U.S SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
(Mark One)
/X/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the fiscal year ended DECEMBER 31, 1996
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-27256
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in Its charter)
DELAWARE 13- 3858917
- ------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2200 Corporate Boulevard, Boca Raton, Florida 33431
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(561) 995-2190
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
None.
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $.001 PAR VALUE
-----------------------------
(Title of Class)
Check whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes / / No /X/
(CONTINUED NEXT PAGE)
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. / /
<PAGE>
State issuer's revenues for its most recent fiscal year: The issuer's
revenues for the fiscal year ended December 31, 1996 were $454,656.
The aggregate market value at June 17, 1997 of shares of the
registrant's Common Stock, $.001 par value per share (based upon the closing
price of $3.50 per share of such stock on the Nasdaq OTC Bulletin Board on such
date), held by non-affiliates of the Registrant was approximately $8,152,305.
Solely for the purposes of this calculation, shares held by directors and
officers of the Registrant have been excluded. Such exclusion should not be
deemed a determination or an admission by the Registrant that such individuals
are, in fact, affiliates of the Registrant.
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: At June 17, 1997, there
were outstanding 9,540,187 shares of the Registrant's Common Stock, $.001 par
value.
Transitional Small Business Disclosure Format (check one):
Yes / / No /X/
-1-
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
Atlantic International Entertainment, Ltd. (the "Company"), a Delaware
corporation, develops and markets Internet-centric products and services in the
entertainment, medical, information and other industries. The Company (formerly,
Cine-Chrome Laboratories, Inc., Medco Health Care Services, Inc., Cine-Chrome
Video Corp., Network 4, Inc. and CEEE Group Corporation) was incorporated in the
state of Colorado in October 1939 under the name "Pacific Gold, Inc." to explore
and develop gold and silver ore prospects and to operate mining and milling
facilities. The Company conducted limited mining activities until operations
ceased. The Company then sought new business opportunities as a development
stage entity.
In 1973 the Company changed its name to Cine-Chrome Laboratories, Inc.
and operated a film processing lab in California. From 1984 until June 1994, the
Company did not conduct any operations, transactions or business activities. In
June 1994, the Company's investment banking operations included acting as a
"finder" with respect to U.S. public companies and providing advisory services
concerning corporate structure and raising capital. Beginning in 1996, the
Company has concentrated its business operations primarily on the manufacturing,
marketing and development of products and services via the Internet and the
World Wide Web (the "Web"). These products and services are focused on two major
industries which include Internet gaming and the international distribution of
medical products and equipment.
Prior to July 16, 1996, the Company had no operations other than
searching for a business combination. In July 1996, the Company consummated a
share exchange pursuant to a Exchange of Stock Agreement and Plan of
Reorganization with Atlantic International Capital Ltd., a Delaware corporation
("Atlantic Capital") and the former stockholders of Atlantic Capital (the "Stock
Exchange Agreement"). As a result of the Stock Exchange Agreement, the business
of Atlantic Capital became the business of the Company.
On November 22, 1996, the Company merged with and into its wholly-owned
Delaware subsidiary, Atlantic International Entertainment, Ltd., whereby the
Company, among other things, (i) changed its state of incorporation to Delaware;
(ii) increased its authorized capital stock to 110,000,000 (100,000,000 shares
of common stock, $.001 per share (the "Common Stock") and 10,000,000 shares of
preferred stock, $.001 par value per share (the "Preferred Stock")); and (iii)
effectuated a 1 for 3 share exchange. All shares referred to herein (unless
specifically stated otherwise) refer to post split amounts.
The Company acquired the major assets of RAM Associates, Inc. ("RAM")
pursuant to a Purchase and Sale Agreement dated April 15, 1996. The RAM assets
acquired by the Company included COMMUNITY CASINO and REALSPORTS(TM) which
formed the substantive foundation of the
<PAGE>
Company's current gaming software products. Other products acquired from RAM
included HOTEL HOTLINKS(TM) and CLUB INTERACTIVE and the forerunner program of
ATLANTIC INTERNATIONAL MEDICAL and THE ORIGINAL AS SEEN ON TV.
The Company's executive offices are located at 2200 Corporate Blvd.,
Suite 317, Boca Raton, Florida 33431. The telephone number of the Company is
(561) 995-2190. The Company maintains a home page on the Internet at
http://www.aieltd.com.
PRODUCTS AND SERVICES
INTERNET GAMING AND SPORTS WAGERING PRODUCTS
INTERNET CASINO EXTENSION(TM)
The Company is a developer and world wide marketer of private network
and Internet gaming and wagering products including its proprietary flagship
product, Internet Casino Extension(TM) or "ICE(TM)." The Company licenses these
products to virtual casino operators and sports book businesses. Trial
operations, under the name ARUBA PALMS CASINO and SPORTSBOOK, began in October,
1996. At the conclusion of the trial period, the name of this operation was
changed to EMERALD PALMS CASINO and SPORTSBOOK and it now serves as the
demonstration site for marketing of ICE(TM) to Internet casinos, hotel/casinos,
clubs and casino ships. It is availabLE on the Web at
http://www.emeraldpalms.com.
The Company has also added bingo, pull-tab slots and lottery to the
base ICE(TM) produCT to create a system specifically targeted to Indian casinos.
This product package, also called Indian Casino Extension(TM), can be seen at
http://www.whisperingwinds.com. Another variations to ICE(TM) aimed at a
specific market includes the INTERNET CHARITY EXTENSION(TM).
The Company has entered into three license agreements for the ICE(TM)
product. In December 1996, the Company signed a licensing agreement for its
ICE(TM) product with Patroon Agency ("Patroon"), an offshore gaming company
based in Curacao. Patroon will operate a casino called FIRSTPRIZE CASINO &
SPORTSBOOK which is currently available for free contest play. The casino is
expected to commence live wagering in June 1997. The contract provides for a
perpetual single user license for $450,000, $30,000 of which was paid to the
Company on November 22, 1996, and the remainder of which is payable in either
(i) 48 equal monthly payments, or (ii) 50% of the net win from the ICE(TM)
Internet Casino, at Patroon's option, upon installation of the ICE(TM) product.
In addition, the Company will receive a fee of $2,000 per month for technical
support and product upgrades until the balance of the payment is paid and then
$1,000 per month for the duration of the agreement.
In March 1997, the Company entered into a licensing agreement for its
ICE(TM) product with THIRDAGE, the ICE(TM) based Casablanca extension to the
Wyndham Aruba Beach Resort & Casino in Aruba, which is expected to begin live
wagering in July 1997. The contract provides for a single user perpetual license
for $450,000 payable as follows: (i) $15,000 was paid to the
-2-
<PAGE>
Company on June 11, 1997 with an additional $15,000 payable by June 25, 1997,
(ii) $20,000 is payable upon installation of the ICE(TM) product and the
commencement of the casino's operation as a revenue producing Internet casino,
and (iii) $400,000 to be received over time based on three percent (3%) of the
gross revenue of the ICE(TM) Internet casino operated by THIRDAGE, which shall
not exceed $10,000 per month. There is also an additional fee of $2,000 per
month for technical support and upgrades. THIRDAGE was granted the option of
becoming a value added reseller of the Company's ICE(TM) licenseS.
The Company's third licensing agreement for its ICE(TM) product was
entered into with Atlantic International Entertainment, N.V., which was
subsequently acquired by Australian Advisors in December 1996. See Recent
Developments. This casino is expected to open in Curacao in July 1997. The
contract provides for a single user perpetual license for $450,000 payable at a
minimum rate of $6,000 per month beginning 180 days after the commencement of
the casino's operation. Payments will commence not later than August 1, 1997 and
payment in full is due by November 15, 1999. The Company will receive an
additional $2,000 per month for technical support and upgrades for 48 months
beginning on August 1, 1997.
HOTEL HOTLINKS(TM):
The Company also actively markets the Hotel HotLinks(TM) system which
is a variation and expansion of ICE(TM) which has features specific to hotel
guests such as in-room services, Internet access and in-room advertising of
local goods and services. The product uses set top boxes and infrared remote
controls to allow hotel guests to access gaming and the additional services
mentioned above. As of the date hereof, the Company has not consummated any
sales of the Hotel HotLinks(TM) system.
The set top boxes used in the Hotel Hotlinks(TM) product permit the use
of smart cards for identification and other purposes. This same hardware/smart
card technology will be employed in other products which the Company intends to
develop throughout the year ending December 31, 1997.
WEBSPORTS(TM)
The Company licenses the webSports(TM) sportsbook software system to
virtual casino operators and sports book businesses. Unlike casinos, sports
books require no "play value". A player simply needs to know the "line" and have
the ability to place the bet. The client needs only a standard Web to play.
However, the server requires sophisticated database, accounting and auditing
systems.
In December 1996, the Company signed a licensing agreement to provide
its webSports(TM) system to Carib Sportsbook Inc. ("Carib"), an offshore gaming
company based in Antigua, West Indies. The agreement provides for a perpetual
single user license which may not be shared or used at more than one location.
The fee for this product is $150,000 payable as follows: (i)
-3-
<PAGE>
$3,000 was paid to the Company upon signing the agreement, (ii) an additional
$3,000 was paid upon installation of the webSports(TM) software system, and
(iii) the balance is payable over time based on two percent (2%) of the gross
wagers placed on the system. Carib will receive technical support from the
Company for an additional fee of $500 per month.
On February 27, 1997, the Company entered into a license agreement with
Grenada Management Corporation ("GMC"). The agreement provides for a perpetual
single user license which may not be shared or used at more than one location.
The fee for this product is $190,000 payable at a minimum rate of $3,500 per
month beginning 30 days after the commencement of the commercial operation of
the sports book. Payments will commence not later than September 1, 1997 and
payment in full in due by November 15, 1998. The Company will receive an
additional $500 per month for technical support and upgrades.
The Company entered into a letter of intent with CasinoWorld Holdings,
Ltd. ("CWH") dated March 28, 1997, pursuant to which the Company would to grant
a license to permit CWH to integrate webSports(TM) into its own casino software
product. This letter of intent provides for a Non-Exclusive Master Source Code
License for a period of ten years, renewable for an additional five years. Upon
the execution of the definitive agreement, the Company will receive a license
fee of $50,000 and will receive an additional $50,000 upon the creation of an
integrated application suitable for CWH. For each sub-license entered into by
CWH, CWH will pay to the Company a fee of $100,000. In addition, in the first
year, CWH will pay to the Company an integration fee of $25,000. The definitive
agreement is expected to be executed in July 1997.
INFORMATION PRODUCTS
REALSPORTS(TM)
The Company offers an information service on the Web called
"realSports(TM)." This service provides real-time odds, scores and other sports
wagering information and is free of charge to users. The Company anticipates to
generate revenues from this service by selling advertising space to companies
wishing to target their marketing to sports fans and individuals who wager on
sporting events. The Company uses this service to promote visits to model sites
established for its ICE(TM), webSports(TM) and Internet related products. The
Web address is http://www.realsports.com.
MEDICAL PRODUCTS
The Atlantic International Medical ("AIM") division of the Company is
developing a global distribution network for medical testing devices (e.g., HIV,
pregnancy, drug abuse, hepatitis, etc.) and other medical products. On December
8, 1996, the Company's medical division was certified as an authorized
independent agent of New World Biotechnology Consultants, Ltd. ("NWBC"), a
medical products manufacturer. The Company is authorized to market all of NWBC's
products globally on the Internet until December 7, 1997. These products
-4-
<PAGE>
include family planning products, HIV tests, Nitrite, Protein and Glucose urine
tests, and vision screening.
AIM markets distributorships for American manufacturers of medical
testing and diagnostic kits and other medical products throughout the world. AIM
acts as a broker between the manufacturer and distribution companies located in
foreign countries. AIM does not resell products but simply collects a commission
for taking an order from the distributor and placing the order with the
manufacturer. This approach limits the risks associated with inventory and
product liability and keeps overhead and direct costs to a minimum. AIM is
seeking additional manufacturers to represent.
CONSUMER RETAIL PRODUCTS
THE ORIGINAL AS SEEN ON TV(TM) markets directly to retail many of the
products widely marketed on television. The Company acts as an intermediary by
marketing these products on the Web at http://www.as-seen-on-tv.com. Any orders
placed with the Company are filled by JAD Products of West Palm Beach, Florida.
The Company receives a commission based on product sales, which varies from
product to product. As of the date hereof, commissions from the sales of these
products have been insignificant.
MARKETING/ADVERTISING SERVICES
The Company, through Eminet Domain, Inc., offers consulting services to
other firms which develop private network and Internet-based businesses or
implement Internet marketing and distribution elements for existing businesses.
Such services offered include technology integration, Web site development,
electronic marketing and traditional marketing and advertising consulting and
execution. The Web address is http://www.emi.net.com. See Recent Developments.
INDUSTRY OVERVIEW
The Internet is a global network of computers connecting millions of
individual computers and more than 70,000 business, commercial, government and
academic networks. This interconnectivity allows any one of these computers to
transmit information to any other computer. Management believes that there is
tremendous growth potential for Internet products as consumer and business
access becomes easier and more cost efficient. It is estimated that there are
already over 50 million Internet users, and the number of users is growing at a
rate of 10% per month.
The commodity pricing of powerful computers and the wealth of
information available on the Internet have all contributed to the creation of a
vast market of consumers and business buyers. During the last three years, the
number of internet service providers ("ISPs") in the United States has grown
from roughly zero to over 3,000. Management attributes the influx of ISPs to
several factors which include: (i) an increasing demand for connection to the
Internet; (ii)
-5-
<PAGE>
the Internet offers significant marketing opportunities for a variety of
products and services; and (iii) providing Internet connections requires minimum
expertise and start-up costs.
GROWTH STRATEGY
The Company's current plan of operations is to develop new businesses
using the Internet to provide casino gaming and sports booking services and to
distribute medical products internationally. Achieving market acceptance for the
Company's services and products will require substantial marketing efforts and
the expenditure of significant funds to create awareness and demand.
MARKETING
Marketing efforts are directed by the Company's President and Chief
Executive Officer. Sales efforts for its gaming and wagering products are
directed primarily to casino operators and duly licensed sports books throughout
the United States and abroad.
TRADEMARKS
The Company markets its services utilizing various names. The Company
is currently in the process of registering the following trademarks recognizable
in the United States: AIE(TM), Internet Casino Extension(TM), ICE(TM),
webSports(TM), realSports(TM), Indian Casino Extension(TM), Internet Charity
Extension(TM) and Hotel Hotlinks(TM). The Company has no patents or copyrights.
DEPENDENCE ON CUSTOMERS
During the year ended December 31, 1996 the Company's two largest
customers, Spintek Gaming Technologies, Inc. ("Spintek") and Patroon Agency,
Inc., accounted for approximately 46% of the Company's revenues. During the year
ended December 31, 1996, the Company provided investment advisory services to
Spintek which accounted for approximately 27% of the Company's revenues. The
Company does not anticipate revenues from this customer in the year ending
December 31, 1997.
REGULATORY MATTERS
The legality of gaming through the use of the Internet is uncertain at
this point. Since the sale of a foreign subsidiary which ran a sports book (see
Recent Developments), the Company does not operate virtual casinos or Internet
sports books. However, sales of the Company's products depend on the continued
international growth of virtual casinos and Internet sports books. A number of
United States federal and state statutes could be construed to prohibit gaming
through use of the Internet. While the Company focuses its sales and marketing
efforts in jurisdictions that allow private network and Internet gaming which
include Australian, Caribbean and American gaming markets, there can be no
assurance that international, federal, state or local laws or regulatory
procedures, including those which relate to the issue of
-6-
<PAGE>
jurisdiction over gaming on the Internet, which would adversely affect the
Company's business, financial condition, results of operations or prospects will
not be expanded or imposed.
COMPETITION
The Company competes with other companies involved in the development
and marketing of entertainment and medical products and services over the
Internet and the Web. The Company faces intense competition in connection with
its gaming operations. The Company believes that its Internet casino and sports
book products currently compete with four (4) companies and that its Hotel
Hot-Links product currently competes with two (2) companies. The Company
continues to face increasing competition from both established and
newly-emerging operations in both the United States and elsewhere. There are
numerous casinos and sports books currently operating over the Internet, many of
which use software developed for their own purposes. The Company believes that
some of these operators may decide to offer to sell their software to other
casino and sports book operators in the future. The Company's gaming products
also compete with other forms of gaming activities, including state-sponsored
lotteries and horse racing and competes for discretionary spending with other
leisure time activities and alternate forms of entertainment.
The Company's operations involving the distribution of medical testing
and diagnostic devices over the Internet will compete against much larger
pharmaceutical companies, such as Merck, Pfizer and Glaxo.
EMPLOYEES
As of June 1, 1997 the Company had sixteen full-time employees, of whom
5 are software engineers. None of the Company's employees is covered by a
collective bargaining agreement or is a member of a union. The Company may also
employ full-time and part-time consultants on an as-needed basis. The Company
considers its relationship with its employees to be satisfactory.
RECENT DEVELOPMENTS
On November 25, 1996, the Company signed an agreement with
Telecommunication Information Services Systems, NV, a Curacao based company to
provide international sports and entertainment information services. The
agreement was terminated in February 1997 in contemplation of the consummation
of the Company's sale of Atlantic International, N.V., as described below.
On December 15, 1996, the Company entered into an agreement to sell its
foreign subsidiary, known as Atlantic International, N.V. ("AIE, NV"), which ran
a sportsbook operation. The purchase price was $850,000 payable as follows: (i)
$2,000 was paid to the Company at closing and (ii) the balance payable beginning
60 days after closing based on 40% of net win before expenses of the casino in a
minimum monthly amount of $3,000. Interest on the unpaid
-7-
<PAGE>
balance accrues at 8% per annum. The effective date of this transaction was
January 1, 1997, and the transaction closed in March 1997.
On January 31, 1997, the Company entered into an agreement to purchase
all of the shares of Eminet Domain, Inc. ("Eminet"). The purchase price for the
shares was $2,020,000 payable by the issuance and delivery to the shareholders
of Eminet or their designees of a minimum of 200,000 shares of fully-paid and
non-assessable shares of Common Stock at the market value as of January 31, 1997
and $20,000 cash payable at March 31, 1997. In addition, the shareholders of
Eminet or their designees will receive additional shares at market price equal
to one time Eminet's net profit before taxes for the years ending 1997 and 1998
up to $750,000 per annum, one and one-half times over $750,000 to $1,000,000 and
two times over $1,000,000. Eminet provides monthly Internet service to
approximately 1,000 subscribers. The current equipment and personnel are capable
of handling up to 2,500 subscribers without upgrades. As additional profit
centers, Eminet hosts and programs web sites for businesses and individuals,
provides networking design and services and sells computer and networking
equipment.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company leases approximately 4,000 square feet of office space in
Boca Raton, Florida pursuant to a lease expiring on November 30, 1997 with a
monthly rent of approximately $5,000. The Company believes that its existing
facilities are adequate for its current needs and that additional facilities in
its service area are available to meet future needs.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any material threatened or pending
litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
On November 18, 1996, the Company held a Special Meeting of
Shareholders to, among other things, vote on a proposal to reincorporate the
Company under the laws of Delaware. There were 7,062,238 shares voted for the
proposal, 700 shares voted against the proposal and 105 shares abstaining from
the vote.
-8-
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock has been quoted on the Nasdaq OTC Bulletin
Board since July 25, 1996. Prior to July 25, 1996, the Company believes that its
Common Stock last traded in a public market in approximately 1987. The Company's
current symbol is "AIEE."
The following table sets forth, for the periods indicated, the highest
and lowest bid prices for the Common Stock, as reported by the Nasdaq OTC
Bulletin Board. The prices reported reflect inter-dealer prices, without retail
mark-up, mark-down or commission, and may not reflect actual transactions. The
prices have been adjusted to reflect a 3 for 1 reverse split of the Company's
Common Stock in November 1996.
CALENDAR 1996 HIGH LOW
- ------------- ---- ---
Third Quarter 11.625 5.25
Fourth Quarter 11.25 9.75
CALENDAR 1997 HIGH LOW
- ------------- ---- ---
First Quarter 10 1.5
At June 17, 1997, there were approximately 286 holders of record of the
Company's Common Stock. This number does not include an indeterminate number of
shareholders whose shares are held by brokers in "street name."
The Company has not paid any cash dividends on the Common Stock in the
past and the Board of Directors does not anticipate declaring any cash dividends
on the Common Stock in the foreseeable future. The Company currently intends to
utilize any earnings it may achieve for the development of its business and
working capital purposes.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION CONTAINS
FORWARD- LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE
FORWARD-LOOKING STATEMENTS. FACTORS THAT MAY CAUSE SUCH DIFFERENCES INCLUDE, BUT
ARE NOT LIMITED TO, THE COMPANY'S EXPANSION INTO NEW MARKETS, COMPETITION,
TECHNOLOGICAL ADVANCES AND AVAILABILITY OF MANAGERIAL PERSONNEL.
OVERVIEW
During 1996, the Company's redirected its business from investment
banking to providing products and services built around new and emerging
technologies including the Internet, intranets, private networks and smart
cards. The moratorium on investment banking operations
-9-
<PAGE>
did not result in the obsolescence of any property, plant or equipment because
these assets included office and computer equipment and office furniture which
the Company can use in the internet business activities. No employees were
displaced and additional employees were hired to support the new operations.
RESULTS OF OPERATIONS
The following is a summary of the Company's consolidated financial and
operating data:
Year Ended December 31,
-----------------------
STATEMENTS OF OPERATIONS DATA: 1996 1995
- ------------------------------ ---- ----
Revenue $454,656 $702,307
Income [Loss] from Operations (427,975) 249,655
Net Income [Loss] (376,270) 158,839
Primary Income [Loss] Per Common Share $(.04) $.02
BALANCE SHEET DATA: December 31, 1996 December 31, 1995
- ------------------- ----------------- -----------------
Working Capital $ 199,893 $147,166
Total Assets 1,982,014 261,870
Total Liabilities 302,879 102,949
Stockholders' Equity 1,679,135 158,929
The following is a summary of the Company's financial data broken into
business segments:
1996 1995
--------------- ---------------
Net Sales:
Investment Advisory Services 366,204 702,307
Internet Software 87,000 --
Medical Testing Kits 1,452 --
----------- ----------
$ 454,656 $ 702,307
Operating Income:
Investment Advisory Services 231,081 249,655
Internet Software (659,056) --
Medical Testing Kits -- --
----------- -----------
$ (427,975) $ 249,655
Total Assets:
Investment Advisory Services 1,423 1,423
Internet Software 1,980,591 --
Medical Testing Kits -- --
---------- ----------
$1,982,014 $ 1,423
Depreciation and Amortization:
Investment Advisory Services 285 285
Internet Software 67,091 --
Medical Testing Kits -- --
---------- ----------
$ 67,376 $ 285
-10-
<PAGE>
1996 1995
--------------- --------------
Capital Expenditures:
Investment Advisory Services 1,423 1,423
Internet Software 1,490,395 --
Medical Testing Kits -- --
---------- -----------
$1,491,818 $ 1,423
During the year ended December 31, 1995, the Company's activities
consisted primarily of investment advisory services which generated gross
revenues in the amount of $702,307. General and administrative expenses totaled
$452,367, or 64.40% of revenues. Of this amount, $245,800 represented rent,
salaries and other general and administrative costs which was paid to an
affiliate of the Company under a management agreement which expired on December
31, 1995. Beginning in January 1996, the Company paid all expenses out of its
own operating accounts. Depreciation expense for 1995 totaled $285 or .04% of
revenues, on total fixed assets of $1,423 consisting of office furniture and
equipment. Net income, after a $90,500 (12.89% of revenues) provision for income
taxes, totaled $158,839.
In the first half of the year ended December 31, 1996, the focus of
Company's business activity shifted from investment advisory services to
supplying Internet related products upon the acquisition of various computer
software products from RAM. During this period, investment advisory services
were phased out and currently remain an inactive profit center of the Company.
In 1996, expenditures were made for both software and hardware in an aggregate
amount of $1,490,395. Additional employees were hired in both the technical and
sales areas. With the further development of the Internet related software
products and the change of business focus, revenues dropped by 35.26%, or
$247,651 to a total of $454,656 for 1996. Investment advisory service income for
1996 was $366,204 representing 80.55% to total revenues. Internet related sales
totaled $88,452 or 19.45% of total revenues. Depreciation expense and software
amortization for 1996 totaled $68,332 or 15.03% of gross revenues.
The operating income from the investment advisory services for the year
ended December 31, 1996 totaled $231,081. Internet related activities generated
a net loss from operations of ($659,056) due to the costs associated with the
start up of the new business segment. In the fourth quarter of 1996, a wholly
owned subsidiary of the Company, AIE(TM), NV, opened A demonstration site for
it's Internet gaming software in Curacao. In the first quarter of 1997, AIE(TM)
NV and its operations were sold as an opening Internet casino and sports book.
The neT operating loss from this discontinued business segment totaled
($29,244).
OUTLOOK
The gaming industry, particularly as it relates to the Internet is
expected to continue to grow for the foreseeable future. Worldwide interest in
the ICE(TM) and webSports(TM) softWare systems is high with particular attention
coming from Australia where the government is supportive of private network and
Internet gaming. Management expects continued sales growth
-11-
<PAGE>
from these products. The Company will continue to focus its efforts on marketing
these software systems as well as the Hotel Hotlinks(TM) product. Management
believes that interest in the HoteL Hotlinks(TM) product is very high especially
in Australia, Las Vegas and Atlantic City. ThE company expects significant sales
of this product to begin in the third quarter of 1997. The Company will also
continue its development of add-on products for both ICE(TM) and webSports(TM)
including the adaptations for Indian and Charity gaming markets.
Management expects continued growth in its credit card cash advance
system as smart card technology integration allows this system to expand into
other financial services. In addition, the Company will continue to provide
on-line, private network, Web and networking services through Eminet which is
also expected to contribute significantly to profits in 1997 due to new
contracts and expanding awareness among area Internet users. The Company is
considering expanding its portfolio of Internet and computer related services by
increasing its training capabilities.
Management does not expect the Company's medical and consumer products
divisions to significantly contribute to revenues and profits in the near
future. The AIM division is expected to become fully active in the third quarter
of 1997 and contribute modestly to profits until the middle of 1998 at which
time revenues are expected to increase substantially based on the Company's
commitment to dedicating additional resources to this division.
While THE ORIGINAL AS SEEN ON TV business does not contribute currently
to either revenues or expenses, consumer response has been significant. In
addition, interest in the business has been appreciable from manufacturers of
these types of products. The Company expects to allocate some minor resources to
this activity in the third quarter of 1997, but does not expect significant
revenues to be realized until the first quarter, 1998.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL. At December 31, 1995 the Company had a working capital
of $147,166. At December 31, 1996, the Company had working capital of $199,893.
CASH FLOWS FROM CONTINUING OPERATING ACTIVITIES. During the years ended
December 31, 1995 and 1996, net cash used by operating activities was $0 and
$193,975, respectively. Cash flows from continuing operating activities
decreased by $193,975 for the year ended December 31, 1996 compared to the same
period in 1995 primarily due to start up expenditures of a new segment of
business which included costs associated with the acquisition of Internet and
private network products. Initial research and development costs were expensed
as well as related costs associated with start up operations. Additional office
space was acquired and additional employees were hired to support the
development of the software products.
CASH FLOWS FROM INVESTING ACTIVITIES. During the years ended December
31, 1995 and 1996, the Company made net capital expenditures of $48,144 and
$308,859, respectively,
-12-
<PAGE>
primarily for purchases of property and equipment. The amounts expended in 1996
represent expenditures necessary for the Internet and private network
development and implementation.
CASH FLOWS FROM FINANCING ACTIVITIES. During the years ended December
31, 1995 and 1996, cash flows from financing activities were $723,425 and $90,
respectively. For the year ended December 31, 1996, cash flows from financing
activities are primarily from the issuance of Common Stock in connection with
private placements of the Company's Common Stock which raised proceeds to the
Company of approximately $701,770.
The Company believes that cash from operating activities will be
sufficient to fund proposed operations for at least the next 12 months at its
current rate of growth.
INFLATION
In the opinion of management, inflation has not had a material adverse
effect on its results of operations.
ITEM 7. FINANCIAL STATEMENTS.
[See page F-1.]
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
On December 19, 1996, the Board of Directors of the Company dismissed
Jones, Jensen & Company ("Jones Jensen") as independent accountants to the
Company and appointed Buchbinder Tunick & Company LLP as the new independent
accountants to the Company. Jones Jensen's accountant's report on the financial
statements of the Registrant for the year ended December 31, 1995 (the period
for which Jones Jensen was engaged as independent accountants) did not contain
any adverse opinion or disclaimer of opinion and other than a going concern
qualification, was not qualified or modified as to uncertainty, audit scope, or
accounting principles.
On January 30, 1997, the Board of Directors of the Company dismissed
Buchbinder Tunick & Company LLP as independent accountants to the Company and on
March 5, 1997 appointed Moore Stephens, P.C. as the new independent accountants
to the Company. Buchbinder Tunick & Company LLP has not reported on any of the
Company's financial statements. Since, December 19, 1996 (the date on which
Buchbinder was engaged as the Company's independent accountants), there were no
disagreements between the Company and Buchbinder Tunick & Company LLP on any
matters of accounting principles or practices, financial statement disclosure,
or auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Buchbinder Tunick & Company LLP, would have caused Buchbinder
Tunick & Company LLP to make a reference to the subject matter of the
disagreements in connection with its reports.
-13-
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company and their positions
with the Company are set forth below.
NAME AGE POSITION
---- --- --------
Norman J. Hoskin 62 Chairman of the Board
Secretary and Treasurer
Richard A. Iamunno 39 President, Chief Executive
Officer and Director
Steven D. Brown 50 Director
NORMAN J. HOSKIN has served as the Chairman of the Board, Secretary and
President since July 16, 1996 and served as Chairman of the Board, Secretary and
President of Atlantic since its inception in 1994. Mr. Hoskin served a Senior
Vice President of Rentar Industries Group from 1972 to 1982, one of the largest
transportation, warehousing and banking conglomerates in the United States. Mr.
Hoskin was former Chairman of the Board of Tapistron International (NASDAQ/NMS:
TAPI). He was formerly a Director and Officer of Trinitech Systems (AMEX: TSI).
Currently he is a Director of Aquacare Systems (NASDAQ: AQCR), Consolidated
Technologies (NASDAQ: COTG), Spintek Gaming (NASDAQ/OTC: SPTK) and American
Artists Corporation. Mr. Hoskin is also a Director and Secretary of Aqua Care
Systems.
RICHARD A. IAMUNNO has served as a Director, the Chief Executive
Officer and President since July 16, 1996 and served as a Director, the Chief
Executive Officer and President of Atlantic since its inception in 1994. Prior
to starting the Company, Mr. Iamunno was President of Ameristar International,
an investment banking firm which provided European-based companies with merger
assistance into the U.S. public marketplace from December 1992 to June 1994. Mr.
Iamunno's business experience incudes positions as Senior Director of Marketing
and Vice President of Western Union Corporation. Mr. Iamunno has recently served
as a Director of Tapistron International (NASDAQ/NMS: TAPI) and in the past as a
Director of Trinitech Systems, Inc. (AMEX:TSI) among others. Mr. Iamunno earned
his Business degree from Drake University in Des Moines, Iowa.
STEVEN D. BROWN was appointed a Director of the Company on July 16,
1996. Mr. Brown is the Chairman of American Artists Film Corporation, A
Georgia-based public company. Since 1989, Mr. Brown has been active in the
development of feature film projects, through Movie America Corporation, a
Georgia corporation which Mr. Brown helped organize and for which he
-14-
<PAGE>
served as President and Director until leaving that company in 1991 to found
American Artists Film Corporation.
MEETINGS AND COMMITTEES
The Board held no meetings during the year ended December 31, 1996.
From time to time during such year, the members of the Board acted by unanimous
written consent. The Company has no standing compensation or audit committees.
The typical functions of such committees are performed by the entire Board of
Directors.
-15-
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the total compensation for the Company's
chief executive officer during the year ended December 31, 1996, 1995 and 1994.
No other executive officer's salary and bonus exceeded $100,000 for services
rendered to the Company during such years.
SUMMARY COMPENSATION TABLE
Annual Compensation(1)
-----------------------------
Name And
Principal Position Year Salary($) Bonus($)
------------------ ---- --------- --------
Richard A. Iamunno................. 1996 $ 63,000 --
President and Chief 1995 57,000(2) --
Executive Officer 1994 20,000(2) --
- ---------------------
(1) THE COLUMNS FOR "OTHER ANNUAL COMPENSATION" AND "LONG-TERM
COMPENSATION" HAVE BEEN OMITTED AS THERE IS NO COMPENSATION REQUIRED TO
BE REPORTED IN SUCH COLUMNS. THE AGGREGATE AMOUNT OF PERQUISITES AND
OTHER PERSONAL BENEFITS DID NOT EXCEED THE LESSER OF $50,000 OR 10% OF
THE TOTAL OF SALARY AND BONUS. IN ADDITION, THE OPTION GRANTS IN LAST
YEAR TABLE AND AGGREGATED OPTION EXERCISES IN LAST YEAR AND YEAR END
OPTION VALUES TABLE HAVE BEEN OMITTED AS THE ABOVE NAMED EXECUTIVE
OFFICER WAS NOT GRANTED ANY OPTIONS DURING THE LAST YEAR AND OWNS NO
OPTIONS.
(2) REPRESENTS SALARY PAID FOR SERVICES RENDERED AS AN EXECUTIVE OF
ATLANTIC INTERNATIONAL CAPITAL, LTD., A WHOLLY-OWNED SUBSIDIARY OF THE
COMPANY.
BOARD OF DIRECTORS COMPENSATION
The Company does not currently compensate directors who are also
executive officers of the Company for service on the Board of Directors.
Directors are reimbursed for their expenses incurred in attending meetings of
the Board of Directors.
LONG-TERM INCENTIVE AND PENSION PLANS
The Company does not have any long-term incentive or defined benefit
pension plans.
-16-
<PAGE>
OTHER
No director or executive officer is involved in any material legal
proceeding in which he is a party adverse to the Company or has a material
interest adverse to the Company.
EMPLOYMENT AGREEMENTS
On June 17, 1996, the Company entered into a consulting agreement with
Wayne Newton which expires on June 1, 1999, pursuant to which Mr. Newton will
serve as a spokesman of the Company. As compensation, Mr. Newton will receive
5,000 shares of the Company's Common Stock for each year of the three year term
and will receive a cash payment for each activity he participates in on behalf
of the Company at fees to be negotiated by the parties.
On July 22, 1996, the Company reached an oral agreement with Centerline
Associates, Inc. ("Centerline") pursuant to which Centerline provides the
Company with consulting services in the areas of software and hardware project
requirements and the development of business and acquisition opportunities. As
compensation, Centerline received base compensation of $52,000 per annum for the
year ended December 31, 1996 and will receive $72,000 per annum for the
remainder of the agreement which expires on December 31, 1997.
The Company is currently negotiating employment agreements with Messrs.
Iamunno, Hoskin and Halaburda pursuant to which they will continue to serve as
the Company's President and Chief Executive Officer, Chairman of the Board,
Secretary and Treasurer, and Chief Financial Officer, respectively. It is
anticipated that as compensation for their services, the Company will pay
Messrs. Iamunno, Hoskin and Halaburda base salaries of $110,000, $110,000 and
$90,000 per annum, respectively which shall be subject to annual increases of
10%. The Company expects that each of the agreements will continue for three
years will expire in the year 2000. Other than the aforementioned agreements,
the Company has not entered into any other employment agreement with any of its
officers, directors or any other persons and no such agreements are anticipated
in the immediate future.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission"). Officers, directors and greater than ten percent
shareholders are required by the Commission's regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Each of the following persons failed to file on a timely basis one
report for a single transaction required by Section 16(a) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "Exchange Act"), during the year ended December 31, 1996: Norman
Hoskin, Richard Iamunno and Steven D. Brown. Each of the
-17-
<PAGE>
transactions for the above named individuals were subsequently reported to the
Commission on Form 3.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of June 17, 1997, information
regarding the beneficial ownership of the Company's Common Stock by each person
known by the Company to own five percent or more of the outstanding shares, by
each of the directors and officers, and by the directors and officers as a
group. As of June 17, 1997, there were outstanding 9,540,187 shares of the
Common Stock of the Company.
Amount of
Beneficial
Name and Address of Beneficial Owner(2) Ownership Percent of Class
- ---------------------------------------- ---------- ---------------
Norman J. Hoskin 1,115,935 11.7%
Richard A. Iamunno 1,133,270 11.9%
Steven D. Brown 0 *
The AWIXA Trust 2,480,876 26.0%
c/o Smith, Barnard & Diel
52 Reid Street
Hamilton, Bermuda
The Kunni Lemmel Trust 2,480,876 26.0%
c/o Smith, Barnard & Diel
52 Reid Street
Hamilton, Bermuda
All Officers and Directors as a Group 2,249,205 23.6%
(3 persons)
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
of the Securities Exchange Act of 1934. Generally, a person is deemed
to be the beneficial owner of a security if he has the right to acquire
voting or investment power within 60 days.
(2) Unless otherwise indicated, all addresses are at the Company's office
at 2200 Corporate Blvd., Suite 317, Boca Raton, Florida 33431.
-18-
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 1995, the Company entered into a one year management
agreement with a company which is deemed to be an affiliate because of identical
stockholder interests. Under the agreement, the Company paid monthly management
fees aggregating $245,800 for the year ended December 31, 1995, representing
operating expenses including rent, salaries and other general and administrative
costs. The agreement expired on December 31, 1995, at which date $10,000 was due
from the affiliate. Additionally, the Company made advances to the affiliated
company during the year ended December 1996, increasing the balance receivable
to $48,273. The advances are non-interest bearing, and due on demand.
The Company has notes payable to two officers in the aggregate amount
of $21,655 at December 31, 1996. The notes are demand notes and incur interest
at 8% per annum. Interest expense related to the shareholders notes totaled
$1,302 for the year ended December 31, 1996.
-19-
<PAGE>
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.
(a) Exhibits:
*3.1 -- Certificate of Incorporation of the Company.
*3.2 -- Bylaws of the Company.
*4.1 -- Specimen Common Stock Certificate.
*10.1 -- Incentive Stock Option Plan for Employees, Directors,
Consultants and Advisers.
*10.2 -- Exchange of Stock Agreement and Plan of
Reorganization dated July 16, 1996 by and between the
Company (formerly known as CEEE Group Corporation),
Edward Cowle, Deworth Williams, Atlantic
International Capital, Ltd., and each of the former
stockholders of Atlantic International Capital, Ltd.
listed on Schedule I thereto.
*10.3 -- Amendment No. 1 to Exchange of Stock Agreement and
Plan of Reorganization dated September 5, 1996 by and
between the Company (formerly known as CEEE Group
Corporation), Edward Cowle, Deworth Williams,
Atlantic International Capital, Ltd., and each of the
former stockholders of Atlantic International
Capital, Ltd. listed on Schedule I thereto.
*10.4 -- Agreement and Plan of Merger dated as of November 18,
1996, between Atlantic International Entertainment,
Ltd., a Delaware corporation and CEEE Group
Corporation, Ltd., a Colorado corporation.
*10.5 -- Purchase and Sale Agreement dated as of April 15,
1996 by and between the Company, RAM Associates and
James A Dougherty.
*10.6 -- Agreement for Purchase and Sale of Stock dated as of
December 15, 1996 by and between the Company,
Atlantic International Entertainment, NV and
Australian Advisers, Ltd.
*10.7 -- Agreement for Purchase and Sale of Stock dated as of
January 31, 1997 by and between the Company and
Eminet Domain, Inc.
*10.8 -- Consulting Agreement dated as of June 17, 1996 by and
between the Company and Wayne Newton.
*10.9 -- License Agreement dated as of November 4, 1996 by and
between the Company and Atlantic International
Entertainment, N.V.
-20-
<PAGE>
*10.10 -- License Agreement dated as of December 27, 1996 by
and between the Company and Patroon Agency, Inc.
*10.11 -- License Agreement dated as of December 31, 1996 by
and between the Company and Carib Sportsbook, Inc.
*10.12 -- License Agreement dated as of February 27, 1997 by
and between the Company and Grenada Management
Corporation.
*10.13 -- License Agreement dated as of March 17, 1997 by and
between the Company and ThirdAge, Inc.
*11.1 -- Statement re: computation of per share earnings.
*27 -- Financial Data Schedule.
- --------------------------
* Included herein.
(b) REPORTS ON FORM 8-K
On December 3, 1996, the Company filed with the Commission, a
report on Form 8-K dated November 18, 1996 disclosing the
reincorporation merger with and into Atlantic International
Entertainment, Ltd., a Delaware corporation. No other report
on Form 8-K was filed during the three month period ended
December 31, 1996.
On February 6, 1997, the Company filed two reports on Form 8-K
dated December 19, 1996 and January 30, 1997, respectively.
Such reports disclosed changes in the Company's independent
accountants.
On April 14, 1997, the Company filed with the Commission a
Form 8-K dated March 7, 1997 disclosing the acquisition of
Eminet Domain, Inc.
-21-
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ATLANTIC INTERNATIONAL ENTERTAINMENT,
LTD.
Dated: July 3, 1997 /s/ NORMAN HOSKIN
-------------------------------------
Norman J. Hoskin,
Chairman of the Board
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant in the capacities and on
the dates indicated.
Signature Title Date
--------- ----- ----
/s/ NORMAN HOSKIN Chairman of the Board, July 3, 1997
- ----------------------------- Secretary, and Treasurer
Norman J. Hoskin
/s/ RICHARD IAMUNNO President, Chief Executive July 3, 1997
- ----------------------------- Officer and Director
Richard A. Iamunno
/s/ DAVID HALABURDA Chief Financial Officer July 3, 1997
- ----------------------------- (principal accounting officer)
David Halaburda
/s/ STEVEN BROWN Director July 3, 1997
- -----------------------------
Steven D. Brown
-22-
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
INDEX TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
PAGE
----
Independent Auditor's Report ............................................. F-2
Consolidated Balance Sheet as of December 31, 1996 ....................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1996 and 1995................................................ F-4
Consolidated Statements of Changes in Stockholders' Equity for the
years ended December 31, 1996 and 1995.................................... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1996 and 1995................................................ F-6
Notes to Consolidated Financial Statements ............................... F-8
. . . . . . . . . . . .
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Board of Directors of
Atlantic International Entertainment, Ltd.
We have audited the accompanying consolidated balance sheet of
Atlantic International Entertainment, Ltd. and its subsidiaries as of December
31, 1996, and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for the year then ended. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the consolidated financial
position of Atlantic International Entertainment, Ltd. and its subsidiaries as
of December 31, 1996, and the consolidated results of their operations and their
cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ MOORE STEPHENS, P. C.
-----------------------------
MOORE STEPHENS, P. C.
Certified Public Accountants.
Cranford, New Jersey
March 26, 1997
F-2
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1996.
- --------------------------------------------------------------------------------
ASSETS:
CURRENT ASSETS:
Cash and Cash Equivalents $ 421,188
Refundable Income Taxes 77,215
Prepaid Expenses 4,369
----------
TOTAL CURRENT ASSETS 502,772
----------
FURNITURE, FIXTURES AND EQUIPMENT
Furniture and Fixtures 2,901
Computer Hardware 247,894
Equipment 18,914
Leasehold Improvements 13,401
----------
Total - At Cost 283,110
Less: Accumulated Depreciation and Amortization 19,723
----------
FURNITURE, FIXTURES AND EQUIPMENT - NET 263,387
----------
SOFTWARE [NET OF ACCUMULATED AMORTIZATION OF $48,894] 1,159,814
----------
OTHER ASSETS:
Organization Costs - [Net of Accumulated Amortization of $323] 2,902
Due from Related Parties 48,273
Other Assets 4,866
----------
TOTAL OTHER ASSETS 56,041
----------
TOTAL ASSETS $1,982,014
==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts Payable and Accrued Expenses $ 252,945
Notes Payable - Officer 21,655
Due to Customers 28,279
----------
TOTAL CURRENT LIABILITIES 302,879
----------
STOCKHOLDERS' EQUITY:
Preferred Stock - Par Value $.001 Per Share; Authorized
10,000,000 Shares, None Issued or Outstanding --
Common Stock - Par Value $.001 Per Share;
Authorized 100,000,000 Shares, Issued and
Outstanding 9,190,184 Shares 9,190
Additional Paid-in Capital 1,887,376
Accumulated Deficit (217,431)
----------
TOTAL STOCKHOLDERS' EQUITY 1,679,135
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,982,014
==========
The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
F-3
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended
-----------
December 31,
------------
1 9 9 6 1 9 9 5
------- -------
<S> <C> <C>
REVENUE $ 454,656 $ 702,307
--------------- ---------------
GENERAL AND ADMINISTRATIVE 815,255 452,367
DEPRECIATION AND AMORTIZATION 67,376 285
--------------- ---------------
TOTAL OPERATING EXPENSES 882,631 452,652
--------------- ---------------
[LOSS] INCOME FROM OPERATIONS (427,975) 249,655
--------------- ---------------
OTHER INCOME [EXPENSES]:
Interest Income 4,350 --
Interest Expense (2,870) --
Interest Expense - Related Party (1,302) --
Other Income [Expense] 3,556 (316)
--------------- ---------------
OTHER INCOME [EXPENSES] - NET 3,734 (316)
--------------- ---------------
[LOSS] INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAX [BENEFIT] EXPENSE (424,241) 249,339
INCOME TAX [BENEFIT] EXPENSE (77,215) 90,500
--------------- ---------------
[LOSS] INCOME FROM CONTINUING OPERATIONS (347,026) 158,839
[LOSS] FROM OPERATIONS OF DISCONTINUED FOREIGN SUBSIDIARY (29,244) --
--------------- ---------------
NET [LOSS] INCOME $ (376,270) $ 158,839
=============== ===============
[LOSS] INCOME PER COMMON SHARE:
Continuing Operations (.04) .02
Discontinued Operations -- --
--------------- ---------------
TOTAL [LOSS] INCOME PER COMMON SHARE $ (.04) $ .02
=============== ===============
NUMBER OF SHARES 8,514,537 8,303,484
=============== ===============
</TABLE>
The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
F-4
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock Additional
------------ ----------
Number of Paid-in
--------- -------
Shares Amount Capital
------ ------ -------
<S> <C> <C> <C>
BALANCE - JANUARY 1, 1995 -- $ -- $ --
Issuance of Common Stock in Combination [1] 6,803,451 6,803 (6,803)
Sale of Common Stock 90 90 --
Recapitalization Adjustment [1] (90) (90) 90
Net Income -- -- --
---------- ------------ ----------
BALANCE - DECEMBER 31, 1995 6,803,451 6,803 (6,713)
Equity of CEEE [1] 1,500,033 1,500 (6,794)
Sale of Common Stock 13 13 35,749
Recapitalization Adjustment [1] (13) (13) 13
Private Placement [1] 886,700 887 825,994
Asset Acquisition [4] 200,000 -- 1,200,000
Recapitalization Adjustment [1] (200,000) -- --
Recapitalization Costs [1] -- -- (160,873)
[Loss] from Continuing Operations -- -- --
[Loss] from Discontinued Foreign Subsidiary -- -- --
---------- ------------ ----------
BALANCE - DECEMBER 31, 1996 9,190,184 $ 9,190 $1,887,376
========== ============ ==========
</TABLE>
<TABLE>
<CAPTION>
Total
-----
Accumulated Preferred Stockholders'
----------- --------- -------------
Deficit Stock Equity
------- ----- ------
<S> <C> <C> <C>
BALANCE - JANUARY 1, 1995 $ -- $ -- $ --
Issuance of Common Stock in Combination [1] -- -- --
Sale of Common Stock -- -- 90
Recapitalization Adjustment [1] -- -- --
Net Income 158,839 -- 158,839
---------- -------- ----------
BALANCE - DECEMBER 31, 1995 158,839 -- 158,929
Equity of CEEE [1] -- -- (5,294)
Sale of Common Stock -- -- 35,762
Recapitalization Adjustment [1] -- -- --
Private Placement [1] -- -- 826,881
Asset Acquisition [4] -- -- 1,200,000
Recapitalization Adjustment [1] -- -- --
Recapitalization Costs [1] -- -- (160,873)
[Loss] from Continuing Operations (347,026) -- (347,026)
[Loss] from Discontinued Foreign Subsidiary (29,244) -- (29,244)
---------- --------- ------------
BALANCE - DECEMBER 31, 1996 $ (217,431) $ -- $ 1,679,135
========== ========= ===========
</TABLE>
The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
F-5
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended
-----------
December 31,
------------
1 9 9 6 1 9 9 5
------- -------
OPERATING ACTIVITIES:
<S> <C> <C>
[Loss] Income from Continuing Operations $ (347,026) $ 158,839
Adjustments to Reconcile Net Income [Loss] to
Net Cash [Used for] Operating Activities:
Depreciation and Amortization 67,376 285
Changes in Assets and Liabilities:
[Increase] Decrease in:
Trade Accounts Receivable (63,965) (13,250)
Prepaid Expenses and Other Current Assets 20,723 (92)
Other Assets (6,900) --
Increase [Decrease] in:
Accounts Payable and Accrued Expenses 225,686 12,449
Income Taxes Payable (90,500) 90,500
Other Current Liabilities 631 --
--------------- ---------------
NET CASH - CONTINUING OPERATIONS (193,975) 248,731
--------------- ---------------
DISCONTINUED OPERATIONS:
[Loss] from Discontinued Operations (29,244) --
Adjustments to Reconcile Net [loss] to Net Cash Operations:
Depreciation 1,278 --
Changes in Assets and Liabilities:
[Increase] Decrease in:
Other Assets (815) --
Increase [Decrease] in:
Accounts Payable 14,808 --
Customer Deposits 27,648 --
--------------- ---------------
NET CASH - DISCONTINUED OPERATIONS 13,675 --
--------------- ---------------
NET CASH - OPERATING ACTIVITIES - FORWARD (180,300) 248,731
--------------- ---------------
INVESTING ACTIVITIES - CONTINUING OPERATIONS:
Increase in due from Related Parties (37,177) (11,096)
Increase in Other Receivable -- (25,000)
Sale [Purchase] of Investments 10,252 (10,625)
Purchase of Property and Equipment (281,934) (1,423)
--------------- ---------------
NET CASH - INVESTING ACTIVITIES (308,859) (48,144)
INVESTING ACTIVITIES - DISCONTINUED OPERATIONS:
Purchase of Property and Equipment (13,755) --
--------------- ---------------
NET CASH INVESTING ACTIVITIES - FORWARD $ (322,614) $ (48,144)
</TABLE>
The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
F-6
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended
-----------
December 31,
------------
1 9 9 6 1 9 9 5
------- -------
<S> <C> <C>
NET CASH - OPERATING ACTIVITIES - FORWARDED $ (180,300) $ 248,731
--------------- ---------------
NET CASH - INVESTING ACTIVITIES - FORWARDED (322,614) (48,144)
--------------- ---------------
FINANCING ACTIVITIES - CONTINUING OPERATIONS:
Proceeds from Issuance of Common Stock 701,770 90
Increase in Loan Payable to Shareholder 21,655 --
--------------- ---------------
NET CASH - FINANCING ACTIVITIES - CONTINUING OPERATIONS 723,425 90
--------------- ---------------
INCREASE IN CASH AND CASH EQUIVALENTS 220,511 200,677
CASH AND CASH EQUIVALENTS - BEGINNING OF YEARS 200,677 --
--------------- ---------------
CASH AND CASH EQUIVALENTS - END OF YEARS $ 421,188 $ 200,677
=============== ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the years for:
Interest $ 4,172 $ --
Income Taxes $ 77,215 $ --
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
On April 15, 1996, the Company entered into an asset acquisition agreement.
The non-cash portion of the transaction included the issuance of 200,000 shares
of common stock with a fair value of $1,200,000 [See Note 1 for details of
recapitalization].
The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.
F-7
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
[1] ORGANIZATION AND STOCK ACQUISITION
CORPORATE STRUCTURE - CEEE Group, Inc. ["CEEE"] was incorporated under the laws
of the State of Colorado in October of 1939 as Pacific Gold, Inc. CEEE was
organized to explore, develop, mine and mill gold and silver deposits of ore.
The Company conducted limited mining activities until operations ceased. CEEE
was seeking new business opportunities as a development stage entity.
On July 16, 1996, CEEE entered into an exchange of stock and plan of
organization with Atlantic International Capital, Ltd. ["AIC"] pursuant to which
CEEE acquired all of the common shares of AIC in exchange for an aggregate of
6,803,451 common shares of CEEE. Following the share exchange and the issuance
of all shares, the shareholders of AIC own approximately 94% of CEEE.
For accounting purposes, the acquisition is being recorded as a recapitalization
of AIC, with AIC as the acquirer. The shares issued are treated as issued by AIC
for cash and are shown as outstanding for all periods presented in the same
manner as for a stock split. Recapitalization costs totaling $160,873 were
charged to additional paid-in capital. The consolidated financial statements of
the Company reflect the results of operations of CEEE and AIE from July 1, 1996
through December 31, 1996. The consolidated financial statements prior to July
1, 1996 reflect the results of operations and financial position of AIC. Pro
forma information on this transaction is not presented as, at the date of this
transaction, CEEE is considered a public shell and, accordingly, the transaction
will not be considered a business combination. CEEE changed its name to Atlantic
International Entertainment, Ltd. ["AIE or the "Company"]. AIE was incorporated
under the laws of the State of Delaware on August 22, 1996.
Upon consummation of the merger, the Company's authorized capital was increased
to 100,000,000 shares of common stock, $.001 par value, and 10,000,000 shares of
preferred stock, $.001 par value. The combined entity operates under the name of
Atlantic International Entertainment, Ltd.
PRIVATE PLACEMENT - On September 18, 1996 and October 31, 1996, the Company
issued 521,500 and 365,200 shares, respectively of common stock in a private
placement of its securities. The Company received net proceeds of approximately
$826,881.
NATURE OF BUSINESS - The Company is located in Southern Florida and develops and
markets products and services which are offered and operated via the Internet
and World Wide Web. The operations are focused on three industries which include
investment advisory services, Internet software and medical products and
equipment.
[2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
CASH AND CASH EQUIVALENTS - Cash equivalents are comprised of certain highly
liquid investments with a maturity of three months or less when purchased.
PROPERTY AND EQUIPMENT AND DEPRECIATION - Property and equipment are stated at
cost. Depreciation is computed primarily using the straight-line method over the
estimated useful lives of the assets, which range from 5 to 7 years. Leasehold
improvements are amortized using the straight-line method over the lesser of the
term of the related lease or the estimated useful lives of the improvements.
ORGANIZATION COSTS - Costs incurred with the organization of the Company have
been capitalized and are being amortized over a period of five-years on the
straight-line method. As of December 31, 1996, organization costs net of
accumulated depreciation totaled $2,902.
F-8
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #2
- --------------------------------------------------------------------------------
[2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]
REVENUE RECOGNITION - Revenue from computer software licensing agreements is
accounted for under the cost recovery method, no profit is recognized until cash
payments by the buyer exceed the seller's cost of the software sold. After all
costs have been recovered, any additional cash collections are included in
income. Included in general and administrative expenses is $11,200 of cost
related to recovered costs. Revenue from investment advisory services is
recognized when services are performed.
DEFERRED INCOME TAXES - The Company accounts for deferred income taxes in
accordance with Statement of Financial Accounting Standards ["SFAS"] No. 109
"Accounting for Income Taxes." The statement requires that deferred income taxes
reflect the tax consequences on future years of differences between the tax
bases of assets and liabilities and their financial reporting amounts. Temporary
differences include different tax and book bases of property and equipment.
ADVERTISING EXPENSES - The Company expenses advertising costs as incurred. Total
advertising costs charged to expenses for the years ended December 31, 1996 and
1995 amounted to approximately $51,500 and $-0-, respectively.
LOSS PER SHARE - Loss per share of common stock is based on the weighted average
number of common shares outstanding for the periods presented, plus the number
of shares issued in the reverse merger, as if they were outstanding for all
periods presented.
SOFTWARE AND AMORTIZATION - Costs related to the conceptual formulation and
design of licensed programs are expensed as research and development. Costs
incurred subsequent to establishment of technological feasibility to produce the
finished product are capitalized. The annual amortization of the capitalized
amounts is the greater of the ratio that current gross revenues for a product
bear to the total of current and anticipated future gross revenues for that
product or the straight-line method over the remaining estimated economic life
of the product including the period being reported on. Amortization begins when
the product is available for general release to customers. Periodic reviews are
performed to ensure that unamortized program costs remain recoverable from
future revenues. Costs to support or service licensed programs are charged
against income as incurred, or when related revenue is recognized, whichever
occurs first.
IMPAIRMENT - Certain long-term assets of the Company are reviewed when changes
in circumstances require as to whether their carrying value has become impaired,
pursuant to guidance established in Statement of Financial Accounting Standards
["SFAS"] No. 121, "Accounting for the Impairment of Long-Lived Assets to be
Disposed Of." Management considers assets to be impaired if the carrying value
exceeds the future projected cash flows from related operations [undiscounted
and without interest charges]. If impairment is deemed to exist, the assets will
be written down to fair value or projected discounted cash flows from related
operations. Management also re-evaluates the periods of amortization to
determine whether subsequent events and circumstances warrant revised estimates
of useful lives. As of December 31, 1996, management expects these assets to be
fully recoverable.
[3] SIGNIFICANT RISKS AND UNCERTAINTIES
[A] CONCENTRATIONS OF CREDIT RISK - CASH - The Company currently has
approximately $301,000 on deposit in excess of federally insured limits.
[B] OTHER CONCENTRATION - The Company purchases software from one vendor.
Management believes that there is no business vulnerability regarding this
concentration of purchases from the vendor as the software is available from
other sources.
F-9
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #3
- --------------------------------------------------------------------------------
[3] SIGNIFICANT RISKS AND UNCERTAINTIES [CONTINUED]
[C] USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions 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.
[D] LICENSE RIGHTS - The Company's business is dependent on maintaining its
licensing rights to the software.
[4] ASSET ACQUISITION
On April 15, 1996, the pre-merger Company [See Note 1] purchased certain assets
consisting principally of computer software for Internet products and hardware.
The purchase price was $1,230,000 payable as $30,000 in cash and issued 200,000
shares of common stock with a fair value of $1,200,000.
In accordance with generally accepted accounting principles, the assets acquired
were capitalized since management believes these assets have alternative future
uses.
[5] PROPERTY AND EQUIPMENT
The following details the composition of property and equipment:
<TABLE>
<CAPTION>
Accumulated
-----------
Cost Depreciation Net
---- ------------ ---
<S> <C> <C> <C>
Equipment, Office Fixtures and Furnishings $ 250,795 $ 17,464 $ 233,331
Leasehold Improvements 13,401 958 12,443
Equipment 18,914 1,301 17,613
-------------- --------------- --------------
TOTALS $ 283,110 $ 19,723 $ 263,387
------ ============== =============== ==============
</TABLE>
Depreciation expense for the years ended December 31, 1996 and 1995 was $19,438
and $285, respectively.
[6] LEASES
The Company leases and subleases office space under operating leases expiring
through November 1997, and has a $3,081 security deposit with its landlord. The
lease grants an option for renewal for an additional three years.
Minimum future rental payments under non-cancelable operating having remaining
terms in excess of one year as of December 31, 1996.
Year Ending Operating
- ----------- ---------
December 31, Leases Subleases
- ------------ ------ ---------
1997 $ 41,973 $ 2,792
================ ===============
Rent expense for the years ended December 31, 1996 and 1995 was $53,427 and
$-0-, respectively. The prior year rent was included as part of a management fee
to an affiliated company [See Note 8].
F-10
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #4
- --------------------------------------------------------------------------------
[7] FAIR VALUE OF FINANCIAL INSTRUMENTS
Effective December 31, 1995, the Company adopted Statement of Financial
Accounting Standards ["SFAS'] No. 107, "Disclosure About Fair Value of Financial
Instruments" which requires disclosing fair value to the extent practicable for
financial instruments which are recognized or unrecognized in the balance sheet.
The fair value of the financial instruments disclosed herein is not necessarily
representative of the amount that could be realized or settled, nor does the
fair value amount consider the tax consequences of realization or settlement.
The following table summarizes financial instruments by individual balance sheet
classifications as of December 31, 1996:
Carrying Fair
-------- ----
Amount Value
------ -----
Due from Related Parties $ 48,273 $ 39,146
Due to Related Officers $ 22,286 $ 22,286
In assessing the fair value of financial instruments, the Company used a variety
of methods and assumptions, which were based on estimates of market conditions
and risks existing at that time. For certain instruments, including cash and
cash equivalents, related party and trade payables, it was assumed that the
carrying amount approximated fair value for the majority of these instruments
because of their short maturities.
[8] RELATED PARTY TRANSACTIONS
In January 1995, the Company entered into a one year management agreement with a
company which is deemed to be an affiliate because of identical stockholder
interests. Under the agreement, the Company paid monthly management fees
aggregating $245,800 for the year ended December 31, 1995, representing
operating expenses including rent, salaries, and other general and
administrative costs. The agreement expired on December 31, 1995, at which date
$10,000 was due from the affiliate.
Additionally, the Company made advances to the affiliated company during the
year ended December 1996, increasing the balance receivable to $48,273. The
advances are non-interest bearing, and due on demand.
The Company has notes payable to two officers in the aggregate amount of $21,655
at December 31, 1996. The notes are demand notes and incur interest at 8% per
annum. Interest expense related to the shareholders notes totaled $1,302 for the
year ended December 31, 1996.
[9] PROVISION FOR INCOME TAXES
Income tax [benefit] expense consists of the following
December 31,
------------
1 9 9 6 1 9 9 5
------- -------
Current:
Federal $ (77,215) $ 76,800
States -- 13,700
---------------- ---------------
Total Current (77,215) 90,500
---------------- ---------------
Deferred:
Federal $ -- $ --
States -- --
---------------- ---------------
Total Deferred -- --
---------------- ---------------
TOTAL [BENEFIT] TAX $ (77,215) $ 90,500
------------------- ================ ===============
F-11
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #5
- --------------------------------------------------------------------------------
[9] PROVISION FOR INCOME TAXES [CONTINUED]
Income tax at the federal statutory rate reconciled to the Company's effective
rate is as follows:
December 31,
------------
1 9 9 6 1 9 9 5
------- -------
Federal Statutory Rate (34.0)% 30.8%
Non-Deductible Expenses (13.3) --
Benefit of Net Operating Loss 52.8 --
State Income Taxes (5.5) 5.5
----------- ----------
EFFECTIVE RATE --% 36.3%
-------------- =========== ==========
In 1996, the Company recognized the benefit of $77,215 from the utilization of
an operating loss carryback which is expected to be filed in 1997.
The Company has a net operating loss carryforward of approximately $369,000 all
of which will expire in 2011.
The major components of deferred income tax assets and liabilities are as
follows:
December 31,
------------
1 9 9 6
-------
Deferred Tax Liabilities
Accelerated Depreciation $ (85,620)
--------------
Deferred Tax Assets:
Net Operating Loss 138,700
Net Deferred Tax Asset:
Before Valuation Allowance 53,080
Valuation Allowance 53,080
NET DEFERRED INCOME TAX ASSET $ --
----------------------------- ==============
The Company recorded a valuation allowance due to the uncertainty that the
Company will generate income in the future sufficient to fully or partially
utilize these carryforwards.
[10] BUSINESS SEGMENT INFORMATION
The Company's operations have been classified into three business segments:
investment advisory services Internet software and medical products and
equipment.
1 9 9 6 1 9 9 5
------- -------
Net Sales:
Investment Advisory Services $ 366,204 $ 702,307
Internet Software Licensing 87,000 --
Medical Products and Equipment 1,452 --
---------------- ---------------
$ 454,656 $ 702,307
================ ===============
Operating Income:
Investment Advisory Services $ 231,081 $ 249,655
Internet Software Licensing (659,056) --
Medical Products and Equipment -- --
---------------- ---------------
(427,975) $ 249,655
================ ===============
F-12
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #6
- --------------------------------------------------------------------------------
[10] BUSINESS SEGMENT INFORMATION [CONTINUED]
1 9 9 6 1 9 9 5
------- -------
Total Assets:
Investment Advisory Services $ 1,423 $ 1,423
Internet Software Licensing 1,980,591 --
Medical Products and Equipment -- --
---------------- ---------------
$ 1,982,014 $ 1,423
================ ===============
Depreciation and Amortization:
Investment Advisory Services $ 285 $ 285
Internet Software Licensing 67,091 --
Medical Products and Equipment -- --
---------------- ---------------
$ 67,376 $ 285
================ ===============
Capital Expenditures:
Investment Advisory Services $ 1,423 $ 1,423
Internet Software Licensing 1,490,395 --
Medical Products and Equipment -- --
---------------- ---------------
$ 1,491,818 $ 1,423
================ ===============
[11] COMMITMENTS
[A] On June 17, 1996, the Company entered into a three year consulting agreement
with a well known personality to act as the Company's spokesman. The agreement
calls for the issuance of 5,000 shares of common stock during each year of the
three year term of the agreement. The shares are to be issued in quarterly
installments commencing September 30, 1996. No shares have yet been issued but
the Company has recorded a liability of $17,364 which represents the fair market
value of the first two quarterly installments of shares to be issued.
[B] On July 22, 1996, the Company entered into an agreement for business
development and acquisition consulting services through December 31, 1997. The
agreement provides for payments of $72,000 for the year ended December 31, 1997.
[C] On August 7, 1996, the Company's medical division signed an exclusive
distribution agreement for world wide sales of medical testing devices for HIV,
hepatitis, pregnancy, ovulation and other tests using the Internet as its means
of sales and distribution.
[D] On November 25, 1996, the Company signed and agreement with
Telecommunication Information Services Systems, NV ["TISS"], a Curacao based
company to provide international sports and entertainment information services.
As of December 31, 1996, $11,625 was received as revenues.
The agreement was terminated in February 1997 in contemplation of the
consummation of the Company's sale of its foreign subsidiary [See Note 14].
[E] In December 1996, the Company signed two licensing agreements totaling
approximately $700,000 over the next year with two offshore gaming companies,
Patroon Agency ["Patroon"] based in Curacao and Carib Sportsbook, Inc. ["Carib"]
in Antigua, West Indies. The Company will provide its Internet Casino Extension
system to Patroon and its Web Sports system to the Carib [See Note 13B]. A
shareholder of the Patroon Agency is also a less than 1% shareholder of the
Company.
[12] MAJOR CUSTOMER
Two customers account for 46% of revenues. The customers account for $125,500
[Investment Advisory Services] and $87,000 [Internet Software] of revenues for
the year ended December 31, 1996. In the year ended December 31, 1995, three of
the Company's customers accounted for 84% of the Company's revenues. Revenue
from these customers approximated $210,000, $204,000 and $176,000, respectively.
F-13
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #7
- --------------------------------------------------------------------------------
[13] SUBSEQUENT EVENTS
[A] BUSINESS ACQUISITION - On January 31, 1997, the Company entered into an
agreement to purchase all of the shares of Eminet Domain, Inc. ["Eminet"]. The
purchase price for the shares was $2,020,000 payable by the issuance and
delivery to the shareholders of Eminet or their designees of a minimum of
200,000 shares of fully-paid and non-assessable common stock of the Company at
the market value as of January 31, 1997 and $20,000 cash payable at March 31,
1997. In addition, the shareholders of Eminet or their designees will receive
additional shares at market equal to one time Eminet's net profit before taxes
for the years ending 1997 and 1998 up to $750,000 per annum, one and one-half
times over $750,000 to $1,000,000 and two times over $1,000,000.
[B] LICENSE AGREEMENTS - In addition to the license agreements discussed in Note
11E, the Company has also entered into various single license user agreements
with fees totaling approximately $700,000 Management believes these fees will be
recognized as income by December 31, 1997.
[C] INCENTIVE STOCK OPTION PLAN
On January 1, 1997, the Company adopted an Incentive Stock Option Plan for
Employees, Directors, Consultants and Advisors [the "Plan"]. The Plan will
expire December 31, 2006 unless further extended by appropriate action of the
Board of Directors. Employees, directors, consultants and advisors of the
Company, or any of its subsidiary corporations, are eligible for participation
in the Plan. The Plan provides for stock to be issued pursuant to options
granted and shall be limited to 250,000 shares of Common Stock, $.001 par value.
The shares have been reserved for issuance in accordance with the terms of the
Plan.
[14] DISCONTINUED OPERATIONS
On December 15, 1996, the Company adopted a plan to discontinue and sell its
foreign subsidiary, known as Atlantic International, N.V. ["AIE, NV"], which
operated a Sportsbook operation. The purchase price was $850,000, $2,000 payable
at closing and beginning 60 days after closing, 40% of net win before expenses
on a minimum of $3,000 monthly, until the balance is paid. Interest on the
unpaid balance shall be accrued at 8% per annum. The effective date of this
transaction is January 1, 1997. The foreign subsidiary is reported as a
discontinued operation for the year ended December 31, 1996. Net assets of the
discontinued operations at December 31, 1996 consists primarily of property,
plant and equipment.
The closing date of the sale was March 26, 1997. The operations of AIE, N.V.
from the measurement date to the balance sheet date is deemed immaterial. AIE,
N.V. will be inactive from that date to the expected date of disposal.
A summary of net assets of discontinued operations is as follows:
December 31,
------------
1 9 9 6
-------
Cash $ 29,921
Furniture, Fixtures, Equipment 12,476
Other Assets 815
----------------
Total Assets 43,212
Accounts Payable and Accrued Expenses 14,808
Due to Customers 27,648
Total Liabilities 42,456
NET ASSETS OF DISCONTINUED OPERATIONS $ 756
------------------------------------- ================
F-14
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #8
- --------------------------------------------------------------------------------
[15] NEW AUTHORITATIVE ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board ["FASB"] has issued Statement of
Financial Accounting Standards ["SFAS"] No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities." SFAS No. 125
is effective for transfers and servicing of financial assets and extinguishment
of liabilities occurring after December 31, 1996. Earlier application is not
allowed. The provisions of SFAS No. 125 must be applied prospectively;
retroactive application is prohibited. Adoption on January 1, 1997 is not
expected to have a material impact on the Company. The FASB deferred some
provisions of SFAS No. 125, which are expected to be relevant to the Company.
The Financial Accounting Standards Board ["FASB"] has issued Statement of
Financial Accounting Standards ["SFAS"] No. 128, "Earnings per Share," and SFAS
No. 129, "Disclosure of Information about Capital Structure," in February 1997.
SFAS No. 128 simplifies the earnings per share ["EPS"] calculations required by
Accounting Principles Board ["APB"] Opinion No. 15, and related interpretations,
by replacing the presentation of primary EPS with a presentation of basic EPS.
SFAS No. 128 requires dual presentation of basic and diluted EPS by entities
with complex capital structures. Basic EPS includes no dilution and is computed
by dividing income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution of securities that could share in the earnings of an entity,
similar to the fully diluted EPS of APB Opinion No. 15. SFAS No. 128 is
effective for financial statements issued for periods ending after December 15,
1997, including interim periods; earlier application is not permitted. When
adopted, SFAS No. 128 will require restatement of all prior-period EPS data
presented; however, the Company has not sufficiently analyzed SFAS No. 128 to
determine what effect SFAS No. 128 will have on its historically reported EPS
amounts.
SFAS No. 129 does not change any previous disclosure requirements, but rather
consolidates existing disclosure requirements for ease of retrieval.
. . . . . . . . . . .
F-15
CERTIFICATE OF INCORPORATION OF
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
FIRST: The name of this corporation is Atlantic International
Entertainment, Ltd.
SECOND: The address of the registered office of the corporation in the
State of Delaware is 1013 Centre Road, City of Wilmington, County of New Castle,
Delaware 19805, and the name of its registered agent at that address is The
Prentice-Hall Corporation System, Inc.
THIRD: The name and mailing address of the incorporator of the
corporation is:
Michael I. Otner, Esq.
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
FOURTH: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FIFTH: The corporation is authorized to issue 110,000,000 shares,
100,000,000 of which are designated "Common Stock," $.001 par value, and
10,000,000 of which are designated "Preferred Stock," $.001 par value. The Board
of Directors is hereby authorized to fix or alter the rights, preferences,
privileges and restrictions granted to or imposed upon any series of Preferred
Stock, and the number of shares constituting any such series and the designation
thereof, or of any of them. The Board of Directors is also authorized to
increase or decrease the number of shares of any series, prior or subsequent to
the issue of that series, but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall be so decreased,
the shares 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.
SIXTH: In furtherance and not in limitation of the powers conferred by
statue, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind from time to time any or all of the bylaws of the corporation;
provided, however, that any bylaw amendment adopted by the Board of Directors
increasing or reducing the authorized number of directors or amending,
repealing, altering or rescinding Article 3, Section 3.2 of the Bylaws of the
corporation shall require a resolution adopted by the affirmative vote of not
less than sixty-six and two-thirds percent (66-2/3%) of the directors. Any Bylaw
amendment adopted by the stockholders
<PAGE>
increasing or reducing the authorized number of directors or amending,
repealing, altering or rescinding Article 3, Section 3.2 of the Bylaws of the
corporation shall require the approval of not less than sixty-six and two-thirds
percent (66-2/3%) of the total voting power of all outstanding shares of stock
of the corporation entitled to vote thereon.
SEVENTH: The number of directors of the corporation shall be fixed from
time to time by a Bylaw or amendment thereof duly adopted by the Board of
Directors. Any director or the entire Board of Directors may be removed from
office by the stockholders of the corporation only for cause.
EIGHTH: No stockholder will be permitted to cumulate votes in any
election of directors.
NINTH: Special meetings of the stockholders of this corporation for any
purpose or purposes may be called at any time upon the request in writing of a
majority of the Board of Directors or by the Chairman of the Board or the
President of the corporation. Any such request shall state the purpose or
purposes of the proposed meeting. As soon as reasonably practicable after
receipt of such a request, written notice of such meeting, stating the place,
date (which shall be sixty (60) days from the date of the notice) and hour of
the meeting, shall be given to each stockholder entitled to vote at such
meeting. Special meetings may not be called other than as provided in this
ARTICLE NINTH.
TENTH: Stockholders of the corporation shall take action by meetings
held pursuant to this Certificate of Incorporation and the Bylaws. Stockholders
may not take any action by written consent in lieu of a meeting. Meetings of
stockholders may be held within or outside of the State of Delaware, as the
Bylaws may provide. The books of the corporation may be kept (subject to any
provision contained in the statute) outside the State of Delaware at such place
or places as may be designated from time to time by the Board of Directors or in
the Bylaws of the corporation.
ELEVENTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred on
stockholders herein are granted subject to this reservation. Notwithstanding the
foregoing, the provisions set forth in ARTICLES SIXTH, SEVENTH, TENTH, TWELFTH
and this ARTICLE ELEVENTH may not be repealed or amended in any respect unless
such repeal or amendment is approved by the affirmative vote of not less than
sixty-six and two-thirds percent (66-2/3%) of the total voting power of all
outstanding shares of stock of this corporation entitled to vote thereon, unless
such amendment or repeal has been previously approved by the vote of not less
than sixty-six and two-thirds percent (66-2/3%) of the members of the Board of
Directors, in which case those Articles of this
-1-
<PAGE>
Certificate of Incorporation may be so amended or repealed by a vote of not less
than a majority of the total voting power of all outstanding shares of stock of
the corporation entitled to vote thereon.
TWELFTH: A director of the corporation shall not be personally liable
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived any
improper personal benefit. If the Delaware General Corporation Law is hereafter
amended to authorize, with the approval of a corporation's stockholder, further
reductions in the liability of the directors of a corporation for breach of
fiduciary duty, then a director of the corporation shall not be liable for any
such breach to the fullest extent permitted by the Delaware General Corporation
Law as so amended. Any repeal or modification of the foregoing provisions of
this ARTICLE TWELFTH by the stockholders of the corporation shall not adversely
affect any right or protection of a director of the corporation existing at the
time of such repeal or modification.
THIRTEENTH: Elections of directors need not be by written ballot unless
the Bylaws of the corporation shall so provide.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation to do business both within and without the
State of Delaware, and in pursuance of the Delaware General Corporation Law,
does hereby make this Certificate, under penalties of perjury, hereby declaring
and certifying that this is my act and deed and the facts herein stated are
true, and accordingly have hereunto set my hand this 22nd day of August, 1996.
/s/ MICHAEL I. OTNER
--------------------
Michael I. Otner
Sole Incorporator
BYLAWS
OF
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
ARTICLE 1 - OFFICES
1.1 REGISTERED OFFICE. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
1.2 OTHER OFFICES. The corporation may also have offices at such other
places both within or without the State of Delaware as the Board of Directors
may from time to time determine or the business of the corporation may require.
ARTICLE 2 - STOCKHOLDERS
2.1 PLACE OF MEETINGS. All meetings of stockholders shall be held at
such place within or without the State of Delaware as may be designated from
time to time by the Board of Directors, the President or the Chief Executive
Officer or, if not so designated, at the registered office of the corporation.
2.2 ANNUAL MEETING. The annual meeting of stockholders for the election
of directors and for the transaction of such other business as may properly be
brought before the meeting shall be held at a time fixed by the Board of
Directors, the President or the Chief Executive Officer. If this date shall fall
upon a legal holiday at the place of the meeting, then such meeting shall be
held on the next succeeding business day at the same hour. If no annual meeting
is held in accordance with the foregoing provisions, the Board of Directors
shall cause the meeting to be held as soon thereafter as convenient.
2.3 SPECIAL MEETINGS. A special meeting of the stockholders may be
called only in the manner specified in the Certificate of Incorporation.
2.4 NOTICE OF MEETINGS. Except as otherwise provided by law, written
notice of each meeting of stockholders, whether annual or special, shall be
given not less than 10 nor more than 60 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. If mailed, notice is given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the corporation.
2.5 VOTING LIST. The officer who has charge of the stock ledger of the
corporation shall prepare, at least 10 days before every meeting of
stockholders, 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.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, at a place within the city where the meeting is to
be held. The list shall also be produced and kept at the time and place of the
meeting during the whole time of the meeting, and may be inspected by any
stockholder who is present.
2.6 QUORUM. Except as otherwise provided by law, the Certificate of
Incorporation of these By-Laws, the holders of a majority of the shares of the
capital stock of the corporation issued and outstanding and entitled to vote at
the meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of business.
<PAGE>
2.7 ADJOURNMENTS. Any meeting of stockholders may be adjourned to
another time and to any other place at which a meeting of stockholders may be
held under these By-Laws by the stockholders 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. It shall not be necessary to notify any stockholder of any adjournment
of less than 30 days if the time and place of the adjourned meeting are
announced at the meeting at which adjournment is taken, unless after the
adjournment a new record date is fixed for the adjourned meeting. At the
adjourned meeting, the corporation may transact any business which might have
been transacted at the original meeting.
2.8 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 Certificate of Incorporation. Each stockholder of record entitled to vote
at a meeting of stockholders, 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. No such proxy shall be voted or acted upon
after three years from the date of its execution, unless the proxy expressly
provides for a longer period.
2.9 ACTION AT MEETING. When a quorum is present at any meeting, the
holders a majority of the stock present or represented and voting on a matter
properly before the meeting (or if there are two or more 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 or represented and
voting on a matter) shall decide any matter properly before the meeting to be
voted upon by the stockholders at such meeting, except when a different vote is
required by express provision of law, the Certificate of Incorporation or these
By-Laws. Any election by stockholders shall be determined by a plurality of the
votes cast by the stockholders entitled to vote at the election.
ARTICLE 3 - DIRECTORS
3.1 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
Certificate of Incorporation or these By-Laws. In the event of a vacancy in the
Board of Directors, the remaining directors, except as otherwise provided by
law, may exercise the powers of the full Board until the vacancy is filled.
3.2 NUMBER; ELECTION; TENURE AND QUALIFICATION. The number of directors
shall constitute the whole Board shall be fixed by resolution of the Board of
Directors, with the number initially fixed at three (3). Each director shall be
elected by the stockholders at the annual meeting and shall hold office until
the next annual meeting and until his successor is elected and qualified, or
until his earlier death, resignation or removal. Directors need not be
stockholders of the corporation.
3.3 VACANCIES. Unless and until filled by the stockholders, any vacancy
in the Board of Directors, however occurring, including a vacancy resulting from
an enlargement of the Board, may be 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, or a director chosen to full a
position resulting from an increase in the number of directors shall hold office
until the next annual meeting of stockholders and until his successor is elected
and qualified, or until his earlier death, resignation or removal.
-2-
<PAGE>
3.4 RESIGNATION. Any director 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.
3.5 REGULAR MEETINGS. Regular meetings of the Board of Directors may be
held without notice at such time and place, within or without the State of
Delaware, 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 stockholders.
3.6 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
held at any time and place, within or without the State of Delaware, designated
in a call by the Chairman of the Board, President, two or more directors, or by
one director in the event that there is only a single director in office.
3.7 NOTICE OF SPECIAL MEETINGS. Notice of any special meeting of
directors shall be given to each director by the Secretary or by the officer or
one of the directors calling the meeting. Notice shall be given to each director
in person, by telephone or by telegram sent to his business or home address at
least 48 hours in advance of the meeting, or by written notice mailed to his
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
purposes of the meeting.
3.8 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.
3.9 QUORUM. A majority of the number of directors fixed pursuant to
Section 3.2 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
(1/3) of the number so fixed 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.
3.10 ACTION AT MEETING. At any meeting of the Board of Directors at
which 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 By-Laws.
3.11 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 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 or committee.
3.12 COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members
-3-
<PAGE>
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 disqualified member. Any such committee, to the extent provided in the
resolution of the Board of Directors and subject to the provisions of the
General Corporation Law of the State of Delaware, 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. 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
By-Laws for the Board of Directors.
3.13 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 4 - OFFICERS
4.1 ENUMERATION. The officers of the corporation shall consist of a
President, a Chief Executive Officer, a Secretary, a Chief Financial Officer and
such other officers with such other titles as the Board of Directors shall
determine, including a Chairman of the Board, a Vice-Chairman of the Board, a
Treasurer, and one or more Vice Presidents, Controllers, and Assistant
Secretaries. The Board of Directors may appoint such other officers as it may
deem appropriate.
4.2 ELECTION. The President, Chief Executive Officer, Chief Financial
Officer and Secretary shall be elected annually by the Board of Directors at its
first meeting following the annual meeting of stockholders or, if no such annual
meeting has yet been held, by the Board of Directors at any meeting. Other
officers may be appointed by the Board of Directors at such meeting or at any
other meeting.
4.3 QUALIFICATION. No officer need be a director. No officer need be a
stockholder. Any two or more offices may be held by the same person.
4.4 TENURE. Except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws, 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.
4.5 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.
The Board of Directors, or a committee duly authorized to do so, may
remove any officer with or without cause. 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
-4-
<PAGE>
compensation is expressly provided in a duly authorized written agreement with
the corporation.
4.6 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 the President, Chief
Financial Officer 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.
4.7 CHAIRMAN OF THE BOARD AND VICE-CHAIRMAN OF THE BOARD. If the Board
of Directors appoints a Chairman of the Board, he shall, when present, preside
at all meetings of the Board of Directors. He shall perform such duties and
possess such powers as are usually vested in the office of the Chairman of the
Board or as may be vested in him by the Board of Directors. If the Board of
Directors appoints a Vice Chairman of the Board, he shall, in the absence or
disability of the Chairman of the Board, perform the duties and exercise the
powers of the Chairman of the Board and shall perform such other duties and
possess such other powers as may from time to time be vested in him by the Board
of Directors.
4.8 PRESIDENT. The President shall be the chief operating officer of
the corporation. He shall also be the chief executive officer of the corporation
unless such title is assigned to another person. The President shall, subject to
the direction of the Board of Directors, have general supervision and control of
the business of the corporation. Unless otherwise provided by the directors, he
shall preside at all meetings of the stockholders and of the Board of Directors
(except as provided in Section 4.7 above). The President shall perform such
other duties and shall have such other powers as the Board of Directors may from
time to time prescribe.
4.9 VICE PRESIDENTS. Any Vice President shall perform such duties and
possess such powers as the Board of Directors or the President may from time to
time prescribe. In the event of the absence, inability or refusal to act of the
President, the Vice President (or if there shall be more than one, the Vice
Presidents in the order determined by the Board of Directors) shall perform the
duties of the President and when so performing shall have all the powers of and
be subject to all the restrictions upon the President. The Board of Directors
may assign to any Vice President the title of Executive Vice President, Senior
Vice President or any other title selected by the Board of Directors.
4.10 SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall perform
such duties and shall have such powers as 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 stockholders and special meetings of the Board of Directors, to
attend all meetings of stockholders and the Board of Directors and keep a record
of the proceedings, to maintain a stock ledger and prepare lists of stockholders
and their addresses as required, to be custodian of corporate records and the
corporate seal 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 President or the Secretary may from time
to time prescribe. In the event of the absence, inability or refusal or refusal
to act of the Secretary, the Assistant Secretary, (or if there shall 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 stockholders or directors, the person presiding at the meeting shall
designate a temporary secretary to keep a record of the meeting.
-5-
<PAGE>
4.11 CHIEF FINANCIAL OFFICER AND CONTROLLER. The Chief Financial
Officer shall perform such duties and shall have such powers as may from time to
time be assigned to him by the Board of Directors or the President. The Chief
Financial Officer shall also be the Treasurer of the corporation unless the
Board of Directors has appointed another person as the Treasurer. In addition,
the Chief Financial Officer 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 By-Laws, to disburse such funds as ordered by the Board of
Directors, to make proper accounts of such funds, and to render as required by
the Board of Directors statements of all such transactions and of the financial
condition of the corporation.
The Controller shall perform such duties and possess such powers as the
Board of Directors, the President or the Chief Financial Officer may from time
to time prescribe. In the event of the absence, inability or refusal to act of
the Chief Financial Officer, the Controller, (or if there shall be more than
one, the Controllers in the order determined by the Board of Directors) shall
perform the duties and exercise the powers of the Chief Financial Officer.
4.12 BONDED OFFICERS. The Board of Directors may require any officer to
give the corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors upon such terms and conditions
as the Board of Directors may specify, including without limitation a bond for
the faithful performance of his duties and for the restoration to the
corporation of all property in his possession or under his control belonging to
the corporation.
4.13 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 5 - CAPITAL STOCK
5.1 ISSUANCE OF STOCK. Unless otherwise voted by the stockholders and
subject to the provisions of the Certificate 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.
5.2 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.
Each certificate for shares of stock which are subject to any
restriction on transfer pursuant to the Certificate of Incorporation, the
By-Laws, 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.
5.3 TRANSFERS. Subject to the restrictions, if any, stated or noted on
the stock certificates, 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
-6-
<PAGE>
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 reasonably require. Except as may be otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, 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 By-Laws.
5.4 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 of such indemnity as
the Board of Directors may require for the protection of the corporation or any
transfer agent or registrar.
5.5 RECORD DATE. The Board of Directors may fix in advance a date as a
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders 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 60 nor less than 10 days before
the date of such meeting, nor more than 60 days prior to any other action to
which such record date relates.
If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders 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 stockholders 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
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders 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 6 - INDEMNIFICATION
The corporation shall, to the fullest extent permitted by Section 145
of the General Corporation Law of Delaware, as that Section may be amended and
supplemented from time to time, indemnify any director, officer or trustee which
it shall have power to indemnify under the Section against any expenses,
liabilities or other matters referred to in or covered by that Section. 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 by-law,
agreement or vote on stockholders 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.
-7-
<PAGE>
Expenses incurred by a director of the Corporation in defending a civil
or criminal action, suit or proceeding by reason of the fact that he is or was a
director of the Corporation (or was serving at the Corporation's request as a
director or officer of another corporation) shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized by relevant sections of the General Corporation Law of
Delaware.
To assure indemnification under this Article of all such persons who
are determined by the corporation or otherwise to be or to have been
"fiduciaries" of any employee benefit plan of the corporation which may exist
from time to time, such Section 145 shall, for the purposes of this Article, be
interpreted as follows: an "other enterprise" shall be deemed to include such an
employee benefit plan, including, without limitation, any plan of the
corporation which is governed by the Act of Congress entitled "Employee
Retirement Income Security Act of 1974," as amended from time to time; the
corporation shall be deemed to have requested a person to serve an employee
benefit plan where the performance by such person of his duties to the
corporation also imposes duties on, or otherwise involves services by, such
person to the plan or participants or beneficiaries of the plan; excise taxes
assessed on a person with respect to an employee benefit plan pursuant to such
Act of Congress shall be deemed "fines"; and action taken or omitted by a person
with respect to an employee benefit plan in the performance of such person's
duties for a purpose reasonably believed by such person to be in the interest of
the participants and beneficiaries of the plan shall be deemed to be for a
purpose which is not opposed to the best interests of the corporation.
ARTICLE 7 - GENERAL PROVISIONS
7.1 FISCAL YEAR. Except as from time to time otherwise designated by
the Board of Directors, the fiscal year of the corporation shall end on December
31 of each year.
7.2 CORPORATE SEAL. The corporate seal shall be in such form as shall
be approved by the Board of Directors.
7.3 EXECUTION OF INSTRUMENTS. The President, the Chief Executive
Officer or the Treasurer shall have power to execute and deliver on behalf and
in the name of the corporation any instrument requiring the signature of an
officer of the corporation, except as otherwise provided in these By-Laws, or
where the execution and delivery of such an instrument shall be expressly
delegated by the Board of Directors to some other officer or agent of the
corporation.
7.4 WAIVER OF NOTICE. Whenever any notice whatsoever is required to be
given by law, by the Certificate of Incorporation or by these By-Laws, 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.
7.5 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 fact for this corporation
(with or without power of substitution) at, any meeting of stockholders or
shareholders of any other corporation or organization, the securities of which
may be held by this corporation.
7.6 EVIDENCE OF AUTHORITY. A certificate by the Secretary, or an
Assistant Secretary, or a temporary Secretary, as to any action taken by the
-8-
<PAGE>
stockholders, 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.
7.7 CERTIFICATE OF INCORPORATION. All references in these by-Laws to
the Certificate of Incorporation shall be deemed to refer to the Certificate of
Incorporation of the corporation, as amended and in effect from time to time.
7.8 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 and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board or committee in good faith authorizes 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 stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(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 stockholders.
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.
7.9 SEVERABILITY. Any determination that any provision of these By-Laws
is for any reason inapplicable, illegal or ineffective shall not affect or
invalidate any other provision of these By-Laws.
7.10 PRONOUNS. All pronouns used in these By-Laws 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 8 - AMENDMENTS
8.1 BY THE BOARD OF DIRECTORS. These By-Laws may be altered, amended or
replaced or new by-laws may be adopted by the 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 except when a different vote is required
by express provision of law, the Certificate of Incorporation or these By-Laws.
8.2 BY THE STOCKHOLDERS. These By-Laws may be altered, amended or
repealed or new by-laws 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 stockholders, or at
any special meeting of stockholders, except when a different vote is required by
express provision of law, the Certificate of Incorporation or these By-Laws,
provided notice of such alteration, amendment, repeal or adoption of new by-laws
shall have been stated in the notice of such special meeting.
-9-
EXHIBIT 4.1
NUMBER SHARES
AIE CUSIP 048605 10 9
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed.
This certificate is not valid unless countersigned by the Transfer
Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
/s/NORMAN HOSKIN /s/RICHARD IAMUNNO
- ---------------- -----------------------------------------
SECRETARY PRESIDENT
COUNTERSIGNED AND REGISTERED:
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
TRANSFER AGENT AND REGISTRAR,
BY
---------------------------------------
AUTHORIZED SIGNATURE
<PAGE>
The Corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______ Custodian ______
(Cust) (Minor)
under Uniform Gifts to Minors
Act__________________________
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
__________________________________________________________________________shares
of capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated:________________
______________________________________________________________
NOTICE: The signatures to this assignment and correspond
with the name as written upon the face of this
certificate in every particular, without alteration
or enlargement of any change whatever and must be
guaranteed by an Eligible Institution (as defined in
Rule 17Ad-15 under the Securities Exchange Act of
1934) which may include a commercial bank, trust
company or savings association, credit union or
member firm of the American Stock Exchange, New York
Stock Exchange, Pacific Stock Exchange or Midwest
Stock Exchange.
-2-
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
INCENTIVE STOCK OPTION PLAN
FOR
EMPLOYEES, DIRECTORS, CONSULTANTS, AND ADVISORS
The securities issued pursuant to this Plan have not been registered
pursuant to the Securities Act of 1933, as amended. The securities may be
offered or sold only pursuant to (i) a Registration Statement pursuant to such
Act, including a Registration Statement on Form S-8, or (ii) an opinion of
counsel, satisfactory to the Company, that an exemption from registration
pursuant to such Act is available.
1. PURPOSE. The purpose of this Plan is to secure long term
relationships for Atlantic International Entertainment, Ltd., and thereby afford
its stockholders the benefits arising from capital stock ownership by the
Company's Employees, Directors, Consultants, and Advisors, who can help in the
company's growth and success and to provide an effective means of compensation
for such persons and entities providing services to the Company in lieu of cash
payments therefor.
2. ADMINISTRATION. The Plan shall be administered by the Board of
Directors or a Committee appointed by the Board (the "Committee"), which shall
consist of not less than two members appointed by the Board of Directors. As
used in this Plan, references to the "Committee" shall mean either such
Committee or the Board if no committee has been established. The Board of
Directors may from time to time and in its sole discretion remove members from
or add members to any such Committee. Vacancies, however caused, shall be filled
by the Board of Directors. The Committee may act at a meeting, including
telephonically, in which a majority are present, or by written consent of a
majority of the Committee. The Committee shall have the authority to construe
and interpret the Plan, to define the terms used herein, and to review,
deliberate and act upon the written recommendations of the Chief Executive
Officer of the Company with respect to shares of Common Stock proposed to be
issued pursuant to the Plan. All determinations and interpretations made by the
Committee shall be binding and conclusive upon all participants in the Plan and
on their legal representatives and beneficiaries.
3. ELIGIBILITY AND PARTICIPATION. Employees, Directors, Consultants,
and Advisors of the Company, or any of its subsidiary corporations, shall be
eligible for participation in the Plan. Each person or entity acquiring shares
of Common Stock pursuant to exercise of Options granted under the Plan shall be
acquiring such shares for investment purposes only, in lieu of cash compensation
for services rendered to the Company, and at such exercise price(s) as shall be
determined by the Committee at time of grant. Such shares issuable upon exercise
of any Option shall be issued only upon opinion of counsel that an exemption
from registration pursuant to the Securities Act of 1933, as amended, is
available for such issuance. The Company may, but is not required to, register
such shares for public sale pursuant to the Act, including but not limited to a
Registration on Form S-8.
<PAGE>
4. SHARES SUBJECT TO PLAN. Subject to modification by the Board of
Directors in accordance with the By-Laws of the Company, the stock to be issued
pursuant to Options granted pursuant to this Plan shall be limited to 250,000
shares of Common Stock, $.001 par value, which number of shares have been
reserved for issuance in accordance with the terms of this Plan by prior action
of the Board.
5. ADJUSTMENTS. If the outstanding shares of the Common Stock of the
Company are increased, decreased, or changed into or exchanged for a different
number or kind of shares or securities of the Company, through reorganization,
recapitalization, reclassification, stock split or reverse stock split, an
appropriate and proportionate adjustment shall be made in the maximum number and
kind of shares authorized to be issued pursuant to this Plan.
6. ASSIGNMENT OR TRANSFER OF OPTIONS. Options granted pursuant to the
Plan may not be transferred by the Option grantee without the express written
consent of the Committee, except that an Option grantee shall not be require to
obtain such consent for transfer or sale of such Option to any member of the
Option grantee's immediate family, including a transfer by operation of law, or
a transfer or sale to a corporation or partnership of which the Option grantee
holds at least a 25% interest at the time of such transfer or sale.
7. AMENDMENT AND TERMINATION OF PLAN. The Board of Directors of the
Company may at any time, by appropriate action, suspend or terminate the Plan,
or amend the terms and conditions of the Plan.
8. INDEMNIFICATION OF COMMITTEE. In addition to such other rights of
indemnification as they may have as directors of the Company, the members of the
Committee shall be indemnified by the Company to the full extent permitted by
the General Corporation Law of the State of Delaware, and to indemnify and hold
harmless each member with respect to any action, claim, suit or proceeding to
which such indemnification applies, including the costs and expenses of defense.
9. APPLICABLE LAW. The terms and conditions of this Plan, and all
proceedings related thereto, shall be interpreted and construed in accordance
with the Laws of the State of Delaware.
10. EFFECTIVE DATE. The Plan shall be come effective as of the 1st day
of January, 1997, and shall expire of the 31st day of December, 2006, unless
further extended by appropriate action of the Board of Directors.
-2-
EXCHANGE OF STOCK AGREEMENT AND PLAN OF REORGANIZATION
Exchange of Stock Agreement and Plan of Reorganization dated
July 16, 1996 (the "Agreement"), by and between CEEE GROUP CORPORATION ("CEEE"),
a Colorado corporation having its principal place for the transaction of
business at 51 Hudson Point Lane, Ossining, New York 10562, EDWARD COWLE,
residing at 708 3rd Avenue, New York, N.Y. 10017 ("Cowle"), DEWORTH WILLIAMS,
residing at 56 West 400 South, Salt Lake City, Utah 84101 ("Williams"), ATLANTIC
INTERNATIONAL CAPITAL, LTD., a Delaware corporation having its principal place
for the transaction of business at 2200 Corporate Blvd., Suite 317, Boca Raton,
Florida 33431 ("Atlantic"), and each of the stockholders of the Corporation
listed on Schedule I attached hereto (each, a "Stockholder" and collectively,
the "Stockholders").
W I T N E S E T H:
WHEREAS, the Stockholders represent all stockholders of
Atlantic who collectively own 100 shares of common stock, par value $.01 per
share, of Atlantic (the "Atlantic Stock") which constitutes all of the issued
and outstanding shares of the common stock of Atlantic; and
WHEREAS, CEEE currently has an authorized capitalization of at
least 10,000,000 shares of Common Stock, $.001 par value per share (the "CEEE
Stock") of which 1,500,033 shares are issued and outstanding; and
WHEREAS, CEEE desires to acquire from the Stockholders all of
the Atlantic Stock in exchange solely for 7,000,000 shares of CEEE Stock (the
"Exchange Shares"); and
WHEREAS, it is the intention of CEEE that, upon the amendment
of the Certificate of Incorporation of CEEE more fully described in Article VII
hereof, CEEE will issue to the Stockholders, in the aggregate, an additional
18,183,759 shares (the "Additional Shares") of CEEE Stock as set forth under the
column "Number of Additional Shares to be Received on SCHEDULE I; and
WHEREAS, it is the intention of CEEE and Atlantic that the
exchange of the Corporation Stock for the Exchange Shares constitute a
"reorganization" as defined in Section 368(a)(1)(B) of the Internal Revenue Code
of 1986, as amended.
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants herein contained, IT IS AGREED as follows:
<PAGE>
ARTICLE I
EXCHANGE OF STOCK
Section 1.1 EXCHANGE OF STOCK. Subject to the terms and
conditions of this Agreement, at the "Closing" as such term as defined in
Section 7.1 hereof, the Atlantic Stock shall be exchanged by the Stockholders
with CEEE for the Exchange Shares in the respective amounts for each Stockholder
set forth opposite his name on Schedule I hereto under the column "Number of
Exchange Shares to be Received."
Section 1.2 DELIVERY OF CERTIFICATES. At the Closing, the
certificates representing all of the outstanding shares of Atlantic Stock duly
endorsed to CEEE with signatures guaranteed and with all requisite stock
transfer tax stamps affixed, shall be delivered to CEEE. The cost of any
transfer tax stamps required to be affixed to any stock certificates shall be
paid by Atlantic. Upon delivery by CEEE of the certificates evidencing the
Exchange Shares, the Stockholders shall be vested with good and valid title to
such Exchange Shares, free and clear of all liens, claims and encumbrances,
other than those created by the Stockholders. The Exchange Shares and the
Additional Shares shall together constitute approximately 94.012% of the
outstanding capital stock of CEEE.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CEEE
CEEE represents and warrants to the Stockholders and Atlantic
as follows:
Section 2.1 ORGANIZATION AND QUALIFICATION OF CEEE. CEEE is a
corporation duly incorporated, duly organized, validly existing and in good
standing under the laws of the State of Colorado. CEEE has the corporate power
and authority to own or lease and operate all of its properties and assets and
to carry on its business as such business in now being conducted and is duly
licensed or qualified to do business and is in good standing in all states in
which the nature of the business conducted by CEEE or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualifications necessary and where the failure to qualify would not have a
material adverse effect on the conditions (financial or otherwise), operations,
properties, assets, liabilities, earnings or business of CEEE or on the
enforceability of any contract or commitment referred to in Section 2.14 hereof
or give rise to any obligation for taxes. Norman Hoskin and Richard Iamunno, as
representatives of Atlantic and the Stockholders (the "Representatives") have
received copies of CEEE's Certificate of Incorporation, certified by the
Secretary of State of the State of Colorado as of a recent date, and of CEEE's
By-Laws, certified
-2-
<PAGE>
by its Secretary, which Certificate and By-Laws are complete and correct.
Section 2.2 CAPITALIZATION AND OWNERSHIP OF CEEE. The
authorized capital stock of CEEE consists of 10,000,000 shares of Common Stock,
$.001 par value per share, of which 1,500,033 shares are issued and outstanding.
The authorized capitalization is based upon the Amendments to the Articles of
Incorporation filed with the State of Colorado on April 10, 1987, in connection
with certain Articles of Merger filed the same date, which Articles of Amendment
changed the authorized capitalization of CEEE from 10,000,000 shares of $.001
par value common stock, to 100,000,000 shares of $.001 par value common stock.
The Merger Agreement to which the Articles of Merger relate was subsequently
rescinded by court action, however, no action has been taken by CEEE to notify
the State of Colorado of this rescission and no determination has been made as
to the effect the rescission shall have on the authorized capitalization. All
outstanding shares of CEEE Stock are validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership thereof and
free of pre-emptive rights. There are no shares of CEEE Stock issued or
outstanding except as referred to above and, except as set forth on SCHEDULE 2.2
hereto, there are no options, calls, subscriptions, warrants, rights, agreements
or commitments of any character obligating CEEE, contingently or otherwise, to
issue shares of CEEE's capital stock or to register shares of CEEE's capital
stock under the Securities Act of 1933, as amended (the "Securities Act"), or
any other applicable Federal or state securities laws.
Section 2.3 NO VIOLATIONS. The execution and delivery of this
Agreement by CEEE will not violate any provisions of CEEE's Certificate of
Incorporation or By-Laws, conflict with any law, rule, statute or regulation to
which CEEE is subject or violate or result in a default under any agreement to
which CEEE is a party or by which it is bound.
Section 2.4 SEC FILINGS. CEEE has filed with the Securities
and Exchange Commission (the "SEC") all statements and documents which it is
required to so file (the "Filings"). CEEE has been subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, (the "Exchange
Act") since November 15, 1995 (the "Reporting Date"). Copies of all Filings made
since the Reporting Date have been provided to the Representatives. All such
Filings are accurate and complete in all material respects.
Section 2.5 INVESTMENTS. CEEE has not made any investments and
does not own any capital stock of any other corporation or other entity.
-3-
<PAGE>
Section 2.6 CONSENTS AND APPROVALS. To the best knowledge of
CEEE, no permit, consent, approval or authorization of, or declaration, filing
or registration with, any public body or authority or other person, firm or
entity is necessary in connection with the execution and delivery by CEEE of
this Agreement or the consummation by it of the transactions contemplated
hereby.
Section 2.7 COMPLIANCE WITH LAW. CEEE holds all licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business, and has complied and is in compliance with all applicable statutes,
laws, ordinances, rules and regulations of all Federal, state, local and foreign
governmental bodies, agencies and subdivisions having, asserting or claiming
jurisdiction over it or over any part of its operations and, to the best of its
knowledge, currently is not in violation of any thereof, except for such
licenses, franchises, permits and authorizations, the lack of which, and for
such statutes, laws, ordinances, rules and regulations, non-compliance or
violation of which, in any one case or in the aggregate, would not have a
materially adverse effect on the condition (financial or otherwise), operations,
properties, assets, liabilities, earnings, or business of CEEE, or impair CEEE's
ability to consummate the transactions contemplated hereby. In connection with
any sale of any securities CEEE has complied with the Securities Act of 1933, as
amended (the "Securities Act"), the Exchange Act, and all rules and regulations
of the SEC and the laws, rules and regulations of each state in which such
securities are offered for sale.
Section 2.8 FINANCIAL STATEMENTS. The Representatives have
received copies of the audited financial statements of CEEE for the fiscal years
ended December 31, 1994 and December 31, 1995 (the "Financial Statements")
including the related balance sheets, statements of operations, statement of
changes in shareholders' equity for such years and the notes thereto,
accompanied by the reports of Jones, Jensen & Co., 349 South 200 East, Salt Lake
City, Utah 84111, Certified Public Accountants for CEEE. The Financial
Statements (a) present fairly the financial position, results of operations and
changes in financial position of CEEE, as of the respective dates and for the
respective periods indicated, and (b) have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied. The
balance sheet of CEEE as of December 31, 1995 reflects no total liabilities (the
"Total Liabilities").
Section 2.9 EXISTING CONDITION. Except as disclosed in
SCHEDULE 2.9 hereto, since the date of the December 31, 1995 Financial
Statements, CEEE has not:
(a) incurred any liabilities;
-4-
<PAGE>
(b) sold, encumbered, assigned or transferred
any of its assets;
(c) made or suffered any amendment or termination
of any material agreement, contract, commitment, lease under which CEEE is
lessee, or cancelled, modified or waived any significant debts or claims held by
it or waived any rights of significant value, whether or not in the ordinary
course of business;
(d) suffered any damage, destruction or loss,
whether or not covered by insurance;
(e) suffered any material adverse change in its
business, operations, assets, properties, prospects or condition
(financial or otherwise);
(f) made commitments or agreements for capital
expenditures;
(g) hired any employees;
(h) changed any of the accounting principles
followed by it or the methods of applying such principles;
(i) entered into any transaction other than this
Agreement; or
(j) issued any shares of its capital stock.
Section 2.10 TITLE TO PROPERTIES; LEASEHOLD INTERESTS. CEEE
has good and valid title to all properties and assets, real, personal and mixed,
free and clear of all mortgages, liens, pledges, security interests, charges,
claims, restrictions and other encumbrances and defects of title of any nature
whatsoever, except for liens for taxes not yet due and payable.
Section 2.11 CONDITION OF TANGIBLE ASSETS. All material items
of tangible personal property are in good condition and repair, subject to
normal wear and tear, and are usable in the regular and ordinary course of
business of CEEE.
Section 2.12 BOOKS OF ACCOUNT. The books, records and accounts
of CEEE maintained with respect to the business of CEEE accurately and fairly
reflect, in reasonable detail, all the transactions and all the assets and
liabilities of CEEE. CEEE has not engaged in any transaction, maintained any
bank account or used any of its funds except for transactions, bank accounts and
funds which have been and are reflected in the normally maintained books and
records of the business.
-5-
<PAGE>
Section 2.13 LITIGATION. No litigation, including any
arbitration, investigation or other proceeding of or before any court,
arbitrator or governmental or regulatory official, body or authority is pending
or, to the best of CEEE's knowledge, threatened against CEEE. CEEE is not a
party to or subject to the provisions of any judgment, order, writ, injunction,
decree or award of any court, arbitrator or governmental or regulatory official,
body or authority which may materially and adversely affect the business or
assets of CEEE.
Section 2.14 CONTRACTS AND COMMITMENTS. Except as listed and
annexed to SCHEDULE 2.14 hereto, CEEE is not a party to any written or oral:
(a) agreement, contract or commitment with any
present or former employee or consultant or for the employment of any person;
(b) agreement contract or commitment for the
future purchase of, or payment for, equipment, supplies or products, or for the
performance of services by a third party except for any agreement, contract or
commitment arising in the ordinary course of business;
(c) agreement, contract or commitment to finance
any acquisition of or purchase any asset or to perform any
service; or
(d) note, debenture, bond, equipment trust
agreement, letter of credit agreement, loan agreement or other contract or
commitment for the borrowing or lending of money or agreement or arrangement for
a line of credit or guarantee, pledge or undertaking of the indebtedness of any
other person.
Each of the agreements, contracts, commitments, leases, plans
and other instruments, documents and undertakings listed on SCHEDULE 2.14 is
valid and enforceable in accordance with its terms except as the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting the
rights of creditors generally; CEEE is not in default of the performance,
observance or fulfillment of any material obligations, covenant or condition
contained therein; and no event has occurred which with or without the giving of
notice or lapse of time, or both, would constitute a default thereunder;
furthermore, except as may be disclosed on SCHEDULE 2.14, no such agreement,
contract, commitment, lease, plan or other instrument, document or undertaking,
in the reasonable opinion of CEEE, contains any contractual requirement with
which there is a likelihood CEEE will be unable to comply.
Section 2.15 NO BROKER OR FINDER. CEEE has not dealt with or
retained any finder or broker whose fees or expenses have
-6-
<PAGE>
been paid by CEEE or for whose fees or expenses CEEE or Atlantic would be
responsible in connection with this Agreement or the transactions contemplated
hereby.
Section 2.16 PERSONNEL AND CERTAIN AUTHORIZED PERSONS.
SCHEDULE 2.16 hereto contains a true and complete list of all bank accounts of
CEEE and the names of all persons who are authorized signatories with respect to
such accounts.
Section 2.17 EMPLOYEES; EMPLOYEE BENEFIT PLANS AND
ARRANGEMENTS. CEEE has no employees and has not sponsored, maintained or
supported, or otherwise been a party to, in default under, or had any liability
or accrued obligations under, any plan, program, fund or arrangement, either
qualified or non-qualified for Federal income tax purposes, relating to the
employees of CEEE, whether for the benefit of a single individual or for more
than one individual, and whether or not funded, including, without limitation,
any incentive or other benefit arrangement for employees, their dependents
and/or their beneficiaries and any "employee pension benefit plan" or "employee
welfare benefit plan", as such terms are defined in Section 3 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). CEEE has not, at
any time, maintained or contributed or been required to maintain or contribute
to any "Multi-Employer Plan" as such term is defined in Section 3(37) of ERISA.
Section 2.18 COMPLETENESS OF DISCLOSURE. No representation or
warranty in this Agreement nor any certificate, statements, document or
instrument furnished or to be furnished to the Representatives and Atlantic by
CEEE pursuant hereto, or in connection with the negotiation, execution or
performance of this Agreement, contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact required to be
stated herein or therein or necessary to make any statement herein or therein
not misleading.
Section 2.19 TAX MATTERS. CEEE has filed or will file on a
timely basis (including all extensions) all tax returns which were required to
have been filed, or are hereafter required to be filed up to the Closing Date by
it (including, without limitation, all Federal, state, county, local and foreign
tax returns) and such returns are complete and accurate in all material
respects, and CEEE has paid or provided for all taxes, interest or penalties
which have been incurred or are due and payable pursuant to such returns or
pursuant to any assessments received by it in connection with such returns. No
foreign, Federal, state, local or other taxing authority has provided CEEE with
any notice of any questions relating to, or claims asserted for, taxes against
CEEE or for which CEEE may be liable. All taxes which CEEE is required by law to
withhold or collect have
-7-
<PAGE>
been duly withheld or collected and, to the extent required, have been paid over
to the proper governmental authorities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ATLANTIC AND THE STOCKHOLDERS
A. Atlantic represents and warrants to CEEE as follows:
Section 3.1 ORGANIZATION AND QUALIFICATION OF ATLANTIC.
Atlantic is a corporation duly incorporated, duly organized, validly existing
and in good standing under the laws of Delaware. Atlantic has the corporate
power and authority to own or lease and operate all of its properties and assets
and to carry on its business as such business is now being conducted and is duly
licensed or qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by Atlantic or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualifications necessary and where the failure to qualify
would not have a material adverse effect on the conditions (financial or
otherwise), operations, properties, assets, liabilities, earnings or business of
Atlantic.
Section 3.2 CAPITALIZATION AND OWNERSHIP OF ATLANTIC. The
authorized capital stock of Atlantic consists of 100 shares of Common Stock, no
par value per share, all of which are issued and outstanding. All outstanding
shares of Atlantic Stock are validly issued and outstanding, fully paid and
nonassessable with no personal liability attaching to the ownership thereof,
free of preemptive rights and are owned free and clear of all liens, claims and
encumbrances. There are no shares of Atlantic Stock issued or outstanding except
as referred to above, and there are no options, calls, subscriptions, warrants,
rights, agreements or commitments of any character obliging Atlantic,
contingently or otherwise, to issue shares of Atlantic's capital stock or to
register shares of Atlantic's capital stock under the Securities Act or any
other applicable Federal or state securities laws. The Stockholders are the
record and beneficial owners of all of the issued and outstanding shares of
Atlantic Stock, free and clear of all liens and encumbrances.
Section 3.3 AUTHORITY. Atlantic has the full power and
authority to enter into this Agreement and to carry out its obligations
hereunder. Other than approval by the Board of Directors and/or stockholders of
Atlantic, no proceedings, on the part of Atlantic are necessary to authorize
this Agreement or the transactions contemplated hereby. This Agreement
constitutes the legal, valid and binding obligation of Atlantic enforceable in
accordance with its terms.
-8-
<PAGE>
Section 3.4 CONSENTS AND APPROVALS. No permit, consent,
approval or authorization of, or declaration, filing or registration with, any
public body or authority or other person, firm or entity is necessary in
connection with the execution and delivery by Atlantic or the Stockholders of
this Agreement or the consummation by the Stockholders or Atlantic of the
transactions contemplated hereby.
Section 3.5 COMPLETENESS OF DISCLOSURE. No representation or
warranty in this Agreement nor any certificate, Schedule, statements, document
or instrument furnished or to be furnished to CEEE by Atlantic pursuant hereto,
or in connection with the negotiation, execution or performance of this
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact required to be stated herein or
therein or necessary to make any statement herein or therein not misleading.
Section 3.6 LITIGATION. No litigation, including any
arbitration, investigation or other proceeding of or before any court,
arbitrator or governmental or regulatory official, body or authority is pending
or, to the best of Atlantic's knowledge, threatened against Atlantic. Atlantic
is not a party to or subject to the provisions of any judgment, order, writ,
injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which may materially and adversely affect
the business or assets of Atlantic.
Section 3.7 TAX MATTERS. Atlantic has filed or will file on a
timely basis (including all extensions) all tax returns which were required to
have been filed, or are hereafter required to be filed up to the Closing Date by
it (including, without limitation, all Federal, state, county, local and foreign
tax returns) and such returns are complete and accurate in all material
respects, and Atlantic has paid or provided for all taxes, interest or penalties
which have been incurred or are due and payable pursuant to such returns or
pursuant to any assessments received by it in connection with such returns. No
foreign, Federal, state, local or other taxing authority has provided Atlantic
with any notice of any questions relating to, or claims asserted for, taxes
against Atlantic or for which Atlantic may be liable. All taxes which Atlantic
is required by law to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid over to the proper governmental
authorities.
B. Each of the Stockholders represents and warrants to CEEE
that (i) such Stockholder has such knowledge and experience that such
Stockholder is capable of evaluating the merits and risks of acquiring the
Exchange Shares and the Additional Shares and of making an informed decision,
(ii) such Shareholder is
-9-
<PAGE>
acquiring the Exchange Shares and the Additional Shares for investment for such
Stockholder's own account and not with a view to, or for resale in connection
with, any distribution thereof and understands that the Exchange Shares and the
Additional Shares have not been registered under the Securities Act by reason of
a specified exemption from the registration provisions of the Securities Act
which depends upon, among other things, the bona fide nature of such
Stockholder's intent as expressed herein, and (iii) such Stockholder is an
"accredited investor" within the meaning of Rule 501 under the Securities Act or
has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the
prospective investment, is able to bear the economic risk of such investment,
and at the present time, is able to afford a complete loss of such investment.
ARTICLE IV
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 4.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by the parties in this Agreement or in any
certificate, Schedule, document or instrument furnished hereunder shall survive
for two years from the closing of the transactions contemplated hereby.
ARTICLE V
AGREEMENTS PENDING CLOSING
Section 5.1 AGREEMENT PENDING THE CLOSING. Each of Atlantic
and CEEE covenant and agree that, pending the Closing (if the Closing shall not
occur on the date hereof) and except as otherwise agreed to in writing by the
other parties:
(a) BUSINESS IN THE ORDINARY COURSE. Its business
shall be conducted solely in the ordinary course.
(b) MAINTENANCE OF PHYSICAL ASSETS. It shall
continue to maintain and service the physical assets used in the conduct of its
business in the same manner as has been its consistent past practice.
(c) EMPLOYEES AND BUSINESS RELATIONS. It shall
continue to maintain its business relations and relations with its employees, if
any, in the same manner as has been its consistent past practice.
(d) COMPLIANCE WITH LAW. ETC. It shall comply with
all laws, ordinances, rules, regulations and orders applicable to it or their
operations, assets or properties in respect thereof, the noncompliance with
which might materially
-10-
<PAGE>
affect its business or assets including, without limitation in the case of CEEE
the filing of all reports required by the Securities Act and the Exchange Act.
(e) COOPERATION. It shall cooperate with the other
parties to this Agreement and use its best efforts to cause all of the
conditions to the obligations on its part to be performed under this Agreement
to be satisfied on or prior to the Closing Date.
(f) SALES OF ASSETS; NEGOTIATIONS. It shall not,
directly or indirectly, sell or encumber all or any part of its assets, other
than in the ordinary course of business consistent with past practice, or
initiate or participate in any discussions or negotiations or enter into any
agreement to do any of the foregoing.
(g) ACCESS. Each of Atlantic and CEEE shall give to
the other's officers, employees, counsel, accountants and other representatives
free and full access to and the right to inspect, during normal business hours,
all of the premises, properties, assets, records, contracts and other documents
relating to it and shall permit the other to consult with its officers,
employees, accountants, counsel and agents for the purpose making such
investigation as it desires to make, provided that such investigation shall not
unreasonably interfere with its business operations.
(h) PRESS RELEASES. Except as required by applicable
law, no party hereto shall give notice to third parties or otherwise make any
public statement or releases concerning this Agreement or the transactions
contemplated hereby except for such written information as shall have been
approved in writing as to form and content by all parties hereto.
(i) CONFIDENTIALITY. Pending the Closing and except
as required by applicable law or otherwise agreed to in writing unless and until
the Closing has been consummated, it will hold, and shall cause its counsel,
agents and independent representatives to hold in confidence any confidential
data or information made available to it in connection with this Agreement with
respect to which it shall use the same standard of care to protect such
confidential data or information as is used to protect its own confidential
information. If the transactions contemplated by this Agreement are not
consummated, it agrees that it shall (i) return or cause to be returned to the
party furnishing such data or information all written materials and all copies
thereof that were supplied to it; and (ii) continue to hold in confidence all
such confidential information and data.
-11-
<PAGE>
ARTICLE VI
CONDITIONS PRECEDENT TO THE CLOSING
Section 6.1 CONDITIONS PRECEDENT TO ATLANTIC'S OBLIGATIONS.
All obligations of Atlantic and the Stockholders' under this Agreement are
subject to the fulfillment or satisfaction, and CEEE covenants and agrees to the
fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES TRUE AS OF THE
CLOSING DATE. The representations and warranties of CEEE and Cowle contained in
this Agreement or in a Schedule, certificate or document delivered by CEEE to
Atlantic or the Representatives pursuant to the provisions hereof shall be true
on the date hereof without regard to any updates furnished by CEEE after the
date hereof and shall be true on the Closing Date with the same effect as though
such representations and warranties were made as of such date.
(b) COMPLIANCE WITH THIS AGREEMENT. CEEE shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.
(c) NO THREATENED OR PENDING LITIGATION. On the
Closing Date, no suit, action or other proceeding, or injunction or final
judgment relating thereto, shall be threatened or be pending before any court or
government or regulatory official, body or authority in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that might result in any such suit, action or proceeding shall
be pending or threatened.
(d) CONSENTS AND APPROVALS. All of the consents
required to carry out the transactions contemplated hereunder have been
obtained.
(e) MATERIAL ADVERSE CHANGES. There has been no
material adverse change in the business, operations, assets or properties of
CEEE.
(f) APPROVAL OF COUNSEL; CORPORATE MATTERS. All
actions, proceedings, resolutions, instruments and documents required to carry
out this Agreement or incidental hereto and all other related legal matters
shall have been approved on the Closing Date by counsel Atlantic in the exercise
of their reasonable judgment.
-12-
<PAGE>
(g) COUNSEL OPINION. Atlantic shall have received
from Colorado counsel for CEEE an opinion, reasonably acceptable to counsel for
Atlantic, to the effect that (i) the issuance of the Exchange Shares does not
require the approval of the stockholders of CEEE, (ii) CEEE has the corporate
power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby and (iii) CEEE is duly incorporated and is
validly existing as a corporation in good standing under the laws of Colorado.
(h) CERTIFICATES. CEEE shall have delivered to the
Stockholders certificates for the Exchange Shares and CEEE shall also have
delivered to the Stockholders such other documents, instruments, certifications
and further assurances as its counsel may reasonably require.
(i) DIRECTORS AND OFFICERS. The directors and
officers of CEEE shall have resigned and CEEE shall have caused those directors
and officers designated by the Representatives to be appointed.
(j) NO LIABILITIES. CEEE shall have no liabilities
or obligations, either accrued, absolute, contingent or otherwise except for its
ongoing obligation to file periodic reports with the SEC. For purposes of this
Agreement, the terms "liabilities" shall include, without limitation, any direct
or indirect indebtedness, guaranty, endorsement, indemnity, claim, loss, damage,
deficiency, cost, expense, or obligation, fixed or unfixed, choate or inchoate,
liquidated or un-liquidated, secured or unsecured or a reserve for any of the
foregoing.
(k) FORMS 10-K AND 10-Q. CEEE shall have filed with
the SEC an Annual Report on Form 10-K for the year ended December 31, 1995 and a
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996.
Section 6.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CEEE.
All obligations of CEEE under this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent:
(a) REPRESENTATIONS AND WARRANTIES TRUE AS OF THE
CLOSING DATE. The representations and warranties of Atlantic contained in this
Agreement or in any list, certificate or document delivered by the
Representatives or Atlantic to CEEE pursuant to the provisions hereof shall be
true on the Closing Date with the same effect as though such representations and
warranties were made as of such date.
(b) COMPLIANCE WITH THIS AGREEMENT. Atlantic shall
have performed and complied with all agreements and
-13-
<PAGE>
conditions required by this Agreement to be performed or complied with by them
prior to or at the Closing.
(c) NO THREATENED OR PENDING LITIGATION. On the
Closing Date, no suit, action or other proceeding, or injunction of final
judgment relating thereto, shall be threatened or be pending before any court or
governmental or regulatory official, body or authority in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that might result in any such suit, action or proceeding shall
be pending or threatened.
(d) MATERIAL ADVERSE CHANGES. There shall have been
no material adverse changes in the business, operations, assets or properties of
Atlantic.
(e) APPROVAL OF COUNSEL; CORPORATE MATTERS. All
actions, proceedings, resolutions, instruments and documents required to carry
out this Agreement or incidental hereto and all other related legal matters
shall have been approved on the Closing Date by counsel for CEEE in the exercise
of its reasonable judgment.
(f) CERTIFICATES. The Representatives shall have
delivered to CEEE one or more certificates for Atlantic Stock and the
Representatives shall have also delivered to CEEE such other documents,
instruments, certifications and further assurances as its counsel may reasonably
require.
ARTICLE VII
CLOSING, FURTHER ASSURANCES
AND CONDITIONS SUBSEQUENT
Section 7.1 CLOSING. The Closing (the "Closing") of the
exchange of Atlantic Stock and the Exchange Shares shall take place at the
offices of Olshan Grundman Frome & Rosenzweig, 505 Park Avenue, New York, New
York 10022 on the date hereof or such other date as may be mutually agreed upon
in writing by the parties hereto. The date of the Closing is sometimes herein
referred to as the "Closing Date".
Section 7.2 ACTS TO BE PERFORMED BY CEEE FOLLOWING THE
CLOSING. Following the Closing, CEEE shall:
(a) Cause there to be held a meeting of stockholders
of CEEE at which (i) the name of CEEE shall be changed to "Atlantic
International Entertainment, Ltd.", or such other name as the Representatives
shall request (ii) the authorized capital stock of CEEE shall be increased to
110,000,000 shares of CEEE Stock authorized (the "Capital Authorization"), and
(iii) all of the CEEE Stock outstanding
-14-
<PAGE>
(including the Exchange Shares and the Additional Exchange Shares) shall be
split 1 for 3;
(b) Immediately following the Capital Authorization,
cause to be issued to the Stockholders the Additional Shares.
(c) change the address of its principal executive
offices and to take all actions necessary to qualify to transact business in the
jurisdiction thereof and all other jurisdictions in which the nature of the
business conducted by CEEE or the character or location of the properties and
assets owned or leased by it make such qualification necessary, except where the
failure to so qualify would not have a material adverse effect on CEEE; and
(d) execute the appropriate certificates and make
the appropriate public filings to effectuate each of the foregoing actions.
(e) pay to each of Cowle and Williams $25,000 upon
the sale by CEEE of greater than $500,000 of securities.
Section 7.3 FURTHER ASSURANCES. Each of the parties from time
to time after the Closing, at the other's request, will execute, acknowledge and
deliver to the other such other instruments of conveyance and transfer and will
take such other actions and execute and deliver such other documents,
certifications and further assurances as the other may reasonably require in
order to vest more effectively Atlantic Stock, the Exchange Shares and the
Additional Shares, as the case may be, in the owner thereof. Each of the parties
hereto will cooperate with the other and execute and deliver to the other
parties hereto such other instruments and documents and take such other actions
as may be reasonably requested from time to time by any other party hereto as
necessary to carry out, evidence and confirm the intended purposes of this
Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 TERMINATION.
(a) Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated by written notice of
termination at any time before the Closing Date only as follows:
(i) by mutual consent of Atlantic, the
Representatives and CEEE;
-15-
<PAGE>
(ii) by the Stockholders and Atlantic at any time if
the representations and warranties of CEEE and Cowle were materially incorrect
when made;
(iii) by CEEE at any time if the representations and
warranties of Atlantic were materially incorrect when made; or
(iv) by any party hereto if the transactions
contemplated by this Agreement do not close on or before July 31, 1996 unless
extended in writing by mutual agreement of the parties hereto.
(b) In the event of the termination and abandonment
hereof pursuant to the provisions of this Section 8.01, this Agreement, except
as provided in this Section 8.01(b) shall become void and have no effect,
without any liability on the part of any of the parties or their directors or
officers or stockholders in respect of this Agreement. Notwithstanding any such
termination and abandonment, the provisions of Section 5.01(i) regarding
confidential information shall remain binding upon the parties hereto.
Section 8.2 BROKERS' AND FINDERS' FEES. Each party represents
and warrants to the other that all negotiations relative to this Agreement have
been carried on by it directly without the intervention of any person, and each
of the parties agree to indemnify and hold the other harmless against any and
all claims, losses, liabilities and expenses which may be asserted against or
incurred by it as a result of its dealings, arrangements or agreements with any
such person.
Section 8.3 INCOME, SALES, TRANSFER AND DOCUMENTARY TAXES;
ETC. Atlantic shall pay all Federal, state and local income taxes, if any, due
as a result of the purchase, sale or transfer of the Exchange Shares, the
Additional Shares and the Atlantic Stock in accordance herewith.
Section 8.4 EXPENSES. Each party hereto shall pay its own
expenses incidental to the preparation of this Agreement and the transactions
contemplated hereby.
-16-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first above written.
ATLANTIC INTERNATIONAL CAPITAL,
LTD.
By:/S/ RICHARD IAMUNNO
-------------------
Richard Iamunno
President
CEEE GROUP CORPORATION
By:/S/ EDWARD A. COWLE
-------------------
Edward A. Cowle
President and Chief
Executice Officer
/S/ NORMAN HOSKIN
-----------------
Norman Hoskin
THE KUNNI LEMMEL TRUST
By:/S/ HILDEBERTO S. DEFRIAS
-------------------------
HILDEBERTO S. DEFRIAS
Trustee
By:/S/ JOSEPH E. WAKEFIELD
-------------------------
JOSEPH E. WAKEFIELD
Trustee
THE AWIXA TRUST
By:/S/ HILDEBERTO S. DEFRIAS
-------------------------
HILDEBERTO S. DEFRIAS
TRUSTEE
By:/S/ JOSEPH E. WAKEFIELD
-------------------------
JOSEPH E. WAKEFIELD
TRUSTEE
/S/ ROBERT H. FRIEDMAN
----------------------
Robert H. Friedman
CENTERLINE ASSOCIATES
By:/s/JEANNE WILLIAMS
------------------
JEANNE WILLIAMS
President
-17-
<PAGE>
/S/ EITHNE WILMOTT
------------------
Eithne Wilmott
/S/ EDWARD COWLE
------------------
Edward Cowle
/S/ DEWORTH WILLIAMS
--------------------
DeWorth Williams
/S/ JAMES DOUGHERTY
-------------------
James Dougherty
-18-
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Number of Number of
Number of Exchange Additional Total Number
Shares of Shares to be Shares to be of Shares to
Name of Stockholder Atlantic Held Received Received be Received
- ----------------------------------- ------------- ---------------- ------------ ---------------
<S> <C> <C> <C> <C>
Norman Hoskin 13.5 945,000 2,454,587 3,399,587
2200 Corporate Blvd.
Suite 317
Boca Raton, FL 33431
THE KUNNI LEMMEL 30.0 2,100,000 5,454,638 7,554,638
TRUST
c/o Norman Hoskin
2200 Corporate Blvd.
Boca Raton, FL 33431
Richard Iamunno 13.5 945,000 2,454,587 3,399,587
2200 Corporate Blvd.
Suite 317
Boca Raton, FL 33431
THE AWIXA TRUST 30.0 2,100,000 5,454,638 7,554,638
c/o Richard Iamunno
2200 Corporate Blvd.
Suite 317
Boca Raton, FL 33431
Robert Frome 1.23 86,100 224,472 308,572
505 Park Avenue
New York, NY 10022
Robert Friedman .25 17,500 44,214 61,714
505 Park Avenue
New York, NY 10022
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
Number of Number of
Number of Exchange Additional Total Number
Shares of Shares to be Shares to be of Shares to
Name of Stockholder Atlantic Held Received Received be Received
- ----------------------------------- ------------- ---------------- ------------ ---------------
<S> <C> <C> <C> <C>
Centerline 4.9 343,000 891,427 1,234,427
Associates, Inc.
Jeanne Williams
850 E. Palm Ave
Boca Raton, FL 33432
Eithne Wilmott .07 4,900 13,696 18,596
1234 S. Military
Trail, #1812
Deerfield Beach, FL
33442
Edward Cowle 2.085 145,950 379,050 525,000
708 3rd Avenue
New York, NY 10017
DeWorth Williams 2.085 145,950 379,050 525,000
56 West 440 South
Salt Lake City, UT
84101
James Dougherty 2.38 166,600 433,400 600,000
629 Sea Pineway B2
West Palm Beach, FL
33415
</TABLE>
-20-
<PAGE>
SCHEDULE 2.2
None
-21-
<PAGE>
SCHEDULE 2.9
None
-22-
<PAGE>
SCHEDULE 2.14
1. Appointment of Transfer Agent and Agreement between CEEE Group Corporation
and Interstate Transfer Company.
<PAGE>
SCHEDULE 2.16
None
-24-
AMENDMENT NO. 1 TO
EXCHANGE OF STOCK AGREEMENT AND PLAN OF REORGANIZATION
Amendment No. 1 dated as of September 5, 1996, to that certain Exchange
of Stock Agreement and Plan of Reorganization dated July 16, 1996 (the "Stock
Exchange Agreement"), by and between CEEE GROUP CORPORATION ("CEEE"), ATLANTIC
INTERNATIONAL CAPITAL, LTD. ("Atlantic"), and each of the stockholders of the
Corporation listed on the Amended and Restated Schedule I attached hereto (each,
a "Stockholder" and collectively, the "Stockholders"). All capitalized terms
used herein without definitions shall have the respective meanings ascribed to
them in the Stock Exchange Agreement.
WHEREAS, CEEE, Atlantic and the Stockholders desire to amend Schedule I
to the Stock Exchange Agreement to create a uniform share exchange ratio with
respect to the allocation of an aggregate of 18,183,759 shares to be issued to
the Stockholders following an amendment to CEEE's Certificate of Incorporation
to, among other things, increase the number of authorized shares.
NOW, THEREFORE, in consideration of the above premises, CEEE, Atlantic
and the Stockholders agree as follows:
1. Schedule I of the Stock Exchange Agreement is hereby amended and
restated in its entirety as set forth in the Amended and Restated Schedule I
attached hereto.
2. All other provisions of the Stock Exchange Agreement shall remain
unchanged.
3. This Amendment No. 1 may be executed in any number of counterparts,
each of which shall be an original, but such
<PAGE>
counterparts shall together constitute one and the same instrument.
4. This Amendment No. 1 and the legal relations between the parties
hereto shall be governed by and construed in accordance with the laws of the
State of New York, without regard to principles of conflicts of law.
5. This Amendment No. 1 to the Stock Exchange Agreement constitutes the
entire amendment to the Stock Exchange Agreement and shall not constitute a
modification, acceptance or waiver of any other provision of the Stock Exchange
Agreement or any rights or claims thereunder.
6. As modified hereby, the Stock Exchange Agreement and its terms and
provisions are hereby ratified and confirmed for all purposes and in all
respects.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 as of the day and year hereinabove first set forth.
ATLANTIC INTERNATIONAL CAPITAL,
LTD.
By:/s/ Richard Iamunno
-------------------------------------
Richard Iamunno
President
CEEE GROUP CORPORATION
By:Richard Iamunno
-------------------------------------
Name: Richard Iamunno
Title: President
/S/ NORMAN HOSKIN
----------------------------------------
NORMAN HOSKIN
THE KUNNI LEMMEL TRUST
By: /S/ HILDEBERTO S. DEFRIAS
-------------------------------------
HILDEBERTO S. DEFRIAS
TRUSTEE
By:/S/ JOSEPH E. WAKEFIELD
-------------------------
JOSEPH E. WAKEFIELD
Trustee
/S/ RICHARD IAMUNNO
----------------------------------------
RICHARD IAMUNNO
THE AWIXA TRUST
By:/S/ HILDEBERTO S. DEFRIAS
-------------------------------------
HILDEBERTO S. DEFRIAS
Trustee
By:/S/ JOSEPH E. WAKEFIELD
-------------------------
JOSEPH E. WAKEFIELD
Trustee
/S/ ROBERT L. FROME
----------------------------------------
ROBERT L. FROME
/S/ ROBERT H. FRIEDMAN
----------------------------------------
ROBERT H. FRIEDMAN
CENTERLINE ASSOCIATES
By:/S/ JEANNE WILLIAMS
-------------------------------------
JEANNE WILLIAMS
PRESIDENT
-3-
<PAGE>
/S/ EITHNE WILMOTT
----------------------------------------
EITHNE WILMOTT
/S/ EDWARD COWLE
----------------------------------------
EDWARD COWLE
/S/ DEWORTH WILLIAMS
----------------------------------------
DEWORTH WILLIAMS
/S/ JAMES DOUGHTERY
----------------------------------------
JAMES DOUGHTERY
-4-
<PAGE>
AMENDED AND RESTATED SCHEDULE I
<TABLE>
<CAPTION>
Number of Number of
Number of Exchange Additional Total Number
Shares of Shares to be Shares to be of Shares to
Name of Stockholder Atlantic Held Received Received be Received
- --------------------------- ---------------- --------------- ------------- -----------------
<S> <C> <C> <C> <C>
Norman Hoskin 13.5 945,000 2,454,808 3,399,808
2200 Corporate Blvd.
Suite 317
Boca Raton, FL 33431
THE KUNNI LEMMEL 30.0 2,100,000 5,455,128 7,555,128
TRUST
c/o Norman Hoskin
2200 Corporate Blvd.
Boca Raton, FL 33431
Richard Iamunno 13.5 945,000 2,454,808 3,399,808
2200 Corporate Blvd.
Suite 317
Boca Raton, FL 33431
THE AWIXA TRUST 30.0 2,100,000 5,455,128 7,555,128
c/o Richard Iamunno
2200 Corporate Blvd.
Suite 317
Boca Raton, FL 33431
Robert Frome 1.23 86,100 223,660 309,760
505 Park Avenue
New York, NY 10022
Robert Friedman .25 17,500 45,459 62,959
505 Park Avenue
New York, NY 10022
Centerline 4.9 343,000 891,004 1,234,004
Associates, Inc.
Jeanne Williams
850 E. Palm Ave
Boca Raton, FL 33432
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Number of Number of
Number of Exchange Additional Total Number
Shares of Shares to be Shares to be of Shares to
Name of Stockholder Atlantic Held Received Received be Received
- --------------------------- ---------------- --------------- ------------- -----------------
<S> <C> <C> <C> <C>
Eithne Wilmott .07 4,900 12,729 17,629
1234 S. Military
Trail, #1812
Deerfield Beach, FL
33442
Edward Cowle 2.085 145,950 379,131 525,081
708 3rd Avenue
New York, NY 10017
DeWorth Williams 2.085 145,950 379,131 525,081
56 West 440 South
Salt Lake City, UT
84101
James Dougherty
629 Sea Pineway B2
West Palm Beach, FL
33415 2.38 166,600 432,773 599,373
--------- ---------- ----------
7,000,000 18,183,759 25,183,759
========= ========== ==========
</TABLE>
-6-
AGREEMENT AND PLAN OF MERGER
OF ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
A DELAWARE CORPORATION
AND
CEEE GROUP CORPORATION
A COLORADO CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated as of November 18, 1996 (the
"Agreement") is between Atlantic International Entertainment, Ltd., a Delaware
corporation ("Atlantic") and CEEE Group Corporation, Ltd., a Colorado
corporation ("CEEE"). Atlantic and CEEE are sometimes referred to herein as the
"Constituent Corporations."
RECITALS
A. Atlantic is a corporation duly organized and existing under the laws
of the State of Delaware and has an authorized capital of 100,000,000 shares
designated "Common Stock", $.001 par value and 10,000,000 shares designated
"Preferred Stock," $.001 par value. As of the date hereof, 1,000 shares of
Common Stock are issued and outstanding, all of which are held by CEEE. No
shares of Preferred Stock were outstanding.
B. CEEE is a corporation duly organized and existing under the laws of
the State of Colorado and has an authorized capital of 10,000,000 shares
designated "Common Stock", $.001 par value. As of the date hereof, 9,386,733
shares of Common Stock are outstanding.
C. The Board of Directors of CEEE has determined that, for the purpose
of effecting the reincorporation of CEEE in the State of Delaware, it is
advisable and in the best interests of CEEE that it merge with and into Atlantic
upon the terms and conditions here provided.
D. The respective Boards of Directors of Atlantic and CEEE have
approved this Agreement and have directed that this Agreement be submitted to a
vote of their respective shareholders and executed by the undersigned officers.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, Atlantic and CEEE hereby agree, subject to the terms and
conditions hereinafter set forth, as follows:
I. MERGER
1.1 MERGER. In accordance with the provisions of this Agreement, the
Delaware General Corporation Law and the Colorado Business Corporation Act shall
be merged with and into Atlantic (the "Merger"), the separate existence of CEEE
shall cease and Atlantic shall be, and is herein sometimes referred to as, the
"Surviving Corporation," and the name of the Surviving Corporation shall be
Atlantic International Entertainment, Ltd.
1.2 FILING AND EFFECTIVENESS. The Merger shall become effective when
the following actions shall have been completed:
(a) This Agreement and the Merger shall have been adopted and approved
by the shareholders of each Constituent Corporation in accordance with the
requirements of the Delaware General Corporation Law and the Colorado Business
Corporation Act;
<PAGE>
(b) All of the conditions precedent to the consummation of the Merger
specified in this Agreement shall have been satisfied or duly waived by the
party entitled to satisfaction thereof;
(c) An executed Certificate of Merger or an executed counterpart of
this Agreement meeting the requirements of the Delaware General Corporation Law
shall have been filed with the Secretary of State of the State of Delaware; and
(d) Executed Articles of Merger meeting the requirements of the
Colorado Business Corporation Act shall have been filed with the Secretary of
State of the State of Colorado.
The date and time when the Merger shall become effective, as aforesaid,
is herein called the "Effective Date of the Merger."
1.3 EFFECT OF THE MERGER. Upon the Effective Date of the Merger, the
separate existence of CEEE shall cease and Atlantic, as the Surviving
Corporation, (i) shall continue to possess all of its assets, rights, powers and
property as constituted immediately prior to the Effective Date of the Merger,
(ii) shall be subject to all actions previously taken by its and CEEE's Board of
Directors, (iii) shall succeed, without other transfer, to all of the assets,
rights, powers and property of CEEE in the manner more fully set forth in
Section 259 of the Delaware General Corporation Law, (iv) shall continue to be
subject to all of its debts, liabilities and obligations as constituted
immediately prior to the Effective Date of the Merger, and (v) shall succeed,
without other transfer, to all of the debts, liabilities and obligations of CEEE
in the same manner as if Atlantic had itself incurred them, all as more fully
provided under the applicable provisions of the Delaware General Corporation Law
and the Colorado Business Corporation Act.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Atlantic as in effect immediately prior to the Effective Date of the Merger
shall continue in full force and effect as the Certificate of Incorporation of
the Surviving Corporation until duly amended in accordance with the provisions
thereof and applicable law.
2.2 BYLAWS. The Bylaws of Atlantic as in effect immediately prior to
the Effective Date of the Merger shall continue in full force and effect as the
Bylaws of the Surviving Corporation until duly amended in accordance with the
provisions thereof and applicable law.
2.3 DIRECTORS AND OFFICERS. The directors and officers of CEEE
immediately prior to the Effective Date of the Merger shall be the directors and
officers of the Surviving Corporation until their successors shall have been
duly elected and qualified or until as otherwise provided by law, the
Certificate of Incorporation of the Surviving Corporation or the Bylaws of the
Surviving Corporation.
III. MANNER OF CONVERSION OF STOCK
3.1 CEEE COMMON SHARES. Upon the Effective Date of the Merger, each
three shares of CEEE Common Stock, $.001 par value, issued and outstanding
immediately prior thereto shall survive by virtue of the Merger and without any
action by the Constituent Corporations, the holder of such shares or any other
person, shall be converted into and exchanged for one fully paid and
nonassessable share of Common Stock, $.001 par value, of the Surviving
Corporation.
-1-
<PAGE>
3.2 CEEE OPTIONS, STOCK PURCHASE RIGHTS AND CONVERTIBLE SECURITIES.
Upon the Effective Date of the Merger, the Surviving Corporation shall assume
and continue, if any, the stock option plans and all other employee benefit
plans of CEEE. Each outstanding and unexercised option, or other right to
purchase, or security convertible into, CEEE Common Stock, if any, shall become
an option, or right to purchase, or a security convertible into the Surviving
Corporation's Common Stock on the basis of one share of the Surviving
Corporation's Common Stock for each three shares of CEEE Common Stock issuable
pursuant to any such option, or stock purchase right or convertible security, on
the same terms and conditions and at an exercise or conversion price per share
equal to one-third of the exercise or conversion price per share applicable to
any such CEEE option, stock purchase right or other convertible security at the
Effective Date of the Merger.
A number of shares of the Surviving Corporation's Common Stock shall be
reserved for issuance upon the exercise of options, stock purchase rights and
convertible securities equal to one-third of the number of shares of CEEE Common
Stock so reserved immediately prior to the Effective Date of the Merger.
3.3 ATLANTIC COMMON STOCK. Upon the Effective Date of the Merger, each
share of Atlantic Common Stock, $.001 par value, issued and outstanding
immediately prior thereto shall, by virtue of the Merger and without any action
by Atlantic, the holder of such shares or any other person, be cancelled and
returned to the status of authorized but unissued shares.
3.4 EXCHANGE OF CERTIFICATES. After the Effective Date of the Merger,
each holder of an outstanding certificate representing shares of CEEE Common
Stock may, at such stockholder's option, surrender the same for cancellation to
Continental Stock Transfer & Trust Company, or such other entity as the Company
so designates as exchange agent (the "Exchange Agent"), and each such holder
shall be entitled to receive in exchange therefor a certificate or certificates
representing the number of shares of the Surviving Corporation's Common Stock
into which the surrendered shares were converted as herein provided. Until so
surrendered, each outstanding certificate theretofore representing shares of
CEEE Common Stock shall be deemed for all purposes to represent the number of
whole shares of the Surviving Corporation's Common Stock into which such shares
of CEEE Common Stock were converted in the Merger.
The registered owner on the books and records of the Surviving
Corporation or the Exchange Agent of any such outstanding certificate shall,
until such certificate shall have been surrendered for transfer or conversion or
otherwise accounted for to the Surviving Corporation or the Exchange Agent, have
and be entitled to exercise any voting and other rights with respect to and to
receive dividends and other distributions upon the shares of Common Stock of the
Surviving Corporation represented by such outstanding certificate as provided
above.
Each certificate representing Common Stock of the Surviving Corporation
so issued in the merger shall bear the same legends, if any, with respect to the
restrictions on transferability the certificates of CEEE so converted and given
in exchange therefore, unless otherwise determined by the Board of Directors of
the Surviving Corporation in compliance with applicable laws.
If any certificate for shares of Atlantic stock is to be issued in a
name other than that in which the certificate surrendered in exchange therefor
is registered, it shall be a condition of issuance thereof that the certificate
so surrendered shall be properly endorsed and otherwise in proper form for
transfer, that such transfer otherwise be proper and that the person requesting
such transfer pay to the Exchange Agent any transfer or other taxes payable by
reason of issuance of such new certificate in a name other than that of the
registered holder of the certificate surrendered or establish to the
satisfaction of Atlantic that such tax has been paid or is not payable.
-2-
<PAGE>
IV. GENERAL
4.1 COVENANTS OF ATLANTIC. Atlantic covenants and agrees that it will
take such actions as may be required by the Colorado Business Corporation Act.
4.2 FURTHER ASSURANCES. From time to time, as and when required by
Atlantic or by its successors or assigns, there shall be executed and delivered
on behalf of CEEE such deeds and other instruments, and there shall be taken or
caused to be taken by it such further and other actions as shall be appropriate
or necessary in order to vest or perfect in or conform of record or otherwise by
Atlantic the title to and possession of all the property, interests, assets,
rights, privileges, immunities, powers, franchises and authority of CEEE and
otherwise to carry out the purposes of this Agreement, and the officers and
directors of Atlantic are fully authorized in the name and on behalf of CEEE or
otherwise to take any and all such action and to execute and deliver any and all
such deeds and other instruments.
4.3 ABANDONMENT. At any time before the Effective Date of the Merger,
this Agreement may be terminated and the Merger may be abandoned for any reason
whatsoever by the Board of Directors of either CEEE or of Atlantic, or of both,
notwithstanding the approval of this Agreement by the shareholders of CEEE or by
the sole stockholder of Atlantic, or by both.
4.4 AMENDMENT. The Boards of Directors of the Constituent Corporations
may amend this Agreement at any time prior to the filing of this Agreement or
certificate in lieu thereof with the Secretary of State of the State of
Delaware, provided that an amendment made subsequent to the adoption of this
Agreement by the shareholders of either Constituent Corporation shall not: (1)
alter or change the amount or kind of shares, securities, cash, property and/or
rights to be received in exchange for or on conversion of all or any of the
shares of any class or series thereof of such Constituent Corporation, (2) alter
or change any term of the Certificate of Incorporation of the Surviving
Corporation to be effected by the Merger, or (3) alter or change any of the
terms and conditions of this Agreement if such alteration or change would
adversely affect the holders of any class or series of capital stock of either
Constituent Corporation.
4.5 REGISTERED OFFICE. The registered office of the Surviving
Corporation in the State of Delaware is located at 1013 Centre Road, City of
Wilmington, County of New Castle, Delaware 19805, and The Prentice-Hall
Corporation System, Inc. is the registered agent of the Surviving Corporation at
such address.
4.6 AGREEMENT. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation at 2200 Corporate
Blvd., Suite 317, Boca Raton, Florida 33431 and copies thereof will be furnished
to any stockholder of either Constituent Corporation, upon request and without
cost.
4.7 GOVERNING LAW. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Delaware and, so far as applicable, the merger provisions of the
Colorado Business Corporation Act.
-3-
<PAGE>
4.8 COUNTERPARTS. In order to facilitate the filing and recording of
this Agreement, the same may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement having first been approved by the
resolutions of the Board of Directors of Atlantic and CEEE, is hereby executed
on behalf of each of such two corporations and attested by their respective
officers thereunto duly authorized, under penalties of perjury, hereby declaring
and certifying that this is their act and deed and the facts herein stated are
true.
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
a Delaware corporation
By: /s/ RICHARD IAMUNNO
------------------------------------
Name: Richard Iamunno
Title: President
ATTEST:
/s/ NORMAN J. HOSKIN
- ---------------------------
Norman J. Hoskin, Secretary
CEEE GROUP CORPORATION
a Colorado corporation
By: /s/ RICHARD IAMUNNO
--------------------------------------
Name: Richard Iamunno
Title: President
ATTEST:
/s/ NORMAN J. HOSKIN
- --------------------
Norman J. Hoskin, Secretary
-4-
PURCHASE AND SALE AGREEMENT
Purchase and Sale Agreement, dated April 15, 1996 ("Agreement"), by
and between Atlantic International Capital, Ltd. ("Purchaser"), and James A.
Dougherty d.b.a. Ram Associates and James A. Dougherty ("Seller").
The parties agree as follows:
Seller hereby sells, transfers, assigns, conveys, and delivers to
Purchaser, and Purchaser purchases and accepts from Seller, all assets,
including, without limitation, licenses, computer equipment, software, a fully
operational and commercially functioning Internet virtual casino and sports book
and various other Internet products. Inventory list is attached as Exhibit "A".
Seller represents that it is conveying an operating business to the Purchaser.
Seller represents that it is conveying his interest to Purchaser free and clear
of any and all liens, pledges, encumbrances, claims and rights of others of any
kind of nature.
Purchaser will pay the Seller one million two hundred and thirty
thousand dollars ($1,230,000.00) payable as $30,000.00 in cash and 2.38 shares
of common stock valued at $504,201.68 per share. The closing date will be no
later than June 15, 1996 or within ten days of the initial funding of the
Purchaser. At closing $30,000.00 will be paid to the Seller. Within ten days of
acceptance of the Internet casino and sports book product, 25% of the shares of
stock will be distributed to the Seller. The balance of the shares will be
distributed to the Seller by December 31, 1996. James A. Dougherty will continue
to operate the business as well as perform other management functions.
Purchaser may assign this Agreement, or any party thereof, to any
person or entity.
This Agreement contains the entire agreement among the parties to
this agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
Atlantic International Entertainment, Ltd. James A. Dougherty
By: /s/ Norman Hoskin /s/ James A. Dougherty
-------------------------- -------------------------
Title: Chairman and
Secretary
<PAGE>
PURCHASE AND SALE AGREEMENT
BETWEEN
ATLANTIC INTERNATIONAL CAPITAL, LTD.
AND
RAM ASSOCIATES
ASSET LIST
Internet Sites/Products:
Community Casino
Hotel HotLinks
Club Interactive
WorldWide Medical
As Seen On TV
realSports
Software:
Windows 95
Windows NT Server (10 user)
ACT (14 user)
CorelDraw (10 user)
Corel Ventura (10 user)
MicroGraphix Designer
MicroGraphix Picture Publisher
BSDI Unix (Unlimited user)
Various other commercial software
Custom CGI/Perl Scripts
Hardware:
Six Gateway 2000 486sx workstations
One Gateway 2000 486dx servers
One Epson high resolution flat bed scanner
Seven Intel network cards and cables
Ten Zoom modems
One Ascend Pipeline 50 Router
AGREEMENT FOR PURCHASE AND SALE OF STOCK
THIS AGREEMENT IS MADE as of the 15th day of December, 1996 by and
between Australian Advisors, Ltd. a Bahamian corporation with its principal
office at Bay & Deveaux Street (hereinafter referred to as "Purchaser"); and
Atlantic International Entertainment, Ltd., a Delaware corporation with its
principal office at 2200 Corporate Blvd., Suite 317, Boca Raton, Florida 33431,
(hereinafter referred to as "Seller").
WITNESSETH:
WHEREAS, Purchase desires to acquire and the Seller desires to sell
all shares of the (AIE, NV, Acquired Company) representing 100% of the issued
and outstanding capital stock of the Acquired Company upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of these premises, the parties
hereto agree as follows:-
1. PURCHASE OF SHARES. Purchaser hereby agrees to acquire from the
SELLER of the Acquired Company, 100% of all shares of Common Stock of the
Acquired Company upon the terms and conditions set forth herein.
2. TERMS OF PURCHASE. The purchase price for the shares shall be
payable as follows: -
(i) $850,000 payable, $2,000 at closing, balance payable
monthly, beginning 60 days after closing, at 40% of the
net win before expenses, or a minimum of $3,000 per
month, until the balance is paid. Interest on the unpaid
balance shall be accrued at 8% per annum.
(ii) At the time of the closing of the purchases set forth in
Paragraphs "1" and "2" above, the Acquired Company shall
deliver to Purchaser stock certificates representing the
Shares purchased herein duly endorsed for transfer to
the Purchaser.
3. REPRESENTATIONS OF ACQUIRED COMPANY. SELLER represents and warrants
to Purchaser as follows: -
3.1 That the Acquired Company has been duly organized
in the manner set forth below and that the
Certificates of Incorporation have not been
revoked or canceled nor has the Corporation been
dissolved;
3.2 That the Acquired Company has certain assets and
liabilities as shown on Exhibit A.
4. DELIVERY OF CORPORATE RECORDS AT CLOSING. SELLER shall cause to be
delivered to purchaser at the time of Closing the Corporate Minute Books, Stock
Certificate Ledgers and unissued Certificates, and the Corporate Seals as well
as all financial records of the Acquired Company.
<PAGE>
5. AGREEMENTS. Following the acquisition of the Company the SELLER
shall allow the Shareholders of the acquired company to utilize, show, and
mention in advertising the existing business of the acquired company as an
operating model of the webSports(TM) and ICE(TM). The Acquired Company shall
receive a commission of 15% of the sale price for referrals that lead to a sale
of any of the SELLERS gaming software systems.
6. UNDERTAKINGS BY THE ACQUIRED COMPANY.
6.1 During the period prior to the closing date hereunder
the SELLER shall conduct the business operations, of the
acquired company in the usual and normal course.
7. REPRESENTATIONS BY PURCHASER. Purchaser represents and warrants to
the SELLER as follows:-
7.1 That Purchaser has been duly organized pursuant to the
laws of the Bahamas that its Certificate of
Incorporation has not been revoked or canceled nor has
the Corporation been dissolved;
7.2 That Purchaser has expertise in foreign operations and
shall operate the business and expand the business in
areas outside the ISP States.
8. CONDITIONS PRECEDENT TO CLOSING. All obligations of Acquired Company
and Purchaser under this Agreement are subject to the fulfillment, on or prior
to the closing date, of each of the following conditions;
8.1 That the representations of Purchaser and SELLER shall be true
at and as of the closing date as though such representations
were made at and as of such time;
9. APPROVALS AND RATIFICATIONS. All transactions contemplated by this
Agreement shall be subject to the approval and ratification of the Boards of
Directors and Shareholders of the Acquired Company and of Purchaser, and to the
approval of Counsel for the respective parties.
10. CLOSING DATE. The effective date of this transaction is January 1,
1997. The closing under this Agreement shall take place at the offices of the
SELLERS in Boca Raton, Florida on or before March 26, 1997, and that all other
required approvals and ratification's shall be obtained by respective parties at
least 7 days prior thereto.
11. NOTICES. All notices under this Agreement shall be in writing and
addressed to the parties at the addresses hereinabove set forth, and shall be
mailed by certified mail, return receipt requested.
12. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and assigns, provided, however, that this Agreement cannot be
assigned by any party except by or with the written consent of all parties
hereto. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation other than the parties
hereto and their respective legal representatives, successors and assigns any
rights or benefits under or by reason of this Agreement.
<PAGE>
13. LAW GOVERNING. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have respectively executed
this Agreement as of the day and year first written above.
PURCHASER: /s/ David Laing
---------------
By: President & CEO
Date: __________________
SELLER: /s/ Richard Iamunno
-------------------
By: President & CEO
Date: ___________________
<PAGE>
EXHIBIT A
Assets
Cash
Leasehold Improvements
webSports Software system
ICE Software System
Two (2) Pentium Pro Servers
Five (5) Pentium 166 Workstations
Seven (7) Monitors
Seven (7) Mice and Keyboards
One (1) Cisco Router
One (1) Hub
One (1) ASUS Motherboard
One (1) television
One (1) Fax Machine
One (1) Printer
One (1) Large Desk
Five (5) Computer Desks
Six (6) Chairs
Two (2) Fans
Three (3) Waste Baskets
One (1) Western Union Machine/Printer
One (1) Premier Quick Collect Machine/Printer
Liabilities
Accounts payables
Players balances
AGREEMENT FOR PURCHASE AND SALE OF STOCK
THIS AGREEMENT IS MADE this 31th day of January, 1997 by and between
Atlantic International Entertainment, Ltd., a Delaware corporation with its
principal office at 2200 Corporate Blvd. Suite 317, Boca Raton, FL 33431
(hereinafter referred to as "Purchaser"); and EmiNet Domain, Inc., a Delaware
corporation with its principal office at 1325 South Congress Ave., Suite 241,
Boynton Beach, Florida 33426 (hereinafter referred to as "Acquired Company").
WITNESSETH:
WHEREAS, Purchaser desires to acquire all shares of the Acquired Company
representing 100% of the issued and outstanding capital stock of the Acquired
Company upon the terms and conditions hereinafter set forth; and
WHEREAS, the parties intend that this transaction qualify as a tax-free
exchange of stock as defined in the Internal Revenue Code;
NOW, THEREFORE, in consideration of these premises, the parties hereto
agree as follows:
1. PURCHASE OF SHARES. Purchaser hereby agrees to acquire from the
shareholders of the Acquired Company, as their interests appear in Exhibit A
attached hereto, all shares of Common Stock of the Acquired Company upon the
terms and conditions set forth herein.
2. TERMS OF PURCHASE. The purchase price for the shares shall be payable
as follows:
(i) $2,020,000.00 payable by the issuance and delivery to the
shareholders of the Acquired Company or their designees of a
minimum of 200,000 shares of fully-paid and non assessable Common
Stock of the Purchaser at the market value as of January 31,1997
and $20,000 cash, payable March 31, 1997, for 100% of the stock. In
addition, shareholders of the Acquired Company or their designees
will receive additional shares at market equal to one time the
Acquired company's net profit before taxes for the years ending
1997 and 1998 up to $750,000 per annum, one and one-half times over
$750,000 to $1,000,000, and two times over $1,000,000. The closing
for the additional shares shall be 30 days after completion of the
year end audited financial statements.
At the time of the closing of the purchases set forth in Paragraphs
"1" and "2" above, the Acquired Company shall deliver to Purchaser
stock certificates representing the Shares purchased herein duly
endorsed for transfer to the Purchaser. Upon receipt of these
shares, the Purchaser shall direct Continental Stock Transfer
Company, as Transfer Agent for the Purchaser, to issue to the
shareholders of the Acquired Company, as their interests appear on
Appendix A attached hereto, certificates representing the shares of
Common Stock of the Purchaser as set forth in Paragraph 2(i) above.
<PAGE>
3. REPRESENTATIONS OF ACQUIRED COMPANY. Acquired Company represents and
warrants to Purchaser as follows:
3.1. That the Acquired Company has been duly organized in the manner
set forth below and that the Certificates of Incorporation have not been revoked
or canceled nor has the Corporation been dissolved;
3.2. Other than as disclosed herein, there are no lawsuits pending
against the Acquired Company or its Officers or Directors, nor are there any
such lawsuits threatened or anticipated, nor are there any judgments, warrants,
or levies outstanding against the Acquired Company, its subsidiaries, or its
property, nor are there any tax examinations or proceedings pending relating to
taxes or other assessments against the Acquired Company, nor has the Acquired
Company at any time taken any insolvency or bankruptcy actions;
3.3. That the Acquired Company has entered into certain lease(s) of
real and personal property, which lease(s) are attached hereto as an Exhibit,
and that said lease(s) are in full force and effect and that there are no
defaults thereunder, and that all payments require to be made thereunder have
been made as of the date of this Agreement;
3.4. That all of the chattels, trade fixtures, motor vehicles, and
equipment owned or utilized by the Acquired Company is free and clear of all
liens and encumbrances, except for such liens or security agreements as are set
forth an Exhibit hereto;
3.5. A Balance Sheet of the Acquired Company as of December 31, 1996 ,
a copy of which is annexed hereto a Appendix B, has been prepared as a
management compilation and accurately and fairly presents the financial
condition and liabilities of the Acquired Company as of such date, and that the
Acquired Company shall be liable to Purchaser for any undisclosed liabilities or
claims which may appear or be made subsequent to the Closing Date;
3.6. The Acquired Company is duly qualified and entitled to own or
lease its respective properties and to carry on its business all as and in the
places where such properties are now owned or such businesses are conducted;
3.7. The Acquired Company has good marketable title to all of the
property and assets (including title in fee simple to all real property)
included in the Balance Sheet of the Acquired Company annexed hereto, except,
however, property and assets in non-material amounts sold in the ordinary course
of business since the date of such Balance Sheet, and that all of the properties
and assets are free of all liens, encumbrances, or claims except as set forth in
the Balance Sheet;
<PAGE>
3.8. The Acquired Company is not party to any pending or threatened
litigation which might adversely affect the financial condition, business
operations, or properties of the Acquired Company, nor to the knowledge of the
Acquired Company is there any threatened or pending governmental or regulatory
litigation, investigation, inquiry, or proceeding involving the Acquired Company
except as disclosed herein;
3.9. All required returns for income taxes, surtaxes, and excess
profits taxes of the Acquired Company for all periods up to and including the
calendar year 1995 have been duly prepared and filed in good faith and all taxes
and assessments shown thereon have been paid or accrued on the Acquired
Company's books; all state franchise taxes and real and personal property taxes
have been paid as of the dates due; and no proceeding or other action has been
taken for the assessment or collection of additional taxes for any such periods;
3.10. The business, properties and assets of the Acquired Company has
not, since the date of the Balance Sheet, been materially and adversely affected
as the result of any fire, explosion, natural disaster, governmental act,
cancellation of contracts, or any other event;
3.11. No representation by the Acquired Company or by its Officers made
in this Agreement and no statement made in any certificate furnished in
connection with this transaction contains or will contain any knowingly untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make such statement, representation or warranty not misleading to a
prospective purchaser of the stock of the Acquired Company who is seeking full
information as to the Acquired Company and its business affairs.
3.12. The Acquired Company is a corporation duly organized and existing
under the laws of Florida. All shares are presently issued and outstanding; it
does not have authorized, issued, or outstanding any other shares of stock of
any class or any subscription or other rights to the issuance or receipt of
shares of its capital stock; and all voting rights are vested exclusively in
such capital stock.
4. DELIVERY OF CORPORATE RECORDS AT CLOSING. Acquired Company shall
cause to be delivered to Purchaser at the time of Closing the Corporate Minute
Books, Stock Certificate Ledgers and unissued Certificates, and the Corporate
Seals of the Acquired Company.
5. EMPLOYMENT AGREEMENTS AND CONSULTING AGREEMENTS. The four principals
of the Acquired Company agree to continue employment with the Acquired Company
or the Purchaser in similar capacities through the end of 1998. Salaries for
1997 shall not to exceed $45,000 per annum.
<PAGE>
6. UNDERTAKINGS BY THE ACQUIRED COMPANY.
6.1. The Officers and Directors of the Acquired Company shall not
cause, suffer or permit the Acquired Company, subsequent to the date hereof and
prior to the delivery of the Shares as contemplated hereunder, to issue any
additional shares or securities; make any distribution to its shareholders;
mortgage, pledge, or subject to lien or encumbrance any of its properties or
assets except in the ordinary course of its business; sell or transfer any of
its assets, tangible or intangible, except in the ordinary or usual course of
business; incur or become liable for any obligations or liabilities except for
current liabilities incurred in the ordinary and usual course of business; or
increase the rate of compensation of its Officers;
6.2. During the period prior to the closing date hereunder the Acquired
Company shall conduct its business operations in the usual and normal course.
7. REPRESENTATIONS BY PURCHASER. Purchaser represents and warrants to
the Acquired Company as follows:
7.1. That Purchaser has been duly organized pursuant to the laws of the
State of Delaware and that its Certificate of Incorporation has not been revoked
or canceled nor has the Corporation been dissolved;
7.2. Other than as disclosed herein, there are no lawsuits pending
against Purchaser or its Officers or Directors, nor are there any such lawsuits
threatened or anticipated, nor are there any judgments, warrants, or levies
outstanding against Purchaser, or its property, nor are there any tax
examinations or proceedings pending relating to taxes or other assessments
against Purchaser, nor has Purchaser at any time taken any insolvency or
bankruptcy actions;
7.3. That all of the chattels, trade fixtures, motor vehicles, and
equipment owned or utilized by Purchaser, if any, are free and clear of all
liens and encumbrances, except for such liens or security agreements as are set
forth an Exhibit hereto;
7.4. The Balance Sheet of Purchaser as of December 31, 1996, a copy of
which is attached hereto as an Exhibit, has been prepared in accordance with
generally accepted accounting principles consistently applied and accurately and
fairly presents the financial condition and liabilities of Purchaser as of such
date, and that Purchaser shall be liable to Acquired Company for any undisclosed
liabilities or claims which may appear or be made subsequent to the Closing
Date;
7.5. Purchaser is duly qualified and entitled to own or lease its
respective properties and to carry on its business all as and in the places
where such properties are now owned or such businesses are conducted;
7.6. Purchaser has good marketable title to all of the property and
assets (including title in fee simple to all real property) included in the
Balance Sheet of Purchaser annexed hereto, except, however, property and assets
in non-material amounts sold in the ordinary course of business since the date
of such Balance Sheet, and that all of the properties and assets are free of all
liens, encumbrances, or claims except as set forth in the Balance Sheet;
<PAGE>
7.7. Purchaser is not party to any pending or threatened litigation
which might adversely affect the financial condition, business operations, or
properties of Purchaser, nor to the knowledge of Purchaser is there any
threatened or pending governmental or regulatory investigation, inquiry, or
proceeding involving Purchaser except as disclosed herein, and that it is
current in all filings required to be made pursuant to the Securities Act of
1933, as amended;
7.8. All returns for income taxes, surtaxes, and excess profits taxes
of Purchaser for all periods up to and including the calendar year 1995 have
been duly prepared and filed in good faith and all taxes and assessments shown
thereon have been paid or accrued on Purchaser's books; all state franchise
taxes and real and personal property taxes have been paid as of the dates due;
and no proceeding or other action has been taken for the assessment or
collection of additional taxes for any such periods;
7.9. The business, properties and assets of Purchaser have not, since
the date of the Balance Sheet, been materially and adversely affected as the
result of any fire, explosion, natural disaster, governmental act, cancellation
of contracts, or any other event;
7.10. No representation by Purchaser or by its Officers made in this
Agreement and no statement made in any certificate furnished in connection with
this transaction contains or will contain any knowingly untrue statement of a
material fact or omits or will omit to state any material fact necessary to make
such statement, representation or warranty not misleading to a prospective
purchaser of the stock of Purchaser who is seeking full information as to
Purchaser and its business affairs.
8. CONDITIONS PRECEDENT TO CLOSING. All obligations of Acquired Company
and Purchaser under this Agreement are subject to the fulfillment, on or prior
to the closing date, of each of the following conditions:
8.1. That the representations of Purchaser and Acquired Company shall
be true at and as of the closing date as though such representations were made
at and as of such time;
8.2. That Purchaser shall have received a written opinion, dated on the
closing date, of counsel representing the Acquired Company, to the effect that
the Acquired Company has been duly incorporated and is in good standing under
the laws of the State of its organization with a capitalization as represented
in this Agreement; that the Acquired Company is duly licensed or qualified to do
business in any and all States or jurisdictions in which it does business or
where in the opinion of Counsel such qualification is required; that such
counsel knows of no litigation, investigation, or governmental proceeding
pending or threatened against the Acquired Company which might result in any
material adverse change in the business, properties, or financial condition of
the Acquired Company or in any liability on the part of the Acquired Company;
and that the assignment and delivery of the Shares of the Acquired Company
pursuant to this Agreement will vest in Purchaser all right, title and interest
in and to such Shares, free and clear of all liens, encumbrances and equities;
<PAGE>
8.3. That Purchaser shall have received a certificate dated on the
closing date and signed by the President of the Acquired Company, that since the
date of this Agreement the Acquired Company has not done or permitted to be done
any of the acts or things prohibited by this Agreement;
8.4. That no claim or liability not fully covered by insurance shall
have been asserted against the Purchaser or the Acquired Company nor has either
party suffered any loss on account of fire, flood, accident or other calamity of
such a character as to materially adversely affect their financial condition,
regardless of whether or not such loss shall have been insured.
8.5. That all covenants and indemnification's made herein by Purchaser
and by the Acquired Company which are to be performed at or prior to closing
shall have been duly performed;
8.6. That at the time of closing the Common Stock of Purchaser shall
not be the subject of any investigation or inquiry by the Securities and
Exchange Commission, the National Association of Securities Dealers, and any
other State or Federal regulatory body.
9. APPROVALS AND RATIFICATIONS. All transactions contemplated by this
Agreement shall be subject to the approval and ratification of the Boards of
Directors and Shareholders of the Acquired Company and of Purchaser, and to the
approval of Counsel for the respective parties.
10. CLOSING DATE. The closing under this Agreement shall take place at
the offices of Purchasing Company in Boca Raton, Florida on or before February
21, 1996, and that all other required approvals and ratification's shall be
obtained by the respective parties at least 48 hours prior thereto.
11. NOTICES. All notices under this Agreement shall be in writing and
addressed to the parties at the addresses hereinabove set forth, and shall be
mailed by certified mail, return receipt requested.
12. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and assigns, provided, however, that this Agreement cannot be
assigned by any party except by or with the written consent of all parties
hereto. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation other that the parties
hereto and their respective legal representatives, successors and assigns any
rights or benefits under or by reason of this Agreement.
<PAGE>
13. LAW GOVERNING. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have respectively executed this
Agreement as of the day and year first written above.
PURCHASER: AIE, LTD.
By: /s/ Richard A. Iamunno, President
---------------------------------
ACQUIRED COMPANY: _____________________________
By: /s/ Michael Carpenter
-------------------------
By: /s/ Sinjay Jindel
-------------------------
By: /s/ Michael Wertheimer
-------------------------
By: /s/ Thomas Bagli
-------------------------
By: _________________________
<PAGE>
EXHIBIT A
NAME, ADDRESS AND SOCIAL NUMBER OF ATLANTIC
SECURITY NUMBER OF STOCKHOLDER SHARES TO BE RECEIVED
- ------------------------------------------- ---------------------------------
Thomas Bagli
3170 Leewood Terrace, #L-110
Boca Raton, Florida 33431
Soc. Sec. # 48,000
Michael Carpenter
7125 Lake Island Drive
Lake Worth, Florida 33467
Soc. Sec. # 48,000
Michael Wertheimer
7380 West Country Club Boulevard
Boca Raton, Florida 33487
Soc. Sec. # 48,000
Sinjay Jindal
2230-C Spring Harbor Drive
Delray Beach, Florida 33445
Soc. Sec. # 48,000
Avraham Uriel Chamish
7070 Davit Circle
Lake Worth, Florida 33467
Soc. Sec. # 8,000
-------
200,000
=======
-1-
CONSULTING AGREEMENT
AS OF JUNE 17, 1996
Mr. Wayne Newton
6629 South Tecos
Las Vegas, Nevada 89120
Dear Mr. Newton:
This letter sets forth the arrangements, terms and conditions
pursuant to which Wayne Newton or his "Nominee" (the "Consultant") has been
retained to serve as a consultant and advisor to Atlantic International Capital,
Ltd. (the "Company") for a period of thirty-six (36) months, commencing as of
June 1, 1996. The undersigned hereby agree to the following terms and
conditions:-
1. DUTIES AS CONSULTANT: Consultant shall, at the request of the
Company, upon reasonable notice, render the following services to the Company
from time to time:
(a) INTRODUCTIONS ON THE INTERNET. The Consultant will
act as the Internet Casino Spokesman pursuant to which the
Consultant would, among other activities, provide audio
introductions of the Company's services on the Internet. The form
and content of this introduction will be as the Company may
reasonably determine, as long as the content is not false
advertising.
(b) SPOKESPERSON. The Consultant will function generally
as a spokesperson for the Company. In this capacity, the Consultant
may be featured, at the discretion of the Company, in print and
media campaigns and may play a role in infomercials produced by the
Company. The Consultant would also, at the discretion of the
Company, provide other public relations services. Company shall
consult with the Consultant prior to the release of any material
that contains Consultant's I age or words, and receive prior written
approval from Consultant. Consultant shall not reasonably withhold
such approval.
(c) PERFORMANCES. The Consultant sand the Company will
consider the performance by the consultant at properties that may be
acquired in the future by the Company. The terms of such
performances will be as set forth in a separate agreement between
the parties hereto.
<PAGE>
2. COMPENSATION.
(a) As compensation for Consultant's services hereunder, the
company shall pay to Consultant 5,000 (Five Thousand) shares of Company stock of
the Company during each year of the three-year term of this agreement. The
shares shall be issued to Consultant at the end of each successive three-month
period following the date hereof. The number of shares to be granted is based
upon but not more than 9,000,000 shares of common stock of the Company (or its
successor) to be outstanding following completion of an anticipated share
exchange. Consultant's stock shall be fully transferable and not lettered stock.
(b) A cash fee will be paid for each activity participated in. A
fee proposal will be presented prior to each planned event/activity for
acceptance.
(c) All reasonable out-of-pocket expenses incurred by Consultant in
the performance of the services to be rendered hereunder shall be borne by the
Company, provided prior authorization is received therefor.
3. AVAILABLE TIME. Consultant shall make available to the Company, at
the request of the Company, up to (ten) hours per month (exclusive of travel
time).
4. RELATIONSHIP. Nothing herein shall constitute Consultant as an
employee or agent of the company, except to such extent as might hereinafter be
agreed upon for a particular purpose. Except as might hereinafter be expressly
agreed Consultant shall not have the authority to obligate or commit the Company
in any manner whatsoever. Company herein states that the business it is engaged
in is not illegal. If the business is deemed to be illegal then Consultant shall
immediately be released from this contract but shall still be entitled to keep
all of the stock.
5. INDEMNIFICATION. The Company shall pay on behalf of the Consultant
and consultant's executors, administrators or assigns, any amount which
Consultant is or becomes legally obligated to pay as a result of any claim or
claims made against Consultant by reason of the fact of Consultant`s service to
the Company pursuant to this Agreement or otherwise based upon his relationship
to the Company or because of any actual or alleged breach of duty, neglect,
error, misstatement, misleading statement, omission or other act done, or
suffered or wrongfully attempted by Consultant in Consultant's capacity on
behalf of the Company. The payments that the Company will be obligated to make
hereunder shall include (without limitation) damages, judgements, settlements,
costs and expenses of investigation, costs and expenses of defense of legal
actions, claims and proceedings and appeals therefrom, and costs of attachments
and similar bonds. The Company shall not be liable under this Agreement to make
any payment in connection with any claim made against Consultant: (I) for which
payment is actually made to Consultant under an insurance policy maintained by
the Company, except in respect of any excess beyond the amount of payment under
such insurance; (ii) for which Consultant is indemnified by the Company
otherside than pursuant to this Agreement; (iii) based upon or attributable to
Consultant gaining in fact any personal profit or advantage to which he was not
legally entitled; (iv) for an accounting of profits made from the purchase or
sale by Consultant or securities of the Company of the Company within the
meaning of Section 16(b) of (v) brought about or contributed to by the
dishonesty of Consultant. Consultant, as a condition precedent to his right to
be indemnified under this Agreement, shall give to the Company notice in writing
as soon as practicable of any claim made against him for which indemnity will or
could be sought under this Agreement.
<PAGE>
6. ASSIGNMENT AND TERMINATION. This Agreement shall not be assignable
by any party except to successors to all or substantially all of the business of
either the Consultant or the Company nor may this Agreement be terminated by
either party for any reason whatsoever without the prior written consent of the
other party, which consent may be arbitrarily withheld by the party whose
consent is required.
7. CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida. Any actions brought in respect
of this Agreement shall be brought in courts in the State of Florida.
VERY TRULY YOURS AGREED AND ACCEPTED
ATLANTIC INTERNATIONAL WAYNE NEWTON/OR NOMINEE
CAPITAL, LTD.
/s/ Richard A. Iamunno /s/ Wayne Newton
- -------------------------- -------------------------
By: Richard A. Iamunno By: Wayne Newton
President
Date: 6/20/96 Date: 6/21/96
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. LICENSE AGREEMENT
- --------------------------------------------------------------------------------
AIE Internet Casino Extension (ICE)
This SINGLE USER LICENSE AGREEMENT is a binding agreement between Atlantic
International Entertainment, N.V. (User) and Atlantic International
Entertainment, Ltd. for the Software System Product (ICE), which includes
computer software and associated printed materials. By installing or otherwise
using the Software System Product (ICE), User agrees to be bound by the terms of
this agreement.
- --------------------------------------------------------------------------------
SOFTWARE SYSTEM PRODUCT LICENSE
The Software Systems Product is protected by copyright laws and International
copyright treaties as well as other intellectual property laws and treaties.
This Software Product is licensed and not sold.
1. GRANT OF LICENSE. This SINGLE USER LICENSE AGREEMENT grants User the
following rights:
o User may install and use one copy of the Software System
Product. This Software System Product may not be shared or
used concurrently at more than one location.
2. DESCRIPTION OF OTHER RIGHTS AND LIMITATIONS.
o User may not reverse engineer, decompile, or disassemble the
Software System Product.
o The Software System Product is licensed as a single product.
Its component parts may not be separated for use other than
for one specific application.
o User may not rent, lease, sell, transfer or assign the
Software System Product without written consent of Atlantic
International Entertainment, Ltd.
o This is a non-expiring license. Without prejudice to any other
rights, Atlantic International Entertainment, Ltd. may
terminate this SINGLE USER LICENSE AGREEMENT if user fail to
comply with all terms and conditions of this agreement. In
such event, User must destroy all copies of this product.
3. COPYRIGHT. All title and copyrights to the Software System Product are
owned by Atlantic International Entertainment, Ltd.
4. FEE. $450,000, payable after installation and acceptance by AIENV at
minimum rate of $6,000 per month beginning 180 days after system is
operating commercially. Payments to start no later than August 1, 1997.
Fee includes all hardware requirements to provide a fully operational
system. A $250,000 flat fee will be charged for additional Software
Systems in one location, not including any additional hardware
requirements. Payment in full by November 15, 1999.
5. SUPPORT AND UPGRADES. User will also pay $2000 per month for telephone
technical support, software upgrades and new releases of gaming
software systems for forty-eight months beginning August 1, 1997.
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. TO THE MAXIMUM EXTENT PERMITTED BY
DELAWARE LAW, DISCLAIM ALL WARRANTIES, EITHER EXPRESSED OR IMPLIED WITH REGARD
TO THIS PRODUCT AND IN NO EVENT SHALL ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
BE LIABLE FOR ANY SPECIAL, INCIDENTAL. INDIRECT, OR CONSEQUENTIAL DAMAGES
WHATSOEVER ARISING OUT OF THE USE OF THIS PRODUCT.
Agreed to this 4th day of November, 1996
Atlantic International Atlantic International
Entertainment, N.V. Entertainment, Ltd.
Bapor-Kibra 5C Building #1&2 2200 Corporate Blvd., Suite 317
Curacao, N.V. Boca Raton, Florida 33431
BY: /s/ Norman Hoskin BY: /S/ RICHARD IAMUNNO
----------------------------- ----------------------------
Secretary Richard Iamunno, President
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. LICENSE AGREEMENT
- --------------------------------------------------------------------------------
AIE INTERNET CASINO EXTENSION (ICE)
THIS SINGLE USER LICENSE AGREEMENT IS A BINDING AGREEMENT BETWEEN PATROON
AGENCY, INC. (USER) AND ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. FOR THE
SOFTWARE SYSTEM PRODUCT (ICE), WHICH INCLUDES COMPUTER SOFTWARE AND ASSOCIATED
PRINTED MATERIALS. BY INSTALLING OR OTHERWISE USING THE SOFTWARE SYSTEM PRODUCT
(ICE), USER AGREES TO BE BOUND BY THE TERMS OF THIS AGREEMENT.
- --------------------------------------------------------------------------------
SOFTWARE SYSTEM PRODUCT LICENSE
The Software Systems Product is protected by copyright laws and International
copyright treaties as well as other intellectual property laws and treaties.
This Software System Product is licensed and not sold.
1. GRANT OF LICENSE. This SINGLE USER LICENSE AGREEMENT grants USER the
following rights:
o User may install and use one copy of the Software System Product.
This Software System Product may not be shared or used
concurrently at more than one location.
2. DESCRIPTION OF OTHER RIGHTS AND LIMITATIONS.
o User may not reverse engineer, decompile, or disassemble the
Software System Product.
o The Software System Product is licensed as a single product. Its
component parts may not be separated for use other than for one
specific application.
o User may not rent, lease, sell, transfer or assign the Software
System Product without written consent of Atlantic International
Entertainment, Ltd.
o This is a non-expiring license. Without prejudice to any other
rights, Atlantic International Entertainment, Ltd. may terminate
this SINGLE USER LICENSE AGREEMENT if user fail to comply with
all terms and conditions of this agreement. In such event, User
must must destroy all copies of this product.
3. COPYRIGHT. All title and copyrights to the Software System Product are
owned by Atlantic International Entertainment, Ltd.
4. FEE. $450,000 , Payable $30,000 upon signing this agreement or no later
than January 17, 1997, balance upon installation of Software System by
Atlantic International Entertainment, Ltd., in USER'S computers, payable,
at users option, 50% of the net win or 48 equal monthly payments. For
additional copies of the Software System in the same location the license
fee per copy is $350,000 for five copies and $400,000 for an additional
five copies. Terms to be negotiated at the time of sale.
<PAGE>
5. SUPPORT AND UPGRADES. USER will also pay $2000 per month for telephone
technical support and software upgrades per copy until the balance is paid.
After the balance is paid the fee shall be $1000 per month for the duration
of this agreement.
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. TO THE MAXIMUM EXTENT PERMITTED BY
DELAWARE LAW, DISCLAIM ALL WARRANTIES, EITHER EXPRESSED OR IMPLIED WITH REGARD
TO THIS PRODUCT AND IN NO EVENT SHALL ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES
WHATSOEVER ARISING OUT OF THE USE OF THIS PRODUCT.
Agreed to this 27th day of December, 1996
Patroon Agency, Inc. Atlantic International Entertainment, Ltd.
19101 Mystic Point Dr. 2200 Corporate Blvd., Suite 317
Aventura, Fl. 33180 Boca Raton, Florida 33431
BY: /s/ Gerald Cohn BY: /s/ Richard Iamunno
------------------------- --------------------------
Gerald Cohn, President Richard Iamunno, President
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. LICENSE AGREEMENT
- --------------------------------------------------------------------------------
AIE SPORTS BOOK SOFTWARE SYSTEM PRODUCT (WEBSPORTS)
THIS SINGLE USER LICENSE AGREEMENT IS A BINDING AGREEMENT BETWEEN CARIB
SPORTSBOOK, INC. ( USER ) AND ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. FOR THE
SOFTWARE SYSTEM PRODUCT (WEBSPORTS), WHICH INCLUDES COMPUTER SOFTWARE AND
ASSOCIATED PRINTED MATERIALS. BY INSTALLING OR OTHERWISE USING THE SOFTWARE
SYSTEM PRODUCT (WEBSPORTS), USER AGREES TO BE BOUND BY THE TERMS OF THIS
AGREEMENT.
- --------------------------------------------------------------------------------
SOFTWARE SYSTEM PRODUCT LICENSE
The Software Systems Product is protected by copyright laws and International
copyright treaties as well as other intellectual property laws and treaties.
This Software System Product is licensed and not sold.
1. GRANT OF LICENSE. This SINGLE USER LICENSE AGREEMENT grants USER the
following rights:
o User may install and use one copy of the Software System
Product. This Software System Product may not be shared or used
concurrently at more than one location.
2. DESCRIPTION OF OTHER RIGHTS AND LIMITATIONS.
o User may not reverse engineer, decompile, or disassemble the
Software System Product.
o The Software System Product is licensed as a single product. Its
component parts may not be separated for use other than for one
specific application.
o User may not rent, lease, sell, transfer or assign the Software
System Product without written consent of Atlantic International
Entertainment, Ltd.
o This is a non-expiring license. Without prejudice to any other
rights, Atlantic International Entertainment, Ltd. may terminate
this SINGLE USER LICENSE AGREEMENT if user fail to comply with
all terms and conditions of this agreement. In such event, User
must must destroy all copies of this product.
3. COPYRIGHT. All title and copyrights to the Software System Product are owned
by Atlantic International Entertainment, Ltd.
4. FEE. $150,000 , Payable $3000 upon signing this agreement, $3000 upon
installation of Software System by Atlantic International Entertainment,
Ltd., and 2% of the Gross Wagering Handle until the balance is paid.
5. SUPPORT AND UPGRADES. USER at his option may elect to pay $500 per month for
telephone technical support and software upgrades beginning 30 days after
payment of the $150,000 fee. YES NO (please circle choice)
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. TO THE MAXIMUM EXTENT PERMITTED BY
DELAWARE LAW, DISCLAIM ALL WARRANTIES, EITHER EXPRESSED OR IMPLIED WITH REGARD
TO THIS PRODUCT AND IN NO EVENT SHALL ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES
WHATSOEVER ARISING OUT OF THE USE OF THIS PRODUCT.
Agreed to this 31 day of December, 1996
Carib Sportsbook, Inc. Atlantic International Entertainment, Ltd.
24 Mable Hill Villas 2200 Corporate Blvd., Suite 317
Antigua, West Indies Boca Raton, Florida 33431
BY: /s/ Jon Rogers BY: /s/ Richard Iamunno
----------------------------- --------------------------
Jon Rogers, Managing Director Richard Iamunno, President
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. LICENSE AGREEMENT
- --------------------------------------------------------------------------------
AIE SPORTS BOOK SOFTWARE SYSTEM PRODUCT (WEBSPORTS)
THIS SINGLE USER LICENSE AGREEMENT IS A BINDING AGREEMENT BETWEEN GRENADA
MANAGEMENT CORPORATION (USER) AND ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. FOR
THE SOFTWARE SYSTEM PRODUCT (WEBSPORTS), WHICH INCLUDES COMPUTER SOFTWARE AND
ASSOCIATED PRINTED MATERIALS. BY INSTALLING OR OTHERWISE USING THE SOFTWARE
SYSTEM PRODUCT (WEBSPORTS), USER AGREES TO BE BOUND BY THE TERMS OF THIS
AGREEMENT.
- --------------------------------------------------------------------------------
SOFTWARE SYSTEM PRODUCT LICENSE
The Software Systems Product is protected by copyright laws and International
copyright treaties as well as other intellectual property laws and treaties.
This Software System Product is licensed and not sold.
1. GRANT OF LICENSE. This SINGLE USER LICENSE AGREEMENT grants USER the
following rights:
o User may install and use one copy of the Software System
Product. This Software System Product may not be shared or
used concurrently at more than one location.
2. DESCRIPTION OF OTHER RIGHTS AND LIMITATIONS.
o User may not reverse engineer, decompile, or disassemble the
Software System Product.
o The Software System Product is licensed as a single product.
Its component parts may not be separated for use other than
for one specific application.
o User may not rent, lease, sell, transfer or assign the
Software System Product without written consent of Atlantic
International Entertainment, Ltd.
o This is a non-expiring license. Without prejudice to any other
rights, Atlantic International Entertainment, Ltd. may
terminate this SINGLE USER LICENSE AGREEMENT if user fail to
comply with all terms and conditions of this agreement. In
such event, User must must destroy all copies of this product.
3. COPYRIGHT. All title and copyrights to the Software System Product are
owned by Atlantic International Entertainment, Ltd.
4. FEE. $190,000, Payable after installation and acceptance by User at a
minimum rate of $2,500 per month beginning 30 days after system (Version
1.5) is operating commercially. Payments to start no later than September
1, 1997. Fee includes all hardware requirements to provide a fully
operational system. Hardware to be installed by User. A $50,000 flat fee
will be charged for additional Software Systems in one location, not
including any additional hardware requirements. Payment in full by
November 15, 1998.
5. SUPPORT AND UPGRADES. User will also pay $500 per month for telephone
technical support and software upgrades.
<PAGE>
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. TO THE MAXIMUM EXTENT PERMITTED BY
DELAWARE LAW, DISCLAIM ALL WARRANTIES, EITHER EXPRESSED OR IMPLIED WITH REGARD
TO THIS PRODUCT. IN NO EVENT SHALL ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. BE
LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES
WHATSOEVER ARISING OUT OF THE USE OF THIS PRODUCT.
Agreed to this 27 day of February, 1997
Grenada Management Corporation Atlantic International Entertainment, Ltd.
P.O. Box 556 2200 Corporate Blvd., Suite 317
Harlestown, Nevis Boca Raton, Florida 33431
BY: /s/ Greg Gottson BY: /s/ Richard Iamunno
---------------------------- ---------------------------
Greg Gottson, U.S. Agent Richard Iamunno, President
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
LICENSING AGREEMENT
This single user license agreement (the "Licensing Agreement") is a
binding agreement between ThirdAge, Inc. a New York corporation with offices at
611 Broadway, Suite 405, New York NY, 10012 or its assignee(s) (hereafter
"ThirdAge") and Atlantic International Entertainment, Ltd., a publicly listed
Delaware corporation with offices at 2200 Corporate Blvd., Suite 317, Boca
Raton, FL 33431 (hereafter "AIE") for ThirdAge to utilize AIE's Internet casino
software (hereafter the "Internet Casino Extension" or "ICE").
Whereas, AIE has acquired and/or developed software for use in
operating a gaming site on the Internet/World Wide Web; and Whereas, ThirdAge is
willing to be the first licensee of AIE, under the terms stated herein. Now
therefore, in consideration of the covenants and agreements set forth herein,
the parties hereto agree as follows:
1. SUBJECT MATTER OF THE LICENSE. The ICE includes, but is not limited
to, software, computer hardware, trade secrets, proprietary information,
computer code and computer processes for creating and operating wagered and
non-wagered gaming activities on the Internet. Such gaming activities include,
but are not limited to, poker, blackjack, roulette, Caribbean poker, bingo,
keno, slots and any other Internet game offered now, or in the future, by AIE.
2. GRANT OF LICENSE. The ICE is licensed and not sold hereunder. This
Agreement grants ThirdAge the following rights:
(a) ThirdAge may install and use one copy of the ICE. The ICE may not
be shared or used concurrently at more than one location;
(b) ThirdAge shall have timely access to all improvements, updates and
upgrades developed by AIE and/or its licensees, so long as ThirdAge is current
with its payments under Article 3 herein;
(c) ThirdAge may adopt, or not adopt, any upgrades provided by AIE. In
the event ThirdAge does not adopt, or otherwise alters, any part of the code
provided by AIE, ThirdAge:
(i) shall be in no way relieved of its obligation to pay the
remainder of the Article 3 Fee payable out of Net Revenue while using ICE; and
(ii) shall remove the "ICE" logo from all software.
(d) The above mentioned 1(c) shall thereafter constitute the sole
liability of ThirdAge to AIE.
3. FEE. ThirdAge shall pay to AIE:
(a) Thirty Thousand Dollars ($30,000) within ninety (90) days of the
execution of this Agreement;
(b) an additional Twenty Thousand Dollars ($20,000) upon installation
by AIE of the ICE and commencement of operation as a revenue-producing Internet
casino; and
(c) an additional Four Hundred Thousand Dollars ($400,000) thereafter
to be received from a three percent (3%) participation in the gross revenue of
such Internet casino operated by ThirdAge using ICE (such payment amount not to
exceed Ten Thousand Dollars per month) until such time as AIE has received a
total of Four Hundred Fifty Thousand Dollars ($450,000) hereunder. Thereafter,
no further revenue participation, or licensing fee of any kind, shall be due for
such license.
Nothing in this Agreement shall oblige AIE to incur any expense under
this licensing agreement prior to AIE receiving the first payment of Thirty
Thousand Dollars ($30,000). ThirdAge shall be granted a thirty (30) day "cure
period" for any Fee installment not paid to AIE when due.
4. COPYRIGHT. AIE represents that the ICE is, and at all times during
the term of this Agreement shall remain, protected by copyright laws and
international copyright treaties as well as other intellectual property laws and
treaties. All title and copyrights to the ICE are owned solely by AIE. AIE
agrees to indemnify and hold harmless ThirdAge and its assignee(s) against any
and all third party claimants challenging such ownership, or the right to
license, by AIE. Further, AIE agrees to indemnify and hold harmless ThirdAge and
its assignee(s) against claims of any type by anyone licensing software or code
to AIE.
5. DESCRIPTION OF OTHER RIGHTS AND LIMITATIONS
(a) In the event of a subsequent modification of ICE by ThirdAge, such
addition or improvement shall become the property of ThirdAge or its
assignee(s); ThirdAge shall thereafter offer AIE a non-exclusive license on
terms and conditions to be determined at the time of the granting of such
non-exclusive license to AIE.
<PAGE>
(b) Other than as provided herein, ThirdAge may not rent, lease, sell,
transfer or assign the ICE without written consent of AIE.
6. SUPPORT AND UPGRADES. ThirdAge shall pay AIE Two Thousand Dollars
($2,000) per month for the timely telephone technical support and upgrades to
the current ICE for the thirty-six (36) months following the commencement of
wagering operations on the ThirdAge Internet casino.
7. CUSTOMIZATION. AIE shall make cosmetic modifications to the ICE
graphical user interface with specifications provided by ThirdAge.
8. SYSTEM HARDWARE. AIE will provide to ThirdAge, at no additional
cost, the attendant computer hardware required to run the ICE and operate the
Internet casino according tot he specifications annexed hereto as Exhibit 1.
9. TERM. The term of this Agreement shall commence upon the execution
hereof and shall not be terminated thereafter for any reason other than:
(a) by AIE, for non-payment of the Fee pursuant to Article 3 herein or,
(b) by ThirdAge, for the breach of any representation, covenant, or
obligation by AIE to ThirdAge or any of its assignees.
10. VALUE ADDED RESELLER. ThirdAge shall have the option to license up
to five (5) additional ICE licenses for the lower of $250,000 or 50% percent of
the amount AIE would charge a retain (i.e. single-user) purchaser. Payment for
such ICE licenses shall be paid to AIE:
(a) Thirty Thousand Dollars ($30,000) on execution of the license by
assignee;
(b) Twenty Thousand Dollars ($20,000) upon the installation by AIE of
the ICE and commencement of operation as a revenue producing Internet casino;
and
(c) an additional Two Hundred Thousand Dollars ($200,000) thereafter to
be received from a three (3%) participation in gross revenue in such Internet
casino using ICE (such payment amount not to exceed Ten Thousand Dollars per
month) until such time as AIE has received a total of Two Hundred and Fifty
Thousand Dollars ($250,000). Thereafter no further licensing fee, or revenue
participation of any type, shall be due for such license. And, so long as any
assignee of ThirdAge is current in their Fee payments: (i) they shall receive
any and all AIE upgrades; and (ii) in no instance shall their license be
terminated.
11. TERMINATION. This is a non-expiring royalty-free license for use
worldwide by ThirdAge. AIE or ThirdAge may terminate this Agreement if one of
the parties fails to comply with the conditions of this Agreement. In such
event, ThirdAge must destroy all copies of the ICE provided by AIE. A default
and/or termination under this Licensing Agreement by ThirdAge shall not
constitute a default under any licensing agreement with any assignee of
ThirdAge, unless such assignee is independently in default due to non-payment of
the AIE Fee while operating an Internet Casino using ICE software. AIE
recognizes that assignees of ThirdAge, as well as ThirdAge, may suffer
irreparable injury in the event of a termination of this Agreement.
12. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties and supersedes all prior negotiations. Article and Section headings
in this Agreement are included herein for convenience or reference only.
EXCEPT AS PROVIDED HEREIN, ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
TO THE MAXIMUM EXTENT PERMITTED BY DELAWARE LAW, DISCLAIMS ALL WARRANTIES,
EITHER EXPRESSED OR IMPLIED WITH REGARD TO THIS PRODUCE ANT, EXCEPT FOR ITS
PROVEN NEGLIGENCE, IN NO EVENT SHALL ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES
WHATSOEVER ARISING OUT OF THE USE OF THIS PRODUCT.
Agreed to this _______ day of March 1997.
Authorized signatory for Authorized signatory for
ThirdAge, Inc. Atlantic International Entertainment, Ltd.
611 Broadway 2200 Corporate Blvd
Suite 405 Suite 317
New York, NY 10012 Boca Raton, FL 33431
By: /s/ Robert Berg By: /s/ Richard A. Iamunno
-------------------------- -----------------------------
Robert W. Berg, President Richard A. Iamunno, President
<PAGE>
ADDENDUM # 1
Addendum to License Agreement between Atlantic International Entertainment. Ltd.
and ThirdAge, Inc.
DEFINITIONS AND CLARIFICATIONS
1. Net Revenue is defined as the total amount wagered less winnings
before expenses. A mutually acceptable procedure will be established to allow
AIE to determine the Net Revenue to ThirdAge from gaming operations derived from
its licensed Internet casino hereunder. During those months that such casino is
operating and receiving gaming revenue, AIE is to receive a minimum monthly
payment of $3000 toward the balance of the Fee. Such monthly payments shall
begin ninety (90) days after the commencement of gaming operations and shall
terminate upon receipt of the Fee by AIE (pursuant to Article 3). 2. The ICE
system is the product licensed and does not include non-gaming or non-casino
related software that may be developed by AIE in future. 3. ThirdAge, Inc. is
not the first licensee of the current ICE product.
PARAGRAPH MODIFICATIONS AND CLARIFICATIONS:
1. Paragraph 1 - All casino related games developed, and upgrades for
the ICE software system purchase by ThirdAge, will be available to ThirdAge or
its assignee(s) at no additional cost. Caribbean poker, bingo and keno are not
currently available but are under study for possible development and inclusion
in the current product. Other Internet games may be developed by AIE hereafter
that are non-gaming and not Internet casino related. They are not part of this
agreement.
2. Paragraph 6 - Each ICE system installed including those sold in
accordance with Paragraph 10 is subject to the $2000 per month support and
upgrade charge for thirty-six (36) months following the commencement of wagering
operations.
3. Paragraph 7 - ThirdAge is to furnish the necessary graphic art to
AIE.
4. Paragraph 8 - The maximum hardware allowance included in this
agreement is $15,000 and will include all that is required to operate the
system. Some items on Exhibit 1; items 5 and 6 are optional at additional cost,
the software in users computers. As resellers, ThirdAge will market the ICE
product for the equivalent consideration AIE is deriving for the product.
5. Paragraph 10 - Computers and hardware are not included in the
reseller license fee but AIE will install, at n additional cost, the software in
users computers. As resellers, ThirdAge will market the ICE product for the
equivalent consideration AIE is deriving for the product.
Agreed to this _________ day of March 1997
ThirdAge, Inc. Atlantic International Entertainment, Ltd
By: /s/ Robert W. Berg By: /s/ Richard Iamunno
-------------------------- -----------------------------
Robert W. Berg, President Richard A. Iamunno, President
Exhibit 11
ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
Computation of Earnings (Loss) Per Share
Net Earnings (Loss) per common share is computed by dividing net
earnings or loss by the weighted average number of shares of Common Stock
outstanding during each year. The Company did not have any Common Stock
equivalents outstanding during the years ended December 31, 1995 and 1996.
FOR THE YEAR ENDED DECEMBER 31,
1996 1995
---- ----
Earnings (Loss) per
Share:
Net Income (Loss) $(376,270) $ 158,839
---------- ----------
Weighted average
number of shares
outstanding 8,514,537 8,303,484
--------- ---------
Assumed issuances
under exercise of
stock options and
warrants --(1) --(1)
Income (Loss) per
share $ (.04) $ .02
======= =========
(1) During 1995 and 1996 there were no Common stock equivalents
outstanding.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ATLANTIC
INTERNATIONAL ENTERTAINMENT FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 421,188
<SECURITIES> 0
<RECEIVABLES> 77,215
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 502,772
<PP&E> 1,491,818
<DEPRECIATION> 68,617
<TOTAL-ASSETS> 1,982,014
<CURRENT-LIABILITIES> 302,879
<BONDS> 0
<COMMON> 9,190
0
0
<OTHER-SE> 1,679,135
<TOTAL-LIABILITY-AND-EQUITY> 1,982,014
<SALES> 454,656
<TOTAL-REVENUES> 454,656
<CGS> 815,255
<TOTAL-COSTS> 882,631
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 178
<INCOME-PRETAX> (424,241)
<INCOME-TAX> (77,215)
<INCOME-CONTINUING> (347,026)
<DISCONTINUED> (29,244)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (376,270)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
