Item 1.01 Entry Into a Material Definitive Agreement
Execution of Joint Cooperation Agreement with Pilot Media
Limited
On December 14, 2007, ITonis Inc. (“we” or the “Company”)
executed a binding, definitive joint cooperation agreement (the “Joint
Cooperation Agreement”) with Beijing Lushi (SDTV) Pilot Media Co., Ltd.
(“Pilot Media”), a company organized and validly existing under the
laws of the Peoples Republic of China (“PRC”). The following summary
of the joint cooperation does not purport to be complete and is qualified in
its entirety by reference to the Joint Cooperation Agreement (titled flOw TV
Joint Cooperation Contract), a copy of which is attached as
Exhibit 10.1
to this Current Report on Form 8-K.
The Joint Cooperation Agreement establishes an online
television network platform in China. Under the joint cooperation, Pilot Media
is responsible for providing the television network platform, assembling the
necessary licenses and permits and operational management of the joint
cooperation and the Company is responsible for financing, business development
and intellectual property. The Company is required to raise $15,000,000 by June
1, 2008, for the implementation of the internet television platform. The Company
has operational control of the joint cooperation.
Material terms of this agreement include the following:
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The stated objectives of the Joint Cooperation Agreement are to strengthen
the economic and technical cooperation between the two parties and sell a
complete Internet television platform solution (the “IPTV Platform”) and to
exploit the IPTV Platform throughout the PRC.
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The business scope of the joint cooperation is to create a robust IPTV
platform for distribution of television programming over the Internet
throughout the PRC, to market and sell the IPTV Platform throughout the PRC
and to maximize revenues by creating innovative economic sales and advertising
models for the IPTV Platform.
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An initial investment of $15,000,000 is required, which is required to be
contributed by us by no later than June 1, 2008.
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Pilot Media will not be required by contribute any cash and will hold a 40%
interest in the Joint Cooperation;
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We will hold a 60% interest in the Joint Cooperation, provided that we will
allocate an interest in the Joint Cooperation through the issuance of shares
of our common stock to the management of Pilot Media.
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Pilot Media’s management will ultimately hold a 20% interest in the Joint
Cooperation by virtue of owning a 10% interest in ITonis.
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Pilot Media will be obligated to secure certain agreed upon licenses for
the Joint Cooperation, including a business license, an Internet content
provide license, a network culture operation license and a information network
video/ audio program license. These licenses must be obtained within 100 days
of the execution of the Joint Cooperation Agreement. In addition, Pilot Media
will be obligated to file applications in connection with the establishment of
the business of the Joint Cooperation and employee local personnel as required
for the operation of the business of the Joint Cooperation.
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We are obligated to pay a deposit of $150,000, which was paid on January
25, 2008. The deposit will be returned to us if the licenses are not obtained
within the 100 day period from the execution of the agreement. If the licenses
are obtained within this period, the deposit will belong to Pilot Media and
will be applied towards the $15,000,000 investment amount if the investment
amount is raised by June 1, 2008.
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We have agreed to provide equipment and technology for the IPTV Platform,
manage matters that the Joint Cooperation may prescribe (such as equipment
purchases abroad) and develop IPTV content, license content and create an
advertising based revenue generator for the IPTV Platform.
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We have agreed to provide a license of the technology for the IPTV Platform
to the Joint Cooperation on an exclusive basis within China, and a
non-exclusive basis with respect to the rest of the world.
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The Joint Cooperation will be governed by a supervisory committee
consisting of seven supervisors, four who will be nominated by us and three
who will be nominated by Pilot Media.
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The net profit of the Joint Cooperation will be divided between Pilot Media
and us, with Pilot Media receiving 40% and us receiving 60%. Of the amount
that we receive, 20% will ultimately be allocated to the management of Pilot
Media through shares of ITonis that are to be acquired by management of Pilot
Media.
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The Joint Cooperation shall cover a term of 20 years.
There is no assurance that Pilot Media will be able to obtain
the required licenses and permits, nor that the Company will be able to raise
the $15,000,000 it is required to raise for the implementation of the internet
television platform.
Execution of Share Purchase Agreement with Niu Zhengping and
Wu Jiping, individually
On January 15, 2008, the Company executed a binding, definitive
share purchase agreement (the “Beijing Share Purchase Agreement”)
with Niu Zhengping and Wu Jiping, individually (“Sellers”) for the
acquisition of their company, Beijing Tuo Jiang Culture Development Ltd. (“BTJCD”),
a company organized and validly existing under the laws of the PRC. The following
summary of the Beijing Share Purchase Agreement does not purport to be complete
and is qualified in its entirety by reference to the Share Purchase Agreement,
a copy of which is attached as
Exhibit 10.2
to this Current Report on
Form 8-K.
Under the Joint Cooperation Agreement, the Company must utilize
a Chinese subsidiary to operate in the PRC. The lead time for creating a new
company in the PRC is approximately six months, while the lead time for the
acquisition of an existing company is three months. Therefore, the Company
decided to acquire an existing company. The Sellers agreed to sell BTJCD in
exchange for 1,000,000 shares of our common stock, and $500,000 cash. Among
BTJCD’s assets are $300,000 in cash, made immediately available to the Company
for use in China for Company purposes, which is prior to the expected closing of
the purchase of BTJCD on or about June 1, 2008.
There is no assurance that the acquisition of BTJCD will be
completed by June 1, 2008, due to the number of regulatory approvals required in
the PRC.
Acquisition of Aquos Media Limited
On January 21, 2008, we entered into an amended and restated share purchase agreement (the “Amended Share Purchase Agreement”) with iOcean Media Limited (“iOcean”) and Aquos Media Limited (“Aquos”), a wholly owned
subsidiary of iOcean pursuant to which we agreed to amended and restated terms for our acquisition of Aquos. The agreement replaces and supersedes the original share purchase agreement that we entered into with iOcean and Aquos on October 23, 2007
(the “Original Share Purchase Agreement”). Under the Original Share Purchase Agreement, we agreed to purchase all of the issued and outstanding share capital of Aquos in consideration of the issue to iOcean of 70,340,800 shares of our
common stock. We disclosed the completion of this acquisition and the issuance of these shares on our Current Report on Form 8-K filed with the Securities and Exchange Commission on October 29, 2007. Under the terms of the Amended Share Purchase
Agreement, we have agreed that the acquisition of Aquos will be completed in consideration for the issuance of 16,138,370 shares of our common stock. We agreed with iOcean that the acquisition of Aquos would complete on January 29, 2008, not October
26, 2007, as previously disclosed. We further agreed that the Original Share Purchase Agreement was replaced and superseded in whole by the Amended Share Purchase Agreement. The issuance of 70,340,800 shares to iOcean contemplated under the
Original Share Purchase Agreement were not in fact issued.
Thomas Neal Roberts, Chief Executive Officer – Employment Agreement
On January 2nd, 2008, we finalized and entered into a new employment agreement (the “Employment Agreement”) with Mr. Thomas Neal Roberts, our president, chief executive officer and chief financial officer and a director of the Company,
with respect to his appointment as our chief executive officer. The Employment Agreement is dated as of January 2, 2008 (the “Effective Date”). The following summary of the Employment Agreement does not purport to be complete and is
qualified in its entirety by reference to the Employment Agreement, a copy of which is attached as
Exhibit 10.4
to this Current Report on Form 8-K.
Mr. Roberts was appointed as a director of the Company and as president, chief executive officer, chief financial officer and secretary on July 2, 2007. Mr. Roberts appointment as our director and officer and the negotiation with Mr. Roberts
regarding the finalization of his employment agreement with the Company were reported in our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 9, 2007. On September 6, 2007, an employment agreement was executed
between the Company and Mr. Roberts, and was effective through December 31, 2007, when it was superseded by the new employment agreement. The earlier employment agreement was reported in our Current Report on Form 8-K filed with the Securities and
Exchange Commission on September 6, 2007.
Pursuant to the terms of the Employment Agreement, Mr. Roberts will serve our chief executive officer and as chief executive officer of all of our subsidiaries. Mr. Roberts will perform such duties and responsibilities as our board of
director’s may from time to time reasonably determine and assign as is customarily performed by persons in an executive position. A more detailed description of Mr. Robert’s job responsibilities is attached as Exhibit “A” to the
Employment Agreement. Mr. Roberts will report directly to our board of directors. Mr. Roberts has agreed to devote, on an as-needed basis, all necessary time, energy, knowledge, skill and reasonably best efforts to the business of the Company,
however, Mr. Roberts is permitted to have limited involvement with outside business ventures which do not conflict with the business of the Company. Mr. Roberts will be based in Beijing.
In consideration for Mr. Robert’s services, we have agreed
to:
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pay Mr. Roberts a base salary in the amount of $300,000 per year, less
applicable payroll deductions and tax withholdings, payable in accordance with
the then-current payroll policies of the Company during Mr. Roberts employment
period,
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issue to Mr. Roberts up to 25,000,000 shares of common stock of the Company
in a combination of option grants and share grants, pursuant to a separate
stock and option grant agreements (each, a “Share and Option Grant
Agreement”). It is anticipated that the exercise of any stock options and the
grant of any stock awards will be subject to vesting based on the achievement
of specified milestones based on the Company’s business plan. Negotiations
regarding the stock and option grants and strike price are ongoing and are
anticipated to be concluded by March 1, 2008. We will file an additional
Current Report on Form 8-K disclosing these agreements once they have been
concluded.
In addition, we have agreed to reimburse Mr. Roberts for all
reasonable business expenses incurred by Mr. Roberts during the course of his
employment.
The term of Mr. Robert’s employment shall commence from the
Effective Date through to the third anniversary of the Effective Date and may be
extended by mutual written agreement of the parties. We are entitled to
terminate the Employment Agreement for cause, as defined in the Employment
Agreement, which includes, without limitation, failure of Mr. Roberts to perform
his material duties or a material breach of the material terms of the agreement
by Mr. Roberts. We will be entitled to terminate the Employment Agreement
without cause at any time after the first year of the Employment Agreement. If
we terminate the Employment Agreement without cause or if Mr. Roberts terminates
the Employment Agreement for “good reason”, as defined in the Employment
Agreement, we will be obligated to pay to Mr. Roberts an amount equal to 90 days
base salary, in addition to unpaid or accrued salary and bonus payments to the
date of termination.
Lawrence Haber, Senior Vice President and General Counsel–
Employment Agreement
On January 2nd, 2008, we finalized and entered into an
employment agreement (the “Employment Agreement”) with Mr. Lawrence Haber with
respect to his employment as our senior vice-president and general counsel. The
Employment Agreement is dated as of January 2, 2008 (the “Effective Date”). The
following summary of the Employment Agreement does not purport to be complete
and is qualified in its entirety by reference to the Employment Agreement, a
copy of which is attached as
Exhibit 10.5
to this Current Report on Form
8-K.
Mr. Haber has also been appointed as our corporate secretary
effective August 27, 2007. On September 6, 2007, an employment agreement was
executed between the Company and Mr. Haber, and was effective through December
31, 2007, when it was superseded by the new employment agreement. The earlier
employment agreement was reported in our Current Report on Form 8-K filed with
the Securities and Exchange Commission on September 6, 2007.
Pursuant to the terms of the Employment Agreement, Mr. Haber
will serve our senior vice-president and general counsel and as senior
vice-president and general counsel of all of our subsidiaries. Mr. Haber will
perform such duties and responsibilities as our chief executive officer may from
time to time reasonably determine and assign as is customarily performed by
persons in such an executive position. A more detailed description of Mr.
Haber’s job responsibilities is attached as Exhibit “A” to the Employment
Agreement. Mr. Haber will report directly to our chief executive officer. Mr.
Haber has agreed to devote, on an as-needed basis, all necessary time, energy,
knowledge, skill and reasonably best efforts to the business of the Company,
however, Mr. Haber is permitted to continue his law practice and
limited involvement with outside business ventures which do not
conflict with the business of the Company. Mr. Haber will be based in
Florida.
In consideration for Mr. Haber’s services, we have agreed
to:
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pay Mr. Haber a base salary in the amount of $200,000 per year, less
applicable payroll deductions and tax withholdings, payable in accordance with
the then-current payroll policies of the Company during Mr. Haber employment
period,
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issue to Mr. Haber up to 10,000,000 shares of common stock of the Company
in a combination of option grants and share grants, pursuant to a separate
stock and option grant agreements (each, a “Share and Option Grant
Agreement”). It is anticipated that the exercise of any stock options and the
grant of any stock awards will be subject to vesting based on the achievement
of specified milestones based on the Company’s business plan. Negotiations
regarding the stock and option grants and strike price are ongoing and are
anticipated to be concluded by March 1, 2008. We will file an additional
Current Report on Form 8-K disclosing these agreements once they have been
concluded.
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In addition, we have agreed to reimburse Mr. Haber for all reasonable
business expenses incurred by Mr. Haber during the course of his employment.
The term of Mr. Haber’s employment shall commence from the
Effective Date through to the third anniversary of the Effective Date and may be
extended by mutual written agreement of the parties. We are entitled to
terminate the Employment Agreement for cause, as defined in the Employment
Agreement, which includes, without limitation, failure of Mr. Haber to perform
his material duties or a material breach of the material terms of the agreement
by Mr. Haber. We will be entitled to terminate the Employment Agreement without
cause at any time after the first year of the Employment Agreement. If we
terminate the Employment Agreement without cause or if Mr. Haber terminates the
Employment Agreement for “good reason”, as defined in the Employment Agreement,
we will be obligated to pay to Mr. Haber an amount equal to 90 days base salary,
in addition to unpaid or accrued salary and bonus payments to the date of
termination.