U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 E
For the transition period from _________________ to ____________________
Commission file number: 000-26971
AREA INVESTMENT AND DEVELOPMENT COMPANY
(Name of small business issuer in its charter)
Utah 87-0284871
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Solomon Broadcasting International, Inc.
130 S. El Camino Drive, Beverly Hills,CA 90212
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: 301-205-6220
Securities to be registered under Section 12(b) of the Exchange Act:
Title of Each Class: None Name of each exchange on which registered:
N/A
Securities to be registered under Section 12(g) of the Exchange Act:
Common Stock, $0.01 par value
-----------------------------
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes [_] No
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenue for its most recent fiscal year: $489.00.
<PAGE>
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the average bid and asked prices of such stock, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2): $38,216,952 as of March 8, 2000.
Note: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are estimated.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court Yes ______ No ______
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of the issuer's common equity, as of
the latest practicable date: 14,591,397 shares of common stock as of March 27,
2000.
DOCUMENTS INCORPORATED BY REFERENCE
Our definitive information statement which was filed with the Securities
and Exchange Commission (the "Commission") on March 27, 2000, for a special
meeting of stockholders, expected to be held on or about April 17, 2000, is
incorporated by reference into Parts I and III of this Form 10-KSB. In addition,
our information statement which was filed with the Commission on February 9,
2000, in connection with a change in the majority of the board of directors of
the Company, is incorporated into Parts I and III of this Form 10-KSB.
Transitional Small Business Disclosure Format (check one): Yes [_] No [X]
Certain statements in this Annual Report that are not historical facts
constitute "forward- looking statements" within the meaning of the Federal
securities laws. Discussions containing such forward-looking statements may be
found in the sections entitled, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business," as well in this
Annual Report generally. In addition, when used in this Annual Report the words
"anticipates," "intends," "seeks," "believes," "plan," "estimates," and
"expects" and similar expressions as they relate to us or our management are
intended to identify such forward-looking statements. Such statements are
subject to a number of risks and uncertainties. Our actual results, performance
or achievements could differ materially from the results expressed in, or
implied by, these forward-looking statements. We undertake no obligation to
revise these forward-looking statements to reflect any future events or
circumstances.
<PAGE>
TABLE OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF BUSINESS .......................................... 1
ITEM 2. DESCRIPTION OF PROPERTY .......................................... 3
ITEM 3. LEGAL PROCEEDINGS ................................................ 3
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS3
PART II
ITEM 5. MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS .................................. 4
ITEM 6. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF PLAN OF OPERATION ................................ 5
ITEM 7. FINANCIAL STATEMENTS ............................................. 6
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANT ON ACCOUNTING FINANCIAL DISCLOSURE .................... 17
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT ................ 18
ITEM 10. EXECUTIVE COMPENSATION ........................................... 21
ITEM 11. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT ................................. 21
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ................... 24
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K ................................. 26
SIGNATURES ................................................................ 28
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Business Development
As used herein, the term "Company" refers to Area Investment and
Development Company, a Utah corporation, and its subsidiaries and predecessors,
unless the context indicates otherwise.
The Company was originally formed as a Utah corporation in June 1970, for
the purpose of engaging in real estate, general business and investment
opportunities. From 1997 through 1999, the Company had no material operations.
Until recently, the Company had been primarily engaged in seeking business
ventures to acquire (for more information about material events subsequent to
the Company's year-end covered by this filing please see "subsequent events"
below).
On June 15, 1997, the Company entered into a Financial Consulting Agreement
with Park Street Investments, Inc., a Utah corporation ("Park Street") wholly
owned by Ken Kurtz, who subsequently resigned his positions as an executive
officer and director of the Company in February 2000. In consideration for
consulting services and payment of the Company's expenses, the Company issued
3,000,000 shares of common stock to Park Street in November 1997. Park Street
subsequently assigned 2,000,000 shares it received to Mr. Kurtz, and 500,000
each to Carrie Kurtz and Tammy Gehring, both of whom were directors of the
Company at the time of the transfer. Ms. Kurtz resigned in February 2000 while
Ms.Gehring remains a director.
In January 1999, the Company began discussions with representatives of
Fax4free.com, Inc. ("Fax4free"), an online service provider, for the possibility
of a business combination or strategic alliance. The Company and Fax4free agreed
on the terms of Fax4free's acquisition. In anticipation of the acquisition of
Fax4free, the Company authorized an offering of 4,000,000 shares of its common
stock (the "Offering") pursuant to Rule 504 of Regulation D, promulgated under
the Securities Act of 1933, as amended (the "Act"). The 4,000,000 shares were
offered at $.03125 per share to raise $125,000. Proceeds were to be used to pay
expenses related to the acquisition of Fax4free, and to pay off the remainder of
the Company's debts. On March 30, 1999, the Company closed the Offering after
having sold 4,000,000 shares to a total of seven investors. Of the 4,000,000
shares sold, 3,918,750 shares were sold for $122,461 in cash and 81,250 were
sold for $2,539 in debt settlement. On March 24, 1999, the Company paid off the
remainder of its debts in the amount of $32,461 and paid a finder/consulting fee
in the amount of $90,000 to Hudson Consulting Group, Inc. ("Hudson"), for
introducing Fax4free to the Company.
In April 1999, Fax4free terminated its agreement with the Company because
it subsequently discovered it could not obtain the additional necessary funding,
from unrelated financing sources, for its future business operations on terms
acceptable to Fax4free. Hudson agreed to assist the Company in locating another
merger acquisition candidate, at no extra fee. Management opted to expense the
entire $90,000 fee paid to Hudson, which was non-refundable, because Hudson did
not have an exclusive agreement with management and was not obligated to
perform.
1
<PAGE>
In April 1999, the Company issued an additional 2,000,000 shares of its
common stock to Mr. Kurtz, pursuant to Section 4(2) of the Act, at $0.01 per
share, for a total of $20,000, which was used by the Company for general working
capital.
Subsequent Events
On February 19, 2000, the Company closed an Asset Acquisition Agreement
("Agreement") with Maxx International, Inc. ("Maxx"). Pursuant to the Agreement,
the Company acquired 100% of the assets of Maxx, including the worldwide
distribution rights to the private prayer books of His Holiness, Pope John Paul
II, in exchange for 3,500,000 shares of the Company's common stock (the
"Acquisition"). In connection with the Acquisition, the Company appointed
Michael Solomon as a director and chairman of the board and Rick Garson as a
director and the Company's president and secretary. Immediately after such
appointments, Ken Kurtz and Carrie Kurtz resigned from all of their positions as
directors and officers of the Company. Tammy Gehring remains a director.
Additionally, in March of 2000, the Company acquired 100% of the
outstanding shares of common stock of Pure Vision Internet, Inc., a California
corporation ("Pure Vision") in exchange for the issuance by the Company of an
aggregate of 2,043,226 shares of the Company's common stock, options to purchase
an additional 1,050,000 shares of the Company's common stock and satisfaction of
a Pure Vision debt. Pure Vision manages 35,000 digital video and audio files
daily. Pure Vision is well established in the areas of web site template
development, video streaming, webcasting, web conferencing, hosting sites,
automatic e-commerce store generator, domain name provider and ISP/DSL reseller.
The main focus of Pure Vision for the last three years has been their Web site
www.thegospel.com. The gospel.com is a Christian Web Community that links the
churches and ministries of today with the furthest points of the world.
Accordingly, as of the date of this report, the Company now engages in the
business of producing, licensing and distributing broad-based multimedia
entertainment programs and products. The Company now owns the rights to produce
a number of high-profile entertainment programs and products in the religious,
music and sports markets.
Additional information required by this item is incorporated by reference
from the Company's definitive information statement filed with the Securities
and Exchange Commission (the "Commission") on March 27, 2000, for a special
meeting of stockholders, expected to be held on or about April 17, 2000, and the
Company's information statement which was filed with the Commission on February
9, 2000, in connection with a change in the majority of the board of directors
of the Company.
2
<PAGE>
ITEM 2. DESCRIPTION OF PROPERTY
During the calendar years ended December 31, 1999 and 1998 the Company
used, at no cost, the office and related clerical services owned and provided by
Mr. Kurtz, a former officer and director of the Company. All correspondence for
the Company was received through a mail service at 2133 East 9400 South, Suite
151, Sandy, Utah 84093, which was recently changed to 3434 East 7800 South,
#237, Salt Lake City, Utah 84121.
As of the date of this report, the Company uses the offices of Solomon
Broadcasting International, Inc., a company owned by the Company's Chairman of
the Board, Michael Solomon, located at 130 S. El Camino Drive, Beverly Hills,
California 90212. A tenant at will, the Company pays Solomon Broadcasting
International, Inc., $3,000 a month for the use of the office space.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceeding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote before its shareholders
during the year ended December 31, 1999 and 1998.
Additional information required by this item is incorporated by reference
from the Company's definitive information statement filed with the Commission on
March 27, 2000, for a special meeting of stockholders, expected to be held on or
about April 17, 2000, and the Company's information statement which was filed
with the Commission on February 9, 2000, in connection with a change in the
majority of the board of directors of the Company.
3
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The common stock of the Company is currently traded through the NASD
OTC-Bulletin Board under the symbol "AIVD," although very limited trading
occurred during the year ended December 31, 1999.
The table set forth below lists the range of high and low bids of the
Company's common stock for each quarter over the last two calendar years ended
December 31, 1999 and 1998. The prices in the table reflect inter-dealer prices,
without retail markup, markdown or commission and may not represent actual
transactions.
Calender Year Quarter High Low
------------- ------- ---- ---
1998 First N/A N/A
Second N/A N/A
Third N/A N/A
Fourth $0.02 $0.005
1999 First $0.02 $0.001
Second $6.00 $0.062
Third $7.00 $0.062
Fourth $6.50 $0.062
As of March 24, 2000, there were approximately 58 holders of record of the
Company's common stock.
The Company has not declared any cash dividends for the last two fiscal
years. The Company does not anticipate declaring any cash dividends in the near
future. There are no restrictions that limit the Company's ability to pay
dividends, other than those generally imposed by applicable state law. The
future payment of dividends, if any, on the common stock is within the
discretion of the board of directors and will depend on the Company's earnings,
capital requirements, financial condition, and other relevant factors. The
Company does not anticipate the payment of future dividends.
4
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Financial
Statements, including the Notes thereto, of the Company included elsewhere in
this report.
Plan of Operation
The Company's mission is to own and manage Web content and media assets
which are packaged and converged across multiple distribution platforms to
provide multifaceted revenue streams and increase stockholder equity.
The Company is presently seeking to form a strategic alliance with another
entity and or investor to help satisfy its current cash flow needs for the next
fiscal year. The Company is in the unique position of owning the exclusive
worldwide licensing rights to the seven private prayer books written by His
Holiness Pope John Paul II. Although there can be no assurance, a significant
publishing advance of $5,000,000 to $8,000,000 is anticipated once the approved
translations are received from the Vatican. Additionally, the Company's
marketing program includes the distribution will be a collection of music
compact discs with unique characteristics. This will involve famous national and
international entertainment idols, actors and sports stars reading various
prayers contained within the Pope's Prayer Books, combined with music.
In March 2000, the Company acquired 100% of the outstanding stock of Pure
Vision Internet Inc. ("Pure Vision") which manages 35,000 digital video and
audio files daily. Pure Vision is well established in the areas of web site
template development, video streaming, webcasting, web conferencing, hosting
sites, automatic e-commerce store generator, domain name provider and ISP/DSL
reseller. The main focus of Pure Vision for the last three years has been their
Web site www.thegospel.com. The Gospel.com is a Christian Web Community that
links the churches and ministries of today with the furthest points of the
world. As the Company develops, additional personnel will be required to staff
the various business centers.
5
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
Independent Auditors' Report .............................................. 7
Balance Sheets ............................................................ 8
Statements of Operations .................................................. 9
Statements of Stockholders' Equity (Deficit) .............................. 10
Statements of Cash Flows .................................................. 11
Notes to the Audited Financial Statements ................................. 12
6
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Area Investment and Development Company
Salt Lake City, Utah
We have audited the accompanying balance sheets of Area Investment and
Development Company as of December 31, 1999 and 1998 the related statements of
operations, shareholders' equity, and cash flows for the years ended December
31, 1999 and December 31, 1998. These financial statements are the
responsibility of the Company's Management. Our responsibility is to express an
opinion on these financial statements based on our audit.
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 financial statements are free of material
misstatements. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the 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 financial statements referred to above present fairly, in
all material respects, the financial position of Area Investment and Development
Company as of December 31, 1999 and 1998 and the results of its statements of
operations, shareholders' equity, and cash flows for the years ended December
31, 1999 and 1998 in conformity with generally accepted accounting principles.
The accompanying financial statements have been presented assuming the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has transacted little business activity for some time,
which raises substantial doubt about its ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
/s/ SELLERS & ASSOCIATES, P.C.
Ogden, Utah
February 29, 2000
7
<PAGE>
AREA INVESTMENT AND DEVELOPMENT COMPANY
Balance Sheets
(Audited)
ASSETS
<TABLE>
<CAPTION>
December 31,
1999 1998
--------- ---------
<S> <C> <C>
Current Assets
Cash $ 20,489 $ 0
--------- ---------
Total Current Assets 20,489 0
--------- ---------
Total Assets $ 20,489 $ 0
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 0 $ 35,000
--------- ---------
Total Current Liabilities 0 35,000
--------- ---------
Stockholders' Equity (Deficit)
Common Stock, $0.01 par value, 50,000,000 authorized
Issued and outstanding 9,048,178 shares at
12-31-99 and 3,048,173 shares at 12-31-98 90,482 30,482
Additional Paid-In Capital 116,700 31,700
Accumulated during (Deficit) (186,693) (97,182)
--------- ---------
Total Stockholders' Equity 20,489 (35,000)
--------- ---------
Total Liabilities and Stockholders'
Equity (Deficit) 20,489 0
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
AREA INVESTMENT AND DEVELOPMENT COMPANY
Statements of Operations
(Audited)
For the Years Ended
December 31,
1999 1998
----------- -----------
INCOME
Settlement of debt $ 0 $ 51,915
Interest Income 489 0
----------- -----------
GROSS INCOME $ 489 $ 51,915
----------- -----------
EXPENSES
General and administrative $ 90,000 $ 480
----------- -----------
Total Expenses $ 90,000 $ 480
----------- -----------
INCOME (LOSS) FROM OPERATIONS (89,511) 51,435
----------- -----------
NET INCOME (LOSS) $ (89,511) $ 51,435
----------- -----------
BASIC INCOME (LOSS) PER SHARE$ (0.01) $ 0.02
=========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 7,634,474 3,048,173
=========== ===========
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
AREA INVESTMENT AND DEVELOPMENT COMPANY
Statements of Stockholders' Equity (Deficit)
(Audited)
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid-in Accumulated Stockholders'
Shares Amount Capital (Deficit) Equity
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 3,048,173 $ 30,482 $ 31,700 $(148,617) $ 86,435
Net Income for the year ended
December 31, 1998 0 0 0 51,435 51,435
--------- --------- --------- --------- ---------
Balance, December 3,048,173 30,482 31,700 (97,182) (35,000)
Issuance of common stock for
cash and debt 6,000,000 60,000 85,000 0 145,000
Net loss for the year
ended December 31, 1999 0 0 0 (89,511) (89,511)
--------- --------- --------- --------- ---------
Balance, December 31, 1999 9,048,173 $ 90,482 $ 116,700 $(186,693) $ 20,489
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
AREA INVESTMENT AND DEVELOPMENT COMPANY
Statements of Cash Flows
(Audited)
<TABLE>
<CAPTION>
For the Years Ended
December 31,
CASH FLOWS FROM OPERATING ACTIVITIES 1999 1998
--------- ---------
<S> <C> <C>
Net Income/(loss) $ (89,511) $ 51,435
--------- ---------
Adjustments to reconcile net loss to net cash
used by operating activities:
Increase/(Decrease) Accounts Payable (32,461) (51,435)
--------- ---------
Net Cash Provided (Used) by Financing Activities (121,972) 0
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES 0 0
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Stock for Cash 142,461 0
--------- ---------
Net Cash Provided by Financing Activities 142,461 0
--------- ---------
NET INCREASE (DECREASE) IN CASH 20,489 0
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 0 0
--------- ---------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 20,489 $ 0
========= =========
- ---------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF NON CASH
Investing and financing activities - stock issued
for debt settlement $ 2,539 $ 0
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
AREA INVESTMENT AND DEVELOPMENT COMPANY
Notes to the Audited Financial Statements
December 31, 1999 and 1998
NOTE 1 - NATURE OF ORGANIZATION
The financial statements presented are those of Area Investment and
Development Company (the "Company"). The Company was organized under the
laws of the State of Utah on June 10, 1970. The Company was organized for
the purpose of seeking potential business ventures.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year end.
b. Income Taxes
Deferred income taxes arise from the temporary differences between
financial statement and income tax recognition of net operating losses. A
deferred tax asset arising from the net operating loss carryover of
approximately $90,000 has been offset by a valuation allowance.
c. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
d. Statement of Cash Flows
For purpose of the statement of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less when
purchased to be cash equivalents.
e. Net Income (Loss) Per Share
Primary net income or (loss) per share is computed by dividing net income
or (loss) by the weighted average number of common shares outstanding.
12
<PAGE>
AREA INVESTMENT AND DEVELOPMENT COMPANY
Notes to the Audited Financial Statements
December 31, 1999 and 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
f. Revenue Recognition
Revenue is recognized when earned.
g. Fair Value of Financial Instruments
The methods and assumptions used to estimate the fair value of each class
of financial instruments are as follows:
Cash and cash equivalents :
The carrying amounts approximate fair value because of the short maturity
of these instruments.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course
of business. However, the Company does not have significant cash or other
material assets, nor does it have an established source of revenues
sufficient to cover its operating costs and to allow it to continue as a
going concern.
Management developed a plan and raised $145,000 by issuing stock. All
obligations were paid off and $20,000 cash was left in the Company.
On December 31, 1999 the Company was negotiating an asset acquisition of
Maxx International, Inc. (Maxx) which finalized February 3, 2000. Assets
were acquired in exchange for 3,500,000 shares of capital stock. Management
believes the Company's future success will be achieved through the
development of assets acquired from Maxx. However, there can be no
assurance of future success. The financial statements do not include any
adjustment that might be necessary if the Company is unable to continue as
a going concern.
13
<PAGE>
AREA INVESTMENT AND DEVELOPMENT COMPANY
Notes to the Audited Financial Statements
December 31, 1999 and 1998
NOTE 4 - RELATED PARTY TRANSACTIONS
Because the Company lacked assets or resources to compensate or induce
personnel to assist it with a program of reviving or combining the Company
with an operational business, the Company entered into a Financial
Consulting Agreement ("Agreement")with Park Street Investments, Inc. ("Park
Street") in June of 1997. Park Street is a Utah Corporation 100% owned by
Ken Kurtz, the Company's President, majority shareholder and director.
According to the Agreement, Park Street has agreed to assist the Company
with its corporate maintenance, administration, financial statement
preparation and securities filings. In addition, Park Street is to actively
pursue, negotiate and structure a merger or business combination with a
third party on behalf of the Company. Park Street has also agreed to pay
for the costs associated with these responsibilities until the Company
effects a combination with another entity.
As consideration for its services and payment of the Company's costs
therewith, the Company's board authorized the issuance of 3,000,000
restricted common stock shares valued at $.01 per share. By November 25,
1997 all 3,000,000 shares were issued. Of this, Park Street assigned
2,000,000 shares to Ken Kurtz, who is both the Company's and Park Street's
President and 500,000 shares to each of the Company's two directors for
their assistance with Park Street in implementing its contract with the
Company.
Also according to the Agreement, Park Street shall be entitled to as much
as 10% of the total issued and outstanding shares of the Company after a
business combination. Park Street shall also be entitled to any cash
consideration it can negotiate from a potential reorganization entity. The
Agreement is flexible and actual results will vary depending upon actual
negotiation.
This agreement resulted in a change in control of the Company giving Ken
Kurtz majority control of the Company's common stock. This stock issuance
is not deemed to be at arms length.
In June 1997 the Company appointed Ken Kurtz, a director at the time, as
the Company's President. In September 1997, the Company appointed Tammy
Gehring and Carrie Kurtz as additional directors and as Secretary/Treasurer
and Vice President respectively. Ms. Gehring is also employed by Park
Street. Mrs. Kurtz is the wife of the Company's President/Director. 14
14
<PAGE>
AREA INVESTMENT AND DEVELOPMENT COMPANY
Notes to the Audited Financial Statements
December 31, 1999 and 1998
NOTE 4 - RELATED PARTY TRANSACTIONS (CONTINUED)
In January 1999, the Company began discussions with representatives of
Fax4free.com, Inc. - an online service provider - for the possibility of a
business combination. In anticipation of such business combination, the
Company authorized an offering for 4,000,000 shares of its common stock
under Regulation D Rule 504 at $.03125 per share to raise $125,000.
Proceeds were to be used to pay expenses related to the business
combination and to pay off the remainder of the Company's debts.
On March 30, 1999, the Company closed the offering after having sold the
4,000,000 shares to seven investors of which 3,918,750 shares were sold for
$122,461 in cash and 81,250 were sold for $2,539 in debt settlement. On
March 24, 1999, the Company paid off the remainder of its debts in the
amount of $32,461 and paid a finder/consulting fee in the amount of $90,000
to Hudson Consulting Group, Inc. ("Hudson") for introducing Fax4free.com,
Inc. to the Company. Hudson has agreed to assist in locating another merger
acquisition candidate as part of its $90,000 fee which has been already
paid. Management has opted to expense the entire $90,000 fee which is
non-refundable because Hudson does not have an exclusive agreement with
management and is not obligated to perform. Therefore, there are no
assurances that the Company may not be obligated to pay additional fees to
other parties in the future.
On April 5, 1999 the Company sold and issued 2,000,000 restricted shares of
its common stock to it its President, Ken W. Kurtz for $20,000 cash. Later
in April, 1999 the Company terminated its negotiations with Fax4free.com,
Inc. and the anticipated business combination ceased.
NOTE 5 - REDUCED SETTLEMENT OF PAYABLE
Present management negotiated a settlement of accounts payable due to a
prior consultant. On June 25, 1998, the payable was reduced by $51,915,
going from $86,915 to $35,000. In February 1999, the Company issued 81,250
common stock shares to a creditor towards payment of its $35,000 note
payable. The 81,250 share issuance was valued at $.03125 per share and
hence reduced the $35,000 obligation by $2,539. On March 24, 1999, the
Company paid off the remainder of its debts in the amount of $32,461 from
proceeds of its January 1999 Regulation D Rule 504 common stock offering.
Currently, the Company has no debts.
NOTE 6 - ISSUANCE OF STOCK
In June of 1997, the company entered into a consulting agreement with Park
Street Investments, Inc. ("Park Street"), a firm 100% owned by the
Company's President whereby
15
<PAGE>
AREA INVESTMENT AND DEVELOPMENT COMPANY
Notes to the Audited Financial Statements
December 31, 1999 and 1998
Park Street has agreed to pay all necessary expenses to maintain the
company in good standing and to seek out a merger with a viable operating
entity. Park Street has also agreed to provide all administrative
assistance, office space and costs as part of its Agreement. In
consideration for the above, the Company authorized the issuance of
3,000,000 restricted common stock shares valued at $.01 per share. By
November 25, 1997 all 3,000,000 shares were issued. Of this, Park Street
assigned 2,000,000 shares to Ken Kurtz, who is the Company's and Park
Street's President and 500,000 shares to each of the Company's two
directors for their assistance with Park Street in implementing its
contract with the Company.
In January 1999, the Company authorized an offering for 4,000,000 shares of
its common stock under Regulation D Rule 504 at $.03125 per share to raise
$125,000. Proceeds were to be used to pay expenses related to the business
combination and to pay off the remainder of the Company's debts. On March
30, 1999, the Company closed the offering after having sold the 4,000,000
shares to seven investors of which 3,918,750 shares were sold for $122,461
in cash and 81,250 shares were sold for $2,539 in debt settlement.
On April 5, 1999 the Company sold and issued 2,000,000 restricted shares of
its common stock to it its President, Ken W. Kurtz for $20,000 cash.
NOTE 7 - SUBSEQUENT EVENT - ASSET ACQUISITION OF MAXX INTERNATIONAL, INC. AND
CHANGE IN COMPANY MANAGEMENT
On February 3, 2000 the Company closed on an Asset Acquisition Agreement
with Maxx International, Inc., ("Maxx") whereby the Company acquired all of
Maxx's assets in exchange for 3,500,000 restricted shares of the Company's
$.01 par value Common Stock. No liabilities or other encumbrances were
acquired from Maxx in the asset acquisition.
On February 3, 2000 the Company closed on an Asset Acquisition Agreement
with Maxx International, Inc., whereby the Company acquired all of Maxx's
assets in exchange for 3,500,000 restricted shares of the Company's $.01
par value Common Stock. Also in connection with the acquisition, Ken Kurtz
and Carrie Kurtz resigned as officers and directors of the Company and Ms.
Gehring resigned as Secretary/Treasurer and stayed on as a director.
Michael Solomon was appointed as director and Chairman of the Board of the
Company and Rick Garson was appointed as director, president, secretary and
treasurer.
As a result of this asset acquisition, neither Ken Kurtz nor any other
party owns or controls over 50% of the outstanding stock of the Company.
16
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING FINANCIAL
DISCLOSURE
None.
17
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
Additional information required by this item is incorporated by reference
from the Company's definitive information statement filed with the Commission on
March 27, 2000, for a special meeting of stockholders, expected to be held on or
about April 17, 2000, and the Company's information statement which was filed
with the Commission on February 9, 2000, in connection with a change in the
majority of the board of directors of the Company.
Directors and Executive Officers
Executive Officers and Directors for Years Ended December 31, 1999 and 1998
NAME AGE POSITION
---- --- --------
Ken Kurtz (1) 32 President and Director
Carrie Kurtz(1) 36 Vice President and Director
Tammy Gehring 25 Secretary, Treasurer and Director
- ----------
(1) Ken Kurtz and Carrie Kurtz are married.
Executive Officers and Directors as of February 19, 2000
On February 19, 2000, the Company closed an Asset Acquisition Agreement
("Agreement") with Maxx International, Inc. ("Maxx"). Pursuant to the Agreement
the Company acquired 100% of the assets of Maxx in exchange for 3,500,000 shares
of the Company's Common Stock (the "Acquisition"). In connection with the
Acquisition, the Company appointed Michael Solomon as a director and Chairman of
the Board and Rick Garson as a director and the Company's President and
Secretary. Immediately after such appointments, Ken Kurtz and Carrie Kurtz
resigned from all of their positions as directors and officers of the Company.
Tammy Gehring remains as a director.
The following table sets forth information regarding the Company's
executive officers and directors as a result of the Acquisition.
18
<PAGE>
NAME AGE POSITION
---- --- --------
Michael Solomon 62 Director, Chairman of the Board
Rick Garson 37 President, Secretary, Treasurer and Director
Tammy Gehring 25 Director
Ken Kurtz served as the Company's President and a director from 1997 to
February 2000. From 1992 to present, Mr. Kurtz served as the President, sole
director and sole shareholder of Park Street Investments, Inc., a Utah
corporation ("Park Street"). Through Park Street, Mr. Kurtz provides consulting
services to public and private companies on mergers, recapitalization, and other
forms of corporate reorganization. Mr. Kurtz currently serves or has served as
an officer, director and/or control person for a number of publicly held
companies subject to the reporting requirements of the Securities Exchange Act
of 1934, as amended, including Hamilton Exploration Co., Inc., Nugget
Exploration, Inc., Eastport Red's Incorporated and Score One, Inc. Mr. Kurtz is
a graduate of the University of Utah with a Bachelor's of Science degree in
Finance. Mr. Kurtz is married to Carrie Kurtz, the former Vice President and a
former director of the Company.
Carrie Kurtz served as the Company's Vice President and director from
September 1997 to February 2000. She is married to Ken Kurtz, the Company's
former President and a former director. From January 1992 to present, Ms. Kurtz
has held several part-time positions in the health, banking, and food service
industries while also working as a homemaker. Prior to 1992, Ms. Kurtz spent
seven years in the banking industry in positions ranging from customer
representative to branch manager. Ms. Kurtz is not an officer, director or
control person of any other public company.
Tammy Gehring served as the Company's Secretary and Treasurer of the
Company from September 1997 to February 2000. Ms. Gehring has also served as a
director of the Company since September 1997. Ms. Gehring has been employed by
Park Street as an assistant and consultant in mergers and acquisitions since
June of 1997. From 1995 to 1997, Ms. Gehring was employed as an administrative
assistant in the mergers and acquisitions department of a financial consulting
firm based in Salt Lake City, Utah. Previous to that, Ms. Gehring was an
accounting and finance student at Salt Lake Community College. Ms. Gehring
served as an officer and director of Flexweight Corporation from August 1996
until May 1998. Currently, Ms. Gehring is not an officer, director or control
person of any other public company.
Michael Solomon, Chairman of the Board, has approximately 42 years of
experience in the entertainment industry as founder and president of several
publicly and privately held production companies. Mr. Solomon is currently
founder and major shareholder of Sunstorm Entertainment Group, a television
production company; founder and owner of Prime Time Communications, a television
production company producing in Spain and Romania; founder and owner of Solomon
Broadcasting International, a Spanish television production company; founder and
owner of NBO Ole, the leading PAY-TV service company in Latin America, with new
interests in the Russian, Chinese and Indian markets; founder of Codena Del Sol,
a major shareholder of Channel 11 in Peru;
19
<PAGE>
and, co-owner of Iguana Productions, the largest independent production company
in Latin America. In 1978 Mr. Solomon founded Telepictures Corporation, which
traded on the NASDAQ, and which became the largest television syndication
company in the U.S. and one of the largest international distribution companies
in the world. Telepictures Corporation was acquired by Lorimar Telepictures in
1985 which traded on the American Stock Exchange. During his tenure at Lorimar
Telepictures, Mr. Solomon served as president and director and led the Company
to become one of the largest television production and distribution company in
the world, producing major television series such as "Dallas", "Falcon Crest"
and "Knots Landing". Lorimar Telepictures was then acquired by Warner Brothers
in 1989, which trades on the New York Stock Exchange. Mr. Solomon went on to
serve as president of Warner Brothers International Television, until 1994,
which became the largest television distribution company in the world. In his
earlier years, Mr. Solomon was, to his credit, the youngest field manager in the
history of the motion picture industry, and MCA's youngest vice president. Mr.
Solomon currently serves on the Board of Directors of Team Communications, Inc.
(NASDAQ); the Board of Directors of The North Face, Inc., a privately held
company; the Board of Directors of Pittard-Sullivan, a privately held company;
the Board of Directors of New York University Stern School of Business; the
Board of Directors of the Entertainment Business & Management Advisory Board at
UCLA; and the Board of Directors of the International Council of the National
Academy of Television Arts and Sciences. Mr. Solomon was educated at Boston's
Emerson College, where he also holds an honorary law degree, and at New York
University Stern School of Business.
Rick Garson, President, Secretary, Treasurer and a director, is the creator
and executive producer of "NFL JAMS", "NFL Country", "MTV's NFL JAMS world
premiere" and "NFL JAMS MTV Special Live from Super Bowl XXXI". Mr. Garson has
created and produced some of the most successful music and television
productions in history, including the Billboard Music Awards, now entering its
eighth year with Fox Broadcasting Corporation. He has packaged, produced and
promoted specials such as the Rolling Stones "Steel Wheels Tour" pay-per-view TV
special; the New Kids On The Block pay-per-view TV special; and a John Lennon
Anniversary TV Special. Mr. Garson has created and/or produced major campaigns
for Entertainment Weekly, McDonald's, Reebok, Miller Brewing, the Parliament
Sound Series, the Michael Jackson Thriller Tour, George Michael's Faith Tour,
and Amnesty International Human Rights Tour featuring Bruce Springsteen, Sting,
Peter Gabriel and Tracy Chapman, as well as the Amnesty International Conspiracy
of Hope Tour featuring U2, The Police, Bryan Adams and Peter Gabriel.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon the Company's review of Forms 3, 4 and 5 and amendments
thereto furnished to the registrant under Rule 16a-3(a) during the fiscal year
preceding the filing of this Form 10-KSB, the Company is not aware of any other
person who was a director, officer, or beneficial owner of more than ten percent
of the Company's common stock and who failed to file reports required by Section
16(a) of the Securities Exchange Act of 1934 in a timely manner.
20
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
No compensation in excess of $100,000 was awarded to, earned by, or paid to
any executive officer or director of the Company during the years ended December
31, 1999, 1998 or 1997. The following table sets forth the cash compensation
paid by the Company, as well as certain other compensation paid or accrued,
during the fiscal years ended December 31, 1999, 1998, 1997 to the executive
officers and directors of the Company.
<TABLE>
<CAPTION>
Annual Compensation(1) Long Term Compensation (1)
-------------------------------------------------------------------------------------------------
AWARDS PAYOUTS
- ------------------------------------------------------------------------------------------------------------------------------------
Name and Principal Year Salary Bonus Other Annual Restricted Securities LTIP All Other
Position ($) ($) Compensation Stock Underlying Payouts($) Compensation
($) Award(s) Options/SARs ($)
(#)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ken Kurtz (2) 1999 N/A N/A N/A N/A N/A N/A N/A (2)
President; Director 1998 N/A N/A N/A N/A N/A N/A N/A (2)
1997 N/A N/A N/A N/A N/A N/A N/A (2)
- ------------------------------------------------------------------------------------------------------------------------------------
Carrie Kurtz 1999 N/A N/A N/A N/A N/A N/A N/A
Vice President 1998 N/A N/A N/A N/A N/A N/A N/A
Director 1997 N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Tammy Gehring 1999 N/A N/A N/A N/A N/A N/A N/A
Secretary, Treasurer 1998 N/A N/A N/A N/A N/A N/A N/A
Director 1997 N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) No executive officer received compensation of $100,000 or greater in
any fiscal year from 1997 to 1999.
(2) Does not include 3,000,000 shares issued to Park Street Investment,
Inc. pursuant to a Consulting Agreement with the Company. Ken Kurtz is
the sole director, officer and stockholder of Park Street Investments,
Inc. See "Certain Relationships and Related Transactions".
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of common stock
beneficially owned as of the year ended December 31, 1999, and as of March 27,
2000, after giving effect to the closing of the Asset Acquisition Agreement with
Maxx International, Inc. (the "Acquisition") on February 19, 2000, and the
acquisition of 100% of the outstanding shares of Pure Vision Internet, Inc.
common stock, by: (i) those persons or groups known to the Company who
beneficially own more than 5% of the Company's Common Stock; (ii) each director
and director nominee; (iii) each executive officer whose compensation exceeded
$100,000 in the year ended December 31, 1999; (iv) each executive officer of the
Company who assumed office after the closing of the Acquisition; and, (v) all
directors and executive officers as a group. The information is determined in
accordance with Rule 13d-3 promulgated under the Exchange Act based upon
information furnished by persons listed
21
<PAGE>
or contained in filings made by them with the SEC. Except as indicated below,
the stockholders listed possess sole voting and investment power with respect to
their shares.
Additional information required by this item is incorporated by reference
from the Company's definitive information statement filed with the Commission on
March 27, 2000, for a special meeting of stockholders, expected to be held on or
about April 17, 2000, and the Company's information statement which was filed
with the Commission on February 9, 2000, in connection with a change in the
majority of the board of directors of the Company.
<TABLE>
<CAPTION>
As of March 24, 2000
As of the Year Ended and after closing the
December 31, 1999(1) Acquisition(2)
AMOUNT AND AMOUNT AND
NATURE OF NATURE OF
BENEFICIAL PERCENT BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNER OF CLASS OWNER OF CLASS
- ------------------------ ----- -------- ----- --------
<S> <C> <C> <C> <C>
A-Z Oil LLC
27 Burr Road
London, England SW184SQ 770,000 8.5% 770,000 5.3%
David Michael Irrevocable Trust
c/o Wendell Hall
5519 Rawls Road
Tampa, FL 33625 730,000 8.1% 730,000 5.0%
Ariel Finances, Inc.
10, Elvira Mendez Street
Panama 5
Rep. of Panama 800,000 8.8% 800,000 5.5%
Arno Holding Corp.
10, Elvira Mendez street
Panama 5
Rep. of Panama 800,000 8.8% 800,000 5.5%
Yosif Flek (3)
Wilhelm Str 41
10963 Berlin Germany 737,500 8.2% 0 0.0%
Ken Kurtz (4)(5)(6)
2133 East 9400 South, Suite 151
Sandy, Utah 84093 3,801,843 42.0% 3,801,843 26.1%
</TABLE>
22
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Carrie Kurtz (4)
2133 East 9400 South, Suite 151
Sandy, Utah 84093 500,000 5.5% 500,000 3.4%
Tammy Gehring (6)
2133 East 9400 South, Suite 151
Sandy, Utah 84093 500,000 5.5% 500,000 3.4%
Maxx International, Inc.(7)(8)(9)
c/o Solomon Broadcasting International, Inc.
130 S. El Camino Drive 0 0.0% 0 0.0%
Beverly Hills, CA 90212
CPW Associates, Inc. (7)(8)(9)
c/o Solomon Broadcasting International, Inc.
130 S. El Camino Drive 0 0.0% 3,500,000 24.0%
Beverly Hills, CA 90212
Rick Garson (7)(8)(9)
c/o Solomon Broadcasting International, Inc.
130 S. El Camino Drive 0 0.0% 3,500,000 24.0%
Beverly Hills, CA 90212
Michael Solomon (6)(10)
c/o Solomon Broadcasting International, Inc.
130 S. El Camino Drive 0 0.0% 150,000 1.0%
Beverly Hills, CA 90212
All Executive officers and
Directors as a Group (6)
(3 persons) 4,800,000 53.0% 4,150,000 28.4%
(7)(8)(9)(10) (7)(8)(9)(10)
</TABLE>
- ----------
(1) Based on 9,048,171 shares of common stock actually issued and
outstanding at December 31, 1999.
(2) Based on 14,591,397 shares of common stock issued and outstanding as
of March 24, 2000, including 3,500,000 shares of common stock issued
in connection with the Acquisition of the assets of Maxx and 2,043,226
shares of common stock issued in connection with the acquisition of
100% of the outstanding shares of Pure Vision Internet, Inc. common
stock. Does not include an option to be granted to the holders of the
Pure Vision common stock, to purchase an additional 1,050,000 shares
of the Company's common stock.
(3) Yosif Flek ceased owning five percent or more of the outstanding
shares of the Company's common stock after the date of the closing of
the Acquisition.
(4) Ken Kurtz and Carrie Kurtz are married.
23
<PAGE>
(5) The stock amount of shares beneficially owned by Ken Kurtz includes
1,843 shares in the name of Park Street Investments, Inc., of which
Mr. Kurtz is the sole owner.
(6) Ken Kurtz, Carrie Kurtz and Tammy Gehring were directors of the
Company as of December 31, 1999. After closing of the Acquisition,
Michael Solomon and Rick Garson filled vacancies on the Board of
Directors caused by the resignation of Ken Kurtz and Carrie Kurtz.
Tammy Gehring remains a director.
(7) Rick Garson is the sole officer, director and stockholder of Maxx
International, Inc. and CPW Associates, Inc.
(8) Includes 3,500,000 shares issued to Maxx International, Inc., in
connection with the Acquisition.
(9) Maxx International, Inc. distributed the 3,500,000 shares it received
as part of the Acquisition to CPW Associates, Inc.
(10) Includes 150,000 shares of Common Stock issuable upon exercise of
options to purchase Common Stock at a price of $3.00 per share until
December 31, 2002, and subject to the limitations set forth in the
Company's Stock Option Plan which is to be determined. Does not
include 100,000 shares issuable in 25,000 share lots every 90 days,
for a period of one year, from the date of and pursuant to a
Consulting Agreement, which was deemed effective upon closing of the
Acquisition.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1997, the Company entered into a consulting agreement with Park
Street Investments, Inc. ("Park Street"), a corporation wholly owned by Ken
Kurtz, the Company's President and a director at the time of the agreement.
Pursuant to the agreement, Park Street agreed to pay all necessary expenses to
maintain the Company in good standing and to assist in seeking out a favorable
business opportunity. In consideration for the above services, the Company
issued 3,000,000 shares of common stock to Park Street, which were subsequently
assigned to Mr. Kurtz, and the other two directors of the Company at the time,
Carrie Kurtz, his wife, and Tammy Gehring. In addition to these shares, Park
Street was entitled to receive up to 15% of the total outstanding common stock
shares of the Company post-merger, as well as any cash fees it can obtain from a
merger candidate.
In April 1999, the Company sold 2,000,000 shares of common stock to Mr.
Kurtz for $20,000. The shares were sold to raise working capital to pay the cost
of the Company becoming a reporting company under the Securities Exchange Act of
1934, as amended.
Prior to the acquisition of the assets (the "Acquisition") of Maxx
International ("Maxx"), Mr. Kurtz owned 3,600,000 of the Company's 9,048,171
shares of common stock issued and outstanding
24
<PAGE>
or approximately 42%. Immediately after the Acquisition, Mr. Kurtz's 3,600,000
shares represented approximately 30% of the Company's total issued and
outstanding Common Stock.
Upon the close of the Acquisition, Maxx was issued 3,500,000 shares of the
Company's common stock. Rick Garson, who is the current President, Secretary,
Treasurer and a director of the Company, is the sole officer, director and
stockholder of Maxx. The shares issued to Maxx were subsequently distributed to
CPW Associates, Inc. ("CPW"). Mr. Garson is the sole officer, director and
stockholder of CPW.
Additionally, upon the close of the Acquisition, the Company agreed to
assume a one year Consulting Agreement with Michael Solomon, negotiated by Maxx,
whereby Mr. Solomon would provide the Company with certain business and
entertainment consultation and contacts, and the Company would compensate Mr.
Solomon with a yearly consulting fee of $250,000, a success fee on all
agreements entered into by the Company with third parties introduced to the
Company by Mr. Solomon, 100,000 shares of the Company which shall be issued in
25,000 share lots every 90 days for a one year term, and an option to purchase
150,000 shares at an exercise price of $3.00 per share, until December 31, 2002.
Beginning in March 2000, the Company began a tenancy at will to use office
space from Solomon Broadcasting International, Inc., a company owned by the
Company's Chairman of the Board, Michael Solomon. The office space, located at
130 S. El Camino Drive, Beverly Hills, California 90212, is leased at $3,000 a
month.
Additional information required by this item is incorporated by reference
from the Company's definitive information statement filed with the Securities
and Exchange Commission (the "Commission") on March 27, 2000, for a special
meeting of stockholders, expected to be held on or about April 17, 2000, and the
Company's information statement which was filed with the Commission on February
9, 2000, in connection with a change in the majority of the board of directors
of the Company.
25
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) The Exhibits listed below are filed as part of this Annual Report.
Exhibit No. Document
----------- --------
(3)(i) Articles of Incorporation (incorporated by reference from the
Registration Statement on Form 10-SB filed with the Securities
and Exchange Commission under File No. 000-26971)
(3)(ii) Bylaws (incorporated by reference from the Registration Statement
on Form 10-SB filed with the Securities and Exchange Commission
under File No. 000-26971)
(10)(i) Assignment of Accounts Receivable Dated December 14, 1998 by and
between the Company and Canton Financial Services Corporation
(incorporated by reference from the Registration Statement on
Form 10-SB filed with the Securities and Exchange Commission
under File No. 000-26971)
(10)(ii) Settlement Agreement Dated June 25, 1998 by and between the
Company and Canton Financial Services Corporation (incorporated
by reference from the Registration Statement on Form 10-SB filed
with the Securities and Exchange Commission under File No.
000-26971)
(10)(iii) Financial Consulting Agreement Dated June 15, 1997 by and between
the Company and Park Streets Investments, Inc. (incorporated by
reference from the Registration Statement on Form 10-SB filed
with the Securities and Exchange Commission under File No.
000-26971)
(10)(iv) Asset Acquisition Agreement Dated February 3, 2000 by and between
the Company and Maxx International, Inc. (incorporated by
reference from the Report on Form 8-K filed with the Securities
and Exchange Commission under File No. 000-26971)
(10)(v) Consulting Agreement Dated February ___, 2000 by and between
Michael Solomon and the Company
26
<PAGE>
(10)(vi) Stock Purchase Agreement Dated February ___, 2000 by and between
the Company and Holders of 100% of the Outstanding Shares of Pure
Vision Internet, Inc. Common Stock
(21) Subsidiaries of the Registrant
(27) Financial Data Schedule*
- ----------
* The Financial Data Schedule is presented only in the electronic filing
with the Securities and Exchange Commission.
(b) No reports on Form 8-K were filed by the Company during the last
quarter of it's fiscal year ending December 31, 1999.
27
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed by the undersigned, thereunto duly authorized,
this 30th day of March, 2000.
AREA INVESTMENT AND DEVELOPMENT COMPANY
By: /s/ Rick Garson
------------------------------------
Rick Garson, President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dated indicated.
By: /s/ Rick Garson Date: March 30, 2000
-------------------------------------------
Rick Garson, President, Secretary, Treasurer
and Director
By: /s/ Michael Solomon Date: March 30, 2000
-------------------------------------------
Michael Solomon, Chairman of the Board and
Director
By: /s/ Tammy Gehring Date: March 30, 2000
-------------------------------------------
Tammy Gehring, Director
28
Exhibit (10)(v)
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement"') is effective as of February
____, 2000, by and between Area Investment and Development Co., Inc., a Utah
corporation (the "Company"), and Michael Solomon (the "Consultant').
The Company desires to retain the Consultant to use Consultant's best
efforts to explore, introduce and negotiate with third parties for certain
corporate sponsorships, financing and disposition of rights, and the Consultant
agrees to such engagement upon the terms set forth below.
1. Duties, Involvement and Scope of Service.
A. The Company hereby engages Consultant, as an independent contractor and
not as an employee, to use Consultant's best efforts to explore, introduce
and/or negotiate with third parties for: (i) corporate sponsorships; (ii)
financing; (iii) disposition of television and audio/music rights; and, (iv)
licensing and merchandising of the Company's products and services.
Additionally, the Company engages Consultant to perform such other reasonably
related services, as reasonably requested by the Company (collectively, the
"Services").
B. Consultant acknowledges that any and all arrangements or agreements that
Consultant may negotiate for the Company, shall be subject to acceptance by the
Board of Directors of the Company and which shall be evidenced by execution by
an authorized officer for the Company.
C. The Consultant shall devote such time and effort to the duties hereunder
and shall use its best efforts to fulfill obligations hereunder; however, the
Company acknowledges that the Consultant is engaged in other business activities
and that such activities will continue during the term of this Agreement.
2. Term/Duration/Termination.
Except as otherwise provided hereunder, this Agreement shall remain in full
force and effect for one year (1) from the date hereof Following the completion
of such initial term, this Agreement shall continue in effect from year-to-year
thereafter unless one party shall provide The other party written notice of its
intent to terminate the Agreement no less than sixty (60) days prior to the end
of the annual period. Expiration/Termination of the Agreement shall not affect
the right of the Consultant to receive Success Fees (as that term is defined in
paragraph 3(B) below) subject to the Terms of this Agreement.
3. Compensation.
1
<PAGE>
A. Annual Retainer Fee. The Company agrees to compensate Consultant a sum
of Two Hundred Fifty Thousand Dollars ($250,000.00) (the "Consulting Fee"), for
the Services. Payment of the Consulting Fee shall be made pursuant to the
following schedule:
a. Ten Thousand Dollars ($10,000.00) per calender month during the term
of this Agreement, and,
b. The balance of One Hundred Thirty Thousand Dollars ($130,000.00)
payable on the one year anniversary of this Agreement.
Consultant and Company agree that the above mentioned schedule may be
modified upon written consent by both parties. Notwithstanding the above, it is
the Company's intention that payments of the Consulting Fee may be spread more
evenly on a monthly basis in the event the Company determines that cash flow is
sufficient to do so.
B. Success Fees. Notwithstanding the termination of this Agreement in
accordance with paragraph 2 above, and subject to the provisions of paragraph 8
below, Consultant shall receive a "Success Fee" which shall be defined as 10% of
all monies paid to Company pursuant to all agreements with any third party which
Consultant: (i) first introduced to the Company; (ii) initiated negotiations;
and/or, (iii) assisted to finalize and execute, provided however that all such
third party agreements is first approved and ratified by disinterested directors
of the Board of Directors, pursuant to the Company's Articles of Incorporation,
By-Laws and the General Corporation Law of Utah.
The Success Fee shall continue to be payable in respect of: (i) all monies
paid to Company from all agreements executed during the term of this Agreement
with any third party which Consultant first introduced to the Company, initiated
negotiations, and/or assisted to finalize and execute; (ii) all monies paid to
Company from all renewed agreements with any third party who was first
introduced to the Company by the Consultant during the term of this Agreement,
and who was previously under contract with the Company during the term of this
Agreement; (iii) all monies paid to the Company from all agreements with any
third party who Consultant first introduced to the Company during the term of
this Agreement, and which agreements are finalized and executed on the date of
termination of this Agreement, or prior to the one year anniversary date of such
termination; and (iv) all monies paid to Company from all renewed agreements
with any third party who was first introduced to the Company by the Consultant
during the term of this Agreement) and whose initial agreement with the Company
was finalized and executed on the date of termination of this Agreement, or
prior to the one year anniversary date of such termination.
In any fiscal year that a Success Fee is owed to Consultant, the Company
shall furnish Consultant with an Officer's Certificate, setting forth an
itemized calculation as to the payment of the Success Fee and setting forth
certain representations as to the status of all agreements, contemplated in tile
preceding paragraph, between the Company and all third parties introduced to
tile Company by the Consultant.
C. Equity Interest. 100,000 shares of common stock (the "Equity Interest")
shall be issued
2
<PAGE>
to Consultant, or its designees, at a nominal rate; provided. however, that the
Equity Interest Shall be issued pursuant to the following schedule:
NUMBER OF SHARES DATE OF ISSUANCE
---------------- ----------------
25,000 90 days from the date of this agreement
25,000 180 days from the date of this agreement
25,000 270 days from the date of this agreement
25,000 360 days from the date of this agreement
Consultant acknowledges that the issuance of the Equity Interest is subject
to Consultant substantially performing the Services, in accordance with the
terms of this Agreement. Prior to tile issuance of Equity Interests pursuant to
the schedule above, a determination will be made by the Board of Directors on
the business day immediately preceding the scheduled date of issuance of shares
of common stock, that such Services has been substantially performed.
Consultant further acknowledges and understands that the above mentioned
shares of common stock comprising the Equity Interest shall be issued pursuant
to an exemption from registration requirements under Federal Securities Laws and
are considered "Restricted Stock" under the Securities Act of 1933, as amended.
D. Options. The Company agrees to grant Consultant an option to purchase
150,000 shares of common stock (the "Option"), at an exercise price of $3.00 per
share of common stock, until December 31, 2002, and further subject to the terms
and conditions of a 1999 Stock Option Plan (the "Plan") to be approved by the
shareholders of tile Company and ratified by the Board of Directors, as soon as
practicable. Such Plan shall be in compliance with the Company's Articles of
Incorporation, Bylaws and the General Corporation Law of Utah. The Consultant
further acknowledges and agrees that the terms of the Option shall be subject to
the Plan, and in the event of a conflict between the terms and conditions of the
Plan and the terms of the Option granted herein, the terms and conditions of the
Plan shall prevail.
4. Taxes and other Liabilities.
Consultant acknowledges and agrees that it is an independent contractor and
not an employee of the Company. As such, Consultant acknowledges that it is
responsible for all employment and other tax payable to any federal, state or
local authority and any other obligation or liabilities arising from its
engagement and compensation hereunder.
5. Appointment as Chairman of the Board of Directors.
Upon the execution of this Agreement the Company shall appoint Consultant
as a director and the Chairman of the Board of Directors of the Company until
his respective successor is elected, his respective resignation or his
respective removal before the expiration of his term. Such appointment shall be
subject to the Company's Articles of Incorporation, By-Laws and the General
Corporation Laws of Utah.
3
<PAGE>
6. Notice.
All notices to the Company or the Consultant permitted to be required hereunder
shall be in writing and shall be delivered personally, by telecopier or by
courier service providing for next-day delivery or sent by registered or
certified mail return receipt requested, to the following address:
The Company: Area Investment and Development Co.
C/o Beckman, Millman & Sanders, LLP
116 John Street
New York 10038
Attention: Steven Sanders, Esq.
The Consultant Michael Solomon
130 S. El Camino Drive
Beverly Hills, California 90212
Either party may change the address to which notices shall be sent by
sending written notice of such change of address to the other party. Any such
notice shall be deemed given if delivered personally upon receipt; if
telecopied, when telecopied; if sent by courier service; and if sent by
certified or registered mail, three (3) days after deposit (postage prepared)
with the U.S. Postal Service.
7. Representations and Warranties; Indemnification.
The Company and Consultant each represent and warrant to the other that it
has all rights to enter into this Agreement and that its execution of the
Agreement shall not infringe upon the rights of any third party. The Company and
Consultant each agree to indemnify the other and hold the other completely
harmless from any claims made by any third party against the other relating to,
or arising from, any breach of this Agreement or obligations arising herefrom.
In addition, the Company agrees to indemnify Consultant and hold Consultant
harmless from any third party claims made against Consultant as a shareholder of
the Company, relating to any failure of the Company to comply with its corporate
obligations, including, but not limited to the Company's failure to pay any
debts owed to creditors; provided, however, that at any time the Consultant
shall become a "controlling person" as the term is defined or used in the
Securities Act of 1933, as amended, the aforementioned indemnification shall not
be applicable; and provided further, however, that this indemnification shall
not be applicable for any claims arising from, or a result of Consultant's
capacity as a director of the Company. Consultant acknowledges that any
indemnification provided to Consultant, in his capacity as a director of the
Company, shall solely be pursuant to the terms of the Company's Articles of
Incorporation, By4aws and the General Corporation Laws of Utah, and not from
this Agreement.
8. Delegation.
The Company and the Consultant agree that Consultant shall be entitled to
delegate all or any part or parts of his duties and obligations hereunder to any
person, firm or corporation (collectively,
4
<PAGE>
the "designees" and individually, "designee") approved by the Company in writing
(which consent shall not be unreasonably withheld)) whether or not such designee
is subject to an existing contract with the Company for similar services. Any
such delegation may be on such terms and conditions as the Consultant may deem
appropriate; provided, however, that should the Consultant make the initial
delegation or request for assistance from a designee, the Consultant shall
remain liable to perform his duties and obligations, and shall indemnify the
Company from any liability for any finder's fees, agent's commissions or other
similar forms of compensation in Connection with this Agreement or the
transactions contemplated hereby, notwithstanding the fact that such designee
may be subject to an existing contract with the Company for similar services
9. Governing Law.
Notwithstanding the place where this Agreement may be executed by any of the
parties hereto, the parties expressly agree that all the terms and provisions
hereof shall be construed in accordance with and governed by the laws of the
State of New York, without giving effect to conflict of laws principles thereof.
10. Entire Agreement.
This Agreement contains the entire agreement between Consultant and Company
and correctly sets forth the rights and duties of each of the parties to each
other concerning such matters as of this date. Any agreement or representation
concerning the subject matter of this Agreement or the duties of Consultant not
set forth in this Agreement is null and void.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first written above.
CONSULTANT: COMPANY:
Area Investment and Development Co.
By: /s/ Michael Solomon
-----------------------
By: /s/ Rick Garson
---------------------------
Name: Rick Garson
Title: President
5
Exhibit (10)(vi)
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of February __, 2000, by and among
Area Development and Investment Company, a Utah corporation (the "Company")
(whose name is to be changed to Maxx International, Inc.), and each of the other
parties on the signature page of this Agreement (the "Sellers").
WITNESSETH:
WHEREAS, the Sellers own 100% of the shares of common stock of Pure Vision
Internet, Inc., a California corporation ("Pure Vision") in the denominations as
set forth opposite their respective names on Schedule I to this Agreement which
shares constitute all of the issued and outstanding shares of capital stock of
Pure Vision (the "Pure Vision Shares"); and
WHEREAS, the Company desires to acquire from the Sellers, and the Sellers
desire to sell to the Company, all of the Pure Vision Shares in exchange for the
issuance by the Company of an aggregate of 3,513,488 (post 2-for-1 forward
split) shares (the "Company Shares") of the Company's common stock, par value
$.01 per share (the "Company Common Stock") which shall on the date of issuance
constitute an equity position of not less than fourteen percent (14%) of the
total number of common shares of the Company issued and outstanding shares prior
to issuance of the Company Shares. Seller shall also receive options to purchase
One Million Fifty Thousand (1,050,000) (post 2-for-1 forward split) shares of
common stock at the option prices set forth herein below and the payment of One
Hundred Thousand dollars ($100,000) designated for payment of debt owed to
Centralized Escrow Systems, Inc. by Pure Vision, on the terms and conditions set
forth below;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and agreements set forth herein, the parties hereto
agree as follows:
ARTICLE I
EXCHANGE OF SHARES
1.1 Exchange of Shares. Subject to the terms and conditions of this
Agreement, on the Closing Date (as hereinafter defined):
(a) the Company shall issue and deliver to each of the Sellers the number
of authorized but unissued shares of Company Common Stock set forth opposite
such Seller's name set forth on Schedule I hereto or the designees of Seller as
set forth therein, and
(b) each Seller agrees to deliver to the Company, the number of authorized
but unissued shares of Common Stock, no par value per share, of Pure Vision set
forth opposite such Seller's name on Schedule I hereto along with an
appropriately executed stock power endorsed in
1
<PAGE>
favor of the Company; and
(c) the Company shall at the time of closing deliver to Seller or Seller's
designees options to purchase a total of One Million Fifty Thousand (1,050,000)
shares of the common stock of the Company at the following prices:
Three hundred fifty thousand (350,000) shares at a price of five dollars
($5.00) per share;
Three hundred fifty thousand (350,000) shares at a price of ten dollars
($10.00) per share; and
Three hundred fifty thousand (350,000) shares at a price of fifteen dollars
($15.00) per share.
(d) the Company shall deliver to the Seller the sum of One Hundred Thousand
dollars ($100,000) for the sole purpose of paying debt owed to Centralized
Escrow Systems, Inc. by Pure Vision upon execution of all parties on Signature
page of this Agreement.
(e) the Company shall pay to Seller the sum of $100,000.00, beginning on
the 14th day of February, 2000 and continuing monthly thereafter until the 14th
day of February 2001. Said funds are to be used as operating expenses and
salaries as per Employment Agreements, a copy of which the Company has read,
received and approved, and, by execution of this Agreement, agrees. All parties
to this Agreement understand, represent and agree that said $100,000.00 per
month is for current working capital and operating expenses of Pure Vision. The
Parties hereto understand that to further expand Pure Vision business additional
capital may be needed.
1.2 Time and Place of Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of the Company's counsel
on or before February 24, 2000 (the "Closing Date") at 10:00 A.M., New York
time, or at such other place or time as the Company and the Sellers may agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Sellers that now and/or
as of the Closing:
2.1 Due Organization and Qualification; Subsidiaries; Due Authorization.
(a) The Company and each Subsidiary of the Company is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of formation, with full corporate power and authority to own, lease
and operate its respective business and proper ties and to carry on its
respective business in the places and in the manner as presently conducted or
proposed to be conducted. The Company and each Subsidiary is in good standing as
a foreign corporation in each jurisdiction in which the properties owned, leased
or operated, or the business conducted, by it requires such qualification except
for any such failure, which when taken together
2
<PAGE>
with all other failures, is not likely to have a material adverse effect on the
business of the Company and its Subsidiaries taken as a whole.
(b) The Company does not own, directly or indirectly, any capital stock,
equity or interest in any corporation, firm, partnership, joint venture or other
entity, other than those (each, a "Subsidiary" and together, the "Subsidiaries")
set forth in Item 2.1 of the Disclosure Schedule of even date herewith, which
accompanies this Agreement and is incorporated herein by reference (the
"Disclosure Schedule"). Except as set forth in Item 2.1 of the Disclosure
Schedule, each Subsidiary is wholly owned by the Company, all the outstanding
shares of capital stock of each Subsidiary are owned free and clear of all Liens
(as hereinafter defined), there is no contract, agreement, arrangement, option,
warrant, call, commitment or other right of any character obligating or
entitling any Subsidiary to issue, sell, redeem or repurchase any of its
securities, and there is no outstanding security of any kind convertible into or
exchangeable for securities of any Subsidiary, and except as set forth on
Schedule I attached hereto and made a part hereof by this reference.
(c) The Company has all requisite corporate power and authority to execute
and deliver this Agreement, and to consummate the transactions contemplated
hereby and thereby. The Company has taken all corporate action necessary for the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and this Agreement constitutes the valid and
binding obligation of the Company, enforceable against the Company in accordance
with its respective terms, except as may be affected by bankruptcy, insolvency,
moratoria or other similar laws affecting the enforcement of creditors' rights
generally and subject to the qualification that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
there for may be brought.
(d) Prior to the date of closing provided for herein, the Company shall
have completed its acquisition of all of the assets of Maxx International, Inc.
a Delaware corporation and the rights to the use of the Maxx International, Inc.
name.
2.2 No Conflicts or Defaults. The execution and delivery of this Agreement
by the Company and the consummation of the transactions contemplated hereby do
not and shall not (a) contravene the Certificate of Incorporation or By-laws of
the Company or (b) with or without the giving of notice or the passage of time
and subject to obtaining such consents prior to the Closing as are set forth in
Item 2.2 of the Disclosure Schedule, (i) violate, conflict with, or result in a
breach of, or a default or loss of rights under, any material covenant,
agreement, mortgage, indenture, lease, instrument, permit or license to which
the Company or any of the Subsidiaries is a party or by which the Company or any
of the Subsidiaries or any of their respective assets are bound, or any
judgment, order or decree, or any law, rule or regulation to which the Company
or any of the Subsidiaries or any of their respective assets are subject, (ii)
result in the creation of, or give any party the right to create, any lien,
charge, encumbrance or any other right or adverse interest ("Liens") upon any of
the assets of the Company or any of the Subsidiaries, (iii) terminate or give
any party the right to terminate, amend, abandon or refuse to perform, any
material agreement, arrangement or commitment to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries or
any of their respective assets are bound, or (iv) accelerate or modify, or give
any party the right to accelerate or modify, the time within which, or the terms
under which,
3
<PAGE>
the Company or any of the Subsidiaries is to perform any duties or obligations
or receive any rights or benefits under any material agreement, arrangement or
commitment to which it is a party.
2.3 Capitalization. All of the outstanding shares of Common Stock are, and
the Company Shares when issued in accordance with the terms hereof, will be,
duly authorized, validly issued, fully paid and non assessable, and have not
been or, with respect to the Company Shares, will not be issued in violation of
any preemptive right of stockholders. The Company Shares are not subject to any
preemptive or subscription right, any voting trust agreement or other contract,
agreement, arrangement, option, warrant, call, commitment or other right of any
character obligating or entitling the Company to issue, sell, redeem or
repurchase any of its securities, and there is no outstanding security of any
kind convertible into or exchangeable for Common Stock.
2.4 Financial Statements. Exhibit 1 to the Disclosure Schedule contains
copies of the consolidated balance sheets of the Company at September 30, 1999
and December 31, 1998, and the related statements of operations, stockholders'
equity and cash flows for the fiscal quarter and year then ended, including the
notes thereto, as reviewed by Sellers & Associates, certified public accountants
(all such statements being the "Company Financial Statements"). Except as set
forth in Item 2.4 of the Disclosure Schedule, the Financial Statements, together
with the notes thereto, have been prepared in accordance with U.S. generally
accepted accounting principles applied on a basis consistent throughout all
periods presented, subject to audit adjustments, which are not expected to be
material. Such statements present fairly the financial position of the Company
as of the dates and for the periods indicated. The books of account and other
financial records of the Company have been maintained in accordance with good
business practices.
2.5 Further Financial Matters. (a) Except as set forth in Item 2.5 of the
Disclosure Schedule, neither the Company nor any of the Subsidiaries has any
material liabilities or obligations, whether secured or unsecured, accrued,
determined, absolute or contingent, asserted or unasserted or otherwise, which
are required to be reflected or reserved in a balance sheet or the notes thereto
under generally accepted accounting principles, but which are not reflected in
the Financial Statements.
2.6 Taxes. Except as indicated in Item 2.6 of the Disclosure Schedule, each
of the Company and the Subsidiaries has filed all United States federal, state,
county, local and foreign national, provincial and local returns and reports
which were required to be filed on or prior to the date hereof in respect of all
income, withholding, franchise, payroll, excise, property, sales, use,
value-added or other taxes or levies, imposts, duties, license and registration
fees, charges, assessments or withholdings of any nature whatsoever (together,
"Taxes"), and has paid all Taxes (and any related penalties, fines and interest)
which have become due pursuant to such returns or reports or pursuant to any
assessment which has become payable, or, to the extent its liability for any
Taxes (and any related penalties, fines and interest) has not been fully
discharged, the same have been properly reflected as a liability on the books
and records of the Company and adequate reserves there for have been
established. All such returns and reports filed on or prior to the date hereof
have been properly prepared and are true, correct (and to the extent such
returns reflect judgments made by the Company or a Subsidiary, as the case may
be, such judgments were reasonable under the circumstances) and complete in all
material respects. Except as indicated in 2.6 of the Disclosure
4
<PAGE>
Schedule, no extension for the filing of any such return or report is currently
in effect. Except as indicated in Item 2.6 of the Disclosure Schedule, no tax
return or tax return liability of the Company or any Subsidiary has been audited
or, presently under audit. All taxes and any penalties, fines and interest which
have been asserted to be payable as a result of any audits have been paid.
Except as indicated in Item 2.6 of the Disclosure Schedule, neither the Company
nor any Subsidiary has given or been requested to give waivers of any statute of
limitations relating to the payment of any Taxes (or any related penalties,
fines and interest). There are no claims pending or, to the knowledge of the
Company, threatened, against the Company or any Subsidiary for past due Taxes.
Except as indicated in Item 2.6 of the Disclosure Statement, all payments for
withholding taxes, unemployment insurance and other amounts required to be paid
for periods prior to the date hereof to any governmental authority in respect of
employment obligations of the Company and each Subsidiary, including, without
limitation, amounts payable pursuant to the Federal Insurance Contributions Act,
have been paid or shall be paid prior to the Closing and have been duly provided
for on the books and records of the Company and in the Financial Statements.
2.7 Indebtedness; Contracts; No Defaults.
(a) Item 2.7 of the Disclosure Schedule sets forth a true, complete and
correct list of all material instruments, agreements, indentures, mortgages,
guarantees, notes, commitments, accommodations, letters of credit or other
arrangements or understandings, whether written or oral, to which the Company or
any Subsidiary is a party (collectively, the "Operating Agreements"). An
agreement shall not be considered material for the purposes of this Section
2.7(a) if it provides for expenditures or receipts of less than $10,000 and has
been entered into by the Company or a Subsidiary in the ordinary course of
business. The Operating Agreements constitute all of the contracts, agreements,
understandings and arrangements required for the operation of the business of
the Company and the Subsidiaries or which have a material effect thereon. Copies
of all such material written Operating Agreements have previously been delivered
or otherwise made available to the Sellers and such copies are true, complete
and correct as of the date hereof.
(b) Except as disclosed in Item 2.7 of the Disclosure Schedule, neither the
Company, any Subsidiary, nor, to the Company's knowledge, any other person or
entity is in breach in any material respect of, or in default in any material
respect under, any material contract, agreement, arrangement, commitment or plan
to which the Company or any Subsidiary is a party, and no event or action has
occurred, is pending or is threatened, which, after the giving of notice,
passage of time or otherwise, would constitute or result in such a material
breach or material default by the Company or any Subsidiary or, to the knowledge
of the Company, any other person or entity. Neither the Company nor any
Subsidiary has received any notice of default under any contract, agreement,
arrangement, commitment or plan to which it is a party, which default has not
been cured to the satisfaction of, or duly waived by, the party claiming such
default on or before the date hereof.
2.8 Personal Property. Except as set forth in Item 2.8 of the Disclosure
Schedule, each of the Company and the Subsidiaries has good and marketable title
to all of its tangible personal property and assets, including, without
limitation, all of the assets reflected in the Financial Statements that have
not been disposed of in the ordinary course of business March 31, 1999 are free
and clear of all Liens or mortgages, except for any Lien for current taxes not
yet due and payable and
5
<PAGE>
such restrictions, if any, on the disposition of securities as may be imposed by
federal or applicable state securities laws.
2.9 Real Property. Item 2.9 of the Disclosure Schedule sets forth a true
and complete list of all real property owned by, or leased or subleased by or
to, the Company and its Subsidiaries (the "Company Real Property"). Except as
set forth in Item 2.9 of the Disclosure Schedules, each lease to which the
Company is a party is valid, binding and in full force and effect with respect
to the Company or a Subsidiary, as the case may be, and, to the knowledge of the
Company no notice of default or termination under any such lease is outstanding.
2.10 Compliance with Law. (a) Except as set forth in Item 2.10 of the
Disclosure Schedule, neither the Company nor any Subsidiary is conducting its
respective business or affairs in material violation of any applicable federal,
state or local law, ordinance, rule, regulation, court or administrative order,
decree or process, or any requirement of insurance carriers. Neither the Company
nor any Subsidiary has received any notice of violation or claimed violation of
any such law, ordinance, rule, regulation, order, decree, process or
requirement.
(b) Each of the Company and the Subsidiaries is in compliance in all
material respects with all applicable federal, state, local and foreign laws and
regulations relating to the protection of the environment and human health.
There are no claims, notices, actions, suits, hearings, investigations,
inquiries or proceedings pending or, to the knowledge of the Company, threatened
against the Company or any of the Subsidiaries that are based on or related to
any environmental matters or the failure to have any required environmental
permits, and there are no past or present conditions that the Company has reason
to believe are likely to give rise to any material liability or other
obligations of the Company or any Subsidiary under any environmental laws.
2.11 Permits and Licenses. Except as set forth in Item 2.11 of the
Disclosure Schedule, each of the Company and the Subsidiaries has all
certificates of occupancy, rights, permits, certificates, licenses, franchises,
approvals and other authorizations as are reasonably necessary to conduct its
respective business and to own, lease, use, operate and occupy its assets, at
the places and in the manner now conducted and operated, except those the
absence of which would not materially adversely affect its respective business.
Except as set forth in Item 2.11 of the Disclosure Schedule, as of the date
hereof, neither the Company nor any Subsidiary has received any written or oral
notice or claim pertaining to the failure to obtain any material permit,
certificate, license, approval or other authorization required by any federal,
state or local agency or other regulatory body, the failure of which to obtain
would materially and adversely affect its business.
2.12 Ordinary Course. Except as set forth in Item 2.12 of the Disclosure
Schedule, since December 31, 1999, each of the Company and the Subsidiaries has
conducted its business, maintained its real property and equipment and kept its
books of account, records and files, substantially in the same manner as
previously conducted, maintained or kept and solely in the ordinary course; it
being understood and acknowledged that the Company has been substantially
reducing its operations for some time.
2.13 No Adverse Changes. Except as set forth in Item 2.13 of the Disclosure
Schedule,
6
<PAGE>
since December 31, 1999, there has not been (a) any material adverse change in
the business, prospects, the financial or other condition, or the respective
assets or liabilities of the Company and the Subsidiaries as reflected in the
Financial Statements, (b) any material loss sustained by the Company or any
Subsidiary, including, but not limited to any loss on account of theft, fire,
flood, explosion, accident or other calamity, whether or not insured, which has
materially and adversely interfered, or may materially and adversely interfere,
with the operation of the Company's or any Subsidiary's business, or (c) to the
best knowledge of the Company, any event, condition or state of facts,
including, without limitation, the enactment, adoption or promulgation of any
law, rule or regulation, the occurrence of which materially and adversely does
or would affect the results of operations or the business or financial condition
of the Company or any Subsidiary; it being understood and acknowledged that the
Company has been substantially reducing its operations for some time.
2.14 Litigation. (a) Except as set forth in Item 2.14 of the Disclosure
Schedule, there is no claim, dispute, action, suit, proceeding or investigation
pending or, to the knowledge of the Company, threatened, against or affecting
the business of the Company or any Subsidiary, or challenging the validity or
propriety of the transactions contemplated by this Agreement, at law or in
equity or admiralty or before any federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality, nor to the
knowledge of the Company, has any such claim, dispute, action, suit, proceeding
or investigation been pending or threatened, during the 12-month period
preceding the date hereof; (b) there is no outstanding judgment, order, writ,
ruling, injunction, stipulation or decree of any court, arbitrator or federal,
state, local, foreign or other governmental authority, board, agency, commission
or instrumentality, against or materially affecting the business of the Company
or any Subsidiary; and (c) neither the Company nor any Subsidiary has received
any written or verbal inquiry from any federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality concerning
the possible violation of any law, rule or regulation or any matter disclosed in
respect of its business.
2.15 Insurance. The Company and the Subsidiaries do not currently maintain
any form of insurance.
2.16 Certificate of Incorporation and By-laws; Minute Books. The copies of
the Certificate of Incorporation and By-laws (or similar governing documents) of
the Company and each Subsidiary, and all amendments to each are true, correct
and complete. The minute books of the Company and each Subsidiary contain true
and complete records of all meetings and consents in lieu of meetings of their
respective Board of Directors (and any committees thereof), or similar governing
bodies, since the time of their respective organization. The stock books of the
Company and each Subsidiary are true, correct and complete.
2.17 Employee Benefit Plans. Except as set forth in Item 2.17 of the
Disclosure Schedule, neither the Company nor any Subsidiary maintains, nor has
the Company or any Subsidiary maintained in the past, any employee benefit plans
("as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), or any plans, programs, policies, practices,
arrangements or contracts (whether group or individual) providing for payments,
benefits or reimbursements to employees of the Company or any Subsidiary, former
employees, their
7
<PAGE>
beneficiaries and dependents under which such employees, former employees, their
beneficiaries and dependents are covered through an employment relationship with
the Company, any Subsidiary or any entity required to be aggregated in a
controlled group or affiliated service group with the Company for purposes of
ERISA or the Internal Revenue Code of 1986 (the "Code") (including, without
limitation, under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of
ERISA, at any relevant time ("Benefit Plans").
2.18 Patents; Trademarks and Intellectual Property Rights. Each of the
Company and the Subsidiaries owns or possesses sufficient legal rights to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, Internet web site(s), proprietary rights and processes
necessary for its business as now conducted without any conflict with or
infringement of the rights of others. There are no outstanding options, licenses
or agreements of any kind relating to the foregoing, and neither the Company nor
any Subsidiary is bound by, or a party to, any options, licenses or agreements
of any kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity.
2.19 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Company directly
with the Sellers without the intervention of any Person on behalf of the Company
in such a manner as to give rise to any valid claim by any Person against any
Seller for a finder's fee, brokerage commission or similar payment.
2.20 Affiliate TransactExcept as set forth in Item 2.20 of the Disclosure
Schedule, neither the Company nor any officer, director or employee of the
Company (or any of the relatives or Affiliates of any of the aforementioned
Persons) is a party to any agreement, contract, commitment or transaction with
the Company or affecting the business of the Company, or has any interest in any
property, whether real, personal or mixed, or tangible or intangible, used in or
necessary to the Company which will subject the Sellers to any liability or
obligation from and after the Closing Date.
2.21 Existing Employment Agreements. The Company agrees to honor and assume
the employment contracts of individuals with The Gospel.com, Inc. a subsidiary
of Pure Vision, agreements are acknowledged to exist with the following persons:
Paul Hall, D. Min., Aaron Andrews, Catherine McGee, Bruce Gammill and Anthony
Lee.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers represents and warrants, jointly and severally to the
Company that now and/or as of the Closing:
3.1 Due Organization and Qualification; Subsidiaries; Due Authorization.
(a) Pure Vision and each Subsidiary of Pure Vision is a corporation duly
incorporated,
8
<PAGE>
validly existing and in good standing under the laws of its jurisdiction of
formation, with full corporate power and authority to own, lease and operate its
respective business and properties and to carry on its respective business in
the places and in the manner as presently conducted or proposed to be conducted.
Pure Vision and each Subsidiary is in good standing as a foreign corporation in
each jurisdiction in which the properties owned, leased or operated, or the
business conducted, by it requires such qualification except for any such
failure, which when taken together with all other failures, is not likely to
have a material adverse effect on the business of Pure Vision and its
Subsidiaries taken as a whole. Pure Vision holds the rights and ownership of the
Internet site "thegospel.com" and will provide proof of such ownership and
copies of all contracts that relate to or are used by this site.
(b) Pure Vision does not own, directly or indirectly, any capital stock,
equity or interest in any corporation, firm, partnership, joint venture or other
entity, other than those (each, a "Subsidiary" and together, the "Subsidiaries")
set forth in Item 2.1 of the Disclosure Schedule of even date herewith, which
accompanies this Agreement and is incorporated herein by reference (the
"Disclosure Schedule"). Except as set forth in Item 2.1 of the Disclosure
Schedule, each Subsidiary is wholly owned by Pure Vision, all the outstanding
shares of capital stock of each Subsidiary are owned free and clear of all Liens
(as hereinafter defined), there is no contract, agreement, arrangement, option,
warrant, call, commitment or other right of any character obligating or
entitling any Subsidiary to issue, sell, redeem or repurchase any of its
securities, and there is no outstanding security of any kind convertible into or
exchangeable for securities of any Subsidiary.
(c) Each of Pure Vision and the Sellers has all requisite power and
authority to execute and deliver this Agreement, and to consummate the
transactions contemplated hereby and thereby. Each of Pure Vision and the
Sellers has taken all corporate action necessary for the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby,
and this Agreement constitutes the valid and binding obligation of each of Pure
Vision and the Sellers, enforceable against each of Pure Vision and the Sellers
in accordance with its respective terms, except as may be affected by
bankruptcy, insolvency, moratoria or other similar laws affecting the
enforcement of creditors' rights generally and subject to the qualification that
the availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought.
3.2 No Conflicts or Defaults. The execution and delivery of this Agreement
by each of Pure Vision and the Sellers and the consummation of the transactions
contemplated hereby do not and shall not (a) contravene the Certificate of
Incorporation or By-laws of Pure Vision or the governing documents of any
Seller, if applicable, or (b) with or without the giving of notice or the
passage of time, (i) violate, conflict with, or result in a breach of, or a
default or loss of rights under, any material covenant, agreement, mortgage,
indenture, lease, instrument, permit or license to which Pure Vision, any of the
Subsidiaries or any Seller is a party or by which Pure Vision, any of the
Subsidiaries or any Seller or any of their respective assets are bound, or any
judgment, order or decree, or any law, rule or regulation to which Pure Vision,
any of the Subsidiaries or any Seller or any of their respective assets are
subject, (ii) result in the creation of, or give any party the right to create,
any Lien upon any of the assets of Pure Vision or any of the Subsidiaries, (iii)
terminate or give any party the right to terminate, amend, abandon or refuse to
perform, any material agreement,
9
<PAGE>
arrangement or commitment to which Pure Vision or any of the Subsidiaries is a
party or by which Pure Vision or any of the Subsidiaries or any of their
respective assets are bound, or (iv) accelerate or modify, or give any party the
right to accelerate or modify, the time within which, or the terms under which,
Pure Vision or any of the Subsidiaries is to perform any duties or obligations
or receive any rights or benefits under any material agreement, arrangement or
commitment to which it is a party.
3.3 Capitalization. The authorized capital stock of Pure Vision immediately
prior to giving effect to the transactions contemplated hereby consists of
100,000 authorized shares of Pure Vision Common Stock, no par value per share,
of which as of the date hereof 3,000 shares of Common Stock are issued and
outstanding. Set forth in Item 2.3 of the Disclosure Schedule is a list of all
Stockholders of Pure Vision, setting forth their names, addresses and number of
shares owned. All of the outstanding shares of Pure Vision Common Stock are, and
Pure Vision Shares when transferred in accordance with the terms hereof, will
be, duly authorized, validly issued, fully paid and non-assessable, and have not
been or, with respect to Pure Vision Shares, will not be transferred in
violation of any rights of third parties. The Pure Vision Shares are not subject
to any preemptive or subscription right, any voting trust agreement or other
contract, agreement, arrangement, option, warrant, call, commitment or other
right of any character obligating or entitling Pure Vision to issue, sell,
redeem or repurchase any of its securities, and there is no outstanding security
of any kind convertible into or exchangeable for Common Stock.
3.4 Financial Statements. Exhibit 2 to the Disclosure Schedule contains
copies of the consolidated balance sheets of Pure Vision at December 31, 1999,
and the related statements of operations, stockholders' equity and cash flows
for the fiscal quarter then ended, including the notes thereto, as reviewed by ,
certified public accountants (all such statements being the "Pure Vision
Financial Statements"). Except as set forth in Item 3.4 to the Disclosure
Schedule, the Financial Statements, together with the notes thereto, have been
prepared in accordance with generally accepted accounting principles applied on
a basis consistent throughout all periods presented, subject to audit
adjustments, which are not expected to be material. Such statements present
fairly the financial position of Pure Vision as of the dates and for the periods
indicated. The books of account and other financial records of Pure Vision have
been maintained in accordance with good business practices.
3.5 Further Financial Matters. (a) Except as set forth in Item 3.5 to the
Disclosure Schedule, neither Pure Vision nor any of the Subsidiaries has any
material liabilities or obligations, whether secured or unsecured, accrued,
determined, absolute or contingent, asserted or unasserted or otherwise, which
are required to be reflected or reserved in a balance sheet or the notes thereto
under generally accepted accounting principles, but which are not reflected in
the Financial Statements.
(b) The forecasted operations statements and cash flow statements of Pure
Vision, true and complete copies of which have been delivered to the Company,
were prepared in good faith on the assumptions stated therein, which assumptions
were believed to be reasonable in light of conditions existing at the time of
delivery of such forecasts, and represented, at the time of delivery, Pure
Vision's best estimate of its future financial performance, it being recognized
that such forecasts
10
<PAGE>
do not constitute a warranty as to the future performance of Pure Vision and
that actual results may vary from forecasted results.
3.6 Taxes. Except as indicated in Item 3.6 of the Disclosure Schedule, each
of Pure Vision and the Subsidiaries has filed all United States federal, state,
county, local and foreign national, provincial and local tax returns and reports
which were required to be filed on or prior to the date hereof, and has paid all
Taxes (and any related penalties, fines and interest) which have become due
pursuant to such returns or reports or pursuant to any assessment which has
become payable, or, to the extent its liability for any Taxes (and any related
penalties, fines and interest) has not been fully discharged, the same have been
properly reflected as a liability on the books and records of Pure Vision and
adequate reserves there for have been established. All such returns and reports
filed on or prior to the date hereof have been properly prepared and are true,
correct (and to the extent such returns reflect judgments made by Pure Vision or
a Subsidiary, as the case may be, such judgments were reasonable under the
circumstances) and complete in all material respects. Except as indicated in 3.6
of the Disclosure Schedule, no extension for the filing of any such return or
report is currently in effect. Except as indicated in Item 3.6 of the Disclosure
Schedule, no tax return or tax return liability of Pure Vision or any Subsidiary
has been audited or, presently under audit. All taxes and any penalties, fines
and interest which have been asserted to be payable as a result of any audits
have been paid. Except as indicated in Item 3.6 of the Disclosure Schedule,
neither Pure Vision nor any Subsidiary has given or been requested to give
waivers of any statute of limitations relating to the payment of any Taxes (or
any related penalties, fines and interest). There are no claims pending or, to
the knowledge of Pure Vision, threatened, against Pure Vision or any Subsidiary
for past due Taxes. Except as indicated in Item 3.6 of the Disclosure Statement,
all payments for withholding taxes, unemployment insurance and other amounts
required to be paid for periods prior to the date hereof to any governmental
authority in respect of employment obligations of Pure Vision and each
Subsidiary, including, without limitation, amounts payable pursuant to the
Federal Insurance Contributions Act, have been paid or shall be paid prior to
the Closing and have been duly provided for on the books and records of Pure
Vision and in the Financial Statements.
3.7 Indebtedness; Contracts; No Defaults.
(a) Item 3.7 of the Disclosure Schedule sets forth a true, complete and
correct list of all material instruments, agreements, indentures, mortgages,
guarantees, notes, commitments, accommodations, letters of credit or other
arrangements or understandings, whether written or oral, to which Pure Vision or
any Subsidiary is a party (collectively, the "Pure Vision Operating
Agreements"). An agreement shall not be considered material for the purposes of
this Section 3.7(a) if it provides for expenditures or receipts of less than
$2,000 and has been entered into by Pure Vision or a Subsidiary in the ordinary
course of business. The Pure Vision Operating Agreements constitute all of the
contracts, agreements, understandings and arrangements required for the
operation of the business of Pure Vision and the Subsidiaries or which have a
material effect thereon. Copies of all such material written Pure Vision
Operating Agreements have previously been delivered or otherwise made available
to the Company and such copies are true, complete and correct as of the date
hereof.
11
<PAGE>
(b) Except as disclosed in Item 3.7 of the Disclosure Schedule, neither
Pure Vision, any Subsidiary, nor, to Pure Vision's knowledge, any other person
or entity is in breach in any material respect of, or in default in any material
respect under, any material contract, agreement, arrangement, commitment or plan
to which Pure Vision or any Subsidiary is a party, and no event or action has
occurred, is pending or is threatened, which, after the giving of notice,
passage of time or otherwise, would constitute or result in such a material
breach or material default by Pure Vision or any Subsidiary or, to the knowledge
of Pure Vision, any other person or entity. Neither Pure Vision nor any
Subsidiary has received any notice of default under any contract, agreement,
arrangement, commitment or plan to which it is a party, which default has not
been cured to the satisfaction of, or duly waived by, the party claiming such
default on or before the date hereof.
3.8 Personal Property. Except as set forth in Item 3.8 of the Disclosure
Schedule, each of Pure Vision and the Subsidiaries has good and marketable title
to all of its tangible personal property and assets, including, without
limitation, all of the assets reflected in the Financial Statements that have
not been disposed of in the ordinary course of business since December 31, 1999,
free and clear of all Liens or mortgages, except for any Lien for current taxes
not yet due and payable and such restrictions, if any, on the disposition of
securities as may be imposed by federal or applicable state securities laws.
3.9 Real Property. (a) Item 3.9 of the Disclosure Schedule sets forth a
true and complete list of all real property owned by, or leased or subleased by
or to, Pure Vision and its Subsidiaries (the "Pure Vision Real Property").
(b) Except as set forth in Item 3.9 of the Disclosure Statement, each lease
to which Pure Vision is a party is valid, binding and in full force and effect
with respect to Pure Vision or a Subsidiary, as the case may be, and, to the
knowledge of Pure Vision, all other parties thereto; no notice of default or
termination under any such lease is outstanding.
3.10 Compliance with Law. (a) Except as set forth in Item 3.10 of the
Disclosure Schedule, neither Pure Vision nor any Subsidiary is conducting its
respective business or affairs in material violation of any applicable federal,
state or local law, ordinance, rule, regulation, court or administrative order,
decree or process, or any requirement of insurance carriers. Neither Pure Vision
nor any Subsidiary has received any notice of violation or claimed violation of
any such law, ordinance, rule, regulation, order, decree, process or
requirement.
(b) Each of Pure Vision and the Subsidiaries is in compliance in all
material respects with all applicable federal, state, local and foreign laws and
regulations relating to the protection of the environment and human health.
There are no claims, notices, actions, suits, hearings, investigations,
inquiries or proceedings pending or, to the knowledge of Pure Vision, threatened
against Pure Vision or any of the Subsidiaries that are based on or related to
any environmental matters or the failure to have any required environmental
permits, and there are no past or present conditions that Pure Vision has reason
to believe are likely to give rise to any material liability or other
obligations of Pure Vision or any Subsidiary under any environmental laws.
3.11 Permits and Licenses. Except as set forth in Item 3.11 of the
Disclosure Schedule,
12
<PAGE>
each of Pure Vision and the Subsidiaries has all certificates of occupancy,
rights, permits, certificates, licenses, franchises, approvals and other
authorizations as are reasonably necessary to conduct its respective business
and to own, lease, use, operate and occupy its assets, at the places and in the
manner now conducted and operated, except those the absence of which would not
materially adversely affect its respective business. Except as set forth in Item
3.11 of the Disclosure Schedule, as of the date hereof, neither Pure Vision nor
any Subsidiary has received any written or oral notice or claim pertaining to
the failure to obtain any material permit, certificate, license, approval or
other authorization required by any federal, state or local agency or other
regulatory body, the failure of which to obtain would materially and adversely
affect its business.
3.12 Ordinary Course. Except as set forth in Item 3.12 of the Disclosure
Schedule, since December 31, 1999, each of Pure Vision and the Subsidiaries has
conducted its business, maintained its real property and equipment and kept its
books of account, records and files, substantially in the same manner as
previously conducted, maintained or kept and solely in the ordinary course; it
being understood and acknowledged that Pure Vision has been substantially
reducing its operations for some time.
3.13 No Adverse Changes. Except as set forth in Item 3.13 of the Disclosure
Schedule, since December 31, 1999, there has not been (a) any material adverse
change in the business, prospects, the financial or other condition, or the
respective assets or liabilities of Pure Vision and the Subsidiaries as
reflected in the Financial Statements, (b) any material loss sustained by Pure
Vision or any Subsidiary, including, but not limited to any loss on account of
theft, fire, flood, explosion, accident or other calamity, whether or not
insured, which has materially and adversely interfered, or may materially and
adversely interfere, with the operation of Pure Vision's or any Subsidiary's
business, or (c) to the best knowledge of Pure Vision, any event, condition or
state of facts, including, without limitation, the enactment, adoption or
promulgation of any law, rule or regulation, the occurrence of which materially
and adversely does or would affect the results of operations or the business or
financial condition of Pure Vision or any Subsidiary; it being understood and
acknowledged that Pure Vision has been substantially reducing its operations for
some time.
3.14 Litigation. (a) Except as set forth in Item 3.14 of the Disclosure
Schedule, there is no claim, dispute, action, suit, proceeding or investigation
pending or, to the knowledge of Pure Vision, threatened, against or affecting
the business of Pure Vision or any Subsidiary, or challenging the validity or
propriety of the transactions contemplated by this Agreement, at law or in
equity or admiralty or before any federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality, nor to the
knowledge of Pure Vision, has any such claim, dispute, action, suit, proceeding
or investigation been pending or threatened, during the 12-month period pre
ceding the date hereof; (b) there is no outstanding judgment, order, writ,
ruling, injunction, stipulation or decree of any court, arbitrator or federal,
state, local, foreign or other governmental authority, board, agency, commission
or instrumentality, against or materially affecting the business of Pure Vision
or any Subsidiary; and (c) neither Pure Vision nor any Subsidiary has received
any written or verbal inquiry from any federal, state, local, foreign or other
governmental authority, board, agency, commission or instrumentality concerning
the possible violation of any law, rule or regulation or any matter disclosed in
respect of its business.
13
<PAGE>
3.15 Insurance. Pure Vision and the Subsidiaries maintain insurance against
all risks customarily insured against by companies in its industry. All such
policies are in full force and effect, and neither Pure Vision nor any
Subsidiary has received any notice from any insurance company suspending,
revoking, modifying or canceling (or threatening such action) any insurance
policy issued to Pure Vision.
3.16 Certificate of Incorporation and By-laws; Minute Books. The copies of
the Certificate of Incorporation and By-laws (or similar governing documents) of
Pure Vision and each Subsidiary, and all amendments to each are true, correct
and complete. The minute books of Pure Vision and each Subsidiary contain true
and complete records of all meetings and consents in lieu of meetings of their
respective Board of Directors (and any committees thereof), or similar governing
bodies, since the time of their respective organization. The stock books of Pure
Vision and each Subsidiary are true, correct and complete.
3.17 Employee Benefit Plans. Except as set forth in Item 3.17 of the
Disclosure Schedule, neither Pure Vision nor any Subsidiary maintains, nor has
Pure Vision or any Subsidiary maintained in the past, any employee benefit plans
("as defined in Section 3(3) of the "ERISA"), or any plans, programs, policies,
practices, arrangements or contracts (whether group or individual) providing for
payments, benefits or reimbursements to employees of Pure Vision or any
Subsidiary, former employees, their beneficiaries and dependents under which
such employees, former employees, their beneficiaries and dependents are covered
through an employment relationship with Pure Vision, any Subsidiary or any
entity required to be aggregated in a controlled group or affiliated service
group with Pure Vision for purposes of ERISA or the Internal Revenue Code of
1986 (the "Code") (including, without limitation, under Section 414(b), (c), (m)
or (o) of the Code or Section 4001 of ERISA, at any relevant time ("Pure Vision
Benefit Plans").
3.18 Patents; Trademarks and Intellectual Property Rights. Each of Pure
Vision and the Subsidiaries owns or possesses sufficient legal rights to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, Internet web site(s) proprietary rights and processes
necessary for its business as now conducted without any conflict with or
infringement of the rights of others. There are no outstanding options, licenses
or agreements of any kind relating to the foregoing, and neither Pure Vision nor
any Subsidiary is bound by, or a party to, any options, licenses or agreements
of any kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity.
3.19 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Pure Vision directly
with the Sellers without the intervention of any Person on behalf of Pure Vision
in such a manner as to give rise to any valid claim by any Person against any
Seller for a finder's fee, brokerage commission or similar payment.
3.20 Subsidiaries. Item 3.20 of the Disclosure Statements sets forth all
the Subsidiaries of Pure Vision. All the outstanding shares of capital stock of,
or other equity interests in, each such subsidiary have been validly issued and
are fully paid and non-assessable and are owned directly or
14
<PAGE>
indirectly by Pure Vision, free and clear of all Liens and free of any other
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests). Each Subsidiary of
Pure Vision is wholly owned by Pure Vision.
3.21 Purchase for Investment.
(a) Such Seller is acquiring the Company Shares for investment for such
Seller's own account and not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and such Seller has no present
intention of selling, granting any participation in, or otherwise distributing
the same. Such Seller further represents that it does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
a participation to such person or to any third person, with respect to any of
the Company Shares.
(b) Such Seller understands that the Company Shares are not registered
under the Act on the ground that the sale and the issuance of securities
hereunder is exempt from registration under the Act pursuant to Section 4(2)
thereof, and that the Company's reliance on such exemption is predicated on such
Seller's representations set forth herein. Such Seller is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D under the Act.
3.22 Investment Experience. Such Seller acknowledges that it can bear the
economic risk of its investment, and has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the investment in the Company Shares.
3.23 Information. The Sellers have carefully reviewed such information as
each Seller deemed necessary to evaluate an investment in the Company Shares. To
the full satisfaction of each Seller, it has been furnished all materials that
it has requested relating to the Company and the issuance of the Company Shares
hereunder, and each Seller has been afforded the opportunity to ask questions of
representatives of the Company to obtain any information necessary to verify the
accuracy of any representations or information made or given to the Sellers.
Notwithstanding the foregoing, nothing herein shall derogate from or otherwise
modify the representations and warranties of the Company set forth in this
Agreement, on which each of the Sellers has relied in making an exchange of the
Pure Vision Shares of the Company Shares.
3.24 Restricted Securities. Such Seller understands that the Company Shares
may not be sold, transferred, or otherwise disposed of without registration
under the Act or an exemption there from, and that in the absence of an
effective registration statement covering the Company Shares or any available
exemption from registration under the Act, the Company Shares must be held
indefinitely. Such Seller is aware that the Company Shares may not be sold
pursuant to Rule 144 promulgated under the Act unless all of the conditions of
that Rule are met. Among the conditions for use of Rule 144 may be the
availability of current information to the public about the Company.
ARTICLE IV
INDEMNIFICATION
15
<PAGE>
4.1 Indemnity of Sellers. The Company agrees to defend, indemnify and hold
harmless each Seller from and against, and to reimburse each Seller with respect
to, all liabilities, losses, costs and expenses, including, without limitation,
reasonable attorneys' fees and disbursements, asserted against or incurred by
such Seller by reason of, arising out of, or in connection with any material
breach of any representation or warranty contained in this Agreement made by the
Company or in any document or certificate delivered by the Company pursuant to
the provisions of this Agreement or in connection with the transactions
contemplated thereby.
4.2 Indemnity of the Company. Each of the Sellers agrees to jointly and
severally defend, indemnify and hold harmless the Company from and against, and
to reimburse the Company with respect to, all liabilities, losses, costs and
expenses, including, without limitation, reasonable attorneys' fees and
disbursements, asserted against or incurred by such Seller by reason of, arising
out of, or in connection with any material breach of any representation or
warranty contained in this Agreement and made by the Company or in any document
or certificate delivered by the Company pursuant to the provisions of this
Agreement or in connection with the transactions contemplated thereby.
4.3 Indemnification Procedure.
A party (an "Indemnified Party") seeking indemnification shall give prompt
notice to the other party (the "Indemnifying Party") of any claim for
indemnification arising under this Article 4. The Indemnifying Party shall have
the right to assume and to control the defense of any such claim with counsel
reasonably acceptable to such Indemnified Party, at the Indemnifying Party's own
cost and expense, including the cost and expense of reasonable attorneys' fees
and disbursements in connection with such defense, in which event the
Indemnifying Party shall not be obligated to pay the fees and disbursements of
separate counsel for such in such action. In the event, however, that such
Indemnified Party's legal counsel shall determine that defenses may be available
to such Indemnified Party that are different from or in addition to those
available to the Indemnifying Party, in that there could reasonably be expected
to be a conflict of interest if such Indemnifying Party and the Indemnified
Party have common counsel in any such proceeding, or if the Indemnified Party
has not assumed the defense of the action or proceedings, then such Indemnifying
Party may employ separate counsel to represent or defend such Indemnified Party,
and the Indemnifying Party shall pay the reasonable fees and disbursements of
counsel for such Indemnified Party. No settlement of any such claim or payment
in connection with any such settlement shall be made without the prior consent
of the Indemnifying Party which consent shall not be unreasonably withheld.
ARTICLE V
DELIVERIES
5.1 Items to be delivered to Pure Vision prior to or at Closing by the
Company.
(a) articles of incorporation and amendments thereto, bylaws and amendments
thereto, certificate of good standing in the Company's state of incorporation;
16
<PAGE>
(b) all applicable schedules hereto;
(c) all minutes and resolutions of board of director and shareholder
meetings in possession of the Company;
(d) shareholder list;
(e) all financial statements and tax returns in possession of the Company;
(f) copies of all SEC filings;
(g) resolution from the Company's current directors appointing designees of
Pure Vision to the Company's Board of Directors;
(h) letters of resignation from the Company's current officers and
directors to be effective upon Closing and after the appointments described in
this section;
(i) certificates representing 3,513,488 shares of the Company's $.001 par
value common stock issued in the denominations as set forth opposite their
respective names on Schedule I to this Agreement, duly authorized, validly
issued, fully paid for and non-assessable;
(j) wire in the amount of $100,000 for payment of debt owed to Centralized
Escrow Systems, Inc. by Pure Vision on or before February 10, 2000; and, wire in
the amount of $100,000.00 as set forth in Section 1.1(d) on or before February
14, 2000;
(k) copies of board, and if applicable, shareholder resolutions approving
this transaction and authorizing the issuances of the shares hereto;
(l) any other document reasonably requested by Pure Vision that it deems
necessary for the consummation of this transaction
5.2 Items to be delivered to the Company prior to or at Closing by Pure
Vision.
(a) articles of incorporation and amendments thereto, bylaws and amendments
thereto, certificate of good standing in the Company's state of incorporation;
(b) all applicable schedules hereto;
(c) all minutes and resolutions of board of director and shareholder
meetings in possession of the Company;
(d) shareholder list;
(e) all financial statements and tax returns in possession of the Company;
17
<PAGE>
(f) resolution from Pure Vision' current directors appointing designees of
Pure Vision to the Company's Board of Directors;
(g) certificates representing 100% of Pure Vision' common stock as set
forth opposite their respective names on Schedule I to this Agreement, duly
authorized, validly issued, fully paid for and non-assessable;
(h) copies of board, and if applicable, shareholder resolutions approving
this transaction and authorizing the issuances of the shares hereto;
(i) copies of Pure Vision' current business plan;
(j) proof of ownership of the Internet site "thegospel.com" and copies of
all related contracts that in any fashion affect the site;
(k) any other document reasonably requested by the Company that it deems
necessary for the consummation of this transaction
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent to Closing. The obligations of the Parties under
this Agreement shall be and are subject to fulfillment, prior to or at the
Closing, of each of the following conditions:
(a) That each of the representations and warranties of the Parties
contained herein shall be true and correct at the time of the Closing date as if
such representations and warranties were made at such time;
(b) That the Parties shall have performed or complied with all agreements,
terms and conditions required by this Agreement to be performed or complied with
by them prior to or at the time of the Closing;
(c) That the Parties shall be satisfied with the results of their due
diligence and review of the other books and records.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated at any time before or, at
Closing, by:
(a) The mutual agreement of the Constituent Parties;
18
<PAGE>
(b) Any party if:
(i) Any provision of this Agreement applicable to a party shall be
materially untrue or fail to be accomplished;
(ii) Any legal proceeding shall have been instituted or shall be
imminently threatening to delay, restrain or prevent the consummation
of this Agreement; or
(iii) The conditions precedence to Closing are not satisfied.
(c) Upon termination of this Agreement for any reason, in accordance with
the terms and conditions set forth in this paragraph, each said party shall bear
all costs and expenses as each party has incurred and no party shall be liable
to the other.
ARTICLE VIII
MISCELLANEOUS
8.1 Survival of Representations, Warranties and Agreements. All
representations and warranties and statements made by a party to in this
Agreement or in any document or certificate delivered pursuant hereto shall
survive the Closing Date for so long as the applicable statute of limitations
shall remain open. Each of the parties hereto is executing and carrying out the
provisions of this agreement in reliance upon the representations, warranties
and covenants and agreements contained in this agreement or at the closing of
the transactions herein provided for and not upon any investigation which it
might have made or any representations, warranty, agreement, promise or
information, written or oral, made by the other party or any other person other
than as specifically set forth herein.
8.2 Access to Books and Records. During the course of this transaction
through Closing, each party agrees to make available for inspection all
corporate books, records and assets, and otherwise afford to each other and
their respective representatives, reasonable access to all documentation and
other information concerning the business, financial and legal conditions of
each other for the purpose of conducting a due diligence investigation thereof.
Such due diligence investigation shall be for the purpose of satisfying each
party as to the business, financial and legal condition of each other for the
purpose of determining the desirability of consummating the proposed
transaction. The Parties further agree to keep confidential and not use for
their own benefit, except in accordance with this Agreement any information or
documentation obtained in connection with any such investigation.
8.3 Further Assurances. If, at any time after the Closing, the parties
shall consider or be advised that any further deeds, assignments or assurances
in law or that any other things are necessary, desirable or proper to complete
the merger in accordance with the terms of this agreement or to vest, perfect or
confirm, of record or otherwise, the title to any property or rights of the
parties hereto, the Parties agree that their proper officers and directors shall
execute and deliver all such proper deeds, assignments and assurances in law and
do all things necessary, desirable or proper to
19
<PAGE>
vest, perfect or confirm title to such property or rights and otherwise to carry
out the purpose of this Agreement, and that the proper officers and directors
the parties are fully authorized to take any and all such action.
8.4 Notice. All communications, notices, requests, consents or demands
given or required under this Agreement shall be in writing and shall be deemed
to have been duly given when delivered to, or received by prepaid registered or
certified mail or recognized overnight courier addressed to, or upon receipt of
a facsimile sent to, the party for whom intended, as follows, or to such other
address or facsimile number as may be furnished by such party by notice in the
manner provided herein:
If to the Company:
C/O Beckman, Millman & Sanders LLP
116 John Street
New York, NY 10038
Attention: Steven Sanders
Tel: (212) 406-4700
Fax: (212) 406-3750
If to the Sellers:
Catherine McGee
1615 N. El Camino Real, Suite G
San Clemente, CA 92672
Tel: (949) 492-1471
Fax: (949) 492-0457
8.5 Entire Agreement. This Agreement, the Disclosure Schedule and any
instruments and agreements to be executed pursuant to this Agreement, sets forth
the entire understanding of the parties hereto with respect to its subject
matter, merges and supersedes all prior and contemporaneous understandings with
respect to its subject matter and may not be waived or modified, in whole or in
part, except by a writing signed by each of the parties hereto. No waiver of any
provision of this Agreement in any instance shall be deemed to be a waiver of
the same or any other provision in any other instance. Failure of any party to
enforce any provision of this Agreement shall not be construed as a waiver of
its rights under such provision.
8.6 Successors and Assigns. This Agreement shall be binding upon,
enforceable against and inure to the benefit of, the parties hereto and their
respective heirs, administrators, executors, personal representatives,
successors and assigns, and nothing herein is intended to confer any right,
remedy or benefit upon any other person. This Agreement may not be assigned by
any party hereto except with the prior written consent of the other parties,
which consent shall not be unreasonably withheld.
8.7 Governing Law. This Agreement shall in all respects be governed by and
construed in accordance with the laws of the State of California are applicable
to agreements made and fully to be performed in such state, without giving
effect to conflicts of law principles.
20
<PAGE>
8.8 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8.9 Construction. Headings contained in this Agreement are for convenience
only and shall not be used in the interpretation of this Agreement. References
herein to Articles, Sections and Exhibits are to the articles, sections and
exhibits, respectively, of this Agreement. The Disclosure Schedule is hereby
incorporated herein by reference and made a part of this Agreement. As used
herein, the singular includes the plural, and the masculine, feminine and neuter
gender each includes the others where the context so indicates.
8.10 Severability. If any provision of this Agreement is held to be invalid
or unenforceable by a court of competent jurisdiction, this Agreement shall be
interpreted and enforceable as if such provision were severed or limited, but
only to the extent necessary to render such provision and this Agreement
enforceable.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first set forth above.
Area Investment and Development Company Shareholder of Pure Vision Internet,
Inc.
Provided wire transfer in the amount
of $100,000.00 is received by the end
of business on Feb. 10th 2000 and
provided that the wire transfer in
the amount of $100,000.00 is received
by the end of business on or before
February 14, 2000 as per Section
1.1(d). In the event either wire is
not received this agreement shall be
null and void.
By: /s/ Catherine McGee
---------------------------------
Catherine McGee
Title: Shareholder
By: /s/ Rick Garson
-----------------------
Name: Rick Garson
Title: President
21
<PAGE>
SCHEDULE 1
Seller's Name and Address Number
of Pure Vision Shares Number of Company Shares
Catherine McGee 3,000 2,043,226 to the below
listed designees:
List of Designees:
Name Number of Company Shares from
Ms. McGee's 2,043,226
David Newren 255,492
Collie Christensen 255,492
Venture-Net Partners, LP 179,998
Steve Fanning 3,750
Phil Bernard 3,750
Kenneth E. Grubbs, Jr. Lit.D 2,500
Brian Bobo 2,500
David Blachley 2,500
Dave Dawson 500
Danny and Ruth Brazeau 1,000
Don Logan 1,000
David Culross, Jr 6,000
Ken Shin 17,501
Alan W. Curtis, J.D 33,783
Anthony Lee 255,492
Paul Hall, D.Min 255,492
Aaron Andrews 255,492
Bruce Gammill 255,492
Catherine McGee 255,492
List of Designees to receive stock options of Seller from each price group of
175,000 in the following amounts:
David Newren 25,000 shares
Colie Christensen 25,000 shares
Aaron Andres 40,000 shares
Bruce Gammill 40,000 shares
Catherine McGee 40,000 shares
Anthony Lee 5,000 shares
22
<PAGE>
ADDENDUM
TO
STOCK PURCHASE AGREEMENT
Now comes, Area Development and Investment Company, a Utah corporation
(whose name is to be changed to Maxx International, Inc.) and Catherine McGee,
an individual resident of the State of California, the only signatories to that
certain Stock Purchase Agreement dated as of February , 2000 between them.
Whereas the parties are in agreement that unavoidable delays have occurred
to the closing of the agreements set forth in the Stock Purchase Agreement on or
before March 14, 2000, the parties hereto agree as follows:
1. The time and date for the closing stated in the Stock Purchase Agreement
in paragraph 1.2 Time and Place of Closing. Shall be amended to read as follows:
"The closing of the transaction contemplated hereby (the "Closing") shall
take place at the offices of the Company's counsel on or before March 21, 2000
(the "Closing Date") at 10:00 A.M., New York time, or at such other place or
time as the Company and the Sellers may agree."
2. All other provisions of the Stock Purchase Agreement, except as modified
by the change to the Closing Date, shall remain as stated and no other change is
intended by the parties hereto.
EXECUTED THIS DAY OF MARCH, 2000.
----
Area Development and Investment Company
A Utah Corporation Catherine McGee
By: /s/ Rick Garson Signature: /s/ Catherine McGee
--------------- -------------------
Name: Rick Garson
Title: President
Exhibit (21)
SUBSIDIARIES OF THE COMPANY
Pure Vision Internet, Inc. - a California corporation
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> DEC-31-1999 DEC-31-1998
<CASH> 20,489 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 20,489 0
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 20,489 0
<CURRENT-LIABILITIES> 0 35,000
<BONDS> 0 0
0 0
0 0
<COMMON> 90,482 30,482
<OTHER-SE> (69,993) (65,482)
<TOTAL-LIABILITY-AND-EQUITY> 20,489 (35,000)
<SALES> 0 0
<TOTAL-REVENUES> 489 51,915
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 90,000 480
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (89,511) 51,435
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
