U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file no.
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REDMOND CAPITAL CORP.
---------------------
(Name of Small Business Issuer in Its Charter)
Florida N/A
----------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
1255 West Pender Street
Vancouver, British Columbia, V6E 2V1
Canada
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(Address of principal executive (Zip Code)
offices)
Issuer's telephone number: (604) 638-1636
Securities to be registered pursuant to Section 12(b) of the Act.
Title of each class Name of each exchange of
which registered
None
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----------------------------------- ------------------------------------
Securities to be registered pursuant to Section 12(g) of the Act.
Common Stock, Par Value $0.001 per share
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(Title of Class)
<PAGE>
TABLE OF CONTENTS
Item Page
PART I
Item 1 Description of Business 1
Item 2 Management's Discussion and Analysis or Plan of Operation 3
Item 3 Description of Property 4
Item 4 Security Ownership of Certain Beneficial Owners and Management 5
Item 5 Directors, Executive Officers, Promoters and Control Persons 6
Item 6 Executive Compensation 7
Item 7 Certain Relationships and Related Transactions 9
Item 8 Description of Securities 9
PART II
Item 1 Market Price of Registrant's Common Equity and Other
Shareholder Matters 11
Item 2 Legal Proceedings 12
Item 3 Changes in and Disagreements With Accountants 12
Item 4 Recent Sales of Unregistered Securities 13
Item 5 Indemnification of Directors and Officers 14
PART F/S
Financial Statements 16
PART III
Item 1 Index to Exhibits 38
Signature Page 38
DOCUMENTS INCORPORATED BY REFERENCE
Documents incorporated by reference: None
<PAGE>
Page 1
Item 1. Description of Business.
Historical Overview of the Company
Redmond Capital Corp. (the "Company") was incorporated on September 12, 1996
under the name "Minex Minerals, Inc." under the laws of the State of Florida,
U.S.A. On February 3, 1999, the Company filed Articles of Amendment effecting
the change of the Company's name to Redmond Capital Corp. The Company's
executive office is located at 1255 West Pender Street, Vancouver, British
Columbia, Canada.
The Company was formerly quoted on the NASD OTC Bulletin Board under the symbol
"REDM". The Company is currently quoted on the National Quotation Bureau Inc.'s
"Pink Sheets" under the symbol "REDME".
The Company was originally organized to pursue opportunities in the exploration
and exploitation of hydrocarbons in North and South America. On July 4, 1997,
the Company, through its subsidiary Minex S.A., acquired a concession permit for
the exploration and exploitation of hydrocarbons on four properties in the Gulf
of San Jorge, Province of Chubut, Argentina. On September 15, 1997, the
Company, through Minex S.A., purchased concession permits for three additional
properties located in the Gulf of San Jorge. During 1998, the Company determined
that both permits were of limited potential and entered into agreements to sell
the majority of their interests in both permits. Currently, the Company retains
a 5% interest in one concession. The Company is no longer actively pursuing
opportunities in the oil and gas sector and its subsidiary Minex S.A. no longer
has any operations.
In light of the Company's change of direction, in February of 1999, the Company
changed its name to Redmond Capital Corp. Since then, the Company has focused
on acquiring start-up businesses that offer substantial growth opportunities to
the Company and its shareholders. As a result of this change in focus, by
agreement dated July 1, 1999, the Company acquired 100% of the outstanding
shares of Sirius Animation Inc. ("Sirius"), a company incorporated under the
laws of the Province of British Columbia, Canada on October 22, 1998. The
Company paid a total purchase price of $400,000 for Sirius satisfied through the
issuance of the 186,048 common shares of the Company's stock to the former
Sirius shareholders. Sirius is a 3-D animation company developing a multi-part,
animated television series entitled "The Elf King". Sirius expects to finish
the first episode of the series in August of 2000. On April 26, 2000 signed a
worldwide distribution agreement (excluding Canada) with Bruder Releasing Inc.
of Santa Monica, California for the marketing and promotion of The Elf King
series.
On July 22, 1999, the Company incorporated a company, Moxy Resources, Inc.
("Moxy"), under the laws of the State of Nevada. At the time, it was
management's intention to spin-off any remaining interests held by Minex S.A. to
the Company's shareholders through Moxy. As of July 17, 2000, Moxy has yet to
be fully organized and has carried on no business. Present management does not
intend to proceed with a spin-off due to the limited potential of the remaining
assets of Minex S.A.
On September 9, 1999, the Company entered into an agreement to acquire 35% of
the shares of RedCell Canada Inc. ("RedCell"), a battery packager and
wholesaler, incorporated on June 15, 1998 under the laws of the Province of
Alberta, Canada. On October 8, 1999, the Company's board of directors approved
a new agreement for the acquisition of 56.31% of the shares of RedCell. Under
the terms of the October agreement, the Company would issue 30,000 shares in the
common stock of the Company for every one percent holding in RedCell. Pursuant
to the agreement, 2,197,045 common shares of the Company were placed in trust
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Page 2
with the Company's attorney. The October 8, 1999 agreement was superseded by a
February 7, 2000 agreement whereby the Company agreed to acquire 100% of the
outstanding shares of RedCell on the same terms as the October 8, 1999
agreement. Additionally, certain loans due to RedCell shareholders in the
amount of $4,153,954 would be cancelled by the issuance of 923,101 warrants
allowing the holder to purchase one common share of the Company's stock for
$4.50. The acquisition of RedCell as contemplated by the February 7, 2000
agreement has yet to close as a condition of closing requires that the Company
be a reporting issuer. As of July 17, 2000, the Company had not yet become a
reporting issuer.
As of July 17, 2000, the Company has 21 full-time employee located at the
Company's headquarters in Vancouver, British Columbia. Four employees are
corporate staff directly employed by the Company. Another 17 employees are
animators and associated staff working for the Company's subsidiary Sirius.
Sirius Animation
Sirius has only one product at the present time - The Elf King series. Sirius
is currently finishing off the first episode of the series. Completion of
episode one is scheduled for August 2000. This 30 minute animated television
show features high-definition three-dimensional animation and a storyline based
on a Brother's Grimm fairytale. The creative inspiration behind Sirius is Ross
Belyea, who developed the original concept and script and was a founder of
Sirius in 1998. The Company has already signed an exclusive worldwide
distribution agreement (the agreement includes all territories except Canada)
with Bruder Releasing Inc. of Santa Monica, California. Upon completion of the
first episode, the Company, through its distributor, intends to market and
pre-sell the entire 13 episode series. Currently, the potential customers for
the show include the major American television networks (Disney, Fox, NBC and
CBS) as well as foreign broadcasters in Europe and Asia. Generally, series are
sold on a geographic basis with the United States market representing the
greatest financial opportunity.
The only intellectual property owned by the Company is the script to the first
episode developed by Mr. Belyea which was acquired by Sirius in 1998. The
transfer of the right to the first script also provides Mr. Belyea the right of
first refusal to produce, write and direct and manage the preproduction,
production and post-production of any and all existing or planned productions
with respect to any work based on The Elf King series or a Brother's Grimm
anthology by the Company.
Competitive Business Conditions
The animation and film business is highly competitive. The marketplace is
composed of several large studios including Disney, Pixar, Dreamworks, and
Cinar, as well as smaller independent studios similar to Sirius. Given the
relative size of Sirius to the major players, the Company is a minor player that
is limited in its ability to recruit and retain staff. Currently the demand for
animators exceeds supply and there is good mobility of workers. Many of the
Company's competitors have greater name recognition and resources than does the
Company. There are no assurances that the Company will be able to successfully
compete or that the projects will be viable. Additionally, the Company is
disadvantaged by the fact that it only has one property under development.
Should the first episode of The Elf King be difficult to sell, it is unlikely
the Company will be able to find additional funding to continue operations.
Finally, given the rapid technological advances in computer animation and the
long lead times to completion of a project, Sirius faces the risk that by the
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Page 3
time The Elf King series is ready for pre-sale its animation will be viewed as
obsolete.
Government Approval
Currently, Sirius' products are not subject to any government approval or
regulation except for the classification of its films regarding their
suitability for viewing by different age groups. Management expects that The
Elf King series will be classified as being suitable for viewing by all ages.
Effects of Existing or Probable Government Regulations
There are no existing or probable government regulations that materially affect
Sirius' business. Currently, however, there are government grants and taxation
considerations that favour cinematic productions that are classified as
Canadian. Currently, due to Sirius' ownership by an American company, Sirius
does not qualify for such grants or preferential tax treatment.
Research and Development Activities
Since its inception in 1998, Sirius has expended no resources on research and
development.
Item 2. Management's Discussion and Analysis or Plan of Operation
The following sets out the Company's plans for the year 2000:
- Market the completed first episode of The Elf King series and secure
additional financing for the completion of the remaining 12 episodes by
Sirius;
- Close the acquisition of RedCell as contemplated by the February 7, 2000
agreement; and
- The Company has no plans for either Minex S.A. or Moxy.
The Company expects to use episode one of The Elf King series to generate
sufficient advances in order to allow the financing of the completion of the
other 12 episodes without the use of outside financing sources. Given the
Company's current financial situation, without significant revenues in the near
future, the Company will only be able to satisfy its cash requirements for the
next three months. After such time, the Company will have to raise substantial
additional funds through either debt or equity financing in order to continue
operation over the next twelve months. At the current time, management does not
know of any probable sources of this funding. The Company's cash requirements
will increase substantially when its acquisition of RedCell is complete.
The Company does not expect to have any significant purchases or sales of plant
and/or equipment in the next twelve months. The Company does not intend to
expend any resources on research and development during the next twelve months.
The Company does however anticipate hiring of an additional 5 to 10 new
employees when the acquisition of RedCell closes.
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Page 4
Item 3. Description of Property
Business Offices
The Company's principal business office is located at 1255 West Pender Street,
Vancouver, British Columbia. Pursuant to an annual lease entered into on
December 15, 1999, the Company leases approximately 3,700 square feet of office
space at a cost of approximately $9,000 ($13,300 Canadian dollars) per month.
The lease is cancelable by the lessor upon receipt of three months written
notice. The space is used by the corporate management and for computer
animation.
Interests In Real Estate
On July 4, 1997, the Company completed the purchase of a concession permit for
the exploitation, complementary exploration, and development of hydrocarbons on
lands known as Mina del Carmen, Territorio del Chubut, Colonia Escalante,
Distrito Minera De Comodoro Rivadavia, Catco Exp. 0 - 1828 - 21, Superficie 1998
has, located in the Gulf of San Jorge, Province of Chubut, Argentina. The lands
consist of 4 separate oil and gas concessions totalling 100 sq. km. and are
known as Mina Maria Ines, Mina Catalina, Mina Carmen Dos, and Mina Marcelina.
The purchase price was $100,000 with $50,000 due and payable on December 31,
1999. A second payment of $50,000 was due and payable on December 31, 1998. At
December 31, 1998, the Company determined that the concessions were of limited
potential and have included in operations a write-off of $75,000. During 1999,
the Company received $25,000 for the sale of these concessions.
On September 15, 1997, the Company purchased of a concession permit for the
exploitation, complementary exploration, and development of hydrocarbons on
lands known as Canadon Pilar, Pico Salamanca and Mina Satamanca, all located in
the Gulf of San Jorge, Province of Chubut, Argentina. The purchase price was
$608,000, consisting of cash in the amount of $400,000 and the issuance of
260,000 shares of the Company's common stock at $0.80 per share, or $208,000.
By the terms of the contract, $100,000 was due and payable on December 31, 1999.
Another payment of $100,000 was due on December 31, 1998. During 1998, the
Company determined that the concessions were of limited potential and have
included in operations a write-off of $339,267. During 1998, the Company
received $150,000 for the partial sale of the concessions. During 1999 the
Company received $200,000 for the sale of these concessions.
At the current time, the Company has no other investments or interests in real
estate, real estate mortgages, securities of or interests in persons primarily
engaged in real estate activities.
Intellectual Property
Pursuant to an agreement dated August 30, 1998 between A. Ross Belyea and Sirius
Animation Inc., the Company owns all the rights in regard to the exploitation
and ownership to the screenplay titled "The Elves & The Shoemaker", the first in
a multi-series three dimensional animated television program. The screenplay
was transferred to the Sirius Animation Inc. at Mr. Belyea's historical cost of
zero.
The Company has no other interests in property except as disclosed as above.
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Page 5
Item 4. Security Ownership of Certain Beneficial Owners and Management
As of July 17, 2000, the were no shareholders known to the Company to be the
beneficial owner of more than five percent of any class of the Company's shares.
Security Ownership of Management
The following table sets forth certain information with respect to the
beneficial ownership of each officer and director, and of all directors and
executive officers as a group as of July 17, 2000.
Name and Address Total Amount of Common Stock Percent
Of Beneficial Beneficial Stock Options of Class1
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Clifford Wilkins 0 0 0 *
10 Kestral Close
Ewshot, Farnham
Surrey, UK
Byron P. Loewen 0 0 0 *
1004-1708 Dolphin Avenue,
Kelowna, BC
Canada
John Lagadin 50,000 50,000 0 *
Suite 750,
715-5th Avenue SW,
Calgary, AB
Canada
Richard Smith 0 0 0 *
Henville Building
Main Street, Charlestown,
Nevis, West Indies
Maurice Minivielle 0 0 0 *
59 Edcath Road NW,
Calgary, AB
Canada
Rod Reum 7,000 7,000 0 *
P.O. Box 10
140 Arlayne Road
Kaleden, BC
Canada
All officers and directors (as a group of six persons) *
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Page 6
Notes:
1 As of July 17, 2000 there were 16,857,567 common shares of the Company's
stock issued and outstanding.
* Indicates less than 1% Ownership.
Item 5. Directors, Executive Officers, Promoters and Control Persons
The following table identifies the Company's directors and executive officers
and certain other key employees as of July 17, 2000. Directors are elected at
the Company's annual meeting of stockholders and hold office until their
successors are elected and qualified. The Company's officers are appointed
annually by the Board of Directors and serve at the pleasure of the Board. The
date of the Company's 1999 Annual General Meeting of Stockholders has not yet
been set.
Name Position Held Term as Director Expires
---- ------------- ------------------------
Clifford Wilkins Chairman 2000
Byron P. Loewen C.E.O./Director/Secretary 2000
Richard Smith Director
John Lagadin Director 2000
Maurice Minvielle Executive Vice-President 2000
Rod Reum Chief Financial Officer
A. Ross Belyea Key Employee/President -
Sirius Animation
Clifford Wilkins has been Chairman of the Company's Board of Directors since
February 8, 2000. Mr. Wilkins, a British citizen, has over 35 years' experience
in commercial and international banking. Since 1996, Mr. Wilkins has been the
Managing Director of the First Nevisian Group, of the West Indies.
Byron P. Loewen has been the Secretary and Director of the Company since
February 10, 2000. Mr. Loewen was appointed to the position of Chief Executive
Officer of the Company on May 23, 2000. For the past five years Mr. Loewen has
been the President and Director of Autumn Industries Inc. a public company
listed on the Canadian Venture Exchange. Based in Kelowna, British Columbia,
Autumn Industries Inc. builds and operates small-scale electrical generating
facilities using flare gas and biomass fuels.
Richard Smith has been a Director of the Company since February 10, 2000. Mr.
Smith, a British citizen, is a member of the Securities Institute of London,
England and a member of the London Stock Exchange since 1976. Since 1995, Mr.
Smith has been a partner of First Nevisian Stockbrokers Ltd., a full-service
brokerage firm based in the West Indies.
John Lagadin has been a Director of the Company since February 10, 2000. Mr.
Lagadin has over 30 years' experience in the oil industry. From 1986 to 1996,
Mr. Lagadin was the President and CEO of Direct Energy Marketing Limited, the
largest independent marketer of natural gas in Canada. Since 1996, Mr. Lagadin
has been an independent businessman providing consulting services to the oil
sector in Canada and the United States through his company GeoScope Exploration
Technologies, Inc. Mr. Lagadin is the President and Director of GeoScope
Exploration Technologies, Inc.
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Page 7
Maurice Minvielle has been the Executive Vice-President of the Company since
March 27, 2000. From 1996 to 1999 Mr. Minvielle was a Finance Team Leader for
Schlumberger Ltd. based in Paris, France. From 1995 to 1996, Mr. Minvielle was
the Vice-President of Finance for Intera Information Technologies Ltd. of
Lakewood, Colorado. Mr. Minvielle is a Chartered Accountant and holds a
Bachelor of Science degree in economics and a Master of Business Administration
degree from the University of Western Ontario.
Rod Reum has been the Chief Financial Officer of the Company since June 1, 2000.
For the past five years, Mr. Reum has been the co-owner and CEO of Reum
Contracting Ltd., a heavy equipment contractor specializing in subdivision
development, road construction and pipeline installation. Mr. Reum is also the
President of Belt Rebuilders Inc., the only Canadian-based rebuilder of heavy
industrial conveyor belting used in the mining, aggregate and forest industries.
Mr. Reum has a Bachelor of Commerce degree from the University of Alberta and is
a Certified General Accountant.
Ross Belyea has been the President of Sirius Animation since February 10, 2000.
Mr. Belyea is a founder of Sirius Animation and the creator of "The Elf King"
animated series. Prior to starting Sirius Animation in 1998, Mr. Belyea worked
as an animator and special effects supervisor on a number of projects for
Vancouver-based Motion Works. Mr. Belyea is a graduate of the British Columbia
Institute of Technology with a double diploma in Administrative Management and
Computer Systems Management. In addition, in 1995, Mr. Belyea finished Advanced
Animation Level III, the highest level of Alias software training.
Mr. Loewen, Mr. Minvielle, Mr. Reum and Mr. Belyea all work for the Company on a
fulltime basis. All other directors of the Company work on a part-time,
advisory basis for the Company and are not compensated for their work.
Family Relationships
There are no family relationships among directors, executive officers, or
persons nominated or chosen by the Company to become directors or executive
officers.
Involvement in Certain Legal Proceedings
None of the officers, directors or key employees has been involved in any legal
proceedings during the past five years that are material to an evaluation of the
ability or integrity of any director, officer or key employee of the Company.
Item 6. Executive Compensation
The following table sets forth compensation paid or accrued by the Company for
fiscal 1999 and for the period to the end of fiscal 2000, to the Company's Chief
Executive Officer and shows compensation paid to all other officers of the
Company. No Directors of the Company receive compensation for their services.
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Page 8
Summary Compensation Table
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Annual Compensation
--------------------------------------------------------------------------------
Name and Other Annual LTIP
Principal Fiscal Year Annual Salary Bonus Compensation Payouts
Position Ended ($) ($) ($) ($)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Kevan Garner1 12/31/00 0 0 0 0
--------------------------------------------------------------------------------
President 12/31/99 0 0 0 0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Carson Walker2
--------------------------------------------------------------------------------
Secretary/
Treasurer 12/31/00 0 0 0 0
--------------------------------------------------------------------------------
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12/31/99 0 0 0 0
--------------------------------------------------------------------------------
Byron Loewen3 12/31/00 0 0 0 0
--------------------------------------------------------------------------------
CEO/Secretary
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Maurice
Minvielle4 12/31/00 100,000 0 0 0
--------------------------------------------------------------------------------
Executive Vice-
President
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Rod Reum5 12/31/00 68,000 0 0 0
--------------------------------------------------------------------------------
Chief Financial
Officer
--------------------------------------------------------------------------------
Notes:
1 Kevan Garner served as the Company's President from June 9, 1997 to
February 8, 2000.
2 Carson Walker served as the Company's Secretary and Treasurer from November
27, 1998 to February 8, 2000.
3 Byron Loewen has served as the Company's Secretary since February 10, 2000
and the Company's CEO since May 27, 2000. Mr. Loewen receives no compensation
from the Company for his services.
4 Maurice Minvielle has served as the Company's Executive Vice-President since
March 27, 2000. Mr. Minvielle receives annual salary of $100,000.
5 Rod Reum has served as the Company's Chief Financial Officer since June 1,
2000. Mr. Reum receives annual salary of approximately $68,000 ($100,000
Canadian dollars).
Options Outstanding
The Company has had three stock option plans that provide for the granting of
stock options to officers and key employees. No shares have been exercised
under any of the plans. All three Stock Option Plans expired on December 31,
1999.
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Page 9
Item 7. Certain Relationships and Related Transactions
On February 7, 2000 the Company entered into an agreement to acquire 100% of the
outstanding shares of a private company, RedCell Canada Inc. from RedCell Canada
Inc.'s four corporate shareholders. Under the terms of the agreement, the
Company agreed to issue common shares in the stock of the Company in the amount
of 30,000 common shares of the Company for every one percent of the shares held
in RedCell Canada Inc. Additionally, the Company agreed to purchase all
outstanding shareholder loans of RedCell Canada Inc. by the issuance of warrants
for the purchase of the Company's common stock having an exercise price of
$4.50. As of July 17, 2000, the purchase of RedCell Canada Inc. has not closed
as it was a term of the agreement that the Company would be a fully reporting
issuer.
One of the Company's directors, Mr. John Lagadin, and one of the Company's
officer's, Mr. Rod Reum, have a direct interest in the RedCell purchase due to
their shareholdings in two of RedCell Canada Inc.'s corporate shareholders.
Pursuant to the terms of the February 7, 2000 agreement, Mr. Reum will directly
or indirectly receive 63,750 shares of the Company. Mr. Lagadin will receive
111,989 shares of the Company.
On March 31, 2000, the Company entered into a loan agreement with First Nevisian
Holdings Ltd. ("First Nevisian") a venture capital firm. The loan provides up
to $3,000,000 of financing to the Company for ongoing operations. As additional
compensation for the loan, the Company issued a convertible debenture to First
Nevisian Holdings Ltd. whereby First Nevisian Holdings Ltd. may, at its sole
option, elect to convert any or all amount of principal and interest outstanding
on the loan for common shares of the Company at a conversion price of $2.00 up
until March 31, 2003. Mr. Clifford Wilkins, the Company's Chairman, is also the
Managing Director of the First Nevisian Group, a related party to First Nevisian
Holdings Ltd.
There are no other relationships with any person under consideration for
nomination as a director or appointment as an executive officer of the Company.
Item 8. Description of Securities.
The Company's articles of incorporation currently provide that the Company is
authorized to issue 50,000,000 shares of common stock with a par value of $0.001
per share and 1,000,000 preferred stock with a par value of $0.10 per share. As
of July 17, 2000, 16,857,567 common shares were outstanding. As of July 17,
2000, no preferred shares were outstanding.
Common Stock
Each holder of record of the Company's common stock is entitled to one vote per
share in the election of the Company's directors and all other matters submitted
to the Company's stockholders for a vote. Holders of the Company's common stock
are also entitled to share ratably in all dividends when, as, and if declared by
the Company's Board of Directors from funds legally available therefore, and to
share ratably in all assets available for distribution to the Company's
stockholders upon liquidation or dissolution, subject in both cases to any
preference that may be applicable to any outstanding preferred stock. There are
no preemptive rights to subscribe to any of the Company's securities, and no
conversion rights or sinking fund pro-visions applicable to the common stock.
Neither the Company's articles of incorporation nor its bylaws provide for
cumulative voting. Accordingly, persons who own or control a majority of the
shares outstanding may elect all of the Company's directors, and persons owning
less than a majority could be foreclosed from electing any.
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Page 10
Preferred Stock
On December 4, 1997, the Company amended its articles of incorporation to
increase its authorized capital by 1,000,000 preferred shares at a par value of
$0.10 per share. As of July 17, 2000, the Company has issued no preferred
shares. The articles and bylaws of the Company do not establish any special
restrictions or rights of the preference shares.
Debt Securities
On March 31, 2000, the Company entered into a loan agreement with First Nevisian
Holdings Ltd. a venture capital firm. Under the terms of the loan agreement,
First Nevisian Holdings Ltd. undertakes to advance up to $3,000,000 with
interest accruing annually at a rate of 10% and payable quarterly. As
additional consideration for the loan, the Company has issued a convertible
debenture allowing First Nevisian Holdings Ltd. to convert the outstanding
principal and interest into common shares of the capital stock of the Company at
a conversion price of $2.00 per share. Under the terms of the convertible
debenture, First Nevisian Holdings Ltd. may convert, at its sole option, any or
all of the principal and interest outstanding on the loan up until March 31,
2003.
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Page 11
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters
Market Information
Currently, the Company's shares are quoted on the National Quotation Bureau,
Inc.'s "Pink Sheets" under the symbol of "REDME". Formerly, the Company's
shares were quoted on the NASD OTC Bulletin Board under the symbol "REDM". After
meeting its reporting requirements under the Exchange Act of 1934, the Company
once again intends to have its shares quoted on the OTC Bulletin Board.
IPO Capital Corp. of Vancouver, British Columbia provided the following price
information.
High and Low Sales (Bid) Prices for each quarter within the last two fiscal
years.*1
HIGH LOW
(Price per Share $) (Price per Share $)
March 1998 84 3/8 15 5/9
June 1998 50 18 3/4
September 1998 37 8
December 1998 13 1/2
March 1999 2 1/4
June 1999 4 1
September 1999 1 13/16 17/32
December 1999 1 7/16 5/16
March 2000 26/32 5/32
June 2000 0.48 0.18
* The quotations reflect inter-dealer prices, without mark-up, mark-down or
commission and may not represent actual transactions.
1 Prices reflect reverse stock split (100:1) that occurred on January 25,
1999.
Holders
The number of record holders of the Company's common stock as of July 17, 2000
is 114.
Dividends
The Company has never paid cash dividends on its common stock and does not
intend to do so in the foreseeable future. The Company currently intends to
retain any earnings for the operation and development of its business.
Transfer Agent
The Company's transfer agent is Holladay Stock Transfer, Inc. 2939 North 67th
Place, Unit C, Scottsdale, Arizona 85251, U.S.A.
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Page 12
Item 2. Legal Proceedings
As of July 17, 2000, the following lawsuits and claims have been made against
the Company and/or subsidiaries of the Company:
Northwest Petroleum, Inc. v. Kevan Garner, Michelle Garner, Jack Purdy, Kern
Country Oil & Gas Inc., and Redmond Capital Corporation, individually and
collectively carrying on business as "Indigo Communications" and "Kern County
Oil and Gas" and Redmond Capital Corp."(Supreme Court of British Columbia,
Vancouver Registry, action # C996409, commenced December 6, 1999):
Northwest Petroleum, Inc. ("Northwest"), a California corporation, is the holder
of certain oil and gas properties in the State of California. In September of
1999, Mr. Kevan Garner and Mr. Jack Purdy signed a letter of intent whereby the
defendants would fund the drilling of certain oil properties (the "Chowchilla
Property") owned by Northwest. On September 29, 1999, Mr. Purdy delivered a wire
transfer to Northwest with the amount of $8,000 representing a first payment
toward the drilling of a well on the Chowchilla Property. On October 19, 1999,
Northwest and Kern County Oil and Gas Inc. ("Kern") entered into an operating
agreement whereby Northwest agreed to drill the Chowchilla Property and Kern
agreed to pay $143,000 of the costs of drilling. Concurrent with the signing of
the operating agreement, Kern arranged for payment to Northwest of $65,000
toward the drilling. On October 29, 1999, Kern provided a check to Northwest in
the amount of $70,000 representing the balance of funds payable under the
operating agreement. On November 1, 1999, Northwest commenced drilling the
Chowchilla Property. On November 5, 1999, Northwest advised the Mr. Garner and
Mr. Purdy that the drilling was complete and that that the well was
non-producing. On November 22, 1999, Northwest was advised by its bank Wells
Fargo that a stop payment order had been placed on the Kern's check and that it
could not be negotiated.
Northwest has alleged that the defendants are partners or members of a joint
venture or common enterprise with a view to a profit and has sued on the debt of
a note, breach of contract, misrepresentation and inducement of a breach of
contract. Northwest is seeking payment of the $70,000, interest on the unpaid
$70,000 at the contractual rate of 12% per annum from October 29, 1999 to the
date of judgement ($6,006 as of July 17, 2000), its legal costs and unspecified
punitive damages.
On January 5, 2000, the defendants collectively filed a statement of defence
denying Northwest's allegations in the statement of claim. It is the view of
management and the Company's legal counsel that the Company is not a proper
party to the lawsuit. At the time the operating agreement with Northwest was
entered into, Mr. Garner was a director and president of the Company. Mr.
Garner, however, was not acting in his capacity as an officer or director of the
Company in regard to Northwest. As such, the Company has not accrued any amount
in regard to the action by Northwest.
Item 3. Changes in and Disagreements with Accountants
From inception to July 17, 2000, the Company's Auditors were Clancy and Co.,
P.L.L.C. of 1300 E. Missouri, Ste. B-200, Phoenix, Arizona 85014. Such firm's
audited financial statements for the period from inception to December 31, 1999,
did not contain any adverse opinion or disclaimer, nor were there any
disagreements between them and the management of the Company.
<PAGE>
Page 13
Item 4. Recent Sales of Unregistered Securities
From inception through July 17, 2000, the Company has issued and/or sold the
following unregistered securities. Such transactions were exempt from
registration by virtue of Rule 504 of Regulation D promulgated under the
Securities Act of 1933. Such transactions were also exempt from registration by
virtue of the fact that they did not involve a public offering of securities
and/or occurred outside of the United States.
Note that the Company effected a reverse stock split of 100:1 on January 25,
1999. Under column "Number of Shares" numbers in brackets indicates the current
equivalent number of shares.
==================================================================
Number of Shares Date of Issue Price Per Share
==================================================================
3,000,000 December 1, 1996 Issued for Services
(30,000) at $.001 per share
------------------------------------------------------------------
200,000 December 31, 1996 Issued for Cash at
(2,000) $0.25
------------------------------------------------------------------
6,600,000 May 1997 Issued for Services
(66,000) at $0.05 per share
------------------------------------------------------------------
800,000 August 1997 Issued for Cash at
(8,000) $0.40 per share
------------------------------------------------------------------
550,000 August 1997 Issued for Cash at
(5,500) $0.60 per share
------------------------------------------------------------------
260,000 September 19, 1997 Issued for Services
(2,600) at $0.80 per share
------------------------------------------------------------------
175,000 May 12, 1998 Issued for Services
(1,750) at $0.20 per share
------------------------------------------------------------------
1,395,000 May 12, 1998 Issued to convert
(13,950) debt to equity at
$0.20 per share
------------------------------------------------------------------
70,000 August 19, 1998 Issued for Services
(700) at $0.50 per share
------------------------------------------------------------------
493,125 August 24, 1998 Issued to convert
(4,931) debt to equity at
$0.20 per share
------------------------------------------------------------------
<PAGE>
Page 14
------------------------------------------------------------------
125,000 January 25, 1999 Issued as deposit on
contract at $1.00
per share
------------------------------------------------------------------
5,000,000 February 17, 1999 Issued for Cash at
$0.01 per share
------------------------------------------------------------------
250,000 April 7, 1999 Issued for Cash at
$0.01 per share
------------------------------------------------------------------
5,250,000 April 7, 1999 Issued pursuant to
the conversion of
warrants exercisable
at $0.02 per share
------------------------------------------------------------------
113,000 April 19, 1999 Issued for Services
at $1.00 per share
------------------------------------------------------------------
300,000 April 19, 1999 Issued for Services
at $1.00 per share
------------------------------------------------------------------
5,000 May 10, 1999 Issued for Services
at $3.00 per share
------------------------------------------------------------------
21,000 June 14, 1999 Issued for Services
at $1.00 per share
------------------------------------------------------------------
50,000 June 28, 1999 Issued for Services
at $0.67 per share
------------------------------------------------------------------
186,088 July 1, 1999 Issued in exchange
for acquisition of
Sirius Animation Inc.
------------------------------------------------------------------
2,197,045 November 22, 1999 Issued and placed
in trust in regard
to agreement to
acquire RedCell
Canada Inc.
------------------------------------------------------------------
3,250,000 November 30, 1999 Issued as collateral
on contract with
Galaxy Motor Sports
at $1.00 per share
------------------------------------------------------------------
Item 5. Indemnification of Directors and Officers
Section 607.0850 of the Florida Business Corporation Act allows the Company to
indemnify any person who was or is a party to any proceeding (other than an
action by, or in the right of, the corporation), by reason of the fact that he
or she is or was a director, officer, employee or agent of the corporation or is
or was serving at the request of the corporation as director, officer, employee,
or agent of another corporation, partnership, joint venture, trust or other
enterprise against liability incurred in connection with such proceeding,
including any appeal thereof, if he or she acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
<PAGE>
Page 15
The Company's bylaws require that the Company indemnify every person who is or
was a director or officer of the Corporation to fullest extent permitted or
authorized by current or future legislation or judicial or administrative
decision against all fines, liabilities, costs and expenses, including
attorneys' fees, arising out of his or her status as a director, officer, agent,
employee or representative of the Company.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers, and controlling persons of the Company
pursuant to the foregoing pro-visions or otherwise, the Company has been advised
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in such act, and is
therefore unenforceable.
Finally, the Company's bylaws authorizes the Company to maintain insurance, at
its expense, to protect itself and all officers and directors against fines,
liabilities, costs and expenses, whether or not the Company would have the legal
power to indemnify them directly against such liability. As of July 17, 2000,
the Company maintained no such insurance coverage.
<PAGE>
Page 16
PART F/S
The following financial statements are filed with this Form 10-SB:
Page No.
--------
Accountant's Report 17
Consolidated Financial Statements of Redmond Capital Corp. and Subsidiaries 18
Consolidated Balance Sheet as of December 31, 1999 and December 31, 1998 18
Consolidated Statements of Operations for the Years Ended December 31, 1999,
1998 and the Period From Inception (September 12, 1996) to December 31,
1999 19
Consolidated Statement of Stockholders' Equity for the Period From Inception
(September 12, 1996) to December 31, 1999 20
Consolidated Statement of Cash Flows for the Years Ended December 31, 1999
and 1998, and for the Period From Inception (September 12, 1996) to
December 31, 1999 26
Notes to the Consolidated Financial Statements 28
<PAGE>
Page 17
INDEPENDENT AUDITORS' REPORT
Board of Directors
Redmond Capital Corp.
Vancouver, B.C. V6E 2V1
We have audited the accompanying consolidated balance sheet of Redmond Capital
Corp. (formerly Minex Minerals, Inc.) (A Development Stage Company), (the
Company), as of December 31, 1999 and 1998, and the related consolidated
statement of operations, changes in stockholders' equity, and cash flows for
the years then ended, and for the period from inception (September 12, 1996) to
December 31, 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company at December 31, 1999 and 1998, and the results of their consolidated
operations and their consolidated cash flows for the periods indicated, 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 discussed in Note 1 to the
financial statements, the Company is a development stage company as defined in
Financial Accounting Standards Board Statement No. 7. The Company has incurred
significant net losses in recent years. The Company is devoting substantially
all of its present efforts in establishing a new business and planned principal
operations have not commenced. These factors raise substantial doubt about its
ability to continue as a going concern. These financial statements do not
include any adjustments that might result form the outcome of this uncertainty.
By: /s/ Clancy and Co., P.L.L.C.
Phoenix, Arizona
April 25, 2000
<PAGE>
Page 18
REDMOND CAPITAL CORP.
(formerly Minex Minerals, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999 and 1998
ASSETS 1999 1998
---- ----
Current Assets
Cash $ 0 $ 3,647
Inventories (Note 3) 255,627 0
Due From Related Parties (Note 6) 0 128,265
Total Current Assets 255,627 131,912
----------------------------
Property and Equipment, Net (Note 4) 115,666 9,337
Other Assets
Investments - Oil and Gas Properties (Note 6) 0 163,733
----------------------------
Total Assets $ 371,293 $ 304,982
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Checks Issued in Excess of Cash $ 829 $ 0
Accounts Payable (Note 5) 263,610 150,000
Capital Lease Obligation, Current Portion
(Note 7) 23,924 0
Due to Related Parties (Note 6) 414,939 0
Total Current Liabilities 703,302 150,000
----------------------------
Long-Term Liabilities
Capital Lease Obligation, Noncurrent Portion
(Note 7) 53,639 0
----------------------------
Total Liabilities 756,941 150,000
Stockholders' Equity
Common Stock: $0.001 Par Value, 50,000,000
Authorized, and Outstanding, 11,410,512
and 135,434, respectively 11,411 136
Additional Paid In Capital 2,690,174 1,688,489
Loss Accumulated During The Development Stage (3,025,111) (1,533,643)
----------------------------
Total Stockholders' Equity (A Deficit) (385,648) 154,982
----------------------------
Total Liabilities and Stockholders' Equity $ 371,293 $ 304,982
========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 19
REDMOND CAPITAL CORP.
(formerly Minex Minerals, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998, AND FOR THE PERIOD
FROM INCEPTION (SEPTEMBER 12, 1996) TO DECEMBER 31, 1999
Inception
(September
Year Ended Year Ended 12, 1996) To
December 31 December 31, December 31,
1999 1998 1999
---- ---- ----
Revenues $ 0 $ 0 $ 0
Expenses
General and Administrative (1,180,594) (489,064) (2,347,174)
----------- ---------- ----------
Operating Loss (1,180,594) (489,064) (2,347,174)
Other Income (Expense)
Interest Income 0 0 2,204
Write-Off Goodwill of Subsidiary
Acquired (185,874) 0 (185,874)
Write-Down of Mining Claims (Note 5) 0 (369,267) (369,267)
Write-Off of Deposit on Contract
(Note 4) (125,000) 0 (125,000)
----------- ---------- ----------
Total Other Income (Expense) (310,874) (369,267) (677,937)
----------- ---------- ----------
Net Loss Available to Common
Stockholders $(1,491,468) $ (858,331) $(3,025,111)
========== ========== ==========
Basic Loss Per Common Share $ (0.17) $ (6.87) $ (0.34)
========== ========== ==========
Basic Weighted Average Common Shares
Outstanding 8,980,895 124,994 8,980,895
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 20
REDMOND CAPITAL CORP.
(formerly Minex Minerals, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (SEPTEMBER 12, 1996) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Loss
Accumulated Accumulated
Preferred Preferred Common Common Additional During the Other
Stock Stock Stock Stock Paid In Development Comprehensive
Shares Amount Shares Amount Capital Stage Income/(Loss) Total
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of Common
Stock For Services
Rendered as of December
1, 1996 30,000 $ 30 $ 2,970 $ $ 3,000
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common
Stock For Cash
Through December
31, 1996 2,000 2 49,998 50,000
----------------------------------------------------------------------------------------------------------------------------------
Loss From Inception
(September 12, 1996)
Through December 31,
1996 (2,985) (2,985)
----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31,
1996 0 0 32,000 32 52,968 (2,985) 0 50,015
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common
Stock for Services
Per Offering Memorandum
Dated April 19,
1997, at $0.05 Per Share 66,000 66 329,934 330,000
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 21
REDMOND CAPITAL CORP.
(formerly Minex Minerals, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (SEPTEMBER 12, 1996) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Loss
Accumulated Accumulated
Preferred Preferred Common Common Additional During the Other
Stock Stock Stock Stock Paid In Development Comprehensive
Shares Amount Shares Amount Capital Stage Income/(Loss) Total
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of Common
Stock for Services
Per Offering Memorandum
Dated August 19,
1997, at $0.40 Per Share 8,000 8 319,992 320,000
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common
Stock for Services
Per Offering Memorandum
Dated August 28,
1997, at $0.60 Per Share 5,500 6 329,994 330,000
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common Stock
in Exchange for Partial
Payment of Oil and Gas
Properties on September
19, 1997 2,500 2 199,998 200,000
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common Stock
for Services Rendered as
Finder's Fee For Oil and
Gas Properties on September
19, 1997 100 0 8,000 8,000
----------------------------------------------------------------------------------------------------------------------------------
Fractional Shares
----------------------------------------------------------------------------------------------------------------------------------
Loss, Year Ended December
31, 1997 (672,327) (672,327)
----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31,
1997 0 0 114,100 114 1,240,886 (675,312) 0 565,688
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 22
REDMOND CAPITAL CORP.
(formerly Minex Minerals, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (SEPTEMBER 12, 1996) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Loss
Accumulated Accumulated
Preferred Preferred Common Common Additional During the Other
Stock Stock Stock Stock Paid In Development Comprehensive
Shares Amount Shares Amount Capital Stage Income/(Loss) Total
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Issuance of Common
Stock for Services
Rendered at $0.20
Per Share, May 12,
1998 1,750 2 34,998 35,000
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common
Stock for Services
Per Offering Memorandum,
at $0.05 Per
Share, May 12, 1998 8,120 8 162,392 162,400
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common
Stock for Services
Per Offering Memorandum,
at $0.05 Per
Share, May 12, 1998 5,830 6 116,594 116,600
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common
Stock for Services
Rendered at $0.50
Per Share, August 19,
1998 700 1 34,999 35,000
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 23
REDMOND CAPITAL CORP.
(formerly Minex Minerals, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (SEPTEMBER 12, 1996) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Loss
Accumulated Accumulated
Preferred Preferred Common Common Additional During the Other
Stock Stock Stock Stock Paid In Development Comprehensive
Shares Amount Shares Amount Capital Stage Income/(Loss) Total
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of Common
Stock for Services
Per Offering Memorandum,
at $0.05 Per
Share, August 24, 1998 4,931 5 98,620 98,625
----------------------------------------------------------------------------------------------------------------------------------
Fractional Shares 3
----------------------------------------------------------------------------------------------------------------------------------
Loss, Year Ended
December 31, 1998 (858,331) (858,331)
----------------------------------------------------------------------------------------------------------------------------------
Balance, December
31, 1998 0 0 135,434 136 1,688,489 (1,533,643) 0 154,982
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common
Stock as Deposit on
Contract at $1.00
Per Share, January 25,
1999 125,000 125 124,875 125,000
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common
Stock Under Private
Placement Memorandum for
Cash at $0.01
Per Share, February
17, 1999 5,000,000 5,000 45,000 50,000
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 24
REDMOND CAPITAL CORP.
(formerly Minex Minerals, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (SEPTEMBER 12, 1996) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Loss
Accumulated Accumulated
Preferred Preferred Common Common Additional During the Other
Stock Stock Stock Stock Paid In Development Comprehensive
Shares Amount Shares Amount Capital Stage Income/(Loss) Total
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Issuance of Common
Stock for Services
Rendered Under Private
Placement Memorandum at
$0.01 Per Share, April
7, 1999 250,000 250 2,250 2,500
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common
Stock for Conversion
of Warrants for Services
Rendered Under Private
Placement Memorandum at
$0.02 Per Share, April
7, 1999 5,250,000 5,250 99,750 105,000
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common
Stock for Services
Rendered at $1.00 Per
Share, April 19,
1999 388,000 388 387,612 388,000
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common
Stock for Services
Rendered at $1.00 Per
Share, May 10, 1999 5,000 5 14,995 15,000
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 25
REDMOND CAPITAL CORP.
(formerly Minex Minerals, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (SEPTEMBER 12, 1996) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Loss
Accumulated Accumulated
Preferred Preferred Common Common Additional During the Other
Stock Stock Stock Stock Paid In Development Comprehensive
Shares Amount Shares Amount Capital Stage Income/(Loss) Total
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of Common
Stock for Services
Rendered at $1.00
Per Share, June
14, 1999 21,000 21 20,979 21,000
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common
Stock for Services
Rendered, at $0.67
Per Share, June 18,
1999 50,000 50 33,450 33,500
----------------------------------------------------------------------------------------------------------------------------------
Issuance of Common
Stock in Exchange for
100% Acquisition of
Subsidiary, July 1,
1999 186,088 186 272,774 272,960
----------------------------------------------------------------------------------------------------------------------------------
Other Comprehensive
Income (Loss):
Translation Adjustments (62,122) (62,122)
----------------------------------------------------------------------------------------------------------------------------------
Loss, Year Ended
December 31, 1999 (1,491,468) (1,491,468)
----------------------------------------------------------------------------------------------------------------------------------
Balance, December
31, 1999 0 $ 0 11,410,522 $ 11,411 $2,690,174 $(3,025,111) $ (62,122) $(385,648)
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 26
REDMOND CAPITAL CORP.
(formerly Minex Minerals, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998, AND FOR THE
PERIOD FROM INCEPTION (SEPTEMBER 12, 1996) TO DECEMBER 31, 1999
Inception (September 12, 1996) To December 31, 1999
Inception
(September
Year Ended Year Ended 12, 1996) To
December 31 December 31, December 31,
1999 1998 1999
---- ---- ----
Cash Flows From Operating
Activities
Net Loss $(1,491,468) $ (858,331) $(3,025,111)
Common Stock Issued for Services 565,000 164,865 1,062,865
Common Stock Issued for 100%
Acquisition of Subsidiary 272,960 0 272,960
Depreciation and Amortization 16,158 2,352 20,481
Write-Off of Deposit on Contract 125,000 0 125,000
Write-Down of Oil and Gas Properties 0 369,267 369,267
Translation Adjustments (62,122) 0 (62,122)
Adjustments to Reconcile Net
Loss to Net Cash Provided By
(Used In) Operating Activities
Changes in Assets and Liabilities
(Increase) Decrease in Inventories (255,627) 0 (255,627)
Increase (Decrease) in Accounts
Payable 113,610 0 113,610
Total Adjustments 774,979 536,484 1,646,435
-----------------------------------------
Net Cash Provided By (Used In)
Operating Activities (716,489) (321,847) (1,378,677)
-----------------------------------------
Cash Flows From Investing Activities
Acquisition of Property and
Equipment (40,713) (3,801) (54,373)
Proceeds From the Sale of Oil
and Gas Properties 163,733 175,000 338,733
Purchase of Oil and Gas Properties 0 0 (350,000)
Net Cash Flows Provided By (Used In)
Investing Activities 123,020 171,199 (65,640)
Cash Flows From Financing Activities
Checks Issued in Excess of Cash 829 (200) 829
Principle Payments On Capital
Lease Obligations (4,212) 0 (4,212)
Proceeds From Sale of Common Stock 50,000 36,202 786,202
Net Advances From (To) Related Parties 543,205 118,293 661,498
-----------------------------------------
Net Cash Provided By Financing
Activities 589,822 154,295 1,444,317
-----------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 27
REDMOND CAPITAL CORP.
(formerly Minex Minerals, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998, AND FOR THE
PERIOD FROM INCEPTION (SEPTEMBER 12, 1996) TO DECEMBER 31, 1999
Inception
(September
Year Ended Year Ended 12, 1996) To
December 31 December 31, December 31,
1999 1998 1999
---- ---- ----
Increase (Decrease) in Cash and
Cash Equivalents (3,647) 3,647 0
Cash and Cash Equivalents,
Beginning of Year 3,647 0 0
-----------------------------------------
Cash and Cash Equivalents, End of Year $ 0 $ 3,647 $ 0
========= ========= =========
Supplemental Information
Cash paid for:
Interest $ 331 $ 0 $ 331
========= ========= =========
Income Taxes $ 0 $ 3,647 $ 0
========= ========= =========
Noncash Supplemental Information
Issuance of Common Stock For
Services Rendered $ 565,000 $ 164,865 $1,062,865
========= ========= =========
Issuance of Common Stock For
Conversion of Debt $ 0 $ 246,558 $ 246,558
========= ========= =========
Issuance of Common Stock
in Exchange for Partial
Payment on Oil and Gas
Properties (Services Rendered) $ 0 $ 0 $ 208,000
========= ========= =========
Issuance of Common Stock in
Exchange for Partial Payment
on Oil and Gas
Properties (Accounts Payable) $ 0 $ 0 $ 150,000
========= ========= =========
Issuance of Common Stock as
a Deposit on Contract $ 125,000 $ 0 $ 125,000
========= ========= =========
Write Down of Oil and
Gas Properties $ 0 $ 369,267 $ 369,267
========= ========= =========
Write Off of Deposit on
Contract $ 125,000 $ 0 $ 125,000
========= ========= =========
Assets Acquired Under Capital
Lease Obligations $ 81,775 $ 0 $ 81,775
========= ========= =========
Common Stock Issued for 100%
Acquisition of Subsidiary $ 272,960 $ 0 $ 272,960
========= ========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 28
REDMOND CAPITAL CORP.
(formerly Minex Minerals, Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1 - ORGANIZATION
------------
Redmond Capital Corp. (formerly Minex Minerals, Inc.) (the Company) was
incorporated under the laws of the State of Florida on September 12, 1996, with
an authorized capital of 50,000,000 shares of common stock with a par value of
$0.001 per share. On December 4, 1997, the Company amended its articles of
incorporation to increase its authorized capital by 1,000,000 preferred shares
at a par value of $0.10 per share. On January 25, 1999, the Board of Directors
approved a reverse split of 100:1. On February 3, 1999, the Company amended its
articles of incorporation to change its name to Redmond Capital Corp. All per
share and per share information have been
adjusted retroactively to reflect stock splits and changes in par value.
On December 1, 1996, the Company issued 3,000,000 (30,000 current equivalent)
shares of common stock for services rendered at $0.001, or $3,000.
On December 31, 1996, the Company completed an Offering Memorandum for 200,000
(2,000 current equivalent) shares of common stock for cash at $0.25 per share,
or $50,000.
During May 1997, the Company completed an Offering Memorandum for 6,600,000
(66,000 current equivalent) shares of common stock for services at $0.05 per
share, or $330,000.
During August 1997, the Company completed an Offering Memorandum for 800,000
(8,000 current equivalent) shares of common stock for cash at $0.40 per share,
or $320,000.
During August 1997, the Company completed an Offering Memorandum for 550,000
(5,500 current equivalent) shares of common stock for cash at $0.60 per share,
or $330,000.
On September 19, 1997, the Company issued 260,000 (2,600 current equivalent)
shares of common stock for services at $0.80 per share, or $208,000.
On May 12, 1998, the Company issued 175,000 (1,750 current equivalent) shares
of common stock for services at $0.20 per share, or $35,000.
On May 12, 1998, the Company completed an Offering Memorandum for 1,395,000
(13,950 current equivalent) shares of common stock for the conversion of debt to
equity at $0.20 per share, or $279,000.
On August 19, 1998, the Company issued 70,000 (700 current equivalent) shares of
common stock for services at $0.50 per share, or $35,000.
<PAGE>
Page 29
NOTE 1 - ORGANIZATION (CONTINUED)
------------------------
On August 24, 1998, the Company completed an Offering Memorandum for 493,125
(4,931 current equivalent) shares of common stock for the conversion of debt to
equity at $0.20 per share, or $98,625.
At December 31, 1998, fractional shares of three (3) resulted from the rollback
of 100:1.
On January 25, 1999, the Company issued 125,000 shares of common stock as a
deposit on a contract for $1.00 per share, or $125,000. The contract has been
canceled and it is uncertain at this time if the shares will be returned.
On February 17, 1999, the Company, through a Private Placement Memorandum,
issued 5,000,000 shares of common stock for cash at $0.01 per share, or $50,000.
On April 7, 1999, the Company completed an Private Placement Memorandum and
issued 250,000 shares of common stock for services at $0.01 per share, or
$2,500, and converted 5,250,000 warrants to common stock at $.02 per share, or
$105,000.
On April 19, 1999, the Company issued 113,000 shares of common stock for
services at $1.00 per share, or $113,000.
On April 19, 1999, the Company issued 300,000 shares of common stock for
services at $1.00 per share, or $300,000.
On May 10, 1999, the Company issued 5,000 shares of common stock for services at
$3.00 per share, or $15,000.
On June 14, 1999, the Company issued 21,000 shares of common stock for services
at $1.00 per share, or $21,000.
On June 28, 1999, the Company issued 50,000 shares of common stock for services
at $0.67 per share, or $33,500.
On July 1, 1999, the Company issued 186,088 shares of common stock in exchange
for 100% of the outstanding common stock and certain shareholder loans of Sirius
Animation, Inc. The purchase price was $272,960 ($400,000 Canadian dollars) and
was paid by the issuance of restricted stock. This company is retained as a
subsidiary.
Presently, the Company is an acquisition-seeking company. Until the middle of
1999, the Company's primary focus was on the exploration and development of oil
and gas properties. During 1999, the Company abandoned that effort and acquired
Sirius Animation, Inc., a company that creates and produces an animated
television series called "The Elf King."
The Company is a development stage company, as defined in the Financial
Accounting Standards Board No. 7. The Company is devoting substantially all of
its present efforts in securing and establishing a new business, and planned
principal operations have not
commenced. These factors raise substantial doubt about its ability to continue
as a going concern.
<PAGE>
Page 30
The financial statements have been prepared on the basis of accounting
principles applicable to a going concern. Accordingly, they do not purport to
give effect to adjustments, if any, that may be necessary should the Company be
unable to continue as a going concern. The continuation of the Company as a
going concern is dependent upon the Company's ability to establish itself as a
profitable business. The Company's ability to achieve these objectives cannot
be determined at this time. It is the Company's
belief that it will continue to incur losses for the next 12 months, and as a
result, will require additional funds. The additional funding will be
accomplished by seeking funds from private or public equity investments to meet
such needs. There are no guarantees the Company will be successful in obtaining
these funds.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with a maturity of
three months or less when acquired to be cash and cash equivalents.
Concentration of Credit Risk
The Company maintains U.S. Dollar cash balances in Canadian banks, that are not
insured.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries Minex, S.A. and Sirius Animation, Inc.
(Sirius). Intercompany transactions have been eliminated in consolidation.
Purchase Method
Investments in companies have been included in the financial report using the
purchase method of accounting on the basis of the fair value of the acquired
assets less liabilities assumed. The Company retains the acquired companies as
subsidiaries.
Property and Equipment
Property and equipment, stated at cost, is depreciated under the straight-line
method over their estimated useful lives, ranging from three to seven years.
Inventories
Inventories consist of theatrical and television product (which include direct
production costs, production overhead, and certain exploitation costs) and are
stated at the lower of amortized cost or net realizable value. Inventories are
amortized on an individual product basis based on the proportion that current
gross revenues bear to the estimated remaining total lifetime revenues.
Estimates of total lifetime revenues and expenses are periodically reviewed.
The costs of feature and television films are classified as current assets to
the extent such costs are expected to be recovered through their respective
primary markets, with the remainder classified as noncurrent.
<PAGE>
Page 31
Revenue Recognition
Revenue from the distribution of the animated television series is recognized
when the license period begins, the film is accepted by the licensee, and the
film is available for its first showing or telecast.
Cost Recognition
Selling, general, and administrative costs are expensed as incurred. Research
and development expenses are expensed as incurred.
Advertising Costs
Advertising costs are expensed as incurred.
Use of Estimates
Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses. Actual results may differ from these estimates.
Income Taxes
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes."
Under SFAS No. 109, deferred tax liabilities and assets are determined based on
the difference between the financial statement and tax bases of assets and
liabilities, using enacted tax rates in effect for the year in which the
differences are expected to reverse.
Per Share of Common Stock
Effective January 1, 1997, basic earnings or loss per share has been computed
based on the weighted average number of common shares outstanding. All earnings
or loss per share amounts in the financial statements are basic earnings or loss
per share, as defined by SFAS No. 128, "Earnings Per Share." Diluted earnings
or loss per share does not differ materially from basic earnings or loss per
share for all periods presented. Diluted weighted average shares outstanding
exclude the potential common shares from warrants
and stock options because to do so would have been antidilutive. All per share
and per share information are adjusted retroactively to reflect stock splits and
changes in par value.
Stock-Based Compensation
The Company accounts for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees." Compensation cost for stock options, if any, is
measured as the excess of the quoted market price of the Company's stock at the
date of grant over the amount an employee must pay to acquire the stock. SFAS
No. 123, "Accounting for Stock-Based Compensation," established accounting and
disclosure requirements using a fair-value-based method of accounting for
stock-based employee compensation plans. The Company has elected to remain on
its current method of accounting as described above, and has adopted the
disclosure requirements of SFAS No. 123, effective January 1,
1997.
Capital Structure
The Company has implemented SFAS No. 129, "Disclosure of Information about
Capital Structure," effective January 1, 1998, which established standards for
disclosing information about an entity's capital structure. The implementation
of SFAS No. 129 had no effect on the Company's financial statements.
<PAGE>
Page 33
Comprehensive Income
The Company has implemented SFAS No. 130, "Reporting Comprehensive Income,"
effective January 1, 1998, which requires companies to classify items of other
comprehensive income by their nature in a financial statement and display the
accumulated balance of other comprehensive income separately from retained
earnings and additional paid in capital in the equity section of a statement of
financial position. Accumulated Other Comprehensive Income (Loss) for 1999
represents foreign currency translation items associated with the Company's
Canadian subsidiary operations, Sirius. The implementation of SFAS No. 130 had
no effect on the Company's 1998 financial statements.
Business Segment Information
The Company implemented SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," effective January 1, 1998. At December 31,
1999, the Company is being managed as two operating segments, the animated
television series company, (Sirius) and corporate headquarters. During 1999,
Sirius had not generated any revenues and management did not allocate any of its
corporate, selling, administrative or overhead expenses to Sirius.
Foreign Operations
The assets and liabilities of the Company's foreign operations are generally
translated into U.S. dollars at current exchange rates, and revenues and
expenses are translated at average exchange rates for the year. Resulting
translation adjustments are reflected as a separate component of stockholders'
equity.
Transaction gains and losses that arise from exchange rate fluctuations on
transactions denominated in a currency other than the functional currency,
except those transactions which operate as a hedge of an identifiable foreign
currency commitment or as a hedge of an foreign currency investment position,
are included in the results of operations as
incurred.
Start-Up Costs
Effective January 1, 1999, the Company also adopted the provisions of the
American Institute of Certified Public Accountants' Statement of Position (SOP)
98-5, "Reporting on the Costs of Start-Up Activities." SOP 98-5 provides
guidance on the financial reporting of start-up and organization costs and
requires such costs to be expensed as incurred. This new requirement did not
have a significant effect on the financial statements for 1999.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current
year presentation.
Pending Accounting Pronouncements
It is anticipated that current pending accounting pronouncements will not have
an adverse impact on the financial statements of the Company.
<PAGE>
Page 33
REDMOND CAPITAL CORP.
(formerly Minex Minerals, Inc.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 3 - INVENTORIES
-----------
Inventories consists of the following at December 31, 1999:
Direct Production Costs $ 211,068
Production Overhead 42,567
Exploitation Costs 1,992
Total $ 255,627
NOTE 4 - PROPERTY AND EQUIPMENT
----------------------
Property and equipment consisted of the following at December 31:
1999 1998
---- ----
Equipment $ 130,596 $ 13,660
Leasehold Improvements 5,551 0
Total 136,147 13,660
Accumulated Depreciation (20,481) (4,324)
Net Book Value $ 115,666 $ 9,336
Depreciation and amortization expense charged to operations during 1999 and 1998
was $2,733 and $2,352, respectively. Depreciation and amortization expense
included in inventories for 1999 is $13,425.
NOTE 5 - INVESTMENT - OIL AND GAS PROPERTIES
-----------------------------------
On July 4, 1997, the Company completed the purchase of a certain Concession
Permit for the exploitation, complementary exploration, and development of
Hydrocarbons properties known as Mina del Carmen, Territorio del Chubut, Colonia
Escalante, Distrito Minera De Comodoro Rivadavia, Catco Exp. 0 - 1828 - 21,
Superficie 1998 has, consisting of 4 separate oil and gas concessions totaling
100 sq. km., known as Mina Maria Ines, Mina Catalina, Mina Carmen Dos, and Mina
Marcelina. All the properties are located in the Gulf of San Jorge, Province of
Chubut, Argentina. The purchase price was $100,000, of which $50,000 was due
and payable at December 31, 1999 and 1998. At December 31, 1998, the Company
determined that the concessions were of limited potential and have included in
operations a write-off of $75,000. During 1999, the Company received $25,000
for the sale of these concessions.
On September 15, 1997, the Company through its wholly owned subsidiary, Minex,
S.A., completed the purchase of a certain Concession Permit for the
exploitation, complementary exploration, and development of Hydrocarbons
properties known as Canadon Pilar, Pico Salamanca amd Mina Satamanca, all
located in the Gulf of San Jorge, Province of Chubut, Argentina. The purchase
price was $608,000, that included the payment of cash of $400,000 and the
issuance of 260,000 shares of the Company's common stock at $0.80 per share, or
<PAGE>
Page 34
$208,000. Under the contract, $100,000 was due and payable at December 31, 1999
and 1998. During 1998, the Company determined that the concessions were of
limited potential and have included in operations a write-off of $339,267.
During 1998, the Company received $150,000 for the partial sale of the
concessions and during 1999, the Company received $200,000, less certain
expenses incurred by the purchaser such as legal fees and exploration studies of
$36,267, or $163,733, for the sale of these concessions.
NOTE 6 - DUE TO/FROM RELATED PARTIES
---------------------------
From time to time, certain related parties advanced funds to the Company to help
finance working capital operations. At December 31, 1999, $414,939 was advanced
to the Company. At December 31, 1998, $128,265 was due to the Company. The
funds are unsecured, noninterest bearing, and due on demand. There is no
guarantee additional funds will be available to fund future operations.
NOTE 7 - CAPITAL LEASE OBLIGATIONS
-------------------------
The Company leases certain equipment under capital lease at the rate of
approximately $2,300 per month ($3,336.56 Canadian plus applicable taxes), and
due in thirty-six (36) monthly instalments. Included in property and equipment
are amounts due under capital lease obligation totalling $81,775, and are
amortized over the life of the lease. Lease expense charged to operations for
1999 was $4,213.
Total Minimum Lease Payments $ 83,788
Less Amount Representing Interest (6,225)
----------
Present Value of Minimum Lease
Payments 77,563
Current Portion 23,924
Long-Term Capital Lease Obligations $ 53,639
==========
Future minimum lease payments due under capital lease at December 31 are as
follows:
2000 $ 23,924
2001 $ 25,147
2002 $ 28,492
NOTE 8 - DEPOSIT ON CONTRACT
-------------------
On January 25, 1999, the Company issued 125,000 shares of common stock at $1.00
per share, or $125,000, as a deposit on a contract. The contract has been
canceled and it is uncertain at this time if the shares will be returned.
Included in operations for the year ended December 31, 1999, is a write-off of
$125,000.
NOTE 9 - INCOME TAXES
------------
There is no current or deferred tax expense for the years ended December 31,
1999 and 1998, due to the Company's loss position. The benefits of time
differences have not been previously recorded. The deferred tax consequences of
temporary differences in reporting items for financial statement and income tax
purposes are recognized, as appropriate. Realization of the future tax benefits
<PAGE>
Page 35
related to the deferred tax assets is dependent on many factors, including the
Company's ability to generate taxable income within the net operating loss
carryforward period. Management has considered these factors in reaching its
conclusion as to the valuation allowance for financial reporting purposes. The
income tax effect of temporary differences comprising the deferred tax assets
and deferred tax liabilities on the accompanying consolidated balance sheet is a
result of the following:
Deferred Taxes 1999 1998
---- ----
Net Operating Loss
Carryforwards $1,080,532 $ 536,775
Inventories 255,627 0
Valuation Allowance (1,336,159) (536,775)
--------- ---------
Net Deferred Tax Assets $ 0 $ 0
========= ========
The Company has available net operating loss carryforwards of approximately
$3,000,000 for tax purposes to offset future taxable income, which expire
principally in the year 2013.
Pursuant to the Tax Reform Act of 1986, annual utilization of the Company's net
operating loss carryforwards may be limited if a cumulative change in ownership
of more than 50% is deemed to occur within any three-year period.
NOTE 10 - STOCK OPTION PLAN
-----------------
The Company has three stock option plans that provide for the granting of stock
options to officers and key employees. The objectives of these plans include
attracting and retaining the best personnel, provide for additional performance
incentives, and promoting the success of the Company by providing employees the
opportunity to acquire common stock. Options outstanding under the Company's
three stock option plans have been granted at prices which are either equal to
or above the market value of the stock on the date of the grant and expire at
various dates after the grant date.
The status of the Company's three stock option plans is summarized below as of
December 31:
1997 Stock Option Plan 200,000 options granted at $0.55 per share.
1998 Stock Option Plan 500,000 shares reserved for issuance.
1999 Stock Option Plan 500,000 shares reserved for issuance.
No shares have been exercised under the 1997 plan. All three Stock Option Plans
expired on December 31, 1999.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
-----------------------------
Operating Lease - The Company has entered into an operating lease commencing on
---------------
December 15, 1999, on an annual basis, cancellable by the lessor upon receipt of
three months written notice. The premises consist of approximately 3,700 square
feet of office space at approximately $9,000 per month. Future annual rentals
for the year ended December 31, 2000, are $108,000.
Capital Lease - On November 3, 1999, the Company entered into a capital lease
-------------
with SGI Solutions Finance to lease certain equipment as described in the lease
<PAGE>
Page 36
schedule for approximately $2,300 per month ($3,336.56 Canadian Dollars plus
applicable taxes), for thirty-six months, at a discount rate of 5%, commencing
on November 1, 1999. Certain renewal provisions apply.
Lawsuit - The Company is a party to a lawsuit filed in the Supreme Court of
-------
British Columbia, Vancouver, British Columbia, dated December 5, 1999, between
Northwest Petroleum, Inc. versus Kevan Garner, Michelle Garner, Jack Purdy, Kern
County Oil & Gas Inc. and Redmond Capital Corporation, individually and
collectively carrying on business as "Indigo Communications," and Kern County
Oil and Gas and Redmond Capital Corp. The plaintiff is seeking $70,000. The
Company filed a Statement of Defence on January 5, 2000, in the Supreme Court of
British Columbia, Vancouver, British Columbia, denying any allegations. The
Company does not believe it will be liable for any damages and it intends to
vigorously defend itself. No provision for loss has been made in the financial
statements.
Contract- On November 17, 1999, the Company entered into an agreement with
--------
Galaxy Motorsports, L.L.C., (GMS) and automobile racing team, for a term of one
year, effective January 1, 2000 to December 31, 2000. GMS agrees to provide
certain sponsorship services for the year 2000 Winston Cup Nascar season. The
Company agrees to pay $3,500,000 pursuant to the following payment terms: Upon
signing, $250,000; February 1, 2000, $458,000; March 1, 2000, $542,000; April 1,
2000, $750,000; June 1, 2000, $750,000; and August 1, 2000, $750,000. As
collateral for the payments, the Company has placed 3,250,000 shares of common
stock in trust. Upon default by the Company of any payment, GMS has the right
to receive an amount of stock equal to the payment amount due. However, GMS has
the right to not receive the stock and terminate the agreement. As of the date
of issuance of these financial statements, the Company has paid $1,408,000. No
shares of common stock have been issued.
On April 20, 2000, the agreement was modified to revise the payment plan as
follows: May 1, 2000, $100,000; June 1, 2000, $100,000; July 1, 2000, $475,000;
August 1, 2000, $475,000; September 1, 2000, $475,000, and October 1, 2000,
$467,000.
NOTE 12 - SEGMENT INFORMATION
-------------------
The Company currently operates in one segment, that being the creation and
production of an animated television series through its wholly owned subsidiary,
Sirius Animation, Inc. (Sirius). Management evaluates the performance of its
segments and allocates resources to them primarily based on pretax income along
with cash flows and overall economic returns. The accounting policies of the
segments are substantially the same as those described in the summary of
significant accounting policies, as discussed in Note 2.
Certain items are maintained at the Company's corporate level and are not
allocated to the segments. They primarily include most of the Company's debt
and cash and cash equivalents and related net interest expense and corporate
headquarters costs.
Sirius Corporate Total
Revenues $ 0 $ 0 $ 0
Operating Loss 0 1,504,894 1,567,016
<PAGE>
Page 37
Total Assets 364,689 6,604 371,293
Capital Expenditures 122,487 13,660 136,147
Depreciation/Amortization 13,426 2,732 16,158
Revenues $ 0 $ 0 $ 0
Operating Loss 0 0 0
Total Assets 0 304,982 304,982
Capital Expenditures 0 13,660 13,660
Depreciation/Amortization 0 2,352 2,352
From 1997 through the middle of 1999, the Company had only one line of business,
that being the exploration and development of oil and gas properties. All
corporate, selling, administrative, or overhead expenses are included in
corporate for 1999 and 1998.
At December 31, 1999, Sirius had not generated any revenues and management did
not allocate any corporate, selling, administrative, or overhead expenses to
Sirius.
NOTE 13 - SUBSEQUENT EVENTS
-----------------
On February 7, 2000, the Company entered into an agreement with First Nevisian
Holdings, Ltd., (Nevis) a venture capital company, who has agreed to invest
$3,000,000 for working capital needs. The Company and Nevis have offered to
acquire from the shareholders of Redcell Canada, Inc. (Redcell) all of the
issued shares of and all of the shareholder loans owed by Redcell in exchange
for the issuance by the Company of Rule 144 shares in the authorized capital of
the Company. The Company agrees to issue 30,000 shares for each one percent of
shares held in Redcell, for a total of 3,000,000 shares of common stock. Total
advances from Nevis are $2,184,289 as of the date of these financial statements.
The Company also agrees to recognize and to purchase the aggregate of all loans
and interest to the Closing date, guarantees, accounts due, and all other
financial claims committed by Redcell. Payment will be made in the form of
warrants in the stock of the Company having an exercise price of $4.50. This
amount is considerably less than the balances due and is in full settlement of
all claims. The closing has not occurred as of the date of issuance of these
financial statements. However, as of February 1, 2000, the
total amount due the stockholders of Redcell was $4,153,954, or 923,101
warrants. As of the date of issuance of these financial statements, the Company
has placed 2,197,045 shares of common stock in trust for the issuance to
Redcell.
<PAGE>
Page 38
PART III
Item 1. Index of Exhibits
Exhibit No. Page No.
3 Articles of Incorporation, as amended, of the Company
4 Bylaws of the Company
4 Specimen Certificate of Common Stock
10 Material Contracts not made in the ordinary course of business:
10a Share Purchase Agreement dated July 1, 1999 between Registrant and
Douglas R. Walls, A. Ross Belyea, Jason Gray, Joan MacKenzie, Edward
Magee, and Stan Semrau
10b Profit Sharing Agreement between Registrant, Douglas R. Walls, A. Ross
Belyea, Jason Gray, Joan MacKenzie, and Sirius
10c Loan Agreement between Registrant, Sirius, Douglas R. Walls, A. Ross
Belyea, Jason Gray and Joan MacKenzie
10d Loan Agreement dated March 31, 2000 between Registrant and First
Nevisian Holdings Ltd.
10e Convertible Debenture issued by the Registrant to First Nevisian
Holdings Ltd.
10f Transfer of Rights to Screenplay from Ross Belyea to Sirius Animation
Inc.
10g Worldwide Distribution Agreement between Sirius Animation Inc. and
Bruder Releasing Inc.
21 Current Subsidiaries of the Registrant
23 Consent of Clancy and Co., P.L.L.C. Certified Public Accountants
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
REDMOND CAPITAL CORP.
--------------------------------
(Registrant)
Date: July 24, 2000 By: /s/ CLIFFORD WILKINS
--------------------------------
Clifford Wilkins, Chairman
<PAGE>
Exhibit No. 3
H96000012721
Articles of Incorporation
of
Minex Minerals, Inc.
Article I. Name
---------------
The name of this Florida corporation is:
Minex Minerals, Inc.
Article II. Address
-------------------
The mailing address of the Corporation is:
Minex Minerals, Inc.
1400-400 Burrard Street
Vancouver BC V6C3G2
Article III. Capital Stock
--------------------------
The Corporation shall have the authority to issue 50,000,000 shares of common
stock, par value $.001 per share.
Article IV. Registered Agent
----------------------------
The name and address of the registered agent of the Corporation is:
Corporate Creations Enterprises, Inc.
686 North Dupont Boulevard #302
Milford DE 19963
Article V. Board of Directors
-----------------------------
The affairs of the Corporation shall be managed by a Board of Directors
consisting of no less than one director. The number of directors may be
increased or decreased from time to time in accordance with the Bylaws of the
Corporation.
H96000012721
Corporate Creations International Inc.
401 Ocean Drive - Suite 312 - Door Code #125
Miami Beach FL 33139-6629
(305) 672-0686
<PAGE>
H96000012721
The election of directors shall be done in accordance with the Bylaws. The
directors shall be protected from personal liability to the fullest extent
permitted by law. The name of each initial member of the Corporation's Board of
Directors is:
Harmel S. Rayat
Article VI. Incorporator
------------------------
The name and address of the incorporator is:
Corporate Creations International Inc.
401 Ocean Drive - Suite 312 - Door Code #125
Miami Beach FL 33139-6629
Article VII. Corporate Existence
--------------------------------
The corporate existence of the Corporation shall begin effective September 12,
1996.
The authorized representative of the incorporator executed these Articles of
Incorporation on September 11, 1996
Corporate Creations International Inc.
By:/s/ Brian R. Fons
------------------------------------
Brian R. Fons Vice President
H96000012721
Corporate Creations International Inc.
401 Ocean Drive - Suite 312 - Door Code #125
Miami Beach FL 33139-6629
(305) 672-0686
<PAGE>
ARTICLES OF AMENDMENT
Article 1. Name
---------------
The name of this Florida corporation is: Minex Minerals, Inc. (the
"Corporation").
Article II. Amendment
---------------------
The Articles of Incorporation of the Corporation are amended as follows:
Article III is deleted in its entirety and replaced with the following:
Article III - Capital Stock
---------------------------
The corporation shall have the authority to issue 50,000,000 shares of common
stock, par value $0.001 per share, and 1,000,000 preferred shares at a par value
of $0.10.
Article 111. Date Amendment Adopted
-----------------------------------
The amendment set forth in these Articles of Amendment was adopted on December
4, 1997.
Article IV. Shareholder Approval of Amendment
---------------------------------------------
The amendment set forth in these Articles of Amendment was proposed by the
Corporation's Board of Directors and approved by the shareholders by a vote
sufficient for approval of the amendment.
The undersigned executed this document on the date shown below.
Minex Minerals, Inc.
By: /s/ Greg K. Kuroda
------------------------------------
Print Name: Greg K. Kuroda
Print Title: Vice President
Date: 12/4/97
------------------------------------
Corporate Creations International Inc.
941 Fourth Street #200
Miami Beach FL 33139
(305) 672-0686
H97000020019 Copyright(C) 1993-1997 CC
<PAGE>
FILED
99 FEB -3 AM 10: 40
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
ARTICLES OF AMENDMENT
Article I. Name
---------------
The Name of this Florida Corporation is: Minex Minerals, Inc. (the Corporation)
Article II. Amendment
---------------------
The Articles of Incorporation of the Corporation are amended as follows: The
name of the Corporation shall be changed from Minex Minerals, Inc. to Redmond
Capital Corp.
Article III. Date Amendment Adopted
-----------------------------------
The amendment set forth in these Articles of Amendment was adopted on Feb. 1st.
1999
Article IV. Shareholder Approval of Amendment
---------------------------------------------
The amendment set forth in these Articles of Amendment was proposed by the
Corporation's Board of Directors and approved by the shareholders by a vote
sufficient for the approval of the amendment.
The undersigned executed this document on the date shown below.
Redmond Capital Corp.
By: /s/ Kevan Garner
------------------------------------
Kevan Garner
President
Date: Feb 1st 1999
------------------------------------
<PAGE>
Exhibit 4
Bylaws
of
Minex Minerals, Inc.
ARTICLE I. DIRECTORS
--------------------
Section 1. Function. All corporate powers shall be exercised by or under the
-------------------
authority of the Board of Directors. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. Directors must
be natural persons who are at least 18 years of age but need not be shareholders
of the Corporation. Residents of any state may be directors.
Section 2. Compensation. The shareholders shall have authority to fix the
-----------------------
compensation of directors. Unless specifically authorized by a resolution of the
shareholders, the directors shall serve in such capacity without compensation.
Section 3. Presumption of Assent. A director who is present at a meeting of the
--------------------------------
Board of Directors or a committee of the Board of Directors at which action on
any corporate matter is taken shall be presumed to have assented to the action
taken unless he objects at the beginning of the meeting (or promptly upon
arriving) to the holding of the meeting or transacting the specified business at
the meeting, or if the director votes against the action taken or abstains from
voting because of an asserted conflict of interest.
Section 4. Number. The Corporation shall have at least the minimum number of
-----------------
directors required by law. The number of directors may be increased or decreased
from time to time by the Board of Directors.
Section 5. Election and Term. At each annual meeting of shareholders, the
----------------------------
shareholders shall elect directors to hold office until the next annual meeting
or until their earlier resignation, removal from office or death. Directors
shall be 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.
Section 6. Vacancies. Any vacancy occurring in the Board of Directors, including
--------------------
a vacancy created by an increase in the number of directors, may be filled by
the shareholders or by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors. A director
elected to fill a vacancy shall hold office only until the next election of
directors by the shareholders. If there are no remaining directors, the vacancy
shall be filled by the shareholders.
<PAGE>
Page 2
Section 7. Removal of Directors. At a meeting of shareholders, any director or
-------------------------------
the entire Board of Directors may be removed, with or without cause, provided
the notice of the meeting states that one of the purposes of the meeting is the
removal of the director. A director may be removed only if the number of votes
cast to remove him exceeds the number of votes cast against removal.
Section 8. Quorum and Voting. A majority of the number of directors fixed by
----------------------------
these Bylaws shall constitute a quorum for the transaction of business. The act
of a majority of directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 9. Executive and Other Committees. The Board of Directors, by resolution
-----------------------------------------
adopted by a majority of the full Board of Directors, may designate from among
its members one or more committees each of which must have at least two members.
Each committee shall have the authority set forth in the resolution designating
the committee.
Section 10. Place of Meeting. Regular and special meetings of the Board of
----------------------------
Directors shall be held at the principal place of business of the Corporation or
at another place designated by the person or persons giving notice or otherwise
calling the meeting.
Section 11 Time, Notice and Call of Meetings. Regular meetings of the Board of
--------------------------------------------
Directors shall be held without notice at the time and on the date designated by
resolution of the Board of Directors. Written notice of the time, date and place
of special meetings of the Board of Directors shall be given to each director by
mail delivery at least two days before the meeting.
Notice of a meeting of the Board of Directors need not be given to a
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting constitutes a waiver of notice of that
meeting and waiver of all objections to the place of the meeting, the time of
the meeting, and the manner in which it has been called or convened, unless a
director objects to the transaction of business (promptly upon arrival at the
meeting) because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors must be specified in the notice or waiver of notice of
the meeting.
A majority of the directors present, whether or not a quorum exists, may
adjourn any meeting of the Board of Directors to another time and place. Notice
of an adjourned meeting shall be given to the directors who were not present at
the time of the adjournment and, unless the time and place of the adjourned
meeting are announced at the time of the adjournment, to the other directors.
<PAGE>
Page 3
Meetings of the Board of Directors may be called by the President or the
Chairman of the Board of Directors. Members of the Board of Directors and any
committee of the Board may participate in a meeting by telephone conference or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation by these means constitutes
presence in person at a meeting.
Section 12. Action By Written Consent. Any action required or permitted to be
-------------------------------------
taken at a meeting of directors may be taken without a meeting if a consent in
writing setting forth the action to be taken and signed by all of the directors
is filed in the minutes of the proceedings of the Board. The action taken shall
be deemed effective when the last director signs the consent, unless the consent
specifies otherwise.
ARTICLE II, MEETINGS OF SHAREHOLDERS
------------------------------------
Section 1. Annual Meeting. The annual meeting of the shareholders of the
-------------------------
corporation for the election of officers and for such other business as may
properly come before the meeting shall be held at such time and place as
designated by the Board of Directors.
Section 2. Special Meeting. Special meetings of the shareholders shall be held
--------------------------
when directed by the President or when requested in writing by shareholders
holding at least 10% of the Corporation's stock having the right and entitled to
vote at such meeting. A meeting requested by shareholders shall be called by the
President for a date not less than 10 nor more than 60 days after the request is
made. only business within the purposes described in the meeting notice may be
conducted at a special shareholders, meeting.
Section 3. Place. Meetings of the shareholders will be held at the principal
----------------
place of business of the Corporation or at such other place as is designated by
the Board of Directors.
Section 4. Notice. A written notice of each meeting of shareholders shall be
-----------------
mailed to each shareholder having the right and entitled to vote at the meeting
at the address as it appears on the records of the Corporation. The meeting
notice shall be mailed not less than 10 nor more than 60 days before the date
set for the meeting. The record date for determining shareholders entitled to
vote at the meeting will be the close of business on the day before the notice
is sent. The notice shall state the time and place the meeting is to be held. A
notice of a special meeting shall also state the purposes of the meeting. A
notice of meeting shall be sufficient for that meeting and any adjournment of
it. If a shareholder transfers any shares after the notice is sent, it shall not
be necessary to notify the transferee. All shareholders may waive notice of a
meeting at any time.
<PAGE>
Page 4
Section 5. Shareholder Quorum. A majority of the shares entitled to vote,
-----------------------------
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. Any number of shareholders, even if less than a quorum, may
adjourn the meeting without further notice until a quorum is obtained.
Section 6. Shareholder Voting. If a quorum is present, the affirmative vote of a
-----------------------------
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders. Each outstanding share
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. An alphabetical list of all shareholders who are-entitled to
notice of a shareholders' meeting along with their addresses and the number of
shares held by each shall be produced at a shareholders' meeting upon the
request of any shareholder.
Section 7. Proxies. A shareholder entitled to vote at any meeting of
------------------
shareholders or any adjournment thereof may vote in person or by proxy executed
in writing and signed by the shareholder or his attorney-in-fact. The
appointment of proxy will be effective when received by the Corporation's
officer or agent authorized to tabulate votes. No proxy shall be valid more
than 11 months after the date of its execution unless a longer term is expressly
stated in the proxy.
Section 8. Validation. If shareholders who hold a majority of the voting stock
---------------------
entitled to vote at a meeting are present at the meeting, and sign a written
consent to the meeting on the record, the acts of the meeting shall be valid,
even if the meeting was not legally called and noticed.
Section 9. Conduct of Business By Written Consent. Any action of the
-------------------------------------------------
shareholders may be taken without a meeting if written consents, setting forth
the action taken, are signed by at least a majority of shares entitled to vote
and are delivered to the officer or agent of the Corporation having custody of
the Corporation's records within 60 days after the date that the earliest
written consent was delivered. Within 10 days after obtaining an authorization
of an action by written consent, notice shall be given to those shareholders who
have not consented in writing or who are not entitled to vote on the action. The
notice shall fairly summarize the material features of the authorized action. If
the action creates dissenters' rights, the notice shall contain a clear
statement of the right of dissenting shareholders to be paid the fair value of
their shares upon compliance with and as provided for by the state law governing
corporations.
<PAGE>
Page 5
ARTICLE III. OFFICERS
---------------------
Section 1. Officers; Election; Resignation; Vacancies. The Corporation shall
-----------------------------------------------------
have the officers and assistant officers that the Board of Directors appoint
from time to time. Except as otherwise provided in an employment agreement which
the Corporation has with an officer, each officer shall serve until a successor
is chosen by the directors at a regular or special meeting of the directors or
until removed. Officers and agents shall be chosen, serve for the terms, and
have the duties determined by the directors. A person may hold two or more
offices.
Any officer may resign at any time upon written notice to the Corporation. The
resignation shall be effective upon receipt, unless the notice specifies a later
date. If the resignation is effective at a later date and the Corporation
accepts the future effective date, the Board of Directors may fill the pending
vacancy before the effective date provided the successor officer does not take
office until the future effective date. Any vacancy occurring in any office of
the Corporation by death, resignation, removal or otherwise may be filled for
the unexpired portion of the term by the Board of Directors at any regular or
special meeting.
Section 2. Powers and Duties of Officers. The officers of the Corporation shall
----------------------------------------
have such powers and duties in the management of the Corporation as may be
prescribed by the Board of Directors and, to the extent not so provided, as
generally pertain to their respective offices, subject to the control of the
Board of Directors.
Section 3. Removal of Officers. An officer or agent or member of a committee
------------------------------
elected or appointed by the Board of Directors may be removed by the Board with
or without cause whenever in its judgment the best interests of the Corporation
will be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of an
officer, agent or member of a committee shall not of itself create contract
rights. Any officer, if appointed by another officer, may be removed by that
officer.
Section 4. Salaries. The Board of Directors may cause the Corporation to enter
-------------------
into employment agreements with any officer of the Corporation. Unless provided
for in an employment agreement between the Corporation and an officer, all
officers of the Corporation serve in their capacities without compensation.
Section 5. Bank Accounts. The Corporation shall have accounts with financial
------------------------
institutions as determined by the Board of Directors.
<PAGE>
Page 6
ARTICLE IV. DISTRIBUTIONS
-------------------------
The Board of Directors may, from time to time, declare distributions to its
shareholders in cash, property, or its own shares, unless the distribution would
cause (i) the Corporation to be unable to pay its debts as they become due in
the usual course of business, or (ii) the Corporation's assets to be less than
its liabilities plus the amount necessary, if the Corporation were dissolved at
the time of the distribution, to satisfy the preferential rights of shareholders
whose rights are superior to those receiving the distribution. The shareholders
and the Corporation may enter into an agreement requiring the distribution of
corporate profits, subject to the provisions of law.
ARTICLE V. CORPORATE RECORDS
----------------------------
Section 1. Corporate Records. The corporation shall maintain its records in
----------------------------
written form or in another form capable of conversion into written form within a
reasonable time. 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 on behalf of the
Corporation. The Corporation shall maintain accurate accounting records and a
record of its shareholders in a form that permits preparation of a list of the
names and addresses of all shareholders in alphabetical order by class of shares
showing the number and series of shares held h- each.
The Corporation shall keep a copy of its articles or restated articles of
incorporation and all amendments to them currently in effect; these Bylaws or
restated Bylaws and all amendments currently in effect; resolutions adopted by
the 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; the minutes of all shareholders,
meetings and records of all actions taken by shareholders without a meeting for
the past three years; written communications to all shareholders generally or
all shareholders of a class of series within the past three years, including the
financial statements furnished for the last three years; a list of names and
business street addresses of its current directors and officers; and its most
recent annual report delivered to the Department of State.
Section 2. Shareholders' Inspection Rights. A shareholder is entitled to inspect
------------------------------------------
and copy, during regular business hours at a reasonable location specified by
the Corporation, any books and records of the Corporation. The shareholder must
give the Corporation written notice of this demand at least five business days
before the date on which he wishes to inspect and copy the record(s). The demand
must be made in good faith and for a proper purpose. The shareholder must
<PAGE>
Page 7
describe with reasonable particularity the purpose and the records he desires to
inspect, and the records must be directly connected with this purpose. This
Section does not affect the right of a shareholder to inspect and copy the
shareholders' list described in this Article if the shareholder is in litigation
with the Corporation. In such a case, the shareholder shall have the same rights
as any other litigant to compel the production of corporate records for
examination.
The Corporation may deny any demand for inspection if the demand was made
for an improper purpose, or if the demanding shareholder has within the two
years preceding his demand, sold or offered for sale any list of shareholders of
the Corporation or of any other corporation, has aided or abetted any person in
procuring any list of shareholders for that purpose, or has improperly used any
information secured through any prior examination of the records of this
Corporation or any other corporation.
Section 3. Financial Statements for Shareholders. Unless modified by resolution
------------------------------------------------
of the shareholders within 120 days after the close of each fiscal year, the
Corporation shall furnish its shareholders with annual financial statements
which may be consolidated or combined statements of the Corporation and one or
more of its subsidiaries, as appropriate, that include a balance sheet as of the
end of the fiscal year, an income statement for that year, and a statement of
cash flows for that year. If financial statements are prepared for the
Corporation on the basis of generally accepted accounting principles, the annual
financial statements must also be prepared on that basis.
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 stating his reasonable belief whether the
statements were prepared on the basis of generally accepted accounting
principles and, if not, describing the basis of preparation and describing any
respects in which the statements were not prepared on a basis of accounting
consistent with the statements prepared for the preceding year. The Corporation
shall mail the annual financial statements to each shareholder within 120 days
after the close of each fiscal year or within such additional time thereafter as
is reasonably necessary to enable the Corporation to prepare its financial
statements. Thereafter, on written request from a shareholder who was not mailed
the statements, the Corporation shall mail him the latest annual financial
statements.
Section 4. Other Reports to Shareholders. If the Corporation indemnifies or
----------------------------------------
advances expenses to any director, officer, employee or agent otherwise than by
court order or action by the shareholders or by an insurance carrier pursuant to
insurance maintained by the Corporation, the Corporation shall report the
<PAGE>
Page 8
indemnification or advance in writing to the shareholders with or before the
notice of the next annual shareholders, meeting, or prior to the meeting if the
indemnification or advance occurs after the giving of the notice but prior to
the time the annual meeting is held. This report shall include a statement
specifying the persons paid, the amounts paid, and the nature and status at the
time of such payment of the litigation or threatened litigation.
If the Corporation issues or authorizes the issuance of shares for promises
to render services in the future, the Corporation shall report in writing to the
shareholders the number of shares authorized or issued, and the consideration
received by the corporation, with or before the notice of the next shareholders'
meeting.
ARTICLE VI, STOCK CERTIFICATES
------------------------------
Section 1. Issuance. The Board of Directors may authorize the issuance of some
-------------------
or all of the shares of any or all of its classes or series without
certificates. Each certificate issued shall be signed by the President and the
Secretary (or the Treasurer). The rights and obligations of shareholders are
identical whether or not their shares are represented by certificates.
Section 2. Registered Shareholders. No certificate shall be issued for any
----------------------------------
share until the share is fully paid. The Corporation shall be entitled to treat
the holder of record of shares as the holder in fact and, except as otherwise
provided by law, shall not be bound to recognize any equitable or other claim to
or interest in the shares.
Section 3. Transfer of Shares. Shares of the Corporation shall be transferred on
-----------------------------
its books only after the surrender to the Corporation of the share certificates
duly endorsed by the holder of record or attorney-in- fact. If the surrendered
certificates are canceled, new certificates shall be issued to the person
entitled to them, and the transaction recorded on the books of the Corporation.
Section 4. Lost, Stolen or Destroyed Certificates. If a shareholder claims to
-------------------------------------------------
have lost or destroyed a certificate of shares issued by the Corporation, a new
certificate shall be issued upon the delivery to the Corporation of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed, and, at the discretion of the Board of Directors, upon the deposit
of a bond or other indemnity as the Board reasonably requires.
<PAGE>
Page 9
ARTICLE VII. INDEMNIFICATION
----------------------------
Section 1. Right to Indemnification. The Corporation hereby indemnifies each
-----------------------------------
person (including the heirs, executors, administrators, or estate of such
person) who is or was a director or officer of the Corporation to the fullest
extent permitted or authorized by current or future legislation or judicial or
administrative decision against all fines, liabilities, costs and expenses,
including attorneys' fees, arising out of his or her status as a director,
officer, agent, employee or representative. The foregoing right of
indemnification shall not be exclusive of other rights to which those seeking an
indemnification may be entitled. The Corporation may-maintain insurance, at its
expense, to protect itself and all officers and directors against fines,
liabilities, costs and expenses, whether or not the Corporation would have the
legal power to indemnify them directly against such liability.
Section 2. Advances. Costs, charges and expenses (including attorneys' fees)
-------------------
incurred by a person referred to in Section 1 of this Article in defending a
civil or criminal proceeding shall be paid by the Corporation in advance of the
final disposition thereof upon receipt of an undertaking to repay all amounts
advanced if it is ultimately determined that the person is not entitled to be
indemnified by the Corporation as authorized by this Article, and upon
satisfaction of other conditions required by current or future legislation.
Section 3. Savings Clause. If this Article or any portion of it is invalidated
-------------------------
on any ground by a court of competent jurisdiction, the Corporation nevertheless
indemnifies each person described in Section 1 of this Article to the fullest
extent permitted by all portions of this Article that have not been invalidated
and to the fullest extent permitted by law.
ARTICLE VIII. AMENDMENT
------------------------
These Bylaws may be altered, amended or repealed, and new Bylaws adopted,
by a majority vote of the directors or by a vote of the shareholders holding a
majority of the shares.
I certify that these are the Bylaws adopted by the Board of Directors of
the Corporation.
/s/Sopinder Singh
------------------
Secretary
Date signed: Sep 14/96
-------------
(C) 1993-95 CC
<PAGE>
Exhibit 4
[GRAPHIC OMITTED]
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
RESTRICTED
CUSIP NO. 757648 10 0
Number Shares
Redmond Capital Corp.
AUTHORIZED COMMON STOCK: 50,000,000 SHARES
PAR VALUE: $.001
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
* Shares of REDMOND CAPITAL CORP. Common Stock *
transferable on the Looks of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned by the Transfer Agent and registered by the
Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated: August 11, 1999
/s/ Carson Walder /s/ Kevan Garner
------------------------ ------------------------
SECRETARY PRESIDENT
REDMOND CAPITAL CORP.
CORPORATE SEAL
FLORIDA
<PAGE>
Exhibit 10a
SHARE PURCHASE AGREEMENT
------------------------
THIS AGREEMENT made effective the 1st day of July, 1999.
BETWEEN:
DOUGLAS R. WALLS, A. ROSS BELYEA, JASON GRAY, JOAN MacKENZIE, EDWARD A.
MAGEE and STAN SEMRAU, Businesspersons, all c/o 1255 West Pender
Street, Vancouver, British Columbia, V613 2V I
(hereinafter collectively called the "Vendor")
OF THE FIRST PART
AND:
REDMOND CAPITAL CORP., a company incorporated under the laws of the
State of Florida, United States of America and having an office at 1250
West Hastings Street, Vancouver, British Columbia, V6E 2M4
(hereinafter called the "Purchaser")
OF THE SECOND PART
WHEREAS the Vendor is the registered and/or beneficial holder of all
of the issued and outstanding shares in the capital of Sirius Animation Inc.
(the "Corporation);
AND WHEREAS the Corporation is indebted to certain individuals who
form part of the Vendor in the collective sum of Seventy-eight Thousand Eight
Hundred Forty-eight Dollars and Ninety-five Cents ($78,848.95);
AND WHEREAS the Purchaser desires to buy and the Vendor desires to
sell all of the issued and outstanding shares in the capital of the Corporation
and the receivable owed to the Vendor by the Corporation for the purchase price
and upon the terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of
payment of the sum of Ten Dollars ($ 10.00) by the Purchaser to the Vendor (the
receipt and sufficiency whereof the Vendor hereby acknowledges), the premises
and the covenants, agreements, warranties and payments hereinafter set forth and
provided for, the parties hereto covenant and agrees as follows:
<PAGE>
Page 2
ARTICLE 1
INTERPRETATION
--------------
1.1 Definitions
-----------
Whenever used in this Agreement, unless there is something in the subject
matter or context inconsistent therewith, the following words and phrases shall
have the respective meanings ascribed to them as follows:
(a) "Agreement" means this Share Purchase Agreement, any instrument amending
this Agreement; "hereof', "hereto" and "hereunder" and similar
expressions mean and refer to this Agreement and not to a particular
article or Paragraph; and the expression "Article" or "Paragraph"
followed by a number means and refers to the specified article or
Paragraph of this Agreement;
(b) "Assets" means all of the assets set out in Schedule 8 attached hereto;
(c) "Business Day" means a day other than a Saturday, Sunday or any other
day on which the principal chartered banks located at the City of
Vancouver are not open for business during normal banking hours;
(d) "Closing" means the completion of the sale to the Purchaser of the
Purchased Shares hereunder by the transfer and delivery of certificates
representing the Purchased Shares endorsed for transfer and the payment
of the Purchase Price therefor as contemplated hereby;
(e) "Completion Date" means the 30th day of July, 1999;
(f) "Corporation" means Sirius Animation Incorporated;
(g) "Document Date" means that day which is five (5) Business Days prior to
the Completion Date;
(h) "Effective Date" means July 1, 1999;
(i) "Financial Statements" means the unaudited financial statements of the
Corporation as at the Financial Year End consisting of the balance sheet
of the Corporation as at the Financial Year End and the accompanying
statement of income and expenses prepared in accordance with generally
accepted accounting principles copies of which are annexed hereto as
Schedule 1;
(j) "Financial Year End" means June 3 0, 1999;
(k) "Lease" means that lease of the Real Property between Sierra Pacific
Holdings Ltd. as Landlord and the Corporation as Tenant.
<PAGE>
Page 3
(l) "Multimedia Assets" means those assets set out or described in Schedule
9 attached hereto;
(m) "New Director(s)" means that director or those directors of the
Corporation elected as of the Document Date by the Purchaser as
shareholder of the Corporation;
(n) "New Officers" means that officer or those officers of the Corporation
elected as of the Document Date by the New Directors;
(o) "Person" means any individual, corporation, partnership, trustee or
trust or unincorporated association or such person's heirs, executors,
administrators, successors or assigns, as the case may be and pronouns
have a similar extended meaning;
(p) "Purchase Price" means the purchase price payable to the Vendor for the
Purchased Shares and Shareholders' Loans provided for in Paragraph 4.1
hereof;
(q) "Purchased Shares" means collectively the:
(i) Nine Thousand (9,000) Class "A" Common shares without par value;
(ii) Fifteen Thousand Three Hundred and Thirty-three (15,333) Class "C"
Preference shares without par value; and
(iii) Two Thousand Five Hundred (2,500) Class "D" Preference shares with
a par value of $0.01 each;
issued and outstanding in the capital of the Corporation;
(r) "Purchaser's Conditions" means those conditions precedent set out in
Paragraph 7.2 hereof;
(s) "Real Property" means Suite 101 - 1020 Mainland Street, Vancouver,
British Columbia;
(t) "Shareholders' Loans" means the total collective sum of monies loaned to
the Corporation by certain of the individuals comprising the Vendor as
at the Completion Date;
(u) "Rule 144 Shares" means common shares in the capital stock of the
Purchaser which are issued subject to restrictions on trading set out in
Rule 144 of the Securities Act Rules made by the United States
Securities & Exchange Commission pursuant to the United States
Securities Act of 1933, as amended;
----------------------
(v) "Subsidiary" means, with respect to the Corporation, any corporation of
which shares to which are attached more than 50% of the voting rights
ordinarily exercisable at meetings of the shareholders of the
corporation are beneficially owned, directly or indirectly, by the
Corporation and includes any corporation in like relation to a
Subsidiary; and
(w) "Vendor's Conditions" means those conditions precedent set out in
Paragraph 7.1 hereof.
<PAGE>
Page 4
1.2 Number and Gender
-----------------
In this Agreement, words importing the singular include the plural and
vice versa and words importing a specific gender include all genders.
1.3 Currency
--------
Unless otherwise indicated all dollar amounts referred to in this
Agreement are in Canadian funds.
1.4 Accounting Principles
---------------------
Wherever in this Agreement reference is made to generally accepted
accounting principals, such reference shall be deemed to be to the generally
accepted accounting principles from time to time approved by the Canadian
Institute of Chartered Accountants, or any successor institute, applicable as at
the date on which such principles are applied.
1.5 Headings
--------
The division of this Agreement into Articles and Paragraphs and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement.
ARTICLE 2
SCHEDULES
---------
2.1 Description of Schedules
------------------------
The following are the Schedules attached to and incorporated in this
Agreement by reference and deemed to be a part hereof:
Schedule 1 - Financial Statements
Schedule 2 - Leases
Schedule 3 - Encumbrances
Schedule 4 - Insurance Policies
Schedule 5 - Contracts
Schedule 6 - Litigation
Schedule 7 - Form of Promissory Notes and Assignment
Schedule 8 - Assets
Schedule 9 - Multimedia Assets
Schedule 10 - Form of Loan Agreement
Schedule 11 - Form of Profit Sharing Agreement
<PAGE>
Page 5
ARTICLE 3
PURCHASE AND SALE
-----------------
3.1 Purchase and Sale
-----------------
Subject to the terms and conditions hereof, the Vendor hereby sells,
assigns and transfers to the Purchaser and the Purchaser hereby purchases the
Purchased Shares and all of the Vendor's right, title and interest in the
Shareholders' Loans.
ARTICLE 4
PURCHASE PRICE
--------------
4.1 Amount of Purchase Price
------------------------
The aggregate Purchase Price payable by the Purchaser to the Vendor for
the Purchased Shares and the Shareholders' Loans shall be the sum of Four
Hundred Thousand Canadian Dollars ($400,000.00) (the "Purchase Price"). The
allocation of the Purchase Price shall be firstly, in respect of the
Shareholders' Loans an amount equal to the face value of such Shareholders'
Loans plus all interest due and owing thereon as of the Completion Date, and
secondly, in respect of the Purchased Shares, the remaining balance of the
Purchase Price.
4.2 Payment of Purchase Price
-------------------------
The Purchase Price shall be paid and satisfied by delivery on the
Completion Date to the solicitor for the Vendor of 186,048 Rule 144 Shares.
4.3 Adjustments
-----------
The Vendor and the Purchaser agree that there shall be no adjustments made
to the Purchase Price.
All bank accounts and accounts receivable of the Corporation as at the
close of business on the Completion Date shall be for the credit of Purchaser.
The Purchaser shall be responsible for collecting any such accounts receivable.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
--------------------------------------------
5.1 Vendor's Representations and Warranties
---------------------------------------
The Vendor hereby represents and warrants to the Purchaser as follows and
acknowledge that the Purchaser is relying on such representations and warranties
in connection with the transactions contemplated by this Agreement.
<PAGE>
Page 6
5.1.1 Incorporation and Organization of the Corporation
-------------------------------------------------
The Corporation is a corporation duly incorporated, subsisting and in
good standing under the laws of the Province of British Columbia. No proceedings
have been instituted or are pending for the dissolution or liquidation of the
Corporation or threatening of its existence.
5.1.2 Qualification to do Business
----------------------------
The Corporation has the necessary corporate power, authority and
capacity to own or lease its property and to carry on its business as now being
conducted by it and is qualified to carry on its business under the laws of the
Province of British Columbia, being the only jurisdiction in which the
Corporation carries on business.
5.1.3 Authorized Capital
------------------
The authorized capital of the Corporation consists of four million
(4,000,000) shares divided into:
(a) one million (1,000,000) Class "A" Common shares without par value;
(b) one million (1,000,000) Class "B" Common shares without par value;
(c) one million (1,000,000) Class "C" Preference shares without par value;
and
(d) one million (1,000,000) Class "D" Preference shares with a par value of
one ($0.01) cent each.
5.1.4 Issued Shares
-------------
Only the Purchased Shares in the authorized capital of the Corporation
will be, after the Completion Date, duly and validly allotted and issued and
outstanding as fully paid and non-assessable.
5.1.5 Ownership of Purchased Shares
-----------------------------
The Vendor is the legal and beneficial owner of the Purchased Shares.
5.1.6 No Options
----------
No person other than the Purchaser under this Agreement has any
agreement or option or any right capable of becoming an agreement or option for
the purchase from the Vendor of the Purchased Share.
<PAGE>
Page 7
5.1.7 No Issue of Shares or Convertible Securities
--------------------------------------------
No person has any agreement or option or any right capable of becoming
an agreement or option, including convertible securities, warrants or
convertible obligations of any nature, for the purchase, subscription or
issuance of any unissued shares of the Corporation or of any other securities of
the Corporation.
5.1.8 Absence of Conflicting Agreements
---------------------------------
The Vendor is not a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, instrument, order, judgement or decree
which would be violated, contravened or breached by the execution and delivery
by the Vendor of this Agreement or the performance by the Vendor of any of the
terms hereof.
5.1.9 Subsidiaries
------------
The Corporation has no Subsidiaries.
5.1.10 Financial Statements
--------------------
(a) The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent
with those of previous years and present fairly:
(i) all the assets, liabilities (whether accrued, absolute, contingent
or otherwise) and the financial condition of the Corporation as at
the Financial Year End; and
(ii) the sales, earnings and results of operations of the Corporation
for the twelve month period then ended.
5.1.11 Business Carried on in Ordinary Course
--------------------------------------
The business of the Corporation has been carried on in the ordinary
course since the Financial Year End and the Corporation has not, since the
Financial Year End, sold or otherwise disposed of any of its assets except in
the ordinary course of business. Since the Financial Year End there has been no
change in the business, operations, affairs or condition of the Corporation,
financial or otherwise, or arising as a result of any legislative-or regulatory
change, revocation of any license or right to do business, fire, explosion,
accident, casualty, labour problem, flood, drought, riot, storm, act of God or
otherwise, except changes occurring in the ordinary course of business and
which, in the aggregate, have not materially adversely affected and will not
materially adversely affect the business, operations, affairs or condition of
the Corporation nor is the Vendor aware of any such proposed change.
5.1.12 Absence of Unusual Transactions
-------------------------------
Since the date of the Financial Year End, the Corporation has not:
(a) transferred, assigned, sold or otherwise disposed of any of its
assets except in the ordinary and usual course of business;
<PAGE>
Page 8
(b) suffered an operating loss or any extraordinary loss, or waived any
rights of substantial value, or entered into any commitment or
transaction not in the ordinary and usual course of business where
such loss, rights, commitment or transaction is or would be material
in relation to the Corporation or its business, as the case may be;
(c) mortgaged, pledged, subjected to lien, granted a security interest
in or otherwise encumbered any of the assets of the Corporation; or
(d) authorized or agreed or otherwise become committed to do any of the
foregoing.
5.1.13 Minute Books and Corporate Records
----------------------------------
The corporate records and minute book of the Corporation contain
originals of all of the constating documents and amendments thereto and complete
and accurate minutes of all meetings of and copies of all by-laws and
resolutions passed by the directors and shareholders of the Corporation since
its incorporation; all such meetings were duly called and held, all such by-laws
and resolutions duly passed and the share certificate books, register of
shareholders, register of transfers, register of directors, register of debt
holders and other corporate registers of the Corporation are complete and
accurate in all material respects. There is neither a shareholders' agreement
nor a unanimous shareholders' agreement governing the affairs of the Corporation
or the relationships, right and duties of its shareholders.
5.1.14 Accuracy of Books and Records
-----------------------------
The books and records, financial and otherwise, of the Corporation
fairly and correctly set out and disclose in all material respects the financial
position of the Corporation as at the date hereof and all material financial
transactions of the Corporation have been accurately recorded in such books and
records in conformity with generally accepted accounting principles.
5.1.15 No Guarantees, etc.
-------------------
The Corporation is not a party to or bound by any agreement of
guarantee, indemnification, assumption or endorsement or any like commitment of
the obligations, liabilities (contingent or otherwise) or indebtedness of any
other Person.
5.1.16 No Dividends, etc.
------------------
The Corporation has not since the Financial Year End declared or paid
and has not been deemed under the Income Tax Act (Canada) to have declared or
paid any dividends or declared or made any other distribution on its outstanding
securities and has not redeemed, purchased, or otherwise acquired any of its
outstanding securities or agreed to do so.
5.1.17 Payments to Employees and Others
--------------------------------
(a) No payments have been made or authorized since the Financial Year
End by the Corporation to its officers, directors, shareholders or
employees, to its former officers, directors, shareholders or
employees or to any Person not dealing at arm's length (as such term
is construed under the Income Tax Act (Canada) with any of the
<PAGE>
Page 9
foregoing, except in the ordinary course of business and at the
regular rates payable to them as salaries, pensions, bonuses, rents,
management fees or other remuneration of any nature.
(b) The aggregate amount of salaries, pensions, bonuses, rents,
management fees or other remuneration of any nature (other than
dividends disclosed in the Financial Statements) paid or payable by
the Corporation to or for the benefit of the Vendor or to or for the
benefit of any person not dealing with the Vendor at arm's length (as
such term is construed under the Income Tax Act (Canada)) during the
period ended the Financial Year End are accurately reflected in the
Financial Statements, and since that date have been made at no
greater rates than those prevailing at the end of the said period.
5.1.18 Capital Expenditures
--------------------
No capital expenditures have been made or authorized by the Corporation
since the Financial Year End except in the ordinary course of business.
5.1.19 Vacation Pay
------------
All vacation pay, bonuses, commissions and other employee benefit
payments payable to employees of the Corporation are reflected and have been
accrued in the books of the Corporation.
5.1.20 Leases
------
The Corporation is not a party to any lease or agreement in the nature
of a lease, whether as lessor or lessee, except as set forth and described in
Schedule 2, in which schedule is specified the parties to the lease, the date of
execution and expiry date, any options to renew, the location and description of
the property being leased and the rental payable thereunder, which leases are in
good standing and in full force and effect without amendment thereto except as
set out in Schedule 2, and no party thereto is in breach of any of the material
covenants, conditions or agreements contained in such leases. Except as
indicated in Schedule 2, the completion of the transactions contemplated by this
Agreement will not afford any of the parties to such leases, the right to
terminate such leases, nor will such transactions impose any more onerous
obligations on the Corporation under such leases than exist at present.
5.1.21 Title to Personal Property
--------------------------
The Corporation is the owner of all of its personal property, Assets and
Multimedia Assets (other than any personal property leased to it) with good and
marketable title thereto free and clear of any mortgage, lien, charge, security
interest, adverse claim or other encumbrance whatsoever except as set forth in
Schedule 3.
5.1.22 Insurance
---------
The Corporation maintains fire (with extended risk and casualty
coverage), liability, business interruption, use and occupancy and other forms
of insurance with reputable and sound insurers covering its property and assets
and protecting its business in amounts and against such losses and claims as are
generally maintained for comparable businesses and properties. Schedule 4 lists
all policies of such insurance currently maintained by the Corporation on its
assets and personnel together with a brief description of each such policy
including the type of policy, name of insurer, policy number, coverage limits,
<PAGE>
Page 10
expiration dates, annual premiums and any pending material claims thereunder and
true and complete copies of the most recent inspection reports, if any, received
from insurance underwriters as to the condition or insurance value of its
assets; the Corporation is not in default with respect to any of the provisions
contained in any such insurance policy nor has it failed to give any notice or
present any claim under any such insurance policy in due and timely fashion. To
the best of the knowledge of the Vendor there are no circumstances which would
or might entitle the Corporation to make a claim under any of such insurance
policies or which would or might be required under any of such policies to be
notified to the insurers and no material claim under any such policy has been
made by the Corporation since the Financial Year End and none of such policies
is subject to any special or unusual terms or restrictions or provides for a
premium in excess of the normal rate. No notice of cancellation or non-renewal
with respect to, nor disallowance of any claim under or with respect to any such
policy or policies has been received by the Corporation. None of the Vendor has
knowledge of any circumstances or occurrences which might form the basis of a
material increase in premiums for the current insurance coverage by the
Corporation.
5.1.23 Material Contracts
------------------
Schedule 5 describes all of the material contracts entered into by the
Corporation. Except for the material contracts described in Schedule 5, the
leases described in Schedule 2, the insurance policies described in Schedule 4
and agreements, contracts and commitments in the ordinary course of business
which have no more than three months to run, the Corporation has no outstanding
agreement, contract or commitment, whether written or oral, of any nature or
kind whatsoever. Except as specifically noted on any of the said schedules, no
consents are required from the parties to the said contracts, agreements,
engagements or commitments to the change in control of the Corporation
contemplated hereby nor are there any defaults thereunder.
5.1.24 No Default Under Agreements
---------------------------
The Corporation is not in default under or in breach of any material
contract, agreement (whether written or oral), indenture or other instrument to
which it is a party or by which it is bound and to the best of the knowledge of
the Vendor there exists no set of facts which, after notice or lapse of time or
both, would constitute such a default or breach, and each of such contracts,
agreements, indentures or other instruments is now in good standing and in full
force and effect without amendment thereto and the Corporation is entitled to
all rights and benefits thereunder.
5.1.25 Non-Arm's Length Contracts
--------------------------
Except as disclosed to the Purchaser in writing, the Corporation is not
a party to any contract, agreement or arrangement with any associated or
affiliated corporation within the meaning of the Company Act, R.S.B.C., 1996,
c. 62 and amendments thereto or with any Person with which it does not deal at
arm's length within the meaning of the Income Tax Act (Canada).
<PAGE>
Page 11
5.1.26 No Loans to Directors etc.
--------------------------
The Corporation has no loan or other indebtedness outstanding (other
than the normal salaries, bonuses, fringe benefits and the obligations to
reimburse for expenses incurred on behalf of the Corporation in the normal
course of employment) which has been made or incurred to any director, officer,
shareholder or employee, to any former director, officer, shareholder or
employee of the Corporation or to any Person with which it or any of the
foregoing do not deal at arm's length within the meaning of the Income Tax Act
(Canada).
5.1.27 Litigation
----------
Except as disclosed in Schedule 6, there are no actions, suits,
investigations, arbitration proceedings or other proceedings (whether or not
purportedly on behalf of the Corporation) pending or threatened against or
affecting the Corporation, the Vendor, the title of the Vendor to the Purchased
Shares or that would enjoin, restrict or prohibit the purchase and sale of the
Purchased Shares contemplated hereby, at law or in equity or before or by any
federal, provincial, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or by
or before any arbitrator. The Vendor is not aware of any existing grounds on
which any such action, suit or proceeding might be commenced with any reasonable
likelihood of success; and, except as disclosed in the said Schedule 6, there is
not currently outstanding against the Corporation or the Vendor any judgment,
decree, injunction, ruling, order or award of any court, governmental
department, commission, board, bureau, agency, instrumentality, domestic or
foreign, or arbitrator.
5.1.28 Tax and Government Returns
--------------------------
The Corporation has duly filed in a timely manner all Federal and
Provincial Tax and all Corporate Capital Tax returns required to be filed by it
in respect of all fiscal periods up to and including the Financial Year End
(including any and all tax elections available to the Corporation in relation to
such tax returns) and all information returns as to which the non-filing or late
filing could result in interest or penalties, has made complete and accurate
disclosure in such returns and has paid all taxes shown on such returns as being
due and payable and has also paid all assessments and reassessments and all
other taxes, governmental charges, penalties, interest and fines due and payable
by the Corporation in respect of such returns up to the Financial Year End date
hereof There are no agreements, waivers or other arrangements providing for an
extension of time with respect to the assessment or reassessment of such taxes
or the filing of any such tax return by, or payment of any such tax by, or
levying of any governmental charge against, the Corporation. There are no
actions, audits, assessments, reassessments, suits, proceedings, investigations
or claims now threatened or pending against the Corporation in respect of such
taxes or governmental charges or any matters under discussion with any
governmental authority relating to such taxes or governmental charges asserted
by any such authority. The Corporation has withheld from each payment made by it
the amount of all such taxes and other deductions required to be withheld
therefrom and has paid the same to the proper taxing or other authority within
the time prescribed under any applicable legislation or regulation.
<PAGE>
Page 12
5.1.29 Goods and Services and Social Services Taxes and Returns
--------------------------------------------------------
The Corporation has duly filed in a timely manner all Goods and Services
Tax and Social Services Tax returns required to be filed by it in respect of all
periods up to and including the date hereof (including any and all tax elections
available to the Corporation in relation to such tax returns) and all
information returns as to which the non-filing or late filing could result in
interest or penalties, has made complete and accurate disclosure in such returns
and has paid all taxes shown on such returns as being due and payable and has
also paid all assessments and reassessments and all other taxes, governmental
charges, penalties, interest and fines due and payable by the Corporation in
respect of such returns up to the date hereof. There are no agreements, waivers
or other arrangements providing for an extension of time with respect to the
assessment or reassessment of such taxes or the filing of any such tax return
by, or payment of any such tax by, or levying of any governmental charge
against, the Corporation. There are no actions, audits, assessments,
reassessments, suits, proceedings, investigations or claims now threatened or
pending against the Corporation in respect of such taxes or governmental charges
or any matters under discussion with any governmental authority relating to such
taxes or governmental charges asserted by any such authority. The Corporation
has withheld from each payment made by it the amount of all such taxes and other
deductions required to be withheld therefrom and has paid the same to the proper
taxing or other authority within the time prescribed under any applicable
legislation or regulation.
5.1.30 Compliance with Applicable Laws, etc.
-------------------------------------
The Corporation has conducted and is conducting its business in
compliance with all applicable laws, rules and regulations of each jurisdiction
in which its business is carried on and is not in breach of any such laws, rules
or regulations, and is duly licensed, registered or qualified in the
jurisdiction in which it owns or leases its assets or carries on its business,
to enable the business to be carried on as now conducted and its property and
assets to be owned, leased and operated, and all such licenses, registrations
and qualifications are valid and subsisting and in good standing and none of the
same contains any burdensome term, provision, condition or limitation which has
or may have adverse effect on the operation of the said business.
5.1.31 Residence of Vendor
---------------------
The Vendor is a not non-resident of Canada within the meaning of the
Income Tax Act (Canada).
5.1.32 No Liabilities, etc.
--------------------
There are no liabilities of the Corporation of any kind whatsoever,
contingent or otherwise, existing on the date hereof in respect of which the
Corporation or the Purchaser may be liable on or after the completion of the
transactions contemplated by this Agreement other than:
(a) liabilities (including liabilities for unpaid taxes) disclosed on,
reflected in and provided for in the Financial Statements;
(b) liabilities disclosed or referred to in this Agreement or the
Schedules; and
(c) liabilities incurred in the ordinary course of business and
attributable to the period from the Financial Year End to the
Completion Date.
<PAGE>
Page 13
5.1.33 Condition and Sufficiency of Assets
-----------------------------------
All facilities, machinery and equipment owned and used by the
Corporation are in good operating condition and in a state of good repair and
maintenance, reasonable wear and tear excepted. The Corporation owns or leases
all of the property and assets necessary for the conduct of its business as
currently conducted.
5.1.34 Operational Permits and Licences
--------------------------------
All operational permits and licenses required by the Company to operate
its business including, but not limited to, the business licence of the
Corporation are in good standing.
5.1.35 Ownership Assets
----------------
The Corporation is the legal and beneficial owner of all of the Assets
and the Multimedia Assets and no Person has any legal or beneficial right or any
agreement to acquire any legal or beneficial right in or to the Assets and the
Multimedia Assets.
ARTICLE 6
COVENANTS
---------
6.1 Delivery of Documents, Consents, Books and Records
--------------------------------------------------
Vendor shall on or before the Document Date deliver or cause to be
delivered to the solicitor for the Purchaser the following:
(a) the share certificate(s) representing the Purchased Shares duty
endorsed for transfer as at the Effective Date to the Purchaser;
(b) a waiver dated the Effective Date signed by each party comprising
the Vendor waiving the provisions of Part 26.2 of the Articles of the
Corporation;
(c) a Notice of Termination addressed to the Corporation and the
Purchaser acknowledging the termination, as at the Effective Date, of
the Shareholders' Agreement made between the individuals comprising
the Vendor as of January 19, 1999 and the Corporation duly accepted
by the Corporation;
(d) a signed notice of the Vendor to the Corporation of the transfer of
the Purchased Shares to the Purchaser and the assignment of the
Shareholders' Loans to the Purchaser dated the Effective Date;
(e) signed Resolutions of the Directors of the Corporation dated the
Effective Date:
(i) accepting share certificate number A-8 from Douglas R. Walls
for cancellation, cancelling the shares represented thereby and
returning such shares to the treasury of the Corporation;
<PAGE>
Page 14
(ii) authorizing the transfer of the Purchased Shares to the
Purchaser, the recording of such transfer in the records of the
Corporation showing the Purchaser as the holder of the
Purchased Shares as at the Effective Date and the issuance of
share certificates in the name of the Purchaser dated the
Effective Date representing the Purchased Shares; and
(iii) acknowledging the assignment of the Shareholders' Loans by the
Vendor to the Purchaser;
(f) signed share certificates in the name of the Purchaser dated the
Completion Date representing the Purchased Shares; and
(g) the resignations in writing of all of the then current directors and
officers of the Corporation, such resignations to be effective on the
Effective Date;
(h) properly issued Promissory Notes in the name of the appropriate
individuals to the Purchaser in the amount of the Shareholders' Loans
and executed Assignments thereof;
(i) all records maintained by the Corporation in connection with its
business, including all minute books, corporate records and
documents, corporate seals, books of account, accounting records,
past financial statements, tax returns, share certificate books and
share records, all contracts, agreements, licenses, permits, patents,
trade marks or other instruments to which it is a party or by which it
is bound, lists of suppliers and all other documents, files, records
and other data financial or otherwise of the Corporation which may be
in the possession or within the control of the Corporation or the
Vendor.
(j) the approvals or consents from all Persons, including all appropriate
federal, provincial, municipal or other governmental or administrative
bodies, as are required to permit the change of ownership of the
Purchased Shares contemplated hereby.
(k) acknowledgements from the Lessors to the leases listed in Schedule 2
hereto that the same are in full force and effect and there is no
outstanding breach thereof and that change of control of the
Corporation as a result of the transactions contemplated hereby is
consented to;
(l) consents from the parties to those contracts, agreements, engagements
or commitments referred to in Schedule 5 which require consent to the
change in control of the Corporation contemplated hereby;
(m) a Loan Agreement duly executed by the Corporation and those
individuals comprising the Vendor named as parties thereto, effective
the Effective Date, in the form attached hereto as Schedule 10;
(n) a Profit Sharing Agreement duly executed by the Corporation and those
individuals comprising the Vendor named as parties thereto, effective
the Effective Date, in the form attached hereto as Schedule 11;
<PAGE>
Page 15
(o) the minute book, corporate seal, corporate records, books of account
and financial records of the Corporation;
(p) a legal opinion of the solicitors for the Corporation to the effect
that:
(i) the Corporation is duly incorporated and is validly subsisting
and in good standing with the office of the registrar of
Companies for the Province of British Columbia with respect to
all necessary corporate filings;
(ii) the directors and officers of the Corporation are as indicated
in the records of the office of the Registrar of Companies for
the Province of British Columbia; and
(iii) to their knowledge, there is no litigation threatened or pending
against the Corporation; and
(q) such further and other documents, resolutions, notices, consents and
acknowledgements as the Purchaser, in its discretion, deems
necessary;
6.2 Purchaser's Covenants On and After Completion
---------------------------------------------
Subject to the deliveries to be made by the Vendor pursuant to Paragraph
6.1 being made the Purchaser covenants and agrees as follows:
(a) The Purchaser shall upon completion of the purchase transaction
contemplated herein take all necessary steps and proceedings to
appoint the New Directors and as soon thereafter as is practicable
shall lodge a Notice of Change of Directors at the Corporate
Registry for the Province of British Columbia;
(b) The Purchaser shall upon completion of the purchase transaction
contemplated herein cause the New Directors to take all necessary
steps and proceedings to appoint the New Officers;
(c) The Purchaser shall on the Completion Date of the purchase
transaction contemplated herein execute the Loan Agreement and the
Profit Sharing Agreement and deliver an executed copy thereof to the
Vendor;
(d) The Purchaser acknowledges that the documents to be delivered by the
Vendor on or before the Document Date pursuant to Paragraph 6.1
hereof (the "Vendor's Documents) shall be held by the Purchaser's
solicitors in escrow until such time as the Purchaser has delivered
the Rule 144 Shares to the Vendor pursuant to Paragraph 4.2 hereof
and the executed Loan Agreement and Profit Sharing Agreement
pursuant to Paragraph 6.2(c) hereof, which deliveries are to be made
on the Completion Date, and the Vendor's Documents shall be returned
to the Vendor or the Vendor's solicitor immediately upon demand by
the Vendor or the Vendor's solicitors in the event that the
deliveries by the Purchaser to the Vendor set out in Paragraph 4.2
and 6.2(c) hereof are not made on the Completion Date. The Vendor
acknowledges that delivery to the Vendor's solicitor by the
Purchaser's solicitor, subject to any undertakings arising out of the
terms of this Agreement, shall be considered effective delivery for
the purposes of this Agreement; and
<PAGE>
Page 16
(e) The Purchaser shall retain A. Ross Belyea as director for the
production of the First Episode and the Next Twelve Episodes (as
such terms are defined in the Profit Sharing Agreement attached as
Schedule 11) subject to A. Ross Belyea being able to complete the
production of the First Episode within the Budget Period at a cost
after deduction of any Vendors' Funds equal to or less than the
Budget Amount (as such terms are defined in the Loan Agreement
attached hereto as Schedule 10) and being able to complete the
production of the Next Twelve Episodes within reasonable mutually
agreeable time frames and budget amounts recognizing always that the
intention of the Purchaser, the Vendors and A. Ross Belyea is to
maximize the net after tax profit of the Corporation.
6.3 Financial Statements and Returns
--------------------------------
The Vendor further covenants and agrees that as soon as possible following
the Completion Date and in any event on or before that date which is the earlier
of ninety (90) days after the Completion Date or the date which is ten (10)
Business Days prior to the last filing date allowed by the respective
governmental authority with which any such Returns (as hereinafter defined) are
to be filed, provide all assistance and records necessary to permit the
Corporation to prepare:
(a) financial statements of the Corporation for the period from the
Financial Year End to the Effective Date (the "Stub Period"), which
financial statements, collectively, shall hereinafter be called the
"Statement";
(b) a Corporate Capital Tax Return of the Corporation for the Stub
Period and the preceding Financial Year;
(c) a Goods and Services Tax Return and, if required, a Social Services
Tax Return of the Corporation to the Effective Date;
(d) all necessary returns in respect of all employee withholdings
required to be withheld by the Corporation to the Effective Date; and
(e) any other returns required to be filed by the Corporation with any
third party for the businesses of the Corporation to the Effective
Date
(all of which returns, collectively, hereinafter shall be called the
"Returns").
The Statement and Returns shall be reviewed and approved by the
accountant of the Purchaser prior to filing and the approved amounts to be
remitted therewith shall be remitted or caused to be remitted by the
Corporation.
The Vendor shall indemnify the Purchaser and the Corporation for any
payment amount interest thereon or penalties incurred by the Corporation because
of any delay in payment of an amount set out on the Returns or because any of
the Returns are filed later than required by law in consequence of the failure
of the Vendor to provide assistance and records as and when required by the
Purchaser and the Corporation.
<PAGE>
Page 17
6.4 Costs and Expenses
------------------
The Vendor and Purchaser shall each bear their own costs and expenses in
relation to the preparation of agreements relating to and the completion of the
purchase and sale of the Purchased Shares and Shareholders' Loans.
ARTICLE 7
CONDITIONS PRECEDENT
--------------------
7.1 Vendor's Conditions Precedent
-----------------------------
The obligation of the Vendor to sell the Purchased Shares and assign the
Shareholders' Loans as set out herein are subject to the Purchaser having made
the delivery to the Vendor set out in Paragraph 4.2 on the Completion Date.
7.2 Purchaser's Conditions Precedent
--------------------------------
The obligations of the Purchaser set out in this Agreement are subject to
the fulfilment by the Vendor, at or prior to the time for performance thereof of
the following conditions:
(a) the Vendor shall, on or before the Document Date, have delivered those
certificates, documents, share certificates, consents and other
documents and agreements set out in Paragraph 6.1 inclusive;
(b) the title to the personal property, assets, Assets and Multimedia
Assets of the Corporation being free and clear of all financial
encumbrances as at the Document Date;
(c) the purchase and sale of the Purchased Shares and Shareholders' Loans
and the issuance of the Rule 144 Shares to the Vendor by the Purchaser
as contemplated herein shall have been approved by any and all
regulatory authorities whose prior approval thereof is required by
law;
(d) no damage, destruction, or loss to any Assets, Multimedia Assets or
other assets of the Corporation shall have occurred prior to the
Closing;
(e) prior to the Closing no injunction or restraining order of a court or
administrative tribunal of competent jurisdiction shall be in effect
prohibiting the transactions between the parties contemplated hereby
and no action or proceeding shall have been instituted and remain
pending before any court or administrative tribunal to restrain or
prohibit the transactions between the parties contemplated hereby; and
(f) prior to the Closing no event shall have occurred or condition or
state of facts of any character shall have arisen or legislation,
whether by statute, rule, regulation, by-law, or otherwise, shall have
been introduced which might reasonably be expected to have a
material adverse effect upon the financial condition, results of
operations, business, or prospects of the Corporation, other than
<PAGE>
Page 18
those of general application to businesses similar to that of the
Corporation.
7.3 The Vendor's Conditions are for the exclusive benefit of the Vendor and
may be waived in writing by the Vendor in whole or in part on or before the date
for performance thereof or failing a specific date for performance on or before
the Completion Date.
7.4 The Purchaser's Conditions are for the exclusive benefit of the
Purchaser and may be waived in writing by the Purchaser in whole or in part on
or before the date for performance thereof or failing a specific date for
performance on or before the Completion Date.
7.5 If the Purchaser does not waive all of the conditions precedent set out
in Paragraph 7.2 hereof then the Purchaser shall have no further interest in the
Purchased Shares or Shareholders' Loans and all obligations of the Vendor and
Purchaser one to the other set out herein shall automatically terminate.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------------------
8.1 Certificate of a Party
----------------------
All statements contained in any certificate or other instrument delivered
by or on behalf of any party pursuant to or in connection with the transactions
contemplated by this Agreement shall be deemed to be made by such party
hereunder.
8.2 Survival of Representations and Warranties of the Vendor
--------------------------------------------------------
All representations and warranties of the Vendor contained in this
Agreement or contained in any agreement, certificate or other document delivered
or given pursuant to this Agreement shall survive the Closing and,
notwithstanding such Closing or any investigation made by or on behalf of the
Purchaser with respect thereto, shall continue in full force and effect for the
benefit of the Purchaser:
(a) in respect of matters other than those set out in paragraph 8.2(b) and
(c) hereof for a period of one (1) year from the Closing;
(b) in respect of tax matters, unless resulting from any misrepresentation
made or fraud committed in filing a return or supplying information
for the purposes of the Income Tax Act (Canada), or any other
legislation imposing tax on the Corporation, for the period
commencing on the Closing and ending on the date on which the last
applicable limitation period under applicable income tax or other tax
legislation expires with respect to any taxation year which is
relevant in determining any liability under this Agreement with
respect to tax matters; and
(c) there shall be no limit on the representations and warranties relating
to title of the Vendor to the Purchased Shares and the Shareholders'
Loans, title of the Corporation to the Assets and Multimedia Assets or
relating to tax liability of the Corporation based on any
<PAGE>
Page 19
misrepresentation made or fraud committed in filing a return or
supplying information for purposes of any legislation imposing tax on
the Corporation,
and any claim in respect thereof (except a claim based on fraud) shall be made
within such period in accordance with the provisions set out in Article 10 and
upon the expiry of such period the Vendor shall have no further liability to the
Purchaser hereunder with respect to any such representations or warranties.
8.3 Survival of Covenants
---------------------
All covenants of the Vendor and the Purchaser contained in this Agreement
including the indemnity covenants, or in any agreement or other document
delivered or given pursuant to or in connection with this Agreement, shall
survive the Closing.
ARTICLE 9
CLOSING ARRANGEMENTS
--------------------
9.1 Time and Place of Closing
-------------------------
The completion of the transactions contemplated by this Agreement shall
take place at the offices of the solicitors for the Purchaser, Beadle Woods,
Suite 1710, 1177 West Hastings Street, Vancouver, British Columbia, Canada, and
shall commence at 10:00 o'clock a.m. local time at Vancouver, British Columbia,
Canada on the Completion Date, or at such other place on such other date or at
such other time as may be mutually determined by the parties hereto.
9.2 The purchase and sale of the Purchased Shares herein contemplated shall,
upon completion, be effective from 12:01 a.m. local time at Vancouver, British
Columbia, Canada on the Effective Date.
9.3 All matters of payment, execution, delivery and registration of
documents set out in this Agreement shall be deemed to be concurrent
requirements notwithstanding the actual date of such payment, execution,
delivery or registration and it is specifically agreed by the Vendor and
Purchaser that nothing will be complete at the Closing until all such matters
have been completed.
ARTICLE 10
INDEMNIFICATION
--------------
10.1 Indemnification by the Vendor and Indemnifier
---------------------------------------------
The Vendor shall indemnify and save the Purchaser and the Corporation
harmless from and against all losses, costs, damages and liabilities suffered or
incurred by the Purchaser or the Corporation relating to, arising from, or as a
result of any breach of representation, warranty or covenant on the part of the
Vendor contained in this Agreement or in any agreement or document delivered to
the Purchaser pursuant to or in connection with this Agreement, including,
without limitation, all claims, actions, suits, demands, costs and expenses,
including reasonable legal fees and disbursements on a solicitor and own client
basis and accounting fees, in respect of the foregoing.
<PAGE>
Page 20
10.2 Notice of Claim
---------------
If the Purchaser (herein called the "Indemnified Party") wishes to make a
claim for indemnification (herein called a "Claim") pursuant to this Article 10
against the Vendor (herein called the "Indemnifying Party"), the Indemnified
Party shall promptly give notice to the Indemnifying Party of the Claim. Such
notice shall specify whether the Claim originates with the Indemnified Party
(herein called an "Original Claim") or with a Person other than the Indemnified
Party (herein called a "Third Party Claim"), and shall also specify with
reasonable particularity (to the extent that the information is available):
(a) the factual basis for the Claim; and
(b) the amount of the Claim, or, if an amount is not then determinable, an
approximate and reasonable estimate of the potential amount of the
Claim.
10.3 Procedure for Indemnification
-----------------------------
(a) Following receipt of notice of a Claim from an Indemnified Party, the
Indemnifying Party shall have thirty (30) days (or such lesser period
as may be required by law to file a defence) to make such
investigation of the Claim as the Indemnifying Party considers
necessary or desirable. For the purpose of such investigation, the
Indemnified Party shall make available to the Indemnifying Party and
its authorized representatives the information relied upon by the
Indemnified Party to substantiate the Claim. If the Indemnified Party
and the Indemnifying Party agree at or prior to the expiration of such
thirty (30) day period (or any extension thereof upon which they
agree) to the validity and the amount of the claim' the Indemnifying
Party shall immediately pay such amount to the Indemnified Party in
full.
(b) With respect to any Third Party Claim, the Indemnifying Party shall
have the right exercisable by written notice to the Indemnified Party
not later than thirty (30) days (or such lesser period as may be
required by law to file a defence) following the Indemnifying Parties
receipt of the notice of the Third Party Claim pursuant to Paragraph
10.2 and at their own expense, to participate in or assume control of
the negotiation, settlement or defence of the Third Party Claim and,
in such event, the Indemnifying Party shall reimburse the Indemnified
Party for all of the Indemnified Party's reasonable actual out-of-
pocket expenses as a result of such participation or assumption and,
at the Indemnified Parties' request, furnish the Indemnified Party
with reasonable security against any costs or liabilities to which the
Indemnified Party may be or become exposed by reason of such
negotiation, settlement or defence. If the Indemnifying Party elects
to assume such control, the Indemnified Party shall cooperate with the
Indemnifying Party, shall have the right to participate in the
negotiation, settlement or defence of such Third Party Claim at its
own expense and shall have the right to disagree on reasonable grounds
with the selection and retention of counsel, in which case counsel
satisfactory to the Indemnifying Party and the Indemnified Party shall
be retained by the Indemnifying Party. If the Indemnifying Party,
having elected to assume such control thereafter fails to defend any
such Third Party Claim within a reasonable time, the Indemnified Party
shall be entitled to assume such control and the Indemnifying Party
shall be bound by the results obtained by the Indemnified Party with
respect to such Third Party Claim.
<PAGE>
Page 21
10.4 Additional Rules and Procedures
-------------------------------
The obligation of the Indemnifying Party to indemnify the Purchaser
pursuant to this Article shall also be subject to the following:
(a) any Claim arising as a result of a breach of a representation or
warranty shall be made not later than the date on which, pursuant to
Article 8, such representation or warranty terminated;
(b) if any Third Party Claim is of such a nature that the Indemnified
Party is required by applicable law to make a payment to any Person
(a "Third Party") with respect to such Third Party Claim before the
completion of settlement negotiations or related proceedings, the
Indemnified Party may make such payment and the Indemnifying Party
shall, forthwith after demand by the Indemnified Party, reimburse the
Indemnified Party for any such payment. If the amount of any liability
under the Third Party Claim in respect of which such a payment was
made, as finally determined, is less than the amount which was paid by
the Indemnifying Party to the Indemnified Party, the Indemnified Party
shall, forthwith after receipt of the difference from the Third Party,
pay such difference to the Indemnifying Party;
(c) except in the circumstance contemplated by Subparagraph 10.4(b) and
whether or not the Indemnifying Party assumes control of the
negotiation, settlement or defence of any Third Party Claim, the
Indemnified Party shall not negotiate, settle, compromise or pay any
Third Party Claim except with the prior written consent of the
Indemnifying Party (which consent shall not be unreasonably withheld);
(d) the Indemnified Party shall not permit any right of appeal in respect
of any Third Party Claim to terminate without giving the Indemnifying
Party notice thereof and an opportunity to contest such Third Party
Claim;
(e) the Indemnified Party and the Indemnifying Party shall co-operate
fully with each other with respect to Third Party Claims, shall keep
each other fully advised with respect thereto (including supplying
copies of all relevant documents promptly as they become available)
and shall be prepared to discuss the Third Party Claim with each other
and with counsel at all reasonable times;
(f) notwithstanding Paragraph 10.3(b), an Indemnifying Party shall not
settle any Third Party Claim or conduct any related legal or
administrative proceeding in a manner which would, in the opinion of
the Indemnified Party, acting reasonably, have a material adverse
impact on the Indemnified Party;
(g) the final determination of any Third Party Claim, including all
related costs and expenses will be binding and conclusive upon the
parties hereto as to the validity or invalidity, as the case may be,
of such Third Party Claim;
(h) if the Indemnified Party subsequently recovers all or part of the
Third Party Claim from any other Personal legally obligated to pay the
claim, the Indemnified Party shall forthwith repay to the Indemnifying
<PAGE>
Page 22
Party the amounts recovered up to an amount not exceeding the payment
made by the Indemnifying Party by way of indemnity;
(i) the obligations of the various Persons comprising the Indemnifying
Party shall be joint as well as several. There shall be no requirement
that the Indemnified Party proceed against any one or all of the
Persons comprising the Indemnifying Party before proceeding against
any other such Person; and
(j) the provisions of this Article 10 shall constitute the sole remedy of
the Purchaser against the Vendor with respect to any and all breaches
of any agreement covenant, representation or warranty made by such
party in this Agreement or in any agreement; certificate or other
document given pursuant to this Agreement.
ARTICLE 11
MISCELLANEOUS
-------------
11.1 Brokerage, Commissions, etc.
----------------------------
The Purchaser agrees to indemnify and save harmless the Vendor from and
against any and all claims whatsoever for any brokerage, commission or other
remuneration payable or alleged to be payable to any broker, agent or other
intermediary who purports to act or has acted for the Purchaser.
11.2 Further Assurances
------------------
This Agreement shall operate as an actual conveyance of the Purchased
Shares and Shareholders' Loans, but each of the parties hereto covenants and
agrees upon the request of the other party or parties hereto, whether before or
after Closing, that it shall do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged or delivered all such further acts, deeds,
documents, assignments, transfers, conveyances, powers of attorney and
assurances as may be reasonably necessary or desirable to give full effect to
this Agreement.
11.4 Notices
-------
Any notice, direction or other instrument required or permitted to be
given to any party hereunder shall be in writing -and shall be sufficiently
given if delivered personally, or if sent by registered prepaid mail or if
transmitted by telecopier to such party:
(a) in the case of a notice to the Purchaser at:
Redmond Capital Corp.
1250 West Hastings Street
Vancouver, British Columbia
Canada V6E 2M4
Telecopier No. (604) 638-1642
<PAGE>
Page 23
with a copy for information purposes only to:
M. Byron Woods
Beadle Woods, Corporate Commercial Lawyers
Suite 1710, 1177 West Hastings Street
Vancouver, British Columbia
Canada V6E 2L3
Telecopier No. (604) 681-0139
(b) in the case of a notice to the Vendor at:
1255 West Pender Street
Vancouver, British Columbia
Canada V6E 2V I
Telecopier No. (604) 684-2108
Any such notice, direction or other instrument, if delivered personally,
shall be deemed to have been given and received on the date on which it was
delivered at such address, provided that if such day is not a Business Day then
the notice shall be deemed to have been given and received on the Business Day
next following such day. Any notice mailed as aforesaid shall be deemed to have
been given and received on the Third Business Day next following the date of its
mailing. Any notice transmitted by telecopier shall be deemed to have been given
and received on the date of confirmation of receipt by the recipient provided
that if such day is not a Business Day or if it is received after 5:00 o'clock
p.m. in the recipient's time zone on the day of its transmission then it shall
be deemed to have been given and received at the opening of business in the
office of the recipient on the first Business Day next following the
transmission thereof.
Any party hereto may change its address for service from time to time by
notice given to the other parties hereto in accordance with the forgoing.
11.5 Time of the Essence
-------------------
Time shall be of the essence of this Agreement.
11.6 Expense
-------
Except as otherwise provided herein, costs and expenses (including,
without limitation, the fees and disbursements of legal counsel) incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses.
11.7 Applicable Law
--------------
This Agreement shall be construed and enforced in accordance with and the
rights of the parties shall be governed by, the laws of the Province of British
Columbia and the laws of Canada applicable therein. Any and all disputes arising
under this Agreement, whether as to interpretation, performance or otherwise,
shall be subject to the exclusive jurisdiction of the Courts of the Province of
<PAGE>
Page 24
British Columbia and each of the parties hereto hereby irrevocably attorns to
the jurisdiction of the Courts of such Province.
11.8 Entire Agreement
----------------
This Agreement (including the schedules hereto) and each of the other
agreements or documents entered into in connection with or pursuant to this
Agreement constitutes the entire agreement between the parties hereto with
respect to the transactions provided for herein and cancels and supersedes any
prior understandings, agreements, negotiations and discussions between the
parties hereto with respect thereto. There are no representations, warranties,
terms, conditions, undertakings or collateral agreements or understandings,
express or implied, between the parties hereto other than is expressly set forth
in this Agreement or in the said other agreements or documents. This Agreement
may not be amended or modified in any respect except by written instrument
executed by each of the parties hereto.
11.9 Counterparts
------------
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same agreement and may be delivered by facsimile.
11.10 Assignment
----------
This Agreement and the rights and obligations of the Vendor and the
Purchaser set out herein may not be assigned by the Vendor or the Purchaser.
11.11 Joint and Several Liability
---------------------------
All obligations, representations, warranties, covenants and agreements of
the Vendor set out herein are joint as well as several.
11.12 Form of Documents Delivered by Vendor
-------------------------------------
All documents, share certificates, assignments, legal opinions and
certificates delivered to the purchaser on or prior to the Completion Date are
required to be in a form satisfactory to the Purchaser's legal counsel.
11.13 Parties in Interest
-------------------
This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, personal
representatives and successors.
<PAGE>
Page 25
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto
this day of July, 1999.
REDMOND CAPITAL CORP.
per: /s/ Kevan Garner
-----------------------------
Authorized Signatory
/s/ Douglas R. Walls /s/ Maureen McDonald
-------------------------------------- --------------------------------------
DOUGLAS R. WALLS Witness
/s/ A. Ross Belyea /s/ Joan MacKenzie
-------------------------------------- --------------------------------------
A. ROSS BELYEA Witness
/s/Jason Gray /s/ signed
-------------------------------------- --------------------------------------
JASON GRAY Witness
/s/ Joan MacKenzie /s/ A. Ross Belyea
-------------------------------------- --------------------------------------
JOAN MacKENZIE Witness
/s/ E.A. Magee /s/ T. Sanford
-------------------------------------- --------------------------------------
EDWARD A. MAGEE Witness
/s/Stan Semrau /s/ Joan MacKenzie
-------------------------------------- --------------------------------------
STAN SEMRAU Witness
<PAGE>
Exhibit 10b
SCHEDULE II
-----------
PROFIT SHARING AGREEMENT
------------------------
This Agreement made effective the 1st day of July, 1999.
BETWEEN:
REDMOND CAPITAL CORP., a company duly incorporated under the laws of the
Province of British Columbia and having an office at 1250 West Hastings
Street, Vancouver, British Columbia, V6E 2M4
(hereinafter called the "Redmond")
OF THE FIRST PART
AND:
DOUGLAS R. WALLS, A. ROSS BELYEA, JASON GRAY and JOAN MacKENZIE,
Businesspersons, all c/o 1255 West Pender Street, Vancouver, British
Columbia, V6B 2V I
(hereinafter collectively called the "Vendors")
OF THE SECOND PART AND:
SIRIUS ANIMATION INCORPORATED, a company duly incorporated under the
laws of the Province of British Columbia and having its office at 1255
West Pender Street, Vancouver, British Columbia, V6B 2VI
(hereinafter called the "Corporation")
OF THE THIRD PART
WHEREAS:
A. Redmond as purchaser and the Vendors as vendors have entered into a Share
Purchase Agreement made effective July 1, 1999 whereby Redmond purchased and the
Vendors sold all of the issued shares of the Corporation legally and
beneficially owned by the Vendors and assigned to Redmond all of the interest of
the Vendors in loans advanced by the Vendors to the Corporation;
B. Redmond as lender and the Corporation as borrower have entered into a Loan
Agreement made effective July 1, 1999 (the "Loan Agreement") whereby Redmond
agreed to advance certain loans to the Corporation (the "Loans") and the
Corporation granted security to Redmond for the repayment of the Loans all as
more particularly set out in the Loan Agreement;
C. It has been agreed by Redmond and the Vendors, as a term of the Share
Purchase Agreement that the parties thereto would deliver this Profit Sharing
Agreement concurrently with the completion of the transactions contemplated by
the Share Purchase Agreement.
<PAGE>
Page 2
C. it has been agreed by Redmond and the Vendors, as a term of the Share
Purchase Agreement that the parties thereto would deliver this Profit Sharing
Agreement concurrently with the completion of the transactions contemplated by
the Share Purchase Agreement.
NOW THEREFORE in consideration of the payment by Redmond and the Vendors each to
the other of the sum of $10.00 (the receipt and sufficiency whereof is hereby
acknowledged) and other good and valuable consideration including Redmond and
the Vendors entering into the Share Purchase Agreement and Redmond entering into
the Loan Agreement the parties hereto agree as follows:
1. Redmond and the Vendors covenant and agree that, subject to the provisions
of paragraph 2 hereinafter, the net after tax profit of the Corporation
from the first episode of "The Elf King" series (the "First Episode") to be
developed by the Corporation (the "First Episode Net Profit"), within 15
days after the First Episode Net Profit has been determined, shall be paid
out by the Corporation in the following priority to the parties:
(a) firstly to Redmond in repayment of all Loans made to the Corporation by
Redmond pursuant to the Loan Agreement; and
(b) secondly any remainder of the First Episode Net Profit to Redmond as to
a 75% share (the "Redmond Share") and the Vendors as to a 25% share
(the "Vendors' Share").
2. The Vendors' Share of the First Episode Net Profit shall be decreased and
the Redmond Share of the First Episode Net Profit shall be increased by the
following percentages in the event of the following events occurring:
(a) If Redmond elects, pursuant to the terms of the Loan Agreement, to advance
funds thereunder to the Corporation in excess of the sum of $360,000.00
(the "Excess Advances") then and in that event the Vendors' Share of the
First Episode Net Profit shall be reduced by that amount obtained when the
Vendors' Share (ie. 25%) is multiplied by a fraction the numerator of
which will be the amount of the Excess Advances and the denominator of
which shall be $150,000.00 (such that in the event the total of the Excess
Funds was $150,000.00 the Vendors' Share would be reduced to 0%) and the
Redmond Share shall be increased by an amount equal to such reduction in
the Vendors' Share; or
(b) If the First Episode is not completely developed and ready for
distribution (hereinafter called "Completion") on or before January 15,
2000 and Redmond elects not to advance the Excess Funds the Vendors' Share
shall be reduced by that amount obtained when the Vendors' Share (ie. 25%)
is multiplied by a fraction the numerator of which will be the number of
days after January 15, 2000 that Completion of the First Episode is
achieved and the denominator of which shall be 75 (such that if Completion
of the First Episode is achieved on March 30, 2000 or later the Vendors'
Share shall be reduced to 0%) and the Redmond Share shall be increased by
an amount equal to such reduction in the Vendors' Share.
3. Redmond and the Vendors covenant and agree that the net after tax profit
of the Corporation from episodes two through thirteen of "The Elf King"
series (the "Next Twelve Episodes") to be developed by the Corporation (the
"Next Twelve Episodes Net Profit"), within 15 days after the net after tax
profit of each of the Next Twelve Episodes has been determined, shall be
paid out by the Corporation in the following priority to the parties:
<PAGE>
Page 3
(a) firstly to Redmond in repayment of all Loans made to the Corporation by
Redmond pursuant to the Loan Agreement; and
(b) secondly any remainder of the Next Twelve Episode Net Profit to Redmond
as to a 90% share (the "Redmond Share") and the Vendors as to a 10%
share (the "Vendors' Share").
4. All net after tax profit of the Corporation other than the First Episode
Net Profit and the Next Twelve Episodes Net Profit shall be distributed to
Redmond as and when the directors of the Corporation, in their discretion,
may decide.
5. This Profit Sharing Agreement shall be effective from and including July 1,
1999.
6. It shall be a condition precedent to this agreement and the obligations of
the parties hereto that this agreement shall have been approved by any and
all regulatory authorities whose prior approval hereof is required by law.
7. This Agreement (including the schedules hereto) and each of the other
agreements or documents entered into in connection with or pursuant to this
Agreement constitutes the entire agreement between the parties hereto with
respect to the transactions provided for herein and cancels and supersedes
any prior understandings, agreements, negotiations and discussions between
the parties hereto with respect thereto. There are no representations,
warranties, terms, conditions, undertakings or collateral agreements or
understandings, express or implied, between the parties hereto other than
is expressly set forth in this Agreement or in the said other agreements or
documents. This Agreement may not be amended or modified in any respect
except by written instrument executed by each of the parties hereto.
8. Each of the parties hereto, upon the request of and at the cost of the
other party hereto, shall do, execute, acknowledge and deliver or cause to
be done, executed, acknowledged or delivered all such further acts, deeds,
documents, assignments, discharges, powers of attorney and assurances as
may be reasonably necessary or desirable to effect complete consummation of
the transaction contemplated by this Profit Sharing Agreement.
9. Time shall be of the essence of this Profit Sharing Agreement.
10. This Profit Sharing Agreement, whether in original, telegram or telefax
form, may be executed in one or more counterparts by any one or more of the
parties hereto and each such counterpart will be deemed an original hereof
and together shall be deemed to constitute one and the same agreement.
11. This Profit Sharing Agreement and the Vendors' interest herein may not be
assigned by the Vendors.
12. This Profit Sharing Agreement shall enure to the benefit of and be binding
upon the parties hereto, the heirs, executors, administrators and personal
representatives of the Vendors, and the successors, including any
successors by reason of amalgamation, and assigns of Redmond or the
Corporation.
13. This Profit Sharing Agreement shall be construed and enforced in
accordance with, and the rights of the parties hereto shall be governed by,
the laws of the Province of British Columbia and the laws of Canada
applicable therein.
<PAGE>
Page 4
14. Wherever the singular or plural, or the masculine or feminine or neuter
pronoun is used, each will include the other or others of them respectively
as the context, or the gender of any of the parties hereto, shall require.
15. The obligations and liabilities of the Vendors set out herein shall,
between the individuals comprising the Vendors, be joint as well as
several.
16. Any notice, direction or other instrument required or permitted to be given
to any party hereunder shall be in writing and shall be sufficiently given
if delivered personally, or if sent by registered prepaid mail or if
transmitted by telecopier to such party:
in the case of a notice to Redmond at:
1250 West Hastings Street
Vancouver, B.C., V6E 2M4
Attention: Mr. Kevan Garner
---------------------------
Telecopier No. (604) 638-1642
with a copy to:
Beadle Woods, Corporate Commercial Lawyers
1710 - 1177 West Hastings Street
Vancouver, B.C., V6E 2L3
Attention: Mr. M. Byron Woods
-----------------------------
Telecopier No. (604) 681-0139
Any such notice, direction or other instrument, if delivered personally,
shall be deemed to have been given and received on the date on which it was
delivered at such address, provided that if such day is not a Business Day
then the notice shall be deemed to have been given and received on the
Business Day next following such day. Any notice mailed as aforesaid shall
be deemed to have been given and received on the Third Business Day next
following the date of its mailing. Any notice transmitted by telecopier
shall be deemed to have been given and received on the date of confirmation
of receipt by the recipient provided that if such day is not a Business Day
or if it is received after 5:00 o'clock p.m. in the recipient's time zone
on the day of its transmission then it shall be deemed to have been given
and received at the opening of business in the office of the recipient on
the first Business Day next following the transmission thereof.
Any party hereto may change its address for service from time to time by
notice given to the other parties hereto in accordance with the forgoing.
17. The term, "Business Day", as utilized in this Loan Agreement, means a day
which is not a Saturday, Sunday or statutory holiday in the jurisdiction of
the addressee.
18. All references to any dollar amounts or monies set out herein shall be
deemed to be references to such amounts in Canadian currency.
<PAGE>
Page 5
IN WITNESS WHEREOF this Profit Sharing Agreement has been executed and
delivered by the parties hereto as of the date first above written.
The Common Seal of REDMOND CAPITAL )
CORP. was hereunder affixed in the presence of. )
)
)
--------------------------------- )
Authorized Signatory ) c/s
)
)
--------------------------------- )
Authorized Signatory )
)
SIGNED, SEALED AND DELIVERED in )
the presence of: )
)
)
--------------------------------- )
Signature )
)
)
--------------------------------- ) ------------------------
Name ) DOUGLAS R. WALLS
)
)
--------------------------------- )
Address )
)
)
--------------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED in )
the presence of: )
)
)
/s/ Philip Cook )
--------------------------------- )
Signature )
)
)
Philip Cook ) /s/ A. Ross Belyea
--------------------------------- ) ------------------------
Name ) A. ROSS BELYEA
)
)
3E E 20th )
--------------------------------- )
Address )
)
)
Businessman )
--------------------------------- )
Occupation )
<PAGE>
Page 6
SIGNED, SEALED AND DELIVERED in )
the presence of: )
)
)
--------------------------------- )
Signature )
)
)
--------------------------------- ) ------------------------
Name ) JASON GRAY
)
)
--------------------------------- )
Address )
)
)
--------------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED in )
the presence of: )
)
)
/s/ Philip Cook )
--------------------------------- )
Signature )
)
)
Philip Cook ) /s/ Joan MacKenzie
--------------------------------- ) ------------------------
Name ) JOAN MacKENZIE
)
)
3E E 20th )
--------------------------------- )
Address )
)
)
Businessman )
--------------------------------- )
Occupation )
The Common Seal of SIRIUS ANIMATION )
INCORPORATED was hereunder affixed in )
the presence of: )
)
)
)
--------------------------------- )
Authorized Signatory ) c/s
)
)
--------------------------------- )
Authorized Signatory )
)
<PAGE>
Exhibit 10c
LOAN AGREEMENT
--------------
This Loan Agreement dated for reference and made effective July 1, 1999.
BETWEEN:
REDMOND CAPITAL CORP., a company duly incorporated under the laws of the
Province of British Columbia and having an office at 1250 West Hastings
Street, Vancouver, British Columbia, V6E 2M4
(hereinafter called the "Lender")
OF THE FIRST PART
AND:
SIRIUS ANIMATION INCORPORATED, a company duly incorporated under the laws
of the Province of British Columbia and having its office at 1255 West
Pender Street, Vancouver, British Columbia, V613 2V I
(hereinafter called the "Borrower")
OF THE SECOND PART
AND:
DOUGLAS R. WALLS, A. ROSS BELYEA, JASON GRAY and JOAN MacKENZIE,
Businesspersons, all c/o 1255 West Pender Street, Vancouver, British
Columbia, V6B 2V1
(hereinafter collectively called the "Vendors")
OF THE THIRD PART
WHEREAS:
A. By a Share Purchase Agreement made effective July 1, 1999 and entered into
by the Lender as purchaser and the Vendors as vendors (the "Purchase
Agreement") the Lender agreed to purchase and the Vendors agreed to sell all
of issued and outstanding shares of the Borrower and all shareholders'
loans due to the Vendors from the Borrower all effective as at July 1, 1999;
B. It was a term of the Purchase Agreement that a Loan Agreement would be
entered into contemporaneously with the completion of the transactions
contemplated by the Purchase Agreement which would set out the terms and
conditions of the advance of loans by the Lender to the Borrower; and
C. It was a term of the Purchase Agreement that the parties thereto would
enter into a Profit Sharing Agreement the form of which is attached to the
Purchase Agreement as Schedule I I contemporaneously with the completion of the
<PAGE>
Page 2
transactions contemplated by the Purchase Agreement which would set out the
terms and conditions of the division of the net after tax profit of the Borrower
between the Lender and the Vendors.
NOW THEREFORE THIS LOAN AGREEMENT WITNESSETH as follows:
1. The Lender covenants to lend to the Borrower up to the maximum of
$55,385.00 (Canadian funds) during each month commencing with the month of
July, 1999 and each and every month thereafter to and including the month
of December, 1999 and a maximum of $27,690.00 during the period January 1,
2000 to January 15, 2000 (the "Periodic Loans"). The amount to be loaned in
each month shall be equal to the expenses incurred by the Borrower during
that month up to an amount which is equal to the number of months of the
Budget Period (as such term is hereinafter defined) then expired multiplied
by $55,385.00, less the cumulative amount of Periodic Loans previously
advanced. The Lender covenants to release monies as Periodic Loans as and
when required to meet the expenses of the Borrower. The Lender, as the sole
shareholder of the Borrower, shall make its best efforts to cause the
Periodic Loans to be expended only in the development of the First Episode
(as hereinafter defined).
2. The Vendors, as the creative team for the business of the Borrower, have
prepared a budget for the Borrower for the period July 1, 1999 to January
15, 2000 (the "Budget Period") which budget reflects total projected
expenditures of $360,000.00 (the "Budget Amount"), which budget is attached
hereto as Schedule "A". The Vendors represent and warrant that the whole of
the expenditures by the Borrower in respect of the business of the Borrower
for the Budget Period will be equal to or less than the Budget Amount.
3. The Vendors, as the creative design team for the business of the Borrower,
have prepared a time schedule for the development of the first episode of
"The Elf King" series (the "Development Schedule") which sets out that the
development time required is a period of time equal to the Budget Period
(the "Development Period").
4. If the amount of funds required to develop the first episode of "The Elf
King" series (the "First Episode") is greater than the Budget Amount due to
the inability of the Borrower to complete the development of the First
Episode within the Development Period (the "Delay Shortfall") then and in
that event the Vendors shall have the first option to provide to the
Borrower, without obligation of the Borrower to repay, the amount of the
Delay Shortfall (the "Vendors' Funds") within ten (10) days of such amount
being identified by the Borrower and notice thereof being given to the
Vendors. Failing the advance of the Vendors' Funds within the time frame
set out the Lender, at its option to be exercised in each and every month
following the expiry of the Development Period until completion of the
development of the First Episode, may elect to lend to the Borrower such
further amounts as may be required to permit the Borrower to meet its
obligations (the "Further Advances") which Further Advances shall be added
to and shall form a part of the Periodic Loans.
5. If the First Episode is completely developed within the Development
Period but the expenditures incurred by the Borrower in such development
are greater than the Budget Amount (the "Budget Shortfall") then and in the
event the Vendors shall have the first option to provide to the Borrower,
without obligation of the Borrower to repay, the amount of the Budget
Shortfall (the "Vendors' Funds") within ten (10) days of such amount being
identified by the Borrower and notice thereof being given to the Vendors.
Failing the advance of the Vendors' Funds within the time frame set out the
Lender, at its option, may advance the amount of such excess expenditures
(the "Excess Advances") to the Borrower which Excess Advances shall be
added to and shall form a part of the Periodic Loans.
<PAGE>
Page 3
6. The Borrower shall pay the whole of the amount of the outstanding Periodic
Loans to the Lender immediately upon demand being made therefor by the
Lender after the expiry of the Development Period.
7. Notwithstanding the demand nature of the Periodic Loans the Borrower shall
pay to the Lender, in priority to any other distribution to any other legal
entity, the whole of the amount of the outstanding Periodic Loans from any
and all net after tax profit earned by the Borrower as set out in the
Profit Sharing Agreement and so long as such payments are made the Lender
agrees to not demand repayment of the Periodic Loans.
8. The Borrower shall evidence the repayment obligation of the Periodic Loans
by the issuance of a Promissory Note in favour of the Lender and shall
grant to the Lender a general security agreement (the "GSA") granting the
Lender a first fixed and floating charge over all of the personal property
of the Borrower (the "First Charge").
9. If the Lender fails to advance that portion of the Periodic Loans set out
in paragraph I hereof then and in that event all of the right, title and
interest of the Borrower in the scripts, titles, technology and
intellectual property developed in respect of the First Episode as more
particularly set out in Schedule 9 of the Purchase Agreement (the
"Developed Assets") shall be transferred to and become the sole property of
the Vendors and, for the limited purpose of such transfer, the Borrower
hereby appoints any one of the Vendors its attorney in fact for the purpose
of the execution of such documents and agreements as are required to effect
such a transfer and the Lender hereby appoints any one of the Vendors its
attorney in fact for the purpose of executing and registering a discharge
of the Lender's First Charge over the Developed Assets of the Borrower
being so transferred to the Vendors.
10. If the Lender elects not to advance any Further Advances or Excess
Advances to the Borrower the Vendors shall not as a result of such election
by the Lender, obtain any right, title or interest in the Developed Assets
or any other assets of the Borrower.
11. The Borrower shall insure and keep insured all of the assets of the
Borrower as required pursuant to the terms of the GSA with first loss
payable to the Lender.
12. Intentionally deleted.
13. The effective date of this Loan Agreement shall be July 1, 1999.
14. It shall be a condition precedent to this agreement and the obligations of
the parties hereto that this agreement shall have been approved by any and
all regulatory authorities whose prior approval hereof is required by law.
15. This Agreement (including the schedules hereto) and each of the other
agreements or documents entered into in connection with or pursuant to this
Agreement constitutes the entire agreement between the parties hereto with
respect to the transactions provided for herein and cancels and supersedes
any prior understandings, agreements, negotiations and discussions between
the parties hereto with respect thereto. There are no representations,
warranties, terms, conditions, undertakings or collateral agreements or
understandings, express or implied, between the parties hereto other than
is expressly set forth in this Agreement or in the said other agreements or
documents. This Agreement may not be amended or modified in any respect
except by written instrument executed by each of the parties hereto.
<PAGE>
Page 4
documents. This Agreement may not be amended or modified in any respect
except by written instrument executed by each of the parties hereto.
16. Each of the parties hereto, upon the request of and at the cost of the
other party hereto, shall do, execute, acknowledge and deliver or cause to
be done, executed, acknowledged or delivered all such further acts, deeds,
documents, assignments, discharges, powers of attorney and assurances as
may be reasonably necessary or desirable to effect complete consummation of
the transaction contemplated by this Loan Agreement.
17. Time shall be of the essence of this Loan Agreement.
18. This Loan Agreement, whether in original, telegram or telefax form, may be
executed in one or more counterparts by any one or more of the parties
hereto and each such counterpart will be deemed an original hereof and
together shall be deemed to constitute one and the same agreement.
19. The parties hereto agree that the whole of the Periodic Loans shall be
immediately due and payable, without notice, upon the happening of the
earliest of the following events:
(a) agreement between the parties hereto to terminate this Loan
Agreement; or
(b) the appointment of a trustee, receiver or liquidator on the
bankruptcy, insolvency, liquidation or winding-up of the Borrower or
the occurrence of any other event that would permit a trustee or
receiver to administer the affairs of the Borrower or if the Borrower
takes advantage of any legislation or statute for the benefit of
bankrupt or insolvent debtors;
20. The terms and conditions set out in the GSA, where not in conflict
herewith, are hereby incorporated into and shall form a part of this Loan
Agreement. Any default under the GSA shall be deemed a default under this
Loan Agreement and any default under the Loan Agreement shall be deemed a
default under the GSA.
21. This Loan Agreement shall enure to the benefit of and be binding upon the
Lender and Borrower and the successors and assigns thereof including any
successors by reason of amalgamation.
22. This Loan Agreement shall be construed and enforced in accordance with, and
the rights of the parties hereto shall be governed by, the laws of the
Province of British Columbia and the laws of Canada applicable therein.
23. Wherever the singular or plural, or the masculine or feminine or neuter
pronoun is used, each will include the other or others of them respectively
as the context, or the gender of any of the parties hereto, shall require.
24. Any notice, direction or other instrument required or permitted to be given
to any party hereunder shall be in writing and shall be sufficiently given
if delivered personally, or if sent by registered prepaid mail or if
transmitted by telecopier to such party:
in the case of a notice to Redmond at:
1250 West Hastings Street
Vancouver, B.C., V6E 2M4
Attention: Mr. Kevan Garner
Telecopier No. (604) 638-1642
<PAGE>
Page 5
with a copy to:
Beadle Woods Corporate
Commercial Lawyers
1710 - 1177 West Hastings Street
Vancouver, B.C., V6E 2L3
Attention: Mr. M. Byron Woods
Telecopier No. (604) 681-0139.
Any such notice, direction or other instrument, if delivered personally,
shall be deemed to have been given and received on the date on which it was
delivered at such address, provided that if such day is not a Business Day
then the notice shall be deemed to have been given and received on the
Business Day next following such day. Any notice mailed as aforesaid shall
be deemed to have been given and received on the Third Business Day next
following the date of its mailing. Any notice transmitted by telecopier
shall be deemed to have been given and received on the date of confirmation
of receipt by the recipient provided that if such day is not a Business Day
or if it is received after 5:00 o'clock p.m. in the recipienfs time zone on
the day of its transmission then it shall be deemed to have been given and
received at the opening of business in the office of the recipient on the
first Business Day next following the transmission thereof.
Any party hereto may change its address for service from time to time by
notice given to the other parties hereto in accordance with the foregoing.
25. The term, "Business Day", as utilized in this Loan Agreement means a day
which is not a Saturday, Sunday or statutory holiday in the jurisdiction of
the addressee.
26. All references to any dollar amounts or monies set out herein shall be
deemed to be references to such amounts in Canadian currency.
27. The Vendors are named as a party hereto solely for the purpose of
identification and for no other purpose whatsoever.
IN WITNESS WHEREOF this Loan Agreement has been executed and delivered
by the parties hereto as of the date first above written.
The Common Seal of REDMOND CAPITAL )
CORP. was hereunder affixed in the presence of. )
)
)
/s/ Kevin Garner )
--------------------------------- )
Authorized Signatory ) c/s
)
)
--------------------------------- )
Authorized Signatory )
)
<PAGE>
Page 6
The Common Seal of SIRIUS ANIMATION )
INCORPORATED was hereunder affixed in )
the presence of: )
)
)
/s/ A. Ross Belyea )
--------------------------------- )
Authorized Signatory ) c/s
)
)
--------------------------------- )
Authorized Signatory )
)
)
)
SIGNED, SEALED AND DELIVERED in )
the presence of: )
)
)
/s/ Maureen McDonald )
--------------------------------- )
Signature )
)
Maureen McDonald ) /s/ Douglas R. Walls
--------------------------------- ) ------------------------
Name ) DOUGLAS R. WALLS
)
)
1892 Dewdney Road )
Kelowna, BC )
--------------------------------- )
Address )
)
)
Housewife )
--------------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED in )
the presence of: )
)
)
/s/ Philip Cook )
--------------------------------- )
Signature )
)
)
Philip Cook ) /s/ A. Ross Belyea
--------------------------------- ) ------------------------
Name ) A. ROSS BELYEA
)
)
3E E 20th )
--------------------------------- )
Address )
)
)
Businessman )
--------------------------------- )
Occupation )
<PAGE>
Page 7
SIGNED, SEALED AND DELIVERED in )
the presence of: )
)
)
/s/ Lee Kline )
--------------------------------- )
Signature )
)
)
Lee Kline ) /s/ Jason Gray
--------------------------------- ) ------------------------
Name ) JASON GRAY
)
)
Toronto, Ontario )
--------------------------------- )
Address )
)
)
President, Radiant Media )
--------------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED in )
the presence of: )
)
)
--------------------------------- )
Signature )
)
) /s/ Joan MacKenzie
--------------------------------- ) ------------------------
Name ) JOAN MacKENZIE
)
)
--------------------------------- )
Address )
)
)
--------------------------------- )
Occupation )
<PAGE>
Exhibit 10d
LOAN AGREEMENT
THIS AGREEMENT made the 31st day of March, 2000
BETWEEN:
FIRST NEVISIAN HOLDINGS LTD., a body corporate incorporate pursuant to
the laws of West Indies, and having its offices at Henville Building,
Prince Charles Street, Charleston, Nevis, West Indies
(collectively referred to as the "Lender")
OF THE FIRST PART
AND:
REDMOND CAPITAL CORPORATION, a body corporate incorporated pursuant to
the laws of Florida, USA, and having its offices at 1250 West Hastings
Street, Vancouver, British Columbia, Canada V6E 2M4
(hereinafter called the "Company")
OF THE SECOND PART
WHEREAS:
A. The Lender has agreed to loan the sum of US $3,000,000.00 to the Company in
order to finance the Company's business (the "Loan"); and
B. In consideration of the Loan, the Company has agreed to issue a convertible
debenture to the Lenders on the terms and conditions set forth herein.
NOW THEREFORE WITNESSETH that in consideration of the premises in the sum of Ten
($10.00) Dollars now paid by the Lender to the Company and for other good and
valuable consideration (the receipt and sufficiency of which is hereby
acknowledged by the Company), the parties hereto covenant and agree as follows:
1. The Lender has agreed to loan the sum of Three Million (US $3,000,000.00)
Dollars in US funds to the Company (the "Loan") to be paid to the Company
upon execution of this Agreement.
2. As consideration for the Loan, the Company agrees to issue a convertible
debenture to the Lender, as set forth in Schedule "A" of this Agreement. The
convertible debenture will be issued pursuant to the exemption under
Regulation S promulgated under the US Securities Act of 1933 (the "Act") and
the applicable Florida laws.
3. The Lender acknowledges that it is not a US person under the Act and is not
acquiring the convertible debenture for the account or benefit of any U.S.
person, and the convertible debenture and the Common Shares of the Company
issued to it upon convertion must be held indefinitely unless subsequently
<PAGE>
Page 2
registered under the Act or unless an execmption for such registration is
available, and will bear a restrictive legend pursuant to restirctions on
resale under Rule 144 of the Act.
3. Any notice to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered to, or sent by prepaid registered
post addressed to, the respective addresses of the parties appearing on the
first page of this agreement (or to such other address as one party provides
to the other in a notice given according to this paragraph). Where a notice
is given by registered post it shall be conclusively deemed to be given and
received on the fifth day after its deposit in a Canada post office at any
place in Canada.
4. This Agreement may not be assigned by any party without the prior written
consent of the other parties.
5. This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
6. This Agreement shall be governed by and interpreted in accordance with the
laws of British Columbia, Canada.
7. Time shall be of the essence of this Agreement.
IN WITNESS WIHEREOF the parties hereto have executed this agreement the day and
year first above written.
THE CORPORATE SEAL OF )
FIRST NEVISIAN HOLDINGS LTD. )
was hereunto affixed in the presence of: )
)
)
/s/ signed ) c/s
----------------------------------------- )
Authorized Signatory )
)
)
)
THE CORPORATE SEAL OF )
REDMOND CAPITAL CORPORATION )
was hereunto affixed in the presence of: )
)
)
/s/ J.D. Palmer ) c/s
----------------------------------------- )
Authorized Signatory )
)
)
)
9985.002\loanagmt.doc
<PAGE>
Page 1
CONVERTIBLE DEBENTURE
REDMOND CAPITAL CORPORATION
a Company incorporated under the laws of Florida, USA
under Certificate of Incorporation No. P96000075852 and having its
registered office situate at 941 Fourth Street, #200, Miami Beach, FL, USA 33139
PRINCIPAL AMOUNT: US $3,000,000.00
1. For value received, REDMOND CAPITAL CORPORATION, a Florida company
incorporated under Certificate of Incorporation No. P96000075852 having its
registered office at 941 Fourth Street, #200, Miami Beach, FL, USA 33139, (the
"Company") will pay to First Nevisian Holdings Ltd., of Henville Building,
Prince Charles Street, Charleston, Nevis, West Indies (the "Debenture Holder"),
on the date which is the earlier of the date on which the full amount of the
Principal Sum has been converted into Common shares of the Company and the third
anniversary of the date of this Debenture (the "Maturity Date"), the sum of
Three Million (US $3,000,000.00) DOLLARS of lawful money of the United States
(the "Principal Sum") (less such amount of the Principal Sum as has, prior to
such date, been converted into Common Shares in accordance with the provisions
of section 6 of this Debenture), together with interest as hereinafter provided.
Interest shall accrue on all or such lesser portion of the Principal Sum as has,
from time to time, not been converted into Common Shares in accordance herewith,
at the rate of ten percent (10.0%) per annum, which interest shall be calculated
from the date hereof and yearly, not in advance, such compounding to commence on
the date which is twelve calendar months from the date of this Debenture, both
before and after maturity, default and judgment, and shall be paid by the
Company quarterly, in advance, with any unpaid accrued interest to be paid on
the Maturity Date. (The Company will pay interest at the aforesaid rate on
overdue interest and on all other amounts which may become due hereunder).
2. The Principal Sum and interest payable hereunder and hereby secured shall
be payable at the place referred to in paragraph 8 hereof or at such other place
as the Debenture Holder may in writing from time to time direct.
3. As security for payment of the Principal Sum and interest, and interest on
overdue interest, and of all and every indebtedness, present and future, direct
or indirect, absolute or contingent of the Company to the Debenture Holder and
of all and every liability, present and future, direct or indirect, absolute or
contingent, of the Company to the Debenture Holder and of advances and
re-advances from time to time and for the performance of the obligations and the
covenants of the Company herein contained, the Company hereby charges to and in
favour of the Debenture Holder as and by way of a floating charge all of its
property (the "Property"). The Company shall not grant any mortgage of or create
any charge, lien or encumbrance on the Property subject to the charge hereby
granted ranking in priority to or pari passu with this Debenture without the
prior written consent of the Debenture Holder.
4. The last day of any term created by any lease or agreement therefor is
hereby excepted out of the charge created by this Debenture but the Company
9985.002\loanagmt.doc
<PAGE>
Page 2
shall stand possessed of the reversion thereby remaining in the Company upon
trust for the Debenture Holder to assign and dispose thereof as the Debenture
Holder shall direct.
5. This Debenture is issued subject to and with the benefit of the Conditions
attached hereto, each and all of which form part of this Debenture.
6. Subject to the terms and conditions of this Debenture, the Debenture
Holder and the Company shall, as hereinafter provided, have a right prior to the
maturity of this Debenture, to convert the outstanding Principal Sum and
Interest into fully paid common shares (the "Common Shares") in the capital
stock of the Company, such shares to rank pari passu in all respects with Common
Shares then outstanding, at a conversion price of Two Dollars (US $2.00) in
United States of America funds per Common Share.
(a) If the Debenture Holder wishes to exercise some or all of the conversion
rights as aforesaid it shall deliver to the Company at 1255 West Pender
Street, Vancouver, British Columbia, V6E 2VI, notice in writing containing
notice of exercise of his right to convert this Debenture specifying such
part of the Principal Sum and Interest hereof to be converted, naming the
person in whose name the Common Shares are to be issued. In the event that
the whole of the Principal Sum and Interest is converted into Common
Shares prior to the maturity of this Debenture, the Debenture Holder shall
deliver the Debenture to the Company at the time of giving notice under
this subparagraph. The Company may require delivery to it of a fee
equivalent to any security transfer tax or transfer agent fee which may be
properly required to effect the issue of Common Shares to the registered
holder hereof Upon delivery of the notice of exercise to the Company, the
Company shall deliver the direction and certified cheque (if any) to the
Company's principal transfer agent in Phoenix, Arizona and upon such
delivery the person designated in the said notice shall be deemed for all
purposes the holder of record of fully paid Common Shares in the capital
stock of the Company to the number designated in such notice. Such person
shall be entitled to delivery by the Company of a certificate representing
such Common Shares promptly after the exercise of the right of such
conversion;
(b) If any of the Common Shares to which the holder may be entitled as a
result of the exercise of the rights conferred by this part of the
Debenture are issued prior to the first anniversary of this Debenture, the
Common Shares shall be delivered to the registered holder endorsed with an
appropriate legend;
(c) In the event that any dividends are declared on any of the Common Shares
issuable upon such conversion, the Company covenants to reserve an amount
equal to the amount of such dividends and shall pay such dividends
accordingly to the person into whose name the Common Shares are issued;
(d) If the Company shall declare and pay a stock dividend upon its Common
Shares prior to the date of conversion, then there shall be reserved out
of such stock dividend an appropriate number of Common Shares so that the
Debenture Holder converting its Debenture into Common Shares of the
Company shall receive its pro rata share of any stock dividend declared
prior to the date of conversion;
(e) In the event of any subdivision or re-division or change of the shares of
the Company at any time while this Debenture is outstanding into a greater
or lesser number of shares, the Company shall deliver at the time of the
9985.002\loanagmt.doc
<PAGE>
Page 3
exercise thereafter of the right of conversion by the registered holder of
this Debenture such additional number of shares (or lesser) as would have
resulted from such subdivision, re-division or change if the fight of
conversion had been exercised prior to the date of such subdivision, re-
division or change,
(f) The Company covenants that so long as this Debenture shall remain
outstanding and it has reserved in its treasury unissued Common Shares
that it shall not alter any of the fights or restrictions attached to such
Common Shares remaining held and unissued in its treasury in contemplation
of the exercise of rights of conversion under this Debenture, except for
the purpose of subdivision or re-division or consolidation as aforesaid;
(g) Nothing in this paragraph shall be construed as to prevent the Company
from either increasing its authorized capital or issuing additional Common
Shares from its treasury for its proper corporate purposes;
(h) The exercise of the fights of conversion set forth herein are subject to
the consent of the regulatory authorities having jurisdiction over the
issuance of the Company's securities which authorities are also empowered
to fix the price at which the Debenture Holder may convert its portion of
the Debenture into common stock of the Company. The terms and conditions
restricting resale of any of the Common Shares so converted are those that
may be imposed by the regulatory authorities having jurisdiction over the
offering of the Company's securities.
7. Any notice to the Company in connection with this Debenture shall be well
and sufficiently given if sent by prepaid registered mail or delivered to the
Company addressed as follows:
Redmond Capital Corporation
1255 West Pender Street
Vancouver, B.C., V63 2VI
Canada
Any such notice shall be deemed to have been given if delivered, when delivered,
and if mailed, on the third business day following that on which it was mailed.
8. Any notice to the Debenture Holder in connection with this Debenture shall
be well and sufficiently given if sent by prepaid registered mail or delivered
to the Debenture Holder addressed as follows:
First Nevisian Holdings Ltd.
Henville Building
Prince Charles Street
Charleston, Nevis
West Indies
Any such notice shall be deemed to have been given if delivered, when delivered,
and if mailed, on the third business day following that on which it was mailed.
9. In the event of a known interruption of postal services, any notice
required or contemplated herein shall be deemed to have been delivered to the
Company if delivered by hand to the registered office of the Company and to the
9985.002\loanagmt.doc
<PAGE>
Page 4
Debenture Holder if delivered by hand to the address of the Debenture Holder set
forth herein.
10. The proper law of this Debenture is the law of British Columbia, Canada
11. This Debenture may not be transferred without registration under the
Securities Act of 1933 of the United States and its amendments (the "Act") and
the applicable Florida state laws or, in the alternative, an opinion of US
counsel stating that an exemption from such registration is available under the
US federal and applicable state laws. The Debenture may not be offered for sale,
pledged or hypothecated in the U. S. or to US persons in the absence of a
registration statements in effect with respect to the securities under such act
or an opinion of counsel satisfactory to the Company that such registration is
not required. Hedging transactions involving this Debenture may not be conducted
unless in compliance with the Act and the applicable Florida state laws. The
shares issued would be subject to restriction on transferability and resale and
may not be transferred or resold in the U.S. or to US persons except as
permitted under the Act and applicable state laws pursuant to registration or
exemption therefrom.
IN WITNESS WHEREOF the Company has hereunto caused its corporate seal to be
affixed in the presence of its duly authorized officers in that behalf as of the
31st day of March, 2000.
THE COMMON SEAL OF )
REDMOND CAPITAL CORPORATION )
was hereunto affixed in the presence of: )
)
)
) c/s
----------------------------------------- )
Authorized Signatory )
)
)
----------------------------------------- )
Authorized Signatory )
)
)
9985.002\loanagmt.doc
<PAGE>
Page 1
CONDITIONS
Referred to in the Debenture of
REDMOND CAPITAL CORPORATION (the "Company")
in favour of FIRST NEVISIAN HOLDINGS LTD. in the
amount of US $3,000,000.00
1. This Debenture is issued in accordance with the Resolutions of the
Directors (and of the members as applicable) of the Company and all other
matters and things have been done and performed so as to authorize and make the
execution, creation and issue of this Debenture legal and valid and in
accordance with the requirements of the laws relating to the Company and all
other statutes and laws on that behalf.
If this Debenture is redeemed by the Company, it shall be cancelled and shall
not be reissued, but:
(a) any partial payment made thereon by the Company to the Debenture Holder, or
(b) any partial conversion of the Principal Sum or Interest into Common Shares
of the Company,
shall be deemed not to be a redemption or cancellation pro tanto or otherwise,
and this Debenture shall be and remain valid security for any subsequent advance
or re-advance by the Debenture Holder to the Company to the same extent as if
the said advance or re-advance had been made on the issue of this Debenture.
2. The Company shall not without the prior written consent of the Debenture
Holder:
(a) pay or declare any dividend or make any other distribution or payment to any
shareholder in cash or in kind or repay in whole or in part any shareholders
loan;
(b) purchase or redeem any of its shares or otherwise reduce its share capital;
or
(c) become guarantor of any obligation or become endorser with respect to any
obligation or become liable upon any note or other obligation other than in
the normal course of the Company's business.
3. (1) The Company shall at all times during the continuance of the Debenture:
(a) fully and effectually maintain and keep maintained the security hereby
created as a valid and effective security;
(b) forthwith pay:
(i) all taxes, assessments, rates, duties, levies, governmental fees and
dues lawfully levied, assessed or imposed upon it or its assets or
undertaking when due, unless the Company shall in good faith contest
its obligations so to pay and shall furnish such security as the
Debenture Holder may direct, and
9985.002\loanagmt.doc
<PAGE>
Page 2
(ii) all liens, mortgages, charges and encumbrances which rank or could in
any event rank in priority to this Debenture other than those consented
to in writing by the Debenture Holder;
(c) assume and pay all legal fees and disbursements on a solicitor and client
basis and all other fees and disbursements relating to the creation of this
Debenture, its registration in all proper offices of record and relating to
any and all additional instruments and documents as may be deemed necessary
by Counsel for the Debenture Holder;
(d) at its expense, execute and deliver or cause to be executed and delivered to
the Debenture Holder such further and other assurances, conveyances,
mortgages, assignments, transfers, requests, consents and documents as the
Debenture Holder may require for the purpose of perfecting the security
contemplated by this Debenture.
4. The Principal Sum, interest and other monies hereby secured, shall at the
option of the Debenture Holder, become immediately payable and the security
hereby constituted shall become enforceable in each and every of the following
events:
(a) if the Company makes default in the observance or performance of something
hereby required to be done or breaches some covenant or condition hereby
required to be observed or performed, including, but not limited to, the
covenants contained in paragraph I of the within Debenture;
(b) if an Order is made or a Resolution passed for the winding-up of the Company
or if the motion is filed for the winding-up of the Company;
(c) if the Company becomes insolvent or makes a voluntary assignment or proposal
in bankruptcy or bulk sale of its assets or if a bankruptcy petition is
filed or presented against the Company or if a Receiver or Receiver Manager
is appointed under any other Debenture issued by the Company;
(d) if any execution, sequestration, extent or any other process of any Court
becomes enforceable against the Company or if a distress or analogous
process is levied upon the property of the Company or any part thereof,
(e) if the Company is more than thirty (30) days in arrears of rent payable
under any lease of real property or if the Company allows any amount
outstanding from the Company to the Crown pursuant to federal or provincial
statutes to remain unpaid for a period in excess of thirty (30) days;
(f) if the Company shall permit any sum which has admitted as due by it or is
not disputed to be due by it and which forms or is capable of being made a
charge upon any of the property subject to the charge created by this
Debenture to remain unpaid for thirty (30) days after proceedings have been
taken to enforce the same as such charge;
(g) if the Company ceases or threatens to cease to carry on its business or
commits or threats to commit any act of bankruptcy;
(h) if the Company makes default in payment of any indebtedness or liability to
the Debenture Holder, whether secured hereby or not, when due;
9985.002\loanagmt.doc
<PAGE>
Page 3
(i) if the Company carries on any business that is restricted from carrying on
by its Memorandum;
(j) if the Company uses any of the funds advanced under this Debenture for any
purpose other than as declared to and agreed upon by the Debenture Holder;
and
(k) if the Statutory Declaration of the secretary or other officer or director
of the Company delivered with this Debenture contains any material
misstatement.
5. The security of this Debenture shall become enforceable if the Principal Sum
and all other monies hereby secured shall not be paid when the same become due
and payable in accordance with paragraph I of the within Debenture.
6. At any time after the Principal Sum and all other monies hereby secured
shall become payable and remain unpaid, the Debenture Holder may appoint by
writing a Receiver of the Property hereby charged and may from time to time
remove any Receiver so appointed and appoint another in his stead. Any
Receiver so appointed shall be an officer of the Company and shall have power:
(a) to take possession of and get in the Property hereby charged;
(b) to carry on or concur in carrying on the business of a Company;
(c) to sell or lease or concur in selling or leasing the Property hereby charged
or any part or parts thereof,
(d) to make any arrangement or compromise which the Receiver shall think
expedient;
(e) to borrow money for the purposes of carrying on the business of the Company
or for the maintenance of the property and assets of the Company or any part
or parts thereof, in such sum as will in the opinion of the Receiver, be
sufficient for obtaining upon the security of such property and assets the
amounts from time to time required and in doing so the Receiver may issue
certificates (herein called "Receiver's Certificates") and such certificates
may be payable either to order or to bearer and may be payable at such time
or times as the Receiver may think expedient and shall bear interest as
shall be stated therein and the amounts from time to time payable by virtue
of such Receiver's Certificates shall form a charge upon the property and
assets of the Company in priority to the charge of this Debenture. The
fights and powers conferred by this paragraph are in supplement of and not
in substitution for any rights the Debenture Holder may from time to time
have as the holder of this Debenture.
The net profits of carrying on the said business and the net proceeds of the
sale shall be applied by the Receiver subject to the claims or all secured and
unsecured creditors (if any) ranking in priority to this Debenture:
FIRSTLY: In payment of all costs, charges and expenses of and incidental to
the appointment of the Receiver and the exercise by him of all or any
of the powers aforesaid including the reasonable remuneration of the
Receiver and all outgoings properly payable by him together with all
legal costs in respect thereof on a solicitor and client basis;
9985.002\loanagmt.doc
<PAGE>
Page 4
SECONDLY: In or toward payment to the Debenture Holder of the Principal Sum
and all other monies hereby secured;
THIRDLY: In or towards payment to the Debenture Holder of all arrears of
interest remaining unpaid on this Debenture;
FOURTHLY: Any surplus shall, subject to the rights of other creditors, be
paid to the Company.
The Debenture Holder shall be under no liability to the Receiver for his
remuneration, costs, charges or expenses or otherwise. The term "Receiver" as
used in this paragraph includes a Receiver Manager.
7. To enable the Receiver or Receiver Manager to exercise the powers granted to
him by paragraph 6 of these Conditions, the Company hereby appoints the Receiver
or Receiver Manager to be its attorney to carry out any sale of any or all of
the mortgaged property and to affix the common seal of the Company to any deeds,
transfers, conveyances, assignments, assurances and things which the Company
ought to execute to complete any sale of any of the mortgaged property or,
alternatively, to execute the same under his own seal by conveying in the name
of and on behalf of the Company and under his own seal and any deed or other
instrument signed by him under his seal pursuant hereto shall have the same
effect as if it were under the common seal of the Company.
8. Provided that the Company is not in default hereunder, the Company may at
any time or times pay the whole or any part of the Principal Sum secured by this
Debenture without notice, penalty or bonus.
9. The security hereby created is a continuing security and shall cover and
secure the payments of all and every indebtedness both present and future and
interest thereon and interest on overdue interest and all and every liability,
present or future, direct or indirect, absolute or contingent, of the Company to
the Debenture Holder and is in addition to and not in substitution for any other
security or securities which the Debenture Holder now or from time to time may
hold or take from the Company.
10. The Company agrees that neither the preparation, nor the execution, nor the
registration of this Debenture shall bind the Debenture Holder to advance the
monies hereby secured nor shall the advance of a part of the monies secured
hereby bind the Debenture Holder to advance any unadvanced portion thereof but
nevertheless the charge created by this Debenture shall take effect forthwith
upon its execution by the Company.
11. The Debenture Holder may waive any breach by the Company of any of the
provisions of this Debenture or any default by the Company in the observance or
performance of any covenant or condition required to be observed or performed by
the Company under the terms of this Debenture but, notwithstanding the
foregoing, no act or admission of the Debenture Bolder shall extend to or be
taken in any manner whatsoever to affect any subsequent breach or default or the
rights resulting therefrom.
12. The Company shall assume and pay all costs, charges and expenses including
solicitor's costs, charges and expenses as between solicitor and his own client
which may be incurred by the Debenture Holder in respect of any proceedings
taken or things done by the Debenture Holder or on its behalf in connection with
this Debenture to collect, protect, realize or enforce its security hereunder,
9985.002\loanagmt.doc
<PAGE>
Page 5
whether or not any action or other judicial proceeding has been taken to enforce
this Debenture; and the said costs, charges and expenses shall be added to the
principal monies hereby secured and shall bear interest at the rate set forth in
this Debenture or if more than one rate of interest is so set forth, at the
higher or highest of the said rates of interest.
13. The expression "Debenture Holder" wherever used in this Debenture and in
these Conditions shall include the Debenture Holder's successors and assigns
whether immediate or derivative and any appointment or removal under paragraph 6
hereof may be made by writing, signed or sealed by any such successors or
assigns; and the expression "Company" used in this Debenture shall include the
successors and assigns of the Company.
9985.002\loanagmt.doc
<PAGE>
Exhibit 10e
CONVERTIBLE DEBENTURE
REDMOND CAPITAL CORPORATION
a Company incorporated under the laws of Florida, USA
under Certificate of Incorporation No. P96000075852 and having its
registered office situate at 941 Fourth Street, #200, Miami Beach, FL, USA 33139
PRINCIPAL AMOUNT: US $3,000,000.00
1. For value received, REDMOND CAPITAL CORPORATION, a Florida company
incorporated under Certificate of Incorporation No. P96000075852 having its
registered office at 941 Fourth Street, #200, Miami Beach, FL, USA 33139, (the
"Company") will pay to First Nevisian Holdings Ltd., of Henville Building,
Prince Charles Street, Charleston, Nevis, West Indies (the "Debenture Holder"),
on the date which is the earlier of the date on which the full amount of the
Principal Sum has been converted into Common shares of the Company and the third
anniversary of the date of this Debenture (the "Maturity Date"), the sum of
Three Million (US $3,000,000.00) DOLLARS of lawful money of the United States
(the "Principal Sum") (less such amount of the Principal Sum as has, prior to
such date, been converted into Common Shares in accordance with the provisions
of section 6 of this Debenture), together with interest as hereinafter provided.
Interest shall accrue on all or such lesser portion of the Principal Sum as has,
from time to time, not been converted into Common Shares in accordance herewith,
at the rate of ten percent (10.0%) per annum, which interest shall be calculated
from the date hereof and yearly, not in advance, such compounding to commence on
the date which is twelve calendar months from the date of this Debenture, both
before and after maturity, default and judgment, and shall be paid by the
Company quarterly, in advance, with any unpaid accrued interest to be paid on
the Maturity Date. (The Company will pay interest at the aforesaid rate on
overdue interest and on all other amounts which may become due hereunder).
2. The Principal Sum and interest payable hereunder and hereby secured shall be
payable at the place referred to in paragraph 8 hereof or at such other place as
the Debenture Holder may in writing from time to time direct.
3. As security for payment of the Principal Sum and interest, and interest on
overdue interest, and of all and every indebtedness, present and future, direct
or indirect, absolute or contingent of the Company to the Debenture Holder and
of all and every liability, present and future, direct or indirect, absolute or
contingent, of the Company to the Debenture Holder and of advances and
re-advances from time to time and for the performance of the obligations and the
covenants of the Company herein contained, the Company hereby charges to and in
favour of the Debenture Holder as and by way of a floating charge all of its
property (the "Property"). The Company shall not grant any mortgage of or create
any charge, lien or encumbrance on the Property subject to the charge hereby
granted ranking in priority to or pari passu with this Debenture without the
prior written consent of the Debenture Holder.
4. The last day of any term created by any lease or agreement therefor is
hereby excepted out of the charge created by this Debenture but the Company
shall stand possessed of the reversion thereby remaining in the Company upon
9985.002\1oanagmt.doc
<PAGE>
Page 2
trust for the Debenture Holder to assign and dispose thereof as the Debenture
Holder shall direct.
5. This Debenture is issued subject to and with the benefit of the Conditions
attached hereto, each and A of which form part of this Debenture.
6. Subject to the terms and conditions of this Debenture, the Debenture Holder
and the Company shall, as hereinafter provided, have a right prior to the
maturity of this Debenture, to convert the outstanding Principal Sum and
Interest into fully paid common shares (the "Common Shares") in the capital
stock of the Company, such shares to rank pari passu in all respects with Common
Shares then outstanding, at a conversion price of Two Dollars (US $2.00) in
United States of America funds per Common Share.
(a) If the Debenture Holder wishes to exercise some or all of the conversion
rights as aforesaid it shall deliver to the Company at 1255 West Pender
Street, Vancouver, British Columbia, V6E 2VI, notice in writing containing
notice of exercise of his right to convert this Debenture specifying such
part of the Principal Sum and Interest hereof to be converted, naming the
person in whose name the Common Shares are to be issued. In the event that
the whole of the Principal Sum and Interest is converted into Common Shares
prior to the maturity of this Debenture, the Debenture Holder shall deliver
the Debenture to the Company at the time of giving notice under this
subparagraph. The Company may require delivery to it of a fee equivalent to
any security transfer tax or transfer agent fee which may be properly
required to effect the issue of Common Shares to the registered holder
hereof. Upon delivery of the notice of exercise to the Company, the Company
shall deliver the direction and certified cheque (if any) to the Company's
principal transfer agent in Phoenix, Arizona and upon such delivery the
person designated in the said notice shall be deemed for all purposes the
holder of record of fully paid Common Shares in the capital stock of the
Company to the number designated in such notice. Such person shall be
entitled to delivery by the Company of a certificate representing such
Common Shares promptly after the exercise of the right of such conversion;
(b) If any of the Common Shares to which the holder may be entitled as a result
of the exercise of the rights conferred by this part of the Debenture are
issued prior to the first anniversary of this Debenture, the Common Shares
shall be delivered to the registered holder endorsed with an appropriate
legend;
(c) In the event that any dividends are declared on any of the Common Shares
issuable upon such conversion, the Company covenants to reserve an amount
equal to the amount of such dividends and shall pay such dividends
accordingly to the person into whose name the Common Shares are issued;
(d) If the Company shall declare and pay a stock dividend upon its Common
Shares prior to the date of conversion, then there shall be reserved out of
such stock dividend an appropriate number of Common Shares so that the
Debenture Holder converting its Debenture into Common Shares of the
Company shall receive its pro rata share of any stock dividend declared
prior to the date of conversion;
(e) In the event of any subdivision or re-division or change of the shares of
the Company at any time while this Debenture is outstanding into a greater
or lesser number of shares, the Company shall deliver at the time of the
9985.002\loanagmt.doc
<PAGE>
Page 3
exercise thereafter of the right of conversion by the registered holder of
this Debenture such additional number of shares (or lesser) as would have
resulted from such subdivision, re-division or change if the right of
conversion had been exercised prior to the date of such subdivision, re-
division or change;
(f) The Company covenants that so long as this Debenture shall remain
outstanding and it has reserved in its treasury unissued Common Shares
that it shall not alter any of the rights or restrictions attached to such
Common Shares remaining held and unissued in its treasury in contemplation
of the exercise of rights of conversion under this Debenture, except for
the purpose of subdivision or re-division or consolidation as aforesaid;
(g) Nothing in this paragraph shall be construed as to prevent the Company from
either increasing its authorized capital or issuing additional Common
Shares from its treasury for its proper corporate purposes;
(h) The exercise of the rights of conversion set forth herein are subject to
the consent of the regulatory authorities having jurisdiction over the
issuance of the Company's securities which authorities are also empowered
to fix the price at which the Debenture Holder may convert its portion of
the Debenture into common stock of the Company. The terms and conditions
restricting resale of any of the Common Shares so converted are those that
may be imposed by the regulatory authorities having jurisdiction over the
offering of the Company's securities.
7. Any notice to the Company in connection with this Debenture shall be well
and sufficiently given if sent by prepaid registered mail or delivered to the
Company addressed as follows:
Redmond Capital Corporation
1255 West Pender Street
Vancouver, B.C., V63 2VI
Canada
Any such notice shall be deemed to have been given if delivered, when delivered,
and if mailed, on the third business day following that on which it was mailed.
8. Any notice to the Debenture Holder in connection with this Debenture shall
be well and sufficiently given if sent by prepaid registered mail or delivered
to the Debenture Holder addressed as follows:
First Nevisian Holdings Ltd.
Henville Building
Prince Charles Street
Charleston, Nevis
West Indies
Any such notice shall be deemed to have been given if delivered, when delivered,
and if mailed, on the third business day following that on which it was mailed.
9. In the event of a known interruption of postal services, any notice required
or contemplated herein shall be deemed to have been delivered to the Company if
delivered by hand to the registered office of the Company and to the Debenture
9985.002\1oanagmt.doc
<PAGE>
Page 4
Holder if delivered by hand to the address of the Debenture Holder set forth
herein.
10. The proper law of this Debenture is the law of British Columbia, Canada
11. This Debenture may not be transferred without registration under the
Securities Act of 1933 of the United States and its amendments (the "Act") and
the applicable Florida state laws or, in the alternative, an opinion of US
counsel stating that an exemption from such registration is available under the
US federal and applicable state laws. The Debenture may not be offered for sale,
pledged or hypothecated in the U.S. or to US persons in the absence of a
registration statements in effect with respect to the securities under such act
or an opinion of counsel satisfactory to the Company that such registration is
not required. Hedging transactions involving this Debenture may not be conducted
unless in compliance with the Act and the applicable Florida state laws. The
shares issued would be subject to restriction on transferability and resale and
may not be transferred or resold in the U.S. or to US persons except as
permitted under the Act and applicable state laws pursuant to registration or
exemption therefrom.
IN WITNESS WHEREOF the Company has hereunto caused its corporate seal to be
affixed in the presence of its duly authorized officers in that behalf as of the
31st day of March, 2000.
THE COMMON SEAL OF )
REDMOND CAPITAL CORPORATION )
was hereunto affixed in the presence of: )
)
)
/s/ A. Ross Belyea ) c/s
----------------------------------------- )
Authorized Signatory )
)
/s/ J.D. Palmer )
----------------------------------------- )
Authorized Signatory )
)
)
9985.002\1oanagmt.doc
<PAGE>
Page 1
CONDITIONS
Referred to in the Debenture of
REDMOND CAPITAL CORPORATION (the "Company")
in favour of FIRST NEVISIAN HOLDINGS LTD. in the
amount of US $3,000,000.00
-------------------------------------------------
1. This Debenture is issued in accordance with the Resolutions of the
Directors (and of the members as applicable) of the Company and all other
matters and things have been done and performed so as to authorize and make the
execution, creation and issue of this Debenture legal and valid and in
accordance with the requirements of the laws relating to the Company and all
other statutes and laws on that behalf.
If this Debenture is redeemed by the Company, it shall be cancelled and shall
not be reissued, but:
(a) any partial payment made thereon by the Company to the Debenture Holder, or
(b) any partial conversion of the Principal Sum or Interest into Common Shares
of the Company,
shall be deemed not to be a redemption or cancellation pro tanto or otherwise,
and this Debenture shall be and remain valid security for any subsequent advance
or re-advance by the Debenture Holder to the Company to the same extent as if
the said advance or re-advance had been made on the issue of this Debenture.
2. The Company shall not without the prior written consent of the Debenture
Holder:
(a) pay or declare any dividend or make any other distribution or payment to
any shareholder in cash or in kind or repay in whole or in part any
shareholders loan;
(b) purchase or redeem any of its shares or otherwise reduce its share capital;
or
(c) become guarantor of any obligation or become endorser with respect to any
obligation or become liable upon any note or other obligation other than in
the normal course of the Company's business.
3. (1) The Company shall at all times during the continuance of the Debenture:
(a) fully and effectually maintain and keep maintained the security hereby
created as a valid and effective security;
(b) forthwith pay:
(i) all taxes, assessments, rates, duties, levies, governmental fees and
dues lawfully levied, assessed or imposed upon it or its assets or
undertaking when due, unless the Company shall in good faith contest
its obligations so to pay and shall furnish such security as the
Debenture Holder may direct, and
9985.002\1oanagmt.doc
<PAGE>
Page 2
(ii) all liens, mortgages, charges and encumbrances which rank or could in
any event rank in priority to this Debenture other than those
consented to in writing by the Debenture Holder;
(c) assume and pay all legal fees and disbursements on a solicitor and client
basis and all other fees and disbursements relating to the creation of this
Debenture, its registration in all proper offices of record and relating to
any and all additional instruments and documents as may be deemed necessary
by Counsel for the Debenture Holder;
(d) at its expense, execute and deliver or cause to be executed and delivered
to the Debenture Holder such further and other assurances, conveyances,
mortgages, assignments, transfers, requests, consents and documents as the
Debenture Holder may require for the purpose of perfecting the security
contemplated by this Debenture.
4. The Principal Sum, interest and other monies hereby secured, shall at the
option of the Debenture Holder, become immediately payable and the security
hereby constituted shall become enforceable in each and every of the following
events:
(a) if the Company makes default in the observance or performance of something
hereby required to be done or breaches some covenant or condition hereby
required to be observed or performed, including, but not limited to, the
covenants contained in paragraph I of the within Debenture;
(b) if an Order is made or a Resolution passed for the winding-up of the
Company or if the motion is filed for the winding-up of the Company;
(c) if the Company becomes insolvent or makes a voluntary assignment or
proposal in bankruptcy or bulk sale of its assets or if a bankruptcy
petition is filed or presented against the Company or if a Receiver or
Receiver Manager is appointed under any other Debenture issued by the
Company;
(d) if any execution, sequestration, extent or any other process of any Court
becomes enforceable against the Company or if a distress or analogous
process is levied upon the property of the Company or any part thereof;
(e) if the Company is more than thirty (30) days in arrears of rent payable
under any lease of real property or if the Company allows any amount
outstanding from the Company to the Crown pursuant to federal or
provincial statutes to remain unpaid for a period in excess of thirty
(30) days;
(f) if the Company shall permit any sum which has admitted as due by it or is
not disputed to be due by it and which forms or is capable of being made a
charge upon any of the property subject to the charge created by this
Debenture to remain unpaid for thirty (30) days after proceedings have been
taken to enforce the same as such charge;
(g) if the Company ceases or threatens to cease to carry on its business or
commits or threats to commit any act of bankruptcy;
(h) if the Company makes default in payment of any indebtedness or liability to
the Debenture Holder, whether secured hereby or not, when due;
9985.002\loanagmt.doc
<PAGE>
Page 3
(i) if the Company carries on any business that is restricted from carrying on
by its Memorandum;
(j) if the Company uses any of the funds advanced under this Debenture for any
purpose other than as declared to and agreed upon by the Debenture Holder;
and
(k) if the Statutory Declaration of the secretary or other officer or director
of the Company delivered with this Debenture contains any material
misstatement.
5. The security of this Debenture shall become enforceable if the Principal Sum
and all other monies hereby secured shall not be paid when the same become due
and payable in accordance with paragraph I of the within Debenture.
6. At any time after the Principal Sum and all other monies hereby secured
shall become payable and remain unpaid, the Debenture Holder may appoint by
writing a Receiver of the Property hereby charged and may from time to time
remove any Receiver so appointed and appoint another in his stead. Any Receiver
so appointed shall be an officer of the Company and shall have power:
(a) to take possession of and get in the Property hereby charged;
(b) to carry on or concur in carrying on the business of a Company;
(c) to sell or lease or concur in selling or leasing the Property hereby
charged or any part or parts thereof;
(d) to make any arrangement or compromise which the Receiver shall think
expedient;
(e) to borrow money for the purposes of carrying on the business of the
Company or for the maintenance of the property and assets of the Company
or any part or parts thereof, in such sum as will in the opinion of the
Receiver, be sufficient for obtaining upon the security of such property
and assets the amounts from time to time required and in doing so the
Receiver may issue certificates (herein called "Receiver's Certificates")
and such certificates may be payable either to order or to bearer and may
be payable at such time or times as the Receiver may think expedient and
shall bear interest as shall be stated therein and the amounts from time
to time payable by virtue of such Receiver's Certificates shall form a
charge upon the property and assets of the Company in priority to the
charge of this Debenture. The rights and powers conferred by this paragraph
are in supplement of and not in substitution for any rights the Debenture
Holder may from time to time have as the holder of this Debenture.
The net profits of carrying on the said business and the net proceeds of the
sale shall be applied by the Receiver subject to the claims or all secured and
unsecured creditors (if any) ranking in priority to this Debenture:
FIRSTLY: In payment of all costs, charges and expenses of and incidental to
the appointment of the Receiver and the exercise by him of all or any
of the powers aforesaid including the reasonable remuneration of the
Receiver and all outgoings properly payable by him together with all
legal costs in respect thereof on a solicitor and client basis;
9985.002\1oanagmt.doc
<PAGE>
Page 4
SECONDLY: In or toward payment to the Debenture Holder of the Principal Sum and
all other monies hereby secured;
THIRDLY: In or towards payment to the Debenture Holder of all arrears of
interest remaining unpaid on this Debenture;
FOURTHLY: Any surplus shall, subject to the rights of other creditors, be paid
to the Company.
The Debenture Holder shall be under no liability to the Receiver for his
remuneration, costs, charges or expenses or otherwise. The term "Receiver" as
used in this paragraph includes a Receiver Manager.
7. To enable the Receiver or Receiver Manager to exercise the powers granted to
him by paragraph 6 of these Conditions, the Company hereby appoints the Receiver
or Receiver Manager to be its attorney to carry out any sale of any or all of
the mortgaged property and to affix the common seal of the Company to any deeds,
transfers, conveyances, assignments, assurances and things which the Company
ought to execute to complete any sale of any of the mortgaged property or,
alternatively, to execute the same under his own seal by conveying in the name
of and on behalf of the Company and under his own seal and any deed or other
instrument signed by him under his seal pursuant hereto shall have the same
effect as if it were under the common seal of the Company.
8. Provided that the Company is not in default hereunder, the Company may at
any time or times pay the whole or any part of the Principal Sum secured by this
Debenture without notice, penalty or bonus.
9. The security hereby created is a continuing security and shall cover and
secure the payments of all and every indebtedness both present and future and
interest thereon and interest on overdue interest and all and every liability,
present or future, direct or indirect, absolute or contingent, of the Company to
the Debenture Holder and is in addition to and not in substitution for any other
security or securities which the Debenture Holder now or from time to time may
hold or take from the Company.
10. The Company agrees that neither the preparation, nor the execution, nor the
registration of this Debenture shall bind the Debenture Holder to advance the
monies hereby secured nor shall the advance of a part of the monies secured
hereby bind the Debenture Holder to advance any unadvanced portion thereof but
nevertheless the charge created by this Debenture shall take effect forthwith
upon its execution by the Company.
11. The Debenture Holder may waive any breach by the Company of any of the
provisions of this Debenture or any default by the Company in the observance or
performance of any covenant or condition required to be observed or performed by
the Company under the terms of this Debenture but, notwithstanding the
foregoing, no act or admission of the Debenture Bolder shall extend to or be
taken in any manner whatsoever to affect any subsequent breach or default or the
rights resulting therefrom.
12, The Company shall assume and pay all costs, charges and expenses including
solicitor's costs, charges and expenses as between solicitor and his own client
which may be incurred by the Debenture Holder in respect of any proceedings
taken or things done by the Debenture Holder or on its behalf in connection with
this Debenture to collect, protect, realize or enforce its security hereunder,
9985.002\1oanagmt.doc
<PAGE>
Page 5
whether or not any action or other judicial proceeding has been taken to enforce
this Debenture; and the said costs, charges and expenses shall be added to the
principal monies hereby secured and shall bear interest at the rate set forth in
this Debenture or if more than one rate of interest is so set forth, at the
higher or highest of the said rates of interest.
13. The expression "Debenture Holder" wherever used in this Debenture and in
these Conditions shall include the Debenture Holder's successors and assigns
whether immediate or derivative and any appointment or removal under paragraph
6 hereof may be made by writing, signed or sealed by any such successors or
assigns; and the expression "Company" used in this Debenture shall include the
successors and assigns of the Company.
9985.002\loanagmt.doc
<PAGE>
Exhibit 10f
Transfer of Rights of the Screenplay
The Elves & the Shoemaker
(Elves)
From
A. Ross Belyea
(Belyea)
To
Sirius Animation Incorporated
(Sirius)
August 30, 1998
<PAGE>
1. Transfer of Rights
A. Ross Belyea (Belyea) hereby transfers and grants to Sirius Animation
Incorporated (Sirius) the exploitation and ownership to the screenplay
The Elves & the Shoemaker (Elves) and acknowledge that, when produced,
the short-film Elves shall be the sole and exclusive property of Sirius
Animation or its nominees in perpetuity and that all results and
proceeds of Belyea's services rendered under this agreement, including
the Elves concept, story, copyrights, trademarks and all worldwide
rights therein and extensions and renewals thereof shall constitute
works commissioned by Sirius for inclusion in Elves and are hereby
assigned and transferred to Sirius or its nominees in perpetuity and,
except for provisions stated herein this agreement, without reservation,
free of all claims by Belyea, and that Sirius shall be deemed for all
purposes to be the owner of Elves.
2. Original Work
A. Ross Belyea hereby states and warrants that the Elves' screenplay is an
original creation, based upon and adapted from the Grimm's Brother's
fairy tale The Elves and the Shoemaker, and maintains that the work
created does not infringe upon or violate any right or property of any
other party and that in breach of this statement, Belyea Indemnifies all
claims, liabilities, causes of action, damages and expenses Incurred by
Sirius or related parties because of Belyea's breach or
misrepresentation.
3. Creative Integrity and Credit
Sirius acknowledges that Belyea will retain moral rights and agrees that Elves
will not be altered, adapted or revised without the written permission
of Belyea and that Elves will not be exploited without associating its
production with and giving credit to Belyea as the producer,
screenwriter and director of Elves.
4. Creative and Decision Making Control
Sirius acknowledges and agrees that Belyea will retain creative and decision
making control over the preproduction, production and post-production of
Elves and commissioned to managed the pro-production, production and
post-production of Elves until such a time that Elves is completed and
ready for distribution and subject to budget and delivery criteria and
restrictions as identified in Section 5.
5. Budget and Delivery Timeline Criteria and Restrictions
A. Ross Belyea acknowledges and agrees that in exercising creative and decision
making control over the preproduction, production and post-production of
Elves, in addition to any and all future production as Identified and
set out in Section 6, that such control is restricted to and will be
governed by pro-planned and previously agreed upon budgets and pro-
determined and agreed upon timelines for delivery dates and as such
Belyea's creative and decision making control will be governed by these
pre-budget and delivery date stipulations and further managed by a
committee made up of managers from the administrative, finance,
marketing and production departments of Sirius.
6. First Right of Refusal
Sirius acknowledges and agrees that Belyea has the first right of refusal to
produce. write and direct and be commissioned to manage the pre-
production, production and post-production of any and all existing or
planned productions with respect to any and all prequels, sequels and/or
spin-off productions that derive themselves from the production of
Elves, the Elf King series or a Brother's Grimm anthology.
7. Canadian Content
A. Ross Belyea hereby states that he Is a Canadian citizen and that (he Elves
production, with Belyea credited as producer, writer and director, is in
compliance with all known rules and regulations governing "Canadian
content production" and to all known Canadian tax and sponsorship
programmes, incentives, grants and/or any and all known government or
private sector assistance programmes that will promote or offset the
cost of the production of Elves, the Elf King series or a Brother's
Grimms anthology as presented under the Canadian Content rules of the
CRTC and other regulatory bodies.
Signed on this 30th day of August 1998.
--------------------------------
A. Ross Belyea Witnessed
Witnessed by
<PAGE>
Exhibit 10g
BRI
BRUDER RELEASING,INC.
----------------------------------------
MARC D. BRUDER
PRESIDENT
2020 BROADWAY * SANTA MONICA, CA 90404
TEL (510) 829-2222 - FAX (310) 829-0202
[email protected]
WORLDWIDE DISTRIBUTION AGREEMENT
Between:
Sirius Animation
1255 West Pender Street
Vancouver, BC
V6E 2V1
CANADA
(604) 647-0022
and:
Bruder Releasing Inc.
2020 Broadway
Santa Monica, CA
90404
USA
(310) 829-2222
Page 1 of 9
<PAGE>
Page 2
WORLDWIDE DISTRIBUTION AGREEMENT
The following are the terms of the agreement made and entered into as of April
26, 2000 (The "Agreement") between Bruder Releasing Inc., 2020 Broadway, Santa
Monica, CA 90404, USA ("Distributor") and Sirius Animation Inc., 1255 West
Pender Street, Vancouver BC V6E 2V1 Canada ("Producer") with respect to the
distribution of 26 episodes of an animated television series currently entitled
The Elf King (the "Series").
------------
1. SERVICES/GRANTS OF RIGHTS
-------------------------
(a) Distributor hereby agrees to provide its services (the "Services") to
Producer to package, advertise, market and otherwise exploit the Series in
the territories (the "Territories") noted in paragraph 3, below. During the
term of this Agreement and any renewal thereof, Distributor may receive
instructions and directions from Producer as are necessary in order to
effect the terms of this Agreement.
(b) Distributors Services shall, without limiting the generality of the
foregoing include the following:
(i) Conduct at its sole cost all marketing for the Series, including,
without limiting the generality of the foregoing, sale to
broadcasters, retail stores, mail order sales, wholesale, tradeshows,
conventions, catalogue sales, trade periodical sales, website sales,
etc.:
(ii) Promote the Series at trade shows, speaking engagements, seminars,
etc.
(c) The parties acknowledge and agree that Producer shall have the concurrent
right to advertise, market and otherwise exploit the Series via the
internet throughout the world. In such event, the revenue participation
between Producer and Distributor shall be in accordance with the provisions
of paragraph 7, below.
(d) Distributor hereby acknowledges and agrees that. subject to paragraph 1
(c), above, Producer is granting to it an exclusive license to market,
advertise and otherwise exploit the Series in all media throughout the
Territories during the Term hereof. All rights, title and interest in and
to the Series or any Episode thereof, including copyright shall remain the
sole and exclusive property of Producer.
(e) Distributor shall not change the title of the Series or any Series or and
episodes thereof or otherwise edit, tamper with or alter the fine cut of
the Series as per the relevant Master.
(f) Producer shall have prior written approval, which approval shall not be
unreasonably withheld, of all packaging for the Series, artwork, sell
sheets, etc. prepared by or on behalf of Distributor under this Agreement.
2. TERM
----
(a) The term of this Agreement shall commence upon execution and continue for
an initial period of three (3) years from the date hereof. The Term of this
Agreement may be extended in writing, by mutual agreement of the parties.
(b) Time is and shall be of the essence in this Agreement.
Page 2 of 9
<PAGE>
Page 3
3. TERRITORY
---------
(a) Distributor shall provide the Services in connection with the distribution
of the Series during the Term throughout the entire universe, excluding
Canada (the "Territories"). A list of the Territories"). A list of the
Territories is attached hereto and marked as Schedule "A".
4. RIGHTS
------
(a) The Services provided by Distributor under this Agreement, subject to
paragraph 1(c), above, shall apply to all rights in all media now known or
hereafter devised, including and without limitation to, Theatrical,
NON-Theatrical, Video-Cassette, Video-Disc and other Compact and Video
Devices, Basic and Pay Cable, Pay Per View, Network and Syndication
Television, and Satellite Transmission.
5. RIGHTS RESERVED
---------------
(a) Producer herby reserves onto itself the sole and exclusive right, license
and privilege to, without limitation, exercise all literary publishing
rights, merchandising, ancillary and spin-off rights, remake rights,
prequel rights, and sequel rights and motion picture rights concerning the
Series.
6. DELIVERABLES
------------
(a) At the discretion of the Producer shall make available to Distributor, the
below listed materials to be used in the delivery of the Series:
----------
(i) 525 NTSC "C" Standard One Inch, D2 or Beta Cam SP Video Tape Master
of the Completed, Final Broadcast Version of the Series and Trailer
with English Mix on Channel 1, Music and Effects only on Channel 2,
and Timecode on Channel 3. The Video Tape Master must be Panned and
Scanned to bring the Series into the Televisions Safe Area. Producer
shall grant Distributor permission to place BRI logo on head of
feature(s) upon Programming duplication;
(ii) No fewer than 20 VHS NTSC Screening Cassettes and no fewer than 50
Color Flyers and/or Video Sleeves to promote the Series in the
Territories. ALL SCREENING, CASSETTES MUST INCLUDE WINDOW BURN.
-------------------------------------------------
(iii) Complete set of 20 Original 35mm color Transparencies/Chromes;
(iv) Set of Publicity Material to include the Synopsis, Biographies and
Credits of Producer, Set of Chain of Title Documents including the
Copyright Registration Certificate Director and Major Cast;
(vi) Rating Certificate from the Motion Picture Association of America
(if required by Programmer/Distributor);
(vii) Textless Key Mechanical Artwork of Poster (if required by Programmer
/Distributor);
(viii) Music Cue Sheet setting forth: the Title of the Musical Compositions
and Sound Recordings; if applicable; the Names of the Composers and
their Performing Rights Affiliation; the Names of the Recording
Artists; the Nature, Extent and Exact Timing of the uses made of
each Musical Composition and Sound Recording; and the Name and
Address of the Publisher and Company which controls the Sound
Recording (if required by Programmer/Distributor);
(ix) Copy of the combined Dialogue, Continuity, Music and Effects Script
of the Series (If required by Programmer/Distributor);
(x) Set of Chain of Title Documents including the Copyright Registration
Certificate (If required by Programmer/Distributor);
(b) As sales are secured the Distributor will provide Producer with written
sales estimates and/or projections of the exploitation potential of the
Series in each of the Territories.
Page 3 of 9
<PAGE>
Page 4
(c) On or before 2000, Distributor shall deliver to Producer one copy of
all final versions of promotional materials, packaging for the Series, sell
sheets and any other material that it will use in the marketing,
advertising and exploitation of the Series.
7. COMMISSIONS
-----------
(a) Distributor shall receive an amount equal to twenty percent (20%) of all
Gross Receipts, as defined herein, derived from sales in the Territories
under the terms of this Agreement (the "Commission"). Without limiting any
of Distributors rights hereunder, Distributor shall be entitled to a
Commission for sales, if any, initially negotiated within the Term,
including sales concluded and receipts procured by Producer or Distributor
or through any third person or other business, and regardless whether the
term of any such sale shall be effective during or after the Term.
Distributor shall have the right to collect earned Commissions and recoup
Distribution Expenses, defined in paragraph 8(a), below, not yet paid to
Distributor after the expiration of the Term. "Gross Receipts", as used in
this Agreement, shall mean all monies or consideration of any kind or
character, without deductions of any kind, actually received by or credited
to Distributor from the exploitation of the Series hereunder, including
royalty receipts.
8. DISTRIBUTION EXPENSES
---------------------
(a) Distributor shall not incur any out of pocket expense or other costs
incurred by it under the terms of this Agreement without the prior written
approval of Producer, such approval not to be unreasonably withheld. Such
costs may include manufacture of any delivery requirements, cassette
duplication, marketing, shipping and other reimbursable costs (the
"Distribution Expenses").
(b) Under no circumstances shall Distribution Expense exceed or be in addition
to the Commission payable to Distributor under paragraph 9(a), above. For
greater clarity, Distribution Expenses, if any, shall form part of and be
payable out of Distributor's Commission. Distributor acknowledges and
agrees that Producer shall not be liable in any manner whatsoever to the
Distributor or any third party or sub-contractor (as defined in paragraph
10(b), below) of Distributor for Distribution Expenses, if any, that exceed
Distributor's Commission.
(c) Producer shall invoice Distributor, Net 30 days payable, for all material
and material costs in fulfilling Title to Programmers/Broadcaster (as
defined below) in the relevant Territory, provided that the expenses agree
recoupable from said Programmer/Broadcaster. "Programmer/Broadcaster" shall
be defined as any broadcast media entity in the relevant Territory,
9. GROSS RECEIPTS, NET RECEIPTS
----------------------------
(a) Gross Receipts shall be disbursed in the following order of priority,
within fifteen (15) business days of Distributor's receipt of same:
(i) First, Distributor shall receive the Commission and shall recoup all
approved Distribution Expenses;
(ii) Second, Producer shall receive the remainder of all Gross Receipts
("Net Receipts").
10. SCOPE OF AGENCY
---------------
(a) All sales agreements, approved by Producer in writing, shall be prepared
and executed by Distributor as agent for Producer during the Term.
Distributor shall collect all sales and license fees and deposit same in
Distributor's bank account.
Page 4 of 9
<PAGE>
Page 5
(b) In the event that Distributor retains any sub-agent or sub-contractor, (the
"Sub-Contractor") in order to assist Distributor in providing the Services
under this Agreement, Distributor shall first advise Producer in writing of
the name of such Sub-Contractor and the Territory(ies) in which such Sub-
Contractor shall be rendering services on behalf of Distributor.
11. AUDIT/FINANCIAL RECORDS
-----------------------
(a) Distributor shall keep complete and accurate accounting books and records
regarding its marketing, advertising, distribution and commercial
exploitation of the Series.
(b) Distributor shall provide a statement to Producer showing in reasonable
detail, all Gross Receipts, Distribution Expenses, Net Receipts or other
allowable deductions, if any, in connection with such marketing,
advertising, distribution and commercial exploitation of the Series. Such
statement shall be on a deal by deal basis and the statement shall be
issued no later than ten (10) days after receipt of monies and payment of
Net Receipts due to Producer thereunder, if any, shall accompany the
statement.
(c) Producer shall have the right, upon fifteen (15) day's prior written notice
to Distributor and at Producer's won expense, to have a qualified
Canadian Chartered Accountant and/or COPA audit the books, records and
contracts of Distributor [and its affiliates and associates] but only with
respect to the Series. This audit is limited to taking place at
Distributor's place of business, during reasonable business hours, a
maximum of once per quarter and of no longer tan two (2) business days'
duration.
12. DELIVERY OF SERIES
------------------
(a) Producer hereby warrants that it has access to the delivery elements of
the Series, as set forth in Paragraph 6(a). Producer alone shall be
responsible for satisfying all delivery requirements requested by each
Programmer/Distributor. Notwithstanding the foregoing, in the event
Producer does not supply any of the items to Programmer/Distributor in a
timely fashion, Distributor shall be authorized to complete such delivery
and recoup all costs incurred plus a servicing fee.
13. PRODUCER'S WARRANTIES
---------------------
(a) Producer hereby covenants, represents and warrants that it is the sole
legal owner of the Series with its underlying and constituent elements,
free and clear of all encumbrances with full right and title to enter this
Agreement, and the Producer has obtained necessary clearance in order to
grant the free and unhindered distribution rights in all media as
contemplated hereby and will provide Distributor with any and all documents
evidencing such to Distributor.
(b) Producer hereby agrees and acknowledges that Distributor shall have no
liability whatsoever to any of the artists or other third parties
performing services in connection with the Series or soundtrack, and
Distributor shall not be responsible for any of the Producer's obligations
with regard to third parties; all residuals, royalties, deferments and any
other payments to third parties shall remain the sole responsibility of the
Producer.
(c) Without limiting the generality of the foregoing, Producer covenants,
represents and warrants that it has obtained all necessary music clearance
so that the Series and may be exploited in all media throughout the
Territories without need for payment of mechanical royalties.
Page 5 of 9
<PAGE>
Page 6
14. INDEMNIFICATION
---------------
(a) Distributor and Producer will, at their own expense, indemnify, save and
hold each other harmless, and their respective successors, distributors,
assigns, and employees, from and against any and all liability, loss,
damage, cost and expense (including without limitation, reasonable
attorney's fees) incurred or sustained by any such indemnitee by reason of,
or resulting from, any breach or alleged breach, or claim by a third party
with respect to any warranties, representations or agreements herein made
by each other, or any reliance by and such indemnitee upon any such
warranty, representation or agreement.
(b) The indemnifying party ("Indemnitor") shall undertake, at its own cost and
expense the prompt and complete legal defense against such action or claim.
The indemnified party ("Indemnitee") shall have the right, at its option,
to participate, at its own expense and by its own attorneys, in the defense
of any claim. If Indemnitor does not assume the defense of any such claim
or litigation, any settlement thereof by Indemnitee shall be subject to
Indemnitor's prior approval, which approval Indemnitor shall not
unreasonably withhold.
15. NO INJUCTION
------------
(a) Distributor acknowledges and agrees that if at any time Producer or its
assignees or licensees are alleged to be in breach or default of any
provision of this Agreement, Distributor's sole remedy with respect to such
breach or default shall be limited to a claim for money damages in an
action at law and neither Distributor, nor any party claiming in its place,
shall be entitled to rescind or terminate this Agreement or to apply for,
obtain or enforce any injunctive, equitable, or other relief of any nature
whatsoever which would in any manner prohibit, prevent, restrict, impede,
delay or otherwise interfere with the complete and unfettered exercise by
Producer and its assignees and licensees of all rights and licenses granted
herein, including the production, distribution, advertising and general
exploitation of the Series and all elements and rights therein.
16. CONFIDENTIALITY
---------------
(a) Distributor shall:
-----------------
(i) protect and maintain the confidentiality of all information, materials
and/or data which Producer designates, either orally or in writing to
be of a confidential or proprietary nature or which Producer has
reason to believe should be treated as such, but excluding any
information in the public domain ("Confidential Information");
(ii) not disclose the Confidential Information to any other party than to
customers or potential customers of Producer on a need-to-know basis
in order for Distributor to perform the Services or unless the prior
written permission is received from Producer:
(iii) not use the Confidential Information for any purpose other than to
perform the Services" and
(iv) take all necessary precautions to restrict access to the Confidential
Information in accordance with policy established by Producer.
Page 6 of 9
<PAGE>
Page 7
17. SUSPENSION/TERMINATION
----------------------
(a) Upon thirty (30) day's written notice to either party, the terminating
party may suspend the services rendered under this Agreement or terminate
this Agreement or any portion thereof for its convenience, without
obligation or liability of any nature, except to pay the non-terminating
party the monies due to it up to and including the effective date of
termination and to pay any Commission, Distribution Expenses or Net
Receipts that became due and payable after the date of termination as a
result of contracts or obligations there were entered into prior to the
date of termination. In all other respects, no monies shall be payable to
either party for services commenced or completed or materials provided
after the date of termination, or for any loss of anticipated profits.
(b) In the event that a party is alleged to be in breach of any of the
provisions of this Agreement, the non-defaulting party shall immediately
provide the defaulting party with written notice setting out the
particulars of such breach. The defaulting party shall then have fifteen
(15) days from the date of receipt of such notice during which to cure such
breach, failing which the non-defaulting may suspend or terminate this
Agreement in accordance with the provisions of paragraph 17(a), above.
(c) Immediately upon the termination of this Agreement, the non-terminating
party shall return to the terminating party all Confidential Information,
customer lists, equipment, documents, specifications, business documents,
computer software lists, records, files (electronic or otherwise) and all
other material received by the non-terminating party in relation to this
Agreement, the non-terminating party's business or its Confidential
Information, including all copies of such materials.
18. GENERAL PROVISIONS
------------------
(a) Arbitration. Disputes and all matters of interpretation concerning this
agreement shall be referred for a final and binding determination to a
single arbitrator appointment pursuant to and governed by the provisions of
the Commercial Arbitration Act (B.C.). Costs of any such arbitration shall
be borne and paid forthwith by the unsuccessful party or, in the event of
mixed of partial success, in the manner determined by the arbitrator.
(b) No Authority. Distributor shall not have, nor represent that it has, any
power or authority to enter into any agreement, to make representations or
to incur any debt or liability on behalf of or in the name of Producer,
unless the prior written consent of Producer has been obtained;
(c) Notices. All notices, statements of account, remittances and other
correspondence and documents required or desired to be delivered or served
pursuant to this agreement (herein referred to collectively as the
"Notice") may be delivered and served by personal delivery, telecopier or
by prepaid, first-class mail addressed to the intended recipient party at
its respective addresses written below, or such other address as may have
been designated in accordance with the provisions of this paragraph. A
Notice so given shall be deemed to have been received, if delivered when
delivered, and if given by telecopier, on the date transmitted by the
sender, and if deposited for mailing at any government post office within
the United States or Canada, on the seventh (7th) business day following
the date of postmark thereon; provided that if at the time of mailing or
at any time prior to the actual receipt of the Notice by the addressee,
there is any actual or threatened labour disruption, civil insurrection or
act of God affecting the transport or delivery of mail at the location of
mailing, the location of intended delivery or any location through which
mail would ordinarily travel between those two locations, or if the Notice
is mailed from outside Canada, or if the Notice does not bear a Canada Post
postmark, a Notice delivered by mail shall be deemed not to have been
received until actually received by the addressee.
Page 7 of 9
<PAGE>
Page 8
If to Producer:
1255 West Pender Street
Vancouver BC
V6E 2V1
Fax: 604 638-1642
Attention: A. Ross Belyea, Producer, Director
c.c.
Roberts & Stahl
Barristers and Solicitors
500 - 220 Cambie Street
Vancouver BC
V6B 2M9
Fax: 604 684-6377
Attention: Jeffery E. Wittmann
If to Distributor:
2020 Broadway
Santa Monica, CA
90404
Fax: 310-829-0202
Attention: Marc D. Bruder
(d) No Partnership. Nothing in this agreement is intended or will be
construed as creating a relationship of joint venture, partnership or
employment between the parties hereto and each of the parties specifically
acknowledges and agrees that their relationship is and shall be soley as
independent contractors.
(e) Assignment. Neither party may at any time assign, licence or transfer all
or any of its rights, licences, privileges and property hereunder, in whole
or in part, to any other person, firm or corporation.
(f) Severance. If any provision of this agreement, or part thereof, is held by
a court of competent jurisdiction to be void or unenforceable, it shall be
deemed to have been severed from this agreement and the remainder of the
provisions of this agreement shall continue in full force and effect to the
extent permitted by law.
(g) Law and Service of Documents. This agreement shall be governed by and
construed in accordance with the laws of the Province of British Columbia
and the laws of Canada applicable therein and each of the parties hereby
irrevocably attorns to the jurisdiction of the Courts of the Province of
British Columbia.
(h) Enurement. This agreement and each of the provisions hereof shall enure to
the benefit of and be binding upon the parties hereto and their respective
successors, administrators and assigns.
Page 8 of 9
<PAGE>
Page 9
(i) Entire Agreement. This document contains the entire agreement between the
parties with respect to Distributors Services and supersedes all previous
discussions, understandings and agreements between the parties. There are
no additional or collateral representations, warranties, terms, conditions,
expectations or agreements between the parties regarding the subject matter
hereof, except those expressly set forth herein. No amendment or
modifications of this Agreement shall become effective unless and until
reduced to writing and duly executed by the parties hereto. This Agreement
may be signed by facsimile and in counterparts.
IN WITNESS WHEREOF, the Parties have signed this Agreement effective as of the
------------------
date above written.
AGREED TO AND ACCEPTED BY:
-------------------------
/s/ Marc A. Bruder Date May 9, 2000
------------------------------------- ----------------------
By: Marc D. Bruder, President
For: Bruder Releasing, Inc. (DISTRIBUTOR)
/a/ M. Cahill Date May 9, 2000
------------------------------------- ----------------------
Witness
/s/ A. Ross Belyea Date May 9, 2000
------------------------------------- ----------------------
By: A. Ross Belyea
For: Sirius Animation Inc. (PRODUCER)
/s/ (signed/ Date May 9, 2000
------------------------------------- ----------------------
Witness
Page 9 of 9
<PAGE>
Exhibit 21
Subsidiaries of the Registrant
Minex S.A., incorporated on September 30, 1997 under the laws of the Country of
Argentina.
Moxy Resources, Inc., incorporated on July 22, 1999 under the laws of the State
of Nevada.
Sirius Animation Inc., incorporated on October 22, 1998 under the laws of the
Province of British Columbia.
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in this Registration Statement on Form 10-SB,
including any amendments thereto, of our report dated April 25, 2000, relating
to the financial statements of Redmond Capital Corp., appearing in such
registration statement.
/s/ CLANCY AND CO., P.L.L.C.
Phoenix, Arizona
July 28, 2000
<PAGE>
