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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
REALM PRODUCTION AND ENTERTAINMENT, INC.
(Name of Small Business Issuer in its charter)
FLORIDA 65-0609891
(State of incorporation) (I.R.S. Employer Identification No.)
4950 WEST PROSPECT ROAD, FT. LAUDERDALE, FLORIDA 33309
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number (954) 745-0077
Securities to be registered pursuant to 12(b) of the Act: NONE
Securities to be registered pursuant to 12(g) of the Act:
COMMON STOCK $.005 PAR VALUE
(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
ITEM 1. DESCRIPTION OF BUSINESS
OVERVIEW
Realm Production and Entertainment, Inc. (the "Company"), was
incorporated under the laws of the State of Florida in May 1995. The Company,
through BRT Video, Inc., its majority owned subsidiary ("BRT") and VidKid
Distribution, Inc., its wholly owned subsidiary ("VidKid"), is engaged in (i)
the development and production of live and computer generated children's made
for television movies and series; (ii) the marketing and sale of various
children's programs, including certain "Howdy Doody" episodes; and (iii)
providing video and post-production and distribution services to third parties.
In addition to the foregoing, the Company's business is intended to include,
but not be limited to, obtaining video, broadcast and distribution rights
("Intellectual Properties") to children's television programs and movies owned,
licensed, or to be acquired or created by the Company.
PROGRAM PRODUCTION
In October 1998, the Company acquired 72.5% of the outstanding stock of
BRT. BRT was organized in November 1983 and provides video, audio and editing
post-production services and facilities to the Company and third parties
including local television stations, independent producers and cable
broadcasters. The Company's production business, as conducted through BRT,
involves a three phase process comprised of pre-production, production and
post-production activities.
The pre-production stage begins with the creation of a concept and
story. During pre-production, a script and songs (both music and lyrics) are
written. In addition, Company personnel prepare model sheets for each character,
create story boards and mouth charts for purposes of synchronization. The
Company's pre-production activities are presently conducted principally by the
Company at its offices and at work for hire studios including those of set and
puppet manufacturers.
The production phase includes the actual shooting or computer animation
of the principal photography of each episode and/or movie. During the
production phase, principal photography occurs including but not limited to,
sets lighting, sound recording, blue screen photography and animation.
The post-production phase involves editing the which includes adding
voices, music and special effects to the rough cut magnetic tape, film negative
and/or animation.
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The tape or negative is then edited and reviewed for quality, and any
corrections or final changes required are made. The result of the
post-production process is a final positive print (for film) or a 1-inch master
take (for television or videocassette) in which the video, music and sound
effects are synchronized.
MARKETING AND DISTRIBUTION
In July 1997, the Company formed Vidkid as a wholly-owned subsidiary.
Vidkid will distribute Intellectual Properties owned by the Company and various
third parties for which Vidkid will receive royalty payments. The Company
expects Vidkid to generate revenues from the programs it distributes through
three principal channels: (i) markets, including network, syndicated and cable
television, both in the United States and abroad, (ii) non-television markets,
including videocassette sales and rentals and (iii) after-market merchandising,
including licensing the use of children's characters in connection with toys,
clothing and other forms of children's products ("Merchandising Rights")
although Vidkid has not acquired and Merchandising Rights to date.
Vidkid owns both the broadcast and video distribution rights for 130
color episodes of The New Howdy Doody Show produced in the 1970's (the "Howdy
Doody Episodes"). NBC owns the Howdy Doody trademark rights and all
merchandising rights to "Howdy Doody" products. The Company's marketing strategy
is to utilize the "Howdy Doody Episodes" to establish immediate video sales
revenues, television exposure and to enhance the Company's name in the industry.
"HOWDY DOODY". In August 1997, VidKid entered an agreement with
Madison Sports and Entertainment, Inc. ("Madison") to purchase from Madison the
broadcast and video rights (the "Rights") in 130 color episodes of the "Howdy
Doody" Show produced in the 1970's (the "Madison Agreement"). After the Company
paid an initial deposit of $50,000 to Madison pursuant to the terms of the
Madison Agreement, litigation ensued between Madison and John J. Drury ("Drury")
as to which party owned the Rights. After Drury prevailed in the litigation, the
Company entered into an agreement with Drury and Buffalo Bob Enterprises, Inc.
which set forth the terms pursuant to which the Company would purchase the
Rights from Drury (the "Drury Agreement"). Subsequent to the consummation of the
Drury Agreement, Madison appealed the lower court's ruling naming Drury as the
owner of the Rights but the appellate court upheld the lower court's ruling. As
a result of the appellate court's ruling, the Company intends to pay the
remainder of the purchase price for the Howdy Doody Episodes to Drury. The
Company is in possession of Howdy Doody Episodes and is in the process of
cleaning, digitizing and editing them, which is estimated to be completed in the
second quarter of 1999. Negotiations have commenced to establish the extent of
the market for the episodes as both a video sale and as a television series. QVC
has featured the "Howdy Doody Episodes" on two separate programs, and the
results have been
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favorable. Additionally, the Company, has signed video distribution agreements
with National Syndications, Inc. and Fast Forward Marketing, to distribute the
"Howdy Doody Episodes" to the retail markets. Discussions have also commenced
relative to foreign markets and for domestic television broadcast. Effective
December 29, 1998, VidKid licensed (the "License") Broadcast America
Partnership, Ltd ("BAP") the right to broadcast 65 of the "Howdy Doody" Episodes
(the "Broadcast America Agreement") entitles BAP to broadcast the 65 "Howdy
Doody" Episodes until December 24, 1999 (subject to renewal) on the America One
Television Network. In consideration for granting BAP the License, VidKid will
receive 50% of the net advertising revenues collected for 3 minutes of
advertising time during the "Howdy Doody" Episode airtime. If the Company
receives at least $60,000 in fees from BAP during the time of the Broadcast
America Agreement, BAP has the right of first refusal after the Broadcast
America Agreement expires to broadcast the 65 "Howdy Doody" Episodes on the same
terms as any offer to broadcast the 65 "Howdy Doody" Episodes received by VidKid
from a third party.
In addition to the "Howdy Doody Episodes", the Company has acquired
rights to, and commenced, preliminary pre-production development of additional
children's programs.
In August 1997, the Company entered into a joint venture with The
Animation Factory, Inc. ("TAF"). TAF has established themselves in the video,
TV, CD-ROM and comic book industries, and has animated episodes of "VanPires", a
nationally syndicated children's show. Through the joint venture agreement, the
Company acquired the exclusive distribution rights and a fifty (50%) percent
equity participation in "Atomic Ants" and "Goblins" which are computer animation
concepts to be produced as television series. The Company is entitled to
additional fees of between 10% and 22.8% from gross revenues generated from the
distribution if the Company can arrange for or provide financing necessary to
produce a minimum of thirteen (13) episodes of "Atomic Ants" and "Goblins."
"ATOMIC ANTS is a three dimensional computer animated action series
takes place in the year 3618, when humans have long since become extinct, and
the insect species have evolved to take over the earth. "GOBLINS" is a
children's live action, puppet and three dimensional computer animated show
whose three (3) minute "trailer" is presently being edited.
In May 1995, the Company entered into an agreement with John Driver,
the creator of "YAHOO BUGABOO", to develop, produce, finance and distribute
Yahoo Bugaboo programming. "YAHOO BUGABOO", is a children's adventure story
concept with a set of newly created puppet characters. The Company completed the
production of the pilot (three half-hour episodes) in August 1996. If the
Company decides to expand the Yahoo Bugaboo concept beyond the pilot, the
Company will be obligated to pay Mr. Driver three and one-half (3.5%) percent of
the adjusted gross merchandising royalty revenues the Company receives from
"Yahoo Bugaboo." Mr. Driver is also entitled to perform various production
services on behalf of the Company in connection with the continued development
and production of "Yahoo Bugaboo" program for which the Company must pay Mr.
Driver certain commissions. Mr. Driver has the right to receive the agreement if
certain production quotas are not achieved.
"SPACE PIRATES" is a 3D computer generated pirate adventure that takes
place in the year 3018. The adventure is premised upon classic pirate characters
tales but also involves new concepts and story lines which includes futuristic
majestic space ships that sail through uncharted regions of the universe.
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COMPETITION
The Company competes with many television production and distribution
companies, TV studios and editing facilities, many of which are larger and have
greater human, financial and other resources. In the program creation business,
the Company competes with many other producers of children's television
programs, many of which are larger and have substantially greater human,
financial and other resources than the Company and which have histories of
attracting talent, producing children's programs and hiring key employees for
the production of children's programs, as well as significantly broader access
to production and distribution opportunities and creative talent. The most
critical factor in the program creation business is the commercial acceptance of
the programs by the public. In selecting programs, customers such as television
networks rely heavily on the past history of successful programs by the
producer. Since the Company does not have any history at this time, it is at a
competitive disadvantage.
ITEM 2. DESCRIPTION OF PROPERTY
The Company maintains a 1500 square foot corporate office at 3100 N.
29th Court, Hollywood, Florida. These leased offices house the corporate
executives, and are the center point of the Company's operations. The lease
requires the Company to pay approximately $3,000 per month and terminates in May
2000 subject to the Company's option to renew the lease for a period of three
years.
BRT maintains a 15,000 square foot corporate office at 4950 W. Prospect
Road, Ft. Lauderdale, Florida 33309. These leased offices and the site of video
editing and audio facilities, and a 5,000 square foot sound stage, scheduled to
be constructed in the future. The lease for the BRT facility requires the
Company to pay approximately $11,500 per month and terminates in November 2007.
ITEM 3. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND SIGNIFICANT EMPLOYEES
The following table sets forth the names, positions with the Company
and ages of the executive officers and directors of the Company. Directors will
be elected at the Company's annual meeting of shareholders and serve for one
year or until their successors are elected and qualify. Officers are elected by
the Board and their terms of office are, except to the extent governed by
employment contract, at the discretion of the Board.
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EXECUTIVE OFFICERS AND DIRECTORS
NAME AGE POSITION
- ---- --- --------
Steven Adelstein 51 Chairman of the Board,
Director and President
Gus Guilbert, Jr. 37 Executive Vice President,
Treasurer and Secretary
STEVEN ADELSTEIN has been Chairman of the Board, President and Director
of the Company since May 1995. From February 1993 and February 1995, Mr.
Adelstein was the Executive Producer/coordinator/packager of "Jelly Bean
Jungle," a children's television series syndicated in over 85% of the U.S.
markets and in many foreign territories. Between September 1969 and June 1972,
Mr. Adelstein worked as a Certified Public Accountant with the firm of Peat,
Marwick, Mitchell and Company. In 1989, Mr. Adelstein filed for personal
bankruptcy under the Federal Bankruptcy Act, as a primary result of contingent
liability on commercial real estate loans to various lending institutions.
GUS GUILBERT, JR. has been Executive Vice President, Treasurer and
Secretary of the Company since August 1997. Since June 1993, Mr. Guilbert has
served as Director and President of Gilco, Inc. a computer consulting service.
ITEM 4. EXECUTIVE COMPENSATION
The following table sets forth information relating to the compensation
paid by the Company during the past two fiscal years to the Company's President.
None of the Company's executive officers with the exception of the President
earned more than $100,000 during the fiscal year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
---------------------------------------------------------------------------------
Awards
----------------------------------
Securities
Other Under-
Annual Lying
Name and Principal Compen- Resticted Options/ LTIP All Other
Position Year Salary Bonus sation Stock SARs Payouts Compen-
($) Award(s) (#) ($) sation
(a) (b) (c) (d) (e) ($) (g) (h) ($)
(f) (i)
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<S> <C> <C> <C> <C> <C> <C> <C>
Steven Adelstein,
Chairman 1998 $120,000 $18,000
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1997 $ 90,000 $15,000 200,000(1)
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1996 $ 60,000 $15,000 300,000(1)
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</TABLE>
(1) Assigned by Mr. Adelstein to family members and their affiliates.
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EMPLOYMENT AGREEMENTS
STEVEN ADELSTEIN, PRESIDENT AND CHAIRMAN. In January 1996, the Company
entered into a five year employment agreement with Steven Adelstein. The
agreement entitles Mr. Adelstein to receive an average annual base salary of
$102,000 and standard fringe benefits. The agreement also entitles Mr. Adelstein
to receive a bonus equal to 2.5% of gross receipts actually collected by the
Company resulting from merchandising royalties of the Company's Intellectual
Properties. Mr. Adelstein, or his affiliates, also received warrants to acquire
300,000 shares of Common Stock of the Company at an average exercisable price of
$1.25 per share and expiring December 31, 2005. Pursuant to the terms of Mr.
Adelstein's employment agreement with the Company, the Company is obligated to
make a three (3) year loan to Mr. Adelstein of up to $375,000, the proceeds
which must be used to pay the exercise price of the 300,000 warrants granted to
Mr. Adelstein pursuant to the employment agreement which were subsequently
assigned by Mr. Adelstein to his children.
GUS GUILBERT, JR. EXECUTIVE VICE-PRESIDENT, TREASURER AND SECRETARY. In
August 1997, the Company entered into an three year employment agreement with
Mr. Guilbert. The agreement entitles Mr. Guilbert to an annual base salary of
$36,000 which is increased to $42,000 for the third year of the Agreement and
standard fringe benefits. The agreement also entitles Mr. Guilbert to an annual
bonus based upon performance as determined by the Board of Directors.
Additionally, Mr. Guilbert was granted warrants to acquire 25,000 shares of
Common Stock of the Company at an exercisable price of $2.00 per share
exercisable until December 31, 2005.
STOCK OPTIONS
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Individual Grants
- -------------------------------------------------------------------------
Potential Realizable
Value at
Assumed Annual Alternative To
Percent of Rate of Stock (f) and (g):
Number Of Total Price Appreciation For Grant Date
Securities Options/ Option Term Value
Underlying SARs Granted Exercise Of ---------------------------------------------
Options/SARs To Employees Base Price Expiration Grant Date
Name Granted (#) In Fiscal Year (S/Sh) Date 5% ($) 10% ($) Present Value $
(a) (b) (c) (d) (e) (f) (g) (h)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Steven Adelstein n/a n/a n/a n/a n/a n/a n/a
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</TABLE>
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1998 STOCK OPTION PLAN
INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
In January, 1998, the Board of Directors and a majority of the
Company's shareholders ("Majority Shareholders") adopted the Company's 1998
Stock Option Plan (the "Plan").
The Plan works to increase the employees', consultants' and employee
directors' proprietary interest in the Company and to align more closely their
interests with the interests of the Company's shareholders. The Plan will also
aid the Company in attracting and retaining the services of experienced and
highly qualified professionals. Under the Plan, the Company intends to reserve
an aggregate of 500,000 shares of Common Stock for issuance pursuant to options
granted under the Plan ("Plan Options"). The Board of Directors or a Committee
of the Board of Directors (the "Committee") of the Company will administer the
Plan which includes, without limitation, the selection of the persons who will
be granted Plan Options under the Plan, the type of Plan Options to be granted,
the number of shares subject to each Plan Option and the Plan Option price.
Plan Options granted under the Plan may either be options qualifying as
incentive stock options ("Incentive Options") under Section 422 of the Internal
Revenue Code of 1986, as amended, or options that do not so qualify
("Non-Qualified Options"). In addition, the Plan also allows for the inclusion
of a reload option provision ("Reload Option"), which permits an eligible person
to pay the exercise price of the Plan Option with shares of Common Stock owned
by the eligible person and receive a new Plan Option to purchase shares of
Common Stock equal in number to the tendered shares. Any Incentive Option
granted under the Plan must provide for an exercise price of not less than 100%
of the fair market value of the underlying shares on the date of such grant, but
the exercise price of any Incentive Option granted to an eligible employee
owning more than 10% of the Company's Common Stock must be at least 110% of such
fair market value as determined on the date of the grant. The term of each Plan
Option and the manner in which it may be exercised is determined by the Board of
the Directors or the Committee, provided that no Plan Option may be exercisable
more than 10 years after the date of its grant and, in the case of an Incentive
Option granted to an eligible employee owning more than 10% of the Company's
Common Stock, no more than five years after the date of the grant. The exercise
price of Non-Qualified Options shall be determined by the Board of Directors or
the Committee.
The per share purchase price of shares subject to Plan Options granted
under the Plan may be adjusted in the event of certain changes in the Company's
capitalization, but any such adjustment shall not change the total purchase
price payable upon the exercise in full of Plan Options granted under the Plan.
Officers, directors, key employees and consultants of the Company and its
subsidiaries (if applicable in the future) will be eligible to receive
Non-Qualified Options under the Plan. Only officers, directors and employees of
the Company who are employed by the Company or by any subsidiary thereof are
eligible to receive Incentive Options.
All Plan Options are nonassignable and nontransferable, except by will
or by the laws of descent and distribution, and during the lifetime of the
optionee, may be exercised only by such optionee. If an optionee's employment is
terminated for any reason (other than his death or
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disability or termination for cause), or if an optionee is not an employee of
the Company but is a member of the Company's Board of Directors and his service
as a Director is terminated for any reason (other than death or disability), the
Plan Option granted to him shall lapse to the extent unexercised on the earlier
of the expiration date or 30 days following the date of termination. If the
optionee dies during the term of his employment, the Plan Option granted to him
shall lapse to the extent unexercised on the earlier of the expiration date of
the Plan Option or the date one year following the date of the optionee's death.
If the optionee is permanently and totally disabled within the meaning of
Section 22(e)(3) of the Internal Revenue Code of 1986, the Plan Option granted
to him lapses to the extent unexercised on the earlier of the expiration date of
the option or one year following the date of such disability.
The Board of Directors or the Committee may amend, suspend or terminate
the Plan at any time, except that no amendment shall be made which (i) increases
the total number of shares subject to the Plan or changes the minimum purchase
price therefor (except in either case in the event of adjustments due to changes
in the Company's capitalization), (ii) affects outstanding Plan Options or any
exercise right thereunder, (iii) extends the term of any Plan Option beyond ten
years, or (iv) extends the termination date of the Plan. Unless the Plan shall
theretofore have been suspended or terminated by the Board of Directors, the
Plan shall terminate on approximately 10 years from the date of the Plan's
adoption. Any such termination of the Plan shall not affect the validity of any
Plan Options previously granted thereunder.
As of May 5, 1999, no Plan Options had been granted.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the exercise
of options to purchase shares of Common Stock during the fiscal year ended
December 31, 1998, of each person named in the Summary Compensation Table and
the unexercised options held as of the end of the 1998 fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Number of
Securities Value Of
Underlying Unexercised
Unexercised In-The-Money
Options/SARs Options/SARs
At Fiscal Year-End At Fiscal Year-
Shares Value (#) End ($)
Acquired On Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
(a) (b) (c) (d) (e)
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<S> <C> <C> <C> <C>
Steven Adelstein 500,000(1)
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- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes 500,000 warrants held by Mr. Adelstein family members and
affiliates. See "Security Ownership of Certain Beneficial Owners and Management.
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ITEM 5. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
Company's Common Stock beneficially owned on May 4, 1999, for (i) each
shareholder known by the Company to be the beneficial owner of five (5%) percent
or more of the Company's outstanding Common Stock, (ii) each of the Company's
executive officers and directors, and (iii) all executive officers and directors
as a group. At May 4, 1999, there were 2,962,626 Shares ("Shares") of
Company common stock, par value $.005 (the "Common Stock") outstanding.
<TABLE>
<CAPTION>
No. of Shares Percent of
Name and Address or of Common Stock Beneficial
Identity of Group(1) Beneficially Owned(2) Ownership
- -------------------- --------------------- ---------
<S> <C> <C>
Steve Adelstein (3) 906,400 26.2%
Gus Guilbert, Jr. (4) 88,000 2.9%
FAC Enterprises, Inc.(5) 300,000 10.1%
Realm Holding, Inc.(6) 600,000 20.3%
Kaufmann Fund(7) 172,000 5.8%
---------- ------
2,066,400 65.3%
========== ======
</TABLE>
All Executive Officers and Directors
as a group (2 persons)
- --------------
(1) Unless otherwise indicated, the address of each of the persons set
forth below is 4950 West Prospect Road, Fort Lauderdale, Florida 33309.
(2) In general, a person is considered a "beneficial owner" of a security
if that person has or shares the power to vote or direct the voting of
such security, or the power to dispose of such security. A person is
also considered to be a beneficial owner of any securities of which the
person has the right to acquire beneficial ownership within (60) days.
(3) Mr. Adelstein is Chairman, Director and President of the Company.
Includes (i) warrants to purchase up to 300,000 shares of Common Stock
at an exercise price of $1.25 exercisable through December 31, 2005
held by Mr. Adelstein's children; (ii) warrants to purchase up to
100,000 shares of Common Stock exercisable at $2.30 exercisable through
December 31, 2005 owned by AUW, Inc. ("AUW"), a company of which Mr.
Adelstein is an officer and which is controlled by Mr. Adelstein's
family members; and (iii) warrants to purchase 100,000 shares of Common
Stock exercisable at $2.00 per share through December 31, 2005 owned by
Mr. Adelstein's parents; and (iv) an aggregate of 406,400 shares of
Common Stock of the Company owned by Mr. Adelstein's family members and
AUW.
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(4) Mr. Guilbert is Executive Vice President, Secretary and Treasurer of
the Company. Includes (i) 25,000 shares of Common Stock issuable upon
the exercise of warrants exercisable at $2.00 per share until December
31, 2005; and (ii) 25,000 shares of Common Stock issuable upon the
exercise of warrants exercisable at $2.30 until December 31, 2005.
(5) Address is 4960 South Virginia Avenue, Suite 300, Reno, NV 89502.
(6) Address is 648 Post Road, Wakefield, RI 02879.
(7) Address is 140 E. 45th Street, 43rd Floor, New York, New York 10017.
ITEM 6. INTEREST OF MANAGEMENT AND OTHER CERTAIN TRANSACTIONS
Prior to being employed by the Company, Mr. Adelstein became employed
with AUW, Inc. ("AUW"), a corporation controlled by family members of Mr.
Adelstein. Pursuant to the terms of an agreement between the Company and AUW in
which AUW allowed Mr. Adelstein to work for the Company at the same time Mr.
Adelstein works for AUW, AUW receives a portion of the compensation received by
Mr. Adelstein from the Company. For example, AUW received $75,000, $60,000 and
$60,000 portions of Mr. Adelstein's compensation in 1996, 1997 and 1998,
respectively.
Pursuant to the terms of Mr. Adelstein's employment agreement with the
Company, the Company is obligated to make a three (3) year loan to Mr. Adelstein
of up to $375,000, the proceeds which must be used to pay the exercise price of
the 300,000 warrants granted to Mr. Adelstein pursuant to the employment
agreement which were subsequently assigned to Mr. Adelstein's children.
ITEM 7. DESCRIPTION OF SECURITIES
The Company is authorized to issue 10,000,000 shares of Common Stock,
par value $.005 per Share, and 2,000,000 shares of Preferred Stock, par value
$.01 per Share. As of May 4, 1998, there were 2,962,626 shares of Common
Stock issued and outstanding and no shares of Preferred Stock outstanding.
COMMON STOCK
The Company is authorized to issue up to 10,000,000 shares ("Shares")
of Common Stock, $.005 par value per share, of which 2,962,626 Shares are issued
and outstanding as of May 4, 1999. Upon liquidation, dissolution or winding up
of the Company, after payment to creditors and holders of any outstanding shares
of Preferred Stock, the assets of the Company will be divided pro rata on a per
Share basis among the holders of the Common Stock.
Each share of Common Stock entitles the holders thereof, to one vote.
Holders of Common Stock do not have cumulative voting rights which means that
the holders of more than 51% of shares voting for the election of Directors can
elect all of the Directors if they choose to do so, and in such event, the
holders of the remaining shares will not be able to elect any Directors. The
ByLaws of the Company require that only a majority of the issued and outstanding
shares of Common Stock of the Company need be represented to constitute a quorum
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and to transact business at a shareholders' meeting. The Common Stock has no
preemptive, subscription or conversion rights and is not redeemable by the
Company.
PREFERRED STOCK
Up to 2,000,000 shares of Preferred Stock may be issued by the Board of
Directors of the Company with rights, designations and preferences as
determined or established by the Board of Directors of the Company. There are
currently no shares of Preferred Stock outstanding.
Currently, there are outstanding an aggregate of 651,900 warrants of
which (i) warrants to purchase 300,000 shares of Common Stock exercisable at
$1.25 per share through December 31, 2005; and (ii) warrants to purchase 150,000
shares of Common Stock exercisable at $2.00 per share through December 31, 2005;
(iii) warrants to purchase 150,000 shares of Common Stock at
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$2.30 per share through December 31, 2005; and (iv) warrants to purchase 51,900
shares of Common Stock at $5.00 per share through December 31, 2001.
CERTAIN FLORIDA LEGISLATION
Florida has enacted legislation that may deter or frustrate takeovers
of Florida corporations. The Florida Control Share Act generally provides that
shares acquired in excess of certain specified thresholds will not possess any
voting rights unless such voting rights are approved by a majority of a
corporation's disinterested shareholders. The Florida Affiliated Transactions
Act generally requires super majority approval by disinterested shareholders of
certain specified transactions between a public corporation and holders of more
than 10% of the outstanding voting shares of the corporation (or their
affiliates). Florida law and the Company's Articles and Bylaws also authorize
the Company to indemnify the Company's directors, officers, employees and
agents. In addition, the Company's Articles and Florida law presently limit the
personal liability of corporate directors for monetary damages, except where the
directors (i) breach their fiduciary duties; and (ii) such breach constitutes or
includes certain violations of criminal law, a transaction from which the
directors derived an improper personal benefit, certain unlawful distributions
or certain other reckless, wanton or willful acts or misconduct.
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE COMPANY'S ARTICLES OF
INCORPORATION AND BYLAWS
Certain provisions of the articles and bylaws of the Company summarized
in the following paragraphs, and above under the Section entitled "Preferred
Stock", may be deemed to have an anti-takeover effect and may delay, defer or
prevent a tender offer or takeover attempt, including attempts that might result
in a premium being paid over the market price for the shares held by
shareholders. Despite the belief of the Company as to the benefits to
shareholders of these provisions of the Company's Articles of Incorporation,
these provisions may also have the effect of discouraging a future takeover
attempt which would not be approved by the Company's Board, but pursuant to
which the shareholders may receive a substantial premium for their shares over
then current market prices. As a result, shareholders who might desire to
participate in such a transaction may not have any opportunity to do so. Such
provisions will also render the removal of the Company's Board of Directors and
management more difficult and may tend to stabilize the Company's stock price,
thus limiting gains which might otherwise be reflected in price increases due to
a potential merger or acquisition. The Board of Directors, however, has
concluded that the potential benefits of these provisions outweigh the possible
disadvantages. Pursuant to applicable regulations, at any annual or special
meeting of its shareholders, the Company may adopt additional Articles of
Incorporation provisions regarding the acquisition of its equity securities that
would be permitted to a Florida corporation.
12
<PAGE> 14
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS
As of January 19, 1999, there were approximately 350 shareholders of
record of the Company's Common Stock. The Company's Common Stock is currently
listed for trading on the over-the-counter bulletin board under the symbol
"RMPE". The following table sets forth, for the period since April 1, 1998, the
high and low bid prices for the Common Stock as reported by the OTC Bulletin
Board. The following high and low bid prices reflect interdealer prices without
detail markup, markdown or commission and may not represent actual transactions.
COMMON STOCK
---------------------------
HIGH LOW
---- ---
1998
January 1, 1998 - March 31, 1998 N/A N/A
April 1, 1998 - June 30, 1998 4.50 3.375
July 1, 1998 - September 30, 1998 6.00 4.00
October 1, 1998 - December 31, 1998 5.00 3.50
January 1, 1999 - March 31, 1999 5.125 3.50
The transfer agent for the Company's Common Stock is Stock Trans, Inc.,
7 East Lancaster, 3rd Floor, Ardmore, PA 19003-2318.
The Company has never paid cash dividends on its Common Stock. The
Company presently intends to retain future earnings, if any, to finance the
expansion of its business and does not anticipate that any cash dividends will
be paid in the foreseeable future. The future dividend policy will depend on the
Company's earnings, capital requirements, expansion plans, financial condition
and other relevant factors.
ITEM 2. LEGAL PROCEEDINGS
Management of the Company believes there are no material legal
proceedings filed, or to the Company's knowledge, threatened against the
Company; however, on October 14, 1998, BRT filed suit against an investor
regarding breach of contract related to the terms of the investment.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company's auditors, Millword & Co., will not stand for reelection
as the Company's independent auditors for the 1999 fiscal year. The Company
has been advised that as a matter of internal policy, Millword & Co. is not, at
the present time, undertaking audits of publicly registered companies.
Notwithstanding, there have been no disagreements between the Company and
Millword.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In January 1996, the Company issued warrants to purchase up to 300,000
shares of Common Stock of the Company to a shareholder and officer of the
Company. These warrants are exercisable at $1.25 per share on or prior to
December 31, 2000. The exercise period of the warrants was subsequently
extended to December 31, 2005.
During August 1997, the Company issued 303,071 shares of Common Stock
at a price of $1.75 per share to 4 investors in accordance with Rule 504 under
Regulation D promulgated
13
<PAGE> 15
under the Securities Act of 1933, as amended (the "Act") for net proceeds of
$530,000 to be used for the operations of the Company.
Between August 1997 and October 1998, the Company issued an aggregate
of 410,500 shares of Common Stock to 16 individuals (four of whom were
affiliates or family members of affiliates of the Company) in exchange for
professional services rendered to the Company.
During August 1997, the Company converted notes payable and accrued
salaries amounting to $114,375 into 85,262 shares of Common Stock at per share
prices ranging from $1.25 to $1.75 per share.
In January 1997, the Company issued warrants to purchase up to 150,000
shares of Common Stock of the Company to shareholders and employees of the
Company. These warrants are exercisable at $2.00 per share on or prior to
December 31, 1999. The exercise period of the warrants was subsequently
extended to December 31, 2005. The individuals had access to financial and other
information concerning the Company and had the opportunity to ask questions
concerning the Company and its operations. Accordingly, the issuance of the
shares was exempt from the registration requirements of the Act pursuant to
Section 4(2) of the Act.
In December 1997, the Company issued warrants to purchase up to 150,000
shares of Common Stock of the Company to shareholders and employees of the
Company. These warrants are exercisable at $2.30 per share on or prior to
December 31, 2002. The exercise period of the warrants was subsequently
extended to December 31, 2005. The individuals had access to financial and other
information concerning the Company and had the opportunity to ask questions
concerning the Company and its operations. Accordingly, the issuance of the
shares was exempt from the registration requirements of the Act pursuant to
Section 4(2) of the Act.
In August 1998, the Company issued 227,434 shares of Common Stock at an
average price of $2.42 per share to six accredited investors in accordance with
Rule 504 of Regulation D promulgated under the Act.
During October 1998, the Company issued warrants to purchase 37,500
shares of stock of the Company to one employee. The options are exercisable at
$5.00 per share through January 20, 2001. The individuals had access to
financial and other information concerning the Company and had the opportunity
to ask questions concerning the Company and its operations. Accordingly, the
issuance of the shares was exempt from the registration requirements of the Act
pursuant to Section 4(2) of the Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Florida Business Corporation Act (the "Corporation Act") permits
the indemnification of directors, employees, officers and agents of Florida
corporations. The Company's Articles of Incorporation (the "Articles") and
Bylaws provide that the Company shall indemnify its directors and officers to
the fullest extent permitted by the Corporation Act. Insofar as indemnification
for liabilities arising under the Act may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing
14
<PAGE> 16
provisions, the Company has been informed that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
express in the act and is therefore unenforceable.
The Articles of Incorporation and Bylaws of the Company require the
Company to indemnify its Directors and officers to the fullest extent permitted
by the Business Corporation Act of the State of Florida.
The above indemnification provisions notwithstanding, the Company is
aware that insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as express in the act and is
therefore unenforceable.
PART F/S
The financial statements and supplementary data are included herein.
FINANCIAL STATEMENTS AND EXHIBITS
The following audited Financial Statements for the Company, include the
audited balance sheet at December 31, 1998 and the related audited statements of
operations, changes in Stockholders Equity and cash flows for each of the years
in the two year period ended December 31, 1998 and 1997.
15
<PAGE> 17
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1998 and 1997
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Certified Public Accountants.........................................................2
Consolidated Financial Statements:
Consolidated Balance Sheet.............................................................................3
Consolidated Statements of Operations..................................................................4
Consolidated Statement of Changes in Stockholders' Equity (Deficiency).................................5
Consolidated Statements of Cash Flows..................................................................6
Notes to Consolidated Financial Statements..............................................................7-17
</TABLE>
-1-
<PAGE> 18
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders
Realm Production and Entertainment, Inc. and Subsidiaries
Hollywood, Florida
We have audited the accompanying consolidated balance sheet of Realm Production
and Entertainment, Inc. and Subsidiaries as of December 31, 1998 and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for the two years 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 financial statement presentation. We believe that our
audits provide 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 Realm
Production and Entertainment, Inc. and Subsidiaries as of December 31, 1998,
and the results of their operations and their cash flows for the two years then
ended, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
Realm Production and Entertainment, Inc. and Subsidiaries will continue as a
going concern. As discussed in Note 1 to the consolidated financial statements,
the Company's need to generate cash from operations and obtain additional
financing raises substantial doubt about its ability to continue as a going
concern. Management's plans as to these matters are discussed in Note 1. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Millward & Co. CPAs
Fort Lauderdale, Florida
March 15, 1999
-2-
<PAGE> 19
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 68,261
Accounts Receivable (Net of Allowance for Doubtful Accounts of $41,000) 155,182
Prepaid Expenses and Other 11,165
-----------
Total Current Assets 234,608
-----------
Property and Equipment, at Cost (Net of Accumulated Depreciation of $73,752) 1,216,629
-----------
OTHER ASSETS:
Security Deposits 26,680
Capitalized Production Costs 1,161,605
-----------
1,188,285
-----------
Total Assets $ 2,639,522
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current Portion of Loans Payable $ 877,496
Notes Payable - Related Parties 145,431
Current Portion of Capital Lease Obligations 120,931
Film Costs Payable 100,000
Accounts Payable and Accrued Expenses 456,034
Accrued Salaries 50,000
-----------
Total Current Liabilities 1,749,892
CAPITAL LEASE OBLIGATIONS 62,556
LOANS PAYABLE 14,801
-----------
Total Liabilities 1,827,249
-----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock ($.01 Par Value; 2,000,000 Shares Authorized)
Convertible Preferred Stock - Series A ($.01 Par Value; 375,000 Shares
Authorized; No Shares Issued and Outstanding) --
Convertible Preferred Stock - Series B ($.01 Par Value; 375,000 Shares
Authorized; No Shares Issued and Outstanding) --
Common Stock ($.005 Par Value; 10,000,000 Shares Authorized;
2,936,267 Shares Issued and Outstanding) 14,681
Additional Paid-in Capital 2,190.403
Accumulated Deficit (1,392,811)
Total Stockholders' Equity 812,273
-----------
Total Liabilities and Stockholders' Equity $ 2,639,522
===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-3-
<PAGE> 20
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended December 31,
-----------------------------------
1998 1997
---------- ---------
<S> <C> <C>
REVENUES $ 347,997 $ --
COST OF SALES 96,781 --
---------- ----------
GROSS PROFIT 251,216 --
---------- ----------
OPERATING EXPENSES:
Amortization of Production Costs 125,938 55,709
Depreciation and Amortization 64,590 2,699
Salaries and Fringe Benefits 351,136 126,375
Legal and Accounting 57,698 30,770
Consulting Fees 97,716 57,250
Phones and Utilities 30,284 11,920
Rent (Not of Sub-Lease Rental Income of $7,800 in 1997) 59,073 14,975
Other Selling, General and Administrative 93,831 45,859
---------- ----------
Total Operating Expenses 880,266 345,557
---------- ----------
LOSS FROM OPERATIONS (629,050) (345,557)
---------- ----------
OTHER INCOME (EXPENSES):
Interest Income 260 1,643
Interest Expense (22,480) (12,562)
---------- ----------
(22,220) (10,919)
---------- ----------
NET LOSS $ (651,270) $(356,476)
========== ==========
BASIC AND DILUTED:
Net Loss Per Common Share $ (0.25) $ (0,19)
========== ==========
Weighted Common Shares Outstanding 2,599,818 1,869,538
========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 21
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Common Stock Total
Preferred Stock $.005 Per Additional Stockholders'
-------------------- -------------------- Paid-In Accumulated Equity
Shares Amount Shares Amount Capital Deficit (Deficiency)
------- --------- --------- ------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 375,000 $ 375,000 1,700,000 $ 8,500 $ -- $ (385,065) $ (1,565)
Shares Issued in Exchange for
Services -- -- 54,500 272 95,103 -- 95,375
Shares Issued in Connection with
Private Placement -- -- 303,071 1,515 528,485 -- 530,000
Issuance of Common Stock for
Debt Forgiveness -- -- 85,262 427 113,943 -- 114,375
Interest Expense on Debt Exchange
for Common Stock -- -- -- -- 10,834 -- 10,834
Redemption of Preferred Stock (175,000) (175,000) -- -- -- -- (175,000)
Net Loss for the Year Ended
December 31,1997 -- -- -- -- -- (356,476) (356,476)
--------- --------- ---------- ------- ---------- ----------- ---------
Balance at December 31, 1997 200,000 200,000 2,142,833 10,714 748,370 (741,541) 217,543
Shares Issued in Exchange for
Services -- -- 16,000 30 39,920 -- 40.000
Shares Issued for Production Cost -- -- 340,000 1,700 610,300 -- 612,000
Shares Issued in Connection with
Offering -- -- 227,434 1,137 467,863 -- 469,000
Shares Issued in Connection with
Acquisition -- -- 50,000 250 124,750 -- 125,000
Conversion of Preferred Stock (200,000) (200,000) 160,000 800 199,200 -- --
Net Loss for the Year Ended
December 31, 1998 -- -- -- -- -- (651,270) (651,270)
--------- --------- ---------- ------- ---------- ----------- ---------
Balance at December 31, 1998 -- -- 2,236,267 $14,681 $2,190,403 $(1,392,811) $ 812,273
========= ========= ========== ======= ========== =========== =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-5-
<PAGE> 22
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended
December 31,
----------------------------
1998 1997
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (651,270) $(356,476)
Adjustments to Reconcile Net Loss to Net Cash Flows
Used in Operating Activities:
Depreciation 64,590 2,699
Amortization of Film Costs 125,938 55,709
Stock Issued for Services 53,500 95,375
Interest Expense on Debt Exchange for Common Stock -- 10,834
Interest Expense 12,600 --
(Increase) Decrease in:
Accounts Receivable (39,281) --
Prepaid Expenses and Other (3,991) (3,009)
Increase (Decrease) in:
Accounts Payable and Accrued Expenses 74,719 (10,195)
Accrued Salaries and Fringe Benefits 30,000 2,375
Due to Officer (1,167) (4,854)
---------- ---------
Net Cash Flows Used in Operating Activities (334,362) (207,542)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Property and Equipment (52,542) (16,354)
Increase in Capitalized Production Costs (238,461) (145,638)
---------- ---------
Net Cash Flows Used in Investing Activities (291,003) (161,992)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Common Stock 363,000 530,000
Redemption of Preferred Stock -- (175,000)
Principal Repayments of Notes Payable - Related Parties -- (51,450)
Principal Repayments of Capital Lease Obligations (3,893) --
Proceeds from Issuance of Notes Payable - Related Parties 142,931 --
Proceeds from Issuance of Notes Payable 203.500 102,500
Principal Repayments of Notes Payable (17,698) (32,000)
---------- ---------
Net Cash Flows Provided by Financing Activities 687,840 374,050
---------- ---------
Net Increase in Cash 62,475 4,516
Cash - Beginning of Year 5,786 1.270
---------- ---------
Cash - End of Year $ 68,261 $ 5,786
========== =========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Conversion of preferred stock to common $ 200,000 $ --
========== =========
Issuance of common stock in exchange for reduction in Debt $ 106,000 $ 114,375
========== =========
Common stock issued in connection with acquisition $ 125,000 $ --
========== =========
Issuance of common stock related to capitalized film costs $ 598,500 $ --
========== =========
Details of Acquisition:
Fair value of assets $1,227,934 $ --
Liabilities 1,227,934 --
---------- ---------
Cash Paid -- --
Less: cash acquisitions -- --
---------- ---------
Net cash paid for acquisition $ -- $ --
========== =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-6-
<PAGE> 23
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
Realm Production and Entertainment, Inc. (the "Company") was incorporated under
the laws of the State of Florida on May 12, 1995. The Company, through BRT
Video, Inc. ("BRT"), its 72.5% majority owned subsidiary and Vidkid
Distribution, Inc., its wholly owned subsidiary ("Vidkid"), is engaged in (i)
the development and production of children's made for television movies and
series; (ii) the marketing and sale of various children's programming; and
(iii) providing video and post-production and distribution services to third
parties.
On October 1, 1998, the Company acquired 72.5% of the outstanding stock of BRT.
BRT was organized in November 1983 and provides video, audio and editing
post-production services and facilities to the Company and to third parties
including local television stations, independent producers and cable
broadcasters. See Note 2 for details.
The Company maintains its principal business operations in Fort Lauderdale,
Florida.
BASIS OF PRESENTATION
The consolidated statements include the accounts or Realm Production and
Entertainment, Inc. and its wholly owned and majority-owned subsidiaries. All
significant inter-company balances and transactions have been eliminated.
GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. At December 31, 1998, the Company
had a working capital deficiency of $1,515,284 and losses since inception of
$1,392,811. These conditions raise substantial doubt about the ability of the
Company to continue as a going concern.
Management's plans include developing efficiencies and additional revenue as a
result of the acquisition of BRT, a company that provides video, audio and
editing post-production facilities. The Company owns 130 color episodes of
"Howdy Doody", a popular children's program aired in the 1970's, which the
Company expects to begin marketing to cable outlets. The Company has commenced
production on a computer animated feature film. In addition to distribution
through film, video and television markets, the Company anticipates additional
revenue from character development. The Company also needs financing to
complete its plans and will pursue obtaining funding through private placements
of debt or equity offerings. However, there is no assurance that the
aforementioned events will occur and be successful.
-7-
<PAGE> 24
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING FOR PRODUCTION COSTS AND DISTRIBUTION RIGHTS
For the period ended December 31, 1997, the Company did not have revenues
primarily as a result of being in the development stage of its operations.
During 1998 revenues were primarily attributable to its BRT division and
revenue is recorded when services are performed
The Company generally capitalizes all costs incurred to produce children's
intellectual properties, excluding any interest expense funded under the
production loans. Such costs also include the actual direct costs of
production, certain exploitation costs and production overhead. Capitalized
exploitation or distribution costs include those costs that clearly benefit
future periods such as video prints and prerelease and early release
advertising that is expected to benefit the program in future markets. These
costs, as well as participation and talent residuals, are amortized each period
on an individual video or television program basis in the ratio that the
current period's gross revenues from all sources for the program bear to
management's estimate of anticipated total gross revenues for such video or
program from all sources. Revenue estimates are reviewed quarterly and adjusted
where appropriate and the impact of such adjustments could be material.
Production costs are stated at the lower of unamortized cost or estimated net
realizable value. Losses, which may arise because costs of individual videos or
television series exceed anticipated revenues, are charged to operations
through additional amortization.
The Company has entered into agreements with outside entities to exclusively
distribute other children's intellectual properties. Under the term of these
Agreements, the Company advances funds for the "pilot" development, production
and marketing costs in accordance with the specific agreements.
It is the Company's policy to write off capitalized investment costs associated
with the intellectual properties if, in management's opinion, the capitalized
costs are in excess of net realizable value. Accordingly, for the year ended
December 31, 1998 and 1997, management amortized film costs of $125,938 and
$55,709, respectively, for the Company's intellectual properties.
PROPERTY AND EQUIPMENT
Property and equipment are stated on the basis of cost less accumulated
depreciation and amortization. The Company provides for depreciation on a
straight-line basis over the following estimated useful lives: equipment,
furniture and fixtures, 5 to 7 years. Leasehold costs are being amortized on a
straight-line basis over a ten-year period, the lease term.
When assets are retired or otherwise disposed of, the costs and accumulated
depreciation are removed from the respective accounts and any related gain or
loss is recognized. Maintenance and repair costs are charged to expense as
incurred, and renewals and improvements that extend the useful lives of assets
are capitalized.
-8-
<PAGE> 25
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR MARKET VALUE OF FINANCIAL INSTRUMENTS
The carrying amount reported in the consolidated balance sheet for cash,
accounts and other receivables, accounts payable and accrued liabilities,
capital lease obligations, and notes payable approximates fair market value due
to the immediate or short-term maturity of these financial instruments.
INCOME TAXES
The Company utilizes the asset and liability method of accounting for deferred
income taxes. Under this method, deferred tax assets and liabilities are
established based on the differences between financial statement and income tax
bases of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse.
The Company provides a valuation allowance against deferred tax assets if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.
USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period to prepare these consolidated financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates and assumptions.
LOSS PER COMMON SHARE
Basic earnings per share is computed by dividing net loss, after adding back
preferred stock dividends accumulated during the period, by weighted average
number of shares of common stock outstanding during each period. Diluted loss
per share is computed by dividing net loss by the weighted average number of
shares of common stock, common stock equivalents and potentially dilutive
securities outstanding during each period.
Diluted loss per common share is not presented because it is anti-dilutive.
STOCK-BASED COMPENSATION
The Company uses SFAS No. 123, "Accounting for Stock-Based Compensation," which
permits entities to recognize as expense over the vesting period the fair value
of all stock-based awards on the date of grant. Alternatively, SFAS No. 123
also allows entities to continue to apply the provisions of APB Opinion No. 25
and provide pro forma net income and pro forma earnings per share disclosures
for employee stock option grants as if the fair-value-based method defined in
SFAS No. 123 has been applied. The Company has elected to continue to apply the
provisions of APB Opinion No. 25 and provide the pro forma disclosure
provisions of SFAS No. 123.
-9-
<PAGE> 26
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE 2 - ACQUISITION
On October 1, 1998, the Company acquired 72.5% of the outstanding stock of BRT
in exchange for 50,000 shares of Company stock with a fair value of $125,000.
BRT provides video, audio and editing post-production services and facilities
to the Company and to third parties including local television stations,
independent producers and cable broadcasters. The Company is accounting for
this acquisition using the purchase method of accounting. The purchase price
exceeded the fair value of net liabilities assumed by approximately $425,000.
The excess has been applied to leasehold improvement and costs and is being
amortized on a straight-line basis over 10 years, the life of the lease. The
results of operations of BRT are included in the accompanying financial
statements from October 1, 1998 (date of acquisition) to December 31, 1998.
The following unaudited pro forma consolidated results of operations have been
prepared as if the acquisition of Realm and BRT had occurred as of the
beginning of fiscal 1998 and 1997:
1998 1997
---------------- --------------
Net Sales $ 1,184,172 $ 812,736
Net Loss $(1,006,340) $(453,650)
Net Loss per Share $ (.38) $ (.24)
Pro forma data does not purport to be indicative of the results that would have
been obtained had these events actually occurred at the beginning of the
periods presented and is not intended to be a projection of future results.
NOTE 3 - PROPERTY AND EQUIPMENT
At December 31, 1998, property and equipment and related accumulated
depreciation consisted of the following:
Video and Audio Equipment $ 504,882
Office Furniture and Equipment 85,255
Truck 15,806
Leasehold Improvements and Costs 684,438
----------
1,290,381
Less: Accumulated depreciation (73,752)
----------
Total $1,216,629
==========
For the years ended December 31, 1998 and 1997, depreciation expense amounted
to $64,590 and $2,699, respectively.
-10-
<PAGE> 27
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE 4 - NOTES PAYABLE - RELATED PARTIES
The Company has notes payable to related parties and a stockholder of the
Company. These notes are non-interest bearing, non-collateralized, and are
payable on demand. As of December 31, 1998, notes payable to these related
parties amounted to $145,431. For the year ended December 31, 1998, the Company
imputed interest on these notes at an annual rate of 12%.
During 1997, a note amounting to $5,000 was converted into 3,810 shares of the
Company's $.005 par value common stock at a price of $1.3125 per share.
Beneficial interest was calculated for this transaction and accordingly, $1,667
was charged to interest expense and to additional paid-in capital. See Note 9.
NOTE 5 - LOANS PAYABLE
At December 31, 1998, loans payable consisted of the following:
<TABLE>
<CAPTION>
<S> <C>
Notes payable - BRT investor - See (a) below. $641,840
Note payable - third party. This note bears interest at 9.6% per
annum beginning on July 1, 1998 is non-collateralized and is payable
in full on June 30, 1999. 150,000
Note payable to third party. This note bears interest at 12% per annum and
is payable on demand. 50,000
Revolving credit agreement with a bank aggregating $30,000. The agreement bears
interest at the bank's prime rate plus 3% (10.75% at December 31, 1998) and is
payable on demand. The loan contains certain covenants that require, among
other matters, that the Company obtain the consent of the lender before
incurring any additional debts, except for indebtedness for trade credit in the
ordinary course of the Company's business. 26,150
Notes payable to bank payable in 36 monthly installments of $1,012 including
interest at 12.85% per annum payable on or before April 22, 2001. The loan
contains certain covenants that require, among other matters, that the Company
obtain the consent of the lender before incurring any additional debts, except
for Indebtedness for trade credit in the ordinary course of the Company's business. 24,307
--------
$892,297
========
Long-term debt maturing at December 31 for the next five years and thereafter
is as follows:
1999 (included in current liabilities) $877,496
2000 10,861
2001 3,940
--------
$892,297
========
</TABLE>
-11-
<PAGE> 28
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE 5 - LOANS PAYABLE (CONTINUED)
(a) In September 1997, BRT and an investor entered into an informal agreement
whereby the investor would advance $1,500,000 for expansion and renovation of a
new facility in exchange for a 49% ownership interest in BRT. The parties to
the agreement intended to engage an independent appraiser to determine the
value of the stock and thus the portion of the $1,500,000 that would be
attributable to equity financing. The balance of the advanced funds would be
evidenced by a note payable bearing interest at prime plus 1%. Between October
1997 and December 31, 1997, the investor advanced $435,000. In early 1998 the
investor advanced an additional $150,000. Thus, by the end of February 1998,
the investor had advanced $585,000. In addition to advances totaling $585,000,
the Company has recorded accrued interest amounting to $56,840 as of December
31, 1998 which has been included in the loan payable to this investor.
In 1998, due to disagreements between management of the Company and the
investor, no formal agreement was ever executed; no independent appraiser was
ever engaged to value the Company's stock and the investor cease advancing any
funds. BRT and Realm Production and Entertainment, Inc. ("Realm"), who acquired
72.5% ownership interest in the Company, have held preliminary discussions with
the investor. However, as of the date of these financial statements, there has
been no resolution of this matter. Therefore, for purposes of preparing these
financial statements, management has reported the entire amount contributed
through the end of December ($585,000) as a current loan payable. In addition,
the reported balance includes accrued interest at prime plus 1% amounting to
$56,840.
On October 14, 1998, BRT filed a lawsuit against the investor based upon both a
breach of agreement and a possible fraud action. At this time it is not
possible to determine what the outcome of this litigation might be, how long it
will take, or what counterclaims the investor may assert. Therefore, while
management would intend to vigorously defend itself in any litigation and
believes it has meritorious defenses against any suit, it is reasonably
possible that this matter will have an effect on the Company's financial
position in the near term (within the next year) and that effect may be
material.
NOTE 6 - INCOME TAXES
Current income taxes are computed at statutory rates on pretax income. Deferred
taxes would be recorded based on differences in financial statements and
taxable income. At December 31, 1998, the Company had elected to carry forward
net operating losses for federal and state income tax purposes of approximately
$860,000 that are available to reduce future taxable income through 2013. As
utilization of such operating losses for tax purposes is not assured, the
deferred tax asset has been fully reserved through the recording of a 100%
valuation allowance. These operating losses may be limited to the extent an
"ownership change" occurs.
The components of the deferred tax asset as of December 31, 1998 are as
follows:
1998
---------
Deferred Tax Asset:
Net Operating Loss Carryforward $ 334,000
Amortization of Film Costs 138,000
Deduction for Stock Issued for Services 61,000
---------
533,000
Less: Valuation Allowance (533,000)
---------
Net Deferred Tax $ -0-
=========
-12-
<PAGE> 29
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE 6 - INCOME TAXES (CONTINUED)
Net operating losses expire as follows:
Expiration
Year Amount
----------------- --------
2010 $ 39,000
2011 164,000
2012 185,000
2013 472,000
--------
$860,000
========
NOTE 7 - FILM COSTS PAYABLE
During 1997, the Company purchased the rights and master prints of 130 color
half- hour episodes of The Howdy Doody Show (Note 1). As of December 31, 1998,
the Company owes $100,000 relating to the purchase of these films.
NOTE 8 - CAPITAL LEASE OBLIGATION
BRT has entered into various leases for its video production equipment that
meet the requirements of a capital lease. The total capitalized cost of the
equipment as of December 31, 1998 is $622,634. These amounts represents the
present value of the minimum lease payments during the lease term and was
determined using BRT's estimated borrowing rate at the inception of the lease.
The Company's borrowing rate was used because the lessor's implicit interest
rate was not readily determinable. The following is a schedule of noncancelable
future minimum lease payments required under these leases:
1999 $ 136,045
2000 46,297
2001 21,840
---------
Total minimum lease payments 204,162
Less amount representing interest (20,695)
---------
Present value of net minimum lease payments 183,487
Less current obligations due under capital leases (120,931)
---------
Long-term obligations due under capital leases $ 62,556
=========
-13-
<PAGE> 30
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE 9 - STOCKHOLDERS' EQUITY
INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
In January 1998, the Company adopted the Company's 1998 Stock Option Plan (the
"Plan). The Plan provides for the granting of either incentive stock options or
nonqualified stock options to purchase shares of the Company's common stock to
officers, directors and key employees responsible for the direction and
management of the Company and to non-employee consultants and independent
contractors. At December 31, 1998, 500,000 shares of common stock were reserved
for issuance under the Plan and no options have been granted.
PREFERRED STOCK
The Company is authorized to issue 375,000 shares of Series A Preferred Stock,
Par value $.01 per share. This preferred stock has a cumulative dividend of
9.6%. Said dividend is payable in cash or by issuance of Common Shares of the
Company, at the sole discretion of the Company's Board of Directors. Said
preferred stock is convertible into the Company's common stock at a share price
subject to adjustment. The Company may compel the conversion of the Series A
Preferred Stock into common stock of the Company. In January 1996, the Company
exchanged 375,000 shares of its Preferred Stock in exchange for the forgiveness
of payment of a $375,000 debt. During 1997, the Company redeemed 175,000 shares
preferred stock at $1.00 per share or $175,000. During April 1998, the
preferred stock shareholders' converted 200,000 preferred shares into 160,000
shares of the Company's common stock.
For the year ended December 31, 1997, the Company has accrued a cumulative
preferred stock dividend amounting to $9,600.
The Company is authorized to issue 375,000 shares of Series B Preferred Stock,
Par value $.01 per share. The Series B Preferred Stock for the most part
includes rights and preferences similar to that of the Series A Preferred
Stock.
COMMON STOCK
During August 1997, the Company issued 303,071 shares of common stock at a
price of $1.75 per share in accordance with Rule 504 under Regulation D
promulgated under the Securities Act of 1933 for net proceeds of $530,000 to be
used for the operations of the Company.
During August 1997, the Company issued 54,500 shares of common stock in
exchange for professional services rendered to third parties and related
parties. These shares were valued at $1.75 per share, the fair value and
charged to operations.
-14-
<PAGE> 31
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE 9 - STOCKHOLDERS' EQUITY (CONTINUED)
COMMON STOCK
During August 1997, the Company converted notes payable and accrued salaries
amounting to $114,375 into 85,262 shares on common stock at per share prices
ranging from $1.25 to $1.75 per share.
During 1998, the Company issued 340,000 shares of common stock at a price of
$1.80 for production and video costs.
Also in 1998, the Company issued 227,434 shares of common stock at an average
price of $2.42 per share in accordance with Rule 504 under Regulation D
promulgated under the Securities Act of 1933 for net proceeds of $469,000 to be
used for the operations of the Company.
During October 1998, the Company issued 16,000 shares of common stock in
exchange for professional services rendered to third parties and related
parties. These shares were valued at $2.50 per share, the fair value and
charged to operations.
On October 1, 1998, the Company entered into a stock purchase agreement with
BRT Video Inc. The Company agreed to exchange 50,000 shares of its common stock
for 72.5% of BRT Video, Inc.
WARRANTS
In January 1996, the Company issued warrants to purchase up to 300,000 shares
of Common Stock of the Company to a shareholder and officer of the Company as
part of an employment agreement. These warrants are exercisable at $1.25 per
share on or prior to December 31, 2005.
In January 1997, the Company issued warrants to purchase up to 150,000 shares
of Common Stock of the Company to shareholders and employees of the Company.
These warrants are exercisable at $2.00 per share on or prior to December 31,
2005.
In December 1997, the Company issued warrants to purchase up to 150,000 shares
of Common Stock of the Company to shareholders and employees of the Company.
These warrants are exercisable at $2.30 per share on or prior to December 31,
2005.
All of the above warrant exercise prices were at the estimated market price at
the date of grant. The fair value of warrants granted was minimal.
On October 1, 1998, an employee was granted warrants to acquire 37,500 shares
of the Company's common stock at an exercise price of $5.00 per share. The
warrants are exercisable commencing one year from agreement date at one third
each year until January 30, 2001. The fair value of the option grant was
estimated on the date of grant using the Black-Scholes option-pricing model
with the following assumptions: dividend yield of 0%; expected volatility of
64%; risk-free interest rate of 5.5%, and an expected life of 28 months.
-15-
<PAGE> 32
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE 9 - STOCKHOLDERS' EQUITY (CONTINUED)
WARRANTS
As permitted by SFAS No. 123, the Company has elected to continue to apply the
provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions
of SFAS No. 123. Had the Company determined compensation cost based of the fair
value at the grant date for its stock options under SFAS No. 123, the Company's
net loss would have been increased to the pro forma amounts indicated below:
1998 1997
--------- ---------
Net Loss
As reported $(651,270) $(356,476)
Pro forma $(738,270) $(356,476)
Net Loss per Share
As reported $ (.25) $ (.19)
Pro forma $ (.28) $ (.19)
NOTE 10 - COMMITMENTS
OPERATING LEASE
The Company leases office and production space in Hollywood and Fort
Lauderdale, Florida, pursuant to operating leases. The leases generally provide
for fixed monthly rental payments of approximately $2,650 through May 2000. For
the years ended December 31, 1998 and 1997, rent expense, net of sublease
rental income of $7,800 in 1997, amounted to $59,073 and $14,975, respectively.
At December 31, 1998, the future minimum annual rental payments under the
non-cancelable operating leases are as follows:
YEAR
----
1999 $ 140,301
2000 124,308
2001 116,728
2002 122,562
2003 128,694
Thereafter 555,250
----------
$1,187,843
==========
-16-
<PAGE> 33
REALM PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE 10 - COMMITMENTS (CONTINUED)
EMPLOYMENT AGREEMENTS
In January 1996, the Company entered into a five (5) year employment agreement
with its President for an annual base salary of $60,000 for 1996, $90,000 for
1997, and $120,000 for 1998, 1999 and 2000, plus normal benefits, plus 2.5% of
gross receipts actually collected by the Company specifically pertaining to
merchandising of its intellectual properties. Additionally, in January 1996,
the President was granted warrants to acquire 300,000 shares of common stock of
the Company at an exercise price of $1.25 per share, expiring December 31,
2005. Pursuant to the terms of this agreement, the Company is obligated to make
a three (3) year loan to the President of up to $375,000, the proceeds which
must be used to pay the exercise price of the 300,000 warrants granted.
In August 1997, the Company entered into a three- (3) year employment agreement
with an employee for an annual base salary averaging $30,000 for 1997, $36,000
for 1998, and $42,000 for 1998. The agreement entitles the employee to an
annual bonus based on performance as determined by the Board of Directors.
Additionally, the employee was granted warrants to acquire 25,000 shares of
common stock of the Company at an exercise price of $2.00 per share exercisable
until December 31, 2005.
In October 1, 1998, the Company entered into a five (5) year employment
agreement with a shareholder for an annual base salary of $75,000 plus a bonus
of fifteen (15%) percent of annual pre-tax profits up to $250,000 and five (5%)
percent of annual pre-tax profits of over $250,000. The Company also has an
unfunded deferred compensation agreement with this employee providing for
payments upon retirement. The payments will to seven and one half (7.5%)
percent of the annual pre-tax profit of BRT for a period of five years.
Additionally, the employee was granted warrants to acquire 37,500 shares of the
Company's common stock at an exercise price of $5.00 per share (See Note 9).
The warrants are exercisable commencing one year from agreement date at one
third each year until January 30, 2001.
-17-
<PAGE> 34
PART III
ITEM 1. INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION OF DOCUMENT
- -------- -----------------------
<S> <C>
3.1 Articles of Incorporation of Realm Production and Entertainment, Inc.
3.2 Bylaws of Realm Production and Entertainment, Inc.
4.1 1998 Stock Option Plan
10.1 Employment Agreement between Realm Production and Entertainment, Inc. and
Steven Adelstein dated January 15, 1996.
10.2 Employment Agreement between Realm Production and Entertainment, Inc. and
Gus Guilbert dated August 1, 1997.
10.3 Agreement between Realm Production and Entertainment, Inc. and The Animation
Factory dated August 4, 1997.
10.4 Agreement between Realm Production and Entertainment, Inc. and John Driver
dated May 15, 1995.
10.5 Stock Purchase Agreement between Realm Production and Entertainment, Inc. and
Norman Titcomb and BRT Video, Inc. dated October 1, 1998.
10.6 Asset Purchase Agreement between VidKid Distribution, Inc. and Madison Sports
and Entertainment, Inc. dated August 14, 1997.
10.7 Settlement Agreement between Realm Production and Entertainment, Inc. and
VidKid Distribution, Inc., John J. Drury, National Media Enterprises, Inc. and
Buffalo Bob Enterprises, Inc. dated September 10, 1998.
10.8 Lease Agreement between Realm Production and Entertainment,
Inc. and Reyno International, Inc. dated May 15, 1997.
10.9 Program License Agreement between Vidkid Distributions, Inc.
and Broadcast America Partnership, Ltd.
10.10 Loan Out Agreement between Realm Production and Entertainment, Inc.,
Steven Adelstein and A.U.W., Inc. dated January 15, 1996.
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.
</TABLE>
16
<PAGE> 35
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the Registrant caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
REALM PRODUCTION & ENTERTAINMENT, INC.
Date:____________________ , 1999 By: /s/ STEVEN ADELSTEIN
-----------------------------------
Steven Adelstein, Chairman, Director
and President
Date:___________________ , 1999 By: /s/ GUS GUILBERT, JR.
-----------------------------------
Gus Guilbert, Jr., Vice President,
Secretary and Treasurer
17
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
REALM PRODUCTION AND ENTERTAINMENT, INC.
Pursuant to Section 607.1007 of the Business Corporation Act of the
State of Florida, the undersigned President of Realm Production and
Entertainment, Inc. a corporation organized and existing under and by virtue of
the Business Corporation Act of the State of Florida (hereinafter the
"Corporation"), and desiring to amend and restate its Articles of
Incorporation, does hereby certify:
FIRST: The name of the Corporation is REALM PRODUCTION AND
ENTERTAINMENT, INC., the name under which the Corporation was originally
incorporated. The original Articles of Incorporation of the Corporation were
filed in the Office of the Secretary of State of Florida on May 12, 1995
(Document No. P95000038104).
SECOND: This Amended and Restated Articles of Incorporation, which
supersede the original Articles of Incorporation of the Corporation, was
adopted by all of the Directors of the Corporation pursuant to Unanimous
Written Consent of the Board of Directors on May 5, 1999, and by the holders of
a majority of the shares of the outstanding Common Stock of the Corporation
acting by written consent on May 5, 1999, such actions undertaken in accordance
with Section 607.0704 and Section 607.0821 of the Florida Business Corporation
Act. Therefore, the number of votes cast for the Amended and Restated Articles
of Incorporation of the Corporation was sufficient for approval.
THIRD: The text of the Articles of Incorporation of the Corporation,
as Amended and Restated, shall be as follows:
ARTICLE I
CORPORATE NAME
The name of this Corporation is Realm Production and Entertainment,
Inc.
ARTICLE II
PRINCIPAL OFFICE AND MAILING ADDRESS
The principal office and mailing address of the Corporation is as
follows:
4950 West Prospect Road
Fort Lauderdale, Florida 33309
Robert J. Burnett, Esq., FL Bar # 0117978
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
Phone No: (954) 763-1200
<PAGE> 2
ARTICLE III
NATURE OF CORPORATE BUSINESS AND POWERS
The general nature of the business to be transacted by this
Corporation shall be to engage in any and all lawful business permitted under
the laws of the United States and the State of Florida.
ARTICLE IV
CAPITAL STOCK
The maximum number of shares of stock that this Corporation is
authorized to issue and have outstanding at any one time shall be ten million
(10,000,000) shares of Common Stock having a par value of $.005 per share and
two million (2,000,000) shares of Preferred Stock having a par value of $.01
per share. Series of the Preferred Stock may be created and issued from time to
time, with such designations, preferences, conversion rights, cumulative,
relative, participating, optional or other rights, qualifications, limitations
or restrictions thereof as shall be stated and expressed in the resolution or
resolutions providing for the creation and issuance of such series of preferred
stock as adopted by the Board of Directors pursuant to the authority in this
paragraph given.
ARTICLE V
TERM OF EXISTENCE
This Corporation shall have perpetual existence.
ARTICLE VI
REGISTERED AGENT AND
REGISTERED OFFICE IN FLORIDA
The Registered Agent and the street address of the Registered Office
of this Corporation in the State of Florida is:
Steven Adelstein
3100 North 29th Court
Hollywood, Florida 33020
ARTICLE VII
BOARD OF DIRECTORS
This Corporation shall have two (2) Directors. The number of Directors
may be increased from time to time by Bylaws adopted by the Directors or the
stockholders, but shall never be less than one (1) Director. A Director of the
Corporation may only be removed for cause.
2
<PAGE> 3
ARTICLE VIII
LIABILITY
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 shareholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under the General Corporation Law of the State
of Florida, or (iv) for any transaction from which the director derived any
improper personal benefit.
ARTICLE IX
INDEMNIFICATION
The Corporation shall, to the fullest extent permitted by the
provisions of the General Corporation Law of the State of Florida, as the same
may be amended and supplemented, indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all
expenses, liabilities or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-Law, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action
in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent, and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
3
<PAGE> 4
IN WITNESS WHEREOF, the undersigned, being the President of this
Corporation, has executed these Articles of Amendment this ____ day of May,
1999.
REALM PRODUCTION AND ENTERTAINMENT, INC.
By: ------------------------------------
Steven Adelstein, President
4
<PAGE> 1
Exhibit 3.2
AMENDED BY-LAWS
OF
REALM PRODUCTION AND ENTERTAINMENT, INC.
a Florida corporation
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
OFFICES
<S> <C> <C>
Section 1.01 PRINCIPAL OFFICE........................................... 1
Section 1.02 REGISTERED OFFICE.......................................... 1
Section 1.03 OTHER OFFICES.............................................. 1
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.01 ANNUAL MEETING............................................. 1
Section 2.02 SPECIAL MEETINGS........................................... 2
Section 2.03 SHAREHOLDERS' LIST FOR MEETING............................. 2
Section 2.04 RECORD DATE................................................ 3
Section 2.05 NOTICE OF MEETINGS AND ADJOURNMENT......................... 3
Section 2.06 WAIVER OF NOTICE........................................... 4
ARTICLE III
SHAREHOLDER VOTING
Section 3.01 VOTING GROUP DEFINED....................................... 5
Section 3.02 QUORUM AND VOTING REQUIREMENTS FOR
VOTING GROUPS........................................ 5
Section 3.03 ACTION BY SINGLE AND MULTIPLE VOTING
GROUPS............................................... 5
Section 3.04 SHAREHOLDER QUORUM AND VOTING; GREATER
OR LESSER VOTING REQUIREMENTS........................ 6
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
Section 3.05 VOTING FOR DIRECTORS; CUMULATIVE VOTING.................... 6
Section 3.06 VOTING ENTITLEMENT OF SHARES............................... 7
Section 3.07 PROXIES.................................................... 8
Section 3.08 SHARES HELD BY NOMINEES.................................... 9
Section 3.09 CORPORATION'S ACCEPTANCE OF VOTES.......................... 10
Section 3.10 ACTION BY SHAREHOLDERS WITHOUT MEETING..................... 11
ARTICLE IV
BOARD OF DIRECTORS AND OFFICERS
Section 4.01 QUALIFICATIONS OF DIRECTORS................................ 11
Section 4.02 NUMBER OF DIRECTORS........................................ 11
Section 4.03 TERMS OF DIRECTORS GENERALLY............................... 12
Section 4.04 STAGGERED TERMS FOR DIRECTORS.............................. 12
Section 4.05 VACANCY ON BOARD........................................... 12
Section 4.06 COMPENSATION OF DIRECTORS.................................. 12
Section 4.07 MEETINGS................................................... 13
Section 4.08 ACTION BY DIRECTORS WITHOUT A MEETING...................... 13
Section 4.09 NOTICE OF MEETINGS......................................... 13
Section 4.10 WAIVER OF NOTICE........................................... 13
Section 4.11 QUORUM AND VOTING.......................................... 14
Section 4.12 COMMITTEES................................................. 14
Section 4.13 LOANS TO OFFICERS, DIRECTORS AND
EMPLOYEES; GUARANTY OF OBLIGATIONS.................. 15
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
Section 4.14 REQUIRED OFFICERS.......................................... 15
Section 4.15 DUTIES OF OFFICERS......................................... 16
Section 4.16 RESIGNATION AND REMOVAL OF OFFICERS........................ 16
Section 4.17 CONTRACT RIGHTS OF OFFICERS................................ 16
Section 4.18 GENERAL STANDARDS FOR DIRECTORS............................ 16
Section 4.19 DIRECTOR CONFLICTS OF INTEREST............................. 17
Section 4.20 RESIGNATION OF DIRECTORS................................... 18
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
Section 5.01 DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS........................................... 18
ARTICLE VI
OFFICE AND AGENT
Section 6.01 REGISTERED OFFICE AND REGISTERED AGENT..................... 22
Section 6.02 CHANGE OF REGISTERED OFFICE OR REGISTERED
AGENT; RESIGNATION OF REGISTERED AGENT.............. 23
ARTICLE VII
SHARES, OPTION, DIVIDENDS AND DISTRIBUTIONS
Section 7.01 AUTHORIZED SHARES.......................................... 24
Section 7.02 TERMS OF CLASS OR SERIES DETERMINED
BY BOARD OF DIRECTORS................................ 24
Section 7.03 ISSUED AND OUTSTANDING SHARES.............................. 25
Section 7.04 ISSUANCE OF SHARES......................................... 25
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C>
Section 7.05 FORM AND CONTENT OF CERTIFICATES........................... 26
Section 7.06 SHARES WITHOUT CERTIFICATES................................ 27
Section 7.07 RESTRICTION ON TRANSFER OF SHARES
AND OTHER SECURITIES................................. 27
Section 7.08 SHAREHOLDER'S PRE-EMPTIVE RIGHTS........................... 27
Section 7.09 CORPORATION'S ACQUISITION OF ITS
OWN SHARES........................................... 28
Section 7.10 SHARE OPTIONS.............................................. 28
Section 7.11 TERMS AND CONDITIONS OF STOCK RIGHTS
AND OPTIONS.......................................... 28
Section 7.12 SHARE DIVIDENDS............................................ 29
Section 7.13 DISTRIBUTIONS TO SHAREHOLDERS.............................. 29
ARTICLE VIII
AMENDMENT OF ARTICLES AND BYLAWS
Section 8.01 AUTHORITY TO AMEND THE ARTICLES OF
INCORPORATION........................................ 31
Section 8.02 AMENDMENT BY BOARD OF DIRECTORS............................ 31
Section 8.03 AMENDMENT OF BYLAWS BY BOARD OF
DIRECTORS............................................ 32
Section 8.04 BYLAW INCREASING QUORUM OR VOTING
REQUIREMENTS FOR DIRECTORS........................... 32
ARTICLE IX
RECORDS AND REPORT
Section 9.01 CORPORATE RECORDS.......................................... 33
Section 9.02 FINANCIAL STATEMENTS FOR SHAREHOLDERS...................... 34
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C> <C>
Section 9.03 OTHER REPORTS TO SHAREHOLDERS.............................. 34
Section 9.04 ANNUAL REPORT FOR DEPARTMENT OF STATE...................... 35
ARTICLE X
MISCELLANEOUS
Section 10.01 DEFINITION OF THE "ACT".................................... 35
Section 10.02 APPLICATION OF FLORIDA LAW................................. 36
Section 10.03 FISCAL YEAR................................................ 36
Section 10.04 CONFLICTS WITH ARTICLES OF
INCORPORATION....................................... 36
</TABLE>
v
<PAGE> 7
ARTICLE I
OFFICES
SECTION 1.01. PRINCIPAL OFFICE.
The principal office of the corporation in the State of Florida shall
be established at such places as the board of directors from time to time
determine.
SECTION 1.02. REGISTERED OFFICE.
The registered office of the corporation in the State of Florida shall
be at the office of its registered agent as stated in the articles of
incorporation or as the board of directors shall from time to time determine.
SECTION 1.03. OTHER OFFICES.
The corporation may have additional offices at such other places,
either within or without the State of Florida, as the board of directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 2.01. ANNUAL MEETING.
(1) The corporation shall hold a meeting of shareholders annually, for
the election of directors and for the transaction of any proper business, at a
time stated in or fixed in accordance with a resolution of the board of
directors.
(2) Annual shareholders' meeting may be held in or out of the State of
Florida at a place stated in or fixed in accordance with a resolution by the
board of directors or, when not inconsistent with the board of directors'
resolution stated in the notice of the annual meeting. If no place is stated in
or fixed in accordance with these bylaws, or stated in the notice of the annual
meeting, annual meetings shall be held at the corporation's principal office.
(3) The failure to hold the annual meeting at the time stated in or
fixed in accordance with these bylaws or pursuant to the Act does not affect the
validity of any corporate action and shall not work a forfeiture of or
dissolution of the corporation.
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SECTION 2.02. SPECIAL MEETING.
(1) The corporation shall hold a special meeting of shareholders:
(a) On call of its board of directors or the person or persons
authorized to do so by the board of directors; or
(b) If the holders of not less than 10% of all votes entitled
to be cast on any issue proposed to be considered at the proposed special
meeting sign, date and deliver to the corporation's secretary one or more
written demands for the meeting describing the purpose or purposes for which it
is to be held.
(2) Special shareholders' meetings may be held in or out of the State
of Florida at a place stated in or fixed in accordance with a resolution of the
board of directors, or, when not inconsistent with the board of directors'
resolution, in the notice of the special meeting. If no place is stated in or
fixed in accordance with these bylaws or in the notice of the special meeting,
special meetings shall be held at the corporation's principal office.
(3) Only business within the purpose or purposes described in the
special meeting notice may be conducted at a special shareholders' meeting.
SECTION 2.03. SHAREHOLDERS' LIST FOR MEETING.
(1) After fixing a record date for a meeting, a corporation shall
prepare a list of the names of all its shareholders who are entitled to notice
of a shareholders' meeting, in accordance with the Florida Business Corporation
Act (the "Act"), or arranged by voting group, with the address of, and the
number and class and series, if any, of shares held by, each.
(2) The shareholders' list must be available for inspection by any
shareholder for a period of ten days prior to the meeting or such shorter time
as exists between the record date and the meeting and continuing through the
meeting at the corporation's principal office, at a place identified in the
meeting notice in the city where the meeting will be held, or at the office of
the corporation's transfer agent or registrar. A shareholder or his agent or
attorney is entitled on written demand to inspect the list (subject to the
requirements of Section 607.1602(3) of the Act), during regular business hours
and at his expense, during the period it is available for inspection.
(3) The corporation shall make the shareholders' list available at the
meeting, and any shareholder or his agent or attorney is entitled to inspect the
list at any time during the meeting or any adjournment.
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SECTION 2.04. RECORD DATE.
(1) The board of directors may set a record date for purposes of
determining the shareholders entitled to notice of and to vote at a
shareholders' meeting; however, in no event may a record date fixed by the board
of directors be a date preceding the date upon which the resolution fixing the
record date is adopted.
(2) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to demand a special meeting is the date
the first shareholder delivers his demand to the corporation. In the event that
the board of directors sets the record date for a special meeting of
shareholders, it shall not be a date preceding the date upon which the
corporation receives the first demand from a shareholder requesting a special
meeting.
(3) If no prior action is required by the board of directors pursuant
to the Act, and, unless otherwise fixed by the board of directors, the record
date for determining shareholders entitled to take action without a meeting is
the date the first signed written consent is delivered to the corporation under
Section 607.0704 of the Act. If prior action is required by the board of
directors pursuant to the Act, the record date for determining shareholders
entitled to take action without a meeting is at the close of business on the day
on which the board of directors adopts the resolution taking such prior action.
(4) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to notice of and to vote at an annual or
special shareholders' meeting is the close of business on the day before the
first notice is delivered to shareholders.
(5) A record date may not be more than 70 days before the meeting or
action requiring a determination of shareholders.
(6) A determination of shareholders entitled to notice of or to vote at
a shareholders' meeting is effective for any adjournment of the meeting unless
the board of directors fixes a new record date, which it must do if the meeting
is adjourned to a date more than one 120 days after the date fixed for the
original meeting.
SECTION 2.05. NOTICE OF MEETINGS AND ADJOURNMENT.
(1) The corporation shall notify shareholders of the date, time and
place of each annual and special shareholders' meeting no fewer than 10 or more
than 60 days before the meeting date. Unless the Act requires otherwise, the
corporation is required to give notice only to shareholders entitled to vote at
the meeting. Notice shall be given in the manner provided in Section 607.0141 of
the Act, by or at the direction of the president, the secretary, of the officer
or persons calling the meeting. If the notice is mailed at least 30 days before
the date of the meeting, it may be done by a class of
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United States mail other than first class. Notwithstanding Section 607.0141, if
mailed, such notice shall be deemed to be delivered when deposited in the United
Statement mail addressed to the shareholder at his address as it appears on the
stock transfer books of the corporation, with postage thereon prepaid.
(2) Unless the Act or the articles of incorporation requires otherwise,
notice of an annual meeting need not include a description of the purpose or
purposes for which the meeting is called.
(3) Notice of a special meeting must include a description of the
purpose or purposes for which the meeting is called.
(4) If an annual or special shareholders meeting is adjourned to a
different date, time, or place, notice need not be given of the new date, time,
or place if the new date, time or place is announced at the meeting before
adjournment is taken, and any business may be transacted at the adjourned
meeting that might have been transacted on the original date of the meeting. If
a new record date is or must be fixed under Section 607.0707 of the Act,
however, notice of the adjourned meeting must be given under this section to
persons who are shareholders as of the new record date who are entitled to
notice of the meeting.
(5) Notwithstanding the foregoing, no notice of a shareholders' meeting
need be given if: (a) an annual report and proxy statements for two consecutive
annual meetings of shareholders, or (b) all, and at least two checks in payment
of dividends or interest on securities during a 12-month period, have been sent
by first-class United States mail, addressed to the shareholder at his address
as it appears on the share transfer books of the corporation, and returned
undeliverable. The obligation of the corporation to give notice of a
shareholders' meeting to any such shareholder shall be reinstated once the
corporation has received a new address for such shareholder for entry on its
share transfer books.
SECTION 2.06. WAIVER OF NOTICE.
(1) A shareholder may waive any notice required by the Act, the
articles of incorporation, or bylaws before or after the date and time stated in
the notice. The waiver must be in writing, be signed by the shareholder entitled
to the notice, and be delivered to the corporation for inclusion in the minutes
or filing with the corporate records. Neither the business to be transacted at
nor the purpose of any regular or special meeting of the shareholders need be
specified in any written waiver of notice.
(2) A shareholder's attendance at a meeting: (a) Waives objection to
lack of notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting; or (b) waives objection to consideration of a particular matter
at the meeting that is not within
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the purpose or purposes described in the meeting notice, unless the shareholder
objects to considering the matter when it is presented.
ARTICLE III
SHAREHOLDER VOTING
SECTION 3.01. VOTING GROUP DEFINED.
A "voting group" means all shares of one or more classes or series that
under the articles of incorporation or the Act are entitled to vote and be
counted together collectively on a matter at a meeting of shareholders. All
shares entitled by the articles of incorporation or the Act to vote generally on
the matter are for that purpose a single voting group.
SECTION 3.02. QUORUM AND VOTING REQUIREMENTS FOR VOTING GROUPS.
(1) Shares entitled to vote as a separate voting group may take action
on a matter at a meeting only if a quorum of those shares exists with respect to
that matter. Unless the articles of incorporation or the Act provides otherwise,
a majority of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on that matter.
(2) Once a share is represented for any purpose at a meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
(3) If a quorum exists, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
articles of incorporation or the Act requires a greater number of affirmative
votes.
SECTION 3.03. ACTION BY SINGLE AND MULTIPLE VOTING GROUPS.
(1) If the articles of incorporation or the Act provides for voting by
a single voting group on a matter, action on that matter is taken when voted
upon by that voting group as provided in Section 3.02 of these bylaws.
(2) If the articles of incorporation or the Act provides for voting by
two or more voting groups on a matter, action on that matter is taken only when
voted upon by each of those voting groups counted separately as provided in
Section 3.02 of these bylaws. Action may be taken by one voting group on a
matter even though no action is taken by another voting group entitled to vote
on the matter.
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SECTION 3.04. SHAREHOLDER QUORUM AND VOTING; GREATER OR LESSER VOTING
REQUIREMENTS.
(1) A majority of the shares entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of shareholders, but in no
event shall a quorum consist of less than one-third of the shares entitled to
vote. When a specified item of business is required to be voted on by a class or
series of stock, a majority of the shares of such class or series shall
constitute a quorum for the transaction of such item of business by that class
or series.
(2) An amendment to the articles of incorporation that adds, changes or
deletes a greater or lesser quorum or voting requirement must meet the same
quorum requirement and be adopted by the same vote and voting groups required to
take action under the quorum and voting requirements then in effect or proposed
to be adopted, whichever is greater.
(3) If a quorum exists, action on a matter, other than the election of
directors, is approved if the votes cast by the holders of the shares
represented at the meeting and entitled to vote on the subject matter favoring
the action exceed the votes cast opposing the action, unless a greater number of
affirmative votes or voting by classes is required by the Act or the articles of
incorporation.
(4) After a quorum has been established at a shareholders' meeting, the
subsequent withdrawal of shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a quorum, shall
not affect the validity of any action taken at the meeting or any adjournment
thereof.
(5) The articles of incorporation may provide for a greater voting
requirement or a greater or lesser quorum requirement for shareholders (or
voting groups of shareholders) than is provided by the Act, but in no event
shall a quorum consist of less than one-third of the shares entitled to vote.
SECTION 3.05. VOTING FOR DIRECTORS; CUMULATIVE VOTING.
(1) Directors are elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting at which a quorum is
present.
(2) Each shareholder who is entitled to vote at an election of
directors has the right to vote the number of shares owned by him for as many
persons as there are directors to be elected and for whose election he has a
right to vote. Shareholders do not have a right to cumulate their votes for
directors unless the articles of incorporation so provide.
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SECTION 3.06. VOTING ENTITLEMENT OF SHARES.
(1) Unless the articles of incorporation or the Act provides otherwise,
each outstanding share, regardless of class, is entitled to one vote on each
matter submitted to a vote at a meeting of shareholders. Only shares are
entitled to vote.
(2) The shares of the corporation are not entitled to vote if they are
owned, directly or indirectly, by a second corporation, domestic or foreign, and
the first corporation owns, directly or indirectly, a majority of shares
entitled to vote for directors of the second corporation.
(3) This section does not limit the power of the corporation to vote
any shares, including its own shares, held by it in a fiduciary capacity.
(4) Redeemable shares are not entitled to vote on any matter, and shall
not be deemed to be outstanding, after notice of redemption is mailed to the
holders thereof and a sum sufficient to redeem such shares has been deposited
with a bank, trust company, or other financial institution upon an irrevocable
obligation to pay the holders the redemption price upon surrender of the shares.
(5) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the bylaws of the
corporate shareholder may prescribe or, in the absence of any applicable
provision, by such person as the board of directors of the corporate shareholder
may designate. In the absence of any such designation or in case of conflicting
designation by the corporate shareholder, the chairman of the board, the
president, any vice president, the secretary, and the treasurer of the corporate
shareholder, in that order, shall be presumed to be fully authorized to vote
such shares.
(6) Shares held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name or the name of his nominee.
(7) Shares held by or under the control of a receiver, a trustee in
bankruptcy proceedings, or an assignee for the benefit of creditors may be voted
by him without the transfer thereof into his name.
(8) If a share or shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, tenants by the entirety, or otherwise, or if two or more persons have
the same fiduciary relationship respecting the same shares, unless the secretary
of the corporation is given
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notice to the contrary and is furnished with a copy of the instrument or order
appointing them or creating the relationship wherein it is so provided, then
acts with respect to voting have the following effect:
(a) If only one votes, in person or in proxy, his act binds
all;
(b) If more than one vote, in person or by proxy, the act of
the majority so voting binds all;
(c) If more than one vote, in person or by proxy, but the vote
is evenly split on any particular matter, each faction is entitled to vote the
share or shares in question proportionally;
(d) If the instrument or order so filed shows that any such
tenancy is held in unequal interest, a majority or a vote evenly split for
purposes of this subsection shall be a majority or a vote evenly split in
interest;
(e) The principles of this subsection shall apply, insofar as
possible, to execution of proxies, waivers, consents, or objections and for the
purpose of ascertaining the presence of a quorum;
(f) Subject to Section 3.08 of these bylaws, nothing herein
contained shall prevent trustees or other fiduciaries holding shares registered
in the name of a nominee from causing such shares to be voted by such nominee as
the trustee or other fiduciary may direct. Such nominee may vote shares as
directed by a trustee or their fiduciary without the necessity of transferring
the shares to the name of the trustee or other fiduciary.
SECTION 3.07. PROXIES.
(1) A shareholder, other person entitled to vote on behalf of a
shareholder pursuant to Section 3.06 of these bylaws, or attorney in fact may
vote the shareholder's shares in person or by proxy.
(2) A shareholder may appoint a proxy to vote or otherwise act for him
by signing an appointment form, either personally or by his attorney in fact. An
executed telegram or cablegram appearing to have been transmitted by such
person, or a photographic, photostatic, or equivalent reproduction of an
appointment form, is a sufficient appointment form.
(3) An appointment of a proxy is effective when received by the
secretary or other officer or agent authorized to tabulate votes. An appointment
is valid for up to 11 months unless a longer period is expressly provided in the
appointment form.
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(4) The death or incapacity of the shareholder appointing a proxy does
not affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment.
(5) An appointment of a proxy is revocable by the shareholder unless
the appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest. Appointments coupled with an interest
include the appointment of: (a) a pledgee; (b) a person who purchased or agreed
to purchase the shares; (c) a creditor of the corporation who extended credit to
the corporation under terms requiring the appointment; (d) an employee of the
corporation whose employment contract requires the appointment; or (e) a party
to a voting agreement created in accordance with the Act.
(6) An appointment made irrevocable under this section becomes
revocable when the interest with which it is coupled is extinguished and, in a
case provided for in Subsection 5(c) or 5(d), the proxy becomes revocable three
years after the date of the proxy or at the end of the period, if any, specified
herein, whichever is less, unless the period of irrevocability is renewed from
time to time by the execution of a new irrevocable proxy as provided in this
section. This does not affect the duration of a proxy under subsection (3).
(7) A transferee for value of shares subject to an irrevocable
appointment may revoke the appointment if he did not know of its existence when
he acquired the shares and the existence of the irrevocable appointment was not
noted conspicuously on the certificate representing the shares or on the
information statement for shares without certificates.
(8) Subject to Section 3.09 of these bylaws and to any express
limitation on the proxy's authority appearing on the face of the appointment
form, a corporation is entitled to accept the proxy's vote or other action as
that of the shareholder making the appointment.
(9) If an appointment form expressly provides, any proxy holder may
appoint, in writing, a substitute to act in his place.
SECTION 3.08. SHARES HELD BY NOMINEES.
(1) The corporation may establish a procedure by which the beneficial
owner of shares that are registered in the name of a nominee is recognized by
the corporation as the shareholder. The extent of this recognition may be
determined in the procedure.
(2) The procedure may set forth (a) the types of nominees to which it
applies; (b) the rights or privileges that the corporation recognizes in a
beneficial owner; (c) the
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manner in which the procedure is selected by the nominee; (d) the information
that must be provided when the procedure is selected; (e) the period for which
selection of the procedure is effective; and (f) other aspects of the rights and
duties created.
SECTION 3.09. CORPORATION'S ACCEPTANCE OF VOTES.
(1) If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the corporation if acting in good
faith is entitled to accept the vote, consent waiver, or proxy appointment and
give it effect as the act of the shareholder.
(2) If the name signed on a vote, consent, waiver, or proxy appointment
does not correspond to the name of its shareholder, the corporation if acting in
good faith is nevertheless entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of the shareholder if: (a) the
shareholder is an entity and the name signed purports to be that of an officer
or agent of the entity; (b) the name signed purports to be that of an
administrator, executor, guardian, personal representative, or conservator
representing the shareholder and, if the corporation requests, evidence of
fiduciary status acceptable to the corporation has been presented with respect
to the vote, consent, waiver, or proxy appointment; (c) the name signed purports
to be that of a receiver, trustee in bankruptcy, or assignee for the benefit of
creditors of the shareholder and, if the corporation requests, evidence of this
status acceptable to the corporation has been presented with respect to the
vote, consent, waiver, or proxy appointment; (d) the name signed purports to be
that of a pledgee, beneficial owner, or attorney in fact of the shareholder and,
if the corporation requests, evidence acceptable to the corporation of the
signatory's authority to sign for the shareholder has been presented with
respect to the vote, consent, waiver, or proxy appointment; or (e) two or more
persons are the shareholder as covenants or fiduciaries and the name signed
purports to be the name of at least one of the co-owners and the person signing
appears to be acting on behalf of all the co-owners.
(3) The corporation is entitled to reject a vote, consent, waiver, or
proxy appointment if the secretary or other officer or agent authorized to
tabulate votes, acting in good faith, has reasonable basis for doubt about the
validity of the signature on it or about the signatory's authority to sign for
the shareholder.
(4) The corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance with
the standards of this section are not liable in damages to the shareholder for
the consequences of the acceptance or rejection.
(5) Corporate action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a court
of competent jurisdiction determines otherwise.
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SECTION 3.10. ACTION BY SHAREHOLDERS WITHOUT MEETING.
(1) Any action required or permitted by the Act to be taken at any
annual or special meeting of shareholders of the corporation may be taken
without a meeting, without prior notice and without a vote, if the action is
taken by the holders of outstanding stock of each voting group entitled to vote
thereon having not less than the minimum number of votes with respect to each
voting group that would be necessary to authorize or take such action at a
meeting at which all voting groups and shares entitled to vote thereon were
present and voted. In order to be effective, the action must be evidenced by one
or more written consents describing the action taken, dated and signed by
approving shareholders having the requisite number of votes of each voting group
entitled to vote thereon, and delivered to the corporation by delivery to its
principal office in this state, its principal place of business, the corporate
secretary, or another office or agent of the corporation having custody of the
book in which proceedings of meetings of shareholders are recorded. No written
consent shall be effective to take the corporate action referred to therein
unless, within 60 days of the date of the earliest dated consent is delivered in
the manner required by this section, written consent signed by the number of
holders required to take action is delivered to the corporation by delivery as
set forth in this section.
(2) Within 10 days after obtaining such authorization by written
consent, notice in accordance with Section 607.0704(3) of the Act must be given
to those shareholders who have not consented in writing.
ARTICLE IV
BOARD OF DIRECTORS AND OFFICERS
SECTION 4.01. QUALIFICATIONS OF DIRECTORS.
Directors must be natural persons who are 18 years of age or older but
need not be residents of the State of Florida or shareholders of the
corporation.
SECTION 4.02. NUMBER OF DIRECTORS.
(1) The board of directors shall consist of not less than one nor more
than nine individuals.
(2) The number of directors may be increased or decreased from time to
time by amendment to these bylaws.
(3) Directors are elected at the first annual shareholders' meeting and
at each annual meeting thereafter unless their terms are staggered under Section
4.04 of these bylaws.
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SECTION 4.03. TERMS OF DIRECTORS GENERALLY.
(1) The terms of the initial directors of the corporation expire at the
first shareholders' meeting at which directors are elected.
(2) The terms of all other directors expire at the next annual
shareholders' meeting following their election unless their terms are staggered
under Section 4.04 of these bylaws.
(3) A decrease in the number of directors does not shorten an incumbent
director's term.
(4) The term of a director elected to fill a vacancy expires at the
next shareholders' meeting at which directors are elected.
(5) Despite the expiration of a director's term, he continues to serve
until his successor is elected and qualifies or until there is a decrease in the
number of directors.
SECTION 4.04. STAGGERED TERMS FOR DIRECTORS.
The directors of any corporation organized under the Act may, by the
articles of incorporation, or by amendment to these bylaws adopted by a vote of
the shareholders, be divided into one, two or three classes with the number of
directors in each class being as nearly equal as possible; the term of office of
those of the first class to expire at the annual meeting next ensuing; of the
second class one year thereafter; at the third class two years thereafter; and
at each annual election held after such classification and election, directors
shall be chosen for a full term, as the case may be, to succeed those whose
terms expire. If the directors have staggered terms, then any increase or
decrease in the number of directors shall be so apportioned among the classes as
to make all classes as nearly equal in number as possible.
SECTION 4.05. VACANCY ON BOARD.
(1) Whenever a vacancy occurs on a board of directors, including a
vacancy resulting from an increase in the number of directors, it may be filled
by the affirmative vote of a majority of the remaining directors.
(2) A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date) may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.
SECTION 4.06. COMPENSATION OF DIRECTORS.
The board of directors may fix the compensation of directors.
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SECTION 4.07. MEETINGS.
(1) The board of directors may hold regular or special meetings in or
out of the State of Florida.
(2) A majority of the directors present, whether or not a quorum
exists, may adjourn any meeting of the board of directors to another time and
place. Notice of any such adjourned meeting shall be given to the directors who
were not present at the time of the adjournment and, unless the time and place
of the adjourned meeting are announced at the time of the adjournment, to the
other directors.
(3) Meetings of the board of directors may be called by the chairman of
the board or by the president.
(4) The board of directors may permit any or all directors to
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all directors participating may
simultaneously hear each other during the meeting. A director participating in a
meeting by this means is deemed to be present in person at the meeting.
SECTION 4.08. ACTION BY DIRECTORS WITHOUT A MEETING.
(1) Action required or permitted by the Act to be taken at a board of
directors' meeting or committee meeting may be taken without a meeting if the
action is taken by all members of the board or of the committee. The action must
be evidenced by one or more written consents describing the action taken and
signed by each director or committee member.
(2) Action taken under this section is effective when the last director
signs the consent, unless the consent specifies a different effective date.
(3) A consent signed under this section has the effect of a meeting
vote and may be described as such in any document.
SECTION 4.09. NOTICE OF MEETINGS.
Regular and special meetings of the board of directors may be held
without notice of the date, time, place, or purpose of the meeting.
SECTION 4.10. WAIVER OF NOTICE.
Notice of a meeting of the board of directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and a waiver of any and
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all objections to the place of the meeting, the time of the meeting, or the
manner in which it has been called or convened, except when a director states,
at the beginning of the meeting or promptly upon arrival at the meeting, any
objection to the transaction of business because the meeting is not lawfully
called or convened.
SECTION 4.11. QUORUM AND VOTING.
(1) A quorum of a board of directors consists of a majority of the
number of directors prescribed by the articles of incorporation or these bylaws.
(2) If a quorum is present when a vote is taken, the affirmative vote
of a majority of directors present is the act of the board of directors.
(3) A director of a corporation who is present at a meeting of the
board of directors or a committee of the board of directors when corporate
action is taken is deemed to have assented to the action taken unless:
(a) He objects at the beginning of the meeting (or promptly
upon his arrival) to holding it or transacting specified business at the
meeting; or
(b) He votes against or abstains from the action taken.
SECTION 4.12. COMMITTEES.
(1) The board of directors, by resolution adopted by a majority of the
full board of directors, may designate from among its members an executive
committee and one or more other committees each of which, to the extent provided
in such resolution, shall have and may exercise all the authority of the board
of directors, except that no such committee shall have the authority to:
(a) Approve or recommend to shareholders actions or proposals
required by the Act to be approved by shareholders.
(b) Fill vacancies on the board of directors or any committee
thereof.
(c) Adopt, amend, or repeal these bylaws.
(d) Authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the board of directors.
(e) Authorize or approve the issuance or sale or contract for
the sale of shares, or determine the designation and relative rights,
preferences, and limitations of a voting group except that the board of
directors may authorize a committee (or a senior
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executive officer of the corporation) to do so within limits specifically
prescribed by the board of directors.
(2) The sections of these bylaws which govern meetings, notice and
waiver of notice, and quorum and voting requirements of the board of directors
apply to committees and their members as well.
(3) Each committee must have two or more members who serve at the
pleasure of the board of directors. The board, by resolution adopted in
accordance herewith, may designate one or more directors as alternate members of
any such committee who may act in the place and stead of any absent member or
members at any meeting of such committee.
(4) Neither the designation of any such committee, the delegation
thereto of authority, nor action by such committee pursuant to such authority
shall alone constitute compliance by any member of the board of directors not a
member of the committee in question with his responsibility to act in good
faith, in a manner he reasonably believes to be in the best interests of the
corporation, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances.
SECTION 4.13. LOANS TO OFFICERS, DIRECTORS, AND EMPLOYEES; GUARANTY OF
OBLIGATIONS.
The corporation may lend money to, guaranty any obligation of, or
otherwise assist any officer, director, or employee of the corporation or of a
subsidiary, whenever, in the judgment of the board of directors, such loan,
guaranty, or assistance may reasonably be expected to benefit the corporation.
The loan, guaranty, or other assistance may be with or without interest and may
be unsecured or secured in such manner as the board of directors shall approve,
including, without limitation, a pledge of shares of stock of the corporation.
Nothing in this section shall be deemed to deny, limit, or restrict the powers
of guaranty or warranty of any corporation at common law or under any statute.
Loans, guaranties, or other types of assistance are subject to section 4.19.
SECTION 4.14. REQUIRED OFFICERS.
(1) The corporation shall have such officers as the board of directors
may appoint from time to time.
(2) A duly appointed officer may appoint one or more assistant
officers.
(3) The board of directors shall delegate to one of the officers
responsibility for preparing minutes of the directors' and shareholders'
meetings and for authenticating records of the corporation.
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(4) The same individual may simultaneously hold more than one office in
the corporation.
SECTION 4.15. DUTIES OF OFFICERS.
Each officer has the authority and shall perform the duties set forth
in a resolution or resolutions of the board of directors or by direction of any
officer authorized by the board of directors to prescribe the duties of other
officers.
SECTION 4.16. RESIGNATION AND REMOVAL OF OFFICERS.
(1) An officer may resign at any time by delivering notice to the
corporation. A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date and the corporation accepts the future effective date, the board of
directors may fill the pending vacancy before the effective date if the board of
directors provides that the successor does not take office until the effective
date.
(2) The board of directors may remove any officer at any time with or
without cause. Any assistant officer, if appointed by another officer, may
likewise be removed by the board of directors or by the officer which appointed
him in accordance with these bylaws.
SECTION 4.17. CONTRACT RIGHTS OF OFFICERS.
The appointment of an officer does not itself create contract rights.
SECTION 4.18. GENERAL STANDARDS FOR DIRECTORS.
(1) A director shall discharge his duties as a director, including his
duties as a member of a committee:
(a) In good faith;
(b) With the care an ordinarily prudent person in a like
position would exercise under similar circumstances; and
(c) In a manner he reasonably believes to be in the best
interests of the corporation.
(2) In discharging his duties, a director is entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, if prepared or presented by:
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(a) One or more officers or employees of the corporation whom
the director reasonably believes to be reliable and competent in the matters
presented;
(b) Legal counsel, public accountants, or other persons as to
matters the director reasonably believes are within the persons' professional or
expert competence; or
(c) A committee of the board of directors of which he is not a
member if the director reasonably believes the committee merits confidence.
(3) In discharging his duties, a director may consider such factors as
the director deems relevant, including the long-term prospects and interests of
the corporation and its shareholders, and the social, economic, legal, or other
effects of any action on the employees, suppliers, customers of the corporation
or its subsidiaries, the communities and society in which the corporation or its
subsidiaries operate, and the economy of the state and the nation.
(4) A director is not acting in good faith if he has knowledge
concerning the matter in question that makes reliance otherwise permitted by
subsection (2) unwarranted.
(5) A director is not liable for any action taken as a director, or any
failure to take any action, if he performed the duties of his office in
compliance with this section.
SECTION 4.19. DIRECTOR CONFLICTS OF INTEREST.
No contract or other transaction between a corporation and one or more
interested directors shall be either void or voidable because of such
relationship or interest, because such director or directors are present at the
meeting of the board of directors or a committee thereof which authorizes,
approves or ratifies such contract or transaction, or because his or their votes
are counted for such purpose, if:
(1) The fact of such relationship or interest is disclosed or known to
the board of directors or committee which authorizes, approves or ratifies the
contract or transactions by a vote or consent sufficient for the purpose WITHOUT
counting the votes or consents of such interested directors;
(2) The fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
(3) The contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the board, a committee or the
shareholders.
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Common or interested directors may be counted in determining the
presence of a quorum at the meeting of the board of directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
For the purpose of paragraph (2) above, a conflict of interest
transaction is authorized, approved or ratified if it receives the vote of a
majority of the shares entitled to be counted under this subsection. Shares
owned by or voted under the control of a director who has a relationship or
interest in the conflict of interest transaction may not be counted in a vote of
shareholders to determine whether to authorize, approve or ratify a conflict of
interest transaction under paragraph (2). The vote of those shares, however, is
counted in determining whether the transaction is approved under other sections
of the Act. A majority of the shares, whether or not present, that are entitled
to be counted in a vote on the transaction under this subsection constitutes a
quorum for the purpose of taking action under this section.
SECTION 4.20. RESIGNATION OF DIRECTORS.
A director may resign at any time by delivering written notice to the
board of directors or its chairman or to the corporation.
A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date, the board of directors may fill the pending vacancy before the
effective date if the board of directors provides that the successor does not
take office until the effective date.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
SECTION 5.01. DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.
(1) The corporation shall have power to indemnify any person who was or
is a party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against liability
incurred in connection with such proceeding, including any appeal thereof, if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any proceeding by judgment, order, settlement,
or conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he
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reasonably believed to be in, or not opposed to, the best interests of the
corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(2) The corporation shall have power to indemnify any person, who was
or is a party to any proceeding by or in the right of the corporation to procure
a judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses and amounts paid in settlement not exceeding, in the judgment of the
board of directors, the estimated expense of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the corporation, except that no indemnification shall be made under this
subsection in respect of any claim, issue, or matter as to which such person
shall have been adjudged to be liable unless, and only to the extent that, the
court in which such proceeding was brought, or any other court of competent
jurisdiction, shall determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which such court shall
deem proper.
(3) To the extent that a director, officer, employee, or agent of the
corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in subsections (1) or (2), or in defense of any claim,
issue, or matter therein, he shall be indemnified against expenses actually and
reasonably incurred by him in connection therewith.
(4) Any indemnification under subsections (1) or (2), unless pursuant
to a determination by a court, shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee, or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in subsections (1) or (2).
Such determination shall be made:
(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;
(b) If such a quorum is not obtainable or, even if obtainable,
by majority vote of a committee duly designated by the board of directors (in
which directors who are parties may participate) consisting solely of two or
more directors not at the time parties to the proceeding;
(c) By independent legal counsel:
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(i) Selected by the board of directors prescribed in
paragraph (a) or the committee prescribed in paragraph (b); or
(ii) If a quorum of the directors cannot be obtained
for paragraph (a) and the committee cannot be designed under paragraph (b),
selected by majority vote of the full board of directors (in which directors who
are parties may participate); or
(d) By the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such proceeding or, if no
such quorum is obtainable, by a majority vote of shareholders who were not
parties to such proceeding.
(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by paragraph (4)(c)
shall evaluate the reasonableness of expenses and may authorize indemnification.
(6) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if he is ultimately found not to
be entitled to indemnification by the corporation pursuant to this section.
Expenses incurred by other employees and agents may be paid in advance upon such
terms or conditions that the board of directors deems appropriate.
(7) The indemnification and advancement of expenses provided pursuant
to this section are not exclusive, and the corporation may make any other or
further indemnification or advancement of expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
However, indemnification or advancement of expenses shall not be made to or on
behalf of any director, officer, employee, or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute:
(a) A violation of the criminal law, unless the director,
officer, employee, or agent had reasonable cause to believe his conduct was
lawful or had no reasonable cause to believe his conduct was unlawful;
(b) A transaction from which the director, officer, employee,
or agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under which the
liability provisions of Section 607.0834 under the Act are applicable; or
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(d) Willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder.
(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person, unless otherwise provided when authorized or ratified.
(9) Notwithstanding the failure of the corporation to provide
indemnification, and despite any contrary determination of the board or of the
shareholders in the specific case, a director, officer, employee, or agent of
the corporation who is or was a party to a proceeding may apply for
indemnification or advancement of expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction.
On receipt of an application, the court, after giving any notice that it
considers necessary, may order indemnification and advancement of expenses,
including expenses incurred in seeking court-ordered indemnification or
advancement of expenses, if it determines that:
(a) The director, officer, employee, or agent if entitled to
mandatory indemnification under subsection (3), in which case the court shall
also order the corporation to pay the director reasonable expenses incurred in
obtaining court-ordered indemnification or advancement of expenses;
(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the exercise
by the corporation of its power pursuant to subsection (7); or
(c) The director, officer, employee, or agent is fairly and
reasonably entitled to indemnification or advancement of expenses, or both, in
view of all the relevant circumstances, regardless of whether such person met
the standard of conduct set forth in subsection (1), subsection (2) or
subsection (7).
(10) For purposes of this section, the term "corporation" includes, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger, so that
any person who is or was a director, officer, employee, or agent of a
constituent corporation, or is or was serving at the request of a constituent
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, is in the same position
under this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
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(11) For purposes of this section:
(a) The term "other enterprises" includes employee benefit
plans;
(b) The term "expenses" includes counsel fees, including those
for appeal;
(c) The term "liability" includes obligations to pay a
judgment, settlement, penalty, fine (including an excise tax assessed with
respect to any employee benefit plan), and expenses actually and reasonably
incurred with respect to a proceeding;
(d) The term "proceeding" includes any threatened, pending, or
completed action, suit or other type of proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the corporation"
includes any service as a director, officer, employee, or agent of the
corporation that imposes duties on such persons, including duties relating to an
employee benefit plan and its participants or beneficiaries; and
(g) The term "not opposed to the best interest of the
corporation" describes the actions of a person who acts in good faith and in a
manner he reasonably believes to be in the best interests of the participants
and beneficiaries of an employee benefit plan.
(12) The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee,
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this section.
ARTICLE VI
OFFICE AND AGENT
SECTION 6.01. REGISTERED OFFICE AND REGISTERED AGENT.
(1) The corporation shall have and continuously maintain in the State
of Florida:
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(a) A registered office which may be the same as its place of
business; and
(b) A registered agent, who, may be either:
(i) An individual who resides in the State of Florida
whose business office is identical with such registered office; or
(ii) Another corporation or not-for-profit
corporation as defined in Chapter 617 of the Act, authorized to transact
business or conduct its affairs in the State of Florida, having a business
office identical with the registered office; or
(iii) A foreign corporation or not-for-profit foreign
corporation authorized pursuant to chapter 607 or chapter 617 of the Act to
transact business or conduct its affairs in the State of Florida, having a
business office identical with the registered office.
SECTION 6.02. CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT; RESIGNATION
OF REGISTERED AGENT.
(1) The corporation may change its registered office or its registered
agent upon filing with the Department of State of the State of Florida a
statement of change setting forth:
(a) The name of the corporation;
(b) The street address of its current registered office;
(c) If the current registered office is to be changed, the
street address of the new registered office;
(d) The name of its current registered agent;
(e) If its current registered agent is to be changed, the name
of the new registered agent and the new agent's written consent (either on the
statement or attached to it) to the appointment;
(f) That the street address of its registered office and the
street address of the business office of its registered agent, as changed, will
be identical;
(g) That such change was authorized by resolution duly adopted
by its board of directors or by an officer of the corporation so authorized by
the board of directors.
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ARTICLE VII
SHARES, OPTIONS, DIVIDENDS AND DISTRIBUTIONS
SECTION 7.01. AUTHORIZED SHARES.
(1) The articles of incorporation prescribe the classes of shares and
the number of shares of each class that the corporation is authorized to issue,
as well as a distinguishing designation for each class, and prior to the
issuance of shares of a class the preferences, limitations, and relative rights
of that class must be described in the articles of incorporation.
(2) The articles of incorporation must authorize:
(a) One or more classes of shares that together have unlimited
voting rights, and
(b) One or more classes of shares (which may be the same class
or classes as those with voting rights) that together are entitled to receive
the net assets of the corporation upon dissolution.
(3) The articles of incorporation may authorize one or more classes of
shares that have special, conditional, or limited voting rights, or no rights,
or no right to vote, except to the extent prohibited by the Act;
(a) Are redeemable or convertible as specified in the articles
of incorporation;
(b) Entitle the holders to distributions calculated in any
manner, including dividends that may be cumulative, non-cumulative, or partially
cumulative;
(c) Have preference over any other class of shares with
respect to distributions, including dividends and distributions upon the
dissolution of the corporation.
(4) Shares which are entitled to preference in the distribution of
dividends or assets shall not be designated as common shares. Shares which are
not entitled to preference in the distribution of dividends or assets shall be
common shares and shall not be designated as preferred shares.
SECTION 7.02. TERMS OF CLASS OR SERIES DETERMINED BY BOARD OF DIRECTORS.
(1) If the articles of incorporation so provide, the board of directors
may determine, in whole or part, the preferences, limitations, and relative
rights (within the limits set forth in Section 7.01) of:
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(a) Any class of shares before the issuance of any shares of
that class, or
(b) One or more series within a class before the issuance of
any shares of that series.
(2) Each series of a class must be given a distinguishing designation.
(3) All shares of a series must have preferences, limitations, and
relative rights identical with those of other shares of the same series and,
except to the extent otherwise provided in the description of the series, of
those of other series of the same class.
(4) Before issuing any shares of a class or series created under this
section, the corporation must deliver to the Department of State of the State of
Florida for filing articles of amendment, which are effective without
shareholder action, in accordance with Section 607.0602 of the Act.
SECTION 7.03. ISSUED AND OUTSTANDING SHARES.
(1) A corporation may issue the number of shares of each class or
series authorized by the articles of incorporation. Shares that are issued are
outstanding shares until they are reacquired, redeemed, converted, or canceled.
(2) The reacquisition, redemption, or conversion of outstanding shares
is subject to the limitations of subsection (3) and to Section 607.06401 of the
Act.
(3) At all times that shares of the corporation are outstanding, one or
more shares that together have unlimited voting rights and one or more shares
that together are entitled to receive the net assets of the corporation upon
dissolution must be outstanding.
SECTION 7.04. ISSUANCE OF SHARES.
(1) The board of directors may authorize shares to be issued for
consideration consisting of any tangible or intangible property or benefit to
the corporation, including cash, promissory notes, services performed, promises
to perform services evidenced by a written contract, or other securities of the
corporation.
(2) Before the corporation issues shares, the board of directors must
determine that the consideration received or to be received for shares to be
issued is adequate. That determination by the board of directors is conclusive
insofar as the adequacy of consideration for the issuance of shares relates to
whether the shares are validly issued, fully paid, and non-assessable. When it
cannot be determined that outstanding shares
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are fully paid and non-assessable, there shall be a conclusive presumption that
such shares are fully paid and non-assessable if the board of directors makes a
good faith determination that there is no substantial evidence that the full
consideration for such shares has not been paid.
(3) When the corporation receives the consideration for which the board
of directors authorized the issuance of shares, the shares issued therefor are
fully paid and non-assessable. Consideration in the form of a promise to pay
money or a promise to perform services is received by the corporation at the
time of the making of the promise, unless the agreement specifically provides
otherwise.
(4) The corporation may place in escrow shares issued for a contract
for future services or benefits or a promissory note, or make other arrangements
to restrict the transfer of the shares, and may credit distributions in respect
of the shares against their purchase price, until the services are performed,
the note is paid, or the benefits received. If the services are not performed,
the shares escrowed or restricted and the distributions credited may be canceled
in whole or part.
SECTION 7.05. FORM AND CONTENT OF CERTIFICATES.
(1) Shares may but need not be represented by certificates. Unless the
Act or another statute expressly provides otherwise, the rights and obligations
of shareholders are identical whether or not their shares are represented by
certificates.
(2) At a minimum, each share certificate must state on its face:
(a) The name of the issuing corporation and that the
corporation is organized under the laws of the State of Florida;
(b) The name of the person to whom issued; and
(c) The number and class of shares and the designation of the
series, if any, the certificate represents.
(3) If the shares being issued are of different classes of shares or
different series within a class, the designations, relative rights, preferences,
and limitations applicable to each class and the variations in rights,
preferences, and limitations determined for each series (and the authority of
the board of directors to determine variations for future series) must be
summarized on the front or back of each certificate. Alternatively, each
certificate may state conspicuously on its front or back that the corporation
will furnish the shareholder a full statement of this information on request and
without charge.
(4) Each share certificate:
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(a) Must be signed (either manually or in facsimile) by an
officer or officers designated by the board of directors, and
(b) May bear the corporate seal or its facsimile.
(5) If the person who signed (either manually or in facsimile) a share
certificate no longer holds office when the certificate is issued, the
certificate is nevertheless valid.
(6) Nothing in this section may be construed to invalidate any share
certificate validly issued and outstanding under the Act on July 1, 1990.
SECTION 7.06. SHARES WITHOUT CERTIFICATES.
(1) The board of directors of the corporation may authorize the issue
of some or all of the shares of any or all of its classes or series without
certificates. The authorization does not affect shares already represented by
certificates until they are surrendered to the corporation.
(2) Within a reasonable time after the issue or transfer of shares
without certificates, the corporation shall send the shareholder a written
statement of the information required on certificates by the Act.
SECTION 7.07. RESTRICTION ON TRANSFER OF SHARES AND OTHER SECURITIES.
(1) The articles of incorporation, these bylaws, an agreement among
shareholders, or an agreement between shareholders and the corporation may
impose restrictions on the transfer or registration of transfer of shares of the
corporation. A restriction does not affect shares issued before the restriction
was adopted unless the holders of such shares are parties to the restriction
agreement or voted in favor of the restriction.
(2) A restriction on the transfer or registration of transfer of shares
is valid and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this section, and effected in compliance with the
provisions of the Act, including having a proper purpose as referred to in the
Act.
SECTION 7.08. SHAREHOLDER'S PRE-EMPTIVE RIGHTS.
The shareholders of the corporation do not have a pre-emptive right to
acquire the corporation's unissued shares.
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SECTION 7.09. CORPORATION'S ACQUISITION OF ITS OWN SHARES.
(1) The corporation may acquire its own shares, and, unless otherwise
provided in the articles of incorporation or except as provided in subsection
(4), shares so acquired constitute authorized but unissued shares of the same
class but undesignated as to series.
(2) If the articles of incorporation prohibit the reissue of acquired
shares, the number of authorized shares is reduced by the number of shares
acquired, effective upon amendment of the articles of incorporation.
(3) Articles of amendment may be adopted by the board of directors
without shareholder action, shall be delivered to the Department of State of the
State of Florida for filing, and shall set forth the information required by
Section 607.0631 of the Act.
(4) Shares of the corporation in existence on June 30, 1990, which are
treasury shares under Section 607.004(18), Florida Statutes (1987), shall be
issued, but not outstanding, until canceled or disposed of by the corporation.
SECTION 7.10. SHARE OPTIONS.
(1) Unless the articles of incorporation provide otherwise, the
corporation may issue rights, options, or warrants for the purchase of shares of
the corporation. The board of directors shall determine the terms upon which the
rights, options, or warrants are issued, their form and content, and the
consideration for which the shares are to be issued.
(2) The terms and conditions of stock rights and options which are
created and issued by the corporation, or its successor, and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized by unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
restrictions, or conditions that preclude or limit the exercise, transfer,
receipt, or holding of such rights or options by any person or persons,
including any person or persons owning or offering to acquire a specified number
or percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
SECTION 7.11. TERMS AND CONDITIONS OF STOCK RIGHTS AND OPTIONS.
The terms and conditions of the stock rights and options which are
created and issued by the corporation [or its successor], and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized but
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unissued shares, treasury shares, or shares to be purchased or acquired by the
corporation, may include, without limitation, restrictions or conditions that
preclude or limit the exercise, transfer, receipt or holding of such rights or
options by any person or persons, including any person or persons owning or
offering to acquire a specified number or percentage of the outstanding common
shares or other securities of the corporation, or any transferee or transferees
of any such person or persons, or that invalidate or void such rights or options
held by any such person or persons or any such transferee or transferees.
SECTION 7.12. SHARE DIVIDENDS.
(1) Shares may be issued pro rata and without consideration to the
corporation's shareholders or to the shareholders of one or more classes or
series. An issuance of shares under this subsection is a share dividend.
(2) Shares of one class or series may not be issued as a share dividend
in respect of shares of another class or series unless:
(a) The articles of incorporation so authorize,
(b) A majority of the votes entitled to be cast by the class
or series to be issued approves the issue, or
(c) There are no outstanding shares of the class or series to
be issued.
(3) If the board of directors does not fix the record date for
determining shareholders entitled to a share dividend, it is the date of the
board of directors authorizes the share dividend.
SECTION 7.13. DISTRIBUTIONS TO SHAREHOLDERS.
(1) The board of directors may authorize and the corporation may make
distributions to its shareholders subject to restriction by the articles of
incorporation and the limitations in subsection (3).
(2) If the board of directors does not fix the record date for
determining shareholders entitled to a distribution (other than one involving a
purchase, redemption, or other acquisition of the corporation's shares), it is
the date the board of directors authorizes the distribution.
(3) No distribution may be made if, after giving it effect:
(a) The corporation would not be able to pay its debts as they
become due in the usual course of business; or
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(b) The corporation's total assets would be less than the sum
of its total liabilities plus (unless the articles of incorporation permit
otherwise) the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
(4) The board of directors may base a determination that a distribution
is not prohibited under subsection (3) either on financial statements prepared
on the basis of accounting practices and principles that are reasonable in the
circumstances or on a fair valuation or other method that is reasonable in the
circumstances. In the case of any distribution based upon such a valuation, each
such distribution shall be identified as a distribution based upon a current
valuation of assets, and the amount per share paid on the basis of such
valuation shall be disclosed to the shareholders concurrent with their receipt
of the distribution.
(5) Except as provided in subsection (7), the effect of a distribution
under subsection (3) is measured;
(a) In the case of distribution by purchase, redemption, or
other acquisition of the corporation's shares, as of the earlier of:
(i) The date money or other property is transferred
or debt incurred by the corporation, or
(ii) The date the shareholder ceases to be a
shareholder with respect to the acquired shares;
(b) In the case of any other distribution of indebtedness, as
of the date the indebtedness is distributed;
(c) In all other cases, as of:
(i) The date the distribution is authorized if the
payment occurs within 120 days after the date of authorization, or
(ii) The date the payment is made if it occurs more
than 120 days after the date of authorization.
(6) A corporation's indebtedness to a shareholder incurred by reason of
a distribution made in accordance with this section is at parity with the
corporation's indebtedness to its general, unsecured creditors except to the
extent subordinated by agreement.
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(7) Indebtedness of the corporation, including indebtedness issued as a
distribution, is not considered a liability for purposes of determinations under
subsection (3) if its terms provide that payment of principal and interest are
made only if and to the extent that payment of a distribution to shareholders
could then be made under this section. If the indebtedness is issued as a
distribution, each payment of principal or interest is treated as a
distribution, the effect of which is measured on the date the payment is
actually made.
ARTICLE VIII
AMENDMENT OF ARTICLES AND BYLAWS
SECTION 8.01. AUTHORITY TO AMEND THE ARTICLES OF INCORPORATION.
(1) The corporation may amend its articles of incorporation at any time
to add or change a provision that is required or permitted in the articles of
incorporation or to delete a provision not required in the articles of
incorporation. Whether a provision is required or permitted in the articles of
incorporation is determined as of the effective date of the amendment.
(2) A shareholder of the corporation does not have a vested property
right resulting from any provision in the articles of incorporation, including
provisions relating to management, control, capital structure, dividend
entitlement, or purpose or duration of the corporation.
SECTION 8.02. AMENDMENT BY BOARD OF DIRECTORS.
The corporation's board of directors may adopt one or more amendments
to the corporation's articles of incorporation without shareholder action:
(1) To extend the duration of the corporation if it was incorporated at
a time when limited duration was required by law;
(2) To delete the names and addresses of the initial directors;
(3) To delete the name and address of the initial registered agent or
registered office, if a statement of change is on file with the Department of
State of the State of Florida;
(4) To delete any other information contained in the articles of
incorporation that is solely of historical interest;
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(5) To change each issued and unissued authorized share of an
outstanding class into a greater number of whole shares if the corporation has
only shares of that class outstanding;
(6) To delete the authorization for a class or series of shares
authorized pursuant to Section 607.0602 of the Act, if no shares of such class
or series have been issued;
(7) To change the corporate name by substituting the word
"corporation," "incorporated," or "company," or the abbreviation "corp.," Inc.,"
or Co.," for a similar word or abbreviation in the name, or by adding, deleting,
or changing a geographical attribution for the name; or
(8) To make any other change expressly permitted by the Act to be made
without shareholder action.
SECTION 8.03. AMENDMENT OF BYLAWS BY BOARD OF DIRECTORS.
The corporation's board of directors may amend or repeal the
corporation's bylaws unless the Act reserves the power to amend a particular
bylaw provision exclusively to the shareholders.
SECTION 8.04. BYLAW INCREASING QUORUM OR VOTING REQUIREMENTS FOR DIRECTORS.
(1) A bylaw that fixes a greater quorum or voting requirement for the
board of directors may be amended or repealed:
(a) If originally adopted by the shareholders, only by the
shareholders;
(b) If originally adopted by the board of directors, either by
the shareholders or by the board of directors.
(2) A bylaw adopted or amended by the shareholders that fixes a greater
quorum or voting requirement for the board of directors may provide that it may
be amended or repealed only by a specified vote of either the shareholders or
the board of directors.
(3) Action by the board of directors under paragraph (1)(b) to adopt or
amend a bylaw that changes the quorum or voting requirement for the board of
directors must meet the same quorum requirement and be adopted by the same vote
required to take action under the quorum and voting requirement then in effect
or proposed to be adopted, whichever is greater.
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ARTICLE IX
RECORDS AND REPORTS
SECTION 9.01. CORPORATE RECORDS.
(1) The corporation shall keep as permanent records minutes of al
meetings of its shareholders and board of directors, a record of all actions
taken by the shareholders or board of directors without a meeting, and a record
of all actions taken by a committee of the board of directors in place of the
board of directors on behalf of the corporation.
(2) The corporation shall maintain accurate accounting records.
(3) The corporation or its agent shall maintain a record of its
shareholders in a form that permits preparation of a list of the names and
addresses of all shareholders in alphabetical order by class of shares showing
the number and series of shares held by each.
(4) The corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable time.
(5) The corporation shall keep a copy of the following records:
(a) Its articles or restated articles of incorporation and all
amendments to them currently in effect;
(b) Its bylaws or restated bylaws and all amendments to them
currently in effect;
(c) Resolutions adopted by the board of directors creating one
or more classes or series of shares and finding their relative rights,
preferences, and limitations, if shares issued pursuant to those resolutions are
outstanding;
(d) The minutes of all shareholders' meetings and records of
all action taken by shareholders without a meeting for the past three years;
(e) Written communications to all shareholders generally or
all shareholders of a class or series within the past three years, including the
financial statements furnished for the past three years;
(f) A list of the names and business street addresses of its
current directors and officers; and
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(g) Its most recent annual report delivered to the Department
of State of the State of Florida.
SECTION 9.02. FINANCIAL STATEMENTS FOR SHAREHOLDERS.
(1) Unless modified by resolution of the shareholders within 120 days
of the close of each fiscal year, the corporation shall furnish its shareholders
annual financial statements which may be consolidated or combined statements of
the corporation and one or more of its subsidiaries, as appropriate, that
include a balance sheet as of the end of the fiscal year, an income statement
for that year, and a statement of cash flows for that year. If financial
statements are prepared for the corporation on the basis of generally-accepted
accounting principles, the annual financial statements must also be prepared on
that basis.
(2) If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the president or the person responsible for the
corporation's accounting records:
(a) Stating his reasonable belief whether the statements were
prepared on the basis of generally-accepted accounting principles and, if not,
describing the basis of preparation; and
(b) Describing any respects in which the statements were not
prepared on a basis of accounting consistent with the statements prepared for
the preceding year.
(3) The corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the corporation
to prepare its financial statements, if for reasons beyond the corporation's
control, it is unable to prepare its financial statements within the prescribed
period. Thereafter, on written request from a shareholder who was not mailed the
statements, the corporation shall mail him the latest annual financial
statements.
SECTION 9.03. OTHER REPORTS TO SHAREHOLDERS.
(1) If the corporation indemnifies or advances expenses to any
director, officer, employee or agent otherwise than by court order or action by
the shareholders or by an insurance carrier pursuant to insurance maintained by
the corporation, the corporation shall report the indemnification or advance in
writing to the shareholders with or before the notice of the next shareholders'
meeting, or prior to such meeting if the indemnification or advance occurs after
the giving of such notice but prior to the time such meeting is held, which
report shall include a statement specifying the persons paid,
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the amounts paid, and the nature and status at the time of such payment of the
litigation or threatened litigation.
(2) If the corporation issues or authorizes the issuance of shares for
promises to render services in the future, the corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the next
shareholders' meeting.
SECTION 9.04. ANNUAL REPORT FOR DEPARTMENT OF STATE.
(1) The corporation shall deliver to the Department of State of the
State of Florida for filing a sworn annual report on such forms as the
Department of State of the State of Florida prescribes that sets forth the
information prescribed by Section 607.1622 of the Act.
(2) Proof to the satisfaction of the Department of State of the State
of Florida on or before July 1 of each calendar year that such report was
deposited in the United States mail in a sealed envelope, properly addressed
with postage prepaid, shall be deemed in compliance with this requirement.
(3) Each report shall be executed by the corporation by an officer or
director or, if the corporation is in the hands of a receiver or trustee, shall
be executed on behalf of the corporation by such receiver or trustee, and the
signing thereof shall have the same legal effect as if made under oath, without
the necessity of appending such oath thereto.
(4) Information in the annual report must be current as of the date the
annual report is executed on behalf of the corporation.
(5) Any corporation failing to file an annual report which complies
with the requirements of this section shall not be permitted to maintain or
defend any action in any court of this state until such report is filed and all
fees and taxes due under the Act are paid and shall be subject to dissolution or
cancellation of its certificate of authority to do business as provided in the
Act.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. DEFINITION OF THE "ACT".
All references contained herein to the "Act" or to sections of the
"Act" shall be deemed to be in reference to the Florida Business Corporation
Act.
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SECTION 10.02. APPLICATION OF FLORIDA LAW.
Whenever any provision of these bylaws is inconsistent with any
provision of the Florida Business Corporation Act, Statutes 607, as they may be
amended from time to time, then in such instance Florida law shall prevail.
SECTION 10.03. FISCAL YEAR.
The fiscal year of the corporation shall be determined by resolution of
the board of directors.
SECTION 10.04. CONFLICTS WITH ARTICLES OF INCORPORATION.
In the event that any provision contained in these bylaws conflicts
with any provision of the corporation's articles of incorporation, as amended
from time to time, the provisions of the articles of incorporation shall prevail
and be given full force and effect, to the full extent permissible under the
Act.
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Exhibit 4.1
REALM PRODUCTION AND ENTERTAINMENT, INC.
1998 STOCK OPTION PLAN
1. GRANT OF OPTIONS; GENERALLY. In accordance with the provisions
hereinafter set forth in this stock option plan, the name of which is the REALM
PRODUCTION AND ENTERTAINMENT, INC. 1998 STOCK OPTION PLAN (the "Plan"), the
Board of Directors (the "Board") or, the Compensation Committee (the "Stock
Option Committee") of Realm Production and Entertainment, Inc. (the
"Corporation") is hereby authorized to issue from time to time on the
Corporation's behalf to any one or more Eligible Persons, as hereinafter
defined, options to acquire shares of the Corporation's no par value common
stock (the "Stock").
2. TYPE OF OPTIONS. The Board or the Stock Option Committee is
authorized to issue Incentive Stock Options ("ISOs") which meet the requirements
of Section ss.422 of the Internal Revenue Code of 1986, as amended (the "Code"),
which options are hereinafter referred to collectively as ISOs, or singularly as
an ISO. The Board or the Stock Option Committee is also, in its discretion,
authorized to issue options which are not ISOs, which options are hereinafter
referred to collectively as Non Statutory Options ("NSOs"), or singularly as an
NSO. The Board or the Stock Option Committee is also authorized to issue "Reload
Options" in accordance with Paragraph 8 herein, which options are hereinafter
referred to collectively as Reload Options, or singularly as a Reload Option.
Except where the context indicates to the contrary, the term "Option" or
"Options" means ISOs, NSOs and Reload Options.
3. AMOUNT OF STOCK. The aggregate number of shares of Stock which may
be purchased pursuant to the exercise of Options shall be 500,000 shares. Of
this amount, the Board or the Stock Option Committee shall have the power and
authority to designate whether any Options so issued shall be ISOs or NSOs,
subject to the restrictions on ISOs contained elsewhere herein. If an Option
ceases to be exercisable, in whole or in part, the shares of Stock underlying
such Option shall continue to be available under this Plan. Further, if shares
of Stock are delivered to the Corporation as payment for shares of Stock
purchased by the exercise of an Option granted under this Plan, such shares of
Stock shall also be available under this Plan. If there is any change in the
number of shares of Stock due to the declaration of stock dividends,
recapitalization resulting in stock split-ups, or combinations or exchanges of
shares of Stock, or otherwise, the number of shares of Stock available for
purchase upon the exercise of Options, the shares of Stock subject to any Option
and the exercise price of any outstanding Option shall be appropriately adjusted
by the Board or the Stock Option Committee. The Board or the Stock Option
Committee shall give notice of any adjustments to each Eligible Person granted
an Option under this Plan, and such adjustments shall be effective and binding
on all Eligible Persons. If because of one or more recapitalizations,
reorganizations or other corporate events, the holders of outstanding Stock
receive something other than shares of Stock then, upon exercise of an Option,
the Eligible Person will receive what the holder would have owned if the holder
had exercised the Option immediately before the first such corporate event and
not disposed of anything the holder received as a result of the corporate event.
<PAGE> 2
4. ELIGIBLE PERSONS.
(a) With respect to ISOs, an Eligible Person means any individual who
has been employed by the Corporation or by any subsidiary of the Corporation,
for a continuous period of at least sixty (60) days.
(b) With respect to NSOs, an Eligible Person means (i) any individual
who has been employed by the Corporation or by any subsidiary of the
Corporation, for a continuous period of at least sixty (60) days, (ii) any
director of the Corporation or any subsidiary of the Corporation, or (iii) any
consultant of the Corporation or any subsidiary of the Corporation.
5. GRANT OF OPTIONS. The Board or the Stock Option Committee has the
right to issue the Options established by this Plan to Eligible Persons. The
Board or the Stock Option Committee shall follow the procedures prescribed for
it elsewhere in this Plan. A grant of Options shall be set forth in a writing
signed on behalf of the Corporation or by a majority of the members of the Stock
Option Committee. The writing shall identify whether the Option being granted is
an ISO or an NSO and shall set forth the terms which govern the Option. The
terms shall be determined by the Board or the Stock Option Committee, and may
include, among other terms, the number of shares of Stock that may be acquired
pursuant to the exercise of the Options, when the Options may be exercised, the
period for which the Option is granted and including the expiration date, the
effect on the Options if the Eligible Person terminates employment and whether
the Eligible Person may deliver shares of Stock to pay for the shares of Stock
to be purchased by the exercise of the Option. However, no term shall be set
forth in the writing which is inconsistent with any of the terms of this Plan.
The terms of an Option granted to an Eligible Person may differ from the terms
of an Option granted to another Eligible Person, and may differ from the terms
of an earlier Option granted to the same Eligible Person.
6. OPTION PRICE. The option price per share shall be determined by the
Board or the Stock Option Committee at the time any Option is granted, and shall
be not less than (i) in the case of an ISO, the fair market value, (ii) in the
case of an ISO granted to a ten percent or greater stockholder, 110 percent of
the fair market value, or (iii) in the case of an NSO, not less than the fair
market value (but in no event less than the par value) of one share of Stock on
the date the Option is granted, as determined by the Board or the Stock Option
Committee. Fair market value as used herein shall be:
(a) If shares of Stock shall be traded on an exchange or
over-the-counter market, the mean between the high and low sales prices of Stock
on such exchange or over-the-counter market on which such shares shall be traded
on that date, or if such exchange or over-the-counter market is closed or if no
shares shall have traded on such date, on the last preceding date on which such
shares shall have traded.
(b) If shares of Stock shall not be traded on an exchange or
over-the-counter market, the value as determined by a recognized appraiser as
selected by the Board or the Stock Option Committee.
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<PAGE> 3
7. PURCHASE OF SHARES. An Option shall be exercised by the tender to
the Corporation of the full purchase price of the Stock with respect to which
the Option is exercised and written notice of the exercise. The purchase price
of the Stock shall be in United States dollars, payable in cash, check,
Promissory Note secured by the Shares issued through exercise of the related
Options, or in property or Corporation stock, if so permitted by the Board or
the Stock Option Committee in accordance with the discretion granted in
Paragraph 5 hereof, having a value equal to such purchase price. The Corporation
shall not be required to issue or deliver any certificates for shares of Stock
purchased upon the exercise of an Option prior to (i) if requested by the
Corporation, the filing with the Corporation by the Eligible Person of a
representation in writing that it is the Eligible Person's then present
intention to acquire the Stock being purchased for investment and not for
resale, and/or (ii) the completion of any registration or other qualification of
such shares under any government regulatory body, which the Corporation shall
determine to be necessary or advisable.
8. GRANT OF RELOAD OPTIONS. In granting an Option under this Plan, the
Board or the Stock Option Committee may include a Reload Option provision
therein, subject to the provisions set forth in Paragraphs 20 and 21 herein. A
Reload Option provision provides that if the Eligible Person pays the exercise
price of shares of Stock to be purchased by the exercise of an ISO, NSO or
another Reload Option (the "Original Option") by delivering to the Corporation
shares of Stock already owned by the Eligible Person (the "Tendered Shares"),
the Eligible Person shall receive a Reload Option which shall be a new Option to
purchase shares of Stock equal in number to the tendered shares. The terms of
any Reload Option shall be determined by the Board or the Stock Option Committee
consistent with the provisions of this Plan.
9. STOCK OPTION COMMITTEE. The Stock Option Committee may be appointed
from time to time by the Corporation's Board of Directors. The Board may from
time to time remove members from or add members to the Stock Option Committee.
The Stock Option Committee shall be constituted so as to permit the Plan to
comply in all respects with the provisions set forth in Paragraph 20 herein. The
members of the Stock Option Committee may elect one of its members as its
chairman. The Stock Option Committee shall hold its meetings at such times and
places as its chairman shall determine. A majority of the Stock Option
Committee's members present in person shall constitute a quorum for the
transaction of business. All determinations of the Stock Option Committee will
be made by the majority vote of the members constituting the quorum. The members
may participate in a meeting of the Stock Option Committee by conference
telephone or similar communications equipment by means of which all members
participating in the meeting can hear each other. Participation in a meeting in
that manner will constitute presence in person at the meeting. Any decision or
determination reduced to writing and signed by all members of the Stock Option
Committee will be effective as if it had been made by a majority vote of all
members of the Stock Option Committee at a meeting which is duly called and
held.
10. ADMINISTRATION OF PLAN. In addition to granting Options and to
exercising the authority granted to it elsewhere in this Plan, the Board or the
Stock Option Committee is
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granted the full right and authority to interpret and construe the provisions of
this Plan, promulgate, amend and rescind rules and procedures relating to the
implementation of the Plan and to make all other determinations necessary or
advisable for the administration of the Plan, consistent, however, with the
intent of the Corporation that Options granted or awarded pursuant to the Plan
comply with the provisions of Paragraph 20 and 21 herein. All determinations
made by the Board or the Stock Option Committee shall be final, binding and
conclusive on all persons including the Eligible Person, the Corporation and its
stockholders, employees, officers and directors and consultants. No member of
the Board or the Stock Option Committee will be liable for any act or omission
in connection with the administration of this Plan unless it is attributable to
that member's willful misconduct.
11. PROVISIONS APPLICABLE TO ISOS. The following provisions shall apply
to all ISOs granted by the Board or the Stock Option Committee and are
incorporated by reference into any writing granting an ISO:
(a) An ISO may only be granted within ten (10) years from the date that
this Plan was originally adopted by the Corporation's Board of Directors.
(b) An ISO may not be exercised after the expiration of ten (10) years
from the date the ISO is granted.
(c) The option price may not be less than the fair market value of the
Stock at the time the ISO is granted.
(d) An ISO is not transferrable by the Eligible Person to whom it is
granted except by will, or the laws of descent and distribution, and is
exercisable during his or her lifetime only by the Eligible Person.
(e) If the Eligible Person receiving the ISO owns at the time of the
grant stock possessing more than ten (10%) percent of the total combined voting
power of all classes of stock of the employer corporation or of its parent or
subsidiary corporation (as those terms are defined in the Code), then the option
price shall be at least one hundred ten (110%) percent of the fair market value
of the Stock, and the ISO shall not be exercisable after the expiration of five
(5) years from the date the ISO is granted.
(f) The aggregate fair market value (determined at the time the ISO is
granted) of the Stock with respect to which the ISO is first exercisable by the
Eligible Person during any calendar year (under this Plan and any other
incentive stock option plan of the Corporation) shall not exceed $100,000.
(g) Even if the shares of Stock which are issued upon exercise of an
ISO are sold within one year following the exercise of such ISO so that the sale
constitutes a disqualifying disposition for ISO treatment under the Code, no
provision of this Plan shall be construed as prohibiting such a sale.
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(h) This Plan was adopted by the Corporation on January 8, 1998, by
virtue of its approval by the Corporation's Board of Directors and a majority of
the vote of the shareholders of the Company holding 50% or more of the
outstanding capital stock of the Company.
12. DETERMINATION OF FAIR MARKET VALUE. In granting ISOs under this
Plan, the Board or the Stock Option Committee shall make a good faith
determination as to the fair market value of the Stock at the time of granting
the ISO.
13. RESTRICTIONS ON ISSUANCE OF STOCK. The Corporation shall not be
obligated to sell or issue any shares of Stock pursuant to the exercise of an
Option unless the Stock with respect to which the Option is being exercised is
at that time effectively registered or exempt from registration under the
Securities Act of 1933, as amended, and any other applicable laws, rules and
regulations. The Corporation may condition the exercise of an Option granted in
accordance herewith upon receipt from the Eligible Person, or any other
purchaser thereof, of a written representation that at the time of such exercise
it is his or her then present intention to acquire the shares of Stock for
investment and not with a view to, or for sale in connection with, any
distribution thereof; except that, in the case of a legal representative of an
Eligible Person, "distribution" shall be defined to exclude distribution by will
or under the laws of descent and distribution. Prior to issuing any shares of
Stock pursuant to the exercise of an Option, the Corporation shall take such
steps as it deems necessary to satisfy any withholding tax obligations imposed
upon it by any level of government.
14. EXERCISE IN THE EVENT OF DEATH OF TERMINATION OR EMPLOYMENT.
(a) If an optionee shall die (i) while an employee of the Corporation
or a Subsidiary or (ii) within three months after termination of his employment
with the Corporation or a Subsidiary because of his disability, or retirement or
otherwise, his Options may be exercised, to the extent that the optionee shall
have been entitled to do so on the date of his death or such termination of
employment, by the person or persons to whom the optionee's right under the
Option pass by will or applicable law, or if no such person has such right, by
his executors or administrators, at any time, or from time to time. In the event
of termination of employment because of his death while an employee or because
of disability, his Options may be exercised not later than the expiration date
specified in Paragraph 5 or one year after the optionee's death, whichever date
is earlier, or in the event of termination of employment because of retirement
or otherwise, not later than the expiration date specified in Paragraph 5 hereof
or one year after the optionee's death, whichever date is earlier.
(b) If an optionee's employment by the Corporation or a Subsidiary
shall terminate because of his disability and such optionee has not died within
the following three months, he may exercise his Options, to the extent that he
shall have been entitled to do so at the date of the termination of his
employment, at any time, or from time to time, but not later than the expiration
date specified in Paragraph 5 hereof or one year after termination of
employment, whichever date is earlier.
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(c) If an optionee's employment shall terminate by reason of his
retirement in accordance with the terms of the Corporation's tax-qualified
retirement plans if any, or with the consent of the Board or the Stock Option
Committee or involuntarily other than by termination for cause, and such
optionee has not died within the following three months, he may exercise his
Option to the extent he shall have been entitled to do so at the date of the
termination of his employment, at any time and from to time, but not later than
the expiration date specified in Paragraph 5 hereof or thirty (30) days after
termination of employment, whichever date is earlier. For purposes of this
Paragraph 14, termination for cause shall mean; (i) termination of employment
for cause as defined in the optionee's Employment Agreement or (ii) in the
absence of an Employment Agreement for the optionee, termination of employment
by reason of the optionee's commission of a felony, fraud or willful misconduct
which has resulted, or is likely to result, in substantial and material damage
to the Corporation or a Subsidiary, all as the Board or the Stock Option
Committee in its sole discretion may determine.
(d) If an optionee's employment shall terminate for any reason other
than death, disability, retirement or otherwise, all right to exercise his
Option shall terminate at the date of such termination of employment absent
specific provisions in the optionee's Option Agreement.
15. CORPORATE EVENTS. In the event of the proposed dissolution or
liquidation of the Corporation, a proposed sale of all or substantially all of
the assets of the Corporation, a merger or tender for the Corporation's shares
of Common Stock the Board of Directors may declare that each Option granted
under this Plan shall terminate as of a date to be fixed by the Board of
Directors; provided that not less than thirty (30) days written notice of the
date so fixed shall be given to each Eligible Person holding an Option, and each
such Eligible Person shall have the right, during the period of thirty (30) days
preceding such termination, to exercise his Option as to all or any part of the
shares of Stock covered thereby, including shares of Stock as to which such
Option would not otherwise be exercisable. Nothing set forth herein shall extend
the term set for purchasing the shares of Stock set forth in the Option.
16. NO GUARANTEE OF EMPLOYMENT. Nothing in this Plan or in any writing
granting an Option will confer upon any Eligible Person the right to continue in
the employ of the Eligible Person's employer, or will interfere with or restrict
in any way the right of the Eligible Person's employer to discharge such
Eligible Person at any time for any reason whatsoever, with or without cause.
17. NONTRANSFERABILITY. No Option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution.
During the lifetime of the optionee, an Option shall be exercisable only by him.
18. NO RIGHTS AS STOCKHOLDER. No optionee shall have any rights as a
stockholder with respect to any shares subject to his Option prior to the date
of issuance to him of a certificate or certificates for such shares.
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19. AMENDMENT AND DISCONTINUANCE OF PLAN. The Corporation's Board of
Directors may amend, suspend or discontinue this Plan at any time. However, no
such action may prejudice the rights of any Eligible Person who has prior
thereto been granted Options under this Plan. Further, no amendment to this Plan
which has the effect of (a) increasing the aggregate number of shares of Stock
subject to this Plan (except for adjustments pursuant to Paragraph 3 herein), or
(b) changing the definition of Eligible Person under this Plan, may be effective
unless and until approval of the stockholders of the Corporation is obtained in
the same manner as approval of this Plan is required. The Corporation's Board of
Directors is authorized to seek the approval of the Corporation's stockholders
for any other changes it proposes to make to this Plan which require such
approval, however, the Board of Directors may modify the Plan, as necessary, to
effectuate the intent of the Plan as a result of any changes in the tax,
accounting or securities laws treatment of Eligible Persons and the Plan,
subject to the provisions set forth in this Paragraph 19, and Paragraphs 20 and
21.
20. COMPLIANCE WITH RULE 16B-3. This Plan is intended to comply in all
respects with Rule 16b-3 ("Rule 16b-3") promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), with respect to participants who are subject to Section 16 of
the Exchange Act, and any provision(s) herein that is/are contrary to Rule 16b-3
shall be deemed null and void to the extent appropriate by either the Stock
Option Committee or the Corporation's Board of Directors.
21. COMPLIANCE WITH CODE. The aspects of this Plan on ISOs is intended
to comply in every respect with Section 422 of the Code and the regulations
promulgated thereunder. In the event any future statute or regulation shall
modify the existing statute, the aspects of this Plan on ISOs shall be deemed to
incorporate by reference such modification. Any stock option agreement relating
to any Option granted pursuant to this Plan outstanding and unexercised at the
time any modifying statute or regulation becomes effective shall also be deemed
to incorporate by reference such modification and no notice of such modification
need be given to optionee.
If any provision of the aspects of this Plan on ISOs is determined to
disqualify the shares purchasable pursuant to the Options granted under this
Plan from the special tax treatment provided by Code Section 422, such provision
shall be deemed null and void and to incorporate by reference the modification
required to qualify the shares for said tax treatment.
22. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant and
exercise of Options thereunder, and the obligation of the Corporation to sell
and deliver Stock under such options, shall be subject to all applicable federal
and state laws, rules, and regulations and to such approvals by any government
or regulatory agency as may be required. The Corporation shall not be required
to issue or deliver any certificates for shares of Stock prior to (a) the
listing of such shares on any stock exchange or over-the-counter market on which
the Stock may then be listed and (b) the completion of any registration or
qualification of such shares under any federal or state law, or any ruling or
regulation of any government body which the Corporation shall, in its sole
discretion, determine to be necessary or advisable. Moreover, no Option may
7
<PAGE> 8
be exercised if its exercise or the receipt of Stock pursuant thereto would be
contrary to applicable laws.
23. DISPOSITION OF SHARES. In the event any share of Stock acquired by
an exercise of an Option granted under the Plan shall be transferable other than
by will or by the laws of descent and distribution within two years of the date
such Option was granted or within one year after the transfer of such Stock
pursuant to such exercise, the optionee shall give prompt written notice thereof
to the Corporation or the Stock Option Committee.
24. NAME. The Plan shall be known as the "Realm Production and
Entertainment, Inc. 1998 Stock Option Plan."
25. NOTICES. Any notice hereunder shall be in writing and sent by
certified mail, return receipt requested or by facsimile transmission (with
electronic or written confirmation of receipt) and when addressed to the
Corporation or the Committee shall be sent to it at its office, 4950 West
Prospect Road, Fort Lauderdale, Florida 33309, subject to the right of either
party to designate at any time hereafter in writing some other address,
facsimile number or person to whose attention such notice shall be sent.
26. HEADINGS. The headings preceding the text of Sections and
subparagraphs hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Plan nor shall they affect its meaning,
construction or effect.
27. EFFECTIVE DATE. This Plan, the Realm Production and Entertainment,
Inc. 1998 Stock Option Plan, was adopted by the Board of Directors of the
Corporation on January 8, 1998. The effective date of the Plan shall be the same
date.
Dated as of January 8, 1998.
REALM PRODUCTION AND ENTERTAINMENT, INC.
By:
------------------------------------
Name: Steven Adelstein
Its: President
8
<PAGE> 1
Exhibit 10.1
REALM PRODUCTION AND ENTERTAINMENT, INC.
EMPLOYMENT AGREEMENT
Employment Agreement, between Realm Production and Entertainment, Inc.,
(the "Company") and Steven Adelstein (the "Employee").
1. For good consideration, the Company employs the Employee on the
following terms and conditions.
2. Term of Employment: Subject to the provisions for termination set
forth below this agreement will begin on, January 1, 1996 and end December 31,
2000, unless sooner terminated.
3. Salary: The Company shall pay Employee a salary as listed below, for
the services of the Employee, payable at regular payroll periods.
a. Cash Remuneration
<TABLE>
<CAPTION>
TERM BASE ESTIMATED TOTAL
FRINGED BENEFITS
<S> <C> <C> <C>
Jan. 1 thru Dec. 31, 1996 $ 60,000 $ 12,000 $ 72,000
Jan. 1 thru Dec. 31, 1997 90,000 15,000 105,000
Jan. 1 thru Dec. 31, 1999 120,000 18,000 138,000
Jan. 1 thru Dec. 31, 1999 120,000 18,000 138,000
Jan. 1 thru Dec. 31, 2000 120,000 18,000 138,000
</TABLE>
NOTE: It is understood between Employee and Company, that to this date, and in
the future until such time as the Company is funded hereunder, compensation to
Employee for services rendered shall be as follows:
Services provided by Employee is under a "loan out arrangement" from AUW, Inc.,
a Florida Corporation, whereby AUW, Inc., or Assigns, has agreed with the
Company that compensation for Employee's services, up to $75,000, shall be
remitted directly to A.U.W., Inc., as full compensation for the "loan out" of
employee's services.
b. Additional Compensation
I. Warrants: The Employee and/or assigns (Tammi and/or Todd Adelstein)
shall receive warrants to acquire 300,000 Common Shares of the
Company at $1.25 per Common Share, expiring in whole or in part, on
Dec. 31, 2000. The Company agrees to loan a total of $375,000 at
9.6% interest only, payable semi-annually, and secured only by the
common shares exercised by this warrant. Said loan shall be for a
period of three (3) years from the date of exercise and receipt of
said loan, if applicable, at which time the principal amount shall
be due and payable.
II. Percentage of Gross Merchandising: The Employee and/or assigns
(Tammi and/or Todd Adelstein) shall receive 2.5% of Gross Receipts
from all merchandise Agreements between the Company and any outside
merchandisers. Said 2.5% shall be payable within 30 days of receipt
by the Company, and this 2.5% shall be
1
<PAGE> 2
II. Percentage of Gross Merchandising: The Employee and/or assigns
(Tammi and/or Todd Adelstein) shall receive 2.5% of Gross Receipts
from all merchandise Agreements between the Company and any outside
merchandisers. Said 2.5% shall be payable within 30 days of receipt
by the Company, and this 2.5% shall be applicable in perpetuity for
all Agreements executed during the term of Employees employment.
III. Fringe Benefits: The Employee shall receive health and
disability insurance, and auto allowance in the total maximum
amount as outlined the above schedule.
4. Duties and Position: The Company hires the Employee in the capacity of
President and Chief Executive Officer. The Employee's duties may be reasonably
modified at the Company's direction from time to time.
5. Employee to Devote Full Time to Company: The Employee will devote full
time, attention, and energies to the business of the Company and during this
employment, will not engage in any other business activity, regardless of
whether such activity is pursued for profit, gain, or other pecuniary advantage.
Employee is not prohibited from making personal investments in any other
businesses provided those investments do not require active involvement in the
operation of said companies.
6. Confidentiality of Proprietary Information: Employee agrees, during or
after the term of this employment, not to reveal confidential information, or
trade secrets to any person, firm, corporation, or entity. Should Employee
reveal or threaten to reveal this information, the Company shall be entitled to
an injunction restraining the Employee from disclosing same, or from rendering
any services to any entity to whom said information has been or is threatened to
be disclosed. The right to secure an injunction is not exclusive, and the
Company may pursue any other remedies it has against the Employee for a breach
or threatened breach of this condition, including the recovery of damages from
the Employee.
7. Reimbursement of Expenses: The Employee may incur reasonable expenses
for furthering the Company's business, including expenses for entertainment,
travel, and similar items. The Company shall reimburse Employees for all
business expenses after the Employee presents an itemized account of
expenditures, pursuant to Company policy. The Company agrees to advance and/or
reimburse Employee all costs relative to legal expense relative to Company
business or litigation.
8. Vacation: The Employee shall be entitled to a yearly vacation of four
(4) weeks at full pay.
9. Disability: If Employee cannot perform the duties because of illness or
incapacity for a period of more than eighteen (18) weeks, the compensation
otherwise due during said illness or incapacity will be reduced by fifty (50%)
percent. The Employee's full compensation will be reinstated upon return to
work. However, if the Employee is absent from work for any reason for a
continuous period of over twelve (12) months, the Company may terminate the
Employee's employment, and the Company's obligations under this agreement will
cease on that date.
10. Termination of Agreement: With cause, the Company may terminate this
agreement at any time upon ninety (90) days' written notice to the Employee. If
the Company requests, the Employee will continue to perform his/her duties and
be paid his/her regular salary up to the date of termination.
2
<PAGE> 3
11. Death Benefit: Should Employee die during the term of employment, the
Company shall pay to Employee's estate any compensation due through the end of
the month in which death occurred.
12. Restriction on Post Employment Compensation: For a period of one (1)
year after the end of employment, the Employee shall not control, consult to or
be employed by any business similar to that conducted by the Company, either by
soliciting any of its accounts or by operating within Employer's general trading
area.
13. Assistance in Litigation: Employee shall upon reasonable notice,
furnish such information and proper assistance to the Company as it may
reasonably require in connection with any litigation in which it is, or may
become, a party either during or after employment.
14. Effect of Prior Agreements: This agreement supersedes any prior
agreement between the Company or any predecessor of the Company and the
Employee, except that this agreement shall not affect or operate to reduce any
benefit or compensation inuring to the Employee of a kind elsewhere provided and
not expressly provided in this agreement.
15. Settlement by Arbitration: Any claim or controversy that arises out of
or relates to this agreement, or the breach of it, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. Judgment upon the award rendered may be entered in any court with
jurisdiction.
16. Limited Effect of Waiver by Company. Should Company waive breach of
any provision of this agreement by the Employee, that waiver will not operate or
be construed as a waiver of further breach by the Employee.
17. Severability: If, for any reason, any provision of this agreement is
held invalid, all other provisions of this agreement shall remain in effect. If
this agreement is held invalid or cannot be enforced, then to the full extent
permitted by law any prior agreement between the Company (or any predecessor
thereof) and the Employee shall be deemed reinstated as if this agreement had
not been executed.
18. Assumption of Agreement by Company's Successors and Assignees: The
Company's rights and obligations under this agreement will inure to the benefit
and be binding upon the Company's successors and assignees.
19. Oral Modifications Not Binding: This instrument is the entire
agreement of the Company and the Employee. Oral changes shall have no effect. It
may be altered only by a written agreement signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
Signed this day of January 15, 1996
Realm Production and Entertainment, Inc.
/s/ /s/
- ----------------------------- -----------------------------
By: President Employee
3
<PAGE> 1
Exhibit 10.2
REALM PRODUCTION AND ENTERTAINMENT, INC.
CONFIDENTIAL EMPLOYMENT AGREEMENT
Employment Agreement, dated August 1, 1997, between Realm Production and
Entertainment, Inc., (the "Company") and Gus A. Guilbert, Jr. (the "Employee").
1. For good consideration, the Company employs the Employee on the
following terms and conditions.
2. Term of Employment: The term of this agreement shall be for a 36 month
period commencing on the date hereof. The Company may terminate this agreement
at any time upon Seven (7) days written notice.
3. Salary: The Company shall pay Employee an annual salary averaging
Thirty Six Thousand Dollars ($36,000) per year for the term of employment (i.e.
$30,000 for 1st year; $36,000 for 2nd year and $42,000 for 3rd year), for the
services of the Employee, payable at regular payroll periods.
4. Duties and Position: The Company hires the Employee in the capacity of
Executive Vice President and advisor regarding the Company's technical affairs.
The Employee's duties may be reasonably modified at the Company's discretion
from time to time.
5. Employee to Devote Full Time to Company: The Employee will devote full
time, attention, and energies to the business of the Company.
6. Confidentiality of Proprietary Information: Employee agrees, during the
term of this employment, not to reveal confidential information, or trade
secrets to any person, firm, corporation, or entity.
7. Reimbursement of Expenses: The Employee may incur reasonable expenses
for furthering the Company's business, including expenses for entertainment,
travel, and similar items. The Company shall reimburse Employee for all business
expenses pursuant to Company policy.
8. Non-Accountable Expenses: The Employee shall be entitled to a
non-accountable expense reimbursement of One Hundred Dollars ($100) per month to
cover Company use of vehicle, cellular telephone, beeper, etc... owned by
Employee.
9. Other Compensations: The Company hereby issues (see attached Agreement)
warrants for 25,000 Common Shares of the Company at $2.00 per Common Share
pursuant to the terms and conditions of the executed warrant.
10. Miscellaneous: This agreement supersedes any prior agreement between
the Company and the Employee. This Agreement cannot be modified, nor can any of
its provisions be waived, except by woven agreement signed by all parties. The
State of Florida shall govern this Agreement. In the event of any dispute as to
the terms of this Agreement, the prevailing party in any litigation shall be
entitled to reasonable attorney's fees.
Accepted and Agreed to on this day August 1, 1997
Realm Production and Entertainment, Inc. Gus A. Guilbert, Jr.
Steven Adelstein Gus A. Guilbert Jr.
- ----------------------------------- -----------------------------------
Steven Adelstein - President Employee
<PAGE> 1
Exhibit 10.3
AGREEMENT As of August 4, 1997
The Animation Factory, Inc.
3100 N. 29th Court
Hollywood, FL 33020
RE: TWO(2) INTELLECTUAL PROPERTIES TENTATIVELY KNOWN AS "ATOMIC ANTS & GOBLINS"
Gentlemen:
Set forth below are the terms and conditions (the "Agreement") pursuant to which
REALM PRODUCTION AND ENTERTAINMENT, INC. ("Realm") shall acquire from THE
ANIMATION FACTORY, INC. ("Producer") the exclusive distribution of all rights
and a Fifty Percent (50%) equity participation to the tentatively entitled
computer animation concepts known as "Atomic Ants & Goblins" (the "Concepts") to
be produced as television series (the "Series").
THIS AGREEMENT SUPERCEDES THE AGREEMENT BETWEEN THE PARTIES DATED DECEMBER 4,
1996, AND MAKES SAID AGREEMENT NULL AND VOID.
1. Upon execution of the Agreement, and completion of the below listed
items, and subject only to the items listed below, this Agreement
shall be in full force and effect for perpetuity,
a. "ATOMIC ANTS": The parties acknowledge that Realm has paid to
"Producer", $13,000, and agrees to fund an additional $7,000 to
producer to upgrade and complete the existing trailer (for a total of
$20,000).
b. "GOBLINS": The parties acknowledge that Realm will pay to
"Producer", the sum of $10,000, and agrees to fund an additional
$15,000 to producer for the completion of a test trailer (for a total
of $25,000). Said $25,000 is to be spent as follows:
Producer $10,000
6 Digitized Characters $5,000
Robotic Puppet (1) $5,000
Studio Shoot $2,000
Marketing costs $3,000
Total $25,000
2. (a) In the event Realm arranges production financing necessary to produce
the television series based upon budgets to be mutually agreed upon between the
parties to create, then said series shall go into production for a minimum of 13
episodes.
(b) In the event Realm and Producer comply with Section 2a above, the
Producer agrees to pay to Realm the following fees and compensations:
(1) From gross revenues, Realm shall be entitled to receive its
distribution fee of Twenty Two and One Half Percent (22.5%) from all sources,
for each series, (which shall not include any sub-distributors fees); recoup any
and all distribution advances and related out of pocket expenses (including,
without limitation, all advertising and marketing expenses). If and only if
Realm uses the
Page 1
<PAGE> 2
services of a sub-distributor, then the Realm's distribution fee shall be
reduced from Twenty Two and One Half Percent (22.5%) to Ten Percent (10%) of
gross revenues from all sources, plus related out of pocket expenses
(including, without limitation, all advertising and marketing expenses).
(2) Realm shall be entitled to receive a production fee of Five (5%)
percent of the total turnkey production costs of each episode
for coordinating production services.
2. (a) In consideration for Realm's investment of time and marketing advances
with reference to the two above named intellectual properties, Realm shall
receive exclusive distribution rights for the universe in all media and
merchandising (including but not limited to broadcast, video, music,
publishing, merchandising, CD-ROM, etc...) in perpetuity of the Concepts
("ATOMIC ANTS & GOBLINS") plus a Fifty Percent (50%) of equity
participation pursuant to Section 5(f).
(b) It is acknowledged and agreed between the parties that "ATOMIC ANTS",
and "GOBLINS" are two separate intellectual properties, and are to be
treated as separate and distinct under this Agreement, WITH NO CROSS
COLLATERALIZATION THEREOF. Each property shall open and maintain it's own
set of books, and all costs relative to the production, distribution and
marketing of each shall be kept on a separate basis.
4. The Producer warrants they are the creators owners of 100% of all rights,
title and interest to the "ATOMIC ANTS & GOBLINS" Concepts.
5. Cash flow from all gross revenues, in order of priority are as follows:
(a) Third Party distribution and merchandising fees and costs
(sub-distribution fee) other than Realm's distribution fees and costs.
(b) Production costs, and/or distribution or merchandising advances.
(c) Distribution and/or merchandising fees and costs (inclusive of
sub-distributor fees or barter fees relating to the sale of advertising
time, which shall be deducted from the gross revenues if applicable.)
(d) Scale residuals actually paid by Realm to Third parties on account of
the exploitation of the Concept.
(e) The Producer shall receive a Two (2%) percent unaccountable fee of
the total turnkey production costs of each episode for production
services. Said 2% is in addition to Producers fee as will be delineated in
the agreed upon production budgets.
(f) With respect to the balance of such revenues, Producer shall retain
Fifty Percent (50%) and Realm shall retain the remaining Fifty Percent
(50%).
6. (a) Producer and Realm shall have mutual creative control with respect to
the Concepts: In the event of a dispute, Realm's and/or assign's decision
shall be final provided the creative dispute is at the request of a third
party broadcaster and/or merchandiser, and the decision does not
materially affect the production budget.
(b) With regard to game format only, Producer shall have right of first
refusal to produce, or appoint an independent third party production
company to produce, the CD Rom, cartridge based or any multi-media
application of "ATOMIC ANT" and/or "GOBLINS", based upon competitive
pricing.
Page 2
<PAGE> 3
7. If Producer notifies Realm in writing, and provides Three (3) choices of
Florida licensed practicing attorneys to provide escrow agent services,
specifically pertaining to all gross revenues of the Concepts after Third party
distribution and marketing costs, Realm shall choose One (1) of said Three (3)
attorneys for a period of One (1) annual year to serve as escrow agent. This
process shall be repeated annually and any such cost for the escrow agent
services shall be shared equally between Realm and Producer.
8. Producer agrees that, without Realm's prior written consent, Producer
shall not disclose, permit or authorize the disclosure (including by Producer's
representatives), of any term or condition of the Agreement to any Third party
(other than officers, directors, and employees of the parties hereto).
9. Each of the parties shall execute and deliver any further documents or
instruments the other may reasonably request to carry out the intent of this
Agreement.
10. A formal Agreement, including mutually agreed upon production budgets,
will be prepared and executed in due course covering the above terms and
conditions and such other incidental and ancillary provisions as are customary
and usual with Realm in such Agreements (including provisions relating to
warrantees, indemnities, no equitable relief, FCC Section 507, and publicity).
This formal Agreement will be promptly prepared on a good faith indication
that Realm can arrange financing in accordance with Section 2(a) above.
However, until such time as such more formal Agreement is executed, the
Agreement, this executed letter Agreement shall constitute a fully binding
Agreement between the parties.
Sincerely,
REALM PRODUCTION AND ENTERTAINMENT, INC.
By: Steven Adelstein
-----------------------------------
Steven Adelstein
President
AGREED TO AND ACCEPTED:
THE ANIMATION FACTORY, INC.
By:
-----------------------------------
Its: President
-----------------------------------
FED ID#: 65-0579082
-------------------------------
Date of Execution: 8/4/97
--------------------
Page 3
<PAGE> 4
AMENDMENT "A"
SEPTEMBER 16, 1997
Set forth below are the modified terms and conditions to the "Agreement As of
August 4, 1997" as they have been mutually agreed upon herein.
Regarding SECTION 1A "ATOMIC ANTS" - "...additional $7,000 to product to
upgrade and complete the existing trailer ..." have been waived by both parties
until such time as mutually agreed.
AGREED TO AND ACCEPTED BY:
REALM PRODUCTION AND ENTERTAINMENT, INC.
By: /s/ Steven Adelstein
-----------------------------------
Steven Adelstein
President
THE ANIMATION FACTORY, INC.
By: /s/ Steven Adelstein
---------------------------------
Its: President
---------------------------------
Date of Execution: 9/16/97
------------------
<PAGE> 1
Exhibit 10.4
AGREEMENT
This agreement dated this 15th day of May, 1995 between REALM PRODUCTION and
ENTERTAINMENT, INC., a Florida Corporation ("Producer" and/or "REI") and JOHN
DRIVER ("Owner"), with respect to Producer's purchase of the exclusive rights
in and to owner's creation tentatively entitled YAHOO BUGABOOS (hereinafter
referred to as the "PROPERTY")
Owner hereby agrees to provide to Producer all rights, title and interest to
the Property and other services, as set forth herein, and further agrees to
accept the compensation set forth herein as full consideration for all of the
rights and services being transferred or provided pursuant to this Agreement.
In consideration of the mutual covenants and agreements herein contained, Owner
and Producer hereby agree as follows:
1. RIGHTS
A. In consideration of Producer's payment to Owner of Five Thousand
($5000.00) Dollars, (which such payment shall be due and payable on or before
June 10, 1995), Owner shall transfer all rights, title and interest to the
Property for perpetuity, forever and throughout the universe, and in any and
all languages, including but not limited to, all ancillary and allied rights to
merchandising, music, scripts, stage, music publication, characters, sequels,
motion picture, radio and/or television broadcast,
1
<PAGE> 2
video, book publishing, CD-ROM, or other electronic media rights, distribution,
marketing, licensing, copyrights and trademarks.
B. Nothing herein contained shall, however, be deemed to prohibit
Producer from (i) concurrently using Owner's name or biography in connection
with any personal or business activity to promote the Property; or (ii)
appearing on talk, magazine or news shows to discuss the Property, and/or giving
interviews in any television or print media.
2. OWNER'S SERVICES
A. PILOT EPISODES. Owner agrees to consult with, and lend his aid and
knowledge to Producer and it's successors, affiliates, licensees and assigns if
requested, and to act in the capacity of an Independent Contractor For Hire to
fully complete the pilot episodes (herein defined as Three (3) half hour
episodes, consisting of approximately 22 minutes each, in English of the
Property) including but not limited to consulting, directing, writing the
scripts, lyrics and bible, supervising editing and other pertinent services
relating to same, for consideration of Producer's payment to Owner in the
amount of Nine Thousand ($9,000) Dollars, (which such payment shall be due and
payable Five Thousand ($5000) Dollars at commencement of principal photography,
and the full balance of Four Thousand ($4000) Dollars, sixty (60) days
thereafter. In addition to the Nine Thousand ($9,000) Dollar fee, Owner shall
receive expenses in the amount of Two Thousand ($2000) Dollars which is all
inclusive of, but not limited to, travel, hotel and living, food,
transportation, etc., payable at commencement of principal photography.
2
<PAGE> 3
B. THE SERIES. If the Producer, at his sole discretion, decides to
expand production beyond the Pilot Episodes into a Series (defined as a total
of thirteen (13) episodes including the Pilot), then in that event Owner shall
receive the following compensation:
I. Three and one half (3.5%) percent of ADJUSTED GROSS MERCHANDISING
ROYALTY revenues (defined as the percentage of Merchandise License
Royalty of Gross Merchandise Revenues (the funds actual collected for
both domestic and international markets), less only merchandising
agency fees and third party marketing costs (with said third party
marketing costs not to exceed forty (40%) percent of the funds actually
collected). Said funds, as collected, shall be placed into an
institutional escrow account acceptable to Owner, whose approval shall
not be unreasonably withheld. Owner shall receive payments from the
escrow account within 30 days of receipt of funds therein.
FOR EXAMPLE PURPOSES: IF ONE (1) YEAR ANNUAL MERCHANDISING
REVENUES ARE:
Gross wholesale merchandise revenues $100,000,000
Merchandising License royalty @ 8% $ 8,000,000
3rd party Fees and Costs @ 40% $ 3,200,000
ADJUSTED GROSS MERCHANDISING ROYALTY $ 4,800,000
Owner's 3.5% of adjusted gross $ 168,000
For purposes of the example above, Gross wholesale merchandise revenues are
defined as "all revenues generated by the Property in all medias of the
universe, except for video and broadcast (free and paid)" until such time as
REI has received two hundred (200%) percent of the production budget per
episode (including hard and soft costs actually expended, accrued and
deferred). Once REI receives funds equal to two hundred (200%) percent of the
production budget, then, at that time, Owner shall be
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<PAGE> 4
entitled to collect the three and a half (3.5%) percent of ADJUSTED GROSS
MERCHANDISE ROYALTY on video and broadcast revenues, as actually collected by
REI.
II. Compensation for services. The Owner shall have the option to perform
services as listed in 2A above or the schedule below, for the initial twenty
six (26) episodes, and the continuing option for these same services for a
minimum of seven (7) episodes of every subsequent thirteen (13) episodes of the
series for the consideration as listed below. The production and shooting
schedules are to be mutually agreed upon by Owner and REI, subject to delivery
requirements by the Merchandising Agent and Broadcasters.
OWNER'S COMPENSATION PER EPISODE
<TABLE>
<CAPTION>
Episodes
(beyond the Pilot Direct/Head Writer Writing Scripts and
Episodes) Other Services Lyrics Only Total
- ----------------- ------------------ ------------------- ------
<S> <C> <C> <C>
1-13 $2,500 $2,000 $4,500
14-26 $2,750 $2,250 $5,000
27-39 $3,000 $2,500 $5,500
40-52 $3,250 $2,750 $6,000
53 and thereafter $4,000 $3,000 $7,000
</TABLE>
III. If Owner decides to perform services (as outlined in 2A and 2B (II)
above) Owner shall receive additional compensation at a rate of Seven Hundred
and Fifty ($750) Dollars per week, in the form of
4
<PAGE> 5
reimbursement of all expenses while Owner is displaced from his primary
residence, and working full time on the Series. Said expense reimbursements
include but are not limited to, travel, hotel and living, food, ground
transportation, etc. It is agreed that Owner shall also receive the sum of
Three Hundred ($300) Dollars for air fares upon completion of each six (6)
episodes for which Owner performs the delineated services.
IV. If REI decides to produce any long form versions of the Property, and for
any reason Owner is not hired to Direct same, then in that event, Owner shall
receive two (2%) percent of any and all long form production budgets (hard costs
only), as total compensation for consulting services to be provided by Owner as
an Independent Contractor for hire.
3. REVERSION
If Producer does not produce a minimum of thirteen (13) episodes, including the
Pilot episodes, within thirty (30) months hereof, then in that event only, all
rights, title and interest to the Property shall revert to Owner, subject to
all written and executed agreements then in force which are the subject of the
Property. Owner shall provide ninety (90) days written notice of intent
pursuant to exercising the rights contained within this clause.
4. REPRESENTATIONS
Both Owner and Producer hereby represents and warrant that they have the full
right and authority to enter into this Agreement; and that the consent of no
other person or entity is necessary to fully perform under this Agreement.
Further, Owner specifically represents that he is the sole owner of the
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<PAGE> 6
Property, and will not cause, allow or sanction any use of the Property, or any
part thereof to anyone other than Producer and its successors, affiliates,
licensees or assigns, or make any agreement with any other person, firm or
entity which is in conflict or otherwise inconsistent with this Agreement. At
Producer's request, Owner hereby agrees at all times to defend, indemnify and
hold harmless the Producer and its successors, affiliates, licensees and
assigns from and against any and all claims, liabilities, damages, losses and
expenses which may arise from any breach or alleged breach of any
representation, warranty or agreement made by Owner hereunder. Owner further
agrees to use his best efforts to assist Producer in executing all reasonable
documentation pursuant to Producer's rights hereunder. REI similarly
indemnifies Owner for any claim arising out of the development, production, and
distribution of the Pilot and Series of the Property, provided such claim does
not involve a breach by Owner.
5. RIGHT TO EQUITABLE RELIEF
Owner hereby acknowledges that the rights, title and interest to the Property
hereunder are of a special, unique, unusual, extraordinary and intellectual
character, which gives them a peculiar value, for the loss of which Producer
can not be reasonably or adequately compensated in damages, and a breach by
Owner of the provisions of this Agreement will cause Producer irreparable
injury and damage. Therefore Owner expressly agrees that Producer shall be
entitled to seek injunctive and other equitable relief to prevent a breach of
this Agreement or any part hereof by Owner, and to secure its enforcement.
Resort to such equitable relief, however, shall not be construed to be a waiver
of any other rights or remedies which Producer may have.
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6. ASSIGNMENT
Producer shall have the right at any time to assign or otherwise transfer this
Agreement, in whole or in part, or any or all of Producer's rights or
obligations hereunder, to any third party.
7. APPLICABLE LAW
This Agreement is made and entered into in the State of Florida. In the event
of a dispute concerning the subject matter of this Agreement, Florida law shall
be applicable with respect thereto.
8. CREATIVE CONTROL
Both Owner and Producer shall have mutual creative control of the Property
subject to the production episode budget, not to exceed Sixty Five Thousand
($65,000) Dollars per episode, which includes any and all hard and soft costs.
In the event that there is a disagreement between Owner and Producer of a
creative decision, both Owner and Producer hereby agree to appoint Mr. John
Gentile, of the firm Abrams/Gentile Entertainment, Inc., with full authority
given to Mr. Gentile to make the final and binding decision, subject to budget
restrictions. If for any reason Mr. Gentile is unable to perform these
services, then in that event Owner and Producer shall mutually approve a
substitute independent third party, and said approval shall not be unreasonably
withheld.
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9. CREDITS
Producer shall accord Owner (unless Owner elects to decline such credit ) a
screen credit to read "Created by John Driver", and a screen credit for any and
all services rendered by Owner of the Pilot and each episode of the series,
which is normal and customary of industry standards for similar Properties. No
casual or inadvertent failure of the Producer to comply with this credit
provision shall constitute a breach of this Agreement by Producer. Both Owner
and Producer acknowledge that screen credits must be approved by outside third
parties, including but not limited to, broadcasters, merchandisers, etc., and
that all such credits are subject to their changes and standards.
10. PLACE OF BUSINESS
The principal place of business shall be solely determined by the Producer.
11. TERM
The term of this Agreement shall commence upon execution of this Agreement, and
shall continue for perpetuity unless sooner terminated in accordance with the
following:
a) The duration of any and all trademarks, copyrights of the Property to be
held and owned by REI.
b) So long as REI shall be entitled to compensation of the Property for any
agreements and/or licenses to third parties.
c) Mutual agreement to terminate this Agreement signed in writing by the
parties hereto.
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12. TITLE, TRADEMARKS AND COPYRIGHTS
The copyright and trademarks (past, present and future) and all rights
thereunder, shall be held, registered and extended in the name of REI, of it's
assigns.
13. CONTROL OF THE ASSETS
Owner hereby relinquishes all of his rights and title to the Property for the
Universe, and agrees to execute all reasonable documentation (including short
form assignment of copyright) requested by REI, to assure proper assignment of
said title and interest to REI. If Owner, for any reason whatsoever, fails to
sign said documents within five (5) days of request, Owner hereby appoints REI
his irrevocable attorney-in-fact to do any necessary act with regard to
implementation of the copyright and any other documentation pursuant to this
Agreement.
14. NO OBLIGATION TO PRODUCE
It is understood and agreed by Owner that REI shall have no obligation to
produce, complete, release, distribute, advertise or exploit the Property, and
Owner specifically releases REI from any liability for any loss or damage
either or both parties may suffer by reason of REI's failure to produce,
complete, release, distribute, advertise or exploit the Property. Nothing
contained in this Agreement shall constitute a partnership. Joint venture by
the Owner or REI hereto, or constitute either party an agent of the other.
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15. DISABILITY
In the event Owner is disabled REI shall have the right to suspend compensation
for Owner's services except for the three and one half (3.5%) percent
compensation as outlined in paragraph BI.
16. MISCELLANEOUS:
A. All such notices which any party is required to may desire to serve
hereunder shall be in writing and shall be served by personal delivery to the
other parties or by prepaid registered or certified mail addressed to the
parties at their respective addresses as set forth in the recitals hereof, or
at such other address as the parties may from time to time designate in writing
to the other. Notices by mail shall be deemed received three (3) days after
deposit in the United States Mail.
B. This agreement may be executed in Counterparts with each being deemed
a whole and complete copy.
C. Both REI and Owner agree that all payments to Owner hereunder shall
be paid directly to the Fifi Oscard Agency, Inc. at 24 W. 40th St., NY, NY.
10018, attn: Kevin McShane.
17. ARBITRATION: In the event of any dispute among the parties to enforce the
terms of this Agreement, (except as to paragraph 5) such dispute shall be
exclusively resolved under the auspices of the American Arbitration Association
in Miami, Florida. In all events, the prevailing party shall be entitled to
recover from the non-prevailing party all costs of attorneys' fees and other
costs of arbitration.
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18. COMPLETE AGREEMENT: This Agreement shall contain the entire and Complete
Agreement among the parties and shall not be modified except in writing, signed
by all parties hereto.
AGREED:
REALM PRODUCTION
AND ENTERAINMENT, INC.
/S/ Steven Adelstein /s/ John Driver
- ------------------------------- ---------------------------
STEVEN ADELSTEIN, PRESIDENT JOHN DRIVER, "OWNER"
"REI AND/OR PRODUCER"
11
<PAGE> 1
Exhibit 10.5
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made this 1 day of October, 1998, by and between
REALM PRODUCTION & ENTERTAINMENT, INC., hereinafter referred to as, "PURCHASER"
and NORMAN TITCOMB and BRT VIDEO, INC., hereinafter referred to as, "SELLER" and
"CORPORATION", respectively.
WITNESSETH:
WHEREAS, Seller is the owner of Five Thousand (5,000) shares of the
outstanding stock of that certain Florida Corporation known as, BRT VIDEO, INC.,
hereinafter referred to as, "CORPORATION", and;
WHEREAS, SELLER is willing to sell and PURCHASER is willing to
purchase EIGHTY PERCENT (80%) of the outstanding shares or a total of FOUR
THOUSAND SHARES (4,000) of the stock of the CORPORATION in exchange for FIFTY
THOUSAND (50,000) SHARES of the stock in REALM, a publicly traded corporation,
NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and
other good and valuable consideration, the mutual promises herein contained and
other good and valuable consideration, the parties hereto agree as follows:
1. Seller agrees to sell to Purchaser, and Purchaser agrees to
purchase from Seller, for the sum of FIFTY Thousand shares in REALM, Eight
Hundred (800) Shares of the stock of BRT VIDEO, INC., said exchange of stock to
be consummated at closing.
2. REALM shall transfer evidence of FIFTY THOUSAND (50,000) shares of
stock to NORMAN TITCOMB simultaneously with the issuance of a stock certificate
for FOUR THOUSAND (4,000) shares of stock in BRT VIDEO, INC. to purchaser.
3. The Corporation or Seller, at the request of Purchaser, shall
execute and deliver to Purchaser all such further assignments, endorsements, and
other documents as Purchaser may reasonably request in order to perfect the sale
of said stock to Purchaser.
4. The Corporation and Seller represent and warrant as follows:
A. That the business being purchased herein is operated in
accordance with the Laws of the State of Florida; and that all rules and
regulations pertaining to the business assets, have been complied with.
B. The corporation has a total of Five Thousand (5,000)
authorized capital stock, of which Five Thousand (5,000) are issued and
outstanding, the ownership of which is as follows:
NORMAN TITCOMB -- 5,000 Shares
C. That the CORPORATION is a Florida Corporation, active and in
good standing through and including the date hereof.
D. That Seller has good title to the stock as described herein,
free and clear of all encumbrances, liens and claims whatsoever, with full right
and authority to sell and deliver the same pursuant to the terms of this
Agreement, and upon delivery and payment for the stock, as herein provided,
Purchaser and/or his assigns, will receive good and marketable title to the
stock, free and clear of all liens and claims whatsoever.
E. The warranties and representations as set out herein, shall
survive the closing.
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5. Both REALM PRODUCTION & ENTERTAINMENT, INC. and BRT VIDEO, INC.
acknowledge the only fees specifically related to this transaction are as
follows:
A. JACK DRURY $15,000 and 1,500 Restricted Common Shares of REALM.
B. MIKE GREENE 2,000 Restricted Common Shares of REALM.
C. JOHN W. CASE, 1,000 Restricted Common Shares of REALM.
6. It is agreed between the parties that this Agreement may be altered or
modified only by an Agreement in writing, signed by all parties.
7. This Agreement shall be binding and shall inure to the benefit of the
parties and their equal representatives, successors and assigns.
8. This Agreement may only be consigned with the prior written consent of
both parties; such consent not to be unreasonably withheld and shall be binding
upon any and all such Assignees.
PLEASE NOTE: ALL STOCK ISSUED BY REALM, INCLUDING THE 50,000 COMMON SHARES
ISSUED TO NORMAN TITCOMB, HAS A RESTRICTIVE LEGEND AS FOLLOWS AND CANNOT BE
SOLD, TRANSFERRED OR HYPOTHECATED UNTIL MARCH 31, 2001:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND SAID SHARES CANNOT BE SOLD,
TRANSFERRED, DISPOSED OF, PLEDGED OR HYPOTHECATED IN ANY MANNER WHATSOEVER
UNLESS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR, IF IN
THE OPINION OF COMPANY COUNSEL, AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS IS, IN FACT, APPLICABLE TO SAID SHARES."
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals the day and year first above written.
WITNESSES:
/s/ /s/
- ----------------------------- ----------------------------------------
REALM PRODUCTION & ENTERTAINMENT, INC.,
Purchaser
/s/
- -----------------------------
As to Purchaser
/s/ /s/ NORMAN TITCOMB
- ----------------------------- -----------------------------------------
NORMAN TITCOMB, Seller
/s/
- -----------------------------
As to Seller
/s/ BRT VIDEO, INC.
- ----------------------------- a Florida Corporation
/s/ By: /s/ NORMAN TITCOMB
- ----------------------------- -------------------------------------
As to Corporation Norman Titcomb, President
[LAUREN L. GINAND]
[SEAL]
[NOTARY PUBLIC STATE OF FLORIDA]
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Exhibit 10.6
ASSET PURCHASE AGREEMENT
This Agreement is entered into this 14th day of August, 1997, by and
between Madison Sports and Entertainment, Inc. ("Madison") and VidKid
Distribution, Inc. ("VidKid").
RECITALS:
A. Madison is the owner of the master prints and rights to 130 color half
hour episodes of the NEW HOWDY DOODY SHOW which were produced in the 1970's
under a license from the National Broadcasting Company to Robert E. Smith (the
"Shows").
B. Madison desires to sell, transfer, and assign its rights to the Shows to
VidKid and VidKid wishes to acquire and exploit the rights to the Shows.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
1. Purchase and Sale of Assets
1.1 Description of Assets. Madison shall sell, assign, transfer, convey,
and deliver to VidKid, and VidKid shall purchase and accept from Madison, all
of its tangible and intangible assets relating to the Shows including without
limitation:
1.1.1 Any and all intellectual property rights and interests which
are owned by Madison relating to the Shows.
1.1.2 Any and all rights to the master prints to the Shows.
1.1.3 Any and all rights to merchandizing of the Howdy Doody
character and other characters related to the Shows ("Characters").
1.1.4 Any and all license agreements, merchandizing agreements or
other contract rights owned by Madison relating to the Shows or the Characters.
1.1.5 All copyrights, trademarks, trade names, and service marks
owned by Madison or for which Madison has a license which are used or useful or
intended to be used in relation to the Shows.
1.1.6 The asset being purchased shall be subject to no encumbrances,
charges, adverse claims, liens, hypothecations, security interests, or
liabilities whatsoever.
2. Purchase Price
2.1 Purchase Price. VidKid shall within 72 hours of receipt
<PAGE> 2
of tapes, deliver the sum of $50,000 to Madison in the form of a refundable
deposit ("Refundable Deposit") pursuant to Section 2.4. Repayment of the
Refundable Deposit in the event the transaction contemplated by this Agreement
is not closed shall be evidenced by the non-interest bearing Promissory Note
attached as an Exhibit to this Agreement which shall be signed by Madison and
delivered to VidKid in exchange for the Refundable Deposit. In addition, as
security for the Promissory Note, Madison grants to VidKid a first priority
security interest in the master prints of the Shows and the other items
described in Article I. At closing, VidKid shall make an additional payment of
$100,000 to Madison.
2.2 Royalty Payment. In addition to the sums payable under Section 2.1,
VidKid shall pay to Madison 40% of the "net positive cash flow" from all sources
relating to the Shows or to licensing and merchandising relating to the
Characters until Madison has received $325,000 in addition to the payments under
Section 2.1. For purposes of this provision, the term "net positive cash flow"
shall be defined as gross receipts less costs of production, marketing,
distribution, third-party costs, interest (at no more than 2 1/2% over Chase
Manhattan Bank prime), insurance, advertising, legal, accounting and
administration costs. VidKid will provide annual audited financial statements to
Madison within 120 days of the end of each calendar year until the Royalty or
$325,000 (as adjusted pursuant to 2.3) is paid in full.
2.3 Adjustments to Royalty Payment. If any of the master tapes is
unusable, there shall be a reduction in the Royalty Payment provided under
Section 2.2. The reduction shall be equal to $3,654 (1/30th of the total
consideration of $475,000) for each unusable tape. The determination of whether
a tape is usable shall be made by VidKid or its agents. If a tape is unusable,
it shall be returned to Madison upon demand.
2.4 Initial Deliveries. Upon execution of this Agreement, delivery of the
executed Promissory Note to VidKid, and within 72 hours of delivery of the
master tapes for the Shows to Herb Brady, Vid-Film Services, Inc., 1631
Gardena Avenue, Glendale, CA 91204, VidKid will deliver the Refundable Deposit
to Madison.
3. Madison's Representations and Warranties
Madison represents and warrants to VidKid as follows:
3.1 Authorization. The execution, delivery, and performance of this
Agreement and the other documents to be executed and delivered pursuant to this
Agreement constitute the valid and binding obligation of Madison, enforceable
in accordance with their terms.
3.2 Other Contracts. Madison is not a party to any other contract or
agreement relating to any transfer or assignment of its
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ownership of the Shows or use of rights relating to the Characters.
3.3 No Litigation or Claims. There is no arbitration, litigation,
proceeding, or claim of any kind with respect to the Shows, the Characters or
Madison threatened, pending or being prosecuted in any court or before any
department, commission, board, bureau, agency, or other governmental
instrumentality and, to the best of Madison's knowledge, no such action, suit,
arbitration, litigation, proceeding, or claim is threatened or being asserted.
3.4 Title to Assets. Madison now has, and on the Closing Date will have,
good, marketable, and indefeasible ownership, right, title, and interest in and
to the Shows, the rights to the Characters and all other rights and assets
being transferred, free and clear of any security interest, third party rights,
lien, encumbrance, charge, liability, condition, or adverse claim whatsoever.
3.5 No Infringement. To the best of Madison's knowledge, neither the
production, distribution or other exploitation of the Shows will violate or
infringe upon any trademark or copyright rights of any other party.
3.6 No Misrepresentations. None of the representations and warranties of
Madison set forth in this Agreement (notwithstanding any investigation thereof
by VidKid) contains any untrue statement of a material fact or omits the
statement of any material fact necessary to render the same not misleading.
3.7 Commissions. Madison has not authorized any person to act in such a
manner as to give rise to any claim against VidKid for a brokerage commission,
finder's fee, or similar payment as a result of the transactions contemplated
under this Agreement.
4. Madison's Covenants
4.1 Assistance. From the date of this Agreement until the Closing Date,
Madison will assist VidKid, and VidKid's counsel, accountants, consultants, and
other agents and representatives, in its due diligence.
4.2 Consents. Madison shall use its best efforts to assist VidKid to
procure the consents of any third parties necessary for the assignment to
VidKid of any licensing rights, merchandising rights, contract or agreement
which VidKid requires to distribute and exploit the Shows and the Characters.
5. Due Diligence. Upon execution of this Agreement, Madison shall deliver or
cause to be delivered to VidKid the master prints of the Shows. For a maximum
of 120 days after receipt of the master print of the Shows, VidKid shall have
full rights to review the Shows and
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to determine whether the Shows are suitable for the purposes contemplated by
VidKid ("Inspection Period"). VidKid shall specifically have the authority to
transfer tapes from their present format to any other format required by VidKid
for its investigation and to have third parties perform all examinations
necessary to make this determination. If, at any time prior to the end of the
Inspection Period, VidKid determines that the Shows are not suitable for their
purposes, then VidKid shall notify Madison that it does not desire to go
forward with this Agreement. Upon repayment of the Refundable Deposit, VidKid
shall simultaneously return the master tapes and any other documentation or
information provided to VidKid by Madison back to Madison.
6. CONDITIONS TO VIDKID'S OBLIGATION TO CLOSE. VidKid's obligation to close
shall be subject to the satisfaction of the following conditions before or at
the Closing:
6.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
and warranties made by Madison in this Agreement shall be true and correct.
6.2 COMPLIANCE WITH AGREEMENT. Madison shall have performed and complied
with all of its obligations under this Agreement.
6.3 NO ADVERSE CHANGE. There has been no event or occurrence relating to
the Shows or the Characters which could reasonably be considered to have a
material adverse effect.
6.4 THIRD PARTY RIGHTS. VidKid shall have received any other rights it
may need from NBC or other third parties to exploit the Shows and the
Characters.
7. CLOSING, TERMINATION, POST CLOSING
7.1 CLOSING.
7.1.1. SCHEDULE. The Closing shall take place at such date and
time as VidKid and Madison may mutually determine within 30 days after the end
of the Inspection Period (the "Closing Date"). If VidKid does not close on the
transaction as contemplated herein, and this contract is terminated, and if
Madison does not return the $50,000 refundable deposit as stipulated in the
note, VidKid shall retain the episodes as agreed herein. In the event that
VidKid contracts to air said episodes within a five (5) year period from the
date hereof, then in that event, the terms of this Agreement between the
parties shall therefore be reinstated.
7.1.2 TERMINATION. At any time before the Closing, this
Agreement may be terminated by mutual consent of the parties, or by VidKid upon
notice to Madison.
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7.2 Madison's Deliveries. At the Closing, Madison shall deliver to
VidKid:
7.2.1 Any remaining copies of the Shows it may have in any format.
7.2.2 Bills of sale, assignments, and other instruments of transfer
and conveyance, in form and content acceptable to VidKid.
7.2.3 All books, records, scripts, artwork, contracts, files, forms,
and other documents relating to the Shows or the Characters.
7.2.4 All other items contemplated in Article I.
7.3 VidKid's Deliveries. At the Closing, VidKid shall deliver the balance
of the purchase price, $100,000, to Madison. In addition, VidKid shall cancel
the promissory note.
7.4 Post-Closing Deliveries. After the Closing, each party to this
Agreement shall, at the request of the other, furnish, execute, and deliver
such documents, instruments, certificates, notices, or other further assurances
as the requesting party shall reasonably request as necessary or desirable to
effect complete consummation of this Agreement and the transactions
contemplated hereby.
8. Indemnification
8.1 Nature and Survival of Representations and Warranties. All of the
representations and warranties made by Madison and VidKid under this Agreement
shall survive the Closing.
8.2 Indemnification. Madison shall indemnify and hold VidKid, and its
shareholders, directors, officers, employees, and agents harmless from and
against, and reimburse VidKid on demand for, any actual damage, loss, cost or
expense (including reasonable attorneys' fees) incurred by VidKid, its Partners
and their shareholders, directors, officers, employees, and agents resulting
from any breach of Madison's representations, warranties, or covenants in this
Agreement.
9. Miscellaneous
9.1 Notices. Any notice or other communication requested or permitted to
be given shall be in writing and shall be deemed to have been properly given
when deposited in the mail if mailed by certified mail, postage prepaid, or
hand deliveries with receipt.
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addressed as follows (or to such other addresses as the parties may specify by
due notice to the others):
If to Madison:
133 "F" Ave
-------------------------
Coronado, CA 92110
-------------------------
-------------------------
If to VidKid:
VidKid Distribution, Inc.
3100 North 29th Court
2nd FL
Hollywood, FL 33020
9.2 Expenses. Each party shall bear its own expenses in the performance
of this Agreement.
9.3 Headings. The headings in this Agreement are intended solely for
convenience or reference and shall be given no effect in the construction or
interpretation of this Agreement.
9.4 Governing Law. This Agreement shall be governed by the laws of the
State of Florida, and venue for any action between the parties with respect to
this agreement shall be in Broward County, Florida.
9.5 Exclusivity. This Agreement embodies all of the representations,
warranties, and agreements of the parties hereto with respect to the subject
matter hereof, and all prior understandings, representations, and warranties
(whether oral or written) with respect to such matters are superseded and may
not be amended, modified, waived, discharged, or orally terminated except by an
instrument in writing signed by the party or an executive office of a corporate
party against whom enforcement of the change, waiver, discharge, or termination
is sought.
9.6 Litigation. If there is any litigation among the parties hereto
concerning or arising out of this Agreement or the transactions contemplated by
this Agreement, the prevailing party's reasonable attorney's fees and costs,
including both at trial and on appeal shall be borne by the other party.
9.7 VidKid may assign its rights under this Agreement to a subsidiary or
affiliated company.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Madison Sports and Entertainment, Inc.
By: /s/
----------------------------------
President
VidKid Distribution, Inc.
By: /s/
----------------------------------
President
7
<PAGE> 8
PROMISSORY NOTE
U.S. $50,000 August 14, 1997
FOR VALUE RECEIVED, MADISON SPORTS AND ENTERTAINMENT, INC. ("Maker"),
hereby promises to pay to the order of VIDKID DISTRIBUTION, INC. ("Payee"), at
such places as the holder hereof may designate, the sum of $50,000 ("Loan")
until paid in full. The indebtedness evidenced by this Note shall be due and
payable on the dates, in the manner and upon the following terms:
1. Interest. This Note shall be non-interest bearing until the Maturity
Date as defined below. After the Maturity Date, this Note will thereafter bear
interest at the rate of 18% per year ("Default Rate").
2. Maturity. Anything herein to the contrary notwithstanding, the entire
unpaid principal balance shall be due and payable in full on the 90th day after
termination of the Asset Purchase Agreement dated August ___, 1997 (the
"Agreement") between the Maker as seller and the Payee as purchaser (the
"Maturity Date"). This Note shall be cancelled by the Payee, if Payee closes on
the acquisition of assets contemplated by the Agreement.
3. Additional Terms and Conditions.
This Note is secured by the grant of a security interest in 130 master
tapes of half hour color episodes of the New Howdy Doody Show as more fully
described in the Agreement. The terms and conditions of the Agreement are made
a part hereof and shall control in the interpretation hereof.
Each and every party to this Note, whether as Maker, Endorser, Surety,
Guarantor or otherwise, hereby waives presentment, demand, protest and notice
of dishonor and of protest and assents to the terms hereof and to any extension
or postponement for the time for payment or any other indulgence. All monies
paid by the Payee to the Maker hereon shall at Payee's option be applied first
to interest and the balance to principal.
In the event of default in the performance of any of the covenants or
agreements set forth in this Note or in the Agreement, the holder hereof may
declare the entire debt then remaining unpaid immediately due and payable. In
the event the holder hereof declares the entire debt remaining unpaid
immediately due and payable as above provided, the undersigned Maker shall also
be obligated to pay therewith as part of their indebtedness evidenced by this
Note, all costs of collection, including without limitation reasonable attorneys
fees, and all expenses in connection with the protection or realization of the
collateral securing this Note incurred by the holder hereof on account of such
collection, whether or not suit is filed hereon. Such costs and expenses shall
include without limitation all costs, attorney's fees and expenses incurred by
the holder hereof in connection with any insolvency, bankruptcy, reorganization,
arrangement or other similar proceedings involving any of the undersigned, or
involving any endorser or guarantor hereof, which in any way affect the exercise
by the holder hereof of its rights and remedies under this Note, the Agreement
or under any security agreement or other agreement securing this Note. The Maker
hereby acknowledges and agrees that this Note shall be governed by, and
construed under, the laws of the State of Florida.
IN WITNESS WHEREOF, Maker has executed and delivered this Note according
to law on the date first above written.
Madison Sports and Entertainment, Inc.
By: Jaryl T. Rssad
-----------------------------------
<PAGE> 1
Exhibit 10.7
SETTLEMENT AGREEMENT
This Agreement is entered into by and among John J. Drury ("Drury"),
National Media, Inc., a dissolved Florida corporation ("Media"), Buffalo Bob
Enterprises, Inc., a Florida corporation ("BBE"), VidKid Distribution, Inc., a
Florida corporation ("VidKid") and Realm Production and Entertainment, Inc., a
Florida corporation ("Realm").
RECITALS
A. The parties have entered into numerous written agreements regarding
services to be performed for VidKid or Realm by Drury, BBE and Robert E. Smith
who is now deceased.
B. The Agreements also provided for Drury, Media and BBE to transfer any
ownership interest they had in one hundred thirty episodes of the Howdy Doody
Show which are described on Attachment A (the "Tapes") to VidKid.
C. Over the past several months, Drury and Media have been involved in
litigation with Madison Sports and Entertainment, Inc. ("Madison") over the
ownership of the Tapes.
D. At this point, although the time periods for appeal have not yet expired,
orders have been entered by the Broward County Circuit Court granting ownership
in the Tapes to John J. Drury. Madison has brought appeals from these orders
which are currently pending (the "Appeals").
E. VidKid had entered into an agreement with Madison for the purchase of the
Tapes. Madison was unable to perform under that agreement due to the lawsuit by
Drury and Media.
F. VidKid has planned to exploit the Tapes in connection with the 50th
anniversary of the Howdy Doody Show and can not go forward without clear title
to the Tapes.
G. All of the parties wish to resolve all of their outstanding
responsibilities to each other by Drury, Media and BBE conveying any ownership
rights they may have in the Tapes to VidKid in exchange for the payments
provided for in this Agreement.
In consideration of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged by the
parties, the parties agree as follows:
1. The above recitals are true and correct and are incorporated herein.
2. Drury, Media and BBE assign and convey to VidKid all of their right,
title and interest in and to the Tapes.
3. The parties agree to terminate the rights and obligations of the
parties described in the "Agreement as of February 11, 1998" by and among
VidKid, Drury, Media and Robert E. Smith (now deceased) as well as the
Independent Contractors Agreement dated as of October 21, 1997 by and among
VidKid and BBE pertaining to the personal services of Robert E. Smith and Drury
(the "1997 Agreement"). Further, the parties agree to terminate any rights or
obligations they may have to each other pertaining to any other agreements that
they may have entered into. To further acknowledge their intentions, the
parties shall execute and exchange
<PAGE> 2
the General Releases, attached in the form of Attachment B.
4. In exchange for conveying to VidKid any ownership rights they may
have in the Tapes, subject to a final disposition of the Appeals in which Drury,
Media and BBE are found to have complete ownership rights to the Tapes without
the possibility of further appeal ("Final Disposition"), VidKid or Realm shall
pay to Drury the total sum of $130,000 to be divided among Drury, Media and BBE
in any manner they determine. The payment shall be made in four installments,
with $25,000 being payable on or before September 21, 1998; $25,000 being
payable on or before October 16, 1998; $50,000 being payable on or before March
15, 1999; and the final installment of $30,000 being payable on or before June
15, 1999. As the Appeals are pending and the results of which may not be known
for months, VidKid agrees to make the first $25,000 payment as provided, but the
remaining payments shall not be made until there is a Final Disposition of the
cases pending. If the result of the Appeals is that the case is remanded to the
trial court for further action, payments shall be deferred until there is a
Final Disposition. If the result of the Appeal is a Final Disposition, then the
remaining payments shall be made with VidKid being given at least 30 days from
the Final Disposition to make the payments which would have already been payable
if they had not been deferred as provided. If Madison is successful on Appeal
and is eventually found to have ownership rights in the Tapes, then the $25,000
payment provided above shall be applied to the payments due under the 1997
Agreement and shall satisfy in full all obligations for payment to Drury and the
other parties under the 1997 Agreement.
5. The assignment of the Tapes by Drury, Media and BBE is intended to
include the assignment of any copyright they may have to any of the tapes.
Further, Drury, BBE and Media agree to execute any additional documents which
may be necessary to further assign any copyright or any other right they may
have or any other documents which may be necessary to acknowledge or prove to
third parties that they have assigned their rights to the Tapes and vested
title to the Tapes in VidKid.
6. Drury, Media and BBE, jointly and severally, represent and warrant to
VidKid and Realm as follows:
a. BBE is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida. BBE has all necessary
power and authority to enter into this agreement and perform its obligations
under this agreement.
b. Media is a dissolved corporation all of the stock of which was
owned by Drury and Drury is the sole surviving director and has all necessary
power and authority to enter into this agreement and perform its obligations
under this agreement.
c. BBE and Media have both properly authorized Drury to act on
their respective behalf and to accept the funds to be paid under this agreement
on their respective behalf,
d. Each of Drury, Media and BBE has the requisite power and
authority to execute, deliver, and perform this Agreement and all other
agreements, assignments, releases and other documents to be executed and
delivered by them hereunder or in connection herewith,
2
<PAGE> 3
at any time, and all necessary actions on the part of each of Media, BBE and
Drury has been duly and validly taken to authorize the execution, delivery and
performance of this Agreement and such other agreements and instruments to be
executed and delivered by Sellers in connection herewith.
e. This Agreement is and shall constitute the legal, valid and
binding obligation of each of Drury, Media and BBE enforceable against each in
accordance with its terms.
f. Neither the execution, delivery and performance of this
Agreement and such other agreements and instruments nor the consummation of the
transactions contemplated hereby, (i) conflicts with any provision of the
Articles of Incorporation or By-Laws of Media or BBE; (ii) conflicts with,
results in a breach of, or constitutes a default under any applicable law,
judgment, order, ordinance, decree, rule, regulation or ruling of any court or
governmental instrumentality; (iii) results in a breach of, conflicts with,
constitutes a default under or permits any party to terminate, modify,
accelerate the performance of or cancel the terms of, any agreement, lease,
license, indenture, instrument of indebtedness or other obligations to which any
of Drury, media or BBE is a party or is bound; or (iv) creates any liability,
mortgage, lien, pledge, condition or encumbrance of any nature whatsoever upon
any of the Tapes.
g. Neither Drury, Media or BBE has received any notices of
infringement, misappropriation, or conflict from any third party with respect to
the Tapes (other than the claims of Madison) and to their knowledge, none of
them has infringed, misappropriated or otherwise conflicted with any proprietary
rights of any third parties to the Tapes.
h. Other than the lawsuit with Madison, there are no actions,
suits, proceedings, orders, investigations or claims pending or threatened
against Drury, BBE or Media relating to the Tapes or their ownership of the
Tapes, or before or by any governmental department, commission, board, bureau,
agency or instrumentality.
i. Drury, Media and BBE have good and marketable title in and to
the Tapes.
j. No representation or warranty made by Drury, Media or BBE herein
nor any document or other written instrument furnished or to be furnished
pursuant hereto contains or will contain any untrue statement of a material
fact nor shall any such certificate, document or written instrument omit any
material fact necessary in order to make any statement herein or therein not
misleading.
7. Drury, Media and BBE, jointly and severally, each agree to indemnify
VidKid and Realm from any and all costs and claims, damages, negligence,
liabilities, or other obligations growing out of, arising from or relating to
any breach of any obligation, warranty or representation of Drury, Media or BBE
under this Agreement or any document given in connection with this agreement,
and to defend, and to save and hold harmless VidKid and Realm from any and all
liability, claims, losses, costs, expenses or damages VidKid and Realm may
suffer or which are or may at any time be made against VidKid and Realm
relating to the Tapes including but not limited to claims, demands, costs,
expenses, damages, liabilities, settlements or judgements against VidKid or
Realm resulting from litigation or threatened litigation and
3
<PAGE> 4
counsel fees incurred by VidKid and Realm.
8. Any notice under this Agreement shall be in writing and shall be
deemed to have been given when delivered by hand upon receipt, or upon receipt
when sent by United States registered or certified mail, return receipt
requested, postage prepaid, or by a recognized overnight carrier such as
Federal Express, to the address set forth below, or to such other address or
addresses as any party on five days' prior written notice may from time to time
give to the other parties:
To Media, Drury or Mr. John Drury
BBE
---------------------------------
---------------------------------
If to Realm or VidKid: Realm Entertainment and Production, Inc.
3100 N. 29th Court
Hollywood, FL 33020
attn: Mr. Steven Adelstein
With a copy to: Richard H. Breit, Esq.
Becker & Poliakoff, P.A.
3111 Stirling Road
Fort Lauderdale, FL 33312
9. The invalidity of any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part hereof,
all of which are inserted conditionally on their being valid in law, and, if
any one or more of the words, phrases, sentences, clauses or sections contained
in this Agreement shall be declared invalid, this Agreement shall be construed
as if such invalid word or words, phrase or phrases, sentence or sentences,
clause or clauses or section or sections had not been inserted.
10. The waiver by any party hereto of a condition, breach, or violation
of any provision of this Agreement shall not operate nor be construed as a
waiver of any subsequent condition, breach or violation.
11. If a party retains or engages any attorney or attorneys to collect,
enforce or protect its interest with respect to this Agreement, or any
instrument or document delivered pursuant to this Agreement, the non-prevailing
party in any court action shall pay all of the reasonable costs and expenses of
such collection, enforcement or protection, including without limitation all
reasonable attorneys' fees and court costs prior to litigation, at trial and on
appeal.
12. This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida.
13. All parties agree that venue for any court action pertaining to this
Agreement shall be in the state and federal courts located in Broward County,
Florida. All parties agree to submit themselves to the jurisdiction of these
courts.
4
<PAGE> 5
14. This Agreement and its terms and covenants shall be binding upon and
shall inure to the benefit of the respective successors, heirs, personal
representatives and permitted assigns of the parties.
This Agreement is signed as of the date first above written.
WITNESSES: NATIONAL MEDIA, INC.
a dissolved Florida corporation
/s/ By: JOHN DRURY
- --------------------- ---------------------------------
John Drury, President
/s/
- ---------------------
(AS TO DRURY, MEDIA AND BBE)
BUFFALO BOB ENTERPRISES, INC.
a Florida corporation
By: JOHN DRURY
----------------------------------
John Drury, President
JOHN DRURY
-------------------------------------
John Drury, individually, and as the
sole director of both National Media,
Inc. and Buffalo Bob Enterprises, Inc.
VidKid DISTRIBUTION, INC.
a Florida corporation
- ------------------------ By: STEVEN ADELSTEIN
----------------------------------
Steven Adelstein, President
- ------------------------
(AS TO VIDKID AND REALM)
REALM PRODUCTION AND ENTERTAINMENT, INC.
a Florida corporation
By: STEVEN ADELSTEIN
------------------------------------
Steven Adelstein, President
5
<PAGE> 6
ATTACHMENT "A"
THE 130 TAPES
<PAGE> 7
INCOMING REPORT FAST PRINT TUE, SEP 9, 1997
<TABLE>
<CAPTION>
TITLE EPISODE# EPISODE NAME PART LANG FOR STAN CLAS
<S> <C> <C> <C> <C> <C> <C> <C>
NEW HOWDY DOODY SHOW, THE 0011 HOWDY PHANTOM 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0012 PHANTOM OF THE DOODIO 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0013 PHANTOM OF THE DOODIO 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0014 PHANTOM OF THE DOODIO 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0015 PHANTOM 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0021 DOODYVILLE ART 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0022 DOODYVILLE ART 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0023 DOODYVILLE ART 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0024 DOODYVILLE ART 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0025 ART FESTIVAL 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0031 PRUNELLA STORY, THE 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0032 PRUNELLA STORY, THE 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0033 PRUNELLA STORY, THE 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0034 PRUNELLA STORY, THE 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0035 PRUNELLA STORY, THE 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0041 MUSIC APPRECIATION 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0042 MUSIC APPRECIATION 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0043 MUSIC APPRECIATION 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0044 MUSIC APPRECIATION 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0045 MUSIC APPRECIATION 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0051 UNHAPPY HAPPY 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0052 UNHAPPY HAPPY 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0053 UNHAPPY HAPPY 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0054 UNHAPPY HAPPY 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0055 UNHAPPY HAPPY 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0061 CLOWN TAMER 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0062 THE CLOWN TAMER 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0063 THE CLOWN TAMER 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0064 THE CLOWN TAMER 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0065 CLOWN TAMER 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0071 DOODYVILLE 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0072 DOODYVILLE 1of1 Unkn QUAD Unkno Ms
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
TITLE EPISODE # EPISODE NAME PART LANG FOR STAN CLASS
<S> <C> <C> <C> <C> <C> <C> <C>
NEW HOWDY DOODY SHOW, THE 0073 DOODYVILLE 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0074 DOODYVILLE 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0075 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0081 GLORY GRITS 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0082 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0083 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0084 GLORY GIRLS 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0085 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0091 BIONIC CLOWN 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0092 BIONIC CLOWN 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0093 BIONIC CLOWN 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0094 BIONIC CLOWN 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0095 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0101 PSYCHIC PRUNELLA 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0102 PSYCHIC PRUNELLA 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0103 PSYCHIC PRUNELLA 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0104 PSYCHIC PRUNELLA 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0105 PSYCHIC PRUNELLA 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0111 DAVIS DILEMMA 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0112 DAVIS DILEMMA 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0113 DAVIS DILEMMA 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0114 DAVIS DILEMMA 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0115 DAVIS DILEMMA 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0121 FIBADOODLE 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0122 FIBADOODLE 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0123 FIBADOODLE 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0124 FIBADOODLE 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0125 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0131 KING COBB 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0132 KING COBB 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0133 KING COBB 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0134 KING COBB 1 OF 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0135 KING COBB 1 OF 1 Unkn QUAD Unkno Ms
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
TITLE EPISODE # EPISODE NAME PART LANG FOR STAN CLASS
<S> <C> <C> <C> <C> <C> <C> <C>
NEW HOWDY DOODY SHOW, THE 0141 PROPMAN BINKY 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0142 PROPMAN BINKY 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0143 PROPMAN BINKY 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0144 PROPMAN BINKY 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0145 PROPMAN BINKY 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0151 SALLY SUPERSTAR 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0152 SALLY SUPERSTAR 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0153 SALLY SUPERSTAR 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0154 SALLY SUPERSTAR 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0155 SALLY SUPERSTAR 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0161 THE SCUTTLEBUTT CAPER 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0162 THE SCUTTLEBUTT CAPER 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0163 THE SCUTTLEBUTT CAPER 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0164 THE SCUTTLEBUTT CAPER 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0165 THE SCUTTLEBUTT CAPER 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0171 DILLY DALLY'S BIRTHDAY 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0172 DILLY DALLY'S BIRTHDAY 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0173 DILLY DALLY'S BIRTHDAY 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0174 DILLY DALLY'S BIRTHDAY 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0175 DILLY DALLY'S BIRTHDAY 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0181 CLARABELLE'S FUN SHOW 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0182 CLARABELLE'S FUN SHOW 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0183 CLARABELLE'S FUN SHOW 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0184 CLARABELLE'S FUN SHOW 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0185 CLARABELLE'S FUN SHOW 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0191 WIZARD OF WIT 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0192 WIZARD OF WIT 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0193 WIZARD OF WIT 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0194 WIZARD OF WIT 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0195 WIZARD OF WIT 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0201 GOOD BEHAVIOR CONTEST 1 of 1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0202 GOOD BEHAVIOR CONTEST 1 of 1 Unkn QUAD Unkno Ms
</TABLE>
<PAGE> 10
INCOMING REPORT FAST PRINT TUE, Sep 9, 1997
<TABLE>
<CAPTION>
TITLE EPISODE # EPISODE NAME PART LANG FOR STAN CLAS
<S> <C> <C> <C> <C> <C> <C> <C>
NEW HOWDY DOODY SHOW, THE 0203 GOOD BEHAVIOR CONTEST 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0204 GOOD BEHAVIOR CONTEST 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0205 GOOD BEHAVIOR CONTEST 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0211 DOODYVILLE FAIR 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0212 DOODYVILLE FAIR 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0213 DOODYVILLE FAIR 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0214 DOODYVILLE FAIR 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0215 DOODYVILLE FAIR 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0221 MAGIC CONTEST 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0222 MAGIC CONTEST 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0223 MAGIC CONTEST 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0224 MAGIC CONTEST 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0225 MAGIC CONTEST 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0231 DV LAFF-A-THON 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0232 DV LAFF-A-THON 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0233 DV LAFF-A-THON 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0234 DV LAFF-A-THON 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0235 DY LAFF-A-THON 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0241 PEANUT PARADE 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0242 PEANUT PARADE 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0243 PEANUT PARADE 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0244 PEANUT PARADE 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0245 PEANUT PARADE 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0251 GRAB BAG 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0252 GRAB BAG 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0253 GRAB BAG 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0254 GRAB BAG 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0255 GRAB BAG 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0261 SONGFEST 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0262 SONGFEST 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0263 SONGFEST 1of1 Unkn QUAD Unkno Ms
NEW HOWDY DOODY SHOW, THE 0264 SONGFEST 1of1 Unkn QUAD Unkno Ms
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
TITLE EPISODE # EPISODE NAME PART LANG FOR STAN CLASS
<S> <C> <C> <C> <C> <C> <C> <C>
NEW HOWDY DOODY SHOW, THE 0265 SONGFEST 1 of 1 Unkn QUAD Unkno Ms
TOTAL ELEMENTS RECEIVED: 130
</TABLE>
<PAGE> 12
ATTACHMENT "B"
GENERAL RELEASES
<PAGE> 13
GENERAL RELEASE
KNOW ALL MEN BY THESE PRESENTS that VIDKID DISTRIBUTION, INC., and REALM
PRODUCTION AND ENTERTAINMENT, INC., first party, for and in consideration of the
sum of ten dollars, or other valuable considerations, received from or on behalf
of JOHN DRURY, NATIONAL MEDIA, INC. and BUFFALO BOB ENTERPRISES, and Becker &
Poliakoff, P.A., second party, the receipt whereof is hereby acknowledged
(wherever used herein the terms "first party" and "second party" shall include
singular and plural, heirs, legal representatives, and assigns of individuals,
and the successors and assigns of corporations, wherever the context so admits
or requires), hereby releases, acquits, satisfies, and forever discharges the
second party, of and from any and all manner of action and actions, cause and
causes of action, suits, debts, dues, sums of money, accounts, bonds, bills,
covenants, contracts, controversies, agreements, promises, damages, judgments,
executions, claims and demands whatsoever, in law or in equity, which the first
party ever had, now has, or which any personal representative, successor, heir
or assign of the first party, hereafter can, shall or may have, against the
second party, for upon or by reason of any matter, cause or thing whatsoever,
from the beginning of the world to the day of these presents other than the
obligations, representations and warranties contained in the Agreement between
the parties dated ________________, 1998.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 10th day of
Sept., 1998.
Witnesses as to all parties: VIDKID DISTRIBUTION, INC.
a Florida corporation
/s/ Steven Adelstein
- --------------------------- ---------------------------
Steven Adelstein, President
/s/
- --------------------------- REALM PRODUCTIONS AND
ENTERTAINMENT, INC.
a Florida corporation
Steven Adelstein
---------------------------
Steven Adelstein, President
STATE OF FLORIDA )
) ss:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this 10th day of
September, 1998 by STEVEN ADELSTEIN, President of VIDKID DISTRIBUTION, INC. and
REALM PRODUCTIONS AND ENTERTAINMENT, INC., on behalf of the corporations, who is
personally known to me or who has produced a Florida driver's license as
identification and who did (did not) take an oath. FDL A342-78047-185
Yolanda E. Espi-Tamayo
-----------------------------
Notary Public Signature
Yolanda E. Espi-Tamayo
-----------------------------
Notary Public Print Name
My Commission Expires:
<PAGE> 14
GENERAL RELEASE
KNOW ALL MEN BY THESE PRESENTS that JOHN DRURY, NATIONAL MEDIA INC. and
BUFFALO BOB ENTERPRISES, INC., first party, for and in consideration of the sum
of ten dollars, or other valuable considerations, received from or on behalf of
VIDKID DISTRIBUTION, INC., and REALM PRODUCTION and ENTERTAINMENT, INC., second
party, the receipt whereof is hereby acknowledged (wherever used herein the
terms "first party" and "second party" shall include singular and plural,
heirs, legal representatives, and assigns of individuals, and the successors
and assigns of corporations, wherever the context so admits or requires),
hereby releases, acquits, satisfies, and forever discharges the second party,
of and from any and all manner of action and actions, cause and causes of
action, suits, debts, dues, sums of money, accounts, bonds, bills, covenants,
contracts, controversies, agreements, promises, damages, judgments, executions,
claims and demands whatsoever, in law or in equity, which the first party ever
had, now has, or which any personal representative, successor, heir or assign
of the first party, hereafter can, shall or may have, against the second party,
for upon or by reason of any matter, cause or thing whatsoever, from the
beginning of the world to the day of these presents other than the obligations
to pay the total sum of $130,000 pursuant to the Agreement between the parties
dated ______________ , 1998.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 10 day of
September, 1998.
Witnesses as to all parties: NATIONAL MEDIA, INC.
a Florida Corporation
/s/ Stacy Hallberg /s/ John Drury
- --------------------------- ---------------------------
Stacy Hallberg John Drury, President
/s/ Carolyn Lee BUFFALO BOB ENTERPRISES, INC.
- --------------------------- a Florida Corporation
Carolyn Lee
/s/ John Drury
----------------------------
John Drury, President
/s/ John Drury
----------------------------
John Drury
STATE OF FLORIDA )
) ss:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this 10 day of
September, 1998 by John Drury, individually and as President of National Media,
Inc., and Buffalo Bob Enterprises, Inc., on behalf of the corporations, who is
personally known to me or who has produced a Florida driver's license as
identification and who did (did not) take an oath.
/s/ Jill Adams
----------------------------
Notary Public Signature
My Commission Expires:
----------------------------
Notary Public Print Name
[SEAL]
<PAGE> 15
[Check for $25,000.00 to Jack Drury & Associates, Inc., from Realm Production
and Entertainment, Inc.]
<PAGE> 16
[VIDKID LOGO]
ADDENDUM
November 20, 1998
Jack Drury
P.O. Box 11385
Fort Lauderdale, FL 33319-1385
RE: Settlement Agreement Dated September 10, 1998
Dear Jack,
Pursuant to the above referenced Agreement, VidKid Distribution, Inc. shall
modify the $105,000 payment schedule (item #4 of subject agreement) as follows:
$ 25,000 Within 30 days of resolution
50,000 Within 120 days of resolution
30,000 Within 210 days of resolution
--------
$105,000 TOTAL
All other terms and conditions of subject agreement shall remain in full force
and effect.
Sincerely, AGREED TO AND ACCEPTED BY:
/s/ STEVEN ADELSTEIN /s/ JACK DRURY
- ----------------------------- --------------------------------
Steven Adelstein Jack Drury, President
President
VidKid Distribution, Inc.
3100 North 29th Court-Hollywood, Florida 33020-954.927.2722 FAX 954.927.8859
<PAGE> 1
Exhibit 10.8
BUSINESS LEASE
THIS AGREEMENT, entered into this 15 DAY OF MAY 1997 between REYNO
INTERNATIONAL, INC., hereinafter called the Lessor, party of the first part, and
REALM PRODUCTION AND ENTERTAINMENT, INC., of the County of Broward and the State
of Florida hereinafter called the Lessee or tenant, party of the second part:
WITNESSETH, That the said Lessor does this day lease unto said Leasee, and
said Lessee does hereby hire and take as tenant under said Lessor Space
containing approximately 4217 SQ. FT., MORE OR LESS, THE PARTIES ACKNOWLEDGE
THAT THE SQUARE FOOTAGE OF THE LEASED PREMISES IS APPROXIMATE FOR DESCRIPTIVE
PURPOSES ONLY AND THAT ANY SUBSEQUENT DIFFERENCE OF DETERMINATION OF THE SQUARE
FOOTAGE SHALL NOT AFFECT THE AMOUNT OF RENT, at the TOTAL BOTTOM FLOOR AREA OF
THE FRONT MAIN BUILDING, PLUS THE NORTH SIDE OF THE 2ND FLOOR OF THE FRONT MAIN
BUILDING located at 3100 North 29th Court, Hollywood, Florida situate in
Hollywood, State of Florida, to be used and occupied by the Lessee as business
office and for no other purposes or uses whatsoever, for the term of THIRTY-SIX
MONTHS (36) months, subject and conditioned on the provisions of this lease,
beginning the 15TH day of MAY, 1997 and ending the 14th DAY OF MAY, 2000 at and
for the agreed total rental of NINETY-FOUR THOUSAND FIVE HUNDRED AND SEVENTY
FIVE DOLLARS ($94,575.00), PLUS FLORIDA STATE SALES TAX, payable as follows:
<TABLE>
<S> <C> <C>
Date: MAY 15TH, 1997 - MAY 14TH, 1998 2500.00 Monthly Rent
150.00 6% Florida Sales Tax
included in rent- Water & Sewerage & trash
$2650.00 TOTAL each Month
Date: MAY 15TH, 1998 - MAY 14TH, 1999 2625.00 Monthly Rent
157.50 6% Florida Sales Tax
included in rent- Water & Sewerage & trash
$2782.50 TOTAL each Month
Date: MAY 15TH, 1999 - MAY 14TH, 2000 2756.25 Monthly Rent
165.38 6% Florida Sales Tax
included in rent- Water & Sewerage & trash
$2921.63 TOTAL each Month
</TABLE>
all payments to be made to the Lessor on the fifteenth day of each and every
month in advance without demand at the office of Reyno International, Inc.,
3100 N. 29th Court, Hollywood, Florida 33020-1321. A late fee of five (5%)
percent after five (5) calendar days is due each month after the due date of
rent payment.
The following express stipulations and conditions are made a part of this lease
and are hereby assented to by the Lessee:
FIRST: The Lessor grants the Lessee permission to sublet to THE ANIMATION
FACTORY, INC. Lessee shall not assign this lease, nor sublet to any other, the
premises, or any part thereof nor use the same or any part thereof, nor permit
the same, or any part thereof, to be used for any other purpose than as above
stipulated, nor make any alterations therein, and all additions thereto,
without the written consent of the Lessor, and all additions, fixtures or
improvements which may be made by Lessee, except movable office furniture,
shall become the property of the lessor and remain upon the premises as a part
thereof, and be surrendered with the premises at the termination of the lease.
PERMISSION TO ASSIGN OR SUBLET SHALL NOT BE UNREASONABLY WITHHELD.
SECOND: All personal property placed or moved in the premises above described
shall be at the risk of the Lessee or owner thereof, and Lessor shall not be
liable for any damage to said personal property, or to the Lessee arising from
the bursting or leaking of water pipes, or from any act of negligence of any
co-tenant or occupants of the building or of any other person whomsoever.
<PAGE> 2
THIRD: That the tenant shall promptly execute and comply with all statutes,
ordinances, rules, orders, regulations and requirements of the Federal, State
and City Government and of any and all their Departments and Bureaus applicable
to said premises, for the corrections, prevention, and abatement of nuisances
or other grievances, in, upon, or connected with said premises during said
term; and shall also promptly comply with and execute all rules, orders, and
regulations of the applicable fire prevention codes for the prevention of
fires, at tenant's own cost and expense.
FOURTH: In the event the premises shall be destroyed or so damaged or injured
by fire or other casualty during the life of this agreement, whereby the same
shall be rendered untenantable, then the Lessor shall have the right to render
said premises tenantable by repairs within ninety days therefrom. If said
premises are not rendered tenantable within said time, it shall be optional
with either party hereto to cancel this lease, and in the event of such
cancellation the rent shall be paid only to the date the premises are deemed
untenantable. The cancellation herein mentioned shall be evidenced in writing.
FIFTH: The prompt payment of rent for said premises upon the dates named, and
the faithful observance of the rules and regulations printed upon this lease,
and which are hereby made a part of this covenant, and of such other and made
by the Lessor, are the conditions upon which the lease is made and accepted and
any failure on the part of the Lessee to comply with the terms of said lease,
or any of said rules and regulations now in existence, prescribed by the
Lessor, shall at the option of the Lessor, work a forfeiture of this contract,
and all of the rights of the Lessee hereunder.
SIXTH: If The Lessee shall abandon or vacate said premises before the end of
the term of this lease, or shall suffer the rent to be in arrears, the Lessor
may, at his option, forthwith cancel this lease or he may enter said premises
as the agent of the Lessee, without being liable in any way therefor, and relet
the premises with or without any furniture that may be therein, as the agent of
the Lessee, at such price and upon such terms and for such duration of time as
the Lessor may determine, and receive the rent therefor, applying the same to
the payment of the rent due by these presents, and if the full rental herein
provided shall not be realized by Lessor over and above the expenses to Lessor
in such re-letting, the said Lessee shall pay any deficiency, and if more than
the full rental is realized Lessor will pay over to said Lessee the excess of
demand.
SEVENTH: Lessee agrees to pay the cost of collection and ten per cent
attorney's fee on any part of said rental that may be collected by suit or by
attorney, after the same is past due.
EIGHTH: THE LESSEE AGREES THAT HE WILL PAY FOR ALL CHARGES FOR ELECTRICITY OR
OTHER ILLUMINATION USED ON THE FIRST FLOOR (FLP METER #S 5J71506 ALSO KNOW AS
BWEST, AND 5J14876 ALSO KNOWN AS EAST) TO BE PAID DIRECTLY TO THE PROVIDER.
THE LESSEE ALSO AGREES TO PAY LESSOR IN THE FORM OF A CHECK PAYABLE TO FPL, FOR
THE ELECTRICITY USED FOR THE PREMISED LOCATED ON THE NORTH SIDE OF THE SECOND
FLOOR, ANY AMOUNT OVER $260 ON FPL METER #1T35847 PER MONTH. THIS IS FOR THE
LESSEES PRO-RATED SHARE OF THE ELECTRICITY FOR THAT AREA. THE LESSOR SHALL
ADVISE THE AMOUNT DUE BY THE 3RD DAY AFTER RECEIPT OF THE BILL, AND THE LESSEE
SHALL MAKE PAYMENT TO THE LESSOR WITHIN 5 CALENDAR DAYS. (Tenant to pay its own
electricity, If these items are not metered separately then landlord will
estimate the monthly costs for any or all of these services, which will be
adjusted up or down accordingly if it is determined the estimate is not
accurate. If any dispute occurs over the estimated costs then tenant may
install its own meter and pay for the provided services directly to the
provider.)
And should said charges for rent, or light herein provided for at any time
remain due and unpaid for the space of five calendar days after the same shall
become due, the lessor may at its option consider the said lessee tenant at
sufferance and the entire rent for the rental period then next ensuing shall at
once be due and payable and may forthwith be collected by distress or otherwise.
NINTH: The said lessee hereby pledges and assigns to the lessor all the
fixtures, which shall or may be brought or put on said premises as security of
the payment of the rent herein reserved, and the lessee agrees that the said
lien may be enforced by distress foreclosure or otherwise at the election of
the said lessor, and does hereby agree to pay attorney's fees of ten percent of
the amount so collected or found to be due, together with all costs and charges
therefore incurred or paid by the lessor.
<PAGE> 3
TENTH: Rent to be paid in advance each month, a late fee of five (5.00%) after
five calendar days is due each month after the due date of rent payment.
ELEVENTH: The Lessor or any of his agents shall have the right to enter said
premises during all reasonable hours, to examine the same to make such repairs,
additions or alterations as may be deemed necessary for the safety, comfort, or
preservation thereof, or of said building, or to exhibit said premises, and to
put or keep upon the doors or windows there a notice "FOR RENT" at any time
within thirty (30) days before the expiration of this lease. The right of entry
shall likewise exist for the purpose of removing placards, signs, fixtures,
alterations, or additions, which do not conform to this agreement, or to the
rules and regulations of the building.
TWELVE: Lessee hereby accepts the premises in the condition they are at the
beginning of this lease and agrees to maintain said premises in the same
condition, order and repair as they are at the commencement of said term,
excepting only reasonable wear and tear arising from the use thereof under this
agreement, and to make good to said Lessor immediately upon demand any damage
to water apparatus, or electric lights or any fixture, appliances or
appurtenances of said premises, or the building, caused by any act of neglect
of Lessee, or of any person or persons in the employ or under the control of
the Lessee.
THIRTEENTH: It is expressly agreed and understood by and between the parties to
this agreement that the landlord shall not be liable for any damage or injury
by water, which may be sustained by the said tenant or other person or for any
other damage or injury resulting from the carelessness, negligence, or improper
conduct on the part of any other tenant or agents, or employees, or by reason
of the breakage, leakage, or obstruction of the water, sewer or soil pipes, or
other leakage in or about the said building.
FOURTEENTH: If the lessee shall become insolvent or if bankruptcy proceedings
shall be begun by or against the Lessee, before the end of said term of Lessor
is hereby irrevocably authorized at its option to forthwith cancel this lease,
as for a default. Lessor may elect to accept rent from such receiver, trustee,
or other judicial officer during the term of their occupancy in their fiduciary
capacity without affecting Lessor's rights as contained in this contract, but no
receiver, trustee or other judicial officer shall ever have any right, title or
interest in or to the above described property by virtue of this contract.
FIFTEENTH: Lessee hereby waives and renounces for himself and family any and
all homestead and exemption rights he may have now, or hereafter, under or by
virtue of the constitution and laws of the State of Florida, or of any other
State, or of the United States, as against the payment of said rental or any
portion hereof, or any other obligation or damage that may accrue under the
terms of this agreement.
SIXTEENTH: This contract shall bind the Lessor and it assigns or successors,
and the heirs, assigns, personal representative, or successors as the case may
be, of the Lessee.
SEVENTEENTH: It is understood and agreed between the parties hereto that time
is of the essence of this contract and this applies to all terms and conditions
contained herein.
EIGHTEENTH: It is understood and agreed between the parties hereto that written
notice mailed or delivered to the premises, leased hereunder shall constitute
sufficient notice to the Lessee and written notice mailed or delivered to the
office of the Lessor shall constitute sufficient notice to the Lessor, to
comply with the terms of this contract.
NINETEENTH: The rights of the Lessor under the foregoing shall be cumulative,
and failure on the part of the Lessor to exercise promptly and rights given
hereunder shall not operate to forfeit any of the said rights.
TWENTIETH: It is further understood and agreed between the parties hereto that
any charges against the Lessee by the Lessor for services or for work done on
the premises by order of the Lessee or otherwise accruing under this contract
shall be considered as rent due and shall be included in any lien for rent due
and unpaid.
TWENTY-FIRST: It is hereby understood and agreed that any signs or advertising
to be used, including awnings (no advertising on the awning), in connection
with the premises leased hereunder shall be first submitted to the Lessor for
approval before installation of same. ANY SIGNAGE APPROVED FOR USE BY THE
LESSEE WILL NOT BE CONSIDERED A TENANT IMPROVEMENT AND THE EXPENSE THEREOF WILL
BE THE EXPENSE OF LESSEE. THERE IS NO ALLOWANCE GIVEN BY THE LESSOR FOR THIS
IMPROVEMENT - SEE CLAUSE #44 OF THIS LEASE.
<PAGE> 4
TWENTY-SECOND: The lessor shall maintain the outside walls of the building,
the roof, landscaping and parking areas. The lessee shall maintain all and
singular the balance of the premises, including but not limited to the inside
plumbing and electrical components, air conditioning systems, acoustical
ceilings, floors, etc.
TWENTY-THIRD: The lessee shall carry owner, landlord and tenant liability
insurance in a sum not less than $1,000,000 single limit and $2,000,000
aggregate bodily injury with $500,000 property damage and legal fire liability
coverage, with lessor named as additional insureds as their interests may
appear. If any of Lessee's business activities cause Lessor's hazard insurance
premiums to increase over those normally applied to the subject building, then
Lessee agrees to pay the said increase in insurance premiums as additional rent
due within 15 days after being notified by Lessor of the increase due.
TWENTY-FOURTH: At the conclusion and termination of this lease, all
improvements, fixtures, air conditioning systems and other appurtenances
affixed to the premises shall remain and become the property of the Lessor,
however Lessee must remove any of its trade fixtures and equipment used in the
carrying on of its business and make repairs to floors, walls, roof and
ceilings as necessary to bring the premises to its original condition at the
commencement date of the lease, normal wear and tear excepted and excepting
those improvements Lessor specifically authorizes in a separate written
document in which will not be required to be returned to original condition.
TWENTY-FIFTH: All of the Lessee's business activities shall be carried on
inside the leased premises.
TWENTY-SIXTH: Monthly rent shall be TWO THOUSAND FIVE HUNDRED DOLLARS
($2,500.00) per month. All rents are to have Florida Sales Tax added as
additional rent due. The lease term is THREE (3) years and monthly rent to
increase on an annual basis by 5% per year and in no event shall monthly rent
decrease during the lease term.
TWENTY-SEVENTH: The Lessee will install a directory inside the front door of
the building, or at a location approved by the Lessor, indicating the locations
of the other tenants of the 3100 Building.
TWENTY-EIGHTH: Lessee may install such security devices as it may desire to so
as to protect its premises, vehicles, personnel, inventory and equipment. All
security devices shall be paid for and maintained by the Lessee at the Lessee's
expense. If any device is attached to the building, Lessee shall obtain
Lessor's written consent, which may not be unreasonably withheld, prior to
making the improvement. Lessor provides no security for the subject premises.
TWENTY-NINTH: In the event of any litigation arising out of this lease,
prevailing parties will be entitled to attorney's fees and cost.
THIRTIETH: Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks
to persons who are exposed to it over time. Level of radon that exceed federal
and state guidelines have been found in buildings in Florida. Additional
information regarding radon and radon testing may be obtained from your county
public health unit. Pursuant to 404.056(b) Florida Statutes. If radon in
amounts considered hazardous by the county public health unit is found in the
leased premises, then lessor will take steps to reduce the radon to
non-hazardous levels. If the expense to reduce radon levels to non-hazardous
levels exceeds $1,000.00 then Lessor may cancel this lease upon 30 days written
notice to Lessee, whereupon all parties are released from the provision of this
lease.
THIRTY-FIRST: All rent payments due pursuant to this lease shall be paid to
Reyno International, Inc., 3100 N. 29th Court, Hollywood, Florida, 33020-1321,
Suite 202 until notified in writing by Reyno International that rents are to be
sent elsewhere.
THIRTY-SECOND: Lessee agrees to obtain all necessary building permits which
are required prior to doing any improvements to the premises. Lessee shall make
no holes in the walls, roof or floors of the premises or make any improvements
to the premises without Lessor's written consent, which will not be
unreasonably withheld.
THIRTY-THIRD: Landlord shall provide a dumpster for disposal of Lessee's
normal office use trash and waste. In the event tenant's trash and waste to be
removed is deemed excessive (more than normal office use), then Lessee shall be
charged a sum, as additional rent due, equal to the estimated cost to remove
said waste.
<PAGE> 5
THIRTY-FOURTH: This lease is automatically subordinate to any existing or
future mortgage financing placed upon the subject property by the property
owner. If any written document is required by any lending institution
evidencing this subordination then Lessee agrees to execute same within five
business days after said document is submitted to Lease.
THIRTY-FIFTH: Lessee agrees to keep the leased premises, parking areas in front
of the leased premises clean and neat at all times. Lessee to have exclusive
use of all the available parking directly in front of the leased premises.
THIRTY-SIXTH: Tenant's business activity is limited to business office and
storage of tenant's inventory, in pursuit of its business of production and
entertainment.
THIRTY-SEVENTH: If any of the Tenant's business activities cause Landlord's
insurance premiums for insurance covering the entire property of which the
leased premises are a part to increase over that rate normally applies to the
subject building (as a office-warehouse building) then Lessee shall pay any
such increase.
THIRTY-EIGHTH: Landlord agrees to pay all real estate taxes, special
assessment taxes, hazard insurance premiums and outside maintenance costs
related to the subject premises for the first year of the lease term and for
all subsequent years of the lease term. Upon renewal of the Lessees first lease
option May 14th, 2000, in the event real estate taxes, special assessment
taxes, hazard insurance premiums or outside maintenance costs increase over
that of the last year of the original lease term (1999) then Lessee shall pay
its proportional share (based on tenants prorated percentage of occupancy of
the premises as related to the entire building of which the leased premises are
a part) of the real estate taxes, special assessment taxes and hazard insurance
premiums. Lessee shall pay the said increase with 15 days after being notified
of the assessment due.
THIRTY-NINTH: Lessee agrees to obtain all necessary occupational and
environmental licenses which are required by governmental authorities at
Lessee's expense. Lessee agrees to operate its business in a manner that is
environmentally safe and in conformity with applicable governmental rules and
regulations. Lessee will not dispose of hazardous materials or products on the
premises.
FORTIETH: Upon execution of this lease Lessor acknowledges the sum of $2,000.
The balance of $6,071.63 will be paid May 15th, 1997 before any tenant
improvements are started. The sum of these two amounts equals $8,071.63 which
constitutes the security deposit of $2,5000,000, the first month's rent of
$2,500.00 plus 6% Florida sales tax of $150.00, plus the last month's rent of
$2,756.25, plus 6% Florida Sales Tax of $165.38. The security deposit shall not
bear interest and may be commingled with Lessor's other funds. The security
deposit shall be returned to the Lessee at the termination of this lease,
subject to the provisions of this lease. The leased premises are to be returned
to their original condition, normal wear and tear excepted and as per the
provisions of this lease prior to the return of security deposits.
FORTY-FIRST: The commencement date of this lease shall be May 15th, 1997, in
accordance with paragraph 44 the first rental payment will be due June 15th,
1997. Tenant will be responsible for any other obligations under this lease,
including but not to electricity and tenant liability insurance, commencing May
15th, 1997.
FORTY-SECOND: Landlord hereby grants tenant an option to renew this lease for
2 additional 3 year term on the following terms and conditions:
1. Rent shall increase on an annual basis by five percent.
2. That all rents have been paid within 5 days after the due date;
3. That the lease is not in default at the time of renewal;
4. That tenant provides landlord with 90 days written notice, given by
certified mail, return receipt requested, of its intent to renew this
lease.
Option 1: 4-6 years and Option 2: 7-9 years both: Prior base, 5% annually
increase, plus terms of this lease.
<PAGE> 6
FORTY-THIRD: Tenant has inspected the subject premises and agrees to accept
same in an "As is" condition.
FORTY-FORTH: Tenant improvement allowances will be as follows with the
agreement that the rents have been paid within 5 calendar days of the due date
and that the lease is not in default.
The Tenant will be responsible for all its own tenant improvements. Upon the
occurrence that the Lessee submits to the Lessor a minimum of $12,000.00 in
improvement receipts (all work must be done by licensed contractors) for any or
all the following tenant improvements:
1. Front of the building - awnings with no advertising built in;
2. Interior: repainting, wallcoverings, chair rails, and new flooring
within 90 days from May 15th, 1997, allowance in rent only payments will be
made as follows:
1. The lessor will forgo the rent payment the first month in order that
the tenant is able to make necessary improvements to the premises.
(receipts do not have to be provided for this - this is granted by the
Lessor to the Lessee).
2. The lessor will forgo the rent payment for the (13) thirteenth month of
the lease term,
3. And/if upon renewal of the 1st lease option, the Lessor will forgo the
rent payment for the (37) thirty seventh month of the lease term.
The electricity for the premises will be the responsibility of the Lessee.
FORTH-FIFTH: In the event that DBR should vacate their premises at any time
during this leases term, Realm, Inc. will have the first option to obtain that
area at the current rate they are paying per square foot for the area of DBR,
as long as they are not in default of the lease and that they have paid their
rent by the 20th of each month.
IN WITNESS HEREOF, the parties hereto have hereunto executed this instrument
for the purpose herein expresses, the day and year above written.
Signed, sealed and delivered the presence of:
/s/ Regina Reyno by /s/ 5-6-97
- ----------------------- ---------------------------------
Lessee President (Date)
/s/
- -----------------------
As To Tenant (Lessee)
/s/ Regina Reyno pfe
- ----------------------- ---------------------------------
Reyno International, Inc. (Date)
/s/
- -----------------------
As To Landlord (Lessor)
<PAGE> 1
Exhibit 10.9
PROGRAM LICENSE AGREEMENT
This agreement ("Agreement") is between Broadcast America Partnership, Ltd.
("Network") with offices at 100 East Royal Lane, Suite 100, Irving Texas 75039
and VidKid Distributions, Inc. ("Licensor").
1. PROGRAM(S): 65 episodes of the program entitled "Howdy Doody".
2. TERM OF AGREEMENT: Effective Date: December 28, 1998; Termination Date:
December 24, 1999.
3. LICENSOR: VidKid Distribution, Inc., 3100 North 29th Court, Hollywood, FL
33020
Phone: 954/927-2722 Fax: 954/927-8859
4. NETWORK: America One Television.
5. DATE OF DELIVERY OF PROGRAM: One week prior to air.
6. FORMAT: The program (and any commercial spots) to be provided on beta sp
tape with audio mixed to channel two, or channel one and two. No stereo tapes
will be accepted.
7. PAYMENT TERMS: Network and Licensor shall share the net revenues from the
three (3) minutes of advertising time on a fifty-fifty basis. Net revenues
shall mean revenues actually collected from the sale of advertising spots
during such time periods, less agency, sales person, and representative fees
and commissions (up to 30%)(e.g., commissions paid to companies for selling
advertising time during the Program. Net revenues shall be distributed by
Network in the month following the month they are collected. Network will
provide Licensor a billing summary 10 business days after the conclusion of
each broadcast month.
8. PROGRAM SCHEDULE:
America One will distribute the Program between the hours of 7am - 6pm est
Monday through Friday.
Notwithstanding the foregoing, Network may preempt the Program Schedule with
live events in its sole discretion. In the event of preemption, Network will
provide a "make good" broadcast at no charge.
9. COMMERCIAL SPOTS: Licensor: :30 .
-----------------
Affiliate: 2:00 .
---------------
Network: 3:00 .
-----------------
5:30 Total Minutes
-----------------
10. LENGTH OF PROGRAM: Commercial Time: 5:30 .
-------------------
PSA Time: :30 .
--------------------------
Content Time: 22:30 (minimum).
----------------------
Running Time: 28:30 .
----------------------
11. ADDITIONAL TERMS:
- - The program is supplied to America One on a barter basis.
- - This agreement will automatically renew thirty days prior to expiration
for an additional year upon the same terms, unless either party notifies
the other party that it does not wish to renew the Agreement at least
ninety (90) days prior to the end of the Term.
- - If Licensor notifies Network that it does not wish to renew this
Agreement, then, from time to time if Licensor receives a bonafide offer to
broadcast or distribute the Program, Licensor shall promptly notify Network
of such offer (along with evidence of the financial terms of such offer
[including term of years]), and Network shall have the right to match such
offer (within ten (10) business days of its receipt of such offer) and
broadcast the Program under the financial terms set forth in such offer
(and the parties shall enter into an agreement in the form of this
Agreement but with the economic terms set forth in the offer), provided
Network shall have paid Licensor at least $60,000 during the Term of this
Agreement. Networks matching right shall remain until Network rejects such
offer and Licensor consummates a written agreement with such third party.
- - Licensor is supplying this Program on an exclusive basis for over the air
broadcasts in North America (excluding cable television broadcasts to
fee-based cable subscribers) and Internet broadcasts.
- - Network will offer Licensor ten (10) thirty (30) second spots, ROS per
week, subject to availability. Additionally, Licensor shall receive two (2)
additional spots guaranteed within other children's programming; provided
(i) only one (1) spot will be shown per program, and (ii) the commercials
are targeted to and are suitable for children.
12. TERMS AND CONDITIONS: The Terms and Conditions set out in the attached
EXHIBIT "A" are a part of this Agreement. Licensor hereby acknowledges receipt
of Exhibit "A."
(Licensor's Initials_______)
<TABLE>
<S> <C>
AGREED TO AND ACCEPTED:
("Network") ("Licensor")
BROADCAST AMERICA PARTNERSHIP, LTD. VidKid Distribution, Inc.
----------------------------------------
By: Broadcast America, Inc, general partner.
By: /s/ Thomas A. Stacy By: /s/ Steven Adelstein
--------------------------------------- ----------------------------------
Name: Thomas A. Stacy Name: Steven Adelstein
------------------------------------- --------------------------------
Title: Asst General Manager Title: President
------------------------------------ -------------------------------
</TABLE>
<PAGE> 2
EXHIBIT "A"
TERMS AND CONDITIONS TO PROGRAM LICENSE AGREEMENT
1. GRANT: Licensor hereby grants to Network the right and license within the
United States (including its territories and possessions), and in the territory
covered by the satellite signal of the Network, itself and/or through third
parties to distribute, broadcast, transmit, copy, display, exhibit, advertise,
promote, project and perform, on a live and/or tape-delayed basis, (including
but not limited to exploitation by means of all forms of video cassette,
videodiscs, video cartridges, Internet and videotapes, now known or hereafter
devised) but subject to any restrictions set forth herein, the Program(s)
listed in this Agreement or any portions or segments thereof, during the Term
subject to the terms and conditions contained herein.
2. TERM: The rights granted to Network herein shall be vested for the term
of this Agreement.
3. DELIVERY REQUIREMENTS (TAPE): Licensor, at its sole cost and expense shall
provide and deliver (i) one (1) commercial broadcast television quality
videotape, with a complete audio mix as described in the Agreement. Each
videotape shall be delivered prepaid to Network on or before the delivery dates
specified in this Agreement. Delivery shall not be deemed complete unless and
until the materials delivered by Licensor in accordance with the provisions
hereof are technically and editorially acceptable to Network. Timely delivery
of such technically acceptable material is of the essence of this Agreement.
The videotape referred to herein shall be a duplicate of the master.
4. PAYMENTS: Licensor and Network shall each have available to it only the
number of Commercial Spots within each Program as set forth in this Agreement.
5. REPRESENTATIONS AND WARRANTIES: Licensor represents and warrants to
Network that:
(a) it has the right to enter into this Agreement and to grant the rights
herein granted to Network free and clear of all liens and encumbrances;
(b) the exercise by Network of any of the rights herein granted to it will not
violate or infringe the copyright (including music performance rights),
trademark, service mark, trade name, patent, literacy, intellectual, artistic
or dramatic right, right of privacy or civil, property or any other rights
whatsoever of any person or entity; and
(c) Licensor has paid or shall pay (or third parties not affiliated with
Network paid) any and all residuals, including all necessary music title and
performance rights, reuse, and other fees or compensation of any kind, however
denominated, which are due or may be come due by reason of Network's full
exercise of any and all of its rights hereunder.
6. INDEMNIFICATION: Licensor shall indemnify, defend, and hold harmless the
Network and its agents, contractors, officers, directors, employees, partners,
affiliates, representatives, and broadcast affiliates to the fullest extent
allowed by law, from and against all losses, claims, damages, liabilities,
expenses, including, without limitation, reasonable attorneys' fees based upon,
relating to, or arising out of (i) claims arising out of the information
contained in or linked to any Program or other information supplied by Licensor
or its agents or representatives, (ii) actions or claims that the Programs are
not owned by Licensor, (iii) claims for infringement upon any patent,
trademark, service mark, copyright, trade name, trade secret, right of
publicity, right to broadcast or rebroadcast, or other proprietary right or
interest of a third party relating to the Program, (iv) actions taken by
governmental agencies and/or industry or trade associations for advertisements
not conforming to any applicable law and/or voluntary agreement, (v) actions or
claims brought by ASCAP, BMF, or SESAC or other licensing groups in connection
with the Programs, and (vi) breach of any representation or warranty made by
Licensor or its agents or representatives. The obligations under this paragraph
shall survive any termination of this Agreement unless specifically released in
a writing executed by both parties.
7. FORCE MAJEURE: If because of act of God, inevitable accident; fire;
lockout, strike or other labor dispute; riot or civil commotion; act of
governmental instrumentality (whether federal, state or local); failure in
whole or in part of technical facilities; failure or broadcast facilities,
technical or programming difficulties, or other causes beyond Network's
reasonable control Network fails to fully perform hereunder, the same shall not
constitute a breach of this Agreement by Network, and Network will not be liable
to Licensor for such failure to perform.
8. CANCELLATION: Network may cancel this Agreement under normal
circumstances by delivering to Licensor, Network or their designated
representative thirty (30) days prior notice in writing, provided that the
Program shall air for at least 13 weeks. However, Network shall have the right
to cancel this Agreement immediately by the most expedient means of
communications to Licensor in the event that Licensor fails to timely perform
any one or all of its responsibilities enumerated else where in the Agreement.
Any cancellation of this Agreement shall be prospective only and shall not
affect the Network's perpetual rights to any Program(s) delivered prior to the
effective date of such cancellation.
Page 1
<PAGE> 3
9. MISCELLANEOUS:
(a) Licensor shall give mention and/or credit to Network in all press
releases or publicity covering the Program(s).
(b) Network may use and authorize the use in any media of the names, logos,
trade names, trademarks, service marks and other intellectual property of
Licensor and other entities or individuals participating in the Program, and
the names, likenesses and voices of, and biographical information concerning,
all athletes, contestants, players, coaches, managers, actors and others
connected with the Program to broadcast, advertise, promote and publicize the
Program.
(c) If Licensor decides to seek any recourse, action or claim to which it is
entitled under or by reason of this Agreement, Licensor agrees that such
recourse, action or claim shall extend only to Network and not to any of
Network's partners (limited, general or otherwise), owners, or affiliates.
(d) The prevailing party in any litigation (or arbitration to which the
parties may hereafter agree) between the parties arising out of or relating to
the interpretation, application or enforcement of any provision of this
Agreement shall be entitled to recover all of its reasonable attorneys' fees
(including an allocable portion of in-house attorneys' fees if any) and costs,
including, but not limited to, costs and attorneys' fees related to or arising
out of any trial or appellate proceedings.
(e) This Agreement is made and delivered in Irving, Texas and shall be
governed by and construed in accordance with the laws of the State of Texas
(without regard to Texas' choice of law rules). Any delay or waiver (whether
due to course of dealing or otherwise) of any right or remedy by Network shall
not act as a waiver of any right or remedy available to Network.
(f) This Agreement embodies the entire understanding of the parties with
respect to the subject matter hereof, supersedes any prior agreement or
understanding, and may not be altered, amended, or otherwise modified except by
an instrument in writing executed by both parties.
(g) The invalidity of any provision of this Agreement will not affect the
validity of any other provision of this Agreement, but both parties must
negotiate in good faith the equitable modification of any provision held to be
invalid. No provision of this Agreement is intended or shall be construed to
provide or create any third party beneficiary right. Additionally, this
Agreement does not create, and shall not be construed to create, any joint
venture, partnership, principle-agent, or any other similar relationship between
the parties or their owners.
(h) Licensor acknowledges that, except as specifically set forth in this
Agreement, the Network has not made, does not make, and specifically negates
and disclaims any representations, warranties, promises, covenants, agreements,
or guarantees of any kind of character whatsoever, whether express or implied,
oral or written, of, as to, concerning, or with respect to (i) the subject
matter of this Agreement, (ii) the amount of any projected revenues, or (iii)
Network's affiliates. This paragraph shall survive the expiration or earlier
termination of this Agreement.
(i) Unless otherwise specifically stated in this Agreement, (i) it shall be
up to the sold discretion of the Network in its good faith business judgment,
to select the form, production, and placement (e.g., time, duration, and
location) of any Program or commercials, (ii) Network shall make revisions to
the Program Schedule as it deems appropriate, and (iii) all commercials must be
delivered at the same time the Program is delivered to Network. The Network
reserves the right to refuse to broadcast any material which, in the Network's
sole discretion, promotes or contains firearms, pornography, or any other
products, services, or content which may be deemed inappropriate material for
general public access.
(j) Licensor agrees that the terms and conditions of this Agreement will be
kept confidential by it and its agents, employees, and affiliates, and, except
as may be required by law, will not be disclosed in any manner whatsoever, in
whole or in part, without the prior written consent of the Network.
<PAGE> 1
Exhibit 10.10
REALM PRODUCTION AND ENTERTAINMENT, INC.
EMPLOYMENT AGREEMENT
LOAN OUT AGREEMENT WITH A.U.W., INC.
Employment Agreement, between Realm Production and Entertainment, Inc.,
(the "Company") Steven Adelstein (the "Employee") and A.U.W., Inc., collectively
called the "Parties".
It is fully acknowledged by the parties that Steven Adelstein is currently
employed by A.U.W., Inc. until December 31, 2005 and A.U.W., Inc. consents to
Steven Adelstein entering into an employment agreement with the Company,
subject to the following terms and conditions.
1. For good consideration, the Company employs the Employee on the
following terms and conditions.
2. Term of Employment: Subject to the provisions set forth below this
agreement will begin on, January 1, 1996 and end December 31, 2000, unless
sooner terminated.
3. Loan Out Arrangement (between A.U.W., Inc. and the Company pertaining
to the services of Steven Adelstein):
It is understood between the Realm Production and Entertainment, Inc., the
Company and A.U.W., Inc., that all services rendered by Steven Adelstein are
specifically under a Loan Out arrangement. The following are to be fully
included in said employment agreement:
a. Any and all warrants issued by the Company to Steven Adelstein
shall be issued to A.U.W., Inc., and or assigns until December 31, 2005.
b. Commencing January 1, 1998 thru December 31, 1999, Mr. Adelstein
shall be paid directly from the Company an annual salary of $36,000 plus normal
fringe benefits. All excess payments shall be remitted as consulting fees
pursuant to the Loan Out arrangement and each of the Parties shall be
responsible for their taxes accordingly. For example: for the total year 1998,
if Mr. Adelstein, under the Loan Out arrangement, is paid a total of $150,000,
$36,000 shall be paid directly to Mr. Adelstein and appropriate payroll
withholdings shall be the responsibility of Mr. Adelstein, individual, and the
balance $114,000 shall be remitted to A.U.W., Inc. and accordingly, A.U.W., Inc.
is responsible for said taxes.
c. Commencing January 1, 2000 thru December 31, 2005, Mr. Adelstein
shall be paid directly from the Company an annual salary of $48,000 plus normal
fringe benefits. All excess payments shall be remitted as consulting fees
pursuant to the Loan Out arrangement and each of the Parties shall be
responsible for their taxes accordingly. For example: for the total year 2000,
if Mr. Adelstein, under the Loan Out arrangement, is paid a total of $200,000,
$48,000 shall be paid directly to Mr. Adelstein and appropriate payroll
withholdings shall be the responsibility of Mr. Adelstein, individual, and the
balance $152,000 shall be remitted to A.U.W., Inc. and accordingly, A.U.W., Inc.
is responsible for said taxes.
1
<PAGE> 2
4. Effect of Prior Agreements: This agreement supersedes any prior
agreement between the Company or any predecessor of the Company and the
Employee, except that this agreement shall not affect or operate to reduce any
benefit or compensation inuring to the Employee of a kind elsewhere provided and
not expressly provided in this agreement.
5. Settlement by Arbitration: Any claim or controversy that arises out of
or relates to this agreement, or the breach of it, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. Judgment upon the award rendered may be entered in any court with
jurisdiction.
6. Oral Modifications Not Binding: This instrument is the entire agreement
of the Company and the Employee. Oral changes shall have no effect. It may be
altered only by a written agreement signed by the party against whom enforcement
of any waiver, change, modification, extension, or discharge is sought.
Signed this day of January 15, 1996
REALM PRODUCTION AND ENTERTAINMENT, INC.:
/s/ STEVEN ADELSTEIN
- -----------------------------------
By: President
EMPLOYEE:
/s/ STEVEN ADELSTEIN
- -----------------------------------
A.U.W., INC.
/s/ STEVEN ADELSTEIN
- -----------------------------------
By: President
2
<PAGE> 1
EXHIBIT 21
Schedule of Subsidiaries of
Realm Products and Entertainment, Inc.
As of the date of filing of the Form 10-SB Registration Statement of
which this exhibit forms a part, the Registrant's subsidiaries were Vidhid
Distribution, Inc., a wholly owned subsidiary, and BRT Video, Inc., a majority
owned subsidiary.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REALM
PRODUCTION AND ENTERTAINMENT, INC. AND SUBSIDIARIES FORM 10-QSB FOR THE YEAR
ENDED DECEMBER 31, 1998 FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 68,261
<SECURITIES> 0
<RECEIVABLES> 196,182
<ALLOWANCES> 41,000
<INVENTORY> 0
<CURRENT-ASSETS> 234,608
<PP&E> 1,290,381
<DEPRECIATION> 73,752
<TOTAL-ASSETS> 2,639,522
<CURRENT-LIABILITIES> 1,749,892
<BONDS> 0
0
0
<COMMON> 14,681
<OTHER-SE> 797,592
<TOTAL-LIABILITY-AND-EQUITY> 2,639,522
<SALES> 347,997
<TOTAL-REVENUES> 347,997
<CGS> 96,781
<TOTAL-COSTS> 96,781
<OTHER-EXPENSES> 880,266
<LOSS-PROVISION> (629,050)
<INTEREST-EXPENSE> 22,480
<INCOME-PRETAX> (651,270)
<INCOME-TAX> 0
<INCOME-CONTINUING> (651,270)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (651,270)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
