SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-SB12G
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACTS OF 1934
DIGITAL VIDEO DISPLAY TECHNOLOGY CORP.
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(Exact name of registrant as specified in its Charter)
Nevada
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(State of other jurisdiction of incorporation or organization)
86-0891931
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(I.R.S. Employer Identification No.)
590 Madison Avenue - 21st Floor
New York, New York 10022
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code:(212) 521-4075
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
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(Title of Class)
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PART I
=======
Registrant is filing this Form 10-SB on a voluntary basis to (1) provide
current, public information to the investment community; (2) to expand the
availability of secondary trading exemptions under the Blue Sky laws and thereby
expand the trading market in Registrant's securities; and (3) to comply with the
reporting requirements for listing of the Company's securities. In the event
Registrant's obligation to file periodic reports under the Exchange Act is
suspended, Registrant reserves the right to reevaluate whether to continue
filing periodic reports on a voluntary basis.
ITEM 1. DESCRIPTION OF BUSINESS
=========================
Background and Reorganization
- -------------------------------
Digital Video Display Technology Corp. (Registrant) was incorporated under the
laws of the State of Nevada on August 1, 1997, under the name Meximed
Industries. On January 27, 1999, Registrant filed an Amendment to its Articles
of Incorporation changing its name to Digital Video Display Technology Corp.
Registrant was initially formed to engage in the business of developing,
producing and distributing a non-reusable medical syringe. In July 1998,
Registrant raised a total of $200,000 in a public offering pursuant to an
exemption provided by Rule 504 of Regulation D, promulgated under the
Securities Act of 1933, as amended. The offering was approved for sale by
The New York State Department of Law. After recognizing the syringe project
was going to be far too expensive and difficult to pursue, Registrant began
looking for another business to acquire.
In January 1999, Registrant completed a reorganization and change in control
and acquired a License to a U.S. Patent for proprietary technology for an audio
video jukebox system from Software Control Systems International Inc., a
Canadian corporation and unrelated third party (SCSI). As consideration for the
License, Registrant agreed to pay SCSI the sum of $250,000 U.S. in cash and
issued SCSI 2,000,000 shares of its restricted common stock. The License is for
a term of 15 years and grants Registrant an exclusive right to market and sell
the SCSI proprietary technology and products throughout Canada and the states of
Oregon, Washington, Montana, Idaho and Hawaii. Subsequently, on May 10, 1999,
registrant entered into a Distributor Agreement with SCSI granting SCSI the
right to act as s distribution agent for Registrant. Pursuant to the Agreement,
Registrant will supply SCSI a minimum of 500 jukebox systems at a price of
$7,500 which may be paid in full at the time of delivery or at the rate of $150
per month for 60 months.
Proprietary Technology and Products
- -----------------------------------
Registrant's proprietary technology creates an interactive, audio-visual jukebox
system (the "DVD Juke System") linked to a satellite server network (the
"DVD Satellite System"). The DVD Juke System and the DVD Satellite System
are collectively referred to as the DVD System." In addition to revolutionizing
the conventional jukebox, the DVD System was designed to create a totally new
marketing venue.
(a) The DVD Juke System: Registrant's main product is the DVD Juke System,
which is an interactive audio/video entertainment kiosk. The DVD Juke System
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has significantly greater flexibility and content than any product currently on
the market since it is capable of playing individual musical selections
similar to a standard jukebox; however, the DVD Juke System also has many
additional revenue generating capabilities. A standard jukebox is able to
store approximately 100 CD's, whereas the DVD Juke System is currently capable
of storing on the internal hard drive 1,000 songs and 250 music videos.
Registrant expects to install improvements to the System such that,
within a year, the DVD Juke System will be capable of storing 4,500 audio
tracks and 3,000 music videos. Unlike conventional jukebox, the DVD Juke
System is capable of playing music videos, as well as audio tracks. Any
number of video terminals and TV's are connected by cable to the DVD Juke
System and placed throughout each location. When a customer chooses a video
selection, the DVD Juke System displays the video on the video terminals and
TV's and plays the audio track of the song on the location's sound system. The
DVD Juke System also contains a user interface that enables a consumer to seek
information about artists, receive coupons providing discounts on merchandise,
and provides e-commerce connectivity to prime retail web sites that offer
products.
The DVD Juke System's audio and video capability allows it to run the
full-fledged audio-visual advertisements seen on television. The system has
approximately 12,000 minutes of available ad space per month. The Company will
be attempting to sell advertising time slots to national advertisers and is
currently in discussions with several companies in this regard. The
advertisements will run for 15, 30 or 45 seconds. There are 16 advertising
spots per hour during prime time that will be interlaced between the music video
selections. In addition, the system will offer customized content such as
concerts, chat groups, custom comedy selections, new artist previews,
infomercials, entertainment product marketing and merchandising video with
instant click-through e-commerce opportunities, as well as many other potential
programming highlights. This content is expected to create marketing
opportunities for marketers and enhance the DVD Juke System's unique features.
The DVD Juke System will also print discount and cross-promotional coupons.
Certain musical selections will trigger the Juke System to print coupons
extending offers from various marketers. The Company will derive revenue on a
per-coupon-issued basis or by receiving a percentage of the sales generated
by redeemed coupons.
In addition, the DVD Juke System will be connected to the Internet via a virtual
private network, proprietary to Registrant. Consumers will be automatically
linked to the web sites of the record companies whose songs have been selected,
and will be able to "click through" to additional web sites. Consumers will
be able to browse through these web sites and to purchase CD's and merchandise
at the sites.
The DVD Juke System's advertising, marketing and promotional capabilities will
provide advertisers and marketers with a new avenue with which they will be able
to target a captive audience where they have chosen to sit and relax and may be
prone to impulse purchasing. This aspect of the DVD Juke System is unique to
Registrant and currently unavailable by any other means. The DVD Juke System
effectively creates a new advertising and promotional channel for marketers.
Currently conventional jukeboxes allow for payment in cash only. The DVD Juke
System allows for payment by cash, credit card, debit cards and smart cards/
loyalty cards.
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The DVD Juke System is also capable of collecting, storing and disseminating
data, including play lists and personal information input by its customers.
The play lists generated by the DVD Juke System are flexible and are capable
of providing the total number of plays of a given song, record company totals
and location-specific information, depending on the desired output. Registrant
intends to market this information to record companies and brand advertisers.
The conventional jukebox is different in that it holds complete CD's.
Because of this, several songs take up space in the jukebox that would otherwise
not have been chosen by the jukebox owner. That is, in order to stock the
one or two popular songs of a given artist on a given CD, the jukebox owner has
no choice but to stock the rest of the songs on that artist's CD. With DVD Juke
System technology, each song is copied in digital format onto the hard drive of
the DVD Juke System, just as files are copied onto a computer's hard drive
allowing the location owner to stock only the specific tracks he/she wishes to
stock. In this way, only the most popular songs by any given artist will be
loaded onto the DVD Juke System's hard drive without any extraneous, unwanted
songs taking up potential revenue-generating space.
An important and unique programming feature of the DVD Juke System is that the
content can be customized for each location, and may be updated as frequently
as a location owner desires. The location owner may order the Juke System pre-
programmed with standard combinations of rock and pop standards, jazz, country
and western, and recent hits, or can order programming specifically tailored
to their geographic area and/or their customers' demographics. Registrant will
provide content and updating of content for $100.00 per month, providing an
additional source of income to Registrant.
(b) The DVD Satellite System: The DVD Satellite System is a proprietary
satellite server network which will provide content and updated content to DVD
Juke Systems throughout North America. The content will be transmitted, or
"uplinked," from Registrant's central server to satellites, and then
"downlinked" from the satellites to satellite dishes stationed at each
location. The content will be stored in digital format on the DVD Juke
Systems' high capacity hard drives. The Satellite System will also create a
private network, which will be capable of collecting data and remotely managing
the stand-alone DVD Juke Systems.
The DVD Satellite System technology is expected to significantly reduce the time
and cost involved in providing content and updated content to sites once a
critical mass of locations has been installed. The Satellite System technology
also allows for the easy and flexible loading and re-loading of content
by providing updates by satellite, obviating the need to send service
technicians to individual locations to update each DVD Juke System's
content.
Service and Support
- ---------------------
The DVD Juke System will be sold with a content, service, maintenance, and
management contract which will be subcontracted to an independent third party.
Registrant has been verbally negotiating with several large, well-established
independent service organizations which offer seven-day a week, 24-hour a day
maintenance and service. Registrant feels service will be a primary concern to
location owners who have installed or are contemplating installing a jukebox.
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Industry Background
- --------------------
Currently, the conventional jukebox industry generates over $2.5 billion per
year in coin drop revenues in the United States alone (Vending Times, 1998).
There are approximately 350,000 jukeboxes operating in the United States.
The average jukebox generates revenues of approximately $600 per month based on
1,800 selections played. Currently there are approximately 50 large
distributors and 7,500 operators managing this business.
The business model for the jukebox industry has been under tremendous pressure
over the past five years due to the emergence of broadcast music video,
video game narrowcast networks, and other media competing for the attention of
consumers. In addition, certain basic economic factors must be considered in
evaluating any entry into the jukebox industry, which are set forth below:
- - The cost for audio plays has remained static at three plays for
a $1.00. (This number is trending downward to as low as 5 plays
for $1.00.)
- - The average play time of a jukebox is 7,200 minutes per month,
based on 1,800 plays within a 13 hour day, six days a week.
The total playtime possible within this timeframe is 20,280 minutes.
- - A cost efficient video jukebox does not exist in the market today.
- - Service, maintenance, and content-update costs continue to rise.
- - Theft, and pilferage continue to be on the rise.
- - Intense competition for prime locations continue to erode operating
margins.
Any entrant into the jukebox industry must be prepared to operate within these
parameters and to cooperate with the current distributors, while at the same
time introducing cutting edge technology into the industry to obviate potential
competitive technologies. Today, in this industry, jukebox manufacturers all
suffer from technological obsolescence.
Competition
- -----------
Registrant's primary competitors are manufacturers of conventional jukeboxes.
The largest manufacturers of conventional jukeboxes and their estimated market
share as of 1997 are the following companies:
<TABLE>
<CAPTION>
<S> <C>
Rowe International, Grand Rapids, Michigan: 40%
NSM America, Bensenville, Illinois: 25%
Rock-Ola Manufacturing, Torrance California: 25%
Wurlitzer Jukebox, Gurnee Illinois: 10%
</TABLE>
Registrant has not been able to identify any competitors with technology
comparable or similar to the DVD Juke System . However, all of Registrant's
primary competitors are substantially larger and have significantly greater
financial resources than Registrant. In addition, their distribution channels
are fully established and their brand names are well-known.
In 1997, manufacturers sold approximately 22,000 jukebox units for a total
retail value of $132 million. The average retail price of a jukebox, loaded
with content, was $6,000 per unit.
5
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Registrant has identified other competition for the DVD Juke System, primarily
from audio music private networks, cable and satellite. Examples are MTV,
MuchMusic, and VH1. Because these companies have entirely different
distribution and pricing models than the conventional electro-mechanical jukebox
companies, direct comparisons cannot be made.
Marketing Plan
- --------------
Registrant intends to aggressively market the superior technology of the DVD
Juke System. Its initial goal is to replace approximately 15% of the 350,000
conventional jukeboxes located primarily in bars and restaurants with the
DVD Juke System within the next 5 years, as more fully described below.
Registrant believes it can accomplish this goal by forming business
relationships with the top distributors in the jukebox industry by offering
a unique split of the coin drop revenues generated by the DVD Juke System,
thereby enhancing the total revenue generated by its partners within the
industry. However, Registrant has not yet formed any such business
relationships. Registrant will also attempt to expand the market for the DVD
Juke System beyond bars and restaurants to fast food restaurants, colleges,
shopping centers, etc.
The incentives provided to distributors for forging such relationships will be
(i) significant new revenue potential from their distribution network, (ii)
exclusive territorial boundaries granted by Registrant, thereby ensuring maximum
penetration of the new product, (iii) long-term access to new video products and
(iv) access to the entertainment, e-commerce business. In addition, Registrant
has addressed the problems of the industry as follows:
- - By providing video, the cost per play can be increased to two selections for
$1.00, thereby increasing the pay-for-play reven
- - Because the DVD Juke System includes video, it can offer 600 minutes per
month of prime time consumer and brand advertising (
- - The company can offer off-peak customized content of 12,480 minutes at
Internet prices ($15.00 per hour) representing a minim
- - The DVD Juke system will retail at comparable prices to the standard jukebox
- - The entire system is networked for cost effective remote diagnostics and
satellite downloading of content, reducing infrastru
- - The distributors and operators will be able to remotely access each DVD Juke
System, ensuring security and optimum management
- - The industry will have a state-of-the-art product for their locations that is
revenue generating, versus subscription or cost
- - The distributors will have a product that they can expand into many new
channels of distribution, such as hotels, malls, fast
Registrant intends to work closely with its distributors in marketing the DVD
Juke System to the bars and restaurants that commonly have jukeboxes.
Registrant is in the process of introducing the DVD Juke System to several
national brand name advertisers, most of which have requested a demonstration.
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To date, presentations have been made to several potential
Advertisers. The response of these advertisers has been positive and
discussions are currently under way with various advertisers to become
sponsors of the DVD Juke System. However, no such sponsors have entered
into agreements to date.
Registrant's marketing plan also includes the following marketing and
promotional activities, which Registrant anticipates will create further
interest in the DVD Juke System:
(a) Test Marketing: Registrant expects the DVD Juke System to be fully
operational by mid-February 2000 and intends to perform a 20-unit trial in the
New York metropolitan area between March and April of 2000. Certain test
locations will be chosen to market the DVD Juke System to the Hispanic and
African American communities. This market segment represents the largest
coin-drop per unit of any group. Registrant expects to fully launch the Juke
System to the public in May 2000.
(b) Trade Shows: Registrant will participate as an exhibitor to demonstrate
the DVD Juke System and issue new product releases at selected national and
international trade shows sponsored by the Amusement and Music Operators
Association (AMOA) and Amusement Showcase International (ASI).
Registrant considers the following Year 2000 trade shows to be excellent venues
in which to demonstrate its DVD Juke System: the Point-of-Purchase Advertising
Institute Show, the Annual Nightclub and Bar Show, the Family Entertainment
Centers Show, and the International Amusement Parks and Attractions Show. Other
possible venues will include the National Restaurant Show, the Convenience Store
Show, the American Hotel and Motel Show, and the International Shopping Center
Show.
(c) Trade Publications: A number of print media opportunities exist for
promoting the DVD Juke System in order to communicate the superiority of the DVD
Juke System compared to conventional jukeboxes. These publications include
Replay Magazine, Playmeter Magazine, Vending Times, Street Beat Magazine,
Nightclub and Bar Magazine and Fun World Magazine. Registrant intends to
advertise its DVD Juke System in some or all of these publications to promote
the product.
(d) Promotional Video and Informational Kit: Registrant intends to produce a
promotional/informational video describing the DVD Juke System and its features,
benefits and values. A brochure and informational kit will also be created
summarizing the features of the DVD Juke System. The materials will
differentiate the product from its competitors' products outlining the
advantages and superiority of the DVD Juke System over conventional jukeboxes.
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Manufacturing and Distribution
- --------------------------------
Registrant has established business relationships with some distributors in the
jukebox industry and has verbal agreements with certain distributors and written
agreements with additional distributors to market the DVD Juke System to the
locations that they service.
Software Control Systems International, Inc., the Canadian distributor, has
entered into a Letter of Intent with the Windfield Group, one of Canada's
largest distributors, to form a joint venture for the purpose of distributing
jukeboxes. The joint venturers and Registrant are entering into a distribution
agreement which includes a commitment to install 1,000 units in the first year
of Registrant's operations at the rate of approximately 80 units per month.
Patents and Copyright Protection
- -----------------------------------
Registrant has entered into a License Agreement for the rights to use U.S.
Patent #5481509, issued by the United States Patent and Trademark Office on
January 2, 1996, with Software Control Systems International Inc. (SCSI), an
unrelated third party. The License Agreement grants Registrant the exclusive
right to use SCSI's patented technology, which is the basis for the DVD Juke
System. The License Agreement was executed on March 1, 1999 and is effective
until 2017. As consideration for the licensing right, Registrant agreed to pay
SCSI the amount of $250,000 in cash; 2,000,000 restricted shares of common stock
of Registrant; and the right to appoint one director Registrant's Board.
According to the terms of the License Agreement, Registrant is not required to
pay SCSI any additional consideration for the rights granted therein. SCSI is
unrelated to the Company, and does not control Registrant's Board or govern its
business decisions and policies.
Registrant has also developed additional technology of its own which is utilized
in the DVD Juke System, and continues to develop technology to further enhance
the DVD Juke System. The software comprising the DVD Juke System will be covered
by appropriate patent protection and copyright registration.
Licenses
- --------
Registrant is actively pursuing license agreements with several record companies
for the right to display music videos. Registrant does not expect to incur a
cost for such rights, but rather, in exchange for the right to display their
videos, Registrant is offering record companies programming information such as
play lists compiled by the DVD Juke System and cross-promotions. As an example
of the latter, every time a certain music video by a well-known artist is
selected by a customer, Registrant will program the DVD Juke System to also play
at no additional cost a music video by an unknown artist that the record company
is attempting to promote. Additionally, since music videos are primarily
considered promotional materials by the record companies, as opposed to revenue
generating assets, Registrant expects to obtain the rights to display music
videos on the DVD Juke System at no cost to Registrant.
Registrant intends to generate revenue from e-commerce, specifically by
automatically linking consumers to the web sites of the record companies whose
songs have been selected. The consumers will then be able to "click through" to
additional web sites to browse as well as to purchase CD's and merchandise.
Registrant intends to obtain licenses from web sites such as Amazon.com and CD
Now to allow consumers to click through to such sites and purchase CD's and
merchandise.
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In accordance with The Copyright Act of 1976, as amended, Registrant is not
required to obtain licenses to stock the audio content of the DVD Juke System.
Payment of a performance royalty is required for the songs played over the DVD
Juke System; however, this fee is the responsibility of the location owner and
Registrant has no responsibility for this fee or for obtaining performance
licenses for the locations.
Registrant also intends to expand the scope of its content licenses and obtain
licenses that will enable it to display sports highlight films, comedy clips and
pay-per-view events on the DVD Juke System.
Employees
- ---------
At the present time, Registrant has no full-time employees.
Relationships with Third-Parties
- --------------------------------
On March 30, 1999, Registrant entered into a Letter of Agreement with The
Investor Relations Group (IRG), an unrelated third party. Pursuant to
the terms of the Agreement, IRG will provide Registrant investor relations
and corporate communications services in exchange for $10,000 per month in cash,
beginning April 1, 1999, for a period of 1 year, renewable annually thereafter.
As additional compensation, Registrant granted IRG stock options, with piggy-
back rights, to purchase up to a total of 150,000 shares of Registrant's
restricted common stock at an exercise price of $2.50 per share. In addition,
Registrant has agreed to register the shares subject of the option with its
first appropriate registration statement.
On November 19, 1999, Registrant entered into an Agreement for Financial
Communication Services with North American Corporate Consultants, Inc. (NACC),
an unrelated third party. Pursuant to the Agreement, NACC will assist
Registrant on a non-exclusive basis in developing, implementing and maintaining
an ongoing market awareness program for a period of 6 months from the date of
the Agreement. As compensation for its services, NACC shall receive 277,500
shares of Registrant's restricted common stock, payable in monthly increments of
87,500 shares for the first two months, 27,500 shares the third month, and
25,000 shares the last 3 months of the term. In addition, in the event NACC is
the procuring cause in a successful merger, acquisition or corporate financing
on behalf of Registrant, NACC shall be compensated in the amount of 5% of the
merger/acquisition value, or the total value of the corporate financing,
whichever is applicable. Any such fees would be due and payable at the close of
the transaction.
Registrant is also currently in negotiations with NeTune Communications to
provide satellite links and telecommunications technology that will allow
Registrant to transmit content to the DVD Juke Systems. NeTune provides wireless
multimedia network and telecommunications services primarily to the motion
picture, television and advertising industry. NeTune's technology allows high
quality sound and images to be transmitted via satellite from remote locations
to production studios. NeTune's technology also includes an elaborate,
multilevel, state-of-the-art encryption and security system which protects the
content transmitted over its system. The technology utilized by NeTune is
proprietary and covered by 40 United States patents. NeTune is currently in the
process of expanding its business and technology model to other industries that
require high resolution, broadband telecommunications services. NeTune utilizes
leased satellite transponders which cover most of North America. The NeTune
satellite delivery system provides global connectivity on demand 24 hours a day,
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7 days a week. NeTune's ability to transmit extremely high-quality sound and
images is extremely beneficial to Registrant, since Registrant will save time
and money delivering content to its DVD Juke Systems, while maintaining a high
quality of digital sound and images.
In April, 1999, Registrant retained The Marshall Firm, an entertainment law firm
located in New York City, of which Marilyn Haft, an officer, director and
shareholder of Registrant, is associated, to obtain and negotiate licenses for
music and music video content for the DVD Juke System. The Marshall Firm
is well-known for its expertise in entertainment law and its many contacts in
entertainment industry, especially the music industry. Pursuant to the letter
of engagement, Registrant paid The Marshall Firm a retainer in the sum of
$15,000 against which legal fees will be billed at The Marshall Firm's customary
rates of between $125 and $475 an hour.
In August, 1999, Registrant entered into an Agreement for Computer and/or
Programming Services with FirePlug Computers Inc., an unrelated third party, to
design and system software development, documentation, testing, project
management and implementation of the DVD Juke System. All services will be
billed on an hourly rate ranging from $45 to $150/hour.
In November, 1999, Registrant entered into an Agreement for Financial Communica-
tion Services with North American Corporate Consultants, Inc., (NACC) an
unrelated third party to assist Registrant on a non-exclusive basis to develop,
implement and maintain an ongoing market awareness program for its products.
The term of the Agreement is for 6 months. As consideration for the services,
Registrant has agreed to issue to NACC a total of 277,500 shares of its
restricted common stock in the following denominations: 87,500 for each of the
first two months of the Agreement, 27,500 shares the third month and 25,000
for shares each of the last three months. In addition, in the event NACC is the
procuring cause of a successful merger, acquisition or corporate financing on
behalf of Registrant, NACC will receive 5% of the merger/acquisition value or
the total value of the corporate financing, whichever applies, payable at the
time of closing of the transaction.
Future Projects in Development
- ---------------------------------
Registrant intends to generate additional future revenues by pressing, or
"burning," CD's at each DVD Juke System. "Burning" a CD means copying a song or
songs onto a blank CD.
Registrant projects the DVD Juke System to be able to burn CD's by the third
quarter of 2000. When this process is fully operational, consumers will be able
to copy onto a CD a song or songs they have selected on a fee-per-song basis.
Registrant expects to generate revenue by retaining a percentage of the cost per
song charged to the consumer. Registrant intends to offer the record
companies a percentage of the income generated by each burned CD in exchange
for the right to reproduce their songs, while retaining a five to ten
percent (5-10%) royalty for each song copied onto a CD by the DVD Juke System.
The Company is also developing technology which will allow the DVD Juke System
to be capable of video-conferencing and dispensing cash as an automatic teller
machine ("ATM"). These additional uses of the DVD Juke System involve only minor
modifications to the Registrant's current technology. For example, the Juke
System technology is already capable of accepting and calculating the amounts of
currency input into the unit; dispensing cash will involve only minor
adjustments to already existing technology. Therefore, Registrant expects to be
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able to implement these additional uses of the DVD Juke System in the second
quarter of 2000.
In addition, with only minor additions to Registrant's content, the DVD Juke
System will be capable of playing sports highlight films, comedy clips and
pay-per-view events. These additional content categories do not involve
technological advances, but merely expanding Registrant's content licenses and
marketing these additional uses of the DVD Juke System to distributors, location
owners and ultimate consumers. Registrant intends to launch these efforts in
the fourth quarter 2000.
Registrant is also developing an independent audio and video network designed to
provide background video and advertising for hospitality and retail locations.
The system is designed to replace the VCR and Laser Disc players used by tens of
thousands of hospitality and retail locations. The product will provide
interactive commercial support at the point of sale, creating a new media
channel for locations to assist consumer brand companies in enhancing their
visibility on the sites where their products are sold.
Additional Information
- -----------------------
Registrant intends to provide annual reports to its security holders, and to
make quarterly reports available for inspection by its security holders.
The annual report will include audited financial statements.
Upon completion of this registration statement, Registrant will be subject to
the informational requirements of the Securities Exchange Act of 1934 (the
Exchange Act) and, in accordance therewith, will file reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information may be inspected at public reference facilities
of the Commission at Judiciary Plaza, 450 Fifth Street N.W., Washington D.C.
20549; Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; 7 World Trade Center, New York, New York, 10048; and 5670
Wilshire Boulevard, Los Angeles, California 90036. Copies of such material can
be obtained from the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street N.W., Washington, D.C. 20549 at prescribed rates.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSES
======================================
This registration statement contains forward-looking statements that involve
risks and uncertainties. The statements contained in this registration statement
that are not purely historical are forward-looking statements, including without
limitation statements regarding Registrant's expectations, beliefs,
intentions or strategies regarding the future. All forward-looking
statements included in this document are based on information available to the
Registrant on the date hereof, and Registrant assumes no obligation to
update any such forward-looking statements. Registrant's actual results
may differ materially as a result of certain factors, including those set
forth hereafter and elsewhere in this registration statement. Potential
investors should consider carefully the following factors, as well as the more
detailed information contained elsewhere in this registration statement,
before making a decision to invest in the Common Stock of Registrant.
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Selected Consolidated Financial Data
- ---------------------------------------
The following historical financial data for the period from inception through
September 30, 1999 was derived from the historical consolidated financial
statements of Registrant that have been audited by Mark Bailey & Co., Ltd.,
Certified Public Accountants and independent auditors (the Financial
Statements).
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<CAPTION>
BALANCE SHEET DATA:
- ------------------
<S> <C> <C>
9-30-99 12-31-98
========== ==========
Current Assets
- --------------
Cash $ 4,390 $ 194,124
Interest receivable 18 -
---------- ----------
$ 4,408 $ 194,124
Other Assets
- ------------
Deposits $ 600 $ -
Other assets (net of accumulated
Amortization of $12,000 and $0)
(Note 3) 258,000 20,000
---------- ---------
Total assets $ 263,008 $ 214,124
========== =========
Current Liabilities
- -------------------
Accounts payable $ 204,430 $ -
Line of credit (Note 4) 159,761 -
Current portion of patent right
Payable (Note 3) 200,000 -
---------- ---------
Total current liabilities $ 564,191 $ -
Long-Term Portion of Patent Right
Payable (Note 3) $ 50,000 $ -
---------- ---------
Total liabilities $ 614,191 $ -
---------- ---------
Total shareholders'
equity $ (351,183) $ 214,124
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS DATA:
- ------------------------------
From Nine Mos.
Inception to Ended Year Ended
September 30, September December 31,
1999 30, 1999 1998
------------- --------- --------------
<S> <C> <C> <C>
Revenue $ - $ - $ -
- -------
Costs and Expenses
- ------------------
Operating and
Administrative expense (566,468) (555,957) (9,513)
Amortization expense (12,000) (12,000) -
Other Income 10,150 10,150 -
----------- ---------- ------------
Net Loss $ (568,318) $ (557,807) $ (9,513)
=========== ========== ============
Loss per share $ (0.0248) $ (0.0243) $ (0.0003)
=========== ========== ============
</TABLE>
Results of Operations
- -----------------------
Limited Operating History; Accumulated Deficit; Need for Additional Capital
There is limited historical financial information about Registrant upon which
to base an evaluation of the Registrant's performance or to make a decision
regarding an investment in shares of Registrant's Common Stock. Registrant has
an accumulated deficit of $568,318 through September 30, 1999. Registrant's
cash decreased from $194,124 at December 31, 1998 to $4,390 at September 30,
1999.
Nine Months Ended September 30, 1999 Compared to Nine Months Ended
September 30, 1998
Registrant has not yet realized any revenue from its business operations.
Operating
and administrative expenses from inception to the nine months ended September
30, 1999 were $566,468, and represent the majority of Registrant's net loss to
date.
Net cash provided by financing activities increased from $153,500 for the nine
months ended September 30, 1999 to $358,135 for the period ended September 30,
1999, as a result of proceeds in the amount of $204,635 received from sales
of Common Stock of Registrant.
Registrant's net loss for the period from inception to September 30, 1999 was
a deficit of $568,318, or a deficit of $.0248 per share, based on 23,250,000
weighted average shares outstanding at September 30, 1999. Since there have
been no revenues realized since inception, no comparison of net loss is made.
13
<PAGE>
Liquidity and Capital Resources
- -------------------------------
Due to the infant stage of its operations, substantial ongoing investment in
software development, and expenditures required to build the appropriate
infrastructure to support expected future growth, Registrant has been
substantially dependent on private placements of its equity securities and a
bank line of credit to fund its cash requirements.
Net cash used in operating activities increased from $9,513 for the year ended
December 31, 1998 to $353,745 for the period from inception to September 30,
1999.
Proceeds from common stock subscriptions increased from $194,635 for the year
ended December 31, 1998 to $204,635 for the nine months ended September 30,
1999.
As of September 30, 1999, Registrant had total assets of $263,008 and total
liabilities of $614,191.
Year 2000 Issues
- ------------------
Management has done a significant analysis and assessment of its Year 2000
Issues, including Registrant's officers and directors consulting with
independent Y2K consultants and devoting significant time and energies, at
several lengthy meetings, to the analysis and assessment of the Y2K issue.
Based thereon, it was determined that Registrant's computers are Y2K compliant
and Y2K should not have a material effect on Registrant's business operations.
Registrant has no contingency plan established relative to the Y2K issues, and
does not intend to establish one, as it does not intend to commence full
business operations and sales until after January, 2000, when any Y2K issues
will be obvious. To date, Registrant has incurred nominal costs (less than
$500) to address Y2K issues and upgrade its computer systems and software
programs. Registrant has consulted with its third-party vendors and has been
verbally advised that they are Y2K compliant in their respective operations.
Therefore, based upon its analysis and assessment, Registrant has concluded
that:
(1) The assessment of its Year 2000 issues is complete; and
(2) Management has determined that the consequences of its Year 2000
issues will not have a material effect on its business, results
of operations or financial condition.
ITEM 3. DESCRIPTION OF PROPERTY
=========================
Registrant does not own any property.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
=========================================================
MANAGEMENT
==========
The following table sets forth information regarding the shares of Registrant's
Common Stock, par value $.001, beneficially owned for (i) each stockholder known
by Registrant to be the beneficial owner of 5% or more of the Registrant's
issued and outstanding Common Stock; (ii) each of the Registrant's officers and
14
<PAGE>
directors; and (iii) all officers and directors as a group. At September
30, 1999, there were 23,250,000 shares of Common stock outstanding.
<TABLE>
<CAPTION>
Amount &
Nature of
Title Beneficial Percent of
Name and address Of Class Ownership Class
- ----------------- ---------- ----------- ----------
<S> <C> <C> <C>
Lee Edmondson Common Stock 575,000(1) 2%
590 Madison Avenue
New York, NY 10022
Marilyn G. Haft Common Stock 500,000(2) 2%
111 West 40th Street,
11th Floor
New York, NY 10018
Software Control Systems
International Inc. Common Stock 2,000,000 9%
#250-5711 No. 3 Road
Richmond, B.C., Canada V6X 2C9
- --------------------------
All officers and directors
as a group 1,075,000 5%
</TABLE>
(1) Includes stock options to purchase up to 500,000 shares of common stock
at $2.50 per share until March 31, 2001.
(2) Includes stock options to purchase up to 500,000 shares of common stock at
$4.00 per share until April 30, 2009.
There are no arrangements, known to Registrant, including any pledge by any
person of securities of the Registrant, which may, at a subsequent date, result
in a change in control of Registrant.
Future Sales by Existing Stockholders
- -----------------------------------------
All shares of Common Stock of Registrant are "restricted securities", as that
term is defined in Rule 144 of the Rules and Regulations of the SEC promulgated
under the Act ("Rule 144"), save and except the shares which were issued
under a public offering in the State of New York, pursuant to an exemption
provided by Rule 504 of Regulation D, promulgated under the Securities Act of
1933, as amended, which are not "restricted securities" under Rule 144 and can
be publicly sold, except for those Shares purchased by "affiliates" of the
Registrant, as that term is defined in Rule 144.
Under Rule 144, restricted shares can be publicly sold, subject to volume
restrictions and certain restrictions on the manner of sale, commencing one (1)
year after their acquisition. Sales of shares by "affiliates" are subject to
volume restrictions and certain other restrictions pertaining to the manner of
sale, all pursuant to Rule 144.
15
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
==================================================================
The following table sets forth the names, ages and positions of the Directors
and Executive Officers of Registrant:
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address . . . Age Position(s) Held (1)
- ---------------- --- --------------------
Lee Edmondson 45 President and Director
590 Madison Avenue
Yew York, NY 10022
Marilyn G. Haft 56 Secretary, Treasurer,
111 West 40th Street Executive Vice President and
11th Floor Director
New York, NY 10018
</TABLE>
Each director of the Registrant is elected by the stockholders to a term of one
one year and serves until his successor is elected and qualified. Each
officer of the Registrant is elected by the Board of Directors to a term of one
one year and serves until his successor is duly elected and qualified, or
until he is removed from office. The Board of Directors has no nominating,
auditing or compensation committees.
Background of Officers and Directors
- ----------------------------------------
Lee Edmondson - Mr. Edmondson has been the President and Chairman of the
Board of Directors of the Registrant since January 1999. From April to
November, 1998, he was CEO and a Director of VTI Acquisition, N.V., a privately-
held research and development firm. From 1994 to 1997, he was Manager and a
Director of Software Control Systems International Inc. He has been involved in
several retail kiosk and multi-media companies since 1986. In 1998,
he assisted in the formation of Digital Video Display Technology and is
responsible for the formative activities of the commercialization of the
products and business. He devotes full time to the business of Registrant.
Marilyn G. Haft - Ms. Haft has been the Secretary, Treasurer, Executive Vice
President and a Director of the Company since January 1999. From October
1998, she has also been Of Counsel with The Marshall Firm, in New York City, New
York. From March 1996 to December 1997, she was a Partner with Look Here
Pictures, Inc. in New York. From June 1994 to March 1996, she was General
Counsel for Dover Film Finance Group Ltd., a financial services company that
provides short-term funding requirements for major film studios, independent
film producers and distributors, cable and record companies. In that role,
Ms. Haft acted as a liaison with the CEOs and CFOs of film companies, guiding
them through the financing structure, and conducted due diligence on all
contractual and cash flow aspects of film distribution from theatrical,
home video, pay and free television, pay-per view and ancillary rights.
She also oversaw all legal issues and documentation for Dover programs..
16
<PAGE>
Ms. Haft was a law partner of Tanner, Propp & Farber, a partner of Fischbein,
Badillo, Wagner and Itzler and Of Counsel to Summit, Rovins and Feldesman. She
also acted as a test case constitutional law litigator on the national level for
a period of six years. Ms. Haft served in the Carter Administration in the
following capacities: Associate Director of the Office of Public Liaison in the
White House, Deputy Counsel to Vice President Walter Mondale in the White House
and U.S. Representative to the United Nations. She ran the New York City primary
campaign for Carter/Mondale in 1980.
She has been an award-winning independent film producer and worked at NBC News
and ABC News on content and production. She is also an author of general
non-fiction works, including legal works. She has been an adjunct professor of
law at New York University School of Law and is an adjunct professor at NYU's
Tisch School of the Arts Graduate Film and TV program where she teaches
entertainment law and business to third year film graduate students. Ms. Haft
is a graduate of the New York University School of Law and a member of the bar
in New York State, the District of Columbia and the U.S. Supreme Court. She
received a B.A. in 1965 from Brooklyn College and her J.D. from New York
University in 1968. She devotes her time as required to the business of
Registrant.
Employment Agreements
- ----------------------
None of Registrant's officers or directors are currently party to employment
agreements with Registrant. Registrant presently has no pension, health,
annuity, bonus, insurance, profit sharing or similar benefit plans; however, it
may adopt such plans in the future. There are presently no personal benefits
available for directors, officers or employees of Registrant, except for options
granted by the Board of Directors to certain officers, directors and consultants
to Registrant.
ITEM 6. EXECUTIVE COMPENSATION
========================
Neither of Registrant's officers or directors currently receive a salary for
their services; however, Lee Edmondson, President of Registrant, received a
consulting fee of $94,000 through September 30, 1999, $65,000 of which is unpaid
and accrued and is included in the accounts payable figure in Registrant's
financial statements included herein.
There are no employment contracts between Registrant and any of its officers or
directors.
Registrant does not have any plan or arrangement with respect to compensation to
its executive officers which would result from the resignation, retirement or
any other termination of employment with Registrant or from a change in control
of Registrant, or a change in the executive officers' responsibilities following
any change in control, where in respect of an executive officer, the value of
such compensation exceeds $120,000.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
------------------------------------------
In March 1999, Registrant granted the following stock options to the
following officers and/or directors as compensation and incentives for services
rendered to Registrant:
17
<PAGE>
<TABLE>
<CAPTION>
PERCENT
OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED EXERCISE DATE OF
NAME OF HOLDER GRANTED (#) FISCAL YR PRICE EXERCISE
- -------------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C>
Lee Edmondson 500,000 40% $2.50/Share Until 3/31/01
Marilyn Haft 500,000 40% $4.00/Share Until 4/30/09
</TABLE>
(1) These percentages are based on the total number of option shares granted
since inception.
Any shares acquired through exercise of these options shall be restricted
shares and may not, under any circumstances, be registered or in any way
become free trading until two years from the date the shares are acquired
through exercise of the option. The records of the stock transfer agency, as
well as any certificates issued upon exercise of these options shall
contain said restrictive legend.
There are no other bonus, pension, deferred compensation, long-term incentive
plans or awards, or any other similar plans for executive officers and/or
directors of Registrant.
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
==================================================
In April, 1999, Registrant retained The Marshall Firm, an entertainment law firm
located in New York City, of which Marilyn Haft, an officer, director and
shareholder of Registrant, is associated, to obtain and negotiate licenses for
music and music video content for the DVD Juke System. The Marshall Firm
is well-known for its expertise in entertainment law and its many contacts in
entertainment industry, especially the music industry. Pursuant to the letter
of engagement, Registrant paid The Marshall Firm a retainer in the sum of
$15,000 against which legal fees will be billed at The Marshall Firm's customary
rates of between $125 and $475 an hour.
ITEM 8. DESCRIPTION OF SECURITIES
===========================
The authorized capital stock of the Registrant consists of 100,000,000 shares
of Common Stock, par value $.001, of which a total of 23,250,000 are issued
and outstanding. The holders of the Common Stock (i) have equal ratable rights
to dividends from funds legally available therefor, when, as and if declared by
the Board of Directors of the Registrant; (ii) are entitled to share ratably in
all of the assets of the Registrant available for distribution to holders of
Common Stock upon liquidation, dissolution or winding up of the affairs
of the Registrant; (iii) do not have preemptive, subscription or conversion
rights and there are no redemption or sinking fund provisions or rights
applicable thereto; and (iv) are entitled to one non-cumulative vote per
share on all matters on which stockholders may vote. All shares of Common Stock
now outstanding are fully paid for and non-assessable. Reference is made to
the Registrant's Articles of Incorporation, By-Laws and the applicable
statutes of the State of Nevada for a more complete description of the rights
and liabilities of holders of the Registrant's securities.
18
<PAGE>
The holders of shares of Common Stock of the Registrant do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
shares, voting for the election of directors, can elect all of the directors to
be elected, if they so choose, and, in such event, the holders of the remaining
shares will not be able to elect any of the Registrant's directors.
To date, Registrant has not paid any cash dividends to stockholders. The
declaration of any future cash dividend will be at the discretion of the Board
of Directors and will depend upon the earnings, if any, capital requirements and
financial position of the Registrant, general economic conditions, and other
pertinent conditions. It is the present intention of the Registrant not to pay
any cash dividends in the foreseeable future, but rather to reinvest earnings,
if any, in the Registrant's business.
Registrant will furnish annual financial reports to stockholders, certified by
its independent accountants, and may, in its discretion, furnish unaudited
quarterly financial statements.
Options
- -------
In March 1999, Registrant granted stock options to purchase up to 500,000
shares of common stock at $2.50 per share to Lee Edmondson, an officer and
director, until March 31, 2001, at which time they will expire and become null
and void.
In March 1999, Registrant granted stock options to purchase up to 500,000
shares of common stock at $4.00 per share to Marilyn G. Haft, an officer and
director, until April 30, 2009, at which time they will expire and become null
and void.
In March, 1999, Registrant entered into a Letter of Agreement with The Investor
Relations Group (IRG), an unrelated third party. Pursuant to the Agreement, IRG
will provide Registrant investor relations and corporate communications
services in exchange for $10,000 per month in cash, beginning April 1, 1999, for
a period of one year, renewable annually thereafter. As additional compensation,
Registrant granted IRG stock options, with piggy-back rights, to purchase up to
a total of 150,000 shares of Registrant's restricted common stock at an
exercise price of $2.50 per share. In addition, Registrant has agreed to
register the shares subject of the option with its first appropriate
registration statement.
PART II
========
ITEM 1. STOCK MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON
==================================================================
STOCK AND OTHER SHAREHOLDER MATTERS
=======================================
Common Stock Trading Information
- -----------------------------------
Registrant's shares are traded on the OTC Bulletin Board under the symbol DVDT
and commenced trading in February 1999. Registrant's shares will be delisted
from the Bulletin Board in February 2000 if it fails to comply with the
OTC Bulletin Board Eligibility Rule, which requires all companies to be fully
reporting under the Securities Exchange Act of 1934, and for their Form 10SB to
be in a "no comment" stage with the SEC. The Registrant has filed this Form
19
<PAGE>
10SB in an effort to comply with the Eligibility Rule. The following table sets
forth the high and low bid quotations for the Common Stock for the periods
indicated. These quotations reflect prices between dealers, do not include
retail mark-ups, mark-downs or commissions and may not necessarily represent
actual transactions.
<TABLE>
<CAPTION>
PERIOD HIGH LOW
- ------ ----- -----
<S> <C> <C>
SEPTEMBER 30, 1999 $ 3 1/4 $ 1
JUNE 30, 1999 $ 6 3/8 $2 1/4
MARCH 31, 1999 $ 3 $2 5/16
</TABLE>
This information was obtained from the Internet (Quicken.com) and does not
reflect inter-dealer prices, without retail mark-up, mark-down, or commission,
and may not represent actual transactions.
As of September 30, 1999 there were 8 shareholders of record of the 23,250,000
shares of Common Stock issued and outstanding.
Stock Transfer Agent
- ----------------------
Transfer Online, 227 S.W. Pine Street, Suite 300, Portland, Oregon 97204,
telephone number (503) 227-2950, is Registrant's stock transfer
agent for its securities.
Dividends
- ---------
Registrant has not paid any cash dividends to any of its shareholders. The
declaration of any future cash dividends will be at the sole discretion of the
Board of Directors and will depend upon the earnings, if any, the capital
requirements and financial position of Registrant, general economic conditions
and other pertinent conditions. Unless otherwise determined by the Board of
Directors, no dividends shall be paid on any share which has been purchased or
redeemed by Registrant while the shares are held by Registrant. Pursuant to
Registrant's Articles of Incorporation (attached hereto as Exhibit 3(I) and
incorporated herein by reference), the Directors may, from time to time,
capitalize any undistributed surplus on hand of Registrant and may from time to
time issue shares, bonds, debentures or debt obligations of Registrant as a
dividend representing such undistributed surplus on hand, or any part thereof.
It is the present intention of Registrant not to pay any cash dividends in the
foreseeable future, but rather to reinvest any earnings into its business
operations.
The Securities and Exchange Commission has adopted regulations which generally
define "penny stock" to be any equity security that has a market price of
less than $5.00 per share, subject to certain exceptions. Registrant's Common
Stock may be deemed to be a penny stock and thus will become subject to rules
that impose additional sales practice requirements on broker/dealers who sell
such securities to persons other than established customers and accredited
investors, unless the Common Stock is listed on The Nasdaq SmallCap Market.
Consequently, the penny stock rules may restrict the ability of broker/
dealers to sell Registrant's securities and may adversely affect the
20
<PAGE>
ability of holders of Registrant's Common Stock to resell their shares in
the secondary market.
ITEM 2. LEGAL PROCEEDINGS
==================
None.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
==================================================
Registrant has not had any changes in or disagreements with Accountants since
inception.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
===========================================
In August, 1997, Registrant issued 1,000,000 shares of restricted common
stock to its officers and directors in exchange for $.01 per share, or a
total of $10,000. Subsequently, in January 1999, during a reorganization
and change in management, these shares of common stock were canceled and
returned to Registrant's treasury.
In May, 1998, Registrant issued 100,000 shares of restricted common stock,
with a fair market value of $20,000, in exchange for the distribution rights
to a non-reusable medical syringe. In January 1999, these shares of common
stock were canceled and returned to Registrant's treasury and the distribution
rights were abandoned.
In July, 1998, Registrant issued 1,000,000 shares of Common Stock at $.20 per
share pursuant to a Rule 504 Regulation D offering, approved by the New York
Department of Law, and received total net proceeds of $200,000.
On February 11, 1999, Registrant issued 2,000,000 shares of restricted common
stock, valued at $20,000, to Software Control Systems International, Inc., an
unrelated third party, in exchange for the patent rights to Digital Video
Display computer technology. In addition, Registrant incurred a patent right
payable in the amount of $250,000.
On March 10, 1999, Registrant issued 100,000 shares each to 386878 B.C. Ltd.,
an unrelated third party, and Richard Brunette, a former director of
Registrant, in exchange for consulting services valued at $2,000.
On July 1, 1999, Registrant issued 50,000 shares of restricted common stock to
Bob Noble, an unrelated third party in exchange for consulting services valued
at $500.
In November, 1999, Registrant entered into an Agreement for Financial Communica-
tion Services with North American Corporate Consultants, Inc., (NACC) an
unrelated third party to assist Registrant on a non-exclusive basis to develop,
implement and maintain an ongoing market awareness program for its products.
The term of the Agreement is for 6 months. As consideration for the services,
Registrant has agreed to issue to NACC a total of 277,500 shares of its
restricted common stock in the following denominations: 87,500 for each of the
first two months of the Agreement, 27,500 shares the third month and 25,000
for shares each of the last three months. In addition, in the event NACC is the
procuring cause of a successful merger, acquisition or corporate financing on
21
<PAGE>
behalf of Registrant, NACC will receive 5% of the merger/acquisition value or
the total value of the corporate financing, whichever applies, payable at the
time of closing of the transaction.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
=============================================
Pursuant to the Articles of Incorporation of Registrant, Registrant's officers
and directors, and/or heirs and personal representatives, who may be made a
party to any proceeding, including a law suit, because of his/her position, may
be indemnified from any personal liability. This indemnification shall include
payment of all costs, charges and expenses, including an amount paid to settle
an action or satisfy a judgment, actually and reasonably incurred in a civil,
criminal or administrative proceeding. The indemnification is intended to be to
the fullest extent permitted by law.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors or officers of Registrant
pursuant to the foregoing provisions, Registrant is informed that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy, as expressed in said Act and is, therefore,
unenforceable.
PART F/S
========
FINANCIAL STATEMENTS AND EXHIBITS
====================================
Audited financial statements of Registrant for the period from inception
(date of incorporation) through the period ended September 30, 1999 and the
year ended December 31, 1998, were audited by Mark Bailey & Co. Ltd. and
immediately follow.
22
<PAGE>
DIGITAL VIDEO DISPLAY TECHNOLOGY CORPORATION
FINANCIAL STATEMENTS
FROM INCEPTION (AUGUST 1, 1997)
THROUGH
SEPTEMBER 30, 1999
WITH
AUDIT REPORT OF
CERTIFIED PUBLIC ACCOUNTANTS
23
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
Independent Auditors' Report on the Financial Statements F-2
Balance Sheets . . . . . . . . . . . . . . . . . . . . . F-3
Statements of Operations . . . . . . . . . . . . . . . . F-4
Statements of Stockholders' Equity . . . . . . . . . . . F-5
Statements of Cash Flows . . . . . . . . . . . . . . . . F-6
Notes to Financial Statements. . . . . . . . . . . . . . F-8
</TABLE>
24
<PAGE>
MARK BAILEY & CO. LTD.
Certified Public Accountants
Management Consultants
Phone: 775-332-4200
Fax: 775-332-4210
Office Address: Mailing Address:
1495 Ridgeview Drive, Suite 200 P.O. Box 6060
Reno, Nevada 89509-6634
Reno, Nevada 89513
Independent Auditors' Report
-----------------------------------
December 3, 1999
Board of Directors
Digital Video Display Technology Corporation
We have audited the accompanying balance sheets of Digital Video Display
Technology Corporation (a Company in the development stage) as of December 31,
1998 and September 30, 1999 and the related statements of operations,
stockholders' equity, and cash flows from inception (August 1, 1997) through
September 30, 1999. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 Digital Video Display
Technology Corporation (a Company in the development stage), as of December 31,
1998 and September 30, 1999 and the results of its operations and its cash flows
from inception (August 1, 1997) through September 30, 1999 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 1 to the
financial statements, the Company is in the development stage, and existing cash
and available credit are insufficient to fund the Company's cash flow needs for
the next year. Management's plans in regard to these matters are also described
in Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Mark Bailey & Co., Ltd.
Reno, Nevada
F-2
<PAGE>
<TABLE>
<CAPTION>
DIGITAL VIDEO DISPLAY TECHNOLOGY CORPORATION
(A Company in the Development Stage)
BALANCE SHEETS
--------------
December 31, 1998 and September 30, 1999
ASSETS
======
September 30, 1999 December 31, 1998
------------------ -----------------
<S> <C> <C>
Current Assets
- --------------
Cash $ 4,390 $ 194,124
Interest receivable 18 -
------------- ---------------
Total current assets 4,408 194,124
Other Assets
- ------------
Deposits 600 -
Other assets (net of
accumulated amortization
of $12,000 and $0) (Note 3) 258,000 20,000
-------------- ----------------
Total assets $ 263,008 $ 214,124
LIABILITIES AND STOCKHOLDERS' EQUITY
====================================
Current Liabilities
- -------------------
Accounts payable $ 204,430 $ -
Line of credit (Note 4) 159,761 -
Current portion of patent
right payable (Note 3) 200,000 -
-------------- ---------------
Total current liabilities 564,191 -
Long-Term Portion of Patent
Right Payable (Note 3) 50,000 -
-------------- ----------------
Total liabilities $ 614,191 $ -
Stockholders' Equity (Note 7)
Common stock, $.001 par
value, 100,000,000 shares
authorized, 23,250,000 in 1999
and 2,100,000 in 1998
shares issued and outstanding 23,250 2,100
Additional paid-in-capital 193,885 222,535
Deficit accumulated during the
development stag (568,318) (10,511)
-------------- ---------------
Total stockholders' equity $ (351,183) $ 214,124
Total liabilities and stockholders'
Equity $ 263,008 $ 214,124
</TABLE>
The Accompanying Notes are an Integral Part of These Financial Statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
DIGITAL VIDEO DISPLAY TECHNOLOGY CORPORATION
(A Company in the Development Stage)
STATEMENT OF OPERATIONS
-----------------------
For the Period from Inception (August 1, 1997) through September 30, 1999
Inception
(August 1, 1997) Nine Months Year
to Ended Ended
September 30, September 30, December 31
1999 1999 1998
---------------- ------------ -----------
<S> <C> <C> <C>
Revenue $ - $ - $ -
Costs and Expenses
- ------------------
Operating and administrative
Expenses (566,468) (555,957) (9,513)
Amortization expense (12,000) (12,000) -
Other Income 10,150 10,150 -
-------------- ----------- ---------
Net loss $ (568,318) $ (557,807) $ (9,513)
============= ========== ========
Loss per share $ (0.0248) $ (0.0243) $(0.0003)
============= ========== ========
</TABLE>
The Accompanying Notes are an Integral Part of These Financial Statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
DIGITAL VIDEO DISPLAY TECHNOLOGY CORPORATION
(A Company in the Development Stage)
STATEMENT OF STOCKHOLDERS' EQUITY
---------------------------------
For the Period from Inception (August 1, 1997) through September 30, 1999
Additional
Common Stock Paid-in Retained Total
Shares Amount Capital Deficit Equity
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
Issuance of shares to
DVD Technology Corp.'s
Officers and directors for
cash on August 1, 1997, at
$.01 per share 1,000,000 $ 1,000 $ 9,000 $ - $ 10,000
Net loss at
December 31, 1997 - - - (998) (998)
----------------------------------------------------
Balance at
December 31, 1996 1,000,000 1,000 9,000 (998) 9,002
Issuance of shares for
cash from an offering on
April 30, 1998, at $.20
per share 1,000,000 1,000 199,000 - 200,000
Costs associated with
the offering on April 30,
1998 - - (5,365) - (5,365)
Issuance of shares to a
related company for
distribution rights,
valued at the fair market
value of the shares issued,
on May 1, 1998, at $.20 per
share 100,000 100 19,900 - 20,000
Net loss at
December 31, 1998 - - - (9,513) (9,513)
-----------------------------------------------------
Balance at
December 31, 1998 2,100,000 2,100 222,535 (10,511) 214,124
Cancellation of the
stock issued to the
officers, directors and
the related company on
January 25, 1999 (1,100,000) (1,100) (28,900) - (30,000)
F-5
<PAGE>
Stock split of 21:1
For the outstanding
stock, retaining
original par value, on
January 25, 1999 20,000,000 20,000 (20,000) - -
Issuance of shares
for patent rights,
valued at the fair
market value of the
shares issued, on
February 11, 1999, at
$.01 per share 2,000,000 2,000 18,000 - 20,000
Issuance of shares for
consulting services,
valued at the fair
market value of the
services received, on
July 7, 1999, at $.01
per share 250,000 250 2,250 - 2,500
Net loss at
September 30, 1999 - - - (557,807) (557,807)
Balance at
September 30, 1999 23,250,000 $ 23,250 $ 193,885 $(568,318)$(351,183)
======================================================
</TABLE>
The Accompanying Notes are an Integral Part of These Financial Statements
F-5
<PAGE>
<TABLE>
<CAPTION>
DIGITAL VIDEO DISPLAY TECHNOLOGY CORPORATION
(A Company in the Development Stage)
STATEMENT OF CASH FLOWS
-----------------------
For the Period from Inception (August 1, 1997) through September 30, 199
Nine Months Year
Inception Ended Ended
To Date September 30, 1999 12/31/98
--------- ----------------- --------
<S> <C> <C> <C>
Cash Flows from Operating Activities
- ------------------------------------
Net loss $ (568,318) $ (557,807) $ (9,513)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Amortization 12,000 12,000 0
Gain from cancellation of common
stock (10,000) (10,000) 0
Increase in receivables (18) (18) 0
Increase in deposits (600) (600) 0
Increase in accounts payable 204,430 204,430 0
Increase in accrued interest 6,261 6,261 0
Expenses paid by issuance of
common stock 2,500 2,500 0
---------- ---------- --------
Net cash used in operating
activities $ (353,745) $ (343,234) $ (9,513)
----------- ---------- --------
Cash Flows from Financing
Activities
- -------------------------
Proceeds received from issuance
of stock 204,635 0 194,635
Deferred offering costs 0 0 4,865
Proceeds received from line of
credit 153,500 153,500 0
Net cash provided by financing
activities 358,135 153,500 199,500
Net increase (decrease) in cash and
cash equivalents (Note 1) 4,390 (189,734) 189,987
Cash and cash equivalents at
beginning of period 0 194,124 4,137
----------- ----------- ----------
Cash and cash equivalents at end
of period $ 4,390 $ 4,390 $ 194,124
=========== =========== ==========
</TABLE>
The Accompanying Notes are an Integral Part of These Financial Statements
F-6
<PAGE>
DIGITAL VIDEO DISPLAY TECHNOLOGY CORPORATION
(A Company in the Development Stage)
STATEMENT OF CASH FLOWS
-----------------------
For the Period from Inception (August 1, 1997) through September 30, 199
Supplementary Schedule of Non Cash Activities
- ---------------------------------------------
During 1998 the Company issued 100,000 shares of common stock, with a fair
market value of $20,000, for the distribution rights to a non-reusable medical
syringe. In January 1999 these shares of common stock were canceled, and the
distribution rights were abandoned (see Note 3).
On February 11, 1999 the Company issued 2,000,000 shares of common stock, with a
fair market value of $20,000, for patent rights to Digital Video Display
computer technology. In addition, the Company incurred a patent right payable
in the amount of $250,000 (see Note 3)
On July 7, 1999 the Company issued 250,000 shares of stock for consulting
services, with a fair market value of $2,500.
No amounts were actually paid for either interest or income taxes from inception
(August 1, 1997) through September 30, 1999.
The Accompanying Notes are an Integral part of These Financial Statements
F-7
<PAGE>
DIGITAL VIDEO DISPLAY TECHNOLOGY CORPORATION
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
For the Period from Inception (August 1, 1997) through September 30, 199
1. Organization and Significant Accounting Policies
-------------------------------------------------
The Company was incorporated in the State of Nevada on August 1, 1997 under the
name Meximed Industries, Inc. The Company is in the development stage as its
operations principally involve research and development, market analysis, and
other business planning activities, and no revenue has been generated from its
business activities. Originally, the Company intended to distribute non-reusable
medical syringes. In January 1999, the Company abandoned its plan to distribute
medical syringes, and changed its name to Digital Video Display Technology
Corporation. The Company intends to create a Digital Video Display jukebox
system for distribution in Canada and the United States.
These financial statements have been prepared assuming that the Company will
continue as a going concern. The Company is currently in the development stage,
and existing cash and available credit are insufficient to fund the Company's
cash flow needs for the next year. As discussed in Note 4, on April 15, 1999 an
unrelated third party extended the Company a line of credit, which is due on
demand June 1, 2000. The Company plans to raise additional capital in the near
future through private placements, ranging from between $6,000,000 to
$8,000,000.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Cash and Cash Equivalents
- -------------------------
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.
F-8
<PAGE>
1. Organization and Significant Accounting Policies (continued)
-----------------------------------------------------------
Research and Development Costs
- ------------------------------
Research and development costs are expensed as incurred. Such costs were $0 and
$159,027 at December 31, 1998 and September 30, 1999, respectively.
2. Federal Income Taxes
--------------------
The Company will be taxed under Subchapter C of the Internal Revenue Code for
its U.S. operations.
3. Other Assets
------------
The other assets at December 31, 1998 consist of the distribution rights of a
non-reusable medical syringe. The Company purchased these distribution rights
from a related company for 100,000 shares of common stock (see Note 5). In
January 1999, these distribution rights were abandoned and the related asset was
written off.
The other assets at September 30, 1999 consist of patent rights to a jukebox
entertainment system. On February 11, 1999 the Company entered into an agreement
with an unrelated third party whereby the Company will be the exclusive holder
of a jukebox entertainment system patent for a period of fifteen years. As
consideration for these patent rights, the Company issued 2,000,000 shares of
its common stock (see Note 7), and incurred a patent right payable of $250,000.
Originally, this payable was due at the earlier of September 1, 1999 or when the
Company was able to obtain financing. On September 1, 1999, the agreement was
modified. The Company is now obligated to pay the $250,000 in $20,000
installments, beginning December 15, 1999, with a final payment of $10,000 due
on December 15, 2000. The total cost of the patent rights was capitalized, and
is currently being amortized over the fifteen year life of the agreement.
F-9
<PAGE>
4. Line of Credit
--------------
During the nine months ended September 30, 1999 an unrelated third party issued
the Company an unsecured $500,000 line of credit. The line of credit carries
interest at 12% per annum, and is due on demand June 1, 2000. The balance at
December 31, 1998 and September 30, 1999, was $0 and $159,761, respectively.
5. Related Party Transactions
--------------------------
On May 1, 1998 the Company issued 100,000 shares of common stock to a separate
entity, owned by the directors of the Company, in consideration for the
distribution rights to a non-reusable medical syringe. In January 1999, this
stock was canceled and the related distribution rights were written off (see
Note 3).
In March of 1999 the Company issued an option to purchase 500,000 shares of
common stock at $2.50 per share to the President, CEO and Director of the
Company. The option expires March 31, 2001 (see Note 8).
In April of 1999 the Company issued an option to purchase 500,000 shares of
common stock at $4.00 per share to a Director of the Company. The option expires
April 30, 2009 (see Note 8).
6. Fair Value of Financial Instruments
-----------------------------------
Financial Accounting Standards Board ("FASB") Statement No. 107,
Disclosure About Fair Value of Financial Instruments is a part of a continuing
process by the FASB to improve information on financial statements. The
following methods and assumptions were used by the Company in estimating its
fair value disclosures for such financial instruments as defined by the
Statement.
The carrying amounts reported in the balance sheets for cash approximate fair
value at December 31, 1998 and September 30, 1999.
F-10
<PAGE>
6. Fair Value of Financial Instruments (continued)
----------------------------------------------
The carrying amounts reported in the balance sheets for the other assets
approximate fair value at December 31, 1998 and September 30, 1999 as the assets
were recently purchased at fair market value.
The carrying amounts reported in the balance sheets for accounts payable
approximate fair value at December 31, 1998 and September 30, 1999 as the
payables mature in less than one year.
The estimated fair values of the line of credit are not materially different
from the carrying values for financial statement purposes at December 31, 1998
and September 30, 1999.
7. Stockholders' Equity
--------------------
On August 1, 1997 the Company issued 1,000,000 shares of common stock to its
officers and directors at $0.01 per share, for a total of $10,000 in cash.
In May 1998, the Company issued 100,000 shares of common stock, with a fair
market value of $20,000, to a related company for the distribution rights to a
non-reusable medical syringe. Also during 1998, the Company issued 1,000,000
shares of common stock as part of an offering memorandum at $0.20 per share, for
a total of $200,000 in cash.
In January 1999, the Company canceled the 1,100,000 shares of common stock
previously issued to the officers, directors, and the related company. The
Company recorded a gain of $10,000 on the cancellation of 100,000 of the above
shares, as cash of $10,000 received by the Company when the stock was originally
issued was retained by the Company upon cancellation of the shares.
F-11
<PAGE>
7. Stockholders' Equity (continued)
--------------------------------
Also in January 1999, the Company declared a forward stock split of 21:1 for the
remaining 1,000,000 shares of common stock outstanding, retaining the $0.001 par
value.
On February 11, 1999, the Company issued 2,000,000 shares of common stock, with
a fair market value of $20,000, for the patent rights to a jukebox entertainment
system (see Note 3). The Company also issued 250,000 shares of its common stock
to unrelated third parties at $.01 per share for a total of $2,500 for
consulting services provided. These shares were issued at the fair market value
of the consulting services.
8. Stock Options
-------------
The Company issued an option to purchase 500,000 shares of common stock at $2.50
per share, to the President, CEO, and Director. The option expires March 31,
2001 (see Note 5). The Company also issued an option to purchase 500,000 shares
of common stock at $4.00 a share to a Director. The option expires April 30,
2009 (see Note 5). The Company issued an option to purchase 150,000 shares of
common stock at $2.50 per share to an unrelated third party in exchange for
consulting services. The options expire on April 1, 2000. The option price for
all stock options exceeded the fair market value of the stock at the grant date,
accordingly, no compensation costs have been recognized. The fair market value
of the stock options is $0.
F-12
<PAGE>
PART III
=========
ITEM 1. INDEX TO EXHIBITS
===================
Exhibit No. Document Description
- ----------- ---------------------
3.1 Articles of Incorporation and any Amendments
3.2 Bylaws
5 Opinion and Consent of Michael J. Morrison, Esq.
8 Consent of Mark Bailey & Co. Ltd.,
Certified Public Accountants
10.1 Agreement with Software Control Systems International, Inc.
and Addendum
10.2 Distributor Agreement with Software Control Systems
International Inc.
10.3 Letter of Agreement with The Investor Relations Group
10.4 Agreement-North American Consultants, Inc.
10.5 Retainer Agreement- The Marshall Firm
10.6 Agreement - FirePlug Computers
10.7 Consulting Agreement with 386878 B.C. Ltd.
10.8 Consulting Agreement with Richard Brunette
10.9 Consulting Agreement with Bob Noble
10.10 Stock Option Agreement - Marilyn G. Haft
10.11 Consulting Agreement- Lee Edmondson
37
<PAGE>
SIGNATURES
===========
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
DIGITAL VIDEO DISPLAY TECHNOLOGY CORP.,
A Nevada corporation
/s/ Lee Edmondson, Dated: December 10, 1999
Chief Executive Officer and President
/s/ Marilyn G. Haft, Dated: December 10, 1999
Chief Financial Officer
38
<PAGE>
Filed in the office of the
Secretary of State of the
STATE OF NEVADA
AUG 01 1997
NO: C16546-97
/s/ Dean Heller
Dean Heller, Secretary of State
ARTICLES OF INCORPORATION
OF
MEXIMED INDUSTRIES
The undersigned, to form a Nevada corporation, CERTIFIES THAT:
I. NAME: The name of the corporation is Meximed Industries
II. REGISTERED OFFICE; RESIDENT AGENT: The location of the
registered office of this corporation within the State of Nevada is 1025
Ridgeview Drive, Suite 400, Reno, Nevada, 89509; this corporation may maintain
an office or offices in such other place inside or outside the State of Nevada
as may be from time to time designated by the Board of Directors or by the
By-Laws of the corporation; and the corporation may conduct all corporation
business of every kind or nature, including the holding of any meetings of
directors or shareholders, inside or outside the State of Nevada.
The Resident Agent for the corpora-tion shall be Michael J. Morrison, Esq.,
1025 Ridgeview Drive, suite 400, Reno, Nevada, 89509.
III. PURPOSE: The purpose for which this corporation is formed is:
To engage in any lawful activity.
IV. AUTHORIZATION OF CAPITAL STOCK: The amount of the total
authorized capital stock of the corporation shall be Twenty Five Thousand
Dollars ($25,000), consisting of Twenty Five Million (25,000,000) shares of
Common Stock, par value $.001 per share.
V. INCORPORATOR: The name and post office address of the Incorporator
signing these Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
Rita S. Dickson 1025 Ridgeview Drive #400
Reno, Nevada 89509
VI. DIRECTORS: The governing board of this corporation shall be known
as directors, and the first Board shall consist of four (3) directors.
So long as all of the shares of this corporation are owned beneficially and of
record by either one or two shareholders, the number of Directors may be fewer
that three, but not fewer than the number of shareholders.
<PAGE>
The number of directors may, pursuant to the By-Laws, be increased or
decreased by the Board of Directors, provided there shall be no less than one
(1) nor more than nine (9) Directors.
The name and post office address of the directors constituting the
first Board of Directors is as follows:
NAME POST OFFICE ADDRESS
ROBERT MICHAEL GELFAND #30 B Cedar Tower, President Park
99 Soi Kasem Sukhumvit 24 Road
Klogton, Klongtoey, Bangkok, 10110
THAILAND
THOMAS GELFAND 6240 Ash Street
Vancouver, B.C.
CANADA V5Z 3G9
FREDERICK STEVEN FISHER #30 B Cedar Tower, President Park
99 Soi Kasem Sukhumvit 24 Road
Klogton, Klongtoey, Bangkok, 10110
THAILAND
VII. STOCK NON-ASSESSABLE: The capital stock, or the holders
thereof, after the amount of the subscription price has been paid in, shall not
be subject to any assessment whatsoever to pay the debts of the corporation.
VIII. TERM OF EXISTENCE: This corporation shall have perpetual
existence.
IX. CUMULATIVE VOTING: No cumulative voting shall be permitted in
the election of directors.
X. PREEMPTIVE RIGHTS: Shareholders shall not be entitled to
preemptive rights.
<PAGE>
XI. LIMITED LIABILITY: No officer or director of the Corporation
shall be personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as an officer or director, except for
liability (i) for any breach of the officer or director's duty of loyalty to the
Corporation or its Stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, or (iii) for
any transaction from which the officer or director derived any improper personal
benefit. If the Nevada General Corporation Law is amended after the date of
incorpora-tion to authorize corporate action further eliminating or limiting the
personal liability of officers or directors, then the liability of an officer or
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Nevada General Corporation Law, or amendments thereto. No
repeal or modification of this paragraph shall adversely affect any right or
protection of an officer or director of the Corporation existing at the time of
such repeal or modification.
<PAGE>
XII. INDEMNIFICATION: Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
for whom he or she is the legal representative, is or was an officer or
director of the Corporation or is or was serving at the request of the
Corporation as an officer or director of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans whether the basis of such proceeding is
alleged action in an official capacity as an officer or director or in any other
capacity while serving as an officer or director shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the Nevada
General Corporation Law, as the same exists or may hereafter be amended, (but,
in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be an officer or
director and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that except as provided herein with respect
to proceedings seeking to enforce rights to indemnification, the Corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Section shall be a contract right
and shall include the right to be paid by the Corporation the expenses incurred
in defending any such proceeding in advance of its final disposition; provided
however, that, if the Nevada General Corporation Law requires the payment of
such expenses incurred by an officer or director in his or her capacity as an
officer or director (and not in any other capacity in which service was or is
rendered by such person while an officer or director, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, payment shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such officer or director, to
repay all amounts so advanced if it shall ultimately be determined that such
officer or director is not entitled to be indemnified under this Section or
otherwise.
If a claim hereunder is not paid in full by the Corporation within ninety
days after a written claim has been received by the Corporation, the claimant
may, at any time thereafter, bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful, in whole or in part, the claimant
shall be entitled to be paid the expense of prosecuting such claim. It shall be
a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Nevada General Corporation Law for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Nevada General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Section shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-Law, agreement, vote of Stockholders or disinterested
directors or otherwise.
<PAGE>
The Corporation may maintain insurance, at its expense, to protect itself
and any officer, director, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Nevada General Corporation Law.
The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification to any employee or agent of
the Corporation to the fullest extent of the provisions of this section with
respect to the indemnification and advancement of expenses of officers and
directors of the Corporation or individuals serving at the request of the
Corporation as an officer, director, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise.
THE UNDERSIGNED, being the Incorporator hereinbefore named for the purpose
of forming a corporation pursuant to the General Corporation Law of the State of
Nevada, does make and file these Articles of Incorporation, hereby declaring and
certifying the facts herein stated are true, and, accordingly, has hereunto set
her hand this 14TH day of July, 1997.
/s/ Rita Dickson, Incorporator
STATE OF NEVADA )
) ss.
COUNTY OF WASHOE )
On this, 14th day of July, 1997, before me, a Notary Public, personally
appeared Rita S. Dickson, who acknowledged to me that she executed the above
instrument.
/s/ Willett Y. Smith, Notary Public
WILLETT Y. SMITH
Notary Public - State of Nevada
Appointment Recorded in Washoe County
MY APPOINTMENT EXPIRES AUG 23, 1999
<PAGE>
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY RESIDENT AGENT
In the matter of MEXIMED INDUSTRIES, I MICHAEL J. MORRISON, with address at
1025 Ridgeview Drive, Suite 400, Reno, NV 89509, hereby accept the appointment
as Resident Agent of the above-entitled corporation in accordance with NRS
78.090.
Furthermore, that the mailing address for the above registered office is
1025 Ridgeview Drive, Suite 400, Reno, NV 89509.
IN WITNESS WHEREOF, I hereunto set my hand this 14th day of July, 1997
/s/ Michael J. Morrison
Michael J. Morrison, Resident Agent
<PAGE>
Filed in the Office
Of the Secretary of
State of the State of
Nevada January 27,
1999; No. C16546-97
/s/ Dean Heller,
Secretary of State
CERTIFICATE
OF AMENDMENT TO
ARTICLES
OF INCORPORATION
OF
MEXIMED INDUSTRIES
The undersigned, being the President and Secretary of Meximed Industries.,
hereby declare that the original Articles of the corporation were filed with the
Secretary of State of the State of Nevada on August 1, 1997. Pursuant to the
provisions of NRS 78.385-390, at duly noticed and convened meeting of the
Shareholders of the corporation, representing a majority of the voting power of
the Company's Common Stock, unanimously voted for the following amendment to the
Articles of Incorporation:
ARTICLE I: NAME: The name of the corporation is Digital Video Display
Technology Corp.
ARTICLE IV. AUTHORIZATION OF CAPITAL STOCK: The amount of the total
authorized capital stock of the corporation shall be One
Hundred Thousand Dollars ($100,000), consisting of One
Hundred Million (100,000,000) shares of Common Stock, par
value $.001 per share.
The total number of shares of Common Stock of the Company issued
and outstanding on January 25, 1999 were forward split on the
basis of 21:1 without affecting the total authorized shares
and retaining the par value at $.001 per share.
As a result of the split, any fractional shares shall be rounded
up to the next whole share.
This amendment and the share split shall be effective on January
25, 1999.
THE UNDERSIGNED, being the President and Secretary of Meximed Industries. hereby
declares and certifies that the facts herein stated are true and, accordingly,
have hereunto set their hands this 26th day of January, 1999.
/s/ Thomas Gelfand, President and Secretary
STATE OF NEVADA )
) ss.
COUNTY OF WASHOE )
On this 26th day of January, 1999, before me, a Notary Public, personally
appeared Thomas Gelfand, personally known to me or proven to me, and who
acknowledged to me, that they are the President and Secretary, respectively, of
Meximed Industries and that he executed the above instrument.
/s/ Rita S. Dickson, Notary Public
My commission expires April 21, 2001
<PAGE>
BYLAWS OF
MEXIMED INDUSTRIES
ARTICLE 1. OFFICES
1.1 Business Office
The principal business office ("principal office") of the corporation shall be
located at any place either within or without the State of Nevada as designated
in the corporation's most current Annual List filed with the Nevada Secretary of
State. The corporation may have such other offices, either within or without
the State of Nevada, as the Board of Directors may designate or as the business
of the corporation may require from time to time. The corporation shall
maintain at its principal office a copy of certain records, as specified in
Section 2.14 of Article 2.
1.2 Registered Office
The registered office of the corporation shall be located within Nevada and may
be, but need not be, identical with the principal office, provided the principal
office is located within Nevada. The address of the registered office may be
changed from time to time by the Board of Directors.
ARTICLE 2. SHAREHOLDERS
2.1 Annual Shareholder Meeting
The annual meeting of the shareholders shall be held on or about the 29th day of
September, each year beginning with the year 1998, or at such other time on such
other day within such month as shall be fixed by the Board of Directors, for
the purpose of electing directors and for the transaction of such other business
as may come before the meeting. If the day fixed for the annual meeting shall
be a legal holiday in the State of Nevada, such meeting shall be held on the
next succeeding business day.
If the election of directors shall not be held on the day designated herein for
any annual meeting of the shareholders, or at any subsequent continuation after
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as convenient.
2.2 Special Shareholder Meetings.
Special meetings of the shareholders, for any purpose or purposes described in
the notice of meeting, may be called by the president, or by the Board of
Directors, and shall be called by the president at the request of the holders of
not less than one-tenth of all outstanding shares of the corporation entitled to
vote on any issue at the meeting.
<PAGE>
2.3 Place of Shareholder Meetings
The Board of Directors may designate any place, either within or without the
State of Nevada, as the place for any annual or any special meeting of the
shareholders, unless by written consent, which may be in the form of waivers of
notice or otherwise, all shareholders entitled to vote at the meeting designate
a different place, either within or without the State of Nevada, as the place
for the holding of such meeting. If no designation is made by either the Board
of Directors or unanimous action of the voting shareholders, the place of
meeting shall be the principal office of the corporation in the State of Nevada.
2.4 Notice of Shareholder Meeting
(a) Required Notice. Written notice stating the place, day and hour of
any annual or special shareholder meeting shall be delivered not less than 10
nor more than 60 days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the Board of Directors, or other
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting and to any other shareholder entitled by the laws of the State of
Nevada governing corporations (the "Act") or the Articles of Incorporation to
receive notice of the meeting. Notice shall be deemed to be effective at the
earlier of: (1) when deposited in the United States mail, addressed to the
shareholder at his address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid; (2) on the date shown on the return
receipt if sent by registered or certified mail, return receipt requested, and
the receipt is signed by or on behalf of the addressee; (3) when received; or
(4) 5 days after deposit in the United States mail, if mailed postpaid and
correctly addressed to an address, provided in writing by the shareholder, which
is different from that shown in the corporation's current record of
shareholders.
(b) Adjourned Meeting. If any shareholder meeting is adjourned to a
different date, time, or place, notice need not be given of the new date, time,
and place if the new date, time, and place is announced at the meeting before
adjournment. But if a new record date for the adjourned meeting is, or must be
fixed (see Section 2.5 of this Article 2) then notice must be given pursuant to
the requirements of paragraph (a) of this Section 2.4, to those persons who are
shareholders as of the new record date.
(c) Waiver of Notice. A shareholder may waive notice of the meeting (or
any notice required by the Act, Articles of Incorporation, or Bylaws), by a
writing signed by the shareholder entitled to the notice, which is delivered to
the corporation (either before or after the date and time stated in the notice)
for inclusion in the minutes of filing with the corporate records.
A shareholder's attendance at a meeting:
(1) waives objection to lack of notice or defective notice of the meeting
unless the shareholder, at the beginning of the meeting, objects to holding the
meeting or transacting business at the meeting; and
(2) waives objection to consideration of a particular matter at the meeting
that is not within the purpose or purposes described in the meeting notice,
unless the shareholder objects to consideration of the matter when it is
presented.
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(d) Contents of Notice. The notice of each special shareholder meeting
shall include a description of the purpose or purposes for which the meeting is
called. Except as provided in this Section 2.4(d), or as provided in the
corporation's articles, or otherwise in the Act, the notice of an annual
shareholder meeting need not include a description of the purpose or purposes
for which the meeting is called.
If a purpose of any shareholder meeting is to consider either: (1) a proposed
amendment to the Articles of Incorporation (including any restated articles
requiring shareholder approval); (2) a plan of merger or share exchange; (3)
the sale, lease, exchange or other disposition of all, or substantially all of
the corporation's property; (4) the dissolution of the corporation; or (5)
the removal of a director, the notice must so state and be accompanied by,
respectively, a copy or summary of the: (a) articles of amendment; (b) plan of
merger or share exchange; and (c) transaction for disposition of all, or
substantially all, of the corporation's property. If the proposed corporate
action creates dissenters' rights, as provided in the Act, the notice must state
that shareholders are, or may be entitled to assert dissenters' rights, and must
be accompanied by a copy of relevant provisions of the Act. If the corporation
issues, or authorizes the issuance of shares for promissory notes or for
promises to render services in the future, the corporation shall report in
writing to all the shareholders the number of shares authorized or issued, and
the consideration received with or before the notice of the next shareholder
meeting. Likewise, if the corporation indemnifies or advances expenses to an
officer or a director, this shall be reported to all the shareholders with or
before notice of the next shareholder meeting.
2.5 Fixing of Record Date
For the purpose of determining shareholders of any voting group entitled to
notice of or to vote at any meeting of shareholders, or shareholders entitled to
receive payment of any distribution or dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date. Such record date shall
not be more than 70 days prior to the date on which the particular action
requiring such determination of shareholders entitled to notice of, or to vote
at a meeting of shareholders, or shareholders entitled to receive a share
dividend or distribution. The record date for determination of such
shareholders shall be at the close of business on:
(a) With respect to an annual shareholder meeting or any special shareholder
meeting called by the Board of Directors or any person specifically authorized
by the Board of Directors or these Bylaws to call a meeting, the day before the
first notice is given to shareholders;
(b) With respect to a special shareholder meeting demanded by the
shareholders, the date the first shareholder signs the demand;
(c) With respect to the payment of a share dividend, the date the Board of
Directors authorizes the share dividend;
(d) With respect to actions taken in writing without a meeting (pursuant to
Article 2, Section 2.12), the first date any shareholder signs a consent; and
(e) With respect to a distribution to shareholders, (other than one
involving a repurchase or reaquisition of shares), the date the Board of
Directors authorizes the distribution.
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When a determination of shareholders entitled to vote at any meeting of
shareholders has been made, as provided in this section, such determination
shall apply to any adjournment thereof unless the Board of Directors fixes a new
record date, which it must do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
If no record date has been fixed, the record date shall be the date the written
notice of the meeting is given to shareholders.
2.6 Shareholder List
The officer or agent having charge of the stock transfer books for shares of the
corporation shall, at least ten (10) days before each meeting of shareholders,
make a complete record of the shareholders entitled to vote at each meeting of
shareholders, arranged in alphabetical order, with the address of and the number
of shares held by each. The list must be arranged by class or series of shares.
The shareholder list must be available for inspection by any shareholder,
beginning two business days after notice of the meeting is given for which the
list was prepared and continuing through the meeting. The list shall be
available at the corporation's principal office or at a place in the city where
the meeting is to be held, as set forth in the notice of meeting. A
shareholder, his agent, or attorney is entitled, on written demand, to inspect
and, subject to the requirements of Section 2.14 of this Article 2, to copy the
list during regular business hours and at his expense, during the period it is
available for inspection. The corporation shall maintain the shareholder list
in written form or in another form capable of conversion into written form
within a reasonable time.
2.7 Shareholder Quorum and Voting Requirements
A majority of the outstanding shares of the corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. If less than a majority of the outstanding shares are represented
at a meeting, a majority of the shares so represented may adjourn the meeting
from time to time without further notice. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. The
shareholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Once a share is represented for any purpose at a meeting, it is deemed present
for quorum purposes for the remainder of the meeting and for any adjournment of
that meeting, unless a new record date is or must be set for that adjourned
meeting.
If a quorum exists, a majority vote of those shares present and voting at a duly
organized meeting shall suffice to defeat or enact any proposal unless the
Statutes of the State of Nevada, the Articles of Incorporation or these Bylaws
require a greater-than-majority vote, in which event the higher vote shall be
required for the action to constitute the action of the corporation.
2.8 Increasing Either Quorum or Voting Requirements
For purposes of this Section 2.8, a "supermajority" quorum is a requirement that
more than a majority of the votes of the voting group be present to constitute a
quorum; and a "supermajority" voting requirement is any requirement that
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requires the vote of more than a majority of the affirmative votes of a voting
group at a meeting.
The shareholders, but only if specifically authorized to do so by the Articles
of Incorporation, may adopt, amend, or delete a Bylaw which fixes a
"supermajority" quorum or "supermajority" voting requirement.
The adoption or amendment of a Bylaw that adds, changes, or deletes a
"supermajority" quorum or voting requirement for shareholders must meet the same
quorum requirement and be adopted by the same vote required to take action under
the quorum and voting requirement then if effect or proposed to be adopted,
whichever is greater.
A Bylaw that fixes a supermajority quorum or voting requirement for shareholders
may not be adopted, amended, or repealed by the Board of Directors.
2.9 Proxies
At all meetings of shareholders, a shareholder may vote in person, or vote by
written proxy executed in writing by the shareholder or executed by his duly
authorized attorney-in fact. Such proxy shall be filed with the secretary of
the corporation or other person authorized to tabulate votes before or at the
time of the meeting. No proxy shall be valid after six (6) months from the date
of its execution unless otherwise specifically provided in the proxy or coupled
with an interest.
2.10 Voting of Shares
Unless otherwise provided in the articles, each outstanding share entitled to
vote shall be entitled to one vote upon each matter submitted to a vote at a
meeting of shareholders.
Shares held by an administrator, executor, guardian or conservator may be voted
by him, either in person or by proxy, without the transfer of such shares into
his name. Shares standing in the name of a trustee may be voted by him, either
in person or by proxy, but no trustee shall be entitled to vote shares held by
him without transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority to do so is contained in
an appropriate order of the Court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such shares
until the shares are transferred into the name of the pledgee, and thereafter,
the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
Redeemable shares are not entitled to vote after notice of redemption is mailed
to the holders and a sum sufficient to redeem the shares has been deposited with
a bank, trust company, or other financial institution under an irrevocable
obligation to pay the holders the redemption price on surrender of the shares.
<PAGE>
2.11 Corporation's Acceptance of Votes
(a) If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the corporation, if acting in good
faith, is entitled to accept the vote, consent, waiver, or proxy appointment and
give it effect as the act of the shareholder.
(b) If the name signed on a vote, consent, waiver, or proxy appointment does
not correspond to the name of its shareholder, the corporation, if acting in
good faith, is nevertheless entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of the shareholder if:
(1) the shareholder is an entity, as defined in the Act, and the name signed
purports to be that of an officer or agent of the entity;
(2) the name signed purports to be that of an administrator, executor,
guardian or conservator representing the shareholder and, if the corporation
requests, evidence of fiduciary status acceptable to the corporation has been
presented with respect to the vote, consent, waiver, or proxy appointment;
(3) the name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the corporation requests, evidence of this
status acceptable to the corporation has been presented with respect to the
vote, consent, waiver or proxy appointment;
(4) the name signed purports to be that of a pledgee, beneficial owner, or
attorney-in-fact of the shareholder and, if the corporation requests, evidence
acceptable to the corporation of the signatory's authority to sign for the
shareholder has been presented with respect to the vote, consent, waiver, or
proxy appointment; or
(5) the shares are held in the name of two or more persons as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of the
co-owners and the person signing appears to be acting on behalf of all the
co-owners.
(c) The corporation is entitled to reject a vote, consent, waiver, or proxy
appointment if the secretary or other officer or agent authorized to tabulate
votes, acting in good faith, has reasonable basis for doubt about the validity
of the signature on it or about the signatory's authority to sign for the
shareholder.
(d) The corporation and its officer or agent who accepts or rejects a vote,
consent, waiver, or proxy appointment in good faith and in accordance with the
standards of this Section 2.11 are not liable in damages to the shareholder for
the consequences of the acceptance or rejection.
(e) Corporation action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a court
of competent jurisdiction determines otherwise.
2.12 Informal Action by Shareholders
Any action required or permitted to be taken at a meeting of the shareholders
may be taken without a meeting if one or more written consents, setting forth
the action so taken, shall be signed by shareholders holding a majority of the
shares entitled to vote with respect to the subject matter thereof, unless a
"supermajority" vote is required by these Bylaws, in which case a
<PAGE>
"supermajority" vote will be required. Such consent shall be delivered to the
corporation secretary for inclusion in the minute book. A consent signed under
this Section has the effect of a vote at a meeting and may be described as such
in any document.
2.13 Voting for Directors
Unless otherwise provided in the Articles of Incorporation, directors are
elected by a plurality of the votes cast by the shares entitled to vote in the
election at a meeting at which a quorum is present.
2.14 Shareholders' Rights to Inspect Corporate Records
Shareholders shall have the following rights regarding inspection of corporate
records:
Minutes and Accounting Records - The corporation shall keep, as permanent
records, minutes of all meetings of its shareholders and Board of Directors, a
record of all actions taken by the shareholders or Board of Directors without a
meeting, and a record of all actions taken by a committee of the Board of
Directors in place of the Board of Directors on behalf of the corporation.
The corporation shall maintain appropriate accounting records.
(b) Absolute Inspection Rights of Records Required at Principal Office - If
a shareholder gives the corporation written notice of his demand at least five
business days before the date on which he wishes to inspect and copy, he, or his
agent or attorney, has the right to inspect and copy, during regular business
hours, any of the following records, all of which the corporation is required to
keep at its principal office:
(1) its Articles or restated Articles of Incorporation and all amendments to
them currently in effect;
(2) its Bylaws or restated Bylaws and all amendments to them currently in
effect;
(3) resolutions adopted by its Board of Directors creating one or more
classes or series of shares, and fixing their relative rights, preferences and
limitations, if shares issued pursuant to those resolutions are outstanding;
(4) the minutes of all shareholders' meetings, and records of all action
taken by shareholders without a meeting, for the past three years;
(5) all written communications to shareholders within the past three years,
including the financial statements furnished for the past three years to the
shareholders;
(6) a list of the names and business addresses of its current directors and
officers; and
(7) its most recent annual report delivered to the Nevada Secretary of
State.
(c) Conditional Inspection Right - In addition, if a shareholder gives the
corporation a written demand, made in good faith and for a proper purpose, at
least five business days before the date on which he wishes to inspect and copy,
64
<PAGE>
describes with reasonable particularity his purpose and the records he desires
to inspect, and the records are directly connected to his purpose, a shareholder
of a corporation, or his duly authorized agent or attorney, is entitled to
inspect and copy, during regular business hours at a reasonable location
specified by the corporation, any of the following records of the corporation:
(1) excerpts from minutes of any meeting of the Board of Directors; records
of any action of a committee of the Board of Directors on behalf of the
corporation; minutes of any meeting of the shareholders; and records of action
taken by the shareholders or Board of Directors without a meeting, to the extent
not subject to inspection under paragraph (a) of this Section 2.14;
(2) accounting records of the corporation; and
(3) the record of shareholders (compiled no earlier than the date of the
shareholder's demand).
(d) Copy Costs - The right to copy records includes, if reasonable, the
right to receive copies made by photographic, xerographic, or other means. The
corporation may impose a reasonable charge, to be paid by the shareholder on
terms set by the corporation, covering the costs of labor and material incurred
in making copies of any documents provided to the shareholder.
"Shareholder" Includes Beneficial Owner - For purposes of this Section 2.14, the
term "shareholder" shall include a beneficial owner whose shares are held in a
voting trust or by a nominee on his behalf.
2.15 Financial Statements Shall Be Furnished to the Shareholders.
(a) The corporation shall furnish its shareholders annual financial
statements, which may be consolidated or combined statements of the corporation
and one or more of its subsidiaries, as appropriate, that include a balance
sheet as of the end of the fiscal year, an income statement for that year, and a
statement of changes in shareholders' equity for the year, unless that
information appears elsewhere in the financial statements. If financial
statements are prepared for the corporation on the basis of generally accepted
accounting principles, the annual financial statements for the shareholders must
also be prepared on that basis.
(b) If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the president or the person responsible for the
corporation's accounting records:
(1) stating his reasonable belief that the statements were prepared on the
basis of generally accepted accounting principles and, if not, describing the
basis of preparation; and
(2) describing any respects in which the statements were not prepared on a
basis of accounting consistent with the statements prepared for the preceding
year.
(c) A corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year. Thereafter, on
written request from a shareholder who was not mailed the statements, the
corporation shall mail him the latest financial statements.
<PAGE>
2.16 Dissenters' Rights.
Each shareholder shall have the right to dissent from and obtain payment for his
shares when so authorized by the Act, Articles of Incorporation, these Bylaws,
or a resolution of the Board of Directors.
2.17 Order of Business.
The following order of business shall be observed at all meetings of the
shareholders, as applicable and so far as practicable:
(a) Calling the roll of officers and directors present and determining
shareholder quorum requirements;
(b) Reading, correcting and approving of minutes of previous meeting;
(c) Reports of officers;
(d) Reports of Committees;
(e) Election of Directors;
(f) Unfinished business;
(g) New business; and
(h) Adjournment.
ARTICLE 3. BOARD OF DIRECTORS
3.1 General Powers.
Unless the Articles of Incorporation have dispensed with or limited the
authority of the Board of Directors by describing who will perform some or all
of the duties of a Board of Directors, all corporate powers shall be exercised
by or under the authority of, and the business and affairs of the corporation
shall be managed under the direction of the Board of Directors.
3.2 Number, Tenure and Qualification of Directors.
Unless otherwise provided in the Articles of Incorporation, the authorized
number of directors shall be not less than 1 (minimum number) nor more than 9
(maximum number). The initial number of directors was established in the
original Articles of Incorporation. The number of directors shall always be
within the limits specified above, and as determined by resolution adopted by
the Board of Directors. After any shares of this corporation are issued,
neither the maximum nor minimum number of directors can be changed, nor can a
fixed number be substituted for the maximum and minimum numbers, except by a
duly adopted amendment to the Articles of Incorporation duly approved by a
majority of the outstanding shares entitled to vote. Each director shall hold
office until the next annual meeting of shareholders or until removed. However,
if his term expires, he shall continue to serve until his successor shall have
been elected and qualified, or until there is a decrease in the number of
directors. Unless required by the Articles of Incorporation, directors do not
need to be residents of Nevada or shareholders of the corporation.
<PAGE>
3.3 Regular Meetings of the Board of Directors.
A regular meeting of the Board of Directors shall be held without other notice
than this Bylaw immediately after, and at the same place as, the annual meeting
of shareholders. The Board of Directors may provide, by resolution, the time
and place for the holding of additional regular meetings without other notice
than such resolution. (If permitted by Section 3.7, any regular meeting may be
held by telephone).
3.4 Special Meeting of the Board of Directors.
Special meetings of the Board of Directors may be called by or at the request of
the president or any one director. The person or persons authorized to call
special meetings of the Board of Directors may fix any place, either within or
without the State of Nevada, as the place for holding any special meeting of the
Board of Directors or, if permitted by Section 3.7, any special meeting may be
held by telephone.
3.5 Notice of, and Waiver of Notice of, Special Meetings of the Board of
Directors.
Unless the Articles of Incorporation provide for a longer or shorter period,
notice of any special meeting of the Board of Directors shall be given at least
two days prior thereto, either orally or in writing. If mailed, notice of any
director meeting shall be deemed to be effective at the earlier of: (1) when
received; (2) five days after deposited in the United States mail, addressed to
the director's business office, with postage thereon prepaid; or (3) the date
shown on the return receipt, if sent by registered or certified mail, return
receipt requested, and the receipt is signed by or on behalf of the director.
Notice may also be given by facsimile and, in such event, notice shall be deemed
effective upon transmittal thereof to a facsimile number of a compatible
facsimile machine at the director's business office. Any director may waive
notice of any meeting. Except as otherwise provided herein, the waiver must be
in writing, signed by the director entitled to the notice, and filed with the
minutes or corporate records. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
and at the beginning of the meeting, or promptly upon his arrival, objects to
holding the meeting or transacting business at the meeting, and does not
thereafter vote for or assent to action taken at the meeting. Unless required
by the Articles of Incorporation or the Act, neither the business to be
transacted at, nor the purpose of, any special meeting of the Board of Directors
need be specified in the notice or waiver of notice of such meeting.
3.6 Director Quorum.
A majority of the number of directors fixed, pursuant to Section 3.2 of this
Article 3, shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, unless the Articles of Incorporation or the
Act require a greater number for a quorum.
Any amendment to this quorum requirement is subject to the provisions of Section
3.8 of this Article 3.
Once a quorum has been established at a duly organized meeting, the Board of
Directors may continue to transact corporate business until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum.
<PAGE>
3.7 Actions By Directors.
The act of the majority of the directors present at a meeting at which a quorum
is present when the vote is taken shall be the act of the Board of Directors,
unless the Articles of Incorporation or the Act require a greater percentage.
Any amendment which changes the number of directors needed to take action is
subject to the provisions of Section 3.8 of this Article 3.
Unless the Articles of Incorporation provide otherwise, any or all directors may
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all directors participating may
simultaneously hear each other during the meeting. Minutes of any such meeting
shall be prepared and entered into the records of the corporation. A director
participating in a meeting by this means is deemed to be present in person at
the meeting.
A director who is present at a meeting of the Board of Directors or a committee
of the Board of Directors when corporate action is taken is deemed to have
assented to the action taken unless: (1) he objects at the beginning of the
meeting, or promptly upon his arrival, to holding it or transacting business at
the meeting; or (2) his dissent or abstention from the action taken is entered
in the minutes of the meeting; or (3) he delivers written notice of his dissent
or abstention to the presiding officer of the meeting before its adjournment or
to the corporation within 24 hours after adjournment of the meeting. The right
of dissent or abstention is not available to a director who votes in favor of
the action taken.
3.8 Establishing a "Supermajority" Quorum or Voting Requirement for the
Board of Directors.
For purposes of this Section 3.8, a "supermajority" quorum is a requirement that
more than a majority of the directors in office constitute a quorum; and a
"supermajority" voting requirement is one which requires the vote of more than a
majority of those directors present at a meeting at which a quorum is present to
be the act of the directors.
A Bylaw that fixes a supermajority quorum or supermajority voting requirement
may be amended or repealed:
(1) if originally adopted by the shareholders, only by the shareholders
(unless otherwise provided by the share- holders); or
(2) if originally adopted by the Board of Directors, either by the
shareholders or by the Board of Directors.
A Bylaw adopted or amended by the shareholders that fixes a supermajority quorum
or supermajority voting requirement for the Board of Directors may provide that
it may be amended or repealed only by a specified vote of either the
shareholders or the Board of Directors.
Subject to the provisions of the preceding paragraph, action by the Board of
Directors to adopt, amend, or repeal a Bylaw that changes the quorum or voting
requirement for the Board of Directors must meet the same quorum requirement and
be adopted by the same vote required to take action under the quorum and voting
requirement then in effect or proposed to be adopted, whichever is greater.
<PAGE>
3.9 Director Action Without a Meeting.
Unless the Articles of Incorporation provide otherwise, any action required or
permitted to be taken by the Board of Directors at a meeting may be taken
without a meeting if all the directors sign a written consent describing the
action taken. Such consents shall be filed with the records of the corporation.
Action taken by consent is effective when the last director signs the consent,
unless the consent specifies a different effective date. A signed consent has
the effect of a vote at a duly noticed and conducted meeting of the Board of
Directors and may be described as such in any document.
3.10 Removal of Directors.
The shareholders may remove one or more directors at a meeting called for that
purpose if notice has been given that a purpose of the meeting is such removal.
The removal may be with or without cause unless the Articles of Incorporation
provide that directors may only be removed for cause. If cumulative voting is
not authorized, a director may be removed only if the number of votes cast in
favor of removal exceeds the number of votes cast against removal.
3.11 Board of Director Vacancies.
Unless the Articles of Incorporation provide otherwise, if a vacancy occurs on
the Board of Directors, excluding a vacancy resulting from an increase in the
number of directors, the director(s) remaining in office shall fill the vacancy.
If the directors remaining in office constitute fewer than a quorum of the Board
of Directors, they may fill the vacancy by the affirmative vote of a majority
of all the directors remaining in office.
If a vacancy results from an increase in the number of directors, only the
shareholders may fill the vacancy.
A vacancy that will occur at a specific later date (by reason of a resignation
effective at a later date) may be filled by the Board of Directors before the
vacancy occurs, but the new director may not take office until the vacancy
occurs.
The term of a director elected to fill a vacancy expires at the next
shareholders' meeting at which directors are elected. However, if his term
expires, he shall continue to serve until his successor is elected and qualifies
or until there is a decrease in the number of directors.
3.12 Director Compensation.
Unless otherwise provided in the Articles of Incorporation, by resolution of the
Board of Directors, each director may be paid his expenses, if any, of
attendance at each meeting of the Board of Directors, and may be paid a stated
salary as director or a fixed sum for attendance at each meeting of the Board of
Directors, or both. No such payment shall preclude any director from serving
the corporation in any other capacity and receiving compensation therefor.
3.13 Director Committees.
(a) Creation of Committees. Unless the Articles of Incorporation provide
otherwise, the Board of Directors may create one or more committees and appoint
members of the Board of Directors to serve on them. Each committee must have
two or more members, who serve at the pleasure of the Board of Directors.
<PAGE>
(b) Selection of Members. The creation of a committee and appointment of
members to it must be approved by the greater of (1) a majority of all the
directors in office when the action is taken, or (2) the number of directors
required by the Articles of Incorporation to take such action.
(c) Required Procedures. Sections 3.4, 3.5, 3.6, 3.7, 3.8 and 3.9 of this
Article 3 apply to committees and their members.
(d) Authority. Unless limited by the Articles of Incorporation or the Act,
each committee may exercise those aspects of the authority of the Board of
Directors which the Board of Directors confers upon such committee in the
resolution creating the committee. Provided, however, a committee may not:
(1) authorize distributions to shareholders;
(2) approve or propose to shareholders any action that the Act requires be
approved by shareholders;
(3) fill vacancies on the Board of Directors or on any of its committees;
(4) amend the Articles of Incorporation;
(5) adopt, amend, or repeal Bylaws;
(6) approve a plan of merger not requiring shareholder approval;
(7) authorize or approve reacquisition of shares, except according to a
formula or method prescribed by the Board of Directors; or
(8) authorize or approve the issuance or sale, or contract for sale of
shares, or determine the designation and relative rights, preferences, and
limitations of a class or series of shares; except that the Board of Directors
may authorize a committee to do so within limits specifically prescribed by the
Board of Directors.
ARTICLE 4. OFFICERS
4.1 Designation of Officers.
The officers of the corporation shall be a president, a secretary, and a
treasurer, each of whom shall be appointed by the Board of Directors. Such
other officers and assistant officers as may be deemed necessary, including any
vice-presidents, may be appointed by the Board of Directors. The same
individual may simultaneously hold more than one office in the corporation.
4.2 Appointment and Term of Office.
The officers of the corporation shall be appointed by the Board of Directors for
a term as determined by the Board of Directors. If no term is specified, they
shall hold office until the first meeting of the directors held after the next
annual meeting of shareholders. If the appointment of officers is not made at
such meeting, such appointment shall be made as soon thereafter as is
convenient. Each officer shall hold office until his successor has been duly
appointed and qualified, until his death, or until he resigns or has been
removed in the manner provided in Section 4.3 of this Article 4.
<PAGE>
The designation of a specified term does not grant to the officer any contract
rights, and the Board of Directors can remove the officer at any time prior to
the termination of such term.
Appointment of an officer shall not of itself create any contract rights.
4.3 Removal of Officers.
Any officer may be removed by the Board of Directors at any time, with or
without cause. Such removal shall be without prejudice to the contract rights,
if any, of the person so removed.
4.4 President.
The president shall be the principal executive officer of the corporation and,
subject to the control of the Board of Directors, shall generally supervise and
control all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the shareholders. He may sign, with the
secretary or any other proper officer of the corporation thereunto duly
authorized by the Board of Directors, certificates for shares of the corporation
and deeds, mortgages, bonds, contracts, or other instruments which the Board of
Directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these Bylaws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed. The president shall
generally perform all duties incident to the office of president and such other
duties as may be prescribed by the Board of Directors from time to time.
4.5 Vice-President.
If appointed, in the absence of the president or in the event of the president's
death, inability or refusal to act, the vice-president (or in the event there be
more than one vice-president, the vice-presidents in the order designated at the
time of their election, or in the absence of any designation, then in the order
of their appointment) shall perform the duties of the president, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the president. If there is no vice-president, then the treasurer shall perform
such duties of the president. Any vice-president may sign, with the secretary
or an assistant secretary, certificates for shares of the corporation the
issuance of which have been authorized by resolution of the Board of Directors.
A vice-president shall perform such other duties as from time to time may be
assigned to him by the president or by the Board of Directors.
4.6 Secretary.
The secretary shall (a) keep the minutes of the proceedings of the shareholders
and of the Board of Directors in one or more books provided for that purpose;
(b) see that all notices are duly given in accordance with the provisions of
these Bylaws or as required by law; (c) be custodian of the corporate records
and of any seal of the corporation and, if there is a seal of the corporation,
see that it is affixed to all documents, the execution of which on behalf of the
corporation under its seal is duly authorized; (d) when requested or required,
authenticate any records of the corporation; (e) keep a register of the post
office address of each shareholder, as provided to the secretary by the
shareholders; (f) sign with the president, or a vice-resident, certificates for
shares of the corporation, the issuance of which has been authorized by
resolution of the Board of Directors; (g) have general charge of the stock
transfer books of the corporation; and (h) generally perform all duties incident
<PAGE>
to the office of secretary and such other duties as from time to time may be
assigned to him by the president or by the Board of Directors.
4.7 Treasurer.
The treasurer shall (a) have charge and custody of and be responsible for all
funds and securities of the corporation; (b) receive and give receipts for
moneys due and payable to the corporation from any source whatsoever, and
deposit all such moneys in the name of the corporation in such banks, trust
companies, or other depositories as may be selected by the Board of Directors;
and (c) generally perform all of the duties incident to the office of treasurer
and such other duties as from time to time may be assigned to him by the
president or by the Board of Directors.
If required by the Board of Directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the Board of Directors shall determine.
4.8 Assistant Secretaries and Assistant Treasurers.
The assistant secretaries, when authorized by the Board of Directors, may sign
with the president, or a vice-president, certificates for shares of the
corporation, the issuance of which has been authorized by a resolution of the
Board of Directors. The assistant treasurers shall respectively, if required by
the Board of Directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall determine. The
assistant secretaries and assistant treasurers, generally, shall perform such
duties as may be assigned to them by the secretary or the treasurer,
respectively, or by the president or the Board of Directors.
4.9 Salaries.
The salaries of the officers, if any, shall be fixed from time to time by the
Board of Directors.
ARTICLE 5. INDEMNIFICATION OF DIRECTORS, OFFICERS, AGENTS, AND EMPLOYEES
5.1 Indemnification of Officers, Directors, Employees and Agents.
Unless otherwise provided in the Articles of Incorporation, the corporation
shall indemnify any individual made a party to a proceeding because he is or was
an officer, director, employee or agent of the corporation against liability
incurred in the proceeding, all pursuant to and consistent with the provisions
of NRS 78.751, as amended from time to time.
5.2 Advance Expenses for Officers and Directors.
The expenses of officers and directors incurred in defending a civil or criminal
action, suit or proceeding shall be paid by the corporation as they are incurred
and in advance of the final disposition of the action, suit or proceeding, but
only after receipt by the corporation of an undertaking by or on behalf of the
officer or director on terms set by the Board of Directors, to repay the
expenses advanced if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the corporation.
<PAGE>
5.3 Scope of Indemnification.
The indemnification permitted herein is intended to be to the fullest extent
permissible under the laws of the State of Nevada, and any amendments thereto.
ARTICLE 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Certificates for Shares.
(a) Content. Certificates representing shares of the corporation shall at
minimum, state on their face the name of the issuing corporation; that the
corporation is formed under the laws of the State of Nevada; the name of the
person to whom issued; the certificate number; class and par value of shares;
and the designation of the series, if any, the certificate represents. The form
of the certificate shall be as determined by the Board of Directors. Such
certificates shall be signed (either manually or by facsimile) by the president
or a vice-president and by the secretary or an assistant secretary and may be
sealed with a corporate seal or a facsimile thereof. Each certificate for
shares shall be consecutively numbered or otherwise identified.
(b) Legend as to Class or Series. If the corporation is authorized to issue
different classes of shares or different series within a class, the
designations, relative rights, preferences, and limitations applicable to each
class and the variations in rights, preferences, and limitations determined for
each series (and the authority of the Board of Directors to determine variations
for future series) must be summarized on the front or back of the certificate
indicating that the corporation will furnish the shareholder this information on
request in writing and without charge.
(c) Shareholder List. The name and address of the person to whom the shares
are issued, with the number of shares and date of issue, shall be entered on the
stock transfer books of the corporation.
(d) Transferring Shares. All certificates surrendered to the corporation
for transfer shall be canceled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed, or mutilated certificate, a
new one may be issued therefore upon such terms as the Board of Directors may
prescribe, including indemnification of the corporation and bond requirements.
6.2 Registration of the Transfer of Shares.
Registration of the transfer of shares of the corporation shall be made only on
the stock transfer books of the corporation. In order to register a transfer,
the record owner shall surrender the share certificate to the corporation for
cancellation, properly endorsed by the appropriate person or persons with
reasonable assurances that the endorsements are genuine and effective. Unless
the corporation has established a procedure by which a beneficial owner of
shares held by a nominee is to be recognized by the corporation as the owner,
the person in whose name shares stand on the books of the corporation shall be
deemed by the corporation to be the owner thereof for all purposes.
6.3 Restrictions on Transfer of Shares Permitted.
The Board of Directors may impose restrictions on the transfer or registration
of transfer of shares, including any security convertible into, or carrying a
right to subscribe for or acquire shares. A restriction does not affect shares
issued before the restriction was adopted unless the holders of the shares are
<PAGE>
parties to the restriction agreement or voted in favor of the restriction.
A restriction on the transfer or registration of transfer of shares may be
authorized:
(1) to maintain the corporation's status when it is dependent on the number
or identity of its shareholders;
(2) to preserve exemptions under federal or state securities law; or
(3) for any other reasonable purpose.
A restriction on the transfer or registration of transfer of shares may:
(1) obligate the shareholder first to offer the corporation or other persons
(separately, consecutively, or simultaneously) an opportunity to acquire the
restricted shares;
(2) obligate the corporation or other persons (separately, consecutively, or
simultaneously) to acquire the restricted shares;
(3) require the corporation, the holders or any class of its shares, or
another person to approve the transfer of the restricted shares, if the
requirement is not manifestly unreasonable; or
(4) prohibit the transfer of the restricted shares to designated persons or
classes of persons, if the prohibition is not manifestly unreasonable.
A restriction on the transfer or registration of transfer of shares is valid and
enforceable against the holder or a transferee of the holder if the restriction
is authorized by this Section 6.3 and its existence is noted conspicuously on
the front or back of the certificate. Unless so noted, a restriction is not
enforceable against a person without knowledge of the restriction.
6.4 Acquisition of Shares.
The corporation may acquire its own shares and unless otherwise provided in the
Articles of Incorporation, the shares so acquired constitute authorized but
unissued shares.
If the Articles of Incorporation prohibit the reissue of shares acquired by the
corporation, the number of authorized shares is reduced by the number of shares
acquired, effective upon amendment of the Articles of Incorporation, which
amendment shall be adopted by the shareholders, or the Board of Directors
without shareholder action (if permitted by the Act). The amendment must be
delivered to the Secretary of State and must set forth:
(1) the name of the corporation;
(2) the reduction in the number of authorized shares, itemized by class and
series; and
(3) the total number of authorized shares, itemized by class and series,
remaining after reduction of the shares.
<PAGE>
ARTICLE 7. DISTRIBUTIONS
7.1 Distributions.
The Board of Directors may authorize, and the corporation may make,
distributions (including dividends on its outstanding shares) in the manner and
upon the terms and conditions provided by law.
ARTICLE 8. CORPORATE SEAL
8.1 Corporate Seal.
The Board of Directors may adopt a corporate seal which may be circular in form
and have inscribed thereon any designation, including the name of the
corporation, Nevada as the state of incorporation, and the words "Corporate
Seal."
ARTICLE 9. EMERGENCY BYLAWS
9.1 Emergency Bylaws.
Unless the Articles of Incorporation provide otherwise, the following provisions
shall be effective during an emergency, which is defined as a time when a quorum
of the corporation's directors cannot be readily assembled because of some
catastrophic event. During such emergency:
(a) Notice of Board Meetings
Any one member of the Board of Directors or any one of the following officers:
president, any vice-president, secretary, or treasurer, may call a meeting of
the Board of Directors. Notice of such meeting need be given only to those
directors whom it is practicable to reach, and may be given in any practical
manner, including by publication and radio. Such notice shall be given at least
six hours prior to commencement of the meeting.
(b) Temporary Directors and Quorum
One or more officers of the corporation present at the emergency board meeting,
as is necessary to achieve a quorum, shall be considered to be directors for the
meeting, and shall so serve in order of rank, and within the same rank, in order
of seniority. In the event that less than a quorum (as determined by Section
3.6 of Article 3) of the directors are present (including any officers who are
to serve as directors for the meeting), those directors present (including the
officers serving as directors) shall constitute a quorum.
(c) Actions Permitted To Be Taken
The Board of Directors, as constituted in paragraph (b), and after notice as set
forth in paragraph (a), may:
(1) Officers' Powers. Prescribe emergency powers to any officer of the
corporation;
(2) Delegation of Any Power. Delegate to any officer or director, any of
the powers of the Board of Directors;
<PAGE>
(3) Lines of Succession. Designate lines of succession of officers and
agents, in the event that any of them are unable to discharge their duties;
(4) Relocate Principal Place of Business Relocate the principal place of
business, or designate successive or simultaneous principal places of business;
(5) All Other Action. Take any other action which is convenient, helpful, or
necessary to carry on the business of the corporation.
ARTICLE 10. AMENDMENTS
10.1 AMENDMENTS
The Board of Directors may amend or repeal the corporation's Bylaws unless:
(1) the Articles of Incorporation or the Act reserve this power exclusively
to the shareholders, in whole or part; or
(2) the shareholders, in adopting, amending, or repealing a particular
Bylaw, provide expressly that the Board of Directors may not amend or repeal
that Bylaw; or
(3) the Bylaw either establishes, amends or deletes a "supermajority"
shareholder quorum or voting requirement, as defined in Section 2.8 of Article
2.
Any amendment which changes the voting or quorum requirement for the Board of
Directors must comply with Section 3.8 of Article 3, and for the shareholders,
must comply with Section 2.8 of Article 2.
The corporation's shareholders may also amend or repeal the corporation's Bylaws
at any meeting held pursuant to Article 2.
CERTIFICATE OF SECRETARY
I hereby certify that I am the Secretary of Meximed Industries. and that
that the foregoing Bylaws constitute the Code of Meximed Industries, as
duly adopted by the Board of Directors of the corporation on this 22nd day of
August, 1997.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 22nd day of August,
1997.
/s/ Robert Gelfand, Secretary
MICHAEL J. MORRISON, CHTD.
1495 Ridgeview Drive, Suite 220
Reno, Nevada 89509
Telephone: (775) 827-6300
Facsimile: (775) 827-6311
December 10, 1999
Mr. Lee T. Edmondson, President
Digital Video Display Technology Corp.
590 Madison Avenue, 21st Floor
New York, NY 10022
Dear Mr. Edmondson:
I have acted as counsel to Digital Video Display Technology Corp.(the Company)
In connection with registration of the Company's securities pursuant to filing
of a Form 10-SB registration statement with the U.S. Securities and Exchange
Commission. You have requested my opinion as to certain matters in connection
with the Form 10-SB filing.
In my capacity as counsel to the Company, I have examined and am familiar with
the originals and/or copies, the authenticity of which has been established to
my satisfaction, of all documents, corporate records and other instruments which
I have deemed necessary to express the opinions hereinafter set forth.
Based upon my examination and upon consideration of applicable laws, rules and
regulations, it is my opinion that the shares of Common Stock to be registered
by the Company described in the Form 10-SB registration statement have been
validly issued, fully paid and non-assessable.
Further, I consent to the use of this opinion as an Exhibit to the registration
statement and to the use of my name in such registration statement and
prospectus.
Very truly yours,
/s/ Michael J. Morrison, Esq.
MARK BAILEY & CO. LTD.
Certified Public Accountants
Management Consultants
Phone: 775-332-42--
Fax: 775-332-4210
Office Address: Mailing Address:
1495 Ridgeview Drive, Suite 200 P.O. Box 6060
Reno, Nevada 89509-6634 Reno, Nevada 89513
E-mail: [email protected]
Mark Bailey,CPA, ABV
December 6, 1999
Securities and Exchange Commission
Washington, D.C. 20549
RE: Digital Video Display Technology Corporation
Form S-1
To Whom It May Concern:
We hereby authorize and consent to the use of our report, dated December 5,
1999 as an Exhibit to the above-referenced filing and to the use of our
name as it appears therein.
Sincerely,
/s/ Mark Bailey, CPA/ABV
Mark Bailey & Co., Ltd.
AGREEMENT
Made between Digital Video Display Technologies Corp. ("DVD" or "Licensee") of
590 Madison Avenue, New York, New York, USA, 10022 and Software Control Systems
International, Inc. ("SCSI") of #250, 5711 No. 3 Road Richmond, B.C. Canada V6X
2C9 made this 14th day of June, 1999.
Whereas, SCSI holds the exclusive right, title and interest in and to the United
States Patent Number, 5,481,509 and is duly authorized to enter into this
agreement and
Whereas, Licensee desires to obtain a license to the United States Patent Number
5,481,509 under the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the parties agree as follows:
1. Licensee hereby obtains from SCSI an exclusive license to utilize its
United States Patent Number 5,481,509 (attached as Exhibit 1) for the term of
the patent and any permissible renewals thereof. This license will include all
present and future improvements and enhancements as made by SCSI.
2. Licensee is free to enter into this agreement without restriction and is
legally and financially unencumbered.
3. In consideration for the license, Licensee will issue to SCSI 2,000,000
shares of Digital Video Display Technologies Corp. pursuant to the restrictions
as provided in Rule 144 under the Securities act of 1933, plus Two Hundred and
Fifty Thousand ($250,000) Dollars US payable upon the completion of DVDT's
financing or September 1, 1999, whichever is earlier.
4. In the event that the Licensee ceases operations or any creditor
arrangement is entered into, or Licensee is declared bankrupt then the license
will be returned to SCSI.
5. At the closing of this agreement SCSI will be issued its shares or an
irrevocable undertaking to issue the shares.
6. SCSI will have the right to appoint one member to the Board of Directors.
7. Each party has been duly authorized to enter into this agreement by
resolution of its Board of Directors.
8. SCSI will have the exclusive right to offer DVDT's products for sale
within Canada and the States of Oregon, Washington, Montana, Idaho and Hawaii at
favourable wholesale prices.
9. This agreement contains the entire understanding of the parties, and
neither party is relying upon any representation which does not expressly appear
in this agreement. It cannot be modified unless in writing and signed by both
parties. No waiver by a party of any provision of this agreement shall
constitute a waiver of any future violation of any said provision or of any
other provision of this agreement. Each party has had an opportunity to review
this agreement with counsel, and there shall be no presumption concerning the
agreement against the drafter of the agreement. In the event that any provision
of this agreement is found to violate any statue, regulation, rule or law, the
invalidity of such provision shall not be deemed to affect any other provision
hereof or the validity of the remainder of this letter agreement, and such
invalid provision shall be deemed deleted from this letter agreement to the
minimum extent necessary to cure such violation. This agreement is and shall be
binding upon the parties, their agents, successors, heirs' representatives,
administrators, designees and assigns, as well as upon all entities with which
they are directly or indirectly associated or affiliated in a capacity other
than as a passive investor together with individuals associated with such
entities. This agreement will be governed by and construed in accordance with
the laws of the Province of B.C. and all parties agree to be subject to the
personal jurisdiction of the courts of the Province of B.C.
Signed and sealed the day and year first above written.
Digital Video Display Technologies Corp.
/s/ Marilyn G. Haft, Director
Software Control Systems International Inc.
/s/ Norman Knowles, President
ADDENDUM TO AGREEMENT
Made between Digital Video Display Technologies Corp.(DVDT) of 590 Madison,
Avenue, 21st Floor, New York, NY USA 10022 and Software Control Systems
International Inc. # 250, 5711 No. 3 Road, Richmond, B.C., Canada V6X 2C9 made
this 26th day of November, 1999.
Whereas, SCSI has licensed to DVDT its United States Patent 5,481,509
under certain terms and conditions and
Whereas, DVDT has issued 2,000,000 shares, which SCSI acknowledges
receiving.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the parties agree as follows:
1. Pursuant to the license agreement DVDT agrees to pay on or before the
15th day of every month $20,000 USD to SCSI starting December 15, 2000 with an
additional payment of $10,000.00 on December 15, 2000.
2. Each party has been duly authorized to enter into this agreement by its
Board of Directors.
3. This agreement contains the entire understanding of the parties and
neither party is relying upon any representation which does not expressly appear
in this agreement. This agreement is and shall be binding upon the parties their
agents, successors, heirs, representatives, administrators, designees and
assigns as well as upon all entities with which they are directly or indirectly
associated or affiliated in a capacity other than as a passive investor together
with individuals associated with such entities. This agreement will be governed
by and construed in accordance with the laws of the Province of B.C. and all
parties agree to be subjected to the personal jurisdiction of the courts of the
Province of B.C.
Signed the day and year first above written
Digital Video Display Technologies Corp.
/s/ Lee Edmondson
President and Director
Software Control Systems International Inc.
/s/ Norm Knowles
President
DISTRIBUTOR AGREEMENT
- ---------------------
Terms and Conditions
This AGREEMENT is effective as of May 10, 1999, between Digital Video Display
Technology Corp. (DVDT), a Nevada corporation with an address for notices set
forth in Section 6 hereof, and Software Control Systems International Inc.
(SCSI) an Alberta corporation, with an address for notice as set forth in
Section 6 hereof.
1. DIstribution Rights
(a) DVDT as per the licensing agreement grants the Distributor the right to
act as the distribution agent with respect to the sale of DVDT juke system
products (Products) within the agreed upon territory in attachment 1.
(b) SCSI and DVDT agree that for all purposes hereunder SCSI is, and shall
be deemed to be, the exclusive distributor for the territory in attachment I
(c) SCSI has signed a letter of Intent with the Winfield Group ("affiliate")
to Joint Venture the systems in the territory.
2. Purchase of and payment for products
(a) SCSI agrees to purchase from DVDT and DVDT agrees to sell to SCSI,
Products at the terms below.
(i) Final price has yet to be determined
(ii) Standard payment terms are net 60 from the date of invoice, F. 0. B.
manufacturing plant.
(iii) DVDT will supply to SCSI and its affiliate 500 systems at a maximum price
of $7,500.00 that may be paid in full or at the rate of $150.00 per month for 60
months. These systems are to be placed with the affiliate's subsidiary company
"Inter State Amusements" and its locations.
3. Warranty
To be determined at a later date
4. Content
DVDT will be the exclusive supplier of the entertainment and advertising content
and the content will remain the property of DVDT.'
5. Royalties
DVDT shall be responsible for any and all royalties as it relates
to the content.
6. Advertising Revenue
(a) 25 % of advertising revenue will paid to SCSI and its affiliates until
all systems are fully paid for after which 50% of all advertising revenue will
be paid to SCSI and its affiliates
7. Coupon Dispensing
(a) to be determined at a later date
8. Content Provider
(a) Entertainment content will be supplied at a network cost of $100.00 per
month per system any additional content charges will be added to this cost.
Billing is to be determined at a later date.
9. E-Commerce
(a) to be determined
10. Service and Support
(a) Service will be supplied by Decision One or a like and similar provider
11. Coin Drop Revenue
(a) All coin drop revenue will be SCSI's or its affiliates
12. Notices
(a) All notices demands, and statements shall be deemed to have been
sufficiently served if sent to the party at the address below or at such address
as may be supplied.
If To DVDT
Digital Video Display Technology Corp.
do The Marshall Finn
1065 Avenue of the Americas
New York, New York
U.S.A. 10018
Attn: Marilyn Haft
If To SCSI
Software Control Systems International Inc.
#250-5711 No.3 Road
Richmond, B.C.
Canada V6X 2C9
Attn: Norman Knowles
(b) This agreement shall be construed in all respects and for all purposes in
accordance with the laws of the State of New York and subject solely to the
jurisdiction of the courts of the State of New York.
IN WITNESS WHEREOF. the parties have caused this Agreement to be
signed as of the first day and year written above.
Digital Video Display Corp. Software Control Systems International
Inc.
/s/ Lee Edmondson, President /s/ Norman Knowles, President
Distribution Territory:
The Country Of: Canada
And The States of:
Washington
Oregon
Hawaii
Montana
Idaho
Alaska
1
The Investor Relations Group
A Corporate Communications Company
LETTER OF AGREEMENT
Section 1. Services to be Rendered. The purpose of this letter is to set forth
the terms and conditions on which The Investor Relations Group (IRG) agrees to
provide Digital Video Display Technology ("DVD") (the "Company") investor
relations and corporate communications services. These services may include,
but are not limited to:
- - overall management of the corporate communications program which will include
co-ordinating all investor relations activities;
- - designing a corporate fact sheet that can readily be mass produced for
distribution to brokers, analysts, and other industry personnel;
- - assistance or complete design of corporate slide show for more orderly
presentations;
- - writing & editing news releases;
- - shareholder management--working as the primary investor contact for all
telephone calls, faxes, and postal dissemination of corporate materials;
- - active telephone solicitation on a daily basis to generate accumulation
interest in the DVD story;
- - securing one-on-one and group appointments with industry professionals for
presentations by, for, and about Company management, including promotion and
event planning;
- - solicitation to secure brokerage and/or financial newsletter analyst
coverage;
- - recruitment and hands-on indoctrination of new market makers;
- - targeted mailings and postcards to our industry contacts;
- - writing and editing shareholder letters;
- - assistance in the editing and design of all promotional materials;
- - active solicitation of media placements in industry and financial trades;
- - advice on packaging the Company story;
- - access to our contacts in the event DVD needs to secure additional financing
in the form of secondary, bridge, debt or pipes;
- - assistance in securing listing with NASDAQ markets or AMEX;
The Investor Relations Group will fax on a daily basis a complete update of the
day's activities, interest and correspondence to corporate headquarters.
Section 2. Fees. The Company shall pay to IRG for its services hereunder
including investor relations services a cash maintenance fee of $10,000 per
month for a renewable term of 12 months beginning April 1, 1999 ending March 31,
2000, payable on or before the 1st day after the beginning of each month which
occurs during such period (the "Engagement Period"). Upon signing this
agreement, the Company also agrees to deliver to IRG 150,000 non-qualified,
cashless stock options with piggy-back rights, to purchase shares priced at
$_________ per share. Such options shall be granted and the paperwork shall be
delivered in a timely manner after the execution of this Agreement. The Company
agrees to fully register resale of these options in conjunction with the first
appropriate registration executed.
The options shall be issued in the name of Dian Griesel and assignable
exclusively to employees of The Investor Relations Group, Inc.
Section 3. Expenses. In addition to all other fees payable to IRG hereunder,
the Company hereby agrees to reimburse IRG for all reasonable out-of-pocket
expenses incurred in connection with the performance of services hereunder.
These out-of-pocket expenses shall include, but are not limited to:
- - telephone
- - photocopying
- - postage
- - messenger service and Federal Express--only when necessary due to time
restraints
- - clipping service & information retrieval service--if requested
- - maintaining mailing lists
- - all production costs for press releases including paper, envelopes, folding,
insertion and delivery to the post office
- - all reasonable meeting expenses including rental of audio/visual equipment.
No individual expenses over $100 will be expended without first notifying the
Company. The Company agrees to remit upon the signing of this agreement a check
for $10,000 to be placed on deposit with IRG and credited to the Company against
expenses incurred, on a permanent basis, throughout the program. From time to
time, the Company will replenish the expense account as necessary to maintain a
balance of $3,500. The balance of said deposit is fully refundable should the
program terminate. A running invoice will be maintained of all expenses
incurred and will be available for review by the Company upon request.
Section 4. Indemnification. The Company and IRG agree to defend, indemnify and
hold harmless each other and their affiliates, stockholders, directors,
officers, attorneys, agents, employees, successors, and assigns (each an
"Indemnified Person") from and against any and all liabilities, obligations,
losses, damages, penalties, actions, claims, judgments, suits, costs, expenses
and disbursements of any kind or nature whatsoever (including, without
limitation, reasonable fees and disbursements of counsel) which may be incurred
by, or asserted or awarded against the Indemnified Person, in each case arising
in any manner under, out of or in connection with an IRG undertaking or
performance of service hereunder or arising in any manner under, out of or in
connection with investigating, preparing or defending such action, claim or suit
related to such undertaking or performance (all other foregoing collectively,
the "Indemnified Liabilities"). It is recognized and agreed by IRG that the
Company shall have no liability hereunder to any Indemnified Person with respect
to Indemnified Liabilities which have arisen from the gross negligence or
willful misconduct of such Indemnified Person. The foregoing indemnity shall be
in addition to any rights that any Indemnified Person may have at common law or
otherwise, including, but not limited to, any right to contribution.
IRG requires that the Company shall approve all printed material prior to
its release, by signing off on the final draft submitted for approval. The
Company is solely responsible for the truth and accuracy of such printed
information.
Section 5. Term of Agreement. (a) After March 31, 2000 the engagement of IRG
under the provisions of this agreement shall continue until notice of
termination under section (b) hereunder is received. (b) The Company may
terminate IRG's engagement hereunder, with or without cause, at any time on 60
days' written notice after March 31, 2000. Upon receipt of less than 60 days'
notice, the balance of the 60 days' fees owed to IRG will be due on the
termination date. (c) IRG may terminate its engagement hereunder, with or
without cause, at any time, on 60 days notice after March 31, 2000. The
obligations of the Company under Sections 4 and 6 shall survive termination or
breach of this agreement, with or without cause, by either party. Prior to or
immediately thereafter March 31, 2000, IRG shall provide 90 days' written
notice of any increase in fees for their services hereunder.
Section 6. Severability. In case any provision of this letter agreement shall
be invalid, illegal, or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not be affected or impaired thereby.
Section 7. Choice by Law. This agreement shall be governed by and construed in
accordance with the laws of the State of New York.
Section 8. Other Services. If the Company desires additional services not
included in this agreement, any such additional services shall be covered by a
separate agreement between the parties hereto.
Please evidence your acceptance of the provisions of this letter by signing the
copy of this letter enclosed herewith and returning it to
Very truly yours,
/s/ Dian Griesel, Chairman & CEO
The Investor Relation's Group, Inc.
ACCEPTED AND AGREED
AS OF THE DATE FIRST
ABOVE WRITTEN:
Digital Video Display Technology
/s/ Lee Edmondson, Chief Executive Officer
Date: March 30, 1999
AGREEMENT FOR
FINANCIAL COMMUNICATION SERVICES
THIS AGREEMENT is entered into on this 19th day of November
1999 by and between North American Corporate Consultants, Inc. (hereinafter
"NACC"), with its principal place of business at 1425 Main Street, Suite 300,
Ramona, Ca. 92065 and Digital Video Display Technology, Inc (hereinafter
"Client"), with its principal place of business at 590 Madison Avenue, 21st
floor New York, NY 10022 Hereinafter Client and NACC are referred to
collectively as "Parties" and singularly as "Party".
WHEREAS, the Parties desire to set forth the terms and conditions under which
the said services shall be performed.
NOW, THEREFORE, in consideration of these promises of the mutual covenants
herein, the Parties hereto agree as follows:
ARTICLE I - SCOPE OF SERVICES
NACC will assist the Client on a non-exclusive basis to develop, implement, and
maintain an ongoing market awareness program.
ARTICLE II - PERIOD OF PERFORMANCE
The period of performance under this agreement shall be a period of 6 months
from the Effective Date of said Agreement (Article X).
ARTICLE III - CONTRACTUAL RELATIONSHIP
In performing the services under this Agreement, NACC shall operate as, and have
the status of, an independent contractor. The client and NACC will be mutually
responsible for determining the means and the method for performing the services
described in ARTICLE I above.
ARTICLE IV - COMPENSATION As full consideration for the performance of services
herein, the Client shall pay NACC compensation as follows:
(a) Fee: 277,500 shares of clients 144 stock.
In the following denominations:
87,500 shares
87,500 shares
27,500 shares
25,000 shares
25,000 shares
25,000 shares
(b) Mergers, Acquisitions & Corporate Financing: In the event that NACC is
the procuring cause in a successful merger, acquisition or corporate financing
on behalf of the Client, NACC shall be compensated in the amount of 5% of the
merger/acquisition value or the total value of corporate financing, whichever
applies. Fees are due and payable at the close of the respective transactions.
ARTICLE V - CLIENT INFORMATION
Since NACC must at all times rely upon the accuracy and completeness of
information supplied to it by the Client's officers, directors, agents, and
employees, the Client agrees to indemnify, hold harmless, and defend NACC, its
officers, agents, and employees at the Client's expense, in any proceeding or
suit which may arise out of and/or due to any inaccuracy or incompleteness of
such material supplied by the Client to NACC.
article vi - PROTECTION OF PROPRIETARY RIGHTS
NACC agrees that all information disclosed to it about the Client's products,
processes and services are the sole property of the Client and it will not
assert any rights to any confidential or proprietary information or material,
nor will it directly or indirectly, except as required in the conduct of its
duties under the Agreement, disseminate or disclose any such confidential
information.
ARTICLE VII - REPRESENTATIVE AND NOTICES
Notices provided for hereunder shall be in writing and may be served personally
to the Client's Representative and NACC's representative at their respective
places of business or by registered mail to the address of each Party as first
set forth hereinabove or may be transmitted by Facsimile Transmission to the
respective FAX numbers of record.
ARTICLE VIII - ARBITRATION/JURISDICTION OF COURT
Any controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration in the County of San Diego,
California, in accordance with the rules of the American Arbitration Association
there in effect, except that the parties thereto shall have any right to
discovery as would be permitted by the Federal Rules of Civil Procedure and the
prevailing Party shall be entitled to actual costs and actual attorney's fees
from arbitration or any other civil action. Judgment upon the award rendered
therein may be entered in any Court having jurisdiction thereof. Jurisdiction
for any legal action is stipulated between the Parties to lie in the County of
San Diego, California
ARTICLE IX - MISCELLANEOUS
This Agreement constitutes the entire agreement between the Client and NACC
relating to providing financial relations services. It supersedes all prior or
contemporaneous communications, representations or agreements, whether oral or
written, with respect to the subject matter hereof and has been induced by no
representations, statements or agreements other than those herein expressed. No
agreement hereafter made between the Parties shall be binding on either Party
unless reduced to writing and signed by an authorized officer of the Party bound
thereby.
ARTICLE X - EFFECTIVE DATE
Effective Date shall be the date of NACC's receipt of the Client compensation in
Article IV above.
This Agreement shall in all respects be interpreted and construed, and the
rights of the Parties hereto shall be governed by the laws of the State of
California.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by duly authorized officers.
DVD Technology, Inc. North American Corporate Consultants, Inc.
By: By:
Lee Edmondson, President Robert Millstone, President
Date: 11/22/99 Date: 11/22/99
April 14, 1999
Digital Video Display Technology Corp.
Attn: Lee Edmonson
Re: Engagement Agreement For Legal Services
Gentlemen:
This letter confirms that Digital Video Display Technology Corp., a valid
and existing public corporation in good standing under the laws of the State of
Nevada ("You" or the "Company"), has retained the services of the Law Office of
Paul G. Marshall, P.C. (the "Firm") to act on your behalf as attorneys for the
following purposes:
1. (a) to counsel, advise and guide You with respect to the
negotiation of licensing and/or similar and related agreements with the
licensors (e.g., record companies and other content providers), advertisers,
merchandise providers and strategic partners relating to possible "e-commerce"
which may be offered as part of the Company's products, and, as applicable, the
licensees/purchasers of the products and services regarding and resulting from
your so-called "video jukebox" technology, and to perform any legal services
related thereto; and
2. (b) to counsel, advise and guide You with respect to the
negotiation of any arrangements regarding third-party investors, private and/or
public financings and/or similar and related agreements regarding the Company,
and to perform any legal services related thereto.
3. Notwithstanding the foregoing, the Firm shall not provide any
tax counseling or litigation services to You.
4. (a) As Compensation for legal services provided by the Firm on
all matters hereunder, You shall pay the Firm its basic fees (subject to Section
3 below), based upon the Firm's current hourly rates, which range from one
hundred twenty-five dollars ($125.00) to four hundred seventy-five dollars
($475.00), depending upon the attorney who is rendering services. You
understand that necessity may require the Firm to adjust these rates from time
to time, and the Firm agrees to give You prior notice of any such adjustment.
In addition, You will reimburse the Firm for all of its expenses incurred in
connection with the performance of its services hereunder promptly upon its
submission to You of statements summarizing such expenses.
5. (b) Charges for services performed and expenses incurred
will be submitted generally to You on a monthly basis, and You agree to make all
payments promptly following your receipt of the Firm's invoice setting forth
such charges. These charges will be subject to reasonable interest charges and
collection costs in the event of late payment or non-payment. The Firm will be
entitled to assume that You have raised all questions You might have (if any)
about a particular invoice within twenty (20) days after your receipt thereof.
The Firm reserves the right to postpone or defer providing additional services
to You or to discontinue its representation of You if billed amounts are not
paid when due.
6. To commence our work consistent with Section 1 above, You shall pay
to the Firm a retainer of Ten Thousand Dollars ($10,000) (the "Retainer"), which
You will deliver or wire transfer to the Firm along with a signed copy of this
agreement and another Five Thousand (5,000) within ten days of signing of this
Retainer the total of Fifteen Thousand ($15,000) Dollars will then be credited
against the Firm's basic legal fees and related expenses as and when they are
billed to You.
7. The foregoing provisions notwithstanding, the Firm shall have
complete discretion to accept or decline representation of You in any particular
matter in respect of which You request the Firm's counsel or advice, and You
similarly may terminate this agreement at any time, provided that such
termination shall not affect any expenses incurred, or any fees earned or
equitably accrued, before such termination.
8. If the Firm should be of particularly beneficial assistance in
helping You locate or consummate a new business opportunity that You choose to
enter into, then, in addition to the legal fees provided for above, the Firm
shall also be eligible for a reasonable "success fee," arrived at ad hoc for
each such matter, in good faith discussion between You and the Firm at such
time.
<PAGE>
9. This agreement shall be interpreted and governed by the laws of the
State of New York pertaining to agreements made and to be wholly performed
therein. The State and Federal courts located in New York County shall have
exclusive jurisdiction over any dispute arising hereunder, and You do hereby (a)
consent to the personal jurisdiction of any such court and (b) irrevocably waive
any objection to the venue, or the inconvenience of the forum, of any such
court. The prevailing party in any action or proceeding brought in connection
with this agreement shall be entitled to recover its expenses and reasonable
attorneys' fees from the other party. The prevailing party in any action or
proceeding brought in connection with this agreement shall be entitled to
recover its expenses and reasonable attorneys' fees from the other party.
10. The Firm's insurance carrier requires the Firm to inform You that
it has had, and will continue to have, dealings with many parties involved in
the entertainment business, some of which may be in direct competition or
conflict with You. To the extent the Firm is aware of a direct conflict, the
Firm shall notify You and possibly seek your consent to further representation
in the area of possible conflict. Similarly, this agreement constitutes your
acknowledgment of the Firm's general role in the entertainment business and its
regular representation of multiple parties with differing interests.
11. If the foregoing accurately reflects your understanding of our
retainer agreement, kindly so indicate by signing the enclosed copy of this
letter and returning it to the Firm.
Very truly yours,
THE LAW OFFICE OF PAUL G. MARSHALL, P.C.
By:/s/ Paul G. Marshall
ACCEPTED AND AGREED TO:
DIGITAL VIDEO DISPLAY TECHNOLOGY CORP.
By:
/s/ Lee Edmondson, President
FirePlug Computers Inc.
-----------------------
Agreement for Computer and/or Programming Services
Customer Name and Address:
Digital Video Technology Corp.
590 Madison Avenue
New York, New York
USA 10022
Hereinafter referred to as "Customer"
Agreement No.990401
FirePlug Computers Inc. shall furnish to Customer the following goods and
services, as available:
Design and system/software development, documentation, testing, project
management and implementation of the DVD Technology Video Jukebox system as
outlined in the "Proposal to create a Video Jukebox System for DVDTechnology"
document attached.
Senior consultants' rate: US$12,000/month
US$3,500/week
Daily and other rates, travel, disbursements per current rate schedule
(attached)
All software and intellectual property created by FirePlug and/or its
contractors and sub contractors under this contract will become the property of
Customer upon payment of all amounts billed under this contract, subject to
software licenses and agreements entered into as necessary with 3rd parties.
All actions and costs arising from the sale or use of software/systems created
under this contract will be borne by Customer. FirePlug will endeavor to inform
Customer of potential license and/or patent concerns as they arise. Customer
will likewise inform FirePlug of any license and/or patent concerns that
Customer has with respect to systems created proposed and created under this
contract.
FirePlug's agreement to furnish goods and services is expressly conditioned upon
the terms and conditions set forth in this Agreement whether on the face,
reverse side, attachments indicated above or documents incorporated by
reference. Any other terms and conditions are rejected regardless of content,
timing or other method of communication to FirePlug.
<PAGE>
Terms and Conditions
1. This Agreement constitutes the entire agreement between FirePlug and
Customer, and supersedes all prior contracts, agreements, proposals,
understandings, representations, correspondence or communications relative to
the subject matter hereof. Customer acknowledges that it has not been induced to
enter into this Agreement by any representations or promises not specifically
stated herein. This Agreement may be modified only by a written instrument
executed by authorized representatives of FirePlug and Customer.
2. TERM OF AGREEMENT: This Agreement becomes effective on the date accepted by
FirePlug and expires on the date specified. If no date is specified, either
party may terminate this Agreement upon 30 days prior written notice.
3. PRICES AND PAYMENT TERMS:
3.1. Customer agrees to pay for all goods and services furnished by FirePlug or
used by Customer at the prices specified, or if none are specified, at prices in
effect on the date of usage.
3.2. FirePlug may revise the prices and pricing data set forth in this Agreement
upon 30 days prior written notice.
3.3. Prices do not include taxes. Customer shall pay any applicable sales, use,
personal property or similar taxes, customs duties, and any governmental charges
based on transactions hereunder, exclusive of FirePlug's net income.
3.4. Terms are net cash payable as specified in this agreement or within 30 days
after date of invoice, unless Customer is notified otherwise by FirePlug in
writing.
4. PROPRIETARY INFORMATION: Proprietary information disclosed by either party to
the other for the purposes of this Agreement which is in tangible form and is
clearly marked as such, shall be protected by the recipient in the same manner
and to the same degree that the recipient protects its own proprietary
information, except that each party may use or disclose information that is or
becomes publicly available, is already lawfully in its possession, is
independently developed by it, or is lawfully obtained from third parties.
5. TITLE: Unless otherwise specifically stated in this Agreement, FirePlug
retains title to and reserves all rights in the programs, data, information or
other property developed or provided by FirePlug hereunder.
6. REVISIONS: FirePlug may, without notice, revise the goods and services
offered, method of operation, documentation provided, and equipment used, and
make normalization changes to billing algorithms.
7. SECURITY: Precautions have been taken by FirePlug to minimize the potential
for loss or alteration of or improper access to Customer programs, data,
information or other property while on FirePlug's systems, but FirePlug does not
guarantee their integrity or security. Customer is responsible for utilizing, as
desired, those features of the FirePlug system which enhance the security of
Customer's programs, data, information and materials. Customer is responsible
solely for security on Customer owned and operated machines unless otherwise
stated.
8. PROPERTY: (applies to physical property if it forms part of the details of
this agreement, and to intellectual property and materials normally resident on
FirePlug's system(s) in any case)
8.1. Customer shall use any of FirePlug's property in accordance with this
Agreement; shall not misuse or modify and shall otherwise protect and maintain
such property; shall maintain any labels which identify ownership; shall not
retain such property as a setoff or in full or partial satisfaction of any claim
against FirePlug; and shall return such property upon termination of usage in
accordance with FirePlug's instructions and in the same condition as received,
normal wear and tear excepted.
8.2. Customer will indemnify and hold FirePlug harmless from any costs, expenses
or liability resulting from any claim based on Customer's use or possession of
FirePlug's property, excluding claims of FirePlug's negligence or patent
infringement. Such indemnity shall survive the termination or expiration of this
Agreement.
8.3. Customer's interfacing equipment and methods shall be compatible with
FirePlug's computer system(s).
8.4. Any goods owned by FirePlug and supplied to Customer for installation at
Customer's premises are AT THE RISK OF Customer from the time the Customer
receives them until they are removed at the termination of this Agreement or any
subsequent Agreement; and the Customer shall keep the goods insured in a
sufficient amount to cover the replacement values shown, FirePlug to be the
payee.
9. AVAILABILITY OF PROGRAM LIBRARIES AND DATA FILES: FirePlug's program
libraries and data files available for general use are set forth in current
publications, documentation and supplemental product announcements. Use of other
program libraries and data files requires prior written approval.
10. DISPOSITION OF Customer PROGRAMS, DATA, INFORMATION OR OTHER PROPERTY: If
Customer fails to remove or instruct FirePlug on disposition of Customer
programs, data, information or other property on FirePlug's premises or
equipment within 30 days after termination of this Agreement or written notice
from FirePlug, FirePlug may destroy or otherwise dispose of same.
11. DEFAULT: If Customer becomes bankrupt or otherwise insolvent or fails to pay
for services rendered in accordance with the terms hereof, FirePlug may, at its
sole option and without notice, discontinue performance and terminate this
Agreement for default and pursue any other remedies available at law or in
equity. FirePlug's failure to exercise any of its rights shall not constitute a
waiver of any past, present or future right or remedy. Upon termination for
default, FirePlug may enter Customer's premises without a court order and take
possession of FirePlug's property.
12. WARRANTIES, REMEDIES AND DISCLAIMERS:
12.1. Other warranties, remedies and disclaimers may be found in Attachments.
12.2. Except as noted in subparagraph 12.3 below, FirePlug warrants any
processing or storage services furnished on FirePlug's systems hereunder against
malfunctions, errors or loss of data which are due solely to errors on the part
of FirePlug, its equipment or its employees. If Customer notifies FirePlug in
writing and furnishes adequate documentation of any malfunction, error or loss
of data covered by the above warranty within 30 days after its occurrence then:
(1) with respect to malfunction or error, FirePlug shall grant a credit to the
amount charged by FirePlug for that portion of such service which falls within
reasonable checkpoint intervals; and
(2) with respect to lost data, FirePlug shall (at FirePlug's discretion) either:
(i) regenerate without charge any lost data from FirePlug's normal backup
materials or from Customer specific backup materials if Customer has specified
and paid for more frequent backups, or (ii) regenerate without charge any lost
data if the Customer provides adequate backup materials in machine readable
form, or (iii) if Customer does not provide such backup materials, grant
Customer a credit in an amount equal to the FirePlug estimated cost of
regeneration, such estimate made as if such backup material were available.
12.3. FirePlug MAKES NO WARRANTY, AND HEREBY DISCLAIMS ANY LIABILITY WITH
RESPECT TO SOFTWARE RESIDING IN FirePlug's VENDOR LIBRARY OR ANY DATA BASE OR
SOURCE DATA, INCLUDING BUT NOT LIMITED TO ITS ACCURACY, ADEQUACY, COMPLETENESS,
USEFULNESS OR RELIABILITY, WHICH IS MADE AVAILABLE TO Customer BY FirePlug, OR
USED BY Customer IN CONNECTION WITH ANY GOODS OR SERVICES COVERED BY THIS
AGREEMENT.
12.4. FirePlug's OBLIGATIONS UNDER THE WARRANTIES SET FORTH IN THIS AGREEMENT
ARE CONDITIONED UPON REQUEST BY FirePlug OF NOTICE AND ADEQUATE DOCUMENTATION AS
STATED IN THIS AGREEMENT. EXCEPT FOR THE WARRANTIES SET FORTH IN THIS AGREEMENT,
THERE ARE NO WARRANTIES, WHETHER EXPRESS, IMPLIED, ORAL OR WRITTEN, WITH
PURSUANT TO THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO ANY PARTICULAR IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. MOREOVER, THE
REMEDIES PROVIDED FOR IN THIS CLAUSE 12 ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
REMEDIES.
13. EXCUSED PERFORMANCE: FirePlug shall not be liable for, and is excused from
any failure to deliver or perform or for delay in delivery or performance due to
causes beyond its reasonable control, including but not limited to, acts of
nature, governmental actions, fire, labor difficulty, shortages, civil
disturbances, transportation problems, interruptions of power or communications,
failure of FirePlug's suppliers or subcontractors, or natural disasters.
14. ASSIGNMENT OR TRANSFER: Neither this Agreement nor any rights or obligations
hereunder shall be assigned or otherwise transferred by Customer without the
prior written consent of FirePlug
15. PUBLICITY: Neither party shall use the name of the other in publicity
releases, advertising, or similar activity without the prior written consent of
the other, except that the Customer hereby consents to FirePlug including
Customer's name in its client list.
16. LIMITATION OF LIABILITY:
16.1 IN NO EVENT SHALL FirePlug's SUPPLIERS OR LICENSORS HAVE ANY LIABILITY TO
Customer OR ANY THIRD PARTY FOR DAMAGES RESULTING FROM Customer's USE OF ANY
APPLICATION PROGRAM, DATA BASE, SOURCE DATA, OR RELATED DOCUMENTATION.
16.2. IN NO EVENT SHALL FirePlug BE LIABLE FOR ANY LOSS OF PROFIT OR REVENUE BY
Customer OR FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, PUNITIVE OR EXEMPLARY
DAMAGES INCURRED OR SUFFERED BY Customer, EVEN IF FirePlug HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH LOSS OR DAMAGES. FURTHER, Customer AGREES THAT
FirePlug's TOTAL LIABILITY FOR ALL CLAIMS OF ANY KIND ARISING AS A RESULT OF, OR
RELATED TO THIS AGREEMENT, WHETHER BASED ON CONTRACT, TORT (INCLUDING BUT NOT
LIMITED TO STRICT LIABILITY AND NEGLIGENCE), WARRANTY OR ON OTHER LEGAL OR
EQUITABLE GROUNDS, SHALL BE LIMITED TO GENERAL MONEY DAMAGES AND EXCEPT AS
SPECIFICALLY PROVIDED IN THE REMEDIES SET FORTH IN THE CLAUSE OF THIS AGREEMENT
ENTITLED, "WARRANTIES, REMEDIES AND DISCLAIMERS", SHALL NOT EXCEED AN AMOUNT
EQUAL TO: (i) THE TOTAL AMOUNT ACTUALLY PAID BY Customer HEREUNDER DURING THE
THREE MONTHS IMMEDIATELY PRECEDING THE DATE THE FIRST CLAIM AROSE; OR (ii)
$100,000, WHICHEVER IS LESS.
17. APPLICABLE LAW: This Agreement shall be governed by the laws of the Province
of British Columbia, Canada.
<PAGE>
Accepted by:
For Customer:
/s/ Lee T. Edmondson, Chief Executive Officer
Date: 8/4/99
For FirePlug:
/s/ Richart Pitt, President
Date: 5/10/99
Consulting Agreement
This agreement entered into at Richmond in the Province of B.C. this 10th day of
March, 1999
Between:
386878 B.C., Ltd.
(hereinafter called the "Consultant"
of the first part
and:
Digital Video Display Technology Corp.
(hereinafter called the "Client"
of the second part
Whereas:
1. The Consultant is engaged in the business of providing consulting and
professional services to business enterprises.
2. The Client desires to avail itself of these services of the Consultant in
connection with certain of the Clients business activities and the Consultant
desires to enter into this agreement with the Client:
In consideration of the mutual promises and agreements contained in this
agreement, and other good and valuable consideration, the parties agree as
follows:
1. In lieu of cash the remuneration shall be 100,000 shares of Digital Video
Display Technology Corp. and shall be issued upon the signing of this agreement.
2. The shares will be issued pursuant to rule 144 dated the date of the
agreement.
3. The company further agrees to register the shares for sale upon its
registration for small cap or national NASDAQ or at the time other restricted
shares may be registered.
4. This agreement shall insure to the benefit of and be binding upon the
parties hereto and their respective heirs administrators, successors and
assigns.
In Witness Whereof, the parties have executed this agreement
on the day and year first above written.
Digital Video Display Technology Corp. 386878 B.C., Ltd.
/s/ Lee Edmondson /s/ Norman Knowles
Lee Edmondson, President Norman Knowles, President
Consulting Agreement
This agreement entered into at Richmond in the Province of B.C. this 10th day of
March, 1999
Between:
Richard Brunette
(hereinafter called the "Consultant"
of the first part
and:
Digital Video Display Technology Corp.
(hereinafter called the "Client"
of the second part
Whereas:
1. The Consultant is engaged in the business of providing consulting and
professional services to business enterprises.
2. The Client desires to avail itself of these services of the Consultant in
connection with certain of the Clients business activities and the Consultant
desires to enter into this agreement with the Client:
In consideration of the mutual promises and agreements contained in this
agreement, and other good and valuable consideration, the parties agree as
follows:
1. In lieu of cash the remuneration shall be 100,000 shares of Digital Video
Display Technology Corp. and shall be issued upon the signing of this agreement.
2. The shares will be issued pursuant to rule 144 dated the date of the
agreement.
3. The company further agrees to register the shares for sale upon its
registration for small cap or national NASDAQ or at the time other restricted
shares may be registered.
4. This agreement shall insure to the benefit of and be binding upon the
parties hereto and their respective heirs administrators, successors and
assigns.
In Witness Whereof, the parties have executed this agreement
on the day and year first above written.
Digital Video Display Technology Corp.
/s/ Lee Edmondson /s/ Richard Brunette
Lee Edmondson, President
Consulting Agreement
This agreement entered into at Richmond in the Province of B.C. this 1st day of
July, 1999
Between:
Bob Noble
(hereinafter called the "Consultant"
of the first part
and:
Digital Video Display Technology Corp.
(hereinafter called the "Client"
of the second part
Whereas:
1. The Consultant is engaged in the business of providing consulting and
professional services to business enterprises.
2. The Client desires to avail itself of these services of the Consultant in
connection with certain of the Clients business activities and the Consultant
desires to enter into this agreement with the Client:
In consideration of the mutual promises and agreements contained in this
agreement, and other good and valuable consideration, the parties agree as
follows:
1. In lieu of cash the remuneration shall be 50,000 shares of Digital Video
Display Technology Corp. and shall be issued upon the signing of this agreement.
2. The shares will be issued pursuant to rule 144 dated the date of the
agreement.
3. The company further agrees to register the shares for sale upon its
registration for small cap or national NASDAQ or at the time other restricted
shares may be registered.
4. This agreement shall insure to the benefit of and be binding upon the
parties hereto and their respective heirs administrators, successors and
assigns.
In Witness Whereof, the parties have executed this agreement
on the day and year first above written.
Digital Video Display Technology Corp.
/s/ Lee Edmondson /s/ Bob Noble
Lee Edmondson, President
DIGITAL VIDEO DISPLAY TECHNOLOGY CORP.
STOCK OPTION AGREEMENT
Agreement, effective as of April 30, 1999 by and between Digital Video
Display Technology Corp., a Nevada corporation (the "Corporation"), and Marilyn
G. Haft (the "Optionee").
WHEREAS, the Optionee is a valuable and trusted contributor to the
Corporation's business and the Corporation considers it desirable and in its
best interest that the Optionee be given an opportunity to acquire a proprietary
interest in the Corporation as an added incentive to advance the interest of the
Corporation by being granted a stock option, which is not intended to qualify as
an incentive stock option as defined in Section 422 of the Internal Revenue Code
of 1986, as amended, to purchase the Corporation's common stock, par value $____
per share (the "Shares").
NOW, THEREFORE, in consideration of the foregoing premises, it is agreed by
and between the parties as follows:
1. Grant of Option. Pursuant to the action by the Corporation's Board
of Directors taken on the date first above written, the Corporation hereby
grants to the Optionee the right, privilege and option to purchase Five Hundred
Thousand (500,000) Shares at the purchase price of U.S. $4.00 per Share (the
"Option") in the manner and subject to the conditions hereinafter provided.
2. Vesting of Option. The Optionee's Option shall vest at such time as the
price per Share equals the amount of U.S. $4.00 (the "Vesting Date"). On the
Vesting Date, the Option shall automatically vest without any further action
required by the Corporation or the Optionee, and shall remain vested
notwithstanding the subsequent performance of the Share price. The Corporation
agrees to promptly notify the Optionee in writing at such time as the Share
price reaches the amount of U.S. $4.00.
3. Time of Exercise of Option. Other than possible early vesting as
provided for in Paragraph 6 hereof, this Option may only be exercised by the
Optionee at any time on or after the one (1) year anniversary of the Vesting
Date. Once exercisable, the Option may be exercised at any time, and from time
to time, in whole or in part, until the termination thereof as provided in
Paragraph 5 below.
4. Method of Exercise. The Option shall be exercised by the delivery of
written notice (the "Option Notice") from the Optionee to the Corporation
stating the number of Shares with respect to which the Option is being exercised
and accompanied by payment in full of the aggregate exercise price ("Aggregate
Exercise Price") of such Option. Such written notice shall be delivered to the
Corporation at its principal office or at such other address as may be
established by the Board of Directors, provided the Optionee has been notified
in writing of any such other address prior to the date of the Option Notice.
Payment of the Aggregate Exercise Price may be made (i) in cash; (ii) by
certified check or bank cashier's check payable to the order of the Corporation
in the amount of such Aggregate Exercise Price; (iii) if permitted by the Board
of Directors in their discretion, by promissory note issued by the Optionee in
favor of the Corporation in an amount equal to such Aggregate Exercise Price and
payable on terms prescribed by the Board of Directors and which provides for the
payment of interest at a fair market rate, as determined by the Board of
Directors; (iv) by applying to the exercise of the Option cash provided by the
Corporation in exchange for the Optionee consenting to a reduction in the number
of Shares covered by the Option to that number of Shares which have a fair
market value (on the date of exercise) equal to the excess of the fair market
value (on the date of exercise) of the Shares covered by the original unreduced
Option over the Aggregate Exercise Price of the Shares covered by the original
unreduced Option; or (v) by any combination of the methods of payment permitted
by (i) through (iv) above. For purposes of this Paragraph 4, if the Shares are
listed on a national securities exchange or traded on the over-the-counter
market, the fair market value shall be the closing price on the most recent day
preceding the day on which the Option is exercised for which such prices are
available. If the Shares are not so listed on a national securities exchange or
traded on the over-the-counter market, such fair market value shall be equal to
U.S. $5.00 per Share. The Corporation shall immediately instruct its transfer
agent to make delivery of such Shares; provided, however, that if any law or
regulation requires any further action to be taken with respect to the Shares
specified in such notice before the issuance thereof, then the date of delivery
of such Shares shall be extended for the period necessary to take such action.
5. Termination of Option. Except as herein otherwise stated, the
Option, to the extent not theretofore exercised, shall terminate upon the first
to occur of the following dates:
(a) If the Optionee dies while the Option granted hereunder has
not otherwise terminated or been exercised, her personal representative may
exercise any outstanding portion of the Option within one (1) year following the
date of her death (but no later than the date specified in Paragraph 5(b)
hereof).
(b) April 30, 2009.
6. Reclassification, Consolidation or Merger. In the event that the
outstanding Shares are hereafter changed by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock split-up, combination
or exchange of Shares and the like, or dividends payable in Shares, an
appropriate adjustment shall be made by the Board of Directors in the number of
Shares and price per Share subject to the Option granted hereunder such that the
total value of the Shares subject to the Option shall be unaffected. If the
Corporation shall be reorganized, consolidated, or merged with another
corporation, or if all or substantially all of the assets of the Corporation
shall be sold or exchanged, all unvested options hereunder shall become
immediately fully vested and the Optionee shall, at the time of issuance of the
stock under such a corporate event, be entitled to receive upon the exercise of
her Option the same number and kind of shares of stock or the same amount of
property, cash or securities as she would have been entitled to receive upon the
occurrence of any such corporate event as if she had been, immediately prior to
such event, the holder of the number of Shares covered by her Option. Any
adjustment under this Paragraph 6 in the number of Shares subject to the Option
shall apply proportionately to only the unexercised portion of any Option
granted hereunder. If fractions of a Share would result from any such
adjustment, the adjustment shall be revised to the next lower whole number of
Shares.
7. Rights Prior to Exercise of Option. (a) This Option is freely
transferable by the Optionee, provided that at the time of a transfer of any or
all of the Option, the Optionee delivers an opinion of counsel to the
Corporation to the effect that such transfer complies with federal and state
securities laws.
(b) The Optionee shall have no rights as a stockholder with respect
to the Shares subject to the Option until payment of the Aggregate Exercise
Price. However, in the event that the Optionee makes full payment of the
Aggregate Exercise Price for a certain number of Shares (the "Exercised Shares")
and the Corporation does not promptly deliver the Exercised Shares to the
Optionee pursuant to the registration requirements set forth in Paragraph 8
below, the Optionee shall have all rights of a stockholder with respect to the
Exercised Shares, including all voting rights and the right to receive dividend
payments, as of thirty (30) days from the date of the Option Notice.
8. Restrictions on Disposition. If, at any time when Shares would be
issued to the Optionee pursuant hereto, the Corporation shall be subject to the
reporting requirements of the Securities Act of 1934, as amended, then the
Corporation shall not be obligated to issue or sell any Shares until they have
been listed on each securities exchange on which the common stock of the
Corporation may then be listed and until and unless, in the opinion of counsel
to the Corporation, the Corporation may issue such shares pursuant to a
quali-fication or an effective registration statement, or an exemp-tion from
registration, under such state and federal laws, rules or regulations as such
counsel may deem applicable. However, the Corporation agrees to effect such
listing, qualification or registration, as the case may be, within ninety (90)
days of the date of the Option Notice.
9. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
10. No Employment Contract or Joint Venture. Nothing contained in this
Agreement shall be deemed to create an employment agreement between or a joint
venture among the Optionee and the Corporation or any parent or subsidiary of
the Corporation.
11. Miscellaneous. This Agreement cannot be changed or terminated
orally and contains the entire agreement between the parties relating to the
sub-ject matter hereof. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within such State without reference to any choice or
conflict of laws rules. The paragraph headings herein are intended for
reference only and shall not affect the interpretation hereof.
IN WITNESS WHEREOF, the parties hereby acknowledge and agree to all of the
terms embodied herein.
Dated: April 30, 1999 DIGITAL VIDEO DISPLAY TECHNOLOGY CORP.
/s/ Lee Edmondson, President
/s/ Marilyn G. Haft
CONSULTING AGREEMENT
--------------------
Consulting Agreement (this agreement), dated as of March 1, 1999, between Lee T.
Edmondson (the "consultant") of 7071 Ash Street, Richmond B.C. Canada V6Y 2T9
and DVD Technologies ("Employer"), 590 Madison Avenue, New York, New York 10022,
a Nevada corporation engaged in the exploitation of a patented and proprietary
computer technology for an interactive audio/video location-based entertainment
and marketing media channel.
Whereas, the Consultant's unique skills, knowledge and experience with respect
to Employer and Employer's business, and Consultant's ongoing participation and
contracting by Employer are a most significant and material inducement in
Employer's decision to enter into a consulting agreement with Consultant,
Whereas, Employer is in the start-up phase of its business and requires
Consultant's services to assist in developing the formative plans and early
Stage strategic relationships and alliances,
WhereAS, Employer desires to contract Consultant initially in the capacity of
acting CEO and consultant, and after the initial first consulting year, CEO of
the Company, and Consultant desires to be contracted in such capacity,
Now therefore, in consideration of the mutual covenants contained herein and for
Other good and valuable consideration, the Employer and Consultant hereby
Agree as follows:
1. Employment Duties and Agreements
(a) Employer hereby agrees to employ the Consultant (the "Contract") as the
acting CEO of Employer (Consultant) with such senior executive and management
duties, related to the development of the business which are assigned to the
acting CEO by the Board of Directors of Employer.
(b) Consultant hereby accepts the Contract and agrees to serve the Employer
during the period described in Section 1(d) hereof. In rendering service to
the Employer, Consultant shall be subject to, and agrees to act in accordance
with the instructions and directions of Employer's Board of Directors and all
applicable policies and rules thereof.
(c) During the Contract period, Consultant will be responsible for the
development of the business plan, strategic and action plan, strategic
relationships and alliances, development of manufacturing, distribution and
exploitation of the DVDT System and the company's license hereto for Employer.
Consultant is not responsible for financing, investor relations other than to
liase with shareholder representatives, accounting, legal, hiring and
managing Employer's other contracts.
(d) The initial consulting term shall be one year ending March 1, 2000,
renewable on terms subject to good faith negotiations and mutual approval of
formal CEO responsibilities by the Board of Directors. The negotiations will
begin once the Employer becomes a full reporting issuer, firm financing of
the business plan is offered, the company has purchased D and O Insurance,
and the company is ready to begin operations.
2. Compensation
(a) Signing Bonus:
The Consultant will be paid $15,000 per month and any pre-approved
expenses incurred on behalf of the company.
500,000 options exercisable at $2.50 per share. They will be issued
into escrow and Consultant will have full voting rights on these shares.
They will be released from escrow on March 1, 2000, and until then will
vest prorate 41,666 options per month.
3. Termination Events
In the event Employer wishes to terminate the consulting agreement for any
reason other than for cause or resignation, the outstanding invoices will
be paid with 30-day's notice. The option contract will be delivered and
any outstanding invoices will be offset against the exercise price of the
options. Upon termination, the options will be granted registration
rights and become freely tradeable.
4. Protection of Confidential Information
Employer agrees to protect the Consultant's intellectual property, know
how, trade secrets, whether written or verbal for the life of the
Contract. Employee agrees to protect DVDT intellectual property of
Licensor.
5. Ownership of Work, Product and Ideas
During the consulting period any discoveries, inventions or patents,
Materials and ideas related to the video jukebox industry and previously
Owned or known by the Consultant will remain the property of Consultant.
6. This Contract supercedes all prior written or oral agreements on the
subject matter hereto and shall be construed under the laws of the
State of Nevada.
Digital Video Display Technology Corp.
/s/ Marilyn Haft, Director /s/ Lee T. Edmondson, Consultant
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