<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 9, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
S.M.A. REAL TIME INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEW YORK 7812 13-3724883
(STATE OR JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
100 AVENUE OF THE AMERICAS, 10TH FLOOR
NEW YORK, NEW YORK 10013
(212) 226-7474
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES
AND PRINCIPAL PLACE OF BUSINESS)
------------------------
MICHAEL J. MORRISSEY, PRESIDENT
100 AVENUE OF THE AMERICAS, 10TH FLOOR
NEW YORK, NEW YORK 10013
(212) 226-7474
(ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C>
STEPHEN M. ROBINSON LAWRENCE B. FISHER, ESQ.
STEPHEN M. ROBINSON, P.A. ORRICK, HERRINGTON & SUTCLIFFE LLP
172 TUCKERTON ROAD 666 FIFTH AVENUE
MEDFORD, NEW JERSEY 08055 NEW YORK, NEW YORK 10103
(856) 596-5530 (212) 506-5000
(856) 596-3340 FAX (212) 506-5151 FAX
</TABLE>
------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this registration statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier registration
statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier registration
statement for the same offering. / /
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED SHARE(1) PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common stock.................................... 2,300,000(2) $10.00 $23,000,000 $6,394
Representative's warrants to purchase shares of
common stock(3)............................... 200,000 $-- $-- $--
Common stock underlying the representative's
warrants(4)................................... 200,000 $12.00 $2,400,000 $667
Total....................................... $25,400,000 $7,061
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of the Securities Act of 1933, as amended.
(2) Includes 300,000 shares of common stock that the Underwriters have the
option to purchase to cover over-allotments, if any.
(3) No registration fee is required pursuant to Rule 457(g) under the Securities
Act.
(4) Pursuant to Rule 416 of the Securities Act, there are also being registered
such additional securities as may become issuable pursuant to the
anti-dilution provisions of the representative's warrants.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JULY 9, 1999.
2,000,000 SHARES
S.M.A. REAL TIME INC.
COMMON STOCK
------------------------
This is an initial public offering of 2,000,000 shares of common stock of
S.M.A. Real Time Inc. We anticipate that the initial public offering price will
be between $8.00 and $10.00 per share.
Prior to this offering, there has been no public market for our common
stock. We have applied to list our common stock on the American Stock Exchange
under the symbol "VTV."
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 7 TO READ ABOUT CERTAIN FACTORS
YOU SHOULD CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
<S> <C> <C>
Initial public offering price............................... $ $
Underwriting discounts and commissions...................... $ $
Proceeds, before expenses, to SMA........................... $ $
</TABLE>
------------------------
We have granted the underwriters the right to purchase up to 300,000
additional shares at the initial public offering price minus the underwriting
discount, to cover any over-allotments.
Delivery of the shares of common stock will be made on or about August ,
1999, in New York, New York, against payment in immediately available funds.
------------------------
DIRKS & COMPANY, INC.
PROSPECTUS DATED , 1999.
<PAGE>
The inside front cover contains the words, "Virtual Set Technology" and a series
of eight pictures depicting various aspects of a virtual set production
involving Barbara Walters.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK
OFFERED IN THIS PROSPECTUS. THESE ACTIONS INCLUDE PURCHASING COMMON STOCK TO
COVER SOME OR ALL OF A SHORT POSITION OF COMMON STOCK MAINTAINED BY THE
REPRESENTATIVE AND THE IMPOSITION OF PENALTY BIDS.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Summary.......................................................................................... 4
Cautionary Note Regarding Forward-Looking Statements........................................................ 5
Risk Factors................................................................................................ 7
Use of Proceeds............................................................................................. 12
Dividend Policy............................................................................................. 12
Capitalization.............................................................................................. 13
Dilution.................................................................................................... 14
Selected Financial Information.............................................................................. 15
Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 16
Business.................................................................................................... 21
Management.................................................................................................. 29
Certain Transactions........................................................................................ 34
Principal Stockholders...................................................................................... 36
Description of Securities................................................................................... 37
Shares Eligible for Future Sale............................................................................. 38
Underwriting................................................................................................ 40
Legal Matters............................................................................................... 41
Experts..................................................................................................... 42
How to Get More Information................................................................................. 42
Financial Statements........................................................................................ F-1
</TABLE>
------------------------
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may be used only where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
3
<PAGE>
PROSPECTUS SUMMARY
You should read the following summary together with more detailed
information and SMA's combined financial statements and the notes to those
statements appearing elsewhere in this prospectus. This summary is not complete
and may not contain all of the information that investors should consider before
investing in our common stock.
OUR BUSINESS
SMA is video and film studio that combines traditional video and film
production techniques with state of the art technology and expertise to offer
virtual and digital production and post-production services.
We are equipped to manage every aspect of the production process beginning
with production planning, to the original shoot, through editing to final
commercial release. We provide these services to advertising agencies, creative
editorial companies, Fortune 500 companies, freelance producers, Internet
producers, movie studios, production companies, television networks, and
television producers.
We use animation equipment, digital equipment, film cameras, infrared
tracking, pattern recognition, super computers and video cameras. In combination
with our experienced staff, they form the basis for us to offer the following
services:
o Location production
o Film to video transfer
o Studio/Stage production
o Computer animation
o Virtual production
o Graphic design services
o Blue/green screen effects production
o On-line editing
o Motion control production
o Videotape duplication services
o Computer program/database creation
OUR STRATEGY
Our goal is to be the leading production and post-production studio for all
types of media including film, internet and television. In order to achieve this
goal, we will implement the following strategies:
o Continue to expand our facilities, production capabilities and service
offerings to strengthen our brand and provide our customers with a
one-stop-shop for all of their video and film production and post-
production needs;
o Continue to make significant investments in state-of-the-art technologies
as a vehicle to enhance product offerings, improve service, increase
sales and foster growth. We are committed to a number of technological
investments in order to capitalize on the developing High Definition
Television and Internet markets;
o Continue to expand our technical talent, focusing on experts in the
field. We are committed to strengthening our talent base by recruiting
individuals who have expertise, are motivated and energetic and
comprehend the notion of teamwork and customer service;
o Increase our marketing and sales efforts to expand our client base and
further solidify and penetrate existing client business;
o Create and accumulate programming to establish new revenue sources;
o Expand our virtual television production capabilities into new
application areas; and
o Capitalize on the opportunities provided by our fully digital facility.
OUR OFFICES
Our executive offices, virtual studio and production facilities are located
at 100 Avenue of the Americas, New York, New York 10013; our telephone number is
(212) 226-7474; and our web site can be accessed at www.smavid.com. Information
contained in our web site is not part of this prospectus.
4
<PAGE>
CORPORATE BACKGROUND
We began business in 1985 under the name SMA Video, Inc. S.M.A. Real Time
Inc. was formed as a New York corporation in May 1993 to be the operating
company for certain parts of our business. In April 1999, two corporate
subsidiaries, Fly Films, Inc. and SMA Visual Effects Corp. were merged into SMA
Video, Inc., and SMA Video became a wholly owned subsidiary of S.M.A. Real Time
Inc. All references to "S.M.A. Real Time Inc.," "we," "our," or "us" include the
operations of SMA Video, Inc. and its predecessor entities.
THE OFFERING
<TABLE>
<S> <C>
Common stock offered by us................ 2,000,000 shares
Common stock to be outstanding after this
offering................................ 5,700,000 shares, assuming the underwriters do not exercise their
over-allotment option
Use of Proceeds........................... o Expansion and improvements to facilities and other capital
expenditures;
o Expansion of internal operations;
o Sales and marketing expenditures;
o Repayment of promissory notes; and
o Working capital and general corporate purposes
Risk Factors.............................. An investment in the securities we are offering involves a high
degree of risk. Prospective investors should carefully review the
section entitled "Risk Factors" as well as other information provided
in this prospectus.
Proposed Amex Symbol...................... "VTV"
</TABLE>
Except as noted, all of the information in this prospectus assumes that
neither the warrants that we will issue to the representative of the
underwriters or the underwriter's over-allotment option are exercised, and does
not reflect the issuance of any of our 500,000 shares of common stock available
for future grants pursuant to our 1999 stock incentive plan.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These forward-looking
statements are not historical facts, but rather are based on our current
expectations, estimates and projections about our industry, our beliefs and
assumptions. Words including "may," "could," "would," "will," "anticipates,"
"expects," "intends," "plans," "projects," "believes," "seeks," "estimates" and
similar expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties and other factors, some of which are beyond our control,
are difficult to predict and could cause actual results to differ materially
from those expressed or forecasted in the forward-looking statements. These
risks and uncertainties are described in "Risk Factors" and elsewhere in this
prospectus. We caution you not to place undue reliance on these forward-looking
statements, which reflect our management's view only as of the date of this
prospectus. We are not obligated to update these statements or publicly release
the result of any revisions to them to reflect events or circumstances after the
date of this prospectus or to reflect the occurrence of unanticipated events.
5
<PAGE>
SUMMARY FINANCIAL DATA
You should read the following summary financial data together with the
section of this prospectus entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our financial statements and
notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31,
------------------------ ------------------------
1997 1998 1998 1999
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................................. $5,850,308 $6,469,142 $3,262,772 $3,375,320
Cost of revenues......................................... 3,628,295 4,044,591 2,023,739 2,216,328
---------- ---------- ---------- ----------
Gross margin............................................. 2,222,013 2,424,551 1,239,033 1,158,992
Selling, general and administrative...................... 1,652,506 1,611,515 817,867 878,452
---------- ---------- ---------- ----------
Income from operations................................... 569,507 813,036 421,166 280,540
---------- ---------- ---------- ----------
Interest expense, net of interest income................. 540,795 509,513 264,977 200,187
Other expense............................................ 5,432 2,219 669 5,494
---------- ---------- ---------- ----------
Total other expenses..................................... 546,227 511,732 265,646 205,681
---------- ---------- ---------- ----------
Income before income taxes............................... 23,280 301,304 155,520 74,859
Provision for income taxes............................... 7,998 142,000 70,329 34,000
---------- ---------- ---------- ----------
Net income............................................... $ 15,282 $ 159,304 $ 85,191 $ 40,859
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and diluted earnings per share..................... $ .01 $ .05 $ .02 $ .01
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Shares used in basic and diluted earnings per share...... 3,490,000 3,490,000 3,490,000 3,490,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The pro forma balance sheet below, as of March 31, 1999, has been adjusted
to reflect the issuance of $700,000 of promissory notes and 210,000 shares of
common stock in May, 1999. The pro forma as adjusted balance sheet below, as of
March 31, 1999, has been adjusted to reflect the sale of common stock offered
hereby at an assumed initial public offering price of $9.00 per share,
representing the mid point of the filing range, and the receipt of the estimated
net proceeds therefrom.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
AS OF -----------------------------------------
SEPTEMBER 30, PRO FORMA
1998 ACTUAL PRO FORMA AS ADJUSTED
------------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total working capital (deficit)...................... $(1,282,117) $(1,502,686) $(1,372,686) $13,517,314
Total assets......................................... $ 6,162,661 $ 5,924,319 $ 6,604,319 $21,052,319
Total liabilities.................................... $ 4,888,100 $ 4,608,899 $ 5,098,899 $ 4,608,899
Total stockholders' equity........................... $ 1,274,561 $ 1,315,420 $ 1,505,420 $16,443,420
</TABLE>
6
<PAGE>
RISK FACTORS
An investment in our common stock involves a high degree of risk. In addition to
the other information contained in this prospectus, you should carefully
consider the following risk factors and other information in this prospectus
before investing in our common stock.
WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR BUSINESS OR CONTINUE TO ACHIEVE
PROFITABILITY.
We expect that our sales and marketing, product development and
administrative expenses will increase in the future and, as a result, we will
need to generate significant revenues to achieve and maintain profitability.
Although our revenues have grown in recent quarters, we cannot assure you that
we will achieve sufficient revenues for profitability. To stay profitable, we
must, among other things:
o successfully develop and deliver new products and services;
o respond quickly and effectively to competitive, market and technological
developments;
o expand sales and marketing operations;
o broaden production and post-production capabilities;
o retain and attract highly qualified employees;
o improve customer support; and
o control expenses.
If revenues grow slower than we anticipate, or operating expenses exceed our
expectations or cannot be adjusted accordingly, our business, results of
operations, and financial condition will be materially and adversely affected.
WE ARE CURRENTLY DEPENDENT UPON A SMALL NUMBER OF CUSTOMERS FOR A LARGE PORTION
OF OUR REVENUES.
Our largest customer, ABC News, accounted for approximately 13% and 11% of
our revenues in fiscal year 1998 and 1997. We do not have a contract with this
customer. In fiscal 1998, our five largest customers, ABC News, Berwyn
Editorial, Inc., Orbital Power & Light, Inc., Progressive Image Group, Inc. and
Shoot First Editorial, accounted for 32% of our revenues. In fiscal 1997, our
five largest customers, ABC News, Berwyn Editorial, Inc., ESPN Productions,
Inc., Progressive Image Group, Inc. and Subvoyant Corporation accounted for 38%
of our revenues. For the six months ended March 31, 1999 and 1998, ABC News
accounted for approximately 14% and 11% of our revenues. The loss of this
customer would likely have a material adverse effect on our business, financial
condition and results of operations.
Our business and financial condition would be materially adversely affected
if we do not attain substantial additional business from these customers, or if
we lose the business of any of these customers, and if we fail to attain
substantial additional business from other customers.
POTENTIAL FLUCTUATIONS IN OUR QUARTERLY RESULTS COULD ADVERSELY AFFECT OUR STOCK
PRICE.
We expect that our quarterly operating results will fluctuate significantly
due to many factors, including:
o demand for our products and services;
o market acceptance of virtual studio services;
o market acceptance of high definition television;
o market acceptance of the convergence of high definition television and
the Internet;
o price reductions or changes in pricing;
o competitive factors;
o development time and costs of introducing new services;
7
<PAGE>
o technical difficulties with respect to the use of our services;
o management of our growth; and
o general economic conditions.
Additionally, if our operating results in one or more quarters do not meet
market expectations, the price of our common stock could be materially adversely
affected.
WE MAY NOT BE ABLE TO KEEP UP WITH RAPID TECHNOLOGICAL CHANGE.
Our market is characterized by rapid technological change and frequent new
product announcements. Significant technological changes could render our
existing technology obsolete. We will frequently need to upgrade our facilities
to meet the evolving demands of high definition television, as well as
technological changes arising out of utilization of high definition graphics on
the Internet. If we are unable to successfully respond to these developments or
do not respond in a cost-effective way, our business, financial condition and
results of operations will be materially adversely affected. To be successful,
we must adapt to our rapidly changing market by continually improving the
responsiveness, services and features of our products and services and by
developing new features to meet customer needs. Our success will depend, in
part, on our ability to adapt to rapidly changing technologies, to enhance our
existing services and to develop new services and technologies that address the
needs of our customers.
IF WE DO NOT DEVELOP A SUFFICIENT SALES AND MARKETING FORCE WE MAY NOT BE ABLE
TO IMPROVE PROFITABILITY.
Currently we have no sales and marketing employees and have obtained work
through recommendations by existing clients, the use of demo-reels and limited
participation in trade shows rather than extensive marketing campaigns.
Following the completion of this offering, we intend to hire an in-house sales
and marketing staff, but our efforts to develop a sufficient sales and marketing
group may be inadequate. Our inability to develop a sufficient sales and
marketing group would have a negative effect on our business, results of
operations and financial condition.
WE MAY BE UNABLE TO MEET OUR FUTURE CAPITAL REQUIREMENTS.
Based on our current operating plan, we anticipate that the net proceeds of
this offering and cash provided by operations will allow us to meet our cash
requirements for at least the 12 months following the date of this prospectus.
We may require additional funding sooner than anticipated. In addition,
unplanned acquisition and development opportunities and other contingencies may
arise, which could require us to raise additional capital. We cannot be certain
that additional financing will be available on commercially reasonable terms, if
at all. If we raise additional capital through the sale of equity, including
preferred stock or convertible debt securities, the percentage ownership of our
then existing stockholders will be diluted.
THERE IS INTENSE COMPETITION FOR PRODUCTION AND POST-PRODUCTION SERVICES.
The production and post-production industry is highly competitive and
constantly evolving. Specifically we face competition from the following
segments in the industry for the services we offer and plan to offer:
o commercial post-production such as: The Tape House, Inc. and Nice Shoes,
Inc.;
o virtual set production such as: LRP Productions and Atlantic Video, Inc.;
o motion film developing lab such as: Technicolor East Coast, Inc. and
Duart Film and Video;
o high definition post-production such as: The Tape House, Inc.;
o video audio design and mixing such as: ToddAO Studios East, Photomagnetic
Sound Studios, Inc. and Eastside Audio and Video;
o high definition production such as: in-house production studios of CBS
and the MSG Network; and
o internet content production, such as: Razor Fish, Concrete Media,
Broadcast.com, and Funny Garbage.
8
<PAGE>
We believe that the principal competitive factors in our markets include the
ability to customize technology to a customer's particular use, cost for
services and service offerings. Many of our current and potential competitors
have substantially greater human and financial resources, experience and brand
recognition than us and may be competitive through other lines of business and
existing relationships. Furthermore, these competitors may introduce new
products and services addressing these markets in the future. There can be no
assurance that our competitors will not develop services that are superior to
our services or that achieve greater market acceptance than our offerings.
Competition could have a material adverse effect on our business, financial
condition and results of our operations.
WE NEED TO MANAGE OUR GROWTH EFFECTIVELY.
Our growth has placed and will continue to place a significant strain on
our managerial, operational and financial resources. Failure to manage our
growth effectively could have a material adverse effect on our business. We need
to:
o improve our financial and management controls, reporting systems and
procedures;
o expand, train and manage our work force for production and
post-production, marketing and sales, and product development; and
o manage multiple relationships with various customers, strategic partners
and other third parties.
OUR MANAGEMENT WILL CONTROL 50.17% OF OUR COMMON STOCK AFTER THIS OFFERING AND
THEIR INTERESTS MAY BE DIFFERENT FROM AND CONFLICT WITH YOURS.
The interests of management could conflict with the interests of our other
stockholders. Following this offering, our executive officers and directors will
beneficially own a total of approximately 50.17%, and 47.66% if the
underwriter's over-allotment option is exercised in full, of our outstanding
common stock. Accordingly, if they act together, they will have the power to
control the election of all of our directors and the approval of actions for
which the approval of our shareholders is required. If you purchase shares of
our common stock, you may have no effective voice in our management.
OUR SUCCESS DEPENDS ON THE EFFORTS OF, AND OUR ABILITY TO RETAIN, OUR PRESIDENT
AND CHIEF EXECUTIVE OFFICER AND OUR EXECUTIVE VICE PRESIDENT.
We believe the efforts of our executive officers, Michael Morrissey, our
president and chief executive officer, and David Satin, our executive
vice-president, are essential to our operations and growth. The loss of the
services of either Mr. Morrissey or Mr. Satin would have a material adverse
effect on our business. We maintain key-man life insurance on the lives of both
Mr. Morrissey and Mr. Satin, each policy in the amount of $500,000. However, the
proceeds of such insurance have been assigned to Citibank, N.A. as collateral
for obligations owed to Citibank, N.A. We have made application to obtain
additional life insurance policies of $1,500,000 on the lives of Mr. Morrissey
and Mr. Satin. Mr. Morrissey and Mr. Satin have also personally guaranteed
approximately 24 capital leases and various bank loans.
WE ARE DEPENDENT UPON CERTAIN KEY EMPLOYEES.
In addition to our senior management personnel, we are dependent upon
several key employees, namely Leslie Rudner, our Chief Engineer; Todd Ruff, our
Director of Graphics; Jim Suhre, our Virtual Set Designer and 3D Graphics
Designer; and Eli Friedman, our Senior Colorist. Our success is dependent upon
our ability to retain our key employees and to attract, assimilate and retain
other highly qualified employees. If we do not succeed in retaining or
motivating our current personnel or in hiring additional qualified employees,
our business will be adversely affected and our services will be impaired.
Competition for personnel in our industry, particularly those with expertise, is
intense, and there can be no assurance that we will be able to attract and
retain the necessary personnel.
9
<PAGE>
OUR MANAGEMENT WILL HAVE SUBSTANTIAL DISCRETION OVER THE USE OF PROCEEDS OF THIS
OFFERING AND MAY NOT APPLY THEM EFFECTIVELY.
Our management will have significant flexibility in applying the net
proceeds of this offering and may apply the proceeds in ways with which you do
not agree. The failure of our management to apply these funds effectively could
materially harm our business. The proposed allocation of the net proceeds of
this offering represents our management's best estimate of the expected
utilization of funds to finance our activities in accordance with our
management's current objectives and market conditions.
YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION.
You will experience an immediate and substantial dilution of $6.12 per
share in the net tangible book value per share of common stock from the initial
public offering price, assuming an initial public offering price of $9.00 per
share, representing the mid point of the filing range. You may also experience
dilution if future stock options to purchase our shares, or if the warrants to
be issued to the representatives and the underwriters, are exercised.
Accordingly, existing shareholders will benefit disproportionately from this
offering.
UNLESS A PUBLIC MARKET DEVELOPS FOR OUR SECURITIES, YOU MAY NOT BE ABLE TO SELL
YOUR SHARES.
Prior to this offering, there has been no public market for our common
stock. Although we have applied to list our shares of common stock on the
American Stock Exchange, there can be no assurance that an active trading market
will develop or be maintained. Failure to develop or maintain an active trading
market could negatively affect the price of our securities.
WE DO NOT PLAN TO PAY CASH OR STOCK DIVIDENDS.
We have never paid any cash dividends on our stock and we anticipate that,
for the foreseeable future, we will continue to retain any earnings for use in
the operation of our business and do not intend to pay cash or stock dividends.
A SUBSTANTIAL NUMBER OF OUR SHARES ARE ELIGIBLE FOR FUTURE SALE.
The market price of our shares could drop as a result of sales of
substantial amounts of our shares in the public market following this offering
or the perception that such sales may occur. These factors could also make it
more difficult for us to raise funds through future offerings of stock.
The 2,000,000 shares that we are offering will be freely tradable without
restriction except for any shares purchased by our "affiliates" as defined in
Rule 144 under the Securities Act. In addition, if the underwriters exercise
their over-allotment option in part or in full, up to 300,000 additional shares
will be issued and freely tradable, except for shares purchased by our
"affiliates."
Our remaining 3,700,000 outstanding shares are "restricted securities" as
defined in Rule 144. Those shares may only be resold if there is an effective
registration statement under the Securities Act covering those shares or an
exemption from registration under Rule 144 or otherwise is available. The
holders of all currently outstanding 3,7000,000 shares have agreed that they
will not sell any shares without the prior consent of the representative of the
underwriters for a period of 365 days from the effective date of this offering.
We intend to register all 500,000 shares reserved for issuance under our stock
option plan. Shares covered by such registration will be eligible for resale in
the public market, subject to Rule 144 limitations applicable to "affiliates"
and to the lock-up agreements described above. Furthermore, we will be issuing
200,000 warrants to the underwriters upon the closing of this offering.
Our stock options and warrants are likely to be exercised, if at all, at a
time when we otherwise could obtain a price for the sale of our shares that is
higher than the exercise price per share of the options or warrants. Any such
exercise or the possibility of such exercise may impede our efforts to obtain
additional financing through the sale of additional securities or make such
financing more costly.
10
<PAGE>
OUR STOCK PRICES MAY FLUCTUATE, WHICH MAY MAKE IT DIFFICULT TO RESELL YOUR
SHARES AT ATTRACTIVE PRICES.
The market price of our common stock may be highly volatile. The market
prices of securities of other production companies are highly volatile. Factors
that could cause volatility in our stock price include:
o fluctuations in our quarterly operating results;
o changes in the market valuations of other production companies and stock
market price and volume fluctuations generally;
o economic conditions specific to the production and post-production
industry;
o announcements by us or our competitors relating to new services or
technologies, significant acquisitions, strategic relationships, joint
ventures or capital commitments;
o regulatory developments; and
o additions or departures of our key personnel.
THE REPRESENTATIVE OF THE UNDERWRITERS WILL CONTINUE TO HAVE INFLUENCE OVER US
FOLLOWING THE COMPLETION OF THIS OFFERING.
Dirks & Company, the representative of the underwriters, has been given the
right, for a period of five years from the completion of this offering, to
designate a person to our board of directors. Upon completion of this offering,
the representative will also receive, for nominal consideration, warrants to
purchase 200,000 shares of our common stock. The representative was also given
21,000 warrants to purchase 21,000 shares of our common stock as compensation in
connection with our May private placement. Accordingly, the representative will
continue to have influence over our operations following the completion of this
offering.
WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS AND MAY INFRINGE ON THE
PROPRIETARY RIGHTS OF OTHERS.
We regard our trade secrets and similar intellectual property as important
to our success. However, our efforts to establish and protect our proprietary
rights may be inadequate to prevent misappropriation or infringement of our
proprietary property. If we are unable to safeguard our intellectual property
rights, our business, operating results and financial condition could be
materially harmed. We can not give assurance that third parties will not bring
claims of copyright or trademark infringement against us or claim that our use
of certain technologies violates a patent. Further, there can be no assurance
that third parties will not claim that we have misappropriated their creative
ideas or formats or otherwise infringed on their proprietary rights in
connection with the content we have or will create. We are not aware of any
claims. Any claims of infringement, with or without merit, could be time
consuming to defend, result in costly litigation, divert management attention,
require us to enter into costly royalty or licensing arrangements or prevent us
from using important technologies or methods, any of which could damage our
business and financial condition.
FAILURE OF COMPUTER SYSTEMS AND SOFTWARE PRODUCTS TO BE YEAR 2000 COMPLIANT
COULD NEGATIVELY IMPACT OUR BUSINESS.
Many currently installed computer systems and software products only accept
two digits to identify the year in any date. Thus, the year 2000 will appear as
"00," which the system might consider to be the year 1900 rather than the year
2000. This could result in system failures, delays or miscalculations causing
disruptions to our operations. The failure of systems maintained by third
parties to be Year 2000 compliant could cause us to incur significant expense to
remedy any problems, reduce our revenues from such third parties or otherwise
seriously damage our business. Our failure to correct a material Year 2000
problem could result in an interruption in, or a failure of, some of our normal
business activities or operations. We have not incurred significant costs to
date complying with the Year 2000 requirements, and we do not believe that we
will incur significant costs for these purposes in the foreseeable future.
However, there can be no assurance that actual costs of compliance will not have
a material adverse effect on the Company's business, operating results and
financial position.
11
<PAGE>
USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately $15,100,000
from our sale of the 2.0 million shares of common stock offered hereby, assuming
an initial public offering price of $9.00, the mid-point of the filing range. If
the underwriters exercise their over-allotment option in full, we will receive
net proceeds of approximately $17,400,000. That amount is after deducting
estimated underwriting discounts and commissions and after fees and expenses of
approximately $560,000 payable by us.
<TABLE>
<CAPTION>
NET PROCEEDS PERCENT OF TOTAL
------------ ----------------
<S> <C> <C>
Expansion and improvements to facilities.......................................... $ 8,450,000 56.0%
Expansion of internal operations.................................................. 1,650,000 10.9%
Sales and marketing expenditures.................................................. 2,600,000 17.2%
Repayment of promissory notes..................................................... 735,000 4.9%
Working capital and general corporate purposes.................................... 1,665,000 11.0%
------------ ------
Total........................................................................... 15,100,000 100.0%
------------ ------
------------ ------
</TABLE>
Expansion and Improvements to Facilities. We intend to design, purchase and
install high definition television and data equipment, a new motion picture lab,
a new HDTV virtual studio, and a digital audio mixing and design studio which we
intend to locate in approximately 50,000 square feet of space in Manhattan which
we intend to rent and fit out for these purposes.
Expansion of internal operations. We intend to create a new division for
content development, accumulation, and programming for our broadcast, theatrical
and Internet business, concentrating on building and improving web sites and
enhancing virtual elements on Internet sites utilizing high resolution
technology.
Sales and marketing expenditures. We intend to create a new sales and
marketing division with additional sales and marketing staff, and to increase
advertising and trade show related activities. We intend that this staff will
consist of a Director of Marketing who will supervise three to four sales people
who will promote our new services to existing clients and the full range of our
services to potential clients under the one-stop-shop umbrella.
Repayment of Promissory Notes. We intend to repay $700,000 of promissory
notes, issued during May 1999 plus accrued interest at 10% per annum of
approximately $35,000.
Working capital and general corporate purposes. Working capital may be
used, among other things, to pay salaries and wages, professional fees, rent and
other operating expenses.
We anticipate that the net proceeds from this offering and cash provided by
operations will be sufficient to fund our operations and cash requirements for
at least the 12 months following the date of this prospectus. We cannot assure
you, however, that such funds will not be expended earlier due to unanticipated
changes in economic conditions or other circumstances that we cannot foresee. In
the event our plans or assumptions change or prove to be inaccurate, we might
seek additional financing sooner than currently anticipated. Any net proceeds
from the sale of the underwriter's over-allotment option will be allocated to
working capital and general corporate purposes.
The proposed allocation of the net proceeds represents our management's
best estimate of and the current intentions concerning the expected use of funds
to finance our activities in accordance with our management's current objectives
and market conditions. Our management and Board of Directors may allocate the
funds in significantly different proportions, depending on their needs at the
time. Pending application of the net proceeds in the manner mentioned above, we
intend to invest the net proceeds in short-term, interest-bearing,
investment-grade securities.
DIVIDEND POLICY
We have never declared or paid any cash or stock dividends on our capital
stock. We presently intend to reinvest earnings to fund the development and
expansion of our business and, therefore, do not anticipate paying cash
dividends on our common stock in the foreseeable future. The declaration of
dividends will be at
12
<PAGE>
the discretion of our board of directors and will depend upon our earnings,
capital requirements and financial position, general economic conditions and
other pertinent factors.
CAPITALIZATION
The following table sets forth our:
o actual capitalization as of March 31, 1999;
o pro forma capitalization as of March 31, 1999 which gives effect to the
issuance of $700,000 of promissory notes, net of a debt discount of
$210,000, and 210,000 shares of common stock pursuant to a May, 1999
private placement; and
o pro forma as adjusted capitalization as of March 31, 1999 which gives
effect to the sale of 2,000,000 shares of common stock in this offering
at an assumed initial public offering price of $9.00 per share,
representing the mid point of the filing range, after deducting estimated
underwriting discounts, the underwriter's non-accountable expense
allowance and estimated offering expenses, and the application of the net
proceeds of the offering which includes the repayment of the face amount
of the promissory notes issued in the May, 1999 private placement of
$700,000. Pro forma as adjusted retained earnings reflects the
amortization of the debt discount of $210,000 and debt issuance costs of
$60,000, net of an estimated tax benefit of $108,000.
Shares of common stock outstanding have been restated to reflect the
stock-splits and other reorganization transactions described in Note 10 to the
accompanying financial statements. As a result of the reorganization
transactions, the common shares held by our existing shareholders increased to
3,490,000, SMA Video, Inc. became a wholly-owned subsidiary of ours and our two
other affiliates, SMA Visual Effects Corp. and Fly Films, Inc., merged into SMA
Video, Inc.
This table should be read in conjunction with the financial statements and
notes thereto appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
----------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Notes payable and capital lease obligations, less current maturities.. $ 1,673,319 $1,673,319 $ 1,673,319
----------- ---------- -----------
Promissory notes, net of discount of $210,000......................... $ -- $ 490,000 $ --
----------- ---------- -----------
Stockholders' equity:
Preferred stock--$.0001 par value; (no shares authorized and
outstanding at March 31, 1999)...................................... $ -- $ -- $ --
Common stock--$.0001 par value; 50,000,000 shares authorized;
3,490,000 shares outstanding, actual; 3,700,000 shares outstanding,
pro forma; and 5,700,000 shares outstanding, pro forma as
adjusted............................................................ 349 370 570
Additional paid-in capital 40,411 230,390 15,330,190
Retained earnings..................................................... 1,274,660 1,274,660 1,112,660
----------- ---------- -----------
Total stockholders' equity.......................................... $ 1,315,420 $1,505,420 $16,443,420
----------- ---------- -----------
Total capitalization................................................ $ 2,988,739 $3,668,739 $18,116,739
----------- ---------- -----------
----------- ---------- -----------
</TABLE>
The preceding table excludes:
o 10,000,000 preferred shares authorized by our board of directors in May
1999.
o 21,000 shares issuable upon exercise of outstanding placement agent
warrants;
o 300,000 shares issuable upon exercise of the underwriter's over allotment
option;
o 200,000 shares issuable upon exercise of the representative's warrants;
and
o 500,000 shares reserved for issuance under our 1999 stock incentive plan.
13
<PAGE>
DILUTION
As of March 31, 1999, our pro forma net tangible book value was $1,505,420,
or approximately $.41 per share of common stock. Pro forma net tangible book
value per share represents the amount of our total tangible assets less total
liabilities, divided by the number of shares of common stock issued and
outstanding, after giving effect to the private placement completed in May of
1999 and reflecting the reorganization transactions described in the section of
this prospectus entitled "Capitalization" and Note 10 to the financial
statements included elsewhere in this prospectus.
After giving effect to the issuance of $700,000 of promissory notes and
210,000 shares of common stock in May, 1999 and the sale of the 2,000,000 shares
of common stock offered hereby, and after deducting estimated underwriting
discounts and offering expenses, our pro forma as adjusted net tangible book
value at March 31, 1999 would have been $16,443,420, or $2.88 per share of
common stock. This represents an immediate increase in net tangible book value
of $2.47 per share of common stock to existing stockholders and an immediate
dilution in net tangible book value of $6.12 per share of common stock, or
approximately 68%, to new investors. The following table illustrates this per
share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share of common stock........................ $9.00
Pro forma net tangible book value per share prior to the offering...................... $0.41
Increase in net tangible book value per share attributable to the offering............. 2.47
-----
Pro forma, as adjusted, net tangible book value per share after the offering........... 2.88
-----
Dilution of net tangible book value per share to investors in the offering............. $6.12
-----
-----
</TABLE>
If the over-allotment option is exercised in full, our pro forma as
adjusted net tangible book value after the offering would have been $18,783,420,
or $3.13 per share of common stock. This represents an immediate increase in net
tangible book value of $2.72 per share of common stock to existing stockholders
and an immediate dilution in net tangible book value of $5.87 per share of
common stock, or approximately 65%, to new investors.
The following table summarizes on a pro forma basis, as of March 31, 1999,
the number of shares of common stock purchased from us, the total consideration
paid and the average price per share paid by existing stockholders of common
stock and the investors in the offering, assuming the sale of the 2,000,000
shares offered by this prospectus, assuming an initial public offering price of
$9.00 per share. The calculations are based upon total consideration given by
new investors and existing stockholders before any deduction of underwriting
discounts and offering expenses payable by us.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders........................ 3,700,000 65% $ 250,760 1% $ .07
New investors................................ 2,000,000 35% 18,000,000 99% $9.00
--------- --- ----------- ---
Total................................... 5,700,000 100% $18,250,760 100%
--------- --- ----------- ---
--------- --- ----------- ---
</TABLE>
14
<PAGE>
SELECTED FINANCIAL INFORMATION
The historical selected financial data as of September 30, 1998 and for the
years ended September 30, 1997 and 1998 are derived from and should be read in
conjunction with our audited financial statements and notes thereto included
elsewhere in the prospectus. The historical selected financial data as of
March 31, 1999 and for the six months ended March 31, 1998 and 1999 are derived
from and should be read in conjunction with our unaudited financial statements
included elsewhere in the prospectus. In the opinion of management, the
unaudited financial statements include all material adjustments, consisting of
only normal, recurring adjustments, necessary for a fair presentation of the
financial position and results of operations for the period. The data presented
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the financial statements
and accompanying notes appearing elsewhere in the prospectus.
Shares of common stock outstanding have been restated to reflect the stock
splits and other reorganization transactions described in Note 10 to the
accompanying financial statements.
The pro forma balance sheet below, as of March 31, 1999, has been adjusted
to reflect the issuance of $700,000 of promissory notes and 210,000 shares of
common stock in a May, 1999 private placement. The pro forma as adjusted balance
sheet below, as of March 31, 1999, has been adjusted to reflect the sale of
common stock offered hereby at an assumed initial public offering price of $9.00
per share, representing the mid point of the filing range, and the receipt and
application of the estimated net proceeds therefrom.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31,
------------------------ ------------------------
1997 1998 1998 1999
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................................. $5,850,308 $6,469,142 $3,262,772 $3,375,320
Cost of revenues......................................... 3,628,295 4,044,591 2,023,739 2,216,328
---------- ---------- ---------- ----------
Gross margin............................................. 2,222,013 2,424,551 1,239,033 1,158,992
Selling, general and administrative...................... 1,652,506 1,611,515 817,867 878,452
---------- ---------- ---------- ----------
Income from operations................................... 569,507 813,036 421,166 280,540
---------- ---------- ---------- ----------
Interest expense, net of interest income................. 540,795 509,513 264,977 200,187
Other expense............................................ 5,432 2,219 669 5,494
---------- ---------- ---------- ----------
Total other expenses..................................... 546,227 511,732 265,646 205,681
---------- ---------- ---------- ----------
Income before income taxes............................... 23,280 301,304 155,520 74,859
Provision for income taxes............................... 7,998 142,000 70,329 34,000
---------- ---------- ---------- ----------
Net income............................................... $ 15,282 $ 159,304 $ 85,191 $ 40,859
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and diluted earnings per share..................... $ .01 $ .05 $ .02 $ .01
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Shares used in basic and diluted earnings per share...... 3,490,000 3,490,000 3,490,000 3,490,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF MARCH 31, 1999
AS OF -----------------------------------------
SEPTEMBER 30,
1998 PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total working capital (deficit)...................... $(1,282,117) $(1,502,686) $(1,372,686) $13,517,314
Total assets......................................... $ 6,162,661 $ 5,924,319 $ 6,604,319 $21,052,319
Total liabilities.................................... $ 4,888,100 $ 4,608,899 $ 5,098,899 $ 4,608,899
Total stockholders' equity........................... $ 1,274,561 $ 1,315,420 $ 1,505,420 $16,443,420
</TABLE>
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management's discussion and analysis of the financial
condition and results of operations should be read in conjunction with our
financial statements and the notes thereto appearing elsewhere in this
prospectus. In addition to historical information, this management discussion
and analysis of financial condition and results of operations and other parts of
this prospectus contain forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in the forward-looking statements as a result of certain factors, including but
not limited to, those set forth under "Risk Factors" and elsewhere in this
prospectus.
OVERVIEW
We were incorporated in 1985 under the name SMA Video, Inc. S.M.A. Real
Time Inc. was formed as a New York corporation in May 1993 to be the operating
company for our post-production services. In April, 1999, two of our affiliates
(SMA Visual Effects Corp. and Fly Films, Inc.) were merged into SMA Video, Inc.
and SMA Video, Inc. became a wholly-owned subsidiary of S.M.A. Real Time Inc.
Revenues are generated at our video and film studios, where we provide a wide
range of production and post-production services to companies that produce
commercials, television programs, music videos and feature films.
We combine traditional video and film production techniques with state of
the art technology and expertise in the fields of virtual and digital
production. Our services include studio production, film to video transfer, the
creation of high-end computer visual effects (computer animation), on-line
editing and videotape duplication services. Most of our services are performed
at our headquarters in lower Manhattan, New York.
Our largest customer, ABC News, accounted for 11.2% and 14.1% of our
revenues in each of the six month periods ended March 31, 1999 and 1998,
respectively, and 12.7% and 11.1% of revenues in each of the fiscal years ended
September 30, 1998 and 1997, respectively. We anticipate that ABC News will
continue to account for a significant portion of our revenues in the future.
Over the last 14 years, we have invested significant resources and capital
in the acquisition of new equipment and the design and construction of our
studios. Our goal is to be the leading production and post-production studio for
all types of media including film, internet and television. To that end, we
intend to continue to allocate a major portion of our capital to technological
development.
RESULTS OF OPERATIONS
COMPARISON OF SIX MONTHS ENDED MARCH 31, 1999 TO SIX MONTHS ENDED MARCH 31, 1998
Revenues. Revenues increased to $3,375,000 for the six months ended March
31, 1999 from $3,263,000 for the six months ended March 31, 1998. The increase
of $112,000, or 3.4%, was primarily due to an increase in revenue from
post-production services. For the six months ended March 31, 1999, post
production revenue and virtual studio and other production revenue accounted for
approximately 79.4% and 18.3% of revenue, respectively. For the six months ended
March 31, 1998, post production revenue and virtual studio and other production
revenue accounted for approximately 76.7% and 21.3% of revenue, respectively.
Cost of Revenues. Cost of revenues consist primarily of facility and
production costs, production salaries, depreciation expense, outside contracting
services and supplies. Cost of revenues increased to $2,216,000, or 65.7% of
revenues, for the six months ended March 31, 1999 from $2,024,000, or 62.0% of
revenues, for the six months ended March 31, 1998. The increase of $192,000, or
9.5%, was primarily due to an increase in labor costs related to a joint
venture, Flicker FX at SMA LLC, entered into in November 1998 to provide
production of television, film and multimedia graphics products. For the six
months ended March 31, 1999, depreciation and amortization, salaries, and
contract labor accounted for approximately 25.3%, 23.7% and 8.2% of revenues,
respectively. For the six months ended March 31, 1998, depreciation and
amortization, salaries and contract labor accounted for approximately 26.0%,
22.8% and 4.3% of revenues, respectively. We expect our cost of revenues to
continue to increase in dollar amount while declining as a percentage of
revenues as Flicker expands its customer base and from increases in revenues
from our higher margin virtual studio services.
16
<PAGE>
Gross Margin. Gross margin decreased $80,000, or 6.5%, to $1,159,000 for
the six months ended March 31, 1999 from $1,239,000 for the six months ended
March 31, 1998. As a percentage of revenues, gross margin was 34.3% and 38.0%
for the six months ended March 31, 1999 and 1998, respectively. The primary
reason for the decrease was an increase in fixed labor costs related to the
Flicker joint venture.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses consist primarily of salaries, employee benefits, rent
and utilities. Selling, general and administrative expenses increased to
$878,000, approximately $60,000, or 7.3%, for the six months ended March 31,
1999 from $818,000 for the six months ended March 31, 1998. As a percentage of
revenues, selling, general and administrative expenses was 26.0% for the six
months ended March 31, 1999 as compared to 25.0% for the six months ended March
31, 1998. The increase consisted primarily of increases in health insurance and
professional fees of 39.8% and 46.9%, respectively, in the same periods. These
increases are related to the Flicker joint venture. We anticipate that we will
incur significant increases in selling, general and administrative expenses as
we continue to hire personnel and incur various expenses related to the growth
of our business and operations.
Interest Expense, Net of Interest Income. Interest expense includes
interest income from our cash balances and interest expense related to our
financing obligations including bank loans and capital leases. Interest expense,
net of interest income decreased to $200,000 for the six months ended March 31,
1999 from $265,000 for the six months ended March 31, 1998. The decrease of
approximately $65,000, or 24.5%, is attributable to the repayment of principal
portions of capital leases and long term debt.
Net Income. Net income decreased to $41,000 for the six months ended March
31, 1999 from $85,000 for the six months ended March 31, 1998. The decrease was
due primarily to the loss of approximately $100,000 from the Flicker joint
venture.
COMPARISON OF FISCAL YEAR ENDED SEPTEMBER 30, 1998 TO FISCAL YEAR ENDED
SEPTEMBER 30, 1997
Revenues. Revenues increased to $6,469,000 for fiscal 1998 from $5,850,000
for fiscal 1997. The increase of $619,000, or 10.6%, was primarily due to an
increase in revenues from the virtual studio production services of
approximately $407,000. For fiscal 1998, post production revenues and virtual
studio and other production revenues accounted for approximately 75.4% and 22.2%
of revenues, respectively. For fiscal 1997, post production revenues and virtual
studio and other production revenues accounted for approximately 77.1%, and
15.6% of revenues, respectively.
Cost of Revenues. Cost of revenues increased to $4,045,000, or 62.5% of
revenues, for fiscal 1998 from $3,628,000, or 62.0% of revenues, for fiscal
1997. The increase of $417,000, or 11.5%, was primarily due to an increase in
depreciation and amortization, salaries and wages and contract labor with an
offsetting decrease in facility and production costs. For fiscal 1998,
depreciation and amortization, salaries and contract labor accounted for
approximately 26.2%, 24.5% and 4.0% of revenues, respectively. For fiscal 1997,
depreciation and amortization, salaries and contract labor accounted for
approximately 23.0%, 25.7% and 3.4% of revenues, respectively.
Gross Margin. Gross margin for fiscal 1998 increased $203,000, or 9.1%, to
$2,425,000 from $2,222,000 for fiscal 1997. As a percentage of revenues, gross
margin was 37.5 % and 38.0% for fiscal 1998 and 1997, respectively. The primary
reason for the increase in gross margin was due to an increase in virtual studio
production revenue offset by an increase in depreciation expense.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for fiscal 1998 decreased $41,000, or 2.5%, to
$1,612,000 from $1,653,000 for fiscal 1997. As a percentage of revenues, such
expenses decreased to 24.9% for fiscal 1998 as compared to 28.2% for fiscal
1997. The decrease consisted primarily of decreases in utilities costs, office
expenses and bad debts aggregating approximately $27,000.
Interest Expense, Net of Interest Income. Interest expense, net of interest
income for fiscal 1998, decreased 5.8% to $510,000 compared to $541,000 for
fiscal 1997. The decrease of approximately $31,000, or 5.7%, is attributable to
the repayment of principal portions of capital leases and long-term debt.
17
<PAGE>
Net Income. Net income increased from $15,000 for the fiscal year ended
September 30, 1997 to $159,000 for the fiscal year ended September 30, 1998 due
primarily to an increase in virtual studio production revenue and related gross
margin contributions.
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have financed our operations through bank debt and
capital lease financing arrangements. As of March 31, 1999, we had $46,421 in
cash.
Net Cash Provided by Operating Activities. Net cash provided by operating
activities decreased to approximately $912,000 for the six months ended March
31, 1999 from approximately $970,000 for the six months ended March 31, 1998.
The decrease was primarily due to the decrease in income before depreciation and
an increase in accounts receivable offset by an increase in accounts payable.
For the year ended September 30, 1998, our net cash provided by operating
activities increased to approximately $1,866,000 from approximately $1,260,000
for the year ended September 30, 1997. The increase was primarily due to an
increase in net income of approximately $144,000 and an increase in depreciation
expense for the year ended September 30, 1998 of approximately $345,000.
Net Cash Used in Investing Activities. Cash flows used in investing
activities decreased to approximately $27,000 for the six months ended March 31,
1999 from approximately $83,000 for the six months ended March 31, 1998. Cash
flows used in investing activities decreased primarily because of a reduced
investment in property and equipment and an increase in proceeds received from
the sale of equipment in the six months ended March 31, 1999 as compared to the
six months ended March 31, 1998. Cash flows used in investing activities
increased to approximately $174,000 for fiscal 1998 from approximately $148,000
for fiscal 1997. The increase was primarily due to an increase in purchases of
property and equipment and a decrease in proceeds from disposals for the year
ended September 30, 1998. During these periods, most of our new equipment
acquisitions were pursuant to capital lease transactions requiring a minimal
initial outlay of cash.
Net Cash Used in Financing Activities. Cash flows used in financing
activities increased to approximately $960,000 for the six months ended March
31, 1999 from $750,000 for the six months ended March 31, 1998. The increase was
primarily due to an increase in principal payments under capital lease
obligations of approximately $78,000, a reduction in proceeds received from the
line of credit of approximately $28,000 and an increase in costs incurred in
connection with this offering of approximately $100,000. Net cash used in
financing activities increased during fiscal 1998 to approximately $1,570,000
from approximately $1,150,000 in fiscal 1997. The increase was primarily due to
an increase in repayments of term loans of approximately $85,000 and an increase
in repayments of principal under capital lease obligations of approximately
$345,000.
As explained in Note 5 to the accompanying financial statements, we had a
$250,000 revolving line of credit with a bank, of which $223,000 was
outstanding, as of March 31, 1999, three-term loans, with total outstanding
balances of $164,000, as of March 31, 1999, and various obligations under
twenty-four capital leases, which aggregate $3,146,000, as of March 31, 1999.
The indebtedness outstanding under the revolving line of credit and term loans
are collateralized by all of our assets. The obligations under capital leases
are collateralized by the underlying equipment for each loan. Substantially all
of our obligations are personally guaranteed by our two principal shareholders.
In May 1999, we completed a private placement whereby we sold seven units
for aggregate gross proceeds of $700,000. Each unit consists of (i) a $100,000
promissory note bearing interest at 10% per annum, payable the earlier of nine
months from the issuance date, or upon closing of this offering and (ii) 30,000
shares of our common stock. Costs incurred in connection with the private
placement include a $70,000 fee to the placement agent, approximately $10,000 in
legal fees and warrants to the placement agent to purchase 21,000 shares of our
common stock at an exercise price equal to 120% of the initial public offering
price.
In November 1998, we entered into a joint venture agreement with an
unrelated corporation and organized Flicker FX at SMA, LLC to provide the
production of television, film and multimedia graphics products. The agreement
provides for, among other things: (i) that until the joint venture achieves
sufficient revenues to fund its operations, we shall contribute start-up capital
funds and guaranteed annual salaries and
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benefits aggregating $550,000, of which $50,000 is to be compensation to each of
our two principal shareholders; (ii) use of our equipment and facilities; and
(iii) that the operating profits, as defined, shall be allocated 60% to us. The
agreement also provides that we may terminate the agreement in the event that
the joint venture does not achieve certain defined financial goals as of the
first anniversary date of the agreement.
In May 1999, we entered into five-year employment agreements with our two
principal shareholders, which commence upon the closing of this offering. Each
employment agreement provides for, among other things, a base salary of $250,000
per year and annual increases for costs of living.
In addition, in May 1999, we also entered into employment contracts with
two of our key technicians, one for a five-year term providing for a base salary
of $175,000 per year and a second contract for a three-year term providing for a
base salary of $230,000 per year.
In May 1999, we entered into a six-month consulting agreement with an
unrelated individual to assist us in our sales and marketing efforts in the area
of digital audio. The agreement commences on June 1, 1999 and provides for
minimum payments aggregating $140,000 through November 30, 1999 and commissions
based on new clients and new business generated during the term of the agreement
and for the five-year period thereafter.
Our capital requirements have grown since our inception consistently with
the growth of our operations and staffing. We expect our capital requirements to
continue to increase in the future in order to maintain our state of the art
facility and to remain a competitive force in this industry. We intend to use
approximately $8,450,000 of the net proceeds from this initial public offering
for expansion and improvements to our facilities and purchase of related
equipment. See section in this prospectus entitled "Use of Proceeds." We believe
that the cash flow from operations, combined with our borrowing capabilities and
the net proceeds from this offering will be sufficient to meet our anticipated
working capital and capital expenditure requirements for at least the twelve
month-period following this offering.
RECENTLY ISSUED ACCOUNTING STANDARDS
Effective October 1, 1997, we adopted the provisions of SFAS No. 130,
"Reporting Comprehensive Income." SFAS No. 130 establishes standards for
reporting comprehensive income, defined as all changes in equity from non-owner
sources. Adoption of SFAS No. 130 did not have a material effect on our
financial position or net income.
Effective October 1, 1997, we adopted the provisions of SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information." SFAS No.
131 establishes standards for the way public enterprises report information
about operating segments in annual financial statements and requires those
enterprises to report selected information about operating segments in interim
financial reports issued to stockholders. Adoption of SFAS No. 131 did not have
a material effect on our financial position or net income.
Effective October 1, 1997, we adopted American Institute of Certified
Public Accountants Statement of Position 97-2, "Software Revenue Recognition."
SOP 97-2 generally requires revenue earned on software arrangements involving
multiple elements, such as software products, upgrades, enhancements,
post-contract customer support, installation and training to be allocated to
each element based on the relative fair values of the elements. The adoption of
SOP 97- 2 did not have an effect on our financial position or net income.
Effective December 29, 1997, we adopted Statement of Financial Accounting
Standards (SFAS) No. 132, "Employers' Disclosures About Pensions and
Postretirement Benefits," which standardizes the disclosure requirements for
pensions and other postretirement benefits. The Statement addresses disclosure
only. It does not address liability measurement or expense recognition. There
was no effect on our financial position or net income as a result of adopting
SFAS No.132.
In March 1998, the American Institute of Certified Public Accountants
issued SOP 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use," which revises the accounting for software
development costs and will require the capitalization of certain costs. The
adoption of SOP 98-1 did not have an effect on our financial position or net
income.
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YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These systems and
software products will need to accept four digit entries to distinguish 21st
century dates from 20th century dates. As a result, computer systems and/or
software used by many companies and governmental agencies may need to be
upgraded to comply with such Year 2000 requirements or risk system failure or
miscalculations causing disruptions of normal business activities.
State of Readiness
We have made an assessment of our Year 2000 readiness of our operating,
financial and administrative systems, including the hardware and software that
support our systems. Our assessment consisted of:
o quality assurance testing of our internally developed proprietary
software and hardware;
o contacting third-party vendors and licensors of material hardware,
software and services that are both directly and indirectly related
to the delivery of our products and services;
o contacting vendors of third-party systems;
o assessing repair or replacement requirements;
o implementing repair or replacement; and
o creating contingency plans in the event of Year 2000 failures.
We have confirmed our Year 2000 compliance by obtaining representations by
third party vendors of their products' Year 2000 compliance, as well as specific
testing of our products.
Costs
We have not incurred significant costs to date complying with Year 2000
requirements and we do not believe that we will incur significant costs for
these purposes in the foreseeable future. However, should products or systems
maintained by third parties or our products and systems fail to be Year 2000
compliant, despite the representations of third parties and the testing of our
products, we could incur significant expenses to remedy any problems. Such
expenses could have a material adverse effect on our business, results of
operations and financial condition.
Risks
Our failure to identify and correct a Year 2000 problem could result in an
interruption of normal business activities and operations. Although there is an
inherent uncertainty in the Year 2000 issue, we believe the impact on our
business will not be material. Most of the equipment involved in delivering our
product to our clients does not make use of date information at all. We believe
our greatest risk to be suppliers and utilities whose Year 2000 programs are
outside of our control. A disruption caused by a utility or supplier whose
systems are not compliant may have a direct and negative effect on our business.
Contingency Plan
We make use of redundancy as part of our general business model in order to
provide the best and most reliable service to our clients as possible. We
believe this model will continue to serve us in reducing business risks
associated with the Year 2000 problem. We have identified alternate sources for
critical supplies where alternate sources exist and we have created a task force
led by our chief technical and financial personnel to address any Year 2000
issues as they arise. We will continue to develop a contingency plan throughout
the first three quarters of 1999, and expect to be fully compliant at such time.
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BUSINESS
OVERVIEW
SMA is a video and film studio that combines traditional video and film
production techniques with state of the art technology and expertise to offer
virtual and digital production and post-production services.
We are equipped to manage every aspect of the production process beginning
with production planning, to the original shoot, through editing to final
commercial release. We provide these services to advertising agencies, creative
editorial companies, Fortune 500 companies, freelance producers, Internet
producers, movie studios, production companies, television networks, and
television producers.
We use animation equipment, digital equipment, film cameras, infrared
tracking, pattern recognition, super computers and video cameras. In combination
with our experienced staff, they form the basis for us to offer the following
services:
o Location production
o Film to video transfer
o Studio/Stage production
o Computer animation
o Virtual production
o Graphic design services
o Blue/green screen effects production
o On-line editing
o Motion control production
o Videotape duplication services
o Computer program/database creation
SERVICES
Location Production. Location production involves the transportation of
equipment, crew, talent, clients and support facilities to an indoor or outdoor
location for the purpose of using the location as part of a production. All of
the elements required for a production need to be on-site and available while
shooting. Our role in this process is multifaceted. We generally arrange for
transportation for the crew and talent and provide lighting, grip (the rigging
apparatus for lights and scenery), electrical generators, camera supplies and
other support facilities such as catering, wardrobe, makeup trailers, and rest
rooms. We are also responsible for the shooting.
We believe location production often presents unique challenges and
requires a balance between creative and logistical concerns. For example, we
took over an entire MCI Facility in Phoenix, Arizona while working on a
production for an MCI advertising campaign. Prior to filming, the MCI facility
had to be made "camera ready." Fourteen days were required to modify this
facility for the shoot. We installed lighting grids and trusses and arranged for
additional air conditioning and power. Transporting lighting and grip equipment
alone required three 48-foot trailers. Throughout the preparation, shoot and
clean-up, we were responsible for providing three meals a day for over 300
people, and accommodations and amenities for 120 crew people. We were
responsible for a scene that required a snowstorm that extend over the entire
50,000 square feet facility. After the shoot, we spent five days restoring the
facility to its original condition.
Studio/Stage Production. Studio/Stage production takes place in a film or
television studio/stage. Stages and studios are production-friendly environments
equipped with the electrical, air-conditioning and technical requirements for
production. Most of the lighting and grip equipment required for production is
on site as well as support areas for production departments. Additional
equipment and support is readily available.
The major expense of stage production is set creation. Set designers and
construction crews generally have a limited amount of time to construct a
realistic-looking environment in what is essentially a bare space. Complex sets
usually are built first on construction stages, and when completed, are broken
down and reconstructed on the shooting stage. We have the ability to construct
sets.
Set construction, from design to completion, generally takes a week to
30 days. After the set is in place, crews install lighting and prepare the set
for production followed by the actual shooting. Upon completion of shooting, the
set is broken down, and all lights are taken from the lighting grid and
returned. Rentals of props and equipment are sorted and returned to the vendors.
In our experience, this process may involve as many as 25 to 30 separate
deliveries.
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A recent example of our studio/stage production work is our current
production of Elmo's World, for the Children's Television Network. This shoot
required a television facility including a studio equipped with a video control
room, engineering support and cameras. Since we own the majority of the
equipment necessary for this production, we rented a regular stage and installed
the components required for the production.
Virtual Production. Virtual production is the creation of sets and scenery
by computer graphic artists using super computers to replace conventional sets.
In virtual productions, super computers integrate virtual sets stored in the
computer on screen with live performances. As the camera moves, the computer
changes the angle of the scene as if the set was actually there. Since virtual
production sets are three-dimensional computer models, actors moving around a
specially equipped virtual production stage appear, on screen, to be on stage
with the virtual objects and the scenery of the virtual set. The virtual
illusion allows an actor to appear to walk behind a virtual object. Generally,
only a limited number of physical props are needed for virtual production,
usually when there must be some physical interaction between the object and the
actor, for example, when a newscaster sits at a desk during a television news
broadcast.
Using virtual sets, we believe most physical scenes and locations can be
replicated and the need for expensive location production is reduced or
eliminated. Our virtual scenery is High Definition Television (HDTV) compatible
and its quality is limited primarily by the skill of the virtual set designer.
As we continue to design virtual scenes, we are building a library of
common virtual elements which can be used in future productions, as is, or with
modifications. Furthermore, virtual sets exist only in a computer, a much
smaller space than is required for a similar physical set. In addition, a
virtual production stage need only be large enough for the physical objects and
action of the scene. We believe virtual sets can be superior visually, quicker
to create and substantially less expensive than physical sets. Based on our
experience to date, physical sets on the average cost five (5) times more than
their virtual counterparts. A recent example of our virtual production is the
set for ESPN's Fifty Greatest Athletes which was taped in our virtual studio.
Blue/Green Screen Effects Production. Blue/Green Screen Effects Production
is the addition of background scenes not present during shooting. The actor is
placed before a blue or green screen and the camera remains fixed. The blue and
green colors are electronically removed and replaced with pre-filmed
backgrounds. Our recent productions in this format were commercials for the
plays Footloose, and A Christmas Carol.
Motion control production. Motion control production uses robotic special
effects photography to replicate specific shots by computer programing of the
motion of the shots. The position of the camera is controlled by motors which
are controlled by a computer, so that movement of the camera may be replicated
from shot to shot. We own both studio and portable robotic camera systems which
allows film or video shot on location to be combined with models in the studio.
This system also can be used when an actor plays multiple characters in a shot.
We used this technique for a music video in which T-Boz played multiple
characters within the same scene. We also used motion control photography for
MCI's Big Board campaign in which over 185 layers of camera shots were combined
to make the finished commercial.
Computer program/database creation. Computer program/database creation is
the programming and creation of custom software for specific production
specifications such as the generation of virtual graphics. When computer
software packages are not available or tailored for specific production needs,
our computer engineers write computer programs to accomplish the needed effects.
We were employed by the USA Network for the 1997 US Open tennis tournament where
we created a custom computer database to update scores and feature the winners
of each match using graphics generated in real time for live television.
Graphic design services. Graphic design services involve the creation of
signature graphic design for the titling of movies, television shows,
commercials, websites and plays. Examples of our graphic design work are the
logos created for the Cartoon Network and the plays Jekyll and Hyde and Rent.
Computer Animation. Computer animation is the electronic creation of
high-end computer visual effects. We use super computers and animation systems
to create animations for commercials, television shows and movies. Our recent
computer animation work included the titles and floating Cupids for a Cover Girl
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commercial, and the floating in space effects and the effects of eyes changing
into laser discs for a Panasonic commercial.
Film to Video Transfer. Film to video transfer is an integral component of
every film post-production project and is the transfer of film to videotape. Our
colorist has the ability to take motion picture footage and enhance the images
on our film to tape telecine machine. The overall palette, tonality and coloring
of a project is created and transferred to a digital format. A color corrector
is also used to correct video tape in a video to video process.
On-line editing. On-line editing is the process by which video tape,
animations, audio and transferred film footage are assembled to a broadcast
format. It is at this point that any post-effects editing or layering will be
added. We perform this service in one of our digital editing suites and this
layering may take the form of compositing work created in our computer graphics
departments or by utilizing our special effects equipment. This is the final
step before presentation.
Videotape duplication services. Videotape duplication is the process of
making multiple copies of existing videotapes. We have the capability of making
duplicates in both NTSC (a standard used in North America, portions of South
America and Japan) and PAL. PAL formatting is required for material that will be
broadcast overseas (Europe, Asia, and portions of South America and Africa).
Some production needs require multiple copies of tapes. For example, completed
commercials will require multiple copies for distribution to many television
stations across the country.
STRATEGY
Our goal is to be the leading production and post-production studio for all
types of media including film, internet and television. In order to achieve this
goal, we intend to implement the following strategies:
o Continue to expand our facilities, production capabilities and service
offerings to strengthen our brand and provide our customers with a
one-stop-shop for all of their video and film production and post-
production needs;
o Continue to make significant investments in state-of-the-art technologies
as a vehicle to enhance product offerings, improve service, increase
sales and foster growth. We are committed to a number of technological
investments in order to capitalize on the developing HDTV and Internet
markets;
o Continue to expand our technical talent, focusing on experts in the
field. We are committed to strengthening our talent base by recruiting
individuals who have expertise, are motivated and energetic and
comprehend the notion of teamwork and customer service;
o Increase our marketing and sales efforts to expand our client base and
further solidify and penetrate existing client business;
o Create and accumulate programming to establish new revenue sources;
o Expand our virtual television production capabilities into new
application areas; and
o Capitalize on the opportunities provided by our fully digital facility.
As compared to analog, digital delivers brighter and sharper cinema-like
pictures, and permits multi-channel, CD quality sound. Digital also can
provide new uses such as multiple video programs, data service and HDTV,
and therefore we intend to install digital high definition cameras,
switches, tape drives, data drives, monitors, scopes, computers and
conversion equipment in our current facility to make it fully high
definition digital capable.
INDUSTRY BACKGROUND
The production and post-production industry in New York City for which we
provide our segment of services includes commercial production, television
production and feature films. The total gross estimated revenues in 1998 for the
entire segment, from which we could receive a small fraction of these revenues,
was $2.6 billion according to the New York Mayor's Office of Film, Theatre and
Broadcasting. Growth in overall
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production between 1997 and 1998 was 11% and segments of this industry have
shown steady growth, television 113% (1993-1998) and feature films 189%
(1993-1998).
The key cost components of video/film production are:
o Labor
o Equipment Rental
o Studio Rental
o Set Design and Construction
o Talent Costs
o Film/Video Stock
o Location Expense
o Film Development
o Post-production and Finishing Costs
TRENDS--We believe that two communications trends, the advent of HDTV and
the expansion of broad band Internet access, will impact the commercial video
and film production services industry in the next decade. Our expansion plans
are intended to target opportunities arising from these trends.
o The Advent of High Definition Television--The Telecommunications Act of
1996 mandated that all television stations implement digital TV and return their
analog channel space not later than 2006. Furthermore, the United States House
of Representatives Telecommunications Subcommittee mandated that the major
networks standard broadcast be HDTV no later than 2006. In his September 15,
1998 remarks to the International Radio and Television Society, William E.
Kennard, Chairman of the Federal Communications Commission, stated that 175
stations had filed applications with the FCC to begin digital TV broadcasting.
Digital television is expected to become the television broadcast norm. The
FCC November 1998 Digital Television Consumer Information Bulletin states that
50% of households in the United States are projected to be able to receive this
service by the end of 1999 and 100% by 2002. Furthermore, the bulletin states
that television stations will relinquish their analog service and make the
change to all digital television service by the end of 2006. ABC has announced
that the next Superbowl will be broadcast in HDTV.
Currently, traditional production sets are generally constructed with the
least expensive materials necessary to convey the scene. For example, if a scene
requires the use of a marble counter top, television productions may represent
the surface with a wooden mock-up which is painted to give the appearance of
real marble as it would be prohibitively expensive to use actual marble for a
temporary set. In many productions, entire rooms are represented using this faux
construction. The illusion works because the low resolution of traditional
television masks fine details and construction flaws. The higher resolution of
HDTV images shows the flaws of current set construction. Following the
implementation of the HDTV standard, television producers will be forced to
either build sets of much higher quality or rely on location production. We
believe both options will significantly increase the production costs of
television programs currently relying on traditional sets.
Virtual sets present producers with a third option. Since virtual sets are
constructed on supercomputers as high resolution images, they are compatible
with HDTV production. We intend to use a portion of the net proceeds of this
offering to construct a virtual studio to enable us to replace traditionally
constructed physical sets with virtual sets that provide sufficient detail to be
used for HDTV.
o The Expansion of Broad Band Internet Access--We believe an important
factor in driving the growth of overall consumer demand to log on to the
Internet will be the development of the visual/audio quality and download speed
of content on the Web, i.e. broad band solutions such as digital subscriber line
(DSL) and cable modems. Increased bandwidth will allow the Internet to offer
real-time video and sound capabilities of television. Media providers will be
able to broadcast movies, commercials, live news and other television-style
content directly over the Internet.
We also believe that the convergence of television and the Internet will
increase the need for digital content (programming), of which we have extensive
experience over the past fourteen years. In April 1997, FCC Chairman Reed E.
Hunt stated, "As a result of the revised standard, computer manufacturers have
already announced plans to build massive numbers of digital television
compatible computers so that by the time television manufacturers will have made
one million digital television sets, computer manufacturers will have sold 20 to
50 million digital television compatible computers." If the demand for digital
television
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content increases, we believe the demand for our existing content library as
well as for our services to create new content, will also increase.
INTENDED PRODUCTS AND SERVICES
Our one-stop-shop approach is designed to provide our customers with a
total solution for their production and post-production needs. To execute our
one-stop-shop strategy, capitalize on the emerging HDTV and Internet markets and
build on our current business, we intend to:
o Purchase and install high definition television and data equipment -
Although our current studio complex has the infrastructure required to
post-produce high definition television projects, we intend to expand our
facilities and invest in new technologies to meet the HDTV demands of our
customers.
o Design, purchase, build and install a new motion picture lab--Our film to
tape transfer department currently works on an excess of 70 film projects
per month. We believe that the establishment of a new "state of the art"
film lab will further solidify our client base, and should open up new
client prospects as well. We believe the creation of a film lab will
provide us with an opportunity to increase our film to tape revenue.
o Design, purchase, build and install a new HDTV Virtual Studio--The higher
resolution of HDTV images show the flaws, usually from inferior
construction, of current sets. Virtual sets are constructed with
supercomputers as high resolution images and therefore are compatible
with HDTV production. A new virtual studio will enable us to replace
traditional sets with virtual sets that have a much more realistic look.
We intend to acquire additional space in Manhattan for this purpose.
o Design, create and build a digital audio facility--We intend for this to
be a THX Certified 5.1 channel surround sound digital audio mixing and
design studio. 5.1 channel surround sound is the format selected for
HDTV. We intend that the new digital audio facility will include mix to
picture capabilities, Foley Pit, automatic dialogue replacement with
sound design and sound effects production capabilities. We intend for
this facility to be flexible, with the capability to mix both long form
productions, e.g. movies, and short form productions, e.g. commercials,
quickly and efficiently.
o Create a new division for content development, accumulation, and
programming for our broadcast, theatrical and Internet business,
concentrating on building and improving web sites and enhancing virtual
elements on Internet sites utilizing high resolution technology.
CUSTOMERS
We have a diverse customer base, with approximately 300 accounts during
1998. We provided our production and post-production services for commercials,
television programs, special events and music videos to Fortune 500 companies in
the entertainment, communications, manufacturing and services fields. During our
14 year history, we have been engaged to work on projects including or for the
following:
o TV Commercials--AT&T, Coca Cola, Cover Girl Cosmetics, Domino's Pizza,
GE, Heineken Beer, Intel, Kodak, MCI, Molson Ale, Nike, Panasonic, Pepsi
Cola, Pizza Hut and Visa;
o Broadcast--ABC, CBS, NBC, ESPN, Home Box Office, ShowTime, The Movie
Channel, The Cartoon Network and The Classic Sports Network;
o Music Videos--Alanis Morissette, Natalie Cole, Kenny G., Hanson and
T-Boz;
o Feature Films--A New Life, Blue Steel, Big, Joe's Apartment and Money
Train;
o Virtual Sets--ABC News, CBS, The Discovery Channel, ESPN, The Learning
Channel and Madison Square Garden;
o Advertising Agencies--BBDO Worldwide, Cliff Freeman & Partners, Grey
Advertising, Inc., J. Walter Thompson Co., McCann-Erickson Worldwide,
Inc., Messner Vetere Berger McNamee Schmetterer/Euro RSCG, Saatchi &
Saatchi North America Inc. and Uni-World Group, Inc.
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SALES AND MARKETING
Our marketing goal is to position SMA as the leading production and
post-production company providing a one-stop-shop for all media. We currently
sell our services to advertising agencies, cable television program suppliers,
independent producers, local television stations, motion picture studios,
national television networks, program distributors and program syndicators.
Historically, we have not engaged in marketing campaigns but rather obtained new
clients from recommendations of existing clients, the use of demo-reels based on
an inventory of work produced over our 14 year history and limited participation
in video and film trade shows. We believe the demo reels have provided us with
an authority image as such reels demonstrate our work with Fortune 500 companies
and recognized media celebrities including Danny Glover, Bryant Gumbel, Dennis
Hopper and Barbara Walters.
We believe that building a strong brand recognition of our services is
critical to attracting and expanding our client base. Following the completion
of this offering, we intend to hire an in-house marketing and sales staff. We
intend that this staff will consist of a Director of Marketing who will
supervise three to four sales people who will promote our new services to
existing clients and the full range of our services to potential clients under
the one-stop-shop umbrella. Our marketing efforts will be intended to further
penetrate our current existing client base by targeting new divisions and
subsidiaries as well adding to the services which we currently provide to such
clients. In such efforts, we intend to explore the use of print media and other
promotional campaigns. We also intend to use our website as well as links to
other complementary sites to increase our Internet communications client base.
We believe our in-house design team gives us the additional advantage of
creating customized advertising and targeted promotional material to support our
branding efforts.
COMPETITION
The production and post-production industry is highly competitive and
constantly evolving. Specifically, we face competition from the following
segments in the industry for the services we offer and plan to offer:
o Commercial Post-Production such as: The Tape House, Inc. and Nice Shoes,
Inc.
o Virtual Set Production such as: LRP Productions and Atlantic Video, Inc.
o Motion Film Developing Lab such as: Technicolor East Coast, Inc. and
Duart Film and Video, Inc.
o High Definition Post-Production such as: The Tape House, Inc.
o Audio Design and Mixing such as: Todd-AO Studios East, Photomagnetic
Sound Studios, Inc. and Eastside Audio and Video, Inc.
o High Definition Production such as: the in-house production studios of
CBS and the MSG Network
o Internet content producers such as: Razor Fish, Inc., Concrete Media,
Inc., Broadcast.com, Inc. and Funny Garbage, Inc.
We believe that the principal competitive factors in our markets include
the ability to customize technology to a customer's particular use, cost and
service offerings. Many of our current and potential competitors have
substantially greater human and financial resources, experience and brand
recognition than us and may have competitive advantages through other lines of
business and existing relationships. Furthermore, our competitors may introduce
new products and services addressing our markets in the future. Some of our
customers also have the in-house capability to provide a portion of the services
which we offer. Specifically, CBS and the MSG Network have in-house
high-definition production facilities, and CBS runs a virtual studio for
in-house use. There can be no assurance that our competitors will not develop
products and/or services that are superior to our products and/or services or
that achieve greater market acceptance than the services which we offer or plan
to offer. Competition could have a material adverse effect on our business,
financial condition and results of our operations.
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INTELLECTUAL PROPERTY
Our success and ability to compete depends in part on the protection of our
proprietary technology and on the good will associated with our trade names,
service marks and other proprietary rights. We rely on copyright laws to protect
the content that we develop for our website. We have registered the following
Internet domain names: "smavid.com," "hdvtv.com," "smavtv.com," "flickerfx.com"
and "smarealtime.com."
We rely on trade secret and copyright laws to protect the proprietary
technologies that we may develop, but there can be no assurance that those laws
will provide us with sufficient protection, that others will not develop
technologies that are similar or superior to ours, or that third parties will
not copy or otherwise obtain or use our technologies without our authorization.
We have no patents or patent applications filed or pending.
In addition, we rely on certain technology licensed from third parties and
may be required to license additional technologies in the future. There can be
no assurance that these third party licenses will be available or will continue
to be available to us on acceptable commercial terms or at all. The inability to
enter into and maintain any of these licenses could have a material adverse
effect on our business, financial condition or results of our operations.
Policing the unauthorized use of our proprietary technology and other
intellectual property rights could entail significant expense. In addition,
there can be no assurance that third parties will not bring claims of copyright
or trademark infringement against us or claim that our use of certain
technologies violates a patent. Any claims of infringement with or without
merit, could be time consuming to defend, result in costly litigation, divert
management attention, require us to enter into costly royalty or licensing
arrangements or prevent us from using important technologies or methods any of
which could have a material adverse effect on our business, financial condition
or results of our operations.
INSURANCE
We believe that our insurance coverage for our business is generally in
accordance with industry standards and is adequate in light of our business and
the risks to which we are subject. We maintain insurance policies on the lives
of Mr. Morrissey and Mr. Satin in the amounts of $500,000 each. The proceeds of
such insurance policies have been assigned to Citibank N.A. as collateral for
obligations owed to Citibank, N.A. We have made application to obtain additional
life insurance policies of $1,500,000 each on the lives of both Mr. Morrissey
and Mr. Satin. We intend to obtain Directors and Officers liability insurance
prior to or upon completion of this offering.
EMPLOYEES
As of July 1, 1999, we had 34 full-time employees of whom 3 are in
accounting and finance, 3 are administrative, 16 are in creative and technical,
3 are in engineering, 7 are in operations, and 2 are in production. All
employees are based at our offices in New York City. Our future success will
depend in part, upon our ability to attract, retain and motivate qualified
personnel. While several of our employees are union members for the purpose of
facilitating union production on union projects, we are a non-union facility.
None of our employees are covered by a collective bargaining agreement and our
management considers relations with our employees to be good. We regularly enter
into subcontracts with free-lance personnel as production technicians from union
guilds. When using freelance personnel, it is our practice to use payroll
services which are recognized as the employer of record.
FACILITIES
Our principal executive offices, virtual studio and production facility are
located in New York, New York, where we lease approximately 25,000 square feet
of space at a current monthly rental of $27,084. The lease terminates on
December 31, 2005. We also lease 2,500 square feet of space for a production
studio and for storage, in New York, New York at a current monthly rental of
$2,800. The lease terminates on May 31, 2000. We also lease 3,000 square feet of
warehouse space in Little Ferry, New Jersey. We lease this space
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on a month to month basis, at a current monthly rental of $995. To effect our
expansion program, we anticipate that we will require an additional
50,000 square feet of unfinished industrial space located in Manhattan. Based
upon our recent search for such space, we believe that such facilities are
available at market rates ranging from $10 to $50 per square foot. We
occasionally rent temporary space based on production needs and generally such
costs are passed on to our clients.
LEGAL PROCEEDINGS
We are not involved in any pending, or to our knowledge, threatened legal
proceedings. We may from time to time become a party to various legal
proceedings arising in the ordinary course of business.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Our executive officers and directors, and their ages at June 30, 1999, are
as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------ --- ------------------------------------------------
<S> <C> <C>
Michael J. Morrissey............................ 42 Chief Executive Officer, President, Director
David Satin..................................... 39 Executive Vice President, Secretary, Treasurer,
Director
Rafael A. Estevez, Jr........................... 35 Chief Financial Officer and Principal Accounting
Officer
Darryl J. Kramer................................ 52 Director Nominee
Richard P. Aschman.............................. 49 Director Nominee
Marc Goodman.................................... 49 Director Nominee
</TABLE>
Michael J. Morrissey has served as our President, Chief Executive Officer
and a Director since our inception in 1985. From 1983 to 1985, Mr. Morrissey
served as Vice-President of Operations for RVI Industries Inc., a production and
post-production company. During part of 1981, Mr. Morrissey served as a
technical consultant for the construction of Movielab Video Inc., and for the
remainder of 1981 through 1983, as operations manager for Movielab Video Inc.
From 1977 to 1981, Mr. Morrissey was a freelance producer/technical director
working in commercials, art videos, documentaries, television, cable and feature
films, including special effects for the movie Swamp Thing in 1979.
Mr. Morrissey won an ANDY Award in 1992 for the production of the MCI commercial
"Earthquake." In 1993, Mr. Morrissey won Adsweek Magazine's award for Best of
1993, for the MCI commercial "Communicating." Mr. Morrissey received a BAA
degree from Bergen Community College in 1977.
David Satin has served as our Executive Vice President, Director of
Engineering and a Director since our inception in 1985, and currently serves as
the managing director of the SMA Virtual Programming Division. From 1983 to
1985, Mr. Satin served as Vice President of Engineering for RVI Industries Inc.
From 1982 to 1983, Mr. Satin was a consultant to Panavision, Inc. for the
development of the Panacam, a video camera that uses film lenses. From 1982 to
1986, Mr. Satin served on the advisory board of CMX Corp., a technology company
that manufactures editing systems. In 1988, Mr. Satin was nominated for an Emmy
Award for Outstanding Technical Direction for a Mini-Series or Special for the
PBS special "Dance in America: Gregory Hines Tap Dance in America." Mr. Satin
attended Syracuse University from 1978 to 1980.
Rafael A. Estevez, Jr. has served as our Chief Financial Officer and
Principal Accounting Officer since 1995. From 1994 to 1995, Mr. Estevez was
employed as an accountant for the firm of Jack Kane and Company. From 1989 until
1994, Mr. Estevez held various positions at the advertising agency of Rosenfeld,
Sirowitz, Humphrey and Strauss, including Controller. From 1986 to 1989,
Mr. Estevez was employed as Assistant Controller at HBM/Creamer Inc., a division
of Euro/RSCG, Worldwide. Mr. Estevez received a B.B.A degree in accounting from
Iona College in 1988.
Darryl J. Kramer has agreed to serve as one of our directors upon
completion of this offering. Since 1990, Mr. Kramer has been a partner of Kramer
& Kramer, a law firm located in New York, New York. Mr. Kramer received a B.A.
from the University of Pennsylvania in 1969 and a J.D. from Columbia University
School of Law and a joint masters degree in business administration from the
Columbia Graduate School of Business in 1973.
Richard P. Aschman has agreed to serve as one of our directors upon
completion of this offering. Mr. Aschman is Vice President of Eastman Kodak
Company and President and Chief Operating Officer of Kodak's Professional Motion
Imaging Division. Mr. Aschman has been employed by Eastman Kodak since 1972. In
1991, Mr. Aschman was appointed regional business general manager and vice
president for Kodak's commercial imaging group in the Asia Pacific region. In
1996, Mr. Aschman was appointed president and chief operating officer of Kodak's
Professional Motion Imaging division, or PMI, and became president of the
division in January 1997. Mr. Aschman is also chairman of the board of Cinesite,
a PMI subsidiary which is a leading visual effects organization. Mr. Aschman has
served on the board and executive committee of the Computer and Business
Equipment Manufacturer Association, and is currently a member of the Academy of
Motion Picture Arts and Sciences, the Academy of Television Arts and Sciences,
and the
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<PAGE>
American Society of Cinematographers. Mr. Aschman received a B.S. degree in
marketing from Ohio State University in 1972.
Marc Goodman has agreed to serve as one of our directors upon completion of
this offering. Mr. Goodman is president and a co-founder of Kenmar Advisory
Corp., a global investment management firm formed in 1983, and headquartered in
Greenwich, Connecticut. From 1974 to 1983, Mr. Goodman was a vice president and
director of Pasternak, Baum & Co., Inc., an international cash commodity firm.
Mr. Goodman is Chairman of the Board of the Stacy Joy Goodman Memorial
Foundation, a non-profit charity committed to finding a cure for juvenile
diabetes; and is a member of the Board of Diabetes Research Institute
Foundation, a not for profit organization affiliated with the University of
Miami School of Medicine. Mr. Goodman sits on the New York Advisory Board of
Youth EnterNet of America, Inc., a non-profit organization working to improve
the lives of America's youth. Mr. Goodman received a B.B.A. in 1969 and an
M.B.A. in Finance and Investments in 1971 from the Bernard M. Baruch School of
Business of the City University of New York.
KEY EMPLOYEES
In addition to our directors and executive officers, we employ the
following key employees:
Leslie Rudner has been our Chief Engineer since 1989. In addition to
supervising our daily technical operations, Mr. Rudner develops new technologies
for us and our clients. From 1987 to 1989, Mr. Rudner served as President of JNL
Technologies, designing peripherals for computers. From 1984 to 1987,
Mr. Rudner was employed as Electronic Technician for Inscom Electronics,
responsible for final testing and troubleshooting of electronic sub-systems.
While employed at SMA, Mr. Rudner developed image tracking software that
integrated virtual elements into footage shot with sensor or motion control
data, and a database and front end GUI control system for the live 3D graphics
for scores and statistics presented throughout the 1997 U.S. Open. Mr. Rudner
attended Adelphi University from September 1985 through June 1987.
Todd Ruff has been our Director of Graphics since 1995. From 1990 through
1995, Mr. Ruff was Director of Graphics for Caesar's Video Graphics, Inc.
Mr. Ruff has been nominated for seven Emmy Awards and won four Emmy Awards for
animation design including three for Adam Smith (PBS) and one for Nick News
(Nickelodeon). Mr. Ruff received a B.A. degree from Yale University in 1975.
Jim Suhre has been our Virtual Set Designer and 3D Graphics Designer since
1993. From 1993 to 1996, Mr. Suhre was also employed as a graphics design artist
for MTV. From 1989 to 1993, Mr. Suhre was a graphics designer for Young &
Rubicam. Mr. Suhre's credits include the creation of virtual sets currently used
by ABC News, PBS, Madison Square Garden Network, and the Discovery Channel.
Mr. Suhre received a B.A. degree from Stanford University in 1988.
Eli Friedman has been our Senior Colorist since 1996. Mr. Friedman has
17 years' experience as a colorist at various companies in the New York City
area, including Devlin, Magno Video, TVC Video and Editel. In 1993,
Mr. Friedman received a Monitor Award for AT&T's Tree of Life Spot.
Mr. Friedman received a BA degree from Queens College in 1979.
BOARD COMPOSITION
At each annual meeting of our stockholders, all of our directors will be
elected to serve from the time of election and qualification until the next
annual meeting following election. In addition, our bylaws provide that the
authorized number of directors, which is a minimum of two and a maximum of ten,
may be changed only by resolution of the board of directors.
We have also granted to the representative of the underwriters the right,
for a period of 5 years from the closing of this offering, to nominate a
designee of the representative for election to our board of directors. The
representative has not yet exercised its right to designate this person. If the
representative elects not to exercise this right, then the representative may
designate one person to attend meetings of our board of directors.
Each officer is elected by, and serves at the discretion of, our board of
directors. Each of our officers and directors, other than non-employee
directors, devotes his full time to our affairs. Our non-employee directors
devote such time to our affairs as is necessary to discharge their duties. There
are no family relationships among any of our directors, officers or key
employees.
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<PAGE>
BOARD COMMITTEES
Upon completion of this offering, we intend to appoint both a compensation
committee and an audit committee composed of members of our board of directors.
The Audit Committee will review with our independent public accountants the
scope and adequacy of the audit to be performed by the independent public
accountants, the accounting practices, our procedures and policies, and all
related party transactions. The Compensation Committee will recommend to our
board of directors, the compensation to be paid to our officers and directors,
administer our stock option plan and approve the grant of options under the
stock option plan. We have not determined who will serve as the members of these
committees, although we will appoint non-employee directors to serve as members
of each committee.
DIRECTORS' COMPENSATION
Directors who are also our employees receive no additional compensation for
attendance at board meetings. Non-employee directors will receive $500 for
attendance at each board meeting or any committee of the board that they attend
and will be reimbursed for their travel, lodging and other out-of-pocket
expenses in connection with their attendance at board and commitee meetings. No
directors' fees have been paid to date. We anticipate that our Board of
Directors will hold regularly scheduled meetings quarterly.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid to our president
and chief executive officers and each other executive officer whose 1998
compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION YEAR SALARY
- ------------------------------------------------------------------------------------------------ ---- --------
<S> <C> <C>
Michael J. Morrissey,
President and Chief Executive Officer......................................................... 1998 $110,589
1997 $101,720
1996 $101,198
David Satin,
Executive Vice President...................................................................... 1998 $110,589
1997 $101,570
1996 $101,198
</TABLE>
The aggregate compensation paid to all persons who served in the capacity
of director or executive officer during our fiscal year ended September 30, 1998
(3 persons) was approximately $287,178.
OPTION GRANTS
No options have ever been granted to any of our directors, officers,
employees or consultants.
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with Michael J. Morrissey, our
Chief Executive Officer and President, and David J. Satin, our Executive Vice
President and Director of Engineering, which will commence upon the completion
of this offering, and will continue for a five-year period, after which the
agreements will automatically renew for one-year terms, unless terminated by
either party upon ninety days written notice prior to the end of any term, or
for cause. Under the terms of their respective employment agreements,
Mr. Morrissey and Mr. Satin have agreed to work for us full time, and will each
receive an annual base salary of $250,000, with annual percentage increases
equal to the percentage of increase in the cost of living, and an annual bonus
at the discretion of our Board of Directors. The agreements also provide for
health insurance benefits and contain non-competition provisions that prohibit
them from competing with us. The period covered by the non-competition
provisions will end either one year after the expiration of the agreement or one
year after their resignation or termination.
In addition, the agreements provide that if either Mr. Morrissey or
Mr. Satin is terminated without cause, they will receive a severance
consideration of three months' salary. A state court may determine not to
enforce, or only partially to enforce, certain provisions of these agreements.
Furthermore, Mr. Morrissey and Mr. Satin are each to be compensated in the
amount of $50,000 per annum for their efforts in connection with our joint
venture with Flicker FX Corp. As per the joint venture agreement, we will
guarantee these annual salaries until the joint venture achieves sufficient
revenues to fund its operations and pay the salaries.
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<PAGE>
We have entered into an employment agreement with our senior colorist, Eli
Friedman, for a term of three years commencing May 11, 1999. Mr. Friedman has
agreed to provide film-to-tape and tape-to-tape color correction services
exclusively for us on a full time basis. We have agreed to pay Mr. Friedman an
annual salary of $230,000. We have also agreed to pay Mr. Friedman a commission
based on our billings to customers for work performed by Mr. Friedman at a rate
of 10% of the first $1 million billed per year, and 20% of any billings in
excess of $1 million per year. Mr. Friedman's employment agreement also contains
health insurance benefits, vacation benefits and sick leave.
We have also entered into an employment agreement with Larry Trosko, one of
our colorists, for a term of five years commencing May 12, 1999. Mr. Trosko has
agreed to provide film-to-tape and tape-to-tape color correction services
exclusively for us on a full time basis. We have agreed to pay Mr. Trosko an
annual salary of $175,000. We have also agreed to pay Mr. Trosko a commission
based on our billings to customers for work performed by Mr. Trosko at a rate of
10% of such billings in excess of $350,000 per year. Mr. Trosko's employment
agreement also contains health insurance benefits, vacation benefits and sick
leave.
LIMITATION ON LIABILITY OF AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
Overview. Under our Certificate of Incorporation and New York law, our
directors are not liable for monetary damages for breach of fiduciary duties
except in special situations as described below. In addition, under our
Certificate of Incorporation, we are required to indemnify our directors and
officers against all losses to the fullest extent permitted by New York law.
Finally, under New York law, we are entitled to obtain insurance on behalf of
our directors and officers to protect them against liabilities that may occur in
their official capacities.
Limitations on Liability of Directors. Under New York law, a corporation
may adopt a charter provision eliminating or limiting the personal liability of
its directors to the corporation or its stockholders for breach of fiduciary
duties except:
o liability if a judgment or other final adjudication adverse to a director
establishes that his or her acts or omissions were in bad faith or
involved intentional misconduct or a knowing violation of law; or
o liability when the director personally gained a financial profit or other
advantage to which he or she was not legally entitled; or
o liability for any act or omission prior to the adoption by us of the
above indemnity provision; or
o liability when the director's acts violated New York Business Corporation
Law Section 719.
We have adopted a charter provision eliminating the personal liability of
our directors to the fullest extent permitted under New York law except under
the four provisions noted above.
Indemnification for Directors and Officers. Under New York law, a
corporation may indemnify its present and former directors and officers for a
variety of court or administrative proceedings. We have adopted a provision
which requires us to indemnify and hold harmless any person involved in any
action, suit or proceeding because that person is or was a director or officer
of ours. This provision does not, however, require us to indemnify an officer or
director in a proceeding they initiate without the authorization of our
directors.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of ours
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission, indemnification for
liabilities is against public policy as expressed in the Securities Act and is,
therefore, unenforceable.
We have entered into indemnification agreements with our officers and
directors containing provisions which may require us, among other things, to
indemnify our officers and directors against certain liabilities that may arise
by reason of their status or service as officers or directors, other than
liabilities arising from willful misconduct of a culpable nature, and to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified.
Insurance for Directors and Officers. Under New York law, a corporation may
obtain insurance on behalf of its directors and officers against liabilities
incurred by them in those capacities. We have adopted a provision which permits
us to maintain insurance to protect us and our directors and officers against
expenses, liabilities and losses whether or not we would have the power to
indemnify these persons under New York law. We intend to have in place at or
promptly after the closing of this offering a directors' and officers' liability
and company reimbursement liability insurance policy.
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<PAGE>
1999 STOCK INCENTIVE PLAN
Purpose. We believe it is in our best interest to provide incentives for
the continued services of key and valuable employees, directors and
non-employees who perform services for us. Our 1999 stock incentive plan,
adopted in May 1999, allows us to award both incentive and non-qualified stock
options to these persons.
We have reserved 500,000 shares of our common stock for issuance under the
stock incentive plan. Shares of common stock covered by expired or terminated
options generally will be available for subsequent awards. No stock options have
been issued to date.
Awards and Eligibility. The board of directors (or a committee appointed by
the board of directors) will administer the stock incentive plan.
Exercise Price. The option price per share for any option granted under the
plan will be determined by the board of directors. The option price per share
will not be less than 100% of the fair market value of our common stock at the
time of the grant.
Option Term. The board of directors determines the term of each option. No
option may be exercised after the expiration of ten years from the date the
option is granted. Incentive stock options may not be exercised after five years
from the date of the grant. The board of directors may determine that all or a
stated percentage of the shares covered by these options will become exercisable
or "vest" in installments after the completion of specified service requirement
by the holder.
Special Rules for 10% Stockholder. The option price per share of an
incentive stock option granted to an employee who owns more than 10% of the
total combined voting power of all classes of our stock will be at least 110% of
the fair market value of our stock at the time of the grant.
EMPLOYEE BENEFIT PLANS
We have a profit sharing plan, which covers substantially all full time
employees who meet certain service requirements and are not covered by the union
pension plan as disclosed below. During the years ended September 30, 1997 and
1998, and the six-month periods ended March 31, 1998 and 1999, we did not make
any contributions to this plan.
We have several employees covered by a union sponsored, multi-employer
pension plan. We contributed and charged to expense $8,048 and $14,037 for the
years ended September 30, 1997 and 1998, respectively, and $6,553 and $7,620 for
the six months ended March 31, 1998 and 1999, respectively. The contributions
are determined in accordance with provisions of the plan and are generally based
on the number of hours worked.
We adopted a non-contributory 401K plan effective January 1, 1998. The plan
covers all non-union employees who are at least 21 years of age with no minimum
service requirements. There were no contributions to the plan for the year ended
September 30, 1998 and the six months ended March 31, 1999.
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<PAGE>
CERTAIN TRANSACTIONS
On March 28, 1994, Mr. Morrissey, our President and Chief Executive
Officer, and Mr. Satin, our Executive Vice President, Secretary and Treasurer,
guaranteed a construction loan to CitiBank, N.A. for $300,000 and an equipment
loan to CitiBank, N.A. for $300,000. The construction and equipment term loan
agreements both provide for equal monthly principal payments of $5,000 each,
commencing September 1, 1994, and a final payment of the unpaid principal due on
September 1, 1999, plus interest at 1.5% above the prime rate (9.75% at
September 30, 1998 and 9.25% at March 31, 1999), payable monthly. Substantially
all of our assets are pledged to collateralize the indebtedness.
On June 1, 1995, Mr. Morrissey and Mr. Satin personally guaranteed the
lease, expiring in December 2005, for our executive offices and production
facilities located at 100 Avenue of the Americas, New York, New York. The lease
provides for monthly rental payments of $25,000 through September 1, 1997,
$27,083 through September 1, 2000 and $29,333.33 thereafter through expiration.
On August 15, 1995, Mr. Morrissey and Mr. Satin jointly borrowed $103,722
from the SMA Video Profit Sharing Plan and SMA Video Money Purchase Pension Plan
and loaned $103,722 to us. We have been repaying the loan in monthly
installments of $2,093.39 including interest at 7% per annum directly to the SMA
Video Profit Sharing Plan and SMA Video Money Purchase Pension Plan in
accordance with the instructions of Mr. Morrissey and Mr. Satin. The loan is due
on November 21, 2000, is unsecured, and as of June 21, 1999, had a balance of
$33,786.
On June 4, 1997, Mr. Morrissey and Mr. Satin personally guaranteed a
$250,000 term loan with CitiBank, N.A. as part of an amendment to our CitiBank
revolving line of credit agreement. We have been repaying the loan in 36 monthly
payments of principal and interest of $8,037.48. The loan bears interest at
9.75% per annum. Substantially all of the assets of the Company are pledged to
collateralize this loan.
On June 4, 1997, we assigned our $500,000 William Penn Life insurance
policy on the life of Mr. Morrissey and our $500,000 American Mayflower
insurance policy on the life of Mr. Satin to CitiBank, N.A. as additional
collateral for our $250,000 line of credit.
Mr. Morrissey and Mr. Satin personally guaranteed the following twenty-four
capital leases, which aggregated $3,146,000, as of March 31, 1999. The
obligations under the capital leases are collateralized by the underlying
equipment for each loan. Such capital leases are for equipment which we use on a
day to day basis in our business, including color television cameras, portable
robotic motion control systems, super computers, videotape recorders, sound
monitoring and mixing equipment and lighting equipment.
o Equipment Lease with Tilden Financial Corp. dated May 5, 1995 in the
amount of $269,000 payable in forty eight monthly installments;
o Equipment Lease Agreement with Citicorp Leasing dated June 21, 1994 in
the amount of $142,650, payable in sixty monthly installments;
o Term Promissory Note (Equipment Loan ) with Citibank, N.A. dated
March 28, 1994 in the amount of $300,000, payable in sixty monthly
installments;
o Term Promissory Note (Leasehold Improvement Loan) with Citibank, N.A.
dated March 28, 1994 in the amount of $300,000, payable in sixty monthly
installments;
o Equipment Lease Agreement with CreditAmerica dated March 1, 1995 in the
amount of $332,880, payable in forty eight monthly installments;
o Equipment Lease Agreement with WASCO Funding Corp dated March 7, 1995 in
the amount of $45,365.76, payable in 48 monthly installments;
o Business Loan Agreement with Citibank dated June 7, 1997 in the amount of
$250,000, payable in thirty six monthly installments;
o Equipment Lease Agreement with LCA Leasing Corp dated May 5, 1995 in the
amount of $976,673.40, payable in sixty monthly installments;
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<PAGE>
o Equipment Lease Agreement with CreditAmerica dated May 12, 1995 in the
amount of $178,800, payable in forty eight monthly installments;
o Equipment Lease Agreement with CreditAmerica dated May 12, 1995 in the
amount of $239,520, payable in forty eight monthly installments;
o Equipment Lease with CIT Group/Equipment Financing, dated June 6, 1995 in
the amount of $339,620.64, payable in forty eight monthly installments;
o Equipment Lease with CIT Group/Equipment Financing, dated June 6, 1995 in
the amount of $148,265.28, payable in forty eight monthly installments;
o Equipment Lease with Charter Financial dated September 22, 1995 in the
amount of $1,090,080, payable in sixty monthly installments;
o Equipment Lease with The Terminal Marketing Company, Inc. dated June 26,
1996 in the amount of $467,340 payable in sixty monthly installments;
o Equipment Lease with Gateway Funding Inc dated October 16, 1996 in the
amount of $50,255.25, payable in forty eight monthly installments;
o Equipment Lease with Independent Resources, Inc. dated September 12, 1996
in the amount of $1,254,477 payable in 64 monthly installments;
o Equipment Lease with Independent Resources, Inc. dated September 12, 1996
in the amount of $390,690 payable in 65 monthly installments;
o Equipment Lease with Independent Resources, Inc. dated September 12, 1996
in the amount of $433,855 payable in 65 monthly installments;
o Equipment Lease with Independent Resources, Inc. dated September 12, 1996
in the amount of $234,059 payable in 65 monthly installments;
o Equipment Lease--Charter Financial Inc dated February 5, 1997 in the
amount of $1,076,100, payable in sixty monthly installments;
o Purchase Order with ORAD, Inc. dated July 16, 1997 in the amount of
$300,000, payable in thirty monthly installments;
o Equipment Lease with Gateway Funding dated May 18, 1998 in the amount of
$109,250, payable in forty eight monthly installments; and
o Equipment Lease with Gateway Funding dated November 2, 1998 in the amount
of $115,442.50, payable in forty eight monthly installments.
We have entered into indemnification agreements with our officers and
directors containing provisions which may require us, among other things, to
indemnify our officers and directors against certain liabilities that may arise
by reason of their status or service as officers or directors, other than
liabilities arising from willful misconduct of a culpable nature, and to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified.
Our Board of Directors has adopted a policy that all future transactions
with our officers, directors or stockholders owning 5% or more of our
outstanding common stock, and their respective affiliates, will be on terms no
less favorable than could be obtained from unaffiliated third parties and will
be approved by a majority of our independent, disinterested directors with
access to independent counsel.
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PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to the beneficial
ownership of our common stock, as of the date of this prospectus. The
information in this table provides the ownership information for:
o each person known by us to be the beneficial owner of more than 5% of our
common stock;
o each of our directors and director nominees;
o each of our executive officers; and
o our executive officers, directors and director nominees as a group.
Beneficial ownership has been determined in accordance with the rules and
regulations of the Securities and Exchange Commission and includes voting or
investment power with respect to the shares. Unless otherwise indicated, the
persons named in the table have sole voting and investment power with respect to
the number of shares indicated as beneficially owned by them. The number of
shares of common stock outstanding used in calculating the percentage ownership
for each person listed below includes shares of common stock underlying options
or warrants held by the person that are exercisable within 60 days of the date
of this prospectus, but excludes shares of common stock underlying options or
warrants held by any other person. Common Stock beneficially owned and
percentage ownership are based on 3,700,000 shares outstanding before this
offering and 5,700,000 shares to be outstanding after the completion of this
offering, assuming no exercise of the underwriters' over-allotment option.
Unless otherwise indicated, the address of each beneficial owner is c/o
S.M.A. Real Time Inc., 100 Avenue of the Americas, 10th Floor, New York, New
York 10013.
<TABLE>
<CAPTION>
PERCENTAGE OF COMMON STOCK
BENEFICIALLY OWNED
NAME, ADDRESS AND TITLE NUMBER OF SHARES ---------------------------------
OF BENEFICIAL OWNER BENEFICIALLY OWNED BEFORE OFFERING AFTER OFFERING
- -------------------------------------------------------------- ------------------ --------------- --------------
<S> <C> <C> <C>
Michael J. Morrissey, CEO, President.......................... 1,394,850 37.70% 24.47%
David Satin, Executive Vice President,
Secretary, Treasurer........................................ 1,394,850 37.70% 24.47%
Rafael A. Estevez, Jr., Chief Financial
Officer and Principal Accounting Officer.................... * * *
Darryl J. Kramer, Director Nominee
708 3rd Avenue
New York, New York 10017.................................... 69,800 1.89% 1.22%
Richard P. Aschman, Director Nominee
Eastman Kodak Company
343 State Street
Rochester, New York 14650................................... * * *
Marc Goodman, Director Nominee
2 American Lane
Greenwich, CT 06831-8150.................................... * * *
All executive officers, directors, and
director nominees as a group
(6 persons)................................................. 2,859,500 77.28% 50.17%
</TABLE>
- ------------------
* Represents beneficial ownership of less than 1% of the common stock
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<PAGE>
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 50,000,000 shares of common stock,
par value $.0001 per share, and 10,000,000 shares of preferred stock, par value
$0.0001 per share, the rights and preferences of which may be established from
time to time by our board of directors. Assuming no exercise of the
underwriter's over-allotment option, upon completion of this offering, there
will be 5,700,000 shares of our common stock issued and outstanding, no
preferred stock outstanding, and excluding the representative's warrants, there
will be 21,000 placement agent's warrants outstanding.
The description of our securities are summaries and do not contain all the
information that may be important to you. For more complete information, you
should read our Certificate of Incorporation and its amendments, the Form of
Promissory Note issued to purchasers of Units in May 1999 and the Form of
Placement Agent's Warrant Agreement which are all filed as exhibits to the
registration statement of which this prospectus forms a part.
COMMON STOCK
Holders of our common stock are entitled to one vote for each share held on
all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Accordingly, holders of a majority of the shares of our common
stock entitled to vote in any election of directors may elect all of the
directors standing for election. Subject to preferences that may be applicable
to any shares of preferred stock outstanding at the time, holders of our common
stock are entitled to receive dividends ratably, if any, as may be declared from
time to time by our board of directors out of funds legally available therefore.
Upon the liquidation, dissolution or winding up of us, the holders of our common
stock are entitled to receive ratably, our net assets available after the
payment of all liabilities and liquidation preferences on any outstanding
preferred stock. Holders of our common stock have no preemptive, subscription,
redemption or conversion rights, and there are no redemption or sinking fund
provisions applicable to the common stock. The outstanding shares of our common
stock are, and the shares offered by us in this offering will be, when issued
and paid for, validly issued, duly authorized, fully paid and nonassessable. The
rights, preferences and privileges of holders of common stock are subject to,
and may be adversely affected by, the rights of the holders of shares of any
series of preferred stock which we may designate and issue in the future.
PREFERRED STOCK
Our board of directors is authorized, without further stockholder approval,
to issue up to 10,000,000 shares of preferred stock in one or more series and to
fix the rights, preferences, privileges and restrictions of these shares,
including dividend rights, conversion rights, voting rights, terms of redemption
and liquidation preferences, and to fix the number of shares constituting any
series and the designations of these series. These shares may have rights senior
to our common stock. The issuance of preferred stock may have the effect of
delaying or preventing a change in control of us. The issuance of preferred
stock could decrease the amount of earnings and assets available for
distribution to the holders of common stock or could adversely affect the rights
and powers, including voting rights, of the holders of our common stock. At
present, we have no plans to issue any shares of our preferred stock.
OUTSTANDING WARRANTS
Prior to the sale of shares in this offering, we issued 21,000 warrants to
a placement agent as compensation in connection with our private placement in
May 1999. Each placement agent warrant is exercisable into one share of common
stock at an exercise price of $ per share. These placement agent warrants are
for a period of five years, and may be exercised after , 1999.
These warrants have demand and piggyback registration rights. These warrants
also have cashless exercise provisions whereby the holder may, in lieu of
payment of the exercise price in cash, surrender the warrant and receive a net
amount of shares, based on the fair market value of our common stock at the time
of the exercise of the warrant, after deducting the aggregate exercise price.
We have agreed to issue to the representative of the underwriters, for a
total of $20.00, warrants to purchase an aggregate of 200,000 shares of common
stock exercisable for a period of four years commencing
37
<PAGE>
one year after the effective date of the registration statement of which this
prospectus is a part, at a price equal to 120% of the initial public offering
price of the shares of common stock. The representative's warrants contain
anti-dilution provisions providing for automatic adjustments of the exercise
price and number of shares issuable on exercise price and number of shares
issuable on exercise of the representative's warrants upon the occurrence of
some events, including stock dividends, stock splits, mergers, acquisitions and
recapitalizations. The representative's warrants contain certain demand and
piggyback registration rights relating to the 200,000 shares of common stock
issuable thereunder. For the life of the representative's warrants, the
representative will have the opportunity to profit from a rise in the market
price for the 200,000 shares of common stock. The holders of the
representative's warrants will have no voting, dividend or other stockholder
rights with respect to those warrants. The holders of shares of common stock
issued upon exercise of those warrants will have the voting, dividend, and other
stockholder rights of holders of shares of common stock. The representative's
warrants are restricted from sale, transfer, assignment or hypothecation for the
one year period from the date of this prospectus, except to officers or partners
of the underwriters and members of the selling group and/or their officers or
partners.
REGISTRATION RIGHTS
During a five year period commencing 12 months after May 21, 1999, a
majority of the holders of 210,000 shares of common stock issued in connection
with our May 1999 private placement will be entitled to demand that we file a
registration statement with respect to the registration of such shares under the
Securities Act if we are subject to the reporting requirements of the Exchange
Act of 1934.
Such holders are also entitled to "piggy-back" registration rights in
connection with any registration by us of our securities for our own account or
for the account of other security holders. In the event that we propose to
register any shares of common stock under the Securities Act, the holders are
entitled to receive notice and are entitled to include their shares in the
registration statement. The placement agent's warrants and the representative's
warrants also have demand and piggyback registration rights.
TRANSFER AGENT AND REGISTRAR
We intend to appoint Continental Stock Transfer and Trust Company as
transfer agent for our common stock.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has not been any public market for our
securities and there can be no assurance that a significant public market for
any of our securities will be developed or sustained after this offering. Sales
of substantial amounts of our common stock in the public market after this
offering, or the possibility of those sales occurring, could adversely affect
prevailing market prices of our common stock or our future ability to raise
capital through an offering of equity securities. We are unable to predict the
number of shares of our common stock that will be sold after this offering,
whether in the public markets or under Rule 144 under the Securities Act or
otherwise, as this will depend on the market price of our securities, personal
circumstances of the seller, and other factors.
Upon completion of this offering, we will have outstanding 5,700,000 shares
of common stock, assuming no exercise of the underwriters' over-allotment
option. Of these 5,700,000 shares of common stock, 2,000,000 shares will be
freely tradeable without restriction under the Securities Act, except for any
shares purchased by an "affiliate" of ours, as that term is defined under the
rules and regulations of the Securities Act, which will be subject to the resale
limitations of Rule 144 under the Securities Act.
The remaining 3,700,000 shares are "restricted securities" as defined under
Rule 144. These restricted securities were issued and sold by us in private
transactions in reliance upon exemptions from registration under the Securities
Act. In general, under Rule 144, beginning 90 days after the completion of this
offering, a person, or persons whose shares are aggregated, who has beneficially
owned restricted securities for at least one year, including the holding period
of any prior owner who is not an affiliate of ours, would be entitled to sell
within any three-month period a number of common shares that does not exceed the
greater of (1) one
38
<PAGE>
percent of the then outstanding common shares, approximately 57,000 shares
following this offering, or (2) the average weekly trading volume of our common
stock during the four calendar weeks preceding that sale. Sales under Rule 144
are also subject to certain manner of sale and notice requirements and to the
availability of current public information about us. Under Rule 144(k), a person
who is not deemed to have been an affiliate of ours at any time during the
90 days preceding a sale and who has beneficially owned the shares proposed to
be sold for at least two years, including the holding period of any prior owner
who is not an affiliate of ours, is entitled to sell such common stock without
complying with the manner of sale, public information, volume limitation or
notice provisions of Rule 144. Non-affiliates may resell our securities issued
under Rule 701 in reliance upon Rule 144 without having to comply with Rule
144's public information, holding, volume, and notice requirements.
Holders of an aggregate of 210,000 shares of our common stock have certain
piggyback registration rights with regard to the resale of these shares.
Following the completion of this offering, these holders could require us to
register for resale their shares, and the shares would then be freely tradeable,
subject to the lock-up agreements described below.
Holders of placement agent's warrants to purchase an aggregate of 21,000
shares of our common stock have certain demand and piggyback registration rights
with regard to the resale of the shares issuable upon exercise of their
warrants. Following the completion of this offering, these holders could require
us to register for resale the shares issuable upon exercise of the warrants, and
these shares would then be freely tradeable, subject to the lock-up agreements
described below.
Each of our officers, directors, and all other holders of shares of our
common stock and securities exchangeable or convertible into shares of our
common stock, have agreed not to, directly or indirectly, offer, sell, transfer,
pledge, assign, hypothecate or otherwise encumber or dispose of any of our
securities, whether or not presently owned, for a period of 12 months after the
date of this prospectus without the prior written consent of us and the
representative.
39
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement, the form
of which is filed as an exhibit to the registration statement filed with the
Commission of which this prospectus is a part, the underwriters named below
have, severally and not jointly, agreed through Dirks & Company, Inc., as the
representative of the underwriters, to purchase from us, and we have agreed to
sell to the underwriters, the aggregate number of shares of our common stock set
forth opposite their respective names:
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERWRITERS OF COMMON STOCK
- ---------------------------------------------------------------------------- ----------------
<S> <C>
Dirks & Company, Inc........................................................
Total..................................................................... 2,000,000
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters under that agreement are subject to certain conditions precedent,
including the absence of any material adverse change in our business and the
receipt of certain certificates, opinions and letters from our counsel and our
independent public accountants. The underwriters are committed to take and to
pay for all of the shares offered hereby, if any are purchased. In the event of
a default by any of the underwriters, purchase commitments of the non-defaulting
underwriters may be increased or the underwriting agreement may be terminated.
The underwriters have advised us that they propose to offer all or part of
the shares of common stock offered hereby directly to the public initially at
the price set forth on the cover page of this prospectus. They have also advised
us that they may offer shares of common stock to certain dealers at a price that
represents a concession of not more than $. per share, and that the
underwriters may allow, and these dealers may reallow, a concession of not more
than $. per share to certain other dealers. After the commencement of this
offering, the price to the public and the concessions may be changed.
We have granted to the underwriters an option, exercisable within 45 days
after the effective date of the registration statement of which this prospectus
is a part, to purchase up to an additional 300,000 shares of our common stock at
the same price per share as the initial 2,000,000 shares of common stock to be
purchased by the underwriters. The underwriters may exercise this option only to
cover over-allotments, if any. To the extent the underwriters exercise this
option, each of the underwriters will have a firm commitment, subject to certain
conditions, to purchase the same percentage of the additional shares of common
stock as the percentage of the initial 2,000,000 shares of common stock to be
purchased by that underwriter.
We have agreed to indemnify the underwriters and their controlling persons
against certain liabilities, including certain liabilities under the Securities
Act, and to contribute to payments the underwriters and their controlling
persons may be required to make in respect thereof.
We have agreed to pay the representative of the underwriters a
non-accountable expense allowance equal to 3% of the gross proceeds of this
offering, of which none has been paid as of the date of this prospectus. We have
also agreed to pay all expenses in connection with qualifying the securities
under the laws of those states the representative may designate, including fees
and expenses of counsel retained for such purposes by the representative and the
costs and disbursements in connection with qualifying the offering with the
National Association of Securities Dealers, Inc.
We have agreed to issue to the representative of the underwriters, for a
total of $20.00, warrants to purchase an aggregate of 200,000 shares of common
stock exercisable for a period of four years commencing one year after the
effective date of the registration statement of which this prospectus is a part,
at a price equal to 120% of the initial public offering price of the shares of
common stock. The representative's warrants contain anti-dilution provisions
providing for automatic adjustments of the exercise price and number of shares
issuable on exercise price and number of shares issuable on exercise of the
representative's warrants upon the occurrence of some events, including stock
dividends, stock splits, mergers, acquisitions and recapitalizations. The
representative's warrants contain certain demand and piggyback registration
rights relating to the 200,000 shares of common stock issuable thereunder. For
the life of the representative's warrants, the representative will have the
opportunity to profit from a rise in the market price for the 200,000 shares of
common stock. The holders of the representative's warrants will have no voting,
dividend or other
40
<PAGE>
stockholder rights with respect to those warrants. The holders of shares of
common stock issued upon exercise of those warrants will have the voting,
dividend, and other stockholder rights of holders of shares of common stock. The
representative's warrants are restricted from sale, transfer, assignment or
hypothecation for the one year period from the date of this prospectus, except
to officers or partners of the underwriters and members of the selling group
and/or their officers or partners.
We have also granted to the representative of the underwriters the right,
for a period of 5 years from the closing of this offering, to nominate a
designee of the representative for election to our board of directors. The
representative has not yet exercised their right to designate this person. If
the representative elects not to exercise this right, then the representative
may designate one person to attend meetings of our board of directors.
We and our officers, directors and present shareholders have agreed that,
for a period of 365 days after the completion of this offering, without the
prior written consent of the representative of the underwriters, none of us will
sell or otherwise dispose of any of our respective equity securities or
securities convertible into our equity securities, except for the sale of shares
to the underwriters under the terms of the underwriting agreement.
The representative of the underwriters has informed us that the
underwriters do not expect any sales of the shares of common stock offered by
this prospectus to be made to discretionary accounts controlled by the
underwriters.
Prior to this offering, there has been no established market in the United
States or elsewhere for our securities. The public offering price will be
determined by us in consultation with the representative of the underwriters. It
is expected that the price determination will take several factors into account,
including our results of operations, our future prospects and the prevailing
market and economic conditions at the time of this offering. There can be no
assurance that an active trading market will develop for any of the securities
offered by this prospectus, or that any of such securities will trade in the
public market subsequent to this offering at or above the initial public
offering price, or at all.
The representative, on behalf of the underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions and
penalty bids. Over-allotment involves syndicate sales in excess of this offering
size, which creates a syndicate short position. Stabilizing transactions permit
bids to purchase the shares of common stock being offered so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the shares of common stock in the open market
after the distribution has been completed in order to cover syndicate short
positions. Penalty bids permit the representative to reclaim a selling
concession from a syndicate member when the shares of common stock originally
sold by the syndicate member are purchased in a syndicate covering transaction
to cover syndicate short positions. Stabilizing transactions, syndicate covering
transactions and penalty bids may cause the price of the shares of common stock
to be higher than it would otherwise be in the absence of such transactions.
These transactions may be effected on the AMEX or otherwise and, if commenced,
may be discontinued at any time. In addition, the underwriters may engage in
passive market making transactions in our securities on the AMEX in accordance
with Rule 103 of Regulation M. Neither we nor the underwriters make any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the securities offered
by this prospectus.
LEGAL MATTERS
The legality of the common stock offered by this prospectus will be passed
upon for us by Stephen M. Robinson, P.A., Medford, New Jersey, our legal
counsel. Certain legal matters will be passed upon for the underwriters by
Orrick, Herrington & Sutcliffe LLP, New York, New York.
41
<PAGE>
EXPERTS
Our financial statements for the periods ended September 30, 1997 and
September 30, 1998 included in this prospectus and registration statement have
been audited by Tabb, Conigliaro & McGann, P.C., independent certified public
accountants, as set forth in their report contained herein. The financial
statements have been included in reliance upon the report of Tabb, Conigliaro &
McGann, P.C., given upon the authority of such firm as experts in accounting and
auditing.
HOW TO GET MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2 under the Securities Act with respect to the securities
offered by this prospectus. This prospectus, which forms a part of the
registration statement, does not contain all the information set forth in the
registration statement, as permitted by the rules and regulations of the
Commission. For further information with respect to us and the securities
offered by this prospectus, reference is made to the registration statement.
Statements contained in this prospectus as to the contents of any contract or
other document that we have filed as an exhibit to the registration statement
are qualified in their entirety by reference to the exhibits for a complete
statement of their terms and conditions. The registration statement and other
information may be read and copied at the Commission's Public Reference Room at
450 Fifth Street N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices located at 7 World Trade Center, Suite 1300, New York, New York, 10048,
and 500 West Madison Street, Suite 1400, Chicago, Illinois, 60661. The public
may obtain information on the operation of the Public Reference Room by calling
the Commission at 1-800-SEC-0330. The Commission maintains a Web site at
http://www.sec.gov that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the
Commission.
Upon effectiveness of the registration statement, we will be subject to the
reporting and other requirements of the Securities Exchange Act of 1934 and we
intend to furnish our shareholders annual reports containing financial
statements audited by our independent auditors and to make available quarterly
reports containing unaudited financial statements for each of the first three
quarters of each year.
We have applied for the listing of our common stock on the American Stock
Exchange under the symbol "VTV." After this offering is effective, you may
obtain certain information about us on AMEX's Internet site
(http://www.Nasdaq-Amex.com).
42
<PAGE>
INDEX TO COMBINED FINANCIAL STATEMENTS
S.M.A. REAL TIME INC. AND AFFILIATES
<TABLE>
<CAPTION>
PAGE NOS.
---------
<S> <C>
PART I--FINANCIAL INFORMATION:
ITEM I--FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS................................................................. F-2
COMBINED BALANCE SHEETS
At September 30, 1998 (Audited)
At March 31, 1999 (Unaudited)................................................................... F-3
COMBINED STATEMENTS OF INCOME
For the Years Ended September 30, 1997 and 1998 (Audited)
For the Six Months Ended March 31, 1998 and 1999 (Unaudited).................................... F-4
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended September 30, 1997 and 1998 (Audited)
For the Six Months Ended March 31, 1999 (Unaudited)............................................. F-5
COMBINED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 1997 and 1998 (Audited)
For the Six Months Ended March 31, 1998 and 1999 (Unaudited).................................... F-6
NOTES TO COMBINED FINANCIAL STATEMENTS............................................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders
S.M.A. Real Time Inc.
New York, NY
We have audited the accompanying combined balance sheet of S.M.A. Real Time Inc.
and Affiliates as of September 30, 1998, and the related combined statements of
income, stockholders' equity and cash flows for the years ended September 30,
1997 and 1998. These combined financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of S.M.A. Real Time Inc.
and Affiliates as of September 30, 1998, and the combined statements of income,
stockholders' equity and cash flows for the years ended September 30, 1997 and
1998 in conformity with generally accepted accounting principles.
TABB, CONIGLIARO & MCGANN, P.C.
New York, NY
December 9, 1998
(Except as to Note 10 dated as of May 28, 1999)
F-2
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT MARCH 31,
1998 1999
---------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents...................................................... $ 123,543 $ 46,421
Accounts receivable (net of allowance for doubtful accounts of $34,669 at both
September 30, 1998 and March 31, 1999, respectively)........................ 941,725 1,087,500
Prepaid expenses and other current assets...................................... 27,034 19,060
---------- ----------
Total Current Assets........................................................ 1,092,302 1,152,981
Property and equipment--at cost, net of accumulated depreciation................. 4,882,014 4,472,184
Deferred offering costs.......................................................... -- 100,000
Other assets..................................................................... 188,345 199,154
---------- ----------
Total Assets................................................................ $6,162,661 $5,924,319
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit--bank........................................................... $ 223,000 $ 223,000
Current maturities of long-term debt and capital lease obligations............. 1,506,643 1,636,911
Accounts payable and accrued liabilities....................................... 472,992 595,271
Income taxes payable........................................................... 6,132 34,041
Deferred taxes payable......................................................... 143,350 143,350
Current portion of shareholders loans.......................................... 22,302 23,094
---------- ----------
Total Current Liabilities................................................... 2,374,419 2,655,667
Long-term debt, less current maturities.......................................... 2,221,880 1,673,319
Deferred taxes payable........................................................... 268,533 268,533
Shareholders' loans.............................................................. 23,268 11,380
---------- ----------
Total Liabilities........................................................... 4,888,100 4,608,899
---------- ----------
Commitments, Contingencies and Other Matters (Notes 4, 5, 7, 9, and 10)
STOCKHOLDERS' EQUITY:
Common stock--.0001 par value; 50,000,000 shares authorized;
3,490,000 shares issued and outstanding (Note 10)........................... 349 349
Paid-in capital................................................................ 40,411 40,411
Retained earnings.............................................................. 1,233,801 1,274,660
---------- ----------
Total Stockholders' Equity.................................................. 1,274,561 1,315,420
---------- ----------
Total Liabilities and Stockholders' Equity....................................... $6,162,661 $5,924,319
---------- ----------
---------- ----------
</TABLE>
See notes to financial statements.
F-3
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31,
------------------------ ------------------------
1997 1998 1998 1999
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues................................................. $5,850,308 $6,469,142 $3,262,772 $3,375,320
Cost of Revenues......................................... 3,628,295 4,044,591 2,023,739 2,216,328
---------- ---------- ---------- ----------
Gross margin........................................... 2,222,013 2,424,551 1,239,033 1,158,992
Selling, general and administrative expenses............. 1,652,506 1,611,515 817,867 878,452
---------- ---------- ---------- ----------
Income from operations................................... 569,507 813,036 421,166 280,540
---------- ---------- ---------- ----------
Other expenses:
Interest expense, net of interest income............... 540,795 509,513 264,977 200,187
Other expense.......................................... 5,432 2,219 669 5,494
---------- ---------- ---------- ----------
Total Other Expenses................................ 546,227 511,732 265,646 205,681
---------- ---------- ---------- ----------
Income before income taxes............................... 23,280 301,304 155,520 74,859
Provision for income taxes............................... 7,998 142,000 70,329 34,000
---------- ---------- ---------- ----------
Net Income............................................... $ 15,282 $ 159,304 $ 85,191 $ 40,859
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and diluted earnings per share..................... $ .01 $ .05 $ .02 $ .01
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average common shares used in basic and diluted
earnings per share..................................... 3,490,000 3,490,000 3,490,000 3,490,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See notes to financial statements.
F-4
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1998 AND
THE SIX MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID-IN
------------------- CAPITAL RETAINED
SHARES AMOUNT EARNINGS TOTAL
--------- ------ ---------- ---------- ----------
(1)
<S> <C> <C> <C> <C> <C>
Year Ended September 30, 1997:
Balance--September 30, 1996........................ 3,490,000 $349 $ 40,411 $1,059,215 $1,099,975
Net income......................................... -- -- -- 15,282 15,282
--------- ---- -------- ---------- ----------
Balance--September 30, 1997........................ 3,490,000 $349 $ 40,411 $1,074,497 $1,115,257
--------- ---- -------- ---------- ----------
--------- ---- -------- ---------- ----------
Year Ended September 30, 1998:
Balance--September 30, 1997........................ 3,490,000 $349 $ 40,411 $1,074,497 $1,115,257
Net income......................................... -- -- -- 159,304 159,304
--------- ---- -------- ---------- ----------
Balance--September 30, 1998........................ 3,490,000 $349 $ 40,411 $1,233,801 $1,274,561
--------- ---- -------- ---------- ----------
--------- ---- -------- ---------- ----------
Six Months Ended March 31, 1999: (Unaudited)
Balance--September 30, 1998........................ 3,490,000 $349 $ 40,411 $1,233,801 $1,274,561
Net income......................................... -- -- -- 40,859 40,859
--------- ---- -------- ---------- ----------
Balance--March 31, 1999 (Unaudited)................ 3,490,000 $349 $ 40,411 $1,274,660 $1,315,420
--------- ---- -------- ---------- ----------
--------- ---- -------- ---------- ----------
</TABLE>
- ------------------
(1) Share amounts have been restated to reflect the stock splits and other
reorganization transactions effected in April and May of 1999 (Note 10).
See notes to financial statements.
F-5
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEARS ENDED ENDED
SEPTEMBER 30, MARCH 31,
-------------------------- ----------------------
1997 1998 1998 1999
----------- ----------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income.............................................. $ 15,282 $ 159,304 $ 85,191 $ 40,859
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................ 1,347,353 1,693,114 848,035 854,289
(Gain) loss from sale of equipment................... (4,278) -- -- 5,057
Deferred income taxes................................ 2,876 137,004 66,000 --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable--net.... (210,937) 58,839 41,234 (145,775)
Decrease in prepaid expenses and other current
assets.......................................... 44,582 9,781 8,438 7,974
Increase (decrease) in accounts payable and accrued
liabilities..................................... 63,676 (190,148) (75,139) 122,279
Increase (decrease) in income taxes payable........ 1,624 (1,624) (3,684) 27,909
----------- ----------- --------- ---------
Net cash provided by operating activities............ 1,260,178 1,866,270 970,075 912,592
----------- ----------- --------- ---------
Cash flows from investing activities
Purchase of property and equipment...................... (130,025) (171,539) (83,350) (49,359)
Increase in other assets................................ (34,427) (2,720) -- (10,809)
Proceeds from sale of property and equipment............ 15,802 -- -- 32,860
----------- ----------- --------- ---------
Net cash used in investing activities................ (148,650) (174,259) (83,350) (27,308)
----------- ----------- --------- ---------
Cash flows from financing activities
Expenditures for offering costs......................... -- -- -- (100,000)
Principal payments under capital lease obligations...... (1,004,972) (1,353,219) (673,565) (750,327)
Net change under revolving line of credit............... (5,000) 28,000 28,000 --
Repayments of term loans................................ (137,398) (222,146) (97,537) (100,983)
Repayments of loans--stockholders....................... (10,962) (21,103) (10,218) (11,096)
----------- ----------- --------- ---------
Net cash used in financing activities................ (1,158,332) (1,568,468) (753,320) (962,406)
----------- ----------- --------- ---------
(Decrease) Increase in cash and cash equivalents.......... (46,804) 123,543 133,405 (77,122)
Cash and cash equivalents--beginning...................... 46,804 -- -- 123,543
----------- ----------- --------- ---------
Cash and cash equivalents--ending......................... $ -- $ 123,543 $ 133,405 $ 46,421
----------- ----------- --------- ---------
----------- ----------- --------- ---------
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest............................................. $ 546,868 $ 499,751 $ 266,634 $ 200,418
----------- ----------- --------- ---------
----------- ----------- --------- ---------
Corporate income taxes............................... $ 3,498 $ 15,620 $ 8,290 $ 9,480
----------- ----------- --------- ---------
----------- ----------- --------- ---------
Supplemental disclosure of non-cash investing activities:
Purchase of property and equipment under capital
leases............................................... $ 2,929,057 $ 150,995 $ -- $ 433,017
----------- ----------- --------- ---------
----------- ----------- --------- ---------
</TABLE>
See notes to financial statements.
F-6
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE SIX MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Combined Statements
The accompanying financial statements include the accounts of S.M.A. Real
Time Inc. and its affiliates, SMA Video, Inc., SMA Visual Effects Corp. and Fly
Films, Inc. (collectively, the "Company"), all of which were incorporated in the
state of New York and are related through common ownership and management. The
Company commenced operations in 1985 under the name SMA Video, Inc. Commencing
November 9, 1998, the financial statements include the accounts of Flicker FX at
SMA, LLC, a joint venture controlled by the Company (Note 10).
As discussed in Note 10, the companies were reorganized during April and
May of 1999. As a result of the reorganization, SMA Visual Effects Corp. and Fly
Films, Inc. were merged into SMA Video, Inc. and SMA Video, Inc. became a
wholly-owned subsidiary of S.M.A. Real Time Inc. All common shares and related
per share data, reflected in the accompanying financial statements and notes
thereto, have been adjusted to give retroactive effect to the reorganization
transactions.
All material intercompany transactions and balances have been eliminated in
combination.
Description of Business
The Company provides a wide range of production and post-production
services to companies that produce commercials, television programs, music
videos and feature films. The Company's principal activities include studio
videotape recording, film to videotape transfer, computer generated visual
effects and the coloring, creation of customized virtual studio sets, editing
and dubbing of various form of emerging media, including film and video. Most of
the Company's services are performed at its headquarters in lower Manhattan, New
York.
Unaudited Interim Information
The information presented as of March 31, 1999 and for the six-month
periods ended March 31, 1998 and 1999 has not been audited. In the opinion of
management, the unaudited interim financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
information set forth therein. The net income for the six months ended
March 31, 1999 is not necessarily indicative of the results for the year ended
September 30, 1999.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
Cash and cash equivalents, accounts receivable, accounts payable, accrued
expenses and loans payable are reflected in the accompanying balance sheets at
amounts considered by management to reasonably approximate fair value.
F-7
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE SIX MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
Property and Equipment
Property and equipment are recorded at cost. Depreciation and amortization
are provided by accelerated and straight line methods over the estimated useful
lives of the assets as follows:
<TABLE>
<CAPTION>
ESTIMITED
USEFUL LIFE
-----------
<S> <C>
Machinery and equipment........................................................... 5
Furniture and fixtures............................................................ 7
Computers and office equipment.................................................... 5
Leasehold improvements............................................................ 10
</TABLE>
Maintenance and repairs are charged to income as incurred. The asset and
related accumulated depreciation accounts are relieved in respect of items
replaced, retired or otherwise disposed of.
The inherent uncertainties in the estimates of the useful lives and pattern
of usage, make it at least reasonably possible that the Company's estimates of
depreciation and amortization could change in the near term.
Income Taxes
The provision for income taxes for the years ended September 30, 1997 and
1998 is based on the elements of income and expenses as reported in the
accompanying statements of income and retained earnings.
Deferred tax liabilities and assets are determined based on the difference
between the financial statements carrying amounts and tax bases of assets and
liabilities using enacted rates in effect in the years in which the differences
are expected to reverse.
Deferred Offering Costs
Deferred offering costs relate to costs incurred through March 31, 1999
with respect to a proposed initial public offering of the Company's securities
discussed in Note 10 to the financial statements. In the event the proposed
initial public offering of the Company's securities is not consummated, the
deferred offering costs will be expensed.
Revenue Recognition
Substantially all revenues are derived from the performance of video and
commercial film production and post production work. Revenue is recognized at
the time services are rendered.
Advertising
Advertising costs are charged to operations when incurred. Advertising
expense for the years ended September 30, 1997 and 1998 approximated $3,100 and
$1,000, respectively, and for the six months ended March 31, 1998 and 1999
approximated $500 and $1,000, respectively.
F-8
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE SIX MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Stock-Based Compensation
As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Company accounts for its stock-based compensation arrangements pursuant to
APB Opinion No. 25, "Accounting for Stock Issued to Employees." In accordance
with the provisions of SFAS No. 123, the Company discloses the pro forma effects
of accounting for these arrangements using the minimum value method to determine
fair value.
Earnings Per Share
Basic earnings per share ("Basic EPS") is computed by dividing net income
available to common stockholders by the weighted average number of common shares
outstanding during the period. Diluted earnings per share ("Diluted EPS") gives
effect to all dilutive potential common shares outstanding during a period. In
computing Diluted EPS, the treasury stock method is used in determining the
number of shares assumed to be purchased from the conversion of common stock
equivalents.
Impairment of Long-Lived Assets
The Company evaluates the recoverability of long-lived assets by measuring
the carrying amount of the assets against the estimated undiscounted future cash
flows associated with them. At the time such evaluations indicate that the
future undiscounted cash flows of certain long-lived assets are not sufficient
to recover the carrying value of such assets, the assets are adjusted to their
fair values. Based on these evaluations, there were no adjustments to the
carrying value of long-lived assets.
Impact of Recently Issued Accounting Standards
Effective October 1, 1997, the Company adopted the provisions of SFAS
No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards
for reporting comprehensive income, defined as all changes in equity from
non-owner sources. Adoption of SFAS No. 130 did not have a material effect on
the Company's financial position or net income.
Effective October 1, 1997, the Company adopted the provisions of SFAS
No. 131, "Disclosures About Segments of an Enterprise and Related Information."
SFAS No. 131 establishes standards for the way public enterprises report
information about operating segments in annual financial statements and requires
those enterprises to report selected information about operating segments in
interim financial reports issued to stockholders. Adoption of SFAS No. 131 did
not have a material effect on the Company's financial position or net income.
Effective October 1, 1997, the Company adopted American Institute of
Certified Public Accountants Statement of Position 97-2, "Software Revenue
Recognition" ("SOP 97-2"). SOP 97-2 generally requires revenue earned on
software arrangements involving multiple elements, such as software products,
upgrades, enhancements, post-contract customer support, installation and
training to be allocated to each element based on the relative fair values of
the elements. The adoption of SOP 97-2 did not have an effect on the Company's
financial position or net income.
Effective December 29, 1997, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 132, "Employers' Disclosures About Pensions and
Postretirement Benefits," which standardizes the disclosure requirements for
pensions and other postretirement benefits. The Statement addresses disclosure
only. It does not address liability measurement or expense recognition. There
was no effect on financial position or net income as a result of adopting SFAS
No. 132.
F-9
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE SIX MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
In March 1998, the American Institute of Certified Public Accountants
issued SOP 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use," which revises the accounting for software
development costs and will require the capitalization of certain costs. The
adoption of SOP 98-1 did not have an effect on the Company's financial position
or net income.
Reclassifications
Certain prior year balances have been reclassified to conform with the
current year presentation.
NOTE 2. PROPERTY AND EQUIPMENT--NET
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
AT AT
SEPTEMBER 30, MARCH 31,
1998 1999
------------- ------------
<S> <C> <C>
Property held under capital leases...................................... $ 6,468,682 $ 6,901,700
Machinery and equipment................................................. 2,588,067 2,528,973
Leasehold improvements.................................................. 1,390,584 1,390,934
Office equipment........................................................ 198,857 220,480
Furniture and fixtures.................................................. 108,771 109,053
------------- ------------
10,754,961 11,151,140
Less: Accumulated depreciation.......................................... (5,872,947) (6,678,956)
------------- ------------
Property and Equipment--Net........................................... $ 4,882,014 $ 4,472,184
------------- ------------
------------- ------------
</TABLE>
The property under capital leases had a net book value of $3,438,872 and
$3,206,236 at September 30, 1998 and March 31, 1999, respectively.
Depreciation and amortization of property and equipment for the years ended
September 30, 1997 and 1998 amounted to $1,347,353 and $1,693,114, respectively,
and $848,035 and $854,289 for the six months ended March 31, 1998 and 1999,
respectively.
NOTE 3. OTHER ASSETS
In connection with an operating lease for its office space, the Company has
$58,936 in a non-interest bearing account with the landlord as security.
In connection with the purchase of equipment under a capital lease, the
Company placed $100,000 on deposit with the lender. The agreement provides that
the lender shall accrue interest at the rate of 3.5% per annum. Included in
other assets is $106,543 related to this deposit at September 30, 1998 and
March 31, 1999.
NOTE 4. REVOLVING LOAN--BANK
On June 4, 1997, the Company amended its revolving credit facility
providing for a revolving line of credit of up to $250,000 and a term loan of
$250,000 as described below in Note 5. The revolving loan bears interest at 1%
above prime (9.25% at September 30, 1998 and 8.75% at March 31, 1999), and is
collateralized by substantially all of the assets of the Company. As of
September 30, 1998 and March 31, 1999, there was $27,000 of available credit
remaining under this credit facility.
F-10
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE SIX MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 4. REVOLVING LOAN--BANK--(CONTINUED)
The credit agreement provides for, among other things, the maintenance of
minimum tangible net worth, restrictions and limitations on additional
indebtedness and the maintenance of defined current and leverage ratios.
The agreement provides for a personal guarantee by the two principal
shareholders of the Company and additional security guarantee through the
assignment of a $500,000 keyman life insurance policy on each of the two
principal shareholders.
NOTE 5. LONG-TERM DEBT
On March 28, 1994, the Company entered into two term loan agreements, one
for $300,000, which funded costs in connection with the construction of a studio
and other facility improvements and one for $300,000, which funded the purchase
of equipment.
The construction and equipment term loan agreements both provide for equal
monthly principal payments of $5,000 each, commencing September 1, 1994, and a
final payment of the unpaid principal due on September 1, 1999, plus interest at
1.5% above the prime rate (9.75% at September 30, 1998 and 9.25% at March 31,
1999), payable monthly. Substantially all of the assets of the Company are
pledged to collateralize the indebtedness.
As part of the amendments to the revolving credit agreement, discussed in
Note 4, on June 4, 1997, $250,000 of indebtedness outstanding under the
Company's revolving line of credit was converted to a term loan. The term loan
agreement provides for 36 equal monthly payments of principal and interest of
$8,037.48. The loan bears interest at 9.75% per annum. Substantially all of the
assets of the Company are pledged to collateralize the indebtedness.
Each of these obligations have been personally guaranteed by the two
principal shareholders of the Company.
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
AT AT
SEPTEMBER 30, MARCH 31,
1998 1999
------------- ----------
<S> <C> <C>
$300,000 term loan--bank, principal payments of $5,000 payable monthly, plus interest
at 1.5% above prime................................................................ $ 55,000 $ 25,000
$300,000 term loan--bank, principal payments of $5,000 payable monthly, plus interest
at 1.5% above prime................................................................ 55,000 25,000
$250,000 term loan--bank, with interest at 9.75% requiring monthly payments of
principal and interest of $8,037.48 for 36 months.................................. 155,455 114,472
Obligations under capital leases collateralized the by related equipment (see
Note 9)............................................................................ 3,463,068 3,145,758
----------- ----------
Total.............................................................................. 3,728,523 3,310,230
Less: Current maturities............................................................. 1,506,643 1,636,911
----------- ----------
Long-Term Debt..................................................................... $ 2,221,880 $1,673,319
----------- ----------
</TABLE>
F-11
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE SIX MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 5. LONG-TERM DEBT--(CONTINUED)
Aggregate maturities required on long-term debt are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
- -----------------------------------------------------------
<S> <C>
1999....................................................... $ 1,506,643
2000....................................................... 1,175,581
2001....................................................... 716,233
2002....................................................... 330,066
2003....................................................... --
-----------
$ 3,728,523
-----------
-----------
</TABLE>
NOTE 6. INCOME TAXES
Components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEARS ENDED ENDED
SEPTEMBER 30, MARCH 31,
------------------- -------------------
1997 1998 1998 1999
------ -------- ------- -------
<S> <C> <C> <C> <C>
Current:
Federal.............................................. $ -- $ -- $23,000 $19,000
State and local...................................... 5,122 13,996 17,329 15,000
------ -------- ------- -------
5,122 13,996 40,329 34,000
------ -------- ------- -------
Deferred:
Federal.............................................. 2,876 82,000 16,000 --
State and local...................................... -- 46,004 8,000 --
------ -------- ------- -------
2,876 128,004 24,000 --
------ -------- ------- -------
Totals............................................ $7,998 $142,000 $70,329 $34,000
------ -------- ------- -------
------ -------- ------- -------
</TABLE>
The effects of the significant temporary differences that comprise the
deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
AT AT
SEPTEMBER 30, MARCH 31,
1998 1999
------------- ------------
<S> <C> <C>
Assets:
Accounts receivable................................................... $ 15,602 $ 15,602
Liabilities:
Property and equipment................................................ 427,485 427,485
------------- ------------
Net deferred tax liabilities..................................... $ 411,883 $ 411,883
------------- ------------
------------- ------------
</TABLE>
F-12
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE SIX MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 6. INCOME TAXES--(CONTINUED)
A reconciliation of the federal statutory income tax rate to the Company's
effective tax rate as reported is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS
ENDED
SEPTEMBER 30,
------------------
1997 1998
---- ----
<S> <C> <C>
Taxes at federal statutory rate.................................................... 34% 34%
State and local income taxes--net of federal tax benefit........................... 19 13
Effect of graduated federal tax rates.............................................. (19) --
---- --
Effective income tax rate.......................................................... 34% 47%
---- --
---- --
</TABLE>
NOTE 7. EMPLOYEE BENEFIT PLANS
The Company has a profit sharing plan, which covers substantially all full
time employees who meet certain service requirements and are not covered by the
union pension plan as disclosed below. During the years ended September 30, 1997
and 1998, and the six-month periods ended March 31, 1998 and 1999, the Company
did not make any contributions to this plan.
The Company has several employees covered by a union sponsored,
multi-employer pension plan. The Company contributed and charged to expense
$8,048 and $14,037 for the years ended September 30, 1997 and 1998,
respectively, and $6,553 and $7,620 for the six months ended March 31, 1998 and
1999, respectively. The contributions are determined in accordance with
provisions of the plan and are generally based on the number of hours worked.
The Company adopted a non-contributory 401K plan effective January 1, 1998.
The plan covers all non-union employees who are at least 21 years of age with no
minimum service requirements. There were no contributions to the plan for the
year ended September 30, 1998 and the six months ended March 31, 1999.
NOTE 8. SHAREHOLDERS' LOANS PAYABLE
In August 1995, pursuant to one promissory note agreement, the two
principal shareholders of the Company loaned the Company $103,772. The
promissory note provides for 60 monthly payments of $2,093.39, inclusive of
interest at 7% per annum, commencing December 1995 and is unsecured. Interest
paid on such debt during the years ended September 30, 1997 and 1998 amounted to
$5,725 and $4,019, respectively. During the six months ended March 31, 1998 and
1999, the interest expense related to this debt amounted to $2,343 and $1,604,
respectively.
F-13
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE SIX MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 9. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
Leases
The Company leases various production and post-production equipment under
capital leases expiring at various dates through 2002. Interest rates on these
leases vary from approximately 8% to 14% and are imputed based on the Company's
incremental borrowing rate at inception of the lease or the lessor's implicit
rate of return. Substantially all of the capital lease obligations have been
personally guaranteed by the two principal shareholders of the Company.
The Company leases space utilized as a production facility and office space
in New York City under an operating lease expiring in December 2005. The lease
provides for monthly rental payments of $25,000 through September 1, 1997,
$27,083 through September 1, 2000 and $29,333.33 thereafter through expiration.
The lease contains escalation clauses relating to increases in real property
taxes as well as certain maintenance costs and has been personally guaranteed by
the two principal shareholders of the Company.
In addition, the Company leases a studio for the production of commercial
video tapes and films and storage facility for film production equipment under
an operating lease expiring in May 2000, with monthly rental payments of $2,800.
The lease provides that payment of all real estate taxes imposed and utility
costs shall be borne by the Company.
The Company also leases a storage facility in New Jersey on a
month-to-month basis at a rate of $995 per month.
Future minimum lease payments are as follows:
<TABLE>
<CAPTION>
YEARS ENDED OPERATING OBLIGATIONS UNDER
SEPTEMBER 30, LEASES CAPITAL LEASES
- ------------------------------------------------------------- ---------- -----------------
<S> <C> <C>
1999......................................................... $ 358,600 $ 1,611,497
2000......................................................... 349,650 1,278,636
2001......................................................... 352,000 794,026
2002......................................................... 352,000 342,651
2003......................................................... 352,000 --
Thereafter................................................... 440,000 --
---------- -----------
Total minimum obligations.................................... $2,204,250 4,026,810
----------
----------
Less: Amount representing interest expense................... 563,742
-----------
Present value of minimum lease payments...................... 3,463,068
Less: Current portion........................................ 1,310,672
-----------
Long-Term Portion............................................ $ 2,152,396
-----------
-----------
</TABLE>
Rent expense relating to the operating leases included in general and
administrative expenses amounted to $361,689 and $368,274 for the years ended
September 30, 1997 and 1998, respectively, and $191,735 and $190,397 for the six
months ended March 31, 1998 and 1999, respectively.
F-14
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE SIX MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 9. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS--(CONTINUED)
Concentrations of Credit Risk
Financial instruments, which potentially subject the Company to
concentrations of credit risk, are primarily cash and cash equivalents and trade
accounts receivable.
With respect to trade receivables, ongoing credit evaluations of customers'
financial condition are performed and generally, no collateral is required. The
Company maintains a reserve for potential credit losses and such losses, in the
aggregate, have not exceeded management's expectations.
At September 30, 1998, one customer accounted for approximately 11% of the
accounts receivable balance. For the year ended September 30, 1998, the same one
customer accounted for approximately 13% of net revenues. For the year ended
September 30, 1997, the same one customer accounted for 11% of net revenues.
At March 31, 1999, the one customer referred to above accounted for
approximately 12% of the accounts receivable balance. For the six months ended
March 31, 1998, the same one customer accounted for approximately 14% of net
revenues. For the six months ended March 31, 1999, the same one customer
accounted for approximately 11% of net revenues.
NOTE 10. SUBSEQUENT EVENTS
Joint Venture
In November 1998, the Company and an unrelated corporation organized
Flicker FX at SMA, LLC and entered into a joint venture agreement to provide the
production of television, film and multimedia graphics products. The agreement
provides for, among other things: (i) that until the joint venture achieves
sufficient revenues to fund its operations, the Company shall contribute
start-up capital funds and guaranteed annual salaries and benefits aggregating
$550,000, of which $50,000 is to each of the Company's two principal
shareholders; (ii) use of the Company's equipment and facilities; and
(iii) that the operating profits, as defined, shall be allocated 60% to the
Company. The agreement also provides that the Company may terminate the
agreement in the event that the joint venture does not achieve certain defined
financial goals as of the first anniversary date of the agreement.
The results of operations of the joint venture for the period from
inception (November 9, 1998) through March 31, 1999 have been combined in the
accompanying unaudited financial statements in accordance with the Accounting
Principles Board Release No. 51.
Proposed Public Offering
In March 1999, the Company signed a letter of intent with an underwriter
("the Underwriter"), with respect to a proposed public offering of the Company's
securities. There is no assurance that such offering will be consummated. In
connection therewith, the Company anticipates incurring substantial costs, which
if the offering is not consummated, will be charged to expense.
The Company has agreed to issue to the Underwriter on the closing date of
the initial public offering warrants to purchase 200,000 shares of S.M.A. Real
Time Inc.'s common stock at 120% of the initial public offering price. The
warrants shall be exercisable for a four-year period commencing one year after
the effective date of the initial public offering.
F-15
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE SIX MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 10. SUBSEQUENT EVENTS--(CONTINUED)
Reorganization
In April of 1999, the shareholders of S.M.A. Real Time Inc. authorized an
amendment to its Certificate of Incorporation to increase the authorized number
of common shares from 1,000,000 to 50,000,000, to amend the par value of the
common stock from no par to a par value of $.0001, and to effect a 50-for-1
stock split applicable to all issued and outstanding shares of S.M.A. Real Time
Inc.'s common stock, increasing the issued and outstanding shares of common
stock to 1,250,000.
In addition, in April of 1999, the shareholders of each of the Companies
included in this combined group authorized (i) the merger of SMA Visual Effects
Corp. and Fly Films, Inc. with SMA Video, Inc. and (ii) the exchange of all of
their common shares of SMA Video, Inc. for 1,250,000 post split common shares of
S.M.A. Real Time Inc. These transactions were effected in April of 1999 and, as
a result, the issued and outstanding shares of S.M.A. Real Time Inc. common
stock increased to 2,500,000 as of April 30, 1999 and SMA Video, Inc. became a
wholly-owned subsidiary of S.M.A. Real Time Inc.
On May 10, 1999, the stockholders of S.M.A. Real Time Inc. authorized a
1.396-to-1 stock split of its common shares, which increased the outstanding
common shares of S.M.A. Real Time Inc. to 3,490,000 as of such date. All common
shares and related per-share data, reflected in the accompanying financial
statements and notes thereto, have been adjusted to give retroactive effect to
the above reorganization transactions.
Private Placement
In May 1999, the Company completed a Private Placement, pursuant to which
the Company sold 7 units for aggregate gross proceeds to the Company of
$700,000. Each unit consists of (i) a $100,000 promissory note bearing interest
at 10% per annum, payable the earlier of nine months from the issuance date, or
the closing of an initial public offering of the Company's securities and
(ii) 30,000 shares of the Company's common stock. The 210,000 shares of common
stock issued in connection with this financing were valued at $210,000 and will
be amortized as interest expense over the initial term of the notes. Costs
incurred in connection with the Private Placement include a $70,000 fee to the
placement agent, approximately $10,000 in legal fees and warrants to the
placement agent to purchase 21,000 shares of the Company's common stock at an
exercise price equal to 120% of the initial public offering price.
Stock Options
During May of 1999, the Board of Directors and the stockholders of the
Company approved the 1999 Stock Option Plan (the "Plan"), which provides for the
granting of up to 500,000 shares of common stock, pursuant to which officers,
employees, directors and consultants are eligible to receive incentive and/or
nonstatutory stock options. Options granted under the Plan are exercisable for a
period of up to 10 years from date of grant at an exercise price which is not
less than the fair value on date of grant, except that the exercise period of
options granted to a stockholder owning more than 10% of the outstanding capital
stock may not exceed five years and their exercise price may not be less than
110% of the fair value of the common stock at date of grant. The Plan provides
for the options to include vesting provisions. No options under this Plan have
been granted.
F-16
<PAGE>
S.M.A. REAL TIME INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE SIX MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 10. SUBSEQUENT EVENTS--(CONTINUED)
Employment Agreements
In May of 1999, the Company entered into five-year employment agreements
with its two principal shareholders, which commence upon the closing of an
initial public offering of the Company's securities. Each employment agreement
provides for, among other things, a base salary of $250,000 per year and annual
increases for costs of living.
In addition, in May of 1999, the Company entered into employment contracts
with two of its key technicians, one for a five-year term providing for a base
salary of $175,000 per year and a second contract for a three-year term
providing for a base salary of $230,000 per year.
Consulting Agreement
In May of 1999, the Company entered into a six-month consulting agreement
with an unrelated individual to assist the Company in its sales and marketing
efforts in the area of digital audio. The agreement commences on June 1, 1999
and provides for minimum payments of $140,000 through November 30, 1999 and
commissions based on new clients and new business generated during the term of
the agreement and for the five-year period thereafter.
Preferred Stock
In May of 1999, the Company authorized the issuance of up to 10,000,000
shares of preferred stock--par value $.0001 per share. The Board of Directors
has the authority to issue the preferred stock in one or more series and to
determine the powers, preferences and rights and the qualifications, limitations
or restrictions granted to or imposed upon any wholly unissued series of
undesignated preferred stock and to fix the number of shares constituting any
series and the designation of such series, without any further vote or action by
the stockholders.
F-17
<PAGE>
A two-page fold-out containing thirty examples of SMA's graphic design services,
computer animation and virtual set production.
<PAGE>
The inside back cover contains a photograph of the reception area of SMA's
executive offices and a photograph of one of SMA's editing suites at their
Manhattan facility.
<PAGE>
================================================================================
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT
RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS AN
OFFER TO SELL ONLY THE SHARES OFFERED HEREBY, BUT ONLY UNDER CIRCUMSTANCES AND
IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary............................. 4
Cautionary Note Regarding Forward-Looking
Statements................................... 5
Risk Factors................................... 7
Use of Proceeds................................ 12
Dividend Policy................................ 12
Capitalization................................. 13
Dilution....................................... 14
Selected Financial Information................. 15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 16
Business....................................... 21
Management..................................... 29
Certain Transactions........................... 34
Principal Stockholders......................... 36
Description of Securities...................... 37
Shares Eligible for Future Sale................ 38
Underwriting................................... 40
Legal Matters.................................. 41
Experts........................................ 42
How to Get More Information.................... 42
Financial Statements........................... F-1
</TABLE>
------------------------
UNTIL , 1999, 25 DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL
DEALERS THAT BUY, SELL OR TRADE THESE SECURITIES, WHETHER OR NOT PARTICIPATING
IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
================================================================================
================================================================================
2,000,000 SHARES
COMMON STOCK
------------------------
PROSPECTUS
------------------------
DIRKS & COMPANY, INC.
, 1999
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Limitations on Liability of Directors. Under New York law, a corporation
may adopt a charter provision eliminating or limiting the personal liability of
its directors to the corporation or its stockholders for breach of fiduciary
duties except:
o liability if a judgment or other final adjudication adverse to a director
establishes that his or her acts or omissions were in bad faith or
involved intentional misconduct or a knowing violation of law; or
o liability when the director personally gained a financial profit or other
advantage to which he or she was not legally entitled; or
o liability for any act or omission prior to the adoption by us of the
above indemnity provision; or
o liability when the director's acts violated New York Business Corporation
Law Section 719.
We have adopted a charter provision eliminating the personal liability of
our directors to the fullest extent permitted under New York law except under
the four provisions noted above.
Indemnification for Directors and Officers. Under New York law, a
corporation may indemnify its present and former directors and officers for a
variety of court or administrative proceedings. We have adopted a provision
which requires us to indemnify and hold harmless any person involved in any
action, suit or proceeding because that person is or was a director or officer
of ours. This provision does not, however, require us to indemnify an officer or
director in a proceeding they initiate without the authorization of our
directors.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of ours
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission indemnification for
liabilities is against public policy as expressed in the Securities Act and is,
therefore, unenforceable.
We have entered into indemnification agreements with our officers and
directors containing provisions which may require us, among other things, to
indemnify our officers and directors against certain liabilities that may arise
by reason of their status or service as officers or directors, other than
liabilities arising from willful misconduct of a culpable nature, and to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified.
Insurance for Directors and Officers. Under New York law, a corporation may
obtain insurance on behalf of its directors and officers against liabilities
incurred by them in those capacities. We have adopted a provision which permits
us to maintain insurance to protect us and our directors and officers against
expenses, liabilities and losses whether or not we would have the power to
indemnify these persons under New York law. We intend to have in place at or
promptly after the closing of this offering a directors' and officers' liability
and company reimbursement liability insurance policy.
II-1
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses (other than selling
commissions and other fees paid to the underwriters) payable by the Registrant
in connection with the issuance and distribution of the securities being
registered. Except for the SEC and NASD filing fees, all expenses have been
estimated.
<TABLE>
<S> <C>
SEC Registration Fee.............................................................. $ 7,061
American Stock Exchange Listing Fee............................................... $ 35,000
NASD Filing Fee................................................................... $ 5,000
Accounting Fees and Expenses...................................................... $100,000
Printing and Engraving............................................................ $100,000
Legal Fees and Expenses........................................................... $200,000
Blue Sky Fees and Expenses........................................................ $ 30,000
Transfer Agent and Registrar Fees................................................. $ 10,000
Miscellaneous Expenses............................................................ $ 72,939
--------
Total................................................................... $560,000
--------
--------
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, the Registrant has issued unregistered
securities in the transactions described below:
In May 1999, the Company completed a private placement in reliance upon the
exemption provided by Rule 506 of Regulation D of the Securities Act, pursuant
to which the Company sold 7 units for gross proceeds to the Company of $700,000.
Each unit consists of
(i) a $100,000 promissory note bearing interest at 10% per annum,
payable the earlier of nine months from the issuance date, or the closing
of an initial public offering of the Company's securities and
(ii) 30,000 shares of the Company's common stock.
The Company also issued 21,000 warrants to Dirks & Company as placement
agent, as compensation in connection with the Company's private placement in May
1999. Each warrant is exercisable into one share of common stock at an exercise
price equal to 120% of the initial public offering price. These placement agent
warrants are for a period of five years from the closing date of this offering,
and may be exercised after the closing date of this public offering. These
warrants have demand and piggyback registration rights. These warrants also have
exercise provisions under which the holder may, in lieu of payment of the
exercise price in cash, surrender the warrant and receive a net amount of
shares, based on the fair market value of our common stock at the time of the
exercise of the warrant, after deducting the aggregate exercise price. These
securities were issued pursuant to the exemption provided by Rule 506 of
Regulation D of the Securities Act.
ITEM 27. EXHIBITS
The following exhibits are filed as part of this Registration Statement
with the Securities and Exchange Commission pursuant to Item 601 of Regulation
S-B. All exhibits refer to S.M.A. Real Time Inc. unless otherwise indicated.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
*1.1 -- Form of Underwriting Agreement
*1.2 -- Form of Representative's Warrant Agreement
*1.3 -- Form of Representative's Warrant
3.1 -- Certificate of Incorporation, filed with the Department of State of New York on May 26, 1993
3.2 -- Certificate of Amendment to Certificate of Incorporation filed with the Department of State of New
York on November 18, 1998
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
3.3 -- Certificate of Amendment to Certificate of Incorporation filed with the Department of State of New
York on April 16, 1999
3.4 -- Certificate of Amendment to Certificate of Incorporation filed with the Department of State of New
York authorizing preferred stock
3.5 -- By-Laws
*4.1 -- Specimen Common Stock Certificate
*5.1 -- Opinion of Stephen M. Robinson, P.A.
10.1 -- Form of Indemnification Agreement between Registrant and each of its officers and directors
10.2 -- 1999 Stock Incentive Plan
10.3 -- Employment Agreement with Michael Morrissey
10.4 -- Employment Agreement with David Satin
10.5 -- Employment Agreement with Eli Friedman
10.6 -- Employment Agreement with Larry Trosko
10.7 -- Consulting Agreement with Edvardo Bissiccio
10.8 -- Lease dated December 27, 1993, amended June 29, 1995 between The Rector Church-Wardens and Vestrymen
of Trinity Church in the City of New York, and Registrant
10.9 -- Lease dated June 1, 1995 between Dominick Incantalupo and Fly Films, Inc.
+10.10 -- Standard Contractor Agreement dated April 15, 1999 between Children's Television Workshop and SMA
Video, Inc.
+10.11 -- Production Facilities Agreement dated October 15, 1998 between ESPN, Inc. and Registrant
10.12 -- Promissory Note dated August 15, 1995 to David Satin and Michael Morrissey from S.M.A. Real Time Inc.
*10.13 -- Form of Promissory Note aggregating $700,000 issued to purchasers of Units in May 1999
10.14 -- Form of Equipment Lease with Charter Financial, Inc.
10.15 -- Form of Equipment Lease with Terminal Marketing Company
10.16 -- Form of Equipment Lease with Independent Resources, Inc.
10.17 -- Form of Business Ready Credit Agreement with Citibank
10.18 -- Form of Business Loan Agreement with Citibank
10.19 -- Form of Equipment Lease Agreement with LCA Leasing Corp.
*10.20 -- Form of Placement Agent's Warrant Agreement
10.21 -- SMA Video, Inc. Profit Sharing Plan
10.22 -- Chase Manhattan Bank Standardized 401(k) Profit Sharing Plan
*10.23 -- Union-Sponsored Multi-Employer Pension Plan
21.1 -- Subsidiaries of Registrant
*23.1 -- Consent of Stephen M. Robinson, P.A. (Included in Exhibit 5.1)
23.2 -- Consent of Tabb, Conigliaro & McGann, P.C.
*23.3 -- Consent of Darryl J. Kramer (Director Nominee)
*23.4 -- Consent of Richard P. Aschman (Director Nominee)
*23.5 -- Consent of Marc Goodman (Director Nominee)
24 -- Power of Attorney (included on page II-5)
27 -- Financial Data Schedule
</TABLE>
- ------------------
* To be filed by amendment.
+ Confidential treatment has been requested for certain portions of this
agreement.
II-3
<PAGE>
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) of (4), or 497(h)
under the Securities Act as part of this registration statement as of the time
it was declared effective.
For determining any liability under the Securities Act, treat each post
effective amendment that contains a form of prospectus as a new registration
statement for the securities offered in the registration statement, and the
offering of such securities at that time as the initial bona fide offering of
those securities.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has authorized this registration
statement or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York on the 9th
day of July, 1999.
S.M.A. REAL TIME INC.
By: /s/ MICHAEL J. MORRISSEY
----------------------------------
Michael J. Morrissey
President and Chief Executive
Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENT, THAT THE PERSONS WHOSE SIGNATURES APPEAR
BELOW EACH SEVERALLY CONSTITUTES AND APPOINTS MICHAEL J. MORRISSEY AND DAVID
SATIN, AND EACH OF THEM, AS TRUE AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, WITH
FULL POWERS OF SUBSTITUTION AND RESUBSTITUTION, FOR THEM IN THEIR NAME, PLACE
AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS (INCLUDING
PRE-EFFECTIVE AND POST-EFFECTIVE AMENDMENTS) TO THIS REGISTRATION STATEMENT AND
TO SIGN ANY REGISTRATION STATEMENT (AND ANY POST-EFFECTIVE AMENDMENTS THERETO)
RELATING TO THE SAME OFFERING AS THIS REGISTRATION STATEMENT THAT IS TO BE
EFFECTIVE UPON FILING PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT OF 1933,
AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO, AND OTHER DOCUMENTS IN
CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO
SAID ATTORNEYS-IN-FACT AND AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO
DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE
IN AND ABOUT THE PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS THEY MIGHT OR
COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL WHICH SAID
ATTORNEYS-IN-FACT AND AGENTS, OR ANY OF THEM, OR THEIR SUBSTITUTE OR
SUBSTITUTES, MAY LAWFULLY DO, OR CAUSE TO BE DONE BY VIRTUE HEREOF.
IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT OR AMENDMENT THERETO HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES STATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ --------------------------------------------------- -------------
<S> <C> <C>
/s/ MICHAEL J. MORRISSEY President, Chief Executive Officer and Director July 9, 1999
- ------------------------------------------ (Principal Executive Officer)
Michael J. Morrissey
/s/ DAVID SATIN Executive Vice President, Secretary and Treasurer July 9, 1999
- ------------------------------------------
David Satin
/s/ RAFAEL A. ESTEVEZ, JR. Chief Financial Officer (Principal Financial July 9, 1999
- ------------------------------------------ Officer and Principal Accounting Officer)
Rafael A. Estevez, Jr.
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
*1.1 -- Form of Underwriting Agreement
*1.2 -- Form of Representative's Warrant Agreement
*1.3 -- Form of Representative's Warrant
3.1 -- Certificate of Incorporation, filed with the Department of State of New York on May 26, 1993
3.2 -- Certificate of Amendment to Certificate of Incorporation filed with the Department of State of New
York on November 18, 1998
3.3 -- Certificate of Amendment to Certificate of Incorporation filed with the Department of State of New
York on April 16, 1999
3.4 -- Certificate of Amendment to Certificate of Incorporation filed with the Department of State of New
York authorizing preferred stock
3.5 -- By-Laws
*4.1 -- Specimen Common Stock Certificate
*5.1 -- Opinion of Stephen M. Robinson, P.A.
10.1 -- Form of Indemnification Agreement between Registrant and each of its officers and directors
10.2 -- 1999 Stock Incentive Plan
10.3 -- Employment Agreement with Michael Morrissey
10.4 -- Employment Agreement with David Satin
10.5 -- Employment Agreement with Eli Friedman
10.6 -- Employment Agreement with Larry Trosko
10.7 -- Consulting Agreement with Edvardo Bissiccio
10.8 -- Lease dated December 27, 1993, amended June 29, 1995 between The Rector Church-Wardens and Vestrymen
of Trinity Church in the City of New York, and Registrant
10.9 -- Lease dated June 1, 1995 between Dominick Incantalupo and Fly Films, Inc.
+10.10 -- Standard Contractor Agreement dated April 15, 1999 between Children's Television Workshop and SMA
Video, Inc.
+10.11 -- Production Facilities Agreement dated October 15, 1998 between ESPN, Inc. and Registrant
10.12 -- Promissory Note dated August 15, 1995 to David Satin and Michael Morrissey from S.M.A. Real Time Inc.
*10.13 -- Form of Promissory Note aggregating $700,000 issued to purchasers of Units in May 1999
10.14 -- Form of Equipment Lease with Charter Financial, Inc.
10.15 -- Form of Equipment Lease with Terminal Marketing Company
10.16 -- Form of Equipment Lease with Independent Resources, Inc.
10.17 -- Form of Business Ready Credit Agreement with Citibank
10.18 -- Form of Business Loan Agreement with Citibank
10.19 -- Form of Equipment Lease Agreement with LCA Leasing Corp.
*10.20 -- Form of Placement Agent's Warrant Agreement
10.21 -- SMA Video, Inc. Profit Sharing Plan
10.22 -- Chase Manhattan Bank Standardized 401(k) Profit Sharing Plan
*10.23 -- Union-Sponsored Multi-Employer Pension Plan
21.1 -- Subsidiaries of Registrant
*23.1 -- Consent of Stephen M. Robinson, P.A. (Included in Exhibit 5.1)
23.2 -- Consent of Tabb, Conigliaro & McGann, P.C.
*23.3 -- Consent of Darryl J. Kramer (Director Nominee)
*23.4 -- Consent of Richard P. Aschman (Director Nominee)
*23.5 -- Consent of Marc Goodman (Director Nominee)
24 -- Power of Attorney (included on page II-5)
27 -- Financial Data Schedule
</TABLE>
- ------------------
* To be filed by amendment
+ Confidential treatment has been requested for certain portions of this
agreement
<PAGE>
EXHIBIT 3.1
State of New York }
Department of State } ss:
I hereby certify that the annexed copy has been compared with the original
document in the custody of the Secretary of State and that the same is a true
copy of said original.
Witness my hand and seal of the Department of State on JUNE 16 1998
[LOGO]
Special Deputy Secretary of State
DOS-1266 (5/96)
<PAGE>
CERTIFICATE OF INCORPORATION
OF
S.M.A. REAL TIME INC.
Under Section 402 of the Business Corporation Law
IT IS HEREBY CERTIFIED THAT:
1. The name of the corporation is:
S.M.A. REAL TIME INC.
2. The purpose or purposes for which the corporation is formed are as
follows; to wit:
To engage in any lawful act or activity for which corporations may be formed
under the Business Corporation Law. The corporation is not formed to engage in
any act or activity requiring the consent or approval of any state official,
department, board, agency or other body without such consent or approval
first being obtained.
To own, operate, manage, acquire and deal in property, real and personal, which
may be necessary to the conduct of the business.
The corporation shall have all of the powers enumerated in Section 202 of the
Business Corporation Law, subject to any limitations provided in the Business
Corporation Law or any other statute in the State of New York.
3. A director of the corporation shall not be held liable to the
corporation or its shareholders for damages for any breach of duty in such
capacity except for
(i) liability if a judgment or other final adjudication adverse to a
director establishes that his or her acts or omissions were in bad faith or
involved intentional misconduct or a knowing violation of law or that the
director personally gained in fact a financial profit or other advantage to
which he or she was not legally entitled or that the director's acts violated
BCL Section 719, or
(ii) liability for any act or omission prior to the adoption of this
provision.
4. The county in which the office of the corporation is to
be located in the State of New York is: New York
5. The aggregate number of shares which the corporation shall have
authority to issue is: 200 shares, no par value.
6. The Secretary of State is designated as agent of the corporation upon
whom process against it may be served. The post office address to which the
Secretary of State shall mail a copy of any process against the corporation
served upon him is:
Charles W. Weiss, Esq.
84 Wooster Street
Suite 303
New York, New York 10012
The undersigned incorporator is of the age of eighteen years or over.
IN WITNESS WHEREOF, this certificate has been subscribed May 26, 1993 by the
undersigned who affirms that the statements made herein are true under the
penalties of perjury.
Deneane M. Rogers
-------------------
Deneane M. Rogers
33 Rensselaer Street
Albany, New York 12202
<PAGE>
CERTIFICATE OF INCORPORATION
OF
S.M.A. REAL TIME INC.
FILED BY: Charles W. Weiss, Esq.
84 Wooster Street
Suite 303
New York, New York 10012
STATE OF NEW YORK
DEPARTMENT OF STATE
FILED: MAY 26, 1993
TAX$: 10
BY: /s/illegible
<PAGE>
EXHIBIT 3.2
N.Y.S. DEPARTMENT OF STATE
DIVISION OF CORPORATIONS AND STATE RECORDS ALBANY, NY 12231-0001
FILING RECEIPT
===============================================================================
ENTITY NAME: S.M.A. REAL TIME INC.
DOCUMENT TYPE: CERTIFICATE OF AMENDMENT (DOM BUSINESS) COUNTY: NEWY
STOCK
SERVICE COMPANY: SERVICO SERVICE CODE: 35
===============================================================================
FILED: 10/19/1998 DURATION:*************
CASH #:981019000243 FILM #:981019000238
ADDRESS FOR PROCESS
- -------------------
REGISTERED AGENT
- ----------------
STOCK: 1000000 PV .0001000 [LOGO]
===============================================================================
FILER FEES 85.00 PAYMENTS 85.00
- ----- ---- ---------
FILING : 60.00 CASH : 0.00
CHARLES W. WEISS TAX : 0.00 CHECK : 0.00
84 WOOSTER AVENUE CERT : 0.00 BILLED : 85.00
COPIES : 0.00
NEW YORK, NY 10012 HANDLING : 25.00
REFUND : 0.00
------
===============================================================================
DOS-1025 (11/89)
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
S.M.A. REAL TIME INC.
Under Section 805 of the Business Corporation Law
IT IS HEREBY CERTIFIED THAT:
(1) The name of the corporation is:
S.M.A. REAL TIME INC.
(2) The certificate of incorporation was filed by the Department of State
on the 26th day of May, 1993.
(3) The certificate of incorporation is hereby amended to effect the
following change(s):
To increase the number of shares that the corporation is authorized to
issue and to change the par value of the shares, as set forth in the fifth
paragraph.
Currently the corporation is authorized to issue 200 shares at no par
value, of which 100 are issued and 100 are unissued. The issued shares are
changed at the rate of 10 new shares for each one issued share. As a result
there shall be 1,000 shares at $.0001 par value issued. The unissued shares are
changed at the rate of 9,000 new shares for each one unissued share. As a
result there shall be 900,000 shares at $.0001 par value unissued. In order to
accomplish the foregoing, paragraph fifth shall be amended to read as follows:
FIFTH: The aggregate number of shares which the corporation shall
have the authority to issue is 1,000,000 at $.0001 par value.
(4) The above amendment to the certificate of incorporation was authorized
by vote of the board of directors followed by a vote of the holders of a
majority of all outstanding shares entitled to vote thereon.
IN WITNESS WHEREOF, this certificate has been subscribed by the
undersigned who affirm(s) that the statements made herein are true under the
penalties of perjury.
DATED: October 16, 1998
----------------
s/Michael Morrisey s/David Satin
- ------------------ --------------------
Michael Morrisey, President David Satin, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
S.M.A. REAL TIME INC.
Under Section 805 of the Business Corporation Law
FILER:
CHARLES W. WEISS
84 WOOSTER AVENUE
NEW YORK, NY 10012
<PAGE>
N. Y. S. DEPARTMENT OF STATE
DIVISION OF CORPORATIONS AND STATE RECORDS ALBANY, NY 12231-0001
FILING REPORT
================================================================================
ENTITY NAME: S.M.A. REAL TIME INC.
DOCUMENT TYPE: CERTIFICATE OF AMENDMENT (DOM. BUSINESS COUNTY: NEWY
STOCK
SERVICE COMPANY: DELANEY CORPORATE SERVICES LTD. SERVICE CODE: 30
================================================================================
FILED: 04/15/1999 DURATION: ********* CASH#: 990415000646 FILM #: 990415000620
ADDRESS FOR PROCESS
- -------------------
REGISTERED AGENT
- ----------------
STOCK: 50000000 PV .0001000 [LOGO]
================================================================================
FILER FEES 105.00 PAYMENTS 105.00
- ----- ---- ------
FILING 60.00 CASH 0.00
CHARLES W. WEISS TAX 10.00 CHECK 0.00
84 WOOSTER STREET CERT 0.00 CHARGE 0.00
SUITE 203 COPIES 10.00 DRAWDOWN 0.00
NEW YORK, NY 10012 HANDLING 25.00 BILLED 105.00
REFUND 0.00
---------
================================================================================
DOS-1025 (11/89)
<PAGE>
State of New York
ss:
Department of State
I hereby certify that the annexed copy has been compared with the original
document in the custody of the Secretary of State and that the same is a true
copy of said original.
Witness my hand and seal of the Department of State on
[LOGO]
Special Deputy Secretary of State
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
S.M.A REAL TIME INC
Under Section 805 of the Business Corporation Law
IT IS HEREBY CERTIFIED THAT:
(1) The name of the corporation is:
S.M.A. REAL TIME INC.
(2) The certificate of incorporation was filed by the Department of State
on the 26th day of May, 1993 and was amended by Certificate of Amendment filed
by the Department of the State on the 19th day of October, 1998.
(3) The certificate of incorporation is hereby amended to effect the
following change(s):
To increase the number of shares that the corporation is authorized to
issue as set forth in the fifth paragraph.
Currently the corporation is authorized to issue 1,000,000 shares at a par
value of $.0001 of which 25,000 are issued and 975,000 are unissued. The issued
shares are changed at the rate of 50 new shares for each one issued share. As a
result there shall be 1,250,000 shares at $.0001 par value issued. The unissued
shares are changed at the rate of 50 new shares for each one unissued share. As
a result there shall be 48,750,000 shares at $.0001 par value unissued. In
order to accomplish the foregoing, paragraph fifth shall be amended to read as
follows:
FIFTH: The aggregate number of shares which the corporation shall have
the authority to issue is 50,000,000 at $.0001 par value.
(4) The above amendment to the certificate or incorporation was authorized
by vote of the board of directors followed by a vote of the holders of a
majority of all outstanding shares entitled to vote thereon.
IN WITNESS WHEREOF, this certificate has been subscribed by the undersigned who
affirm(s) that the statements made herein are true under penalties of perjury.
DATED: April 13, 1999
s/ Michael Morrissey /s David Satin
- -------------------- ------------------
Michael Morrisey, President David Satin, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
S.M.A REAL TIME INC
Under Section 805 of the Business Corporation Law
FILER:
CHARLES W. WEISS
84 WOOSTER STREET-SUITE 203
NEW YORK, NEW YORK 10012
STATE OF NEW YORK
DEPARTMENT OF STATE
FILED APR 15, 1999
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
S.M.A. REAL TIME INC.
Under Section 805 of the Business Corporation Law
IT IS HEREBY CERTIFIED THAT:
(1) The name of the corporation is:
S.M.A. REAL TIME INC.
(2) The certificate of incorporation was filed by the Department of State
on the 26th day of May, 1993 and was amended by Certificate of Amendment filed
by the Department of the State on the 19th day of October, 1998 and by a second
Certificate of Amendment filed by the Department of State on the 15th day of
April, 1999.
(3) The certificate of incorporation is hereby amended to effect the
following change(s):
To authorize the corporation to issue 10,000,000 shares of Preferred Stock.
Currently the corporation is authorized to issue 50,000,000 shares of
Common Stock. In addition, the corporation wishes authorization to issue
10,000,000 shares of Preferred Stock at a par value of $.0001 per share. None
of the Preferred Stock will be issued at this time. In order to accomplish the
foregoing, paragraph fifth shall be amended to read as follows:
FIFTH: The aggregate number of shares which the corporation shall have the
authority to issue is 60,000,000, consisting of 50,000,000 shares of Common
Stock at $.0001 par value ("Common Stock") and 10,000,000 shares of Preferred
Stock at $.0001 par value ("Preferred Stock"). The Preferred Stock may be
issued from time to time in one or more series. The Board of Directors of the
Corporation (the "Board") is hereby authorized to provide for the issuance of
shares of Preferred Stock in one or more series and to establish from time to
time the number of shares to be included in each such series, and to fix the
designation, powers, preferences and the relative, participating, optional or
other rights of the shares of each such series and the qualifications,
limitations and restrictions thereof. The authority of the Board with respect to
each series shall include, but not be limited to, determination of the
following:
A. the designation of the series, which may be by distinguishing number,
letter or title;
B. the number of shares of the series, which number the Board may
thereafter (except where otherwise provided in the Preferred Stock Designation)
increase (but not above the total number of
<PAGE>
authorized shares of the class) or decrease (but not below the number of shares
thereof then outstanding);
C. whether dividends, if any, shall be cumulative or noncumulative and the
rights with respect to dividends of the series;
D. the redemption rights and price or prices, if any, for shares of the
series;
E. the terms and amount of any sinking fund provided for the purchase or
redemption of shares of the series;
F. the amounts payable on, and the preferences, if any, of shares of the
series in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation;
G. whether the shares of the series shall be convertible into shares of any
other class or series, or any other security of the Corporation or any other
corporation, and, if so, the specification of such other class or series of
such other security, the conversion price or prices or rate or rates, any
adjustments thereof, the date or dates at which such shares shall be
convertible and all other terms and conditions upon which such conversion may be
made;
H. restrictions on the issuance of shares of the same series or of any
other class or series; and
I. the voting rights, if any, of the holders of shares of the series.
The Common Stock shall be subject to the express terms of the Preferred
Stock and any series thereof.
(4) The above amendment to the certificate of incorporation was authorized
by vote of the board of directors followed by a vote of the holders of a
majority of all outstanding shares entitled to vote thereon.
IN WITNESS WHEREOF, this certificate has been subscribed by the undersigned
who affirm(s) that the statements made herein are true under the penalties of
perjury.
DATED: June 8, 1999
s/Michael Morrissey s/David Satin
- ------------------- -------------
Michael Morrissey, President David Satin, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
S.M.A. REAL TIME INC.
Under Section 805 of the Business Corporation Law
FILER:
CHARLES W. WEISS
84 WOOSTER STREET-SUITE 203
NEW YORK, NEW YORK 10012
<PAGE>
BY-LAWS
OF
S.M.A. REAL TIME, INC.
ARTICLE I. OFFICES
Office
1.01 The Corporation shall continuously maintain a office in the State
of New York. The Corporation's office is presently located at 100 Avenue of the
Americas, New York, New York. When the office is changed, the Board shall
determine the address of a new office and shall cause the proper officers of the
Corporation to file the required certificates with the secretary of state of New
York.
Principal Place of Business
1.02 The Board of Directors has full power and authority to establish and
to change the principal place of business at any time to another location within
or outside of the State of New York.
Other Places of Business
1.03 Other places of business or offices may at any time be established by
the Board at any place or places within or outside the State of New York.
ARTICLE II. SHAREHOLDERS AND SHAREHOLDERS' MEETINGS
Annual Meeting
2.01 The annual meeting of shareholders of the Corporation shall be held at
the time and place, either within or outside of the State of New York, fixed by
the Board of Directors. The Secretary of the Corporation shall cause written
notice of the time, place and purposes, including the election of directors, of
the meeting to be transmitted to shareholders within the time periods prescribed
by law.
Special Meetings
2.02 A special meeting of shareholders of the Corporation may be called for
any purpose and at any time by the President or pursuant to a resolution adopted
by the Board of Directors. Special meetings may also be called by the Secretary
or, in the case of the death, absence, incapacity or refusal of the Secretary,
by any other officer on the written request of shareholders who hold, in the
aggregate, at least [ten] percent of the shares of stock of the Corporation
entitled to vote on the matter to be acted on at the meeting. The shareholders'
written request must set forth the purpose or purposes of the special meeting.
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In all instances in which a special meeting is called, the Secretary shall cause
written notice of the time, place and purposes of the meeting to be transmitted
to shareholders within the time periods prescribed by law.
Consents Instead of Meeting
2.03 (a) Except as otherwise provided in the Business Corporation Law of
New York ("BCL"), any action required or permitted to be taken at a meeting of
shareholders may be taken without a meeting, provided that every shareholder who
is entitled to vote on the action consents in writing to the action.
(b) In spite of subparagraph (a) above, any action to be taken by the
shareholders, other than the annual election of directors, may be taken without
a meeting and without the unanimous written consent of the shareholders,
provided that
1. Before the action, the Corporation obtains the written consent of
shareholders who would have been entitled to cast the minimum number
of votes necessary to authorize the action at a meeting at which all
shareholders entitled to vote on the action were present and voting;
2. If any shareholder has the right to dissent from the action, the Board
shall fix a date on which written consents are tabulated, if no
shareholder may dissent, the fixing of a date for tabulation shall be
optional.
3. No consent shall be counted that is received more than sixty days
after the date on which the Board authorizes the solicitation of
consents or, in a case in which consents (or proxies for consents) are
solicited from all shareholders who would have been entitled to vote
at a meeting called to authorize the proposed action, more than sixty
days after the date of mailing of solicitations of consents (or of
proxies for consents); and
4. To the extent (if any) and in the manner required by the BCL, the
Secretary of the Corporation shall provide advance written notice of
the proposed action and the conditions precedent to that action to all
nonconsenting shareholders who would have been entitled to notice of a
meeting to vote on the action.
(c) All written consents obtained by the Corporation pursuant to this
paragraph 2.03 shall be filed in the minute book of the Corporation promptly
after submission by the shareholders. Written consents may be executed together
or in counterparts.
(d) Any action taken pursuant to this paragraph 2.03 shall have the same
effect, for all purposes, as if taken at a shareholders' meeting.
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Quorum
2.04 Except as otherwise required by the BCL, the presence at a meeting in
person or by proxy of the holders of shares entitled to cast a majority of the
votes of all shares issued and outstanding shall constitute a quorum. The
shareholders present at a meeting at which a quorum is present may continue to
do business until adjournment, despite the withdrawal of enough shareholders to
leave less than a quorum. If an insufficient number of shareholders is present
at a meeting, in person or by proxy, to constitute a quorum, those shareholders
who are present and who are entitled to vote at the meeting shall have the power
to adjourn the meeting until enough shareholders are present to constitute a
quorum.
Adjournment of Meetings
2.05 Any annual or special shareholders' meeting may be adjourned by the
holders of a majority of the voting shares of the Corporation who are present in
person or by proxy at the meeting. If the new time and place for the meeting are
announced at the time of adjournment, and the only business to be transacted
after reconvening could have been transacted at the original meeting, then no
further notice of the new time and place for the meeting need be given to the
shareholders. If, however, after the adjournment, the Board of Directors fixes a
new record date for the meeting, new notice of the meeting shall be given to
each shareholder of record, as determined on a new record date.
Voting
2.06(a) At every meeting of shareholders, each person entitled to vote and
present at the meeting in person or by proxy shall have one vote for each full
voting share of the Corporation that stands in that person's name on the books
of the Corporation. If the Corporation has more than one class of shares
outstanding on the applicable record date, then the foregoing provision shall
apply only to the common shares of the Corporation; the shareholders of all
other classes shall vote their shares in the manner provided in the certificate
of incorporation as amended from time to time.
(b) If the Corporation holds its own shares, the Corporation shall not
vote those shares at any meeting and those shares shall not be counted in
determining the total number of outstanding shares at any given time. If the
Corporation holds a majority of the shares entitled to vote for the election of
directors of another domestic corporation or a foreign corporation, shares of
the Corporation held by the other domestic or foreign corporation may not be
voted at any meeting of shareholders of the Corporation for any purpose.
(c) Except as otherwise provided in BCL with regard to multiple classes or
series of shares, whenever any action, other than the election of directors, is
to be taken by vote of the shareholders, the action shall be authorized by a
majority of the votes cast at a meeting of shareholders by the holders of shares
entitled to vote unless a greater plurality is required by the certificate of
incorporation or by the BCL.
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Record Date
2.07 The Board of Directors shall fix, in advance, the record date for the
determination of shareholders entitled to notice of and to vote at any annual or
special meeting of shareholders. The record date shall not be more than sixty
days or less than ten days before the date of the meeting. If the Board fails to
fix a record date for any shareholders' meeting, the record date shall be the
close of business on the day before the day on which notice of the meeting is
given, or if no notice is given, the next day before the date on which the
meeting is held.
Proxies
2.08 Every shareholder entitled to vote at a meeting of shareholders may
authorize another person or persons to act by written proxy (which may be in the
form of a telegram or cable or its equivalent) given by the shareholder or the
shareholder's agent. No proxy shall be valid for more than eleven months, unless
a longer time is expressly provided in the proxy. Unless it is coupled with an
interest or is otherwise irrevocable as provided in the BCL, a proxy shall be
revocable at will. The grant of a later proxy revokes any earlier proxy unless
the earlier proxy is irrevocable. A proxy shall not be revoked by the death or
incapacity of the shareholder but shall continue in force until revoked by the
personal representative or guardian of the shareholder. The presence at any
shareholders' meeting of any shareholder who has given a proxy shall not revoke
the proxy unless the shareholder files a written notice of revocation with the
Secretary of the meeting before the voting of that proxy or the voting of the
shares subject to the proxy by written ballot. A person named in a proxy as the
attorney or agent of a shareholder may, if the proxy so provides, substitute
another person to act in his or her place, including any other person named as
an attorney or agent in the same proxy. The substitution shall not be effective
until an instrument effecting it is filed with the Secretary of the Corporation.
Voting of Pledged Shares
2.09 Any person who has pledged shares entitled to vote at an annual or
special meeting of shareholders of this Corporation shall have the right to vote
those shares until they have been transferred into the name of the pledgee or
the nominee of the pledgee.
Voting of Redeemable Shares
2.10 If the Corporation issues redeemable shares, the holders of those
shares shall not be entitled to vote on any matter on or after the date on
which (a) written notice of redemption of the shares has been mailed to the
holders of those shares, and (b) a sum sufficient to redeem the shares has been
deposited with a bank or trust company with irrevocable authorization to pay the
redemption price to the shareholders on the surrender of the share certificates.
4
<PAGE>
Officers of Meetings
2.11 The President, if present, shall preside at all meetings of
shareholders. In the absence of the President, the most senior Executive Vice
President (or, in the absence of any Executive Vice Presidents, the most senior
Vice President) present at the meeting, shall preside. The Secretary of the
Corporation shall, if present, act as secretary at all meetings of shareholders.
In the absence of the Secretary, any assistant secretary of the Corporation who
is present may act as secretary of the meeting. If no assistant secretary is
present, a temporary secretary for that particular meeting shall be designated
by the presiding officer.
Order of Business
2.12 The order of business at all meetings of the shareholders, unless
changed by a majority vote of the shares entitled to vote at the meeting, shall
be as follows:
(a) Call to order;
(b) Report on presence of quorum;
(c) Reading or waiver of proof of mailing of notice of meeting and minutes
of preceding meeting;
(d) Designation of inspectors of election, if any;
(e) Election of directors (if applicable);
(f) Old business;
(g) New Business;
(h) Reports of officers; and
(i) Adjournment.
Use of Ballots
2.13 Elections of directors and other matters requiring shareholder
approval need not be by ballot unless a shareholder requests a vote by ballot on
a particular issue before the commencement of voting on that issue.
Inspectors
2.14 (a) Before any annual or special meeting of shareholders, the Board of
Directors may appoint one or more inspectors to act as such at the meeting.
5
<PAGE>
(b) In connection with any annual or special meeting of shareholders, if
inspectors are not appointed by the Board of Directors or if they fail to
qualify, the presiding officer at the meeting may and, on the request of any
shareholder entitled to vote at the meeting, shall appoint one or more
individuals to act as inspectors at the meeting.
(c) If an individual appointed as inspector fails to appear, qualify, or
act as an inspector, the vacancy may be filled by the Board of Directors before
the applicable meeting or at the meeting by the presiding officer at the
meeting.
(d) Before performing their duties, all inspectors shall sign an oath or
affirmation to execute faithfully the duties of inspector with strict
impartiality and according to the best of their abilities.
(e) No person shall be elected a director at a meeting at which he or she
has served as an inspector.
Voting List
2.15 At each shareholders' meeting, the Secretary or any assistant
secretary shall produce a list of shareholders entitled to vote at the meeting.
The list shall be certified to be complete by the Secretary or assistant
secretary or by a transfer agent duly appointed by the Board of Directors. The
list, which may consist of cards or any equipment that permits a visual display,
shall be arranged alphabetically within each class and series, with the address
of, and the number of shares held by, each shareholder of record. The list
constitutes prima facie evidence of the identity of the shareholders entitled to
vote at the meeting and may be inspected by any shareholder during the meeting.
ARTICLE III. BOARD OF DIRECTORS
Responsibilities and Nature of the Board
3.01 (a) Except as otherwise provided in the Corporation's certificate of
incorporation, the business and affairs of the Corporation shall be managed by
the Board of Directors. Directors must be at least eighteen years of age, but
need not be residents of New York, citizens of the United States, or
shareholders of the Corporation unless the Corporation's certificate of
incorporation so requires.
(b) In discharging his or her duties to the Corporation and in determining
what he or she reasonably believes to be in the best interest of the
Corporation, a director may, in addition ton considering the effects of any
action on the shareholders, consider any of the following: (1) the effects of
the action on the Corporation's employees, suppliers, creditors, and customers;
(2) the effects of the action on the community in which the Corporation
operates; and (3) the long-term as well as short-term interests of the
6
<PAGE>
Corporation and its shareholders, including the possibility that these interests
may best be served by the continued independence of the Corporation.
(c) If on the basis of the above factors, the Board of Directors determines
that any proposal or offer to acquire the Corporation is not in the best
interest of the Corporation, it may reject such proposal or offer. If the Board
of Directors determines to reject any such proposal or offer, the Board of
Directors shall have no obligation to facilitate, remove any barriers to, or
refrain from impeding the proposal or offer.
Number of Directors
3.02 The Board of Directors shall consist of not less than two nor more
than ten Directors. The precise number of Directors within this range shall be
fixed by the Board of Directors each year before the annual meeting of
shareholders. The Board of Directors immediately following the adoption of these
by-laws shall consist of two Directors.
Regular Meetings
3.03 Regular meetings of the Board of Directors shall be held, without call
or notice, immediately following the annual meeting of shareholders of the
Corporation, and with notice at any other time that the Board of Directors so
determines.
Special Meetings
3.04 A special meeting of the Board may be called for any purpose at any
time by the President or by two Directors.
Notice of Meetings
3.05 The Secretary shall give notice of the time, date, and place of each
special meeting of the Board and of each regular meeting of the Board other than
the meeting that immediately follows the annual meeting of shareholders. Notice
shall be given at least two days before the meeting if given orally, at least
three days before the meeting if given by cable, telegram, telecopier, or
overnight messenger, and at least five days before the meeting if given by mail
or in any other manner. Any notice given by mail shall be deposited in the
United States deposited with the United States Postal Service, postage prepaid
and addressed to the director's last known residence or business address. The
notice need not specify the business to be transacted at the meeting or its
purpose.
Location of Meetings
3.06 Meetings of the Board of Directors may be held at any place within or
outside the State of New York, provided that the regular meeting of the Board
following the annual meeting of shareholders is held at the same location as the
annual meeting.
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Unanimous Consent Instead of Meeting
3.07 Any action required or permitted to be taken pursuant to authorization
voted at a meeting of the Board may be taken without a meeting on the written
consent of each member of the Board of Directors. Written consents by all of the
members of the Board shall have the same effect as a unanimous vote of the Board
for all purposes.
Quorum
3.08 Except as otherwise provided by the certificate of incorporation, each
Director shall have one vote at meetings of the Board, and the participation of
the Directors with a majority of the votes of the entire Board shall constitute
a quorum for the transaction of business.
Voting
3.09 Except as otherwise provided by law or the certificate of
incorporation of the Corporation, every act or decision by a majority of the
Directors present at a duly held meeting at which a quorum is present shall be
regarded as the act of the Board of Directors.
Use of Communication Equipment
3.10 Where appropriate communication facilities are reasonably available,
any or all of the members of the Board of Directors may participate in part or
in all of a meeting of the Board my means of a conference telephone or by any
other means of communication by which all persons participating in the meeting
are able to hear each other.
Resignation and Removal
3.11 (a) Any Director may resign at any time by written notice to the
Corporation. A resignation shall be effective on receipt by the Corporation or
at any later date specified by the resigning Director in the notice of
resignation.
(b) Any Director may be removed for cause by the Board. The Board shall
also have the power to suspend Directors pending a final determination that
cause exists for removal.
Vacancies
3.12 (a) A vacancy or vacancies in the Board of Directors shall be deemed
to exist (1) in the case of the death, resignation, or removal of any Director;
(2) if the authorized number of Directors shall be increased; or (3) if, at any
meeting at which Directors are to be elected, the shareholders fail to elect the
authorized number of Directors to be elected at the meeting. No reduction of the
authorized number of Directors shall have the effect of removing any Director
prior to the expiration of his or her term of office.
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(b) Vacancies in the Board of Directors existing for any reason, including
vacancies arising as a result of an increase in the number of Directors, may be
filled by the affirmative vote of a majority of the remaining Directors then in
office, even if their number is insufficient to constitute a quorum, or by a
sole remaining director. A Director so elected to fill a vacancy shall hold
office until a successor is elected and qualified at the next annual meeting of
the shareholders.
(c) If a Director resigns from the Board effective at some future date, the
future vacancy may be filled by the affirmative vote of a majority of the
Directors then in office, including the Director who has resigned, even if their
number is insufficient to constitute a quorum. The term of the newly elected
Director will begin when the resignation becomes effective. A Director elected
to fill a future vacancy shall hold office from the effective date of the
predecessor's resignation until a successor is elected and qualified at the next
annual or special meeting of the shareholders.
(d) The shareholders may elect a Director or Directors at any time to fill
any vacancy or vacancies not filled by the Directors.
(e) If, for any reason, the Corporation has no Directors in office, any
shareholder, or the executor or administrator of a deceased shareholder, has the
right to call a special meeting of shareholders for the election of Directors.
Any shareholder electing to exercise this right shall give notice of the meeting
in accordance with paragraph 2.02 of these by-laws.
Common Directorships; Directors' Personal Interest
3.13 (a) It shall not be necessary for a Director to leave a meeting of the
board or abstain from voting merely because the Board may be voting on (1) a
transaction between the Corporation and that Director or (2) a transaction
between the Corporation and one or more entities in which that Director is
interested, whether as a director of that entity or otherwise, and whether alone
or with other Directors, provided that the provisions of the BCL are satisfied.
(b) Common or interested Directors may be counted in determining the
presence of a quorum at a Board meeting at which a transaction described in
subparagraph 3.13(a) above is authorized, approved or ratified.
Presiding Officer
3.14 The President, if a member of the Board of Directors, shall preside at
all meetings of the board at which he or she is present. If the President is not
present, the Board shall select one person from among its members present at the
meeting to preside at the meeting. If the Secretary or any Assistant Secretary
is present at meetings of the Board, that person shall record the minutes; if
neither the Secretary nor assistant secretary is present, the Board shall select
one person from among its members present at the meeting to record the minutes.
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Adjournments
3.15 A majority of the members of the Board present at a meeting of the
Board may adjourn any Directors' meeting to meet again at a time and place fixed
in the resolution adjourning the meeting. Notice need not be given if the period
of adjournment does not exceed ten days, and the time and place of the adjourned
meeting are fixed in the resolution.
Compensation of Directors
3.16 Directors shall be compensated for their services and reimbursed for
their expenses as employees, officers, Directors, and members of Board
committees. The Board shall periodically determine a reasonable basis for
compensation, and a majority of the Board must adopt any resolution determining
compensation. The Board may, if it deems it appropriate, provided for reduced or
no additional compensation for Board members who are compensated employees of
the Corporation.
Dissenting Votes
3.17 Any Director who disagrees with any action taken by the Board of
Directors shall have the right to record a dissent in the minute books of the
Corporation; provided, however, that the legal effect of that action shall be
governed by applicable law.
ARTICLE IV. COMMITTEES
Establishment of Committees
4.01 The Board of Directors may designate an executive committee from among
its members, consisting of two or more Directors, and may at any time designate
additional committees, each of which shall consist of two or more Directors, by
the affirmative vote of a majority of the entire Board. Subject to the
limitations contained in paragraph 4.08 below, the executive committee shall
have the maximum authority permitted by law in effect at the time of the
exercise of that authority. Each additional committee shall have the authority,
not exceeding the authority of the executive committee, specified by the Board
in resolutions adopted by a majority of the entire Board.
Presiding Officer and Secretary
4.02 If the President is a member of any committee, the President shall
serve as the chairperson of the committee. If the President is not a member of a
committee, then the committee may choose one of its members to act as
chairperson, unless the Board designates a chairperson. Each committee shall
from time to time designate a secretary of the committee who shall keep a record
if its proceedings.
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Vacancies
4.03 Vacancies in the membership of any committee may be filled by the
Board, pursuant to a resolution adopted by a majority of the entire Board, for
the unexpired term of the member whose death, resignation, removal or disability
caused the vacancy.
Meetings
4.04 Each committee shall adopt its own rules of procedure. Each committee
shall meet at whatever times it may determine by resolution, and shall also meet
whenever called together by the Board. Members of committees may attend meetings
through the medium of communications equipment, in the same manner as members of
the Board; any committee may act by unanimous written consent instead of a
meeting, in the same manner as the Board. Written consents submitted by all of
the members of a committee shall have the same effect as a unanimous vote of the
committee for all purposes.
Notice of Meetings
4.05 If a committee establishes regular meeting dates, it shall not be
necessary to give notice of a regular meeting. Notice of every special meeting
shall be given in the manner and within the time periods specified in these
by-laws with respect to notices of special meetings of the Board.
Quorum; Voting
4.06 Except as otherwise provided by the certificate of incorporation, each
Director shall have one vote at a meeting of the Board committee, and the
participation of the Directors with a majority of the votes of the committee
shall constitute a quorum for the transaction of business. A quorum at any
meeting of any committee shall be a majority of the entire committee, except
that if any committee consists of only one member, then that one Director
constitutes a quorum. Every act or decision by a majority of the Directors
present at a duly held committee meeting at which a quorum is present shall be
regarded as the act of the committee.
Reports
4.07 Actions taken at a meeting of any committee shall be reported to the
board at its next meeting, except that when the meeting of the Board is held
within two days after a committee meeting, the report may be made at the second
Board meeting following the committee meeting.
Limitations on Powers
4.08 No committee of the board shall have authority to do any of the
following:
(a) Make, alter or repeal any by-law of the Corporation;
(b) Elect or appoint any Director, or remove any officer or Director;
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(c) Submit to the shareholders any action that requires their approval; or
(d) Amend or repeal any resolution adopted by the Board that by its terms
is amendable or repealable only by the Board.
Powers of the Board
4.09 By resolution adopted by a majority of the entire Board, the Board
shall have the power to:
(a) Appoint one or more Directors to serve as alternate members of any
committee and to act in the absence or disability of members of any committee
with all the powers of the absent or disabled members;
(b) Abolish any committee at its pleasure; and
(c) Remove any Director from membership on any committee at any time, with
or without cause.
ARTICLE V. WAIVER OF NOTICE
Requirements for Waiver
5.01 Any notice required to be given pursuant to these by-laws may be
waived in writing either before or after the meeting that is the subject of the
notice. Copies of the waivers shall be filed in the minute book of the
Corporation promptly after they are given. The attendance of any Director,
committee member, or shareholder at a meeting without protesting the lack of
notice before the conclusion of the meeting constitutes a waiver of the right to
notice.
Nature of Business
5.02 A waiver of notice of a Board meeting need not specify the nature of
business transacted or to be transacted at the meeting or the purpose of the
meeting. A waiver of notice of a shareholders' meeting shall specify the nature
of business transacted or to be transacted at the meeting and the purpose of the
meeting.
ARTICLE VI. OFFICERS
Election
6.01 The officers of the Corporation shall consist of a President, a
Treasurer, a Secretary, and any other officers, including without limitation one
or more Executive Vice Presidents, one or more Vice Presidents, one or more
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Assistant Treasurers, and one or more Assistant Secretaries as the Board deems
necessary. All officers shall be elected by the Board of Directors. The
President, Treasurer, Secretary, and any other officers that the Board considers
appropriate shall be elected at the regular Board meeting immediately following
the annual meeting of shareholders. Any two or more offices may be held by the
same person; provided, however, that no officer shall be authorized to verify
any instrument in more than one capacity if the instrument is required by law to
be executed, acknowledged, or verified by two or more officers.
Additional Officers
6.02 The Board of Directors may from time to time elect any other officers
that it deems necessary, who shall hold their offices for the terms and have the
powers and duties prescribed by the Board.
Election and Term of Office; Removal
6.03 Each officer shall hold office from the date elected until the next
annual election of officers, and until a successor has been elected unless the
officer has previously resigned or been removed. All officers of the Corporation
shall hold office at the pleasure of the Board of Directors.
Vacancies
6.04 Any vacancy in the offices of President, Treasurer, and Secretary
shall be filled promptly by the Board. Any vacancy in any other office may be
filled by the Board at its discretion.
Removal, Suspension and Resignation
6.05(a) Any officer elected by the Board may be removed by the Board either
with or without cause. Any officer elected by the shareholders may be removed,
without cause, only by the shareholders. However, the Board may suspend for
cause the authority of an officer appointed by the shareholders pending
shareholder action. The removal or suspension of an officer shall be without
prejudice to any contract rights that the officer may have. Election of an
officer shall not, in and of itself, create contract rights.
(b) Any officer may resign at any time by giving written notice to the
Board or to the President. The resignation will be effective on receipt, or at
any later time specified in the resignation. Unless otherwise specified in the
resignation, its acceptance is not necessary to make it effective.
Powers and Duties
6.06 The officers of the Corporation shall have the responsibilities set
forth in these by-laws. The officers may have additional responsibilities as
determined by the Board of Directors, the Executive Committee (if any), and, in
the case of all officers other than the President, the President, provided that
any additional responsibilities are not inconsistent with the provisions of
these by-laws. Without limiting the foregoing, the officers shall have the
following duties and responsibilities:
(a) The President shall be the chief executive officer of the
Corporation and, as such, shall have general supervision over the business and
affairs of the Corporation, subject to the control of the Board of Directors.
The President shall be a member ex officio of each standing committee to which
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he or she is not personally appointed. Subject to the control of the Board of
Directors, the President may enter into any contract or execute and deliver any
instruments on behalf of the Corporation. The President shall preside at all
meetings of the shareholders and at all meetings of the Board of Directors that
he or she attends. In general, the President shall perform all duties incident
to the office of the President, and any other duties that may be assigned by the
Board of Directors.
Vice President
(b) In the order of their seniority unless otherwise determined by the
Board of Directors, the Executive Vice Presidents (if any) shall perform the
functions of the President in the absence or disability of the President. In
addition, they shall perform all other functions prescribed by the President or
the Board of Directors. In the order of their seniority unless otherwise
determined by the Board of Directors, the Vice Presidents (if any) shall perform
the functions of the President in the absence or disability of the President and
the Executive Vice President. They shall perform all other duties and have
whatever other powers prescribed by the President or the Board of Directors.
Treasurer
(c) The Treasurer shall have charge and custody of, and be responsible
for, all funds and securities of the Corporation. The Treasurer shall deposit
all funds in the name of the Corporation in the institutions selected by the
Board of Directors. The Treasurer shall keep or cause to be kept books of
account on behalf of the Corporation and shall make these books available to any
of the Directors of the Corporation during business hours at the office of the
Corporation where the books and records are kept. In general, the Treasurer
shall perform all the duties incident to the office of the Treasurer and any
other duties as may be assigned by the President or the Board of Directors.
Assistant Treasurer
(d) Assistant Treasurers shall perform all of the duties and
responsibilities of the Treasurer whenever the Treasurer is unavailable to
perform the duties of the office, and shall perform all other duties as may be
assigned to them by the Board of Directors, the President or the Treasurer.
Secretary
(e) The Secretary, if present, shall act as secretary at all meetings of
the Board of Directors and of the shareholders and shall keep the minutes of
those meetings in a book or books to be provided for that purpose. The Secretary
shall cause notices of meetings to be given in accordance with these by-laws. In
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general, the Secretary shall perform all the duties incident to the office of
the Secretary and any other duties as may be assigned by the President or the
Board of Directors.
Assistant Secretaries
(f) Assistant Secretaries shall perform all of the duties and
responsibilities of the Secretary whenever the Secretary is unavailable to
perform the duties of the office, and shall perform all other duties and
exercise all other powers as may be assigned to them by the Board of Directors,
the President or the Secretary.
ARTICLE VII. SHARES
Form and Signature
7.01 The certificates for shares of the Corporation shall be in the form
determined by the Board of Directors, subject to these by-laws, the certificate
of incorporation, and applicable provisions of law. Each certificate shall
indicate that the Corporation is organized under the laws of the State of New
York, and shall set forth the registered holder's name and the number of shares.
Each certificate shall e signed by the President or any Executive Vice President
and the Treasurer, any assistant Treasurer, the Secretary or any Assistant
Secretary, and shall bear the seal of the Corporation or its facsimile. If any
certificate is countersigned by a transfer agent or registrar who is not an
officer or any employee of the Corporation, any and all other signatures may be
facsimiles. If any officer, transfer agent, or registrar who has signed, or
whose facsimile signature has been placed on, any certificate shall have ceased
to serve in that capacity before the certificate is issued, the certificate may
be issued by the Corporation with the same effect as if that person continued to
serve in his or her former capacity at the date of the certificate's issue.
Provided that it otherwise complies with the requirements of this paragraph 7.01
and applicable provisions of law, a card that is punched, magnetically coded, or
otherwise treated so as to facilitate machine or automatic processing may be
used by the Corporation as a share certificate.
Description of Rights and Preferences
7.02 If the Corporation is at any time authorized to issue shares of more
than one class, then each share certificate issued by the Corporation shall
contain the following information on the face or back of the certificate, ore
shall state that the Corporation will furnish the following information to any
shareholder on request and without charge:
a. The designations, relative rights, preferences and limitations of the
shares of each class and series authorized to be issued, so far as they have
been determined; and
b. The authority of the Board to divide the shares into classes or series
and to determine and change the relative rights, preferences and limitations of
any class or series.
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Replacement Certificates
7.03 The Board of Directors may direct that a new share certificate be
issued to replace any certificate alleged to have been lost, destroyed, or
wrongfully taken, on written notice received from the shareholder before the
Corporation is informed that the share has been acquired by a bona fide
purchaser. The notice required from the shareholder shall be in the form of an
affidavit showing that the certificate has been lost, destroyed or wrongfully
taken. When authorizing the issuance of a new certificate, the Board of
Directors may, in its discretion and as a condition precedent to the
certificate's issuance, require the shareholder or the shareholder's legal
representative to file a bond with the Corporation in whatever reasonable sum as
it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, destroyed
or wrongfully taken.
Transfer of Securities
7.04 The Corporation's registered securities shall be transferable only on
the books of the Corporation. Transfer shall be permitted only by the person in
whose name the securities appear on the Corporation's books, by that person's
legal representative, or by that person's attorney if authorized by power of
attorney duly executed and filed with the Corporation or its transfer agent.
Transfers of registered securities may be made on surrender to the Corporation
or to its agents of an outstanding certificate or certificates representing the
security with a duly executed assignment and authorization to transfer endorsed
on or attached to the certificate, together with proof of the authenticity of
the signature and of the power of the assignor to transfer the security as the
Corporation or its agents may require. On surrender, the Corporation or its
agent shall issue a new certificate to the person entitled to it, cancel the old
certificate, and record the transaction on its books. Except as provided in
these by-laws or by the laws of the State of New York, the person in whose name
registered securities stand on the books of the Corporation shall be deemed the
owner for all purposes.
Record date for Dividends or Rights
7.05 The Board of Directors may fix, in advance, a date as the record date
for determining the shareholders entitled to receive payment of any dividend or
the allotment of any right. The record date may in no case be more than sixty
days before the event to which it relates. If the Board of Directors does not
fix a record date in connection with these matters, then the record date with
respect to these matters shall be at the close of business on the day on which
the Board adopts the resolution authorizing a dividend or allotment of rights.
Issue of New Shares or Sale of Treasury Shares
7.06 Shares of the Corporation that are authorized but not yet issued and
treasury shares may be issued or sold from time to time for the consideration
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determined by the Board of Directors, but in no case for less than par value,
subject to the provisions of the certificate of incorporation and the BCL.
ARTICLE VIII. FISCAL YEAR
Designation
8.01 The fiscal year of the Corporation shall end on the last day of
September each year.
ARTICLE IX. AMENDMENTS
Amendments in General
9.01 The power to alter, amend, or repeal these by-laws is vested in both
the shareholders and the Board of Directors, subject to paragraphs 9.02 and 9.03
below.
Amendments by Shareholders
9.02 Any by-law made or amended by the Board of Directors may be amended or
repealed by the shareholders, and new by-laws may be added by the shareholders.
The shareholders may provide as to any or all by-laws that by-law provisions
adopted by them may not be altered or repealed by the Board.
Amendments by the Board of Directors
9.03 Any by-law made or amended by the shareholders may be amended or
repealed by the Board of Directors, and new by-laws may be added by the Board of
Directors unless the shareholders prescribe in the by-law that it shall not be
altered or repealed by the Board.
ARTICLE X. MISCELLANEOUS
Seal
10.01 The Corporation's seal shall be inscribed with the name of the
Corporation, the year of its incorporation, and the words "New York". The seal
may be used by causing it or a facsimile to be impressed or reproduced on a
document or instrument, or affixed to a document or instrument.
Maintenance of Books and Records
10.02 The Corporation shall maintain books and records of account and
minutes of the meetings of its shareholders and Directors, including meetings of
committees of the Board. These documents shall be maintained at one or more
locations within or outside the State of New York, the location or locations to
be designated by the Board of Directors. Each of these documents shall be in
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written form or in any other form capable of being converted into written form
within a reasonable time.
Inspection of Corporate Records
10.03 Any shareholder of record of the Corporation who has been a
shareholder of record for at least six months immediately preceding his or her
demand and any person holding at least five percent of the outstanding shares of
any class or series shall have the right, on at least five days' written demand
to the President or the Secretary of the Corporation and for a purpose deemed
proper under any applicable law, to examine in person, by in person or by an
agent or attorney, during usual business hours, the minutes of the Corporation's
shareholders' meeting and the Corporation's record of its shareholders and to
make extracts. The examination shall take place where the minutes and record are
maintained.
Execution of Contracts
10.04 The Board of Directors may authorize any person to enter into any
contract or execute any instrument in the name of and on behalf of the
Corporation. Authorization may be general or specific.
Voting Shares of Other Corporations
10.05 The President and any Executive Vice President or Vice President are
authorized to vote any shares of any other corporation or corporations standing
in the name of the Corporation. This authority may be exercised by these
officers either in person, by proxy, or by a duly executed power of attorney.
Bonds
10.06 The seal of the Corporation and any or all signatures of the officers
or other agents of the Corporation on a bond of the Corporation and on any
coupon attached to the bond may be facsimiles if the bond is countersigned by an
officer or other agent of a trustee or by other certifying or authenticating
authority. If any officer or other agent of the Corporation who has signed or
whose facsimile signature has been placed on a bond or coupon has ceased to be
an officer or agent before the bond is issued, the bond may be issued by the
Corporation with the same effect as if that person were an officer or agent at
the date of its issue.
10.07 Every person who is or was a director or officer, employee or agent
of the Corporation, or any person who serves or has served in any capacity with
any other enterprise at the request of the Corporation, shall be indemnified by
the Corporation to the fullest extent permitted by law. The Corporation shall
indemnify the persons listed above against all expenses and liabilities
reasonably incurred by or imposed on them in connection with any proceedings to
which they have been or may be made parties, or any proceedings in which they
may have become involved by reason of being or having been a director or officer
of the Corporation, or by reason of serving or having served another enterprise
at the request of the Corporation, whether or not in the capacities of directors
or officers of the Corporation at the time the expenses or liabilities are
incurred.
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ARTICLE XI. EMERGENCY PROVISIONS
11.01 The following provisions shall govern and shall supersede any other
provisions in these by-laws in the event of an emergency.
(a) For purposes of this Article XI, the following terms shall have the
following meanings:
1. "Emergency" shall mean an emergency in the conduct of the business of
the Corporation resulting from an attack on the United States or any
nuclear or atomic disaster.
2. "Emergency list" shall mean the most current list in effect pursuant
to paragraph 11.02.
3. "Listed officers" shall mean the officers listed on the "emergency
list".
4. "Principal headquarters" shall mean the principal place of business of
the Corporation. If use of the principal place of business is not
practical during an emergency, the "principal headquarters" shall mean
the place of business at which the largest number of employees remain
employed by the Corporation during the emergency.
(b) In the event of an emergency, the senior officer of the Corporation
present at the principal headquarters shall call an initial emergency meeting of
the Board of Directors to be held as soon as practicable after the commencement
of the emergency. The officer shall use his or her best efforts to notify each
Director and each listed officer of the time and location of the meeting, but no
action taken at the meeting or during the emergency shall be invalidated by
reason of the fact that any Director or listed officer could not be notified of
the time and location of the meeting.
(c) A Director or listed officer may participate in any Board meeting held
during the emergency by means of any communications device that enables him or
her to hear the person presiding at the meeting and enables the presiding
officer to hear that Director or listed officer. It shall not be necessary for
each Director or listed officer to hear all other Directors and listed officers.
(d) For purposes of the initial emergency meeting, the Board of Directors
shall be deemed to consist of the Directors who attend or otherwise participate
at the initial emergency meeting together with those listed officers who both
(1) attend or otherwise participate at the initial emergency meeting and (2) are
designated as "Special Directors" by the Directors participating at the meeting,
by the Senior Officer. The number of listed officers who shall be designated as
Special Directors shall be the lesser of (1) the number of listed officers
participating at the meeting or (2) the difference between the number of
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Directors on the Board immediately before the commencement of the emergency and
the number of Directors participating at the initial emergency meeting. If the
number of Special Directors to be designated is smaller than the number of
listed officers participating at the meeting, the listed officers shall be
designated in the order of priority set forth in the emergency list.
(e) Actions to be taken at the initial emergency meeting shall require the
affirmative vote of a majority of the Directors and Special Directors
participating at the meeting. No quorum requirement shall apply with respect to
the meeting.
(f) At the initial emergency meeting, the Directors and Special Directors
shall adopt whatever procedures they deem appropriate with respect to further
Board meetings during the course of the emergency, provided that the following
conditions shall apply:
1. At these further Board meetings, the Board shall be deemed to consist
of all Directors who participate at the meetings, together with those
listed officers who were designated as Special Directors for purposes
of the initial emergency meeting.
2. No quorum requirements shall apply with respect to these meetings.
Actions to be taken at these meetings shall require the affirmative
vote of a majority of the Directors and Special Directors
participating at the meetings.
3. The procedures to be developed shall, to the maximum extent feasible
under the circumstances, be consistent with the provisions of these
by-laws that apply in the absence of any emergency; provided, however,
that any procedure used shall be valid unless it bears no reasonable
relationship to the circumstances.
11.02 The Board of Directors shall maintain a list of officers eligible to
participate in Board meetings as Special Directors pursuant to paragraph 11.01.
The list shall set forth the titles of the eligible officers and shall rank
these listed officers in order of priority. In the event that the Corporation
fails to maintain this list, the emergency list shall be as follows:
(a) President;
(b) Executive Vice Presidents (if any), in the order in which they were
elected;
(c) Vice Presidents (if any), in the order in which they were elected;
(d) Treasurer; and
(e) Secretary.
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Exhibit 10.1
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is effective as of
this ____ day of June, 1999, by and between S.M.A. Real Time Inc., a New York
corporation (the "Company") and [name of officer or director], ("Indemnitee").
Whereas, the Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for its directors, officers, employees, agents and
fiduciaries, the significant increases in the cost of such insurance and the
general reductions in the coverage of such insurance;
Whereas, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same
time as the availability and coverage of liability insurance has been
severely limited;
Whereas, Indemnitee, as a director of the Company, does not regard
the current protection available as adequate under the present circumstances,
and the Indemnitee and other directors, officers, employees, agents and
fiduciaries of the Company may not be willing to continue to serve in such
capacities without additional protection;
Whereas, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and, in part, in
order to induce Indemnitee to continue to provide services to the Company,
wishes to provide for the indemnification and advancing of expenses to
Indemnitee to the maximum extent permitted by law; and
Whereas, in view of the considerations set forth above, the Company
desires that Indemnitee shall be indemnified by the Company as set forth herein.
Now, therefore, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
(a) Indemnification of Expenses. The Company shall indemnify Indemnitee
to the fullest extent provided under the provisions of the Company's
Certificate of Incorporation, the Company's Bylaws, and to the fullest
extent permitted by law if Indemnitee was or is or becomes a party to or
witness or other participant in, or is threatened to be made a party to or
witness or other participant in, any threatened, pending or completed action,
suit, claim, hearing, proceeding or alternative dispute resolution mechanism,
or any hearing, inquiry or investigation that Indemnitee in good faith believes
might lead to the institution of any such action, suit, claim, hearing,
proceeding or alternative dispute resolution mechanism, whether civil,
criminal, administrative, investigative or other (hereinafter a "Claim") by
reason of (or arising in part out of) any event or occurrence related to the
fact that
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Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or any subsidiary of the Company, or is or was
serving at the request of the Company as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action or inaction on the part of
Indemnitee while serving in such capacity (hereinafter an "Indemnifiable Event")
against any and all expenses (including attorneys' fees and all other costs,
expenses and obligations incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal), or preparing to
defend, be a witness in or participate in, any such action, suit, proceeding,
alternative dispute resolution mechanism, hearing, inquiry or investigation),
judgments, fines, penalties and amounts paid in settlement (if such settlement
is approved in advance by the Company, which approval shall not be unreasonably
withheld) of such Claim and any federal, state, local or foreign taxes imposed
on the Indemnitee as a result of the actual or deemed receipt of any payments
under this Agreement (collectively, hereinafter "Expenses"), including all
interest, assessments and other charges paid or payable in connection with or
in respect of such Expenses. Such payment of Expenses shall be made by the
Company as soon as practicable but in any event no later than thirty (30) days
after written demand by Indemnitee therefor is presented to the Company.
(b) Reviewing Party. Indemnitee shall initially be presumed in all cases
to be entitled to indemnification pursuant to the terms hereof, and Indemnitee
may establish a conclusive presumption of any fact necessary to such a
determination by delivering to the Company a declaration made under penalty of
perjury that such fact is true and that, unless the Reviewing Party shall
deliver to Indemnitee, in accordance with the provisions of this Section 1(b),
written notice that Indemnitee is not entitled to indemnification, such
determination shall conclusively be deemed to have been made in favor of the
Indemnitee's request for indemnification. Notwithstanding the foregoing, (i)
the obligations of the Company under Section 1(a) shall be subject to the
condition that the Reviewing Party (as described in Section 10(f) hereof) shall
not have determined (in a written opinion, in any case in which the Independent
Legal Counsel referred to in Section 1(c) hereof is involved) that Indemnitee
would not be permitted to be indemnified under applicable law, and (ii) the
obligation of the Company to make an advance payment of Expenses to Indemnitee
pursuant to Section 2(a) (an "Expense Advance") shall be subject to the
condition that, if, when and to the extent that the Reviewing Party determines
that Indemnitee would not be permitted to be so indemnified under applicable
law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby
agrees to reimburse the Company) for all such amounts theretofore paid;
provided, however, that if Indemnitee has commenced or thereafter commences
legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or lapsed).
Indemnitee's obligation to reimburse the Company for any Expense Advance shall
be unsecured and no interest shall be charged thereon. If there has not been a
Change in Control (as defined in Section 10(c) hereof), the Reviewing Party
shall be selected by the Board of Directors, and if there has been such a
Change in Control (other than a Change in Control which has been approved by a
majority of the Company's Board of Directors
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who were directors immediately prior to such Change in Control), the Reviewing
Party shall be the Independent Legal Counsel referred to in Section 1(c) hereof.
If there has been no determination by the Reviewing Party or if the Reviewing
Party determines that Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, Indemnitee shall have the
right to commence litigation seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any aspect thereof,
including the legal or factual bases therefor, and the Company hereby consents
to service of process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the Company and
Indemnitee.
(c) Change in Control. The Company agrees that if there is a Change in
Control of the Company (other than a Change in Control which has been approved
by a majority of the Company's Board of Directors who were directors immediately
prior to such Change in Control) then with respect to all matters thereafter
arising concerning the rights of Indemnitee to payments of Expenses and Expense
Advances under this Agreement or any other agreement or under the Company's
Certificate of Incorporation or Bylaws as now or hereafter in effect, the
Company shall seek legal advice only from Independent Legal Counsel (as defined
in Section 10(d) hereof) selected by Indemnitee and approved by the Company
(which approval shall not be unreasonably withheld). Such counsel, among other
things, shall render its written opinion to the Company and Indemnitee as to
whether and to what extent Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to fully indemnify such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
(d) Establishment of Trust. In the event of a Potential Change in Control
(as defined in Section 10(e) hereof), the Company shall, upon written request by
Indemnitee, create a trust for the benefit of Indemnitee and, from time to time
upon written request of Indemnitee, shall fund such trust in an amount
sufficient to satisfy any and all Expenses reasonably anticipated at the time
of each such request to be incurred in connection with investigating, preparing
for and defending any Claim relating to an Indemnifiable Event, and any and all
judgments, fines, penalties and settlement amounts of any and all Claims
relating to an Indemnifiable Event from time to time actually paid or claimed,
reasonably anticipated or proposed to be paid. The amount or amounts to be
deposited in the trust pursuant to the foregoing funding obligation shall be
determined by the Reviewing Party, in any case in which the Independent Legal
Counsel referred to above is involved. The terms of the trust shall provide
that upon a Change in Control (i) the trust shall not be revoked or the
principal thereof invaded, without the written consent of Indemnitee, (ii) the
trustee shall advance, within five (5) business days of a request by
Indemnitee, any and all Expenses to Indemnitee (and Indemnitee hereby agrees to
reimburse the trust under the circumstances under which Indemnitee would be
required to reimburse the Company under Section 1(b) of this Agreement), (iii)
the trust shall continue to be funded by the Company in accordance with the
funding obligation set forth above, (iv) the trustee shall promptly pay to
Indemnitee all amounts for which Indemnitee shall be entitled to
indemnification pursuant to this Agreement or otherwise, and (v) all unexpended
funds in such trust shall revert to the Company upon a final determination by
the Reviewing Party or a court of competent jurisdiction,
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as the case may be, that Indemnitee has been fully indemnified under the terms
of this Agreement. The trustee shall be chosen by Indemnitee. Nothing in this
Section 1(d) shall relieve the Company of any of its obligations under this
Agreement.
(e) Mandatory Payment of Expenses. Notwithstanding any other provision of
this Agreement other than Section 9 hereof, to the extent that Indemnitee has
been successful on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any action, suit,
proceeding, inquiry or investigation referred to in Section (1)(a) hereof or in
the defense of any claim, issue or matter therein, Indemnitee shall be
indemnified against all Expenses incurred by Indemnitee in connection
therewith.
(f) Written Assurance. Notwithstanding anything to the contrary contained
herein, the Company shall not effect any Change in Control of the Company,
unless the surviving entity agrees in writing to assume all of the Company's
obligations under this Agreement.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance all Expenses
incurred by Indemnitee. The advances to be made hereunder shall be paid by the
Company to Indemnitee as soon as practicable but in any event no later than
five (5) days after written demand by Indemnitee therefor to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition
precedent to Indemnitee's right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any Claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the Chief Executive
Officer of the Company at the address shown on the signature page of this
Agreement (or such other address as the Company shall designate in writing to
Indemnitee). In addition, Indemnitee shall give the Company such information
and cooperation as it may reasonably require and as shall be within
Indemnitee's power.
(c) No Presumptions; Burden of Proof. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval) or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law. In addition, neither the failure of the Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under applicable law, shall be a defense to Indemnitee's
claim or create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief. In connection with
any determination by the Reviewing Party
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or otherwise as to whether the Indemnitee is entitled to be indemnified
hereunder, the burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.
(d) Notice to Insurers. If, at the time of the receipt by the Company of a
notice of a Claim pursuant to Section 2(b) hereof, the Company has liability
insurance in effect which may cover such Claim, the Company shall give prompt
notice of the commencement of such Claim to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such action, suit,
proceeding, inquiry or investigation in accordance with the terms of such
policies.
(e) Selection of Counsel. In the event the Company shall be obligated
hereunder to pay the Expenses of any action, suit, proceeding, inquiry or
investigation, the Company, if appropriate, shall be entitled to assume the
defense of such action, suit, proceeding, inquiry or investigation with
counsel approved by Indemnitee, upon the delivery to Indemnitee of written
notice of its election so to do. After delivery of such notice, approval of
such counsel by Indemnitee and the retention of such counsel by the Company,
the Company will not be liable to Indemnitee under this Agreement for any fees
of counsel subsequently incurred by Indemnitee with respect to the same action,
suit, proceeding, inquiry or investigation; provided that, (i) Indemnitee shall
have the right to employ Indemnitee's counsel in any such action, suit,
proceeding, inquiry or investigation at Indemnitee's expense and (ii) if (A)
the employment of counsel by Indemnitee has been previously authorized by the
Company, (B) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of any
such defense, or (C) the Company shall not continue to retain such counsel to
defend such action, suit, proceeding, inquiry or investigation, then the fees
and expenses of Indemnitee's counsel shall be at the expense of the Company.
3. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. The Company hereby agrees to indemnify the Indemnitee to the
fullest extent permitted by law, notwithstanding that such indemnification is
not specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Company's Bylaws or by statute. In
the event of any change after the date of this Agreement in any applicable law,
statute or rule which expands the right of a Delaware corporation to indemnify
a member of its board of directors or an officer, employee, agent or fiduciary,
it is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits afforded by such change. In the event of any
change in any applicable law, statute or rule which narrows the right of a
Delaware corporation to indemnify a member of its board of directors or an
officer, employee, agent or fiduciary, such change, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement, shall
have no effect on this Agreement or the parties' rights and obligations
hereunder.
(b) Nonexclusivity. The indemnification provided by this Agreement shall
be in addition to any rights to which Indemnitee may be entitled under the
Company's Certificate of Incorporation, its Bylaws, any agreement, any vote of
stockholders or disinterested directors, the General Corporation
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Law of the State of Delaware, or otherwise. The indemnification provided under
this Agreement shall continue as to Indemnitee for any action taken or not taken
while serving in an indemnified capacity even though Indemnitee may have ceased
to serve in such capacity.
4. No Duplication of Payments.
The Company shall not be liable under this Agreement to make any payment
in connection with any action, suit, proceeding, inquiry or investigation made
against Indemnitee to the extent Indemnitee has otherwise actually received
payment (under any Company insurance policy, the Company's Certificate of
Incorporation, its Bylaw or otherwise from a Company source) of the amounts
otherwise indemnifiable hereunder.
5. Partial Indemnification.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of Expenses in the
investigation, defense, appeal or settlement of any civil or criminal action,
suit, proceeding, inquiry or investigation, but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion of such Expenses to which Indemnitee is entitled.
6. Mutual Acknowledgment.
Both the Company and Indemnitee acknowledge that in certain instances,
Federal law or applicable public policy may prohibit the Company from
indemnifying its directors, officers, employees, agents or fiduciaries under
this Agreement or otherwise. Indemnitee understands and acknowledges that the
Company has undertaken or may be required in the future to undertake with the
Securities and Exchange Commission to submit the question of indemnification
to a court in certain circumstances for a determination of the Company's right
under public policy to indemnify Indemnitee.
7. Liability Insurance.
To the extent the Company maintains liability insurance applicable to
directors, officers, employees, agents or fiduciaries, Imdemnitee shall be
covered by such policies in such a manner as to provide Indemnitee the same
rights and benefits as are accorded to the most favorably insured of the
Company's directors, if Indemnitee is a director; or of the Company's officers,
if Indemnitee is not a director of the Company but is an officer; or of the
Company's key employees, agents or fiduciaries, if Indemnitee is not an officer
or director but is a key employee, agent or fiduciary.
8. Exceptions.
Any other provision herein to the contrary notwithstanding, the Company
shall not be obligated pursuant to the terms of this Agreement:
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(a) Excluded Action or Omissions. To indemnify Indemnitee for acts,
omissions or transactions from which Indemnitee may not be relieved of
liability under applicable law.
(b) Claims Initiated by Indemnitee. To indemnify or advance expenses to
Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except (i) with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other agreement or insurance policy or under the
Company's Certificate of Incorporation or Bylaws now or hereafter in effect
relating to Claims for Indemnifiable Events, (ii) in specific cases if the
Board of Directors has approved the initiation or bringing of such suit, or
(iii) as otherwise as required under Section 145 of the General Corporation Law
of the State of Delaware, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
(c) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred
by the Indemnitee with respect to any proceeding instituted by Indemnitee to
enforce or interpret this Agreement, if a court of competent jurisdiction
determines that each of the material assertions made by the Indemnitee in such
proceeding was not made in good faith or was frivolous; or
(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses and
the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of
1934, as amended, or any similar successor statute.
9. Period of Limitations.
No legal action shall be brought and no cause of action shall be asserted
by or in the right of the Company against Indemnitee, Indemnitee's estate,
spouse, heirs, executors or personal or legal representatives after the
expiration of one year from the date of accrual of such cause of action, and
any claim or cause of action of the Company shall be extinguished and deemed
released unless asserted by the timely filing of a legal action within such
one-year period; provided, however, that if any shorter period of limitations
is otherwise applicable to any such cause of action, such shorter period shall
govern.
10. Construction of Certain Phrases.
(a) For purposes of this Agreement, references to the "Company" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees, agents or
fiduciaries, so that if Indemnitee is or was a director, officer, employee,
agent or fiduciary of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement
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with respect to the resulting or surviving corporation as Indemnitee would have
with respect to such constituent corporation if its separate existence had
continued.
(b) For purposes of this Agreement, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on Indemnitee with respect to an employee benefit plan; and
references to "serving at the request of the Company" shall include any service
as a director, officer, employee, agent or fiduciary of the Company which
imposes duties on, or involves services by, such director, officer, employee,
agent or fiduciary with respect to an employee benefit plan, its participants
or its beneficiaries.
(c) For purposes of this Agreement a "Change in Control" shall be deemed to
have occurred if (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of stock
of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of the Company
representing more than 20% of the total voting power represented by the
Company's then outstanding Voting Securities, (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Company and any new director whose election by
the Board of Directors or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation other than a merger or consolidation which would result in the
Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 80% of the total
voting power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of (in one
transaction or a series of transactions) all of substantially all of the
Company's assets.
(d) For purposes of this Agreement, "Independent Legal Counsel" shall
mean an attorney or firm of attorneys, selected in accordance with the
provisions of Section 1(c) hereof, who shall not have otherwise performed
services for the Company or Indemnitee within the last three years (other than
with respect to matters concerning the rights of Indemnitee under this
Agreement, or of other indemnitees under similar indemnity agreements).
(e) For purposes of this Agreement, a "Potential Change in Control" shall
be deemed to have occurred if: (i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control,
(ii) any person (including the Company) publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a Change
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in Control, or (iii) any person, other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company acting in such
capacity or a corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of stock
of the Company, who is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 9.5% or more of the combined voting
power of the Company's then outstanding Voting Securities, increases his or her
beneficial ownership of such securities by five percentage points (5%) or more
over the percentage so owned by such person; or (iv) the Board of Directors
adopts a resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control has occurred.
(f) For purposes of this Agreement, a "Reviewing Party" shall mean any
appropriate person or body consisting of a member or members of the Company's
Board of Directors or any other person or body appointed by the Board of
Directors who is not a party to the particular Claim for which Indemnitee is
seeking indemnification, or Independent Legal Counsel.
(g) For purposes of this Agreement, "Voting Securities" shall mean any
securities of the Company that vote generally in the election of directors.
11. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall constitute an original.
12. Binding Effect; Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors, assigns,
including any direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business and/or assets of the
Company, spouses, heirs, and personal and legal representatives. The Company
shall require and cause any successor (whether direct or indirect by purchase,
merger, consolidation or otherwise) to all, substantially all, or a substantial
part, of the business and/or assets of the Company, by written agreement in
form and substance satisfactory to Indemnitee, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.
This Agreement shall continue in effect regardless of whether Indemnitee
continues to serve as a director or officer of the Company or of any other
enterprise at the Company's request.
13. Attorneys' Fees.
In the event that any action is instituted by Indemnitee under this
Agreement or under any liability insurance policies maintained by the Company
to enforce or interpret any of the terms hereof or thereof, Indemnitee shall
be entitled to be paid all Expenses incurred by Indemnitee with respect to
such action, regardless of whether Indemnitee is ultimately successful in
such action, and shall be
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entitled to the advancement of Expenses with respect to such action, unless as
a part of such action the court of competent jurisdiction over such action
determines that each of the material assertions made by Indemnitee as a basis
for such action were not made in good faith or were frivolous. In the event of
an action instituted by or in the name of the Company under this Agreement to
enforce or interpret any of the terms of this Agreement, Indemnitee shall be
entitled to be paid all Expenses incurred by Indemnitee in defense of such
action (including costs and expenses incurred with respect to Indemnitee's
counterclaims and cross-claims made in such action), and shall be entitled to
the advancement Expenses with respect to such action, unless as a part of such
action the court having jurisdiction over such action determines that each of
Indemnitee's material defenses to such action were made in bad faith or were
frivolous.
14. Notices.
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed duly given (i) if delivered
by hand and receipted for by the party addressee, on the date of such receipt,
(ii) if delivered by reputable overnight courier and signed for by the party
addressee, on the date of such receipt or (iii) if mailed by domestic
certified or registered mail with postage prepaid, on the third business day
after the date postmarked. Addresses for notice to either party are as shown
on the signature page of this Agreement, or as subsequently modified by
written notice.
15. Consent to Jurisdiction.
The Company and Indemnitee each hereby irrevocably consent to the
jurisdiction of the courts of the State of New York for all purposes in
connection with any action or proceeding which arises out of or relates to
this Agreement and agree that any action instituted under this Agreement shall
be commenced, prosecuted and continued only in the courts of the City, County
and State of New York, which shall be the exclusive and only proper forum for
adjudicating such a claim.
16. Severability.
The provisions of this Agreement shall be severable in the event that any
of the provisions hereof (including any provision within a single section,
paragraph or sentence) are held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable, and the remaining provisions shall
remain enforceable to the fullest extent permitted by law. Furthermore, to the
fullest extent possible, the provisions of this Agreement (including, without
limitations, each portion of this Agreement containing any provision held to be
invalid, void or otherwise unenforceable, that is not itself invalid, void or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
17. Choice of Law.
This Agreement shall be governed by and its provisions construed and
enforced in accordance with the laws of the State of New York, as applied to
contracts between New York residents, entered
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into and to be performed entirely within the State of New York, without regard
to the conflict of laws principles thereof.
18. Subrogation.
In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all documents required and shall do all acts
that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
19. Amendment and Termination.
No amendment, modification, termination or cancellation of this Agreement
shall be effective unless it is in writing signed by both the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver.
20. Integration and Entire Agreement.
This Agreement sets forth the entire understanding between the parties
hereto and supercedes and merges all previous written and oral negotiations,
commitments, understandings and agreements relating to the subject matter
hereof between the parties hereto.
21. No Construction as Employment Agreement.
Nothing contained in this Agreement shall be construed as giving
Indemnitee any right to be retained in the employ of the Company or any of its
subsidiaries.
22. Specific Performance
The Company and Indemnitee agree that a monetary remedy for breach of this
Agreement, at some later date, will be inadequate, impracticable and difficult
to prove, and the Company and the Indemnitee further agree that such breach
would cause Indemnitee irreparable harm. Accordingly, the Company and
Indemnitee agree that Indemnitee shall be entitled to temporary and permanent
injunctive relief to enforce this Agreement without the necessity of proving
actual damages or irreparable harm. The Company and Indemnitee further agree
that Indemnitee shall be entitled to such injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent
injunctions, without the necessity of posting bond or other undertaking in
connection therewith. The Company hereby waives any such requirement of bond or
undertaking.
IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the date first above written.
S.M.A. REAL TIME INC.
By:_________________________
Title:________________________
AGREED TO AND ACCEPTED
INDEMNITEE: _______________________
[name of officer or director]
<PAGE>
EXHIBIT 10.2
S.M.A. REAL TIME INC.
1999 STOCK INCENTIVE PLAN
1. Purpose.
The purpose of this Stock Incentive Plan (the "Plan") is to enable S.M.A.
REAL TIME INC. (the "Company") to attract and retain the services of selected
employees, officers, directors and other key contributors (including
consultants and nonemployee agents) of the Company or any subsidiary of the
Company. Notwithstanding the foregoing, grants to Non-Employee Directors (as
defined in subparagraph 11.1) of options or other awards under the Plan shall
be made solely in accordance with the provisions of paragraph 11.
2. Shares Subject to the Plan.
Subject to adjustment as provided below, the shares to be offered under
the Plan shall consist of Common Stock of the Company, and the total number of
shares of Common Stock that may be issued under the Plan shall not exceed
500,000 shares. The shares issued under the Plan may be authorized and unissued
shares or reacquired shares. If an option granted under the Plan expires,
terminates or is canceled, the unissued shares subject to such option shall
again be available under the Plan. If shares sold or awarded as a bonus under
the Plan or forfeited to the Company or repurchased by the Company, the number
of shares forfeited or repurchased shall again be available under the Plan.
3. Effective Date and Duration of Plan.
3.1 Effective Date. The Plan shall become effective as of May 3, 1999.
3.2 Duration. The Plan shall continue in effect until all shares available for
issuance under the Plan have been issued and all restrictions on such shares
have lapsed. The Board of Directors may suspend or terminate the Plan at any
time except with respect to options and shares subject to restrictions then
outstanding under the Plan. Termination shall not affect any outstanding
option, any right of the Company to repurchase shares or the forfeitability of
shares issued under the Plan.
4. Administration.
4.1 Board of Directors. The Plan shall be administered by the Board of
Directors of the Company, which shall determine and designate from time to time
the individuals to whom awards shall be made, the amount of the awards and the
other terms and conditions of the awards. Subject to the provisions of the Plan,
the Board of Directors may from time to time adopt and amend rules and
regulations relating to administration of the Plan, advance the lapse of any
waiting period, accelerate any exercise date, waive or modify any restriction
applicable to shares (except those restrictions imposed by law) and make all
other determinations in the judgment of the Board of Directors necessary or
desirable for the administration of the Plan. The interpretation and
construction of the provisions of the Plan and related agreements by the Board
of Directors shall be final and conclusive. The Board of Directors may correct
any defect or supply any omission or
<PAGE>
reconcile any inconsistency in the Plan or in any related agreement in the
manner and to the extent it shall deem expedient to carry the Plan into
effect, and it shall be the sole and final judge of such expediency.
4.2 Committee. The Board of Directors may delegate to a "stock compensation
committee" of the Board of Directors or specified officers of the Company, or
both (the "Committee"), any or all authority for administration of the Plan. If
authority is delegated to a committee, all references to the Board of Directors
in the Plan shall mean and relate to the Committee except (i) as otherwise
provided by the Board of Directors, (ii) that only the Board of Directors may
amend or terminate the Plan as provided in paragraphs 3 and 15 and (iii) that a
Committee including officers of the Company shall not be permitted to grant
options to persons who are officers of the Company unless the officers who are
to be compensated abstain from voting.
5. Types of Awards; Eligibility.
The Board of Directors may, from time to time, take the following actions,
separately or in combination, under the Plan: (i) grant Incentive Stock
Options, as defined in Section 422A of the Internal Revenue Code of 1986, as
amended (the "Code"), as provided in paragraphs 6.1 and 6.2; (ii) grant options
other than Incentive Stock Options ("Non-Statutory Stock Options") as provided
in paragraphs 6.1 and 6.3; (iii) award stock bonuses as provided in paragraph
7; (iv) sell shares subject to restrictions as provided in paragraph 8; (v)
grant cash bonus rights as provided in paragraph 11; and (vi) grant foreign
qualified awards as provided in paragraph 10. Any such awards may be made to
employees, including employees who are officers or directors, directors, and to
nonemployees (including consultants) who the Board of Directors believes have
made or will make an important contribution to the Company or its subsidiaries;
provided, however, that only employees of the Company, or its subsidiaries,
shall be eligible to receive Incentive Stock Options under the Plan. The Board
of Directors shall select the individuals to whom awards shall be made and
shall specify the action taken with respect to each individual to whom an award
is made. At the discretion of the Board of Directors, an individual may be
given an election to surrender an award in exchange for the grant of a new
award.
6. Option Grants.
6.1 General Rules Relating to Options.
(a) Terms of Grant. The Board of Directors may grant options under the
Plan. With respect to each option grant, the Board of Directors shall determine
the number of shares subject to the option, the option price, the period of the
option (but not longer than ten (10) years), the time or times at which the
option may be exercised and whether the option is an Incentive Stock Option or a
Non-Statutory Stock Option.
(b) Exercise of Options. Except as provided in paragraph 6.1(d) or as
determined by the Board of Directors, no option granted under the Plan may be
exercised unless at the time of such exercise the optionee is employed by or in
the service of the Company or any subsidiary of the Company (except for
consultants) and shall have been so employed or provided such service
continuously since the date such option was granted. Absence on leave or on
account of illness or disability under rules established by the
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Board of Directors shall not, however, be deemed an interruption of employment
or service for this purpose. Unless otherwise determined by the Board of
Directors, vesting of options shall not continue during an absence on leave
(including an extended illness) or on account of disability. Except as provided
in paragraphs 6.1(d) and 12, options granted under the Plan may be exercised
from time to time over the period stated in each option in such amounts and at
such times as shall be prescribed by the Board of Directors, provided that
options shall not be exercised for fractional shares. Unless otherwise
determined by the Board of Directors, if the optionee does not exercise an
option in any one year with respect to the full number of shares to which the
optionee is entitled in that year, the optionee's rights shall be cumulative
and the optionee may purchase those shares in any subsequent year during the
term of the option.
(c) Nontransferability. Each Incentive Stock Option and, unless otherwise
determined by the Board of Directors, each other option granted under the Plan
by its terms shall be nonassignable and nontransferable by the optionee, either
voluntarily or by operation of law, except by will or by the laws of descent
and distribution of the state or country of the optionee's domicile at the time
of death, and each option by its terms shall be exercisable during the
optionee's lifetime only by the optionee.
(d) Termination of Employment or Service.
(i) General Rule. Unless otherwise determined by the Board of
Directors, in the event the employment or service of the optionee with the
Company or subsidiary terminates for any reason other than because of physical
disability or death as provided in subparagraphs 6.1(d)(ii) and (iii), the
option may be exercised at any time prior to the expiration date of the option
or the expiration of 30 days after the date of such termination, whichever is
the shorter period, but only if and to the extent the optionee was entitled to
exercise the option at the date of such termination.
(ii) Termination Because of Physical Disability. Unless otherwise
determined by the Board of Directors, in the event of the termination of
employment or service because of physical disability (as that term is defined in
Section 22(e)(3) of the Code), the option may be exercised at any time prior to
the expiration date of the option or the expiration of 12 months after the date
of such termination, whichever is the shorter period, but only if and to the
extent the optionee was entitled to exercise the option at the date of such
termination.
(iii) Termination Because of Death. Unless otherwise determined by
the Board of Directors, in the event of the death of an optionee while employed
by or providing service to the Company or a parent or subsidiary, the option
may be exercised at any time prior to the expiration date of the option or the
expiration of 12 months after the date of such death, whichever is the shorter
period, but only if and to the extent the optionee was entitled to exercise the
option at the date of such termination and only by the person or persons to whom
such optionee's rights under the option shall pass by the optionee's will or by
the laws of descent and distribution of the state or country of domicile at the
time of death.
(iv) Amendment of Exercise Period Applicable to Termination. The Board
of Directors, at the time of grant or at any time thereafter, may extend the 30
day and 12-month exercise periods any length of time
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not later than the original expiration date of the option, and may increase the
portion of an option that is exercisable, subject to such terms and conditions
as the Board of Directors may determine.
(v) Failure to Exercise Options. To the extent that the option of any
deceased optionee or of any optionee whose employment or service terminates is
not exercised within the applicable period, all further rights to purchase
shares pursuant to such option shall cease and terminate.
(vi) Termination Provisions Not Applicable to Consultants. The
termination provisions set forth in subparagraphs i through v above are not
applicable to non-employee consultants.
(e) Purchase of Shares. Unless the Board of Directors determines
otherwise, shares may be acquired pursuant to an option granted under the Plan
only upon receipt by the Company of notice in writing from the optionee of the
optionee's intention to exercise, specifying the number of shares as to which
the optionee desires to exercise the option and the date on which the optionee
desires to complete the transaction, and, if required in order to comply with
the Securities Act of 1933, as amended, containing a representation that it is
the optionee's present intention to acquire the shares for investment and not
with a view to distribution, and any other information the Board of Directors
may request. Unless the Board of Directors determines otherwise, on or before
the date specified for completion of the purchase of shares pursuant to an
option, the optionee must have paid the Company the full purchase price of such
shares in cash (including, with the consent of the Board of Directors, cash that
may be the proceeds of a loan from the Company) or, with the consent of the
Board of Directors, in whole or in part, in Common Stock of the Company valued
at fair market value, restricted stock, or other contingent awards denominated
in either stock or cash, deferred compensation credits, promissory notes and
other forms of consideration. The fair market value of Common Stock provided in
payment of the purchase price shall be determined by the Board of Directors. No
shares shall be issued until full payment therefor has been made. Each optionee
who has exercised an option shall immediately upon notification of the amount
due, if any, pay to the Company in cash amounts necessary to satisfy any
applicable federal, state and local tax withholding requirements. If additional
withholding is or becomes required beyond any amount deposited before delivery
of the certificates, the optionee shall pay such amount to the Company on
demand. If the optionee fails to pay the amount demanded, the Company may
withhold that amount from other amounts payable by the Company to the optionee,
including salary, subject to applicable law. Upon the exercise of an option, the
number of shares reserved for issuance under the Plan shall be reduced by the
number of shares issued upon exercise of the option, less the number of shares
surrendered in payment of the option exercise.
6.2 Incentive Stock Options. Incentive Stock Options shall be subject to the
following additional terms and conditions:
(a) Limitation on Amount of Grants. An Incentive Stock Option shall by its
terms prohibit the exercise of all options in excess of the amount provided for
in Section 422(d) of the Code. Should it be determined that any Incentive Stock
Option granted under the Plan inadvertently exceeds such maximum, such Incentive
Stock Option grant shall be deemed to be a grant of a Nonqualified Stock Option
to the extent, but only to the extent, of such excess.
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(b) Limitation on Grants to 10 Percent Shareholders. An Incentive Stock
Option may be granted under the Plan to an employee possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company or of any parent or subsidiary of the Company only if the option price
is at least 110 percent of the fair market value of the Common Stock subject to
the option on the date it is granted, as described in paragraph 6.2(d), and the
option by its terms is not exercisable after the expiration of five years from
the date it is granted.
(c) Duration of Options. Subject to paragraphs 6.1(b) and 6.2(b),
Incentive Stock Options granted under the Plan shall continue in effect for the
period fixed by the Board of Directors, except that no Incentive Stock Option
shall be exercisable after the expiration of five years from the date it is
granted.
(d) Option Price. The option price per share shall be determined by the
Board of Directors at the time of grant. Except as provided in paragraph 6.2(b),
the option price shall not be less than 100 percent of the fair market value of
the Common Stock covered by the Incentive Stock Option at the date the option is
granted. The fair market value shall be determined by the Board of Directors.
(e) Limitation on Time of Grant. No Incentive Stock Option shall be
granted on or after the fifth anniversary of the effective date of the Plan.
(f) Conversion of Incentive Stock Options. The Board of Directors may at
any time without the consent of the optionee convert an Incentive Stock Option
to a Non-Statutory Stock Option.
6.3 Non Statutory Stock Options. Non-Statutory Stock Options shall be subject
to the following additional terms and conditions:
(a) Options Price. The option price for Non-Statutory Stock Options shall
be determined by the Board of Directors at the time of grant. The option price
may be less than the fair market value of the shares on the date of grant. The
fair market value of shares covered by a Non-Statutory Stock Option shall be
determined by the Board of Directors.
(b) Duration of Options. Non-Statutory Stock Options granted under the
Plan shall continue in effect for the period fixed by the Board of Directors.
7. Stock Bonuses.
The Board of Directors may award shares under the Plan as stock bonuses.
Shares awarded as a bonus shall be subject to the terms, conditions, and
restrictions determined by the Board of Directors. The restrictions may include
restrictions concerning transferability and forfeiture of the shares awarded,
together with such other restrictions as may be determined by the Board of
Directors. The Board of Directors may require the recipient to sign an agreement
as a condition of the award. The agreement may contain any terms, conditions,
restrictions, representations and warranties required by the Board of Directors.
The certificates representing the shares awarded shall bear any legends required
by the Board of Directors. The Company may require any recipient of a stock
bonus to pay to the Company in cash
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upon demand amounts necessary to satisfy any applicable federal, state or local
tax withholding requirements. If the recipient fails to pay the amount
demanded, the Company may withhold that amount from other amounts payable by
the Company to the recipient, including salary or fees for services, subject to
applicable law. Upon the issuance of a stock bonus, the number of shares
reserved for issuance under the Plan shall be reduced by the number of shares
issued.
8. Restricted Stock.
The Board of Directors may issue shares under the Plan for such
consideration (including promissory notes and services) as determined by the
Board of Directors, which consideration may be less than fair market value of
the Common Stock at the time of issuance. Shares issued under the Plan shall be
subject to the terms, conditions and restrictions determined by the Board of
Directors. The restrictions may include restrictions concerning transferability,
repurchase by the Company and forfeiture of the shares issued, together with
such other restrictions as may be determined by the Board of Directors. All
Common Stock issued pursuant to this paragraph 8 shall be subject to a purchase
agreement, which shall be executed by the Company and the prospective recipient
of the shares prior to the delivery of certificates representing such shares to
the recipient. The purchase agreement may contain any terms, conditions,
restrictions, representations and warranties required by the Board of Directors.
The certificates representing the shares shall bear any legends required by the
Board of Directors. The Company may require any purchaser of restricted stock to
pay to the Company in cash upon demand amounts necessary to satisfy any
applicable federal, state or local tax withholding requirements. If the
purchaser fails to pay the amount demanded, the Company may withhold that amount
from other accounts payable by the Company to the purchaser, including salary,
subject to applicable law. Upon the issuance of restricted stock, the number of
shares reserved for issuance under the Plan shall be reduced by the number of
shares issued.
9. Cash Bonus Rights.
9.1 Grant. The Board of Directors may grant cash bonus rights under the Plan
in connection with (i) options granted or previously granted; (ii) stock bonuses
awarded or previously awarded; and (iiv) shares sold or previously sold under
the Plan. Cash bonus rights will be subject to rules, terms and conditions as
the Board of Directors may prescribe. The payment of a cash bonus shall not
reduce the number of shares of Common Stock reserved for issuance under the
Plan.
9.2 Cash Bonus Rights in Connection with Options. A cash bonus right granted
in connection with an option will entitle an optionee to a cash bonus when the
related option is exercised in whole or in part. If an optionee purchases shares
upon exercise of an option, the amount of the bonus shall be determined by
multiplying the excess of the total fair market value of the shares to be
acquired upon the exercise over the total option price for the shares by the
applicable bonus percentage.
9.3 Cash Bonus rights in Connection with Stock Bonus. A cash bonus right
granted in connection with a stock bonus will entitle the recipient to a cash
bonus payable when the stock bonus is awarded or restrictions if any, to which
the stock is subject lapse. If bonus stock awarded is subject to restrictions
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and is repurchased by the Company or forfeited by the holder, the cash bonus
right granted in connection with the stock bonus shall terminate and may not be
exercised. The amount and timing of payment of a cash bonus shall be determined
by the Board of Directors.
9.4 Taxes. The Company shall withhold from any cash bonus paid pursuant to
paragraph 10 the amount necessary to satisfy any applicable federal, state and
local withholding requirements.
10. Foreign Qualified Grants.
Awards under the Plan may be granted to such officers and employees of
the Company and its subsidiaries and such other persons described in paragraph 1
residing in foreign jurisdictions as the Board of Directors may determine from
time to time. The Board of Directors may adopt such supplements to the Plan as
may be necessary to comply with the applicable laws of such foreign
jurisdictions and to afford participants favorable treatment under such laws;
provided, however, that no award shall be granted under any such supplement with
terms which are more beneficial to the participants than the terms permitted by
the Plan.
11. Option Grants to Non-Employee Directors and Advisory Board Directors.
11.1 Initial Grants. Each person who is or becomes a Non-Employee Director or
Advisory Board Director may be granted an option to purchase shares of Common
Stock on the date he or she becomes a Non-Employee Director. A "Non-Employee
Director" is a director who is not an employee of the Company or any of its
subsidiaries and has not been an employee of the Company or any of its
subsidiaries within one year of any date as of which a determination of
eligibility is made, and has not received either options, stock grants,
discounted stock, or cash for services as a Director within a twelve month
period prior to such grant.
11.2 Annual Grants to Continuing Non-Employee Directors or Advisory Board
Directors. Each person who is or becomes a Continuing Non-Employee Director or
Advisory Board Director may annually receive, on the day of the Company's
regular annual meeting of its shareholders, a grant of the option to purchase
shares of the Company's Common Stock. A "Continuing Non-Employee Director" is a
Non-Employee Director or Advisory Board Director who continuously serves as a
Non-Employee Director of the Company during a period of time which includes the
date(s) upon which one or more annual shareholder meetings of the Company are
held.
11.3 Exercise Price. The exercise price of any option granted pursuant to this
paragraph 11 shall be equal to the fair market value of the Common Stock as
determined in accordance with the procedure set forth in paragraph 6.2(d).
11.4 Term of Option. The term of each option granted pursuant to this paragraph
11 shall be 5 years from the date of grant.
11.5 "Complete Month". For all purposes of this paragraph 11, a complete month
shall be deemed to be the period which starts on the day of grant and ends on
the same day of the following calendar month,
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so that each successive "complete month" ends on the same day of each
successive calendar month (or, in respect of any calendar month which does not
include such a day, that "complete month" shall end on the first day of the
next following calendar month).
11.6 Termination as a Director. If an optionee ceases to be a director of the
Company for any reason, including death, all options granted pursuant to this
paragraph 11 may be exercised at any time prior to the expiration date of the
option or the expiration of 30 days (or 12 months in the event of death) after
the last day the optionee served as a director, whichever is the shorter
period, but only if and to the extent the optionee was entitled to exercise the
option as of the last day the optionee served as a director.
11.7 Nontransferability. Each option granted pursuant to this paragraph 11 by
its terms shall be nonassignable and nontransferable by the optionee, either
voluntarily or by operation of law, except by will or by the laws of descent
and distribution of the state or country of the optionee's domicile at the time
of death or pursuant to a qualified domestic relations order as defined under
the Code or Title I of the Employee Retirement Income Security Act of 1974.
12. Changes in Capital Structure.
If the outstanding Common Stock of the Company is hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation by reason of any
recapitalization, reclassification, stock split, combination of shares or
dividend payable in shares, appropriate adjustment shall be made by the Board
of Directors in the number and kind of shares available for awards under the
Plan. In addition, the Board of Directors shall make appropriate adjustment in
the number and kind of shares as to which outstanding options, or portions
thereof then unexercised, shall be exercisable, so that the optionee's
proportionate interest before and after the occurrence of the event is
maintained. The Board of Directors may also require that any securities issued
in respect of or exchanged for shares issued hereunder that are subject to
restrictions be subject to similar restrictions. Notwithstanding the foregoing,
the Board of Directors shall have no obligation to effect any adjustment that
would or might result in the issuance or fractional shares, and any fractional
shares resulting from any adjustment may be disregarded or provided for in any
manner determined by the Board of Directors. Any such adjustments made by the
Board of Directors shall be conclusive.
13. Effect of Liquidation or Reorganization.
13.1 Cash, Stock or Other Property for Stock. Except as provided in paragraph
13.2, upon a merger, consolidation, acquisition of property or stock,
reorganization or liquidation of the Company, as a result of which the
stockholders of the Company receive cash, stock or other property in exchange
for or in connection with their shares of Common Stock, any option granted
hereunder shall terminate, but the optionee shall have the right during a
30-day period immediately prior to any such merger, consolidation, acquisition
of property or stock, reorganization or liquidation to exercise his or her
option in whole or in part whether or not the vesting requirements applicable
to the option have been satisfied at the discretion of the Board of Directors.
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13.2 Conversion of Options on Stock for Stock Exchange. If the stockholders
of the Company receive capital stock of another corporation ("Exchange Stock")
in exchange for their shares of Common Stock in any transaction involving a
merger, consolidation, acquisition of property or stock, separation or
reorganization, all options granted hereunder shall be converted into options
to purchase shares of Exchange Stock unless the Board of Directors, in its sole
discretion, determines that any or all such options granted hereunder shall not
be converted into options to purchase shares of Exchange Stock but instead
shall terminate in accordance with the provisions of paragraph 13.1. The amount
and price of converted options shall be determined by adjusting the amount and
price of the options granted hereunder in the same proportion as used for
determining the number of shares of Exchange Stock the holders of the Common
Stock receive in such merger, consolidation, acquisition of property or stock,
separation or reorganization.
14. Corporate Mergers, Acquisitions, Etc.
The Board of Directors may also grant options, stock bonuses and cash
bonuses and issue restricted stock under the Plan having terms, conditions and
provisions that vary from those specified in this Plan, provided that any such
awards are granted in substitution for, or in connection with the assumption of,
existing options, stock bonuses, cash bonuses and restricted stock granted,
awarded or issued by another corporation and assumed or otherwise agreed to be
provided for by the Company pursuant to or by reason of a transaction involving
a corporate merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation to which the Company or a subsidiary is a party.
15. Amendment of Plan.
The Board of Directors may at any time, and from time to time, modify or
amend the Plan in such respect as it shall deem advisable because of changes in
the law while the Plan is in effect or for any other reason. Except as provided
in paragraphs 6.1(d), 12 and 13, however, no change in an award already granted
shall be made without the written consent of the holders of such award.
16. Approvals.
The obligations of the Company under the Plan are subject to the approval
of state and federal authorities or agencies with jurisdiction in the matter.
The Company shall not be obligated to issue or deliver Common Stock under the
Plan if such issuance or delivery would violate applicable state or federal
securities laws.
17. Employment and Service Rights.
Nothing in the Plan or any award pursuant to the Plan shall: (a) confer upon
any employee any right to be continued in the employment of the Company or any
subsidiary or interfere in any way with the right of the Company or any
subsidiary by whom such employee is employed to terminate such employee's
employment at any time, for any reason, with or without cause, or to decrease
such employee's
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compensation or benefits, or (b) confer upon any person engaged
by the Company any right to be retained or employed by the company or to the
continuation, extension, renewal, or modification of any compensation,
contract, or arrangement with or by the Company.
18. Rights as a Shareholder.
The recipient of any award under the Plan shall have no rights as a shareholder
with respect to any Common Stock until the date of issue to the recipient of a
stock certificate for such shares. Except as otherwise expressly provided in
the plan, no adjustment shall be made for dividends or other rights for which
the record date occurs prior to the date such stock certificate is issued.
Date adopted by Board May 3, 1999
Date Approved by Stockholders May 3, 1999
Date Last Amended by the Shareholders ___N/A______________, 1999
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EXHIBIT 10.3
S.M.A. REAL TIME
AGREEMENT OF EMPLOYMENT
THIS AGREEMENT is entered into this 1st day of April, 1999, by and between
S.M.A. REALTIME ("Company"), a New York corporation, with offices at 100 Avenue
of the Americas, New York, New York, and MICHAEL MORRISSEY ("Employee"), whose
address is 425 Broome Street, New York, New York, 10012.
RECITALS
I. Company desires to employ Employee as its President and Chief
Executive Officer, and Employee is willing to accept such
employment by Company, on the terms and subject to the conditions
set forth in this Agreement.
II. Employee and Company recognize and acknowledge the importance to
Company of protecting Company's rights with respect to its
confidential and proprietary information and know-how as well as
its business relationships and goodwill.
III. In exchange for Employee's agreement to not reveal Company's
confidential information, and to not compete with Company, all as
more fully set forth in this Agreement, Company is willing to
employ Employee and Employee is willing to accept employment upon
all of the terms and conditions set forth in this Agreement as
full and adequate consideration.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
contained in this Agreement, Employee and Company intending to be legally
bound, agree as follows:
1. Employment. Company agrees to employ Employee as President and Chief
Executive Officer, with such duties as are customary for such position.
Employee shall perform these duties subject to the direction and supervision of
the Board of Directors of the Company. Employee accepts such continued
employment and agrees to devote his full time and skills to the conduct of
Company's business, performing to the best of Employee's ability such duties as
may be reasonably requested by Company. Employee agrees to serve Company
diligently and faithfully so as to advance Company's best interests and agrees
to not take any action in conflict with Company's interests.
2. Term. The term of employment of Employee hereunder shall be five (5)
years, commencing upon the closing of the Company's initial public offering of
2,000,000 shares of common stock. Thereafter, this agreement shall
automatically be renewed for successive one (1) year periods unless terminated
by either party upon ninety (90) days written notice prior to the expiration
of the initial term or any renewal term.
3. Compensation.
(a) Salary. In consideration of the services to be performed under
this Agreement, Employee shall receive as compensation the sum of $250,000
annually. The salary will be paid in bi-
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weekly installments, from which shall be deducted all Federal, state and city
withholding taxes and such other amounts as may be required by law or agreed
upon between the parties.
(i) Adjustment of base salary. The base salary of $250,000
to be paid to Employee during each year shall be increased by any increase in
the cost of living determined in accordance with the formula set forth in
subparagraph (ii).
(ii) Cost of living increase in base salary. (a) As promptly
as practicable at the end of each year during the original or extended term of
this Agreement, the Company shall compute the increase, if any, in the cost of
living, using as the basis of such computation "The United States Bureau of
Labor Statistics, Consumer Price Index for Urban Wage Earners and Clerical
Workers, all items New York-Northern N.J.-Long Island (1982-1984=100),"
hereinafter called the Index. (b) The Index number in the column for New York,
entitled "all items," for the month of January, 1999, shall be the "base Index
number" (BIN) and the corresponding Index number for the month of January on
each anniversary of this Agreement, or any extension thereof, shall be the
"current Index number" (CIN). (c) The increase in the cost of living on each
anniversary of this Agreement shall be determined by dividing the current Index
number (CIN) by the base Index number (BIN), and subtracting the integer 1 from
the quotient, in accordance with the following formula:
Increase in cost of living = CIN
--- -1
BIN
(d) The percentage of increase in the cost of living, multiplied by $250,000,
shall be the increase required to be determined by subparagraph (b) of this
paragraph 3(a)(ii). Any portion of the increase retroactively due shall be
payable within five working days after the computation hereunder has been made.
(e) Appropriate adjustment shall be promptly made in case there is a published
amendment of the Index figures upon which the computation is based. (f) If
publication of the Consumer Price Index is discontinued, the parties shall
accept comparable statistics on the cost of living for the City of New York, as
computed and published by an agency of the United States or by a responsible
financial periodical of recognized authority to be selected by the parties.
(b) Bonus/ Options. To be determined annually in the discretion of
the Board of Directors.
(c) Reimbursement for Expenses. Employee will receive reimbursement
from the Company for expenses reasonably incurred by Employee on behalf of the
Company.
4. Other Benefits During the Employment Period.
(a) The Company will provide medical coverage for the Employee to
the extent of medical coverage in effect for the Company's employees in
accordance with its health plan (the benefits may change based upon a
number of factors and no guarantee is made as to the extent of the
benefits or that the medical plan at any time shall be the best coverage
available), as well as all other benefits made available to executive
employees of the Company, from time to time, at its discretion
("Benefits").
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(b) The Company shall furnish Employee with such working
facilities and other services as are suitable to Employee's position with
the Company and adequate to the performance of his duties under this
Agreement.
(c) Employee shall be entitled to paid sick days, personal days
and vacation periods in accordance with SMA's policy.
(d) At the end of any term of this Agreement, should the Company
choose not to renew or require the services of Employee, the Company will
notify Employee in writing ninety (90) days prior to the end of the term of
this Agreement. Employee shall receive a severance consideration equal to three
(3) months' salary.
5. Termination. This Agreement is subject to termination prior to the
expiration of its initial term or any extended term as follows:
(a) Termination for Cause. Company and Employee agree that no
additional salary or other benefits will be payable to the Employee by the
Company and the employment relationship between the parties will terminate
immediately following the occurrence of any one or more of the following
events:
(i) Employee violates any material term or condition
of this Agreement;
(ii) Employee commits a felony, gross misdemeanor or
act of dishonesty or engages in a material violation of the
established rules, regulations and policies of Company;
(iii) Employee engages in a general course of conduct
of non-cooperation, disorganization, gross negligence or other gross
misconduct adversely affecting the welfare, continuity or future of
Company's business.
(b) Death or Disability. If Employee should die or become
totally and permanently disabled during the term of employment, the
parties agree that the employment relationship and this Agreement will
terminate automatically. "Total disability" means the continuous inability
of Employee, resulting from disease or injury, to perform substantially
all the services pertaining to his employment under this Agreement. Such
total disability will be deemed "permanent" if Employee has not recovered
and returned to render the full services of his employment hereunder
within six (6) months of becoming totally disabled.
6. Confidential Information/Trade Secrets. Employee acknowledges that
during the course and as a result of his employment, Employee may receive or
otherwise have access to, or contribute to the production of, Confidential
Information or Trade Secrets. Confidential Information or Trade Secrets means
information that is proprietary to or in the unique knowledge of Company
(including information discovered or developed in whole or in part by
Employee); or information that derives independent economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and is the subject of efforts that are reasonable
under the circumstances to
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maintain its secrecy. In particular, Employee agrees that this information
includes among other things, procedures, manuals, confidential reports, lists
of clients, customers, suppliers, or products, and information concerning the
prices of charges paid by the Company's customers to the Company, or by the
Company to its suppliers.
Employee further acknowledges and appreciates that any Confidential
Information or Trade Secrets constitutes a valuable asset of Company and that
Company intends any such information to remain secret and confidential.
Employee therefore specifically agrees that except to the extent required by
Employee's duties to Company, Employee shall never, either during employment
with Company or at any time thereafter, directly or indirectly use, discuss or
disclose any Confidential Information or Trade Secrets of Company or otherwise
use such information to his own or a third party's benefit.
7. Return of Property. Employee agrees that upon the termination of
his employment with Company that he will immediately return to Company the
originals and all copies of any and all documents (including computer data,
disks, programs, or printouts) that contain any customer information, financial
information, product information, or other information that in any way relates
to Company, its products or services, its clients, its suppliers, or other
aspects of its business. Employee further agrees to not retain any summary of
such information.
8. Non-competition. Employee understands and agrees that, in addition
to Employee's above-described exposure to Company's Confidential Information or
Trade Secrets, Employee may, in his capacity as an employee, at times meet with
Company's customers and/or suppliers on behalf of Company, and that as a
consequence of using or associating himself with Company's name, goodwill, and
professional reputation, Employee's employment will place him in a position
where Employee can further develop personal and professional relationships with
Company's current and prospective customers and/or suppliers. Employee further
acknowledges that during the course and as a result of his employment Employee
may be provided certain specialized training or know-how. Employee understands
and agrees that this goodwill and reputation, as well as Employee's knowledge
of Confidential Information or Trade Secrets and specialized training and
know-how, could be used unfairly in competition against Company.
Accordingly, Employee agrees that, during the course of Employee's
employment with Company and for twelve (12) months from the date of Employee's
voluntary termination of employment or involuntary termination of employment
for cause, Employee shall not:
(a) Directly or indirectly, individually or collectively in
conjunction with others, engage in competition with the Company or any of
its subsidiaries.
(b) Cause or attempt to cause any existing or prospective
customer, client, or account who then has a relationship with the Company
or any of its subsidiaries, for current or prospective business, to
divert, terminate, limit or in any manner modify, or fail to enter into
any actual or potential business relationship with Company or any of its
subsidiaries.
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(c) Directly or indirectly solicit, employ or conspire with
others to employ any of Company's or Company's subsidiary's employees or
subcontractors. The term "employ" for purposes of this paragraph means to
enter into an arrangement for services as a full-time or part-time
employee, independent contractor, agent or otherwise.
Employee further agrees during the above-stated twelve (12) month period
to inform any new employer or other person or entity with whom Employee enters
into a business relationship, before accepting employment or entering into a
business relationship, of the existence of this Agreement and give such
employer, person or other entity a copy of this Paragraph 8, Non-competition.
9. Consideration. Employee and Company agree that the provisions of
this Agreement are reasonable and necessary for the protection of Company.
10. Remedies for Breach. Employee acknowledges that breach by him of the
provisions of this Agreement will cause Company irreparable harm that cannot be
fully remedied by monetary damages. Accordingly, Employee agrees that Company
shall, in addition to any relief afforded by law, be entitled to injunctive
relief. Employee agrees that both damages at law and injunctive relief shall be
proper modes of relief and are not to be considered alternative remedies.
Employee further agrees that Company shall be entitled to recover costs of
litigation and reasonable attorney fees incurred in enforcing this Agreement.
11. General Provisions. Employee and Company acknowledge and agree as
follows:
(a) This Agreement contains the entire understanding of the
parties with regard to all matters contained herein. There are no other
agreements, conditions, or representations, oral or written, express or
implied, with regard to such matters. This Agreement supersedes and
replaces any prior agreement between the parties generally relating to the
same subject matter.
(b) This Agreement may be amended or modified only by a writing
signed by both parties.
(c) Waiver by either Company or Employee of a breach of any
provision, term or condition hereof shall not be deemed or construed as a
further or continuing waiver thereof or a waiver of any breach of any
other provision, term or condition of this Agreement.
(d) The rights and obligations of Company hereunder may be
transferred or assigned to any successor, representative or assign of
Company. The term "Company" as used herein is intended to include S.M.A.
Real Time, Inc., its successors, affiliates, or assigns, if any. No
assignment of this Agreement shall be made by Employee, and any purported
assignment shall be null and void.
(e) Except as set forth herein, Employee's obligations under
paragraphs 6, 7 and 8 of this Agreement shall survive any change in
Employee's employment status with
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Company, by promotion or otherwise, or the termination of Employee's
employment with Company.
(f) If any Court finds any provision or part of this Agreement
to be unreasonable, in whole or in part, such provision shall be deemed
and construed to be reduced to the maximum duration, scope or subject
matter allowable under applicable law. Any invalidation of any provision
or part of this Agreement will not invalidate any other part of this
Agreement.
(g) This Agreement will be construed and enforced in accordance
with the laws and legal principles of the State of New York.
(h) This Agreement may be executed in any number of
counterparts, including counterparts transmitted by telecopier or FAX,
any one of which shall constitute an original of this Agreement. When
counterparts of facsimile copies have been executed by all parties, they
shall have the same effect as if the signatures to each counterpart or
copy were upon the same document and copies of such documents shall be
deemed valid as originals. The parties agree that all such signatures may
be transferred to a single document upon the request of any party.
(i) Any dispute under this Agreement shall be determined by
arbitration. Each party shall appoint one arbitrator and notify the other
of such appointment within ten days after written request from the other.
If the party so requested fails to appoint an arbitrator, the party making
the request shall be entitled to designate two arbitrators. The two
arbitrators shall select a third. The written decision of a majority of
the arbitrators shall be binding upon the Company and Employee and
enforceable at law. The arbitrators shall, by majority vote, determine the
place for hearing, the rules of procedure, and allocation of the expenses
of the arbitration.
(j) This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors, legal representatives,
and assigns.
This Agreement is intended to be a legally binding document fully
enforceable in accordance with its terms.
S.M.A. REAL TIME, INC.
----------------------------------
By:
/s/ Michael Morrissey
----------------------------------
Michael Morrisssey
6
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EXHIBIT 10.4
S.M.A. REAL TIME
AGREEMENT OF EMPLOYMENT
THIS AGREEMENT is entered into this 1st day of April, 1999, by and between
S.M.A. REALTIME ("Company"), a New York corporation, with offices at 100 Avenue
of the Americas, New York, New York, and DAVID SATIN ("Employee"), whose
address is 401 East 34th Street, New York, New York, 10016.
RECITALS
I. Company desires to employ Employee as its Executive Vice President, and
Employee is willing to accept such employment by Company, on the terms and
subject to the conditions set forth in this Agreement.
II. Employee and Company recognize and acknowledge the importance to
Company of protecting Company's rights with respect to its confidential
and proprietary information and know-how as well as its business
relationships and goodwill.
III. In exchange for Employee's agreement to not reveal Company's
confidential information, and to not compete with Company, all as
more fully set forth in this Agreement, Company is willing to
employ Employee and Employee is willing to accept employment upon
all of the terms and conditions set forth in this Agreement as
full and adequate consideration.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
contained in this Agreement, Employee and Company intending to be legally
bound, agree as follows:
1. Employment. Company agrees to employ Employee as Executive Vice
President, with such duties as are customary for such position. Employee shall
perform these duties subject to the direction and supervision of the Board of
Directors of the Company. Employee accepts such continued employment and agrees
to devote his full time and skills to the conduct of Company's business,
performing to the best of Employee's ability such duties as may be reasonably
requested by Company. Employee agrees to serve Company diligently and
faithfully so as to advance Company's best interests and agrees to not take any
action in conflict with Company's interests.
2. Term. The term of employment of Employee hereunder shall be five (5)
years, commencing upon the closing of the Company's initial public offering
of 2,000,000 shares of common stock. Thereafter, this agreement shall
automatically be renewed for successive one (1) year periods unless terminated
by either party upon ninety (90) days written notice prior to the expiration
of the initial term or any renewal term.
3. Compensation.
(a) Salary. In consideration of the services to be performed under
this Agreement, Employee shall receive as compensation the sum of $250,000
annually. The salary will be paid in bi-
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weekly installments, from which shall be deducted all Federal, state and city
withholding taxes and such other amounts as may be required by law or agreed
upon between the parties.
(i) Adjustment of base salary. The base salary of $250,000 to be
paid to Employee during each year shall be increased by any increase in the
cost of living determined in accordance with the formula set forth in
subparagraph (ii).
(ii) Cost of living increase in base salary. (a) As promptly as
practicable at the end of each year during the original or extended term of
this Agreement, the Company shall compute the increase, if any, in the cost of
living, using as the basis of such computation "The United States Bureau of
Labor Statistics, Consumer Price Index for Urban Wage Earners and Clerical
Workers, all items New York-Northern N.J.-Long Island (1982-1984=100),"
hereinafter called the Index. (b) The Index number in the column for New York,
entitled "all items," for the month of January, 1999, shall be the "base Index
number" (BIN) and the corresponding Index number for the month of January on
each anniversary of this Agreement, or any extension thereof, shall be the
"current Index number" (CIN). (c) The increase in the cost of living on each
anniversary of this Agreement shall be determined by dividing the current Index
number (CIN) by the base Index number (BIN), and subtracting the integer 1 from
the quotient, in accordance with the following formula:
Increase in cost of living = CIN
--- -1 .
BIN
(d) The percentage of increase in the cost of living, multiplied by $250,000,
shall be the increase required to be determined by subparagraph (b) of this
paragraph 3(a)(ii). Any portion of the increase retroactively due shall be
payable within five working days after the computation hereunder has been made.
(e) Appropriate adjustment shall be promptly made in case there is a published
amendment of the Index figures upon which the computation is based. (f) If
publication of the Consumer Price Index is discontinued, the parties shall
accept comparable statistics on the cost of living for the City of New York, as
computed and published by an agency of the United States or by a responsible
financial periodical of recognized authority to be selected by the parties.
(b) Bonus/ Options. To be determined annually in the discretion of
the Board of Directors.
(c) Reimbursement for Expenses. Employee will receive reimbursement
from the Company for expenses reasonably incurred by Employee on behalf of the
Company.
4. Other Benefits During the Employment Period.
(a) The Company will provide medical coverage for the Employee
to the extent of medical coverage in effect for the Company's employees in
accordance with its health plan (the benefits may change based upon a number
of factors and no guarantee is made as to the extent of the benefits or that the
medical plan at any time shall be the best coverage available), as well as all
other benefits made available to executive employees of the Company, from time
to time, at its discretion ("Benefits").
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<PAGE>
(b) The Company shall furnish Employee with such working
facilities and other services as are suitable to Employee's position with
the Company and adequate to the performance of his duties under this
Agreement.
(c) Employee shall be entitled to paid sick days, personal days
and vacation periods in accordance with SMA's policy.
(d) At the end of any term of this Agreement, should the Company
choose not to renew or require the services of Employee, the Company will
notify Employee in writing ninety (90) days prior to the end of the term of
this Agreement. Employee shall receive a severance consideration equal to three
(3) months' salary.
5. Termination. This Agreement is subject to termination prior to the
expiration of its initial term or any extended term as follows:
(a) Termination for Cause. Company and Employee agree that no
additional salary or other benefits will be payable to the Employee by the
Company and the employment relationship between the parties will terminate
immediately following the occurrence of any one or more of the following
events:
(i) Employee violates any material term or condition
of this Agreement;
(ii) Employee commits a felony, gross misdemeanor or
act of dishonesty or engages in a material violation of the
established rules, regulations and policies of Company;
(iii) Employee engages in a general course of conduct
of non-cooperation, disorganization, gross negligence or other gross
misconduct adversely affecting the welfare, continuity or future of
Company's business.
(b) Death or Disability. If Employee should die or become
totally and permanently disabled during the term of employment, the
parties agree that the employment relationship and this Agreement will
terminate automatically. "Total disability" means the continuous inability
of Employee, resulting from disease or injury, to perform substantially
all the services pertaining to his employment under this Agreement. Such
total disability will be deemed "permanent" if Employee has not recovered
and returned to render the full services of his employment hereunder
within six (6) months of becoming totally disabled.
6. Confidential Information/Trade Secrets. Employee acknowledges that
during the course and as a result of his employment, Employee may receive or
otherwise have access to, or contribute to the production of, Confidential
Information or Trade Secrets. Confidential Information or Trade Secrets means
information that is proprietary to or in the unique knowledge of Company
(including information discovered or developed in whole or in part by
Employee); or information that derives independent economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and is the subject of efforts that are reasonable
under the circumstances to
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<PAGE>
maintain its secrecy. In particular, Employee agrees that this information
includes among other things, procedures, manuals, confidential reports, lists
of clients, customers, suppliers, or products, and information concerning the
prices of charges paid by the Company's customers to the Company, or by the
Company to its suppliers.
Employee further acknowledges and appreciates that any Confidential
Information or Trade Secrets constitutes a valuable asset of Company and that
Company intends any such information to remain secret and confidential.
Employee therefore specifically agrees that except to the extent required by
Employee's duties to Company, Employee shall never, either during employment
with Company or at any time thereafter, directly or indirectly use, discuss or
disclose any Confidential Information or Trade Secrets of Company or otherwise
use such information to his own or a third party's benefit.
7. Return of Property. Employee agrees that upon the termination of his
employment with Company that he will immediately return to Company the
originals and all copies of any and all documents (including computer data,
disks, programs, or printouts) that contain any customer information, financial
information, product information, or other information that in any way relates
to Company, its products or services, its clients, its suppliers, or other
aspects of its business. Employee further agrees to not retain any summary of
such information.
8. Non-competition. Employee understands and agrees that, in addition to
Employee's above-described exposure to Company's Confidential Information or
Trade Secrets, Employee may, in his capacity as an employee, at times meet with
Company's customers and/or suppliers on behalf of Company, and that as a
consequence of using or associating himself with Company's name, goodwill, and
professional reputation, Employee's employment will place him in a position
where Employee can further develop personal and professional relationships with
Company's current and prospective customers and/or suppliers. Employee further
acknowledges that during the course and as a result of his employment Employee
may be provided certain specialized training or know-how. Employee understands
and agrees that this goodwill and reputation, as well as Employee's knowledge
of Confidential Information or Trade Secrets and specialized training and
know-how, could be used unfairly in competition against Company.
Accordingly, Employee agrees that, during the course of Employee's
employment with Company and for twelve (12) months from the date of Employee's
voluntary termination of employment, involuntary termination of employment, or
the termination of this Agreement at the end of its initial term or any renewal
term, Employee shall not:
(a) Directly or indirectly, individually or collectively in
conjunction with others, engage in competition with the Company or any of
its subsidiaries.
(b) Cause or attempt to cause any existing or prospective
customer, client, or account who then has a relationship with the Company
or any of its subsidiaries, for current or prospective business, to
divert, terminate, limit or in any manner modify, or fail to enter into
any actual or potential business relationship with Company or any of its
subsidiaries.
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<PAGE>
(c) Directly or indirectly solicit, employ or conspire with
others to employ any of Company's or Company's subsidiary's employees or
subcontractors. The term "employ" for purposes of this paragraph means to
enter into an arrangement for services as a full-time or part-time
employee, independent contractor, agent or otherwise.
Employee further agrees during the above-stated twelve (12) month period
to inform any new employer or other person or entity with whom Employee enters
into a business relationship, before accepting employment or entering into a
business relationship, of the existence of this Agreement and give such
employer, person or other entity a copy of this Paragraph 8, Non-competition.
9. Consideration. Employee and Company agree that the provisions of this
Agreement are reasonable and necessary for the protection of Company.
10. Remedies for Breach. Employee acknowledges that breach by him of the
provisions of this Agreement will cause Company irreparable harm that cannot be
fully remedied by monetary damages. Accordingly, Employee agrees that Company
shall, in addition to any relief afforded by law, be entitled to injunctive
relief. Employee agrees that both damages at law and injunctive relief shall be
proper modes of relief and are not to be considered alternative remedies.
Employee further agrees that Company shall be entitled to recover costs of
litigation and reasonable attorney fees incurred in enforcing this Agreement.
11. General Provisions. Employee and Company acknowledge and agree as
follows:
(a) This Agreement contains the entire understanding of the
parties with regard to all matters contained herein. There are no other
agreements, conditions, or representations, oral or written, express or
implied, with regard to such matters. This Agreement supersedes and
replaces any prior agreement between the parties generally relating to the
same subject matter.
(b) This Agreement may be amended or modified only by a writing
signed by both parties.
(c) Waiver by either Company or Employee of a breach of any
provision, term or condition hereof shall not be deemed or construed as a
further or continuing waiver thereof or a waiver of any breach of any
other provision, term or condition of this Agreement.
(d) The rights and obligations of Company hereunder may be
transferred or assigned to any successor, representative or assign of
Company. The term "Company" as used herein is intended to include S.M.A.
Real Time, Inc., its successors, affiliates, or assigns, if any. No
assignment of this Agreement shall be made by Employee, and any purported
assignment shall be null and void.
(e) Except as set forth herein, Employee's obligations under
paragraphs 6, 7 and 8 of this Agreement shall survive any change in
Employee's employment status with
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<PAGE>
Company, by promotion or otherwise, or the termination of Employee's
employment with Company.
(f) If any Court finds any provision or part of this Agreement
to be unreasonable, in whole or in part, such provision shall be deemed
and construed to be reduced to the maximum duration, scope or subject
matter allowable under applicable law. Any invalidation of any provision
or part of this Agreement will not invalidate any other part of this
Agreement.
(g) This Agreement will be construed and enforced in accordance
with the laws and legal principles of the State of New York.
(h) This Agreement may be executed in any number of
counterparts, including counterparts transmitted by telecopier or FAX, any
one of which shall constitute an original of this Agreement. When
counterparts of facsimile copies have been executed by all parties, they
shall have the same effect as if the signatures to each counterpart or
copy were upon the same document and copies of such documents shall be
deemed valid as originals. The parties agree that all such signatures may
be transferred to a single document upon the request of any party.
(i) Any dispute under this Agreement shall be determined by
arbitration. Each party shall appoint one arbitrator and notify the other
of such appointment within ten days after written request from the other.
If the party so requested fails to appoint an arbitrator, the party making
the request shall be entitled to designate two arbitrators. The two
arbitrators shall select a third. The written decision of a majority of
the arbitrators shall be binding upon the Company and Employee and
enforceable at law. The arbitrators shall, by majority vote, determine the
place for hearing, the rules of procedure, and allocation of the expenses
of the arbitration.
(j) This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors, legal representatives,
and assigns.
This Agreement is intended to be a legally binding document fully
enforceable in accordance with its terms.
S.M.A. REAL TIME, INC.
/s/ illegible
----------------------------------
By:
/s/ David Satin
----------------------------------
DAVID SATIN
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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
AGREEMENT, made the 11th day of May, 1999, by and between S.M.A. Video,
Inc., a New York corporation having an office at 100 Avenue of the Americas,
New York, New York ("SMA") and Eli Friedman, residing at 1253 Lednam Court,
Merrick, New York 11566 ("Friedman").
WITNESSETH:
WHEREAS, SMA is engaged in the business of film and videotape editing for
commercial use (the "business"); and
WHEREAS, Friedman has extensive experience providing film-to-tape and
tape-to-tape color correction services; and
WHEREAS, SMA wishes to employ the services of Friedman and Friedman wishes
to provide such services for SMA upon the terms and conditions hereinafter set
forth;
NOW THEREFORE, in consideration of Ten ($10.00) Dollars and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. SERVICES TO BE SUPPLIED BY FRIEDMAN.
SMA hereby employs Friedman to provide film-to-tape and tape-to-tape color
correction services. Friedman shall devote his services to the business,
exclusively, on a full-time basis and shall not be otherwise employed during
the term of this agreement in providing film-to-tape and tape-to-tape color
correction services or in any other capacity without the express written
consent, in advance, of SMA. Such consent may be withheld for any reason or for
no reason in the sole discretion of SMA.
<PAGE>
2. COMPENSATION; BENEFITS.
(a) Salary. SMA shall pay to Friedman an annual minimum salary (the
"Salary") of $230,000.00, during the term of this Agreement. The Salary shall
be paid in bi-weekly installments, from which shall be deducted all Federal,
state and city withholding taxes and such other amounts as may be required by
law or agreed upon between the parties.
(b) Benefits. SMA will provide medical coverage for Friedman to the extent
of medical coverage in effect for SMA employees in accordance with its health
plan (the benefits may change based upon a number of factors and no guarantee
is made as to the extent of the benefits or that the medical plan at any time
shall be the best coverage available). Friedman shall also be entitled to paid
sick days and personal days in accordance with the policy of SMA's employment
manual, and six weeks of paid vacation per year, subject to scheduling with
SMA's personnel department.
(c) Commission. In addition to Salary, Friedman shall be paid a commission
at the rate of ten (10%) percent of all Friedman Billings (as hereinafter
defined), for the first $1,000,000.00 billed and twenty (20%) percent of all
Friedman Billings in excess of $1,000,000.00 per year commencing October 1 and
ending September 30 of each year. "Friedman Billings" shall mean all billings
(which shall be at the basic room rate less discounts to customers) by SMA, for
work performed by Friedman. Commission payments shall be due and payable to
Friedman within thirty (30) days after the end of each calendar quarter for the
three month period immediately preceding the end of the quarter. A computation
of the commission payments will be delivered to Friedman, together with payment
of commissions then due to the extent that same have actually been received by
SMA. If Friedman disputes any computation, a written objection must be
presented to SMA not later than thirty (30) days after the delivery of the
computation to
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<PAGE>
Friedman. Thereafter, Friedman shall be deemed to have accepted the computation
and shall have no further right to dispute same. No commission shall be payable
to Friedman unless and until the amount billed has been paid to SMA.
3. CONFIDENTIALITY; NON-COMPETITION.
(a) All information concerning SMA, including by way of illustration and
not limitation, its clients, its day-to-day operations, its assets and
liabilities and technological secrets, which Friedman may become privy to by
virtue of his employment is strictly confidential and is not to be disclosed to
any person or entity.
(b) This agreement of confidentiality and non-competition is a material
and substantial inducement for SMA to enter into this Employment Agreement,
shall be enforceable in law and/or in equity and shall survive the termination
of this Agreement.
4. TERM.
The term of this agreement shall be three (3) years, commencing on the
date hereof.
5. TERMINATION.
a) SMA may terminate this agreement for cause:
i) in the event of the dishonesty, theft, disclosure of confidential
matters to others or other malfeasance of Friedman; or
ii) in the event of Friedman's death or disability rendering him
unable to carry out his duties hereunder for a period of two (2) months or
longer; or
iii) in the event that Friedman shall fail to carry out his duties
hereunder in a professional and competent manner, in the sole judgment of
Michael Morrissey and/or David Satin.
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<PAGE>
b) If this agreement shall be terminated for cause, Friedman shall have no
rights whatsoever, under this agreement, or to the use of the offices of SMA or
any of the files, data or equipment contained in the office, except that,
within forty-eight (48) hours after termination, Friedman shall be permitted to
remove any personal property belonging to him.
c) Within sixty (60) days after termination, SMA shall prepare and deliver
to Friedman a list of commissions which are claimed to be due from SMA. If
Friedman disputes the list, it shall prepare and deliver its list of
commissions to SMA. If the parties cannot thereafter resolve their differences,
same shall be submitted to arbitration in accordance with Article 7. In no
event shall commissions be payable to Friedman unless and until the billings
upon which they are based have been paid.
6. TERMINOLOGY.
All pronouns and variations thereof shall be deemed to refer to the
masculine, feminine, singular or plural as the identity of the person or
persons may require. Titles of Articles are for convenience only, and neither
limit nor amplify the provisions of the agreement itself.
7. BINDING EFFECT; GOVERNING LAW.
This Agreement shall be binding upon and inure to the benefit of all of the
parties hereto and their successors and any permitted assigns. This agreement
shall be governed by the laws of the State of New York. Any controversy or
claim arising out of or relating to this agreement, or the breach thereof,
shall be settled by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof. Any such arbitration shall be conducted at the New York City offices
of the American Arbitration Association.
4
<PAGE>
8. INTEGRATED AGREEMENT; MODIFICATION.
This agreement reflects the full understanding of the parties with respect
to the subject matter hereof and all prior understandings and agreements are
merged herein. This agreement may be modified only by an agreement in writing
signed by each of the parties hereto or their respective successors in
interest.
9. NOTICES.
Any notice or demand which, under the provisions of this agreement or
otherwise, must or may be given or made by any party hereto, shall be in
writing, and may be given or made by personal delivery or by mailing the same
by certified mail, return receipt requested, addressed to the other party at
the address hereinabove set forth or such other address as such party may
designate in writing by notice given pursuant to the provisions hereof. Any
notice given hereunder by mail shall be deemed delivered five (5) days after
being deposited in a United States general or branch post office, enclosed in a
certified, prepaid wrapper, addressed as hereinabove provided.
IN WITNESS WHEREOF the parties have executed this agreement the day and
year first above written.
S.M.A. Video, Inc.
By: /s/ Michael Morrissey
------------------------
Michael Morrissey, Pres.
/s/ Eli Friedman
-------------------------
Eli Friedman
5
<PAGE>
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
AGREEMENT, made the 12th day of May, 1999, by and between S.M.A. Video,
Inc., a New York corporation having an office at 100 Avenue of the Americas,
New York, New York ("SMA") and Larry Trosko, residing at 76 Wisseman Road,
Lagrangeville, New York ("Trosko").
WITNESSETH:
WHEREAS, SMA is engaged in the business of film and videotape editing for
commercial use (the "business"); and
WHEREAS, Trosko has extensive experience providing film-to-tape and
tape-to-tape color correction services; and
WHEREAS, SMA wishes to employ the services of Trosko and Trosko wishes to
provide such services for SMA upon the terms and conditions hereinafter set
forth;
NOW THEREFORE, in consideration of Ten ($10.00) Dollars and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. SERVICES TO BE SUPPLIED BY TROSKO.
SMA hereby employs Trosko to provide film-to-tape and tape-to-tape color
correction services. Trosko shall devote his services to the business,
exclusively, on a full-time basis and shall not be otherwise employed during
the term of this agreement in providing film-to-tape and tape-to-tape color
correction services or in any other capacity without the express written
consent, in advance, of SMA. Such consent may be withheld for any reason or for
no reason in the sole discretion of SMA.
2. COMPENSATION; BENEFITS.
(a) Salary. SMA shall pay to Trosko an annual minimum salary (the
"Salary") of $175,000.00, during the term of this Agreement. The Salary shall
be paid in bi-weekly installments, from which shall be deducted all Federal,
state and city withholding taxes and such other amounts as may be required by
law or agreed upon between the parties. The Salary shall be for a 40 hour week.
In the event that Trosko is required to work overtime, he shall be paid one and
one-half times his hourly salary until he is entitled to Commissions, as set
forth in (c) below, at which time Trosko shall not be entitled to overtime pay.
(b) Benefits. SMA will provide medical coverage for Trosko to the
extent of medical coverage in effect for SMA employees in accordance with its
health plan (the benefits may change based upon a number of factors and no
guarantee is made as to the extent of the benefits or that the medical plan at
any time shall be the best coverage available). Trosko shall also be entitled
to, paid sick days and personal days in accordance with the policy of SMA's
employment manual, and three weeks of paid vacation per year, subject to
scheduling with SMA's personnel department.
(c) Commission. In addition to Salary, Trosko shall be paid a
commission at the rate of ten (10%) percent of all Trosko Billings (as
hereinafter defined), in excess of $350,000.00 per year. "Trosko Billings" shall
mean all billings (which shall be at the basic room rate less discounts to
customers) by SMA, for work performed by Trosko. Commission payments shall be
due and payable to Trosko within thirty (30) days after the end of each calendar
quarter for the three month period immediately preceding the end of the quarter.
A computation of the commission payments will be delivered to Trosko, together
with payment of commissions then due to the extent that same have actually been
received by SMA. If Trosko disputes any
2
<PAGE>
computation, a written objection must be presented to SMA not later than thirty
(30) days after the delivery of the computation to Trosko. Thereafter, Trosko
shall be deemed to have accepted the computation and shall have no further
right to dispute same. No commission shall be payable to Trosko unless and
until the amount billed has been paid to SMA.
3. CONFIDENTIALITY; NON-COMPETITION.
(a) All information concerning SMA, including by way of illustration
and not limitation, its clients, its day-to-day operations, its assets and
liabilities and technological secrets, which Trosko may become privy to by
virtue of his employment is strictly confidential and is not to be disclosed to
any person or entity.
(b) This agreement of confidentiality and non-competition is a
material and substantial inducement for SMA to enter into this Employment
Agreement, shall be enforceable in law and/or in equity and shall survive the
termination of this Agreement.
4. TERM.
The term of this agreement shall be five (5) years, commencing on the
date hereof.
5. TERMINATION.
a) SMA may terminate this agreement for cause:
i) in the event of the dishonesty, theft, disclosure of
confidential matters to others or other malfeasance of Trosko; or
ii) in the event of Trosko's death or disability rendering him
unable to carry out his duties hereunder for a period of two (2) months or
longer; or
iii) in the event that Trosko shall fail to carry out his duties
hereunder in a professional and competent manner, in the sole judgment of
Michael Morrissey and/or David Satin.
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<PAGE>
b) If this agreement shall be terminated for cause, Trosko shall
have no rights whatsoever under this agreement, or to the use of the offices of
SMA or any of the files, data or equipment contained in the office, except that,
within forty-eight (48) hours after termination, Trosko shall be permitted to
remove any personal property belonging to him.
c) Within sixty (60) days after termination, SMA shall prepare and
deliver to Trosko a list of commissions which are claimed to be due from SMA. If
Trosko disputes the list, it shall prepare and deliver its list of commissions
to SMA. If the parties cannot thereafter resolve their differences, same shall
be submitted to arbitration in accordance with Article 7. In no event shall
commissions be payable to Trosko unless and until the billings upon which they
are based have been paid.
6. TERMINOLOGY.
All pronouns and variations thereof shall be deemed to refer to the
masculine, feminine, singular or plural as the identity of the person or
persons may require. Titles of Articles are for convenience only, and neither
limit nor amplify the provisions of the agreement itself.
7. BINDING EFFECT; GOVERNING LAW.
This Agreement shall be binding upon and inure to the benefit of all of
the parties hereto and their successors and any permitted assigns. This
agreement shall be governed by the laws of the State of New York. Any
controversy or claim arising out of or relating to this agreement, or the
breach thereof, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. Any such arbitration shall be conducted at
the New York City offices of the American Arbitration Association.
4
<PAGE>
8. INTEGRATED AGREEMENT; MODIFICATION.
This agreement reflects the full understanding of the parties with
respect to the subject matter hereof and all prior understandings and agreements
are merged herein. This agreement may be modified only by an agreement in
writing signed by each of the parties hereto or their respective successors in
interest.
9. NOTICES.
Any notice or demand which, under the provisions of this agreement or
otherwise, must or may be given or made by any party hereto, shall be in
writing, and may be given or made by personal delivery or by mailing the same by
certified mail, return receipt requested, addressed to the other party at the
address hereinabove set forth or such other address as such party may designate
in writing by notice given pursuant to the provisions hereof. Any notice given
hereunder by mail shall be deemed delivered five (5) days after being deposited
in a United States general or branch post office, enclosed in a certified,
prepaid wrapper, addressed as hereinabove provided.
IN WITNESS WHEREOF the parties have executed this agreement the day and
year first above written.
S.M.A. Video, Inc.
By: /s/ Michael Morrissey
----------------------
Michael Morrissey, Pres.
/s/ Larry Trosko
----------------------
Larry Trosko
5
<PAGE>
EXHIBIT 10.7
CONSULTING AGREEMENT
This Agreement entered into as of May 28th, 1999, by and between SMA
REAL TIME, INC. ("SMA"), and EDVARDO BISSICCIO (hereinafter "Bissiccio"). In
consideration of the mutual promises and covenants contained below, the parties
agree as follows:
1. Services to be Rendered. Bissiccio shall perform the following
marketing and sales services to the best of his abilities and to SMA's
satisfaction, including, without limitation:
(a) Developing and implementing a marketing program and plan for
sales of products and services relating to digital audio.
(b) Making introductions to, or otherwise initiating sales relationships
in the area of digital audio.
2. Term. The term of this Agreement shall be from June 1, 1999 through
November 30,1999.
3. Independent Contractor Status. Bissiccio expressly acknowledges that
he will be acting as an independent contractor and not as an employee, for all
purposes, including payment of Social Security withholding tax and all other
federal, state and local taxes. Bissiccio shall be free to set its own hours
and appointments. SMA acknowledges that Bissiccio carries on and agrees that
Bissiccio shall be entitled to continue to carry on other business activities,
provided that the same to not compete with or interfere with the performance of
his obligations hereunder.
4. Performance of Bissiccio
(a) All work performed hereunder by Bissiccio shall be of the highest
professional standards and performed to SMA's reasonable satisfaction.
5. Commissions and other Payments. Bissiccio's compensation under this
Agreement is:
(a) $25,000 paid upon the execution of this Agreement;
(b) $17,500 paid on each of June 30, 1999, July 31, 1999, August 31, 1999,
September 30, 1999, October 31, 1999 and November 30, 1999, for a total of
$105,000.
<PAGE>
(c) ordinary and necessary expenses incurred by Bissiccio in the
performance of his assignment hereunder, subject to prior approval by SMA.
(d) Commissions on sales made by SMA which result directly from
Bissiccio's introductions or other interventions as follows:
i Sales resulting from new clients introduced by Bissiccio during
the term of this Agreement and for a five (5) year period thereafter;
ii Sales resulting from new business received by SMA during the
term of this Agreement and any extension thereof;
iii Sales resulting from the introduction or intervention by certain
new employees hired at the request of Bissiccio, but limited to sales made
during the period that such employees remain employed by SMA. A list of such
employees signed by SMA and by Bissiccio shall be attached as a Schedule to
this Agreement. Upon the addition or removal of such employees the schedule
shall be revised and resigned.
iv Commissions shall be paid to Bissiccio at the rate of three (3%)
percent of the revenue collected from customers, calculated on the basis of
total net paid invoices. For purposes of this Agreement, a "net paid invoice"
shall equal the gross amount of a paid invoice, less discounts and allowances.
Commissions shall be paid to Bissiccio by the tenth day of the month
immediately following the month in which payment on invoices is received.
Payment of commissions to Bissiccio shall be accompanied by a statement of
commissions.
SMA shall have the absolute right, in its discretion, to refuse to accept any
orders procured by Bissiccio, or to make any allowances or adjustments to
orders. SMA shall notify Bissiccio in writing of such refusals, allowances or
adjustments.
6. Trade Secrets
(a) With respect to SMA's special business techniques, market
analysis, forms, software programs, customer lists, and all other information
regarding SMA's products and services, Bissiccio acknowledges that all of such
information:
i belongs to SMA;
ii constitutes specialized and highly confidential information not
generally known in the industry; and
ii constitutes trade secrets of SMA.
Accordingly, Bissiccio recognizes and acknowledges that it is essential to SMA
to protect the confidentiality of this trade information.
(b) Bissiccio agrees to act as a trustee of SMA's confidential
information and will hold such information in trust and confidence for SMA's
sole and exclusive use and benefit.
<PAGE>
(c) During the term hereof, and for thirty-six (36) months
thereafter, Bissiccio shall not disclose such information to any person, firm,
association, or other entity for any reason or purpose whatsoever, unless such
information has already become common knowledge or unless Bissiccio is required
to disclose the information by judicial process.
7. Warranty Against Prior Existing Restrictions. Bissiccio
represents and warrants to SMA that he is not a party to any agreement
containing a non-competition clause or other restriction with respect to the
services which he is required to perform hereunder, or the use or disclosure of
any information, directly or indirectly, related to SMA's business or to the
services he is required to render for SMA.
8. Prohibition Against Assignment. Bissiccio agrees, for himself and
on behalf of his successors, heirs, executors, administrators, and any person
or persons claiming under him, that this Agreement and the rights, interests,
and benefits hereunder cannot be assigned, transferred, pledged, or
hypothecated in any way and shall not be subject to execution, attachment, or
similar process. Any attempt to do so, contrary to these terms, shall be null
and void and shall relieve SMA of any and all obligations or liability
hereunder.
9. Agreement not to Compete. SMA has retained Bissiccio only for the
purposes set forth in this Agreement and his relationship to SMA is that of an
independent contractor. During the term hereof, Bissiccio shall not, directly
or indirectly, enter into, or in any manner take part in, any business,
profession, or other endeavor which competes with SMA. Bissiccio shall not so
compete either as an employee, agent, independent, contractor, owner, or
otherwise.
10. Restrictive Covenant
(a) For a period of one (1) year after the expiration or
termination of this Agreement for any reason, with or without cause, Bissiccio
will not, directly or indirectly, contact any then-existing client of SMA for
the purpose of selling services or products in the area of digital audio on
behalf of any other person, firm, company, or corporation.
(b) The parties acknowledge that they have attempted to limit
Bissiccio's right to compete only to the extent to protect SMA from unfair
competition. However, the parties hereby agree that, if the scope or
enforceability of the restrictive covenant is in any way disputed at any time,
a court of other trier of fact may modify and enforce the covenant to the
extent that it believes the covenant to be reasonable under the circumstances
then existing.
(c) Bissiccio further acknowledges that: (1) in the event this
Agreement with SMA terminates for any reason, he will be able to earn a
livelihood without violating the foregoing restrictions; and that his ability
to earn a livelihood without violating such restrictions is a material
condition to his retention by SMA.
11. Notice. All notices shall be given in writing and sent by
registered or certified mail, return receipt requested, and shall be addressed
to:
<PAGE>
In the case of SMA--
Michael J. Morrissey, President
SMA REAL TIME, INC.
100 Avenue of the Americas, 10th Floor
New York, New York 10013
And in the case of Bissiccio--
EDVARDO BISSICCIO
938 6th Street, Suite 4
Santa Monica, CA 90403
12. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors, assigns,
and legal representatives.
13. Captions. Captions of the sections of this Agreement are for
convenience and reference only, and the words contained shall not be held to
modify, amplify, or aid in the interpretation of the provisions of this
Agreement.
14. Counterparts and/or Facsimile Signature. This Agreement may be
executed in any number of counterparts, including counterparts transmitted by
telecopier or FAX, any one of which shall constitute an original of this
Agreement. When counterparts of facsimile copies have been executed by all
parties, they shall have the same effect as if the signatures to each
counterpart or copy were upon the same document and copies of such documents
shall be deemed valid as originals. The parties agree that all such signatures
may be transferred to a single document upon the request of any party.
15. Situs. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflict of laws.
16. Arbitration. Except for obtaining injunctive relief by either
party against actual or threatened conduct that would cause irreparable harm to
that party, and except for controversies, disputes or claims under this
Agreement related to the enforceability of restrictive covenants relating to
non-competition, any dispute arising between the parties shall be submitted for
arbitration to be administered by the New York City office of the American
Arbitration Association on demand of either party. All such claims shall be
heard by one arbitrator. Such arbitration proceedings shall be conducted in New
York City, and except as otherwise provided in this Agreement, shall be
conducted in accordance with the then-current Commercial Arbitration Rules of
the American Arbitration Association. The arbitrator shall have the right to
award or include in its award any relief which he or she deems proper in the
circumstances, including without limitation, money damages (with interest on
unpaid amounts from date due), specific performance, injunctive relief,
reasonable attorneys' fees and costs. The award and decision of the arbitrator
shall be conclusive and binding upon all parties hereto and judgment upon the
award may be entered in any court or competent jurisdiction, and each waives
any right to contest the validity or enforceability of such award. The
arbitrator shall apply the provisions of any applicable limitation on the
period of time in which claims must be brought. The parties
<PAGE>
further agree that, in connection with any such arbitration proceeding, each
shall submit or file any claim that would constitute a compulsory counterclaim
(as defined by Rule 13 of the Federal Rules of Civil Procedure) within the same
proceeding as the claim to which it relates. Any such claim which is not
submitted or filed in such proceeding shall be barred. This provision shall
continue in full force and effect subsequent to and notwithstanding expiration
or termination of this Agreement. The parties agree that arbitration shall be
conducted on an individual, not a class-wide basis and that none of the parties
hereto shall be entitled to consolidation or arbitration proceedings involving
such parties with those of any third party, nor shall the arbitrator or any
court be empowered to order such consolidation.
17. Non-Waiver. No delay or failure by a party to exercise any right
under this Agreement, and no partial or single exercise of that right, shall
constitute a waiver of that or any other right, unless otherwise expressly
provided herein.
18. Severablity. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
19. Modifications. This Agreement may not be and shall not be deemed
or construed to have been modified, amended, rescinded, cancelled, or waived in
whole or in part, except by a written instrument signed by the parties hereto.
20. Entire Agreement. This Agreement constitutes and expresses the
entire agreement and understanding between the parties hereto in reference to
all the matters referred to herein, and any previous discussions, promises,
representations and understanding relative thereto are merged into the terms of
this Agreement and shall have no further force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement on this
28th day of May, 1999.
SMA REAL TIME, INC.
By: /s/ Michael Morrissey
-----------------------
Michael Morrissey
SMA President
/s/ Edvardo Bissiccio
-----------------------
EDVARDO BISSICCIO
<PAGE>
EXHIBIT 10.8
Lease
dated as of
December 27, 1993
between
The Rector, Church-Wardens, and Vestrymen
of Trinity Church
in the City of New York, Landlord
and
SMA Video Inc., Tenant
--------------------------
100 Avenue of the Americas
--------------------------
<PAGE>
TABLE OF CONTENTS
FIRST: Use .................................... 2
SECOND: Rent ................................... 2
THIRD: Repairs ................................ 2
FOURTH: Alterations and Fixtures ............... 3
FIFTH: Compliance with Governmental
Rules and Regulations .................. 5
SIXTH: Compliance with Landlord's
Rules .................................. 6
SEVENTH: Landlord's Access to the
Premises ............................... 6
EIGHTH: Electric Current ....................... 7
NINTH: Condemnation ........................... 7
TENTH: Mechanic's Liens ....................... 9
ELEVENTH: Subordination .......................... 9
TWELFTH: Liquors ................................ 10
THIRTEENTH: Fire and Fire Insurance ................ 10
FOURTEENTH: Change in Use of Premises,
Subletting and Assignment .............. 12
FIFTEENTH: Waiver and Surrender;
Remedies Cumulative .................... 18
SIXTEENTH: Representations as to
Premises, certificate of
Occupancy and Use ...................... 18
SEVENTEENTH: Limitation of Landlord's
Liability .............................. 19
EIGHTEENTH: Indemnity by Tenant .................... 20
NINETEENTH: Insolvency ............................. 20
TWENTIETH: Remedies of the Landlord on
Default; Performance by the
Landlord ............................... 21
(a) Remedies of the Landlord
on Default; Performance
by the Landlord ................ 21
(b) Performance by the Landlord
Not an Exclusive Remedy ........ 22
(c) Dispossess Termination
of Lease ....................... 22
TWENTY-FIRST: Surrender at Expiration ................ 24
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<PAGE>
TWENTY-SECOND: Tenant's Deposit ....................... 24
TWENTY-THIRD: Building Services ...................... 25
TWENTY-FOURTH: Water; HVAC ............................ 27
TWENTY-FIFTH: Work to be Done by Landlord ............ 27
TWENTY-SIXTH: Real Estate Tax and CPI
Escalation ............................. 27
TWENTY-SEVENTH: Construction of Office
Improvements ........................... 31
TWENTY-EIGHTH: Broker ................................. 33
TWENTY-NINTH: Notices; Miscellaneous ................. 33
THIRTIETH: Quiet Enjoyment ........................ 34
THIRTY-FIRST: Security Guard Program ................. 34
THIRTY-SECOND: Headings ............................... 34
THIRTY-THIRD: Free Rent .............................. 34
THIRTY-FOURTH: Delayed Possession ..................... 35
THIRTY-FIFTH: No Pornography ......................... 35
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<PAGE>
THIS LEASE made this 19th day of December, 1993, between THE RECTOR,
CHURCHWARDENS AND VESTRYMEN OF TRINITY CHURCH IN THE CITY OF NEW YORK, a
religious corporation (hereafter referred to as the "Landlord"), having its
offices at 74 Trinity Place, Borough of Manhattan, City, County and State of New
York, and SMA VIDEO INC. (hereinafter referred to as the "Tenant"), a New York
corporation, having its place of business at [address].
W I T N E S S E T H :
--------------------
That the Landlord hereby lets and leases to the Tenant, and the Tenant
hereby takes and hires from the Landlord, the following described space: the
entire 10th floor as crosshatched on the diagram attached hereto as Exhibit
"All (such space is hereafter referred to as the "premises"), in the building
of the Landlord known by street number as 100 Avenue of the Americas, in the
Borough of Manhattan, City, County and State of New York (hereafter referred to
as the "building") with the privilege to the Tenant of using (subject to the
rules and regulations annexed hereto and such further rules and regulations of
which Tenant is given notice as the Landlord shall from time to time prescribe,
provided such further rules and regulations do not materially interfere with or
diminish Tenant's rights under the lease) and the Tenant is hereby granted the
nonexclusive right to use all common areas of the building and the necessary
entrances and appurtenances to the premises, reserving to the Landlord all
other portions of the building not herein specifically demised, for a term to
commence at noon, Standard Time, on March 1, 1994 (the "Commencement Date") and
to expire at noon Standard Time on July 31, 2004 or until such term shall
sooner cease and expire or be terminated as hereafter provided (the "Expiration
Date"), at the rent at the annual rate or rates as follows:
During the period commencing on the Commencement Date and
ending on the day immediately preceding the third anniversary of the
Commencement Date, the annual rent shall be Three Hundred Thousand and
no/100 ($300,000) Dollars;
During the period commencing on the third anniversary of the
Commencement Date and ending on the day immediately preceding the sixth
anniversary of the Commencement Date, the annual rent shall be Three
Hundred Twenty-five Thousand and no/100 ($325,000) Dollars,
During the period commencing on the sixth anniversary of the
Commencement Date and ending on the Expiration Date, the annual rent
shall be Three Hundred Fifty-two Thousand and no/100 ($352,000)
Dollars,
payable at the offices of the Landlord in equal monthly payments equal to
1/12th of the rent at the annual rates as above prescribed for the respective
periods in which they are payable, in advance without demand therefor and an
installment equal to the amount of the rent payable under this lease for the
first month of the term for which rent is payable shall be paid upon the
execution of this Lease, and thereafter, on the first day of each month during
said term, in lawful money of the United States, plus, when due or demanded,
such items as shall be provided hereafter are payable by the Tenant as
additional rent.
THE ABOVE LETTING IS UPON THE FOLLOWING COVENANTS, TERMS AND
CONDITIONS, each and every one of which the Tenant covenants and agrees with
the Landlord to keep and perform, and the Tenant agrees that the covenants
herein contained on the part
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<PAGE>
of the Tenant to be performed, shall be deemed conditional
limitations, as well as covenants and conditions:
FIRST: Use. The Tenant shall use the premises only
for general and executive offices, including but not limited to
offices of a film and video production business, studio and post
production facility, its related or affiliated uses, such as
storage and work area, provided that such use is ancillary to the
use of the premises as offices of a film and video production
business.
SECOND: Rent. (a) The Tenant shall pay the rent and
additional rent as provided in this lease.
(b) If any installment or installments of rent or additional rent or
any service charge shall not be paid within five (5) business days following
the date on which the same shall be due and payable pursuant to this lease
then, in addition to, and without waiving or releasing, any other rights and
remedies of the Landlord, the Tenant shall pay to the Landlord a late charge of
one and one-half (1-1/2%) percent per month computed (on the basis of a 30-day
month) from the date on which each such installment became due and payable to
the date of payment of the installment on the amount of each such installment
or installments, as liquidated damages for Tenant's failure to make prompt
payment, and the same may be collected on demand or as additional rent in
accordance with the provisions of Article TWENTY-FIRST of this lease.
THIRD: Repairs. (a) Tenant shall take good care of the premises and the
fixtures, appurtenances, equipment and facilities therein and shall make, as
and when needed, all repairs in and about the premises required to keep them in
good order and condition; such repairs to be equal in quality to the original
work, provided that the Tenant shall not be obligated for structural or
exterior repairs to the building or for repairs to the systems and facilities
of the building for the use or service of tenants generally (including
the plumbing, heating and electrical systems), other than fixtures,
appurtenances, equipment and facilities in the premises, except where
structural or exterior repairs or repairs to such systems and facilities are
made necessary by reason of one or more of the occurrences described below in
clauses (i) through (iv) of this Article THIRD (a). Should the Tenant fail to
repair any condition in or about the premises or the fixtures, appurtenances,
equipment and facilities therein which is of such a nature that its neglect
would be reasonably likely to result in damage or danger to the building, its
fixtures, appurtenances, facilities and equipment, or to its occupants (of
which nature the Landlord shall be the sole judge) or, in the case of repairs
of any other nature, should the Tenant have failed to make the required repairs
or to have begun, in good faith, the work necessary to make them within five
days after notice from the Landlord of the condition requiring repair, then in
either case, the Landlord may (but shall have no obligation to) immediately
enter the premises and make the required repairs at the expense of the Tenant.
The Landlord may (but shall have no obligation to) make, at the expense of the
Tenant, any repairs to the building or to its fixtures, appurtenances,
facilities or equipment, whether of a structural or any other nature, which are
required by reason of damage or injury due (i) to the negligence or the
improper acts of the Tenant or Tenant's employees, agents, contractors,
licensees or visitors; (ii) to the moving, into or out of the
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<PAGE>
building, of property being delivered to or taken from the premises by Tenant,
Tenant's agents, employees, contractors, licensees or visitors; (iii) to the
installation, repair or removal of the property of the Tenant in the premises
by Tenant or Tenant's agents, employees, contractors, licensees or visitors; or
(iv) to the faulty operation of any machinery, equipment, or facility installed
in the premises by or for the Tenant. The Tenant will pay the actual and
reasonable cost of any repairs made by the Landlord pursuant to this paragraph
upon presentation of bills therefor, or the Landlord may, at its option, add
such amounts to any installment or installments of rent due under this lease
and collect the same as additional rent. The liability of the Tenant under this
Article THIRD shall survive the expiration or other termination of this lease.
Except for the repairs which are the Tenant's obligations under the first
sentence of this Article THIRD (a), the Landlord, at Landlord's cost and
expense, will, upon notice of the need therefor, make the repairs required and
perform all maintenance necessary to keep the building and its fixtures,
appurtenances, facilities, equipment and systems (including the plumbing,
heating and electrical systems) in good working order.
(b) Machinery. If the Tenant shall install or maintain any business
machinery or other apparatus of any description in the premises, the operation
of which produces noise or vibration, which is transmitted beyond the premises
and the Landlord deems it necessary that the noise or vibration of such
machinery or apparatus be diminished, eliminated, prevented or confined to the
premises, the Landlord may give written notice to the Tenant, requiring that
the Tenant provide and install rubber or other approved settings for absorbing,
preventing or decreasing the noise or vibration of such machinery or apparatus
within fifteen (15) days. The judgment of the Landlord of the necessity of such
installation shall be conclusive, and the installation shall be made in such
manner and of such material as the Landlord may direct. Should the Tenant fail
to comply with such request within fifteen (15) days, the Landlord may do the
work necessary to absorb, prevent or decrease the noise or vibration of such
machinery or equipment and the Tenant will pay to the Landlord the cost of such
work upon demand or such cost may, at the option of the Landlord, be added to
any installment or installments of rent under this lease and shall be payable
by the Tenant as additional rent.
(c) Maintenance. Landlord shall at all times maintain the building in
the manner in which buildings of similar quality and character are maintained.
FOURTH: Alterations and Fixtures. (a) The Tenant
shall not make any alteration, addition or improvement in or upon
the premises, nor incur any expense therefor, without having
first obtained the written consent of the Landlord therefor. If
the Tenant shall desire to make alterations, additions or
improvements to fit out the premises for the Tenant's use which
will not adversely affect the structure of the building or the
operation of any of the systems or facilities of the building for
the use of all tenants or violate the requirements of government
hereafter referred to and if the Tenant shall furnish the
Landlord with the Tenant's plans and specifications for the
proposed alteration, addition or improvement in sufficient detail
to permit the Landlord to determine that the same will comply
with the requirements of this subdivision (a), the Landlord's
approval will not be unreasonably withheld or delayed. (The
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<PAGE>
Tenant agrees to reimburse the Landlord for its reasonable fees, expenses and
charges for reviewing any such plans or specifications.) Notwithstanding the
foregoing, Tenant shall have no obligation to submit such plans and
specifications in connection with the mere painting of the premises or the
performance of any non-structural alteration, addition or improvement, provided
such have no effect on the building's systems and the cost thereof, in the
Tenant's reasonable estimate, will not exceed $25,000, either individually or
in the aggregate with other alterations, additions or improvements in the
twelve (12) month period immediately preceding, and provided that (i) Tenant
gives Landlord at least ten (10) days' prior notice describing such work in
reasonable detail (including Tenant's reasonably detailed estimate of the cost
thereof) and setting forth the name(s) and address(es) of the contractor(s)
whom Tenant desires to perform such work, and (ii) Tenant shall obtain all
building or other governmental permits required for such work and Landlord will
not be required to execute any documents in connection with such work or such
permits. Whenever any alterations, decorations, additions or improvements of
the premises are made by the Tenant, the Tenant shall not, knowingly, employ or
permit to be employed therein any labor which will cause strikes or labor
troubles with other employees in the building employed by the Landlord or its
contractors. All alterations, decorations, additions or improvements shall be
made and installed in a good and workmanlike manner and shall comply with all
requirements, by law, regulation or rule, of the Federal, State and City
Governments and all subdivisions and agencies thereof, and with the
requirements of the New York Fire Insurance Exchange, New York Board of Fire
Underwriters and all other bodies exercising similar functions, and shall
conform to any particular requirements of the Landlord expressed in its consent
for the making of any such alterations, decorations, additions, and
improvements. Any such work once begun shall be completed with all reasonable
dispatch, but shall be done at such time and in such manner as not to interfere
with the occupancy of any other tenant or the progress of any work being
performed by or on account of the Landlord. If requested to do so by the Tenant
in connection with the Landlord's approval of any alteration, addition or
improvement, the Landlord will advise the Tenant whether the alteration,
addition or improvement (including, without limitation, the modular partitions
and furnishings included in the Improvements installed pursuant to Article
TWENTY-SEVENTH of this lease) will be required to be removed by the Tenant at
the expiration or earlier termination of this lease or may remain upon the
premises to become the property of the Landlord. If no such advice is given by
the Landlord, the provisions of subdivision (b) of this Article shall apply.
(b) All alterations, additions or improvements, which may be made or
installed in or upon the premises (whether made during or prior to the term of
this lease or during the term of any prior lease of the premises by the
Landlord, the Tenant or any previous tenant), except the furniture, trade
fixtures and equipment (whether or not affixed to the premises) of the Tenant,
shall be conclusively deemed to be part of the freehold and the property of the
Landlord, and shall remain upon the premises, and upon any termination of this
lease, be surrendered therewith as part thereof; provided that the Landlord
may, prior to the expiration of the term, notify the Tenant that the same shall
be removed, in which event, the Tenant shall remove the same together with all
of Tenant's personal property, at its own cost and expense, at or prior to the
expiration of the term and shall
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<PAGE>
restore and repair, at its own cost and expense, any damage or disfigurement of
the premises occasioned by such removal or remaining after such removal so as
to leave the premises in as good order and condition as they were at the time
of the making of this lease or, the Landlord at its option, may make such
restoration and repair and the Tenant will pay the cost thereof upon demand. If
any furniture or trade fixtures and other personal property of the Tenant shall
not be removed at the expiration or any other termination of this lease, they
shall, at the Landlord's option, be deemed to have been irrevocably abandoned
to the Landlord, and the Tenant shall have no further right, title or interest
therein, and the Landlord may remove the same from the premises, disposing of
them in any way which the Landlord sees fit to do, and the Tenant shall, on
demand, pay to the Landlord the expense incurred by the Landlord for the
removal thereof, as well as the cost of any restoration of the premises above
provided. The Tenant's obligations under this subdivision (b) of this Article
FOURTH shall survive the expiration of this lease.
(c) Notwithstanding anything to the contrary in paragraph (b) above, it
is understood and agreed that upon the expiration or early termination of this
lease, the Tenant shall be under no obligation to remove the Improvements to be
made to the premises pursuant to Article TWENTY-SEVENTH hereof.
(d) The Landlord may at any time during the term of this lease change
the arrangement or location of the entrances or passageways, doors and
doorways, and the corridors, elevators, stairs, toilets or other parts of the
building used by the public or in common by the Tenant and other Tenants
(including, without limitation, the conversion of elevators from a manually
operated to an automatic self-service basis) provided the same does not
materially interfere with Tenant's business. The Landlord agrees that in
performing any work permitted by this paragraph, it will, to the extent
practicable, use reasonable efforts to minimize any interference or disruption
of the Tenant's business and operation. The Landlord may alter the staffing of
the building and the scale and manner of the operation thereof, provided that
the services to which the Tenant is entitled as specified in this lease are not
diminished, and may alter the facilities, fixtures, appurtenances and equipment
of the building as it may deem the same advisable, or as it may be required so
to do by any governmental authority, law, rule or regulation. The Landlord may,
after reasonable notice, change the name, street number or designation by which
the building is commonly known.
FIFTH: Compliance with Governmental Rules and Regulations. Tenant shall
promptly comply, at the Tenant's own expense, with all laws, ordinances,
regulations and requirements of the City, State and Federal Governments, and
all subdivisions and agencies thereof, and of the New York Fire Insurance
Exchange, the New York Board of Fire Underwriters, and of any fire insurance
rating organization, and of all other departments; bureaus, officials, boards
and commissions with regard to the premises, or the use thereof by the Tenant,
provided that the Tenant shall not be required to make any structural
alterations or additions to the premises, except where the same are required by
reason of the Tenant's negligence or the negligence of Tenant's employees,
agents, contractors, visitors or licensees. The Tenant will not permit the
maintenance of any nuisance upon the premises or permit its employees, agents,
contractors, licensees or visitors to do any illegal act therein, or in and
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about the building after notice thereof from the Landlord. If any such law,
ordinance, regulation or requirement shall not be promptly complied with by the
Tenant within a reasonable time after notice thereof from the Landlord, then
the Landlord may, at its option, enter upon the premises to comply therewith,
and should any fine or penalty be imposed for failure to comply therewith or by
reason of any such illegal act, the Tenant agrees that the Landlord may, at its
option, pay such fine or penalty, which the Tenant agrees to repay to the
Landlord, with interest from the date of payment, as additional rent. Landlord
will not discriminate against Tenant in enforcing the rules and regulations
promulgated by Landlord for the building.
SIXTH: Compliance with Landlord's Rules. The Tenant and the Tenant's
employees, and any other persons subject to the control of the Tenant, shall
well and faithfully observe all the rules and regulations annexed hereto, and
also any and all reasonable rules and regulations affecting the premises, the
building or the equipment, appurtenances, facilities and services thereof,
hereafter promulgated by the Landlord, all of which shall be applied and
enforced by the Landlord without discrimination. The Landlord may at any time,
and from time to time, prescribe and regulate the placing of safes, machinery,
quantities of supplies and other things, and regulate which elevator and
entrance shall be used for the Tenant's shipping and receiving subject to the
provisions of Article TWENTY-THIRD: and may make such other and further rules
and regulations as in its judgment may, from time to time, be needed or
desirable for the safety, care or cleanliness of the building and for the
preservation of good order therein.
SEVENTH: Landlord's Access to the Premises. (a) The shall, without in
any way affecting the Tenant's obligations hereunder, and without constituting
any eviction, permit the Landlord and its agents: (i) at all reasonable hours
and upon reasonable notice, to enter the premises and have access thereto, for
the purpose of inspecting or examining them and to show them to other persons;
and (ii) to enter the premises to make repairs (including specifically access
to the air conditioning equipment rooms), and to do any work on the premises
and any work in connection with excavation or construction on any adjoining
premises or property (including, but not limited to, the shoring up of the
building) and to take in any of the foregoing instances, any space needed
therefor. The Tenant shall permit the Landlord to erect and maintain ducts,
pipes and conduits in and through the premises. In the exercise of the rights
of the Landlord reserved under clause (ii) or under the sentence of this
subdivision (a) of Article SEVENTH immediately preceding this one, the Landlord
will do so in a manner which minimizes the interference with the Tenant's use
of the premises so far as practicable and where ducts, pipes or conduits are to
be erected through the premises will locate them along walls or ceilings
wherever practicable and in locations which will not materially adversely
affect Tenant's use of the-premises.
(b) In the event that the premises shall, in the Landlord's judgment,
become substantially vacated before the expiration of this lease, or in the
event that the Tenant shall be removed by summary proceedings, or in the event
that, during the last month of the term, the Tenant shall have removed all or
substantially all of the Tenant's property therefrom, the Landlord may
immediately enter into and upon said premises for the purpose of decorating,
renovating or otherwise preparing the
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same for a new tenant, without thereby causing any abatement of rent or
liability on the Landlord's part for other compensation, and such acts shall
have no effect upon this lease.
(c) In the event of an emergency or if the Tenant shall not permit the
Landlord to have access to the premises as required by paragraph (a) above,
then when for any reason access shall be necessary or permissible hereunder,
the Landlord or the Landlord's agents, may enter the same by a master key, or,
in the case of an emergency, may forcibly enter the same without rendering the
Landlord or such agents liable therefor (if during such entry the Landlord
shall accord reasonable care to the Tenant's property) and without in any
manner affecting the obligations and covenants of this lease, and in no event
shall any such entry by the Landlord or its agents be deemed an acceptance of a
surrender of this lease, either expressed or implied, nor a waiver by the
Landlord of any covenant of this lease on the part of the Tenant to be
performed.
EIGHTH: Electric Current. (a) Electric current is initially to be
supplied by the Landlord. The Tenant covenants and agrees to purchase the
Tenant's requirements therefor at the premises from the Landlord or the
Landlord's designated agent at 108% of the rates set forth in the rate schedule
of Consolidated Edison Company of New York, Inc. then applicable to the
building (or the conjunctional group in which the building is included), plus
any sales or use tax or other governmental charge or levy; provided, however,
that if such rate schedule includes any adjustment for time-of-day for either
demand or consumption, the rate applicable to the Tenant's demand for and
consumption of electricity, shall be that specified for the peak period. The
calculation of the rate shall include the effect of all direct and indirect
charges which affect the cost of the electricity, including without limitation,
consumption charges, demand charges and fuel cost escalation charges.
(b) Should the Landlord at any time, be prevented from furnishing the
foregoing service due to a change of rate or a regulation of the Public Service
Commission or due to any rate or regulation of the public utility corporation
serving the building, or if the Landlord for any other reason determines to
discontinue the service, the Landlord may do so, and will give the Tenant not
less than ninety (90) days' notice of the date on which the service will be
discontinued. Beginning with the date on which such service by the Landlord is
discontinued, the Tenant shall purchase its requirements for electric current
from the public utility serving the area directly. The Landlord shall permit
the Landlord's wires and conduits, to the extent to which they are safely
available for such use and the extent to which they may be so used under any
applicable regulations (including those of such public utility) to be used for
the purpose. Should any additional or other wiring, conduits, meters or
distribution equipment be required in order to permit the Tenant to receive
such direct service, the same will be installed by the Landlord at the sole
cost and expense of the Tenant in respect to the wiring, conduits, meters and
distribution equipment. Landlord may, at its sole option, determine that a
single meter will be utilized for the premises for electric billing purposes.
In the event the Landlord uses two meters, the electric charges will be
calculated on a conjunctional billing basis.
NINTH: Condemnation. (a) if the whole of the building or of the
premises shall be taken by condemnation or in
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any other manner for any public or quasi-public use or purpose (other than for
temporary use or occupancy), the term of this Lease ("Lease Term") shall
forthwith cease and terminate as of the date of vesting of title by reason of
such taking (which date is hereinafter referred to as the "date of the
taking"), and the rent shall be apportioned as of such date. If a portion of
the building shall be so taken so that substantial structural alterations or
reconstruction of the building shall be necessary as a result of such taking
(whether or not the premises be affected), which alterations or reconstruction
Landlord reasonably determines will take at least 180 days to complete, or if
50% or more of the common areas of the building are taken, Landlord or the
Tenant by notifying the other party in writing of such termination within sixty
(60) days following the date of the taking may, at its option, terminate this
Lease and the Lease Term and estate hereby granted will terminate sixty (60)
days after receipt of such termination notice.
(b) If any part, but less than all, of the premises shall be so taken
and this Lease shall not be terminated pursuant to Paragraph (a) of this
Article NINTH, then the part so taken shall no longer constitute part of the
premises but this Lease shall otherwise remain unaffected by such taking;
provided, however, that Tenant may elect to terminate the Lease Term in the
event of:
(i) a taking of more than 50% of the total rentable
area of the premises, or
(ii) a taking that has a material adverse effect on Tenant's
access to the building or the premises or the loading dock, if Landlord
determines that it will be unable to provide adequate alternative
access to the building and the premises within 180 days thereafter,
by giving notice of such election to Landlord not later than sixty (60) days
after Tenant's receipt from Landlord of notice of such taking or the date of
such taking, whichever first occurs, or not later than thirty (30) days after
such one hundred eightieth day, as the case may be. If notice of termination of
this Lease shall be given pursuant to this Section, then upon such date as may
be specified by Tenant by notice to Landlord, which date shall be not earlier
than thirty (30) and not later than sixty (60) days after the date of Tenant's
notice, the Lease Term shall terminate as of the date specified in such notice
and the rent shall be apportioned as of such date of termination. Upon a
partial taking and this Lease continuing in force as to any part of the
premises:
(x) the fixed rent and additional rent shall be equitably
reduced for the remainder of the Lease Term, according to the nature
and extent of the loss of use of the premises suffered by Tenant; and
(y) Landlord shall, at its expense, restore with reasonable
diligence the remaining portions of the premises as nearly as
practicable to the same condition as it was in prior to such
condemnation or taking.
(c) In the event of any condemnation or taking hereinabove
mentioned of all or a part of the building (whether or not the premises be
affected), Landlord shall be entitled to receive the entire award in the
condemnation proceeding, Tenant
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shall have no claim for the value of any unexpired term of the Lease, and
Tenant hereby expressly assigns to Landlord any and all right, title and
interest of Tenant now or hereafter arising in or to any such award or any part
thereof, and Tenant shall be entitled to receive no part of such award. The
foregoing, however, shall not be deemed to preclude Tenant from seeking to
recover a separate award for Tenant's moving expenses and Tenant's personal
property, but only provided that such award does not reduce and is not payable
out of the amount for the land and the building.
TENTH: Mechanic's Liens. The Tenant will not permit, during the term
hereby granted, any mechanic's or other lien or order for payment of work,
labor, services, or materials furnished or to be furnished to attach to or
affect the premises or any portion thereof, and agrees that it will not cause
or permit any such lien or order to attach to or affect the fee, leasehold or
other estate of the Landlord herein, or the building. The Tenant's obligation
to keep the premises in repair, and its right to make alterations therein, if
any, shall not be construed as the consent of the Landlord to the furnishing of
any such work, labor or materials within the meaning of any present or future
lien law. Notice is hereby given that the Tenant has no power, authority or
right to do any act or to make any contract which may create, or be the
foundation for, any lien upon the fee or leasehold estate of the Landlord in
the premises or upon the land or buildings of which they are a part or the
improvements now erected or hereafter to be erected upon the premises or the
land or building of which the premises are a part; and if any such mechanic's
or other lien or order shall be filed against the premises or the land or
building of which the premises are a part, the Tenant shall, within ninety (90)
days after the Tenant has notice thereof, discharge said lien or order by
payment, deposit or by bond fixed in a proper proceeding according to law. If
the Tenant shall fail to take such action, or shall not cause such lien or
order to be discharged within ninety (90) days after the filing thereof, the
Landlord may pay the amount of such lien or discharge the same by deposit or by
bond or in any other manner according to law, and pay any judgment recovered in
any action to establish or foreclose such lien or order, and any amount so
paid, together with the expenses incurred by the Landlord, including all
attorneys' fees and disbursements incurred in any defense of any such action,
bonding or other proceeding, shall be deemed additional rent. Any reasonable
expenses incurred by Landlord in connection with the examination of title to
the premises in order to ascertain the existence of any lien or encumbrance and
the discharge of record thereof, shall be payable by Tenant to Landlord on
demand, together with interest as aforesaid, as additional rent.
ELEVENTH: Subordination. (a) This lease, and all
the rights of the Tenant hereunder, are and shall be subject and
subordinate to any and all mortgages now or hereafter liens
either in whole or in part on the building, or the land on which
it stands, and also to any and all other mortgages covering other
lands or lands and buildings, which may now or hereafter be
consolidated with any mortgage or mortgages upon the buildings
and the land on which it stands or which may be consolidated and
spread to cover the building and such land and any such other
land or lands and buildings, and any extension, renewal or
modification of any such mortgages, and to any and all underlying
leases on record, or hereafter to be recorded, against the
building or the land on which it stands, and any extensions,
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renewals or modifications thereof. The Tenant hereby constitutes and
irrevocably appoints the Landlord the Tenant's attorney in fact to execute any
instrument or certificate evidencing such subordination for and on behalf of
the Tenant.
(b) The Tenant hereby agrees that, in the event that any mortgagee
shall succeed to the rights of the Landlord herein named, or if any landlord of
any underlying lease shall succeed to the position or the Landlord under this
lease, then the Tenant will recognize such successor Landlord as the Landlord
of this lease and pay the rent and attorn to and perform the provisions of this
lease for the benefit of any such successor Landlord. No documentation other
than this lease shall be necessary to evidence such attornment but Tenant
nevertheless agrees to execute any documentation reasonably requested by the
successor Landlord to confirm such attornment or to otherwise carry out the
intent and purposes of the provisions of this Article ELEVENTH.
(c) Anything herein to the contrary notwithstanding, the Landlord
represents and warrants to Tenant that as of the date of this lease there is no
mortgage or superior lease encumbering the premises.
(d) If, in connection with obtaining temporary or permanent financing
for the land and/or building, or any underlying lease, any lender shall request
reasonable modifications of this lease as a condition to such financing, Tenant
will not unreasonably withhold, delay or defer the execution of an agreement of
modification of this Lease provided such modifications do not increase the
monetary obligations of Tenant hereunder or materially adversely affect the
leasehold interest hereby created, or Tenant's rights hereunder or materially
interfere with Tenant's business or access rights provided in Article
TWENTY-THIRD.
TWELFTH: Liquors. Neither the Tenant nor any occupant of the premises,
or of any part thereof, shall at any time during the continuance of the term,
sell, traffic in, expose for sale, dispense or give away, upon any part of the
premises, any strong or spirituous liquor, wine, ale or beer, or take or have a
license for such sale, except that it is understood that as a part of the
Tenant's customer relations in its business, the Tenant may from time to time
serve alcoholic beverages to customers at the premises. No charge will be made
for such dispensation or service. Such service of alcoholic beverages will not
be deemed a default or violation under paragraph TWELFTH hereof. In no event
shall Tenant dispense or give away any alcoholic beverage to any employee of
the Landlord.
THIRTEENTH: Fire and Fire Insurance. (a) If the premises shall be
damaged by fire, action of the elements or other casualty or cause which is
within the risks or the insurance carried by the Landlord, the Tenant shall
give immediate notice thereof to the Landlord, and said damage (unless the same
shall be due to the negligence or other fault of the Tenant or its employees)
shall be repaired by the Landlord, to a condition as close as possible as
existed prior to such fire or casualty, at the Landlord's expense, with all
reasonable speed, making due allowance for delay due to labor troubles,
settlement of loss and other causes beyond the control of the Landlord, and the
Tenant shall, in every reasonable way, facilitate the making of such repairs,
and (unless the same shall be due to the negligence or other fault of the
Tenant or its employees) the
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rent and additional rent shall be suspended during such period as the premises
shall have been rendered wholly untenantable. In the event that the premises
are rendered partially untenantable, the rent shall be abated during such
period, in the proportion which the area of the premises which is rendered
untenantable bears to the area of the whole premises, but no damage to the
premises or the building by fire, or other cause, however extensive, shall
terminate this lease, or give the Tenant the right to quit and surrender the
premises, or impair any obligation of the Tenant hereunder, (except, to the
extent permitted in the preceding sentence, with respect to the payment of
rent). Notwithstanding the preceding (i) if the damage shall be so extensive
that the Landlord shall determine to demolish or substantially alter the
building, the Landlord may at any time within ninety (90) days following the
occurrence of the damage give to the Tenant 30 days' notice of intention to
terminate this lease; (ii) if the damage to the premises is substantial so that
the whole or substantially the whole of the premises are rendered untenantable
or if 50% or more of the common areas of the building are destroyed or
substantially damaged and the Landlord does not within 60 days following the
occurrence of the damage notify the Tenant of the Landlord's intention to
repair the damage to the premises so that the premises are again useable by the
Tenant, or if the premises are not, in fact, usable within a period of not more
than 90 days following the occurrence of the damage subject to delays due to
causes of the kinds described in Article TWENTY-SEVENTH of this lease, the
Tenant may cancel this lease by notice given within 30 days following the
expiration of the said 60-day period for the Landlord's notice of election to
repair or 60 days after the expiration of the 90 day period, as the case may
be; and (iii) in the event of the occurrence of damage to the premises of the
degree described above in clause (ii) of this paragraph (a), the Landlord may
also elect to terminate this lease by notice of election to do so given within
60 days following the occurrence of the damage. If notice of election to
terminate this lease shall be given as above provided, then, upon the date for
termination designated in any such notice this lease and the term hereby
granted shall terminate and the rent shall be apportioned as of the date of the
damage or as of such later date as the Tenant may actually surrender
possession. Nothing herein contained shall be deemed to obligate the
Landlord to restore the Tenant's trade fixtures, stocks, furnishings or other
personal property of the Tenant.
(b) The Tenant shall conduct its business and use the premises in such
a manner so as not to increase the rate of insurance applicable to the building
or the property of other tenants, and the Tenant shall install and maintain all
its furniture, fixtures, equipment; stocks and materials in such a manner as to
accomplish the foregoing purposes. The Tenant further agrees not to permit any
act to be done or anything brought into or kept upon the premises which will
void or avoid the insurer's liability under any contract of fire insurance on
the building or its contents (containing normal and usual exemptions) or any
actions which will substantially increase the Landlord's cost of such insurance
and in the event of such increase due to any action of the Tenant, Tenant's
employees, agents, contractors, visitors or licensees, the Tenant agrees to pay
to the Landlord, on demand, the additional cost of such insurance, or, at the
option of the Landlord, the same may be added to any installment of rent and be
payable as additional rent. The schedule of the makeup of a rate issued by an
authorized rating organization shall be conclusive evidence of
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the facts therein stated and of the items in the rate applicable
to the premises.
(c) The Landlord, as to the premises, and the Tenant, as to the
improvements made therein at the Tenant's expense and all of the Tenant's
stock, trade fixtures and other property in the premises, hereby release one
another from all liability for any loss or damage caused by fire or any of the
risks enumerated in standard extended coverage insurance. This release is
conditioned upon the inclusion in their respective policies of insurance, if
any, of a provision stating that such release shall not adversely affect said
policies or prejudice any right of the insured to recover thereunder. The
Landlord and Tenant agree that their respective insurance policies will include
a waiver of subrogation provision so long as the same is obtainable without
extra cost or if extra cost be charged, so long as the party for whose benefit
the clause is obtained shall pay such extra cost. If extra cost shall be
chargeable therefor the party so affected shall advise the other of the amount
or the extra cost and the other party at its election may pay the same or
decline to so pay in which event the release from liability given to said party
by this Article THIRTEENTH (c) shall be deemed to be withdrawn and of no force
and effect.
FOURTEENTH: Change in Use of Premises; Subletting and Assignment. (a)
The use to be made of the premises by the Tenant and the identity of the Tenant
being among the inducements to the making of this lease by the Landlord, the
Tenant shall not, except in accordance with the terms of this Article, (i) use
or permit the premises or any part thereof to be used for any purposes other
than those specified in the lease, (ii) sublet or underlet the premises or any
part thereof, (iii) permit the premises or any part thereof to be occupied by
anyone other than the Tenant or its officers or employees, (iv) mortgage or
encumber this lease or any interest therein, (v) assign or transfer, by
operation of law or otherwise, this lease or any interest therein.
(b) The Tenant shall not, without having first obtained the Landlord's
prior written consent thereto, (i) use or permit the premises or any part
thereof to be used for any purposes other than those specified in the lease, or
(ii) mortgage or encumber this lease or any interest therein.
(c) The Tenant shall not, except in accordance with the provisions of
paragraphs (d) through (m) of this Article, (i) assign or transfer, by
operation of law or otherwise, this lease or any part therein, (ii) sublet or
underlet the premises or any part thereof, or (iii) permit the premises or any
part thereof to be occupied by anyone other than the Tenant or its officers or
employees.
(d) If the Tenant shall desire to assign this lease or to sublet the
whole or any part of the premises or to permit the premises to be occupied by
any person other than the Tenant, the Tenant will notify the Landlord as to (i)
the action which the Tenant proposes; (ii) the portion of the premises with
respect to which the tenant proposes to take such action (the "Affected
Premises"); (iii) the name and business address of the proposed assignee,
sublessee or occupant (the "Proposed Undertenant"), (iv) the name and residence
address of the officers and principal stockholders of the Proposed Undertenant,
if a corporation is involved or the names and residence addresses of the
partners thereof if a partnership or joint venture is involved; (v) the
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information, in reasonable detail, as to the Proposed Undertenant which is
required to permit the Landlord to make the determinations described in
paragraphs (f), (g) or (h) below; (vi) the terms upon which the Tenant proposes
to assign this lease or sublet the premises or permit the premises to be
occupied by the Proposed Undertenant (including the terms under which any
additions, alterations or decorations are to be made to the Affected Premises
and the terms on which the Proposed Undertenant is to buy or lease any
fixtures, leasehold improvements, equipment, furniture, furnishings or other
personal property from the Tenant; and (vii) the name and address of any real
estate broker or other person to whom a commission may be owed by any person in
connection with such assignment, subleasing or occupation. (The Tenant's
notice of desire to assign, sublease or permit the occupancy of the Affected
Premises by others, with the information prescribed above is hereafter referred
to as a "Tenant's Subleasing Notice")
(e) By written notice ("Landlord's Subleasing Notice") executed by the
Landlord and delivered to the Tenant within thirty (30) days following receipt
of the Tenant's Subleasing Notice (for the purposes hereof such notice shall
not be deemed to have been received by the Landlord until all of the
information required by paragraph (d) above shall have been furnished to the
Landlord), the Landlord shall have the absolute right to select one of the
alternatives set forth in paragraphs (f), (g) or (h) below.
(f) In the event of a proposed assignment of this lease or the
subleasing or occupation of the entire premises subject to this lease for the
then remaining balance of the term of this lease, (i) the Landlord may elect to
require the Tenant to surrender the premises to the Landlord and terminate this
lease with respect to the premises on the last day of the second complete
calendar month following the Tenant's Subleasing Notice and comply with the
provisions of this lease respecting surrender at the end of the term not later
than such date or (ii) the Landlord may give its consent to any such
assignment, sublease or occupation. Any subletting or occupancy by a third
party as a consequence of which 25% or less in an area of the Premises shall
remain in occupancy by the Tenant herein named may, at the Landlord's option,
be considered a subleasing of the whole of the Premises.
(g) In the event of a proposed subleasing or occupation of less than
the entire premises subject to this lease or the entire premises for less than
the then remaining balance term of this lease, (i) the Landlord may elect to
require the Tenant to surrender to the Landlord and vacate the Affected
Premises not later than the date upon which the proposed subleasing or
occupation is proposed to commence and comply on such date with the provisions
of this lease as to surrender on the Expiration Date with respect to the
Affected Premises, and the Tenant shall, at its expense, erect the partitioning
required to separate the Affected Premises from the remainder of the premises,
create any doors required to provide an independent means of access to the
affected Premises from elevators and lavatories and to segregate the wiring and
meters and electric current facilities, so that the Affected Premises may be
used as a unit for commercial purposes, separate from the remainder of the
premises remaining in occupation of the Tenant; in which event the rent and all
additional rent payable under this lease shall be reduced proportionately with
the diminution in the area
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of the premises upon surrender of the Affected Premises; or (ii) the Landlord
may give its consent to any such sublease or occupation and thereupon the
provisions of paragraphs (1), (p) and (q) below, will be implemented.
(h) Notwithstanding any other provision herein, in the event that
Landlord does not select one or more of the alternatives set forth in
paragraphs (f) or (g) of this Article following receipt of Tenant's Subleasing
Notice, then Landlord agrees not to unreasonably withhold or delay its consent
to any proposed subleasing or assignment, provided, however, that the Landlord
shall have the right to condition its consent to any proposed sublease of all
or a portion of the premises on the following:
(i) The Tenant shall not be in default in the payment of rent
or in the performance of any other of its obligations under this lease,
the time to cure having expired.
(ii) The Tenant shall have delivered to the Landlord a Tenant's
Subleasing Notice as required by subparagraph (d) above.
(iii) The Tenant shall assign to the Landlord, and grant the
Landlord a security interest in, the sublease and the rents payable
thereunder and shall take all necessary steps required to perfect such
assignment and security interest.
(iv) The sublease shall include provisions to the effect that
(x) if the Landlord shall notify the sublessee that the Tenant is in
default in the payment of rent or in the performance of its other
obligations under this lease, the sublessee shall, if so requested by
the Landlord, pay all rent and other amounts due under the sublease
directly to the landlord, (y) notwithstanding any such payment by the
sublessee directly to the Landlord, the term of the sublease shall
terminate simultaneously with the termination of the term of this lease
and the sublessee shall surrender the subleased premises upon such
termination, and (z) it is subject and subordinate to this lease and to
all matters to which this lease is or shall be subordinate.
(v) The proposed subtenant shall have a financial standing, be
of a character, be engaged in a business, and propose to use the
premises or portion thereof to be sublet in a manner, which in the
Landlord's reasonable judgment, is in keeping with the Landlord's
standards in such respect of the other office tenancies in the
building.
(vi) The proposed subtenant shall not then be a tenant,
subtenant or assignee of any space in the building, nor shall the
proposed subtenant be a person or entity with whom the Landlord is then
actively negotiating to lease space in the building.
(vii) The character of the business to be conducted or the
proposed use of the premises by the proposed subtenant shall not (x) be
likely to increase the Landlord's operating expenses beyond that which
would be incurred for use by the Tenant or for use in accordance with
the
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standards of use of other tenancies in the building, (y) increase the
burden on elevators over the burden prior to such proposed subletting,
or (z) violate or be likely to violate any provisions or restrictions
contained herein relating to the use or occupancy of this lease.
(viii) Any proposed sublease shall provide that in the event of
the termination of this lease, or the re-entry or dispossession of the
Tenant by the Landlord under this lease, such subtenant shall, at the
Landlord's option, attorn to the Landlord as its sublessor pursuant to
the then applicable terms of such sublease for the remaining term
thereof, except that the Landlord shall not be (X) liable for any
previous act or omission of Tenant as sublessor under such sublease,
(y) subject to any offset which theretofore accrued to such subtenant
against the Tenant, or (z) bound by any previous modification of such
sublease not consented to in writing by the Landlord or by any previous
prepayment of rent more than one month in advance.
(ix) Tenant shall pay all of Landlord's reasonable costs
(including attorneys fees and expenses) related to Landlord's review of
proposed sublease or assignment and the preparation, review and
approval of any assignment of rents, financing statement and other
documents related to such sublease or assignment. Tenant shall also pay
the cost of recording or filing any assignment of rents and financing
statements.
(j) if the Landlord's Subleasing Notice shall be to the effect that the
Landlord elects that the Affected Premises be surrendered, then, unless within
ten business days following Tenant's receipt of the Landlord's Subleasing
Notice, time being of the essence, the Tenant notifies Landlord in writing that
it rescinds Tenant's Subleasing Notice, the Affected Premises shall be
surrendered in accordance with clause (i) of paragraph (f) or (g) above, as the
case may be, and any work required to be done to separate the Affected Premises
from the remainder shall be commenced promptly following the Tenant's receipt
of the Landlord's Subleasing Notice and carried on with diligence and
continuity. If Tenant rescinds its Tenant's Subleasing Notice in accordance
with this paragraph, Tenant shall not be permitted to submit another Tenant's
Subleasing Notice for a period of six month's thereafter.
(k) Provided Tenant is in compliance with all other provisions of this
lease, the Tenant is authorized to sublease portions of the premises to a
subsidiary corporation or corporations or to a corporation affiliated with the
Tenant, and the provisions of paragraph (e) through (j) of this Article and the
provisions of paragraph (1) of this Article shall not apply to such subleasing.
A subsidiary corporation means a corporation of which the Tenant owns and holds
at least a majority of each class of stock which is authorized to vote at the
time when the sublease is executed. An affiliated corporation shall mean a
corporation which is owned and controlled by the corporation or the individuals
which own and control the Tenant by ownership of at least a majority of each
such class of stock. Before making any sublease to any such subsidiary or
affiliated corporation, the Tenant shall certify to the Landlord the manner in
which such subsidiary or affiliated corporation is related to and controlled by
the Tenant and the purposes for which the subleased premises
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will be used. Subject to the provisions of this Article FOURTEENTH, and
provided that, at the time of such subleasing, the particular corporation is a
subsidiary of Tenant, Landlord shall not unreasonably withhold or delay its
consent to a subleasing to SMA Real Time Inc., SMA Visual Effects Corp. or Fly
Films, Inc.
(1) In the event the Landlord, in its sole discretion, authorizes
Tenant to sublet (other than the subleasing authorized by paragraph (k) above)
or assign all or a portion of the premises, the Tenant shall pay to the
Landlord, monthly, as additional rent, 50% of all Subleasing Profit.
"Subleasing Profit" shall mean all consideration received by the Tenant (other
than rental received by Tenant under a sublease entered into pursuant to
paragraph (k) of this Article), less (i) the rent, additional rent payable by
the Tenant under this lease for the period in question (exclusive of any amount
payable by the Tenant under this subparagraph (1)), (ii) any brokerage
commissions (not exceeding 110% of those set forth in Landlord's brokerage
commission schedule as published from time to time) and reasonable legal fees
paid by the Tenant in connection with such subletting and assignment, (iii) the
unamortized cost of demising and improving the premises for subtenant, and (iv)
any amounts paid by Tenant to subtenant as a cash or rental concession.
(m) No consent given by the Landlord shall be deemed to permit any act except
the act to which it specifically refers, or to render unnecessary any
subsequent consent, and any assignment or subletting of the premises shall not
relieve the Tenant or any mesne assignee from any obligations, duty or covenant
under this lease, and in all cases a violation of any of the covenants or
duties or obligations under this lease by a subtenant or assignee shall, in
addition, be deemed to be the act of the Tenant herein. No assignment,
transfer, mortgage, encumbrance, subletting or arrangement in respect of the
occupancy of the premises shall create any right in the assignee, transferee,
mortgagee, subtenant or occupant, unless the consent of the Landlord shall
first have been obtained, and unless, if an assignment is involved, the
transferee or assignee shall have delivered an agreement duly executed by the
assignee or transferee wherein the assignee or transferee assumes and agrees to
pay or otherwise keep and perform the obligations of the Tenant in this lease
or, if a sublease is involved wherein the sublessee agrees that any act or
omission by the sublessee which, if performed or omitted by the Tenant under
this lease would be a default thereunder, shall also be a default under the
provisions of the sublease. Any assignee by accepting an assignment shall
nevertheless be conclusively deemed to have assumed this lease and all
obligations already accrued or to accrue thereunder and further to have agreed
to fully and duly perform all the Tenant's covenants herein contained. If the
Tenant shall, at any time, be in default in the payment of rent, the Landlord
shall have the right to collect rent from any assignee, undertenant or
occupant, and credit the same to the account of the Tenant, and no such
collection shall constitute a waiver of the foregoing covenant or the
acceptance of anyone other than the Tenant, as Tenant, or shall otherwise
release, impair or otherwise affect any obligation of the Tenant under this
lease. Immediately following the execution and delivery of any assignment of
this lease or any subleasing of the premises or an agreement as to the
occupancy thereof, the Tenant will furnish a duplicate of the instrument in
question to the Landlord.
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(n) Anything herein to the contrary notwithstanding, the Tenant may not
assign this lease or sublet or permit the occupancy by any other party of all
or any part of the demised premises at any time when the Tenant has not paid
any rent and additional rent when it is payable. The Tenant shall furnish
Landlord with a counterpart (which may be a conformed or reproduced copy) of
each sublease, assignment or agreement of occupancy made hereunder within ten
days after the date of its execution. Tenant shall remain fully liable for the
performance of all of Tenant's obligations hereunder notwithstanding anything
provided for herein, and without limiting the generality of the foregoing,
shall remain fully responsible and liable to Landlord for all acts and
omissions of any subtenant, assignee or occupant or anyone claiming under or
through any such person which shall be in violation of any of the obligations
of this lease and any such violation shall be deemed to be a violation by
Tenant. Tenant shall pay Landlord on demand any cost or expense (including
attorneys' fees and expenses) which Landlord may be required to incur in acting
upon any request for consent pursuant to this Article.
(o) At the request of the Landlord, the Tenant will furnish to the
Landlord, within ten days of a receipt of a request therefor, a certificate
executed in the name and on behalf of the Tenant, confirming that, except as
previously consented to in writing by the Landlord or as otherwise specifically
set forth in such certificate or permitted herein, the Tenant has not (i) used
or permitted the premises or any part hereof to be used for any purposes other
than those specified in this lease, (ii) mortgaged or encumbered this lease or
any interest therein, (iii) assigned or transferred, by operation of law or
otherwise, this lease or any interest, therein, (iv) sublet or underlet the
premises or any part thereof, or (v) permitted the premises or any part thereof
to be occupied by anyone other than the Tenant or its officers or employees.
With respect to any exception to clauses (i) through (v) above to which the
Landlord has not previously consented in writing, the Landlord, in its sole
discretion, may either consent thereto (which consent may be subject to any
conditions specified by the Landlord) or exercise the rights and remedies
available to the Landlord under the terms of this lease.
(p) Tenant assumes and shall be responsible for and liable to Landlord,
for all acts and omissions on the part of any present or future subtenant, and
any violation of any of the terms, provisions or conditions of this Lease,
whether by act or omission by any subtenant, shall constitute a violation by
Tenant. Upon any termination of this lease, it is expressly agreed that Tenant
shall deliver to Landlord all subleases, security deposits (including
interest), contracts, documents, rent rolls and other records used in the
operation of the premises and, unless the sublease shall have previously
terminated and the security deposit returned to subtenant or applied as
provided by the sublease, all security deposits held by Tenant.
(q) With respect to any present or future subleases Tenant shall not
accept prepayment of rent prior to its due date in excess of one month (but the
provisions of the foregoing shall not prohibit Tenant from collecting from any
subtenant a security deposit provided such security deposit is delineated in
the sublease as being not advance rent, but security, returnable to the
subtenant after the termination of the term of the sublease).
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Tenant agrees to indemnify and save Landlord harmless from and against any
claim or lien against Landlord or the demised premises for the return of any
securities under any leases with subtenants which were not previously delivered
to Landlord and agrees further that all leases hereafter made with subtenants
shall provide that the lease security deposited by the subtenant shall not be a
lien or claim against the interest of the Landlord.
FIFTEENTH: Waiver and Surrender; Remedies Cumulative. No consent or
waiver of any provision hereof or acceptance of any surrender shall be implied
from any act or forbearance by the Landlord. No agreement purporting to accept
a surrender of this lease, or to modify, alter, amend or waive any term or
provision thereof, shall have any effect or validity whatever, unless the same
shall be in writing, and executed by the Landlord and by the Tenant, and be
duly delivered, nor shall the delivery of any keys to anyone have any legal
effect, any rule or provision of law to the contrary notwithstanding. Any
consent, waiver or acceptance of surrender, in writing, and properly executed
and delivered as aforesaid, shall be limited to the special instance for which
it is given, and no superintendent or employee, other than an officer of the
Landlord or of its managing agent, and no renting representative shall have any
authority to accept a surrender of the premises, or to make any agreement or
modification of this lease, or any of the terms and provisions hereof. No
provision of any lease made by the Landlord to any other tenant of the building
shall be taken into consideration in any manner whatever in determining the
rights of the Tenant herein. No payment by the Tenant or receipt by the
Landlord of a lesser amount than the monthly rent herein stipulated shall be
deemed to be other than an account of the stipulated rent, nor shall any
endorsement on any check, nor any letter accompanying any such payment of rent
be deemed an accord and satisfaction (unless an agreement to accept a lesser
amount be signed by the Landlord), but the Landlord may accept such payment
without prejudice to the Landlord's full right to recover the balance of such
rent and to institute summary proceedings therefor. The receipt by the Landlord
of any rent, or additional rent or of any other sum of money which may be
payable under this lease,, or of any portion thereof, shall not be deemed a
waiver of the right of the Landlord to enforce the payment of any sum of any
kind previously due or which may thereafter become due under this lease, or of
the right to forfeit this lease by such remedies as may be appropriate, or to
terminate this lease or to exercise any of the rights and remedies reserved to
the Landlord hereunder, and the failure of the Landlord to enforce any covenant
or condition (although the Tenant shall have repeatedly or continuously broken
the same without objection from the Landlord) shall not estop the Landlord at
any time from taking any action with respect to such breach which may be
authorized by this lease, or by law, or from enforcing said covenant or any
other covenant or condition on the occasion of any subsequent breach or
default. In the event of any continuing or threatened breach by the Tenant, the
Landlord shall have the right of injunction. The various rights, remedies,
powers and elections of the Landlord, as provided in this lease or created by
law, are cumulative, and none of them shall be deemed to be exclusive of the
others, or of such other rights, remedies, powers or elections as are now or
may hereafter be conferred upon the Landlord by law.
SIXTEENTH: Representations as to Premises, Certif-
icate of Occupancy and Use. (a) Landlord represents that
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attached hereto as Exhibit B is a true and correct copy of the certificate of
occupancy for the building. The Tenant represents to the Landlord that the
Tenant has made, or caused to be made, a careful inspection of the premises and
that the Tenant has made an examination of the building and that the area and
present condition of the premises are in all respects satisfactory to the
Tenant, except as may herein otherwise be expressly stated in the Work Letter
attached to this lease and in Article TWENTY-SEVENTH hereof. The Tenant
acknowledges that no representations or promises have been made by the Landlord
or the Landlord's agents with respect to the premises or the building or the
certificate of occupancy thereof, except as in this lease set forth. The
statements contained in this lease regarding the use of the premises by the
Tenant shall not be deemed a representation or warranty by the Landlord that
such use is lawful or permitted by the certificate of occupancy of the
building.
(b) The Tenant shall immediately discontinue any use of the demised
premises, which may, at any time, be claimed or declared by the City or State
of New York or other governmental authority to be in violation of or contrary
to the certificate of occupancy of the building, or by reason of which any
attempts may be made to penalize the Landlord or require the Landlord to secure
any certificate of occupancy other than the one now issued for the building.
SEVENTEENTH: Limitation of Landlord's Liability. (a) The Tenant shall
make no claim upon the Landlord for abatement of rent, constructive eviction,
rescission, or otherwise, and the Landlord shall be exempt from all liability,
except for injuries to the Tenant's person or property which are due to the
negligence of the Landlord, its agents, servants or employees in the management
of the premises or the real property of which the demised premises are a part,
for or on account of any annoyance, inconvenience, interference with business,
or other damage, caused by: (i) any interruption, malfunction or curtailment of
the operation of the elevator service, heating plant, sprinkler system, gas,
water, sewer or steam supply, plumbing, machinery, electric equipment or other
appurtenances, facilities, equipment and conveniences in the building, whether
such interruption, malfunction or curtailment be due to breakdowns, or repairs,
or strikes or inability to obtain electricity, fuel or water due to any such
cause or any other cause beyond the Landlord's control; (ii) any work of repair
or restoration done by or on behalf of the Landlord or the Tenant, pursuant to
the provisions of this lease; (iii) any water, rain, snow, steam, gas,
electricity or other element, which may enter, flow from or into the premises
or any part of the building, or any noise or vibration audible in, or
transmitted to the premises; (iv) any vermin; (v) any falling paint, plaster or
cement; (vi) any interference with light or with other easements or incorporeal
hereditaments; (vii) any latent defect or deterioration in the building or the
appurtenances thereof, whether or not the Landlord shall have been notified of
any condition allegedly causing same; (viii) any zoning ordinance or other acts
of governmental or public authority now or hereafter in force; and (ix) any act
or omission of any other occupant of the building or other person temporarily
therein. The Tenant will not hold the Landlord liable for any loss or theft of,
or damage to, any property in the premises done or caused by any employee,
servant, or agent of the Landlord who is invited into the premises by the
Tenant, nor for the loss, damage or theft of
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any property stored or left in the basement or in any other part of the
building, which is not enclosed within the premises or of any property left
with any employee of the Landlord, notwithstanding such theft, loss or damage
may occur through carelessness or negligence of the Landlord's employees; and
the Tenant agrees that any employee in entering the premises at the invitation
of the Tenant or accepting custody of property shall be then deemed agent of
the Tenant or other person at whose instance he may be acting, and not agent of
the Landlord. Employees are not permitted to receive or accept packages or
property for account of Tenants. Storerooms or storage space for personal
property (if provided) are provided gratuitously by the Landlord, and the use
of same shall be at the Tenant's risk and the Tenant will not hold the Landlord
liable for any loss of or damage to person or property therein or thereby.
Nothing in this lease contained shall impose any obligation upon the Landlord
with respect to any real property other than the building, whether said other
real property be owned by the Landlord or otherwise, or shall in any way limit
the Landlord's right to build upon or otherwise use said other real property in
such manner as the Landlord may see fit. The Tenant shall make no claim upon
the Landlord for abatement of rent, constructive eviction or rescission, and
the Landlord shall have no liability by reason of the Landlord's failure to
enforce the provisions of the lease to any other tenant against such other
tenant. Notwithstanding anything herein to the contrary, no partner, officer,
agent or employee of Landlord shall be liable for Landlord's obligations under
this lease and Tenant shall not look to any property or assets of the Landlord
other than Landlord's estate in the land and building of which the premises are
a part, or to the property or assets of any partner, officer, agent or employee
of Landlord in seeking to enforce landlord's obligations under this lease or to
satisfy a judgment for Landlord's failure to perform such obligations.
(b) Any right and authority reserved by and granted to the Landlord
under this lease, to enter upon and make repairs in the premises shall not be
taken as obligating the Landlord to inspect and to repair the premises and the
Landlord hereby assumes no responsibility or liability for the care,
inspection, maintenance, supervision, alteration or repair of the premises,
except as herein specifically provided. The Tenant assumes possession and
control of the premises and exclusively the whole duty of care and repair
thereof, except as herein specifically provided, and the duty of care, if any,
owed by the Tenant to persons on the sidewalk and in the corridors of the
building.
EIGHTEENTH: Indemnity by Tenant. The Tenant hereby indemnifies and
agrees forever to save harmless the Landlord against any and all liabilities,
penalties, claims, damages, expenses (including attorneys' and counsel fees and
disbursements) or judgments, arising from injury to person or property of any
kind, to the extent occasioned by the Tenant's failure to perform or abide by
any of the covenants of this lease or the negligent or wilful misconduct of the
Tenant or Tenant's employees, customers, agents, contractors, licensees,
visitors, assigns or under-tenants of the Tenant, or to the extent based on any
matter or thing growing out of the Tenant's use or occupation of the premises
or any part of the building.
NINETEENTH: Insolvency. If, at any time after the execution and
delivery of this lease, the Tenant shall be adjudicated a bankrupt, or if the
Tenant shall make any
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assignment for the benefit of creditors, or attempt to take the benefit of any
insolvency law, or if a petition or answer to reorganize the Tenant shall be
approved by any court or judge, or if a petition or answer for a composition or
extension shall be filed by the Tenant, or if a receiver or trustee shall be
appointed for the Tenant's property, or if the Tenant's interest in this lease
shall be attached or levied upon or shall devolve upon or pass to any party
other than the Tenant (whether such event occurs prior or subsequent to the
commencement of the term or Tenant's entry into possession) such event shall be
conclusively deemed a default hereunder, and the Landlord shall have the right
to terminate this lease in the manner hereinafter provided, as if such event
were a breach by the Tenant of one of the covenants of this lease. In the event
of such termination, the Tenant or any person claiming under, by or through the
Tenant, by virtue of any statute or of any order of any court, shall not be
entitled to possession or to remain in possession of the demised premises but
shall forthwith quit and surrender same. Exclusive of and in addition to any
other rights or remedies the Landlord may have through any other portion or
provision of this lease or by virtue of any rule of law or statute, said
Landlord may keep and retain, as liquidated damages, any rent, security,
deposit or other moneys or consideration received by the Landlord from the
Tenant, or others on behalf of the Tenant. Also, in the event of termination of
this lease as aforesaid, the Landlord shall be entitled, as and for liquidated
damages from the Tenant for breach of the unexpired term of this lease, to an
amount equal to the difference between the rental value of the remainder of the
term at the time of termination and the actual rent reserved, both discounted
to present worth at the rate of four per cent (4%) per annum. If at any time
within a reasonable period following the date of the termination of the lease,
as aforesaid, the premises should be re-rented by the Landlord, the rent
realized by any re-letting shall be deemed prima facie evidence of the rental
value. In the event of the occurrence of any of the above-mentioned events of
default occasioned solely through the invocation by the Tenant or by third
parties of the laws of the State of New York, judicial or statutory, as
distinguished from the invocation of Federal laws relating to bankruptcy,
reorganization, or otherwise, the Landlord, in addition to the foregoing, may
accelerate the full amount of rent reserved for the remainder of the lease, and
the same shall forthwith become due and payable to the Landlord. Nothing
herein provided shall be deemed to prevent or restrict the Landlord from
proving and receiving as liquidated damages herein the maximum permitted by any
rule of law or statute prevailing when such damages are to be proved, whether
they be greater or less than those referred to above.
TWENTIETH: (a) Remedies of the Landlord on Default; Performance by the
Landlord. If the Tenant shall default in the full and due performance of any
covenant of this lease, the Landlord shall have the right, upon thirty (30)
days' notice to the Tenant (unless a shorter period of notice or provision for
the performance of such work without notice is elsewhere established in this
lease), to perform the same for the account of the Tenant, and in such event
all workmen employed by the Landlord shall be deemed the agents of the Tenant,
and any reasonable payment made, and expense incurred, by the Landlord in this
connection, shall forthwith become due and payable by the Tenant to the
Landlord with interest thereon at a rate of twelve per centum (12%) per annum.
If the Landlord incurs any expenses, including reasonable attorneys' fees and
disbursements in
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instituting, prosecuting or defending any action or proceeding instituted by
reason of any default of the Tenant hereunder, the sum or sums so incurred by
the Landlord with all interest, costs and damages, shall be deemed immediately
due to the Landlord upon demand. Any and all sums payable by the Tenant to the
Landlord shall bear interest at the rate of twelve per centum (12%) per annum
from the due date to the date of actual payment, and any and all such sums
(except the rent hereinabove expressly reserved) shall be deemed to be
additional rent for the period prior to such due date, and the Landlord shall
have the same remedies for default in the payment of such additional rent as
for default in the payment of the rent expressly reserved.
(b) Performance by the Landlord Not an Exclusive Remedy. In the event
that under the provisions of this lease the Landlord shall have the privilege
of performing any covenant in respect of which the Tenant may be in default and
of recovering the expenses so involved from the Tenant as additional rent or
otherwise, such remedy shall not be the exclusive remedy of the Landlord but
the Landlord may, at its option, treat such default as a breach of a
substantial obligation of this lease and shall have all the other remedies in
respect thereof provided in this or any other Article of this lease.
(c) Dispossess Termination of Lease. If the Tenant shall violate or
default in the full and due performance of any covenant, provision or condition
of this lease (other than the covenant to pay the rent or any additional rent),
or any covenant, provision or condition of any other lease under which the
Tenant is a tenant in the building, or if any of the events specified in the
Article of this lease numbered NINETEENTH and headed "Insolvency" shall occur,
the Landlord will give to the Tenant notice of such violation, default or
misconduct. In the event that (i) the Tenant shall default in the payment of
the rent or of any additional rent, or (ii) if the premises shall be vacated,
abandoned or deserted, or (iii) in the event that the Tenant, after notice
thereof as above provided, shall fail to stop any violation or fully cure or
remedy any default or terminate any misconduct under this lease (or in the
event that the default is of a nature such that the steps required to cure or
remedy the same fully cannot reasonably be completed within thirty days, then
if the Tenant shall not have commenced and have diligently and continuously
prosecuted the steps necessary to cure or remedy such default) the Landlord may
give to the Tenant ten (10) days' notice of its intention to terminate this
lease, and, in such event, on the tenth day following the giving of such notice
this lease and the term hereby granted shall terminate and expire as fully and
completely as if that day were the date herein expressly fixed for the
expiration of the term, and the Tenant shall thereupon quit and surrender the
premises into the possession of the Landlord, but the Tenant shall nevertheless
remain liable for deficiency in future rent and for any other defaults
hereunder, as hereinafter provided. If the Tenant shall default in the payment
of the rent, or any additional rent herein mentioned, or of any part of either,
or if this lease shall be terminated by the notice last above provided for, the
Landlord may immediately, or at any time thereafter, re-enter the premises and
remove all persons and property therefrom, either by summary dispossess
proceeding, or by any suitable action or proceeding at law, or otherwise,
without being liable to indictment, prosecution or damages therefor, and
re-possess and enjoy the premises, together with all additions, alterations,
installations and improvements, and no entry by the Landlord shall be deemed an
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acceptance of surrender. Upon any such re-entry, the Landlord may re-let the
premises or any part or parts thereof, and for such term or terms as to the
Landlord may seem wise, even though the same extend beyond the date herein
expressly fixed for the expiration of the term. Any such re-letting shall, at
the Landlord's option, be either for the Landlord's own account, or as the
agent for the Tenant. If the Landlord shall re-let as the agent of the Tenant,
the Landlord shall receive the rents and apply the same, first, to the payment
of all expenses which the Landlord shall have incurred by reason of the
Tenant's default and in connection with such re-entry and re-letting,
including, but not by way of limitation, legal expenses, brokers' commissions,
and the cost of reasonable repairs, redecoration and alterations, and,
secondly, to the fulfillment of the covenants of the Tenant herein contained,
and the surplus, if any, existing at the date herein expressly fixed for the
expiration of the term, shall be paid to the Tenant, but the Tenant shall be
entitled to no such payment until said date. So long as the premises, or any
part thereof, shall not be re-let, or shall be re-let by the Landlord as the
agent of the Tenant, the Tenant shall remain liable for the full and due
performance of all the covenants of this lease, and the Tenant hereby agrees to
pay to the Landlord, as damages for any default hereunder, until the date
herein expressly fixed for the expiration of the term, the equivalent of the
amount of all the rent and additional rent reserved herein, less the net avails
of re-letting, as hereinbefore defined, if any, and the same shall be due and
payable by the Tenant to the Landlord on the several rent days above specified,
that is, upon each of the said rent days the Tenant shall pay to the Landlord
the amount of deficiency then existing, and shall not be entitled to withhold
any such payment until the date herein expressly fixed for the expiration of
the term. The liability of the Tenant shall survive the issuance of a final
order and warrant of dispossess, and re-entry by the Landlord, and any other
termination of this lease for default of the Tenant, and the granting by the
Landlord of a new lease of the premises to another tenant, and the Tenant
hereby waives any defense which might be predicated upon any of said acts or
events.
The Tenant hereby expressly waives (i) any and all right to regain
possession of said premises or to reinstate or redeem this lease as provided by
the Real Property Actions & Proceedings Law (and as said law may be amended),
or any such right which is or may be given by any other statute, law or
decision now or hereafter in force; (ii) the service of any notice demanding
rent or stating an intention to re-enter; or any similar right which is or may
be given by any statute, law or decision now or hereafter in force; (iii) any
and all rights of redemption and all other rights to regain possession or to
reinstate this lease (in case the Tenant shall be dispossessed or ejected by,
or pursuant to judgment, order, execution or warrant of any court or judge).
Except as provided in Section 259-c of the Real Property Law with respect to an
action for personal injury or property damage between the parties hereto, the
Tenant waives and will waive all right to trial by jury in any summary
proceedings and in any other proceeding or action at law hereafter instituted
by the Landlord against the Tenant in respect of this lease, and also in any
action or proceeding between the parties hereto for any cause; and it is hereby
agreed, that in any of such events, the matter in dispute shall be tried before
a judge without a jury. In the event the Landlord shall commence any action or
summary proceeding for non-
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payment of rent or other breach of covenant or condition, the Tenant hereby
agrees not to interpose any counterclaim for whatever nature or description in
any such action or proceeding. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning.
TWENTY-FIRST: Surrender at Expiration. Upon the expiration of the term
of this lease or in the event of termination by reason of casualty or
condemnation, the Tenant shall quit and surrender the demised premises,
together with any fixtures, equipment or appurtenances installed in the
premises at the commencement of this lease, and any alterations, decorations,
additions and improvements which are not to be removed in compliance with the
provisions of Article FOURTH hereof, to the Landlord, broom clean, in good
order and condition, ordinary wear excepted. If the last day of the term of
this lease falls on Sunday, this lease shall expire on the business day
immediately preceding. The Tenant's obligation to observe and perform this
covenant shall survive the expiration or other termination of the term of this
lease.
TWENTY-SECOND: Tenant's Deposit. Upon the execution of this lease, The
Tenant shall deposit with the Landlord the sum of One Hundred Eight Thousand,
Three Hundred Thirty-three and 32/100 Dollars ($108,333.32) to secure the
faithful performance by the Tenant of all the terms, conditions, covenants and
agreements of this lease, and to make good to the Landlord any damage which it
may sustain by reason of any act or omission of the Tenant (such $108,333.32 or
other amount from time to time on hand of the Landlord, hereafter the
"Deposit"). If, during the term of this lease, the Landlord shall sell,
exchange or lease the entire building, subject to this lease, or, being the
lessee thereof, shall assign its lease, the Landlord shall have the right to
pay or transfer the Deposit to such grantee, lessee, or assignee, as the case
may be, and, in such event, the Landlord shall be released from all
responsibility and liability in connection therewith, and the Tenant will look
solely to said grantee, lessee, or assignee for its return. If the Deposit is
in cash, it shall be deposited with a bank or trust company, savings bank or
savings and loan association, and the Landlord shall advise the Tenant of the
name and address thereof. The Tenant shall not be entitled to the payment of
any interest earned upon such Deposit unless earned and any interest earned
shall be added to the Deposit. Landlord shall have the right to deduct annually
from such Deposit, an amount equal to 1% of the Deposit, which 1% shall be
payable to Landlord to defray the cost of administering such Deposit and the
balance of the interest earned on the Deposit shall be paid over to Tenant. The
Tenant's interest in the Deposit shall not be assigned or encumbered without
the written consent of the Landlord, and within thirty (30) days after the
expiration of the term, the amount of Deposit shall be repaid to the Tenant,
less any proper charges against the same, as hereinabove or hereinafter
provided. If the Tenant shall at any time be in default with respect to any
payment of rent or of additional rent or of any other payment due from the
Tenant to the Landlord under this lease beyond the applicable grace period, or
if the Landlord shall be damaged by any act or omission of the Tenant the
Landlord may, at its option, apply such portion of the Deposit as may be
adequate to cure such default or to make good such damage, including, but not
by way of limitation, interest, costs, fees and other expenses, paid or
incurred by the Landlord, and thereafter such portion so applied shall be free
from any claim by the Tenant for its return. No
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termination of this lease or re-entry by the Landlord for default of the Tenant
shall entitle the Tenant to the return of any part of the Deposit, nor shall
the retention of such Deposit, after such re-entry, impair or otherwise affect
the Tenant's liability to the Landlord during the balance of the term
originally provided for. If, at any time, the Deposit shall be diminished, by
reason of the Landlord's having applied any part thereof in accordance with the
provisions of this paragraph, the Tenant shall pay over to the Landlord, upon
demand, the equivalent of such decrease, to be added to the Deposit and to be
held and applied in accordance with the provisions of this paragraph.
Provided that Tenant (a) shall not then be in default and hereunder and
(b) shall have faithfully performed all of its obligations hereunder, Landlord
shall refund to Tenant, within thirty days following the third anniversary of
the Commencment Date, $27,083.33 of the Deposit, and shall refund to Tenant,
within thirty days following the fifth anniversary of the Commencement Date, an
additional $27,083.33 of the Deposit. For purposes of this paragraph "faithful
performance" shall mean (y) with respect to the payment of rent or additional
rent, that Tenant shall not have incurred late charges more than five times in
total or more than once in the twelve months prior to the fifth anniversary of
the Commencement Date and (z) with respect to Tenant's other obligations
hereunder, that Tenant shall not, at any time during the first five years
hereof, have been in default beyond any applicable grace period.
TWENTY-THIRD: Building services. (a) Except on Saturdays and Sundays,
and on holidays recognized as legal holidays by State or Federal Government,
the Landlord shall furnish, between the hours of eight a.m. and six p.m.,
elevator service with elevators now in the building, and during the cold season
(October 15th through April 15th), sufficient heat to heat the premises. The
Landlord may suspend any such services, if it should become necessary so to do,
at any time. The Landlord shall restore such suspended service promptly, making
due allowance for labor troubles, acts of God, or any cause beyond the
Landlord's control.
(b) In addition to the elevator service described in (a) above, the
Landlord will maintain in service and available for the use of the Tenant, one
passenger elevator at all times on all days of the week, including Saturdays,
Sundays and the legal holidays referred to in paragraph (a) above. Tenant shall
also have access to the building loading dock on a 24 hour per day, seven day
per week basis. In the event that the Tenant requires freight elevator service,
or heat on Saturdays, Sundays or any legal holiday referred to in paragraph (a)
above, or during hours in addition to those prescribed under (a) above, the
Landlord will furnish the additional elevator service or heat or both, as the
case may be, upon notice of the Tenant's need therefor. Such notice may be
written or oral and shall be given as long a time as practicable prior to the
time when the additional heat or freight elevator service is required. The
Tenant will pay for any additional freight elevator service and heat furnished
after the hours prescribed in (a) above at the respective prevailing rates per
hour as established from time to time by the Landlord for such services at the
building or in the buildings of the Landlord, generally, for each hour during
which the additional service is supplied. All charges for additional freight
elevator service and heat shall be payable when billed and in the event of
default of payment therefor, Landlord may refuse further service
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and the amount unpaid (plus interest thereon at the rate of twelve per centum
(12%) per annum) shall be deemed additional rent for which the Landlord shall
have all the remedies for collection herein specified with respect to rent. The
failure on the part of the Landlord to furnish such additional elevator service
or heat, if due to breakdowns, repairs, maintenance, strikes, or other causes
beyond the control of the Landlord, shall involve no liability on the part of
the Landlord nor shall it constitute an eviction.
(c) The Tenant shall be responsible for cleaning the premises and shall
keep all windows on the premises clean in accordance with all of Landlord's
Rules and Regulations, and Landlord shall have no obligation to keep the
interior or exterior of such windows clean.
(d) The main entry to the building shall be open and staffed by a
doorman, security guard or other employee or agent
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of the Landlord from 8:00 a.m. to 7:30 p.m. on business days. At all other
times the Tenant and its employees and their invitees shall have access to the
building at any time and without notice to the Landlord by ringing a security
bell provided for after hours service and properly identifying themselves (by
building passes or such other security arrangement as the Landlord shall
institute) to the building staff at that time.
TWENTY-FOURTH: Water; HVAC. The Landlord shall furnish cold water for
ordinary lavatory use so long as the premises are used only for office uses.
The Tenant will, at its own expense, heat the cold water supplied by the
Landlord in order to furnish hot water for lavatory or office uses. In order to
permit the Tenant to heat water for lavatory or office use, the Landlord will
provide, at Landlord's expense, one electric "instantaneous" water heater,
which shall be repaired and, if necessary, replaced by the Landlord. The Tenant
will pay the cost of any electricity utilized in heating water. In the event
that the Tenant shall use water for any industrial purpose or any purpose other
than usual lavatory purposes, the Tenant shall, at its own expense, install a
meter or meters for the measurement of the quantity of water thus consumed and
keep the same in good working order and the Tenant will pay for the water so
shown to have been used. All payments for water shall be due when billed to the
Tenant. In the event that the Tenant defaults in the payment for any water, the
amount not paid shall forthwith be payable as additional rent and the Landlord
may also, without incurring any liability or disability thereby or constituting
a constructive eviction, discontinue the Tenant's supply of water.
TWENTY-FIFTH: Work to be Done by Landlord. The Landlord shall not be
required to furnish any work or materials to the premises, except as expressly
provided in paragraph (a) of Article THIRD and the Work Letter attached hereto
as Exhibit "C" (the "Work Letter"). In case the Landlord is prevented from
making any repairs, improvements, decorations or alterations, installing any
fixtures or articles of equipment, furnishing any services or performing any
other covenant herein contained to be performed on the Landlord's part, due to
the Landlord's inability to obtain, or difficulty in obtaining, labor or
materials necessary therefor, or due to any governmental rules and regulations
relating to-the priority of national defense requirements, or due to labor
troubles, or due to any other cause beyond the Landlord's control, the
Landlord shall not be liable to the Tenant for damages resulting therefrom, nor
except as expressly otherwise provided in Article FOURTEENTH hereof (in respect
of damage to the premises due to fire), shall the Tenant be entitled to any
abatement or reduction of rent by reason thereof, nor shall the same give rise
to a claim in the Tenant's favor that such failure constitutes actual or
constructive, total or partial, eviction from the premises. Upon substantial
completion of the Landlord's work, Landlord shall tender possession of the
premises to Tenant.
TWENTY-SIXTH: (a) Real Estate Tax and CPI Escalation. In order (i) to
adjust, during the term of this lease, for increases in the expenses of the
Landlord for Real Estate Taxes, the Tenant shall pay to the Landlord, as
additional rent, the Tenant's Proportionate Share of any increases in such Real
Estate Taxes, and (ii) to adjust for increases in other operating expenses of
the Landlord, the Tenant shall pay to the Landlord, as additional rent, the CPI
Adjustments for Increases in Other Operating Expenses, namely the amount by
which the Base
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Rent Allocated to other Operating Expenses is increased by application to the
Base Rent Allocated to Other Operating Expenses of increases in the Index over
the Base Index, all as computed as set forth below in this Article. Capitalized
words or expressions used above are defined in subparagraph (b) below.
(b) Definitions. As used in this Article the following capitalized
words or expressions shall have the meanings ascribed to them below:
1. "Real Estate Taxes" shall mean the expenditures of the Landlord for
taxes or assessments payable by the Landlord upon or with respect to the
building and the land upon which it is located, imposed by Federal, State or
local government (plus all expenditures for fees and expenses incurred in the
course of obtaining a reduction in any tentative assessed valuation), but shall
not include any real estate transfer taxes, transfer gains taxes or mortgage
recording taxes. The Tenant shall receive the benefit of the Tenant's
Proportionate Share of the amount of any refund of Real Estate Taxes, less any
related costs and expenses.
2. "Base Rent Allocated to other Operating Expenses" shall mean an
amount equal to 75% of the fixed annual rent prescribed on page 1 of this
lease, as such rent may be payable from time to time.
3. "Increase in Real Estate Taxes" shall mean the amount by which Real
Estate Taxes in any Subsequent Year exceed the Real Estate Taxes in the Base
Year July 1, 1993 - June 30, 1994 ("Base Real Estate Taxes").
4. "CPI Adjustment for Increases in Other Operating Expenses" shall
mean the amount obtained by multiplying the Base Rent Allocated to Other
Operating Expenses by the percentage by which the Index, as last published on
the date next prior to the Computation Date and the Index as last published on
the date next prior to each anniversary date of the Computation Date, shall
exceed the Base Index; provided, however, that, with respect to any particular
12-month period commencing with a Computation Date and ending with the next
Computation Date (the "CRI Adjustment Year"), the CPI Adjustment for Increases
in Other Operating Expenses attributable to such CPI Adjustment Year shall not
exceed an amount equal to 5% per annum multiplied by the fixed rent set forth
on the first page of this lease which is in effect on the then current
Computation Date.
5. "Index" shall mean the "Consumer Price Index for All Urban
Consumers" "(1982-84 = 100)" specified for "All Items," relating to
N.Y-Northern N.J.-Long Island, NY-NJ-CT and published by the Bureau of Labor
Statistics of the United States Department of Labor. In the event the Index
shall hereafter be converted to a different standard reference base or
otherwise revised, the determination of the CPI Adjustment for Increases in
Other Operating Expenses shall be made on the basis of such conversion factor,
formula or table for converting the Index as may be published by the Bureau of
Labor Statistics, or, if said Bureau shall not publish the same, then with the
use of such conversion factor, formula or table as may be published by
Prentice-Hall, Inc., or, failing such publication, by any other nationally
recognized publisher of similar statistical information. In the event either
Index shall cease to be published, then, for the purposes of this Article,
there shall be substituted for the
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Index such other index as Landlord and Tenant shall agree upon, and, if they
are unable within ninety (90) days after the Index ceases to be published, such
matter shall be determined in New York City by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association.
6. "Base Index" shall mean the Index as last published prior to March,
1994.
7. "CPI Comparative Statement" shall mean a statement, in writing,
signed by the Landlord, or, on its behalf, by an officer of any corporation
acting as its managing agent, showing (i) a comparison of (a) Base Real Estate
Taxes with (b) Projected Real Estate Taxes for a Subsequent Year (which shall
be the same calendar year as the year of the Computation Date used in such CPI
Comparative Statement), (ii) the Base Rent Allocated to Other Operating
Expenses and the CPI Adjustment for Increases in Other Operating Expenses for
such Subsequent Year, and (iii) if the Tenant paid additional rent pursuant to
this Article with respect to the immediate preceding Subsequent Year, any
adjustment necessitated by a variance between the Projected Real Estate Taxes
for such Subsequent Year (as shown in the current CPI Comparative Statement)
and the Actual Real Estate Taxes for such Subsequent Year (as shown in the
current CPI Comparative Statement).
8. "Subsequent Year" shall mean any calendar year following the Base
Year, falling wholly or partly within the term of the Tenant under this lease
and the calendar year following the year in which the term of this lease
terminates.
9. "Computation Date" shall mean the 1st day of March, 1995, and, in
Subsequent Years, its anniversary date.
10. "Projected Real Estate Taxes" shall mean the Landlord's estimate
(which in any event must be reasonable in the light of past experience) of Real
Estate Taxes for a particular Subsequent Year.
11. "Tenant's Proportionate Share" shall mean a fraction, of which the
numerator shall be the number of rentable square feet of area of the premises
(22,000) and the denominator shall be the total number of rentable square feet
of area in the entire building (319,188), that is, 6.89249%. Tenant
acknowledges that "rentable square feet" is not the same as "useable square
feet" and has satisfied itself as to the rentable square footage of the
premises. Landlord has made no representations to Tenant with respect to the
useable square footage of the premises.
(c) Statements for the Tenant. On or before April 1, 1995, and on or
before that day in each Subsequent Year, the Landlord will furnish a CPI
Comparative Statement to the Tenant. The failure of the Landlord to furnish a
CPI Comparative Statement shall be without prejudice to the right of the
Landlord to furnish a CPI Comparative Statement at any time in the future.
Every CPI Comparative Statement furnished by the Landlord pursuant to
this Article shall be conclusive and binding upon the Tenant unless (i) within
thirty days after the receipt of such CPI Comparative Statement Tenant shall
notify Landlord that it disputes the correctness thereof, specifying the
particular respects in which the CPI Comparative Statement is
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claimed to be incorrect, and (ii) if such dispute shall not have been settled
by agreement, the dispute shall have been submitted to arbitration within
ninety days after receipt of the CPI Comparative Statement. Pending the
determination of such dispute by agreement of arbitration as aforesaid, Tenant
shall pay additional rent in accordance with the CPI Comparative Statement and
such payment shall be without prejudice to Tenant's position and to the
Tenant's rights to a refund of any overpayment. If the dispute shall be
determined in Tenant's favor, Landlord shall forthwith pay Tenant the amount of
Tenant's overpayment of additional rent resulting from compliance with the CPI
Comparative Statement.
(d) Computation of Increase in Rent Payable by the Tenant. When the
Landlord shall furnish the Tenant with any CPI Comparative Statement in
accordance with this Article which shall show an Increase in Projected Real
Estate Taxes or a CPI Adjustment for Increases in Other Operating Expenses,
then the rent payable under the lease shall be increased by the Tenant's
Proportionate Share of the increase in Projected Real Estate Taxes and by the
CPI Adjustment for Increases in Other Operating Expenses which shall be payable
(with payment on account of such increases) as follows: (1) on the first day
for the payment of rent under this lease following the receipt of a CPI
Comparative Statement, the Tenant shall pay to the Landlord a sum equal to
one-twelfth of the Tenant's Proportionate Share of the increase in Projected
Real Estate Taxes plus one-twelfth of the CPI Adjustment for Increases in Other
Operating Expenses (plus or minus, as the case may be, any adjustment
necessitated by a variance between (x) the Projected Real Estate Taxes for the
calendar year prior to the year of the Computation Date used in such CPI
Comparative Statement and (y) the actual Real Estate Taxes for such calendar
year) and (2) thereafter, until a different CPI Comparative Statement shall be
submitted, the monthly installments of rent payable under this lease shall
continue to be increased by such amount.
With respect to any CPI Comparative Statement furnished to the Tenant
in the Subsequent Year following the year in which the term of this lease
terminates, if such CPI Comparative Statement shall indicate an adjustment
necessitated by a variance between (x) the Projected Real Estate Taxes for the
calendar year prior to the year of the Computation Date used in such CPI
Comparative Statement (i.e., the last calendar year of the lease term) and (y)
the actual Real Estate Taxes for such calendar year, then the Tenant shall
promptly pay to the Landlord, or the Landlord promptly shall pay to the Tenant,
as the case may be, the amount of any such adjustment as indicated in such CPI
Comparative Statement.
(e) Inspection of Books. The Tenant or its authorized representative
shall have a right to examine the books of the Landlord showing the Real Estate
Taxes with respect to the land and building during regular business hours for
the purpose of verifying the information set forth in any CPI Comparative
Statement relating to any Increase in Real Estate Taxes shown in such CPI
Comparative Statement; provided that a written request for such inspection is
made by the Tenant within thirty days of the receipt of any such CPI
Comparative Statement.
(f) Decreases in Real Estate Taxes or Index. In no event shall any
decrease in the Real Estate Taxes or the Index in any way reduce the fixed rent
or additional rent payable by the
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Tenant under this lease, except to the extent to which any such decrease shall
result in a decrease in the additional rent payable pursuant to this Article;
provided, however, that no decrease in Real Estate Taxes shall in any way
reduce any additional rent payable on account of any CPI Adjustment for
Increases in Other Operating Expenses, and that no decrease in the amount of
the CPI Adjustment for Increases in Other Operating Expenses shall in any way
reduce any additional rent payable on account of any Increase in Real Estate
Taxes.
TWENTY-SEVENTH: Construction of Office Improvements. It is agreed that
the Tenant will modify and improve the premises to make them better suited for
the purposes contemplated by Article First hereof, and that the Landlord will
reimburse the Tenant for the cost thereof up to a maximum of $275,000 (and the
Tenant will pay the cost thereof in excess of such amount), all in accordance
with, and subject to the limitations set forth in subparagraphs (a) through (e)
below:
(a) The Tenant will select an architect to design improvements for the
premises (which improvements shall not include any furniture, or telephone,
computer or other office systems or equipment) (the "Improvements"). Tenant
shall hire its own contractors. In the event that Tenant requests Landlord to
hire contractors to perform the work, which request must be made before the
architect has completed the design, and Landlord agrees to do so, the architect
shall be informed that the budgeted cost for the construction and installation
of the Improvements is $275,000 and instructed to design the Improvements so
that this budget is not exceeded. In the event that the projected cost for the
construction and installation of the Improvements will exceed $275,000, and the
Tenant has requested the Landlord to hire the contractors, and the Landlord has
agreed to do so, the Tenant will elect one of the following options:
(i) elect to proceed with the construction and installation of
the' Improvements and to pay such excess cost, in which event the Tenant
will immediately deliver to Landlord the full amount by which such cost
exceeds $275,000; such deposit may be in a form of a letter of credit
issued by a New York Clearinghouse bank, having a term of one year and
otherwise in form satisfactory to Landlord; the letter of credit will be
presented for payment by the Landlord once Landlord has been presented
with invoices equal to or in excess of $275,000 and in the event the
proceeds thereof are insufficient to pay the excess costs, the Tenant
will deposit the balance of such excess amount with the Landlord within
seven days of receipt from Landlord of an invoice for such amount; if
the proceeds of such letter of credit exceed the excess costs, Landlord
will deliver any excess proceeds to Tenant promptly after payment of all
invoices related to the Improvements; or
(ii) cause the Tenant's architects to revise the plans and
specifications for the Improvements so that the total cost thereof does
not exceed $275,000; or
It is understood and agreed that notwithstanding the Tenant's exercising either
or both of the options referred to in (i) and (ii) above, in the event that the
total cost of constructing and installing the Improvements shall, nevertheless,
exceed $275,000,
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the Landlord shall be under no obligation to proceed with the funding of such
construction and installation unless and until the Tenant shall deposit with
the Landlord the full amount of such excess.
(b) As soon as practicable, the Tenant shall submit to the Landlord for
review and approval plans and specifications (including all necessary
mechanical, electrical, engineering and working drawings) for the Improvements
and such plans shall be sufficient (i) to comply with all applicable rules,
regulations and requirements of any governmental authority having jurisdiction
over the building, (ii) to permit the Tenant to apply for and obtain all
necessary permits, licenses and approvals necessary in connection with the
Improvements, and (iii) to permit the contractor to commence and complete the
work relating to the Improvements. The Landlord shall review and approve or
comment on such plans within twenty (20) days of receipt thereof. As soon as
practical thereafter, the Tenant shall submit to the Landlord for approval
complete and final plans and specifications (including all necessary
mechanical, electrical, engineering and working drawings) for the Improvements,
sufficient to meet the requirements set forth in clauses (i) through (iii)
above (such plans as approved by the Landlord are hereinafter referred to as
the "Final Plans"). The Tenant agrees to reimburse the Landlord for its
reasonable fees and expenses for reviewing plans and specifications in an
amount not to exceed $2,500.00.
(c) All professional fees (including those for architectural and design
costs and appraisals) and the cost of all permits, licenses and approvals
required in connection with the construction and installation of the
Improvements shall be borne solely by the Tenant. In the event that the
Landlord advances any such fees or costs, the Tenant shall reimburse the
Landlord for such amount within seven days of receipt of any invoice from the
Landlord for such an amount.
(d) The Landlord shall reimburse the Tenant from time-to-time for work
done in connection with the installation and construction of the Improvements,
provided that the Landlord's obligation to make any such payment or
reimbursement shall be conditioned upon the satisfaction of the following
conditions:
(i) The work done must substantially conform to the design set
forth in the Final Plans and the quality and workmanship of the work
done must be reasonably satisfactory to the Landlord;
(ii) The Landlord shall have been furnished with invoices from
the vendors, supplier, or contractor evidencing the amount for which
payment or reimbursement is sought, such invoices, if submitted for
reimbursement, to be marked "paid in full" by such vendor, supplier or
contractor (or, in lieu thereof, the Landlord shall be furnished other
documentation satisfactory to the Landlord evidencing payment in full);
and
(iii) The Landlord shall have received, with respect to the
work done for which payment or reimbursement is claimed hereunder, a
written waiver from the contractor or vendor in question (and all
subcontractors and subvendors involved in the work in question) waiving
any right to assert any vendor's, mechanic's or other lien on the
building, the
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premises or any fixtures, machinery, equipment or other
installation therein.
(e) It is understood and agreed that the Landlord shall have no
responsibility for the performance of the contractor installing the
Improvements (including matters of quality or timeliness), and in the event
that for any reason the Improvements are not completed in a timely fashion
and/or there is any delay in the date on which the premises are ready for
occupancy by the Tenant for the purposes of conducting business, this lease
shall nevertheless continue in full force and effect, the Tenant shall be
required to pay rent, and the Tenant shall have no right, remedy or claim
(including any claim for actual, punitive or consequential damages) against the
Landlord.
TWENTY-EIGHTH: Broker. The Tenant represents and warrants to the
Landlord that all of the Tenant's negotiations respecting this lease which were
conducted with or through any person, firm or corporation, other than the
officers of the Landlord, were conducted through Creative Leasing concepts
(Salvatore Caputo), real estate brokers (the "Broker"). The Landlord agrees to
pay the commission due to the Broker pursuant to the terms of a separate
agreement. Landlord and Tenant agree to indemnify and hold one another harmless
from and against all demands, liabilities, losses, causes of action, damages,
costs and expenses (including without limitation attorneys' fees and
disbursements) suffered or incurred in connection with any claims for a
brokerage commission or consultation fees arising out of any conversations or
negotiations had by the party against whom indemnification is claimed with any
broker or finder except for the Broker.
TWENTY-NINTH: Notices; Miscellaneous. (a) Any notice which is to be
given by either party to the other pursuant to this lease shall be in writing
and shall be given personally as follows: (i) if such notice is to be given by
the Landlord to the Tenant, such notice shall be given in the following manner:
(x) notice may be given personally, by delivering the same to the Tenant or, if
the Tenant be a corporation or partnership, to any officer of such corporation
or member of the partnership, at the premises or at any other place; or (y)
notice may also be given personally at the premises by delivering same to the
Tenant or any officer or partner of the Tenant; or (z) notice may also be given
by registered or certified mail by depositing the notice, enclosed in an
envelope addressed to the Tenant at its address given in this lease or at the
premises, in any United States Post Office, postage and registry or
certification fees prepaid; (ii) if such notice is to be given by the Tenant to
the Landlord, the notice shall be given by registered or certified mail, by
depositing the notice, enclosed in an envelope, addressed to the Landlord at 74
Trinity Place, New York, N.Y., or at such other place as the Landlord shall
hereafter designate in writing, in any United States Post office, postage and
registry or certification fees prepaid. Any notice shall be deemed to have
been given on the date when the same is delivered as above provided or, if
given by mail, on the date which is two business days following the day when it
is deposited as above provided in the United States Post office.
(b) If Tenant is a corporation, partnership or trust, it shall keep in
effect its existence and rights as a corporation or partnership or trust under
the law of the state of its incorporation or formation and its right to own and
lease
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property and transact business in the state in which the premises are situated
during the entire time that it has any interest in the premises.
THIRTIETH: Quiet Enjoyment. The Landlord covenants that, if the Tenant
shall duly keep and perform all the terms and conditions ions hereof, the
Tenant shall peaceably and quietly have, hold and enjoy the premises for the
term aforesaid, subject, however, to ground leases, underlying leases and
mortgages as hereinbefore described, and to the lien, rights and estate by
virtue of unpaid taxes of any government having jurisdiction of the premises of
which the herein demised premises are a part. If the Landlord shall hereafter
sell, exchange or lease the entire building or the land and the building
wherein the premises are located, subject to this lease, or, being the lessee
thereof, shall assign its lease, the grantee, lessee, or assignee thereof, as
the case may be, shall, without further agreement by any party, be conclusively
deemed to be the Landlord of this lease and to have assumed and undertaken to
carry out all of the obligations hereof on the part of the Landlord to be
performed, and the Tenant does hereby release the above named Landlord from any
claim or liability arising or accruing hereunder subsequent to such transfer of
ownership, for breach of the covenant of quiet enjoyment, or otherwise.
THIRTY-FIRST: Security Guard Program. If the Landlord institutes a
security guard program at the building under contract with a recognized
security guard or patrol agency which shall supply guards for the lobby, hall,
loading bank and other patrol services at the building on a contract basis, the
Tenant will, within ten days following receipt of a statement from the Landlord
of the Landlord's expenditure for the security guard services, pay to the
Landlord the Tenant's proportionate share of 121% of the Landlord's
expenditures for the security guard service in the building. The amount payable
hereunder shall constitute additional rent. Statements of the Landlord's
expenditures in successive periods of 90 days following the institution of the
service shall be submitted not more frequently than once in each period of
three months during the term. The Tenant's proportionate share of the
Landlord's expenditure for the security guard services shall be as set forth in
subparagraph (b) (11) of Article TWENTY-SIXTH.
THIRTY-SECOND: Headings. The headings or titles of the various Articles
or paragraphs of this lease are for reference and index purposes only, and none
of them shall be taken into consideration or given any effect whatever in
determining the meaning or scope of the paragraph to which any of them applies.
The use of any pronoun referring to either of the parties to this lease shall
be construed to include any or no gender and any number.
THIRTY-THIRD: Free Rent. Provided Tenant shall not be in default of any
provision of this lease and shall have faithfully paid all rent and other
amounts payable pursuant to this lease on or before the due date thereof,
Tenant shall not be required to pay fixed rent with respect to the premises (i)
for the three-month period commencing on the Commencement Date and terminating
on May 31, 1994, and (ii) the two-month period commencing on March 1, 1995 and
ending on April 30, 1995; provided, however, that Tenant shall during such
abatement period pay all other amounts due under this lease, including but not
limited to, any additional rent payable pursuant to Article
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<PAGE>
TWENTY-SIXTH of this lease and any service charges for electric current, water
and overtime elevator or heat services.
THIRTY-FOURTH: Delayed Possession. In the event that the Landlord, for
any reason, shall be unable to give possession of the premises hereby demised
by the 1st day of January, 1994, this lease shall nevertheless continue in full
force and effect and the Landlord shall-tender and the Tenant will take
possession of said premises under the terms of this lease as soon as the
Landlord shall have tendered possession thereof to the Tenant; the fixed rent,
however, to begin three months after the date upon which such possession is
tendered to the Tenant.
THIRTY-FIFTH: No Pornography. In conducting its business in the
premises, as permitted by this lease, the Tenant will not deal in any sexually
explicit or pornographic materials. It being understood that violations of the
foregoing restriction may be subject to varying interpretations, it is agreed
that the Landlord shall be the sole judge of what constitutes sexually explicit
or pornographic materials.
If the Tenant shall fail to operate the premises in the manner
specified in this Article, the Landlord may give notice to the Tenant to cure
any violation of this article within 30 days. If the Tenant fails to cure such
violations to the satisfaction of the Landlord, as the Landlord in its sole
discretion shall determine, in such 30-day period, such failure shall
constitute a default hereunder and the Landlord shall have the right to
terminate this lease in accordance with the provisions of Article TWENTIETH of
this lease.
The terms, covenants and conditions contained in the foregoing lease
shall be binding on, and shall enure to the benefit of the parties hereto, and
their respective legal representatives, successors, and assigns, but no
assignment made or purported to be made in violation of the provisions of this
lease shall vest in such assignee any right or title in or to this lease or in
or to the estate hereby created.
IN WITNESS WHEREOF, this agreement has been signed and sealed by the
parties hereto, the day and year first above written.
THE RECTOR, CHURCHWARDENS AND
VESTRYMEN OF TRINITY CHURCH
IN THE CITY OF NEW YORK
Attest:
As to Landlord: By: /s/
-----------------------------------
Executive Vice President of Real Estate
/s/ By: /s/
- ------------------ ------------------------------
Finance Department Director of Leasing
Attest: SMA VIDEO INC.
As to Tenant:
/s/ By: /s/ (L.S)
- ----------------- -------------------------------
Assistant Secretary President
By: /s/ Daniel Paul Mattews
------------------------
Daniel Paul Mattews,
Rector
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<PAGE>
SCHEDULE A
Rules and Regulations
1. The Tenant shall not clean, nor require, permit or allow any window
in the demised premises to be cleaned from the outside in violation of Section
202 of the Labor Law or of the Rules of the Board of Standards and Appeals, or
of any other board or body having or asserting jurisdiction;
2. No sign or lettering shall be inscribed on any door, wall or window
of the demised premises which is visible from the street or the portion of the
building used in common by other tenants except such as may be approved in
writing by the Landlord or its agents or designee, and except that the name of
the Tenant and any permitted occupant may be displayed on or next to the
entrance door of the demised premises. Landlord shall allow the Tenant ten
listings in the building directory in the lobby of the building;
3. No additional locks or bolts shall be placed anywhere upon or within
the demised premises or any on rooms therein, unless duplicate keys thereto be
given to the Landlord and all such keys must, on the termination of this lease,
be surrendered to the Landlord;
4. The Landlord may exclude any persons visiting or attempting to visit
the premises between 7 p.m. and 8 a.m. and on Saturdays, Sundays and the
holidays recognized as such by the state or federal government unless such
person shall be equipped with a pass signed by the Tenant and unless such
person shall sign his/her name and the premises which he/she is to visit on the
night report;
5. The sanitary and safety facilities used solely by the Tenant or by
the Tenant in common with other occupants of the building of which the demised
premises are a part shall be used only for the purposes for which they were
constructed;
6. No signs, signals, devices, displays, sounds or advertisements
visible or audible from the street or from the halls and other parts of the
building used in common by the Tenant and other tenants shall be inscribed,
erected or maintained unless the kind, style, location and manner thereof shall
have been approved in writing by the Landlord and if any sign, signal, sound
display or advertising be erected, made or inscribed without such approval, the
Landlord may remove the same and charge the cost of so doing to the Tenant as
additional rent. Notwithstanding the preceding, the name of the Tenant may be
displayed on or next to the entrance door of the demises premises. The Landlord
may remove any sign or signs or displays in order to paint the premises or any
part of the building, or make any repairs, alterations or improvements in or
upon the premises or building, or any part thereof, provided it causes the same
to be removed and replaced at the Landlord's expense, whenever the said
painting, repairs, alterations or improvements shall have been completed;
7. No advertising which, in the reasonable opinion of the Landlord,
tends to impair the reputation of the building or its desirability as an office
building, shall be published or caused to be published by the Tenant and, upon
notice from the
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<PAGE>
Landlord, the Tenant shall refrain from or discontinue such advertising;
8. Awnings, antennae, aerials, ventilating and air conditioning
apparatus or other projections from the windows or outside walls of the demised
premises shall not be erected or installed. All air conditioning apparatus
installed in windows by the Tenant shall be so arranged that condensate does
not drain on the outside of the building wall or into the street;
9. The lights, skylights, entrances, passages, courts, elevators,
stairways, loading platforms, halls or any part of the building intended for
the use in common by the Tenant and the other occupants thereof shall not be
obstructed or encumbered. In the event of any such encumbrance or obstruction,
the Landlord may remove the material causing such encumbrance or obstruction
and cause it to be stored and charge the cost of doing so to the Tenant after
reasonable notice to the Tenant;
10. No part of the premises or the building shall be marked, painted,
drilled into, or in any way defaced except as otherwise permitted in this
Lease. No laying of linoleum or other similar floor covering so that the same
shall come in direct contact with the floor of the demised premises shall be
made; and if linoleum or other similar floor covering is desired to be used, an
interlining of builder's deadening felt shall be first affixed to the floor, by
a paste or other material, soluble in water; cement and other similar adhesive
material shall not be used;
11. No part of the demised premises shall be used in a manner which, in
the reasonable judgment of the Landlord, might cause structural injury to the
building or its equipment;
12. The Tenant's employees shall not stand or loiter around the
hallways, stairways, elevators, front, roof or any other part of the building
used in common by the occupants thereof;
13. No load shall be placed upon any floor of the building exceeding
the floor load per square foot area which such floor was designed to carry, and
all loads shall be evenly distributed. The existing floor load in the premises
is approximately 250 pounds per square foot. The Landlord reserves the right to
reasonably prescribe the weight and position of all safes, machinery and other
personal property in the premises which must be placed so as to distribute their
weight;
14. Nothing shall be thrown out of the windows or doors, or down the
passages or skylights of the building, nor shall any of them be covered,
obstructed or encumbered. No improper noises shall be made in the building, nor
shall birds or animals be brought therein;
15. Where freight or service elevators are provided by the building and
are in operation, all deliveries shall be made to or from the demised premises
exclusively by means of such elevators;
16. Anyone doing janitorial work for the Tenant shall at all times be
subject to order and direction by the superintendent of the building, although
he shall not be the servant of either the superintendent or the Landlord;
-2-
<PAGE>
17. No peddling, soliciting and canvassing shall be permitted in the
premises or by the Tenant's employees elsewhere in the building;
18. The Landlord may reasonably prescribe, and from time to time
reasonably vary, the time for any removals or deliveries from or into the
premises, at any time, and such prescriptions shall apply whether or not the
material so removed or received is the property of the Tenant. Removals or
deliveries of safes, machinery and any other heavy or bulky matter shall be
done only upon written authorization of the Landlord and only in such manner
and by such persons as may be reasonably acceptable to the Landlord, and the
Landlord may require any further reasonable assurances or agreements or
indemnity from the Tenant and the movers to that effect. The Landlord reserves
the right to inspect all freight to be brought into the building and to exclude
from the building all freight which violates any of these Rules and Regulations
or the lease of which these Rules and Regulations are a part;
19. The Tenant shall not knowingly permit its servants, employees,
agents, visitors or licensees, at any time to bring or keep upon the premises
any inflammable, combustible, corrosive or explosive fluid, chemical (other
than commonly used cleaning products) or substance or cause or permit any
unusual or objectionable odors to be produced upon or emanate from the
premises;
20. The Tenant shall not use any other method of heating than that
supplied by the Landlord; except as set forth in this lease;
21. No drilling in floors, walls or ceilings shall be done except in
compliance with the terms of this lease and no such drilling shall be done
during usual business hours unless authorized by the Landlord in writing;
22. No vending machine shall be installed or permitted to remain in the
premises unless the Landlord shall first have given its specific written
authorization for the installation of each such machine, which authorization
shall not be unreasonably withheld or delayed. The Tenant shall not authorize
or permit any vendor of sandwiches, coffee, or other foods, candies or
beverages to enter the premises for the purpose of soliciting sales of such
wares to the Tenant's employees. This rule shall not be deemed to require the
Landlord's consent to or written authorization of entry upon the premises by
suppliers of vending machines which have been specifically authorized by the
Landlord.
23. The passenger and service elevators, other than automatic
self-service elevators, if any, shall be operated only by employees of the
Landlord, and must not in any event be interfered with by the Tenant, Tenant's
servants, employees, agents, visitors or licensees;
-3-
<PAGE>
EXHIBIT C
WORK LETTER
1. Landlord has installed a Local Law #5 system for base building which
includes a fire command station, necessary risers, warden stations,
pull stations, smoke detectors required for the core area. Tenant to be
responsible for the relocation of existing or installation of any new
devices necessary due to tenant's installation.
2. Install new operable thermopane windows throughout the premises except
for the three (3) existing window bays on the southeast lot-line
elevation. The aforementioned existing lot-line windows have been
rehabilitated to Landlord's specifications.
3. Provide not less than twelve (12) watts per net usable square foot area
of the premises consisting of two (2) watts (120/208) v, 400 nominal
amps, for convenience outlets and ten (10) watts (277/480) v, 400
nominal amps for lighting and HVAC power terminating in two (2) meters
and two (2) switches in the respective floor's electric room, as per
Landlord's specifications. The mark-up of the submeters will be
calculated from the aggregate billing.
4. Modernize building core mens and ladies toilet facilities to Landlord's
specifications, which is in compliance with NYC handicap requirements.
5. Existing sprinkler system to remain as is. The Landlord warrants that
the risers for the sprinkler system, the tanks, pumps and "Siamese"
connections at street level all comply with the presently existing
requirements of the New York City Building Code.
6. The Landlord will install up to two 30-ton Carrier Modu-vac in-door
packaged cooling variable air volume system with two BOHN air-cooled
condensers model #IICD 26ALF, with five-row coil type B, 15HP motor,
flat filter section and vibration insulators in a machine room on the
floor.
Sheetmetal to consist of aluminum condenser air intake and discharge
duct, acoustical lining (ending at machine room wall), motorized
dampers, flexible collars, tuning vanes, access doors, angle-iron
stands for condensers, mixed air plenum, and anodized louvers to match
window frames; supply ductwork to be installed by Tenant. The system is
engineered with the following features:
a) dual Carrier serviceable compressors
b) automatic capacity control with electric unloader
c) positive compressor protection
d) crank case heaters
e) hot gas by-pass
f) pre-wired electrical control center
g) intertwined evaporator coil
h) forward curved fans
i) outdoor fan relay
j) timer control panel
k) 10HP evaporator motor
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<PAGE>
l) discharge air sensor
m) economizer with enthalpy (Honeywell)
n) fresh air dampers, return air dampers, exchange air dampers
o) discharge VAV damper
p) electric resistance heaters sized to the capacity of the
compressor load
At all times during the term of this lease, the Tenant shall pay all electric
costs incurred in the operation of all air conditioning equipment in the
premises, furthermore, Tenant to be responsible for the service contracts on
such equipment after the expiration of the manufacturers warranties.
All electrical distribution within the Tenant's premises (including power and
control connections to the air conditioning equipment) is NOT included in the
Landlord's base building work and is to be installed by Tenant.
7. Heating is provided through perimeter radiation consisting of two pipe,
low pressure intermittent system turned over in good working order with
new traps, valves, and branch piping to risers and return lines.
-5-
<PAGE>
This AMENDMENT OF LEASE dated as of the 29th day of June, 1995, between
The Rector, Church-Wardens, and Vestrymen of Trinity Church in the City of New
York, having its offices at 74 Trinity Place, New York, New York ("Landlord"),
and SMA Video, Inc., having its offices at 100 Avenue of the Americas, New
York, New York ("Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant previously entered into that certain lease
dated as of the December 29, 1993 for the entire tenth floor of the building
known as 100 Avenue of the Americas (the "Lease"); and
WHEREAS, a dispute has arisen between the parties relating to the
responsibility for certain construction delays, with a resulting disagreement
over the appropriate Commencement Date for the Lease; and
WHEREAS, the parties have resolved their differences and this Amendment
of Lease is intended to reflect that resolution.
NOW, THEREFORE, the parties agree as follows:
1. The Commencement Date of the Lease is deemed to be September 1,
1994. Tenant acknowledges that Landlord has completed all work required to be
performed by Landlord and described in Exhibit C ("Work Letter") of the Lease.
2. The term of the Lease is hereby extended so that the Expiration Date
shall be December 31, 2005.
3. In Article THIRTY-THIRD of the Lease, the dates set forth in clauses
(i) and (ii) are hereby deleted and the following substituted therefor: "(i)
the three-month period commencing on September 1, 1994 and terminating on
November 30, 1994 and (ii) the three-month period commencing on February 1,
1995 and terminating on April 30, 1995."
4. The parties agree that fixed rent for the months of December, 1994
and January, 1995 have been paid. As of the date hereof, Tenant owes fixed rent
for May and June, 1995 in the amount of $50,000.
5. Pursuant to Article TWENTY-SEVENTH of the Lease, Landlord agreed to
reimburse up to a maximum of $275,000 of Tenant's cost of construction of office
improvements in the premises. In addition, as a result of field conditions,
Landlord agreed to give Tenant an additional credit of $34,917. As of the date
hereof, Tenant is entitled to a final total reimbursement of $36,668, whereupon
Landlord shall have no further reimbursement obligation under either Article
TWENTY-SEVENTH or with respect to the aforementioned credits.
<PAGE>
6. Simultaneously with the execution hereof by Tenant, Tenant shall
deliver to Landlord a check in the amount of $13,332, representing the fixed
rent for May and June, 1995 in the amount of $50,000, less the Landlord's
reimbursement obligation of $36,668.
7. The Lease, as modified by this Amendment of Lease, remains in full
force and effect and is hereby ratified and confirmed.
IN WITNESS WHEREOF, the parties have executed this Amendment of Lease
as of the day and year first above written.
LANDLORD:
THE RECTOR, CHURCH-WARDENS AND VESTRYMEN
OF TRINITY CHURCH IN THE CITY OF NEW YORK
By: /s/ illegible
-----------------------------
TENANT:
SMA VIDEO, INC.
By: /s/ illegible
-----------------------------
<PAGE>
EXHIBIT 10.9
A 880--Lease of Business Premises. Julius Blumberg, Inc., Law
Blank Publishers
THIS LEASE, dated the First day of June 1995 Between Dominick Incantalupo,
c/o M & M Sanitation Corp., 517-519 West 19th Street, New York, NY 10011
hereinafter referred to as the Landlord, and Fly Films Inc., a New York
corporation and SMA Video Inc., a New York corporation having their address at
45 Renwick Street, New York, NY 10013
hereinafter referred to as the Tenant, WITNESSETH: That the Landlord hereby
demises and leases unto the Tenant, and the Tenant hereby hires and takes from
the Landlord for the term and upon the rentals hereinafter specified, the
premises described as follows, situated in the City of New York, County of New
York and State of New York
The entire building and surrounding premises, known as 45 Renwick Street, New
York, New York 10013
The term of this demise shall be for five (5) years beginning June 1, 1995
and ending May 31, 2000. KK.
The rent for the demised term shall be One Hundred Sixty Eight Thousand and
no/100 Dollars ($168,000.00), which shall accrue at the yearly rate of Thirty
Three Thousand Six Hundred and no/100 Dollars ($33,600.00).
The said rent is to be payable monthly in advance on the first day of each
calendar month for the term hereof, in instalments as follows:
Two Thousand Eight Hundred and no/100 Dollars ($2,800.00) per month for the
entire term of the Lease
at the office of the Landlord
or as may be otherwise directed by the Landlord in writing.
THE ABOVE LETTING IS UPON THE FOLLOWING CONDITIONS:
First.--The Landlord covenants that the Tenant, on paying the said rental
and performing the covenants and conditions in this Lease contained, shall and
may peaceably and quietly have, hold and enjoy the demised premises for the term
aforesaid.
Second.--The Tenant covenants and agrees to use the demised premises as a
studio for the production of commercial video tapes and films, general offices,
and as a storage facility for film and film production equipment.
and agrees not to use or permit the premises to be used for any other purpose
without the prior written consent of the Landlord endorsed hereon.
Third.--The Tenant shall, without any previous demand therefor, pay to the
Landlord, or its agent, the said rent at the times and in the manner above
provided. In the event of the non-payment of said rent, or any instalment
thereof, at the times and in the manner above provided, and if the same shall
remain in default for ten days after becoming due, or if the Tenant shall be
dispossessed for non-payment of rent, or if the leased premises shall be
deserted or vacated, the Landlord or its agents shall have the right to and may
enter the said premises as the agent of the Tenant, either by force or
otherwise, without being liable for any prosecution or damages therefor, and may
relet the premises as the agent of the Tenant, and receive the rent therefor,
upon such terms as shall be satisfactory to the Landlord, and all rights of the
Tenant to repossess the premises under this lease shall be forfeited. Such
re-entry by the Landlord shall not operate to release the Tenant from any rent
to be paid or covenants to be performed hereunder during the full term of this
lease. For the purpose of reletting, the Landlord shall be authorized to make
such repairs or alterations in or to the leased premises as may be necessary to
place the same in good order and condition. The Tenant shall be liable to the
Landlord for the cost of such repairs or alterations, and all expenses of such
reletting. If the sum realized or to be realized from the reletting is
insufficient to satisfy the monthly or term rent provided in this lease, the
Landlord, at its option, may require the Tenant to pay such deficiency month by
month, or may hold the Tenant in advance for the entire deficiency to be
realized during the term of the reletting. The Tenant shall not be entitled to
any surplus accruing as a result of the reletting. The Landlord is hereby
granted a lien, in addition to any statutory lien or right to distrain that may
exist, on all personal property of the Tenant in or upon the demised premises,
to secure payment of the rent and performance of the covenants and conditions of
this lease. The Landlord shall have the right, as agent of the Tenant, to take
possession of any furniture, fixtures or other personal property of the Tenant
found in or about the premises, and sell the same at public or private sale and
to apply the proceeds thereof to the payment of any monies becoming due under
this lease, the Tenant hereby waiving the benefit of all laws exempting property
from execution, levy and sale on distress or judgment. The Tenant agrees to pay,
as additional rent, all attorney's fees and other expenses incurred by the
Landlord in enforcing any of the obligations under this lease.
Fourth.--The Tenant shall not sub-let the demised premises nor any portion
thereof, nor shall this lease be assigned by the Tenant without the prior
written consent of the Landlord endorsed hereon, which consent shall not be
unreasonably withheld or delayed.
Fifth.--The Tenant has examined the demised premises, and accepts them in
their present condition (except as otherwise expressly provided herein) and
without any representations on the part of the Landlord or its agents as to the
present or future condition of the said premises. The Tenant shall keep the
demised premises in their present condition, and shall redecorate, paint and
renovate (provided such renovations are in compliance with applicable building
codes) the said premises as may be necessary to keep them in repair and good
appearance. The Tenant shall quit and surrender the premises at the end of the
demised term in as their present condition. The Tenant shall not make any
alterations, additions, or improvements to said premises without the
<PAGE>
prior written consent of the Landlord which shall not be unreasonably withheld
or delayed. All erections, alterations, additions and improvements, whether
temporary or permanent in character, which may be made upon the premises either
by the Landlord or the Tenant, except furniture or movable trade fixtures
installed at the expense of the Tenant, shall be the property of the Landlord
and shall remain upon and be surrendered with the premises as a part thereof at
the termination of this Lease, without compensation to the Tenant. The Tenant
further agrees to keep said premises and all parts thereof in a clean and
sanitary condition and free from trash, inflammable material and other
objectionable matter. If this lease covers premises, all or a part of which are
on the ground floor, the Tenant further agrees to keep the sidewalks in front of
such ground floor portion of the demised premises clean and free of
obstructions, snow and ice.
Sixth.--In the event that any mechanics lien is filed against the premises
as a result of alterations, additions or improvements made by the Tenant, the
Landlord, at its option, after ninety days notice to the Tenant, may terminate
this lease and may pay the said lien, without inquiring into the validity
thereof, and the Tenant shall forthwith reimburse the Landlord the total expense
incurred by the Landlord in discharging the said lien, as additional rent
hereunder. SEE RIDER
Seventh.--The Tenant agrees to replace at the Tenant's expense any and all
glass which may become broken in and on the demised premises. Plate glass and
mirrors, if any, shall be insured by the Tenant at their full insurable value in
a company satisfactory to the Landlord. Said policy shall be of the full premium
type, and shall be deposited with the Landlord or its agent.
Eighth.--The Landlord shall not be responsible for the loss or damage to
property, or injury to persons, occurring in or about the demised premises, by
reason of any existing or future condition, defect, matter or thing in said
demised premises or the property of which the premises are a part, or for the
acts, omissions or negligence of other persons or tenants in and about the said
property. The Tenant agrees to indemnify and save the Landlord harmless from all
claims and liability for losses of or damage to property, or injuries to persons
occurring in or about the demised premises.
Ninth.--Utilities and services furnished to the demised premises for the
benefit of the Tenant shall be provided and paid for as follows: water by the
Tenant; gas by the Tenant; electricity by the Tenant; heat by the Tenant; hot
water by the Tenant. All other utilities and services are to be provided for and
paid by Tenant.
The Landlord shall not be liable for any interruption or delay in any of
the above services for any reason.
Tenth.--The Landlord, or its agents, shall have the right to enter the
demised premises in an emergency only or upon 24 hours notice in the day or
night to examine the same, provided Landlord shall not interfere with Tenant's
business, or to make such repairs, additions or alterations as shall
necessary for the safety, preservation or restoration of the improvements, or
for the safety or convenience of the occupants or users thereof (there being no
obligation, however, on the part of the Landlord to make any such repairs,
additions or alterations). For three months prior to the expiration of the
demised term, the Landlord, or its agents, may similarly exhibit the premises to
prospective tenants, and may place the usual "To Let" signs thereon.
Eleventh.--In the event of the destruction of the demised premises or the
building containing the said premises by fire, explosion, the elements or
otherwise during the term hereby created, or previous thereto, or such partial
destruction thereof as to render the premises wholly untenantable or unfit for
occupancy, or should the demised premises be so badly injured that the same
cannot be repaired within 180 days from the happening of such injury, then and
in such case the term hereby created shall, cease and become null and void from
the date of such damage or destruction, and the Tenant shall immediately
surrender said premises and all the Tenant's interest therein to the Landlord,
and shall pay rent only to the time of such surrender, in which event the
Landlord may re-enter and re-possess the premises thus discharged from this
lease and may remove all parties therefrom. Should the demised premises be
rendered untenantable and unfit for occupancy, but yet be repairable within 180
days from the happening of said injury, the Landlord may enter and repair the
same with reasonable speed, and the rent shall not accrue after said injury or
while repairs are being made, but shall recommence immediately after said
repairs shall be completed. But if the premises shall be so slightly injured as
not to be rendered untenantable and unfit for occupancy, then the Landlord
agrees to repair the same with reasonable promptness and in that case the rent
accrued and accruing shall not cease or determine. The Tenant shall immediately
notify the Landlord in case of fire or other damage to the premises. If Landlord
fails to complete repairs within 180 days, Tenant at its option may terminate
the Lease upon 30 days notice.
Twelfth.--The Tenant agrees to observe and comply with all laws,
ordinances, rules and regulations of the Federal, State, County and Municipal
authorities applicable to the business to be conducted by the Tenant in the
demised premises. The Tenant agrees not to do or permit anything to be done in
said premises, or keep anything therein, which will increase the rate of fire
insurance premiums on the improvements or any part thereof, or on property kept
therein, or which will obstruct or interfere with the rights of other tenants,
or conflict with the regulations of the Fire Department or with any insurance
policy upon said improvements or any part thereof. in the event of any increase
in insurance premiums resulting from the Tenant's occupancy of the premises, or
from any act or omission on the part of the Tenant, the Tenant agrees to pay
said increase in insurance premiums on the improvements or contents thereof as
additional rent.
Thirteenth.--No sign, advertisement or notice shall be affixed to or placed
upon any part of the demised premises by the Tenant, except in such manner, and
of such size, design and color as shall reasonably be approved in advance in
writing by the Landlord.
Fourteenth.--This lease is subject and is hereby subordinated to all
present and future mortgages, deeds of trust and other encumbrances affecting
the demised premises or the property of which said premises are a part. The
Tenant agrees to execute, at no expense to the Landlord, any instrument which
may be deemed necessary or desirable by the Landlord to further effect the
subordination of this lease to any such mortgage, deed of trust or encumbrance.
Seventeenth.--In case of violation by the Tenant of any of the covenants,
agreements and conditions other than for the payment of rent or additional rent,
of this lease or of the rules and regulations now or hereafter to be reasonably
established by the Landlord, and upon failure to discontinue such violation
within 20 days after notice thereof given to the Tenant, this lease shall after
ten (10) days written notice, become null and void, and the Landlord may
re-enter without further notice or demand. The rent in such case shall become
due, be apportioned and paid on and up to the day of such re-entry, and the
Tenant shall be liable for all loss or damage resulting from such violation as
aforesaid. No waiver by the Landlord of any violation or breach of condition by
the Tenant shall constitute or be construed as a waiver of any other violation
or breach of condition, nor shall lapse of time after breach of condition by the
Tenant before the Landlord shall exercise its option under this paragraph
operate to defeat the right of the Landlord to declare this lease null and void
and to re-enter upon the demised premises after the said breach or violation.
<PAGE>
Eighteenth.--All notices and demands, legal or otherwise, incidental to
this lease, or the occupation of the demised premises, shall be in writing. If
the Landlord or its agent desires to give or serve upon the Tenant any notice or
demand, it shall be sufficient to send a copy thereof by certified mail,
addressed to the Tenant at the demised premises, or to leave a copy thereof with
a person of suitable age found on the premises, or to post a copy thereof upon
the door to said premises. Notices from the Tenant to the Landlord shall be sent
by certified mail or delivered to the Landlord at the place hereinbefore
designated for the payment of rent, or to such party or place as the Landlord
may from time to time designate in writing.
Nineteenth.--It is further agreed that if at any time during the term of
this lease the Tenant shall make any assignment for the benefit of creditors, or
be decreed insolvent or bankrupt according to law, or if a receiver shall be
appointed for the Tenant, then the Landlord may, at its option, terminate this
lease, exercise of such option to be evidenced by notice to that effect served
upon the assignee, receiver, trustee or other person in charge of the
liquidation of the property of the Tenant or the Tenant's estate, but such
termination shall not release or discharge any payment of rent payable hereunder
and then accrued, or any liability then accrued by reason of any agreement or
covenant herein contained on the part of the Tenant, or the Tenant's legal
representatives.
Twentieth.--In the event that the Tenant shall remain in the demised
premises after the expiration of the term of this lease without having executed
a new written lease with the Landlord, such holding over shall not constitute a
renewal or extension of this lease. The Landlord may, at its option, elect to
treat the Tenant as one who bus not removed at the end of his term, and
thereupon be entitled to all the remedies against the Tenant provided by law in
that situation, or the Landlord may elect, at its option, to construe such
holding over as a tenancy from month to month, subject to all the terms and
conditions of this lease, except as to duration thereof, and in that event the
Tenant shall pay monthly rent in advance at the rate provided herein as
effective during the last month of the demised term.
Twenty-first.--If the property wherein the demised premises are located
shall be taken by public or quasi-public authority under any power of eminent
domain or condemnation, this lease, at the option of the Landlord, shall
forthwith terminate and the Tenant shall have no claim or interest in or to any
award of damages for such taking, except that Tenant may make a separate claim
for any property not belonging to Landlord.
Twenty-second.--The Tenant has this day deposited with the Landlord the sum
or $2,800.00 as security for the full and faithful performance by the Tenant of
all the terms, covenants and conditions of this lease upon the Tenant's part to
be performed, which said sum shall be returned to the Tenant after the time
fixed as the expiration of the term herein, provided the Tenant has fully and
faithfully carried out all of said terms, covenants and conditions on Tenant's
part to be performed. In the event of a bona fide sale, subject to this lease,
the Landlord shall have the right to transfer the security to the vendee for the
benefit of the Tenant and the Landlord shall be considered released by the
Tenant from all liability for the return of such security; and the Tenant agrees
to look to the new Landlord solely for the return of the said security, and it
is agreed that this shall apply to every transfer or assignment made of the
security to a new Landlord. The security deposited under this lease shall not
be mortgaged, assigned or encumbered by the Tenant without the written consent
of the Landlord.
Twenty-fourth.--No rights are to be conferred upon the Tenant until this
lease has been signed by the Landlord, and an executed copy of the lease has
been delivered to the Tenant.
Twenty-fifth.--The foregoing rights and remedies are not intended to be
exclusive but as additional to all rights and remedies the Landlord would
otherwise have by law.
Twenty-sixth.--All of the terms, covenants and conditions of this lease
shall inure to the benefit of and be binding upon the respective heirs,
executors, administrators, successors and assigns of the parties hereto.
However, in the event of the death of the Tenant, if an Individual, the Landlord
may, at its option, terminate this lease by notifying the executor or
administrator of the Tenant at the demised premises.
Twenty-seventh.--This lease And the obligation of Tenant to pay rent
hereunder and perform all of the other covenants and agreements hereunder on
part of Tenant to be performed shall in nowise be affected, impaired or excused
because Landlord is unable to supply or is delayed in supplying any service
expressly or impliedly to be supplied or is unable to make, or is delayed in
making any repairs, additions, alterations or decorations or is unable to supply
or is delayed in supplying any equipment or fixtures if Landlord is prevented or
delayed from so doing by reason of governmental preemption in connection with
the National Emergency declared by the President of the United States or in
connection with any rule, order or regulation of any department or subdivision
thereof of any governmental agency or by reason of the conditions of supply and
demand which have been or are affected by the war.
Twenty-eight.--This instrument may not be changed orally.
SEE RIDER ANNEXED HERETO
IN WITNESS WHEREOF, the said Parties have hereunto set their hands and
seals the day and year first above written.
Witness: ---/s/ illegible-----(SEAL)
Landlord
- ---------------------- By:-----------------------
FLY FILMS INC. (SEAL)
- ---------------------- -----------------------
Tenant
By:-----illegible---------
<PAGE>
GUARANTY
In consideration of the execution of the within lease by the Landlord, at
the request of the undersigned and in reliance of this guaranty, the undersigned
hereby guarantees unto the Landlord, its successors and assigns, the prompt
payment of all rent and the performance of all of the terms, covenants and
conditions provided in said lease, hereby waiving all notice of default, and
consenting to any extensions of time or changes in the manner of payment or
performance of any of the terms and conditions of the said lease the Landlord
may grant the Tenant, and further consenting to the assignment and the
successive assignments of the said lease, and any modifications thereof,
including the sub-letting and changing of the use of the demised premises, all
without notice to the undersigned. The undersigned agrees to pay the Landlord
all expenses incurred in enforcing the obligations of the Tenant under the
within lease and in enforcing this guaranty.
Witness: ------------------- -----------------(SEAL)
------------------- -----------------(SEAL)
Date: -------------------
Lease
============================================
Landlord
to
Tenant
============================================
Premises leased:
From:_______________________________________
To:_________________________________________
ASSIGNMENT AND ACCEPTANCE OF ASSIGNMENT
For value received the undersigned Tenant hereby assigns all of said
Tenant's right, title and interest in and to the within lease from and after
unto
heirs, successors, and assigns, the demised premises to be used and occupied
for and for no other purpose, it being expressly agreed that this
assignment shall not in any manner relieve the undersigned assignor from
liability upon any of the covenants of this lease.
Witness: ---------------------- -----------------------(SEAL)
---------------------- -----------------------(SEAL)
Date: ----------------------------
In consideration of the above assignment and the written consent of the
Landlord thereto, the undersigned assignee, hereby assumes and agrees from and
after
to make all payments and to perform all covenants and conditions provided in
the within lease by the Tenant therein to be made and performed.
Witness: ---------------------- -----------------------(SEAL)
---------------------- -----------------------(SEAL)
Date: ----------------------------
CONSENT TO ASSIGNMENT
The undersigned Landlord hereby consents to the assignment of the within
lease to on the express conditions that the original Tenant
, the assignor, herein, shall remain liable for the prompt
payment of the rent and the performance of the covenants provided in the said
lease by the Tenant to be made and performed, and that no further assignment
of said lease or sub-letting of any part of the premises thereby demised shall
be made without the prior written consent of the undersigned Landlord.
-------------------------
Landlord
Date:--------------------------- By:----------------------
<PAGE>
Rider Number 1 to Lease of 45 Renwick Street,
New York, NY 10013 made as of June 1st 1995 - Page 1
1. Landlord and Tenant agree that in the event of any conflict or
inconsistency between the printed portion of this Lease and this Rider, the
provisions of this Rider shall control the interpretation and application of
this Lease.
2. No diminution or abatement of rent or other compensation shall be
claimed by Tenant or allowed for inconvenience, discomfort, loss of space, or
disruption of business arising from any condition or casualty whatever the
cause.
3. Throughout the term hereby demised, the Tenant shall maintain and keep
the water meter measuring the consumption of water to the demised premises in
good order and repair at the Tenant's expense. In default thereof the Landlord
may cause such meter to be repaired or replaced and the cost thereof shall be
paid to the Landlord by the Tenant within ten (10) days after the rendering of a
statement of the cost to the Tenant. The Tenant agrees to pay the Landlord for
all water charges incurred on the premises as well as all sewer charges or
rental for the premises. Such charges shall be payable to Landlord, in full, as
additional rent, in the month next ensuing after Tenant receives notification
from Landlord of same. Along with written notification, Landlord shall provide
Tenant with a copy of any bills for same as received from the City of New York.
Payment of said charges shall become Tenant's obligation from the date of
commencement of this Lease.
4. It is mutually agreed by and between Landlord and Tenant that each
hereby waives his right to trial by jury in any action,
<PAGE>
Rider Number 1 to Lease of 45 Renwick Street,
New York, NY 10013 made as of June 1st, 1995 - Page 2
proceeding, or counterclaim brought by any party against the other (except for
personal injury) on any matters arising out of this Lease or in any way related
to their obligations as Landlord and Tenant. It is further agreed that should
Landlord commence any summary proceeding for possession of the premises
(including a proceeding for non-payment of rent) Tenant will not interpose any
counterclaim in such proceeding.
5. The Tenant agrees to pay to the Landlord all real estate taxes which,
during the term of this Lease, shall be levied or imposed or shall become due
and payable upon and against the premises in any tax year, which exceed the
amounts paid for the 1995/1996 tax year. Such taxes shall be payable, as
additional rent, in the month next ensuing after Tenant receives notification
from Landlord of same, which notification shall include the amount paid by the
Landlord and the period for which said taxes were paid. Landlord shall notify
Tenant, in writing, as to the yearly amount due as and for payment of said
taxes. To the extent that such taxes are payable in installments, Tenant shall
pay its share thereof in such installments whether or not Landlord elects to
pay same in a lump sum. Along with said written notification, Landlord shall
provide Tenant with a copy of the tax bill as received from the City of New
York. Payment of said tax increases shall become Tenant's obligation as of
July, 1996. The parties acknowledge that Landlord has not received and will not
receive his 1995/1996 real estate tax bill until after the commencement of this
Lease. Based
<PAGE>
Rider Number 1 to Lease of 45 Renwick Street,
New York, NY 10013 made as of June 1st, 1995 - Page 3
upon same, the parties agree that, upon receipt of said real estate tax bill, a
copy of same shall be forwarded by Landlord to the Tenant, via certified mail.
6. During the term of this Lease, the Landlord shall be under no obligation
to supply heat, water, electricity, cleaning, exterminating, rubbish removal or
any other service. Tenant shall at his own cost and expense maintain heating,
electrical, plumbing and all other systems and deliver them to Landlord upon
expiration of this Lease in the same condition as delivered to Tenant, ordinary
wear and tear excepted. Landlord represents that the plumbing, heating and
electrical systems will be in working order at the time of Tenant taking
occupancy.
7. The parties herewith acknowledge that the two (2) air
conditioning/heating units on the premises are the property of the Landlord.
Tenant herewith agrees to keep said units in good condition and repair
throughout the term of this Lease, normal wear and tear excepted. The parties
further acknowledge that the Landlord will maintain a service and maintenance
contract with reference to said units with Concord Air Conditioning Corp. Tenant
agrees to be responsible for payments of charges incurred under said contract
from the date of commencement of this Lease. Tenant further agrees to make all
payments under said contract, to the Landlord, as additional rent, within ten
(10) days after the rendering of a statement, as received from said company by
the
<PAGE>
Rider Number 1 to Lease of 45 Renwick Street,
New York, NY 10013 made as of June 1st, 1995 - Page 4
Landlord, to the Tenant. Failure to make such payments shall be deemed a
material breach of this Lease.
8. The Tenant shall take out, during the term of this Lease, what is known
as public liability insurance, naming therein the Landlord as an additional
insured, against any and all claims for damages to property or persons, whether
employees of the Tenant or not, for injuries occurring in, on, about or in front
of the said premises. Any and all such public liability policies shall protect
Tenant and Landlord, as an additional insured, in limits of at least
$2,000,000.00 for personal injury and $150,000.00 for property damage. Tenant
shall furnish Landlord with a copy of said policy or policies of insurance, or a
certificate of insurance, naming Landlord as an additional insured. In the event
any such policy or policies are cancelled, Tenant shall obtain a replacement of
said policy or policies within ten (10) days of receipt of notification of
cancellation.
In the event Landlord ascertains that Tenant has failed to obtain said
policy or policies of insurance, or in the event a new policy or policies have
not been obtained after cancellation of any such existing policy, Landlord, upon
giving Tenant ten (10) days' written notification to obtain said policy or
policies of insurance shall be entitled at his election to obtain same on behalf
of himself and the Tenant, and the costs incurred by the Landlord for the
premium or premiums therefore, shall be paid to the Landlord, as additional
rent, within ten (10) days after presentment by
<PAGE>
Rider Number I to Lease of 45 Renwick Street,
New York, NY 10013 made as of June 1st, 1995 - Page 5
Landlord, to Tenant, in writing, via certified mail, of the charges incurred by
the Landlord.
The failure of the Tenant to obtain insurance as provided for herein,
and/or the failure of the Tenant to repay premium charges incurred by the
Landlord as a result of Tenant's failure to obtain such insurance, shall be
deemed a material breach of this Lease.
9. Tenant shall, during the term of this Lease, keep the contents within
the demised premises, belonging to the Tenant, insured against loss or damage by
fire, or in consequence of fire, to the extent of the replacement value of said
contents, as the same may be determined from time to time by appraisal. Each
such policy shall contain the maximum extended coverage available. All such
policies shall be issued in such manner that the loss, if any, shall be payable
to the Tenant and/or the Landlord, as the case may be. Landlord shall be named
on said policy as an additional insured to the extent of the contents belonging
to him. Tenant shall furnish Landlord with a copy of said policy or a
certificate of insurance.
10. Landlord makes no representation as to the Certificate of Occupancy
issued to the within premises, or that same has been issued for the use intended
by Tenant. Should an additional or amended Certificate of Occupancy be necessary
to conduct Tenant's business as set forth in the "occupancy" clause of the main
Lease, same shall be obtained at Tenant's sole cost and expense. Landlord shall
execute all papers reasonable and necessary in order to allow
<PAGE>
Rider Number 1 to Lease of 45 Renwick Street,
New York, NY 10013 made as of June 1st, 1995 - Page 6
Tenant to obtain said Certificate of Occupancy, however, in no event shall
Landlord be responsible to physically modify the premises to enable Tenant to
secure same. The Landlord shall consent to all reasonable and necessary
alterations to the premises to be made by Tenant, at Tenant's sole cost and
expense, in order to obtain said Certificate of Occupancy.
11. As this Lease is of the entire property and building hereinabove
described, reference in this Lease to the real property or building "of which
the demised premises form a part" and all similar reference shall be deemed to
refer to the entire property or building and to the whole of the demised
premises.
12. The Tenant shall keep the demised premises clean and in order and shall
also keep the sidewalks and driveways in front of and around the demised
premises clear of snow and ice. Tenant shall also keep the sidewalks around the
demised premises in good condition and repair, and return the sidewalks to the
Landlord in the same condition as they are on the date Tenant first took
occupancy. A failure to do so shall constitute a material default on the part of
Tenant.
13. Tenant shall keep the roll-up door on the premises in good condition
and repair, normal wear and tear excepted.
14. Tenant shall be responsible for all violations issued by any
governmental agency as a result of sidewalk condition or refuse removal, during
the term of this Lease. Should Landlord be cited for same, Tenant shall
immediately pay to the Landlord the fine(s)
<PAGE>
Rider Number 1 to Lease of 45 Renwick Street,
New York, NY 10013 made as of June 1st, 1995 - Page 7
of any such violations within seven (7) days of Tenant's receipt of a copy of
same from Landlord via Certified Mail. Any such payment by Landlord shall be
considered as additional rent hereunder.
15. It is understood and agreed that the Tenant is renting the premises for
commercial use only and specifically represents that the premises shall in no
way be used as residences for the Tenant, their officers, directors or by
others. All parties hereto agree that in the event this provision is not
complied with, the Landlord may terminate this Lease in accordance with
Paragraph Seventh of the printed Lease and thereafter commence summary
proceedings to evict Tenant.
16. If after default in payment of rent, or a violation of any other
provision of this Lease, or upon the expiration of this Lease, Tenant moves out
or is dispossessed and fails to remove any trade fixtures or other property
prior to such default, removal, expiration of Lease, or prior to the issuance of
a final judgment or execution of a warrant of eviction, then and in that event,
the fixtures and property shall be deemed abandoned by Tenant and shall become
the property of the Landlord. Tenant shall have no action whatsoever for damages
arising from Landlord's compliance with this provision.
17. Words used in the singular shall include words in the plural where the
text of this statement so requires.
18. The rights and remedies given to Landlord in this Lease are distinct,
separate and cumulative remedies, and no one of them,
<PAGE>
Rider Number I to Lease of 45 Renwick Street,
New York, NY 10013 made as of June lst, 1995 - Page 8
whether or not exercised by Landlord, shall be deemed to be to the exclusion or
waiver of any of the others.
19. This document contains the entire agreement and understanding between
the parties. There are no oral understandings, terms or conditions and neither
party has relied upon any other representation, express or implied, not
contained in this agreement. All prior understandings, terms or conditions are
deemed merged in this agreement. This agreement cannot be changed or
supplemented orally.
20. If Tenant defaults in payment of rent, additional rent, or any other
sums due from Tenant under the Lease, for more than ten (10) days after same is
due, or if Tenant, after demand of Landlord, defaults in the payment of any sums
incurred by Landlord to fulfill any of Tenant's obligations under the Lease,
after ten (10) days written notice, then Tenant shall pay Landlord, as
additional rent, without demand, a late charge of five (5%) percent of the sums
due for that month. In the event any action is commenced by the Landlord to
recover any amounts due from the Tenant as rent or additional rent due under the
Lease, in the event said action is settled or is otherwise disposed of,
including judgment rendered after trial, Tenant agrees to pay to Landlord,
reasonable attorneys' fees for the commencement of said action.
21. Tenant covenants to pay Landlord all rent without notice or demand and
without abatement, deduction or set off, and irrespective of any claims of
Tenant against Landlord, and this
<PAGE>
Rider Number 1 to Lease of 45 Renwick Street,
New York, NY 10013 made as of June 1st, 1995 - Page 9
covenant shall be deemed independent of any other covenants, terms and
conditions of this Lease.
22. No payment by Tenant or receipt by Landlord of any amount less than
full rent provided in this Lease shall be deemed anything other than a payment
on account of the earliest rent due; no endorsement or statement on any check or
payment of rent shall be deemed an accord and satisfaction of Landlord; and
Landlord may accept any such check or payment from Tenant without prejudice to
Landlord's right to recover the balance of rent or to pursue any other right or
remedy provided under this Lease or by law.
23. Tenant has agreed to take occupancy of the within premises in an "as
is" condition. Tenant acknowledges that, inasmuch as it is occupying the entire
premises, and as set forth in other paragraphs contained in the Lease and Rider,
it is responsible for all non-structural repairs in or about the premises and
all structural repairs caused by Tenant's acts, and Tenant further agrees that
Landlord shall not be responsible to any person for any damages arising
therefrom, including water damages caused by roof leaks.
24. Supplementing Paragraph Fourth of the Lease, Tenant must, as a
condition precedent to any request for an assignment or permission to sublet,
submit a written application to Landlord containing the following information:
a. Name of proposed subtenant or assignee;
<PAGE>
Rider Number 1 to Lease of 45 Renwick Street,
New York, NY 10013 made as of June 1st, 1995 - Page 10
b. Certified financial statement for the proposed subtenant or
assignee;
c. Proposed term of sublease.
25. Supplementing Paragraph Sixth of the Lease, Landlord may only terminate
the Lease pursuant to the terms of Paragraph Sixth, if Tenant has failed to
either bond or satisfy the lien or has failed to commence diligent effort to
bond or remove the lien within such ninety (90) day period.
26. Notwithstanding anything contained herein, all notices or demands
required to be made under the Lease shall be made in writing and sent by
certified mail or hand delivery. Such notices shall be sent as follows:
If to Tenant: c/o SMA Video Inc.
100 Avenue of the Americas
New York, NY 10013
and to: Charles Weiss, Esq.
84 Wooster Street
New York, NY 10012
If to Landlord: Dominick Incantalupo
c/o M&M Sanitation
517-519 West 19th Street
New York, NY 10013
and to: Keith Rubenstein, Esq.
Rubenstein & Cohen
60 East 42nd Street, 46th Floor
New York, NY 10165
All notices sent by certified mail shall be deemed effective on the third
business day after the date of mailing. If
<PAGE>
Rider Number 1 to Lease of 45 Renwick Street,
New York, NY 10013 made as of June 1st, 1995 - Page 11
delivered by hand, said notice is deemed effective upon the date of delivery.
27. The demised premises shall be delivered to Landlord upon expiration of
this Lease in broom clean condition and condition in which it was received from
Landlord.
28. Tenant shall at all times during his occupancy, maintain Worker's
Compensation coverage for his employees. Tenant also agrees to hold harmless
and indemnify Landlord from any actions and/or proceedings commenced against
Landlord by any of Tenant's employees or by any third party, as concerns
Tenant's occupancy.
29. Tenant shall pay to Landlord, upon execution of this Lease, the sum of
FIVE THOUSAND SIX HUNDRED AND 00/100 ($5,600.00) DOLLARS, representing the first
month's rental hereunder, and a security deposit of one month's rent. It is
herewith agreed between the parties that the security on deposit hereunder shall
always be equal to one month rent, which amount shall be held in a non-interest
bearing account.
30. Tenant hereby agrees that the security on deposit shall at no time be
applicable to the payment of arrears in monthly rent or additional rent from
time to time due and owing under the provisions of this Lease and that same be
applied only for repairs of actual damages Tenant may be responsible for.
31. Tenant agrees to maintain the telephone, burglar alarm and fire alarm
systems located on the premises in good condition
<PAGE>
Rider Number 1 to Lease of 45 Renwick Street,
New York, NY 10013 made as of June 1st, 1995 - Page 12
and repair during the term of this Lease, normal wear and tear excepted.
Date: New York, New York
June 1, 1995
FLY FILMS INC.
Tenant
By: /s/ Michael Morrissey
-----------------------------
Michael Morissey, Officer
SMA Video, Inc.
Tenant
By: /s/ Michael Morrissey
-----------------------------
Michael Morissey, Officer
/s/ Dominick Incantalupo
-----------------------------
Dominick Incantalupo,
Landlord
<PAGE>
LIMITED PERSONAL GUARANTY OF MICHAEL MORISSEY
I, Michael Morissey, an officer and shareholder of Fly Films Inc. and SMA
Video Inc. ("Tenants"), Tenants under a certain lease (the "Lease") dated as of
June 1, 1995 with Dominick Incantalupo ("Owner"), affecting premises consisting
of the building known as 45 Renwick Street, New York, New York (said premises
hereinafter being referred to as the "demised premises"), for myself, and for
my heirs, successors, executors, administrators and assigns, hereby personally
guaranty to Owner, its heirs, successors and assigns, that I will be personally
liable for all rents due and payable under the Lease, together with any and all
additional rents, adjustments and escalations, until the day the Tenants, sub-
lessors or assigns surrender actual possession of the demised premises to Owner
by vacating the demised premises and returning the keys therefore to Owner. This
is intended to be an absolute and unconditional guaranty of payment, and of
collection, with respect to the aforesaid personal liability.
Notwithstanding this limited guaranty, all obligations of the Tenants will
remain in full force and effect as provided in the Lease, and Tenants shall not
be deemed released from the Lease by virtue of performance by me of my
obligations hereunder, but Tenants shall receive full credit for all payments
made by me pursuant to this instrument.
/s/ Michael Morissey
-------------------------
Michael Morissey
Dated: New York, New York
June 1, 1995
<PAGE>
EXHIBIT 10.10
STANDARD CONTRACTOR AGREEMENT
Date: April 15, 1999
--------------------
Agreement between
+--- ---+
| |
CHILDREN'S TELEVISION WORKSHOP
One Lincoln Plaza hereinafter called "CTW", "we", "our"
New York, New York 10023 or "us"
| |
+--- ---+
and
+--- ---+
| |
SMA VIDEO, INC.
100 Avenue of the
Americas - 10th Floor hereinafter called "Contractor".
New York, NY 10013
Attn: Dave Satin
| |
+--- ---+
This Agreement is made between Children's Television Workshop and Contractor
subject to and in accordance with the provisions set forth below and contained
on the attached Standard Terms and Conditions which are made a part hereof.
1. Description of Services and/or Deliverables: Production and Post Production
of up to 10 Elmo's World Inserts ("EWs"). Number of EWs may be revised by
CTW. Contractor estimates 17 days of studio production, including, but not
limited to, 12 CGI shooting days. Sesame Street producers set all
production and delivery schedules.
2. Contact Person: Dave Satin
3. Term: Pre Production beginning in May, 1999. Production: On or about June
1, 1999 through June 28, 1999; Post Production: On or about July 1, 1999
through October 15, 1999.
4. Compensation:_____ subject to paragraph 1 hereof. In event number of EWs
is revised, compensation hereunder will be adjusted accordingly.
5. Payment Terms: Total contract $_____*. Payment terms to change if number of
EWs decreases.
1) $______ start up costs, payable upon signing this
agreement.
2) $______ due May 10th (upon start of Pre Production start).
3) $______ due May 24th
4) $______ due June 1, 1999.
5) $______ due June 14, 1999.
6) $______ due June 29, 1999.
7) $______ due July 5, 1999.
8-19) $____ (x10) upon delivery and approval of each EWs
(totaling ($____).
6. Other Terms and Conditions:
a. Contractor shall deliver to CTW copies of all third party contracts
which contracts shall evidence CTW's unqualified ownership in and to
all elements of the EWs delivered hereunder.
b. CGI Elements - Includes all phases of the Computer Graphics
Imagining/Realtime Animation Process relevant to producing EWs.
Includes total cost for Pre Production, Production and Post-Production
to deliver 10 EW inserts and each insert not be limited by any
restrictions regarding length.
c. Post Production Bid - Includes completion of Post Production Process
for 10 EW inserts,
<PAGE>
regardless of length, and includes all Color Correction, Compositing,
Rotoscoping and Blue Screen clean up (Total $____ or $____ per insert).
Contractor shall deliver all CGI elements in format and number
designated by Producer. Post production to deliver 10 EW inserts and
each insert not to be limited by any restrictions regarding length.
d. Studio Facilities/Studio Production: All manpower charges will be
invoiced to CTW on an as used basis. All other facility production
charges are part of the attached budget as revised by Contractor and
approved by CTW.
e. Crew Costs: Crew costs are additional and are approximated at $_____,
and will be billed on separate invoice. Each week will be billed in
advance as an estimate one week prior to week worked and then be
reconciled by Sesame Street producer.
f. Overages: Overages can only be billed if general premises set forth
in this agreement change or when overages relate to approved crew
costs.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
SMA Video Inc. CHILDREN'S TELEVISION WORKSHOP
- -------------------------------------- -----------------------------------
Contractor
By: A By: /s/ illegible
----------------------------------- --------------------------------
B-3294628
- --------------------------------------
Federal Employer Identification Number or Social Security Number
<PAGE>
STANDARD TERMS AND CONDITIONS
1. Services. Contractor agrees to provide, on a first priority basis, the
services described in Attachment A and such other services as CTW may
reasonably designate from time to time. Such services shall be subject to CTW's
specifications and approval. It is understood and agreed that CTW shall be
under no obligation to utilize Contractor's services or the results thereof.
Subject to Contractor's obligations hereunder, he or she shall be free to
perform services for others.
2. Term and Termination. The term of this Agreement shall commence as of the
Commencement Date set forth in Attachment A and shall expire on the Expiration
Date set forth in Attachment A, unless earlier terminated. Either party may
terminate this Agreement upon ten (10) days written notice to the other party.
CTW may terminate this Agreement immediately for cause. "Cause" shall include,
but not be limited to, willful misconduct, gross negligence, failure to perform
satisfactorily or conduct which in CTW's reasonable opinion is unprofessional
or reflects unfavorably upon CTW or its affiliated companies. The rights and
remedies provided in this section are not exclusive and are in addition to any
other rights and remedies provided by law or in this Agreement.
3. Payment. In full consideration for all rights and services provided by
Contractor hereunder, Contractor shall receive the Payment sum set forth in
Attachment A. All payments hereunder, including reimbursement of out-of-pocket
expenses, if any, due to Contractor will be contingent upon CTW's receipt and
approval of a budget as well as invoices from Contractor setting forth an
accurate account of all such payments, and of proper receipts and/or vouchers
for all such expenses. Contractor shall maintain books and records which CTW
may examine during normal business hours upon reasonable notice. Contractor
understands and agrees that, as a Contractor, he or she is not eligible for
unemployment or other benefits. Contractor further understands and agrees that
he or she is not an agent of CTW and has no right to employ or contract with
any person on behalf of CTW. Contractor shall have sole responsibility for the
payment of all taxes of every kind applicable or relating to all amounts paid
to him or her hereunder.
4. Work-Made-For-Hire and Assignement. To the extent permitted by law, all
works furnished to CTW by Contractor, including but not limited to all ideas,
concepts, business plans, scripts, logos, artistic and literary works and
intellectual property created, developed, and/or designed by Contractor, either
individually or in collaboration with others, (the "Work") shall be
work-made-for-hire under the U.S. Copyright laws owned by CTW. In the event any
of the Work is not work-made-for-hire or is not a copyrightable subject matter,
Contractor hereby assigns to CTW exclusively all of his or her right, title and
interest in and to the Work, for use in any and all media, now known or
hereafter created, and for any and all purposes. Contractor agrees to execute
all documents and to take all steps as CTW finds appropriate to evidence CTW's
unqualified ownership in and to the Work. Contractor shall deliver the work
free and clear of any third party liabilities and shall deliver to CTW upon
execution hereof documentation evidencing the same including, without
limitation, any third party contracts and/or licenses (which documents shall
grant to CTW all rights in all media in perpetuity). This paragraph shall
survive any termination of this Agreement.
5. Use of Contractor's Name. CTW shall have the right, but not the
obligation, to use Contractor's name or likeness for any publicity or
advertising purpose in connection with the Work or the services rendered under
this Agreement. CTW is under no obligation to accord Contractor credit for any
production.
6. Warranty of Rights. Contractor represents and warrants that (i) he or she
has the right to grant all of the rights granted herein without any limitation
whatsoever, (ii) Contractor is a fully incorporated legal entity or that he or
she has attested to a true and accurate affidavit attached hereto as Attachment
B, (iii) the Work is wholly original to Contractor (unless specifically agreed
upon) and (iv) no materials (including the Work) furnished by Contractor, nor
any use thereof, as contemplated in this Agreement will infringe upon or
violate any rights of any third party. The parties acknowledge CTW intends to
use the work worldwide, in all media in perpetuity.
7. Confidentiality. Contractor agrees and acknowledges that both the Work and
certain information and materials which CTW provides to him or her for the
purposes of performing his or her services may contain valuable, proprietary,
and confidential information and trade secrets that belong solely to CTW.
Contractor agrees not to disclose to other, use for his or her own benefit, or
otherwise appropriate or copy any such confidential information or trade
secrets, including proprietary aspects of the Work, except as required in the
performance of his or her services during the Term of this Agreement.
Contractor further agrees not to disclose the financial terms of this Agreement
except in connection with obtaining legal or financial advice or fulfilling any
tax-reporting obligation with respect to this engagement. This paragraph shall
survive any termination of this Agreement.
<PAGE>
8. Idemnification. Contractor shall defend, indemnify and hold harmless CTW,
its officers, trustees, affiliates, employees, agents, assigns and
representatives from and against any and all claims, actions, damages, costs
and expenses (including, but not limited to, reasonable attorneys' fees)
arising out of or in connection with any breach by Contractor of any of the
representations or warranties contained in this Agreement. This paragraph shall
survive any termination of this Agreement.
9. Assignment. CTW shall have the right to assign this Agreement or all or any
part of its rights hereunder to any third party.
10. Miscellaneous. No waiver of any provision or any breach of this Agreement
shall be held to be a continuing waiver of that or any other provision or
breach of this Agreement. This Agreement supersedes all prior or
contemporaneous agreements and statements, whether written or oral, concerning
the terms of engagement, and no amendment or modification of this Agreement
shall be binding against CTW unless set forth in writing signed by CTW and
delivered to Contractor. The language of all parts of this Agreement shall be
construed as a whole, according to its fair meaning and not strictly for or
against either party. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to conflicts
of laws rules. New York County shall be the exclusive forum for the resolution
of disputes between the parties arising out of this Agreement or its
performance.
<PAGE>
EXHIBIT 10.11
ESPN INC.
PRODUCTION FACILITIES AGREEMENT
THIS AGREEMENT, dated as of October 15, 1998, is between SMA Realtime,
Inc. a New York corporation, with offices at 100 Avenue of the Americas, New
York, New York, 10013 ("SMA"), and ESPN, Inc., a Delaware corporation, with
offices at ESPN Plaza, Bristol, Connecticut 06010-7454 ("ESPN").
SMA hereby agrees to provide to ESPN the services and facilities described
below in accordance with the BASIC PROVISIONS set forth below and the attached
GENERAL TERMS AND CONDITIONS.
BASIC PROVISIONS
I. THE SHOOT
(a) SMA will provide the facilities, equipment and manpower specified in
Section II (collectively, the "Services".) in connection with the
production of television programs (or portions thereof) forming a part
of ESPN's SportsCentury Project (the "Programs").
(b) Dates, Times, and Site: The Services shall be made available at SMA's
business location/studio facility at 100 Avenue of the Americas, New York,
New York (the "Site"); and shall be available to ESPN no fewer than forty
(40) days (each 9:00 a.m. to 5:00 p.m.- except Fridays, which shall be
11:30 a.m. to 7:30 p.m. -- minimum) for shooting (each a "Shoot Day"). In
addition (and at no additonal charge hereunder), the Facilities, Equipment
and such Manpower as is necessary for the purpose, shall be available as
necessary to allow ESPN to conduct walk-throughs, camera tests, graphic
and film tests and other tests to satisfy itself regarding the readiness
and suitability of the Facilities (including, without limitation, the
Virtual Set) and Equipment for the Shoot Days. In connection with such
testing, ESPN shall have the right to make, retain, and utilize
audiovisual recordings for test and review purposes. SMA represents and
warrants that all of the Services shall be available to ESPN on the dates
set forth in Schedule A attached hereto. As soon as ESPN has determined a
reasonable number of additional dates on which it wishes to use the
Services, it will so notify SMA. SMA shall make the Services available to
ESPN on such dates and will not cause or allow any of the applicable
Services to be utilized in connection with any other services that would
conflict with their availability to ESPN. Notwithstanding the foregoing,
if at the time that ESPN notifies SMA of such additional dates, SMA has
an existing, binding commitment to make the Services available to a third
party which commitment, despite SMA's commercially reasonable efforts,
cannot be rescheduled, then SMA shall inform ESPN of all then-available
dates and ESPN shall have the right to select dates from
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<PAGE>
among them, one for each date as to which such a conflict exists. SMA
acknowledges that ESPN's specifications may necessitate access to
Facilities, Manpower and/or Equipment in addition to those specified
herein or at times other than during regular business hours. Should ESPN
require services in addition to those specified hereunder, SMA will
provide such services on an "as-needed" basis at rates no less favorable
than those offered to other customers for equivalent services.
(c) ESPN will provide all "above the line" personnel and announcers and
other elements not specifically provided for in Section II, below, for
production of the Programs at SMA's Site.
(d) All Manpower specified in Section II below will perform its duties
related to the Programs under ESPN's supervision and control. All
Facilities, Equipment and Manpower will be available to ESPN on all days
Monday through Sundays.
II. FACILITIES, EQUIPMENT AND MANPOWER
(a) Facilities: SMA shall construct a "virtual set" pursuant to and in
conformity with designs and specifications provided by ESPN (the "Virtual
Set") and to ESPN's reasonable satisfaction. The Virtual Set shall be
completed no later than December 7, 1998. Facilities shall include: a
studio and stage reasonably satisfactory to ESPN, both incorporating the
Virtual Set; associated full control room; videotape playback and record;
full voiceover facilities; and the complete Orad computer system.
(b) Equipment:
Camera
Audio equipment(of reasonable professional quality, equal to or
better than that customarily utilized in programming telecast on the ESPN
Network)
Light and Grip
Ultimatte Three (3) BetaSP VTRs
One (1) DigiBeta VTR
Teleprompter
SGI RE3 Computer
Digital Disc Recorder
Control Room
(c) Manpower:
Production Coordinator
Lighting Director
Camera Operator
Gaffer
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<PAGE>
EIC/SVO
Technical Director
SGI Director
Teleprompter Operator
(d) Other Terms and Services: Video raw stock as required by ESPN.
III. COMPENSATION
For the Facilities, Equipment and Manpower supplied to it by SMA as
specified above in Paragraph II, ESPN shall pay SMA as follows:
(a) For construction of the Virtual Set: $ within thirty days
following the execution hereof.
(b) For all Facilities, Equipment and Manpower provided by SMA under
this Agreement, ESPN shall pay SMA $ per Shoot Day, payable as
follows: (i) $ (the "Shoot Day Deposit") within the later of
delivery of the Virtual Set pursuant to Section II(a), above, and thirty
days of execution hereof ($ of which shall be attributable to each
anticipated Shoot Day) and (ii) $ per Shoot Day within forty-five
days after ESPN's receipt of an invoice from SMA for each Shoot Day
actually used, which invoicing shall occur no more frequently than weekly.
ESPN shall be entitled to an evaluation period from the date of completion
of the Virtual Set through and including January 31, 1999 (the "Evaluation
Period"). At any time during the Evaluation Period, ESPN shall be
entitled to terminate this Agreement for any reason or no reason, in its
sole discretion, with no further obligation to SMA hereunder and shall be
entitled to an immediate refund of that portion of the Shoot Day Deposit
attributable to Shoot Days not used. If ESPN does not terminate this
Agreement during the Evaluation Period and SMA performs all of its
obligations under this Agreement, ESPN agrees to pay SMA for at least
twenty-five (25) Shoot Days in the aggregate, being $ (the
"Guaranteed Amount") except where actual usage of less than twenty-five
Shoot Days results from SMA's failure to make the Services available to
ESPN on a sufficient number of mutually agreeable dates. Subject to the
foregoing sentence, upon expiration of this Agreement, SMA shall invoice
ESPN for the difference between the sums paid by ESPN pursuant to this
Section III(b) (including the Shoot Day Deposit) and the Guaranteed Amount
and ESPN shall pay such amount within thirty days after its receipt of
such invoice.
(c) For video raw stock supplied by SMA at ESPN's request, SMA shall
invoice ESPN at a rate no less favorable than that offered to any other
SMA customer.
(d) ESPN represents and warrants that, to the best of its knowledge and
belief, the manufacturers' exemption under New York State laws regarding
sales taxes applies to the entire subject matter of this agreement. If
the New York Department of Taxation and Finance
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<PAGE>
("NYDTF") makes a final assessment to the contrary, ESPN shall reimburse
SMA for the portion of such assessment directly attributable to the sales
taxes assessed on this transaction, but the foregoing is conditioned on
SMA's promptly notifying ESPN if NYDTF questions the applicability of the
exemption and affording ESPN a full and continuing right to participate
in all phases of dealing with NYDTF in determining the taxability of this
transaction.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the day and year first written above.
SMA REALTIME INC. ESPN, INC.
By: By:
------------------- -------------------------
Howard Katz
Executive Vice President
Production
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<PAGE>
GENERAL TERMS AND CONDITIONS
1. THE EVENTS
ESPN may delete or add Shoot Days to those listed in Paragraph I of the
BASIC PROVISIONS and may change the Dates previously listed from time to time
and at any time upon ten days' prior notice to SMA, but, except as provided in
I(b) of the BASIC PROVISIONS, SMA may decline without penalty to render its
service hereunder for any added Shoot Days or changed Dates by giving ESPN seven
days' prior notice. Failure to give ESPN such notice shall be deemed to be
acceptance by SMA of such additions or changes.
2. THE SHOOT
(a) Only "below-the-line" (and "above-the-line" if appropriate) personnel
and elements approved by ESPN shall be used by SMA in the furnishing of services
under this Agreement. ESPN hereby approves of the named personnel, if any, and
elements specified above in Paragraph II of this Agreement.
(b) SMA shall be fully responsible for paying all persons providing
services hereunder at least the amount required under any union or guild
collective-bargaining agreement and for the exercise of ESPN's rights
hereunder, if any.
(c) SMA shall deliver the Equipment and Manpower to the applicable Site at
or before the Time and Date specified above in Paragraph I. "Production Day"
shall mean a twenty-four hour period beginning with the later of the Time
specified in Paragraph I or the actual time of delivery of the Equipment and
Manpower by SMA and each succeeding twenty-four hour period in which the use of
the Equipment and Manpower is required by ESPN under this Agreement.
3. TERM AND TERMINATION
(a) The term of this Agreement shall commence on the date hereof and
end on January 31, 2000.
(b) Subject to the terms of III(b), in the BASIC PROVISIONS regarding
compensation, ESPN may terminate this Agreement upon seven days' prior written
notice to SMA or immediately upon any breach of its terms by SMA by so
notifying SMA.
4. COMPENSATION
(a) The payments specified by Paragraph III of the BASIC PROVISIONS are
intended by the parties to be the entire and only amounts payable to SMA for
its services under this Agreement. No additional payments shall be made for
rental equipment or meal penalties, or overtime charges for personnel or any
other extra charges except as
-5-
<PAGE>
specifically agreed to by ESPN in advance in writing on ESPN's standard
contract amendment form (attached) only.
5. EXCLUSIVITY
As between SMA and ESPN, all rights to any audio-video Program(s) produced
of the Events by ESPN (the "Programs"), including any property rights therein,
shall be exclusive to ESPN, and SMA shall not deliver any such Programs or
convey any interest in any Program to any third person without ESPN's prior
written consent. ESPN shall be the sole owner thereof and shall have the right
to affix to each Program a notice designating ESPN as the owner of the
copyright. Nothing in this Agreement shall require ESPN to actually distribute
such Program(s), and ESPN shall have discharged its obligations to SMA under
this Agreement by paying to it the compensation provided above in Paragraph M
in. accordance with the terms of this Agreement.
6. WARRANTIES
(a) Each party represents and warrants to the other that it has the right
to enter into this Agreement and perform all of its obligations under it.
(b) SMA represents and warrants to ESPN (i) that it has obtained, or will
obtain, and will faithfully perform all its obligations under all necessary and
appropriate clearances, licenses, rights agreements, union, guild and other
collective bargaining agreements, employment and other agreements involving all
elements of the Program(s) to be provided by SMA under this Agreement and all
persons and services in connection with it (ii) that ESPN's exercise of its
rights under this Agreement will not give rise to any obligations or
liabilities with respect thereto, and (iii) that all of ESPN's rights under
this Agreement can be fully and freely exercised without any claim of future
payment of any kind with respect to any of the Program(s).
(c) ESPN represents and warrants to SMA that it has obtained, or will
obtain, and will faithfully perform all its obligations under all necessary and
appropriate clearances, licenses, and rights agreements involving all elements
of the set design to be provided by ESPN to SMA under this Agreement.
(d) SMA acknowledges that this Agreement's scope is limited to its
specific subject matter and it does not entitle either SMA or ESPN to any future
rights or expectations with respect to each other except as explicitly provided
herein.
7. FORCE MAJEURE
If the staging of any Shoot Day should be prevented or cancelled due to an
act of God, inevitable accident, strike or other labor dispute, fire, riot or
civil commotion, government action or decree, inclement weather, failure of
technical, production or television equipment, or for any other reason beyond
the control of SMA or ESPN, then neither
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<PAGE>
SMA nor ESPN shall be obligated in any manner to the other with respect to the
Shoot Day (including any compensation for the Shoot Day), but all other rights
ESPN may have in this Agreement shall remain in effect and shall not be
affected in any manner. If, however, any of the Shoot Days should be postponed
or delayed due to one of the causes enumerated above, then ESPN shall have the
right to elect to cause SMA to provide the services and facilities specified in
the BASIC PROVISIONS in connection with the Shoot Day on its rescheduled date
in accordance with all the terms hereof or to not provide the services and
facilities specified in the BASIC PROVISIONS in connection with the rescheduled
Shoot Day, in which case ESPN shall not be obligated in any manner to SMA
therefor (including for payment), but all ESPN's other rights in this Agreement
shall survive.
8. INDEMNIFICATION
A. ESPN and SMA will each indemnify, defend and hold harmless the other,
the other's officers, directors, employees, shareholders, parent and
affiliated companies, agents and contractors from any and all claims,
costs, liabilities, judgments, losses, demands, expenses or damages
(including reasonable attomeys' fees), including those for, but not limited
to, bodily injury, including death resulting therefrom, personal injury and
property damage arising out of any act, omission or negligence, any breach
or alleged breach of this Agreement, performance of the obligations
hereunder, or any misrepresentation made by it herein.
B. In any case in which indemnification is sought hereunder:
(i) the party seeking indemnification shall promptly notify the
indemnifying party of any claim or litigation to which the
indemnification relates; and
(ii) the party seeking indemnification shall afford the
indemnifying party the opportunity to participate in and at the
indemnifying party's option, fully control any compromise,
settlement, litigation or other resolution or disposition in such
claim or litigation, but the indemnifying party shall not make any
agreement that prospectively compromises or limits the other party's
substantive rights without such party's prior, written consent
(which shall not be unreasonably withheld); in no case shall any
such compromise or limitation implicate rights, obligations or
property beyond the subject matter of this Agreement.
C. SMA shall, at its own expense, carry liability insurance of the
following types and limits under the Agreement:
(i) worker's compensation insurance covering all persons employed by
it in connection with the furnishing by it of the services under the
Agreement in compliance with and in the maximum amounts and form
specified by the state law
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<PAGE>
of the state in which such persons render such services and employers'
liability insurance with a limit of not less than $100,000.00 per
occurrence covering its employees; and
(ii) comprehensive general liability insurance covering all liability
for bodily injury including death resulting therefrom, personal
injury and property damage to third parties, having a combined
single limit for injuries to any persons of not less than
$3,000,000.00 for all claims arising out of the same accident or
occurrence, which insurance shall include ESPN as an additional
named insured;
SMA shall provide ESPN with certificates of insurance showing compliance
with the foregoing requirements. Such certificates shall provide no less
than thirty days' prior notice to ESPN by the insurance company in the
event of any material change or cancellation of the required insurances. All
such insurance shall cover ESPN, its affiliated companies and the officers,
directors, employees and agents of all the foregoing. The insurance required
to be carried by SMA shall be primary and noncontributory with any similar
insurance carried by ESPN and shall be written on an occurrence basis and
form.
D. ESPN shall, at its own expense, carry liability insurance of the
following types and limits under the Agreement:
(i) worker's compensation insurance covering all persons employed by ESPN
in connection with its production of the Programs, in compliance with and
in the maximum amounts and form specified by the state law of the state in
which such persons render such services and employers liability of the
state in which such persons render such services and employers' liability
insurance with a limit of not less than $100,000.00 per occurrence covering
its employees.
ESPN shall provide SMA with a certificate of insurance showing compliance
with the foregoing requirements.
9. INDEPENDENT CONTRACTORS
SMA and ESPN are independent contractors with respect to each other, and
nothing in this Agreement shall create any association, partnership, joint
venture or agency relationship between them. As between ESPN and SMA, all
persons employed by SMA in connection with its performance under this Agreement
shall be SMA's employees and SMA shall be fully responsible for them, except as
otherwise explicitly provided in this Agreement.
10. FINANCIAL DISCLOSURE
In conformity with Section 507 of the U.S. Federal Communications Act
concerning broadcasting matters and disclosure required thereunder, SMA
warrants and represents
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<PAGE>
that it has not accepted or agreed to accept, and will not permit its
employees, agents, representatives, contractors, or affiliate entities to
accept any monies, services, or other consideration for the inclusion of any
commercial material or matter in or as part of any Programs(s).
11. ENTIRE AGREEMENT AND AMENDMENT
This Agreement contains the full and complete understanding of the parties
to it, supersedes all prior agreements and understandings whether written or
oral pertaining to its subject matter and cannot be modified or amended except
by a written instrument signed by each party, substantially in the form of the
ESPN standard amendment attached hereto.
12. NOTICE
All notices and other communications from either party to the other under
this Agreement shall be in writing and shall be deemed received when delivered
in person or three days after mailing, postage prepaid, addressed to the other
party at the address specified at the beginning of this Agreement, or at such
other address as that other party may supply by written notice.
13. ASSIGNMENT
SMA shall not assign any of its rights or obligations under this Agreement
without the prior written consent of ESPN, and any purported assignment without
such prior written consent shall be null and void and of no force or effect.
14. GOVERNING LAW AND INTERPRETATION
This Agreement shall be governed by the laws of the State of Connecticut.
The language of all parts of this Agreement shall in all cases be construed as
a whole according to its fair meaning and not strictly for or against any of
the parties.
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<PAGE>
SCHEDULE A
SCHEDULED SHOOT DAYS AS OF THE DATE HEREOF
December 16, 1998
December 21, 1998
January 18, 1998
February 3, 1998
February 18, 1998
February 24, 1998
February 25, 1998
March 4, 1998
March 22, 1998
April 7, 1998
April 14,1998
April 23, 1998
April 28, 1998
May 2,1998
May 7,1998
May 10, 1998
May 19, 1998
May 26, 1998
June 25, 1998
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<PAGE>
ESPN, INC.
AMENDMENT TO STANDARD ESPN PRODUCTION FACILITIES AGREEMENT
THIS AMENDMENT, dated as of _____ is made to the production facilities
agreement dated as of ________, (the "Agreement") between ESPN and SMA and is
made a part thereof.
A. ESPN hereby requests and authorizes the following additional Equipment,
Manpower, and/or supplies for the Production Day(s) on ________of the Shoot
covered by this Agreement:
ITEM COST
______________________ _________________________
______________________ _________________________
______________________ _________________________
______________________ _________________________
B. ESPN hereby authorizes time in excess of __ hours for the Production Day(s)
on _________ for the following Manpower:
[date(s)]
____________________________
____________________________
____________________________
____________________________
C. ESPN hereby requests and authorizes that the Services requirements be
changed as follows:
______________________________________
______________________________________
______________________________________
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<PAGE>
D. Sums payable by ESPN as a consequence of rendered services authorized by
this Amendment shall be paid by ESPN's mailing its check to SMA within sixty
days of ESPN's receiving SMA's invoice therefor.
[Full legal name for SMA:] ESPN, INC.
By ________________________ By __________________________
Title _____________________ Title _______________________
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<PAGE>
Exhibit 10.12
[LOGO]
SMA VIDEO, INC.
100 AVENUE OF THE AMERICAS
10TH FL.
NEW YORK, NY 10013
212-226-7474
FAX 212-941-0439
PROMISSORY NOTE
$103,772.00 New York, New York
August 15, 1995
FOR VALUE RECEIVED, the undersigned hereby promises to pay Michael Morrissey
and David Satin, or order, at 100 Avenue of the Americas, New York, New York
10013, or at such other place as may be designated in writing by the holder of
this note, the principal sum of One Hundred Three Thousand Seven Hundred
Seventy Two ($103,772.00) Dollars, as follows:
Commencing on December 21, 1995, and on the twenty-first day of each succeeding
month thereafter, until the Maturity Date (as hereinafter defined) the sum of
$2,093.39 shall be paid and shall be applied first to interest at the rate of
seven (7%) per cent per annum, and the balance, if any, in reduction of
principal. The entire principal balance, with any accrued interest thereon,
shall be due and payable on November 21, 2000 (the "Maturity Date").
The principal balance may be prepaid at any time, in whole or in part, without
premium or penalty, but with interest to the date of prepayment.
Presentment for payment, notice of dishonor, protect and notice of protest are
hereby waived.
This note may not be changed or terminated orally.
SMA Video, Inc.
-----------------------------
By: /s/
<PAGE>
LEASE OF PERSONAL PROPERTY Number: 2380
- --------------------------------------------------------------------------------
LESSEE LESSOR
SMA Video, Inc CHARTER FINANCIAL, INC
100 Avenue of the Americas 153 EAST 53rd STREET
New York, NY 10013 NEW YORK, N.Y. 10022
- --------------------------------------------------------------------------------
QUANTITY DESCRIPTION OF LEASED EQUIPMENT (Show, Make,
Kind, Model No., Serial No., Other
Identification) - (If additional space needed
attach separate sheet for each copy, marked
"Schedule to Lease from (Lessors Name) to
(Lessee's Name)")
- --------------------------------------------------------------------------------
Various equipment as more fully described on
the attached Schedule "A" annexed hereto and
made a part hereof.
- --------------------------------------------------------------------------------
EQUIPMENT IS TO BE KEPT
AT LESSEE'S ADDRESS
ABOVE UNLESS A DIFFERENT SAME AS ABOVE
LOCATION IS SHOWN HERE.
- --------------------------------------------------------------------------------
TERM AND RENT PAYMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
(2) No. and Amount of Rent Payments
TERM OF LEASE RENT PAYABLE (1) ADVANCE RENT PAID (Excluding Advance Rents Paid)
- ------------------------------------------------------------------------------------------------------------------------------------
NO. OF MONTHLY NO. OF AMOUNT OF TOTALING NUMBER AMOUNT OF
YEARS PAYMENTS EACH EACH
<S> <C> <C> <C> <C> <C> <C>
5 X 60 $18,165.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. Lease. Lessor hereby leases to Lessee, and Lessee hires and takes from
Lessor, the personal property described above (hereinafter with all renewals,
substitutions and replacements, and; all. parts, repairs, improvements,
additions and accessories incorporated therein or affixed thereto referred to as
the "Equipment"). The Equipment is and shall at all times be and remain the sole
and exclusive personal property of Lessor, and notwithstanding any trade-in or
down payment by Lessee or on its behalf with respect to the Equipment, Lessee
shall have no right, title or interest therein or thereto except as to the use
thereof subject to the terms and/or conditions of this Lease.
2. Term. The term of this Lease shall commence on November 1, 1995 and shall
continue until the expiration of thirty (30) days after the due date of the last
payment of rent shown above (the "Term").
3. Rental. Lessee agrees to pay to Lessor or its assignee during the Term
the rent payments shown above with the first rent payment due on the
commencement date shown above. Lessee hereby authorizes Lessor to insert the
commencement date in the space provided hereinabove. The rent payments shown
above together with any and all additional payments to be made by Lessee to
Lessor under this Lease are hereinafter referred to as "Rental". All Rental
shall be paid without notice or demand and without abatement, deduction or set
off of any amount whatsoever, at such address and to such person or persons as
Lessor or its assignee shall direct. Any nonpayment of Rental due hereunder
shall result in the obligation on the part of Lessee promptly to pay also an
amount equal to five percent (5%) (or the maximum rate permitted by law,
whichever is less) of the amounts overdue.
4. Disclaimer of Warranties; Lessee's Obligations. LESSEE ACKNOWLEDGES
THAT: LESSOR IS NOT THE MANUFACTURER OF THE EQUIPMENT NOR THE MANUFACTURER'S
AGENT NOR A DEALER THEREIN; THE EQUIPMENT IS OF A SIZE, DESIGN, CAPACITY,
DESCRIPTION AND MANUFACTURE SELECTED BY THE LESSEE; LESSEE HAS SELECTED THE
EQUIPMENT PRIOR TO HAVING REQUESTED LESSOR TO PURCHASE THE SAME FOR LEASING TO
LESSEE; LESSEE IS. SATISFIED THAT THE EQUIPMENT IS SUITABLE AND FIT FOR ITS
PURPOSES; AND LESSOR HAS NOT MADE AND DOES NOT MAKE ANY WARRANTY OR
REPRESENTATION WHATSOEVER, EITHER EXPRESS OR IMPLIED, AS TO THE FITNESS,
CONDITION, MERCHANTABILITY, DESIGN OR OPERATION OF THE EQUIPMENT, ITS FITNESS
FOR ANY PARTICULAR PURPOSE, THE QUALITY OR CAPACITY OF THE MATERIALS IN THE
EQUIPMENT OR WORKMANSHIP IN THE EQUIPMENT, LESSOR'S TITLE TO THE EQUIPMENT, NOR
ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER. LESSOR SHALL NOT BE-LIABLE TO
LESSEE FOR ANY LOSS, DAMAGE, OR EXPENSE OF ANY KIND OR NATURE CAUSED, DIRECTLY
OR INDIRECTLY, BY ANY EQUIPMENT LEASED HEREUNDER OR THE USE OR MAINTENANCE
THEREOF OR THE FAILURE OF OPERATION THEREOF, OR THE REPAIR, SERVICE OR
ADJUSTMENT THEREOF, OR BY ANY DELAY OR FAILURE TO PROVIDE ANY SUCH MAINTENANCE,
REPAIRS, SERVICE OR ADJUSTMENT, OR BY ANY INTERRUPTION OF SERVICE OR LOSS OF USE
THEREOF OR FOR ANY LOSS OF BUSINESS HOWSOEVER CAUSED. LESSOR SHALL NOT BE LIABLE
FOR DAMAGES OF ANY KIND INCLUDING ANY CONSEQUENTIAL DAMAGES AS THAT TERM IS USED
IN THE UNIFORM COMMERCIAL CODE OR OTHERWISE. No defect or unfitness of the
Equipment, nor any failure on the part of the manufacturer or the shipper of the
Equipment to deliver the Equipment or any part thereof to Lessee, shall relieve
Lessee of the obligation to pay Rental or any other obligation under this Lease.
Lessor shall have no obligation under this Lease in respect of the Equipment
and shall have no obligation to install, erect, test, adjust or service the
Equipment. Lessor agrees, so long as there shall not have occurred or be
continuing any Event of Default hereunder or event which with lapse of time or
notice, or both, might become an Event of Default hereunder, that Lessor will
permit Lessee to enforce in Lessee's own name and at Lessee's sole expense any
supplier's or manufacturer's warranty or agreement in respect of the Equipment
to the extent that such warranty or agreement is assignable. The parties agree
that this Lease is a "Finance Lease" as defined in Article 2A of the Uniform
Commercial Code. Lessee acknowledges either (a) that Lessee has reviewed and
approved the purchase order, supply contract or purchase agreement ("Supply
Contract") covering the Equipment purchased from the vendor or supplier thereof
for lease to Lessee or (b) that Lessor has informed or advised Lessee in
writing, either previously or by this Lease, of the following: (i) the identity
of the supplier/vendor; (ii) that the Lessee may have rights under the Supply
Contract; and (iii) that the Lessee may contact the supplier/vendor for a
description of any such rights Lessee may have under the Supply Contract.
- --------------------------------------------------------------------------------
This Lease is subject to the terms and conditions set forth above and in
Sections 5 through 17 printed on the reverse and successive sides hereof, and
Lessee acknowledges and accepts the provisions thereof.
LESSEE ACKNOWLEDGES RECEIPT OF A SIGNED TRUE COPY OF THIS LEASE
Accepted on September 22, 1995 Date June 23 1995
CHARTER FINANCIAL, INC. SMA VIDEO, Inc.
--------------------------- (Lessee)
(Signature of Proprietor or name
of Corporation or Partnership)
BY: /s/ BY: /s/
- -------------------------------- ------------------------------------
Its VOT 3VTA:OTH% Its President
- -------------------------------- ------------------------------------
(Title of Officer) (If Corporation, President, Vice
President or Treasurer should sign
and give official title. If
Partnership, state partner.)
PAGE 1 OF 4
3 LESSEE'S COPY
<PAGE>
5. Assignment by Lessor. This Lease and Lessor's Interest In the Equipment
shall be assignable by Lessor and by its assigns without notice to or the
consent of Lessee, but Lessee shall not be obligated to any assignee of Lessor
except upon written notice of such assignment from Lessor or such assignee. The
obligation of Lessee to pay Rental to such assignee and perform all other
obligations hereunder shall be absolute, irrevocable, independent and
unconditional and shall not be affected by any circumstances whatsoever, and
such payments shall be made without interruption, deduction, offset or abatement
notwithstanding any event or circumstance whatsoever, including, without
limitation, the late delivery, non-delivery, destruction or damage of or to the
Equipment, the deprivation or limitation of the use of the Equipment, the
bankruptcy or insolvency of Lessor or Lessee or any disaffirmance of this Lease
by or on behalf of Lessee, and notwithstanding any defense, setoff, recoupment
or counterclaim or any other right whatsoever, whether by reason of breach of
this Lease or otherwise which Lessee may now or hereafter have against Lessor
and whether any such event shall be by reason of any act or omission of Lessor
or otherwise; provided, however, that nothing herein contained shall effect any
right of Lessee to enforce against Lessor any claim which Lessee may have
against Lessor in any manner other than by abatement, attachment, or recoupment
of, interference with, or set-off, counterclaim or defense against, the
aforementioned payments to be made to such assignee. Lessee's undertaking herein
to pay the Rental to and to perform the other obligations of Lessee hereunder
for the benefit of an assignee of Lessor shall constitute a direct, independent
and unconditional obligation of Lessee to said assignee. Lessee also
acknowledges and agrees that any assignee of Lessor's interest in this Lease
shall have the right to exercise all rights, privileges and remedies (either in
its own name or in the name of Lessor) which by the terms of this Lease are
permitted to be exercised by Lessor. Lessee acknowledges that any assignment or
transfer by Lessor shall not materially change Lessee's duties or obligations
under this Lease nor materially increase the burdens or risks imposed on Lessee.
Notwithstanding the foregoing, Lessee agrees that Lessor shall have the absolute
right to assign this Lease even if such assignment would be deemed to materially
affect the burdens or risks on Lessee.
6. Damage to or Loss of the Equipment; Requisition. No loss or damage to the
Equipment or any part thereof shall affect any obligation of Lessee under this
Lease which shall continue in full force and effect. Lessee shall advise Lessor
in writing promptly of any item of Equipment lost or damaged and of the
circumstances and extent of such damage. If the Equipment is totally destroyed,
irreparably damaged, lost, stolen or title thereto shall be requisitioned or
taken by any governmental authority under the power of eminent domain or
otherwise, Lessee shall, at the option of the Lessor, replace the same with like
equipment in good repair, condition and working order and transfer title to such
replacement item to Lessor by bill of sale and other appropriate documents or
pay to Lessor all Rental due and to become due hereunder, less the net amount of
the recovery, if any, actually received by Lessor from insurance or otherwise
for such destruction, damage, loss, theft, requisition or taking. Whenever the
Equipment is destroyed or damaged and in the sole discretion of the Lessor, such
destruction or damage can be repaired, Lessee shall, at its expense, promptly
effect such repairs as Lessor shall deem necessary for compliance with paragraph
7(a) below. Any proceeds of insurance received by Lessor with respect to such
reparable damage to the Equipment shall, at the election of Lessor, be applied
either to the repair of the Equipment by payment by Lessor directly to the
party completing the repairs, or to the reimbursement of Lessee for the cost of
such repairs, provided, however, that Lessor shall have no obligation to make
such payment or any part thereof until receipt of such evidence as Lessor shall
deem satisfactory that such repairs have been completed and further provided
that Lessor may apply such proceeds to the payment of any Rental or other
sum due or to become due hereunder if at the time such proceeds are received
by Lessor there shall have occurred and be continuing any Event of Default
hereunder or any event which with lapse of time or notice, or both, would
become an Event of Default. Lessee shall, when and as requested by Lessor,
undertake, by litigation or otherwise, in Lessee's name, the collection of any
claim against any person for such destruction, damage, loss, theft, requisition
or taking, but Lessor shall not be obligated to undertake, by litigation or
otherwise, the collection of any claim against any person for such destruction,
damage, loss, theft, requisition or taking.
7. Affirmative Covenants of Lessee. Lessee shall (a) cause the Equipment to
be kept in good condition and use the Equipment only in the manner for which it
was designed and intended so as to subject it to only ordinary wear and tear and
cause to be made all needed and proper repairs, renewals, and replacements
thereto; (b) maintain at all times property damage, fire, theft and
comprehensive insurance for the full replacement value of the Equipment, with
loss payable provisions in favor of Lessor and any assignee of Lessor as their
interests may appear, and maintain general liability insurance in amounts
satisfactory to Lessor naming Lessor and any assignee of Lessor as insureds with
all of said insurance and loss payable provisions to be in form, substance and
amount and written by companies approved by Lessor, and deliver policies
therefor, or duplicates thereof, to Lessor; (c) pay or reimburse Lessor for any
and all taxes, assessments and other governmental charges of whatever kind or
character, however designated (together with any penalties, fines or interest
thereon) levied or based upon or with respect to the Equipment or the Rental or
upon the manufacture, purchase, ownership, delivery, leasing, possession, use,
storage, operation, maintenance, repair, return or other disposition of the
Equipment, or for titling or registering the Equipment, or upon the income or
other proceeds received with respect to the Equipment or this Lease provided,
however, that Lessee shall pay taxes on or measured by the net income of Lessor
and franchise taxes of Lessor only to the extent that such net Income taxes or
franchise taxes are levied or assessed in: lieu of such other taxes, assessments
or other governmental charges; (d) pay all shipping and delivery charges and
other expenses incurred in connection with the Equipment and pay all lawful
claims, whether for labor, materials, supplies, rent or services, which might or
could if unpaid become a lien on the Equipment; (e) comply with all governmental
laws, regulations, requirements and rules, all manufacturer's instructions and
warranty requirements, and with the conditions and requirements of all policies
of insurance with respect to the Equipment and this Lease; (f) mark and identify
the Equipment with all information and in such manner as Lessor or its assigns
may request from time to time and replace promptly any such markings or
identification which are removed, defaced or destroyed; (g) at any and all times
during business hours, grant Lessor free access to enter upon the premises
wherein the Equipment shall be located or used and permit Lessor to inspect; the
Equipment; (h) reimburse Lessor for all charges, cost and expenses (including
attorneys' fees), incurred by Lessor in defending or protecting its interest in
the Equipment, in the attempted enforcement or enforcement of the provisions of
this Lease or in the attempted collection or collection of any Rental under this
Lease; (i) indemnify and hold Lessor harmless from and against all claims,
losses, liabilities (including negligence, tort and strict liability), damages,
judgments, suits, and all legal proceedings, and any and all costs and expenses
in connection therewith (including attorneys' fees) arising out of or in any
manner connected with the manufacture, purchase, financing, ownership, delivery,
rejection, non-delivery, transportation, possession, use, storage, operation,
maintenance, repair, return or other disposition of the Equipment or with the
Lease, including, without limitation, claims for injury to or death of persons
and for damage to property, and give Lessor prompt notice of any such claim or
liability; (j) upon the expiration of the Term, or any renewal term of this
Lease, or upon sooner termination of this Lease, at its own cost and expense,
deliver possession of the Equipment to Lessor in the condition in which it is
required to be maintained by Lessee hereunder, at a location within the United
States designated by the Lessor; (k) upon the expiration of the Term, or any
renewal term of this Lease, or upon sooner termination of this Lease, upon
request of Lessor, provide suitable and adequate storage space at the place
where the Equipment is to be located hereunder, and permit Lessor to store the
Equipment in such storage space free of charge for a period not to exceed ninety
(90) days, during which period Lessor will be allowed reasonable access thereto;
and (l) maintain, a system of accounts established and administered in
accordance with generally accepted accounting principles and practices
consistently applied; and within thirty (30) days after the end of each fiscal
quarter, deliver to Lessor a balance sheet as at the end of such quarter and
statement of operations for such quarter, and within one hundred and twenty
(120) days after the end of each fiscal year, deliver to Lessor a balance sheet
as at the end of such year and statement of operations for such year, in each
case prepared in accordance with generally accepted accounting principles and
practices consistently applied and certified by Lessee's chief financial officer
as fairly presenting the financial position and results of operations of Lessee,
and in the case of year end financial statements, certified, by an independent
accounting firm acceptable to Lessor.
PAGE 2 OF 4
<PAGE>
8. Negative Covenants of Lease. Lessee shall not (a) voluntarily or
involuntarily create, incur, assume or suffer to exist any mortgage, lien,
pledge or other encumbrance or attachment of any kind whatsoever upon, affecting
or with respect to the Equipment or this Lease or any of Lessee's interests
thereunder; (b) make any changes or alterations in or to the Equipment except as
necessary for compliance with paragraph 7(a) above; (c) permit the name of any
person, association or corporation other than the Lessor to be placed on the
Equipment as a designation that might be interpreted as a claim of ownership or
security interest; (d) part with possession or control of or suffer or allow to
pass out of its possession or control any item of the Equipment or change the
location of the Equipment or any part thereof from the address shown above; (e)
ASSIGN OR IN ANY WAY DISPOSE OF ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS
UNDER THIS LEASE OR ENTER INTO ANY SUBLEASE OF ALL OR ANY PART OF THE EQUIPMENT;
or (f) change its name or address from that set forth above unless it shall have
given Lessor or its assigns no less than thirty (30) days' prior written notice
thereof.
9. Use of Equipment; Equipment Personalty. So long as no Event of Default
shall have occurred, Lessee shall be entitled to possession and use of the
Equipment for the Term of this Lease in its lawful business in accordance with
the provisions of this Lease. The Equipment is, and shall at all times be and
remain, personal property notwithstanding that the Equipment or any part thereof
may now be, or hereafter become, in any manner affixed or attached to, or
imbedded in, or permanently resting upon, real property or any building thereon,
or attached in any manner to real property by cement, plaster, nails, bolts,
screws, wires, pipes or otherwise. If requested by Lessor with respect to any
item of the Equipment, Lessee will obtain and deliver to Lessor waivers of
interest or liens in recordable form, satisfactory to Lessor, from all persons
claiming any interest in the real property on which such item of the Equipment
is installed or located.
10. Event of Default and Remedies. If any one or more of the following
events ("Events of Default") shall occur; (a) Lessee shall fail to make any
payment hereunder, when due, whether for rent or otherwise; or (b) any
certificate, statement, representation, warranty or financial report heretofore
or hereafter furnished by or on behalf of Lessee or any guarantor of any of
Lessee's obligations hereunder proves to have been false in any material respect
at the time as of which the facts therein set forth were stated or certified or
has omitted any material contingent or unliquidated liability or claim against
Lessee or any such guarantor; or (c) Lessee or any guarantor of Lessee's
obligations shall fail to perform or observe any covenant (including, without
limitation, the covenant to keep the Equipment free from any mortgage, lien,
pledge, encumbrance or attachment of any kind whatsoever), condition or
agreement to be performed or observed by it hereunder; or (d) Lessee or any
guarantor of any of Lessee's obligations hereunder shall be in breach of or in
default in the payment and performance of any obligation owing to Lessor whether
or not related to this Lease and howsoever arising, whether by operation of law
or otherwise, present or future, contracted for or acquired, and whether joint,
several, absolute, contingent, secured, unsecured, matured and unmatured; or (e)
Lessee or any guarantor of any of Lessee's obligations hereunder shall cease
doing business as a going concern, make an assignment for the benefit of
creditors, admit its inability to pay its debts as they become due, file a
petition commencing a voluntary case under any chapter of Title 11 of the United
States Code entitled "Bankruptcy" (the "Bankruptcy Code"), be adjudicated as
insolvent, file a petition seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar arrangement under
any present or future statute, law, rule or regulation or file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, consent to the filing of such a petition or acquiesce in the
appointment of a trustee, receiver or liquidator of it or of all or any part of
its assets or properties, or take any action looking to its dissolution or
liquidation; (f) an order for relief against Lessee or any guarantor of any of
Lessee's obligations hereunder shall have been entered under any chapter of the
Bankruptcy Code or a decree or order by a court having jurisdiction in the
premises shall have been entered approving as properly filed a petition seeking
reorganization, arrangement, readjustment, liquidation, dissolution or similar
relief against Lessee or any guarantor of any of Lessee's obligations hereunder
under any present or future statute, law, rule or regulation, or within thirty
(30) days after the appointment without Lessee's or such guarantor's consent or
acquiescence of any trustee, receiver or liquidator of it or such guarantor or
of all or any part of its or such guarantor's assets and properties, such an
appointment shall not be vacated, or an order, judgment, or decree shall be
entered against Lessee or such guarantor by a court of competent jurisdiction
and shall continue in effect for any period of ten (10) consecutive days without
a stay of execution or any execution or writ or process shall be issued under
any action or proceeding against Lessee whereby the Equipment or its use may be
taken or restrained; or (g) Lessee shall suffer an adverse material change in
its financial condition from the date hereof, and as a result thereof Lessor
deems itself or any of the Equipment to be insecure; then and in any such event,
Lessor may (but is not obligated to), at the sole discretion of Lessor, without
notice or demand, take any one or more of the following steps: (1) Immediately
terminate Lessee's rights hereunder; (2) require Lessee, at its expense,
promptly to return all or any portion of the Equipment to the possession of the
Lessor at such place within the United States as Lessor may designate, or with
or without process of law, directly or acting through agents, without liability
to Lessor, enter upon the premises of Lessee or other premises where all or any
portion of the Equipment may be and take immediate possession of all or any
portion of the Equipment, and thenceforth hold, possess, and enjoy the same free
from any right of the Lessee to the possession and use of the Equipment for any
purpose whatsoever in which event Lessee hereby expressly waives all further
rights to possession of the Equipment and all claims for injuries suffered
through or caused by any such repossession; or (3) sue for and seek to recover
from Lessee all rent and other sums then past due pursuant to the terms and
provisions of this Lease; or (4) declare immediately due and payable and sue for
and seek to recover, all payments of rent, whether or not accrued, and all other
amounts payable hereunder, provided, however, upon the occurrence of any of the
events specified in subparagraphs (e) and (f) above, all sums as specified in
this subparagraph (4) shall immediately be due and payable without notice to
Lessee (the date on which Lessor declares all rent and other amounts to be due
and payable is hereinafter referred to as the "Declaration Date"); or (5) sell
or release any or all of the Equipment at a public or private sale on such terms
and notice as Lessor shall deem reasonable and recover from Lessee damages, not
as penalty, but herein liquidated for all purposes and in an amount equal to the
sum of (i) any accrued and unpaid rent as of the later of (A) the date of
default or (B) the date that Lessor has obtained possession of the Equipment
(the "Computation Date"); (ii) the present value of all future rent reserved in
this Lease and contracted to be paid over the unexpired term of the Lease as of
the Computation Date, discounted at a rate equal to six percent (6%); (iii) all
commercially reasonable costs and expenses incurred by Lessor in any
repossession, recovery, storage, repair, sale, re-lease or other disposition of
the Equipment including reasonable attorneys' fees and costs incurred in
connection with or otherwise resulting from the Lessee's default; (iv) estimated
residual value of the Equipment as of the expiration of this Lease; and (v) any
indemnity, if then determinable, plus interest at one and one-half percent
(1.5%) per month; LESS the amount received by Lessor upon such public or private
sale or re-lease of such items of Equipment, if any; or (6) with or without
terminating this Lease, recover from Lessee damages, not as a penalty, but
herein liquidated for all purposes in an amount equal to the sum of (i) any
accrued and unpaid rent as of the Declaration Date plus interest at the rate of
one and one-half percent (1.5%) per month; (ii) the present value of all future
rent reserved in this Lease and contracted to be paid over the unexpired term of
this Lease discounted at a rate equal to six percent (6%); (iii) all
commercially reasonable costs and expenses incurred by Lessor in any
repossession, recovery, storage, repair, sale, re-lease, or other disposition of
the Equipment including reasonable attorneys' fees and costs incurred in
connection therewith or otherwise resulting from the Lessee's default; (iv)
estimated residual value of the Equipment as of the expiration of this Lease;
and (v) any indemnity, if then determinable, plus interest at one and one-half
percent (1.5%) per month; or (7) exercise any other right or remedy which may be
available under the Uniform Commercial Code or any other applicable law or
proceed by appropriate court action or actions, at law or in equity, either to
enforce performance by Lessee of the applicable covenants of this Lease or to
recover damages for the breach thereof or of any warranty or representation
herein contained, or in aid of the exercise of any power, right or remedy
granted herein. Lessee shall be liable for all costs and expenses, including
reasonable attorneys' fees and disbursements, incurred by reason of the
occurrence of any Event of Default or the exercise of Lessor of remedies with
respect thereto. Any personalty in or attached to the Equipment when repossessed
may be held by
PAGE 3 OF 4
<PAGE>
Lessor without any liability arising with respect thereto, and any and all
claims in connection with such personalty shall be deemed to have been waived
unless notice of such claim is made by certified or registered mail upon Lessor
within three business days after repossession. A termination hereunder shall
occur only upon notice by Lessor and only as to such items of Equipment as
Lessor specifically elects to terminate and this Lease shall continue in full
force and effect as to the remaining items, if any. If this Lease is deemed at
any time to be one intended as security, Lessee agrees that the Equipment shall
secure, in addition to the indebtedness set forth herein, any other indebtedness
at any time owing by Lessee to Lessor.
11. Lessor's Right to Perform for Lessee. If Lessee fails to perform or
comply with any of its agreements contained herein, Lessor may perform or comply
with such agreements and the amount of any payments and expenses of Lessor
incurred in connection with such performance or compliance, together with
interest thereon at the rate provided in paragraph 15 below, shall be deemed
Rental payable by Lessee upon demand.
12. Further Assurances. Lessee will cooperate with Lessor for the purpose
of protecting the interests of Lessor in the Equipment, this Lease and the sums
due under this Lease, including, without limitation the execution of all Uniform
Commercial Code financing statements requested by Lessor. Lessor and any
assignee of Lessor is authorized if permitted by applicable law to file one or
more Uniform Commercial Code financing statements disclosing any security
interests in the Equipment, this Lease and the sums due under this Lease without
the signature of Lessee or signed by Lessor or any assignee of Lessor as
attorney-in-fact for Lessee. Lessee will pay all costs of filing any financing,
continuation or termination statements with respect to this Lease, including,
without limitation, any documentary stamp taxes relating thereto. Lessee will do
whatever may be necessary to have a statement of the interest of Lessor and any
assignee of Lessor in the Equipment noted on any certificate of title relating
to the Equipment and will deposit said certificate with Lessor or such assignee.
Lessee shall execute and deliver to Lessor upon request such other instruments
and assurances as Lessor deems necessary or advisable for the implementation,
effectuation, confirmation or perfection of this Lease and any rights of Lessor
hereunder.
13. Non-Waiver. No course of dealing between Lessor and Lessee or any delay
or omission on the part of Lessor in exercising any rights hereunder shall
operate as a waiver of any rights of Lessor. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right or remedy on any future
occasion. No waiver or consent shall be binding upon Lessor unless it is in
writing and signed by Lessor. To the extent permitted by applicable law, Lessee
hereby waives the benefit and advantage of, and covenants not to assert against
Lessor, any valuation, inquisition, stay, appraisement, extension or redemption
laws now existing or which may hereafter exist which, but for this provision,
might be applicable to any sale or re-leasing made under the judgment, order or
decree of any court or under the powers of sale and re-leasing conferred by this
Lease or otherwise. To the extent permitted by applicable law, Lessee hereby
waives any and all rights and remedies conferred upon a Lessee by Article 2A-508
through 2A-522 of the Uniform Commercial Code, including but not limited to
Lessee's rights to: (i) cancel this Lease; (ii) repudiate this Lease; (iii)
reject the Equipment; (iv) revoke acceptance of the Equipment; (v) recover
damages from Lessor for any breaches of warranty or for any other reason; (vi)
claim a security interest in the Equipment in Lessee's possession or control for
any reason; (vii) deduct all or any part of any claimed damages resulting from
Lessor's default, if any, under this Lease; (viii) accept partial delivery of
the Equipment; (ix) "cover" by making any purchase or lease of or contract to
purchase or lease Equipment in substitution of Equipment identified to this
Lease; (x) recover any general, special, incidental, or consequential damages,
for any reason whatsoever; and (xi) specific performance, replevin, detinue,
sequestration, claim, delivery or the like for any Equipment identified to this
Lease. To the extent permitted by applicable law, Lessee also hereby waives any
rights now or hereafter conferred by statute or otherwise which may require
Lessor to sell, lease or otherwise use any Equipment in mitigation of Lessor's
damages as set forth in paragraph 10 or which may otherwise limit or modify any
of Lessor's rights or remedies under paragraph 10.
14. Entire Agreement; Severability; Etc. This instrument constitutes the
entire agreement between Lessor and Lessee relating to the Equipment and all
conversations, agreements or representations relating to this Lease or to the
Equipment are integrated herein. Lessee acknowledges and agrees that neither the
manufacturer, supplier, shipper, dealer or vendor ("Supplier") nor any salesman,
representative or other agent of Supplier, is an agent of Lessor. No salesman,
representative or agent of Supplier is authorized to bind Lessor or to waive or
alter any term or condition to this Lease and no representation as to the
Equipment or any other matter by a Supplier shall in any way affect Lessee's
duty to pay Rental and perform its other obligations as set forth in this Lease.
If any provision hereof or any remedy herein provided for shall be invalid under
applicable law, such provision or remedy shall be inapplicable and deemed
omitted, but the remaining provisions and remedies hereunder shall be given
effect in accordance with the intent hereof. Neither this Lease nor any term
hereof may be changed, discharged, terminated or waived except by an instrument
in writing signed by the party against which enforcement of the change,
discharge, termination or waiver is sought. THIS LEASE SHALL BE DEEMED TO HAVE
BEEN MADE IN THE STATE OF NEW YORK BY VIRTUE OF LESSOR HAVING SIGNED AND
ACCEPTED THIS LEASE IN THE STATE OF NEW YORK, REGARDLESS OF THE ORDER IN WHICH
THE SIGNATURES OF THE PARTIES SHALL BE AFFIXED HERETO, SHALL BE DEEMED TO BE
PERFORMED IN THE STATE OF NEW YORK AND SHALL BE INTERPRETED, AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW OR
CHOICE OF LAW, AND AS PART OF THE CONSIDERATION OF THE LESSOR EXECUTING THIS
LEASE, LESSEE HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING DIRECTLY OR
INDIRECTLY FROM THIS LEASE SHALL BE LITIGATED ONLY IN COURTS HAVING SITUS WITHIN
THE STATE OF NEW YORK AND LESSEE HEREBY CONSENTS TO THE JURISDICTION OF ANY
LOCAL, STATE, OR FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK AND WAIVES
THE PERSONAL SERVICE OF ANY AND ALL PROCESS UPON THE LESSEE HEREIN, AND CONSENTS
THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO THE LESSEE AT THE ADDRESS SHOWN ON THE FACE HEREOF AND
SERVICE SO MADE SHALL BE COMPLETE TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN
POSTED AS AFORESAID. LESSEE HEREBY WAIVES ANY RIGHT TO A JURY TRIAL WITH RESPECT
TO ANY MATTER ARISING UNDER OR IN CONNECTION WITH THIS LEASE. The captions in
this Lease are for convenience for reference only and shall not define or limit
any of the terms or provisions hereof. This Lease shall inure to the benefit of
and be binding upon Lessor and Lessee and their respective successors and
assigns, subject, however, to the limitations set forth in this Lease with
respect to Lessee's assignment hereof. No right or remedy referred to in this
Lease is intended to be exclusive but each shall be cumulative and in addition
to any other right or remedy referred to in this Lease or otherwise available to
Lessor at law or in equity, and shall be in addition to the provisions contained
in any instrument referred to herein and any instrument in supplement hereto.
TIME IS OF THE ESSENCE WITH RESPECT TO THE OBLIGATIONS OF LESSEE UNDER THIS
LEASE.
15. No Prepayment; Interest. Lessee may not prepay this Lease, in whole or
in part, at any time. However, in the event Lessor declares all rents and other
amounts payable hereunder to be due and payable pursuant to paragraph 10 above,
Lessee shall, upon demand, be required to pay the full amount demanded pursuant
to said paragraph 10. All amounts due and payable under this Lease (including
past due installments of rent) shall bear interest from and after their
respective due dates, at the lesser of one and one-half percent (1.5%) per month
or the highest rate permitted by applicable law, provided, however, that Lessee
shall have no obligation to pay any interest on interest except to the extent
permitted by applicable law.
16. Notices. Notices hereunder shall be deemed given if served personally or
by certified or registered mail, return receipt requested, to Lessor and Lessee
at their respective addresses set forth at the head of this Lease. Any party
hereto may from time to time by written notice to the other change the address
to which notices are sent to such party.
17. No Purchase Option. Except as may be provided in a purchase option
agreement executed by Lessor and Lessee of even date, Lessee shall have no
option to purchase or otherwise acquire title to or ownership of any of the
Equipment and shall have only the right to use the same under and subject to the
terms and provisions of this Lease.
PAGE 4 OF 4
<PAGE>
CHARTER FINANCIAL, INC
Merchant Bankers
VIA FEDERAL EXPRESS
- -------------------
November 10, 1995
Mr. David Satin
SMA Video, Inc.
100 Avenue of the Americas
New York, NY 10013
Re: Documents for the transaction between SMA Video, Inc. and Charter Financial,
Inc. Lease No. 2380
Dear Mr. Satin:
Enclosed, please find your copy of the documents for the transaction between
Charter Financial, Inc. and SMA Video. In addition, please find a coupon book
for your use each month when remitting payment. Please note that the next
payment for Lease number 2380 is due 12/01/95. As indicated on the payment
coupons, all payments should be sent to Charter Financial, Inc. at the following
address (unless you receive notice of change from us in the future):
P.O. Box 11104
Church Street Station
New York, NY 10286-1104
Thank you for choosing Charter for this transaction. We are pleased to have been
able to be of service to you. Please do not hesitate to call me if you have any
questions. In addition, please feel free to call your account officer.
Sincerely yours,
/s/ Kysha A. White
Kysha A. White
Contract Administrator
Enclosures
153 East 53rd Street, New York, N.Y. 10022 (212)805-1000 FAX (212)805-1050
<PAGE>
AMENDMENT TO LEASE OF PERSONAL PROPERTY NO. 2380 DATED JUNE 23,
1995 (THE "LEASE") BY AND BETWEEN SMA VIDEO, INC. AS LESSEE AND
CHARTER FINANCIAL, INC. AS LESSOR
The Lease is hereby amended as follows:
1. The items set forth on Schedule A-1 annexed hereto are deemed to be
additional Equipment included under the Lease.
2. It received possession of all of the personal property described on Schedule
A-1 attached hereto on 29 Sept, 1995.
3. Except for the addition of certain Equipment covered by the Lease, there are
no other modifications or amendments to the Lease, which remains in full force
and effect.
SMA VIDEO, INC. CHARTER FINANCIAL, INC.
By: /s/ By: /s/
---------------------------- --------------------------------
Title: VP/Engineering Title: Vice President
------------------------ ----------------------------
Date: 29 Sept., 1995 Date: Sept. 29, 1995
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10022 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-1"
- --------------------------------------------------------------------------------
QTY. MODEL # DESCRIPTION
- ---- ------- -----------
AVID
1 8000 AVID MEDIA COMPOSER
ACCOM
1 ACCOM RTD 4224 64 SECOND
1 RTD SMOOTH MOTION
AMPEX
1 DCT 1700d
1 GENERAL SERVICE KIT
1 525 AUDIO/VIDEO REF TAPE
1 525 GUIDE ALIGNMENT TAPE
CEASAR VIDEO
1 QUANTEL HENRY
1 HARRY
CHYRON
1 MAX
1 16 MB FONT MEMORY
1 RGB COLOR MENU
1 EXTENDED EFX FRAME BUFFER
1 EXTENDED EFX FRAME BUFFER UPGRADE
1 NETWORKING
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 2
100 Avenue of the Americas
New York, New York 10022 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-1"
- --------------------------------------------------------------------------------
1 DI OUTPUT
CYRUS
1 AVS CYRUS STANDARD CONVERTOR
DIS
1 ENSEMBLE TC-400
1 ENSEMBLE CP-10
DON CARDONE
14 AJA D2 SERIALIZER
14 AJA D2 DESERIALIZER
28 WALL WARTS C10WP
GVG
1 ANALOG INTERFACE
1 EDITOR OPTION
1 GRAFIX OPTION
1 PAL SYNC GENERATOR
1 MEP-3 YEAR
HART-MANN
1 QUARTET TRAY
4 VFC 123 Ni
MIDDLE ATLANTIC
3 MIDDLE ATLANTUIC SS SHELVES
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 3
100 Avenue of the Americas
New York, New York 10022 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-1"
- --------------------------------------------------------------------------------
Nvision
3 Nvision NV-1000 FRAME
6 Nvision NV-1060 AUDIO DELAY
6 Nvision NV-1061 TC DELAY
6 Nvision EM-1030-00 ADC
6 Nvision EM-1040-00 DAC
3 Nvision PS-2001
3 Nvision INPUT BUFFERS
1 Nvision CROSSPOINT CARD
PRO-BEL
1 4221 16 CH INPUT BUFFER
2 4111 32X16 CROSSPOINT
1 4215 16 CH OUTPUT AMP
1 128X FRAME UPGRADE W/ TRADE IN
3 6290 CONTROL PANELS
2 6170-20 CONTROL EXPANDERS
SONY
1 DVR 20
1 BKDV 201
1 RACKMOUNT
1 DVW-500
1 PFVD 100A
1 BKPF 108C
1 DVS 2000C
1 BKDS 2031
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 4
100 Avenue of the Americas
New York, New York 10022 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-1"
- --------------------------------------------------------------------------------
1 BKDS 2010
1 BZS 2020
STRASSBERG
1 LEXICON 2400
TECHNISPHERE
1 TEK 1700 F06
1 TEK 764
3 TEK 1765
1 TEK 1700 F07
6 SONY PVM-95
1 LEITCH 151OTG
3 LEITCH VSD 6801
1 GVG SMS 800TID
3 GVG SMS 8301
TEKNICHE
3 TEKNICHE DX-210
COMPUTER WORKSTATION AND VTR
SMA VIDEO, INC.
BY: ____________________
TITLE: _________________
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
AMENDMENT TO LEASE OF PERSONAL PROPERTY NO. 2380 DATED JUNE 23,
1995 (THE "LEASE") BY AND BETWEEN SMA VIDEO, INC. AS LESSEE AND
CHARTER FINANCIAL, INC. AS LESSOR
The Lease is hereby amended as follows:
1. The items set forth on Schedule A-2 annexed hereto are deemed to be
additional Equipment included under the Lease.
2. It received possession of all of the personal property described on the
Schedule A-2 attached hereto on October 13, 1995.
3. Except for the addition of certain Equipment covered by the Lease as set
forth hereinabove, there are no other modifications or amendments to the Lease,
which remains in full force and effect.
SMA VIDEO, INC. CHARTER FINANCIAL, INC.
By: /s/ By: /s/
---------------------------- --------------------------------
Title: Executive V.P. Title: Vice President
------------------------ ----------------------------
Date: October 13, 1995 Date: October 13, 1995
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-2"
- --------------------------------------------------------------------------------
QTY. MODEL # DESCRIPTION
- ---- ------- -----------
ALEXANDER SCHACHTER, TRUSTEE
1 PAINTBOX HARRY WITH SONY DVR 1000 PACKAGE
ASSOCIATED TELEPHONE DESIGN, INC.
5 16-BUTTON DISPLAY SPEAKERPHONES
1 UNIVERSAL DATA CARD
RMC SALES
14 AJA C10-PS SERIALIZER
14 AJA C10-SP DESERIALIZER
28 WALL WARTS C10WP
GVG
1 068-544-00 EDITOR OPTION
1 068-551-00 GRAFIX OPTION
1 068-552-00 GRAFIX OPTION
1 068-519-31 PAL SYNC GENERATOR
1 MEO-3 YEAR
HART-MANN
1 MERINDA QUARTET TRAY
4 MERINDA VFC 123 Ni
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 2
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10013
SCHEDULE "A-2"
- --------------------------------------------------------------------------------
MEMORY INTERNATIONAL
1 VRAM FOR MAC
4 72 PIN SIMM 8 MEG 60 NS
PRO-BEL
1 6290 CONTROL PANELS
RORKE DATA
1 DUAL 44/88 MEG SYQUEST RM
1 EXABYTE 8500 RACK MOUNT
1 SIDE X SIDE RACK MOUNT W/ 2 FIXED 9 GIG
DRIVES
1 31/2" DUAL REMOVABLE CHASIS
DAVID J. SATIN
1 SVGA MONITOR
1 THINKPAD LAPTOP-IBM 755CE
1 LOCAL ETHERNET BRIDGE W/SNMP
2 P5-100/16/1 GIG COMPUTER
2 486DX266/8/850 COMPUTER
1 SHARP PC-3050 LAPTOP COMPUTER
SONY
2 8-960-070-02 D1 ALIGNMENT TAPES
2 DIM-12CLA DI CLEANING TAPES
1 8-960-096-01 D1 BETASP ALIGNMENT TAPE
1 8-960-071-12 D2 ALIGNMENT TAPE
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 3
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-2"
- --------------------------------------------------------------------------------
SVEC
1 12 PORT STACKABLE HUB
2 PCI NETWORK ADAPTER
1 PCMCIA ETHERNET ADAPTER
STRASSBERG
3 Nvision NV-1000 FRAME
6 Nvision NV-1060 AUDIO DELAY
6 Nvision NV-1061 TC DELAY
6 Nvision EM-1030-00 ADC
6 Nvision EM-1040-00 DAC
3 Nvision PS-2001
3 Nvision INPUT BUFFERS
1 Nvision CROSSPOINT CARD
TECHNISPHERE
6 VIDEOTEK DAT 1
5 VIDEOTEK PVS 6
4 VIDEOTEK DAT 2
1 LEITCH CES 3500 FS
TEKNICHE
1 CYRUS
VIDEO CORPORATION OF AMERICA
1 ADOBE ILLUSTRATOR 5-PAK
1 ADOBE AFTER EFFECTS
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 4
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-2"
- --------------------------------------------------------------------------------
2 ELECTRIC IMAGE RENDERCAM
1 POWER PC COMPUTER- APPLE 7100/80-800CD
3 MAC VIEW ADAPTERS
1 EQUILIBRIUM DEBABELIZER
4 15" MULTISCAN MONITORS- SONY CPD-15SF1
1 AVITEL RMA 1 BVW SHELF FOR DVW-500
SMA VIDEO, INC.
BY: /s/
--------------------------
TITLE: Partner
-----------------------
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
AMENDMENT TO LEASE OF PERSONAL PROPERTY NO. 2380 DATED JUNE 23,
1995 (THE "LEASE") BY AND BETWEEN SMA VIDEO, INC. AS LESSEE AND
CHARTER FINANCIAL, INC. AS LESSOR
The Lease is hereby amended as follows:
1. The items set forth on Schedule A-3 annexed hereto are deemed to be
additional Equipment included under the Lease.
2. It received possession of all of the personal property described on the
Schedule A-3 attached hereto on October 23,1995.
3. Except for the addition of certain Equipment covered by the Lease as set
forth hereinabove, there are no other modifications or amendments to the Lease,
which remains in full force and effect.
SMA VIDEO, INC. CHARTER FINANCIAL, INC.
By: /s/ By: /s/
---------------------------- --------------------------------
Title: Exec VP Title: Vice President
------------------------ ----------------------------
Date: October 23, 1995 Date: October 23, 1995
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-3"
- --------------------------------------------------------------------------------
QTY. MODEL # DESCRIPTION
- ---- ------- -----------
ANICOM/MORGAN HILL
1 LEXMARK OPTRA RT+ 1900 DPI
1 500 SHEET 2ND DRAWER P/N 1408160
1 INA ETHERNET (10BT) P/N 1329970
1 TONER CARTRIGE HIGH YIELD
MEMORY INTERNATIONAL
2 512K VRAM FOR 7100
4 256K VRAM FOR 7100
2 72 PIN SIMM 8 MEG 60 NS
ZAXCOM
2 PITCH CORRECTION SOFTWARE FOR DMX-1000
VIDEO CORPORATION OF AMERICA
2 15" MULTISCAN MONITORS- SONY CPD-15SFI
1 APPLE POWER PC 8100/110-16/2000 CD
2 APPLE EXTENDED KEYBOARD II
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 2
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-3"
- --------------------------------------------------------------------------------
DAVID J. SATIN
1 486DX266/8/850 COMPUTER
1 MCAFEE NET REMOTE
SMA VIDEO, INC.
BY: /s/
------------------------
TITLE: Exec VP
---------------------
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
GUARANTY AGREEMENT
Name and address of Guarantor: Fly Films, Inc.
: 100 Avenue of the Americas
: New York, NY 10013
: Federal I.D. #13-3681189
RECITALS
A. Pursuant to the terms of the equipment leases, purchase money security
agreements and/or other agreements (collectively, the "Agreements") presently
existing between Charter Financial, Inc., 153 E. 53rd Street, 55th Floor, New
York, NY 10022 (collectively, "Obligee") and SMA Video, Inc., 100 Avenue of the
Americas, New York, NY 10013 ("Obligor"). Obligor has incurred indebtedness to
Obligee as more fully set forth in the Agreements.
B. Obligee has required, as a condition of entering into the Agreements,
that the payment and performance of all indebtedness and obligations of Obligor
to Obligee of every kind and description, direct or indirect, primary or
secondary, absolute or contingent or due or to become due, whether by
acceleration or otherwise, and any and all renewals, modifications, supplements,
amendments and extensions of the foregoing, whether now or thereafter arising
under the Agreements, or any other present or future agreement, document or
instrument now or hereafter executed and delivered by Obligor to Obligee or any
assignee of Obligee, including, without limitation any equipment leases,
purchase money security agreements, loans, chattel mortgage loans, real estate
loans, advances, payments, extensions of credit, benefits or financial
accommodations whether or not arising under or in connection with the
Agreements, or by operation of law, whether or not evidenced by writing, or
otherwise arising (all of such indebtedness and obligations being hereinafter
referred to as the "Indebtedness"), be guaranteed by Guarantor.
TERMS AND CONDITIONS
1. Guaranty of Payment. In order to induce Obligee to enter into the
Agreements and in consideration of $10.00 and other good and valuable
consideration paid by Obligee to Guarantor, receipt of which is hereby
acknowledged, Guarantor hereby unconditionally guarantees to Obligee (a) the due
and punctual payment of the Indebtedness, when and as the same shall become due
and payable whether at maturity or by required prepayment, notice of optional
prepayment, acceleration or otherwise and (b) the due and punctual performance
of all other obligations arising under or relating to the Indebtedness. Such
guaranty is an absolute, unconditional, continuing guaranty of payment and not
of collectibility, and is in no way conditioned or contingent upon any attempt
to collect from Obligor or from any other person, firm or corporation obligated
with respect to, or any guarantor of, the Indebtedness or upon any other
condition or contingency. In case Obligor shall fail to pay punctually any of
the Indebtedness, or any premium or interest thereon, when and as the same shall
become due and payable, Guarantor will upon demand immediately pay the same to
Obligee.
2. Costs and Expenses. Guarantor will pay all costs and expenses incurred by
or on behalf of Obligee (including, without limitation, reasonable attorneys'
fees and expenses) in enforcing the obligations of Guarantor hereunder, and the
obligations of Obligor with respect to the Indebtedness.
3. Obligations of Guarantor Not Affected. The obligations of Guarantor shall
remain in full force and effect without regard to and shall not be affected or
impaired in any respect by: (a) any assignment, transfer, amendment,
modification, rescission or cancellation of or addition or supplement to the
Agreements or any other agreement or guaranty in respect of the Indebtedness or
collateral held for the Indebtedness; (b) the validity, illegality or
unenforceability of the Agreements or any other agreement or guaranty in respect
of the Indebtedness or collateral held for the Indebtedness; (c) any exercise,
non-exercise, waiver, release or cancellation by Obligee of any right, remedy,
power or privilege under or in respect of the Agreements or any other agreement
or guaranty in respect of the Indebtedness or collateral held for the
Indebtedness, including, without limitation, the taking, release, discharge,
exchange, surrender or disposition of collateral held for the Indebtedness; (d)
any consent, extension, indulgence, or other action, inaction or omission under
or in respect of the Agreements or any other agreement of guaranty in respect of
the Indebtedness or collateral held for the Indebtedness; (e) the death of
Guarantor; (f) any purported termination by Guarantor of this Guaranty Agreement
not expressly permitted hereby; or (g) any other cause or circumstance
whatsoever, including, without limitation, any other act, thing, omission or
delay which would or might in any manner or to any extent vary the risk of
Guarantor or which would or might otherwise operate as a discharge of Guarantor
as a matter of law; whether or not Guarantor shall have notice or knowledge of
any of the foregoing. This Guaranty Agreement shall remain in full force and
effect and shall not be terminable except with the prior written consent of
Obligee or so long as any agreement or arrangement between Obligee and Obligor
or any renewals, continuations, modifications, supplements and amendments
thereof shall remain in force and effect. Thereafter this instrument shall
continue in full force and effect until terminated by the actual receipt by
Obligee by registered or certified mail of notice of termination from Guarantor
or from the legal representative of any deceased Guarantor; such termination
shall be applicable only to transactions having their inception thereafter, and
rights and obligations arising out of transactions having their inception prior
to such termination shall not be affected.
4. Waivers. The following are unconditionally waived by Guarantor (a) notice
of any of the matters referred to in Section 3, (b) all notices which may be
required by statute, rule or law or otherwise to preserve any rights of Obligee
against Obligor or Guarantor, including, without limitation, notice of
presentment and protest to, and demand and payment from, Obligor or Guarantor
(c) any right to the enforcement, assertion, exercise or non-exercise by Obligee
of any right, power or remedy conferred in the Agreement or any other agreement
whatsoever, (d) any right of subrogation, reimbursement or indemnity, and any
right of recourse to or with respect to any assets or property of Obligor or to
any collateral for any Indebtedness, unless and until Obligee shall have
received and retained full payment of all of the Indebtedness, and (e) any
requirement of diligence on the part of Obligee.
5. Security. All sums at any time to the credit of Guarantor and any
property of Guarantor at any time in Obligee's possession shall be deemed held
by Obligee as security for any and all of Guarantor's obligations to Obligee and
to any company or companies which may now or at any time be Obligee's parent,
subsidiary or affiliate, no matter how or when arising and whether under this or
any other instruments, agreement or otherwise. Upon the nonpayment of any
obligation of Obligor to Obligee, full power and authority are hereby given
Obligee to sell, assign, and deliver the whole or any of the property of
Guarantor which Obligee holds as security, at any broker's board, or at public
or private sale (at the option of Obligee) either for cash or on credit or for
future delivery, without assumption of any credit risk, and without demand,
advertisement or notice of any kind, all of which are hereby expressly waived.
No delay on the part of Obligee in exercising any power of sale or any other
rights or options hereunder, and no notice or demand, which may be given to or
made upon Guarantor by Obligee with respect to any power of sale or other right
or option hereunder, shall constitute a waiver thereof, or limit or impair
Obligee's right to take any action or to exercise any power of sale or any other
rights hereunder, without notice or demand, or prejudice Obligee's rights as
against Guarantor in any respect. At any sale hereunder, Obligee may purchase
the whole or any part of the property sold, free from any right of redemption on
the part of Guarantor, all such rights being also hereby waived and released. In
the event of any sale or other disposition of any of the property aforesaid,
after deducting ail costs or expenses of every kind for care, safekeeping,
collection, sale, delivery or otherwise, Obligee shall, after applying the
balance of the proceeds of the sale or other disposition to the payment or
reduction (in whole or in part) of the principal or interest (at the option of
Obligee) then owing on the obligations of Obligor, and after making proper
allowance for interest on obligations of Obligor not then due, return any excess
to Guarantor, all without prejudice to the rights of Obligee as against
Guarantor with respect to any and all amounts which may then be or remain unpaid
on any obligations of Obligor.
<PAGE>
6. Subordination. Any and all rights of Guarantor to the payment or
performance of any and all present and future indebtedness or other obligations
of Obligor to Guarantor shall be subordinate and subject to the rights of
Obligee to the full payment of the Indebtedness and all of the Indebtedness
shall be paid in full mid shall be retained by Obligee before any payment of
such indebtedness from Obligor to Guarantor shall be made. In the event that any
payment or distribution shall be received by Guarantor contrary to the
provisions of the preceding sentence, whether in connection with any insolvency,
bankruptcy, liquidation, reorganization, arrangement, readjustment, composition,
dissolution or other similar proceeding involving Obligor, or otherwise, such
payment or distribution shall be held in trust by Guarantor and shall be
promptly paid over to Obligee for application to the Indebtedness.
7. Bankruptcy or Insolvency. Guarantor agrees that if Obligor or
Guarantor should at any time become insolvent or make a general assignment for
the benefit of its creditor, or if a petition in bankruptcy or any insolvency,
liquidation, reorganization, arrangement, readjustment, composition, dissolution
or other similar proceeding shall be filed or commenced by, against or in
respect of Obligor or Guarantor, or if an order for relief shall be entered in
respect of Obligor or Guarantor in any case under the Bankruptcy Code, the
obligations of Guarantor hereunder shall remain in full force and effect; and
any and all obligations of Obligor and Guarantor to Obligee shall, at the option
of Obligee, forthwith become due and payable without notice.
8. Notices. All notices and other communications hereunder shall be in
writing and shall be delivered or mailed by certified or registered mail, return
receipt requested, addressed to the respective addresses of the parties hereto
designated above in this Guaranty Agreement, or addressed to any such party at
such other address such party shall hereafter have furnished to the other party
in writing.
9. Consent to Jurisdiction; Waiver of Jury Trial. Guarantor hereby
irrevocably consents to the jurisdiction of the courts of the State of New York
and of any federal court located in such state in connection with any action or
proceeding arising out of or relating to this Guaranty Agreement. Any such
action or proceeding will be maintained in the United States District Court for
the Southern District of New York or in any court of the State of New York
located in the County of New York and Guarantor waives any objections based upon
venue or forum non conveniens in connection with any such action or proceeding.
Guarantor consents that process in any such action or proceeding may be served
upon it by registered mail directed to Guarantor at its address set forth at the
head of the Guaranty Agreement or in any other manner permitted by applicable
law or rules of court. Guarantor hereby irrevocably appoints the Secretary of
State of the State of New York as its agent to receive service of process in any
such action or proceeding. GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY ACTION, SUIT OR PROCEEDING COMMENCED BY OBLIGEE, OBLIGOR,
GUARANTOR OR OTHERWISE IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY OF THE
AGREEMENTS. THIS WAIVER HAS BEEN SPECIFICALLY NEGOTIATED BY THE PARTIES WITH
FULL COGNIZANCE AND UNDERSTANDING OF THEIR RIGHTS.
10. Law of New York. This Guaranty Agreement shall in all respects be
governed by and construed in accordance with the internal laws of the State of
New York, without reference to principles of conflict of laws.
11. Miscellaneous. Neither this Guaranty Agreement not any term hereof
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. All the terms of this
Guaranty Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, representatives, successors and assigns, and
in particular shall be enforceable by any holder or holders from time to time of
the Indebtedness of any part thereof. Guarantor agrees and consents that Obligee
shall have the right to assign or transfer this Guaranty Agreement or any of
Obligee's rights or powers hereunder to any other person, firm or corporation
and such assignment shall not affect the liability of Guarantor hereunder. The
books and records of Obligee showing the account between Obligee and Obligor
shall be admissible in evidence in any action or proceeding, shall be binding
upon Guarantor for the purpose of establishing the items therein set forth, and
shall constitute prima facie proof thereof. In the event that there shall be
more than one Guarantor, the obligations of each Guarantor shall be both joint
and several.
Guarantor agrees to all the provisions set forth above. This
agreement is executed pursuant to due authorization.
GUARANTOR ACKNOWLEDGES RECEIPT OF A SIGNED TRUE COPY OF THIS
AGREEMENT.
Accepted on September 22, 1995 Date June 23, 1995
Michael J. Morrissey
------------------------ (Guarantor)
CHARTER FINANCIAL, INC. (Obligee) (Name of Individual)
By: /s/ By: /s/
----------------------------- ------------------------------
Its Vice President
- ---------------------------------
(Title of Officer)
Attest: /s/ Charles W. Weiss
-----------------------[Seal]
Notary Public
CHARLES W. WEISS
NOTARY PUBLIC, State of New York
No. 30-4524678
Qualified in Nassau County
Commission Expires July 31, 1996
<PAGE>
DELIVERY RECEIPT AND ACCEPTANCE CERTIFICATE
-------------------------------------------
RE: LEASE OF PERSONAL PROPERTY NO. 2380 DATED June 23, 1995 BY AND BETWEEN
CHARTER FINANCIAL, INC., AS LESSOR, AND SMA VIDEO, INC, AS LESSEE
The undersigned hereby represent and warrant:
1. It received possession of all of the personal property described on
Schedule "A" attached hereto on September 22, 1995.
2. All of the personal property described on the attached Schedule "A" is in
good condition and has been accepted by the undersigned.
3. The Lessor named above has performed and satisfied all covenants and
conditions to be performed and satisfied by it on or prior to the date
hereof under the above-referenced Lease of Personal Property between the
undersigned and said Lessor.
4. As of the date hereof, there has occurred no Event of Default as defined
in the aforesaid Lease of Personal Property or any event with which the
giving of notice or lapse of time, or both, would constitute an Event of
Default.
5. The undersigned has no claim or defense whatsoever against or with respect
to the Lessor named above or otherwise arising under or relating to the
aforesaid Lease of Personal Property.
6. The payments due under said Lease of Personal Property are $18,165.00 per
month for sixty 60) months commencing on November 1, 1995.
The undersigned has been advised that the Lessor named above may assign the
aforesaid Lease of Personal Property, for value, and makes the foregoing
representations and warranties in order to induce the Assignee to accept such
assignment, and agree that such Assignee may rely upon the aforesaid
representations and warranties and that notwithstanding any event or
circumstances whatsoever, the undersigned shall pay and perform all liabilities
and obligations arising under or relating to the aforesaid Lease of Personal
Property in accordance with its terms.
SMA VIDEO, INC.
By: /s/
-------------------------------
Title: VP/Engingeering
Date: September 22, 1995
RMC:s-11d-sma-video.d&a
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10022 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A"
- --------------------------------------------------------------------------------
QTY. MODEL# DESCRIPTION
- ---- ------ -----------
1 Quantel Henry
1 8000 Avid Media Composer
1 AVS Cyrus Standard Converter
SMA VIDEO, INC.
By: ______________________
RMC:s-11d-sm-video.sa
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
PURCHASE OPTION AGREEMENT
WHEREAS, Charter Financial, Inc. ("Charter"), as Lessor and SMA Video,
Inc. as Lessee ("Lessee") are parties to a certain Lease of Personal Property
(the "Lease"), dated June 23, 1995, affecting the equipment (the "Equipment")
described therein; and
WHEREAS, the parties hereto desire to confirm their understanding
pursuant to which the Lessee may acquire title to the Equipment upon expiration
of the Lease.
NOW, THEREFORE, the parties hereto agree as follows:
1. Provided that the Lessee shall so request Charter in writing not less
than ninety (90) days prior to the expiration of the Lease, and further
provided, that the Lessee shall then be in compliance with all the terms and
provisions of the Lease and shall continue to comply with all the terms and
provisions of the Lease thereafter until the expiration of the Lease, Charter
agrees to sell, assign, transfer and convey the Equipment to the Lessee upon the
expiration of the Lease for and in consideration of an amount equal to $ 1.00 to
be paid in good funds to Charter prior to expiration of the Lease.
2. The Equipment shall be sold to the Lessee and the Lessee shall take
possession of the Equipment "as is" and "where is." Such sale by Charter shall
be without representation or warranty, express or implied, and shall expressly
exclude any warranty as to fitness, condition or merchantability of the
Equipment except that Charter shall warrant that its title to the Equipment is
free and clear of any liens or encumbrances created by, through or under it.
Such Equipment shall be conveyed subject to all liens and encumbrances which may
arise by, through or under the Lessee.
3. All taxes attributable to the transaction herein contemplated shall
be borne exclusively by the Lessee.
4. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
(LESSEE) (LESSOR)
SMA VIDEO, INC. CHARTER FINANCIAL, INC.
By: /s/ By: /s/
--------------------------- --------------------------
(Authorized Signature) (Authorized Signature)
Title: President Title: Vice President
Dated: June 23, 1995 Dated: September 22, 1995
RMC:s-1dd-sma-video.po
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10022 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A"
- --------------------------------------------------------------------------------
QTY. MODEL# DESCRIPTION
- ---- ------ -----------
1 Quantel Henry
1 8000 Avid Media Composer
1 AVS Cyrus Standard Converter
SMA VIDEO, INC.
By: /s/
----------------------
RMC:s-11d-sm-video.sa
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
GUARANTY AGREEMENT
Name and address of Guarantor: David J. Satin
: 401 East 34th Street, Apt. 516-G
: New York, NY 10016
: Social Security ####-##-####
RECITALS
A. Pursuant to the terms of the equipment leases, purchase money
security agreements and/or other agreements (collectively, the "Agreements")
presently existing between Charter Financial, Inc., 153 E. 53rd Street 55th
Floor, New York, NY 10022 ("Obligee") and SMA Video, Inc., 100 Avenue of the
Americas, New York, NY 10013 ("Obligor"). Obligor has incurred indebtedness to
Obligee as more fully set forth in the Agreements.
B. Obligee has required, as a condition of entering into the Agreements,
that the payment and performance of all indebtedness and obligations of Obligor
to Obligee of every kind and description, direct or indirect, primary or
secondary, absolute or contingent or due or to become due, whether by
acceleration or otherwise, and any and all renewals, modifications, supplements,
amendments and extensions of the foregoing, whether now or thereafter arising
under the Agreements, or any other present or future agreement, document or
instrument now or hereafter executed and delivered by Obligor to Obligee or any
assignee of Obligee, including, without limitation any equipment leases,
purchase money security agreements, loans, chattel mortgage loans, real estate
loans, advances, payments, extensions of credit, benefits or financial
accommodations whether or not arising under or in connection with the
Agreements, or by operation of law, whether or not evidenced by writing, or
otherwise arising (all of such indebtedness and obligations being hereinafter
referred to as the "Indebtedness"), be guaranteed by Guarantor.
TERMS AND CONDITIONS
1. Guaranty of Payment. In order to induce Obligee to enter into the
Agreements and in consideration of $ 10.00 and other good and valuable
consideration paid by Obligee to Guarantor, receipt of which is hereby
acknowledged, Guarantor hereby unconditionally guarantees to Obligee (a) the due
and punctual payment of the Indebtedness, when and as the same shall become due
and payable whether at maturity or by required prepayment, notice of optional
prepayment, acceleration or otherwise and (b) the due and punctual performance
of all other obligations arising under or relating to the Indebtedness. Such
guaranty is an absolute, unconditional, continuing guaranty of payment and not
of collectibility, and is in no way conditioned or contingent upon any attempt
to collect from Obligor or from any other person, firm or corporation obligated
with respect to, or any guarantor of, the Indebtedness or upon any other
condition or contingency. In case Obligor shall fail to pay punctually any of
the Indebtedness, or any premium or interest thereon, when and as the same shall
become due and payable, Guarantor will upon demand immediately pay the same to
Obligee.
2. Costs and Expenses. Guarantor will pay all costs and expenses
incurred by or on behalf of Obligee (including, without limitation, reasonable
attorneys' fees and expenses) in enforcing the obligations of Guarantor
hereunder, and the obligations of Obligor with respect to the Indebtedness.
3. Obligations of Guarantor Not Affected. The obligations of Guarantor
shall remain in full force and effect without regard to and shall not be
affected or impaired in any respect by: (a) any assignment, transfer, amendment,
modification, rescission or cancellation of or addition or supplement to the
Agreements or any other agreement or guaranty in respect of the Indebtedness or
collateral held for the Indebtedness; (b) the validity, illegality or
unenforceability of the Agreements or any other agreement or guaranty in respect
of the Indebtedness or collateral held for the Indebtedness; (c) any exercise,
non-exercise, waiver, release or cancellation by Obligee of any right, remedy,
power or privilege under or in respect of the Agreements or any other agreement
or guaranty in respect of the Indebtedness or collateral held for the
Indebtedness, including, without limitation, the taking, release, discharge,
exchange, surrender or disposition of collateral held for the Indebtedness; (d)
any consent, extension, indulgence, or other action, inaction or omission under
or in respect of the Agreements or any other agreement of guaranty in respect of
the Indebtedness or collateral held for the Indebtedness; (e) the death of
Guarantor; (f) any purported termination by Guarantor of this Guaranty Agreement
not expressly permitted hereby; or (g) any other cause or circumstance
whatsoever, including, without limitation, any other act, thing, omission or
delay which would or might in any manner or to any extent vary the risk of
Guarantor or which would or might otherwise operate as a discharge of Guarantor
as a matter of law; whether or not Guarantor shall have notice or knowledge of
any of the foregoing. This Guaranty Agreement shall remain in full force and
effect and shall not be terminable except with the prior written consent of
Obligee or so long as any agreement or arrangement between Obligee and Obligor
or any renewals, continuations, modifications, supplements and amendments
thereof shall remain in force and effect. Thereafter this instrument shall
continue in full force and effect until terminated by the actual receipt by
Obligee by registered or certified mail of notice of termination from Guarantor
or from the legal representative of any deceased Guarantor; such termination
shall be applicable only to transactions having their inception thereafter, and
rights and obligations arising out of transactions having their inception prior
to such termination shall not be affected.
4. Waivers. The following are unconditionally waived by Guarantor (a)
notice of any of the matters referred to in Section 3, (b) all notices which may
be required by statute, rule or law or otherwise to preserve any rights of
Obligee against Obligor or Guarantor, including, without limitation, notice of
presentment and protest to, and demand and payment from, Obligor or Guarantor
(c) any right to the enforcement, assertion, exercise or non-exercise by Obligee
of any right, power or remedy conferred in the Agreement or any other agreement
whatsoever, (d) any right of subrogation, reimbursement or indemnity, and any
right of recourse to or with respect to any assets or property of Obligor or to
any collateral for any In indebtedness, unless and until Obligee shall have
received and retained full payment of all of the Indebtedness, and (e) any
requirement of diligence on the part of Obligee.
5. Security, All sums at any time to the credit of Guarantor and any
property of Guarantor at any time in Obligee's possession shall be deemed held
by Obligee as security for any and all of Guarantor's obligations to Obligee and
to any company or companies which may now or at any time be Obligee's parent,
subsidiary or affiliate, no matter how or when arising and whether under this or
any other instruments, agreement or otherwise. Upon the nonpayment of any
obligation of Obligor to Obligee, full power and authority are hereby given
Obligee to sell, assign, and deliver the whole or any of the property of
Guarantor which Obligee holds as security, at any broker's board, or at public
or private sale (at the option of Obligee) either for cash or on credit or for
future delivery, without assumption of any credit risk, and without demand,
advertisement or notice of any kind, all of which are hereby expressly waived.
No delay on the part of Obligee in exercising any power of sale or any other
rights or options hereunder, and no notice or demand, which may be given to or
made upon Guarantor by Obligee with respect to any power of sale or other right
or option hereunder, shall constitute a waiver thereof, or limit or impair
Obligee's right to take any action or to exercise any power of sale or any other
rights hereunder, without notice or demand, or prejudice Obligee's rights as
against Guarantor in any respect. At any sale hereunder, Obligee may purchase
the whole or any part of the property sold, free from any right of redemption on
the part of Guarantor, all such rights being also hereby waived and released. In
the event of any sale or other disposition of any of the property aforesaid,
after deducting ail costs or expenses of every kind for care, safekeeping,
collection, sale, delivery or otherwise, Obligee shall, after applying the
balance of the proceeds of the sale or other disposition to the payment or
reduction (in whole or in part) of the principal or interest (at the option of
Obligee) then owing on the obligations of Obligor, and after making proper
allowance for interest on obligations of Obligor not then due, return any excess
to Guarantor, all without prejudice to the rights of Obligee as against
Guarantor with respect to any and all amounts which may then be or remain unpaid
on any obligations of Obligor.
<PAGE>
6. Subordination. Any and all rights of Guarantor to the payment or
performance of any and all present and future indebtedness or other obligations
of Obligor to Guarantor shall be subordinate and subject to the rights of
Obligee to the full payment of the Indebtedness and all of the Indebtedness
shall be paid in full and shall be retained by Obligee before any payment of
such indebtedness from Obligor to Guarantor shall be made. In the event that any
payment or distribution shall be received by Guarantor contrary to the
provisions of the preceding sentence, whether in connection with any insolvency,
bankruptcy, liquidation, reorganization, arrangement, readjustment, composition,
dissolution or other similar proceeding involving Obligor, or otherwise, such
payment or distribution shall be held in trust by Guarantor and shall be
promptly paid over to Obligee for application to the Indebtedness.
7. Bankruptcy or Insolvency. Guarantor agrees that if Obligor or
Guarantor should at any time become insolvent or make a general assignment for
the benefit of its creditor, or if a petition in bankruptcy or any insolvency,
liquidation, reorganization, arrangement, readjustment, composition, dissolution
or other similar proceeding shall be filed or commenced by, against or in
respect of Obligor or Guarantor, or if an order for relief shall be entered in
respect of Obligor or Guarantor in any case under the Bankruptcy Code, the
obligations of Guarantor hereunder shall remain in full force and effect; and
any and all obligations of Obligor and Guarantor to Obligee shall, at the option
of Obligee, forthwith become due and payable without notice.
8. Notices. All notices and other communications hereunder shall be in
writing and shall be delivered or mailed by certified or registered mail, return
receipt requested, addressed to the respective addresses of the parties hereto
designated above in this Guaranty Agreement, or addressed to any such party at
such other address such party shall hereafter have furnished to the other party
in writing.
9. Consent to Jurisdiction; Waiver of Jury Trial. Guarantor hereby
irrevocably consents to the jurisdiction of the courts of the State of New York
and of any federal court located in such state in connection with any action or
proceeding arising out of or relating to this Guaranty Agreement. Any such
action or proceeding will be maintained in the United States District Court for
the Southern District of New York or in any court of the State of New York
located in the County of New York and Guarantor waives any objections based upon
venue or forum non conveniens in connection with any such action or proceeding.
Guarantor consents that process in any such action or proceeding may be served
upon it by registered mail directed to Guarantor at its address set forth at the
head of the Guaranty Agreement or in any other manner permitted by applicable
law or rules of court. Guarantor hereby irrevocably appoints the Secretary of
State of the State of New York as its agent to receive service of process in any
such action or proceeding. GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY ACTION, SUIT OR PROCEEDING COMMENCED BY OBLIGEE, OBLIGOR,
GUARANTOR OR OTHERWISE IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY OF THE
AGREEMENTS. THIS WAIVER HAS BEEN SPECIFICALLY NEGOTIATED BY THE PARTIES WITH
FULL COGNIZANCE AND UNDERSTANDING OF THEIR RIGHTS.
10. Law of New York. This Guaranty Agreement shall in all respects be
governed by and construed in accordance with the internal laws of the State of
New York, without reference to principles of conflict of laws.
11. Miscellaneous. Neither this Guaranty Agreement not any term hereof
maybe changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. All the terms of this
Guaranty Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, representatives, successors and assigns, and
in particular shall be enforceable by any holder or holders from time to time of
the Indebtedness of any part thereof. Guarantor agrees and consents that Obligee
shall have the right to assign or transfer this Guaranty Agreement or any of
Obligee's rights or powers hereunder to any other person, firm or corporation
and such assignment shall not affect the liability of Guarantor hereunder. The
books and records of Obligee showing the account between Obligee and Obligor
shall be admissible in evidence in any action or proceeding, shall be binding
upon Guarantor for the purpose of establishing the items therein set forth, and
shall constitute prima facie proof thereof. In the event that there shall be
more than one Guarantor, the obligations of each Guarantor shall be both joint
and several.
Guarantor agrees to all the provisions set forth above. This
agreement is executed pursuant to due authorization.
GUARANTOR ACKNOWLEDGES RECEIPT OF A SIGNED TRUE COPY OF THIS
AGREEMENT.
Accepted on September 22, 1995 Date June 23, 1995
David J. Satin
-------------------------- Guarantor
CHARTER FINANCIAL, INC. (Obligee) (Name of Individual)
By: /s/ (illegible) By: /s/ (illegible)
----------------------------- -----------------------------
Its Vice President
- ---------------------------------
(Title of Officer)
Attest: /s/ Charles W. Weiss
-----------------------[Seal]
Notary Public
CHARLES W. WEISS
NOTARY PUBLIC, State of New York
No. 30-4524678
Qualified in Nassau County
Commission Expires July 31, 1996
<PAGE>
GUARANTY AGREEMENT
Name and address of Guarantor: SMA Visual Effects Corp.
: 100 Avenue of the Americas
: New York, NY 10013
: Federal I.D. #13-3681187
RECITALS
A. Pursuant to the terms of the equipment leases, purchase money
security agreements and/or other agreements (collectively, the "Agreements")
presently existing between Charter Financial, Inc., 153 E. 53rd Street, 55th
Floor, New York, NY 10022 (collectively, "Obligee") and SMA Video, Inc., 100
Avenue of the Americas, New York, NY 10013 ("Obligor"). Obligor has incurred
indebtedness to Obligee as more fully set forth in the Agreements.
B. Obligee has required, as a condition of entering into the Agreements,
that the payment and performance of all indebtedness and obligations of Obligor
to Obligee of every kind and description, direct or indirect, primary or
secondary, absolute or contingent or due or to become due, whether by
acceleration or otherwise, and any and all renewals, modifications, supplements,
amendments and extensions of the foregoing, whether now or thereafter arising
under the Agreements, or any other present or future agreement, document or
instrument now or hereafter executed and delivered by Obligor to Obligee or any
assignee of Obligee, including, without limitation any equipment leases,
purchase money security agreements, loans, chattel mortgage loans, real estate
loans, advances, payments, extensions of credit, benefits or financial
accommodations whether or not arising under or in connection with the
Agreements, or by operation of law, whether or not evidenced by writing, or
otherwise arising (all of such indebtedness and obligations being hereinafter
referred to as the "Indebtedness"), be guaranteed by Guarantor.
TERMS AND CONDITIONS
1. Guaranty of Payment. In order to induce Obligee to enter into the
Agreements and in consideration of $10.00 and other good and valuable
consideration paid by Obligee to Guarantor, receipt of which is hereby
acknowledged, Guarantor hereby unconditionally guarantees to Obligee (a) the due
and punctual payment of the Indebtedness, when and as the same shall become due
and payable whether at maturity or by required prepayment, notice of optional
prepayment, acceleration or otherwise and (b) the due and punctual performance
of all other obligations arising under or relating to the Indebtedness. Such
guaranty is an absolute, unconditional, continuing guaranty of payment and not
of collectibility, and is in no way conditioned or contingent upon any attempt
to collect from Obligor or from any other person, firm or corporation obligated
with respect to, or any guarantor of, the Indebtedness or upon any other
condition or contingency. In case Obligor shall fail to pay punctually any of
the Indebtedness, or any premium or interest thereon, when and as the same shall
become due and payable, Guarantor will upon demand immediately pay the same to
Obligee.
2. Costs and Expenses. Guarantor will pay all costs and expenses
incurred by or on behalf of Obligee (including, without limitation, reasonable
attorneys' fees and expenses) in enforcing the obligations of Guarantor
hereunder, and the obligations of Obligor with respect to the Indebtedness.
3. Obligations of Guarantor Not Affected. The obligations of Guarantor
shall remain in full force and effect without regard to and shall not be
affected or impaired in any respect by: (a) any assignment, transfer, amendment,
modification, rescission or cancellation of or addition or supplement to the
Agreements or any other agreement or guaranty in respect of the Indebtedness or
collateral held for the Indebtedness; (b) the validity, illegality or
unenforceability of the Agreements or any other agreement or guaranty in respect
of the Indebtedness or collateral held for the Indebtedness; (c) any exercise,
non-exercise, waiver, release or cancellation by Obligee of any right, remedy,
power or privilege under or in respect of the Agreements or any other agreement
or guaranty in respect of the Indebtedness or collateral held for the
Indebtedness, including, without limitation, the taking, release, discharge,
exchange, surrender or disposition of collateral held for the Indebtedness; (d)
any consent, extension, indulgence, or other action, inaction or omission under
or in respect of the Agreements or any other agreement of guaranty in respect of
the Indebtedness or collateral held for the Indebtedness; (e) the death of
Guarantor; (f) any purported termination by Guarantor of this Guaranty Agreement
not expressly permitted hereby; or (g) any other cause or circumstance
whatsoever, including, without limitation, any other act, thing, omission or
delay which would or might in any manner or to any extent vary the risk of
Guarantor or which would or might otherwise operate as a discharge of Guarantor
as a matter of law; whether or not Guarantor shall have notice or knowledge of
any of the foregoing. This Guaranty Agreement shall remain in full force and
effect and shall not be terminable except with the prior written consent of
Obligee or so long as any agreement or arrangement between Obligee and Obligor
or any renewals, continuations, modifications, supplements and amendments
thereof shall remain in force and effect. Thereafter this instrument shall
continue in full force and effect until terminated by the actual receipt by
Obligee by registered or certified mail of notice of termination from Guarantor
or from the legal representative of any deceased Guarantor; such termination
shall be applicable only to transactions having their inception thereafter, and
rights and obligations arising out of transactions having their inception prior
to such termination shall not be affected.
4. Waivers. The following are unconditionally waived by Guarantor: (a)
notice of any of the matters referred to in Section 3, (b) all notices which may
be required by statute, rule or law or otherwise to preserve any rights of
Obligee against Obligor or Guarantor, including, without limitation, notice of
presentment and protest to, and demand and payment from, Obligor or Guarantor
(c) any right to the enforcement, assertion, exercise or non-exercise by Obligee
of any right, power or remedy conferred in the Agreement or any other agreement
whatsoever, (d) any right of subrogation, reimbursement or indemnity, and any
right of recourse to or with respect to any assets or property of Obligor or to
any collateral for any Indebtedness, unless and until Obligee shall have
received and retained full payment of all of the Indebtedness, and (e) any
requirement of diligence on the part of Obligee.
5. Security, All sums at any time to the credit of Guarantor and any
property of Guarantor at any time in Obligee's possession shall be deemed held
by Obligee as security for any and all of Guarantor's obligations to Obligee and
to any company or companies which may now or at any time be Obligee's parent,
subsidiary or affiliate, no matter how or when arising and whether under this or
any other instruments, agreement or otherwise. Upon the nonpayment of any
obligation of Obligor to Obligee, full power and authority are hereby given
Obligee to sell, assign, and deliver the whole or any of the property of
Guarantor which Obligee holds as security, at any broker's board, or at public
or private sale (at the option of Obligee) either for cash or on credit or for
future delivery, without assumption of any credit risk, and without demand,
advertisement or notice of any kind, all of which are hereby expressly waived.
No delay on the part of Obligee in exercising any power of sale or any other
rights or options hereunder, and no notice or demand, which may be given to or
made upon Guarantor by Obligee with respect to any power of sale or other right
or option hereunder, shall constitute a waiver thereof, or limit or impair
Obligee's right to take any action or to exercise any power of sale or any other
rights hereunder, without notice or demand, or prejudice Obligee's rights as
against Guarantor in any respect. At any sale hereunder, Obligee may purchase
the whole or any part of the property sold, free from any right of redemption on
the part of Guarantor, all such rights being also hereby waived and released. In
the event of any sale or other disposition of any of the property aforesaid,
after deducting all costs or expenses of every kind for care, safekeeping,
collection, sale, delivery or otherwise, Obligee shall, after applying the
balance of the proceeds of the sale or other disposition to the payment or
reduction (in whole or in part) of the principal or interest (at the option of
Obligee) then owing on the obligations of Obligor, and after making proper
allowance for interest on obligations of Obligor not then due, return any excess
to Guarantor, all without prejudice to the rights of Obligee as against
Guarantor with respect to any and all amounts which may then be or remain unpaid
on any obligations of Obligor.
<PAGE>
6. Subordination. Any and all rights of Guarantor to the payment or
performance of any and all present and future indebtedness or other obligations
of Obligor to Guarantor shall be subordinate and subject to the rights of
Obligee to the full payment of the Indebtedness and all of the Indebtedness
shall be paid in full and shall be retained by Obligee before any payment of
such indebtedness from Obligor to Guarantor shall be made. In the event that any
payment or distribution shall be received by Guarantor contrary to the
provisions of the preceding sentence, whether in connection with any insolvency,
bankruptcy, liquidation, reorganization, arrangement, readjustment, composition,
dissolution or other similar proceeding involving Obligor, or otherwise, such
payment or distribution shall be held in trust by Guarantor and shall be
promptly paid over to Obligee for application to the Indebtedness.
7. Bankruptcy or Insolvency. Guarantor agrees that if Obligor or
Guarantor should at any time become insolvent or make a general assignment for
the benefit of its creditor, or if a petition in bankruptcy or any insolvency,
liquidation, reorganization, arrangement, readjustment, composition, dissolution
or other similar proceeding shall be filed or commenced by, against or in
respect of Obligor or Guarantor, or if an order for relief shall be entered in
respect of Obligor or Guarantor in any case under the Bankruptcy Code, the
obligations of Guarantor hereunder shall remain in full force and effect; and
any and all obligations of Obligor and Guarantor to Obligee shall, at the option
of Obligee, forthwith become due and payable without notice.
8. Notices. All notices and other communications hereunder shall be in
writing and shall be delivered or mailed by certified or registered mail, return
receipt requested, addressed to the respective addresses of the parties hereto
designated above in this Guaranty Agreement, or addressed to any such party at
such other address such party shall hereafter have furnished to the other party
in writing.
9. Consent to Jurisdiction; Waiver of Jury Trial. Guarantor hereby
irrevocably consents to the jurisdiction of the courts of the State of New York
and of any federal court located in such state in connection with any action or
proceeding arising out of or relating to this Guaranty Agreement. Any such
action or proceeding will be maintained in the United States District Court for
the Southern District of New York or in any court of the State of New York
located in the County of New York and Guarantor waives any objections based upon
venue or forum non conveniens in connection with any such action or proceeding.
Guarantor consents that process in any such action or proceeding may be served
upon it by registered mail directed to Guarantor at its address set forth at the
head of the Guaranty Agreement or in any other manner permitted by applicable
law or rules of court. Guarantor hereby irrevocably appoints the Secretary of
State of the State of New York as its agent to receive service of process in any
such action or proceeding. GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY ACTION, SUIT OR PROCEEDING COMMENCED BY OBLIGEE, OBLIGOR,
GUARANTOR OR OTHERWISE IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY OF THE
AGREEMENTS. THIS WAIVER HAS BEEN SPECIFICALLY NEGOTIATED BY THE PARTIES WITH
FULL COGNIZANCE AND UNDERSTANDING OF THEIR RIGHTS.
10. Law of New York. This Guaranty Agreement shall in all respects be
governed by and construed in accordance with the internal laws of the State of
New York, without reference to principles of conflict of laws.
11. Miscellaneous. Neither this Guaranty Agreement not any term hereof
maybe changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. All the terms of this
Guaranty Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, representatives, successors and assigns, and
in particular shall be enforceable by any holder or holders from time to time of
the Indebtedness of any part thereof. Guarantor agrees and consents that Obligee
shall have the right to assign or transfer this Guaranty Agreement or any of
Obligee's rights or powers hereunder to any other person, firm or corporation
and such assignment shall not affect the liability of Guarantor hereunder. The
books and records of Obligee showing the account between Obligee and Obligor
shall be admissible in evidence in any action or proceeding, shall be binding
upon Guarantor for the purpose of establishing the items therein set forth, and
shall constitute prima facie proof thereof. In the event that there shall be
more than one Guarantor, the obligations of each Guarantor shall be both joint
and several.
Guarantor agrees to all the provisions set forth above. This
agreement is executed pursuant to due authorization.
GUARANTOR ACKNOWLEDGES RECEIPT OF A SIGNED TRUE COPY OF THIS
AGREEMENT.
Accepted on September 22, 1995 Date June 23, 1995
SMA VISUAL EFFECTS CORP.
-------------------------- Guarantor
CHARTER FINANCIAL, INC. (Obligee) (Name of Corporation)
By: /s/ (illegible) By: /s/ (illegible)
----------------------------- --------------------------------
Its Vice President Its President
----------------------------- ---------------------------------
(Title of Officer) (If Corporation, President or Vice
President should sign and give
official title; if Partnership,
state partner)
Attest: /s/ (illegible)
------------------------------[Seal]
Secretary
<PAGE>
GUARANTY AGREEMENT
Name and address of Guarantor: SMA Reel Time, Inc.
: 100 Avenue of the Americas
: New York, NY 10013
: Federal I.D. #13-3724883
RECITALS
A. Pursuant to the terms of the equipment leases, purchase money
security agreements and/or other agreements (collectively, the "Agreements")
presently existing between Charter Financial, Inc., 153 E. 53rd Street, 55th
Floor, New York, NY 10022 ("Obligee") and SMA Video, Inc., 100 Avenue of the
Americas, New York, NY 10013 ("Obligor"). Obligor has incurred indebtedness to
Obligee as more fully set forth in the Agreements.
B. Obligee has required, as a condition of entering into the Agreements,
that the payment and performance of all indebtedness and obligations of Obligor
to Obligee of every kind and description, direct or indirect, primary or
secondary, absolute or contingent or due or to become due, whether by
acceleration or otherwise, and any and all renewals, modifications, supplements,
amendments and extensions of the foregoing, whether now or thereafter arising
under the Agreements, or any other present or future agreement, document or
instrument now or hereafter executed and delivered by Obligor to Obligee or any
assignee of Obligee, including, without limitation any equipment leases,
purchase money security agreements, loans, chattel mortgage loans, real estate
loans, advances, payments, extensions of credit, benefits or financial
accommodations whether or not arising under or in connection with the
Agreements, or by operation of law, whether or not evidenced by writing, or
otherwise arising (all of such indebtedness and obligations being hereinafter
referred to as the "Indebtedness"), be guaranteed by Guarantor.
TERMS AND CONDITIONS
1. Guaranty of Payment. In order to induce Obligee to enter into the
Agreements and in consideration of $10.00 and other good and valuable
consideration paid by Obligee to Guarantor, receipt of which is hereby
acknowledged, Guarantor hereby unconditionally guarantees to Obligee (a) the due
and punctual payment of the Indebtedness, when and as the same shall become due
and payable whether at maturity or by required prepayment, notice of optional
prepayment, acceleration or otherwise and (b) the due and punctual performance
of all other obligations arising under or relating to the Indebtedness. Such
guaranty is an absolute, unconditional, continuing guaranty of payment and not
of collectibility, and is in no way conditioned or contingent upon any attempt
to collect from Obligor or from any other person, firm or corporation obligated
with respect to, or any guarantor of, the Indebtedness or upon any other
condition or contingency. In case Obligor shall fail to pay punctually any of
the Indebtedness, or any premium or interest thereon, when and as the same shall
become due and payable, Guarantor will upon demand immediately pay the same to
Obligee.
2. Costs and Expenses. Guarantor will pay all costs and expenses
incurred by or on behalf of Obligee (including, without limitation, reasonable
attorneys' fees and expenses) in enforcing the obligations of Guarantor
hereunder, and the obligations of Obligor with respect to the Indebtedness.
3. Obligations of Guarantor Not Affected. The obligations of Guarantor
shall remain in full force and effect without regard to and shall not be
affected or impaired in any respect by: (a) any assignment, transfer, amendment,
modification, rescission or cancellation of or addition or supplement to the
Agreements or any other agreement or guaranty in respect of the Indebtedness or
collateral held for the Indebtedness; (b) the validity, illegality or
unenforceability of the Agreements or any other agreement or guaranty in respect
of the Indebtedness or collateral held for the Indebtedness; (c) any exercise,
non-exercise, waiver, release or cancellation by Obligee of any right, remedy,
power or privilege under or in respect of the Agreements or any other agreement
or guaranty in respect of the Indebtedness or collateral held for the
Indebtedness, including, without limitation, the taking, release, discharge,
exchange, surrender or disposition of collateral held for the Indebtedness; (d)
any consent, extension, indulgence, or other action, inaction or omission under
or in respect of the Agreements or any other agreement of guaranty in respect of
the Indebtedness or collateral held for the Indebtedness; (e) the death of
Guarantor; (f) any purported termination by Guarantor of this Guaranty Agreement
not expressly permitted hereby; or (g) any other cause or circumstance
whatsoever, including, without limitation, any other act, thing, omission or
delay which would or might in any manner or to any extent vary the risk of
Guarantor or which would or might otherwise operate as a discharge of Guarantor
as a matter of law; whether or not Guarantor shall have notice or knowledge of
any of the foregoing. This Guaranty Agreement shall remain in full force and
effect and shall not be terminable except with the prior written consent of
Obligee or so long as any agreement or arrangement between Obligee and Obligor
or any renewals, continuations, modifications, supplements and amendments
thereof shall remain in force and effect. Thereafter this instrument shall
continue in full force and effect until terminated by the actual receipt by
Obligee by registered or certified mail of notice of termination from Guarantor
or from the legal representative of any deceased Guarantor; such termination
shall be applicable only to transactions having their inception thereafter, and
rights and obligations arising out of transactions having their inception prior
to such termination shall not be affected.
4. Waivers. The following are unconditionally waived by Guarantor: (a)
notice of any of the matters referred to in Section 3, (b) all notices which may
be required by statute, rule or law or otherwise to preserve any rights of
Obligee against Obligor or Guarantor, including, without limitation, notice of
presentment and protest to, and demand and payment from, Obligor or Guarantor
(c) any right to the enforcement, assertion, exercise or non-exercise by Obligee
of any right, power or remedy conferred in the Agreement or any other agreement
whatsoever, (d) any right of subrogation, reimbursement or indemnity, and any
right of recourse to or with respect to any assets or property of Obligor or to
any collateral for any Indebtedness, unless and until Obligee shall have
received and retained full payment of all of the Indebtedness, and (e) any
requirement of diligence on the part of Obligee.
5. Security, All sums at any time to the credit of Guarantor and any
property of Guarantor at any time in Obligee's possession shall be deemed held
by Obligee as security for any and all of Guarantor's obligations to Obligee and
to any company or companies which may now or at any time be Obligee's parent,
subsidiary or affiliate, no matter how or when arising and whether under this or
any other instruments, agreement or otherwise. Upon the nonpayment of any
obligation of Obligor to Obligee, full power and authority are hereby given
Obligee to sell, assign, and deliver the whole or any of the property of
Guarantor which Obligee holds as security, at any broker's board, or at public
or private sale (at the option of Obligee) either for cash or on credit or for
future delivery, without assumption of any credit risk, and without demand,
advertisement or notice of any kind, all of which are hereby expressly waived.
No delay on the part of Obligee in exercising any power of sale or any other
rights or options hereunder, and no notice or demand, which may be given to or
made upon Guarantor by Obligee with respect to any power of sale or other right
or option hereunder, shall constitute a waiver thereof, or limit or impair
Obligee's right to take any action or to exercise any power of sale or any other
rights hereunder, without notice or demand, or prejudice Obligee's rights as
against Guarantor in any respect. At any sale hereunder, Obligee may purchase
the whole or any part of the property sold, free from any right of redemption on
the part of Guarantor, all such rights being also hereby waived and released. In
the event of any sale or other disposition of any of the property aforesaid,
after deducting all costs or expenses of every kind for care, safekeeping,
collection, sale, delivery or otherwise, Obligee shall, after applying the
balance of the proceeds of the sale or other disposition to the payment or
reduction (in whole or in part) of the principal or interest (at the option of
Obligee) then owing on the obligations of Obligor, and after making proper
allowance for interest on obligations of Obligor not then due, return any excess
to Guarantor, all without prejudice to the rights of Obligee as against
Guarantor with respect to any and all amounts which may then be or remain unpaid
on any obligations of Obligor.
<PAGE>
6. Subordination. Any and all rights of Guarantor to the payment or
performance of any and all present and future indebtedness or other obligations
of Obligor to Guarantor shall be subordinate and subject to the rights of
Obligee to the full payment of the Indebtedness and all of the Indebtedness
shall be paid in full and shall be retained by Obligee before any payment of
such indebtedness from Obligor to Guarantor shall be made. In the event that any
payment or distribution shall be received by Guarantor contrary to the
provisions of the preceding sentence, whether in connection with any insolvency,
bankruptcy, liquidation, reorganization, arrangement, readjustment, composition,
dissolution or other similar proceeding involving Obligor, or otherwise, such
payment or distribution shall be held in trust by Guarantor and shall be
promptly paid over to Obligee for application to the Indebtedness.
7. Bankruptcy or Insolvency. Guarantor agrees that if Obligor or
Guarantor should at any time become insolvent or make a general assignment for
the benefit of its creditor, or if a petition in bankruptcy or any insolvency,
liquidation, reorganization, arrangement, readjustment, composition, dissolution
or other similar proceeding shall be filed or commenced by, against or in
respect of Obligor or Guarantor, or if an order for relief shall be entered in
respect of Obligor or Guarantor in any case under the Bankruptcy Code, the
obligations of Guarantor hereunder shall remain in full force and effect; and
any and all obligations of Obligor and Guarantor to Obligee shall, at the option
of Obligee, forthwith become due and payable without notice.
8. Notices. All notices and other communications hereunder shall be in
writing and shall be delivered or mailed by certified or registered mail, return
receipt requested, addressed to the respective addresses of the parties hereto
designated above in this Guaranty Agreement, or addressed to any such party at
such other address such party shall hereafter have furnished to the other party
in writing.
9. Consent to Jurisdiction; Waiver of Jury Trial. Guarantor hereby
irrevocably consents to the jurisdiction of the courts of the State of New York
and of any federal court located in such state in connection with any action or
proceeding arising out of or relating to this Guaranty Agreement. Any such
action or proceeding will be maintained in the United States District Court for
the Southern District of New York or in any court of the State of New York
located in the County of New York and Guarantor waives any objections based upon
venue or forum non conveniens in connection with any such action or proceeding.
Guarantor consents that process in any such action or proceeding may be served
upon it by registered mail directed to Guarantor at its address set forth at the
head of the Guaranty Agreement or in any other manner permitted by applicable
law or rules of court. Guarantor hereby irrevocably appoints the Secretary of
State of the State of New York as its agent to receive service of process in any
such action or proceeding. GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY ACTION, SUIT OR PROCEEDING COMMENCED BY OBLIGEE, OBLIGOR,
GUARANTOR OR OTHERWISE IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY OF THE
AGREEMENTS. THIS WAIVER HAS BEEN SPECIFICALLY NEGOTIATED BY THE PARTIES WITH
FULL COGNIZANCE AND UNDERSTANDING OF THEIR RIGHTS.
10. Law of New York. This Guaranty Agreement shall in all respects be
governed by and construed in accordance with the internal laws of the State of
New York, without reference to principles of conflict of laws.
11. Miscellaneous. Neither this Guaranty Agreement not any term hereof
maybe changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. All the terms of this
Guaranty Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, representatives, successors and assigns, and
in particular shall be enforceable by any holder or holders from time to time of
the Indebtedness of any part thereof. Guarantor agrees and consents that Obligee
shall have the right to assign or transfer this Guaranty Agreement or any of
Obligee's rights or powers hereunder to any other person, firm or corporation
and such assignment shall not affect the liability of Guarantor hereunder. The
books and records of Obligee showing the account between Obligee and Obligor
shall be admissible in evidence in any action or proceeding, shall be binding
upon Guarantor for the purpose of establishing the items therein set forth, and
shall constitute prima facie proof thereof. In the event that there shall be
more than one Guarantor, the obligations of each Guarantor shall be both joint
and several.
Guarantor agrees to all the provisions set forth above. This
agreement is executed pursuant to due authorization.
GUARANTOR ACKNOWLEDGES RECEIPT OF A SIGNED TRUE COPY OF THIS
AGREEMENT.
Accepted on September 22, 1995 Date June 23, 1995
SMA REEL TIME, INC.
------------------------ (Guarantor)
CHARTER FINANCIAL, INC. (Obligee) (Name of Corporation)
By: /s/ (illegible) By: /s/ (illegible)
----------------------------- --------------------------------
Its Vice President Its President
----------------------------- ---------------------------------
(Title of Officer) (If Corporation, President or Vice
President should sign and give
official title; if Partnership,
state partner)
Attest: /s/ (illegible)
------------------------------[Seal]
Secretary
<PAGE>
GUARANTY AGREEMENT
Name and address of Guarantor: Michael J. Morrissey
: 161 Ludlow Street, Apt. 3
: New York, NY 10002
: Social Security ####-##-####
RECITALS
A. Pursuant to the terms of the equipment leases, purchase money
security agreements and/or other agreements (collectively, the "Agreements")
presently existing between Charter Financial, Inc., 153 E. 53rd Street, 55th
Floor, New York, NY 10022 ("Obligee") and SMA Video, Inc., 100 Avenue of the
Americas, New York, NY 10013 ("Obligor"). Obligor has incurred indebtedness to
Obligee as more fully set forth in the Agreements.
B. Obligee has required, as a condition of entering into the Agreements,
that the payment and performance of all indebtedness and obligations of Obligor
to Obligee of every kind and description, direct or indirect, primary or
secondary, absolute or contingent or due or to become due, whether by
acceleration or otherwise, and any and all renewals, modifications, supplements,
amendments and extensions of the foregoing, whether now or thereafter arising
under the Agreements, or any other present or future agreement, document or
instrument now or hereafter executed and delivered by Obligor to Obligee or any
assignee of Obligee, including, without limitation any equipment leases,
purchase money security agreements, loans, chattel mortgage loans, real estate
loans, advances, payments, extensions of credit, benefits or financial
accommodations whether or not arising under or in connection with the
Agreements, or by operation of law, whether or not evidenced by writing, or
otherwise arising (all of such indebtedness and obligations being hereinafter
referred to as the "Indebtedness"), be guaranteed by Guarantor.
TERMS AND CONDITIONS
1. Guaranty of Payment. In order to induce Obligee to enter into the
Agreements and in consideration of $10.00 and other good and valuable
consideration paid by Obligee to Guarantor, receipt of which is hereby
acknowledged, Guarantor hereby unconditionally guarantees to Obligee (a) the due
and punctual payment of the Indebtedness, when and as the same shall become due
and payable whether at maturity or by required prepayment, notice of optional
prepayment, acceleration or otherwise and (b) the due and punctual performance
of all other obligations arising under or relating to the Indebtedness. Such
guaranty is an absolute, unconditional, continuing guaranty of payment and not
of collectibility, and is in no way conditioned or contingent upon any attempt
to collect from Obligor or from any other person, firm or corporation obligated
with respect to, or any guarantor of, the Indebtedness or upon any other
condition or contingency. In case Obligor shall fail to pay punctually any of
the Indebtedness, or any premium or interest thereon, when and as the same shall
become due and payable, Guarantor will upon demand immediately pay the same to
Obligee.
2. Costs and Expenses. Guarantor will pay all costs and expenses
incurred by or on behalf of Obligee (including, without limitation, reasonable
attorneys' fees and expenses) in enforcing the obligations of Guarantor
hereunder, and the obligations of Obligor with respect to the Indebtedness.
3. Obligations of Guarantor Not Affected. The obligations of Guarantor
shall remain in full force and effect without regard to and shall not be
affected or impaired in any respect by: (a) any assignment, transfer, amendment,
modification, rescission or cancellation of or addition or supplement to the
Agreements or any other agreement or guaranty in respect of the Indebtedness or
collateral held for the Indebtedness; (b) the validity, illegality or
unenforceability of the Agreements or any other agreement or guaranty in respect
of the Indebtedness or collateral held for the Indebtedness; (c) any exercise,
non-exercise, waiver, release or cancellation by Obligee of any right, remedy,
power or privilege under or in respect of the Agreements or any other agreement
or guaranty in respect of the Indebtedness or collateral held for the
Indebtedness, including, without limitation, the taking, release, discharge,
exchange, surrender or disposition of collateral held for the Indebtedness; (d)
any consent, extension, indulgence, or other action, inaction or omission under
or in respect of the Agreements or any other agreement of guaranty in respect of
the Indebtedness or collateral held for the Indebtedness; (e) the death of
Guarantor; (f) any purported termination by Guarantor of this Guaranty Agreement
not expressly permitted hereby; or (g) any other cause or circumstance
whatsoever, including, without limitation, any other act, thing, omission or
delay which would or might in any manner or to any extent vary the risk of
Guarantor or which would or might otherwise operate as a discharge of Guarantor
as a matter of law; whether or not Guarantor shall have notice or knowledge of
any of the foregoing. This Guaranty Agreement shall remain in full force and
effect and shall not be terminable except with the prior written consent of
Obligee or so long as any agreement or arrangement between Obligee and Obligor
or any renewals, continuations, modifications, supplements and amendments
thereof shall remain in force and effect. Thereafter this instrument shall
continue in full force and effect until terminated by the actual receipt by
Obligee by registered or certified mail of notice of termination from Guarantor
or from the legal representative of any deceased Guarantor; such termination
shall be applicable only to transactions having their inception thereafter, and
rights and obligations arising out of transactions having their inception prior
to such termination shall not be affected.
4. Waivers. The following are unconditionally waived by Guarantor: (a)
notice of any of the matters referred to in Section 3, (b) all notices which may
be required by statute, rule or law or otherwise to preserve any rights of
Obligee against Obligor or Guarantor, including, without limitation, notice of
presentment and protest to, and demand and payment from, Obligor or Guarantor
(c) any right to the enforcement, assertion, exercise or non-exercise by Obligee
of any right, power or remedy conferred in the Agreement or any other agreement
whatsoever, (d) any right of subrogation, reimbursement or indemnity, and any
right of recourse to or with respect to any assets or property of Obligor or to
any collateral for any Indebtedness, unless and until Obligee shall have
received and retained full payment of all of the Indebtedness, and (e) any
requirement of diligence on the part of Obligee.
5. Security, All sums at any time to the credit of Guarantor and any
property of Guarantor at any time in Obligee's possession shall be deemed held
by Obligee as security for any and all of Guarantor's obligations to Obligee and
to any company or companies which may now or at any time be Obligee's parent,
subsidiary or affiliate, no matter how or when arising and whether under this or
any other instruments, agreement or otherwise. Upon the nonpayment of any
obligation of Obligor to Obligee, full power and authority are hereby given
Obligee to sell, assign, and deliver the whole or any of the property of
Guarantor which Obligee holds as security, at any broker's board, or at public
or private sale (at the option of Obligee) either for cash or on credit or for
future delivery, without assumption of any credit risk, and without demand,
advertisement or notice of any kind, all of which are hereby expressly waived.
No delay on the part of Obligee in exercising any power of sale or any other
rights or options hereunder, and no notice or demand, which may be given to or
made upon Guarantor by Obligee with respect to any power of sale or other right
or option hereunder, shall constitute a waiver thereof, or limit or impair
Obligee's right to take any action or to exercise any power of sale or any other
rights hereunder, without notice or demand, or prejudice Obligee's rights as
against Guarantor in any respect. At any sale hereunder, Obligee may purchase
the whole or any part of the property sold, free from any right of redemption on
the part of Guarantor, all such rights being also hereby waived and released. In
the event of any sale or other disposition of any of the property aforesaid,
after deducting all costs or expenses of every kind for care, safekeeping,
collection, sale, delivery or otherwise, Obligee shall, after applying the
balance of the proceeds of the sale or other disposition to the payment or
reduction (in whole or in part) of the principal or interest (at the option of
Obligee) then owing on the obligations of Obligor, and after making proper
allowance for interest on obligations of Obligor not then due, return any excess
to Guarantor, all without prejudice to the rights of Obligee as against
Guarantor with respect to any and all amounts which may then be or remain unpaid
on any obligations of Obligor.
<PAGE>
6. Subordination. Any and all rights of Guarantor to the payment or
performance of any and all present and future indebtedness or other obligations
of Obligor to Guarantor shall be subordinate and subject to the rights of
Obligee to the full payment of the Indebtedness and all of the Indebtedness
shall be paid in full and shall be retained by Obligee before any payment of
such indebtedness from Obligor to Guarantor shall be made. In the event that any
payment or distribution shall be received by Guarantor contrary to the
provisions of the preceding sentence, whether in connection with any insolvency,
bankruptcy, liquidation, reorganization, arrangement, readjustment, composition,
dissolution or other similar proceeding involving Obligor, or otherwise, such
payment or distribution shall be held in trust by Guarantor and shall be
promptly paid over to Obligee for application to the Indebtedness.
7. Bankruptcy or Insolvency. Guarantor agrees that if Obligor or
Guarantor should at any time become insolvent or make a general assignment for
the benefit of its creditor, or if a petition in bankruptcy or any insolvency,
liquidation, reorganization, arrangement, readjustment, composition, dissolution
or other similar proceeding shall be filed or commenced by, against or in
respect of Obligor or Guarantor, or if an order for relief shall be entered in
respect of Obligor or Guarantor in any case under the Bankruptcy Code, the
obligations of Guarantor hereunder shall remain in full force and effect; and
any and all obligations of Obligor and Guarantor to Obligee shall, at the option
of Obligee, forthwith become due and payable without notice.
8. Notices. All notices and other communications hereunder shall be in
writing and shall be delivered or mailed by certified or registered mail, return
receipt requested, addressed to the respective addresses of the parties hereto
designated above in this Guaranty Agreement, or addressed to any such party at
such other address such party shall hereafter have furnished to the other party
in writing.
9. Consent to Jurisdiction; Waiver of Jury Trial. Guarantor hereby
irrevocably consents to the jurisdiction of the courts of the State of New York
and of any federal court located in such state in connection with any action or
proceeding arising out of or relating to this Guaranty Agreement. Any such
action or proceeding will be maintained in the United States District Court for
the Southern District of New York or in any court of the State of New York
located in the County of New York and Guarantor waives any objections based upon
venue or forum non conveniens in connection with any such action or proceeding.
Guarantor consents that process in any such action or proceeding may be served
upon it by registered mail directed to Guarantor at its address set forth at the
head of the Guaranty Agreement or in any other manner permitted by applicable
law or rules of court. Guarantor hereby irrevocably appoints the Secretary of
State of the State of New York as its agent to receive service of process in any
such action or proceeding. GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY ACTION, SUIT OR PROCEEDING COMMENCED BY OBLIGEE, OBLIGOR,
GUARANTOR OR OTHERWISE IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY OF THE
AGREEMENTS. THIS WAIVER HAS BEEN SPECIFICALLY NEGOTIATED BY THE PARTIES WITH
FULL COGNIZANCE AND UNDERSTANDING OF THEIR RIGHTS.
10. Law of New York. This Guaranty Agreement shall in all respects be
governed by and construed in accordance with the internal laws of the State of
New York, without reference to principles of conflict of laws.
11. Miscellaneous. Neither this Guaranty Agreement not any term hereof
maybe changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. All the terms of this
Guaranty Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, representatives, successors and assigns, and
in particular shall be enforceable by any holder or holders from time to time of
the Indebtedness of any part thereof. Guarantor agrees and consents that Obligee
shall have the right to assign or transfer this Guaranty Agreement or any of
Obligee's rights or powers hereunder to any other person, firm or corporation
and such assignment shall not affect the liability of Guarantor hereunder. The
books and records of Obligee showing the account between Obligee and Obligor
shall be admissible in evidence in any action or proceeding, shall be binding
upon Guarantor for the purpose of establishing the items therein set forth, and
shall constitute prima facie proof thereof. In the event that there shall be
more than one Guarantor, the obligations of each Guarantor shall be both joint
and several.
Guarantor agrees to all the provisions set forth above. This
agreement is executed pursuant to due authorization.
GUARANTOR ACKNOWLEDGES RECEIPT OF A SIGNED TRUE COPY OF THIS
AGREEMENT.
Accepted on September 22, 1995 Date June 23, 1995
Michael J. Morrissey
-------------------------- Guarantor
CHARTER FINANCIAL, INC. (Obligee) (Name of Individual)
By: /s/ (illegible) By: /s/ (illegible)
----------------------------- --------------------------------
Its Vice President
-----------------------------
(Title of Officer)
Attest: /s/ Charles W. Weiss
------------------------------[Seal]
Notary Public
CHARLES W. WEISS
NOTARY PUBLIC, State of New York
No. 30-4524678
Qualified in Nassau County
Commission Expires July 31, 1996
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10022 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A"
- --------------------------------------------------------------------------------
QTY. MODEL# DESCRIPTION
- ---- ------ -----------
1 Quantel Henry
1 8000 Avid Media Composer
1 AVS Cyrus Standard Converter
SMA VIDEO, INC.
By: /s/ (illegible)
------------------------
RMC:s-11d-sma-video.sa
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10022 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-1"
- --------------------------------------------------------------------------------
QTY. MODEL# DESCRIPTION
- ---- ------ -----------
AVID
1 8000 AVID MEDIA COMPOSER
ACCOM
1 ACCOM RTD 4224 64 SECOND
1 RTD SMOOTH MOTION
AMPEX
1 DCT 1700d
1 GENERAL SERVICE KIT
1 525 AUDIO/VIDEO REF TAPE
1 525 GUIDE ALIGNMENT TAPE
CEASAR VIDEO
1 QUANTEL HENRY
1 HARRY
CHYRON
1 MAX
1 16 MB FONT MEMORY
1 RGB COLOR MENU
1 EXTENDED EFX FRAME BUFFER
1 EXTENDED EFX FRAME BUFFER UPGRADE
1 NETWORKING
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 2
100 Avenue of the Americas
New York, New York 10022 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-1"
- --------------------------------------------------------------------------------
1 D1 OUTPUT
CYRUS
1 AVS CYRUS STANDARD CONVERTOR
DIS
1 ENSEMBLE TC-400
1 ENSEMBLE CP-10
DON CARDONE
14 AJA D2 SERIALIZER
14 AJA D2 DESERIALIZER
28 WALL WARTS C10WP
GVG
1 ANALOG INTERFACE
1 EDITOR OPTION
1 GRAFIX OPTION
1 PAL SYNC GENERATOR
1 MEP-3 YEAR
HART-MANN
1 QUARTET TRAY
4 VFC 123 Ni
MIDDLE ATLANTIC
3 MIDDLE ATLANTUIC SS SHELVES
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 3
100 Avenue of the Americas
New York, New York 10022 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-1"
- --------------------------------------------------------------------------------
Nvision
3 Nvision NV-1000 FRAME
6 Nvision NV-1060 AUDIO DELAY
6 Nvision NV-1061 TC DELAY
6 Nvision EM-1030-00 ADC
6 Nvision EM-1040-00 DAC
3 Nvision PS-2001
3 Nvision INPUT BUFFERS
1 Nvision CROSSPOINT CARD
PRO-BEL
1 4221 16 CH INPUT BUFFER
2 4111 32X16 CROSSPOINT
1 4215 16 CH OUTPUT AMP
1 128X FRAME UPGRADE W/TRADE IN
3 6290 CONTROL PANELS
2 6170-20 CONTROL EXPANDERS
SONY
1 DVR 20
1 BKDV 201
1 RACKMOUNT
1 DVW-500
1 PFVD 100A
1 BKPF 108C
1 DVS 2000C
1 BKDS 2031
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 4
100 Avenue of the Americas
New York, New York 10022 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-1"
- --------------------------------------------------------------------------------
1 BKDS 2010
1 BZS 2020
STRASSBERG
1 LEXICON 2400
TECHNISPHERE
1 TEK 1700 F06
1 TEK 764
3 TEK 1765
1 TEK 1700 F07
6 SONY PVM-95
1 LEITCH 1510TG
3 LEITCH VSD 6801
1 GVG SMS 800TID
3 GVG SMS 8301
TEKNICHE
3 TEKNICHE DV-210
COMPUTER WORKSTATION AND VTR
SMA VIDEO, INC.
BY: ____________________
TITLE: _________________
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-2"
- --------------------------------------------------------------------------------
QTY. MODEL # DESCRIPTION
- ---- ------- -----------
ALEXANDER SCHACHTER, TRUSTEE
1 PAINTBOX HARRY WITH SONY DVR 1000 PACKAGE
ASSOCIATED TELEPHONE DESIGN, INC.
5 16-BUTTON DISPLAY SPEAKERPHONES
1 UNIVERSAL DATA CARD
RMC SALES
14 AJA C10-PS SERIALIZER
14 AJA C10-SP DESERIALIZER
28 WALL WARTS C10WP
GVG
1 068-544-00 EDITOR OPTION
1 068-551-00 GRAFIX OPTION
1 068-552-00 GRAFIX OPTION
1 068-519-31 PAL SYNC GENERATOR
1 MEO-3 YEAR
HART-MANN
1 MERINDA QUARTET TRAY
4 MERINDA VFC 123 Ni
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 2
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-2"
- --------------------------------------------------------------------------------
MEMORY INTERNATIONAL
1 VRAM FOR MAC
4 72 PIN SIMM 8 MEG 60 NS
PRO-BEL
1 6290 CONTROL PANELS
RORKE DATA
1 DUAL 44/88 MEG SYQUEST RM
1 EXABYTE 8500 RACK MOUNT
1 SIDE X SIDE RACK MOUNT W/ 2 FIXED 9 GIG
DRIVES
1 31/2" DUAL REMOVABLE CHASIS
DAVID J. SATIN
1 SVGA MONITOR
1 THINKPAD LAPTOP-IBM 755CE
1 LOCAL ETHERNET BRIDGE W/SNMP
2 P5-100/16/1 GIG COMPUTER
2 486DX266/8/850 COMPUTER
1 SHARP PC-3050 LAPTOP COMPUTER
SONY
2 8-960-070-02 D1 ALIGNMENT TAPES
2 D1M-12CLA D1 CLEANING TAPES
1 8-960-096-01 D1 BETASP ALIGNMENT TAPE
1 8-960-071-12 D2 ALIGNMENT TAPE
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 3
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-2"
- --------------------------------------------------------------------------------
SVEC
1 12 PORT STACKABLE HUB
2 PCI NETWORK ADAPTER
1 PCMCIA ETHERNET ADAPTER
STRASSBERG
3 Nvision NV-1000 FRAME
6 Nvision NV-1060 AUDIO DELAY
6 Nvision NV-1061 TC DELAY
6 Nvision EM-1030-00 ADC
6 Nvision EM-1040-00 DAC
3 Nvision PS-2001
3 Nvision INPUT BUFFERS
1 Nvision CROSSPOINT CARD
TECHNISPHERE
6 VIDEOTEK DAT 1
5 VIDEOTEK PVS 6
4 VIDEOTEK DAT 2
1 LEITCH CES 3500 FS
TEKNICHE
1 CYRUS
VIDEO CORPORATION OF AMERICA
1 ADOBE ILLUSTRATOR 5-PAK
1 ADOBE AFTER EFFECTS
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 4
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-2"
- --------------------------------------------------------------------------------
2 ELECTRIC IMAGE RENDERCAM
1 POWER PC COMPUTER-APPLE 7100/80-800CD
3 MAC VIEW ADAPTERS
1 EQUILIBRIUM DEBABELIZER
4 15" MULTISCAN MONITORS-SONY CPD-15SF1
1 AVITEL RMA 1 BVW SHELF FOR DVW-500
SMA VIDEO, INC.
By: /s/
------------------
Title: Partner
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-3"
- --------------------------------------------------------------------------------
QTY. MODEL # DESCRIPTION
- ---- ------- -----------
ANICOM/MORGAN HILL
1 LEXMARK OPTRA RT+ 1900 DPI
1 500 SHEET 2ND DRAWER P/N 1408160
1 INA ETHERNET (10BT) P/N 1329970
1 TONER CARTRIGE HIGH YIELD
MEMORY INTERNATIONAL
2 512K VRAM FOR 7100
4 256K VRAM FOR 7100
2 72 PIN SIMM 8 MEG 60 NS
ZAXCOM
2 PITCH CORRECTION SOFTWARE FOR DMX-1000
VIDEO CORPORATION OF AMERICA
2 15" MULTISCAN MONITORS-SONY CPD-15SFI
1 APPLE POWER PC 8100/110-16/2000 CD
2 APPLE EXTENDED KEYBOARD II
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 2
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-3"
- --------------------------------------------------------------------------------
DAVID J. SATIN
1 486DX266/8/850 COMPUTER
1 MCAFEE NET REMOTE
SMA VIDEO, INC.
BY: /s/
----------------------
TITLE: Exec VP
------------------
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-4"
- --------------------------------------------------------------------------------
QTY. MODEL # DESCRIPTION
- ---- ------- -----------
GRASS VALLEY
1 HB9106-00 HYBRID, VIDEO RAM MODULE
SMA VIDEO, INC.
BY: ____________________
TITLE: __________________
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-5"
- --------------------------------------------------------------------------------
QTY. MODEL # DESCRIPTION
- ---- ------- -----------
ADVANTAGE MEMORY
2 16 MEG DIMMM 60 NS
2 512K VRAM FOR 8100
SVEC
3 10 BASE T PCI CARDS
SMA VIDEO, INC.
BY: ___________________
TITLE: ________________
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street
New York, New York 10022
SCHEDULE "A-6"
- --------------------------------------------------------------------------------
QTY. MODEL#/DESCRIPTION
---- ------------------
The Schedule "A" of the original financing statement is amended as follows:
(1). The following items should be added to the Schedule "A":
Advantage Memory
2 16 Meg SIMM 60ns for PM8100
3 1 Meg VRAM for 7200
SVEC
3 FD0455 PCI 10BT
(2). The following items should be deleted from the Schedule "A":
Advantage Memory
2 16 Meg DIMMM 60ns
2 512K VRAM for 8100
SVEC
3 10 Base T PCI Cards
SMA Video, Inc.
(Lease No. 2380)
By: __________________________
Title: _______________________
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-7"
- --------------------------------------------------------------------------------
QTY. MODEL # DESCRIPTION
- ---- ------- -----------
HEWLETT PACKARD
1 QA100 QUALITY ADVISER
SERIAL #3348A00447, BOX #61283
CREATIVE MEDIA PRODUCTS, INC.
1 8 ULTIMATE CHROMA KEYING DEVISE
SERIAL #8045/8045R
SMA VIDEO, INC.
BY: ________________________
TITLE: _____________________
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-8"
- --------------------------------------------------------------------------------
QTY. MODEL # DESCRIPTION
- ---- ------- -----------
(1) The following items should be deleted from the Schedule "A":
SONY
1 D2 Alignment Tape
STRASSBERG
1 Lexicon 2400
(2) The following items should be added to the Schedule "A":
HEWLETT-PACKARD
1 QA100 Quality Advisor
STRASSBERG ASSOCIATES
1 KRK K-Rock Speakers
2 Teac CD4011MKII
2 Z System Z-2 Sample Rate Converter
2 Audio Design DMM-1 AES/EBU Mixing console
1 nVision 1050 SRC
2 nVision 1061 TC Delay
1 nVision 3302 8 input card
1 nVision 3206 32 output card
1 nVision EM3020 128x32 Crosspoint card
2 nVision 1060 AES/EBU Delay
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSEE: SMA Video, Inc. PAGE: 1
100 Avenue of the Americas
New York, New York 10013 LEASE #:2380
LESSOR: Charter Financial, Inc.
153 E. 53rd Street, 55th Floor
New York, New York 10022
SCHEDULE "A-10"
- --------------------------------------------------------------------------------
QTY. MODEL #/DESCRIPTION
---- ------------------
Metro Marketing Group, Inc.:
Invoice #003997 2 ADTRAN EXPRESS XRT ISDN MODEM
DataComm Warehouse:
PO #SM4211 1 OP0764 WINDOWS NT WORKSTATION
4.0
2 DCS3096 WINDOWS NT SERVER 4.0
UPGRADE w/5 LICENSES
1 DCS3102 WINDOWS NT SERVER 4.0 20
LISCENSE PACK UPGRADE
SMA VIDEO, INC.
By: /s/
-------------------------
Title: President
----------------------
AD:1-share-dd-sma-video-238OA-10-1pp.sa.doc
AND ALL ADDITIONS, ATTACHMENTS, ACCESSORIES, SUBSTITUTIONS, REPLACEMENTS,
REPAIRS, IMPROVEMENTS, BETTERMENTS AND APPURTENANCES OF WHATEVER DESCRIPTION OR
NATURE WHETHER NOW OWNED OR HEREAFTER ACQUIRED, AND ALL PROCEEDS, INCLUDING
WITHOUT LIMITATION, INSURANCE PROCEEDS.
<PAGE>
LESSOR: The Terminal Marketing Company, Inc., 5 Waverly Court, New City,
N.Y., 10956
================================================================================
LESSEE & LOCATION OF EQUIPMENT SUPPLIER
Name SMA Video Inc. Name
Address 100 Avenue of the Americas, Address
10th Floor
City New York State NY Zip Code 10013 City/ State/ Zip Code
- --------------------------------------------------------------------------------
EQUIPMENT DESCRIPTION
- --------------------------------------------------------------------------------
See equipment list attached
- --------------------------------------------------------------------------------
EQUIPMENT LOCATION, IF OTHER THAN AS ABOVE
- --------------------------------------------------------------------------------
No. of RENTAL PAYMENT AMOUNT FIRST RENTAL PAYMENT
Months Check For This Amount
60 Must Accompany Lease
Application
60 Monthly Payments of $7,789.00 $15,578.00
Plus Sales Tax of $____________ for the first month and
Total $7,789.00 Last 1 Months
Commencement Date:
- --------------------------------------------------------------------------------
1. Lease of Equipment. Lessee agrees to lease from Lessor and, upon acceptance
hereof by Lessor, Lessor agrees to lease to Lessee, the Equipment, for the
period commencing with delivery of the Equipment to Lessee and ending upon the
expiration of the Term. Advance rentals paid by Lessee shall not be refundable
to Lessee in the event the Term does not commence.
2. Disclaimer. LESSEE ACKNOWLEDGES THAT LESSOR HAS NOT PARTICIPATED IN THE
SELECTION OF THE EQUIPMENT AND THAT THE EQUIPMENT IS OF THE TYPE, DESIGN, SIZE,
CAPACITY AND MANUFACTURE SELECTED BY LESSEE. LESSEE ACKNOWLEDGES THAT LESSOR
WILL NOT, AND HAS NO OBLIGATION TO, INSPECT THE EQUIPMENT AND THAT LESSOR HAS
NOT MADE AND WILL NOT MAKE ANY REPRESENTATION, WARRANTY OR COVENANT, EXPRESS OR
IMPLIED ON WHICH LESSEE MAY RELY, WITH RESPECT TO THE MERCHANTABILITY, FITNESS,
SAFETY, CONDITION, QUALITY, DURABILITY OR SUITABILITY FOR LESSEE'S PURPOSES OF
THE EQUIPMENT IN ANY RESPECT, THE EQUIPMENT'S COMPLIANCE WITH ANY LAW, RULE,
SPECIFICATION OR CONTRACT PERTAINING THERETO, OR PATENT INFRINGEMENT, LATENT
DEFECTS, OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT, EXPRESS OR IMPLIED.
LESSEE FURTHER ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER OF, OR MERCHANT OR
DEALER IN, EQUIPMENT OF THE SAME TYPE AS THE EQUIPMENT AND THAT LESSOR HAS NO
DUTY TO ENFORCE ANY WARRANTIES ON BEHALF OF LESSEE. LESSOR SHALL NOT BE LIABLE
TO LESSEE FOR ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED
DIRECTLY OR INDIRECTLY BY THE EQUIPMENT OR BY ANY INADEQUACY THEREOF OR
DEFICIENCY OR DEFECT THEREIN, WHETHER DIRECT, INDIRECT, EXEMPLARY OR PUNITIVE,
WHETHER OR NOT LESSOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
3. Lessee's Representations and Waivers. Lessor shall have no liability for
delay in delivery of the Equipment or for Supplier's failure to deliver the
Equipment or for performance of any other convenant, warranty or representation.
Lessee shall make any claim for breach of warranty or representation solely
against Supplier and shall, nevertheless, pay Lessor all Rent and Lessee hereby
waives any such claims as against Lessor. Lessor hereby assigns to Lessee,
solely for the purpose of making and prosecuting any such claim, all of the
rights which Lessor has against Supplier for breach of warranty or other
representation. Lessee understands and agrees that no salesman or other agent of
Supplier is an agent of Lessor and, therefore, no salesman or agent of Supplier
is authorized to waive or alter any term or condition of this Lease, and no
representation as to the Equipment or any other matter by any salesman or agent
of Supplier shall in any way affect Lessee's duty to pay Rent and perform its
other obligations as set forth in this Lease. Lessee hereby acknowledges receipt
of a copy of this Lease. Lessor agrees to order the Equipment from Supplier upon
the terms and conditions of the purchase order provided by Supplier to Lessee
and attached hereto.
THIS LEASE IS SUBJECT TO THE TERMS AND CONDITIONS PRINTED ON THE REVERSE
SIDE WHICH ARE MADE A PART HEREOF AND WHICH LESSEE ACKNOWLEDGES THAT HE HAS
READ.
---------------------------------------
LEASE NO. 1765 THIS IS A NON-CANCELLABLE
LEASE FOR THE TERM INDICATED ABOVE
ACCEPTED: LESSEE SMA Video Inc.
DATE 6/26 1996
THE UNDERSIGNED AFFIRMS THAT HE IS A
DULY AUTHORIZED CORPORATE OFFICER,
PARTNER OR PROPRIETOR OF THE ABOVE
NAMED LESSEE.
6/26, 1996
LESSOR
By /s/ illegible By /s/ illegible Title President
------------------------------- --------------
Authorized Signature ---------------------------------------
================================================================================
WHITE-ORIGINAL LESSEE'S SIGNATURE IN INK IS REQUIRED
YELLOW-LESSEE COPY ON LEASE COPIES
PINK-LESSOR COPY
<PAGE>
Lessee hereby authorizes Lessor to insert in this Lease the serial numbers and
other identification data of the Equipment. Lessee warrants that the Equipment
leased is for business use only and not for personal or consumer use and is for
the sole use of Lessee and Lessee's employees. Lessee hereby waives a trial by
jury and the right to interpose any counterclaim, offset, defense or setoff of
any nature or description whatsoever in any litigation between Lessee and Lessor
with respect to this Lease.
4. Term; Extensions. This Lease shall continue in effect with respect to each
item of Equipment until the expiration of the Term with respect to such item of
Equipment. Thereafter, this Lease shall continue in effect unless either Party
terminates this Lease upon written notice given not less than three (3) months
prior to the date of termination. This Lease shall not terminate by operation of
law or otherwise during the Term and thereafter shall terminate only as
expressly provided herein.
5. Rent; Net Lease. Rent will be due and payable in advance with respect to each
item of Equipment on the first day of each month, commencing on the Commencement
Date, and shall continue until the return of such item of Equipment by Lessee to
Lessor in accordance with the terms of this Lease, Charges, if any, from the
date of acceptance by Lessee to the Commencement Date shall be at the daily rate
of 1/30th of the monthly Rent and shall be payable in arrears on the
Commencement Date. Lessee acknowledges and agrees that (i) THIS IS A NET LEASE
AND THAT ALL COSTS, EXPENSES AND LIABILITIES IN CONNECTION WITH THE EQUIPMENT
SHALL BE BORNE BY LESSEE, (ii) that Lessee's obligation to pay Lessor all
amounts due hereunder is absolute and unconditional, and (iii) Lessee shall not
be entitled to any abatement, reduction, set-off, counterclaim, defense or
deduction with respect to any Rent or other sum payable hereunder.
6. Maintenance. Lessee shall maintain the Equipment in first class condition in
accordance with manufacturer's specifications. Except as expressly provided
herein, Lessee shall make no repair, alteration, addition or attachment with
respect to the Equipment without the express prior written consent of Lessor,
All repairs, alterations, additions, and attachments shall become part of the
Equipment and shall be the property of Lessor.
7. Location. Lessee shall not change the location of any item of Equipment
without the express prior written consent of Lessor, Lessee's use of the
Equipment shall at all times be in conformity with all applicable laws, all
warranties pertaining to the Equipment and conditions of any insurance policy
covering the Equipment. Lessor shall the right, upon reasonable prior notice to
Lessee and during Lessee's regular business hours, to inspect the Equipment at
the premises of Lessee or wherever the Equipment may be located.
8. Title. All Equipment is and shall remain the property of Lessor at all times
hereunder. At the request of Lessor, Lessee shall execute such further
instruments and documents as shall be requested by Lessor to protect Lessor's
title to the Equipment. Lessee shall affix and shall not remove such plates or
other markings to the Equipment as Lessor shall request to indicate Lessor's
ownership of the Equipment. The Equipment shall at all times remain personal
property and Lessee shall take all such action as shall be necessary to prevent
the Equipment from becoming part of the real property on which it is placed,
including the installation and maintenance of each item of Equipment so that it
may be removed without damage to such real property.
9. Transportation and Installation; Redelivery. Lessee shall pay all
transportation, insurance, packing, installation, site preparation and other
charges in connection with the delivery and installation of the Equipment. At
the expiration of the Term or any extension thereof, Lessee will, at its
expense, deliver the Equipment to any place designated by Lessor within the
continental United States, freight and insurance prepaid by Lessee, in the same
condition as when delivered by Lessee, reasonable wear and tear excepted.
10. Risk of Loss; Insurance. Lessee hereby assumes all risk of the occurrence of
a Casualty Event while the Equipment is in transit, in Lessee's possession or
under Lessee's control. The occurrence of a Casualty Event shall not impair any
obligation of Lessee under this Lease. Lessee shall promptly notify Lessor of
the occurrence of any Casualty Event. Lessee agrees to keep the Equipment
insured to protect all interests of Lessor, at Lessee's expense, against all
Casualty Events for not less than the unpaid balance of the lease rentals due
hereunder or 80% of the then current value of Equipment, whichever is higher and
in addition shall obtain and maintain insurance in an amount reasonable under
the circumstances for public liability and property damage. All such insurance
policies and the proceeds therefrom shall be the sole property of Lessor and
Lessor shall be named as an additional insured and additional loss payee in all
said policies and as sole loss payee in policies insuring the Equipment. The
proceeds of such insurance, whether resulting from loss or damage or return
premium or otherwise shall be applied toward the replacement or repair of the
Equipment or the payment of obligations of Lessee hereunder, at the option of
Lessor. Lessee hereby appoints Lessor as Lessee's attorney-in-fact to make claim
for, receive payment of an execute or endorse all documents, checks or drafts
for loss or damage or return premium under insurance policies issued on the
Equipment. All such policies shall provide that they may be cancelled only after
giving 30 days' prior written notification to Lessor. LESSEE SHALL INDEMNIFY AND
HOLD LESSOR HARMLESS FROM ANY LOSS, CLAIM OR DAMAGE TO PERSONS OR PROPERTY
ARISING OUT OF LESSEE'S USE, POSSESSION OR STORAGE OF THE EQUIPMENT.
11.1 Past Due Payments. If payment of any sum due hereunder is not made within
10 days of the due date, Lessee shall pay to Lessor, as liquidated damages
occasioned by such delay an amount calculated at the rate of 5 percent per month
of such past due balance. All advances made by Lessor to preserve the Equipment
or to pay insurance premiums or to discharge and pay any taxes, assessments,
fees, penalties, liens or encumbrances thereon shall be added to the unpaid
balance of rentals due hereunder and shall be repayable by Lessee to Lessor
immediately.
12. Taxes. Lessee shall keep the Equipment free and clear of all levies, liens,
charges and encumbrances and shall pay all assessments, license fees, taxes
(including sales, use, excise, personal property, ad valoren, stamp, documentary
and other taxes) and all other governmental charges, fees, fines or penalties
whatsoever, whenever levied and whether payable by Lessor on or relating to (i)
the Equipment or the use, registration, rental, shipment, transportation,
delivery, ownership or operation thereof, or (ii) this Lease or the Rent or
other sums payable hereunder and Lessee shall file all returns required therefor
and furnish copies thereof to Lessor. On written request from Lessor, Lessee
agrees to reimburse Lessor for the costs incurred in collecting any taxes,
assessments or fees for which Lessee is liable hereunder and remitting the same
to the appropriate authorities, such reimbursement not to exceed 1% of the
amount of such tax, assessment fee or penalty, or $1.00, whichever is greater.
Lessor such may pay such taxes and other amounts and may file such returns on
behalf of Lessee if Lessee fails to do so as provided herein.
13. Default; Remedies Upon Default. Lessee shall be in default hereunder: (a) if
Lessee fails to pay any sum due hereunder within 10 days after the due date
thereof, (b) if Lessee fails to perform any non-monetary convenant and such
failure continues for 15 days after written notice; (c) if proceedings are
instituted by or against Lessee under any provision of the Federal Bankruptcy
Code, insolvency laws or laws relating to the relief of debtors, readustments,
compositions or extensions or any other or similar law, or if Lessee makes an
assignment for the benefit of creditors, or if a receiver, trustee or custodian
or similar official of Lessee or all or any substantial part of its assets shall
be appointed; (d) if the Equipment or any sum due hereunder becomes subject to
any lien other than those imposed by or with the express prior written consent
of Lessor; (e) if Lessee attempts to assign, sublet, hypothecate, mortgage or
otherwise transfer or grant any security interest in Lessee's rights or interest
under this Lease without the express prior written consent of Lessor; (f) if
Lessee shall default under any loan or credit agreement; or (g) if Lessee's
financial condition shall change such that, in Lessor's opinion, Lessor's
security shall be impaired or Lessor's credit risk shall be increased. In any
such event, Lessor may take, concurrently, any action allowed by law and any one
or more of the following actions: (1) proceed by court action to enforce
performance by Lessee of all provisions hereof and to recover damages for the
breach thereof; (2) accelerate payment of all Rent due hereunder during the
balance of the Term or any extension thereof; (3) enter upon the premises of
Lessee or other premises where the Equipment maybe located and take possession
of the Equipment without notice or legal process and without liability for
trespass or responsibility for loss of or damage to the Equipment or any
property attached thereto; and (4) retain all Rent and other sums paid by lessee
hereunder, as well as all insurance proceeds and other sums, if any, then in its
possession which would otherwise be payable to Lessee. Lessee shall pay all
costs and expenses incurred by Lessor in exercising any of its rights or
remedies under this Lease, including expenses of retaking, holding, preparing
for lease or sale, or leasing and selling of the Equipment, and reasonable
attorneys' fees and legal expenses. Any payment received from Lessee may be
applied by Lessor at any time against any obligation due and owing by Lessee
under this Lease or any Schedule hereto, in Lessor's sole discretion,
notwithstanding any statement appearing on or referred to in any remittance from
Lessee or any prior application of such payment. In the event any bankruptcy
proceedings are instituted by or against Lessee under the Federal Bankruptcy
Code within 90 days after receipt by Lessor of any such payment, such payment
shall be deemed applicable to unpaid obligations then due hereunder in the
inverse order of maturity.
14. Assignment by Lessor. This Lease may be assigned by Lessor without notice to
Lessee, in which event the assignee shall be entitled to exercise all rights and
powers, but shall not be chargeable with any obligations or liabilities, of
Lessor hereunder and all reference hereunder and all references herein to Lessor
shall refer, instead, to such assignee. Lessor, or Lessor's assignee, may also
grant a security interest in the Equipment and this Lease. THE ASSIGNEE'S RIGHTS
OR THE RIGHTS OF THE HOLDER OF A SECURITY INTEREST IN THIS LEASE SHALL BE FREE
FROM ALL DEFENSES, SETOFFS OR COUNTERCLAIMS WHICH LESSEE MAY BE ENTITLED TO
ASSERT.
15. Further Assurances. Lessee agrees to deliver to Lessor, its successors and
assigns, upon request of Lessor, such certificates, acknowledgements, consents,
financing statements, opinions of counsel and any other instruments, all in form
and substance satisfactory to Lessor, which Lessor may, in its sole discretion,
determine to be necessary or proper to confirm any or all of the representations
and agreements made by Lessee hereunder or to facilitate the assignment by
Lessor of its right, title and interest in an to the Equipment, this Lease or
the Rent. Where allowed by law, Lessor may execute and file any financing
statements on behalf of Lessee.
16. Notices. All notices and consents shall be in writing and shall be deemed
given when mailed, postage prepaid, to the address of the Party to whom intended
set forth on the face of this Lease or to such other address as such Party shall
have designated by notice in writing to the other Party.
17. Choice of Law. This Lease shall be deemed to have been made in Rockland
County, New York and shall be governed by the laws of the State of New York.
Lessee hereby agrees that all actions or proceedings arising directly or
indirectly from this Lease shall be maintained only in courts within the State
of New York, and Lessee hereby consents that all service of process may be made
by certified or registered mail, return receipt requested, directed to Lessee at
the address as set forth on the face of this Lease. Service so made shall be
complete two (2) days after the same shall have been posted.
18. Miscellaneous. This Lease constitutes the entire agreement among the Parties
and may not be changed or cancelled orally, but only in writing, signed by the
Party to be charged. This Lease shall be binding on the successors and assigns
of the Parties. The invalidity or unenforceability of any provision of this
Lease shall not affect the validity or enforceability or any other provision
hereof. The failure of Lessor to enforce performance by Lessee of any obligation
hereunder shall not constitute a waiver of Lessor's right to thereafter enforce
such performance.
19. Definitions.
"Casualty Event" - damage, destruction, loss theft, seizure, taking by
eminent domain or similar event with respect to the Equipment.
"Commencement Date" - with respect to each item of Equipment, the date
specified on the face of this Lease as the "Commencement Date".
"Equipment" - those items of equipment described on the face of this Lease
and in any Schedules.
"Lessee" - the corporation, partnership or individual so designated on the
face of this Lease.
"Leasor"
"Party" - Lessor or Lessee.
"Rent" - the monthly charge set forth on the face of this Lease, or any
Schedule, payable by Lessee to Lessor for the use of the Equipment during
the Term and all extensions thereof.
"Schedules" - those pages annexed to this Lease and designated "Schedules".
"Supplier" - the manufacturer or distributor of the Equipment so designated
on the face of this Lease.
"Term" - with respect to each item of Equipment, the period commencing on
the Commencement Date and ending on the last day of the month which is the
number of months specified on the face of this lease.
<PAGE>
Equipment List for Lease #1765, between SMA Video Inc. as Lessee and
The Terminal Marketing Company, Inc. as Lessor, dated June 26, 1996
1 HAL Express (7 1/2 minutes)
1 Annual Remote Diagnostics
5 days HAL Training In-House
1 Picturenet Plus Option
BY /s/ Michael J. Morrissey
-------------------------------
<PAGE>
LESSOR The Terminal Marketing Company, Inc., 5 Waverly Court, New City,
N.Y., 10956
================================================================================
LESSEE & LOCATION OF EQUIPMENT SUPPLIER
Name SMA Video Inc. Name
Address 100 Avenue of the Americas, Address
10th Floor
City New York State NY Zip Code 10013 City/ State/ Zip Code
- --------------------------------------------------------------------------------
EQUIPMENT DESCRIPTION
- --------------------------------------------------------------------------------
See equipment list attached
- --------------------------------------------------------------------------------
EQUIPMENT LOCATION, IF OTHER THAN AS ABOVE
- --------------------------------------------------------------------------------
No. of RENTAL PAYMENT AMOUNT FIRST RENTAL PAYMENT
Months Check For This Amount
60 Must Accompany Lease
Application
60 Monthly Payments of $7,789.00 $15,578.00
Plus Sales Tax of $____________ for the first month and
Total $7,789.00 Last 1 Months
Commencement Date: ______________
- --------------------------------------------------------------------------------
1. Lease of Equipment. Lessee agrees to lease from Lessor and, upon acceptance
hereof by Lessor, Lessor agrees to lease to Lessee, the Equipment, for the
period commencing with delivery of the Equipment to Lessee and ending upon the
expiration of the Term. Advance rentals paid by Lessee shall not be refundable
to Lessee in the event the Term does not commence.
2. Disclaimer. LESSEE ACKNOWLEDGES THAT LESSOR HAS NOT PARTICIPATED IN THE
SELECTION OF THE EQUIPMENT AND THAT THE EQUIPMENT IS OF THE TYPE, DESIGN, SIZE,
CAPACITY AND MANUFACTURE SELECTED BY LESSEE. LESSEE ACKNOWLEDGES THAT LESSOR
WILL NOT, AND HAS NO OBLIGATION TO, INSPECT THE EQUIPMENT AND THAT LESSOR HAS
NOT MADE AND WILL NOT MAKE ANY REPRESENTATION, WARRANTY OR COVENANT, EXPRESS OR
IMPLIED ON WHICH LESSEE MAY RELY, WITH RESPECT TO THE MERCHANTABILITY, FITNESS,
SAFETY, CONDITION, QUALITY, DURABILITY OR SUITABILITY FOR LESSEE'S PURPOSES OF
THE EQUIPMENT IN ANY RESPECT, THE EQUIPMENT'S COMPLIANCE WITH ANY LAW, RULE,
SPECIFICATION OR CONTRACT PERTAINING THERETO, OR PATENT INFRINGEMENT, LATENT
DEFECTS, OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT, EXPRESS OR IMPLIED.
LESSEE FURTHER ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER OF, OR MERCHANT OR
DEALER IN, EQUIPMENT OF THE SAME TYPE AS THE EQUIPMENT AND THAT LESSOR HAS NO
DUTY TO ENFORCE ANY WARRANTIES ON BEHALF OF LESSEE. LESSOR SHALL NOT BE LIABLE
TO LESSEE FOR ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED
DIRECTLY OR INDIRECTLY BY THE EQUIPMENT OR BY ANY INADEQUACY THEREOF OR
DEFICIENCY OR DEFECT THEREIN, WHETHER DIRECT, INDIRECT, EXEMPLARY OR PUNITIVE,
WHETHER OR NOT LESSOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
3. Lessee's Representations and Waivers. Lessor shall have no liability for
delay in delivery of the Equipment or for Supplier's failure to deliver the
Equipment or for performance of any other convenant, warranty or representation.
Lessee shall make any claim for breach of warranty or representation solely
against Supplier and shall, nevertheless, pay Lessor all Rent and Lessee hereby
waives any such claims as against Lessor. Lessor hereby assigns to Lessee,
solely for the purpose of making and prosecuting any such claim, all of the
rights which Lessor has against Supplier for breach of warranty or other
representation. Lessee understands and agrees that no salesman or other agent of
Supplier is an agent of Lessor and, therefore, no salesman or agent of Supplier
is authorized to waive or alter any term or condition of this Lease, and no
representation as to the Equipment or any other matter by any salesman or agent
of Supplier shall in any way affect Lessee's duty to pay Rent and perform its
other obligations as set forth in this Lease. Lessee hereby acknowledges receipt
of a copy of this Lease. Lessor agrees to order the Equipment from Supplier upon
the terms and conditions of the purchase order provided by Supplier to Lessee
and attached hereto.
THIS LEASE IS SUBJECT TO THE TERMS AND CONDITIONS PRINTED ON THE REVERSE
SIDE WHICH ARE MADE A PART HEREOF AND WHICH LESSEE ACKNOWLEDGES THAT HE HAS
READ.
---------------------------------------
LEASE NO. 1765 THIS IS A NON-CANCELLABLE
LEASE FOR THE TERM INDICATED ABOVE
ACCEPTED: LESSEE SMA Video Inc.
DATE 6/26 1996
THE UNDERSIGNED AFFIRMS THAT HE IS A
DULY AUTHORIZED CORPORATE OFFICER,
PARTNER OR PROPRIETOR OF THE ABOVE
NAMED LESSEE.
6/26, 1996
LESSOR
By /s/ illegible By /s/ Michael J. Morrissey Title President
--------------------------- ------------------------
Authorized Signature
================================================================================
WHITE-ORIGINAL LESSEE'S SIGNATURE IN INK IS REQUIRED
YELLOW-LESSEE COPY ON LEASE COPIES
PINK-LESSOR COPY
<PAGE>
CORPORATE CERTIFICATE
THE UNDERSIGNED DOES HEREBY CERTIFY THAT (a) I am the duly elected Secretary of
SMA Video Inc. a corporation duly organized and validly existing under the laws
of the State of New York ("Lessee"), and that as such officer I have access to
the original books and records of the Corporation and am authorized to make and
deliver this certificate; (b) the officers named below have been duly appointed
to, and currently hold, the offices of the Corporation set forth opposite their
respective names; and (c) at a duly constituted meeting of the Board of
Directors of Lessee each of said officers was duly empowered and authorized in
and for the Corporation to execute and deliver that certain Lease Agreement with
THE TERMINAL MARKETING COMPANY, INC. dated June 26, 1996 and any other
document(s) deemed necessary or desirable in connection therewith, the execution
and delivery of such documents being conclusive evidence thereof:
NAME TITLE
Michael J. Morrissey President
David J. Satin Secretary
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said
corporation on the date set forth below.
Corporate Seal
/s/ David J. Satin
----------------------------------
David J. Satin Secretary
6/26/96
----------------------------------
Date
<PAGE>
CORPORATE CERTIFICATE
THE UNDERSIGNED DOES HEREBY CERTIFY THAT (a) I am the duly elected Secretary of
S.M.A. Real Time Inc. a corporation duly organized and validly existing under
the laws of the State of New York ("Lessee"), and that as such officer I have
access to the original books and records of the Corporation and am authorized to
make and deliver this certificate; (b) the officers named below have been duly
appointed to, and currently hold, the offices of the Corporation set forth
opposite their respective names; and (c) at a duly constituted meeting of the
Board of Directors of Lessee each of said officers was duly empowered and
authorized in and for the Corporation to execute and deliver that certain Lease
Agreement with THE TERMINAL MARKETING COMPANY, INC. dated June 26, 1996 and any
other document(s) deemed necessary or desirable in connection therewith, the
execution and delivery of such documents being conclusive evidence thereof:
NAME TITLE
Michael J. Morrissey President
David J. Satin Secretary
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said
corporation on the date set forth below.
Corporate Seal
/s/ David J. Satin
----------------------------------
David J. Satin Secretary
6/26/96
----------------------------------
Date
<PAGE>
GUARANTY
To induce The Terminal Marketing Company, Inc., as lessor ("Lessor"), to enter
into and accept a lease (the "Lease"), with SMA Video Inc. ("Lessee") and for
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned hereby jointly, severally, and unconditionally
guarantee to Lessor, its successors and assigns, the prompt and due payment and
performance by Lessee of all of Lessee's obligations pursuant to the Lease and
all other documents and agreements entered into by Lessee in connection
therewith (the "Obligations"). Notice of acceptance of this guaranty, as well as
all demands, presentments and notices of every kind and nature are hereby waived
by the undersigned. Upon any default by Lessee, Lessor may proceed directly and
immediately, without notice, against any or all of the undersigned to enforce
all rights and remedies against the undersigned, without proceeding against
Lessee or any other person and without exercising any other rights which Lessor
might then possess. The undersigned hereby waive (i) the right to require Lessor
to proceed against Lessee or to pursue any other remedy prior to proceeding
against the undersigned, and (ii) any right to the benefit of any modification
of the Obligations which occur as the result of any bankruptcy or insolvency of
Lessee. The undersigned assume the responsibility for keeping informed of the
financial condition and circumstances of Lessee, and Lessor shall have no duty
to advise the undersigned of information known to it regarding such condition or
circumstances. The undersigned hereby agree, without demand, immediately to
reimburse Lessor for all costs and expenses including reasonable attorney's fees
incurred in the enforcement of this guaranty. This guaranty shall be constrained
in accordance with the laws of the State of New York or any Federal court in
such state in any action related to this guaranty. In any such action the
undersigned waives personal service of any summons and complaint and agrees that
service may be made by certified or registered mail at the address set forth
below.
Dated: June 26, 1996
/s/ Michael J. Morrissey
- -------------------------------
Signature
Name: S.M.A. Real Time Inc
Address: 100 Avenue of the Americas, 10th Floor
New York, New York 10013
/s/ illegible
---------------------------------------
Witness
<PAGE>
GUARANTY
To induce The Terminal Marketing Company, Inc., as lessor ("Lessor"), to enter
into and accept a lease (the "Lease"), with SMA Video Inc. ("Lessee") and for
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned hereby jointly, severally, and unconditionally
guarantee to Lessor, its successors and assigns, the prompt and due payment and
performance by Lessee of all of Lessee's obligations pursuant to the Lease and
all other documents and agreements entered into by Lessee in connection
therewith (the "Obligations"). Notice of acceptance of this guaranty, as well as
all demands, presentments and notices of every kind and nature are hereby waived
by the undersigned. Upon any default by Lessee, Lessor may proceed directly and
immediately, without notice, against any or all of the undersigned to enforce
all rights and remedies against the undersigned, without proceeding against
Lessee or any other person and without exercising any other rights which Lessor
might then possess. The undersigned hereby waive (i) the right to require Lessor
to proceed against Lessee or to pursue any other remedy prior to proceeding
against the undersigned, and (ii) any right to the benefit of any modification
of the Obligations which occur as the result of any bankruptcy or insolvency of
Lessee. The undersigned assume the responsibility for keeping informed of the
financial condition and circumstances of Lessee, and Lessor shall have no duty
to advise the undersigned of information known to it regarding such condition or
circumstances. The undersigned hereby agree, without demand, immediately to
reimburse Lessor for all costs and expenses including reasonable attorney's fees
incurred in the enforcement of this guaranty. This guaranty shall be constrained
in accordance with the laws of the State of New York or any Federal court in
such state in any action related to this guaranty. In any such action the
undersigned waives personal service of any summons and complaint and agrees that
service may be made by certified or registered mail at the address set forth
below.
Dated: June 26, 1996
/s/ David J. Satin
- -------------------------------------
Signature
Name: David J. Satin
Address: 401 East 34th Street
New York, New York 10016
/s/ illegible
-------------------------------------
Witness
<PAGE>
GUARANTY
To induce The Terminal Marketing Company, Inc., as lessor ("Lessor"), to enter
into and accept a lease (the "Lease"), with SMA Video Inc. ("Lessee") and for
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned hereby jointly, severally, and unconditionally
guarantee to Lessor, its successors and assigns, the prompt and due payment and
performance by Lessee of all of Lessee's obligations pursuant to the Lease and
all other documents and agreements entered into by Lessee in connection
therewith (the "Obligations"). Notice of acceptance of this guaranty, as well as
all demands, presentments and notices of every kind and nature are hereby waived
by the undersigned. Upon any default by Lessee, Lessor may proceed directly and
immediately, without notice, against any or all of the undersigned to enforce
all rights and remedies against the undersigned, without proceeding against
Lessee or any other person and without exercising any other rights which Lessor
might then possess. The undersigned hereby waive (i) the right to require Lessor
to proceed against Lessee or to pursue any other remedy prior to proceeding
against the undersigned, and (ii) any right to the benefit of any modification
of the Obligations which occur as the result of any bankruptcy or insolvency of
Lessee. The undersigned assume the responsibility for keeping informed of the
financial condition and circumstances of Lessee, and Lessor shall have no duty
to advise the undersigned of information known to it regarding such condition or
circumstances. The undersigned hereby agree, without demand, immediately to
reimburse Lessor for all costs and expenses including reasonable attorney's fees
incurred in the enforcement of this guaranty. This guaranty shall be constrained
in accordance with the laws of the State of New York or any Federal court in
such state in any action related to this guaranty. In any such action the
undersigned waives personal service of any summons and complaint and agrees that
service may be made by certified or registered mail at the address set forth
below.
Dated: 6/26, 1996
/s/ Michael J. Morrissey
- -------------------------------------
Signature
Name Michael J. Morrissey
Address 161 Ludlow Street
New York, New York 10003
/s/ illegible
------------------------------------
Witness
<PAGE>
CONSENT OF STOCKHOLDERS TO GUARANTY
The undersigned, being all of the stockholders of
S.M.A. Real Time Inc.
a New York corporation of 100 Avenue of the Americas, 10th Floor
New York, New York 10013
do hereby consent that said corporation execute and deliver to THE TERMINAL
MARKETING COMPANY, INC., its guaranty of payment of the debts and obligations
now and hereafter incurred by
SMA Video Inc.
a New York corporation of 100 Avenue of the Americas, 10th Floor
New York, New York 10013
said guaranty to be in such form and to contain such provisions as the Officer
executing the same may deem properly advisable, and do further consent that the
Board of Directors and the officers of this corporation do and they hereby are
empowered and authorized to do all things necessary to carry this consent into
effect.
DATED: this 26th day of June 1996
/s/ Michael J. Morrissey /s/ David J. Satin
- --------------------------------- -----------------------------
Michael J. Morrissey (Stockholder) David J. Satin (Stockholder)
CERTIFICATE OF SECRETARY
The undersigned Secretary of this corporation mentioned in the foregoing
stockholders consent and custodian of its stock books, DOES HEREBY CERTIFY:
That, according to the books of said corporation, the persons who have executed
the foregoing consent were at the time of execution the same and now are the
owners upon the books of said corporation of all of the outstanding shares of
the capital stock of said corporation.
IN WITNESS WHEREOF, I have signed and sealed this certificate the 26th day of
June 1996
CORPORATE SEAL
/s/ David J. Satin
-----------------------------------
David J. Satin, Secretary
/s/ illegible
-----------------------------------
Witness
<PAGE>
THE TERMINAL MARKETING COMPANY, INC.
5 Waverly Court, New City, New York 10956
tel: (914)634-7600 fax: (914)634-7813
Gentlemen:
Provided you have complied with all of the terms of the Lease between us to be
dated as of June 26, 1996 and each and every schedule thereto with respect to
each item of equipment (as defined in the Lease) and such Lease is still in
effect, after all payments have been made you may buy such equipment from us.
The purchase price shall be $100.00 at the time you buy.
This agreement shall become effective upon execution and delivery of the Lease.
If this agreement sets forth our mutual understanding, would you please sign and
return a copy thereof.
Very truly yours, Agreed and Accepted:
The Terminal Marketing Company, Inc. SMA Video Inc.
BY: /s/ illegible BY: /s/ Michael J. Morrissey
--------------------------------- -------------------------------
<PAGE>
3. [ ] The Debtor is a
transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s)(Last Name 2. Secured Party(ies) 4. For Filing Officer: Date,
First) and Name(s) and Time, No. Filing Office
Address(es): and Address(es)
SMA Video Inc. The Terminal Marketing
100 Avenue of the Company, Inc.
Americas 5 Waverly Court
10th Floor New City, N.Y. 10956
New York, New York 10013
- --------------------------------------------------------------------------------
5. This Financing Statement covers the 6. Assignee(s) of Secured
following types (or items) of property: Party and Address(es)
See equipment list attached
[ ]Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
7. [ ]The described crops are growing
or to be grown on.*
[ ]The described goods are or are
to be affixed to.*
[ ]The lumber to be cut or minerals
or the like (including oil and
gas) is on.
*(Describe Real Estate Below)
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: [ ] This statement is to be indexed
in the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
[ ]under a security agreement signed by debtor authorizing secured party to
file this statement, or
[ ]which is proceeds of the original collateral described above in which a
security interest was perfected, or
[ ]acquired after a change of name, identity or corporate structure of the
debtor, or [ ] as to which the filing has lapsed, or already subject to a
security interest in another jurisdiction:
[ ]when the collateral was brought into the state, or
[ ]when the debtor's location was changed to this state.
SMA Video Inc. The Terminal Marketing Company, Inc.
- --------------------------------- --------------------------------------
By /s/ Michael J. Morrissey By /s/ illegible
------------------------------ -----------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) FILING OFFICER COPY - NUMERICAL
STANDARD FORM - FORM UCC-1 - APPROVED BY SECRETARY OF STATE OF NEW YORK
<PAGE>
LOAN AND SECURITY AGREEMENT
---------------------------
(EQUIPMENT)
-----------
Loan No.: SMA0001
Loan Date: 09/12/96
Loan and Security Agreement entered into as of the 12th day of September, 1996
(the "Agreement") by and between INDEPENDENT RESOURCES, INC. a New York
corporation with its principal offices at 43 West Street, Litchfield Connecticut
06759 ("Lender") and SMA Video, Inc. a New York Corporation with its principal
office at 100 Avenue of the Americas, 10th Floor, New York, New York 10013
("Borrower").
WHEREAS, Borrower desires to obtain a secured loan from Lender to
finance its acquisition of equipment (and/or to refinance existing
equipment); and
WHEREAS, Lender is agreeable to making a secured loan to Borrower on
the terms and conditions contained in this Loan and Security Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the
parties' mutual agreements below set forth, Borrower and Lender agree
as follows:
1. THE LOAN AND LOAN REPAYMENT. As requested by Borrower, Lender agrees
to lend to Borrower the sum of Nine Hundred Ninety-five Thousand Dollars
($995,000.00) ("Loan"). Borrower agrees to repay the Loan in successive
installments (which installment payments are inclusive of interest) as set forth
in the following Schedule:
SCHEDULE
- --------------------------------------------------------------------------------
NUMBER OF INSTALLMENTS
(Exclusive of Advance PERIODIC INSTALLMENT PAYMENT
ADVANCE PAYMENT Payment) AND PAYMENT PERIOD AMOUNT PER PERIOD
- --------------------------------------------------------------------------------
$0.00 Five (5) Monthly Payment $4,641.75, followed by
Fifty-nine (59) Monthly $20,868.96
Payments
- --------------------------------------------------------------------------------
Commencement Date: _____________________ Security Deposit (if any): N/A
Equipment Location (if other than above address of Borrower): N/A
Equipment: See Schedule A attached hereto and made a part hereof
Special Provisions (if any): N/A
The Advance Payment, if any, shall be due and payable upon execution of
this Agreement. The first periodic installment payment (after excluding the
Advance Payment, if any) shall be due on the first (1st) day of the month
following the advance of the Loan proceeds by Lender and Borrower authorizes
Lender to insert such date above as the Commencement Date. The remaining
periodic installment payments shall be due and payable on the same day of each
successive month (or quarter, if quarterly payments are provided for above).
However, the parties may select another Commencement date by noting the same in
the above Special Provisions section or by a separate writing signed by Lender
and Borrower in which case the first periodic installment payment shall be due
on such date. Unless otherwise specifically provided for in this Agreement, the
Loan may not be prepaid.
2. UNCONDITIONAL OBLIGATION TO PAY, LATE PAYMENTS, ETC. All payments
due hereunder shall be paid to Lender or its assigns without notice or demand
and without abatement, offset, defense or counterclaim, at Lender's principal
office shown above, or such other place as Lender or its assignee may designate
in writing to Borrower. Borrower's obligation to pay the installments and other
payments due hereunder shall be absolute and unconditional and shall not be
affected by reason of (i) any defect in, lack of fitness for use of, damage to,
loss of possession or use of or destruction or, all or any of the Equipment (as
defined below) securing borrower's obligations, (ii) the prohibition or other
restriction against Borrower's use of said Equipment or (iii) for any other
cause, it being the agreement of the parties that the Loan and any other amount
payable by Borrower hereunder shall continue to be payable in all events in the
manner and at the times provided in this Agreement.
The Loan shall become immediately due and payable in its entirely upon
the occurrence of any Event of Default (as defined below). If any periodic
installment payment or other payment is more than Five (5) days late, Lender
may, at its election, and subject to prior exercise of its right of
acceleration, accept the payment in arrears and Borrower shall pay, as
liquidated damages, a late charge equal to two (2%) percent per month on each
defaulted payment from the due date thereof. In no event shall any amount
payable to Lender as interest, including any sum held by a Court of competent
jurisdiction to be "interest" under applicable law, exceed, with respect to any
period of time, the highest rate of interest permitted by applicable law. Any
amount received by lender determined to be in excess of the highest rate of
interest receivable by Lender, shall be refunded to Borrower.
3. SECURITY INTEREST. To secure payment when due (at maturity, by
acceleration or otherwise) of the Loan, any interim fundings against the Loan
and any additional or future advances, renewals, extensions and replacements
thereto and any and all other present and future obligations of Borrower to
Lender, whether direct or contingent or joint and several, Borrower hereby
conveys, assigns, and grants to lender a continuing security interest in and to
(i) the equipment described in the annexed Schedule A including all present and
future additions, attachments, replacements, accessions and accessories thereto
(the "Equipment"), and all substitutions and proceeds thereof including all
proceeds of insurance thereon, and (ii) all equipment, inventory, accounts,
receivables, goods and assets of any and every kind, including, but not limited
to, all items or intangible properly, wherever located, now or hereafter
belonging to Borrower or in which Borrower has any interest, and all proceeds of
the foregoing including insurance proceeds; all of the above, collectively, the
"Collateral".
BORROWER GRANTS LENDER THE AUTHORITY TO FILE THIS AGREEMENT OR A
CARBON, PHOTOGRAPHIC OR OTHER REPRODUCTION THEREOF AS A FINANCING STATEMENT
UNDER THE UNIFORM COMMERCIAL CODE WITH RESPECT TO ALL SECURITY INTERESTS CREATED
HEREBY.
4. FINANCING AGREEMENT. THIS AGREEMENT IS SOLELY A FINANCING
AGREEMENT. BORROWER ACKNOWLEDGES THAT THE EQUIPMENT HAS BEEN OR WILL BE SELECTED
AND ACQUIRED SOLELY BY BORROWER AND THAT LENDER HAS NOT AND DOES NOT MAKE ANY
WARRANTY WITH RESPECT TO ITS CONDITION, MERCHANTABILITY, SUITABILITY, CAPACITY
OR FITNESS FOR ANY PARTICULAR PURPOSE.
5. REPRESENTATIONS AND WARRANTIES. Borrower warrants, represents and
agrees as follows (i) Borrower has full power and authority to execute, deliver
and perform its obligations under this Agreement; (ii) the execution and
delivery of this Agreement has been authorized by all requisite corporate (or
partnership) action; (iii) the execution, delivery and performance of this
Agreement do not and will not constitute a breach, default or violation of or
under Borrower's articles of incorporation, by laws (partnership agreement) or
any other agreement, law, order, lease, judgment or injunction to which it is a
party or may be bound; (iv) the Equipment is (or, on the Commencement Date, will
be) lawfully owned by Borrower, free and clear of all liens, encumbrances and
security interests and Borrower will warrant and defend title thereto against
all claims; (v) Borrower has not granted and will not grant to any one other
than Lender a security interest in the equipment and no Financing Statement or
other instrument affecting the Equipment nor rights therein, bearing the
signature of, or otherwise authorized by, Borrower is on File in any public
office; (vi) the Equipment shall at all times remain personal properly and be
retained in Borrower's possession at its principal address set forth above (or,
if so indicated, at the Equipment Location set forth above), (vii) the Equipment
shall be used for business purposes; and (viii) if the Equipment is attached to
real estate or if it is or may become subject to a prior interest in favor of a
party having any interest in the real estate. Borrower will, on Lender's
demand, furnish Lender with a writing by which any and all parties having such
prior interest waive or subordinate their rights and priorities to, or in favor
of, Lender's security interest provided herein.
6. INSURANCE. Borrower shall, at its sole cost and expense, procure and
maintain, so long as Borrower is indebted to Lender on the Loan or on any other
liability (i) insurance insuring the Equipment against all risks of physical
loss, theft, damage and destruction with extended coverage in an amount equal to
the greater of (a) the amount of the Loan or (b) the full replacement value
(new) of the Equipment with loss payable solely to Lender (and its assigns) and
Borrower as their interests may appear and (ii) personal injury liability and
property damage insurance with respect to the Equipment and the use thereof in
such amounts as may be reasonably acceptable to Lender, and naming Lender (and
its assigns) as additional insured. All insurers and coverages must be
reasonably satisfactory to Lender. Borrower shall deposit said policy or
policies or duplicates thereof or certificates of insurance with lender and said
policies shall provide satisfactory to Lender. Borrower shall deposit said
policy or policies or duplicates thereof or certificates of insurance with
Lender and said policies shall provide that the policies may not be canceled or
altered without at least thirty (30) days prior notice to Lender and that the
coverage shall not be invalidated against Lender because of any violation of any
condition or warranty contained in any policy or application therefor by
Borrower or by reason of any action or inaction of Borrower.
7. USE. REPAIRS, LOSS AND DAMAGE. Borrower agrees to maintain the
Equipment in good condition and repair and in accordance with the manufacturer's
instructions, manuals and warranties (if any), and the requirements of any
applicable insurance and any governmental authority having jurisdiction.
Borrower shall pay for all fuel, service, inspection, overhaul, replacements,
substitutions, materials and labor necessary or desirable for the proper use,
repair, operation and maintenance of the Equipment. All risks of loss, theft,
damage or destruction of the Equipment shall be borne by Borrower and Borrower
shall promptly notify Lender in writing of any such loss, theft, damage or
destruction. In the event of any damage to the Equipment (unless the same is
damaged beyond repair) Borrower shall, at its expense, place the same in good
repair, condition and working order. If the Equipment is determined by Lender to
be lost, stolen or damaged beyond repair, or should the Equipment be
confiscated, seized or the use and title thereof requisitioned to someone other
than Borrower, Borrower shall immediately pay to Lender, in addition to unpaid
periodic installment payments on the Loan, other unpaid sums due hereunder and
late charges then past due, an amount equal to the then remaining periodic
installment payments due on the Loan discounted to present value at the rate of
six (6%) percent per annum, less the net amount of the recovery, if any,
actually received by Lender from insurance on the Equipment.
TERMS AND CONDITIONS OF LOAN AND SECURITY AGREEMENT CONTINUED ON REVERSE SIDE
<TABLE>
<S> <C>
Accepted at Lender's Office at Litchfield, Connecticut The undersigned signatory affirms that he/she has read tile terms and
conditions printed above and on the reverse side, that he/she is a duty
authorized officer, partner or proprietor of the Borrower, and has
authority to execute this Loan and Security Agreement on its behalf.
LENDER: BORROWER:
INDEPENDENT RESOURCES, INC.
SMA VIDEO, INC.
AUTHORIZED OFFICER: AUTHORIZED OFFICER, PARTNER OR PROPRIETOR:
BY: /s/ John McCarthy FP BY: /s/ Illegible
TITLE President
</TABLE>
(1)
<PAGE>
TERMS AND CONDITIONS OF LOAN AND SECURITY AGREEMENT (CONTINUED)
8. TAXES AND OTHER CHARGES. Borrower agrees to pay promp and sales,
use, gross receipts, ad valorum, property and any and all other taxes imposed by
any State, Federal, local or foreign government upon this Agreement or upon the
ownership, shipment, delivery, use or operation of the Equipment or any
Collateral or upon or measured by any payments due hereunder (other than taxes
on or measured solely by the net income of Lender) and any fines, penalties and
interest thereon.
9. BORROWER'S ADDITIONAL COVENANTS. Borrower hereby agrees and
covenants as follows: (i) except for the security interest granted hereby,
Borrower shall keep the Equipment free and clear of any security interest, lien
or encumbrance and shall not sell, lease, assign (by operation of law or
otherwise), exchange or otherwise dispose of any of the Equipment, (ii) at the
request of the Lender in execution of one or more Financing Statements and
continuation statements pursuant to the Uniform Commercial code to establish and
maintain its security interest in the Collateral, in form satisfactory to
Lender, and will pay any filing fees and/or costs with respect thereto and for
lien searches; (iii) Borrower authorizes Lender to file one or more Financing
Statements covering the Collateral without Borrower's signature thereto; (iv)
Borrower will immediately notify Lender in writing of any change in its place(s)
of business or the adoption or change of any trade name or fictitious business
names and will execute any additional Financing Statements as Lender may request
to perfect and maintain its security interest, but such notice shall not be
deemed an authorization to move the Collateral without the prior written consent
of Lender; (vi) Borrower will allow Lender and its representatives free access
to the Collateral at all times during normal business hours, for purposes of
inspection and repair and, following an Event of Default, lender shall have the
right to demonstrate and show the Collateral to others and (vii) Borrower will
furnish to Lender (and will cause any guarantor of Borrower's obligations
hereunder to furnish to Lender) (a) its unaudited quarterly Financial Statements
within thirty (30) days after the end of its first three quarters in each fiscal
year, (b) its certified Financial Statement prepared by an independent certified
public accountant within ninety (90) days after the close of its fiscal year
which shall be prepared in accordance with generally accepted accounting
principles and (c) all other financial information and reports that Lender may
from time to time reasonably request, including income tax returns of Borrower
and any guarantor of Borrower's obligations hereunder.
10. BORROWER'S FAILURE TO PAY TAXES, INSURANCE, ETC. Should Borrower
fail to make any payment or do any act as herein provided (including, but not
limited to, payment of taxes or for insurance). Lender shall have the right, but
not the obligation, and without releasing Borrower from any obligation
hereunder, to make or do the same, and to pay any sum due in connection
therewith or to contest or compromise any encumbrance, charge or lien and in
exercising any such rights, incur any liability and expend whatever amounts in
this absolute discretion it may deem necessary therefor. All sums so incurred or
expended by lender shall be payable by Borrower on demand with interest at the
rate of two (2%) percent per month.
11. CROSS COLLATERALIZATION. Without in any way limited the provisions
of Section 3, as additional collateral security for the Borrowers' obligations
hereunder, Borrower grants to Lender a further security interest in all
machinery, equipment, goods and other collateral covered by any other Loan and
Security Agreement, note and security agreement, other agreement or lease
(collectively the "other agreements") between Borrower and Lender whether such
other agreements are now in existence or hereafter come into existence and
Borrower assigns to Lender as security for its obligations hereunder, all of its
rights, title and interest in and to any surplus money to which Borrower may be
entitled upon the sale of the machinery, equipment, goods and other collateral
covered by such other agreements. Anything above to the contrary notwithstanding
the benefit of the foregoing cross collateralization shall apply for the benefit
of Lender and its assignee holding this Agreement only to the extent that Lender
or such assignee is also the holder of such other agreements or one or more of
them.
12. INDEMNITY. Borrower assumes liability for and agrees to indemnify,
defend, protect, save and keep harmless Lender from and against costs, expenses
and disbursements, including court costs and legal expenses, of whatever kind
and nature, imposed on, incurred by or asserted against Lender (whether or not
also indemnified against by any other person) in any way relating to or arising
out of this Agreement or the manufacture, financing, ownership, delivery,
possession, use, operation, condition or disposition of the Equipment by
Borrower, including, without limitation, any claim alleging latent and other
defects, whether or not discoverable by Lender or Borrower, and any other claim
arising out of strict liability in tort, whether or not in either instance
relating to an event occurring while Borrower remains obligated under this
Agreement, and any claim for patent, trademark or copyright infringement. Each
party agrees to give the other notice of any claim or liability hereby
indemnified against promptly following learning thereof. The fact that a claim
for which Lender is entitled to indemnity under this Section is asserted after
the termination of this Agreement shall not release Borrower from its indemnity
obligations and this covenant of indemnity shall survive the termination of this
Agreement.
13. DEFAULT. The occurrence of any one of the following shall
constitute an Event of Default hereunder: (i) Borrower fails to pay any periodic
installment payment or other amount due hereunder on or before the fifth (5th)
day following the date when the same becomes due and payable; (ii) Borrower
removes, sells, transfers, encumbers, or parts with possession of the Equipment
or any items thereof or attempts to do any of the foregoing; (iii) Borrower
fails to maintain in force the required insurance on the Equipment in compliance
herewith or fails to provide loss payable protection to lender in form
satisfactory to Lender; (iv) any representation or warranty made by Borrower
herein or in any other agreement between the parties or in any statement given
to Lender shall be materially untrue; (v) Borrower shall fail to observe or
perform any of the obligations required to be observed or performed by Borrower
hereunder, or other obligation or indebtedness of Borrower to Lender otherwise
owing or due by Borrower to Lender in any other agreement now or hereafter
executed between the parties hereto, and such failure shall continue uncured for
twenty (20) days after written notice thereof to Borrower; (vi) Borrower shall
(a) fail to pay any indebtedness for borrowed money (other than the Loan) of the
Borrower, or any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), or (b) fail
to perform or observe any term, covenant, or condition on its part to be
performed or observed under any agreement or instrument relating to such
indebtedness, or if any such indebtedness shall be declared to be due or payable
or required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof; (vii) if Borrower leases the
premises where the Equipment is located, a breach of such lease by Borrower and
the commencement of an action by the landlord to evict Borrower or to repossess
the premises; (viii) if Borrower sells, leases or disposes of any of its assets
except in the ordinary course of its business and except for the disposition of
any obsolete or retired property not useful to Borrower; (ix) Borrower ceases
doing business as a going concern, makes an assignment for the benefit of
creditors, admits in writing its inability to pay its debts as they become due,
files a voluntary petition in bankruptcy, is adjudicated a bankrupt or an
insolvent, files a petition seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statue, law or regulation, such proceedings shall not have
been dismissed, or if within sixty (60) days after the appointment without
Borrower's acquiescence of any trustee, custodian, receiver or liquidator of it
or of all or any substantial part of its assets and properties, such appointment
shall to be vacated; (xi) Borrower sells all or substantially all of its assets
or consolidates with or merges into any other entity or Borrower's stockholders
or partners sell all or substantially all of their stock or partnership
interests; or (xii) the death of a guarantor of Borrower's obligations hereunder
or the dissolution or filing of a petition in bankruptcy by or against a
guarantor of Borrower's obligations hereunder.
14. REMEDIES. Upon the occurrence of any Event of Default, Lender shall
have the right to recover from Borrower, as liquidated damages for loss of a
bargain and not as a penalty, a sum equal to the aggregate of the following; (a)
all unpaid periodic installment payments and other sums due under this Agreement
to the date of default plus late charges, if any, (b) the present value (using a
6% per year discount rate) of all remaining periodic installment payments due
under this Agreement and (c) interest at the rate of two percent (2%) per month
on the total of (a) plus (b) from the date of default. In addition, Lender shall
have the right to recover from Borrower any expenses paid or incurred by Lender
in connection with the enforcement of its rights under this Agreement and the
repossession, holding, repair, preparing for sale and subsequent sale, lease or
other disposition of the Collateral including attorneys fees and legal expenses
(collectively "Repossession Expenses"). BORROWER AND LENDER WAIVE ANY AND ALL
RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PRECEEDING BASED UPON THIS AGREEMENT.
The Lender shall have all the rights and remedies of a Secured Party
under the Uniform Commercial Code and Lender is hereby authorized and empowered,
with the aid and assistance of any person or persons, to enter any premises
where the Collateral or any part thereof is, or may be, placed, and to assemble
and/or remove same and/or to render it unusable and sell and dispose of such
Collateral at one or more public or private sales upon at lease seven (7) days'
written notice to Borrower of such sale. The proceeds of each such sale shall be
applied by the Lender toward the payment of the repossession Expenses, the
liquidated damages specified above and other indebtedness secured hereby. Should
the proceeds of any such sale be insufficient to fully pay all the items above
mentioned Borrower hereby covenants and agrees to pay any deficiency to the
Lender. If Lender employs counsel for the purpose of effecting collection of any
monies due hereunder (whether or not Lender has retaken the Collateral or any
part thereof) or for the purpose of recovering the Collateral, or for the
purpose of protecting Lender's interest because of any default of Borrower,
Borrower agrees to pay reasonable attorney's fees. The Lender may require
Borrower to assemble the Collateral and make it available to Lender at a place
to be designated by lender which is reasonably convenient to both parties. All
rights and remedies hereunder are cumulative and not exclusive and a waiver by
lender of any breach by Borrower in the terms, covenants, and conditions hereof
shall not constitute a waiver of future breaches or cumulative and not exclusive
and a waiver by Lender of any breach by Borrower of the terms, covenants, and
conditions hereof shall not constitute a waiver of future breaches or defaults;
and no failure or delay on the part of Lender in exercising any of its options,
powers, rights or remedies, or partial or single exercise thereof, shall
constitute a waiver thereof.
If any court of competent jurisdiction determines that any provision of
this Section 14 is invalid or unenforceable in any jurisdiction, in whole or in
part, such determination, as to such jurisdiction, shall not prohibit Lender
from enforcing its rights and establishing its damages sustained as the result
of any breach of this Agreement in accordance with the laws of such
jurisdiction.
15. ASSIGNMENT. Lender may assign or otherwise transfer this Agreement
and any and all of Lender's right, title and interest hereunder and in the
Collateral including the right to receive all amounts payable hereunder or grant
participations therein without Borrower's consent. In the event of such
assignment, the right of the assignee to receive all amounts payable hereunder
as well as any other right of the assignee shall not be subject to any defense,
set-off or counterclaim which Borrower may have against Lender although any
claim Borrower may have against Lender shall be preserved and may be separately
pursued against Lender. Upon Lender giving notice to Borrower of any such
assignment, Borrower shall promptly acknowledge its obligations hereunder to
such assignee, and shall comply with the written directions or demands of such
assignee and shall make all payments due hereunder as such assignee may direct
in writing. Following any such assignment the term "Lender" shall be deemed to
include or refer to lender's assignees, but no such assignee shall be deemed to
assume any obligation or duty imposed upon Lender hereunder and Borrower shall
look only to Lender for performance thereof. As used in this Section 15,
"assign" shall be deemed to include a pledge, sale of, or grant of a mortgage
on, or a security interest in, any of the Collateral or this Agreement by lender
and the term "assignee" shall be deemed to refer to the recipient of such
pledge, sale, mortgage or security interest. This Agreement and Borrower's
rights and obligations herein shall not be transferable or assignable by
Borrower without the Lender's express prior written consent and any such
purported assignment by Borrower without such consent shall be null and void.
16. GENERAL PROVISION. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF CONNECTICUT. This Agreement may not be changed, modified or
discharged on behalf of Lender, in whole or part, and no right of Lender may be
waived except by a writing signed by a duty authorized officer of Lender. The
Lender is authorized and empowered to date this Agreement and the Schedule(s)
thereto and to fill in blank spaces in accordance with the terms of this
transaction, including, but not limited to inserting serial numbers and
equipment descriptions in Schedule A and the assignment of an account number.
Notices hereunder shall be in writing and shall be deemed given when personally
delivered or when sent by facsimile to a party's facsimile number or three days
after having been mailed to the other party at the address specified above or
such new address as to which a party may advise the other. Forbearance or
indulgence by Lender in any regard shall not constitute a waiver of the covenant
or condition to be performed by Borrower to which the same may apply. The
section captions are for convenience and are not a part of the Agreement. This
Agreement shall be binding upon and inure to the benefit of the heirs,
executors, administrators, successors and permitted assigns of the parties. Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. THIS AGREEMENT AND ANY OTHER WRITTEN AGREEMENTS EXECUTED
SIMULTANEOUSLY HEREWITH SUPERSEDE ANY PRIOR PROPOSAL LETTERS, COMMITMENT LETTERS
OR NEGOTIATIONS AND THERE ARE NO ORAL COVENANTS OR AGREEMENTS. This Agreement
shall not be binding on Lender until accepted and executed on behalf of Lender
at its Litchfield Connecticut office.
(2)
<PAGE>
CORPORATE GUARANTEE
-------------------
WHEREAS, the financial and business affairs of the undersigned corporation (the
"undersigned") are closely associated with and connected with those of SMA
Video, Inc. (the "Obligor"), and the continued successful operations of the
Obligor will directly benefit the undersigned; and
WHEREAS, the Obligor is desirous of having Independent Resources, Inc. ("I.R.")
finance certain equipment for the Obligor and I.R. is unwilling to do so unless
the undersigned guarantees the obligations of the Obligor, as hereafter set
forth:
NOW THEREFORE, in consideration of the foregoing and in order to induce I.R. to
accept and enter into a Loan and Security Agreement dated September 12, 1996
(the "Agreement") with the Obligor, the undersigned agrees as follows:
1. The undersigned unconditionally and irrevocably guarantees to I.R. the
prompt payment in full of all indebtedness and obligations of every kind and
nature now and hereafter owing by the Obligor to I.R. under the Agreement as
well as any other obligations and indebtedness which the Obligor now owes or
may hereafter incur to I.R. under any other agreements or by reason of any
financial accommodation including, without limitation, leases of personal
property and/or notes and security agreements and/or loan and security
agreements between I.R. and the Obligor, now existing or made after the date
hereof whether or not presently contemplated.
2. The undersigned unconditionally and irrevocably guarantees to I.R. the
prompt, full and faithful performance and discharge by the Obligor of each
and every term, condition and warranty to be performed by the Obligor under
the Agreement or any modifications or amendments thereof or under any other
documents or instruments evidencing any other financial accommodation
between I.R. and the Obligor.
3. The undersigned unconditionally and irrevocably agrees to reimburse I.R. for
all expenses, costs and reasonable attorney's fees incurred by it in
enforcing any of its rights and remedies against the Obligor and/or the
undersigned or any other person or concern liable thereon.
4. The undersigned agrees to pay all of the foregoing amounts and perform all
of the foregoing obligations notwithstanding that any part or all of the
Agreement or any other agreements or financial accommodation shall be void
or voidable or unenforceable as against the Obligor or any of the Obligor's
creditors, including a trustee in bankruptcy or receiver of Obligor, by
reason of any fact or circumstance, including, without limitation, failure
of any person to file any document or to take any other action to make any
of the Agreement or any other agreement or instrument enforceable in
accordance with their respective terms. The liability of the undersigned
shall be an absolute and primary obligation of payment and I.R. shall not be
required to first (i) proceed against the Obligor; (ii) proceed against or
exhaust any security held from the Obligor or any guarantor; or (iii) pursue
any other remedies it may have, including remedies against other guarantors.
5. The undersigned waives notice of acceptance hereof and all notices and
demands of any kind to which the undersigned may be entitled, including,
without limitation, demands of payment and notices of nonpayment, default,
protest and dishonor to the undersigned or the Obligor or to the makers or
endorsers of any notes or other instruments for which the undersigned may be
liable hereunder. The undersigned further waives notice of and hereby
consents to any agreement or arrangement for payment, extension,
subordination, moratoria, composition, discharge or release of the whole or
any part of the Obligor's obligations under the Agreement or any other
agreement or instrument, the release of other guarantors or the compromise
of their obligations or the change in location release of any equipment or
collateral or the taking of a security interest in any additional or
substituted equipment or collateral; and none of the same shall in any way
impair the undersigned's liability hereunder. I.R. shall be under no
obligation to insure, protect or otherwise preserve the equipment or any
other collateral which may secure any indebtedness guaranteed hereunder.
6. All sums at any time to the undersigned's credit and any of the
undersigned's property at any time in Ir.'s possession may be held by I.R.
as security for all of obligations hereunder.
7. This guaranty will continue to be effective or will be reinstated, as the
case may be, if at any time any payment made to IR. in rescinded or must be
returned upon the insolvency, bankruptcy, or reorganization of the Obligor,
or otherwise, as if such payment had not been made. The undersigned
expressly waives any and all rights of subrogation, reimbursement,
indemnity, exoneration or any other claim which the undersigned may now or
hereafter have against the Obligor for the obligations guaranteed hereunder
or against or with respect to the property of the Obligor arising from the
existence or performance of this guaranty.
8. This guaranty is a continuing guaranty and shall continue in full force and
effect until terminated by the actual receipt by IR. or its assignee of
written notice of termination from the undersigned. Such termination shall
be applicable only to transactions having their inception thereafter, and
rights and obligations arising out of transactions having their inception
prior to receipt of such termination shall not be affected.
9. THE UNDERSIGNED WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED HEREON. This guaranty is assignable by I.R., in whole or
part, and may be subsequently further assigned by such assignees, all
without notice to the undersigned. Any assignee of I.R. and all subsequent
assignees shall have all of the rights of I.R. hereunder and may enforce
this guaranty with the same force and effect as if such guaranty were given
to such assignee in the first instance. The invalidity, illegality or
unenforceability of any provision of this guaranty shall not affect the
validity, legality or enforceability of any of its other provisions. LEGAL
RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF CONNECTICUT. This guaranty shall be binding on the
undersigned and its successors and assigns.
10. The undersigned acknowledges the accuracy of the facts set forth in the
recitals hereto and warrants and represents that this guaranty is not in
contravention of its charter, certificate of incorporation, by-laws and
applicable law and that the execution and delivery of this guaranty and the
performance thereof has been duly authorized by its Board of Directors.
Executed this 12th day of September, 1996 FLY FILMS, INC.
BY: /s/ illegible
----------------------------------
TITLE: illegible
-------------------------------
Affix Seal
<PAGE>
CERTIFICATE OF SECRETARY
------------------------
The undersigned does hereby certify that he/she is Secretary of Fly Films, Inc.
(hereafter call the "Corporation") and that the following is a true, complete
and correct copy of resolutions duly adopted by the Board of Directors of the
Corporation at a meeting thereof duly called and held on September 12, 1996, at
which a quorum was present and acting throughout, and that such resolutions are
in full force and effect:
"Whereas, the financial affairs of the Corporation are intimately connected to
those of SMA Video, Inc. (the "Obligor"); and
Whereas, the financial success of the Obligor will directly benefit the
Corporation; and
Whereas, the Obligor has requested that the Corporation guaranty its present and
future obligations to INDEPENDENT RESOURCES, INC. ("I.R."); now therefore, it is
RESOLVED, that the officers of the Corporation, and each of them singly, hereby
are authorized to execute and deliver to I.R. an unconditional guaranty by the
Corporation of the obligations of the Obligor to I.R., either in the form
presented to this meeting or with such changes therein as the officer executing
the same may approve, his approval and authority to be conclusively evidenced
by his execution thereof, such execution to be valid and binding on the
Corporation with or without the corporate seal of the Corporation."
The undersigned further certifies that the persons whose names, titles and
signatures appear below are the duly elected (or appointed), qualified and
acting officers of the Corporation and hold on the date of this Certificate the
offices set forth opposite their respective names and the signatures appearing
opposite their respective names are the genuine signatures of such persons.
NAME OF OFFICER TITLE OF OFFICER SIGNATURE OF OFFICER
Mike Morrissey President /s/ Mike Morrissey
- ----------------------- ------------------------ -------------------------
- ----------------------- ------------------------ -------------------------
- ----------------------- ------------------------ -------------------------
- ----------------------- ------------------------ -------------------------
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said
Corporation this 12th day of September, 1996.
/s/ Illegible
-------------------------------------------
Secretary
*Above Certification Confirmed
-------------------------------------------
Other Officer (Title)
(Corporate Seal)
*In the case where the Secretary is authorized to sign the guaranty Agreements,
by this resolution, and does or will execute the same, this Certificate must
also be signed by a second officer of the Corporation.
<PAGE>
CORPORATE GUARANTEE
-------------------
WHEREAS, the financial and business affairs of the undersigned corporation (the
"undersigned") are closely associated with and connected with those of SMA
Video, Inc. (the "Obligor"), and the continued successful operations of the
Obligor will directly benefit the undersigned; and
WHEREAS, the Obligor is desirous of having Independent Resources, Inc. ("I.R.")
finance certain equipment for the Obligor and I.R. is unwilling to do so unless
the undersigned guarantees the obligations of the Obligor, as hereafter set
forth:
NOW THEREFORE, in consideration of the foregoing and in order to induce I.R. to
accept and enter into a Loan and Security Agreement dated September 12, 1996
(the "Agreement") with the Obligor, the undersigned agrees as follows:
1. The undersigned unconditionally and irrevocably guarantees to I.R. the
prompt payment in full of all indebtedness and obligations of every kind and
nature now and hereafter owing by the Obligor to I.R. under the Agreement as
well as any other obligations and indebtedness which the Obligor now owes or
may hereafter incur to I.R. under any other agreements or by reason of any
financial accommodation including, without limitation, leases of personal
property and/or notes and security agreements and/or loan and security
agreements between I.R. and the Obligor, now existing or made after the date
hereof whether or not presently contemplated.
2. The undersigned unconditionally and irrevocably guarantees to I.R. the
prompt, full and faithful performance and discharge by the Obligor of each
and every term, condition and warranty to be performed by the Obligor under
the Agreement or any modifications or amendments thereof or under any other
documents or instruments evidencing any other financial accommodation
between I.R. and the Obligor.
3. The undersigned unconditionally and irrevocably agrees to reimburse I.R. for
all expenses, costs and reasonable attorney's fees incurred by it in
enforcing any of its rights and remedies against the Obligor and/or the
undersigned or any other person or concern liable thereon.
4. The undersigned agrees to pay all of the foregoing amounts and perform all
of the foregoing obligations notwithstanding that any part or all of the
Agreement or any other agreements or financial accommodation shall be void
or voidable or unenforceable as against the Obligor or any of the Obligor's
creditors, including a trustee in bankruptcy or receiver of Obligor, by
reason of any fact or circumstance, including, without limitation, failure
of any person to file any document or to take any other action to make any
of the Agreement or any other agreement or instrument enforceable in
accordance with their respective terms. The liability of the undersigned
shall be an absolute and primary obligation of payment and I.R. shall not be
required to first (i) proceed against the Obligor; (ii) proceed against or
exhaust any security held from the Obligor or any guarantor; or (iii) pursue
any other remedies it may have, including remedies against other guarantors.
5. The undersigned waives notice of acceptance hereof and all notices and
demands of any kind to which the undersigned may be entitled, including,
without limitation, demands of payment and notices of nonpayment, default,
protest and dishonor to the undersigned or the Obligor or to the makers or
endorsers of any notes or other instruments for which the undersigned may be
liable hereunder. The undersigned further waives notice of and hereby
consents to any agreement or arrangement for payment, extension,
subordination, moratoria, composition, discharge or release of the whole or
any part of the Obligor's obligations under the Agreement or any other
agreement or instrument, the release of other guarantors or the compromise
of their obligations or the change in location release of any equipment or
collateral or the taking of a security interest in any additional or
substituted equipment or collateral; and none of the same shall in any way
impair the undersigned's liability hereunder. I.R. shall be under no
obligation to insure, protect or otherwise preserve the equipment or any
other collateral which may secure any indebtedness guaranteed hereunder.
6. All sums at any time to the undersigned's credit and any of the
undersigned's property at any time in I.R.'s possession may be held by I.R.
as security for all of obligations hereunder.
7. This guaranty will continue to be effective or will be reinstated, as the
case may be, if at any time any payment made to I.R. is rescinded or must be
returned upon the insolvency, bankruptcy, or reorganization of the Obligor,
or otherwise, as if such payment had not been made. The undersigned
expressly waives any and all rights of subrogation, reimbursement,
indemnity, exoneration or any other claim which the undersigned may now or
hereafter have against the Obligor for the obligations guaranteed hereunder
or against or with respect to the property of the Obligor arising from the
existence or performance of this guaranty.
8. This guaranty is a continuing guaranty and shall continue in full force and
effect until terminated by the actual receipt by I.R. or its assignee of
written notice of termination from the undersigned. Such termination shall
be applicable only to transactions having their inception thereafter, and
rights and obligations arising out of transactions having their inception
prior to receipt of such termination shall not be affected.
9. THE UNDERSIGNED WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED HEREON. This guaranty is assignable by I.R., in whole or
part, and may be subsequently further assigned by such assignees, all
without notice to the undersigned. Any assignee of I.R. and all subsequent
assignees shall have all of the rights of I.R. hereunder and may enforce
this guaranty with the same force and effect as if such guaranty were given
to such assignee in the first instance. The invalidity, illegality or
unenforceability of any provision of this guaranty shall not affect the
validity, legality or enforceability of any of its other provisions. LEGAL
RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF CONNECTICUT. This guaranty shall be binding on the
undersigned and its successors and assigns.
10. The undersigned acknowledges the accuracy of the facts set forth in the
recitals hereto and warrants and represents that this guaranty is not in
contravention of its charter, certificate of incorporation, by-laws and
applicable law and that the execution and delivery of this guaranty and the
performance thereof has been duly authorized by its Board of Directors.
Executed this 12th day of September, 1996
SMA REAL TIME, INC.
BY: /s/ Illegible
-------------------------------
Affix Seal
TITLE: President
----------------------------
<PAGE>
CERTIFICATE OF SECRETARY
------------------------
The undersigned does hereby certify that he/she is the Secretary of SMA Real
Time, Inc. (hereafter call the "Corporation") and that the following is a true,
complete and correct copy of resolutions duly adopted by the Board of Directors
of the Corporation at a meeting thereof duly called and held on September 12,
1996, at which a quorum was present and acting throughout, and that such
resolutions are in full force and effect:
"Whereas, the financial affairs of the Corporation are intimately connected to
those of SMA Video, Inc. (the "Obligor"); and
Whereas, the financial success of the Obligor will directly benefit the
Corporation; and
Whereas, the Obligor has requested that the Corporation guaranty its present and
future obligations to INDEPENDENT RESOURCES, INC. ("I.R."); now therefore, it is
RESOLVED, that the officers of the Corporation, and each of them singly, hereby
are authorized to execute and deliver to I.R. an unconditional guaranty by the
Corporation of the obligations of the Obligor to I.R., either in the form
presented to this meeting or with such changes therein as the officer executing
the same may approve, his approval and authority to be conclusively evidenced
by his execution thereof, such execution to be valid and binding on the
Corporation with or without the corporate seal of the Corporation."
The undersigned further certifies that the persons whose names, titles and
signatures appear below are the duly elected (or appointed), qualified and
acting officers of the Corporation and hold on the date of this Certificate the
offices set forth opposite their respective names and the signatures appearing
opposite their respective names are the genuine signatures of such persons.
NAME OF OFFICER TITLE OF OFFICER SIGNATURE OF OFFICER
Mike Morrissey President /s/ Mike Morrissey
- ----------------------- ------------------------ -------------------------
- ----------------------- ------------------------ -------------------------
- ----------------------- ------------------------ -------------------------
- ----------------------- ------------------------ -------------------------
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said
Corporation this 12th day of September, 1996.
/s/ Illegible
-------------------------------------------
Secretary
*Above Certification Confirmed
-------------------------------------------
Other Officer (Title)
(Corporate Seal)
*In the case where the Secretary is authorized to sign the guaranty by this
resolution, and does or will execute the same, this Certificate must also be
signed by a second officer of the Corporation.
<PAGE>
CORPORATE GUARANTEE
-------------------
WHEREAS, the financial and business affairs of the undersigned corporation (the
"undersigned") are closely associated with and connected with those of SMA
Video, Inc. (the "Obligor"), and the continued successful operations of the
Obligor will directly benefit the undersigned; and
WHEREAS, the Obligor is desirous of having Independent Resources, Inc. ("I.R.")
finance certain equipment for the Obligor and I.R. is unwilling to do so unless
the undersigned guarantees the obligations of the Obligor, as hereafter set
forth:
NOW THEREFORE, in consideration of the foregoing and in order to induce I.R. to
accept and enter into a Loan and Security Agreement dated September 12, 1996
(the "Agreement") with the Obligor, the undersigned agrees as follows:
1. The undersigned unconditionally and irrevocably guarantees to I.R. the
prompt payment in full of all indebtedness and obligations of every kind and
nature now and hereafter owing by the Obligor to I.R. under the Agreement as
well as any other obligations and indebtedness which the Obligor now owes or
may hereafter incur to I.R. under any other agreements or by reason of any
financial accommodation including, without limitation, leases of personal
property and/or notes and security agreements and/or loan and security
agreements between I.R. and the Obligor, now existing or made after the date
hereof whether or not presently contemplated.
2. The undersigned unconditionally and irrevocably guarantees to I.R. the
prompt, full and faithful performance and discharge by the Obligor of each
and every term, condition and warranty to be performed by the Obligor under
the Agreement or any modifications or amendments thereof or under any other
documents or instruments evidencing any other financial accommodation
between I.R. and the Obligor.
3. The undersigned unconditionally and irrevocably agrees to reimburse I.R. for
all expenses, costs and reasonable attorney's fees incurred by it in
enforcing any of its rights and remedies against the Obligor and/or the
undersigned or any other person or concern liable thereon.
4. The undersigned agrees to pay all of the foregoing amounts and perform all
of the foregoing obligations notwithstanding that any part or all of the
Agreement or any other agreements or financial accommodation shall be void
or voidable or unenforceable as against the Obligor or any of the Obligor's
creditors, including a trustee in bankruptcy or receiver of Obligor, by
reason of any fact or circumstance, including, without limitation, failure
of any person to file any document or to take any other action to make any
of the Agreement or any other agreement or instrument enforceable in
accordance with their respective terms. The liability of the undersigned
shall be an absolute and primary obligation of payment and I.R. shall not be
required to first (i) proceed against the Obligor; (ii) proceed against or
exhaust any security held from the Obligor or any guarantor; or (iii) pursue
any other remedies it may have, including remedies against other guarantors.
5. The undersigned waives notice of acceptance hereof and all notices and
demands of any kind to which the undersigned may be entitled, including,
without limitation, demands of payment and notices of nonpayment, default,
protest and dishonor to the undersigned or the Obligor or to the makers or
endorsers of any notes or other instruments for which the undersigned may be
liable hereunder. The undersigned further waives notice of and hereby
consents to any agreement or arrangement for payment, extension,
subordination, moratoria, composition, discharge or release of the whole or
any part of the Obligor's obligations under the Agreement or any other
agreement or instrument, the release of other guarantors or the compromise
of their obligations or the change in location release of any equipment or
collateral or the taking of a security interest in any additional or
substituted equipment or collateral; and none of the same shall in any way
impair the undersigned's liability hereunder. I.R. shall be under no
obligation to insure, protect or otherwise preserve the equipment or any
other collateral which may secure any indebtedness guaranteed hereunder.
6. All sums at any time to the undersigned's credit and any of the
undersigned's property at any time in Ir.'s possession may be held by I.R.
as security for all of obligations hereunder.
7. This guaranty will continue to be effective or will be reinstated, as the
case may be, if at any time any payment made to IR. in rescinded or must be
returned upon the insolvency, bankruptcy, or reorganization of the Obligor,
or otherwise, as it such payment had not been made. The undersigned
expressly waives any and all rights of subrogation, reimbursement,
indemnity, exoneration or any other claim which the undersigned may now or
hereafter have against the Obligor for the obligations guaranteed hereunder
or against or with respect to the property of the Obligor arising from the
existence or performance of this guaranty.
8. This guaranty is a continuing guaranty and shall continue in full force and
effect until terminated by the actual receipt by IR. or its assignee of
written notice of termination from the undersigned. Such termination shall
be applicable only to transactions having their inception thereafter, and
rights and obligations arising out of transactions having their inception
prior to receipt of such termination shall not be affected.
9. THE UNDERSIGNED WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED HEREON. This guaranty is assignable by I.R., in whole or
part, and may be subsequently further assigned by such assignees, all
without notice to the undersigned. Any assignee of I.R. and all subsequent
assignees shall have all of the rights of I.R. hereunder and may enforce
this guaranty with the same force and effect as if such guaranty were given
to such assignee in the first instance. The invalidity, illegality or
unenforceability of any provision of this guaranty shall not affect the
validity, legality or enforceability of any of its other provisions. LEGAL
RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF CONNECTICUT. This guaranty shall be binding on the
undersigned and its successors and assigns.
10. The undersigned acknowledges the accuracy of the facts set forth in the
recitals hereto and warrants and represents that this guaranty is not in
contravention of its charter, certificate of incorporation, by-laws and
applicable law and that the execution and delivery of this guaranty and the
performance thereof has been duly authorized by its Board of Directors.
Executed this 12th day of September, 1996
SMA VISUAL EFFECTS CORP.
BY: /s/ illegible
-------------------------------------
Affix Seal
TITLE: President
----------------------------------
<PAGE>
INDIVIDUAL GUARANTY
-------------------
1. To induce Independent Resources, Inc. (herein called "I.R.") to accept and
enter into a Loan and Security Agreement dated September 12, 1996 (herein
collectively called the "Agreements") with SMA Video, Inc. (herein called
the "Obligor"), the undersigned:
(a) Unconditionally and irrevocably guarantees to I.R. the prompt
payment in full of all indebtedness and obligations of every kind
and nature now and hereafter owing by the Obligor to I.R. under the
Agreements as well as any other obligations and indebtedness which
the Obligor now owes or may hereafter incur to I.R. under any other
agreements or by reason of any financial accommodation including,
without limitation, leases of personal property and/or notes and
security agreements between I.R. and the Obligor whether now
existing or made after the date hereof, whether or not presently
contemplated;
(b) Unconditionally and irrevocably guarantees to I.R. the prompt, full
and faithful performance and discharge by the Obligor of each and
every term, condition, agreement, and warranty to be performed by
the Obligor under the Agreements or any modifications or amendments
thereof or under any other documents or instruments evidencing any
other financial accommodation between I.R. and the Obligor; and
(c) Unconditionally and irrevocably agrees to reimburse I.R. for all
expenses, costs and reasonable attorney's fees incurred by it in
enforcing any of its rights and remedies against the Obligor and/or
the undersigned or any other person or concern liable thereon.
2. The undersigned agrees to pay all of the foregoing amounts and perform all
of the foregoing obligations notwithstanding that any part or all of the
Agreements or any other agreements or financial accommodation shall be void
or voidable or unenforceable as against the Obligor or any of the Obligor's
creditors, including a trustee in bankruptcy or receiver of Obligor, by
reason of any fact or circumstance, including, without limitation, failure
of any person to file any document or to take any other action to make any
of the Agreements or any financial accommodation enforceable in accordance
with their respective terms. The liability of the undersigned shall be an
absolute and primary obligation of payment and I.R. shall not be required to
first (i) proceed against the Obligor; (ii) proceed against or exhaust any
security held from the Obligor or any guarantor; or (iii) pursue any other
remedies it may have, including remedies against other guarantors.
3. The undersigned waives notice of acceptance hereof, and of all notices and
demands of any kind to which the undersigned may be entitled, including,
without limitation, demands of payment and notices of nonpayment, default,
protest and dishonor to the undersigned or the Obligor or to the makers or
endorsers of any notes or other instruments for which the undersigned may be
liable hereunder. The undersigned further waives notice of and hereby
consents to any agreement or arrangement for payment, extension,
subordination, moratoria, composition, discharge or release of the whole or
any part of the Obligor's obligations under the Agreements or any other
agreement or financial accommodation, the release of other guarantors or the
compromise of their obligations and the change in location or release of any
equipment or collateral or the taking of a security interest in any
additional or substituted equipment or collateral; and none of the same
shall in any way impair the undersigned's liability hereunder. I.R. shall be
under no obligation to insure, protect or otherwise preserve the equipment
or any other collateral which may secure any indebtedness guaranteed
hereunder.
4. All sums at any time to the undersigned's credit and any of the
undersigned's property at any time in I.R.'s possession may be held by I.R.
as security for all of undersigned's obligations hereunder.
5. This Guaranty will continue to be effective or will be reinstated, as the
case may be, if at any time any payment made to I.R. is rescinded or must be
returned upon the insolvency, bankruptcy, or reorganization of the Obligor,
or otherwise, as if such payment had not been made. The undersigned
expressly waives any and all rights of subrogation, reimbursement,
indemnity, exoneration or any other claim which the undersigned may now or
hereafter have against the Obligor for the obligations guaranteed hereunder
or against or with respect to the property of the Obligor arising from the
existence or performance of this Guaranty.
6. This guaranty shall not be discharged or otherwise affected by the death,
incompetence or insolvency of the undersigned and shall be binding on the
undersigned's heirs, executors and administrators.
7. This guaranty is a continuing guaranty and shall continue in full force and
effect until terminated by the actual receipt by I.R. or its assignee of
written notice of termination from the undersigned. Such termination shall
be applicable only to transactions having their inception thereafter, and
rights and obligations arising out of transactions having their inception
prior to receipt of such termination shall not be affected.
8. The undersigned waives all right to a trial by jury in any action or
proceeding based hereon. This guaranty is assignable by I.R., in whole or
part, and may be subsequently further assigned by such assignees, all
without notice to the undersigned. Any assignee of I.R. and all subsequent
assignees shall have all of the rights of I.R. hereunder and may enforce
this guaranty with the same force and effect as if such guaranty were given
to such assignee in the first instance. The invalidity, illegality or
unenforceability of any provision of this guaranty shall not affect the
validity, legality or enforceability of any of its other provisions. Legal
rights and obligations hereunder shall be determined in accordance with the
laws of the State of Connecticut.
Executed this 12th day of September, 1996.
/s/ illegible
- ----------------------------------
WITNESS /s/ David Satin
---------------------------------
David Satin
401 East 34th Street
New York, NY 10016
SS# ###-##-####
<PAGE>
INDIVIDUAL GUARANTY
-------------------
1. To induce Independent Resources, Inc. (herein called "I.R.") to accept and
enter into a Loan and Security Agreement dated September 12, 1996 (herein
collectively called the "Agreements") with SMA Video, Inc. (herein called
the "Obligor"), the undersigned:
(a) Unconditionally and irrevocably guarantees to I.R. the prompt
payment in full of all indebtedness and obligations of every kind
and nature now and hereafter owing by the Obligor to I.R. under the
Agreements as well as any other obligations and indebtedness which
the Obligor now owes or may hereafter incur to I.R. under any other
agreements or by reason of any financial accommodation including,
without limitation, leases of personal property and/or notes and
security agreements between I.R. and the Obligor whether now
existing or made after the date hereof, whether or not presently
contemplated;
(b) Unconditionally and irrevocably guarantees to I.R. the prompt, full
and faithful performance and discharge by the Obligor of each and
every term, condition, agreement, and warranty to be performed by
the Obligor under the Agreements or any modifications or amendments
thereof or under any other documents or instruments evidencing any
other financial accommodation between I.R. and the Obligor; and
(c) Unconditionally and irrevocably agrees to reimburse I.R. for all
expenses, costs and reasonable attorney's fees incurred by it in
enforcing any of its rights and remedies against the Obligor and/or
the undersigned or any other person or concern liable thereon.
2. The undersigned agrees to pay all of the foregoing amounts and perform all
of the foregoing obligations notwithstanding that any part or all of the
Agreements or any other agreements or financial accommodation shall be void
or voidable or unenforceable as against the Obligor or any of the Obligor's
creditors, including a trustee in bankruptcy or receiver of Obligor, by
reason of any fact or circumstance, including, without limitation, failure
of any person to file any document or to take any other action to make any
of the Agreements or any financial accommodation enforceable in accordance
with their respective terms. The liability of the undersigned shall be an
absolute and primary obligation of payment and I.R. shall not be required to
first (i) proceed against the Obligor; (ii) proceed against or exhaust any
security held from the Obligor or any guarantor; or (iii) pursue any other
remedies it may have, including remedies against other guarantors.
3. The undersigned waives notice of acceptance hereof, and of all notices and
demands of any kind to which the undersigned may be entitled, including,
without limitation, demands of payment and notices of nonpayment, default,
protest and dishonor to the undersigned or the Obligor or to the makers or
endorsers of any notes or other instruments for which the undersigned may be
liable hereunder. The undersigned further waives notice of and hereby
consents to any agreement or arrangement for payment, extension,
subordination, moratoria, composition, discharge or release of the whole or
any part of the Obligor's obligations under the Agreements or any other
agreement or financial accommodation, the release of other guarantors or the
compromise of their obligations and the change in location or release of any
equipment or collateral or the taking of a security interest in any
additional or substituted equipment or collateral; and none of the same
shall in any way impair the undersigned's liability hereunder. I.R. shall be
under no obligation to insure, protect or otherwise preserve the equipment
or any other collateral which may secure any indebtedness guaranteed
hereunder.
4. All sums at any time to the undersigned's credit and any of the
undersigned's property at any time in I.R.'s possession may be held by I.R.
as security for all of undersigned's obligations hereunder.
5. This Guaranty will continue to be effective or will be reinstated, as the
case may be, if at any time any payment made to I.R. is rescinded or must be
returned upon the insolvency, bankruptcy, or reorganization of the Obligor,
or otherwise, as if such payment had not been made. The undersigned
expressly waives any and all rights of subrogation, reimbursement,
indemnity, exoneration or any other claim which the undersigned may now or
hereafter have against the Obligor for the obligations guaranteed hereunder
or against or with respect to the property of the Obligor arising from the
existence or performance of this Guaranty.
6. This guaranty shall not be discharged or otherwise affected by the death,
incompetence or insolvency of the undersigned and shall be binding on the
undersigned's heirs, executors and administrators.
7. This guaranty is a continuing guaranty and shall continue in full force and
effect until terminated by the actual receipt by I.R. or its assignee of
written notice of termination from the undersigned. Such termination shall
be applicable only to transactions having their inception thereafter, and
rights and obligations arising out of transactions having their inception
prior to receipt of such termination shall not be affected.
8. The undersigned waives all right to a trial by jury in any action or
proceeding based hereon. This guaranty is assignable by I.R., in whole or
part, and may be subsequently further assigned by such assignees, all
without notice to the undersigned. Any assignee of I.R. and all subsequent
assignees shall have all of the rights of I.R. hereunder and may enforce
this guaranty with the same force and effect as if such guaranty were given
to such assignee in the first instance. The invalidity, illegality or
unenforceability of any provision of this guaranty shall not affect the
validity, legality or enforceability of any of its other provisions. Legal
rights and obligations hereunder shall be determined in accordance with the
laws of the State of Connecticut.
Executed this 12th day of September, 1996.
/s/ illegible
- -------------------------------------
WITNESS
/s/ Michael Morrissey
----------------------------------
Michael Morrissey
161 Ludlow Street
New York, NY 10003
SS# ###-##-####
<PAGE>
CERTIFICATE OF SECRETARY
------------------------
The undersigned does hereby certify that he/she is Secretary of SMA
Visual Effects Corp. (hereafter called the "Corporation") and that the
following is a true, complete and correct copy of resolutions duly adopted by
the Board of Directors of the Corporation at a meeting thereof duly called and
held on September 12, 1996, at which a quorum was present and acting
throughout, and that such resolutions are in full force and effect:
"Whereas, the financial affairs of the Corporation are intimately connected to
those of SMA Video, Inc. (the "Obligor"); and
Whereas, the financial success of the Obligor will directly benefit the
Corporation; and
Whereas, the Obligor has requested that the Corporation guaranty its present and
future obligations to INDEPENDENT RESOURCES, INC. ("I.R"); now therefore, it is
RESOLVED, that the officers of the Corporation, and each of them singly, hereby
are authorized to execute and deliver to I.R. an unconditional guaranty by the
Corporation of the obligations of the Obligor to I.R., either in the form
presented to this meeting or with such changes therein as the officer executing
the same may approve, his approval and authority to be conclusively evidenced
by his execution thereof, such execution to be valid and binding on the
Corporation with or without the corporate seal of the Corporation."
The undersigned further certifies that the persons whose names, titles and
signatures appear below are the duly elected (or appointed), qualified and
acting officers of the Corporation and hold on the date of this Certificate the
offices set forth opposite their respective names and the signatures appearing
opposite their respective names are the genuine signatures of such persons.
NAME OF OFFICER TITLE OF OFFICER SIGNATURE OF OFFICER
Mike Morrissey President /s/ Mike Morrissey
- ----------------------- ------------------------ -------------------------
- ----------------------- ------------------------ -------------------------
- ----------------------- ------------------------ -------------------------
- ----------------------- ------------------------ -------------------------
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said
Corporation this 12th day of September, 1996.
/s/ illegible
-------------------------------------------
Secretary
*Above Certification Confirmed
-------------------------------------------
Other Officer (Title)
(Corporate Seal)
*In the case where the Secretary is authorized to sign the guaranty by
this resolution and does or will execute the same, this Certificate must also
be signed by a second officer of the Corporation.
<PAGE>
September 12, 1996
SMA Video, Inc.
100 Avenue of the Americas
10th Floor
New York, NY 10013
Gentlemen and Madams:
As you are aware, Independent Resources, Inc. requires the following insurance
coverage with companies and in form satisfactory to it as one of the conditions
of its entering into the proposed Loan and Security Agreement #SMA0001 with
respect to its contemplated equipment financing for your Company:
1. Insurance against loss, damage, destruction or theft of the Equipment, with
extended coverage, with loss payable solely to INDEPENDENT RESOURCES, INC.
AND OR ITS ASSIGNS in the amount equal to not less than the Equipment's full
replacement value. The amount initially required is $995,000.00.
2. $5,000,000.00 combined single limit for general liability insurance written
by an insurance carrier rated A+VIII by A.M. Best Company with respect to
the Equipment, naming INDEPENDENT RESOURCES, INC. AND/OR ITS ASSIGNS as
Additional Insured.
3. The policies must provide that they will not be canceled or altered without
thirty (30) days prior written notice to INDEPENDENT RESOURCES, INC. AND/OR
ITS ASSIGNS. Notices to Independent Resources, Inc. are to be sent to 43
West Street, Litchfield, Connecticut 06759 until further notice to the
insurance carrier. The policies insuring against loss, damage, destruction
or theft must provide that the coverage will not be invalidated against
INDEPENDENT RESOURCES, INC. AND/OR ITS ASSIGNS because of any violation of
any condition or warranty contained in any policy or application therefore
by the insured or others or by reason of any act of the insured.
4. Insurance must be effective and Independent Resources, Inc. must receive
duplicates of policies or satisfactory certificates prior to the
commencement date of the applicable Lease, Loan and Security Agreement or
other financing document.
Please be sure to forward a copy of this letter to your insurance company to be
processed, and sign and return a copy of this letter to us.
Very truly yours,
INDEPENDENT RESOURCES, INC.
- ----------------------------------
(Title)
AGREED TO AND ACCEPTED BY:
SMA VIDEO, INC.
BY: /s/ illegible
-------------------------------
(Title)
- --------------------------------------------------------------------------------
INSURANCE COMPANY
NAME: DWD Insurance ADDRESS
----------------------------- ---------------------------------
PHONE: 516-328-8300 CONTACT: David Marinello
---------------------------- --------------------------------
516-327-2800 (Fax)
<PAGE>
INDEPENDENT RESOURCES, INC.
43 WEST STREET
P.O. BOX 456
LITCHFIELD, CT 06759
September 12, 1996
SMA Video, Inc.
100 Avenue of the Americas
10th Floor
New York, NY 10013
Gentlemen and Madams:
Under your Loan and Security Agreement #SMA0001 with Independent Resources, Inc.
you are responsible for the payment of all taxes related to the Equipment that
we are financing for you.
While we normally bill for taxes, if any, payable on the rentals (sales/use
tax), we will not bill you for or furnish any advise with respect to any taxes
on the Equipment, such as property, ad valorem or other tax imposed by any
state, federal, local or foreign government in connection with the purchase,
possession, ownership or operation of the Equipment.
It is your obligation to timely submit such reports, file such returns and pay
applicable taxes when due in connection with the Equipment. If local law
prohibits you from making direct payment or filing the applicable report or
return it is your responsibility to immediately advise us in writing to such
effect and furnish us with the forms, data and information as will enable us to
make and file the return or report, along with your payment for the tax due.
Your prompt attention will avoid accrual of interest and penalties which would
be your responsibility.
Please sign and return a copy of this letter to us.
Very truly yours,
INDEPENDENT RESOURCES, INC.
/s/ illegible
- ---------------------------------------
(Title)
The above is acknowledged and agreed to by:
SMA VIDEO, INC.
/s/ illegible
- ---------------------------------------
(Title)
<PAGE>
September 12, 1996
Independent Resources, Inc.
43 West Street
P.O. Box 456
Litchfield, CT 06759
Gentlemen:
Reference is made herein to a certain Loan and Security Agreement #SMA0001 dated
September 12, 1996 between Independent Resources, Inc. as Lender and SMA Video,
Inc. as Borrower (the "Loan") covering (see Schedule "A" attached hereto and
made a part hereof).
We hereby authorize you to disburse the proceeds representing the amount
financed by virtue of the Loan as follows:
$895,000.00 Philips Broadcast Television Systems Company
94 West Cochran Street
Simi Valley, CA 93065
$100,000.00 Security Deposit to Independent Resources, Inc.
================================================================================
$995,000.00 TOTAL PROCEEDS
Very truly yours,
SMA VIDEO, INC.
/s/ illegible
- ---------------------------------------
(Title)
<PAGE>
LOAN AND SECURITY AGREEMENT
---------------------------
SCHEDULE A
----------
The following description of property supplements, and is part of, the Loan and
Security Agreement #SMA0001 dated September 12, 1996 between the undersigned
Buyer and Independent Resources, Inc. and may be attached to said Loan and
Security Agreement and any related UCC Financing Statements, Acceptance or
Delivery Certificate or other document describing the property.
One (1) Spirit Datacine Telecine 2K X 2K Real Time Film Scanner, S/N 104 .
----
COMPLETE WITH ANY AND ALL ATTACHMENTS, ACCESSIONS, ADDITIONS, REPLACEMENTS,
IMPROVEMENTS, MODIFICATIONS AND SUBSTITUTIONS THERETO AND THEREFOR AND ALL
PROCEEDS INCLUDING INSURANCE PROCEEDS THERETO AND THEREFROM.
SMA VIDEO, INC. INDEPENDENT RESOURCES, INC.
/s/ illegible /s/ illegible
- ----------------------------------- -----------------------------------
(Title) (Title)
<PAGE>
DELIVERY CERTIFICATE
--------------------
TO: INDEPENDENT RESOURCES, INC. LOAN NO.: SMA0001
09/12/96 LOAN DATE:
The undersigned Borrower hereby acknowledges that all of the Equipment described
below and in the Loan and Security Agreement referred to above ("the Loan and
Security Agreement") has been delivered to Borrower, and is of the manufacture,
design and specifications selected by Borrower and is suitable for Borrower's
purposes, and that said Equipment fully complies with said Loan and Security
Agreement and Borrower has accepted said Equipment thereunder.
Borrower understands that this Delivery Certificate may be used as an inducement
to an assignee of Independent Resources, Inc. ("I.R.") to accept an assignment
of said Loan and Security Agreement and to make advances to I.R. Borrower hereby
represents to I.R. and any such assignee that said Loan and Security Agreement
at the date hereof is free from any defense, off-set or counterclaim and hereby
waives, as to any such assignee, all such defenses, off-sets and counterclaims
as may arise in the future (preserving the same against I.R.).
Equipment Description:
SEE SCHEDULE A ATTACHED HERETO MADE A PART HEREOF.
SMA VIDEO, INC.
/s/ illegible
-----------------------------
(Title)
Date: 10/31 , 1996
----------- --
<PAGE>
deneen
LOAN AND SECURITY AGREEMENT
---------------------------
SCHEDULE A
----------
The following description of property supplements, and is part of, the Loan and
Security Agreement #SMA0001 dated September 12, 1996 between the undersigned
Buyer and Independent Resources, Inc. and may be attached to said Loan and
Security Agreement and any related UCC Financing Statements, Acceptance or
Delivery Certificate or other document describing the property.
One (1) Spirit Datacine Telecine 2K X 2K Real Time Film Scanner, S/N 104 .
------
COMPLETE WITH ANY AND ALL ATTACHMENTS, ACCESSIONS, ADDITIONS, REPLACEMENTS,
IMPROVEMENTS, MODIFICATIONS AND SUBSTITUTIONS THERETO AND THEREFOR AND ALL
PROCEEDS INCLUDING INSURANCE PROCEEDS THERETO AND THEREFROM.
SMA VIDEO, INC. INDEPENDENT RESOURCES, INC.
/s/ illegible /s/ illegible
- --------------------------------------- --------------------------------
(Title) (Title)
<PAGE>
INDEPENDENT RESOURCES, INC.
43 WEST STREET, P.O. BOX 456
LITCHFIELD, CT 06759
September 23, 1996
Philips Broadcast Television Systems Company
94 West Cochran Street
Simi Valley, CA 93065
RE: Remarketing Agreement with Respect to SMA Video, Inc. (the "Obligor")
Gentlemen and Madams:
In consideration of the interest of Philips Broadcast Television Systems Company
("Vendor") as the supplier of the equipment listed on the annexed Schedule A
(the "Equipment") to Independent Resources, Inc. and/or Its Assigns ("I.R.") for
financing by I.R. to the above Obligor pursuant to Loan and Security Agreement
#SMA0001 dated September 12, 1996 (the "Agreement"):
If the Obligor defaults under the Agreement, then Vendor agrees that Vendor
will, if requested by I.R., remarket the Equipment on a "best efforts" basis, on
I.R.'s behalf according to the following terms and conditions. Upon I.R.'s
repossessing the Equipment or acquiring the legal right to take possession of
the Equipment, Vendor will, at I.R.'s request with all reasonable dispatch
undertake to sell the Equipment as agent for I.R. utilizing sales efforts at
least as great as efforts Vendor makes to sell similar machinery held for
Vendor's own account. Vendor will keep I.R. regularly apprised of Vendor's sales
efforts and prospects. In addition, if requested by I.R., Vendor shall
dismantle, crate, remove, transport and store the Equipment and maintain hazard
insurance coverage (naming I.R. as owner/loss payee) upon the Equipment in such
amounts and terms as are usual and customary for such Equipment, Vendor also
agrees at I.R.'s request to clean and refurbish the Equipment to the extent
reasonably required to facilitate the sale of the Equipment. All expenses of
Vendor under this paragraph are referred to as Vendor's "Remarketing Expenses"
and Vendor shall bill I.R. for Vendor's cost. I.R. will only be responsible for
the first $5,000.00 of "Remarketing Expenses", excluding cleaning and
refurbishing expenses. Cleaning and refurbishing expenses will be determined
after Vendor inspects the Equipment and will be mutually agreed to by both
Vendor and I.R. Such cleaning and refurbishing expenses will be at Vendor's cost
and paid by I.R. In addition, if requested by I.R., Vendor agrees to give I.R. a
written appraisal of the Equipment without cost. Vendor's sale of the Equipment
shall be as agent for I.R.'s approval, which approval shall not be unreasonably
withheld. The proceeds of such sale shall be paid to I.R. The sale shall not be
consummated until I.R. has given proper notice of sale to Obligor and otherwise
complied with the provisions of the Uniform Commercial Code and other applicable
law.
If the proceeds received by I.R. on the sale or other disposition of the
Equipment exceed I.R.'s close out amount on the transaction (I.R.'s close out
amount shall consist of the unpaid balance due under the Agreement less unearned
interest as calculated by I.R. plus late charges plus any expenses, including
legal fees, incurred by I.R. in enforcing its rights under the Agreement).
Vendor shall be entitled to receive from such excess all Remarketing Expenses
paid or incurred by it to the extent authorized under the Uniform Commercial
Code. To the extent there is no excess to reimburse Vendor, it shall have no
claim against I.R. therefor.
The obligations of Vendor hereunder shall inure to the benefit of I.R.'s
assignees.
Very Truly Yours,
INDEPENDENT RESOURCES, INC.
- ----------------------------------
(Title)
AGREED TO AND ACCEPTED BY:
PHILIPS BROADCAST TELEVISION SYSTEMS COMPANY
/s/ illegible
- ----------------------------------
(Title)
<PAGE>
ACKNOWLEDGMENT OF ASSIGNMENT
----------------------------
TO: PHOENIXCOR, INC.
65 WATER STREET
SOUTH NORWALK, CONNECTICUT 06854
RE: LOAN & SECURITY AGREEMENT #SMA0001 DATED
VIDEO, INC.
Gentlemen:
Reference is made to the annexed Loan & Security Agree related purchase
agreement (collectively, the "Loan") between India ("Lender") and the
undersigned SMA Video, Inc. as Borrower. We consent to Lender's assignment of
the Loan to you, acknowledge receipt of notice of such assignment and in
consideration of your advancement of funds to the vendor of the equipment
described in the Loan (the "Equipment) and/or to Lender with respect to the
Loan, we hereby acknowledge and agree that:
1. The Loan is in full force and effect and constitutes our valid and
binding obligation, enforceable in accordance with its terms. We
have not entered into any agreement with any person modifying the
provisions of the Loan and we cannot make any further modification,
termination or settlement of amounts due under the Loan except with
the consent of you or your assigns.
2. The Loan describes the entire agreement between Lender and us
regarding our use of and rights and obligations with respect to the
Equipment. There are no "side letters" or verbal understandings
between us and Lender modifying the provisions of the Loan or
otherwise affecting our obligations to make the payments
thereunder.
3. The Equipment was first delivered to our premises located at 100
Avenue of the Americas, 10th Floor on or after September 6,1996
and has been unconditionally accepted by us, including backordered
product upgrades remaining to be delivered in the amount of
$76,965.00. We agree to make no claim against you with respect to
the Equipment.
4. If the Equipment does not contain the serial number(s) of the
items, you are hereby authorized to insert any serial number(s)
obtained wherever the Equipment is described in the Loan or related
documents and you are hereby further authorized to execute and file
UCC Amendments to reflect such serial number(s) on our behalf.
5. Lender has assigned to you all of its right, title and interest in
the Loan but none of its obligations and you are the Lender of
record under the Loan. We agree to remit to you the remaining 64
monthly rental payments consisting of 5 monthly payments in the
amount of $4,641.75 followed by 59 monthly payments in the amount
of $20,868.96 (plus tax if applicable) commencing December 21, 1996
and continuing on the same day of every month thereafter. These are
the remaining monthly rentals due after crediting any prepaid
rentals paid to Lender. We will have no obligation to you and you
will have no obligation to us with respect to any such prepaid
rent paid to Lender. However, we preserve all our rights against
Lender and the vendor of the Equipment. We agree to make all
payments due and to give all notices and information required under
the Loan to you at your above address or to any revised address of
which you or your assigns may advise us. The commencement date of
December 21,
<PAGE>
1996 shall supersede the commencement date of December 13, 1996 as
written on the Loan, and Lender may correct such date on the Loan.
6. We will insure the Equipment as required under the Loan and cause
you to be named as loss payee and additional insured and we will
perform for your benefit all of our obligations as Borrower under
the Loan.
7. We have received no notice of a prior sale, transfer, assignment or
pledge of the Loan, the rents reserved thereunder or the Equipment.
8. We have no right to prepay the sums due under the Loan except N/A.
9. There will not be use/sales tax due with each payment under the
Loan.
10. There are no judgments, suits or proceedings pending or threatened
against us which would adversely affect our ability to make
payments under the Loan.
11. No event of default (or that which would constitute an event of
default under the Loan with the passage of time, giving of notice,
or both) on our part, or to our knowledge, on the part of Lender,
has occurred in the performance of each such Party's obligations
under the Loan.
12. This Acknowledgment of Assignment shall inure to the benefit of
your successor and assigns.
DATED: November 21, 1996
Very truly yours,
SMA VIDEO, INC.
---------------
(BORROWER)
BY: /s/ illegible
--------------------------
TITLE: Executive Vice President
ACKNOWLEDGMENT OF LENDER
------------------------
The undersigned Lender under the Loan defined in the foregoing Acknowledgment of
Assignment hereby consent to the foregoing and confirms that it has assigned all
remaining rentals under the Loan to Phoenixcor, Inc., as specified in the
Acknowledgment of Assignment.
DATED: , 19
---------------- ---
INDEPENDENT RESOURCES, INC.
- ---------------------------
(LENDER)
BY:
------------------------
TITLE:
---------------------
<PAGE>
FAX
SMA
SMA VIDEO INC.
SMA Video, Inc.
100 Avenue of the Americas
10th Floor
New York, N.Y. 10013
212 226 7474 Fax 212 941 0439
Date: 11/21/96 Time: 12:07
To: Alyson Guest
Company: IR
From: Angela Madden
Fax #: # of pages (including cover): 3
<PAGE>
Independent Resources, Inc.
================================================================================
FOR YOUR INFORMATION
================================================================================
To: ANGELA MADDEN
Company:
Fax number: +1 (212) 941-0439
Business phone:
From: Alyson M. Guest
Title: Director of
Fax number: +1 (860) 567-7028,
Business phone. 860-567-7707
Date & Time: 11/21/96 9:51:40 AM
Pages sent 4
Re: REVISED NOTICE OF ASSIGNMENT
================================================================================
ANGELA: THIS NEEDS TO BE FAXED BACK TO ME (MAIL ORIGINAL) BY 12:00 NOON IN ORDER
TO WIRE THE MONIES TO PHILLIPS.
PLEASE CALL. THANKS
================================================================================
43 West Street
P.O. Box 456
Litchfield, CT 06759
<PAGE>
ACKNOWLEDGMENT OF ASSIGNMENT
----------------------------
TO: PHOENIXCOR, INC.
65 WATER STREET
SOUTH NORWALK, CONNECTICUT 06854
RE: LOAN & SECURITY AGREEMENT #SMA0001 DATED SEP
VIDEO, INC.
Gentlemen:
Reference is made to the annexed Loan & Security Agreement dated
September 12, 1996 and any related purchase agreement (collectively, the
"Loan") between Independent Resources, Inc. as Lender ("Lender") and the
undersigned SMA Video, Inc. as Borrower. We consent to Lender's assignment of
the Loan to you, acknowledge receipt of notice of such assignment and in
consideration of your advancement of funds to the vendor of the equipment
described in the Loan (the "Equipment") and/or to Lender with respect to the
Loan, we hereby acknowledge and agree that:
1. The Loan is in full force and effect and constitutes our valid and
binding obligation, enforceable in accordance with its terms. We
have not entered into any agreement with any person modifying the
provisions of the Loan and we cannot make any further modification,
termination or settlement of amounts due under the Loan except with
the consent of you or your assigns.
2. The Loan describes the entire agreement between Lender and us
regarding our use of and rights and obligations with respect to the
Equipment. There are no "side letters" or verbal understandings
between us and Lender modifying the provisions of the Loan or
otherwise affecting our obligations to make the payments
thereunder.
3. The Equipment was first delivered to our premises located at 100
Avenue of the Americas, 10th Floor on or after October 29, 1996 and
has been unconditionally accepted by us. We agree to make no claim
against you with respect to the Equipment.
4. If the Equipment does not contain the serial number(s) of the
items, you are hereby authorized to insert any serial number(s)
obtained wherever the Equipment is described in the Loan or related
documents and you are hereby further authorized to execute and file
UCC Amendments to reflect such serial number(s) on our behalf.
5. Lender has assigned to you all of its right, title and interest in
the Loan but none of its obligations and you are the Lender of
record under the Loan. We agree to remit to you the remaining 64
monthly rental payments consisting of 5 monthly payments in the
amount of $4,641.75 followed by 59 monthly payments in the amount
of $20,868.96 (plus tax if applicable) commencing December 14, 1996
and continuing on the same day of every month thereafter. These are
the remaining monthly rentals due after crediting any prepaid
rentals paid to Lender. We will have no obligation to you and you
will have no obligation to us with respect to any such prepaid rent
paid to Lender. However, we preserve all our rights against Lender
and the vendor of the Equipment. We agree to make all payments due
and to give all notices and information required under the Loan to
you at your above address or to any revised address of which you or
your assigns may advise us.
<PAGE>
6. We will insure the Equipment as required under the Loan and cause
you to be named as loss payee and additional insured and we will
perform for your benefit all of our obligations as Borrower under
the Loan.
7. We have received no notice of a prior sale, transfer, assignment or
pledge of the Loan, the rents reserved thereunder or the Equipment.
8. We have no right to prepay the sums due under the Loan except N/A.
9. There will not be use/sales tax due with each payment under the
Loan.
10. There are no judgments, suits or proceedings pending or threatened
against us which would adversely affect our ability to make
payments under the Loan.
11. No event of default (or that which would constitute an event of
default under the Loan with the passage of time, giving of notice,
or both) on our part, or to our knowledge, on the part of Lender,
has occurred in the performance of each such party's obligations
under the Loan.
12. This Acknowledgment of Assignment shall inure to the benefit of
your successor and assigns.
DATED: November 13, 1996
Very truly yours,
SMA VIDEO, INC.
---------------
(BORROWER)
BY: /s/ illegible
--------------------------
TTILE: Executive Vice President
------------------------
Director of Engineering
ACKNOWLEDGMENT OF LENDER
------------------------
The undersigned Lender under the Loan defined in the foregoing Acknowledgment of
Assignment hereby consent to the foregoing and confirms that it has assigned all
remaining rentals under the Loan to Phoenixcor, Inc., as specified in the
Acknowledgment of Assignment.
DATED: ,19
----------------- --
INDEPENDENT RESOURCES, INC.
- ---------------------------
(LENDER)
BY:
------------------------
TITLE:
---------------------
<PAGE>
ACKNOWLEDGMENT OF ASSIGNMENT
----------------------------
TO: PHOENIXCOR, INC.
65 WATER STREET
SOUTH NORWALK, CONNECTICUT 06854
RE: LOAN & SECURITY AGREEMENT #SMA0001 DATED SEP
VIDEO, INC.
Gentlemen:
Reference is made to the annexed Loan & Security Agreement dated
September 12, 1996 and any related purchase agreement (collectively, the
"Loan") between Independent Resources, Inc. as Lender ("Lender") and the
undersigned SMA Video, Inc. as Borrower. We consent to Lender's assignment of
the Loan to you, acknowledge receipt of notice of such assignment and in
consideration of your advancement of funds to the vendor of the equipment
described in the Loan (the "Equipment") and/or to Lender with respect to the
Loan, we hereby acknowledge and agree that:
1. The Loan is in full force and effect and constitutes our valid and
binding obligation, enforceable in accordance with its terms. We
have not entered into any agreement with any person modifying the
provisions of the Loan and we cannot make any further modification,
termination or settlement of amounts due under the Loan except with
the consent of you or your assigns.
2. The Loan describes the entire agreement between Lender and us
regarding our use of and rights and obligations with respect to the
Equipment. There are no "side letters" or verbal understandings
between us and Lender modifying the provisions of the Loan or
otherwise affecting our obligations to make the payments
thereunder.
3. The Equipment was first delivered to our premises located at 100
Avenue of the Americas, 10th Floor on or after October 29, 1996 and
has been unconditionally accepted by us. We agree to make no claim
against you with respect to the Equipment.
4. If the Equipment does not contain the serial number(s) of the
items, you are hereby authorized to insert any serial number(s)
obtained wherever the Equipment is described in the Loan or related
documents and you are hereby further authorized to execute and file
UCC Amendments to reflect such serial number(s) on our behalf.
5. Lender has assigned to you all of its right, title and interest in
the Loan but none of its obligations and you are the Lender of
record under the Loan. We agree to remit to you the remaining 64
monthly rental payments consisting of 5 monthly payments in the
amount of $4,641.75 followed by 59 monthly payments in the amount
of $20,868.96 (plus tax if applicable) commencing December 14, 1996
and continuing on the same day of every month thereafter. These are
the remaining monthly rentals due after crediting any prepaid
rentals paid to Lender. We will have no obligation to you and you
will have no obligation to us with respect to any such prepaid rent
paid to Lender. However, we preserve all our rights against Lender
and the vendor of the Equipment. We agree to make all payments due
and to give all notices and information required under the Loan to
you at your above address or to any revised address of which you or
your assigns may advise us.
<PAGE>
6. We will insure the Equipment as required under the Loan and cause
you to be named as loss payee and additional insured and we will
perform for your benefit all of our obligations as Borrower under
the Loan.
7. We have received no notice of a prior sale, transfer, assignment or
pledge of the Loan, the rents reserved thereunder or the Equipment.
8. We have no right to prepay the sums due under the Loan except N/A.
9. There will not be use/sales tax due with each payment under the
Loan.
10. There are no judgments, suits or proceedings pending or threatened
against us which would adversely affect our ability to make
payments under the Loan.
11. No event of default (or that which would constitute an event of
default under the Loan with the passage of time, giving of notice,
or both) on our part, or to our knowledge, on the part of Lender,
has occurred in the performance of each such party's obligations
under the Loan.
12. This Acknowledgment of Assignment shall inure to the benefit of
your successor and assigns.
DATED: November 1, 1996
Very truly yours,
SMA VIDEO, INC.
---------------
(BORROWER)
BY: /s/ Michael J. Morrissey
-------------------------
Michael J. Morrissey
TTILE: President
ACKNOWLEDGMENT OF LENDER
------------------------
The undersigned Lender under the Loan defined in the foregoing Acknowledgment of
Assignment hereby consent to the foregoing and confirms that it has assigned all
remaining rentals under the Loan to Phoenixcor, Inc., as specified in the
Acknowledgment of Assignment.
DATED: 11/1 ,1996
------------ --
INDEPENDENT RESOURCES, INC.
- ---------------------------
(LENDER)
BY: /s/ illegible
---------------------------
TITLE: Director of Business Development
<PAGE>
[LOGO] PHILIPS
Philips Broadcast Television Systems Company
REMITTANCE ADDRESS
94 West Cochran Street
Simi Valley, CA 93065
INVOICE
BILL SMA VIDEO
TO ATTN: DAVE STAIN
100 6TH AVE, 10TH FLOOR
NEW YORK, NY 10013
SHIP SMA VIDEO
TO ATTN: DAVE SATIN
100 6TH AVE, 10TH FLOOR
NEW YORK, NY 10013
INVOICE NO. RVSN DATE PAGE
277196E 09/18/96 1
CUSTOMER ORDER NO. SALES ORDER TAXABLE
A1-11192 NO
AIRBILL/BILL OF LADING NO. DATE OF SHIPMENT
09/06/96
METHOD OF SHIPMENT F.O.B. P.P.D.
2 XXX
CARRIER
TERMS
LEASE COMPANY BANK
BILL TO CUSTOMER > 2050 SHIP TO CUSTOMER > 2050
<TABLE>
<CAPTION>
ITEM PRODUCT NUMBER DESCRIPTION TAX QTY. SHIPPED QTY.BACK ORD UNIT PRICE EXTENSION
<S> <C> <C> <C> <C> <C> <C> <C>
1 F0-128510-000 SDC200 SPIRIT DATACINE 1 0 $797,730.00 $797,730.00
S/N: 104
2 F0-128102-000 FH 1020 ACCESSORY KIT 1 0 $2,820.00 $2,820.00
4 F0-128151-010 FH-1510 CONTROL PANEL KIT 1 0 $8,450.00 $8,450.00
9 F0-128222-010 FSBFA35LGA SUPER 35 LGA 1 0 $103,236.00 $103,236.00
10 75-033373-001 INSTL & ORIENTATION FDL-90 1 0 $4,860.00 $4,860.00
11 F0-128106-100 FH1061 FUSE SET 1 0 $0.00 $0.00
12 F0-126692-800 FD0708 8MM REEL DRIVE SET 1 0 $0.00 $0.00
13 F0-126624-300 FU-0043 CUSTOMER MANUAL 1 0 $939.00 $939.00
BACKORDERED PRODUCT UPGRADES
SCHEDULED SHIP DATE 12/96
14 F0-128167-410 FH-1674 ROTATION 0 1 $60,069.00
15 F0-128140-810 FY-1408 MONITORING SEL. 0 1 $12,200.00
16 F0-128166-000 FH1660 DIAGNOSTIC SOFTWARE 0 1 $2,348.00
17 F0-128624-400 FU-0044 SERVICE MANUALS 0 1 $2,348.00
TOTAL BACKORDER VALUE $76,965.00
TO BE INVOICED SEPARATEDLY AT TIME
OF SHIPMENT.
--------------
$918,035.00
LESS DEPOSIT ($70,000.00)
FREIGHT $553.41
--------------
TOTAL $848,588.41
</TABLE>
<PAGE>
LOAN AND SECURITY AGREEMENT
---------------------------
SCHEDULE A
----------
The following description of property supplements, and is part of, the Loan and
Security Agreement #SMA0001 dated September 12, 1996 between the undersigned
Buyer and Independent Resources, Inc. and may be attached to said Loan and
Security Agreement and any related UCC Financing Statements, Acceptance or
Delivery Certificate or other document describing the property.
One (1) Spirit Datacine Telecine 2K X 2K Real Time Film Scanner, S/N 104 .
-------
COMPLETE WITH ANY AND ALL ATTACHMENTS, ACCESSIONS, ADDITIONS, REPLACEMENTS,
IMPROVEMENTS, MODIFICATIONS AND SUBSTITUTIONS THERETO AND THEREFOR AND ALL
PROCEEDS INCLUDING INSURANCE PROCEEDS THERETO AND THEREFROM.
SMA VIDEO, INC. INDEPENDENT RESOURCES, INC.
/s/ illegible /s/ illegible
- ------------------------------------ ------------------------------------
(Title) Director of (Title)
Business Development
<PAGE>
RIDER TO LOAN AND SECURITY AGREEMENT #SMA0001
(THE "AGREEMENT"), DATED 09/12/96,
BETWEEN INDEPENDENT RESOURCES, INC. ("I.R.") AND
SMA VIDEO, INC. ("OBLIGOR")
The above mentioned Agreement is hereby amended to add the following:
1. Obligor agrees that so long as the Contract remains outstanding and unpaid,
Obligor shall:
a. Maintain a ratio of Debt (defined as Obligor's total liabilities) to
Tangible Net Worth of not more than 3.50 to 1.00. "Tangible Net Worth" is
defined as: (i) Obligor's net worth plus (ii) all indebtedness to Obligor
which is subordinated to Obligor's indebtedness under the Agreement
pursuant to a subordination agreement in form satisfactory to I.R. less
(iii) all of the following: Obligor's patents, licenses, goodwill,
subscription lists, organization expenses, moneys due from affiliates
(including officers, directors and shareholders), all intangible assets
and any write-up in book value of any assets resulting from a revaluation.
b. Maintain a Cash Flow Coverage of at least 1.00 to 1.00. The "Cash Flow
Coverage" shall mean Obligor's Cash Flow divided by Obligor's Current
Funded Debt Requirements. Obligor's "Cash Flow" shall mean Obligor's net
profit for the applicable fiscal year exclusive of extraordinary gains
plus non-cash outlay expenses of depreciation and amortization. "Current
Funded Debt Requirements" shall mean all current maturities of Obligor's
long term debt, including capital leases, shown on the applicable
Financial Statements.
c. Maintain a Current Ratio of at least 1.00 to 1.00. The "Current Ratio"
shall mean the ratio of Obligor's Total Current Assets to Total Current
Liabilities.
2. Obligor shall inform I.R., in writing, of any change in any business related
structure of the company or its affiliates within thirty (30) days of change.
3. Except as expressly provided herein, all accounting terms used herein shall
be interpreted in accordance with generally accepted accounting principles in
effect from time to time.
4. It shall be an additional Event of Default under the Agreement if Obligor
fails to maintain any of the above financial covenants.
IN WITNESS WHEREOF, the parties have executed this Rider simultaneously with the
Agreement.
SMA VIDEO, INC. INDEPENDENT RESOURCES, INC.
BY: /s/ illegible BY: /s/ illegible
--------------------------- -----------------------------
(Title) Director of (Title)
Business Development
<PAGE>
PAYMENT ADJUSTMENT RIDER
------------------------
RIDER TO LOAN AND SECURITY AGREEMENT #SMA0001 DATED SEPTEMBER 12, 1996 (THE
"CONTRACT") BETWEEN SMA VIDEO, INC. AS BORROWER (THE "OBLIGOR") AND INDEPENDENT
RESOURCES, INC. AS LENDER ("I.R.")
1. Purpose. This Rider sets forth the terms of adjustment to the payments set
forth in the Contract.
2. Definition. The following terms shall have the following meanings herein:
(a) "Adjustment Date" shall mean the date I.R. disburses the proceeds of
the Contract.
(b) "Final T-Note Average" shall mean the average of the yields on U.S.
Treasury Notes maturing in six (6) years, as published by the Dow Jones
Telerate Access Service, Page 19901, for the close of business on each
business day of the two full calendar weeks immediately preceding the
week containing the Adjustment Date.
(c) "Preliminary Payments" shall mean the payments set forth in the
Contract, consisting of five (5) consecutive monthly payments
commencing 30 days after the Adjustment Date consisting of 5 @
$4,641.75, followed by fifty-nine (59) consecutive monthly payments
consisting of 59 @ $20,868.96
(d) "Preliminary T-Note Average" shall mean 6.72%.
3. Adjustment of Payments. The Preliminary Payments were calculated based on a
spread over the Preliminary T-Note Average. If the Adjustment Date occurs
after September 16, 1996 and the Final T-Note Average exceeds the Preliminary
T-Note Average, then the Preliminary payments shall be revised. For each
increase of one (1) basis point (i.e., 1/100 of 1%) in the Final T-Note
Average above the Preliminary T-Note Average, the Preliminary Payments shall
be revised as follows:
o Each of the five (5) payments in the amount of $4,641.75 shall remain
unchanged.
o Each of the fifty-nine (59) payments in the amount of $20,868.96 shall
increase by $5.81
Immediately after the determination of the revised payments due under the
Contract, Obligor shall, at the request of I.R., execute an acknowledgment
reflecting the revised payment schedule and, if requested by I.R., a Replacement
Contract containing the agreed to payments, but the failure of I.R. to make such
a request or the failure of Obligor to execute the acknowledgment or Replacement
Contract shall in no way diminish Obligor's obligations hereunder.
4. I.R.'s Requirements. The commencement of the Contract is subject to
satisfaction of all documentation and credit requirements of I.R. If such
requirements are not satisfied by the Adjustment Date, then at I.R.'s option,
the Adjustment Date shall be the date when such requirements are satisfied.
The calculation of the Contract payments under this Rider will supersede any
prior proposal or quotation.
IN WITNESS WHEREOF, the parties have executed this Rider simultaneously with the
Contract.
SMA VIDEO, INC. INDEPENDENT RESOURCES, INC.
/s/ illegible /s/ illegible
- --------------------------------- -----------------------------
(Title) (Title)
<PAGE>
SECURITY DEPOSIT RIDER
----------------------
Part of a Loan and Security Agreement #SMA0001 dated September 12, 1996 between
INDEPENDENT RESOURCES, INC. ("I.R.") as Lender and SMA VIDEO, INC. ("Borrower")
as Borrower.
The Borrower has simultaneously with the execution of this Loan and Security
Agreement (the "Security Agreement") deposited with the Lender the sum of
$100,000.00 (the "Security Deposit") as security for the full and faithful
performance by Borrower of all the terms and conditions on the Borrower's part
to be performed under the Security Agreement.
In the event of a default by the Borrower in respect to any of the terms,
conditions, covenants or provisions of the Security Agreement, including but
not limited to, the payment of any installment, or other charges, the Lender or
its assignee may use, apply or retain all or any part of the said Security
Deposit for the payment of any unpaid installment or other charges or for any
other amount which the Lender may spend or be required to spend by reason of the
Borrower's default, including any damages or deficiencies. Such Security Deposit
shall not bear interest so long as the Borrower is not in default under the
Security Agreement, Lender shall accrue for the benefit of the Borrower interest
on such Security Deposit amount computed at the rate of 3.5% per annum.
Should the Lender sell or assign this Security Agreement, it may assign and
transfer said Security Deposit to such assignee, and the Lender shall thereupon
be relieved and released from all obligation or liability with respect to this
Security Deposit; and this provision shall apply to all subsequent assignees of
the Security Agreement.
Notwithstanding the foregoing, in the event that Borrower timely pays to Lender
the first twenty-four (24) monthly installments due under the Security Agreement
(exclusive of any advance payments) and Borrower does not otherwise default
under the Security Agreement during said twenty-four (24) month period then, in
such event, Lender, in its sole discretion, agrees, but does not in any manner
obligate itself, to consider the release and return of the Security Deposit to
Borrower.
AGREED TO AND ACCEPTED BY:
SMA VIDEO, INC.
/s/ Mike Morrissey President
- ----------------------------------
(Title)
Date: 9/12/96
-------------
<PAGE>
CERTIFICATE OF SECRETARY
------------------------
The undersigned does hereby certify that he/she is Secretary of SMA Video, Inc.
(hereafter call the "Corporation") and the following is a true, complete and
correct copy of resolutions duly adopted by the Board of Directors of the
Corporation at a meeting thereof duly called and held on September 12, 1996, at
which a quorum was present and acting throughout, and that such resolutions are
in full force and effect:
"RESOLVED, that the Corporation enter into a Loan and Security
Agreement (the "Agreement") with INDEPENDENT RESOURCES, INC. (hereafter
called "I.R."), substantially in the form presented to this meeting,
providing for the Loan by the Corporation from I.R. of the amount
reflected in the Agreement to be secured by the property described in
the Agreement (the "Collateral"); and it is further.
RESOLVED, that the officers of the Corporation and each of them singly,
hereby are authorized (a) to execute and deliver said Agreement in the
name and on behalf of the Corporation, either in the form presented to
this meeting or with such changes therein as the officer executing the
same may approve, his approval and authority to be conclusively
evidenced by his execution thereof, such execution to be valid and
binding on the Corporation with or without the corporate seal of the
Corporation, (b) to carry out the obligations and enforce the rights of
the Corporation under said Agreement, (c) to execute and deliver in the
name and on behalf of the Corporation such other documents as may be
requested or required by I.R. in connection with said Agreement
including (without limiting the generality of the foregoing) security
agreements and financing statements evidencing security interests of
I.R. and its assignees in and to the Equipment and/or additional
collateral, agreements with assignees of I.R. as to the payment of
installments to such assignees and an Acceptance or Delivery
Certificate in respect of the Equipment as contemplated by said
Agreement, and (d) to take all other action deemed by them necessary or
advisable in connection with the foregoing; and it is further
RESOLVED, that the officers of the Corporation, and each of them
singly, hereby are authorized from time to time on behalf of the
Corporation to enter into additional Loan and Security Agreements or
otherwise finance the acquisition of additional equipment from I.R.
upon such terms and conditions as the officers, or any one of them,
shall determine, and in that connection to execute and deliver in the
name and on behalf of the Corporation amendments or additional Loan and
Security Agreements or leases, together with all accompanying documents
as are set forth in the preceding resolutions; and it is further
RESOLVED, that all acts authorized in the foregoing resolutions, but
performed prior to the adoption of these resolutions, are hereby
ratified and affirmed."
The undersigned further certifies that the persons whose names, titles and
signatures appear below are the duly elected (or appointed), qualified and
acting officers of the Corporation and hold on the date of this Certificate the
offices set forth opposite their respective names, and the signatures
appearing opposite their respective names are the genuine signatures of such
persons:
NAME OF OFFICER TITLE OF OFFICER SIGNATURE OF OFFICER
Mike Morrissey President /s/ Mike Morrissey
- --------------------- ------------------ ------------------------
<PAGE>
[Logo] PHILIPS
Philips Broadcast Television Systems Company
REMITTANCE ADDRESS INVOICE
94 West Cochran Street
Simi Valley, CA 93065
INVOICE NO. RVSN DATE PAGE
277196E 09/18/96 1
CUSTOMER ORDER NO. SALES ORDER TAXABLE
A1-11192 NO
AIRBILL/BILL OF LADING NO. DATE OF SHIPMENT
09/06/96
METHOD OF SHIPMENT F.O.B. P.P.D.
2 XXX
CARRIER
TERMS
LEASE COMPANY BANK
BILL TO CUSTOMER > 2050 SHIP TO CUSTOMER > 2050
<TABLE>
<CAPTION>
ITEM PRODUCT NUMBER DESCRIPTION TAX QTY. SHIPPED QTY.BACK ORD UNIT PRICE EXTENSION
<S> <C> <C> <C> <C> <C> <C> <C>
1 F0-128510-000 SDC200 SPIRIT DATACINE 1 0 $797,730.00 $797,730.00
S/N: 104
2 F0-128102-000 FH 1020 ACCESSORY KIT 1 0 $2,820.00 $2,820.00
4 F0-128151-010 FH-1510 CONTROL PANEL KIT 1 0 $8,450.00 $8,450.00
9 F0-128222-010 FSBFA35LGA SUPER 35 LGA 1 0 $103,236.00 $103,236.00
10 75-033373-001 INSTL & ORIENTATION FDL-90 1 0 $4,860.00 $4,860.00
11 F0-128106-100 FH1061 FUSE SET 1 0 $0.00 $0.00
12 F0-126692-800 FD0708 8MM REEL DRIVE SET 1 0 $0.00 $0.00
13 F0-126624-300 FU-0043 CUSTOMER MANUAL 1 0 $939.00 $939.00
BACKORDERED PRODUCT UPGRADES
SCHEDULED SHIP DATE 12/96
14 F0-128167-410 FH-1674 ROTATION 0 1 $60,069.00
</TABLE>
<PAGE>
[Logo] PHILIPS
Philips Broadcast Television Systems Company
REMITTANCE ADDRESS: FUNLOC:133447 INVOICE
P.O. BOX 71400
Chicago, IL 60694-1400
Phone: (805) 584-4700 Fax: (805) 584-4720
BILL SMA SHIP SMA
TO: ATTENTION: ACCOUNTS PAYABLE TO: ATTN: DAVE SATIN
100 10TH AVENUE 100 6TH AVE, 10TH FLOOR
NEW YORK, NY NEW YORK, NY
10013 10013
SHIPMENT ID NUMBER: 1015618
INVOICE NO. RVSN DATE PAGE
279239 1 02/21/97 1
CUSTOMER ORDER NO. SALES ORDER NO. TAXABLE
*SEE BELOW A1-11192 NO
BILL OF LADING NO. DATE OF SHIPMENT
02/20/97
METHOD OF SHIPMENT F.O.B. P.P.D.
DROPSHIP 2 XXX
S.A.
5415
TERMS
LEASE COMPANY/BANK
BILL TO CUSTOMER > 2050 SHIP TO CUSTOMER > 2050 *P.O.: CONTRACT
<TABLE>
<CAPTION>
ITEM PRODUCT NUMBER DESCRIPTION TAX QTY. SHIPPED QTY. BACK ORDERED UNIT PRICE EXTENSION
<S> <C> <C> <C> <C> <C> <C> <C>
3 F0-128167-410 FH-1674 ROTATION .0 1 60069.000 .00
5 F0-128140-810 FY-1408 MONITORING SEL. 1.0 0 12200.000 12200.00
6 F0-128166-000 FH1660 DIAGNOSTIC SOFTWARE .0 1 2348.000 .00
8 F0-128624-400 SERV MANU USE F0-126624-400 .0 1 2348.000 .00
----------
TOTAL: 12200.00
**** ISO 9002 CERTIFIED ****
*** OUR COMMITMENT TO *** [Stamp]
** EXCELLENCE IS TOTAL ** RECEIVED
* CUSTOMER SATISFACTION * FEB 28
"ANY DIVERSION OF THIS SHIP-
MENT CONTRARY TO UNITED STATES
LAW IS PROHIBITED"
PARTIAL SHIPMENTS ALLOWED
CONTACT:
DAVE SATIN
212-226-7474
</TABLE>
<PAGE>
ACKNOWLEDGMENT OF ASSIGNMENT
TO: PHOENIXCOR, INC.
65 WATER STREET
SOUTH NORWALK, CONNECTICUT 06854
RE: LOAN & SECURITY AGREEMENT #SMA0001 DATED SEPTEMBER 12, 1996 WITH SMA
VIDEO, INC.
Gentlemen:
Reference is made to the annexed Loan & Security Agreement dated
September 12, 1996 and any related purchase agreement (collectively, the "Loan")
between Independent Resources, Inc. as Lender ("Lender") and the undersigned SMA
Video, Inc. as Borrower. We consent to Lender's assignment of the Loan to you,
acknowledge receipt of notice of such assignment and in consideration of your
advancement of funds to the vendor of the equipment described in the Loan (the
"Equipment") and/or to Lender with respect to the Loan, we hereby acknowledge
and agree that:
1. The Loan is in full force and effect and constitutes our valid and
binding obligation, enforceable in accordance with its terms. We
have not entered into any agreement with any person modifying the
provisions of the Loan and we cannot make any further modification,
termination or settlement of amounts due under the Loan except with
the consent of you or your assigns.
2. The Loan describes the entire agreement, between Lender and us
regarding our use of and rights and obligations with respect to the
Equipment. There are no "side letters" or verbal understandings
between us and Lender modifying the provisions of the Loan or
otherwise affecting our obligations to make the payments
thereunder.
3. The Equipment was first delivered to our premises located at 100
Avenue of the Americas, 10th Floor on or after September 6, 1996
and has been unconditionally accepted by us, including backordered
product upgrades remaining to be delivered in the amount of
$76,965.00. We agree to make no claim against you with respect to
the Equipment.
4. If the Equipment does not contain the serial number(s) of the
items, you are hereby authorized to insert, any serial number(s)
obtained wherever the Equipment is described in the Loan or related
documents and you are hereby further authorized to execute and file
UCC Amendments to reflect such serial number(s) on our behalf.
5. Lender has assigned to you all of its right title and interest in
the Loan but none of its obligations and you are the Lender of
record under the Loan. We agree to remit to you the remaining 64
monthly rental payments consisting of 5 monthly payments in the
amount of $4,641.75 followed by 59 monthly payments in the amount
of $20,868.96 (plus tax if applicable) commencing December 21, 1996
and continuing on the same day of every month theater. These are
the remaining monthly rentals due after crediting any prepaid
rentals paid to Lender. We will have no obligation to you and you
will have no obligation to us with respect to any such prepaid rent
paid to Lender. However, we preserve all our rights against Lender
and the vendor of the Equipment. We agree to make all payments due
and to give all notices and information required under the Loan to
you at your above address or to any revised address of which you or
your assigns may advise us. The commencement date of December 21,
<PAGE>
1996 shall supersede the commencement date of December 13, 1996 as
written on the Loan, and Lender may correct such date on the Loan.
6. We will insure the Equipment as required under the Loan and cause
you to be named as loss payee and additional insured and we will
perform for your benefit all of our obligations as Borrower under
the Loan.
7. We have received no notice of a prior sale, transfer, assignment or
pledge of the Loan, the rents reserved thereunder or the Equipment.
8. We have no right to prepay the sums due under the Loan except N/A.
9. There will not be use/sales tax due with each payment under the
Loan.
10. There are no judgments, suits or proceedings pending or threatened
against us which would adversely affect our ability to make
payments under the Loan.
11. No event of default (or that which would constitute an event of
default under the Loan with the passage of time, giving of notice,
or both) on our part, or to our knowledge, on the part of Lender,
has occurred in the performance of each such party's obligations
under the Loan.
12. This Acknowledgment of Assignment shall inure to the benefit of
your successor and assigns.
DATED: November 21, 1996
Very truly yours,
SMA VIDEO, INC.
---------------
(BORROWER)
BY: /s/ illegible
--------------------------
TITLE: Executive Vice President
ACKNOWLEDGMENT OF LENDER
------------------------
The undersigned Lender under the Loan defined in the foregoing Acknowledgment of
Assignment hereby consent to the foregoing and confirms that it has assigned all
remaining rentals under the Loan to Phoenixcor, Inc., as specified in the
Acknowledgment of Assignment.
DATED: , 19
----------------- --
INDEPENDENT RESOURCES, INC.
- ---------------------------
(LENDER)
BY:
------------------------
TITLE:
---------------------
<PAGE>
September 12, 1996
Independent Resources, Inc.
43 West Street
P.O. Box 456
Litchfield, CT 06759
This is to confirm our agreement to pay to you the sum of $34,999.23 in
connection with the services rendered in financing BTS Philips Telecine
equipment.
Very truly yours,
SMA Video, Inc.
By: /s/ illegible
--------------------------
Title: President
Agreed To:
Independent Resources, Inc.
By: /s/ illegible
--------------------------
Title: Director of Business Development
<PAGE>
BUSINESS READY CREDIT(SERVICE MARK) AGREEMENT BUSINESS &
PROFESSIONAL
Maximum Credit
$250000
Name and Address of Borrower
SMA VIDEO, INC.
100 AVENUE OF THE AMERICAS
NEW YORK CITY, NY 10013 Account#
In this Agreement, the words You, Your and Yours mean the undersigned
Borrower(s), jointly and severally if more than one. The words We, Us and Our
mean Citibank, N.A.
Using Your Business Ready Credit Account: We have agreed to make credit
available to you through a Business Ready Credit Account ("Account"), which you
can use for any legal business or professional purpose. You may borrow up to the
maximum credit by using the checks we will furnish you. You may use these checks
just as you would any regular checks. Limitations will apply on the amount and
frequency of cash borrowed at an automated teller machine by using your
Citicard(Registered). We may refuse to pay your check or make additional loans
to you from your Account if you have reached your credit limit or upon any
other reasonable circumstance, including without limitation a material adverse
change in your financial condition, without incurring liability to you or
others. You agree that we may impose our current charge for returning such
checks. The first use of your Account means that you have accepted the terms
of this agreement. You agree to maintain a Citibank business checking account
(#1863756) while this Account remains open, from which all payments required
to be made by this agreement will be deducted.
Repayment Schedule: You agree to repay us your Business Ready Credit loans plus
interest and any other charges, as provided for in this agreement. Unless we
cancel your right to obtain loans under this agreement, you will only have to
pay accrued interest and charges (but not principal) each month. If we cancel
your right to obtain loans under this agreement, you agree to repay the
outstanding principal balance in twenty-four (24) equal consecutive monthly
installments, together with accrued monthly interest and any other charges,
beginning approximately thirty (30) days after cancellation. You agree that your
monthly payment will be automatically deducted from the Citibank business
checking account which you agree to maintain with us. We will send you monthly
statements that will show transactions in your Account, your new balance, and
the amount of your next payment and due date. You may make additional payments
at any time by sending us a check to the address listed on your statement, or by
making payment transfers using your Citicard(Registered) through our telephone
customer service or at any Citicard Banking Center(Registered) or branch.
Interest: You agree to pay monthly interest on the outstanding principal balance
at an annual rate of the Prime Rate as published in The Wall Street Journal from
time to time plus 1 %.
We compute interest this way: We start with the principal balance on the first
day of the billing cycle. Each day of that period we add any loans made and
subtract any payments and other credits applied to principal. We will take the
principal balance outstanding on each day of the billing cycle and multiply that
amount by the daily periodic rate to arrive at a daily interest amount. Daily
interest charges are totaled at the end of the billing cycle to arrive at the
monthly interest charge.
Late Charges: If you do not pay the minimum payment within 15 days after the due
date, you agree to pay a late charge of the lesser of 5% of the principal and
interest past due, or $25.
Maximum Charges: We do not intend to charge, and you will not be required to
pay, any interest or other fees or charges in excess of the maximum permitted by
applicable law. Payments in excess of the maximum will be refunded to you or
applied to unpaid principal.
Default: You will be in default if any of the following should occur:
1. There are insufficient available funds in your checking account to make the
minimum monthly payment when due, or you otherwise fail to make the proper
payment when due, or otherwise fail to comply with the terms of this
agreement;
2. Any other creditor tries by legal process to take money or other property
of yours in our possession or under our control;
3. There is any seizure of, or a receiver is appointed for, any of your
property, or the property of any guarantor;
4. Any proceeding under any bankruptcy or insolvency law is commenced by or
against you or any guarantor;
5. Any financial statement you give us is false or misleading in any way;
6. An individual borrower or any guarantor of this obligation shall either die
or cease to be an officer, director or partner in your business;
7. Your business is sold or there is a cessation of your day-to-day
operations;
8. There is a default in the terms or conditions of any other contract with us
or our affiliates, or with any other financial institution;
9. Any required life insurance is canceled without our consent;
10. You fail, after demand, to provide us with your most recent federal tax
return and that of any guarantor, and/or your most recent financial
statement;
11. In our sole good faith opinion, there is a material adverse change in your
financial condition, your business operations or the financial condition of
any guarantor;
12. We, in good faith, believe that our security is impaired or our credit risk
is increased;
13. You close your checking account with us; or
14. We close your checking account.
Upon default, we can, at our option, without further notice or demand, refuse to
pay any outstanding checks and deny more credit to you under this agreement, and
the outstanding Account balance shall, at our option, immediately become due and
payable. After default, you agree to continue to pay interest at the rate you
would be paying if you were not in default, until your Account is paid in full.
Annual Fee: You agree to pay an annual fee of $ 2500. Payment of the annual fee
is due upon the signing of this agreement and annually thereafter until your
right to obtain loans is canceled, or the Account is closed. The annual fee may
be deducted from your checking account. Failure to pay the annual fee when due
shall result in the automatic cancellation of your right to obtain loans under
this agreement.
Account Reviews: We may conduct reviews of your Account from time to time to
determine your continued eligibility to obtain loans. You and any guarantor of
this Account agree to furnish such financial documents as we may request,
including without limitation financial statements and/or the most recent federal
income tax returns, each signed as appropriate by you and any guarantor.
<PAGE>
Credit Life Insurance Election Form Citibank, N.A.
- --------------------------------------------------------------------------------
Not for consumer loans After signing, Borrower should retain one copy
Credit life insurance provides additional protection for your loan in the event
of death. If the Borrower is a corporation or partnership, the Proposed Insured
Party must be a natural person who is a guarantor. If credit life insurance is
required by Citibank, N.A. for your loan, the Proposed Insured Party may assign
an existing policy, or procure and assign a new policy to Citibank, N.A. or may
elect credit life insurance below. The Proposed Insured Party must
satisfactorily complete and sign the Group Credit Insurance Application and be
under the age of 70. For Business Ready Credit and Business Checking Plus,
insurance coverage will terminate when the Proposed Insured Party reaches the
age of 70.
- --------------------------------------------------------------------------------
Borrower Name: SMA VIDEO, INC.
Address: 100 AVENUE OF THE AMERICAS, NEW YORK
CITY, NY 10013
- --------------------------------------------------------------------------------
Proposed Print name of Proposed Insured Party
Insured Party ____________________________________________
(If Borrower is corporation, must be active officer; if partnership, must be
active general partner) Relationship to Borrower:
( ) Active Officer ( ) Partner ( ) Member/Manager
- --------------------------------------------------------------------------------
FIRST CITICORP LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Home Office: One Court Square, 25th Floor
Long Island City, NY 11120
GROUP CREDIT INSURANCE APPLICATION
Plan Desired
(X) Single Life - One Proposed Insured Party
Proposed Insured Party
----------------------
Yes No
1) Have you, during the past 12 months, been
diagnosed or under the care of a doctor or
other practitioner for any of the following:
high blood pressure, diabetes, cancer or
tumor, heart attack, seizures, or stroke;
genitourinary, joint, muscle, or digestive
system disorders; arthritis, back or neck
impairments; Acquired Immunodeficiency
Syndrome (AIDS) or AIDS Related Complex (ARC),
and ( ) ( )
2) Have you, during the past 12 months, been
confined in a hospital or other institution
due to any condition of the following: brain,
nervous system, liver, kidney and lungs? ( ) ( )
By signing below you state that: (1) Your Birth Date is correctly entered below.
(2) You understand insurance will not be provided if you are age 70 or over and
you understand insurance will stop when you reach age 70. (3) You agree to pay
the costs of, and have applied for, the Credit Insurance marked above. (4) Your
responses are complete and true to the best of your knowledge and belief.
If you have answered "YES" to either of the questions listed above, you CANNOT
BE INSURED for Credit Insurance and this Form will not be considered further.
- ------------- -------------- ------------------------------------
Date Birth Date Proposed Insured Party's Signature
PERSONAL INFORMATION NOTICE: Any information you give us about yourself will be
treated as confidential. We will use that information solely to underwrite your
insurance. We will not share it with anyone unless you first authorize it in
writing.
40-5803(10-94)c
- --------------------------------------------------------------------------------
Election If the Borrower is a partnership or corporation, the Proposed
Insured Party is a guarantor and an active general partner or
officer of the Borrower. The Proposed Insured Party has completed
and signed the above Group Credit Insurance Application.
CHOOSE: _____ The undersigned hereby elects credit life insurance.
x The undersigned does not elect credit life insurance.
_____
Cancellation of election: You may cancel within the next seven
business days by notifying, in writing, Citicorp Data Systems, Inc.
at 1680 State Hwy. 211, San Antonio, TX 78245
Proposed
Date ______________ Insured Party __________________________
Signature
(Also, if Borrower is corporation or
partnership, sign below)
Borrower: SMA VIDEO, INC. By:
---------------------------- ------------------------------
(Print exact name)
Name: David Satin Title: Executive Vice President/
Secretary
(See reverse side) PBL 502 (L) * Rev. 9-91
<PAGE>
SIGNATURE CARD
Business Ready Credit (Service Mark)
TITLE OF ACCOUNT
- ----------------
SMA VIDEO, INC.
Address Account/Loan No.
100 AVENUE OF THE AMERICAS
NEW YORK CITY, NY 10013
Telephone No. Taxpayer I.D. No.
133681187
- --------------------------------------------------------------------------------
Type or Print and Titles Signature
- --------------------------------------------------------------------------------
NAME- /s/ David Satin David Satin
TITLE- Secretary EVP/Secretary
- --------------------------------------------------------------------------------
NAME- /s/ Michael Morrissey Michael Morrissey
TITLE- President President
- --------------------------------------------------------------------------------
I HEREBY CERTIFY TO CITIBANK, THAT THE 2 SIGNATURES APPEARING ON
THIS CARD ARE AUTHENTIC. -------
(NUMBER)
/s/ David Satin
---------------------------------
SCERETARY OR GENERAL PARTNER
<PAGE>
MONTHLY PAYMENT BUSINESS LOAN AGREEMENT BUSINESS &
PROFESSIONAL
Name and Address of Borrower
SMA VIDEO, INC.
100 AVENUE OF THE AMERICAS
NEW YORK CITY, NY 10013
In this Agreement, the words, You, Your and Yours mean the undersigned
Borrower(s), jointly and severally if more than one. The words We, Us and Our
mean Citibank, N.A.
Promise To Pay: For value received, you promise to pay us the principal sum of
$250,000.00, together with interest at the rate of 9.75% per annum until paid in
full, in 36 equal, consecutive monthly payments of principal and interest of
$8,037.48 ------------ each, plus any additional charges provided for in this
agreement, beginning. Until all amounts owed us under this agreement are paid
in full, you agree to maintain a Citibank business checking account (#1863756),
from which all payments required to be made by this agreement will be deducted.
Late Charges: If you do not pay your monthly payment of principal and interest
within 15 days after the due date, you agree to pay, at the time of and in
addition to the amount of the next regularly scheduled payment: (i) a late
charge of the lesser of 5% of the principal and interest past due, or $25, if
your original principal balance is $250,000 or less, or (ii) a late charge of 1%
of the principal and interest past due, if your original principal balance is
over $250,000.
Maximum Charges: We do not intend to charge, and you will not be required to
pay, any interest or other fees or charges in excess of the maximum permitted by
applicable law. Payments in excess of the maximum will be refunded to you or
applied to unpaid principal.
Default: You will be in default if any of the following should occur:
1. You fail to make the proper payment when due, or otherwise fail to comply
with the terms of this agreement;
2. Any other creditor tries by legal process to take money or other property
of yours in our possession or under our control;
3. There is any seizure of, or a receiver is appointed for, any of your
property, or the property of any guarantor;
4. Any proceeding under any bankruptcy or insolvency law is commenced by or
against you or any guarantor;
5. Any financial statement you give us is false or misleading in any way;
6. An individual borrower or any guarantor of this obligation shall either die
or cease to be an officer, director or partner in your business;
7. Your business is sold or there is a cessation of your day-to-day
operations;
8. You enter into any merger or consolidation, or sell or lease all or
substantially all of your assets;
9. There is a default in the terms or conditions of any other contract with us
or our affiliates, or with any other financial institution;
10. Any required life insurance is canceled without our consent;
11. You fail to maintain, with financially sound insurance companies, insurance
of the kinds, covering the risks, and in the relative proportionate
amounts, usually carried by businesses similar to yours;
12. You fail to pay any taxes, assessments or other governmental charges
imposed on you or your property prior to the date on which penalties are
attached thereto, unless and to the extent only that the same are contested
by you in good faith and by appropriate proceedings;
13. In our sole good faith opinion, there is a material adverse change in your
financial condition, your business operations or the financial condition of
any guarantor; or
14. We, in good faith, believe that our security is impaired or our credit risk
is increased.
Upon default, at our option, without further notice or demand, the entire unpaid
balance of principal, interest and any other charges shall immediately become
due and payable. After default, you agree to continue to pay interest and other
applicable charges at the rate provided for herein, until the entire unpaid
balance is paid in full.
Collection Costs: You agree to pay on demand all costs and expenses for
collection of amounts due on your Account (by legal proceedings or otherwise),
including without limitation attorneys fees and court costs.
Security: As security for your payment and performance under this agreement and
any other obligations owed to us, you grant us a security interest in all of
your now owned or later acquired personal property and fixtures, including
without limitation all accounts, goods, inventory, equipment, chattel paper,
securities (certificated or uncertificated), documents, instruments, and general
intangibles, their proceeds and products, any money or deposit accounts with or
held by us, and any certificates of deposit or other collateral pledged to us in
a separate agreement (all called the "Collateral"). Collateral does not include
assets in IRAs, Keogh Plans or other tax-qualified retirement plans. You will
promptly notify us of any change concerning the Collateral's location, or any
change in your name or place(s) of business, and will provide other information
concerning the Collateral which we may request. You will not grant or allow to
exist any other security interest in the Collateral without our prior written
consent. You will maintain insurance on the Collateral in form and amount
satisfactory to us. Upon our demand, you will deliver any Collateral to us, make
a payment of any obligation and/or execute any documents or perform any acts we
request to protect our security interest in the Collateral. After default, at
our request, you will assemble the Collateral and make it available to us at a
time and place designated by us which will be reasonably convenient to you and
us. In the event of sale or other disposition of any Collateral, we may apply
the proceeds of any such sale or disposition first to the payment of our costs
in retaking, holding and preparing for sale the Collateral, including without
limitation our reasonable attorneys' fees. You shall be liable for any
deficiency after such sale, including without limitation a sale of accounts or
chattel paper. You agree to sign at our request and you authorize us to file at
your expense any financing statements to perfect the security interest granted
above. It is understood that our security interest in the following described
Collateral will be a first priority security interest regardless of the priority
of our security interest in the other Collateral:
- --------------------------------------------------------------------------------
You hereby authorize us to file at your expense any financing statements to
perfect the security interest granted herein without your signature on such
financing statements and hereby grant us a power of attorney to take any action
or execute, file and deliver any document (including without limitation
financing statements and amendments thereto) which we deem necessary to protect
our security interest.
<PAGE>
Credit Life Insurance Election Form Citibank, N.A.
- --------------------------------------------------------------------------------
Not for consumer loans
After signing, Borrower should retain one copy
Credit life insurance provides additional protection for your loan in the event
of death. If the Borrower is a corporation or partnership, the Proposed Insured
Party must be a natural person who is a guarantor. If credit life insurance is
required by Citibank, N.A. for your loan, the Proposed Insured Party may assign
an existing policy, or procure and assign a new policy to Citibank, N.A. or may
elect credit life insurance below. The Proposed Insured Party must
satisfactorily complete and sign the Group Credit Insurance Application and be
under the age of 70. For Business Ready Credit and Business Checking Plus,
insurance coverage will terminate when the Proposed Insured Party reaches the
age of 70.
- --------------------------------------------------------------------------------
Borrower Name: SMA VIDEO, INC.
Address: 100 AVENUE OF THE AMERICAS, NEW YORK CITY, NY 10013
- --------------------------------------------------------------------------------
Proposed Print name of Proposed Insured Party
Insured Party ____________________________________
(if Borrower is corporation, must be active officer; if partnership, must
be active general partner) Relationship to Borrower:
( )Active Officer ( )Partner ( )Member/Manager
- --------------------------------------------------------------------------------
FIRST CITICORP LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Home Office: One Court Square, 25th Floor
Long Island City, NY 11120
GROUP CREDIT INSURANCE APPLICATION
Plan Desired
(X) Single Life - One Proposed Insured Party
Proposed Insured Party
----------------------
Yes No
1) Have you, during the past 12 months, been
diagnosed or under the care of a doctor or
other practitioner for any of the following:
high blood pressure, diabetes, cancer or tumor,
heart attack, seizures, or stroke;
genitourinary, joint, muscle, or digestive
system disorders; arthritis, back or neck
impairments; Acquired Immunodeficiency Syndrome
(AIDS) or AIDS Related Complex (ARC), and ( ) ( )
2) Have you, during the past 12 months, been
confined in a hospital or other institution due
to any condition of the following: brain,
nervous system, liver, kidney and lungs? ( ) ( )
By signing below you state that: (1) Your Birth Date is correctly entered below.
(2) You understand insurance will not be provided if you are age 70 or over. (3)
You agree to pay the costs of, and have applied for, the Credit Insurance marked
above. (4) Your responses are complete and true to the best of your knowledge
and belief.
If you have answered "YES" to either of the questions listed above, you CANNOT
BE INSURED for Credit Insurance and this Form will not be considered further.
- ------------- --------------- --------------------------------------
Date Birth Date Proposed Insured Party's Signature
PERSONAL INFORMATION NOTICE: Any information you give us about yourself will be
treated as confidential. We will use that information solely to underwrite your
insurance. We will not share it with anyone unless you first authorize it in
writing.
40-5803(10-94)C
- --------------------------------------------------------------------------------
Election If the Borrower is a partnership or corporation, the Proposed
Insured Party is a guarantor and an active general partner or
officer of the Borrower. The Proposed Insured Party has completed
and signed the above Group Credit Insurance Application.
CHOOSE: _____ The undersigned hereby elects credit life insurance.
_____ The undersigned does not elect credit life insurance.
Cancellation of election: You may cancel within the next seven
business days by notifying, in writing, Citicorp Data Systems, Inc.
at 1680 State Hwy. 211, San Antonio, TX 78245.
Proposed
Date _______________ Insured Party _______________________
Signature
(Also, if Borrower is corporation or partnership, sign below)
Borrower: SMA VIDEO, INC. By: /s/ illegible
------------------------- --------------------------------
(Print exact name)
Name: /s/ David Satin Title: -----------------------------
Executive Vice President/
Secretary
(See reverse side) PBL 502 (L)*Rev. 9-91
<PAGE>
GENERAL SECURITY AGREEMENT
Citibank, N.A.
666 FIFTH AVENUE
NEWYORK, NEW YORK 10103
GENTLEMEN:
1. From time to time the undersigned expects to become or has become
indebted or otherwise obligated or liable to you in connection with letter of
credit or acceptance transactions, trust receipt transactions, or other loan or
financial accommodations (such indebtedness, obligations and liabilities being
hereinafter referred to as the "Obligation(s)"). In consideration of the
Obligations, the undersigned agrees that, in order to provide you with security
for payment and performance of all the Obligations, you shall have a security
interest in all of the personal property and fixtures of the undersigned, now or
hereafter existing or acquired, of any type or description, including but not
limited to all of the inventory of the undersigned wherever located, whether
raw, in process or finished; all materials or equipment usable in processing the
same; all documents of title covering any inventory; all equipment, furniture,
trade fixtures and furnishings employed in the operation of the undersigned's
business; all of the undersigned's contract rights, accounts receivable, general
intangibles, instruments, investment securities, chattel paper, notes, drafts,
acceptances, and all bank balances of the undersigned with you or other claims
of the undersigned against you and the proceeds and products of each of the
foregoing in any form whatsoever (all of the foregoing being hereinafter
referred to collectively as the "Collateral"). The undersigned agrees that
should the aggregate market value of the Collateral at any time suffer any
decline in value or should any property be deemed by you to be unsatisfactory or
inadequate, or should such property fail to conform to legal requirements, the
undersigned will upon request deliver to you additional Collateral or will make
one or more payments on account of the Obligations to your satisfaction. To the
extent that the aforesaid Collateral may consist of capital stock, it is further
agreed that, in event of any new or additional certificate(s) of stock being
issued (as stock dividends or otherwise) relative to any such capital stock,
held at the time as Collateral hereunder, such certificate(s) shall be deemed an
increment to the stock so held and under pledge to you and that therefore, such
certificate(s) will-to the extent received by or placed under the control of the
undersigned-be held or controlled in trust for you and will be promptly
delivered to you (in form, for transfer) to be held hereunder if you so request.
2. You shall have no duty of care with respect to the Collateral, except
that you shall exercise reasonable care with respect to Collateral in your
custody, but shall be deemed to have exercised reasonable care if such property
is accorded treatment substantially equal to that which you accord your own
property, or if you take such action with respect to the Collateral as the
undersigned shall request in writing, but no failure to comply with any such
request nor any omission to do any such act requested by the undersigned shall
be deemed a failure to exercise reasonable care, nor shall your failure to take
steps to preserve rights against any parties or property be deemed a failure to
have exercised reasonable care with respect to Collateral in your custody.
3. In addition to the rights and security interest elsewhere herein set
forth, you may, at your option at any time(s) and with or without notice to the
undersigned, appropriate and apply to the payment or reduction, either in whole
or in part, of the amount owing on any one or more of the Obligations, whether
or not then due, any and all moneys now or hereafter with you, on deposit or
otherwise, to the credit of or belonging to the undersigned, it being understood
and agreed that you shall not be obligated to assert or enforce any rights or
security interest hereunder or to take any action in reference thereto, and that
you may in your discretion at any time(s) relinquish your right as to particular
Collateral hereunder without thereby affecting or invalidating your rights
hereunder as to all or any other Collateral hereinbefore referred to.
4. The undersigned further agrees and covenants, (a) that, if you so
demand in writing at any time, all proceeds shall be delivered to you promptly
upon their receipt in a form satisfactory to you; (b) that, if you so demand in
writing at any time, all chattel paper, instruments, and documents shall be
delivered to you at the time and place and in the manner in which specified by
your demand; (c) to execute and deliver, upon request, any notice, statement,
instrument, document, agreement or other papers and/or to perform any act
requested by you which may be necessary to create, perfect, preserve, validate
or otherwise protect any security interest granted pursuant hereto or to enable
you to exercise and enforce your rights hereunder or with respect to such
security interest; (d) that during the period that any Obligation is
outstanding, the undersigned will not, without obtaining your prior written
approval, create, incur, assume, or suffer to exist any security agreement
subject to the Uniform Commercial Code or any similar law of any jurisdiction,
except as herein provided, and the undersigned will not sign or file or
authorize the signing or filing of a financing statement under the said Uniform
Commercial Code of any jurisdiction with respect to the Collateral or any
portion thereof, except as herein provided. The undersigned further agrees to
provide you with such information as you may from time to time request with
respect to the location of any of its places of business. In addition, you will
be notified promptly in writing of any change in location of any office where
records concerning any of the accounts that constitute a portion of the
Collateral are maintained or of a change in location of the undersigned's
principal place of business.
5. In the event of the happening of any one or more of the following
events of default, to wit: (a) the non-payment of any of the Obligations; (b)
the failure of the undersigned forthwith, with or without notice, to furnish
satisfactory additional collateral, or to make payments on account as may be
agreed in any of the Obligations or herein; (c) the death, failure in business,
dissolution or termination of existence of the undersigned, (d) any petition in
bankruptcy being filed by or against the undersigned any endorser or guarantor
of any obligation, or any proceedings in bankruptcy, or under any Acts of
Congress relating to the relief of debtors, being commenced for the relief or
readjustment of any indebtedness of the undersigned or any endorser or guarantor
of any Obligation, either through reorganization, composition, extension or
otherwise; (e) the making by the undersigned or any endorser or guarantor of any
Obligation of an assignment for the benefit of creditors or for taking advantage
by any of the same of any insolvency law; (f) any seizure, vesting or
intervention by or under authority of a government, by which the management of
the undersigned, and or any endorser or guarantor of an Obligation, is displaced
or its authority in the conduct of its business is curtailed; (g) the
appointment of any receiver of any property of the undersigned, or of any
endorser or guarantor of any Obligation; (h) the attachment or distraint of any
of the Collateral or of the same becoming subject at any time to any mandatory
court order or other legal process (i) the failure of the undersigned to perform
any of its duties as specified either in this agreement or in any other
agreement(s) with respect to the Obligations: then or at any time after the
happening of such event of default, or at any time thereafter, any or all of the
Obligations then existing shall become immediately due and payable forthwith
upon declarations to such effect delivered by you to the undersigned without any
other presentment, demand, protest, or notice of any kind, without further
demand or notice to the undersigned. Furthermore, upon the occurrence of any
such event of default, your obligation(s) to make further loans or extensions of
credit or other financial accommodations to the undersigned shall thereupon be
terminated and you shall also have all of the rights and remedies provided to a
secured party by the Uniform Commercial Code in effect in New York State at that
time. In addition thereto the undersigned further agrees that (i) in the event
that notice is necessary under applicable law, written notice mailed to the
undersigned at the address given below three (3) business days prior to the date
of public sale of any of the Collateral subject to the security interest created
herein or prior to the date after which private sale or any other disposition of
said Collateral will be made shall constitute reasonable notice, but notice
given in any other reasonable manner or at any other time shall be sufficient;
(ii) in the event of sale or other disposition of any such Collateral, you may
apply the proceeds of any such sale or disposition to the satisfaction of your
reasonable attorneys' fees, legal expenses, and other costs and expenses
incurred in connection with your
<PAGE>
NOT TO BE USED FOR
CONSUMER TRANSACTIONS CONTINUING GUARANTY
Citibank, N.A.
NEW YORK Date June 4, 1997
------------------
I, for and in consideration of any existing
indebtedness to you of SMA Video, Inc.
--------------------------------
(Name and Address)
100 Avenue of the Americas, New York, NY 10013
- --------------------------------------------------------------------------------
(hereinafter called the "Borrower"), for the payment of which the undersigned is
now obligated to you, either as guarantor or otherwise, and/or in order to
induce you, in your discretion, at any time(s) hereafter, to make any loan(s) or
advance(s) or to extend credit in any other manner to, or at the request or for
the account of the Borrower, either with or without security, and/or to purchase
or discount any notes, bills receivable, drafts, acceptances, checks or other
instruments or evidences of indebtedness upon which the Borrower is or may
become liable as maker, endorser, acceptor, or otherwise, (all liabilities and
obligations of the Borrower to you, now or hereafter existing, being hereinafter
referred to as "Obligations"), the undersigned does hereby GUARANTEE the
punctual payment at maturity to you of each and all of the Obligations, together
with interest thereon and any and all expenses which may be incurred by you in
collecting all or any of the Obligations and/or in enforcing any rights
hereunder; provided,
however, that if and only if an amount of a designated currency is here
specified
----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(indicate Amount and Country of which that Amount is Lawful Currency)
***** U.S. Dollars Unlimited ***** (U.S. $ Unlimited),
- --------------------------------------------------------------------------------
then the liability of the undersigned hereunder shall not exceed at any one time
with respect to the aggregate principal amount of Obligations, and irrespective
of the currency(ies) in which the Obligations are payable, the amount of
currency here specified.
II. As implementing the foregoing, it is understood and agreed that (i)
the undersigned guarantees that the Obligations will be paid to you strictly in
accordance with the terms and provisions of any agreement(s), express or
implied, which has (have) been or may hereafter be made or entered into by the
Borrower in reference thereto, regardless of any law, regulation or decree, now
or hereafter in effect, which might in any manner affect any of the terms or
provisions of any such agreement(s) or your rights with respect thereto as
against the Borrower, or cause or permit to be invoked any alteration in the
time, amount or manner of payment by the Borrower of any of the Obligations, and
(ii) in each instance when the Borrower shall have agreed, relative to any one
or more of the Obligations, to pay or provide your Head Office or any of your
Branches or correspondents with any amount of money that is other than that
which is locally in common circulation at the time as currency in the place
where such agreement is made, and such amount is not actually paid or provided
as and when agreed or within such time as you may deem reasonable, the
undersigned will, upon request and as you may elect, either pay or provide the
amount in the exact currency and place as agreed by the Borrower or pay or
provide you in the City of New York with the equivalent of the amount in U.S.
dollars at your then prevailing rate for sales of the kind of currency
agreed to be paid or provided for transfer by cable to a place where it is
current.
III. As security for any and all liabilities of the undersigned to you,
not existing or hereafter arising hereunder, or otherwise, you are hereby given
the right to retain, and you are hereby given a lien upon and a security
interest in any and all moneys or other property (i.e., goods and merchandise,
as well as any and all documents relative thereto; also, funds, securities,
choices in action and any and all other forms of property whether real, personal
or mixed, and any right, title or interest of the undersigned therein or
thereto), and/or the proceeds thereof, which have/has been, or may hereafter be,
deposited or left with you (or with any third party acting on your behalf) by or
for the account or credit of the undersigned, including (without limitation of
the foregoing) that in safekeeping or in which the undersigned may have any
interest. All remittances and property shall be deemed left with you as soon as
put in transit to you by mail or carrier. In the event of the happening of any
one or more of the following, any one of which shall constitute an event of
default, to wit: (a) the non-payment of any of the Obligations; (b) the death,
failure in business, dissolution or termination of existence of the Borrower or
the undersigned; (c) any petition in bankruptcy being filed by or against the
Borrower or the undersigned, or any proceedings in bankruptcy, or under any laws
or regulations of any jurisdiction, relating to the relief of debtors, being
commenced for the relief or readjustment of any indebtedness of the Borrower or
the undersigned, either through reorganization, composition, extension or
otherwise; (d) the making by the Borrower or the undersigned of any assignment
for the benefit of creditors or the taking advantage by either of the same of
any insolvency law; (e) the appointment of a receiver of any property of the
Borrower or the undersigned; (f) any seizure, vesting or intervention by or
under authority of a government, by which the management of either the Borrower
or the undersigned is displaced or its authority in the conduct of its business
is curtailed; (g) the attachment or distraint of any funds or other property of
the Borrower or the undersigned which may be in, or come into, your possession
or under your control, or that of any third party acting for you, or of the same
becoming subject at any time to any mandatory order of court or other legal
process--then, or at any time(s) after the happening of any such event of
default, any or all of the Obligations shall, at your option, become (for the
purposes of this guaranty) immediately due and payable by the undersigned,
without demand or notice. Furthermore, upon the occurrence of any such event of
default you shall have all of the rights and remedies provided to a secured
party by the Uniform Commercial Code in effect in New York State at that time,
and in addition thereto, the undersigned, further agrees that (1) in the event
that notice is necessary, written notice mailed to the undersigned at the
address given below three business days prior to the date of public sale of the
property subject to the lien and security interest created herein or prior to
the date after which private sale or any other disposition of said property will
be made shall constitute reasonable notice, but notice given in any other
reasonable manner or at any other reasonable time shall be sufficient, (2) in
the event of sale or other disposition of such property, you may apply the
proceeds of any such sale or disposition to the satisfaction of your reasonable
attorneys' fees, legal expenses and other costs and expenses incurred in
connection with your retaking, holding, preparing for sale, and selling of the
property, and (3) without precluding any other methods of sale, the sale of
property shall have been made in a commercially reasonable manner if conducted
in conformity with reasonable commercial practices of banks disposing of similar
property, but in any event, you may sell at your option on such terms as you may
choose without assuming any credit risk and without any obligation to advertise.
IV. The undersigned hereby consents and agrees that you may at any time,
or from time to time, in your discretion: (1) extend or change the time of
payment, and/or the manner, place or terms of payment of all or any of the
Obligations; (2) exchange, release, and/or surrender all or any of the
collateral security, or any part(s), thereof, by whomsoever deposited, which is
now or may hereafter be held by you in connection with all or any of the
Obligations; (3) sell and/or purchase all or any such collateral at public or
private sale, or at any broker's board, and after deducting all costs and
expenses of every kind for collection, sale or delivery, the net proceeds of any
such sale(s) may be applied by you upon all or any of the Obligation(s), and (4)
settle or compromise with the Borrower, and/or any other person(s) liable
thereon, any and all of the Obligations, and/or subordinate the payment of same,
or any part(s) thereof, to the payment of any other debts or claims, which may
at any time(s) be due or owing to you and/or any other person(s) or
corporation(s); all in such manner and upon such terms as you may deem proper,
and without notice to or further assent from the undersigned, it being hereby
agreed that the undersigned shall be and remain bound upon this guaranty,
irrespective of the existence, value or condition of any collateral, and
notwithstanding any such change, exchange, settlement, compromise, surrender,
release, sale, application, renewal or extension, and notwithstanding also that
the Obligations may at time(s) exceed the aggregate principal sum hereinabove
prescribed and regardless of the validity, regularity or enforceability of any
of the Obligations or purported Obligations or existence of any other
circumstance which might otherwise constitute a defense available to the
Borrower or a discharge of the Borrower.
<PAGE>
Ratifying Resolution Authorizing Corp. Continuing Guarantee
CORPORATE RESOLUTION
of
I, the undersigned, Secretary of Fly Films, Inc.
----------------------------
(Exact Name of Corporation)
a corporation duly organized and existing under the laws of New York and
-----------
(Name of State where Incorp.)
having its principal place of business in New York, NY, hereby CERTIFY that
-------------------
(Name of City or Town & State)
the following is a true copy of a certain resolution duly adopted by the
Board of Directors of the said corporation in accordance with the By-Laws
at, and recorded in the minutes of, a meeting of the said Board duly held
on June 4 ,
------------------
(Date of Meeting)
1997 , and not subsequently rescinded or modified:
"RESOLVED, that this Corporation guarantee the liabilities and obligations of
SMA Video, Inc.
to Citibank, N.A. up to the principal amount of: Unlimited U.S. Dollars
plus interest, in the manner set forth in that Bank's form of Continuing
Guaranty presented at this meeting, which is hereby approved, and that any one
of the officers of this Corporation is authorized on behalf thereof to complete,
execute and deliver the same to said Bank and to secure such guaranty by a
mortgage or pledge of or the creation of any security interest in all or any
part of the property of this Corporation or any interest therein wherever
situated, with such changes in the guaranty and documents creating the Security
interest as shall be acceptable to the officer, or person executing and
delivering the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
this Corporation this 4th day of June, 1997.
/s/ illegible
------------------------
Secretary
(Corporate Seal)
<PAGE>
Banking Agreement BUSINESS & PROFESSIONAL
Corporation - General Resolution
Exact Name of Corporation: Principal Place of Business:
Fly Films, Inc. Number & Street 100 6th Ave.
City New York
State, Zip Code NY
Resolved:
1. The Citibank, N.A. (hereinafter called the "Bank") --------------------
Should the Board of Directors desire that the authority conferred be
restricted to one or more particular places of business of the Bank,
please specify here.
be and hereby is designated a depository of the funds of this
Corporation, and
be and hereby is designated a depository of the funds of this
Corporation, and
President, Treasurer/Secretary
If officer(s), designate office(s) only, for example: President,
Treasurer, etc.: if person(s) other than officer(s), insert name(s).
Singly
If two or more are designated, indicate whether they are to sign singly,
any two, jointly or otherwise.
is/are hereby authorized (i) to sign, for and on behalf of this
Corporation, any and all checks, drafts or other orders with respect to
any funds at any time(s) to the credit of this Corporation with the Bank
and/or against any account(s) of this Corporation maintained at any
time(s) with the Bank, inclusive of any and all checks and orders
accessing an overdraft line of credit and inclusive of any such checks,
drafts or other orders in favor of any of the above-designated
officer(s) and/or other person(s), and/or (ii) to make withdrawals at
any time(s) of any such funds or from any such account(s) by any other
means authorized by the Bank, including (without limitation) a debit
card, a credit card, a terminal or other device or facility providing
access to any such funds or account(s), and that the Bank be and hereby
is authorized (a) to pay such checks, drafts or orders, and/or to honor
such withdrawals, by debiting any account(s) of this Corporation then
maintained with it; (b) to receive for deposit to the credit of this
Corporation, and/or for collection for the account of this Corporation,
any and all checks, drafts, notes or other instruments for the payment
of money, whether or not endorsed by this Corporation, which may be
submitted to it for such deposit and/or collection, it being understood
that each such item shall be deemed to have been unqualifiedly endorsed
by this Corporation; and (c) to receive, as the act of this Corporation,
any and all stop-payment instructions (inclusive of any relative
agreement) with respect to any such checks, drafts or other orders as
aforesaid and reconcilement(s) of account when signed by any one or more
of the officer(s) and/or other person(s) as hereinbefore designated.
2. That President, Treasurer/Secretary
If officer(s), designate office(s) only, for example: President,
Treasurer, etc.: if person(s) other than officer(s), insert name(s).
Singly
If two or more are designated, indicate whether they are to sign singly,
any two, jointly or otherwise.
is/are hereby authorized, for and on behalf of this Corporation, to
transact any and all other business with or through the Bank which at
any time(s) may be deemed by the said officer(s) and/or other person(s)
transacting the same to be advisable, including, without limiting the
generality of the foregoing, authority to: (a) discount and/or negotiate
notes, drafts and other commercial paper, (b) apply for letters or
other forms of credit; (c) borrow money, with or without security; (d)
assign, transfer, pledge or otherwise hypothecate any property of the
Corporation; (e) purchase, exchange, sell, or otherwise deal in or with
any stocks, bonds and other securities; (f) execute and deliver
agreements for automated and computer services; (g) execute and deliver
electronic account access agreements, which may establish special
authorizations and limitations, pertaining to the accounts to be
accessed pursuant thereto, different from the authorizations and
limitations herein elsewhere contained, and to change such special
authorizations and limitations from time to time; and (h) in reference
to any of the business or transactions hereinbefore in this subdivision
"2" referred to, make, enter into, execute and deliver to the Bank such
negotiable or non-negotiable instruments, indemnity and other
agreements, obligations, assignments, endorsements, hypothecations,
pledges, receipts and/or other documents as may be deemed by the
officer(s) and/or other person(s) so acting to be necessary or
desirable.
3. That any and all withdrawals of money and/or other transactions
heretofore had in behalf of this Corporation with the Bank are hereby
ratified, confirmed and approved, and that the Bank (and any interested
third party) may rely upon the authority conferred by this entire
resolution unless, and except to the extent that, this resolution shall
be revoked or modified by a subsequent resolution of this Board, and
until a certified copy of such subsequent resolution has been received
by the Bank and the Bank has had a reasonable opportunity to act
thereon.
4. That the Bank is further authorized to pay to the debit of any
account(s) of this Corporation, any and all checks, drafts and other
instruments for the payment of money drawn in the name of this
Corporation bearing or purporting to bear the facsimile signature(s) of
President, Treasurer/Secretary
(If officer(s), designate office(s) only, for example: President,
Treasurer, etc. if person(s) other than officer(s), insert name(s).)
Singly
(If two or more are designated, indicate whether they are to sign
singly, any two, jointly or otherwise.)
inclusive of any in favor of any person(s) whose facsimile signature(s)
appear(s) thereon, if the facsimile signature(s) thereon, regardless of
by whom or what means affixed, resemble(s) the specimen(s) thereof filed
with the Bank.
5. That this corporation has filed a Certificate of Assumed Name with the
Secretary of State of New York in accordance with Section 130 of the
General Business Law and has received permission to use an assumed name
or trade style which is:
------------------------------------------------------------------------
I, the undersigned, Secretary of the above-named corporation, which is duly
organized and existing under the Laws of New York, (Name of state where
incorporated) and having its principal place of business at the above named
address, hereby CERTIFY that the above is a true copy of a certain resolution
duly adopted by the Board of Directors of the said corporation in accordance
with the By-Laws at, and recorded in the minutes of, a meeting of the said Board
duly held on 3/28, 1994, (Date of Meeting) and not subsequently rescinded or
modified.
I FURTHER CERTIFY that the following now occupy(ies) the respective office(s)
designated in the above-quoted resolution and that the same is (are) duly
qualified as such officer(s) and that the specimen(s) of the facsimile
signature(s) on the reverse side is (are) that (those) referred to in the
above-quoted resolution:
Please Complete Reverse Side.
CITIBANK [LOGO]
<PAGE>
CONSENT OF STOCKHOLDERS
of
Fly Films, Inc.
---------------------
WE, the undersigned, Stockholders of the above Corporation, each
holding the number of shares of its capital stock set forth after our respective
names and together holding the entire number of shares outstanding of the
capital stock of this Corporation entitled to vote thereon, do hereby consent in
writing that this Corporation guarantee the liabilities and obligations of SMA
Video, Inc.
100 Avenue of the Americas, New York, NY 10013 to Citibank, N.A.
- --------------------------------------------------------
to the extent of Unlimited U.S. Dollars,
--------------------------------------------------
plus interest, in the manner set forth in the Agreement of Guaranty which we
have examined and which Agreement is approved, and that any Officer of this
Corporation is authorized and directed to execute in the name of and on behalf
thereof the said Agreement of Guaranty and present the same to the Bank, and we
further consent that the said Corporation, by any Officer thereof, be and he
hereby is authorized on behalf thereof to secure such guaranty by a mortgage or
pledge of or the creation of a security interest in all or any part of the
property of this Corporation or any interest therein wherever situated.
NAME OF STOCKHOLDERS NO. OF SHARES HELD
-------------------- ------------------
Signature /s/ illegible 50%
---------------------- ------------
Signature /s/ illegible 50%
---------------------- ------------
Signature
---------------------- ------------
Signature
---------------------- ------------
Page 1 of 2
<PAGE>
GENERAL SECURITY AGREEMENT
Citibank, N.A.
666 FIFTH AVENUE
NEWYORK, NEW YORK 10103
GENTLEMEN:
1. From time to time the undersigned expects to become or has become
indebted or otherwise obligated or liable to you in connection with letter of
credit or acceptance transactions, trust receipt transactions, or other loan or
financial accommodations (such indebtedness, obligations and liabilities being
hereinafter referred to as the "Obligation(s)"). In consideration of the
Obligations, the undersigned agrees that, in order to provide you with security
for payment and performance of all the Obligations you shall have a security
interest in all of the personal property and fixtures of the undersigned, now or
hereafter existing or acquired, of any type or description, including but not
limited to all of the inventory of the undersigned wherever located. whether
raw, in process or finished; all materials or equipment usable in processing the
same: all documents of title covering any inventory; all equipment, furniture,
trade fixtures and furnishings employed in the operation of the undersigned's
business; all of the undersigned's contract rights, accounts receivable, general
intangibles, instruments, investment securities, chattel paper, notes, drafts,
acceptances, and all bank balances of the undersigned with you or other claims
of the undersigned against you and the proceeds and products of each of the
foregoing in any form whatsoever (all of the foregoing being hereinafter
referred to collectively as the "Collateral"). The undersigned agrees that
should the aggregate market value of the Collateral at any time suffer any
decline in value or should any property be deemed by you to be unsatisfactory or
inadequate, or should such property fail to conform to legal requirements, the
undersigned will upon request deliver to you additional Collateral or will make
one or more payments on account of the Obligations to your satisfaction. To the
extent that the aforesaid Collateral may consist of capital stock, it is further
agreed that, in event of any new or additional certificate(s) of stock being
issued (as stock dividends or otherwise) relative to any such capital stock,
held at the time as Collateral hereunder, such certificate(s) shall be deemed an
increment to the stock so held and under pledge to you and that therefore, such
certificate(s) will-to the extent received by or placed under the control of the
undersigned-be held or controlled in trust for you and will be promptly
delivered to you (in form for transfer) to be held hereunder if you so request.
2. You shall have no duty of care with respect to the Collateral,
except that you shall exercise reasonable care with respect to Collateral in
your custody, but shall be deemed to have exercised reasonable care if such
property is accorded treatment substantially equal to that which you accord your
own property, or if you take such action with respect to the Collateral as the
undersigned shall request in writing, but no failure to comply with any such
request nor any omission to do any such act requested by the undersigned shall
be deemed a failure to exercise reasonable care, nor shall your failure to take
steps to preserve rights against any parties or property be deemed a failure to
have exercised reasonable care with respect to Collateral in your custody.
3. In addition to the rights and security interest elsewhere herein set
forth, you may, at your option at any time(s) and with or without notice to the
undersigned, appropriate and apply to the payment or reduction, either in whole
or in part, of the amount owing on any one or more of the Obligations, whether
or not then due, any and all moneys now or hereafter with you, on deposit or
otherwise, to the credit of or belonging to the undersigned, it being understood
and agreed that you shall not be obligated to assert or enforce any rights or
security interest hereunder or to take any action in reference thereto, and that
you may in your discretion at any time(s) relinquish your right as to particular
Collateral hereunder without thereby affecting or invalidating your rights
hereunder as to all or any other Collateral hereinbefore referred to.
4. The undersigned further agrees and covenants, (a) that, if you so
demand in writing at any time, all proceeds shall be delivered to you promptly
upon their receipt in a form satisfactory to you; (b) that, if you so demand in
writing at any time, all chattel paper, instruments, and documents shall be
delivered to you at the time and place and in the manner in which specified by
your demand; (c) to execute and deliver, upon request, any notice, statement,
instrument, document, agreement or other papers and/or to perform any act
requested by you which may be necessary to create, perfect, preserve, validate
or otherwise protect any security interest granted pursuant hereto or to enable
you to exercise and enforce your rights hereunder or with respect to such
security interest; (d) that during the period that any Obligation is
outstanding, the undersigned will not, without obtaining your prior written
approval, create, incur, assume, or suffer to exist any security agreement
subject to the Uniform Commercial Code or any similar law of any jurisdiction,
except as herein provided, and the undersigned will not sign or file or
authorize the signing or filing of a financing statement under the said Uniform
Commercial Code of any jurisdiction with respect to the Collateral or any
portion thereof, except as herein provided. The undersigned further agrees to
provide you with such information as you may from time to time request with
respect to the location of any of its places of business. In addition, you will
be notified promptly in writing of any change in location of any office where
records concerning any of the accounts that constitute a portion of the
Collateral are maintained or of a change in location of the undersigned's
principal place of business.
5. In the event of the happening of any one or more of the following
events of default, to wit: (a) the non-payment of any of the Obligations; (b)
the failure of the undersigned forthwith, with or without notice, to furnish
satisfactory additional collateral, or to make payments on account as may be
agreed in any of the Obligations or herein; (c) the death, failure in business,
dissolution or termination of existence of the undersigned, (d) any petition in
bankruptcy being filed by or against the undersigned or any endorser or
guarantor of any obligation, or any proceedings in bankruptcy, or under any Acts
of Congress relating to the relief of debtors, being commenced for the relief or
readjustment of any indebtedness of the undersigned or any endorser or guarantor
of any Obligation, either through reorganization, composition, extension or
otherwise; (e) the making by the undersigned or any endorser or guarantor of any
Obligation of an assignment for the benefit of creditors or for taking advantage
by any of the same of any insolvency law; (f) any seizure, vesting or
intervention by or under authority of a government, by which the management of
the undersigned, and or any endorser or guarantor of an Obligation, is displaced
or its authority in the conduct of its business is curtailed; (g) the
appointment of any receiver of any property of the undersigned or of any
endorser or guarantor of any Obligation; (h) the attachment or distraint of any
of the Collateral or of the same becoming subject at any time to any mandatory
court order or other legal process (i) the failure of the undersigned to perform
any of its duties as specified either in this agreement or in any other
agreement(s) with respect to the Obligations: then or at any time after the
happening of such event of default, or at any time thereafter, any or all of the
Obligations then existing shall become immediately due and payable forthwith
upon declarations to such effect delivered by you to the undersigned without any
other presentment, demand, protest, or notice of any kind, without further
demand or notice to the undersigned. Furthermore, upon the occurrence of any
such event of default, your obligation(s) to make further loans or extensions of
credit or other financial accommodations to the undersigned shall thereupon be
terminated and you shall also have all of the rights and remedies provided to a
secured party by the Uniform Commercial Code in effect in New York State at that
time. In addition thereto the undersigned further agrees that (i) in the event
that notice is necessary under applicable law, written notice mailed to the
undersigned at the address given below three (3) business days prior to the date
of public sale of any of the Collateral subject to the security interest created
herein or prior to the date after which private sale or any other disposition of
said Collateral will be made shall constitute reasonable notice, but notice
given in any other reasonable manner or at any other time shall be sufficient;
(ii) in the event of sale or other disposition of any such Collateral, you may
apply the proceeds of any such sale or disposition to the satisfaction of your
reasonable attorneys' fees, legal expenses, and other costs and expenses
incurred in connection with your
<PAGE>
NOT TO BE USED FOR
CONSUMER TRANSACTIONS CONTINUING GUARANTY
Citibank, N.A.
NEW YORK
Date June 4, 1997
I, for and in consideration of any existing indebtedness to you of
SMA Video, Inc.
- --------------------------------------------------------------------------------
(Name and Address)
100 Avenue of the Americas, New York, NY 10013
- --------------------------------------------------------------------------------
(hereinafter called the "Borrower"), for the payment of which the undersigned is
now obligated to you, either as guarantor or otherwise, and/or in order to
induce you, in your discretion, at any time(s) hereafter, to make any loan(s) or
advance(s) or to extend credit in any other manner to, or at the request or for
the account of the Borrower, either with or without security, and/or to purchase
or discount any notes, bills receivable, drafts, acceptances, checks or other
instruments or evidences of indebtedness upon which the Borrower is or may
become liable as maker, endorser, acceptor, or otherwise, (all liabilities and
obligations of the Borrower to you, now or hereafter existing, being hereinafter
referred to as "Obligations"), the undersigned does hereby GUARANTEE the
punctual payment at maturity to you of each and all of the Obligations, together
with interest thereon and any and all expenses which may be incurred by you in
collecting all or any of the Obligations and/or in enforcing any rights
hereunder; provided,
however, that if and only if an amount of a designated currency is here
specified
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(indicate Amount and Country of which that Amount is Lawful Currency)
***** U.S. Dollars Unlimited *****
(U.S. $ Unlimited ),
- ------------------------------------------------------------------------------
then the liability of the undersigned hereunder shall not exceed at any one time
with respect to the aggregate principal amount of Obligations, and irrespective
of the currency(ies) in which the Obligations are payable, the amount of
currency here specified.
II. As implementing the foregoing, it is understood and agreed that (i)
the undersigned guarantees that the Obligations will be paid to you strictly in
accordance with the terms and provisions of any agreement(s), express or
implied, which has (have) been or may hereafter be made or entered into by the
Borrower in reference thereto, regardless of any law, regulation or decree, now
or hereafter in effect, which might in any manner affect any of the terms or
provisions of any such agreement(s) or your rights with respect thereto as
against the Borrower, or cause or permit to be invoked any alteration in the
time, amount or manner of payment by the Borrower of any of the Obligations, and
(ii) in each instance when the Borrower shall have agreed, relative to any one
or more of the Obligations, to pay or provide your Head Office or any of your
Branches or correspondents with any amount of money that is other than that
which is locally in common circulation at the time as currency in the place
where such agreement is made, and such amount is not actually paid or provided
as and when agreed or within such time as you may deem reasonable, the
undersigned will, upon request and as you may elect, either pay or provide the
amount in the exact currency and place as agreed by the Borrower or pay or
provide you in the City of New York with the equivalent of the amount in U.S.
dollars at your then prevailing rate for sales of the kind of currency
agreed to be paid or provided for transfer by cable to a place where it is
current.
III. As security for any and all liabilities of the undersigned to you,
not existing or hereafter arising hereunder, or otherwise, you are hereby given
the right to retain, and you are hereby given a lien upon and a security
interest in any and all moneys or other property (i.e., goods and merchandise,
as well as any and all documents relative thereto; also, funds, securities,
choices in action and any and all other forms of property whether real, personal
or mixed, and any right, title or interest of the undersigned therein or
thereto), and/or the proceeds thereof, which have/has been, or may hereafter be,
deposited or left with you (or with any third party acting on your behalf) by or
for the account or credit of the undersigned, including (without limitation of
the foregoing) that in safekeeping or in which the undersigned may have any
interest. All remittances and property shall be deemed left with you as soon as
put in transit to you by mail or carrier. In the event of the happening of any
one or more of the following, any one of which shall constitute an event of
default, to wit: (a) the non-payment of any of the Obligations; (b) the death,
failure in business, dissolution or termination of existence of the Borrower or
the undersigned; (c) any petition in bankruptcy being filed by or against the
Borrower or the undersigned, or any proceedings in bankruptcy, or under any laws
or regulations of any jurisdiction, relating to the relief of debtors, being
commenced for the relief or readjustment of any indebtedness of the Borrower or
the undersigned, either through reorganization, composition, extension or
otherwise; (d) the making by the Borrower or the undersigned of any assignment
for the benefit of creditors or the taking advantage by either of the same of
any insolvency law; (e) the appointment of a receiver of any property of the
Borrower or the undersigned; (f) any seizure, vesting or intervention by or
under authority of a government, by which the management of either the Borrower
or the undersigned is displaced or its authority in the conduct of its business
is curtailed; (g) the attachment or distraint of any funds or other property of
the Borrower or the undersigned which may be in, or come into, your possession
or under your control, or that of any third party acting for you, or of the same
becoming subject at any time to any mandatory order of court or other legal
process then, or at any time(s) after the happening of any such event of
default, any or all of the Obligations shall, at your option, become (for the
purposes of this guaranty) immediately due and payable by the undersigned,
without demand or notice. Furthermore, upon the occurrence of any such event of
default you shall have all of the rights and remedies provided to a secured
party by the Uniform Commercial Code in effect in New York State at that time,
and in addition thereto, the undersigned, further agrees that (1) in the event
that notice is necessary, written notice mailed to the undersigned at the
address given below three business days prior to the date of public sale of the
property subject to the lien and security interest created herein or prior to
the date after which private sale or any other disposition of said property will
be made shall constitute reasonable notice, but notice given in any other
reasonable manner or at any other reasonable time shall be sufficient, (2) in
the event of sale or other disposition of such property, you may apply the
proceeds of any such sale or disposition to the satisfaction of your reasonable
attorneys' fees, legal expenses and other costs and expenses incurred in
connection with your retaking, holding, preparing for sale, and selling of the
property, and (3) without precluding any other methods of sale, the sale of
property shall have been made in a commercially reasonable manner if conducted,
in conformity with reasonable commercial practices of banks disposing of similar
property, but in any event, you may sell at your option on such terms as you may
choose without assuming any credit risk and without any obligation to advertise.
IV. The undersigned hereby consents and agrees that you may at any
time, or from time to time, in your discretion: (1) extend or change the time of
payment, and/or the manner, place or terms of payment of all or any of the
Obligations; (2) exchange, release, and/or surrender all of any of the
collateral security, or any part(s), thereof, by whomsoever deposited, which is
now or may hereafter be held by you in connection with all or any of the
Obligations; (3) sell and/or purchase all or any such collateral at public or
private sale, or at any broker's board, and after deducting all costs and
expenses of every kind for collection, sale or delivery, the net proceeds of any
such sale(s) may be applied by you upon all or any of the Obligation(s), and (4)
settle or compromise with the Borrower, and/or any other person(s) liable
thereon, any and all of the Obligations, and/or subordinate the payment of same,
or any part(s) thereof, to the payment of any other debts or claims, which may
at any time(s) be due or owing to you and/or any other person(s) or
corporation(s); all in such manner and upon such terms as you may deem proper,
and without notice to or further assent from the undersigned, it being hereby
agreed that the undersigned shall be and remain bound upon this guaranty,
irrespective of the existence, value or condition of any collateral, and
notwithstanding any such change, exchange, settlement, compromise, surrender,
release, sale, application, renewal or extension, and notwithstanding also that
the Obligations may at time(s) exceed the aggregate principal sum hereinabove
prescribed and regardless of the validity, regularity or enforceability of any
of the Obligations or purported Obligations or existence of any other
circumstance which might otherwise constitute a defense available to the
Borrower or a discharge of the Borrower.
<PAGE>
Ratifying Resolution Authorizing Corp. Continuing Guarantee
CORPORATE RESOLUTION
of
I, the undersigned, Secretary of SMA Real Time, Inc.
-------------------------------
(Exact Name of Corporation)
a corporation duly organized and existing under the laws of New York and
----------------
(Name of State where Incorp.)
having its principal place of business in New York, NY, hereby CERTIFY that
------------
(Name of City or Town & State)
the following is a true copy of a certain resolution duly adopted by the Board
of Directors of the said corporation in accordance with the By-Laws at, and
recorded
in the minutes of, a meeting of the said Board duly held on June 4 ,
-----------------
(Date of Meeting)
1997 , and not subsequently rescinded or modified:
"RESOLVED, that this Corporation guarantee the liabilities and obligations of
SMA Video, Inc.
to Citibank, N.A. up to the principal amount of: Unlimited U.S. Dollars
plus interest, in the manner set forth in that Bank's form of Continuing
Guaranty presented at this meeting, which is hereby approved, and that any one
of the officers of this Corporation is authorized on behalf thereof to complete,
execute and deliver the same to said Bank and to secure such guaranty by a
mortgage or pledge of or the creation of any security interest in all or any
part of the property of this Corporation or any interest therein wherever
situated, with such changes in the guaranty and documents creating the Security
interest as shall be acceptable to the officer, or person executing and
delivering the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
this Corporation this 4th day of June ,1997
------ ------- --
Secretary
----------------------------------
(Corporate Seal)
<PAGE>
Banking Agreement BUSINESS & PROFESSIONAL
Corporation - General Resolution
Exact Name of Corporation: Principal Place of Business:
SMA REAL TIME, INC. Number & Street 100 6th Ave.
City New York
State, Zip Code NY
Resolved:
1. The Citibank, NA (hereinafter called the "Bank") ______________________
Should the board of Directors desire that the authority conferred be
restricted to one or more particular places of business of the Bank,
please specify here.
be and hereby is designated a depository of the funds of this
Corporation, and
President, Treasurer/Secretary
If officer(s), designate office(s) only, for example: President,
Treasurer, etc. if person(s) other than officer(s), insert name(s).
Singly
If two or more are designated, indicate whether they are to sign singly,
any two, jointly or otherwise.
is/are hereby authorized (i) to sign, for and on behalf of this
Corporation, any and all checks, draft or other orders with respect to
any funds at any time(s) to the credit of this Corporation with the Bank
and/or against any account(s) of this Corporation maintained at any
time(s) with the Bank, inclusive of any and all checks and orders
accessing an overdraft line of credit and inclusive of any such checks,
drafts or other orders in favor of any of the above-designated
officer(s) and/or other person(s), and/or (ii) to make withdrawals at
any time(s) of any such funds or from any such account(s) by any other
means authorized by the Bank, including (without limitation) a debit
card, a credit card, a terminal or other device or facility providing
access to any such funds or account(s), and that the Bank be and hereby
is authorized (a) to pay such checks, drafts or orders, and/or to honor
such withdrawals, by debiting any account(s) of this Corporation then
maintained with it; (b) to receive for deposit to the credit of this
Corporation, and/or for collection for the account of this Corporation,
any and all checks, drafts, notes or other instruments for the payment
of money, whether or not endorsed by this Corporation, which may be
submitted to it for such deposit and/or collection, it being understood
that each such item shall be deemed to have been unqualifiedly endorsed
by this Corporation; and (c) to receive, as the act of this Corporation,
any and all stop-payment instructions (inclusive of any relative
agreement) with respect to any such checks, drafts or other orders as
aforesaid and reconcilement(s) of account when signed by any one or more
of the officer(s) and/or other person(s) as hereinbefore designated.
2. That President, Treasurer/Secretary
If officer(s), designate office(s) only, for example: President,
Treasurer, etc. if person(s) other than officer(s), insert name(s).
Singly
If two or more are designated, indicate whether they are to sign singly,
any two, jointly or otherwise.
is/are hereby authorized, for and on behalf of this Corporation, to
transact any and all other business with or through the Bank which at
time(s) may be deemed by the said officer(s) and/or other person(s)
transacting the same to be advisable, including, without limiting the
generality of the foregoing, authority to: (a) discount and/or negotiate
notes, drafts and other commercial paper, (b) apply for letters or
other forms of credit; (c) borrow money, with or without security; (d)
assign, transfer, pledge or otherwise hypothecate any property of the
Corporation; (e) purchase, exchange, sell, or otherwise deal in or with
any stocks, bonds and other securities; (f) execute and deliver
agreements for authorized and computer services; (g) execute and deliver
electronic account access agreements, which may establish special
authorizations and limitations, pertaining to the accounts to be
accessed pursuant thereto, different from the authorizations and
limitations herein elsewhere contained, and to change such special
authorizations and limitations from time to time; and (h) in reference
to any of the business or transactions hereinbefore in this subdivision
"2" referred to, make, enter into, execute and deliver to the Bank such
negotiable or non-negotiable instruments, indemnity and other
agreements, obligations, assignments, endorsements, hypothecations,
pledges, receipts and/or other documents as may be deemed by the
officer(s) and/or other person(s) so acting to be necessary or
desirable.
3. That any and all withdrawals of money and/or other transactions
heretofore had in behalf of this Corporation with the Bank are hereby
ratified, confirmed and approved, and that the Bank (and any interested
third party) may rely upon the authority conferred by this entire
resolution unless, and except to the extent that this resolution shall
be revoked or modified by a subsequent resolution of this Board, and
until a certified copy of such subsequent resolution has been received
by the Bank and the Bank has had a reasonable opportunity to act
thereon.
4. That the Bank is further authorized to pay to the debit of any
account(s) of this Corporation, any and all checks, drafts and other
instruments for the payment of money drawn in the name of this
Corporation bearing or purporting to bear the facsimile signature(s) of
President, Treasurer/Secretary
(If officer(s), designate office(s) only, for example: President,
Treasurer, etc. if person(s) other than officer(s), insert name(s).)
Singly
(If two or more are designated, indicate whether they are to sign
singly, any two, jointly or otherwise.)
inclusive of any in few of any person(s) whose facsimile signature(s)
appear(s) thereon, if the facsimile signature(s) thereon, regardless of
by whom or what means affixed, resemble(s) the specimen(s) thereof filed
with the Bank.
5. That this corporation has filed a Certificate of Assumed Name with the
Secretary of State of New York in accordance with Section 130 of the
General Business Law and has received permission to use an assumed name
or trade style which is:
------------------------------------------------------------------------
I, the undersigned, Secretary of the above-named corporation, which is duly
organized and existing under the Laws of New York. (Name of state where
incorporated) and having its principal piece of business at the above named
address, hereby CERTIFY that the above is a true copy of a certain resolution
duly adopted by the Board of Directors of the said corporation in accordance
with the By-Laws at, and recorded in the minutes of a meeting of the said Board
duly held on 3/28, 1994, and not subsequently rescinded or modified.
I FURTHER CERTIFY that the following now occupy(ies) the respective office(s)
designated in the above-quoted resolution and that the same is (are) duty
qualified a such officer(s) and that the specimen(s) of the facsimile
signature(s) on the reverse side is (are) that (those) referred to in the
above-quoted resolution:
Please Complete Reverse Side.
CITIBANK
<PAGE>
CONSENT OF STOCKHOLDERS
of
SMA Real Time Inc.
-----------------------
WE, the undersigned, Stockholders of the above Corporation, each holding the
number of shares of its capital stock set forth after our respective names and
together holding the entire number of shares outstanding of the capital stock of
this Corporation entitled to vote thereon, do hereby consent in writing that
this Corporation guarantee the liabilities and obligations of SMA Video, Inc.
100 Avenue of the Americas, New York, NY 10013 to Citibank, NA.
- --------------------------------------------------------
to the extent of Unlimited U.S. Dollars _______________________________________,
plus interest, in the manner set forth in the Agreement of Guaranty which we
have examined and which Agreement is approved, and that any Officer of this
Corporation is authorized and directed to execute in the name of and on behalf
thereof the said Agreement of Guaranty and present the same to the Bank, and we
further consent that the said Corporation, by any Officer thereof, be and he
hereby is authorized on behalf thereof to secure such guaranty by a mortgage or
pledge of or the creation of a security interest in all or any part of the
property of this Corporation or any interest therein wherever situated.
NAME OF STOCKHOLDERS NO. OF SHARES HELD
-------------------- ------------------
Signature 50%
---------------------- ------------
Signature 50%
---------------------- ------------
Signature
---------------------- ------------
Signature
---------------------- ------------
Page 1 of 2
<PAGE>
GENERAL SECURITY AGREEMENT
Citibank, N.A.
666 FIFTH AVENUE
NEWYORK, NEW YORK 10103
GENTLEMEN:
1. From time to time the undersigned expects to become or has become
indebted or otherwise obligated or liable to you in connection with letter of
credit acceptance transactions, trust receipt transactions, or other loan or
financial accommodations (such indebtedness, obligations and liabilities being
hereinafter referred to as the "Obligation(s)"). In consideration of the
Obligations, the undersigned agrees that, in order to provide you with security
for payment and performance of all (the Obligations, you shall have a security
interest in all of the personal property and fixtures of the undersigned, now or
hereafter existing or acquired, of any type or description, including but not
limited to all of the inventory of the undersigned wherever located, whether
raw, in process or finished; all materials or equipment usable in processing the
same; a documents of title covering any inventory; all equipment, furniture,
trade fixtures and furnishings employed in the operation of the undersigned's
business; all of the undersigned's contract rights, accounts receivable, general
intangibles, instruments, investment securities, chattel paper, notes, drafts,
acceptances, and all bank balances of the undersigned with you or other claims
of the undersigned against you and the proceeds and products of each of the
foregoing in any form whatsoever (all of the foregoing being hereinafter
referred to collectively as the "Collateral"). The undersigned agrees that
should the aggregate market value of the Collateral at any time suffer any
decline in value or should any property be deemed by you to be unsatisfactory or
inadequate, or should such property fail to conform to legal requirements, the
undersigned will upon request deliver to you additional Collateral or will make
one or more payments on account of the Obligations to your satisfaction. To the
extent that the aforesaid Collateral may consist of capital stock, it is further
agreed that, in event of any new or additional certificate(s) of stock being
issued (as stock dividends or otherwise) relative to any such capital stock,
held at the time as Collateral hereunder, such certificate(s) shall be deemed an
increment to the stock so held and under pledge to you and that therefore, such
certificate(s) will-to the extent received by or placed under the control of the
undersigned-be held or controlled in trust for you and will be promptly
delivered to you (in form, for transfer) to be held hereunder if you so request.
2. You shall have no duty of care with respect to the Collateral,
except that you shall exercise reasonable care with respect to Collateral in
your custody, but shall be deemed to have exercised reasonable care if such
property is accorded treatment substantially equal to that which you accord your
own property, or if you take such action with respect to the Collateral as the
undersigned shall request in writing, but no failure to comply with any such
request nor any omission to do any such act requested by the undersigned shall
be deemed a failure to exercise reasonable care, nor shall your failure to take
steps to preserve rights against any parties or property be deemed a failure to
have exercised reasonable care with respect to Collateral in your custody.
3. In addition to the rights and security interest elsewhere herein set
forth, you may, at your option at any time(s) and with or without notice to the
undersigned, appropriate and apply to the payment or reduction, either in whole
or in part, of the amount owing on any one or more of the Obligations, whether
or not then due, any an all moneys now or hereafter with you, on deposit or
otherwise, to the credit of or belonging to the undersigned, it being understood
and agreed that you shall not be obligated to assert or enforce any rights or
security interest hereunder or to take any action in reference thereto, and that
you may in your discretion at any time(s) relinquish your right as to particular
Collateral hereunder without thereby affecting or invalidating your rights
hereunder as to all or any other Collateral hereinbefore referred to.
4. The undersigned further agrees and covenants, (a) that, if you so
demand in writing at any time, all proceeds shall be delivered to you promptly
upon their receipt in a form satisfactory to you; (b) that, if you so demand in
writing at any time, all chattel paper, instruments, and documents shall be
delivered to you at the time and place and in the manner in which specified by
your demand; (c) to execute and deliver, upon request, any notice, statement,
instrument, document, agreement or other papers and/or to perform any act
requested by you which may be necessary to create, perfect, preserve, validate
or otherwise protect any security interest granted pursuant hereto or to enable
you to exercise and enforce your rights hereunder or with respect to such
security interest; (d) that during the period that any Obligation is
outstanding, the undersigned with not, without obtaining your prior written
approval, create, incur, assume, or suffer to exist any security agreement
subject to the Uniform Commercial Code or any similar law of any jurisdiction,
except as herein provided, and the undersigned will not sign or file or
authorize the signing or filing of a financing statement under the said Uniform
Commercial Code of any jurisdiction with respect to the Collateral or any
portion thereof, except as herein provided. The undersigned further agrees to
provide you with such information as you may from time to time request with
respect to the location of any of its places of business. In addition, you will
be notified promptly in writing of any change in location of any office where
records concerning any of the accounts that constitute a portion of the
Collateral are maintained or of a change in location of the undersigned'
principal place of business.
5. In the event of the happening of any one or more of the following
events of default, to wit: (a) the non-payment of any of the Obligations; (b)
the failure of the undersigned forthwith, with or without notice, to furnish
satisfactory additional collateral, or to make payments on account as may be
agreed in any of the Obligations or herein; (c) the death, failure in business,
dissolution or termination of existence of the undersigned, (d) any petition in
bankruptcy being filed by or against the undersigned any endorser or guarantor
of any obligation, or any proceedings in bankruptcy, or under any Acts of
Congress relating to the relief of debtors, being commenced for the relief or
readjustment of any indebtedness of the undersigned or any endorser or guarantor
of any Obligation, either through reorganization, composition, extension or
otherwise (e) the making by the undersigned or any endorser or guarantor of any
Obligation of an assignment for the benefit of creditors or for taking advantage
by any of the same as any insolvency law; (f) any seizure, vesting or
intervention by or under authority of a government, by which the management of
the undersigned, and or any endorser a guarantor of an Obligation, is displaced
or its authority in the conduct of its business is curtailed; (g) the
appointment of any receiver of any property of the undersigned, or of any
endorser or guarantor of any Obligation; (h) the attachment or distraint of any
of the Collateral or of the same becoming subject at any time to any mandatory
court order or other legal process (i) the failure of the undersigned to perform
any of its duties as specified either in this agreement or in any other
agreement(s) with respect to the Obligations: then or at any time after the
happening of such event of default, or at any time thereafter, any or all of the
Obligations then existing shall become immediately due and payable forthwith
upon declarations to such effect delivered by you to the undersigned without any
other presentment, demand, protest, or notice of any kind, without further
demand or notice to the undersigned. Furthermore, upon the occurrence of any
such event of default, your obligation(s) to make further loans or extensions of
credit or other financial accommodations to the undersigned shall thereupon be
terminated and you shall also have all of the rights and remedies provided to a
secured party by the Uniform Commercial Code in effect in New York State at that
time. In addition thereto the undersigned further agrees that (i) in the event
that notice is necessary under applicable law, written notice mailed to the
undersigned at the address given below three (3) business days prior to the date
of public sale of any of the Collateral subject to the security interest created
herein or prior to the date after which private sale or any other disposition of
said Collateral will be made shall constitute reasonable notice, but notice
given in any other reasonable manner or at any other time shall be sufficient;
(ii) in the event of sale or other disposition of any such Collateral, you may
apply the proceeds of any such sale or disposition to the satisfaction of your
reasonable attorneys' fees, legal expenses, and other costs and expenses
incurred in connection with your
<PAGE>
NOT TO BE USED FOR
CONSUMER TRANSACTIONS CONTINUING GUARANTY
Citibank, N.A.
NEW YORK
Date June 4, 1997
I, for and in consideration of any existing indebtedness to you of
SMA Video, Inc.
- --------------------------------------------------------------------------------
(Name and Address)
100 Avenue of the Americas, New York, NY 10013
- --------------------------------------------------------------------------------
(hereinafter called the "Borrower"), for the payment of which the undersigned is
now obligated to you, either as guarantor or otherwise, and/or in order to
induce you, in your discretion, at any time(s) hereafter, to make any loan(s) or
advance(s) or to extend credit in any other manner to, or at the request or for
the account of the Borrower, either with or without security, and/or to purchase
or discount any notes, bills receivable, drafts, acceptances, checks or other
instruments or evidences of indebtedness upon which the Borrower is or may
become liable as maker, endorser, acceptor, or otherwise, (all liabilities and
obligations of the Borrower to you, now or hereafter existing, being hereinafter
referred to as "Obligations"), the undersigned does hereby GUARANTEE the
punctual payment at maturity to you of each and all of the Obligations, together
with interest thereon and any and all expenses which may be incurred by you in
collecting all or any of the Obligations and/or in enforcing any rights
hereunder; provided,
however, that if and only if an amount of a designated currency is here
specified
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(indicate Amount and Country of which that Amount is Lawful Currency)
***** U.S. Dollars Unlimited *****
(U.S. $ Unlimited ).
- ------------------------------------------------------------------------------
then the liability of the undersigned hereunder shall not exceed at any one time
with respect to the aggregate principal amount of Obligations, and irrespective
of the currency(ies) in which the Obligations are payable, the amount of
currency here specified.
II. As implementing the foregoing, it is understood and agreed that (i)
the undersigned guarantees that the Obligations will be paid to you strictly in
accordance with the terms and provisions of any agreement(s), express or
implied, which has (have) been or may hereafter be made or entered into by the
Borrower in reference thereto, regardless of any law, regulation or decree, now
or hereafter in effect, which might in any manner affect any of the terms or
provisions of any such agreement(s) or your rights with respect thereto as
against the Borrower, or cause or permit to be invoked any alteration in the
time, amount or manner of payment by the Borrower of any of the Obligations, and
(ii) in each instance when the Borrower shall have agreed, relative to any one
or more of the Obligations, to pay or provide your Head Office or any of your
Branches or correspondents with any amount of money that is other than that
which is locally in common circulation at the time as currency in the place
where such agreement is made, and such amount is not actually paid or provided
as and when agreed or within such time as you may deem reasonable, the
undersigned will, upon request and as you may elect, either pay or provide the
amount in the exact currency and place as agreed by the Borrower or pay or
provide you in the City of New York with the equivalent of the amount in U.S.
dollars at your then prevailing rate for sales of the kind of currency agreed to
be paid or provided for transfer by cable to a place where it is current.
III. As security for any and all liabilities of the undersigned to you,
not existing or hereafter arising hereunder, or otherwise, you are hereby given
the right to retain, and you are hereby given a lien upon and a security
interest in any and all moneys or other property (i.e., goods and merchandise,
as well as any and all documents relative thereto; also, funds, securities,
choices in action and any and all other forms of property whether real, personal
or mixed, and any right, title or interest of the undersigned therein or
thereto), and/or the proceeds thereof, which have/has been, or may hereafter be,
deposited or left with you (or with any third party acting on your behalf) by or
for the account or credit of the undersigned, including (without limitation of
the foregoing) that in safekeeping or in which the undersigned may have any
interest. All remittances and property shall be deemed left with you as soon as
put in transit to you by mail or carrier. In the event of the happening of any
one or more of the following, any one of which shall constitute an event of
default, to wit: (a) the non-payment of any of the Obligations; (b) the death,
failure in business, dissolution or termination of existence of the Borrower or
the undersigned; (c) any petition in bankruptcy being filed by or against the
Borrower or the undersigned, or any proceedings in bankruptcy, or under any laws
or regulations of any jurisdiction, relating to the relief of debtors, being
commenced for the relief or readjustment of any indebtedness of the Borrower or
the undersigned, either through reorganization, composition, extension or
otherwise; (d) the making by the Borrower or the undersigned of any assignment
for the benefit of creditors or the taking advantage by either of the same of
any insolvency law; (e) the appointment of a receiver of any property of the
Borrower or the undersigned; (f) any seizure, vesting or intervention by or
under authority of a government, by which the management of either the Borrower
or the undersigned is displaced or its authority in the conduct of its business
is curtailed; (g) the attachment or distraint of any funds or other property of
the Borrower or the undersigned which may be in, or come into, your possession
or under your control, or that of any third party acting for you, or of the same
becoming subject at any time to any mandatory order of court or other legal
process then, or at any time(s) after the happening of any such event of
default, any or all of the Obligations shall, at your option, become (for the
purposes of this guaranty) immediately due and payable by the undersigned,
without demand or notice. Furthermore, upon the occurrence of any such event of
default you shall have all of the rights and remedies provided to a secured
party by the Uniform Commercial Code in effect in New York State at that time,
and in addition thereto, the undersigned, further agrees that (1) in the event
that notice is necessary, written notice mailed to the undersigned at the
address given below three business days prior to the date of public sale of the
property subject to the lien and security interest created herein or prior to
the date after which private sale or any other disposition of said property will
be made shall constitute reasonable notice, but notice given in any other
reasonable manner or at any other reasonable time shall be sufficient, (2) in
the event of sale or other disposition of such property, you may apply the
proceeds of any such sale or disposition to the satisfaction of your reasonable
attorneys' fees, legal expenses and other costs and expenses incurred in
connection with your retaking, holding, preparing for sale, and selling of the
property, and (3) without precluding any other methods of sale, the sale of
property shall have been made in a commercially reasonable manner if conducted
in conformity with reasonable commercial practices of banks disposing of similar
property, but in any event, you may sell at your option on such terms as you may
choose without assuming any credit risk and without any obligation to advertise.
IV. The undersigned hereby consents and agrees that you may at any
time, or from time to time, in your discretion: (1) extend or change the time of
payment, and/or the manner, place or terms of payment of all or any of the
Obligations; (2) exchange, release, and/or surrender all or any of the
collateral security, or any part(s), thereof, by whomsoever deposited, which is
now or may hereafter be held by you in connection with all or any of the
Obligations; (3) sell and/or purchase all or any such collateral at public or
private sale, or at any broker's board, and after deducting all costs and
expenses of every kind for collection, sale or delivery, the net proceeds of any
such sale(s) may be applied by you upon all or any of the Obligation(s), and (4)
settle or compromise with the Borrower, and/or any other person(s) liable
thereon, any and all of the Obligations, and/or subordinate the payment of same,
or any part(s) thereof, to the payment of any other debts or claims, which may
at any time(s) be due or owing to you and/or any other person(s) or
corporation(s); all in such manner and upon such terms as you may deem proper,
and without notice to or further assent from the undersigned, it being hereby
agreed that the undersigned shall be and remain bound upon this guaranty,
irrespective of the existence, value or condition of any collateral, and
notwithstanding any such change, exchange, settlement, compromise, surrender,
release, sale, application, renewal or extension, and notwithstanding also that
the Obligations may at time(s) exceed the aggregate principal sum hereinabove
prescribed and regardless of the validity, regularity or enforceability of any
of the Obligations or purported Obligations or existence of any other
circumstance which might otherwise constitute a defense available to the
Borrower or a discharge of the Borrower.
<PAGE>
Ratifying Resolution Authorizing Corp. Continuing Guarantee
CORPORATE RESOLUTION
of
I, the undersigned, Secretary of SMA Visual Effects Corp.
-------------------------------
(Exact Name of Corporation)
a corporation duly organized and existing under the laws of New York and
----------------
(Name of State where Incorp.)
having its principal place of business in New York, NY, hereby CERTIFY that
------------
(Name of City or Town & State)
the following is a true copy of a certain resolution duly adopted by the Board
of Directors of the said corporation in accordance with the By-Laws at, and
recorded
in the minutes of, a meeting of the said Board duly held on June 4 ,
-----------------
(Date of Meeting)
1997 , and not subsequently rescinded or modified:
"RESOLVED, that this Corporation guarantee the liabilities and obligations of
SMA Video, Inc.
to Citibank, N.A. up to the principal amount of: Unlimited U.S. Dollars
plus interest, in the manner set forth in that Bank's form of Continuing
Guaranty presented at this meeting, which is hereby approved, and that any one
of the officers of this Corporation is authorized on behalf thereof to complete,
execute and deliver the same to said Bank and to secure such guaranty by a
mortgage or pledge of or the creation of any security interest in all or any
part of the property of this Corporation or any interest therein wherever
situated, with such changes in the guaranty and documents creating the Security
interest as shall be acceptable to the officer, or person executing and
delivering the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
this Corporation this 4th day of June ,1997
------ ------- --
Secretary
----------------------------------
(Corporate Seal)
<PAGE>
Banking Agreement BUSINESS & PROFESSIONAL
Corporation - General Resolution
Exact Name of Corporation: Principal Place of Business:
SMA Visual Effects Corp. Number & Street 100 6th Ave.
City New York
State, Zip Code NY
Resolved:
1. The Citibank, N.A. (hereinafter called the "Bank") ---------------------
Should the Board of Directors desire that the authority conferred be
restricted to one or more particular places of business of the Bank,
please specify here.
be and hereby is designated a depository of the funds of this
Corporation, and
President, Treasurer/Secretary
If officer(s), designate office(s) only, for example: President,
Treasurer, etc: if person(s) other than officer(s), insert name(s).
Singly
If two or more are designated, indicate whether they are to sign singly,
any two, jointly or otherwise.
is/are hereby authorized (i) to sign, for and on behalf of this
Corporation, any and all checks, drafts or other orders with respect to
any funds at any time(s) to the credit of this Corporation with the Bank
and/or against any account(s) of this Corporation maintained at any
time(s) with the Bank, inclusive of any and all checks and orders
accessing an overdraft line of credit and inclusive of any such checks,
drafts or other orders in favor of any of the above-designated
officer(s) and/or other person(s), and/or (ii) to make withdrawals at
any time(s) of any such funds or from any such account(s) by any other
means authorized by the Bank, including (without limitation) a debit
card, a credit card, a terminal or other device or facility providing
access to any such funds or account(s), and that the Bank be and hereby
is authorized (a) to pay such checks, drafts or orders, and/or to honor
such withdrawals, by debiting any account(s) of this Corporation then
maintained with it; (b) to receive for deposit to the credit of this
Corporation, and/or for collection for the account of this Corporation,
any and all checks, drafts, notes or other instruments for the payment
of money, whether or not endorsed by this Corporation, which may be
submitted to it for such deposit and/or collection, it being understood
that each such item shall be deemed to have been unqualifiedly endorsed
by this Corporation; and (c) to receive, as the act of this Corporation,
any and all stop-payment instructions (inclusive of any relative
agreement) with respect to any such checks, drafts or other orders as
aforesaid and reconcilement(s) of account when signed by any one or more
of the officer(s) and/or other person(s) as hereinbefore designated.
2. That President, Treasurer/Secretary
If officer(s), designate office(s) only, for example: President,
Treasurer, etc.: if person(s) other than officer(s), insert name(s).
Singly
If two or more are designated, indicate whether they are to sign singly,
any two, jointly or otherwise.
is/are hereby authorized, for and on behalf of this Corporation, to
transact any and all other business with or through the Bank which at
time(s) may be deemed by the said officer(s) and/or other person(s)
transacting the same to be advisable, including, without limiting the
generality of the foregoing, authority to: (a) discount and/or negotiate
notes, drafts and other commercial paper, (b) apply for letters or
other forms of credit; (c) borrow money, with or without security; (d)
assign, transfer, pledge or otherwise hypothecate any property of the
Corporation; (e) purchase, exchange, sell, or otherwise deal in or with
any stocks, bonds and other securities; (f) execute and deliver
agreements for automated and computer services; (g) execute and deliver
electronic account access agreements, which may establish special
authorizations and limitations, pertaining to the accounts to be
accessed pursuant thereto, different from the authorizations and
limitations herein elsewhere contained, and to change such special
authorizations and limitations from time to time; and (h) in reference
to any of the business or transactions hereinbefore in this subdivision
"2" referred to, make, enter into, execute and deliver to the Bank such
negotiable or non-negotiable instruments, indemnity and other
agreements, obligations, assignments, endorsements, hypothecations,
pledges, receipts and/or other document as may be deemed by the
officer(s) and/or other person(s) so acting to be necessary or
desirable.
3. That any and all withdrawals of money and/or other transactions
heretofore had in behalf of this Corporation with the Bank are hereby
ratified, confirmed and approved, and that the Bank (and any interested
third party) may rely upon the authority conferred by this entire
resolution unless, and except to the extent that, this resolution shall
be revoked or modified by a subsequent resolution of this Board, and
until a certified copy of such subsequent resolution has been received
by the Bank and the Bank has had a reasonable opportunity to act
thereon.
4. That the Bank is further authorized to pay to the debit of any
account(s) of this Corporation, any and all checks, drafts and other
instruments for the payment of money drawn in the name of this
Corporation bearing or purporting to bear the facsimile signature(s) of
President, Treasurer/Secretary
If officer(s), designate office(s) only, for example: President,
Treasurer, etc. if person(s) other than officer(s), insert name(s).
---------------------------
If two or more are designated, indicate whether they are to sign singly,
any two, jointly or otherwise.
inclusive of any in favor of any person(s) whose facsimile signature(s)
appear(s) thereon, if the facsimile signature(s) thereon, regardless of
by whom or what means affixed, resemble(s) the specimen(s) thereof filed
with the Bank.
5. That this corporation has filed a Certificate of Assumed Name with the
Secretary of State of New York in accordance with Section 130 of the
General Business Law and has received permission to use an assumed name
or trade style which is:
------------------------------------------------------------------------
I, the undersigned, Secretary of the above-named corporation, which is duly
organized and existing under the laws of New York. (Name of state where
incorporated) and having its principal place of business at the above named
address, hereby CERTIFY that the above is a true copy of a certain resolution
duty adopted by the Board of Directors of the said corporation in accordance
with the By-Laws at, and recorded in the minutes of, a meeting of the said Board
duty held on 3/28, 1994, and not subsequently rescinded or modified.
I, FURTHER CERTIFY that the following now occupy(ies) the respective office(s)
designated in the above-quoted resolution and that the same is (are) duly
qualified as such officer(s) and that the specimen(s) of the facsimile
signature(s) on the reverse side is (are) that (those) referred to in the
above-quoted resolution:
Please Complete Reverse Side.
CITIBANK
<PAGE>
CONSENT OF STOCKHOLDERS
of
SMA Visual Effects Corp.
-----------------------------
WE, the undersigned, Stockholders of the above Corporation, each holding the
number of shares of its capital stock set forth after our respective names and
together holding the entire number of shares outstanding of the capital stock of
this Corporation entitled to vote thereon, do hereby consent in writing that
this Corporation guarantee the liabilities and obligations of SMA Video, Inc.
100 Avenue of the Americas, New York, NY 10013 to Citibank, N.A.
- --------------------------------------------------------
to the extent of Unlimited U.S. Dollars,
plus interest, in the manner set forth in the Agreement of Guaranty which we
have examined and which Agreement is approved, and that any Officer of this
Corporation is authorized and directed to execute in the name of and on behalf
thereof the said Agreement of Guaranty and present the same to the Bank, and we
further consent that the said Corporation, by any Officer thereof, be and he
hereby is authorized on behalf thereof to secure such guaranty by a mortgage or
pledge of or the creation of a security interest in all or any part of the
property of this Corporation or any interest therein wherever situated.
NAME OF STOCKHOLDERS NO. OF SHARES HELD
-------------------- ------------------
Signature 50%
---------------------- ------------
Signature 50%
---------------------- ------------
Signature
---------------------- ------------
Signature
---------------------- ------------
Page 1 of 2
<PAGE>
LEASE AGREEMENT
---------------
Lease No. 001-03599-01
Lease Date May 5, 1995
TERMS AND CONDITIONS OF LEASE
- --------------------------------------------------------------------------------
LESSOR: LCA LEASING CORP. (hereinafter called "Lessor")
ADDRESS: 9400 Williamsburg Plaza, Suite 200
Louisville, Kentucky 40222
LESSEE: SMA VIDEO INC.
(hereinafter called "Lessee")
ADDRESS: 100 AVENUE OF THE AMERICAS
NEW YORK, NY 10013
SUPPLIER: RANK CINTEL INC. LIPSNER-SMITH COMPANY
(hereinafter called "Supplier")
ADDRESS: 25358 AVENUE STANFORD 4700 CHASE
LINCOLNWOOD, IL 60648
VALENCIIA, CA 91355
- --------------------------------------------------------------------------------
Quantity Description of Leased Equipment (Make, Kind, Model No., Serial No. and
any other pertinent identification) (Collectively "Equipment") and individually
"item" herein)
- --------------------------------------------------------------------------------
(1) NEW RANK CINTEL TELECINE SYSTEM. (1) NEW LIPSNER-SMITH CLEANING MACHINE.
- --------------------------------------------------------------------------------
Location of Equipment
ADDRESS: 100 AVENUE OF THE AMERICAS
NEW YORK, NY 10013
- --------------------------------------------------------------------------------
BASE TERM: 60 : $
- --------------------------------------------------------------------------------
RENTAL PAYMENTS: The first 60 payment(s) each at $16,227.89; followed by 0
payment(s) each at $O; followed by 0 payment(s) each at $O;
followed by 0 payment(s) each at $O; followed by 0 payment(s)
each at $0.
ADVANCE RENTALS: First 0 month(s) and Last 0 month(s) rental payment(s)
payable at the time of signing this Lease in the total amount
of $0.
- --------------------------------------------------------------------------------
<PAGE>
ADDITIONAL TERMS AND CONDITIONS OF LEASE:
1. LEASE OF EQUIPMENT. Lessor leases to Lessee and Lessee hereby leases from
Lessor all the Equipment. Lessee hereby authorizes Lessor to insert in this
lease ("Lease") the serial numbers and other identification information of the
Equipment when determined by Lessor.
2. ORDERING EQUIPMENT. Lessor nbagrees to order the Equipment from Supplier
upon the terms and conditions of Lessor's purchase order. Lessee agrees to
arrange for delivery of Equipment and Lessee shall inspect the Equipment upon
its arrival and shall promptly execute the Delivery and Acceptance Receipt or
notify Lessor in writing of any defects in the Equipment. Lessee agrees that
upon execution of the Delivery and Acceptance Receipt it shall be conclusively
presumed as between Lessor and Lessee that Lessee has fully inspected the
Equipment, that the Equipment is in good condition and repair and that Lessee
is satisfied with and has accepted the Equipment. In case Lessee gives written
notice of a defect with respect to any item of Equipment, Lessee shall on
demand by Lessor pay Lessor any amounts theretofore paid or owing by Lessor in
respect of the purchase of such item of Equipment and upon such payment Lessee
shall be subrogated to Lessor's claim, if any, against Supplier and Lessee
shall indemnify and save Lessor harmless from any and all liability to the
Supplier and/or any other person with regard thereto. Lessee further agrees
that upon execution of the Delivery and Acceptance Receipt, Lessee has
accepted the Equipment and thereby waives any and all of its rights to cover,
reject or revoke acceptance of the Equipment and Lessee acknowledges and
understands that Lessor purchases the Equipment for Lessee's use and
possession in reliance upon this representation.
3. TERM. The term of this lease shall commence on the earlier of the first day
of the month in which Lessee executes and delivers to Lessor the Delivery and
Acceptance Receipt hereinafter mentioned or thirty (30) days after delivery of
the Equipment to the Lessee at the location(s) designated herein, and ends on
the last day of the last month of the number of months stated above as the term
of this Lease.
4. RENT. Lessee shall pay Lessor the total rental for the term of this Lease,
which shall be the total amount of all rental payments stated above, plus such
additional rental as may arise. All monthly payments of rental shall be payable
in advance on the date this Lease commences or on such date that Lessor
designates for such payment and on the same day of each month thereafter,
whether or not Lessor has rendered an invoice therefor. at the office of Lessor
set forth herein or to such other place as Lessor may from time to time
designate in writing.
5. ADVANCE RENTALS. Lessee shall deposit with Lessor any Advance Rentals set
forth herein. Any Advance Rentals so taken shall be non-interest bearing.
Lessor may, but shall not be obligated to, apply any Advance rentals to cure
any default to Lessee hereunder, in which event Lessee shall promptly restore
any amount so applied. Failure to restore immediately Applied Rentals applied
by Lessor shall be a default hereunder.
6. SECURITY DEPOSIT. Lessor shall retain any Security Deposit set forth in this
Lease as security for the performance by Lessee of its obligations hereunder.
Any Security Deposit so taken shall be non-interest bearing. Lessor may, but
shall not be obligated to, apply any Security Deposit to cure any default of
Lessee hereunder, in which event Lessee shall promptly restore any amount so
applied. If Lessee is not in default of any Lessee's obligations hereunder, any
Security Deposit will be returned to Lessee at the termination of this Lease. In
the event that Lessor applies said Security Deposit and Lessee fails to retore
immediately the Security Deposit, Lessee shall be in default hereunder. Lessee
further agrees that Lessor may apply said Security Deposit without conducting a
public or private sale as Lessee agrees that such sale is not necessary under
the circumstances. Lessee further agrees that Lessor may commingle the Security
Deposit with Lessor's general funds and need not segregate the Security Deposit.
7. NON-CANCELABLE NET LEASE. Lessor is the owner of the Equipment for all
purposes. THIS LEASE IS A NON-CANCELABLE NET LEASE. WHEN LESSEE SIGNS AND
DELIVERS A DELIVERY AND ACCEPTANCE RECEIPT FOR AN ITEM, ITS OBLIGATIONS TO PAY
ALL RENT AND OTHER AMOUNTS-WHEN DUE FOR THE ITEM AND OTHERWISE TO PERFORM AS
REQUIRED HEREUNDER ARE UNCONDITIONAL, IRREVOCABLE AND INDEPENDENT. THESE
OBLIGATIONS ARE NOT SUBJECT TO CANCELLATION, TERMINATION, PREPAYMENT,
MODIFICATION, REPUDIATION, EXCUSE OR SUBSTITUTION BY LESSEE. LESSEE IS NOT
ENTITLED TO ANY ABATEMENT, REDUCTION, OFFSET, DEFENSE OR COUNTERCLAIM WITH
RESPECT TO THESE OBLIGATIONS FOR ANY REASON WHATSOEVER, WHETHER ARISING OUT OF
DEFAULT OR OTHER CLAIMS AGAINST LESSOR OR THE MANUFACTURER OR SUPPLIER OF THE
ITEM, DEFECTS IN OR DAMAGE TO THE ITEM, ITS LOSS OR DESTRUCTION, OR OTHERWISE.
This Lease shall not terminate, nor the respective obligations of Lessor or
Lessee be otherwise affected nor shall Lessor have any liability whatsoever to
Lessee, by reason of any defect in or damage to or reduction in value or use
of or loss or destruction of any or all items of Equipment from whatever
cause, including without limitation, any prohibition, commercial frustration,
impossibility, frustration of purpose, or commercial impracticability of
Lessee's use of the Equipment or any item thereof, or the interference with
such use by restrictions imposed by any governmental law, regulation, decree,
ruling or other such legal determination.
8. ASSIGNMENT. WITHOUT LESSOR'S PRIOR WRITTEN CONSENT, LESSEE SHALL NOT (A)
ASSIGN, TRANSFER, PLEDGE, HYPOTHECATE, OR OTHERWISE DISPOSE OF THIS LEASE, THE
EQUIPMENT OR ANY INTEREST THEREIN, OR (B) SUBLET OR LEND THE EQUIPMENT OR PERMIT
IT TO BE USED BY ANYONE OTHER THAN LESSEE OR LESSEE'S EMPLOYEES. ANY SUCH
PURPORTED ASSIGNMENT, SUBLEASE OR LOAN IS VOID. LESSOR MAY ASSIGN THIS LEASE OR
GRANT A SECURITY INTEREST IN THE EQUIPMENT IN WHOLE OR IN PART WITHOUT NOTICE TO
LESSEE, AND LESSOR'S ASSIGNEE OR SECURED PARTY MAY THEN ASSIGN THIS LEASE OR THE
SECURITY AGREEMENT WITHOUT N0TICE TO LESSEE. LESSEE AGREES THAT ANY SUCH
ASSIGNMENT WILL NOT MATERIALLY INCREASE LESSEE'S RISK OR BURDEN. EACH SUCH
ASSIGNEE AND/OR SECURED PARTY SHALL HAVE ALL THE RIGHTS BUT NONE OF THE
OBLIGATIONS OF LESSOR UNDER THIS LEASE. LESSEE SHALL RECOGNIZE SUCH ASSIGNMENTS
AND/OR SECURITY AGREEMENTS AND SHALL NOT ASSERT AGAINST THE ASSIGNEES AND/OR THE
SECURED PARTIES ANY DEFENSE, COUNTERCLAIM OR SETOFF THAT LESSEE MAY HAVE AGAINST
LESSOR.
9. DISCLAIMER OF WARRANTIES. LESSEE ACKNOWLEDGES THAT LESSEE HAS SELECTED BOTH
THE SUPPLIER AND THE LEASED EQUIPMENT AND HAS REQUESTED LESSOR TO PURCHASE SAME
FOR LESSEE AND, IN TURN, LEASE SAME THERETO. LESSOR LEASES THE EQUIPMENT AS-IS,
WHERE-IS, AND WITH ALL FAULTS. LESSEE ACKNOWLEDGES THAT THE EQUIPMENT IS OF A
SIZE, DESIGN AND CAPACITY SELECTED BY LESSEE AND THAT LESSEE IS SATISFIED THAT
THE SAME IS SUITABLE FOR LESSEES PURPOSES, AND THAT LESSOR HAS MADE NO
REPRESENTATION OR WARRANTY WITH RESPECT TO THE SUITABILITY OR DURABILITY OF SAID
EQUIPMENT FOR THE PURPOSES AND USES OF LESSEE, OR ANY OTHER REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT THERETO, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. LESSEE
FURTHER ACKNOWLEDGES THAT FOR ALL PURPOSES HEREUNDER THE SUPPLIER IS LESSEE'S
AGENT. LESSEE ACKNOWLEDGES THAT SUPPLIER IS NOT AN AGENT OF OR SPOKESMAN FOR
LESSOR AND THAT NO STATEMENTS, ACTS, OMISSIONS OR REPRESENTATIONS OF SUPPLIER
ARE BINDING ON LESSOR. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A DEALER OR
MERCHANT OF THE GOODS LEASED AND LESSEE REPRESENTS THAT LESSEE HAS NOT RELIED ON
LESSOR'S SKILL OR JUDGMENT IN SELECTING OR FURNISHING THE EQUIPMENT. LESSEE
ACKNOWLEDGES AND AGREES THAT NEITHER SUPPLIER NOR ANY OTHER PERSON IS AUTHORIZED
TO MAKE ANY STATEMENTS OR REPRESENTATIONS AND THAT NONE ARE BINDING ON LESSOR
AND FURTHER THAT THE BREACH OF SUCH DO NOT RELIEVE LESSEE OF OR IN ANY WAY
AFFECT ANY OF LESSEE'S OBLIGATIONS TO LESSOR HEREIN. If the Equipment is not
properly installed, or is unsatisfactory for any reason, Lessee shall,
nevertheless, pay Lessor all rental payable under this Lease and shall not set
up against Lessee's obligations any such claims as a defense, counterclaim,
offset or otherwise. Lessee further agrees that it hereby waives any claim
(including any claim based on strict or absolute liability in tort) it might
have against Lessor for any loss, damage (including incidental or consequential
damage) or expense caused by the Equipment and will defend, indemnify. and hold
Lessor harmless from any claims. actions, or causes of action arising out of
said Equipment. Lessee will make any claims for any unsatisfactory item only
against the manufacturer, Supplier, or seller and at its own expense and not
against Lessor. All warranties to the extent that they are assignable, if any,
from the Supplier to the Lessor are assigned to the Lessee for the term of this
Lease as long as the Lease is not in default for the Lessee to exercise at its
expense. All warranty as to any tax or accounting consequences resulting from
this Lease are disclaimed by Lessor and Lessee represents to Lessor it has
sought and obtained independent professional advice and has relied on same in
deciding to enter into this Lease and Lessee assumes all tax and accounting
risks and all risks as to the stylization of this Lease.
10. LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee acknowledges, represents and
warrants to Lessor the following:
(a) Lessor has not selected, manufactured, or supplied the Equipment;
(b) Lessor acquired the Equipment or the right to possession and use of the
Equipment in connection with the Lease.
(c) Lessee has received a copy of, reviewed and approved each contract by which
Lessor acquired the Equipment or the right to possession and use of the
Equipment, before signing this Lease:
1 of 4 pages
<PAGE>
(d) Lessee, before signing this Lease, received an accurate and complete
statement designating the promises and warranties and any disclaimers of
warranties, limitations or modifications of remedies, or liquidated damages,
including those of a third party, such as the manufacturer of the Equipment,
provided to the Lessor by the person supplying the Equipment in connection with
or as part of each contract by which Lessor acquired the Equipment or the right
to possession and use of the Equipment;
(e) Lessee has selected Supplier(s) and directed Lessor to purchase the leased
Equipment and/or the right to possession and use of the Equipment from
Supplier(s);
(f) Unless previously known to or acknowledge by Lessee, Lessor informed
Lessee in writing before Lessee signed this Lease, (1) of the identity of each
person supplying the Equipment to Lessor, (2) that the Lessee is entitled to
the promises and warranties including those of any third party, provided to
the Lessor by the person supplying the Equipment in connection with or as a
part of the contract by which the Lessor acquired the Equipment or the right
to possession and use of the Equipment, and (3) that the Lessee may
communicate with the person supplying the Equipment to the Lessor and receive
an accurate and complete statement of those promises and warranties, including
my disclaimers and limitations of them or of remedies;
(g) Lessor provides no warranties or other rights with respect to the
purchase of the Equipment and any and all rights Lessee has with respect to
the purchase of the Equipment are solely against Supplier.
11. EQUIPMENT INSTALLATION AND DELIVERY. Lessee will install or arrange to
install (or base, in the case of a motor vechicle or other movable Equipment)
the Equipment at the location specified herein. Lessee may not move the
Equipment to another location without first obtaining the consent of Lessor in
writing which consent may be withheld by Lessee at its sole discretion. In
such event Lessee must notify Lessor in writing before the move and cooperate
with Lessor in filing appropriate financing statements. Lessee will insure
that the Equipment remains personal property even though it may be installed
on real property. Lessee will at its expense cause each item subject to
vehicle or other registration laws to be fully and correctly titled,
registered and licensed and will apply for and cause a certificate of title to
be issued for the item showing Lessor as both owner and (if possible) sole
lienholder. The Equipment may not be removed to any location other than the
United States of America notwithstanding any term hereof and to do so is an
act of default.
Lessee further acknowledges that Lessor will rely upon the executed Delivery
and Acceptance Receipt by paying Supplier for the Equipment upon Lessor's
receipt thereof. Therefore, Lessees execution of the Delivery and Acceptance
Receipt shall conclusively establish that the Equipment covered thereby is
acceptable to Lessee for all purposes of this Lease and shall constitute an
acceptance of the Equipment described in the Lease.
12. LOCATION: INSPECTION: TAXES: USE. Lessee will be entitled to unlimited
use of the Equipment and Lessee represents the Equipment will be used only for
business or commercial purposes and not for personal, family or household
purposes. Lessee will at its expense comply with all laws, rules, regulations,
requirements, and orders applying to the Equipment and its use, maintenance,
repair, condition, storage and operation. Lessor may inspect the Equipment and
its maintenance records on reasonable notice. Lessee will keep the Equipment
free of liens, claims and encumbrances. Lessee will promptly pay, when due, all
taxes, liens, fees, costs and assessments upon the Equipment imposed by any
governmental, or other, entity or person whatsoever. If Lessee fails to do so,
Lessor may pay such tax and Lessee shall at once reimburse Lessor for the
amount thereof. Failure to pay such tax, when due, by Lessee shall constitute
an event of default hereunder by Lessee. Lessee shall affix and maintain
labels upon a visible place on each item of Equipment indicating that Lessor
is the owner of the Equipment and if Lessee shall fail or refuse to do so
Lessor may do so.
13. ALTERATIONS: MAINTENANCE. Lessee shall, at Lessee's own expense, maintain
the Equipment in good operating condition, repair appearance, furnish all
parts and labor required to keep the Equipment in such condition, protect same
from deterioration other than normal wear and tear, and only use the Equipment
in the regular course of Lessee's business and within normal capacity. For the
purpose of assuring Lessor that the Equipment will be properly serviced,
Lessee shall cause the Equipment to be maintained pursuant to a standard
preventative maintenance contract. Lessee shall not make any modifications,
alterations or additions to the Equipment without prior written consent of
Lessor, and then, all such modifications, alterations and additions shall
belong to Lessor and shall be returned to Lessor with the Equipment upon the
expiration or earlier termination of this Lease.
14. INSURANCE. Lessee shall keep the Equipment insured against all risks of
loss or damage from every cause whatsoever for not less than the full
replacement value thereof. The amount of such insurance shall be sufficient so
that neither Lessor nor Lessee will be considered a co-insurer. Lessee shall
carry public liability insurance, both personal injury and property damage,
covering the Equipment. All such insurance shall be in form and with companies
satisfactory to Lessor and shall name Lessor and its assignee as loss payee as
its interest may appear with respect to property damage coverage and as
additional insured with respect to public liability coverage. Lessee shall pay
the premiums for such insurance and upon Lessor's request deliver to Lessor
satisfactory evidence of insurance coverage required hereunder. The proceeds
of such insurance payable as a result of loss or damage to any item of
Equipment shall be applied to satisfy Lessee's obligations as set forth in
Paragraph 16 below. Lessee hereby irrevocably appoints Lessor as Lessee's
attorney-in-fact to make a claim for, receive payment of and execute and
endorse all documents, checks, or drafts received in payment for loss or
damage under any such insurance policy. Lessee agrees if Lessee shall fail to
procure, maintain, and pay for such insurance, Lessor shall have the right,
but not the obligation, to do so on behalf of Lessee. In the event Lessee does
not obtain and/or pay for such insurance, such failure to obtain and/or pay
for such insurance constitutes a default hereunder.
15. RISK OF LOSS. Lessee shall bear the entire risk of loss, theft, destruction,
damage or disrepair of the Equipment or any part thereof for any cause
whatsoever commencing with the date the Lessee or Lessor has entered into a
contract with Supplier(s) of the Equipment. No such loss, damage, theft,
destruction or disrepair of the Equipment shall relieve Lessee of the obligation
to pay rent or from any other obligation under this Lease. In the event of any
of the above, Lessee, at Lessee's own expense and at Lessor's option, shall
either (a) repair the Equipment, returning same to its previous condition,
unless irreparable; or (b) replace same with like Equipment of equivalent value,
in good condition and acceptable to Lessor, which shall become the property of
the Lessor, or (c) immediately pay Lessor the amount that would be due in the
event of a default upon this Lease. Lessor will then deliver a bill of sale for
the item and Lessee's obligation to pay rent for the item will terminate. All
proceeds of insurance received by Lessor as a result of such loss or damage
shall be applied either toward the replacement or repair of the Equipment or the
payment of the obligations of Lessee as set forth hereinabove.
16. GENERAL INDEMNITY. Lessee shall pay and defend, indemnify and hold Lessor
and any successor, assignee or secured party of Lessor harmless on an after-tax
basis from any and all reasonable legal fees whether or not suit has been filed
of any nature whatsoever that may be imposed on, incurred by or asserted against
an indemnified party with respect to any item or its purchase, acceptance,
delivery, ownership, leasing, possession, maintenance, use, operation or
transportation, whether or not any other parties are involved, including without
limitation claims (a) for latent or other defects, (b) for patent, trademark or
copyright infringement, (c) for personal injury, death or property damage, and
(d) based on the negligence of the indemnified party or on strict liability.
17. EVENT OF DEFAULT. Any of the following events or conditions shall
constitute an event of default with or without demand or notice to Lessee
hereunder:
(a) Lessee does not make any payment of rent or any other amount payable to
Lessor under this Lease or under any other indebtedness of Lessee to Lessor
arising independently of this Lease, when due;
(b) Lessee does not timely perform or observe any other covenant, condition
or agreement to be performed or observed under this Lease or under any other
agreement with Lessor;
(c) Any representation or warranty made by Lessee in any Lease, in any
agreement or in any application or financial statement or in any related
document proves to be incorrect in any material respect when made;
(d) Lessee ceases doing business as a going concern;
(e) Lessee becomes insolvent or makes an assignment for the benefit of
creditors;
(f) If a petition is filed by or against Lessee under the Bankruptcy Code or
under any insolvency law or proceeding;
(g) If Lessee applies for or consents to the appointment of a receiver,
trustee. conservator, or liquidator of Lessee or such receiver, trustee,
conservator. or liquidator is appointed without the application or consent of
Lessee;
(h) If any statement, representation or warranty furnished by Lessee to
Lessor after entering into this Lease is untrue or unperformed in any material
respect;
(i) If a creditor of Lessee or any other person or entity attaches or levies
execution against Lessee and the attachment or levy is not released within 48
hours;
(j) If Lessee makes a bulk transfer of its furniture, fixtures, furnishings,
equipment or inventory;
(k) If Lessee breaches any of the terms of any loan or
credit agreements, or defaults thereunder or if the condition of Lessee's
affairs so changes as to, in Lessor's opinion, increase the credit risk
involved and Lessor thereby becomes insecure as to performance of this Lease
or any other agreement with Lessee;
2 of 4 pages
<PAGE>
(l) If Lessee shall create, incur, assume, cause or suffer to exist any
mortgage, trust deed, lien, pledge, hypothecation, or other encumbrance
attachment, or execution of any kind whatsoever upon, effecting or with
respect to the Equipment, this Lease or any of Lessor's interests under the
Lease or any other obligation due and payable to Lessor;
(m) If Lessee is an individual or sole proprietor and is judicially declared
incompetent.
Lessee may have more than one obligation with Lessor and a default on any one
such obligation constitutes a default on each other obligation at the option Of
Lessor with or without notice or demand.
For purposes of this section, Lessee also means any Guarantor of Lessee's
obligations under any lease and Lease also means my Guaranty of those
obligations. Therefore, in the event my Guarantor dies or any event of default
described above occurs with respect to any Guarantor, this Lease will be deemed
in default.
18. REMEDIES. If any event of default edits, Lessor without notice or demand may
do one or more of the following in any order and such remedies be cumulative:
(a) Lessor may require Lessee to deliver up any or all of the Equipment at
Lessee's expense at such pace or places as Lessor may require.
(b) Lessor may repossess any and all Equipment wherever found, may enter the
premises where the Equipment is located and disconnect, render unusable and
remove same without liability to Lessor, and may use such premises without
charge to store or show the Equipment for sale, re-lease, or other
disposition.
(c) If Lessor does not recover possession of the Equipment, Lessor may
require Lessee to pay Lessor as liquidated damages for loss of the benefit of
its bargain and not as a penalty, and in lieu of any further payments of rent
for the Equipment its Stipulated Loss Value. Stipulated Loss Value is defined
as: (1) All unpaid rent, delinquency charges, interest, and other amounts due
for the Equipment through the date of entry of judgment; and (2) All sums to
be paid pursuant to the terms of the Lease including but not limited to future
rents, the residual value of the Equipment and all tax recapture benefits
which sums shall be discounted as of the date of entry of judgment at the rate
of 6% (the discount will only apply to tax recapture benefits it allowed by
law). The parties acknowledge that the Stipulated Loss Value reasonably
reflects Lessor's anticipated loss with respect to the Equipment and this
Lease resulting from the event of default.
(d) If Lessor recovers any Equipment, Lessor may sell by public or private sale,
re-lease, hold, retain, or otherwise dispose of the Equipment in any manner it
chooses, free and clear of any claims or rights of Lessee and without any duty
to account to Lessee with respect thereto except as provided hereinbelow:
(1) Lessor may hold and/or retain the Equipment and recover from Lessee
the Stipulated Loss Value.
(2) Lessor may re-lease the Equipment and recover from the Lessee the
Stipulated Loss Value less the amount to be received by Lessor for such
releasing which amount to be received by Lessor for such releasing shall
be discounted at the rate of 6%.
(3) Lessor may sell or otherwise dispose of the Equipment and recover
from the Lessee the Stripulated Loss Value less the net amount received
by Lessor from such sale.
(e) Lessor my sue for all rentals due under the Lease as they shall accrue.
(f) In the event any of the damages provided above is inadequate, Lessor may
recover the present value of its profit including reasonable overhead the Lessor
would have made from full performance by the Lessee.
(g) Lessor may terminate any or all Leases, may sue to enforce Lessee's
performance thereof, and/or may exercise any other right or remedy then
available to Lessor permitted at law or in equity.
No failure or delay on the part of the Lessor to exercise any right or remedy
hereunder shall operate as a waiver thereof.
In addition to the above, in all cases, Lessee shall be liable for all costs,
expenses and damages incurred by Lessor whether or not an event of default or
otherwise occurs, including but not limited to, all legal fees whether or not
suit is filed, allocable costs of in-house counsel and other staff, costs
related to the repossession, reconditioning and disposition of the Equipment,
and all incidental and consequential damages.
As used in this Lease, the Residual Value shall be deemed to be the estimated
value of the Equipment at the end of the stated term of this Lease (Lessor may
specifically enforce this provision which is a material inducement to Lessor in
entering into this Lease). For purposes of determining present value as used
herein, Lessor and Lessee agree to utilize the rate of 6%. Lessee acknowledges
that said present value interest rate factor has been freely negotiated between
Lessor and Lessee at a commercially reasonable rate, taking into account the
facts and circumstances as of the date hereof.
Lessor shall not be required to take possession of the Equipment or to proceed
with any legal process including but not limited to the repossessing of the
Equipment or giving Lessee notice before exercising any of the above remedies.
None of the above remedies is intended to be exclusive, but each is cumulative
and in addition to any other remedy available to Lessor. Lessor's exercise of
any one or more remedy shall not preclude its exercise of any other remedy. No
action taken by Lessor shall release Lessee from any of its obligations to
Lessor.
(h) Lessee may have more than one obligation with Lessor and in such event any
collateral securing any one such obligation is deemed collateral for each other
obligation and the security interest granted herein is intended to secure all
such obligations, jointly and severally, and is not limited to the obligations
set forth herein.
19. OWNERSHIP: PERSONAL PROPERTY. The Equipment is, and shall at all times be
and remain sole and exclusive property of Lessor, and Lessee, notwithstanding
any trade-in or down payment made by Lessee or on its behalf with respect to the
Equipment, shall have no right, title or interest therein or thereto, except as
to the use thereof subject to the terms and conditions of this Lease. The
Equipment is, and at all times shall remain, personal property notwithstanding
that the Equipment or any item thereof may now be, or hereafter become, in any
manner affixed or attached to, or imbedded in, or permanently resting upon real
property or any improvement thereof or attached in any manner to what is
permanent.
20. FINANCIAL REPORTS. Lessee shall provide Lessor with: (a) annual financial
statements within 120 days after and as of the close of each fiscal year,
including at least a balance sheet, statement of operations and statement of
changes in financial position, all prepared in accordance with generally
accepted accounting principles applied on a consistent basis, and (b) such other
information as Lessor may reasonably request from time to time.
21. LESSEE'S WAIVERS. To the extent permitted by law, Lessee hereby waives any
rights now or hereafter conferred by statute or otherwise which may require
Lessor to sell, lease or otherwise use any Equipment in mitigation of Lessor's
damages or which may otherwise limit or modify any of Lessor's rights or
remedies hereunder.
22. DELINQUENCY CHARGES AND INTEREST AFTER DEFAULT. If Lessee fails to pay any
rent or other sum to be paid by Lessee to Lessor hereunder within ten (10) days
after the due date thereof, Lessee shall pay Lessor (a) an amount calculated at
the rate of six cents ($.06) per dollar ($ 1.00) for each such delayed payment,
and shall make such payment within ten (10) days after the original due date, as
compensation for Lessor's internal operating expenses arising as a result of
such failure, and (b) other amounts paid by Lessor relevant to the collection
thereof. All sums due as a result of any default shall accrue interest at the
rate of 18% per annum from date of default, or in not lawful, then at the
highest legal rate, until paid in full.
23. STATUTE OF LIMITATIONS. Any action by Lessee against Lessor for any default
by Lessor under this Lease, shall be commenced within one (1) year after any
such cause of action accrues.
24. ENFORCEABILITY. This Lease shall not be binding and enforceable until
accepted by the Credit Committee of LCA Leasing Corp., which convenes
periodically in New York which is the last act necessary to enforcement of this
Agreement.
3 of 4 pages
<PAGE>
25. JURY TRIAL. TO THE EXTENT PREMITTED BY LAW, LESSEE WAIVES TRIAL BY JURY IN
ANY ACTION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LEASE, OR THE
TRANSACTIONS CONTEMPLATED HEREIN.
26. UNIFORM COMMERCIAL CODE FINANCING STATEMENTS. Lessee grants a security
interest to Lessor in all Equipment covered hereunder to the extent necessary
to protect Lessor's title to or interest in the Equipment and hereby authorizes
Lessor to file one or more financing statements covering the Equipment and any
and all other collateral and/or security. Lessee authorizes Lessor to sign,
file, record and otherwise process any such financing statements on Lessee's
behalf and agrees to pay Lessor all fees in connection with such filing.
27. COUNTERPARTS AND RECORDING. This Lease ease may be executed in any number
of required counterparts, each counterpart constituting an original. The
parties are to execute, acknowledge and delivery such further counterparts of
this Lease as may be required at any time in order to comply with the
provisions of any applicable law requiring the recording or filing of this
Lease or a copy hereof in any public office of the United Sates, any state or
any political or governmental subdivision of any state. Lessee agrees to pay
the fees and charges imposed by law for such mandatory recording or filing and
the necessary expenses of Lessor, if any, in effecting such recording or
filing. Only the counterpart marked "Original" may be used as a basis for the
granting of any security interest in chattel paper; all other counterparts not
nominated "Original" are deemed after execution to be mere true copies.
28. MISCELLANEOUS. This Lease shall be governed by the laws of the State of
New York. Any action to enforce this Lease may be brought in a State or
Federal court in New York County, New York, where each Lease has been entered
into and contracted to be performed. To the extent any provision of this Lease
may be determined to be invalid or unenforecable, such invalidity or
unenforceability shall not affect the other provisions hereof. All obligations
of each Lessee, if more than one, shall be joint and several. This Lease shall
be binding upon the parties, its/their successors, legal representatives and
assigns and is a valid legal instrument. All paragraph headings are inserted
for reference purposes only and shall not affect the interpretation or meaning
of this Lease. Time is of the essence in this Lease and each and all provisions
and payment of all indebtedness thereunder. The obligations and liabilities of
Lessee arising hereunder shall survive the expiration or earlier termination
hereof until all obligations have been met and all liabilities haw been paid
in full. Notices hereunder shall (a) be in writing, (b) be delivered
personally or sent by mail or overnight courier to the intended recipient at
its address specified above unless the recipient has given written notice of
another address. Lessee will notify Lessor in writing at least thirty (30) days
before changing its principal place of business or chief executive office.
Lessee will at its expense promptly sign and delivery to Lessor such documents
and assurances and take such further action as Lessor may reasonably request in
order to carry out the intent of this Lease. In the event Lessor incurs any
legal expense enforcement or defense of a term hereof Lessee shall pay all
attorneys fee and court costs whether or not suit is filed both at trial and on
appeal(s). Lessee authorizes Lessor or Lessor's agents to sign, file and record,
on Lessee's behalf, any financing statement Lessor reasonably considers
necessary to protect or perfect its interest in the Equipment and/or other
collateral, if any, and expressly authorizes and instructs Lessor to enter
serial numbers and other pertinent information upon this Lease as Lessor deems
desirable to protect Lessor's interest in the Equipment. Lessee further
authorizes Lessor or Lessor's agents to execute any documents on Lessee's behalf
which Lessee is required and fails to execute pursuant to the terms of the
Lease.
29. ALL MODIFICATIONS MUST BE IN WRITING. The terms of this Lease may not be
waived, altered, amended, modified, revoked, or rescinded and all other prior
and/or contemporaneous oral and written representations are merged herein. This
is the final expression of this Lease between Lessor and Lessee. Any agreements
to modify this Lease must be executed by Lessor and Lessee by a signed writing
and no attempt at modification or rescission of this Lease will be binding or
enforceable as a matter of law.
LCA LEASING CORP.
BY: /s/ Gary Mauer SVP
-----------------------------------------
Title
ACCEPTANCE DATE:
6/30 ,1995
- -------------------------------- --
LESSEE:
SMA VIDEO INC.
BY: /s/ illegible President
-----------------------------------------
Title
BY:
-----------------------------------------
Title
DATE: May 5 ,1995
--------------------------- --
ATTEST: (Witness or Notary) illegible
----------------------------------------------------
Name and Address
Subscribed and sworn to before me this 5 day of May , 1995
-------- --------- --
4 of 4 pages
<PAGE>
EQUIPMENT LEASE SCHEDULE
Lease # 001-03599-001
Schedule No., 001 under Equipment Lease No. 001-03599 between LCA Leasing Corp.
(Lessor) and SMA VIDEO INC. of NEW YORK, NY (Lessee).
Lessor and Lessee agree to the following terms subject to the covenants and
conditions of the above identified lease:
1. SCHEDULE: This schedule is entered into as of the acceptance date stated
below between Lessor and Lessee. This schedule is made part of, is subject
to, and is incorporated by reference into the Lease, numbered and
identified, its terms and conditions. All terms not otherwise defined have
the definitions and meanings stated in the Lease.
2. EQUIPMENT LEASED: THE following equipment is leased under the terms and
conditions stated in the Lease and in this schedule. It is generally
described here and more specifically described in attached Exhibit "A".
(1) NEW RANK CINTEL TELECINE SYSTEM. (1) NEW LIPSNER-SMITH CLEANING
MACHINE.
3. TERM & RENT: The first 60 payment(s) each at $16,227.89; followed by 0
payment(s) each at $O; followed by 0 payment(s) each at $O; followed by 0
payment(s) each at $O; followed by 0 payment(s) each it $0.
ADVANCE RENTAL: $ 0 is due and payable at the signing of this schedule
being first 0 month(s) and last 0 MONTH(S) advance rentals.
SECURITY DEPOSIT. $ is due on or before the signing of the schedule as a
Security Deposit.
4. LOCATION: If different from Lessee's address, items of equipment shall be
located at the following address and shall not be moved without the prior
written consent of Lessor:
100 AVENUE OF THE AMERICAS
NEW YORK, NY 10013
5. INSURANCE: Lessee confirms that the insurance policies required under
section 14 of the terms and conditions of the Lease have been obtained, are
in full force and effect, and a binder or other evidence has been provided
to the satisfaction of Lessor.
6. REPRESENTATIONS BY LESSEE: Lessee represents and warrants that requirements
precedent to the lease and schedule have been fulfilled, satisfied or
complied with; representations and warranties about the Lessee are true,
correct and have experienced no material adverse change as of the date
hereof and no event of default under the lease exists as to this schedule
nor has occurred nor is continuing.
IN WITNESS WHEREOF, Lessor and Lessee execute this schedule upon the dates
written.
LCA LEASING CORP.
BY: /s/ Gary Mauer SVP
-----------------------------------------
Title
ACCEPTANCE DATE:
6/30 ,1995
- -------------------------------- --
LESSEE:
SMA VIDEO INC.
BY: /s/ illegible President
-----------------------------------------
Title
BY:
-----------------------------------------
Title
DATE: May 5,1995
---------------------------------------
ATTEST: (Witness or Notary) illegible
----------------------------------------------------
Name and Address
Subscribed and sworn to before me this 5 day of May , 1995
-------- --------- --
<PAGE>
FROM: (LESSEE) DATE May 5, 1995
SMA VIDEO INC. ---------------------
100 AVENUE OF THE AMERICAS
NEW YORK, NY 10013
TO: LCA LEASING CORP. (LESSOR)
9400 WILLIAMSBURG PLAZA
SUITE 200
LOUISVILLE., KENTUCKY 40222
RE: LEASE # 001-03599-001
Gentlemen:
The Above-Captioned Equipment Lease Agreement between us shall be amended and
supplemented, effective SIXTY (60) days prior to the expiration of the initial
term thereof and provided said Lease is not then and has not been in default, by
the addition to said Lease of the following:
OFFER OF PURCHASE: Notwithstanding anything to the contrary contained herein,
Lessee shall have the OBLIGATION to purchase Lessor's Right, Title and Interest
in and to the equipment, as a whole, but not in part, AS-IS, WHERE-IS, at the
end of the base or the initial term of this Lease for $ 1.00 (plus any and all
applicable taxes) provided that Lessee is not then and has not been in default
hereunder. Lessee agrees that any default hereunder shall render this Offer of
Purchase null and void, of no force or effect and that this provision will be
strictly enforced.
All else in said Equipment Lease shall remain unchanged and in full force and
effect.
If the foregoing is acceptable to you, kindly indicate your acceptance by
signing the enclosed copy of this letter and return such executed copy to the
undersigned, so that this agreement may become effective as set forth above,
SIXTY (60) days prior to the scheduled expiration of the Initial Lease Term. Any
default by Lessee under the Lease shall automatically negate your acceptance
hereof.
Very Truly Yours,
SMA VIDEO
BY: /s/ illegible President
----------------------------------
TITLE
ACCEPTED AND AGREE TO:
LCA LEASING CORP.
BY:/s/ Gary Mauer SVP
-------------------------------
TITLE
DATE: 6/30 , 1995
------------------ --
<PAGE>
Massachusetts Mutual Life Insurance Company
STANDARD PROFIT SHARING
Internal Revenue Service Serial No. D256560a
PROTOTYPE PLAN AND TRUST AGREEMENT
The undersigned Employer hereby adopts the Massachusetts Mutual Life Insurance
Company Prototype Defined Contribution Plan and Trust Agreement, herein called
the Plan, in order to establish a Profit Sharing Plan which will provide
retirement benefits for its Employees. The Profit Sharing Plan hereby
established is a Standard Plan according to Revenue Procedure 84-23 as modified
by Revenue Procedure 89-9.
Massachusetts Mutual submitted in accordance with Revenue Procedure 89-9 the
attached Adoption Agreement and related Pension Plan Document to the Internal
Revenue Service and has received an Opinion Letter approving the form of plan.
It must be understood that a determination by the Internal Revenue Service as to
the qualification under ss.401(a) of the Code of a plan established by a
particular employer can be made only upon consideration of all the facts
peculiar to that employer. Consequently, the Opinion Letter which has been
received, with respect to this plan, does not automatically constitute a
determination as to its qualification when it is established by any individual
employer. An employer who adopts this plan will be considered to have a
qualified plan only if the conditions of the Opinion Letter are satisfied.
In making this form available, Massachusetts Mutual does not make any
representations, either express or implied, that its provisions will necessarily
fulfill all of the requirements of any particular employer.
ANY PENSION PLAN AND ITS RELATED DOCUMENTS INVOLVE SIGNIFICANT FINANCIAL, LEGAL
AND TAX CONSIDERATION FOR WHICH NEITHER MASSACHUSETTS MUTUAL NOR ANY OF ITS
REPRESENTATIVES CAN ASSUME RESPONSIBILITY. NO EMPLOYER SHOULD UNDERTAKE THE
ESTABLISHMENT OF A PENSION PLAN WITHOUT PRIOR CONSULTATION WITH ITS OWN ATTORNEY
AND HIS APPROVAL OF THE NECESSARY DOCUMENTS.
A NON-REFUNDABLE DOCUMENT USE AND REGISTRATION FEE IS REQUIRED
UPON ADOPTION OF THIS PLAN
@Copyright 1986, 1991
SP-LI-7.13b
1/30/91
1b
<PAGE>
Plan Description: Prototype Standardized Profit Sharing Plan
FNN: 50238832302-002 Case: 9203298 EIN: 04-1590850
BPD: 02 Plan: 002 Letter Serial No: 0256560b
MASSACHUSETTS MUTUAL LIFE INSURANCE CO
1295 STATE STREET
SPRINGFIELD, MA 01111
Washington, D.C. 20224
Person to Contact: Mr. Wolf
Telephone Number: (202) 622-8380
Refer Reply to: E:EP:Q:1
Date: 03/10/93
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does not
in and of itself adversely affect the plan's acceptability under section 401 of
the Internal Revenue Code. This opinion relates only to the amendment to the
form of the plan. It is not an opinion as to the acceptability of any other
amendment or of the form of the plan as a whole, or as to the effect of other
Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for highly compensated employees than for
other employees. Except as stated below, the Key District Director will not
issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16) if: (1) an employer ever maintained another qualified plan for one or
more employees who are covered by this plan, other than a specified paired plan
within the meaning of section 7 of Rev. Proc. 89-9, 1989-1 C.B. 780; or (2)
after December 31, 1985, the employer maintains a welfare benefit fund defined
in Code section 419(e), which provides postretirement medical benefits allocated
to separate accounts for key employees as defined in Code section 419A(d)(3).
An employer that has adopted a standardized plan may not rely on this opinion
letter with respect to: (1) whether any amendment or series of amendments to the
plan satisfies the nondiscrimination requirements of section 1.401(a)(4)-5(a) of
the regulations, except with respect to plan amendments granting past service
that meets the safe harbor described in section 1.401(a)(4)-5(a)(5) and are not
part of a pattern of amendments that significantly discriminates in favor of
highly compensated employees; or (2) whether the plan satisfies the effective
availability requirement of section 1.401(a)(4)-6(c) of the regulations with
respect to any benefit, right or feature.
An employer that has adopted a standardized plan as an amendment to a plan other
than a standardized plan may not rely on this opinion letter with respect to
whether a benefit, right or other feature is prospectively eliminated satisfies
the current availability requirements of section 1.401(a)-4 of the regulations.
<PAGE>
Internal Revenue Service
Plan Description: Prototype Standardized Profit Sharing Plan
FNN: 50238832302-002 Case: 9004210 EIN: 04-1590850
BPD: 02 Plan: 002 Letter Serial No: 0256560a
MASSACHUSETTS MUTUAL LIFE INSURANCE CO
1295 STATE STREET
SPRINGFIELD, MA 01111
Department of the Treasury
Washington, D.C. 20224
Person to Contact: Mrs. Fleming
Telephone Number: (202) 566-6421
Refer Reply to: E:EP:Q:1
Date: 01/30/91
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit of
their employees. This opinion relates only to the acceptability of the form of
the plan under the Internal Revenue Code. It is not an opinion of the effect of
other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for officers, owners, or highly compensated
employees than for other employees. Except as stated below, the Key District
Director will not issue a determination letter with regard to this plan.
Our plan does not apply to the form of the plan for purposes of Code section
401(a)(16) if: (1) an employer ever maintained another qualified plan for one or
more employees who are covered by this plan, other than a specified paired plan
within the meaning of section 7 of Rev. Proc. 89-9, 1989-6 I.R.B. 14; or (2)
after December 31, 1985, the employer maintains a welfare benefit fund defined
in Code section 419(e), which provides postretirement medical benefits allocated
to separate accounts for key employees as defined in Code section 419A(d)(3). In
such situations, the employer should request a determination as to whether the
plan, considered with all related qualified plans and, if appropriate, welfare
benefit funds, satisfies the requirements of Code section 401(a)(16) as to
limitations on benefits and contributions in Code section 415.
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor's address and telephone number for
inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief, Employee Plans Qualifications Branch
2b
<PAGE>
Massachusetts Mutual Life Insurance Company
STANDARD PROFIT SHARING
PROTOTYPE PLAN AND TRUST AGREEMENT
(A) GENERAL PLAN AND EMPLOYER INFORMATION
(1) Plan Name SMA Video, Inc. Profit Sharing Plan
----------------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
(2) Trustee(s) Name(s) Michael Morrissey & David Satin
-------------------------------------------
-------------------------------------------------------------------
-------------------------------------------------------------------
(3) Employer Organization Elect One.
(a) (x) Corporation
(b) ( ) S Corporation
(c) ( ) Sole Proprietorship
(d) ( ) Partnership
(e) ( ) Other___________________________________________________
Specify
(4) Type of Funding Elect one.
(a) ( ) Solely through the purchase of individual life insurance
and/or annuity products.
(b) (x) Through other funding arrangements.
3b
<PAGE>
(5) Paired Plan Identify other Massachusetts Mutual
standard paired plan(s), if applicable.
(a) (x) Money Purchase
(b) ( ) Profit Sharing
(c) ( ) ss.401(k)
(d) ( ) Target Benefit
(e) ( ) Defined Benefit Non-integrated
(f) ( ) Defined Benefit Integrated
NOTE: Only one paired plan maintained by the Employer may be integrated.
(B) DATES AND COMPUTATION PERIODS
(1) New Plan
Effective Date of Plan:_________________________________, 19___
Not earlier than the date of establishment of the adopting employer.
First Plan Year end date: _____________________________, 19___
The first Plan Year begins on the Effective Date of the Plan.
Subsequent Plan Years: From ____________________ to ___________
Must be a twelve month period.
(2) Existing Plan Complete if this Adoption Agreement constitutes an
amendment and restatement in its entirety of a
previously established plan.
Effective date of this amendment: October 1, 1989
First Plan Year end date: September 30, 1990
The first Plan Year under this amendment begins on the Effective Date.
Subsequent Plan Years: From October 1 to Sept. 30
Must be a twelve month period.
Pre-existing plan name: SMA Video, Inc. Profit Sharing Plan
From the previous plan document.
4b
<PAGE>
Pre-existing plan Adoption Date: September 23, 1987
From the previous plan document.
(3) Limitation Year shall mean: Elect one.
(a) ( ) the Calendar Year.
(b) (X) the 12-consecutive month period coinciding with the Plan
Year.
(c) ( ) From _____________________________ to __________________
Must be a 12-consecutive month period.
Note: If the Limitation Year is not the calendar year, the Employer shall
adopt a resolution applying the elected Limitation Year to all plans
maintained by the Employer.
(4) Entry Date(s) Elect one.
(a) (X) the first day of the Plan Year.
(b) ( ) the first day of the Plan Year and six months thereafter.
(c) ( ) the first day of the Plan Year and the first day of every
third calendar month thereafter.
(d) ( ) the first day of the Plan Year and the first day of every
calendar month thereafter.
(5) Contract Date(s) Complete if insurance or amenity contracts are
issued under the Plan.
Initial Contract Date: ______________________________, 19__
The date contracts are initially issued under the Plan.
Subsequent Contract Date(s): __________________________________
The month(s) and day any subsequent contracts are issued under the Plan.
(C) ELIGIBILITY FOR PARTICIPATION
(1) Age and Service
(a) Attainment of age 21 Not to exceed 21.
(b) Completion of 1 year(s) of service Not to exceed 2.
5b
<PAGE>
(2) Exclusions From Participation Elect all that apply.
(a) ( ) Employees included in a unit covered by a collective
bargaining agreement between the Employer and Employee
Representatives under which retirement benefits were the subject
of good faith bargaining and if less then 2% of the Employees of
the Employer who are covered pursuant to that agreement are
professionals as defined in ss.410(b)-9(g) of the proposed
regulations. For this purpose, the term "Employee
Representatives" does not include any organization more than
half of whose members are employees who are owners, officers, or
executives of the employer.
(b) ( ) Employees who are nonresident aliens and who receive no earned
earned income from the employer which constitutes income from
sources within the United States.
(3) Predecessor Service Elect all that apply.
Service with a predecessor Employer, including a sole proprietor or
partnership, which did not maintain this Plan shall be considered
service with the Employer for each purpose elected below:
(a) ( ) Eligibility Service
(b) ( ) Vesting Credit
(c) ( ) Limitations on Allocations
(D) COMPENSATION
(1) Compensation means all of a Participant's Elect one.
(a) (X) W-2 withholding wages (Section 3401(a) wages).
(b) ( ) W-2 withholding wages (Box 1).
(c) ( ) ss.415 safe-harbor compensation.
(2) Employer Contributions made pursuant to a salary reduction agreement
which are not includible in the gross income of the Employee under
ss.125, ss.402(a)(8), ss.402(h), ss.403(b), or ss.457 of the Code or
contributions picked up by the employing unit under ss.414(h)(2) of the
Code
(a) (X) shall be included in compensation.
(b) ( ) shall not be included in compensation.
6b
<PAGE>
(3) Applicable to Non-Standard Plans only.
(4) Compensation shall be determined over the following applicable period:
(a) (X) the Plan Year.
(b) ( ) the calendar year ending with or within the Plan Year.
(c) ( ) the portion of the Plan Year during which the Employee
was a Participant in the Plan.
(E) APPLICABLE TO SS.401(K) PLANS ONLY
(F) EMPLOYER CONTRIBUTION FORMULA
(1) (X) A sum to be determined each Plan Year by Employer Resolution.
(2) ( ) ___% of Net Profits in excess of $________ Dollar
Amount
or N/A
(3) ( ) ___% of the Compensation of all Participants. Not to
exceed 15%
(4) ( ) ___% of the first $________ of Net Profits plus
___% of Net Profits in excess thereof.
(5) ( ) $________.
(6) ( ) _____________________________________________________________
_____________________________________________________________
Enter the Employer contribution Formula.
(G) ALLOCATION OF EMPLOYER CONTRIBUTIONS
(1) ( ) Non-integrated. Complete if a Non-integrated allocation
formula is desired.
Based upon the ratio of each Participant's Compensation to the
total Compensation of all Participants
7b
<PAGE>
(2) (X) Integrated Complete if an integrated allocation
formula is desired.
Employer contributions and forfeitures, if applicable, shall be allocated to
each Participant's Account to provide the maximum amount based on
Compensation in excess of the Integration Level, to the extent legally
permitted. (Section 6.2)
Integration Level: Elect one.
(a) (X) Taxable Wage Base
(b) ( ) $_____________ Not to exceed the Taxable Wage
Base.
(c) ( ) ____% of the Taxable Wage Base Not to exceed 100%.
(H) FORFEITURES OF EMPLOYER CONTRIBUTIONS
(1) (X) shall be allocated in the same manner as Employer contributions.
(2) ( ) shall be used to reduce Employer contributions.
(I) PARTICIPANT DIRECTED INVESTMENTS Elect one.
(1) ( ) shall be permitted as provided in Section 2.7.
(2) (X) shall not be permitted.
(J) APPLICABLE TO NON-STANDARD PLANS ONLY
(K) ROLLOVERS AND TRANSFERS
(1) Employee Rollover Contributions Elect one.
(a) (X) shall be permitted.
(b) ( ) shall not be permitted.
8b
<PAGE>
(2) Employee Rollover Contributions Elect one.
(a) (X) shall be permitted.
(b) ( ) shall not be permitted.
(L) PARTICIPANT LOANS Elect one.
(1) (X) shall be permitted as provided in Section 2.19.
(2) ( ) shall not be permitted.
(M) VESTING Complete 1 and 2.
(1) ERISA Vesting Schedule Elect one.
(a) ( ) 20% after 3 Years of Service
40% after 4 Years of Service
60% after 5 Years of Service
80% after 6 Years of Service
100% after 7 Years of Service
(b) ( ) ___% after 1 Year of Service
___% after 2 Years of Service
___% after 3 Years of Service
___% after 4 Years of Service
100% after 5 Years of Service
(c) (X) 0% after 1 Year of Service
20% after 2 Years of Service
40% after 3 Years of Service No less than 20%
60% after 4 Years of Service No less than 40%
80% after 5 Years of Service No less than 60%
100% after 6 Years of Service No less than 80%
100% after 7 Years of Service
(d) ( ) 100% Must be elected if the Service requirement
((C)(1)(b)) exceeds 1.
9b
<PAGE>
(2) Top-heavy Vesting Schedule Elect one.
(a) (X) 0% after 1 Year of Service
20% after 2 Years of Service No less than 20%
40% after 3 Years of Service No less than 40%
60% after 4 Years of Service No less than 60%
80% after 5 Years of Service No less than 80%
100% after 6 Years of Service
(b) ( ) ___% after 1 Year of Service
___% after 2 Years of Service
100% after 3 Years of Service
(c) ( ) 100% Must be elected if the Service requirement
((C)(1)(b)) exceeds 1.
(N) VESTING EXCLUSIONS Elect all that apply.
(1) ( ) Years of Service before Age 18.
(2) ( ) Years of Service with an Employer during any period for which
the Employer did not maintain the Plan or a predecessor plan.
(3) ( ) Years of Service during any Year for which the Plan required an
Employee contribution and the Employee declined to make the entire
contribution to the Plan.
(O) NORMAL RETIREMENT AGE OF A PARTICIPANT Elect one.
(1) ( ) His _____ birthday Not to exceed 65th.
(2) ( ) The earlier of his 65th birthday and the first day of the
Plan Year within 6 months of his 65th birthday
(3) (X) The later of his 65th birthday (not to exceed 65th) and
the 5th anniversary of his participation Not to exceed 5th.
but in no event later than his _____ birthday Complete
only if
desired.
(4) ( ) the later of:
(a) the earlier of his 65th birthday and the first day of the
Plan Year within 6 months of his 65th birthday; and
(b) the ______ anniversary of his participation Not to exceed
5th.
but in no event later than his _____ birthday Complete only
if desired.
NOTE: If option (3) or (4) are elected, see Section 1.25 of the Plan for a
special transition rule.
10b
<PAGE>
(P) EARLY RETIREMENT Elect one.
(1) (X) Permitted upon the completion of the following requirements:
Attainment of Age 55 and the completion of 10 Years of Service
(2) ( ) Not permitted
(Q) LUMP SUM DISTRIBUTION OF BENEFITS
A Participant who terminates employment, requests a distribution, and
obtains spousal consent: Elect one.
(1) (X) will be permitted a lump sum distribution.
(2) ( ) will not be permitted a lump sum distribution.
NOTE: If this Adoption Agreement amends an existing Plan which allows lump sum
distributions and option (2) is elected, Participants who have accrued benefits
as of the later of the adoption or the effective date of the amendment must be
permitted at termination to withdraw benefits accrued to such date as a lump
sum.
(R) ss.415 LIMITATIONS ON MULTIPLE PLANS
(1) Complete if the Employer maintains another qualified defined
contribution plan which is not a master or prototype plan, in which any
Participant in this Plan is a Participant or could
become a Participant. Elect one.
(a) ( ) The provisions of Section 8.2 will apply as if the
other plan were a master or prototype plan.
(b) ( ) The plans will limit total annual additions to the maximum
permissible amount and will properly reduce any excess amounts
in the manner that precludes Employer discretion described
below:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
11b
<PAGE>
(2) Complete if a participant is or has ever been a Participant in a
defined benefit plan maintained by the Employer. Elect one.
(a) ( ) Annual Additions to the Defined Contribution Plan(s) shall be
limited as provided in Section 8.4 if the sum of the
Participant's Defined Contribution Plan Fraction plus his
Defined Benefit Plan Fraction exceeds 1.0.
(b) ( ) The plans will limit total annual additions to the maximum
permissible amount and will properly reduce any excess amounts
in the manner that precludes Employer discretion described
below:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(S) MINIMUM CONTRIBUTIONS FOR TOP-HEAVY PLANS (ss.416)
Complete if the Employer maintains one or more other plans that cover any
Employees covered by this plan.
(1) ( ) A Participant shall receive a minimum contribution under this Plan
equal to 5% of compensation if the Participant also participates in
a defined benefit plan.
(2) ( ) A Participant shall receive a minimum contribution under this plan
equal to 3% of Compensation if the Participant also participates in
another defined contribution plan but does not participate in any
defined benefit plan.
(3) ( ) A Participant shall receive a minimum benefit or contribution under
the following plan rather than a minimum contribution under this
plan:
____________________________________________________________________________
Enter the name of the Other Plan.
NOTE: Both (1) and (2) may be elected if the Employer maintains both a defined
contribution and a defined benefit plan in addition to this Plan.
12b
<PAGE>
(T) ADDITIONAL CONTRIBUTIONS FOR (NON-PAIRED) TOP-HEAVY PLANS (ss.416(h))
If the sum of any Participant's Defined Benefit and Defined Contribution
Plan Fractions, modified as required in any year that the Plan is top-heavy,
exceeds 1.0, then the following benefits or contributions may be provided to
restore to 1.25 the dollar limit factor in the denominators of those
fractions. These amounts are in addition to the minimum benefits or
contribution provided by Plan Section 9.3 and Adoption Agreement
Section (S).
(1) ( ) No additional benefits shall be provided and the dollar limit factor
shall remain at 1.0.
(2) ( ) If Section (S)(1) of this Adoption Agreement is elected, an
additional benefit equal to 1% of Compensation shall be provided to
all Participants who participate in this Plan only and an additional
benefit equal to 2-1/2% of Compensation shall be provided to all
Participants who participate in this Plan and a defined benefit plan
maintained by the Employer.
(3) ( ) If the Employer maintains a defined benefit plan in addition to this
Plan and if (S)(3) of this Adoption Agreement is elected, an
additional benefit equal to 1% of Compensation shall be provided to
each Participant who participates in this Plan only.
NOTE: This Section (T) does not apply if the Plan is super top-heavy as defined
in Section 8.4(b) of the Plan.
(U) MINIMUM CONTRIBUTIONS FOR PAIRED TOP-HEAVY PLANS
If the Employer maintains another defined contribution plan which is paired
with this Plan, the minimum contribution for each Plan Year in which the
paired plans are top-heavy for each Participant shall be determined as
follows:
(1) (X) A Participant shall receive a minimum contribution under this Plan
equal to 3% of Compensation if the Participant also participates in
the paired defined contribution plan.
(2) ( ) A Participant shall receive a minimum contribution from the paired
plan equal to 3% of Compensation if the Participant also
participates in the paired defined contribution plan.
13b
<PAGE>
THIS ADOPTION AGREEMENT MAY BE USED ONLY IN CONJUNCTION WITH BASIC PLAN DOCUMENT
#02. FAILURE TO PROPERLY FILL OUT THE ADOPTION AGREEMENT MAY RESULT IN
DISQUALIFICATION OF THE PLAN.
IF THE EMPLOYER FAILS TO RETAIN QUALIFICATION OF HIS PLAN, HE MAY NO LONGER
PARTICIPATE UNDER THIS PROTOTYPE PLAN.
AN EMPLOYER WHO HAS EVER MAINTAINED OR WHO LATER ADOPTS ANY PLAN (INCLUDING,
AFTER DECEMBER 31, 1985, A WELFARE BENEFIT FUND, AS DEFINED IN SECTION 419(E) OF
THE CODE, WHICH PROVIDES POST-RETIREMENT MEDICAL BENEFITS ALLOCATED TO SEPARATE
ACCOUNTS FOR KEY EMPLOYEES, AS DEFINED IN SECTION 419(d)(3), OR AN INDIVIDUAL
MEDICAL ACCOUNT, AS DEFINED IN ss.415(1)(2) IN ADDITION TO THIS PLAN (OTHER THAN
A PAIRED PLAN) MAY NOT RELY ON THE OPINION LETTER ISSUED BY THE NATIONAL OFFICE
OF THE INTERNAL REVENUE SERVICE AS EVIDENCE THAT THIS PLAN IS QUALIFIED UNDER
SECTION 401 OF THE INTERNAL REVENUE CODE. IF THE EMPLOYER WHO ADOPTS OR
MAINTAINS MULTIPLE PLANS WISHES TO OBTAIN RELIANCE THAT HIS OR HER PLAN(S) ARE
QUALIFIED, APPLICATION FOR A DETERMINATION LETTER SHOULD BE MADE TO THE
APPROPRIATE KEY DISTRICT DIRECTOR OR INTERNAL REVENUE.
THE UNDERSIGNED HAS CONSULTED LEGAL AND TAX COUNSEL TO THE EXTENT CONSIDERED
NECESSARY.
Signed this 15th day of September, 1995.
----- --------- --
Witness: Employer*:
-------------------- ---------------------
Witness: Employer*:
-------------------- ---------------------
Witness: Trustee*:
-------------------- ---------------------
Witness: Trustee*:
-------------------- ---------------------
Witness: Trustee*:
-------------------- ---------------------
*Please type name under signature
THIS DOCUMENT IS VALID ONLY WITH ATTACHMENT OF THE PROPER INTERNAL REVENUE
SERVICE OPINION LETTER.
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY AGREES TO INFORM REGISTERED
PROTOTYPE ADOPTERS OF ANY AMENDMENTS MADE TO THE PLAN OR OF THE DISCONTINUANCE
OR ABANDONMENT OF THE PLAN, INQUIRIES BY THE ADOPTING EMPLOYER SHOULD BE
DIRECTED TO:
QUALIFIED PLANS
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1295 STATE STREET
SPRINGFIELD, MASSACHUSETTS 01111-0001
TELEPHONE: (413) 788-8411
14b
<PAGE>
MASSMUTUAL PROTOTYPE REGISTRATION FORM
This form must be completed for each adopter of the MassMutual Prototype Plan.
Payment of the nonrefundable document use and registration fee of $150 is
required. Notices and/or amendments will be sent to the contact chosen below.
================================================================================
Plan Name: SMA Video, Inc. Profit Sharing Plan
--------------------------------------------------------------------
Trustee or Plan Administrator Name: Michael Morrissey & David Satin
-------------------------------------------
Address: 100 Avenue of the Americas
--------------------------------------------------------------------
10th floor
--------------------------------------------------------------------
New York, New York 10013
--------------------------------------------------------------------
================================================================================
================================================================================
Agent's Name: Richard C. Griggs
-----------------------------------------------------------------
Agency: NY Watson 072 D479
-----------------------------------------------------------------------
Plan PT# if available:
--------------------------------------------------------
================================================================================
================================================================================
Send Amendments to: | | Trustee | X | Agent | | Other (Specify)
----------------
----------------
----------------
================================================================================
Signed: Date: 9-15-95
--------------------------------------- ---------------
(trustee or plan administrator)
- --------------------------------------------------------------------------------
Send this form and your check payable to MassMutual to:
Massachusetts Mutual Life Insurance Company
Treasurer's Department - E078
1295 State Street
Springfield, MA 01111
- --------------------------------------------------------------------------------
================================================================================
Home Office Use Only SPS
Date Received: Check # Site License #
------------------- ---------------- ------
================================================================================
15b
<PAGE>
CERTIFICATE OF RESOLUTION
I, _______________DAVID SATIN__________________, THE DULY ELECTED AND ACTING
SECRETARY OF _________SMA Video, Inc._______, DO HEREBY CERTIFY THAT AT A
MEETING OF THE BOARD OF DIRECTORS OF SAID CORPORATION DULY CALLED AND HELD ON
THE ___15th___ DAY OF _____SEPTEMBER___, 1995___, AT WHICH MEETING A QUORUM WAS
PRESENT, THE FOLLOWING RESOLUTION WAS, UPON MOTION DULY MADE, SECONDED AND
UNANIMOUSLY CARRIED, ADOPTED:
BE IT RESOLVED, that the Company hereby adopts the Massachusetts Mutual
Life Insurance Company Standard Profit Sharing Prototype Plan & Trust
Agreement, a copy of which is attached.
RESOLVED FURTHER, that the limitation year for the Plan of the Company
shall be the 12 month period commencing on __________October 1__________ of
each year.
RESOLVED FURTHER, that the President or Vice President of the Corporation
be and he is hereby authorized and instructed to execute said Plan for and
on behalf of the Corporation.
RESOLVED FURTHER, that the Treasurer be and is hereby authorized to make
such contributions as may be required from time to time under the Plan.
IN WITNESS, WHEREOF, I have hereunto set my hand this _____15th____ day of
__________September______, 1995.
-------------------------------------
Secretary
Attest:
- -----------------------------------------
President
<PAGE>
CHASE MANHATTAN BANK
Qualified Standardized 401(k) Profit Sharing Plan Page 1 of 5
- --------------------------------------------------------------------------------
Retirement Plan ADOPTION AGREEMENT
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SECTION 1. EMPLOYER INFORMATION
Name of Employer SMA RealTime Inc.
------------------------------------------------------------------
- ------------
Retirement Id. Address 100 Avenue of the Americas, 10th Floor
------------------------------------------------------------------------------
City New York State New York Zip 10013
-------------------- ------------------- --------------------------
Telephone 212-226-7474 Federal Tax Identification Number B-3724883
------------------------------- ----------
Income Tax Year End September 30
-----------------------------
(month) (day)
Plan Year End December 31
----------------------------------
(month) (day)
Type of Business (Check only one)
[ ] Sole Proprietorship [ ] Partnership [x] Corporation [ ] Other (Specify) C
-----------
Nature of Business (Describe) Video Production-Post Production
--------------------------------------------------------
Plan Sequence No. 003 Enter 001 if this is the first qualified plan the
Employer has ever maintained, enter 002 if it is the second, etc.
SECTION 2. EFFECTIVE DATES
Part A. Initial Adoption or Amendment of Plan (Check and complete Option 1 or 2):
Option 1: [ ] This is the initial adoption of a profit sharing plan by the Employer.
The Effective Date of this Plan is January 1, 1998
---------------
NOTE: The effective date is usually the first day of the Plan Year in which this
Adoption Agreement is signed.
Option 2: [ ] This is an amendment and restatement of an existing profit sharing plan
(a Prior Plan).
The Prior Plan was initially effective on , 19 .
------------------- ---
The Effective Date of this amendment and restatement is , 19 .
------------ --
NOTE: The effective date is usually the first day of the Plan Year in which this
Adoption Agreement is signed.
Part B. Commencement of Elective Deferrals
Elective Deferrals may commence on January 1, 1998
-----------------
NOTE: This date may be no earlier than the date this Adoption Agreement is signed
because Elective Deferrals cannot be made retroactively.
SECTION 3. ELIGIBILITY REQUIREMENTS Complete Parts A, B, C and D
Part A. Years of Eligibility Service Requirement:
An Employee will be eligible to become a Participant in the Plan after completing 0
(enter 0 or 1) Year of Eligibility Service.
NOTE: If left blank, the Years of Eligibility Service required will be deemed to be 0.
Part B. Age Requirement:
An Employee will be eligible to become a Participant in the Plan after attaining age
21 (no more than 21).
--
NOTE: If left blank, it will be deemed there is no age requirement for eligibility.
Part C. Class of Employees Eligible to Participate:
All Employees shall be eligible to become a Participant in the Plan, except those
checked below:
[x] Those Employees included in a unit of Employees covered by the terms of a
collective bargaining agreement between Employee representatives (the term
"Employee representatives" does not include any organization more than half of
whose members are Employees who are owners, officers or executives of the
Employer) and the Employer under which retirement benefits where the subject
of good faith bargaining unless the agreement provides that such Employees are
to be included in the Plan.
[ ] Those Employees who are non-resident aliens pursuant to Section 410(b)(3)(C) of
the Code and who received no earned income from the Employer which constitutes
income from sources within the United States.
Part D. Entry Dates
The Entry Dates for participation shall be (Choose only one Option)
Option 1. [ ] The first day of the Plan Year and the first day of the seventh month of the Plan
Year.
Option 2. [x] Other (Specify) Quarterly
----------
NOTE: If Option 2 is selected, the Entry Dates specified must be more frequent than
those described in Option 1.
</TABLE>
<PAGE>
Standardized 401(k) Profit Sharing Plan _____________________________Page 2 of 5
ADOPTION AGREEMENT
<TABLE>
<S> <C>
SECTION 4. ELECTIVE DEFERRALS
Part A. Will Elective Deferrals be permitted under this Plan (Choose one)?
Option 1. [x} Yes
Option 2. [ ] No
NOTE: If no option is selected, Option 2 will automatically apply. Complete the
remainder of Section 4 only if Option 1 is selected.
Part B. If Elective Deferrals are permitted under the Plan, a Contributing Participant may
elect under a salary reduction agreement to have his Compensation reduced by an
amount each pay period as described below (Choose one):
Option 1. [x] An amount equal to a percentage of the Contributing Participant's Compensation
from 1% to 15% in increments of 1%.
Option 2. [ ] An amount of the Contributing Participant's Compensation not less than $_________
and not more than $___________. The amount of such reduction shall be contributed
to the Plan by the Employer on behalf of the Contributing Participant. For any taxable
year, a Contributing Participant's Elective Deferrals shall not exceed the limit
contained in Section 402(g) of the Code in effect at the beginning of such taxable
year.
Part C. Participants who claim Excess Elective Deferrals for the preceding calendar year must
submit their claims in writing to the Plan Administrator by _________________________ .
NOTE: This date should be a date prior to the Participant's tax return due date. If
no date is selected, March 1, will be deemed to be selected.
SECTION 5. MATCHING CONTRIBUTIONS
Part A. Will the Employer make Matching Contributions to the Plan on behalf of Contributing
Participants (Choose one)?
Option 1. [ ] Yes
Option 2. [x] No
NOTE: If no option is selected, Option 2 will automatically apply. Complete the
remainder of Section 5 only if Option 1 is selected.
Part B. Matching Contribution Formula. If the Employer will make Matching Contributions, then
the amount of such Matching Contributions made on behalf of a Contributing Participant
each Plan Year shall be (Choose one):
Option 1. [ ] An amount equal to ______% of such Contributing Participant's Elective Deferral.
Option 2. [ ] An amount equal to the sum of ______% of the portion of such Contributing
Participant's Elective Deferral which does not exceed _____% of the Contributing
Participant's Compensation plus ____% of the portion of such Contributing Participant's
Elective Deferral which exceeds ____% of the Contributing Participant's Compensation.
Option 3. [ ] Other Formula. (Specify) _________________________________________________________
NOTE: If Option 3 is selected, the formula specified can only allow Matching
Contributions to be made with respect to a Contributing Participant's Elective
Deferrals.
Part C. Limit On Matching Contributions. Notwithstanding the matching contribution formula
specified above, the Employer will not match a Contributing Participant's Elective
Deferrals in excess of $__________ or ______% of such Contributing Participant's
Compensation.
Part D. Forfeitures. Complete Part D only if Matching Contributions are not 100% vested.
1. Forfeitures of Matching Contributions shall be (Choose one):
Option 1. [ ] Allocated, after all other Forfeitures under the Plan, to each Participant's
Individual Account in the ratio which each Participant's Compensation for the Plan
Year bears to the total Compensation of all Participants for such Plan Year.
Option 2. [ ] Applied to reduce Employer Contributions.
NOTE: If no option is selected, Option 2 will be deemed to be selected.
2. Forfeitures of Excess Aggregate Contributions shall be (Choose one):
Option 1. [ ] Allocated, after all other Forfeitures under the Plan, to each Contributing
Participant's Matching Contribution account in the ratio which each Contributing
Participant's Compensation for the Plan Year bears to the total Compensation of all
Contributing Participants for such Plan Year. Such Forfeitures will not be
allocated to the account of any Highly Compensated Employee.
Option 2. [ ] Applied to reduce Employer Contributions.
NOTE: If no option is selected, Option 2 will be deemed to be selected.
SECTION 6. QUALIFIED NONELECTIVE CONTRIBUTIONS
Part A. Will the Employer make Qualified Nonelective Contributions to the Plan (Choose one)?
Option 1. [ ] Yes
Option 2. [x] No
If the Employer will make Qualified Nonelective Contributions, then the amount of such
contribution to the Plan for each Plan Year shall be an amount determined by
the Employer.
NOTE: If no option is selected, Option 2 will automatically apply. Complete the
remainder of Section 6 only if Option 1 is selected.
</TABLE>
<PAGE>
Standardized 401(k) Profit Sharing Plan______________________________Page 3 of 5
<TABLE>
<CAPTION>
ADOPTION AGREEMENT
<S> <C>
Part B. Participants Entitled to Qualified Nonelective Contributions.
Allocation of Qualified Non-Elective Contributions shall be made to the Individual
Accounts of (Choose one):
Option 1. [ ] All Participants.
Option 2. [ ] Only Participants who are not Highly Compensated Employees.
Part C. Allocation of Qualified Non-Elective Contributions.
Allocation of Qualified Non-Elective Contributions to Participants entitled thereto
shall be made (Choose one):
Option 1. [ ] In the ratio which each Participant's Compensation for the Plan Year bears to the
total Compensation of all Participants for such Plan Year.
Option 2. [ ] In the ratio which each Participant's Compensation not in excess of $__________
for the Plan Year bears to the total Compensation of all Participants not in
excess of $__________ for such Plan Year.
SECTION 7. EMPLOYER PROFIT SHARING CONTRIBUTION AND ALLOCATION FORMULA
Part A. Contribution Formula:
For each Plan Year the Employer will contribute an Amount to be determined from
year to year
Part B. Allocation Formula: Check and complete Option 1 or 2.
Option 1. [ ] Pro Rata Formula. Employer Contributions and Forfeitures shall be allocated to the
Individual Accounts of qualifying Participants in the ratio that each qualifying
Participant's Compensation for the Plan Year bears to the total Compensation of all
qualifying Participants for the Plan Year.
Option 2. [ ] Integrated Formula. Employer Contributions and Forfeitures shall be allocated as
follows:
(Start with Step 3 if this Plan is not a Top-Heavy Plan):
Step 1. Employer Contributions and Forfeitures shall first be allocated pro rata
to qualifying Participants in the manner described in Section 7, Part B,
Option 1. The percent so allocated shall not exceed 3% of each qualifying
Participant's Compensation.
Step 2. Any Employer Contributions and Forfeitures remaining after the allocation
in Step 1 shall be allocated to each qualifying Participant's Individual
Account in the ratio that each qualifying Participant's Compensation for
the Plan Year in excess of the integration level bears to all qualifying
Participants' Compensation in excess of the integration level, but not in
excess of 3%.
Step 3. Any Employer Contributions and Forfeitures remaining after the allocation
in Step 2 shall be allocated to each qualifying Participant's Individual
Account in the ratio that the sum of each qualifying Participant's total
Compensation and Compensation in excess of the integration level bears to
the sum of all qualifying Participants' total Compensation and
Compensation in excess of the integration level, but not in excess of the
profit sharing maximum disparity rate as described in Section 3.01(B)(3)
of the Plan.
Step 4. Any Employer Contributions and Forfeitures remaining after the allocation
in Step 3 shall be allocated pro rata to qualifying Participants in the
manner described in Section 7, Part B, Option 1.
The integration level shall be (Choose one):
Option 1. [ ] The Taxable Wage Base
Option 2. [ ] $__________ (a dollar amount less than the Taxable Wage Base)
Option 3. [ ] _______% of the Taxable Wage Base
NOTE: If no box is checked, the integration level shall be the Taxable Wage Base.
SECTION 8. VESTING Complete Parts A and B
Part A. Vesting Schedules. A Participant shall become Vested in his or her Individual Account
derived from Employer Contributions made pursuant to Section 7 of the Adoption
Agreement (and Forfeitures thereof) as follows (Choose one):
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
VESTED PERCENTAGE
YEARS OF -------------------------------------------------------------------------------
VESTING SERVICE OPTION 1 [ ] OPTION 2 [ ] OPTION 3 [ ] OPTION 4 [ ] (Complete if chosen)
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 0% 0% 100% ______%
2 0% 20% 100% ______% (not less than 20%)
3 100% 40% 100% ______% (not less than 40%)
4 100% 60% 100% ______% (not less than 60%)
5 100% 80% 100% ______% (not less than 80%)
6 100% 100% 100% ______% (not less than 100%)
----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
NOTE: If no selection is made, Option 3 100% vesting will be deemed to be selected.
Part B. Vesting of Matching Contributions. A Participant shall become Vested in his or her
Individual Account derived from Matching Contributions made pursuant to Section 5 of
this Adoption Agreement as follows (Choose one if Matching Contributions will be made):
Option 1. [ ] 100% Vested at all times.
Option 2. [ ] Vested in accordance with the vesting schedule selected in Section 8, Part A above.
NOTE: If no selection is made, the selection shall be deemed to be Option 1.
</TABLE>
<PAGE>
Standardized 401(k) Profit Sharing Plan ____________________________ Page 4 of 5
<TABLE>
<S> <C>
SECTION 9. NORMAL RETIREMENT AGE
The Normal Retirement Age under the Plan is age 62 (not to exceed 65).
NOTE: If left blank, the Normal Retirement Age will be deemed to be age 59-1/2.
SECTION 10. HOURS REQUIRED Complete Parts A and B
Part A. 1000 Hours of Service (no more than 1,000) shall be required to constitute a Year of
Vesting Service or a Year of Eligibility Service.
Part B. 500 Hours of Servive (no more than 500) must be exceeded to avoid a Break in Vesting
Service or a Break in Eligibility Service.
NOTE: The Number of hours in Part A must be greater than the number of hours in Part B.
SECTION 11. OTHER OPTIONS
Answer "Yes" or "No" to each of the following questions by checking the appropriate box.
If a box is not checked for a question, the answer will be deemed to be "No."
A. Loans: Will loans to Participants pursuant to Section 6.08 of the Plan be permitted? /X/ Yes / / No
B. Participant Direction of Investments: Will Participants be permitted to direct the
investment of their Individual Accounts pursuant to Section 5.14 of the Plan? /X/ Yes / / No
C. In-Service Withdrawals: Will Participants be permitted to make withdrawals during
service pursuant to Section 6.01(A)(3) of the Plan? NOTE: If the Plan is being adopted
to amend and replace a Prior Plan which permitted in-service withdrawals you must
answer "Yes."
Check here if such withdrawals will be permitted only on account of hardship / /. / / Yes /X/ No
D. Nondeductible Employee Contributions: Will Participants be permitted to make
Nondeductible Employee Contributions pursuant to Section 11.304 of the Plan? / / Yes /X/ No
E. Hardship Withdrawals: Will Participants be permitted to withdraw Elective Deferrals
on account of hardship pursuant to Section 11.503 of the Plan? /X/ Yes / / No
SECTION 12. JOINT AND SURVIVOR ANNUITY
Part A. Retirement Equity Act Safe Harbor:
Will the safe harbor provisions of Section 6.05(F) of the Plan apply (Choose only one Option)?
Option 1. /X/ Yes
Option 2. / / No
NOTE: You must select "No" if you are adopting this Plan as an amendment and restatement
of a Prior Plan that was subject to the joint and survivor annuity requirements.
Part B. Survivor Annuity Percentage: (Complete only if your answer in Section 12, Part A is "No.")
The survivor annuity portion of the Joint and Survivor Annuity shall be a percentage equal
to ________% (at least 50% but no more than 100% of the amount paid to the Participant
prior to his or her death.
SECTION 13. RELIANCE
An Employer who has ever maintained or who later adopts any plan (including a welfare benefit
fund, as defined in Section 419(e) of the Code, which provides post-retirement medical benefits
allocated to separate accounts for key employees as defined in Section 419A(d)(3) of the Code or
an individual medical account, as defined in Section 415(1)(2) of the Code) in addition to this
Plan (other than a paired standardized money purchase pension plan using Basic Plan Document
No. 03) may not rely on the opinion letter issued by the National Office of the Internal Revenue
Service as evidence that this plan is qualified under Section 401 of the Code. If the Employer
who adopts or maintains multiple plans wishes to obtain reliance that the Employer's plan(s) are
qualified, application for a determination letter should be made to the appropriate Key District
Director of the Internal Revenue Service.
This Adoption Agreement may be used only in conjunction with Basic Plan Document No. 03.
SECTION 14. EMPLOYER SIGNATURE Important: Please read before signing.
I am an authorized representative of the Employer named above and I state the following:
1. I acknowledge that I have relied upon my own advisors regarding the completion of this
Adoption Agreement and the legal and tax implications of adopting this Plan.
2. I understand that my failire to properly complete this Adoption Agreement may result in
disqualification of the Plan.
3. I understand that the Prototype Sponsor will inform me of any amendments made to the Plan
and will notify me should it discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the corresponding Basic Plan Document.
Signature for Employer /s/ David J. Satin Date Signed 12/97
----------------------- -----------
(Type Name) David J. Satin
-------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
Standardized 401(k) Profit Sharing Plan ____________________________ Page 5 of 5
<S> <C>
SECTION 15. TRUSTEE OR CUSTODIAN Check and complete Option A or B
/X/ Option A. Financial Organization as Trustee or Custodian
Check one /X/ Custodian, / / Trustee without full trust powers, or / / Trustee with full
trust powers
NOTE: Custodian will be deemed selected if no box is checked.
Financial Organization The Chase Manhattan Bank
----------------------------------------------------
Signature /s/ ???????????
----------------------------------------------------
(Type Name) _______________________________________________________________
/ / Option B. Individual Trustee(s)
Signature ______________________________________ Signature ___________________________________
(Type Name)_____________________________________ (Type Name) _________________________________
SECTION 16. PROTOTYPE SPONSOR
Name of Prototype Sponsor The Chase Manhattan Bank
--------------------------------------------------------------------
Address 4 New York Plaza, 12th Fl., New York, NY 10004
---------------------------------------------------------------------------------------
Telephone Number 1-800-658-4604
------------------------------------------------------------------------------
SECTION 17. LIMITATION ON ALLOCATIONS - More Than One Plan
If you maintain or ever maintained another qualified plan (other than a paired standardized
money purchase pension plan using Basic Plan Document No. 03) in which any Participant in
this Plan is (or was) a Participant or could become a Participant, you must complete this
section. You must also complete this section if you maintain a welfare benefit fund, as defined
in Section 419(e) of the Code, or an individual medical account, as defined in Section 415(1)(2)
of the Code, under which amounts are treated as annual additions with respect to any Participant
in this Plan.
Part A. If the Participant is covered under another qualified defined contribution plan maintained by the
Employer, other than a master or prototype plan:
1. /X/ The provisions of Sections 3.05(B)(1) through 3.05(B)(6) of the Plan will apply as if the
other plan were a master or prototype plan.
2. / / Other method. (Provide the method under which the plans will limit total annual additions
to the maximum permissible amount, and will properly reduce any excess amounts, in a
manner that precludes Employer discretion.) ____________________________________________
________________________________________________________________________________________
Part B. If the Participant is or has ever been a participant in a defined benefit plan maintained by the
Employer, the Employer will provide below the language which will satisfy the 1.0 limitation of
Section 415(e) of the Code. Such language must preclude Employer discretion.
(Complete) ________________________________________________________________________________________
Part C. Compensation will mean all of each Participant's (Choose one):
Option 1. / / Section 3121(a) wages
Option 2. /X/ Section 3401(a) wages
Option 3. / / 415 safe-harbor compensation
NOTE: If no box is checked, Option 2 will be deemed to be selected.
Part D. The limit year is the following 12-consecutive month period: _____________________________________
SECTION 18. ELECTIVE DEFERRALS BASED EXCLUSIVELY ON BONUSES
May a Contributing Participant base Elective Deferrals on cash bonuses that, at the Contributing
Participant's election, may be contributed to the Plan or received by the Contributing Participant
in cash (Choose one)?
Option 1. / / Yes
Option 2. / / No
NOTE: Answer "yes" only if Elective Deferrals will be based exclusively on cash bonuses rather than
payroll deductions. If no option is selected, Option 2 will automatically apply.
</TABLE>
<PAGE>
[LOGO]
SMA REALTIME INC.
401(K) PLAN
Eligibility Requirements
- ------------------------
Plan is open to full time employees after completing 0 year of service and
attaining age 21.
Salary Deferral
- ---------------
o 1% to 15% of gross annual salary to a maximum of $10,000 (for 1998 tax year).
o Salary deferral percentage may be changed quarterly through Human Resources.
Investment Options
- ------------------
You may invest among the following options:
o Vista U.S. Government Money Market Fund
o Vista U.S. Treasury Income Fund
o Vista Growth and Income Fund
o Dreyfus Appreciation Fund
o Janus Worldwide Fund
o Vista Capital Growth Fund
Please Note: Investments in Mutual Funds should be kept in 5% increments.
Investment allocations can be changed daily through the Voice Response Unit.
Loans (One outstanding loan is permitted at a time).
You can borrow a minimum of $1,000 and a maximum of 50% of the vested balance or
$50,000 for up to five years. Loan repayments including interest are repaid with
after tax dollars through payroll deductions and are deposited in your 401(k)
account according to your current investment elections. Loan modeling can be
done on the Voice Response Unit (VRU). Loan amounts must be rounded off to the
nearest hundred dollars.
A $50 fee is charged to the participant.
Enrollment
- ----------
You may join the plan quarterly: January 1, April 1, July 1, October 1.
Enrollment forms may be obtained through Human Resources.
Hardship Withdrawals
- --------------------
Funds may be withdrawn from your account under the following circumstances:
o Medical Expenses
o Tuition
o Purchase of Primary Residence
o To prevent eviction or foreclosure of a primary residence
* Please Note: Taxes and penalties may apply.
Other Withdrawals
- -----------------
Funds may be withdrawn from your account under the following circumstances:
o Attainment of age 59 1/2
o Death
o Disability
o Retirement
o Plan Termination
o Separation of employment
* Please Note: Taxes and penalties may apply.
Additional Services
- -------------------
o Quarterly account statements
o 401(k) Dimensions Magazine
o 24 hour Voice Response Unit
[LOGO] CHASE
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF THE COMPANY
---------------------------
1. SMA Video Inc., a New York corporation.
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of SMA Real Time Inc. on
Form SB-2 of our report dated December 9, 1998 appearing in the Registration
Statement.
We also consent to the reference to us under the headings "Selected Financial
Data" and "Experts" in such Registration Statement.
TABB, CONIGLIARO & McGANN, P.C.
New York, New York
July 8, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM SMA REAL TIME, INC. BALANCE SHEETS AS OF SEPTEMBER 30, 1998
AND MARCH 31, 1999 AND STATEMENTS OF OPERATIONS FOR THE YEAR ENDED
SEPTEMBER 30, 1998 AND THE SIX MONTHS ENDED MARCH 31, 1999.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1998 SEP-30-1999
<PERIOD-START> OCT-01-1997 OCT-01-1998
<PERIOD-END> SEP-30-1998 MAR-31-1999
<CASH> 124 46
<SECURITIES> 0 0
<RECEIVABLES> 977 1,122
<ALLOWANCES> 35 35
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,092 1,153
<PP&E> 10,755 11,151
<DEPRECIATION> 5,873 6,679
<TOTAL-ASSETS> 6,163 5,924
<CURRENT-LIABILITIES> 2,374 2,656
<BONDS> 2,222 1,673
0 0
0 0
<COMMON> 35 35
<OTHER-SE> 1,274 1,315
<TOTAL-LIABILITY-AND-EQUITY> 6,163 5,924
<SALES> 6,469 3,375
<TOTAL-REVENUES> 6,469 3,375
<CGS> 4,045 2,216
<TOTAL-COSTS> 5,656 3,095
<OTHER-EXPENSES> 2 5
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 509 200
<INCOME-PRETAX> 301 75
<INCOME-TAX> 142 34
<INCOME-CONTINUING> 159 41
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 159 41
<EPS-BASIC> 0.05 0.01
<EPS-DILUTED> 0.05 0.01
</TABLE>
