in the event of any breach or threatened breach by the Employee of the provisions of this Section 9, the Company will suffer irreparable harm and will not have an adequate remedy at law. Accordingly, in the event of any such breach or threatened breach, the Company may seek and obtain appropriate equitable relief to restrain or enjoin such breach or threatened breach and/or to compel compliance herewith.
(h) Trade Secrets. The Parties hereby agree and stipulate that any confidential information of the Parties shall be deemed a "trade secret" as that term is defined under the Economic Espionage Act of 1996 (the "Act"), and further agree and stipulate that the Parties by this Agreement have taken all reasonable steps under the Act to keep such information secret.
10. Successors.
(a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.
11. Payment of Financial Obligations. The payment or provision to the Executive by the Company of any remuneration, benefits or other financial obligations pursuant to this Agreement shall be allocated to the Company and, if applicable, any subsidiary and/or affiliate thereof from time to time.
12. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.
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(b) Arbitration. Except as set forth in Section 9(c) above, any disagreement, dispute, controversy or claim arising out of or relating to this Agreement or the interpretation of this Agreement or any arrangements relating to this Agreement or contemplated in this Agreement or the breach, termination or invalidity thereof shall be settled by final and binding arbitration administered by the America Arbitration Association in Boca Raton, Florida in accordance with the then existing American Arbitration Association Rules and Procedures for Employment Disputes. In the event of such an arbitration proceeding, the Executive and the Company shall select a mutually acceptable neutral arbitrator from among the American Arbitration Association panel of arbitrators. In the event the Executive and the Company cannot agree on an arbitrator, the Administrator of American Arbitration Association will appoint an arbitrator. Neither the Executive nor the Company nor the arbitrator shall disclose the existence, content, or results of any arbitration hereunder without the prior written consent of all parties. Except as provided herein, the Federal Arbitration Act shall govern the interpretation, enforcement and all proceedings. The arbitrator shall apply the substantive law (and the law of remedies, if applicable) of the state of Florida, or federal law, or both, as applicable, and the arbitrator is without jurisdiction to apply any different substantive law. The arbitrator shall have the authority to entertain a motion to dismiss and/or a motion for summary judgment by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure. The arbitrator shall render an award and a written, reasoned opinion in support thereof. Judgment upon the award may be entered in any court having jurisdiction thereof.
(c) Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive: at the Executive's most recent address on the records of the Company,
If to the Company: at the Company’s principal offices, attention of the Company’s Secretary and President.
or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective hen actually received by the addressee.
(d) Sarbanes-Oxley Act of 2002. Notwithstanding anything herein to the contrary, if the Company determines, in its good faith judgment, that any transfer or deemed transfer of funds hereunder is likely to be construed as a personal loan prohibited by Section 13(k) of the Exchange Act and the rules and regulations promulgated thereunder, then such transfer or deemed transfer shall not be made to the extent necessary or appropriate so as not to violate the Exchange Act and the rules and regulations promulgated thereunder.
(e) Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(f) Withholding. The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. In addition, notwithstanding any other provision of this Agreement, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Executive, all or any portion of any Excise Tax Gross-Up Payment, and the Executive hereby consents to such withholding.
(g) No Waiver. The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 3(c) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
(h) Entire Agreement. As of the Effective Date, this Agreement, together with any non-competition agreement between the parties, constitutes the final, complete and exclusive agreement between the Executive and the Company with respect to the subject matter hereof and replaces and supersedes any and all other agreements, offers or promises, whether oral or written, made to you by any related entity, or representative of the Company or the transactions related thereto. The Executive agrees that any such agreement, offer or promise between the Executive and Employer (or any representative thereof) is hereby terminated and will be of no further force or effect, and the Executive acknowledges and agrees that upon his execution of this Agreement, he will have no right or interest in or with respect to any such agreement, offer or promise. In the event that the Effective Date does not occur, this Agreement (including, without limitation, the immediately preceding sentence) shall have no force or effect.
(i) Counterparts. This Agreement may be executed simultaneously in two counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from the Board, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year written below.
Saddle Ranch Media, Inc.
A Nevada Corporation
By: _______________________________
Name: Timothy Peabody
Title: President
EXECUTIVE
_______________________________
Timothy Peabody
EFFECTIVE DATE:
Dated: April ____, 2018
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Exhibit 6.8
INDEMNIFICATION AGREEMENT
_____
by and between
Saddle Ranch Media, Inc.
and
Timothy Peabody
indemnitee
______
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INDEMNIFICATION AGREEMENT
_____
THIS AGREEMENT is entered into, effective as April __, 2018 of by and between Saddle Ranch Media, Inc., a Utah corporation (the “Company”), and Timothy Peabody, INDEMNITEE (“Indemnitee”).
WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims currently being asserted against directors and officers of corporations;
WHEREAS, the Certificate of Incorporation and Bylaws of the Company require the Company to indemnify and advance expenses to its directors and officers to the fullest extent permitted under Nevada law, and the Indemnitee has been serving and continues to serve as a director and/or officer of the Company in part in reliance on the Company’s Certificate of Incorporation and Bylaws; and
WHEREAS, in recognition of Indemnitee’s need for (i) substantial protection against personal liability based on Indemnitee’s reliance on the aforesaid Certificate of Incorporation and Bylaws, (ii) specific contractual assurance that the protection promised by the Certificate of Incorporation and Bylaws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of the Certificate of Incorporation and Bylaws or any change in the composition of the Company’s Board of Directors or acquisition transaction relating to the Company), and (iii) an inducement to provide effective services to the Company as a director and/or officer, the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent (whether partial or complete) permitted under Nevada law and as set forth in this Agreement, and, to the extent insurance is maintained, to provide for the continued coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies.
NOW, THEREFORE, in consideration of the above premises and of Indemnitee continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties agree as follows:
1. Certain Definitions:
(a) Board: the Board of Directors of the Company.
(b) Affiliate: any corporation or other person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified.
(c) Change in Control: shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, and other than any person holding shares of the Company on the date that the Company first registers under the Act or any transferee of such individual if such transferee is a spouse or lineal descendant of the transferee or a trust for the benefit of the individual, his spouse or lineal descendants), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the total voting power represented by the Company’s then outstanding Voting Securities, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other entity, other than a merger or consolidation that would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of transactions) of all or substantially all of the Company’s assets.
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(d) Expenses: any expense, liability, or loss, including attorneys’ fees, judgments, fines, ERISA excise taxes and penalties, amounts paid or to be paid in settlement, any interest, assessments, or other charges imposed thereon, any federal, state, local, or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this A greement, and all other costs and obligations, paid or incurred in connection with investigating, defending, being a witness in, participating in (including on appeal), or preparing for any of the foregoing in, any Proceeding relating to any Indemnifiable Event.
(e) Indemnifiable Event: any event or occurrence that takes place either prior to or after the execution of this Agreement, related to the fact that Indemnitee is or was a director or officer of the Company, or while a director or officer is or was serving at the request of the Company as a director, officer, employee, trustee, agent, or fiduciary of another foreign or domestic corporation, partnership, joint venture, employee benefit plan, trust, or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic corporation that was a predecessor corporation of the Company or of another enterprise at the request of such predecessor corporation, or related to anything done or not done by Indemnitee in any such capacity, whether or not the basis of the Proceeding is alleged action in an official capacity as a director, officer, employee, or agent or in any other capacity while serving as a director, officer, employee, or agent of the
Company, as described above.
(f) Independent Counsel: the person or body appointed in connection with Section 3.
(g) Proceeding: any threatened, pending, or completed action, suit, or proceeding or any alternative dispute resolution mechanism (including an action by or in the right of the Company), or any inquiry, hearing, or investigation, whether conducted by the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit, or proceeding, whether civil, criminal, administrative, investigative, or other.
(h) Reviewing Party: the person or body appointed in accordance with Section 3.
(i) Voting Securities: any securities of the Company that vote generally in the election of directors.
2. Agreement to Indemnify.
(a) General Agreement. In the event Indemnitee was, is, or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Proceeding by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee from and against any and all Expenses to the fullest extent permitted by law, as the same exists or may hereafter be amended or interpreted (but in the case of any such amendment or interpretation, only to the extent that such amendment or interpretation permits the Company to provide broader indemnification rights than were permitted prior thereto). The parties hereto intend that this Agreement shall provide for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Company’s Certificate of Incorporation, its Bylaws, vote of its shareholders or disinterested directors, or applicable law.
(b) Initiation of Proceeding. Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Proceeding initiated by Indemnitee against the Company or any director or officer of the Company unless (i) the Company has joined in or the Board has consented to the initiation of such Proceeding; (ii) the Proceeding is one to enforce indemnification rights under Section 5; or (iii) the Proceeding is instituted after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) and Independent Counsel has approved its initiation.
(c) Expense Advances. If so requested by Indemnitee, the Company shall advance (within ten business days of such request) any and all Expenses to Indemnitee (an “Expense Advance”). The Indemnitee shall qualify for such Expense Advances upon the execution and delivery to the Company of this Agreement which shall constitute an undertaking providing that the Indemnitee undertakes to repay such Expense Advances if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by the Company. Indemnitee’s obligation to reimburse the Company for Expense Advances shall be unsecured and no interest shall be charged thereon.
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(d) Mandatory Indemnification. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred in connection therewith.
(e) Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled.
(f) Prohibited Indemnification. No indemnification pursuant to this Agreement shall be paid by the Company on account of any Proceeding in which judgment is rendered against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of any federal, state, or local laws.
3. Reviewing Party. Prior to any Change in Control, the Reviewing Party shall be any appropriate person or body consisting of a member or members of the Board or any other person or body appointed by the Board who is not a party to the particular Proceeding with respect to which Indemnitee is seeking indemnification; after a Change in Control, the Independent Counsel referred to below shall become the Reviewing Party. With respect to all matters arising after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or under applicable law or the Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, the Company shall seek legal advice only from Independent Counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company or the Indemnitee (other than in connection with indemnification matters) within the last five years. The Independent Counsel shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent the Indemnitee should be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the Independent Counsel and to indemnify fully such counsel against any and all expenses (including attorneys’ fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the engagement of Independent Counsel pursuant hereto.
4. Indemnification Process and Appeal.
(a) Indemnification Payment. Indemnitee shall be entitled to indemnification of Expenses, and shall receive payment thereof, from the Company in accordance with this Agreement as soon as practicable after Indemnitee has made written demand on the Company for indemnification, unless the Reviewing Party has given a written opinion to the Company that Indemnitee is not entitled to indemnification under applicable law.
(b) Suit to Enforce Rights. Regardless of any action by the Reviewing Party, if Indemnitee has not received full indemnification within thirty days after making a demand in accordance with Section 4(a), Indemnitee shall have the right to enforce its indemnification rights under this Agreement by commencing litigation in any court in the State of California or the State of Nevada having subject matter jurisdiction thereof seeking an initial determination by the court or challenging any determination by the Reviewing Party or any aspect thereof. The Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party not challenged by the Indemnitee shall be binding on the Company and Indemnitee. The remedy provided for in this Section 4 shall be in addition to any other remedies available to Indemnitee at law or in equity.
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(c) Defense to Indemnification, Burden of Proof, and Presumptions. It shall be a defense to any action brought by Indemnitee against the Company to enforce this Agreement (other than an action brought to enforce a claim for Expenses incurred in defending a Proceeding in advance of its final disposition) that it is not permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. In connection with any such action or any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proving such a defense or determination shall be on the Company. Neither the failure of the Reviewing Party or the Company (including its Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action by Indemnitee that indemnification of the claimant is proper under the circumstances because Indemnitee has met the standard of conduct set forth in applicable law, nor an actual determination by the Reviewing Party or Company (including its Board, independent legal counsel, or its stockholders) that the Indemnitee had not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. For purposes of this Agreement, the termination of any claim, action, suit, or proceeding, by judgment, order, settlement (whether with or without court approval), conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law.
5. Indemnification for Expenses Incurred in Enforcing Rights. The Company shall indemnify Indemnitee against any and all Expenses that are incurred by Indemnitee in connection with any action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or under applicable law or the Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, and/or (ii) recovery under directors’ and officers’ liability insurance policies maintained by the Company, but only in the event that Indemnitee ultimately is determined to be entitled to such indemnification or insurance recovery, as the case may be. In addition, the Company shall, if so requested by Indemnitee, advance the foregoing Expenses to Indemnitee, subject to and in accordance with Section 2(c).
6. Notification and Defense of Proceeding.
(a) Notice. Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission so to notify the Company will not relieve the Company from any liability that it may have to Indemnitee, except as provided in Section 6(c).
(b) Defense. With respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof, the Company will be entitled to participate in the Proceeding at its own expense and except as otherwise provided below, to the extent the Company so wishes, it may assume the defense thereof with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee of its election to assume the defense of any Proceeding, the Company shall not be liable to Indemnitee under this Agreement or otherwise for any Expenses subsequently incurred by Indemnitee in connection with the defense of such Proceeding other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ legal counsel in such Proceeding, but all Expenses related thereto incurred after notice from the Company of its assumption of the defense shall be at Indemnitee’s expense unless: (i) the employment of legal counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee has reasonably determined that there may be a conflict of interest between Indemnitee and the Company in the defense of the Proceeding, (iii) after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control), the employment of counsel by Indemnitee has been approved by the Independent Counsel, or (iv) the Company shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which cases all Expenses of the Proceeding shall be borne by the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which Indemnitee shall have made the determination provided for in (ii), (iii) and (iv) above.
(c) Settlement of Claims. The Company shall not be liable to indemnify Indemnitee under this Agreement or otherwise for any amounts paid in settlement of any Proceeding effected without the Company’s written consent, such consent not to be unreasonably withheld; provided, however, that if a Change in Control has occurred (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control), the Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if the Independent Counsel has approved the settlement. The Company shall not settle any Proceeding in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent. The Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial award if the Company was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action; the Company’s liability hereunder shall not be excused if participation in the Proceeding by the Company was barred by this Agreement.
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7. Establishment of Trust. In the event of a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) the Company shall, upon written request by Indemnitee, create a Trust for the benefit of the Indemnitee and from time to time upon written request of Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for, participating in, and/or defending any Proceeding relating to an Indemnifiable Event. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by the Independent Counsel. The terms of the Trust shall provide that (i) the Trust shall not be revoked or the principal thereof invaded without the written consent of the Indemnitee, (ii) the Trustee shall advance, within ten business days of a request by the Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust under the same circumstances for which the Indemnitee would be required to reimburse the Company under Section 2(c) of this Agreement), (iii) the Trust shall continue to be funded by the Company in accordance with the funding obligation set forth above, (iv) the Trustee shall promptly pay to the Indemnitee all amounts for which the Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise, and (v) all unexpended funds in the Trust shall revert to the Company upon a final determination by the Independent Counsel or a court of competent jurisdiction, as the case may be, that the Indemnitee has been fully indemnified under the terms of this Agreement. The Trustee shall be chosen by the Indemnitee. Nothing in this Section 7 shall relieve the Company of any of its obligations under this Agreement. All income earned on the assets held in the Trust shall be reported as income by the Company for federal, state, local, and foreign tax purposes. The Company shall pay all costs of establishing and maintaining the Trust and shall indemnify the Trustee against any and all expenses (including attorneys’ fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the establishment and maintenance of the Trust.
8. Non-Exclusivity. The rights of Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company’s Certificate of Incorporation, Bylaws, applicable law, or otherwise; provided, however, that this Agreement shall supersede any prior indemnification agreement between the Company and the Indemnitee. To the extent that a change in applicable law (whether by statute or judicial decision) permits greater indemnification than would be afforded currently under the Company’s Certificate of Incorporation, Bylaws, applicable law, or this Agreement, it is the intent of the parties that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change.
9. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing general and/or directors’ and officers’ liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director or officer.
10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any Affiliate of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors, or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, or such longer period as may be required by state law under the circumstances. Any claim or cause of action of the Company or its Affiliate shall be extinguished and deemed released unless asserted by the timely filing and notice of a legal action within such period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, the shorter period shall govern.
11. Amendment of this Agreement. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed by the party against whom enforcement of the waiver is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.
12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.
13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise received payment (under any insurance policy, Bylaw, or otherwise) of the amounts otherwise indemnifiable hereunder.
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14. Binding Effect. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation, or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity pertaining to an Indemnifiable Event even though he may have ceased to serve in such capacity at the time of any Proceeding.
15. Severability. If any provision (or portion thereof) of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of this Agreement containing any provision held to be invalid, void, or otherwise unenforceable, that is not itself invalid, void, or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, void, or unenforceable.
16. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California applicable to contracts made and to be performed in such State without giving effect to its principles of conflicts of laws.
17. Notices. All notices, demands, and other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed, postage prepaid, certified or registered mail, return receipt requested, and addressed to the Company at:
Saddle Ranch Media, Inc.
3609 Hammerkop Drive N.
Las Vegas, NV 89084
and to Indemnitee at:
Timothy Peabody
3609 Hammerkop Drive N.
Las Vegas, NV 89084
Notice of change of address shall be effective only when given in accordance with this Section. All notices complying with this Section shall be deemed to have been received on the date of hand delivery or on the third business day after mailing.
18. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day specified above.
Company
Saddle Ranch Media, Inc.
By:________________________
Indemnitee
___________________________
Timothy Peabody
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Exhibit 12.1
John E. Lux, Esq.
Attorney at Law
1629 K Street, Suite 300
Washington, DC 20006
(202) 780-1000
Admitted in Maryland and the District of Columbia
July 9, 2018
Board of Directors
Saddle Ranch Media, Inc.
5020 Campus Drive
Newport Beach, CA 92660
Gentlemen:
I have acted, at your request, as special counsel to Saddle Ranch Media, Inc., a Utah corporation, (“Saddle Ranch Media, Inc.”) for the purpose of rendering an opinion as to the legality of 1,000,000,000 shares of Saddle Ranch Media, Inc. common stock, par value $0.0001 per share to be offered and distributed by Saddle Ranch Media, Inc. (the “Shares”), pursuant to an Offering Statement to be filed under Regulation A of the Securities Act of 1933, as amended, by Saddle Ranch Media, Inc. with the U.S. Securities and Exchange Commission (the "SEC") on Form 1-A, for the purpose of registering the offer and sale of the Shares (“Offering Statement”).
For the purpose of rendering my opinion herein, I have reviewed statutes of the State of Utah, to the extent I deem relevant to the matter opined upon herein, certified or purported true copies of the Articles of Incorporation of Saddle Ranch Media, Inc. and all amendments thereto, the By-Laws of Saddle Ranch Media, Inc., selected proceedings of the board of directors of Saddle Ranch Media, Inc. authorizing the issuance of the Shares, certificates of officers of Saddle Ranch Media, Inc. and of public officials, and such other documents of Saddle Ranch Media, Inc. and of public officials as I have deemed necessary and relevant to the matter opined upon herein. I have assumed, with respect to persons other than directors and officers of Saddle Ranch Media, Inc., the due and proper election or appointment of all persons signing and purporting to sign the documents in their respective capacities, as stated therein, the genuineness of all signatures, the conformity to authentic original documents of the copies of all such documents submitted to me as certified, conformed and photocopied, including the quoted, extracted, excerpted and reprocessed text of such documents.
Based upon the review described above, it is my opinion that the Shares are duly authorized and when, as and if issued and delivered by Saddle Ranch Media, Inc. against payment therefore, as described in the offering statement, will be validly issued, fully paid and non-assessable.
I have not been engaged to examine, nor have I examined, the Offering Statement for the purpose of determining the accuracy or completeness of the information included therein or the compliance and conformity thereof with the rules and regulations of the SEC or the requirements of Form 1-A, and I express no opinion with respect thereto. My forgoing opinion is strictly limited to matters of Utah corporation law; and, I do not express an opinion on the federal law of the United States of America or the law of any state or jurisdiction therein other than Utah, as specified herein.
I hereby consent to the filing of this opinion as Exhibit 12.1 to the Offering Statement and to the reference to our firm under the caption “Legal Matters” in the Offering Circular constituting a part of the Offering Statement. We assume no obligation to update or supplement any of the opinion set forth herein to reflect any changes of law or fact that may occur following the date hereof.
Very truly yours,
/s/ John E. Lux
John E. Lux