U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
CLUBCHARLIE.COM, INC.
(Exact name of registrant as specified in its charter)
NEVADA 88-0380343
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10717 Wilshire Boulevard, Suite 1104, Los Angeles, California 90024
(Address of registrant's principal executive offices) (Zip Code)
877.882.5822
(Registrant's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on which
to be so Registered: Each Class is to be Registered:
None Not Applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par Value $.001
(Title of Class)
Copies to:
Thomas E. Stepp, Jr.
Stepp & Beauchamp, LLP
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile: 949.660.9010
Page 1 of 17
Exhibit Index is specified on Page 16
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ClubCharlie.com, Inc.,
a Nevada corporation
Index to Amendment No. 2 to Form 10-SB
Item Number and Caption Page
1. Description of Business 3
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 4
3. Description of Property 10
4. Security Ownership of Certain Beneficial Owners and
Management 10
5. Directors, Executive Officers, Promoters and Control
Persons 10
6. Executive Compensation - Remuneration of Directors and
Officers 11
7. Certain Relationships and Related Transactions 12
8. Description of Securities 12
PART II
1. Market Price of and Dividends on the Registrant's
Common Equity and Related Stockholder Matters 13
2. Legal Proceedings 14
3. Changes in and Disagreements with Accountants 14
4. Recent Sales of Unregistered Securities 14
5. Indemnification of Directors and Officers 15
PART F/S
Financial Statements F-1 through F-13
PART III
1(a). Index to Exhibits 16
1(b). Exhibits E-1 through E-84
Signatures 17
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PART I
Item 1. Description of Business.
Background of the Company. The Company was incorporated pursuant to the laws of
the State of Nevada in January 6, 1993 using the name Lotus Enterprises, Inc. On
or about April 6, 1999, the Company filed Amended and Restated Articles of
Incorporation changing its name to ClubCharlie.com, Inc.
Business of the Company. We are an independent multimedia marketing company
integrating motion picture and television production with e-commerce, database
development and marketing activities. We plan to enter the marketplace for
children's goods, services and entertainment, earning revenue on the Internet
through transaction activity access fees, sales commissions and the delivery of
value-added benefits and services to both buyers and sellers. We also intend to
produce and distribute family films as an independent television and motion
picture production company.
Our Website. We intend to develop and maintain a website concentrating on
children and families. We believe our website will provide visitors with
meaningful content and services, products and loyalty benefits from both online
vendors and offline merchants. Our intent is to create a "virtual community"
between kids and their families, on the one hand, and corporate partners,
on-line vendors and off-line merchants on the other hand. We anticipate that our
website will feature (i) interactive chat and bulletin boards; (ii) product
information; (iii) an on-line store featuring products from vendors, service
providers and digital publishers; (iv) advice from social work professionals on
issues affecting children and their families; (v) video games, quizzes and
mind-benders; (vi) reviews on music CD's, movies, books, and video games; (vii)
contests; (viii) a "members only" benefits section; (ix) free personal websites;
(x) free e-mail; (xi) scheduled chats or interviews with experts or celebrities;
(xii) in on-line scavenger hunt that leads kids through our merchandising
sponsors' websites in order to obtain clues to solve mysteries; (xiii) video and
audio files of our productions; (xiv) a secure online portal where investors and
merchants can update their information on-line in real-time; (xv) on-line member
and vendor registration; (xvi) e-postcards and special occasion cards containing
our brand; (xvii) comic books featuring the same characters as our productions;
and (xviii) free downloads of licensed software and game demos.
Membership Program. We anticipate that we will establish a membership program.
Those persons choosing to become members will be issued a personalized
membership card with a unique identification number. The membership card will
contain a magnetic strip that will be scanned at participating vendor locations
for instant discounts. With each transaction, the member will also receive
"points" redeemable at participating vendors and marketing partners. We believe
that this will encourage purchases while making it possible to track purchasing
trends. For each transaction using the membership card, we will earn transaction
fees.
We intend to establish alliances with corporate partners interested in tapping
into the markets for children's products and entertainment. We will encourage
our corporate partners to establish a "dialogue" with members to determine their
interests, attitudes and purchase preferences. We anticipate that we will be
able to attract support from businesses interested in children's products and
entertainment.
Interactive Multimedia Marketing. We anticipate that we can generate additional
revenue by introducing our productions into new electronic interactive mediums,
such as (i) The Internet; (ii) Ride Simulation; (iii) Adventure Games; (iv)
Electronic Art/Performance; (v) Electronic Books; (vi) Electronic Magazines;
(vii) Interactive Education/Kids; (viii) Interactive Entertainment/Kids; (ix)
Interactive Movie/Interactive Drama; (x) Interactive Music; (xi) Interactive
Presentations/Kiosks; (xii) Interactive Storybook; (xiii)
Simulation/Strategy/Role Playing; (xiv) Twitch/Level Games; and (xv) CD-ROM
Movie Effects Studio Library.
Motion Picture and Television Production. We anticipate that we will produce
original motion pictures and television shows based on either recognizable
published story material or classic plays that have had successful theatrical
runs or have been critically acclaimed. We anticipate that this strategy will
attract recognizable talent who will adjust their normal salaries to accommodate
modestly budgeted productions. For character portrayal, we intend to take
advantage of proven talent. We, as an independent provider of made for TV
movies, intend to market of "G-rated" movies,
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taking advantage of what we perceive as the need for "high-profile - low budget"
classical children's and family film productions. We believe that these types of
films may be profitable as the budgets are low ($3 - 5 million to produce) and
the stories have built-in name and story recognition. We intend to build a
network of relationships with theatrical, videocassette and television
distributors in territories outside of the United States.
Screenplay Acquisitions. In July 1999, we acquired the rights, title and
interest in all properties, rights, interests and claims to the original
storyplot entitled, "The Misadventures of Charlie Chance" from Charlie Chance
Productions, a Canadian corporation ("Charlie Chance"). We plan to develop,
produce and distribute the film.
Current Market Conditions. We plan to supply low-budget feature films in the
markets served by independent production motion picture companies. We believe
that the low-budget feature film industry is the fastest growing area in the
motion picture film industry. Industry figures, according to Paul Kagan
Associates, Inc., illustrate the significant international growth of the home
video market versus the box office. Box office revenues have increased from
1984's $3.3 billion to 1997's $5 billion. Home video revenues have increased
from 1984's $2.2 billion to 1997's $12 billion.
We anticipate that our productions will eventually penetrate such markets as WEB
TV and Internet Networks. We have created a relationship with Moonfire, the
largest Internet network. Moonfire was recently funded by Pat Robertson, current
Presidential Candidate and owner of the Family Channel. We anticipate that these
new Internet-related markets for distribution will provide the consumer with the
ability to order and download films at home.
Distribution. We believe that most of our productions will be intended primarily
for foreign and domestic video distribution. However, if a project tests
positively with a research audience, we will seek third party prints and
advertising ("P &A") funds to release the picture theatrically. In such a
situation, the third party P &A source would typically receive a first position
recoupment lien against box office collection and television receipts, in
addition to a priority position for video revenues. We intend to utilize
distribution agreements to maximize revenues and increase collections,
minimizing cash outlay. The areas of distribution which are cash or personnel
intensive (i.e. domestic theatrical or domestic and foreign video) will be
handled by established distributors.
Employees. We currently have two (2) full-time employees.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources. The Company has cash of $7.00 as of September
30, 1999.
Results of Operations. We have not realized any revenue from operations.
We believe that the main sources of our revenue will be (i) film and television
series production revenues from foreign distribution and domestic theatrical,
home video, pay-per-view, pay cable and basic cable distribution; (ii)
commission or other compensation received from the sale of our products or our
corporate partners' products and services; (iii) advertising and sponsorship
revenues earned from website banner ads and web-based publications; (iv)
enrollment and annual renewal fees of as much as $10 per card holder charged by
attributing "negative point" balances to membership cards; (v) transaction fees
on any loyalty purchases made by our card holders on our website or at a
point-of sale at a participating merchant location; (vi) interest earned on
money being held by us for the future redemption of membership points; (vii)
breakage revenues received from unredeemed points; and (viii) database access
fees.
Our success is materially dependent upon our ability to satisfy additional
financing requirements. We are reviewing our options to raise substantial equity
capital. We anticipate that we will begin to realize positive gross revenue in
or around March 2000. In order to satisfy our requisite budget, management has
held and continues to conduct negotiations with various investors. We anticipate
that these negotiations will result in additional investment income for us. To
achieve and maintain competitiveness, we may be required to raise substantial
funds. Our forecast for the period for which our financial resources will be
adequate to support our operations involves risks and uncertainties and actual
results could fail as a result of a number of factors. We anticipate that we
will need to raise additional capital to develop, promote and conduct our
operations. Such additional capital may be raised through public or private
financing
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as well as borrowings and other sources. There can be no assurance that
additional funding will be available under favorable terms, if at all. If
adequate funds are not available, we may be required to curtail operations
significantly or to obtain funds through entering into arrangements with
collaborative partners or others that may require us to relinquish rights to
certain products and services that we would not otherwise relinquish.
Internet Competition. The Internet market is new, rapidly evolving and intensely
competitive. We expect competition to intensify even more in the future.
Barriers to opening a new Internet storefront are increasing.
We believe that the principal competitive factors in maintaining an Internet
website are selection, convenience, price, speed and accessibility, customer
service, quality of site content, and reliability and speed of fulfillment. Many
of our current and potential competitors have longer operating histories, more
customers, greater brand recognition, and significantly greater financial,
marketing and other resources. In addition, larger, well-established and
well-financed entities may acquire, invest in, or form joint ventures with our
competitors as the Internet, and e-commerce in general, become more widely
accepted.
The Internet and e-commerce are significantly competitive and competition is
expected to continue to increase significantly. There are no substantial
barriers to entry in these markets, and we expect that competition will continue
to intensify. Although we believe that the diverse segments of the Internet
market will provide opportunities for more than one supplier of productions,
products and services similar to those of ours, it is possible that a single
supplier may dominate one or more market segments. If competition increases from
these and other sources, we might have to respond to competitive pressures by
implementing pricing, marketing and other programs, or seeking additional
strategic alliances or acquisitions that may be less favorable than would
otherwise be established or obtained. Any such response to competitive pressures
could materially affect our business, results of operations and financial
conditions. We also have significant competition from other online websites in
international markets, including competition from United States-based
competitors, in addition to online companies that are already well established
in those foreign markets. Many of our existing competitors, in addition to a
number of potential new competitors, have significantly greater financial,
technical and marketing resources than us.
The market for Internet content is relatively new, rapidly changing and
significantly competitive. We expect competition for Internet content to
continue to increase and if we cannot compete effectively, our business could be
harmed. Moreover, we expect the number of websites competing for the attention
and spending of users, advertisers and sponsors to continue to increase, because
there are so few barriers to entry on the Internet. Increased competition could
result in advertising or sponsorship price reductions, reduced margins or loss
of market share, any of which could harm our business. Competition will probably
increase significantly, as new companies enter the market and current
competitors expand their services. Many of our potential competitors will
probably enjoy substantial competitive advantages, including (i) larger numbers
of users; (ii) larger numbers of advertisers; (iii) greater brand recognition;
(iv) more fully-developed e-commerce opportunities; (v) larger technical,
production and editorial staffs; and (vi) substantially greater financial,
marketing, technical and other resources. If we do not compete effectively or if
we experience any pricing pressures, reduced margins or loss of market share
resulting from increased competition, our business could be adversely affected.
In the future, we expect to have competition in the various special interest,
demographic and geographic markets addressed by media properties that are being
developed. This competition may include companies that are larger and better
capitalized than us and that have expertise and established brand recognition in
these markets. There can be no assurance that our competitors will not develop
Internet-related products and services that are superior to those of ours or
that achieve greater market acceptance than our productions, products or
services.
Technological Changes. Our future success is substantially dependent upon
continued growth in the use of the Internet. E-commerce and the distribution of
goods and services over the Internet are relatively new, and predicting the
extent of further growth, if any, is difficult. There can be no assurance that
communication or commerce over the Internet will increase or that extensive
content will continue to be provided over the Internet. The Internet may not
prove to be a viable commercial marketplace for a number of reasons, including
lack of acceptable security technologies, potentially inadequate development of
the necessary infrastructure, such as a reliable network system, or timely
development and commercialization of performance improvements, including high
speed modems. In addition,
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to the extent that the Internet continues to experience significant growth in
the number of users and use, there can be no assurance that the Internet
infrastructure will continue to be able to support the demands placed upon it by
such potential growth or that the performance or reliability of the Internet
will not be adversely affected by this continued growth. If use of the Internet
does not continue to increase, or if the Internet infrastructure does not
effectively support growth that may occur, our business, operating results, and
financial condition would be materially and adversely affected.
The market for Internet products and services is characterized by rapid
technological developments, evolving industry standards and customer demands,
and frequent new product introductions and enhancements. For example, to the
extent that higher bandwidth Internet access becomes more widely available using
cable modems or other technologies, we may be required to make significant
changes to the design and content of our online properties in order to compete
effectively. Our failure to adapt to these or any other technological
developments effectively could adversely affect our business, operating results,
and financial condition. Increasing users is critical to increasing revenues. If
we cannot increase the number of our users we may not be able to generate
additional revenues, which could leave us unable to maintain or grow our
business. To increase the number of our users, we must (i) expand our content
and communities; (ii) expand our network of distribution partners; and (iii)
increase brand recognition by advertising and syndication. If we do not achieve
these objectives to increase the number of our users, our business could be
harmed. Additionally, a significant element of our business strategy is to
develop loyal online communities, because we believe such communities help
retain actively engaged users. However, the concept of developing these
communities on the Web is unproven, and if we are not successful, then it may be
more difficult to increase the numbers of our users.
If the Internet infrastructure continues to be unreliable, access to our website
may be impaired and our business may be harmed. Our success depends in part on
the development and maintenance of the Internet infrastructure. If this
infrastructure fails to develop or be adequately maintained, our business would
be harmed, because users may not be able to access our website. Among other
things, development and maintenance of a reliable infrastructure will require a
reliable network with the necessary speed, data capacity, security and timely
development of complementary products for providing reliable Internet access and
services. The Internet has experienced, and is expected to continue to
experience, significant growth in number of users and amount of traffic. If the
Internet continues to experience increased numbers of users, frequency of use or
increased bandwidth requirements, the Internet infrastructure may not be able to
support these increased demands or perform reliably. The Internet has
experienced a variety of outages and other delays as a result of damage to
portions of our infrastructure, and could experience additional outages and
delays in the future. These outages and delays could reduce Internet usage and
traffic on our website. In addition, the Internet could lose its viability
because of delays in the development or adoption of new standards and protocols
to handle increased levels of activity. If the Internet infrastructure is not
adequately developed or maintained, marketing and distribution of products and
services on our website may be reduced.
Our systems may fail due to natural disasters, telecommunications failures and
other events, any of which would limit user traffic. Fire, floods, earthquakes,
power loss, telecommunications failures, break-ins and similar events could
damage our communications hardware and computer hardware operations for our
website and cause interruptions in our services. Computer viruses, electronic
break-ins or other similar disruptive problems could cause users to stop
visiting our website. If any of these circumstances were to occur, our business
could be harmed. Our insurance policies may not adequately compensate us for any
losses that may occur due to any failures of or interruptions in our systems. We
do not presently have a formal disaster recovery plan. Our website will
eventually be required to accommodate a significant traffic and deliver
frequently updated information. The website may experience slower response times
or decreased traffic for a variety of reasons. In addition, our users will
depend on Internet Service Provides ("ISP's"), Online Service Provides ("OSP's")
and other website operators for access to our website. Many of these providers
and operators have experienced significant outages in the past, and could
experience outages, delays and other difficulties due to system failures
unrelated to our systems. Any of these system failures could harm our business.
Competition in the Film Industry. The business in which we engage is
significantly competitive. Each of our primary business operations is subject to
competition from companies which, in some instances, have greater production,
distribution and capital resources than us. We compete for relationships with a
limited supply of facilities and talented creative personnel to produce our
films. We will compete with major motion picture studios, such as Warner
Brothers
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and The Walt Disney Company, in addition to animation production companies,
including Hanna Barbara and Film Roman, for the services of writers, animators,
actors and other creative personnel and specialized production facilities. We
also anticipate that we will compete with a large number of United States-based
and international distributors of children's films, including The Walt Disney
Company, Warner Brothers, and Nickelodeon in the production of films expected to
appeal to international audiences. More generally, we anticipate we will compete
with various other leisure-time activities, such as home videos, movie theaters,
personal computers and other alternative sources of children's entertainment.
The production and distribution of theatrical productions, television animation,
videocassettes and video disks are significantly competitive businesses, as each
competes with the other, in addition to other forms of entertainment and leisure
activities, including video games and on-line services, such as the Internet.
There is also active competition among all production companies in these
industries for services of producers, directors, actors and others and for the
acquisition of literary properties. The increased number of theatrical films
released in the United States has resulted in increased competition for theater
space and audience attention. Revenues for film entertainment products depend in
part on general economic conditions, but the competitive situation of a producer
of films is still greatly affected by the quality of, and public response to,
the entertainment product that such producer makes available to the marketplace.
There is strong competition throughout the home video industry, both from home
video subsidiaries of several major motion picture studios and from independent
companies, as well as from new film viewing opportunities such as pay-per-view.
We also anticipate competing with several major film studios, such as Paramount
Communications; MCA/Universal; Sony Pictures Entertainment; Twentieth Century
Fox; Time Warner; and MGM/UA Inc., which are dominant in the motion picture
industry, in addition to numerous independent motion picture and television
production companies, television networks and pay television systems, for the
acquisition of literary properties, the services of performing artists,
directors, producers, other creative and technical personnel, and production
financing.
Our management believes that a production's theatrical success is dependent upon
general public acceptance, marketing technology, advertising and the quality of
the production. Our productions will compete with numerous independent and
foreign productions, in addition to productions produced and distributed by a
number of major domestic companies, many of which are divisions of conglomerate
corporations with assets and resources substantially greater than that of ours.
Our management believes that in recent years there has been an increase in
competition in virtually all facets of our business. The growth of pay-per-view
television and the use of home video products may have an effect upon theater
attendance and non-theatrical motion picture distribution. As we may distribute
productions to all of these markets, it is not possible to determine how our
business will be affected by the developments, and accordingly, the resultant
impact on our financial statements. In the distribution of motion pictures,
there is very active competition to obtain bookings of pictures in theaters and
television networks and stations throughout the world. A number of major motion
picture companies have acquired motion picture theaters. Such acquisitions may
have an adverse effect on our distribution endeavors and our ability to book
certain theaters which, due to their prestige, size and quality of facilities,
are deemed to be especially desirable for motion picture bookings. In addition,
our ability to compete in certain foreign territories with either film or
television product is affected by local restrictions and quotas. In certain
countries, local governments require that a minimum percentage of locally
produced productions be broadcast, thereby further reducing available time for
exhibition of our productions. There can be no assurance that additional or more
restrictive theatrical or television quotas will not be enacted or that
countries with existing quotas will not more strictly enforce such quotas.
Additional or more restrictive quotas or stringent enforcement of existing
quotas could materially and adversely affect our business by limiting our
ability to fully exploit our productions internationally.
Government Regulation of the Internet and Legal Uncertainties. We are not
currently subject to direct regulation by any government agency in the United
States, other than regulations applicable to businesses generally, and there are
currently few laws or regulations directly applicable to access to commerce on
the Internet. Because of the increasing popularity and use of the Internet, it
is possible that a number of laws and regulations may be adopted with respect to
the Internet, relating to issues such as user privacy, pricing and
characteristics and quality of products and services. For example, we may be
subject to the provisions of the recently enacted Communications Decency Act
("CDA"). Although the constitutionality of the CDA, the manner in which the CDA
will be interpreted and enforced and its effect
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on our operations cannot be determined, it is possible that the CDA could expose
us to substantial liability. The CDA could also reduce the growth in the use of
the Internet generally and decrease the acceptance of the Internet as a
communications and commercial medium, and could, thereby, have a material
adverse effect on our business, results of operations and financial condition.
A number of other countries have enacted or may enact laws that regulate
Internet content. Other nations, including Germany, have taken actions to
restrict the free distribution of material on the Internet, and the European
Union has recently adopted privacy and copyright directives that may impose
additional burdens and costs on our international operations. In addition,
several telecommunications carriers are attempting to have telecommunications
over the Internet regulated by the Federal Communications Commission ("FCC") in
the same manner as other telecommunications services. For example, America's
Carriers Telecommunications Association ("ACTA") has filed a petition with the
FCC for this purpose. In addition, because the growing popularity and use of the
Internet has burdened the existing telecommunications infrastructure and many
areas with high Internet use have begun to experience interruptions in telephone
service, local telephone carriers, such as Pacific Bell, have petitioned the FCC
to regulate ISPs and OSPs in a manner similar to long distance telephone
carriers and to impose access fees on the ISPs and OSPs. If either of these
petitions is granted, or the relief sought therein is otherwise granted, the
costs of communicating on the Internet could increase substantially, potentially
slowing the growth in use of the Internet, which could in turn decrease the
demand for our productions, products and services.
A number of proposals have been made at various federal, state and local
agencies that would impose additional taxes on the sale of goods and services on
the Internet. Such proposals, if adopted, could substantially impair the growth
of e-commerce, and could adversely affect our opportunity to derive financial
benefit from such activities. In addition, a number of other countries have
announced or are considering additional regulation in many of the foregoing
areas. Such laws and regulations, if enacted in the United States or abroad,
could fundamentally impair our ability to attract corporate participation in our
business, or substantially increase the cost of doing so, which would have a
material adverse effect on our business, operating results, and financial
condition. Moreover, the applicability to the Internet of the existing laws
governing issues such as property ownership, copyright, defamation, obscenity,
and personal privacy is uncertain, and we may be subject to claims that our
products and services violate such laws. Any such new legislation or regulation
in the United States or abroad or the application of existing laws and
regulations to the Internet could have a material adverse effect on our
business, operating results, and financial condition.
Website Security and Privacy. Concerns about transactional security may hinder
our sale of products and services and e-commerce in general. A significant
barrier to e-commerce is the secure transmission of confidential information on
public networks. Any breach in our proposed security could expose us to a risk
of loss or litigation and possible liability. We may rely on encryption and
authentication technology licensed from third parties to provide secure
transmission of confidential information. As a result of advances in computer
capabilities, new discoveries in the field of cryptography or other
developments, a compromise or breach of the algorithms we anticipate using to
protect customer transaction data may occur. A compromise of our security could
severely harm our business. A party who is able to circumvent our security
measures could misappropriate proprietary information, including customer credit
card information, or cause interruptions in the operation of our proposed
website. We may be required to spend significant funds and other resources to
protect against the threat of security breaches or to alleviate problems caused
by these breaches. However, protection may not be available at a reasonable
price or at all. Concerns regarding the security of e-commerce and the privacy
of users may also inhibit the growth of the Internet as a means of conducting
commercial transactions.
Our efforts to sell products and services may expose us to product liability
claims. We have no experience in the sale of products online and the development
of relationships with manufacturers or suppliers of these products. Persons who
purchase products may sue us if any of the products purchased from our website
are defective, fail to perform properly or injure the user. Liability claims
could require us to spend significant time and money in litigation or to pay
significant damages. As a result, any such claims, whether or not successful,
could severely harm our business.
Our success and ability to compete may be significantly dependent on our
proprietary content. We anticipate that we will rely exclusively on copyright
law to protect our proprietary content. Although we will take action to protect
our
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proprietary rights, that action may not be adequate to prevent the infringement
or misappropriation of the content of our website. Infringement or
misappropriation of such content or intellectual property could materially harm
our business. We may be required to obtain licenses from others to refine,
develop, market and deliver new services. We cannot make assurances that we will
be able to obtain any such licenses on commercially reasonable terms, or at all,
or that rights granted pursuant to any licenses will be valid and enforceable.
Because of the global nature of the Internet, it is possible that, although
transmissions by us over the Internet originate primarily in the State of
California, the governments of other states and foreign countries might attempt
to regulate our transmissions or prosecute us for violations of their laws.
There can be no assurance that violations of local laws will not be alleged or
charged by state or foreign governments, that we might not unintentionally
violate such law or that such laws will not be modified, or new laws enacted, in
the future. Any of the foregoing developments could have a material adverse
effect on our business, results of operations, and financial condition.
Compliance with Government Regulation of the Film Industry. The following does
not purport to be a summary of all present and proposed federal, state and local
regulations and legislation relating to the production and distribution of film
entertainment and related products; rather, the following attempts to identify
those aspects that could affect our business. Also, other existing legislation
and regulations, copyright licensing, and, in many jurisdictions, state and
local franchise requirements, are currently the subject of a variety of judicial
proceedings, legislative hearings and administrative and legislative proposals
which could affect, in various manners, the methods in which the industries
involved in film entertainment operate.
Audio visual works, such as television programs and motion pictures, are not
included in the terms of the General Agreement on Trade and Tariffs Treaty. As a
result, many countries, including members of the European Union, are able to
enforce quotas that restrict the number of United States produced feature films
which may be distributed in such countries. Although the quotas generally apply
only to television programming and not to theatrical exhibitions of motion
pictures, there can be no assurance that additional or more restrictive
theatrical or television quotas will not be enacted or that existing quotas will
not be more strictly enforced. Additional or more restrictive quotas or more
stringent enforcement of existing quotas could materially or adversely limit our
ability to exploit our productions completely.
Voluntary industry embargos or United States government trade sanctions to
combat piracy, if enacted, could impact the amount of revenue that we realize
from the international exploitation of our productions. The Motion Picture
Industry, including us, may continue to lose an indeterminate amount of revenue
as a result of motion picture piracy. The Code and Ratings Administration of the
Motion Picture Association of America assigns ratings indicating age group
suitably for the theatrical distribution for motion pictures. United States
television stations and networks, in addition to foreign governments, impose
additional restrictions on the content of motion pictures which may restrict, in
whole or in part, theatrical or television exhibitions in particular
territories. Congress and the Federal Trade Commission are considering, and in
the future may adopt, new laws, regulations and policies regarding a wide
variety of matters that may affect, directly or indirectly, the operation,
ownership and profitably of our business.
Impact of the Year 2000. The Year 2000 (commonly referred to as "Y2K") issue
results from the fact that many computer programs were written using two, rather
than four, digits to identify the applicable year. As a result, computer
programs with time-sensitive software may recognize a two digit code for any
year in the next century as related to this century. For example, "00", entered
in a date-field for the year 2000, may be interpreted as the year 1900,
resulting in system failures or miscalculations and disruptions of operations,
including, among other things, a temporary inability to process transactions or
engage in other normal business activities. While companies and governments in
the United States spent an estimated $150 billion to $225 billion repairing the
problem, countries like Russia and China, which spent relatively minor amounts,
seemed to clear the New Year's Day hurdle with equal success. Major news media
in the United States are reporting that, after years of work and billions of
dollars spent repairing the Year 2000 computer glitch, the technological
tranquility of New Year's Day has raised a new concern that the United States
overreacted to this problem. While it is still too soon to state positively that
the Y2K transition has passed without mishap, we believe that Y2K issues will
not have a material adverse affect on our business.
9
<PAGE>
Item 3. Description of Property.
Property held by the Company. As of the dates specified in the following table,
the Company held the following property:
================================================================================
Property September 30, 1999 September 30, 1998
- --------------------------------------------------------------------------------
Cash $7.00 $0.00
- --------------------------------------------------------------------------------
Furniture and Equipment (net) $0.00 $0.00
================================================================================
The Company's Facilities. At this time, the Company occupies facilities provided
by the Company's directors at no charge to the Company. The office space is
located at 10717 Wilshire Boulevard, Suite 1104, Los Angeles, California 90024.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
(a) Security Ownership of Certain Beneficial Owners. There are no beneficial
owners of 5% or more of the Company's issued and outstanding common stock, other
than officers and directors.
(b) Security Ownership by Management. The following table furnishes information
as to the beneficial ownership of the outstanding shares of the Company's common
stock held by (i) the current officers and directors of the Company, and (ii)
all directors and officers of the Company as a group.
<TABLE>
<CAPTION>
TITLE OF CLASS NAME AND ADDRESS SHARES OWNED PERCENTAGE OF CLASS
<S> <C> <C> <C>
Common Stock Glenn Chilton, President, 500,000 12.95%
Director
Los Angeles, California
Common Stock Zee Batal, Vice President, 1,000,000 25.90%
Director
Los Angeles, California
Common Stock Randolf Turrow, Director 500,000 12.95%
Los Angeles, California
Common Stock Directors and Officers as a 2,000,000 51.8%
group
</TABLE>
Changes in Control. Management of the Company is not aware of any arrangements
which may result in "changes in control" as that term is defined by the
provisions of Item 403 of Regulation S-B.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
================================================================================
Name Age Position
- --------------------------------------------------------------------------------
Glenn Chilton 36 President and a Director
- --------------------------------------------------------------------------------
Zee Batal 40 Vice President and a Director
- --------------------------------------------------------------------------------
Randolf Turrow 43 Director
- --------------------------------------------------------------------------------
Roseanne Milliken 30 Director
================================================================================
Glenn Chilton, age 36, is the President and a director of the Company. Mr.
Chilton attended the University of British Columbia and studied Geography and
Marketing. Mr. Chilton's professional memberships include the American Marketing
Association; the Canadian Marketing Association; and the Vancouver Board of
Trade. From June 1985 to June 1987, Mr. Chilton worked as a Research Director at
Tourigney, Hall and Associates on Granville Island in
10
<PAGE>
Vancouver, British Columbia. From February 1986 to November 1986, Mr. Chilton
worked as the Guest Relations Supervisor for BC Pavilion Corporation in
Vancouver, British Columbia. From June 1987 to July 31, 1996, and then again
from August, 1996 to the present, Mr. Chilton has been the President and Account
Director for Go Direct Marketing, a marketing agency in Vancouver, British
Columbia.
Zee Batal, age 40, is the Vice President of Marketing and Sales and a director
of the Company. From 1977 through 1978, Mr. Batal attended the University of
Windsor. From 1996 to 1998, Mr. Batal belonged to the Vancouver chapter of the
Young Entrepreneur Association. Mr. Batal recently co-wrote, developed and
marketed the script entitled The Misadventures of Charlie Chance, an action
adventure children's comedy. From 1996 through 1998, Mr. Batal was the President
of Ultimate Cigar Company, a publicly-traded company where he established
manufacturing, distribution and marketing programs. Mr. Batal currently owns a
movie catering business in Vancouver.
Randolf Turrow, age 43, is a director of the Company. For four years, Mr. Turrow
studied Speech Communications at California State University, at Northridge. Mr.
Turrow also completed one year of study at the Valley College of Law. Mr.
Turrow's professional memberships include the Directors Guild of America and the
Independent Feature Project/West. From 1988 to 1992, Mr. Turrow was the
President of his own motion picture company, L.A. Dreams Production, Inc., and
maintained an office on the Sony Studios Lot. While with L.A. Dreams Production,
Inc., Mr. Turrow produced six feature films, two commercials and two music
videos. His responsibilities included writing, script breakdown, budgeting,
casting, staffing, accounting, line producing, post supervision and marketing.
Mr. Turrow is also an independent film producer.
Rosanne Milliken, age 30, is a director of the Company. From 1994 to 1998, Ms.
Milliken served as President of Shavick Entertainment Canada. In April 1998, Ms.
Milliken founded Gynormous Pictures in Vancouver, British Columbia, which has
operated as an independent producer. Ms. Milliken has produced a number of
children's television series including Breaker High, Ninja Turtles and the
Magician's House for UPN, Fox Kids and the BBC. She was also Executive in Charge
of Production on over 25 movies.
All directors hold office until the next annual meeting of the shareholders and
the election and qualification of their successors. Officers are elected
annually by the Board of Directors and serve at the discretion of the Board of
Directors.
There are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security, or temporarily or permanently
restraining any of the officers or directors of the Company from engaging in or
continuing any conduct, practice or employment in connection with the purchase
or sale of securities, or convicting such person of any felony or misdemeanor
involving a security, or any aspect of the securities business or of theft or of
any felony, nor are the officers or directors of any affiliate of the officers
and directors so enjoined or entity so enjoined.
Item 6. Executive Compensation - Remuneration of Directors and Officers.
Receipt of Compensation Regardless of Profitability. The officers, directors and
employees of the Company may be entitled to receive significant compensation,
payments and reimbursements regardless of whether the Company operates at a
profit or a loss. Any compensation received by the officers, directors and
management personnel of the Company will be determined from time to time by the
Board of Directors of the Company. Officers, directors and management personnel
of the Company will be reimbursed for any out-of-pocket expenses incurred on
behalf of the Company.
Remuneration of Officers. Specified below, in tabular form, is the aggregate
annual remuneration of the Company's Chief Executive Officer and the two (2)
most highly compensated executive officers other than the Chief Executive
Officer who were serving as executive officers at the end of the Company's last
completed fiscal year.
11
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================
Name of Individual or Identity of Group Capacities in which Remuneration was Aggregate Remuneration
received
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Glenn Chilton President $150,000.00
- -------------------------------------------------------------------------------------------------------------------
Zee Batal Vice President $150,000.00
===================================================================================================================
</TABLE>
Remuneration of Directors. As of February 18, 2000, no compensation has been
paid to any of the directors of the Company for their services as directors.
Item 7. Certain Relationships and Related Transactions.
Transactions with Promoters. There were no transactions with promoters.
Related Party Transactions. On or about July 13, 1999, the Company and Charlie
Chance Productions, a Canadian corporation ("Charlie Chance") entered into an
Original Screenplay Acquisition Agreement ("Agreement"). According to the terms
of the Agreement, the Company purchased from Charlie Chance all rights, title
and interest in all properties, interests, rights and claims to the original
story plot entitled "The Misadventures of Charlie Chance". In exchange, the
Company agreed to execute a promissory note in favor of Charlie Chance in the
amount of One Hundred Fifty Thousand Dollars ($150,000.00). The promissory note
includes a repayment term of six (6) months and bore no interest. The Company
also agreed to execute a royalty agreement whereby Charlie Chance would be
entitled to ten percent (10%) of the net profits (defined more particularly in
the Agreement, attached as Exhibit 10.1 to Form 10-SB filed on December 13,
1999). Zee Batal, an officer and a director of the Company, is the sole officer,
sole director and sole shareholder of Charlie Chance.
The Company did not pay the $150,000.00 when it was due on January 13, 2000, but
rather negotiated a six month extension of the due date. The Company is
conducting a private placement pursuant to Section 4(2) of the Securities Act of
1933 ("Act") and Rule 506 of Regulation D promulgated pursuant to that Act to
pay the $150,000.00. The date of the private offering is January 5, 2000 and, as
of February 18, 2000, no shares have been purchased pursuant to the offering.
Affiliates of former director Thomas Stringham have provided certain website
construction services to the Company which are currently the subject of a
dispute. See "Legal Proceedings".
Employment Contracts. The Company has entered into employment contracts with
Glenn Chilton and Zee Batal. In his capacity as President of the Company, Mr.
Chilton receives $150,000 a year from the Company. In his capacity as Vice
President of Sales and Marketing, Zee Batal receives $150,000 a year from the
Company.
Item 8. Description of Securities.
The Company is authorized to issue 50,000,000 shares of $.001 par value common
stock. As of February 18, 2000, 3,860,000 shares of the Company's common stock
were issued and outstanding to 30 shareholders.
Common Stock. The holders of the Company's common stock are entitled to one vote
for each share held of record on all matters to be voted on by those
shareholders. In the event of liquidation, dissolution, or winding up of the
Company, the holders of the Company's common stock are entitled to share ratably
in all assets remaining available for distribution to them after payment of the
Company's liabilities and after provision has been made for each class of stock,
if any, having preference over the Company's common stock. Holders of shares of
the Company's common stock, as such, have no conversion, preemptive or other
subscription rights, and there are no redemption provisions applicable to the
Company's common stock.
Non-Cumulative Voting. The holders of shares of common stock of the Company do
not have cumulative voting rights, which means that the holders of more than 50%
of the outstanding common stock of the Company, voting for the election of
directors of the Company, may elect all of the directors of the Company to be
elected, if they so desire,
12
<PAGE>
and, in such event, the holders of the remaining common stock of the Company may
not be able to elect any of the Company's directors.
Registration Rights. Existing holders of shares of the Company's common stock
are not entitled to rights with respect to the registration of such shares under
the Securities Act.
Dividends. The payment by the Company of dividends, if any, in the future, shall
be determined by the Company's Board of Directors, in its discretion, and will
depend upon, among other things, the Company's earnings, the Company's capital
requirements, and the Company's financial condition, as well as other relevant
factors. The Company has not paid or declared any dividends to date. Holders of
common stock are entitled to receive dividends as declared and paid from time to
time by the Company's Board of Directors from funds legally available therefor.
The Company intends to retain any earnings for the operation and expansion of
its business and does not anticipate paying cash dividends in the foreseeable
future.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters.
The Company participated in the OTC Bulletin Board, an electronic quotation
medium for securities traded outside of the Nasdaq Stock Market, under the
trading symbol "CLUC". The Company's common stock has closed at a low of $1/32
and a high of $2 7/16 for the 52-week period ending January 20, 2000. As of
January 21, 2000, the Company failed to comply with eligibility requirements
specified in Rule 6530 and therefore should have been delisted from the OTC
Bulletin Board on January 21, 2000. However, although the Company has notified
the OTC Bulletin Board Compliance Unit of its failure to so comply, the Company
has not yet been delisted. The Company anticipates that it will participate on
the National Quotation Bureau's Pink Sheets, an electronic quotation medium for
securities traded outside of the Nasdaq Stock Market, under the trading symbol
"CLUC" until Amendment No.2 to the Company's Registration Statement on Form
10-SB has cleared comments with the Securities and Exchange Commission.
As of February 18, 2000, there were no warrants to purchase common stock
outstanding. There have been no cash dividends declared on the Company's common
stock since the Company's inception. The Company has not yet adopted any policy
regarding payment of dividends.
Penny Stock Regulation. The Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks". Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from those rules, deliver a standardized
risk disclosure document prepared by the Commission, which (i) contained a
description of the nature and level of risk in the market for penny stocks in
both public offerings and secondary trading; (ii) contained a description of the
broker's or dealer's duties to the customer and of the rights and remedies
available to the customer with respect to violation to such duties or other
requirements of Securities' laws; (iii) contained a brief, clear, narrative
description of a dealer market, including "bid" and "ask" prices for penny
stocks and significance of the spread between the "bid" and "ask" price; (iv)
contains a toll-free telephone number for inquiries on disciplinary actions; (v)
defines significant terms in the disclosure document or in the conduct of
trading in penny stocks; and (vi) contains such other information and is in such
form (including language, type, size and format), as the Commission shall
require by rule or regulation. The broker-dealer also must provide, prior to
effecting any transaction in penny stock, the customer (i) with bid and offer
quotations for the penny stock; (ii) the compensation of the broker-dealer and
its salesperson in the transaction; (iii) the number of shares to which such bid
and ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (iv) month account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and
13
<PAGE>
dated copy of a written suitably statement. These disclosure requirements may
have the effect of reducing the trading activity in the secondary market for a
stock that becomes subject to the penny stock rules. If any of the Company's
securities become subject to the penny stock rules, holders of those securities
may have difficulty selling those securities.
Item 2. Legal Proceedings.
The Company is not aware of any pending litigation nor does it have any reason
to believe that any such litigation exists, except as follows:
On or about December 8, 1999, corporate counsel for the Company received a
demand letter from Paterson & Associates, Barristers and Solicitors located in
Vancouver, British Columbia. The demand letter requested immediate payment of
outstanding invoices for services provided to the Company by Thomas Stringham,
Hot Tomali Communications ("HTC"), and others. As specified above, Mr. Stringham
is a director of the company and is also the president and founder of HTC, which
provides Internet marketing and website construction services. Mr. Stringham and
HTC are demanding payment of approximately $38,000CDN (approximately $25,850US)
and are also demanding the Company provide them with various stock options to
purchase Company stock. In late December, 1999 the Company believed it had
settled this matter by the payment of $13,154.33 (U.S. Dollars) and the proposed
issuance of 38,000 options. However, certain disputes have arisen regarding the
performance by HTC, Stringham and others of all the terms and conditions
specified in the settlement agreement, and various significant issues remain in
dispute. In the event a final settlement in this matter is not reached, HTC may
take the Company's website offline, withhold certain copyrighted material, and
file suit in a Canadian court. Moreover, the Company intends to rigorously
prosecute its own action for breach of settlement agreement if the matters in
dispute are not resolved.
Item 3. Changes in and Disagreements with Accountants.
In August, 1999, the Company's former accountant, the firm of Barry L. Friedman,
P.C. ("Friedman") was dismissed. Friedman's reports on the financial statements
for either of the past two (2) years did not contain an adverse opinion or
disclaimer of opinion and the reports were not modified as to uncertainty, audit
scope or accounting principals. The decision to change accountants was
recommended and approved by the Board of Directors and did not result from any
disagreement regarding the Company's policies or procedures. There have been no
disagreements with the Company's accountants since the formation of the Company.
In August, 1999, a new accountant, Strabala, Ramirez & Associates, Inc. was
engaged as the principal accountant to audit the Company's financial statements.
A correspondence from Barry Friedman dated February 10, 2000 specifying that
Company's disclosures regarding the change in accountants are true and correct
is attached as Exhibit 99.
Item 4. Recent Sales of Unregistered Securities.
There have been no sales of unregistered securities within the last three (3)
years which would be required to be disclosed pursuant to Item 701 of Regulation
S-B except for the following:
On or about April 16, 1999, the Company sold 2,000,000 shares of its $.001 par
value common stock for $.001 per share. The shares were issued in reliance upon
the exemption from the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended ("Act"), which exemption is specified by the
provisions of Section 4(2) of the Act and Rule 506 of Regulation D promulgated
by the Securities and Exchange Commission. Gross proceeds to the Company from
that offering were $2,000. The majority of those funds were used for working
capital.
Item 5. Indemnification of Directors and Officers.
Limitation on Liability of Officers and Directors of the Company. Section
78.7502 of the Nevada General Corporation Law permits the Company to eliminate
or limit the personal liability of the officers and directors of the Company to
the Company and its shareholders for damages for breach of fiduciary duty as a
director or officer.
14
<PAGE>
Article Nine of the Articles of Incorporation of the Company includes a
provision eliminating or limiting the personal liability of the officers and
directors of the Company to the Company and its shareholders for damages for
breach of fiduciary duty as a director or officer. Accordingly, the officers and
directors of the Company may have no liability to the shareholders of the
Company for any mistakes or errors of judgment or for any act of omission,
unless such act or omission involves intentional misconduct, fraud, or a knowing
violation of law or results in unlawful distributions to the shareholders of the
Company.
The Company anticipates that it will enter into indemnification agreements with
each of its directors and executive officers pursuant to which the Company
agrees to indemnify each such person for all expenses and liabilities, including
criminal monetary judgments, penalties and fines, incurred by such person in
connection with any criminal or civil action brought or threatened against such
person by reason of such person being or having been an executive officer or
director of the Company. In order to be entitled to indemnification by the
Company, such person must have acted in good faith and in a manner such person
believed to be in the best interests of the Company and, with respect to
criminal actions, such person must have had no reasonable cause to believe his
or her conduct was unlawful.
DISCLOSURE OF POSITION OF COMMISSION REGARDING INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES:
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE COMPANY
PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED THAT IN THE
OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, SUCH INDEMNIFICATION IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT OF 1933 AND IS,
THEREFORE, UNENFORCEABLE.
PART F/S
Copies of the financial statements specified in Regulation 228.310 (Item 310)
are filed with this Registration Statement, Amendment No. 2 to Form 10-SB.
(a) Index to Financial Statements. Page
1 Unaudited Balance Sheet for Period Ended September
30, 1999 F-1
2 Unaudited Statement of Operations for Period Ended
September 30, 1999 F-2
3 Unaudited Statement of Changes in Shareholder's
Equity for the Period Ended September 30, 1999 F-3
4 Unaudited Statement of Cash Flows for the Period
Ended September 30, 1999 F-4
5 Notes to Financial Statements F-5 through F-6
6 Audited Balance Sheets as at December 31, 1997 and
1998 F-7 through F-8
7 Audited Statement of Statement of Operations for
Periods Ended December 31, 1997 and 1998 F-9
8 Audited Statements of Stockholders' Equity for
Period Ended December 31, 1997 and 1998 F-10
15
<PAGE>
9 Audited Statements of Cash Flows for Period Ended
December 31, 1997 and 1998 F-11
10 Notes to Financial Statements F-12 through F-13
PART III
Item 1. Index to Exhibits
Copies of the following documents are filed with this Registration Statement,
Amendment No. 2 to Form 10-SB, as exhibits:
3.1 Amended and Restated Articles of Incorporation E-1 through E-4
3.2 Bylaws of ClubCharlie.com, Inc. E-5 through E-24
10.1 Original Screenplay Acquisition Agreement with
Charlie Chance Productions, Inc. E-25 through E-43
10.2 Employment Agreement with Glenn Chilton E-44 through E-63
10.3 Employment Agreement with Zee Batal E-64 through E-82
27 Financial Data Schedules E-83
99 Correspondence from former accountants E-84
16
<PAGE>
SIGNATURES
In accordance with the provisions of Section 12 of the Securities Exchange
Act of 1934, ClubCharlie.com, Inc., has duly caused this Registration Statement
on Amendment No. 2 to Form 10-SB to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Los Angeles, California, on February
18, 2000.
ClubCharlie.com, Inc.,
a Nevada corporation
By: /s/ Glenn Chilton
-------------------------
Glenn Chilton
Its: President
17
<PAGE>
TABLE OF CONTENTS
Page
BALANCE SHEET .............................................................2
STATEMENT OF OPERATIONS ...................................................3
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY ..............................4
STATEMENT OF CASH FLOWS ...................................................5
NOTES TO FINANCIAL STATAEMENTS ..........................................6-7
<PAGE>
CLUBCHARLLIE.COM, INC.
(FORMERLY LOTUS ENTERPRISES, INC.)
A Development Stage Company
BALANCE SHEET
<TABLE>
<CAPTION>
9/30/98 9/30/99
--------- ---------
<S> <C> <C>
Assets
Cash $ 0 $ 7
Screenplay rights, at cost 0 150,000
Organization costs 1,860 1,860
Accumulated amortization (1,860) (1,860)
--------- ---------
0 0
--------- ---------
Total Assets $ 0 $ 150,007
========= =========
Liabilities and Shareholders' Equity
Accounts payable $ 1,550 $ 70,043
Amounts due officers and directors 0 34,008
--------- ---------
1,550 104,051
Related party acquisition loan for screenplay 0 150,000
Common stock 1,860 3,860
($.001 par value; 50,000,000 shares
authorized; 1,860,000 and 3,860,000 shares
issued and outstanding at September 30,
1998 and 1999, respectively.)
Deficit accumulated during development stage (3,410) (107,904)
--------- ---------
(1,550) (104,044)
--------- ---------
Total Liabilities and Shareholders' Equity $ 0 $ 150,007
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
CLUBCHARLLIE.COM, INC.
(FORMERLY LOTUS ENTERPRISES, INC.)
A Development Stage Company
STATEMENT OF OPERATIONS
Inception
9 months ended (1/6/93)
-------------------------- through
9/30/98 9/30/99 9/30/99
----------- ----------- -----------
Revenue $ 0 $ 0 $ 0
Expenses
Salaries $ 0 $ 52,000 $ 52,000
Marketing 0 21,846 21,846
Research and development 0 13,992 13,992
Legal 0 5,812 5,812
General and administrative 1,100 10,844 14,254
----------- ----------- -----------
1,100 104,494 107,904
----------- ----------- -----------
Net loss $ (1,100) $ (104,494) $ (107,904)
=========== =========== ===========
Weighted average shares outstanding 1,860,000 3,090,769 1,977,827
Earnings per share $ (0.00) $ (0.03) $ (0.05)
The accompanying notes are an integral part of these statements.
3
<PAGE>
CLUBCHARLLIE.COM, INC.
(FORMERLY LOTUS ENTERPRISES, INC.)
A Development Stage Company
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
accumulated
during
Common Stock development Shareholders'
Shares Amount stage Equity
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1997 1,860,000 $ 1,860 $ (2,310) $ (450)
Net loss (1,100) (1,100)
---------- ---------- ---------- ----------
Balance, September 30, 1998 1,860,000 $ 1,860 $ (3,410) $ (1,550)
Net loss 0 0
---------- ---------- ---------- ----------
Balance, December 31, 1998 1,860,000 $ 1,860 $ (3,410) $ (1,550)
Shares issued to officers 4/16/99 for services 2,000,000 2,000 2,000
Net loss (104,494) (104,494)
---------- ---------- ---------- ----------
Balance, September 30, 1999 3,860,000 $ 3,860 $ (107,904) $ (104,044)
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
CLUBCHARLLIE.COM, INC.
(FORMERLY LOTUS ENTERPRISES, INC.)
A Development Stage Company
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Inception
9 months ended (1/6/93)
----------------------------- through
9/30/98 9/30/99 9/30/99
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities -
Net loss $ (1,100) $(104,494) $(107,904)
Adjustments to reconcile net loss to cash
used in operating activities -
Amortization 1,860
Common stock issued for services 2,000 3,860
Changes in assets and liabilities -
Organization costs (1,860)
Increase in payables 1,100 102,501 104,051
--------- --------- ---------
Cash provided by operating activities 0 7 7
Cash flows from investing activities -
Acquisition of screenplay rights 0 (150,000) (150,000)
--------- --------- ---------
Cash used in investing activities 0 (150,000) (150,000)
Cash flows from financing activities -
Loan to acquire screenplay rights 0 150,000 150,000
--------- --------- ---------
Cash provided by financing activities 0 150,000 150,000
Net increase in cash $ 0 $ 7 $ 7
Cash, beginning of the period 0 0 0
--------- --------- ---------
Cash, end of the period $ 0 $ 7 $ 7
========= ========= =========
</TABLE>
Supplemental information: No amounts were paid for interest or taxes during the
periods.
The accompanying notes are an integral part of these statements.
5
<PAGE>
Clubcharlie.com, Inc.
(Formerly Lotus enterprises, Inc.)
(A Development Stage Company)
As of and for the Nine Months ended September 30, 1998 and 1999
1. HISTORY AND OPERATIONS OF THE COMPANY
History. The Company was organized January 6, 1993, under the laws of the State
of Nevada, as Lotus Enterprises, Inc. On February 1, 1993, the Company issued
18,600 shares of its no par value common stock for $1,860.00. On December 17,
1997, the State of Nevada approved the restated Articles of Incorporation, which
changed the no par value common shares to a par value of $.001. The Company
increased its authorized capitalization to 25,000,000 common shares.
Additionally, the Company approved a forward stock split on the basis of 100:1
thus increasing the outstanding common stock from 18,600 shares to 1,860,000
shares. On April 6, 1999, the State of Nevada approved the restated Articles of
Incorporation, which increased its authorized capitalization to 50,000,000
common shares. The Company changed its name to Clubcharlie.com, Inc. On April
16, 1999, the Company issued 2,000,000 shares of its common stock to the three
board members for services valued at $2,000.
Operations. The Company currently has no operations and, in accordance with SFAS
#7, is considered a development stage Company. However, the Company owns
screenplay rights to "The Misadventures of Charlie Chance" which is in
pre-production (that is, they are identifying the players who will direct star
and in the movie.)
2. ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except as follows:
o The Company uses the accrual method of accounting.
o Earnings per share are computed using the weighted average number of shares
of common stock outstanding. There are no common stock equivalents, thus,
basic and diluted EPS are equal.
o Organization costs of $1,860 were amortized over a 60 month period
commencing January 6, 1993 to January 5, 1998.
o Research and development costs incurred to establish and maintain the
Company's web site are expensed as incurred.
o Deferred tax assets have not been recognized due to the uncertainty of the
Company's ability to recognize the benefit in the future.
3. GOING CONCERN
The Companys financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has generated no revenues. Without realization of
additional capital, it would be unlikely for the Company to continue as a going
concern. Management intends to seek additional financing through a private
placement offering in early 2000.
6
<PAGE>
CLUBCHARLLIE.COM, INC.
(FORMERLY LOTUS ENTERPRISES, INC.)
(A Development Stage Company)
As of and for the Nine Months ended September 30, 1998 and 1999
4. SCREENPLAY RIGHTS AND OBLIGATIONS
On July 13, 1999, the Company acquired the rights to the screenplay "The
Misadventures of Charlie Chance" from Charlie Chance Productions, a related
party, for a $150,000 note and royalties of 10% of net profits collected. Net
profits are defined as gross receipts collected reduced by direct production
services, general studio overhead, distribution fees and distribution expenses.
The note, due January 13, 2000, is non-interest bearing. No interest has been
imputed as the note is between related parties, and is due in less than one
year.
As noted on the face of the balance sheet, the screenplay is carried at cost,
$150,000 also Charlie Chance Productions' cost basis. As required by generally
accepted accounting principles, the Company will review the carrying value of
the asset periodically and, if it is determined that the screenplay will not be
used in production, it will be expensed in that period. If by 2003, production
on the screenplay has not been set, costs will be charged to production
overhead.
5. RELATED PARTY TRANSACTIONS
Rent. The officers of the Company currently work out of their own offices and do
not allocate any charges to the Company.
Research and Development. A director provides research and development services
to the Company, developing and maintaining the Company's web site. In the period
ended September 30, 1999, the Company paid approximately $4,000 for these
services. An additional $10,000 has been accrued. See Note 6 for further
discussion.
Screenplay acquisition. The Company acquired screenplay rights from Charlie
Chance Productions, a Canadian corporation, as discussed in Note 4. The
screenplay, written by Zee Batal, a director and officer of the Company, owns
Charlie Chance Productions. The non-interest bearing $150,000 acquisition loan
between the Company and Charlie Chance Productions will be repaid from proceeds
raised in the private placement offering discussed in Note 3.
6. COMMITMENTS AND CONTINGENCIES
Employment Contracts. In August 1999, the Company executed employment contracts
for two officers providing management and marketing services and overseeing the
establishment of the Company's operations. Each contract is for a five year term
with each officer earning $150,000 per year. The contract includes an additional
$600 monthly to each officer for a car allowance, permits annual increases and
is renewable. If the contract is terminated "without cause," the Company is
required to pay one year severance. As of September 30, 1999, expenses of
$52,000 were recorded of which approximately $24,000 remains due to the
officers.
Research and Development. In September 1999, the Company entered into a verbal
arrangement with a director who is developing and maintaining the Company's web
site whereby the director will provide such services until September 2000 in
exchange for 100,000 shares of stock. None of the shares have been issued to
date. However, $10,000 has been accrued as discussed in Note 5.
Film Production and Distribution. The Company intends to produce and distribute
the movie "The Misadventures of Charlie Chance." While the Company has not
entered into any talent, production or distribution contracts, the Company
intends to do so; these costs are not yet determinable.
7
<PAGE>
LOTUS ENTERPRISES INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
December 31, 1998
December 31, 1997
December 31, 1996
<PAGE>
TABLE OF CONTENTS
Page
INDEPENDENT ACCOUNTANTS REPORT ............................................1
ASSETS.....................................................................2
LIABILITIES AND STOCKHOLDERS' EQUITY.......................................3
STATEMENT OF OPERATIONS ..................................................4
STATEMENT OF STOCKHOLDERS' EQUITY..........................................5
STATEMENT OF CASH FLOWS ...................................................6
NOTES TO FINANCIAL STATAEMENTS ............................................7
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors May 19, 1999
Lotus Enterprises, Inc.
Las Vegas, Nevada
I have audited the accompanying Balance Sheets of Lotus Enterprises, Inc.
(A Development Stage Company), as of December 31, 1998, December 31, 1997, and
December 31, 1996, and the related statements of operations, stockholders'
equity and cash flows for the three years ended December 31, 1998, December 31,
1997, and December 31, 1996. These financial statements are the responsibility
of the Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Lotus Enterprises, Inc. (A
Development Stage Company), as of December 31, 1998, December 31, 1997, and
December 31, 1996, and the results of its operations and cash flows for the
three years ended December 31, 1998, December 31, 1997, and December 31, 1996,
in conformity with generally accepted accounting principles.
The accompanying financial statements have teen prepared assuming the
Company will continue as a going concern. As discussed in Note #3 to the
financial statements, the Company has suffered recurring losses from operations
and has no established source of revenue. This raises substantial doubt about
its ability to continue as a going concern. Management's plan in regard to these
matters are also described in Note #3. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Barry L. Friedman May 19, 1999
- ----------------------------
Barry L. Friedman
Certified Public Accountant`S
<PAGE>
LOTUS ENTERPRISES, INC.
(A Development Stage Company)
BALANCE SHEET
ASSETS
December December December
31, 1998 31, 1997 31, 1996
-------- -------- --------
CURRENT ASSETS: $ 0 $ 0 $ 0
---- ---- ----
TOTAL CURRENT ASSETS $ 0 $ 0 $ 0
---- ---- ----
OTHER ASSETS:
Organization Costs (Net) $ 0 $ 0 $372
---- ---- ----
TOTAL OTHER ASSETS $ 0 $ 0 $372
---- ---- ----
TOTAL ASSETS $ 0 $ 0 $372
==== ==== ====
See accompanying notes to financial statements & audit report
2
<PAGE>
LOTUS ENTERPRISES, INC.
(A Development Stage Company)
BALANCE SHEET
LIABILITIES All STOCKHOLDERS' EQUITY
December December December
31, 1998 31, 1997 31, 1996
CURRENT LIABILITIES
Accounts Payable $1,550 $ 450 $ 0
------ ------ ------
TOTAL CURRENT LIABILITIES $1,550 $ 450 $ 0
------ ------ ------
STOCKHOLDERS' EQUITY: (Note 1)
Common stock, no par value,
authorized 25,000 shares,
issued and outstanding at
December 31, 1996-18,600 shs $1,860
Common stock, $.001 par value,
authorized 25,000,000 shares,
issued and outstanding at
December 31, 1997-1,860,000 shs $1,860
December 31, 1997-8,860,000 shs $1,860
Deficit accumulated during
development stage -3,410 -2,310 -1,488
------ ------ ------
TOTAL STOCKHOLDERS' EQUITY $ -1,550 $ -450 $ 372
------ ------ ------
STOCKHOLDERS' EQUITY $ 0 $ 0 $ 372
------ ------ ------
See accompanying notes to financial statements & audit report
3
<PAGE>
LOTUS ENTERPRISES, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Year Year Year Jan 6, 1993
Ended Ended Ended (inception)
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1998 1997 1996 1998
---------- ---------- ---------- ----------
INCOME:
Revenue $ 0 0 0 0
---------- ---------- ---------- ----------
EXPENSES:
General and
Administrative $ 1,100 $ 450 $ 0 $ 1,550
Amortization 0 372 372 1,860
---------- ---------- ---------- ----------
Total Expenses $ 1,100 $ 822 372 3,410
---------- ---------- ---------- ----------
Net Profit/Loss (-) $-1,100 $- 822 $ - 372 $ -3,410
========== ========== ========== ==========
Net Profit/Loss (-)
per weighted
share (Note 1) $-.0006 $-.0004 $-.0002 $ -.0018
========== ========== ========== ==========
Weighted average
shares outstanding 1,860,000 1,860,000 1,860,000 1,860,000
========== ========== ========== ==========
See accompanying notes to financial statements & audit report
4
<PAGE>
LOTUS ENTERPRISES, INC.
(A Development Stage Company)
STATEMENT OF' STOCKHOLDERS' EQUITY
Deficit
accumulated
Common Stock Additional during
----------------------- Paid-in development
Shares Amount Capital stage
--------- -------- ---------- --------
Balance,
December 31, 1995 18,600 $ 1,860 $ 0 $ -1,116
Net loss year ended
December 31, 1996 -372
--------- -------- -------- --------
Balance,
December 31, 1996 18,600 $ 1,860 $ 0 $ -1,488
December 17, 1997
Changed from no par
value to par value
of $.00l -1,841 +1,841
December 17, 1997
forward stock split
100:1 1,841,400 +1,841 -1,84l
Net loss year ended
December 31, 1997 -822
--------- -------- -------- --------
Balance,
December 31, 1997 1,860,000 $ 1,860 $ 0 $ -2,310
Net loss year ended
December 31, 1998 -1,100
--------- -------- -------- --------
Balance,
December 31, 1998 1,860,000 $ 1,860 $ 0 $ -3,410
========= ======== ======== ========
See accompanying notes to financial statements & audit report
5
<PAGE>
LOTUS ENTERPRISES1 INC.
(A Development stage Company)
STATEMENT OF CASH FLOWS
Year Year Year Jan. 6,1993
Ended Ended Ended (inception)
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1998 1997 1996 1998
-------- ------- ------- -----------
Cash Flows from
Operating Activities;
Net Loss $-1,100 $ -822 $ -372 $-3,410
AdjuStment to
reconcile net loss to net cash
provided by operating activities
Amortization 0 +372 +372 +1,860
Changes in assets and
liabilities:
organization Costs -1,860
Increase in current
liabilities: +1,100 +450 0 +1,550
------ ------ ------ ------
Neb cash used in
operating activities $ 0 $ 0 $ 0 $-1,860
Cash Flows from
investing activities 0 0 0 0
Cash Flows from
Financing Activities:
Issuance of common
Stock 0 0 0 +1,860
------ ------ ------ ------
Net increase (decrease)
in cash $ 0 $ 0 $ 0 $ 0
Cash, beginning of
period 0 0 0 0
------ ------ ------ ------
Cash, end of period $ 0 $ 0 $ 0 $ 0
====== ====== ====== ======
See accompanying notes to financial statements & audit report
6
<PAGE>
LOTUS ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998, December 31, 1997, and December 31, l$96
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized January 6, 1993, under the laws of the State of
Nevada, as Lotus Enterprises, Inc. The Company currently has no operations and,
in accordance with SFAS #7, is considered a development stage company.
On February 1, 1993, the company issued 18,600 shares of its no par value
common stock for $ 1,860.00
On December 17, 1997, the State of Nevada approved the restated Articles of
Incorporation, which changed the no par value common shares to a par value of
$.00l. Also, the Company increased it's capitalization from 25,000 common shares
to 25,000,000 common shares.
On December 17, 1997, the Company approved a forward stock split on the
basis of 100:1 thus increasing the outstanding common stock from 18,600 shares
to 1,860,000 shares.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except as
follows:
1. The Company uses the accrual method of accounting.
2. Earnings per share is computed using the weighted average number of
shares of common stock outstanding.
3. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
4. Organization costs of $ 1,860.00 are being amortized over a 60 month
period commencing January 6, 1993, to January 5, 1998.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional capital
through a merger with an existing operating company.
7
<PAGE>
LOTUS ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Con't)
December 31, 1998, December 31, 1997, and December 31, 1996
NOTE 4 - RELATED PARTY TRANSACTION
The Company neither owns or leases any real property. Office services are
provided without charge by a director. Such costs are immaterial to the
financial statements and, accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other business activities
and may, in the future, become involved in other business opportunities. If a
specific business opportunity becomes available, such persons may face a
conflict in selecting between the Company and their other business interests.
The Company has not formulated a policy for the resolution of such conflicts.
NOTE 5 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
shares of common stock.
NOTE 6 - SUBSEQUENT EVENTS (UNAUDITED)
On January 5, 1999, a new Board of Directors took over the Company.
On April 6, 1999, the state of Nevada approved the restated Articles of
Incorporation, which increased it's capitalization from 25,000,000 common shares
to 50,000,000 common shares.
On April 6, 1999, the Company changed its name to ClubCharlie. com, Inc.
On April 16, 1999, the Company issued 2,000,000 shares of its common stock
to the three board meters for services valued at $2,000.00.
8
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
LOTUS ENTERPRISES, INC.
The undersigned, as the President and Secretary of LOTUS ENTERPRISES, INC.,
a Nevada corporation, hereby certify that by unanimous vote of the Board of
Directors by written consent dated March 23, 1999, and majority vote of the
stockholders by written consent dated March 23, 1999, it was agreed that these
RESTATED ARTICLES OF INCORPORATION be filed with the Secretary of State for the
State of Nevada.
The undersigned further certify that the original Articles of Incorporation
of LOTUS ENTERPRISES, INC. were filed with the Secretary of State for the State
of Nevada on the 6th day of January, 1993. The undersigned further certify that
ARTICLE FOURTH of the original Articles of Incorporation filed on the 6th day of
January, 1993, was amended by a Certificate Amending Articles of Incorporation
filed with the Secretary of State for the State of Nevada on the 17th day of
December, 1997.
The exact text of the Restated Articles of Incorporation of LOTUS
ENTERPRISES, INC., which amends Article FIRST, Article SECOND, Article THIRD,
Article FOURTH, Article FIFTH, Article SIXTH, Article SEVENTH, Article EIGHTH,
Article NINTH and Article TENTH, is as follows:
FIRST. The name of this corporation is:
ClubCharlie.com, Inc.
SECOND. The registered office for this corporation in the State of Nevada
is located at 50 West Liberty Street, Suite 880, Reno, Nevada 89501. This
corporation may maintain an office, or offices, in such other place or places
within or without the State of Nevada as may be from time to time designated by
the Board of Directors of this corporation, or by the Bylaws of this
corporation, and this corporation may conduct all business of every kind and
nature, including the holding of all meetings of directors and stockholders,
outside the State of Nevada, as well as within the State of Nevada.
THIRD. The purposes for which this corporation is organized are to engage
in any activity or business not in conflict with the laws of the State of Nevada
or of the United States of America and, without limiting the generality of the
foregoing, specifically, to have all the powers now or hereafter conferred by
the laws of the State of Nevada upon
1
<PAGE>
corporations organized pursuant to the laws pursuant to which this corporation
is organized and any and all acts amendatory thereof and supplemental thereto.
The purposes specified in this article shall be construed both as purposes and
powers and shall be in no manner limited or restricted by reference to, or
inference from, the terms of this or any other article.
FOURTH. That the total number of common stock authorized that may be issued
by this corporation is fifty million (50,000,000) shares, with a par value of
$.001 and no other class of stock shall be authorized.
FIFTH. The affairs of this corporation shall be governed by a Board of
Directors, and the number of directors may from time to time be increased or
decreased in such manner as shall be provided by the Bylaws of this corporation;
provided, however, that the number of directors shall not be reduced to fewer
than one (1).
SIXTH. The capital stock of this corporation, after the amount of the
subscription price, or par value, has been paid, shall not be subject to
assessment to pay the debts of this corporation.
SEVENTH. This corporation shall have a perpetual existence.
EIGHTH. The power to alter, amend, or repeal the Bylaws of this
corporation, or to adopt new Bylaws, shall be vested in the Board of Directors
of this corporation, except as otherwise may be specifically provided in those
Bylaws.
NINTH. No shareholder shall be entitled, as a matter of right, to subscribe
for or receive additional shares of any class of stock of this corporation,
whether now or hereafter authorized, or any bonds, debentures or securities
convertible into such stock, but such additional shares of stock or other
securities convertible into such stock may be issued or disposed of by the Board
of Directors of this corporation to such persons, for such consideration, and on
such terms as, in its discretion, the Board of Directors of this corporation
shall deem advisable.
2
<PAGE>
TENTH. No director or officer of this corporation shall be personally
liable to this corporation or any of its stockholders for damages for breach of
fiduciary duty as a director or officer involving any act or omission of any
such director or officer; provided, however, that the foregoing provision shall
not eliminate or limit the liability of a director or officer (i) for acts or
omissions which involved intentional misconduct, fraud or a knowing violation of
law, or (ii) the payment of dividends in violation of Section 78.300 of the
Nevada Revised Statutes. Any repeal or modification of this article by the
stockholders of this corporation shall be prospective only and shall not
adversely affect any limitation on the personal liability of a director or
officer of this corporation for acts or omissions prior to such repeal or
modification.
The undersigned hereby certify that they have on this _____ day of March,
1999, executed these Restated Articles of Incorporation.
---------------------
President
---------------------
Secretary
3
<PAGE>
ACKNOWLEDGMENT
- ----------------- )
) ss.
- ----------------- )
On _______________________, before me, ___________________________, personally
appeared _____________________________ and ______________________ (personally
known to me or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to this instrument, and acknowledged
to me that he/she/they executed this instrument in his/her/their authorized
capacity/capacities, and that by his/her/their signature(s) on the instrument
the person(s), or the entity on behalf of which the person(s) acted, executed
the instrument.
WITNESS my hand and official seal.
Signature: _______________________________ (Seal)
4
BYLAWS FOR THE REGULATION
EXCEPT AS OTHERWISE PROVIDED BY STATUTE
OR ITS ARTICLES OF INCORPORATION OF
CLUBCHARLIE.COM, INC.
ARTICLE I.
Offices Section 1. PRINCIPAL OFFICE. The principal office for the
transaction of the business of the corporation is hereby fixed and located at
Suite 880, Bank of America Plaza, 50 West Liberty Street, Reno, Nevada 89501,
being the offices of THE NEVADA AGENCY AND TRUST COMPANY. The board of directors
is hereby granted full power and authority to change said principal office from
one location to another in the State of Nevada.
Section 2. OTHER OFFICES. Branch or subordinate offices may at any time be
established by the board of directors at any place or places where the
corporation is qualified to do business.
ARTICLE II.
Meetings of Shareholders
Section 1. MEETING PLACE. All annual meetings of shareholders and all other
meetings of shareholders shall be held either at the principal office or at any
other place within or without the State of Nevada which may be designated either
by the board of
1
<PAGE>
directors, pursuant to authority hereinafter granted to said board, or by the
written consent of all shareholders entitled to vote thereat, given either
before or shareholders entitled to vote thereat, given either before or after
the meeting and filed with the Secretary of the corporation.
Section 2. ANNUAL MEETINGS. The annual meetings of shareholders shall be
held on the second Thursday of September of each year, at the hour of 10:00
o'clock A.M. of said day commencing with the year 1998, provided, however, that
should said day fall upon a legal holiday then any such annual meeting of
shareholders shall be held at the same time and place on the next day thereafter
ensuing which is not a legal holiday.
Written notice of each annual meeting signed by the president or a vice
president, or the secretary, or an assistant secretary, or by such other person
or persons as the directors shall designate, shall be given to each shareholder
entitled to vote thereat, either personally or by mail or other means of written
communication, charges prepaid, addressed to such shareholder at his address
appearing on the books of the corporation or given by him to the corporation for
the purpose of notice. If a shareholder gives no address, notice shall be deemed
to have been given to him, if sent by mail or other means of written
communication addressed to the place where the principal office of the
corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which said office is located. All such
notices shall be sent to each shareholder entitled thereto not less than ten
(10) nor more than sixty (60) days before
2
<PAGE>
each annual meeting, and shall specify the place, the day and the hour of such
meeting, and shall also state the purpose or purposes for which the meeting is
called.
Section 3. SPECIAL MEETINGS. Special meetings of the shareholders, for any
purpose or purposes whatsoever, may be called at any time by the president or by
the board of directors, or by one or more shareholders holding not less than 10%
of the voting power of the corporation. Except in special cases where other
express provision is made by statute, notice of such special meetings shall be
given in the same manner as for annual meetings of shareholders. Notices of any
special meeting shall specify in addition to the place, day and hour of such
meeting, the purpose or purposes for which the meeting is called.
Section 4. ADJOURNED MEETINGS AND NOTICE THEREOF. Any shareholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat, but in the absence
of a quorum, no other business may be transacted at any such meeting.
When any shareholders' meeting, either annual or special, is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall be given as in
the case of an original meeting. Save as aforesaid, it shall not be necessary to
give any notice of an adjournment or of the business to be transacted at an
adjourned meeting, other than by announcement at the meeting at which such
adjournment is taken.
3
<PAGE>
Section 5. ENTRY OF NOTICE. Whenever any shareholder entitled to vote has
been absent from any meeting of shareholders, whether annual or special, an
entry in the minutes to the effect that notice has been duly given shall be
conclusive and incontrovertible evidence that due notice of such meeting was
given to such shareholders, as required by law and the Bylaws of the
corporation.
Section 6. VOTING. At all annual and special meetings of stockholders
entitled to vote thereat, every holder of stock issued to a bona fide purchaser
of the same, represented by the holders thereof, either in person or by proxy in
writing, shall have one vote for each share of stock so held and represented at
such meetings, unless the Articles of Incorporation of the company shall
otherwise provide, in which event the voting rights, powers and privileges
prescribed in the said Articles of Incorporation shall prevail. Voting for
directors and, upon demand of any stockholder, upon any question at any meeting
shall be by ballot. Any director may be removed from office by the vote of
stockholders representing not less than two-thirds of the voting power of the
issued and outstanding stock entitled to voting power.
Section 7. QUORUM. The presence in person or by proxy of the holders of a
majority of the shares entitled to vote at any meeting shall constitute a quorum
for the transaction of business. The shareholders present at a duly called or
held meeting at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum.
4
<PAGE>
Section B. CONSENT OF ABSENTEES. The transactions of any meeting of
shareholders, either annual or special, however called and noticed, shall be as
valid as though at a meeting duly held after regular call and notice, if a
quorum be present either in person or by proxy, and if either before or after
the meeting, each of the shareholders entitled to vote, not present in person or
by proxy, sign a written waiver of Notice, or a consent to the holding of such
meeting, or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of this meeting.
Section 9. PROXIES. Every person entitled to vote or execute consents shall
have the right to do so either in person or by an agent or agents authorized by
a written proxy executed by such person or his duly authorized agent and filed
with the secretary of the corporation; provided that no such proxy shall be
valid after the expiration of eleven (11) months from the date of its execution,
unless the shareholder executing it specifies therein the length of time for
which such proxy is to continue in force, which in no case shall exceed seven
(7) years from the date of its execution.
ARTICLE III
Section I. POWERS. Subject to the limitations of the Articles of
Incorporation or the Bylaws, and the provisions of the Nevada Revised Statutes
as to action to be authorized or approved by the shareholders, and subject to
the duties of directors as
5
<PAGE>
prescribed by the Bylaws, all corporate powers shall be exercised by or under
the authority of, and the business and affairs of the corporation shall be
controlled by the board of directors. Without prejudice to such general powers,
but subject to the same limitations, it is hereby expressly declared that the
directors shall have the following powers, to wit:
First - To select and remove all the other officers, agents and employees
of the corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the Articles of Incorporation or the Bylaws, fix
their compensation, and require from them security for faithful service.
Second - To conduct, manage and control the affairs and business of the
corporation, and to make such rules and regulations therefor not inconsistent
with law,, with the Articles of incorporation or the Bylaws, as they may deem
best.
Third - To change the principal office for the transaction of the business
of the corporation from one location to another within the same county as
provided in Article I, Section 1, hereof; to fix and locate from time to time
one or more subsidiary offices of the corporation within or without the State of
Nevada, as provided in Article I, Section 2, hereof; to designate any place
within or- without the State of Nevada for the holding of any shareholders I
meeting or meetings; and to adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock, and to alter the form of such seal
and of such certificates from time to time, as in their judgment they may deem
best, provided such seal and such certificates shall at all times comply with
the provisions of law.
6
<PAGE>
Fourth - To authorize the issue of shares of stock of the corporation from
time to time, upon such terms as may be lawful, in consideration of money paid,
labor done or services actually rendered, debts or securities canceled, or
tangible or intangible property actually received, or in the case of shares
issued as a dividend, against amounts transferred from surplus to stated
capital.
Fifth - To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and securities therefore.
Sixth - To appoint an executive committee and other committees and to
delegate to the executive committee any of the powers and authority of the board
in management of the business and affairs of the corporation, except the power
to declare dividends and to adopt, amend or repeal Bylaws. The executive
committee shall be composed of one or more directors.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number of
directors of the corporation shall be not less than one (1) and no more than
fifteen (15).
Section 3. ELECTION AND TERM OF OFFICE. The directors shall be elected at
each annual meeting of shareholders, but if any such annual meeting is not held,
or the directors are not elected thereat, the directors may be elected at any
special meeting of
7
<PAGE>
shareholders. All directors shall hold office until their respective successors
are elected.
Section 4. VACANCIES. Vacancies in the board of directors may be filled by
a majority of the remaining directors, though less than a quorum, or by a sole
remaining director, and each director so elected shall hold office until his
successor is elected at an annual or a special meeting of the shareholders.
A vacancy or vacancies in the board of directors shall be deemed to exist
in case of the death, resignation or removal of any director, or if the
authorized number of directors be increased, or if the shareholders fail at any
annual or special meeting of shareholders at which any director or directors are
elected to elect the full authorized number of directors to be voted for at that
meeting.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors. If the board of directors
accept the resignation of a director tendered to take effect at a future time,
the board or the shareholders shall have the power to elect a successor to take
office when the resignation is to become effective.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
Section 5. PLACE OF MEETING. Regular meetings of the board of directors
shall be held at any place within or without the State which has been designated
from time to time by resolution of the board or by written consent of all
members of the board. In the absence of such designation, a regular meeting
shall be held at the principal office of
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the corporation. Special meetings of the board may be held either at a place so
designated, or at the principal office.
Section 6. ORGANIZATION MEETING. Immediately following each annual meeting
of shareholders, the board of directors shall hold a regular meeting for the
purpose of organization, election of officers, and the transaction of other
business. Notice of such meeting is hereby dispensed with.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the board of
directors shall be held without call on the eighth (8th) day of each month at
the hour of 10:00 clock A.M. of said day; provided, however, should said day
fall upon a legal holiday, then said meeting shall be held at the same time on
the next day thereafter ensuing which is not a legal holiday. Notice of all such
regular meetings of the board of directors is hereby dispensed with.
Section 8. SPECIAL MEETINGS. special meetings of the board of directors for
any purpose or purposes shall be called at any time by the president, or, if he
is absent or unable or refuses to act, by any vice president or by any two (2)
directors.
Written notice of the time and place of special meetings shall be delivered
personally to the directors or sent to each director by mail or other form of
written communication, charges prepaid, addressed to him at his address as it is
shown upon the records of the corporation, or if it is not shown on such records
or is not readily ascertainable, at the place in which the meetings of the
directors are regularly held. In
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case such notice is mailed or telegraphed, it shall be deposited in the United
States mail or delivered to the telegraph company in the place in which the
principal office of the corporation is located at least forty-eight (48) hours
prior to the time of the holding of the meeting. In case such notice is
delivered as above provided, it shall be so delivered at least twenty-four (24)
hours prior to the time of the holding of the meeting. Such mailing,
telegraphing or delivery as above provided shall be due, legal and personal
notice to such director.
Section 9. NOTICE OF ADJOURNMENT. Notice of the time and place of holding
an adjourned meeting need not be given to absent directors, if the time and
place be fixed at the meeting adjourned.
Section 10. ENTRY OF NOTICE. Whenever any director has been absent from any
special meeting of the board of directors, an entry in the minutes to the effect
that notice has been duly given shall be conclusive and incontrovertible
evidence that due notice of such special meeting was give to such director, as
required by law and the Bylaws of the corporation.
Section 11. WAIVER OF NOTICE. The transactions of any meeting of the board
of directors, however called and noticed or wherever held, shall be as valid as
though had a meeting duly held after regular call and notice, if a quorum be
present, and if, either before or after the meeting, each of the directors not
present sign a written waiver of notice or a consent to the holding of such
meeting or an approval of the minutes thereof.
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All such waivers, consents or approvals shall be filed with the corporate
records or made a part of the minutes of the meeting.
Section 12. QUORUM. A majority of the authorized number of directors shall
be necessary to constitute a quorum for the transaction of business, except to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present, shall be regarded as the act of the board of directors, unless a
greater number be required by law or by the Articles of Incorporation.
Section 13. ADJOURNMENT. A quorum of the directors may adjourn any
directors' meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum, a majority of the directors present at any
directors' meeting, either regular or special, may adjourn from time to time
until the time fixed for the next regular meeting of the board.
Section 14. FEES AND COMPENSATION. Directors shall not receive any stated
salary for their services as directors, but by resolution of the board, a fixed
fee, with or without expenses of attendance may be allowed for attendance at
each meeting. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise, and receiving compensation therefor.
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ARTICLE IV.
Officers
Section 1. OFFICERS. The officers of the corporation shall be a president,
a vice president and a secretary/treasurer. The corporation may also have, at
the discretion of the board of directors, a chairman of the board, one or more
vice presidents, one or more assistant secretaries, one or more assistant
treasurers, and such other officers as may be appointed in accordance with the
provisions of Section 3 of this Article. officers other than president and
chairman of the board need not be directors. Any person may hold two or more
offices.
Section 2. ELECTION. The officers of the corporation, except such officers
as may be appointed in accordance with the provisions of Section 3 or Section 5
of this Article, shall be chosen annually by the board of directors, and each
shall hold his office until he shall resign or shall be removed or otherwise
disqualified to serve, or his successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC. The board of directors may appoint
such c)ther officers as the business of the corporation may require, each of
whom shall hold office for such period, have such authority and perform such
duties as are provided in the Bylaws or as the board of directors may from time
to time determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed, either with
or without cause, by a majority of the directors at the time in office, at any
regular or special meeting of the board.
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Any officer may resign at any time by giving written notice to the board of
directors or to the president, or to the secretary of the corporation. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the Bylaws for regular appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board, if there shall
be such an officer, shall, if present, preside at all meetings of the board of
directors, and exercise and perform such other powers and duties as may be from
time to time assigned to him by the board of directors or prescribed by the
Bylaws.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as may be
given by the board of directors to the chairman of the board, if there be such
an officer, the president shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction and control of the business and officers of the
corporation. He shall preside at all meetings of the shareholders and in the
absence of the chairman of the board, or if there be none, at all meetings of
the board of directors. He shall be ex-officio a member of all the standing
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committees, including the executive committee, if any, and shall have the
general powers and duties of management usually vested in the office of
president of a corporation, and shall have such other powers and duties as may
be prescribed by the board of directors or the Bylaws.
Section 8. VICE PRESIDENT. In the absence or disability of the president,
the vice presidents in order of their rank as fixed by the board of directors,
or if not ranked, the vice president designated by the board of directors, shall
perform all the duties of the president and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the president. The vice
presidents shall have such other powers and perform such other duties as from
time to time may be prescribed for them respectively by the board of directors
or the Bylaws.
Section 9. SECRETARY. The secretary shall keep, or cause to be kept, a book
of minutes at the principal office or such other place as the board of directors
may order, of all meetings of directors and shareholders, with the time and
place of holding, whether regular or special, and if special, how authorized,
the notice thereof given, the names of those present at directors' meetings, the
number of shares present or represented at shareholders' meetings and the
proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal office, a
share register, or a duplicate share register, showing the names of the
shareholders and their addresses; the number and classes of shares held by each;
the number and date of
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certificates issued for the same, and the number and date of cancellation of
every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all the meetings
of the shareholders and of the board of directors required by the Bylaws or by
law to be given, and he shall keep the seal of the corporation in safe custody,
and shall have such other powers and perform such other duties as may be
prescribed by the board of directors or the Bylaws.
Section 10. TREASURER. The treasurer shall keep and maintain, or cause to
be kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursement, gains, losses, capital, surplus and shares.
Any surplus, including earned surplus, paid-in surplus and surplus arising from
a reduction of stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all times be open to
inspection by any director.
The treasurer shall deposit all moneys and other valuables in the name and
to the credit of the corporation with such depositories as may be designated by
the board of directors. He shall disburse the funds of the corporation as may be
ordered by the board of directors, shall render to the president and directors,
whenever they request it, an account of all of his transactions as treasurer and
of the financial condition of the corporation, and shall have such other powers
and perform such other duties as may be prescribed by the board of directors or
the Bylaws.
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ARTICLE V.
Miscellaneous
Section 1. RECORD DATE AND CLOSING STOCK BOOKS. The board of directors may
fix a time, in the future, not exceeding fifteen (15) days preceding the date of
any meeting of shareholders, and not exceeding thirty (30) days preceding the
date fixed for the payment of any dividend or distribution, or for the allotment
of rights, or when any change or conversion or exchange of shares shall go into
effect, as a record date for the determination of the shareholders entitled to
notice of and to vote at any such meeting, or entitled to receive any such
dividend or distribution, or any such allotment of rights, or to exercise the
rights in respect to any such change, conversion or exchange of shares, and in
such case only shareholders of record on the date so fixed shall be entitled to
notice of and to vote at such meetings, or to receive such dividend,
distribution or allotment of rights, or to exercise such rights, as the case may
be, notwithstanding any transfer of any shares on the books of the corporation
after any record date fixed as aforesaid. The board of directors may close the
books of the corporation against transfers of shares during the whole, or any
part of any such period.
Section 2. INSPECTION OF CORPORATE RECORDS. The share register or duplicate
share register, the books of account, and minutes of proceedings of the
shareholders and directors shall be open to inspection upon the written demand
of any
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shareholder or the holder of a voting trust certificate, at any reasonable time,
and for a purpose reasonably related to his interests as a shareholder, or as
the holder of a voting trust certificate, and shall be exhibited at any time
when required by the demand of ten percent (10%) of the shares represented at
any shareholders' meeting. Such inspection may be made in person or by an agent
or attorney, and shall include the right to make extracts. Demand of inspection
other than at a shareholders' meeting shall be made in writing upon the
president, secretary or assistant secretary of the corporation.
Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the board of directors.
Section 4. ANNUAL REPORT. The board of directors of the corporation shall
cause to be sent to the shareholders not later than one hundred twenty (120)
days after the close of the fiscal or calendar year an annual report.
Section 5. CONTRACT, ETC., HOW EXECUTED. The board of directors, except as
in the Bylaws otherwise provided, may authorize any officer or officers, agent
or agents, to enter into any contract, deed or lease or execute any instrument
in the name of and on behalf of the corporation, and such authority may be
general or confined to specific instances; and unless so authorized by the board
of directors, no officer, agent or
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employee shall have any power or authority to bind the corporation by any
contract or engagement or to pledge its credit to render it liable for any
purpose or to any amount.
Section 6. CERTIFICATES OF STOCK. A certificate or certificates for shares
of the capital stock of the corporation shall be issued to each shareholder when
any such shares are fully paid up. All such certificates shall be signed by the
president or a vice president and the secretary or an assistant secretary, or be
authenticated by facsimiles of the signature of the president and secretary or
by a facsimile of the signature of the president and the written signature of
the secretary or an assistant secretary. Every certificate authenticated by a
facsimile of a signature must be countersigned by a transfer agent or transfer
clerk.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the board of directors or the Bylaws may
provide; provided, however, that any such certificate so issued prior to full
payment shall state the amount remaining unpaid and the terms of payment
thereof.
Section 7. REPRESENTATIONS OF SHARES OF OTHER CORPORATIONS. The president
or any vice president and the secretary or assistant secretary of this
corporation are authorized to vote, represent and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority herein
granted to said officers to vote or represent on behalf of this corporation or
corporations may be exercised either by such
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officers in person or by any person authorized so to do by proxy or power of
attorney duly executed by said officers.
Section 8. INSPECTION OF BYLAWS. The corporation shall keep in its
principal office for the transaction of business the original or a copy of the
Bylaws as amended, or otherwise altered to date, certified by the secretary,
which shall be open to inspection by the shareholders at all reasonable times
during office hours.
Section 9. REFUSAL TO REGISTER TRANSFER. The Corporation shall not register
any transfer of securities issued by the Corporation in any transaction that
qualifies for the exemption from registration requirements specified by the
provisions of Regulation S, unless such transfer is made in accordance with the
provisions of Regulation S.
ARTICLE VI.
Amendments
Section 1. POWER OF SHAREHOLDERS. New Bylaws may be adopted or these Bylaws
may be amended or repealed by the vote of shareholders entitled to exercise a
majority of the voting power of the corporation or by the written assent of such
shareholders.
Section 2. POWER OF DIRECTORS. Subject to the right of shareholders as
provided in Section 1 of this Article VI to adopt, amend or repeal Bylaws,
Bylaws other than a Bylaw or amendment thereof changing the authorized number of
directors may be adopted, amended or repealed by the board of directors.
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Section 3. ACTION BY DIRECTORS THROUGH CONSENT IN LIEU OF MEETING. Any
action required or permitted to be taken at any meeting of the board of
directors or of any committee thereof, may be taken without a meeting, if a
written consent thereto is signed by all the members of the board or of such
committee. Such written consent shall be filed with the minutes of proceedings
of the board or committee.
20
ORIGINAL SCREENPLAY ACQUISITION AGREEMENT
By and Among
ClubCharlie.com, Inc.,
a Nevada corporation;
and
Charlie Chance Productions,
a Canadian corporation
THIS ORIGINAL SCREENPLAY ACQUISTION AGREEMENT ("Agreement") is made this
___ day of ___, 1999, by and among ClubCharlie.com, Inc., a Nevada corporation
("Purchaser") and Charlie Chance Productions, a Canadian corporation ("Seller"),
and provides for the Purchaser to acquire certain original screenplay rights
("Screenplay") of the Seller.
RECITALS
1. The Purchaser desires to acquire, on the terms and subject to the
conditions specified in this Agreement, the Screenplay rights owned by
the Seller.
2. The Seller believes it is in the best interests of the Seller that
they sell the Screenplay to the Purchaser.
NOW THEREFORE, IN CONSIDERATION OF THE RECITALS SPECIFIED ABOVE THAT SHALL
BE DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREEMENT AND THE MUTUAL COVENANTS,
PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES SPECIFIED IN
THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED WITH THE INTENT TO BE OBLIGATED
LEGALLY AND EQUITABLY, THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE, REPRESENT
AND WARRANT AS FOLLOWS:
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ARTICLE I
DEFINITIONS
As used in this Agreement, in addition to the terms defined elsewhere in
this Agreement, the terms specified below in this Article I shall have the
definitions and meanings specified immediately after those terms, unless a
different and common meaning of the term is clearly indicated by the context,
variance and derivatives of the following terms shall have correlative meanings.
To the extent that certain definitions and meanings specified below suggest,
indicate or express agreements between or among parties to this Agreement, or
specify representations, warranties or covenants of a party, the parties agree
to the same by execution of this Agreement. The parties to this Agreement agree
that agreements, representations, warranties and covenants expressed in any part
or provision of this Agreement shall for all purposes of this Agreement be
treated in the same manner as other such agreements, representations, warranties
and covenants specified elsewhere in this Agreement, and the article or section
of this Agreement within such an agreement, representation, warranty or covenant
is specified shall have no separate meaning or effect upon the same.
1.1 "Agreement". This Agreement of Sale of Screenplay, including all of its
schedules, exhibits and all other documents specifically referred to in this
Agreement that have been or are to be delivered to a party to this Agreement to
another such party in connection to the transaction or this Agreement and
including all duly adopted amendments, modifications and supplements to or of
this Agreement and such schedules, exhibits and other documents.
1.2 "Business Day". Any day that is not a Saturday, Sunday, or a day on
which banks in Los Angeles, California, are authorized to close.
1.3 "Closing". The completion of the Transaction, to occur as contemplated
by the provisions of Article II of this Agreement.
1.4 "Closing Date". The date on which the Closing actually occurs, which
shall be ______________, 1999, unless otherwise agreed by the parties to this
Agreement, but shall not in any event be prior to satisfaction or waiver of the
conditions to Closing specified by the provisions of Article VII of this
Agreement.
1.5 "Closing Time". The time at which the Closing actually occurs. All
events that are to occur at the Closing Time shall, for all purposes, be deemed
to occur simultaneously, except to the extent, if at all, that a specific order
of occurrence is otherwise described.
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1.6 "Consideration". (i) A promissory note executed by the President and
Secretary of Purchaser in the principal amount of one hundred and fifty thousand
dollars ($150,000). Such promissory note will include a repayment term of six
(6) months and will not bear any interest; and (ii) a royalty agreement executed
by the President and Secretary of Purchaser entitling Seller to ten percent
(10%) of the Net Profits.
1.7 "Distribution Expenses". Distribution expenses shall mean (i) cost of
positive prints, dupe negatives, lavenders, master and other prints of the
Screenplay and all print duplicating material and costs thereof; (ii) all taxes
except United States income taxes, in posts, duties, quotas, charges for import
permits or permits to transfer currencies and governmental fees of any nature in
connection with or in respect of the Screenplay, or the distribution, exhibition
or other disposition thereof or the collection or transfer of the proceeds, or
on account of or measured by the proceeds from the leasing, licensing or
distribution thereof, and all disbursements for licenses to permit the
distribution of the Screenplay including, but limited to, royalties on account
of sound recordation or dubbing and music licensing, royalties, performing fees
and taxes; (iii) all charges incurred for cost of procuring copyright,
reasonable litigation expenses in any way involving the production, distribution
or exploitation of the Screenplay, checking expenses, proportionate share of
dues and other payments to Motion Picture Association of America, Inc.,
censorship charges, duties, insurance premiums, cost of re-editing or re-cutting
or reduction, in cost of titles and translations; (iv) all cost of replacement
or cost for reprints or parts thereof and of transportation, packing and
handling prints or parts thereof, and of superimposing, dubbing, spotting and
re-recording soundtracks and titles; and (v) all expenses and charges for press
books, artwork, lithographs, lobby displays, slides, and other advertising
accessories (which shall not include trailers), advertising, publicizing,
exploitation and cooperative advertising of the Screenplay.
1.8 "Distribution Fees". A sum equal to thirty percent (30%) of all gross
receipts from the distribution of the Screenplay in the United States, Canada
and United Kingdom, and a sum equal to forty percent (40%) of all gross receipts
from the distribution from the Screenplay and all other countries or territories
in which the Screenplay made be distributed; provided that in cases where the
Screenplay is sold outright for an entire country or territory the distribution
fees shall be ten percent (10%) of the amount payable on said outright sale. In
cases where the Purchaser shall cause the Screenplay to be distributed in a
country or territory by an outside subdistributor, the foregoing distribution
fees shall cover the distribution fee of said subdistributor.
1.9 "Gross Receipts". All monies payable to Purchaser or its subsidiary
companies from the sale, lease, license, reissue or other exploitation of the
Screenplay. Gross receipts
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shall not be deemed received until actually received in cash. The gross receipts
shall not include any monies received from trailers but shall include monies
received from lithographs, lobby displays, and advertising accessories prepared
and distributed in connection with the Screenplay. No money in the nature of
security deposits or periodic payments received shall be deemed included as part
of gross receipts unless the same shall have been earned or forfeited. Whenever
Purchaser shall receive monies in partial payment of licensees due from the
Screenplay, together with other things, such partial payments shall be allocated
between the Screenplay and such other things in such reasonable manner as
Purchaser, in good faith, shall determine.
1.10 "Negative Cost". The amounts as are incurred as direct items of the
cost of production of the Screenplay which shall not include trailers therefore,
together with Purchaser's charges for Direct Production Services and General
Studio Overhead, all calculated and determined in the same manner as such
charges are calculated and determined in most motion pictures produced by
Purchaser at the time of the Screenplay is produced hereunder.
1.11 "Net Profits". The amount, if any, remaining after there shall have
been deducted from the Gross Receipts of the Screenplay, Distribution Fees,
Distribution Expenses and the Negative Cost of the Screenplay.
1.12 "Purchaser". ClubCharlie.com, Inc., a Nevada corporation, which,
pursuant to the provisions of this Agreement, is acquiring the Screenplay.
1.13 "Screenplay". All right, title and interest in and to all properties,
interests, rights and claims to the original story plot entitled "The
Misadventures of Charlie Chance".
1.14 "Seller". Charlie Chance Productions, a Canadian corporation, as the
sellers of the Screenplay.
1.14 "Transaction". The sale of the Screenplay, for the Consideration as
contemplated by, and subject to the terms and conditions of, this Agreement.
ARTICLE II
THE TRANSACTION
2.1 The Transaction. At the Closing Date, and at the Closing Time, such and
all instances to each of the terms, conditions, provisions and limitations
contained in this Agreement, the Seller shall sell, grant, transfer, deliver,
convey, assign and set over to the
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Purchaser, by instruments satisfactory in form and substance to the Purchaser
and its counsel, and the Purchaser shall acquire from the Seller, the Screenplay
in exchange for the Consideration.
2.2 Manner of Payment. Payment of the Consideration by the Purchaser shall
be made by delivery to the Sellers of a promissory note in the amount of one
hundred fifty thousand dollars ($150,000). Such promissory note will include a
repayment term of six (6) months and will not bear any interest; and (ii) a
royalty agreement executed by the President and Secretary of Purchaser entitling
Seller to ten percent (10%) of the Net Profits.
2.3 Closing. The Closing shall take place at the offices of Stepp &
Beauchamp LLP, located at 1301 Dove Street, Suite 460, Newport Beach, California
92660, at 10:00 a.m. on ____________, 1999, or at such other place and time as
Purchaser and Seller may agree upon the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to the Purchaser:
3.1 Screenplay Rights. The Seller warrants and represents that all common
law, statutory copyrights and renewals thereof, and all other rights throughout
the world in the Screenplay have heretofore been conveyed to Seller by the
necessary parties to ensure that Seller has the right to sell, grant, transfer,
deliver, convey, assign and set over to the Purchaser all right, title and
interest in and to the Screenplay.
3.2 No Claims or Encumbrances. In all countries throughout the world where
copyright protection is available, all common law and statutory copyrights and
all renewals thereof and all other rights in and to all of said treatments, and
all parts thereof, are vested in Seller as author thereof, or otherwise, free
and clear of all claims and encumbrances.
3.3 Authority Relative to this Agreement. The Seller has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution delivery of this Agreement and the
consummation of the Transaction have been duly authorized and approved by the
requisite corporate authority of Seller and no other corporate proceedings on
the part of Seller are necessary to approve and adopt this Agreement or to
approve the consummation of the Transaction, including delivery of the Script.
This Agreement has been duly and validly executed and delivered by the Seller
and constitutes a valid and binding obligation of the Seller, enforceable in
accordance with its terms.
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3.4 Absence of Breach; No Consents. The execution, delivery and performance
of this Agreement, and the performance by Seller of its obligations hereunder,
do not (i) conflict with, and will not result in a breach of any of the
provisions of the Articles of Incorporation or Bylaws of the Seller or other
similar corporate charter documents; (ii) contravene any law, rule or regulation
of any State or Commonwealth of the United States, or of any applicable foreign
jurisdiction, or any order, writ, judgment, injunction, decree, determination or
award effecting or binding upon the Seller, in such a manner as to provide a
basis for enjoining or otherwise preventing consummation of the Transaction;
(iii) conflict with or result in material breach or default of any material
indenture or loan or credit agreement or any other material agreement or
instrument to which Seller is a party, in such a manner as to provide a basis
for enjoining or otherwise preventing consummation of the Transaction; or (iv)
require the authorization, consent, approval or license of any third party of
such a nature that the failure to obtain the same would provide a basis for
enjoining or otherwise preventing consummation of the Transaction.
3.5 Government Consents. No consent, approval or authorization of, or
registration, declaration, designation, qualification, or filing with, any
governmental authority on the part of the Seller is required in connection with
the valid execution and delivery of this Agreement, the offer, sale or issuance
of the Consideration, or the consummation of any other transaction contemplated
hereby other than as provided by applicable laws.
3.6 Compliance with Applicable Law. The Seller has not adapted any portion
of the Screenplay from any other literary, dramatic or other work of any kind,
nature or description nor did the Seller copy or use in the Screenplay, the
plot, scene, sequence or story of any other literary, dramatic or other work. No
part of the Screenplay infringes upon or violates the common law or statutory
rights of any other dramatic or any other work. No part of the Screenplay
libels, invades the right of privacy, or otherwise, infringes upon the common
law, statutory or contractual rights of any person, firm or corporation.
3.7 Rights Granted. Seller is the exclusive owner throughout the world of
all rights granted by Seller to Purchaser under this Agreement. Seller has not
heretofore assigned, licensed or in any manner, encumbered or impaired the
rights granted by Seller to Purchaser under this Agreement. Seller has not
committed any act of commission or omission by which the rights granted by
Seller to Purchaser by this Agreement can or will be diminished or impaired. As
far as Seller knows, there is no outstanding claim or litigation pending
involving the title, ownership or copyright in any of the rights granted by
Seller to Purchaser under this Agreement. No motion picture, television or other
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<PAGE>
version of the Screenplay, or any part thereof, have been manufactured,
performed or presented anywhere in the world.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Seller:
4.1 Organization and Qualification. The Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of its
respective jurisdiction of incorporation and has the requisite corporate power
and authority to enter into and to perform this Agreement. There are no actions
or proceedings pending or intended to dissolve the Purchaser. The Purchaser is
not insolvent, nor in the hands of a receiver and no proceedings are pending by
or against the Purchaser in bankruptcy or reorganization of any state or federal
court, nor has Purchaser filed a petition in bankruptcy.
4.2 Authority Relative to this Agreement. The Purchaser has the requisite
corporate power and authority to enter into this Agreement and to carry its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the Transaction have been duly authorized and approved by the
requisite corporate authority of Purchaser and no other corporate proceedings on
the part of the Purchaser are necessary to approve and adopt this Agreement or
to approve the consummation of the Transaction, including delivery of the
Consideration. This Agreement has been duly and validly executed and delivered
by the Purchaser and constitutes a valid and binding obligation of the Purchaser
enforceable in accordance with its terms.
4.3 Absence of Breach; No Consents. The execution, delivery and performance
of this Agreement, and the performance by Purchaser of its obligations
hereunder, do not (i) conflict with, and will not result in a breach of any of
the provisions of the Articles of Incorporation or Bylaws of Purchaser; (ii)
contravene any law, rule or regulation of any State or Commonwealth of the
United States, or of any applicable foreign jurisdiction, or any order, writ,
judgment, injunction, decree, determination or award affecting or binding upon
the Purchaser, in such a manner as to provide a basis for enjoining or otherwise
preventing consummation of the transactions contemplated hereunder; (iii)
conflict with or result in material breach or default of any material indenture
or loan or credit agreement or any other material agreement or instrument to
which Purchaser is a party, in such a manner as to provide a basis for enjoining
or otherwise preventing consummation of the Transaction; or (iv) require the
authorization, consent, approval or license of any third party of such a nature
that the failure to obtain the same would provide a basis for enjoining or
otherwise preventing consummation of the Transaction.
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4.4 Government Consents. No consent, approval or authorization of, or
registration, declaration, designation, qualification, or filing with, any
governmental authority on the part of the Purchaser is required in connection
with the valid execution and delivery of this Agreement, the offer, sale or
issuance of the Consideration, or the consummation of any other transaction
contemplated hereby other than as provided by applicable laws.
ARTICLE V
COVENANTS OF THE PURCHASER
5.1 Affirmative Covenants. From the date of this Agreement to the Closing
Date, the Purchaser will take every action reasonably required of it in order to
satisfy the conditions to closing set forth in this Agreement and otherwise, to
ensure the prompt and expedient consummation of the Transaction and will exert
all reasonable efforts to cause the Transaction to be consummated; provided,
however, in all instances that the representations and warranties of the Seller
in this Agreement are and remain true and accurate that the covenants and
agreements of the Seller in this Agreement are performed and that the conditions
and obligations of the Purchaser set forth in this Agreement are not incapable
of satisfaction.
5.2 Cooperation. The Purchaser shall cooperate with the Seller's counsel,
accountants and agents in every way in carrying out the Transaction and in
delivering all documents and instruments deemed to be reasonably necessary are
useful by counsel to the Seller.
5.3 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by the Purchaser in connection with this Agreement and the
Transaction shall be paid by the Purchaser.
5.4 Issuance and Delivery of the Consideration. At the Closing, the
Purchaser shall deliver or cause to be delivered to Seller a promissory note in
the amount of one hundred fifty thousand dollars ($150,000). Such promissory
note will include a repayment term of six (6) months and will not bear any
interest; and (ii) a royalty agreement executed by the President and Secretary
of Purchaser entitling Seller to ten percent (10%) of the Net Profits, which
shall not be deemed to accrue the remittable to or for the account of Seller and
until such amounts have been actually received by Purchaser.
5.5. Books and Records. Purchaser shall keep accurate books of account and
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records showing, with respect to the Screenplay and the negative cost thereof,
the gross receipts and all expenditures made by Purchaser in respect thereto.
Said books of account and record shall be maintained by Purchaser in its
principal place of business and in foreign countries where Purchaser maintains
its books and accounts in the regular course of business. For a period of 18
months after the date of any statement relating to a transaction in respect to
the distribution of the Screenplay, Purchaser shall forward Seller or its
authorized representative, during reasonable business hours and at intervals not
more frequent that once a year, the right of access to audit and inspection of
said books of accounts and records of such place where said books and records
are maintained as aforesaid; and Purchaser will permit Seller or its
representative, during such inspections, to take excerpts only from such part of
said books and records as relates to the distribution of the Screenplay
hereunder.
5.6 Quarterly reports. Purchaser shall render to Seller quarterly reports
with respect to the distribution of the Screenplay commencing with the first
quarter after release of the Screenplay. Each said report shall be accompanied
by remittance to Seller of any amount showing on said report to be due Seller.
ARTICLE VI
COVENANTS OF THE SELLERS
6.1 Affirmative Covenants. From the date of this Agreement to the Closing
Date, the Seller will take every action reasonably required of it in order to
satisfy the conditions to closing set forth in this Agreement and otherwise, to
ensure the prompt and expedient consummation of the Transaction and will exert
all reasonable efforts to cause the Transaction to be consummated provided in
all instances that the representations and warranties of the Purchaser in this
Agreement are and remain true and accurate and that the conditions and
obligations of the Purchaser set forth in this Agreement are not incapable of
satisfaction.
6.2 Delivery of Screenplay. On the Closing, the Seller shall grant,
transfer, assign and deliver to the Purchaser, free and clear of all
encumbrances, the Screenplay and all rights of any and every nature whatsoever
thereunder.
6.3 Cooperation. The Seller shall cooperate with the Purchaser and its
counsel, accountants and agents in every way in carrying out the Transaction and
in delivering all documents and instruments deemed to be reasonably necessary
are useful by the Purchaser.
6.4 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by the Seller in connection with this Agreement and the
Transaction shall be paid by the Seller.
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ARTICLE 7
CONDITIONS TO OBLIGATONS
7.1 Conditions to Obligation of Purchaser. The obligation of the Purchaser
to effect the Transaction shall be subject to the fulfillment at or prior to the
Closing of the following conditions, unless Purchaser shall waive such
fulfillment:
(1) This Agreement and the transactions contemplated hereby shall have
received all approvals, consents, authorizations, and waivers from
governmental and other regulatory agencies and other third parties
required to consummate the Transaction.
(2) There shall not be in effect a preliminary or permanent in junction or
other order by any federal or state court which prohibits the
consummation of the Transaction.
(3) The Seller shall have performed in all material respects each of its
agreements and obligations contained in this Agreement and required to
be performed on or prior to the Closing and shall have complied with
all material requirements, rules, and regulations of all regulatory
authorities having jurisdiction relating to the Transaction.
(4) No material adverse change shall, in the reasonable judgment of the
Purchaser, have occurred relating to the Screenplay.
(5) The representations and warranties of the Seller set forth in this
Agreement shall be true in all material respects as of the date of
this Agreement and, except in such respects as, in the reasonable
judgment of the Purchaser, do not materially and adversely affect the
Screenplay, as of the Closing as if made as of such time.
7.2 Conditions to Obligation of the Seller. The obligation of the Seller to
effect the Transaction shall be subject to the fulfillment at or prior to the
Closing of the following conditions, unless the Seller shall waive such
fulfillment:
(1) This Agreement and the Transaction shall have received all approvals,
consents, authorizations, and waivers from governmental and other
regulatory agencies and other third parties required by law to
consummate the Transaction.
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(2) There shall not be in effect a preliminary or permanent injunction or
other order by any federal or state authority, which prohibits the
consummation of the Transaction.
(3) The Purchaser shall have performed in all material respects its
agreements and obligations contained in this Agreement required to be
performed on or prior to the Closing.
(4) The representations and warranties of the Purchaser set forth in this
Agreement shall be true in all material respects as of the date of
this Agreement and, as of the Closing Date as if made as of such time.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement and the Transaction may be terminated at
any time prior to the Closing, whether before or after any approval by
shareholders:
(1) By mutual consent of the Purchaser and the Seller; or
(2) By either Purchaser or the Seller, upon written notice to the other,
if the conditions to such party's obligations to consummate the
Transaction were not, or cannot reasonably be, satisfied on or before
_____________, 1999 unless the failure of condition is the result of
the material breach of this Agreement by the party seeking to
terminate.
By any party hereto, upon written notice to the other parties, if such
party reasonably determines that either (i) the consummation of any of the
transactions contemplated hereby or in any of the agreements referenced herein
is likely to violate any non-appealable final order, decree or judgment of any
court or governmental body having competent jurisdiction or (ii) there shall
exist or be enacted or adopted any statute, rule or regulation which makes
consummation of any of the transactions contemplated hereby or in any of the
agreements referenced herein illegal or otherwise prohibited.
In the event of termination of this Agreement pursuant to this Section 8.1,
the transactions contemplated by this Agreement shall be terminated without
further action by the parties hereto and thereupon shall become void and of no
further effect, without any liability of either party to the other, except that
nothing herein shall relieve either party
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from liability for any breach of this Agreement occurring prior to such
termination. If the transactions contemplated by this Agreement are terminated
as provided in this 8.1, each party will promptly return (or cause to be
returned) all documents, work papers and other materials obtained by it or its
affiliates, representatives, consultants and agents from the other party (or any
of its agents) relating to the transactions contemplated hereby.
8.2 Amendment. This Agreement may be amended by the Seller and the
Purchaser by action taken at any time. This Agreement may not be amended except
by an instrument in writing signed on behalf of the Seller and the Purchaser.
8.3 Waiver. At any time prior to the Closing Date, the Purchaser or the
Seller may (i) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant hereto, or (iii) waive compliance with any of the agreements
or conditions specified in this Agreement herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by the Seller. The Seller shall indemnify and hold the
Purchaser harmless in respect of any and claims, losses, damages, liabilities
and expenses, including, without limitation, settlement costs and any legal,
accounting and other expenses for investigating or defending any actions or
threatened actions, reasonably incurred by the Purchaser, in connection with
each and all of the following:
(a) Any breach of any representation or warranty made by the Seller, or
any of them, in this Agreement; and
(b) The breach of any covenant, agreement or obligation of the Seller, or
any of them, contained in this Agreement or any other instrument
contemplated by this Agreement.
9.2 Indemnification by the Purchaser. Purchaser shall indemnify and hold
the Seller harmless in respect of any and all claims, losses, damages,
liabilities and expenses, including, without limitation, settlement costs and
any legal, accounting or other expenses for investigating or defending any
actions or threatened action, reasonably incurred by the Seller in connection
with each and all of the following:
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(a) Any breach of any representation or warranty made by the Purchaser in
this Agreement; and
(b) The breach of any covenant, agreement or obligation of the Purchaser
contained in this Agreement or any other instrument contemplated by
this Agreement.
9.3 Claims for Indemnification. Whenever any claim shall arise for
indemnification hereunder, the party entitled to indemnification ("Indemnified
Party") shall promptly notify the other party ("Indemnifying Party") of the
claims and, when known, the facts constituting the basis for such claim. In the
event of any claim for indemnification hereunder resulting from or in connection
with any claim or legal proceedings by a third party, the notice to the
Indemnifying Party shall specify, if known, the amount or an estimate of the
amount of the liability arising therefrom. The Indemnified Party shall not
settle or compromise any claim by a third party for which it is entitled to
indemnification hereunder, without the prior written consent of the Indemnifying
Party (which shall not be unreasonably withheld) unless suit shall have been
instituted against it and the Indemnifying Party shall not have taken control of
such suit after notification thereof as provided herein.
9.4 Defense by Indemnifying Party. In connection with any claim giving rise
to indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the Indemnifying
Party at its sole cost and expense may, upon written notice to the Indemnified
Party, assume the defense of any such claim or legal proceeding if it
acknowledges to the Indemnified Party in writing its obligations to indemnify
the Indemnified Party with respect to all elements of such claim. The
Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its counsel and at its own expense. If the
Indemnifying Party does not assume the defense of any such claim or litigation
resulting therefrom, (a) the Indemnified Party may defend against such claim or
litigation, in such manner as it may deem appropriate, including, but not
limited to, settling such claim or litigation, after giving notice of the same
to the Indemnifying Party, on such terms as the Indemnified Party may deem
appropriate, and (b) the Indemnifying Party shall be entitled to participate in
(but not control) the defense of such action, with its counsel and at its own
expense. If the Indemnifying Party thereafter seeks to question the manner in
which the Indemnified Party defended such third party claim or the amount or
nature of any such settlement, the Indemnifying Party shall have the burden to
prove by a preponderance of the evidence that the Indemnified Party did not
defend or settle such third party claim in a reasonably prudent manner.
Notwithstanding anything to the contrary set forth herein, in no event may the
Indemnifying Party enter into any settlement without the prior written consent
of the Indemnified Party.
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ARTICLE X
DOCUMENTS AND INSTRUMENTS
TO BE DELIVERED AT CLOSING
10.1 The Purchaser to the Seller. On the Closing, the Purchaser shall
deliver or cause to be delivered the following instruments and documents to the
Seller:
(1) a promissory note executed by the President and Secretary of Purchaser
in the amount of one hundred fifty thousand dollars ($150,000). Such
promissory note will include a repayment term of six (6) months and
will not bear any interest; and
(2) a royalty agreement executed by the President and Secretary of
Purchaser entitling Seller to ten percent (10%) of the Net Profits.
10.2 The Seller to the Purchaser. On the Closing, the Seller shall deliver
or cause to be delivered to the Purchaser all books, records, journals, disks,
documents, memoranda and other instruments relating to the Screenplay which are
necessary or appropriate to enable the Purchaser, to utilize and exploit the
Screenplay to the maximum extent permitted by law after the Closing, including,
but not limited to, all copies of the Screenplay in the possession of Seller.
ARTICLE XI
GENERAL PROVISIONS
11.1 Notices. Any notice, direction or instrument required or permitted to
be given pursuant to this Agreement shall be given in writing by (a) telegram,
facsimile transmission or similar method, if confirmed by mail as herein
provided, by mail; (b) if mailed postage prepaid, by certified mail, return
receipt requested; or (iii) hand delivery to any party at the addresses of the
parties specified, below. If given by telegram or facsimile transmission or
similar method or by hand delivery, such notice, direction or instrument shall
be deemed to have been given or made on the day on which it was given, and if
mailed, shall be deemed to have been given or made on the second (2nd) business
day following the day after which it was mailed. Any party may, from time to
time by similar notice, give notice of any change of address, and in such event,
the address of such party shall be deemed to be changed accordingly. The
address, telephone number and facsimile transmission number for the notice of
each party are:
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If to the Seller: Charlie Chance Productions
---------------------------
---------------------------
---------------------------
If to Purchaser: ClubCharlie.com, Inc.
---------------------------
---------------------------
---------------------------
11.2 Recovery of Enforcement Costs. In the event any party shall institute
any action or proceeding to enforce any provision of this Agreement to seek
relief from any violation of this Agreement, or to otherwise obtain any judgment
or order relating to or arising from the subject matter of this Agreement, each
prevailing party shall be entitled to receive from each losing party such
prevailing party's actual attorneys' fees and costs incurred to prosecute or
defend such action or proceeding.
11.3 Assignment. No party shall have the right, without the consent of the
other party, to assign, transfer, sell, pledge, hypothecate, delegate, or
otherwise transfer, whether voluntarily, involuntarily or by operation of law,
any of such party's rights or obligations created by the provisions of this
Agreement, nor shall the parties' rights be subject to encumbrance or the claim
of creditors. Any such purported assignment, transfer, or delegation shall be
null and void.
11.4 Captions and Interpretations. Captions of the articles and sections of
this Agreement are for convenience and reference only, and the works specified
therein shall in no way be held to explain, modify, amplify or aid in the
interpretation, construction, or meaning of the provisions of this Agreement.
The language in all parts to this Agreement, in all cases, shall be construed in
accordance with the fair meaning of that language as if prepared by all parties
and not strictly for or against any party. Each party and counsel for such party
have reviewed this Agreement. The rule of construction, which requires a court
to resolve any ambiguities against the drafting party, shall not apply in
interpreting the provisions of this Agreement.
11.5 Entire Agreement. This Agreement and the exhibits to this Agreement
are the final written expression and the complete and exclusive statement of all
the agreements, conditions, promises, representations, warranties and covenants
between the parties with respect to the subject matter of this Agreement, and
this Agreement supersedes all pri
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or or contemporaneous agreements, negotiations, representations, warranties,
covenants, understandings and discussions by and between and among the parties,
their respective representatives, and any other person, with respect to the
subject matter specified in this Agreement. No provision of any exhibit to this
Agreement shall supersede or annul the terms and provisions of this Agreement,
unless the matter specified in such exhibit shall explicitly so provide to the
contrary, in the event of ambiguity in meaning or understanding between the
provisions of this Agreement proper and the appended exhibits, the provisions of
this Agreement shall prevail and control in all instances.
11.6 Choice of Law and Consent to Jurisdiction. This Agreement shall be
deemed to have been entered into in the State of Nevada. All questions
concerning the validity, interpretation, or performance of any of the terms,
conditions and provisions of this Agreement or of any of the rights or
obligations of the parties shall be governed by, and resolved in accordance
with, the laws of the State of Nevada, without regard to conflicts of law
principles.
11.7 Waiver and Modification. No modification, supplement or amendment of
this Agreement or of any covenant, condition, or limitation specified in this
Agreement shall be valid unless the same is made in writing and duly executed by
both parties. No waiver of any covenant, condition, or limitation specified in
this Agreement shall be valid unless the same is made in writing and duly
executed by the party making the waiver. No waiver of any provision of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver.
11.8 Number and Gender. Whenever the singular number is used in this
Agreement and, when required by the context, the same shall include the plural,
and vice versa; the masculine gender shall include the feminine and the neuter
genders, and vice versa, and the word "person" shall include individual,
company, sole proprietorship, corporation, joint venture, association, joint
stock company, fraternal order, cooperative, league, club, society,
organization, trust, estate, governmental agency, political subdivision or
authority, firm, municipality, congregation, partnership, or other form of
entity.
11.9 Successors and Assigns. This Agreement and each of its provisions
shall obligate the heirs, executors, administrators, successors, and assigns of
each of the parties. Nothing specified in this section, however, shall be a
consent to the assignment or delegation by any party of such party's respective
rights and obligations created by the provisions of this Agreement.
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11.10 Third Party Beneficiaries. Except as expressly specified by the
provisions of this Agreement, this Agreement shall not be construed to confer
upon or give to any person, other than the parties hereto, any right, remedy or
claim pursuant to, or by reason of, this Agreement or of any term or condition
of this Agreement.
11.11 Severability. In the event any part of this Agreement, for any
reason, is determined by a court of competent jurisdiction to be invalid, such
determination shall not affect the validity of any remaining portion of this
Agreement, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated. It
is hereby declared the intention of the parties that they would have executed
the remaining portion of this Agreement without including any such part, parts,
or portion which, for any reason, may be hereafter determined to be invalid.
11.12 Governmental Rules and Regulations. The Transactions is and shall
remain subject to any and all present and future orders, rules and regulations
of any duly constituted authority having jurisdiction of the Transaction.
11.13 Execution in Counterparts. This Agreement may be prepared in multiple
copies and forwarded to each of the parties for execution. All of the signatures
of the parties may be affixed to one copy or to separate copies of this
Agreement and when all such copies are received and signed by all the parties,
those copies shall constitute one agreement which is not otherwise separable or
divisible. Counsel for Purchaser shall keep all of such signed copies and shall
conform one copy to show all of those signatures and the dates thereof and shall
mail a copy of such conformed copy to each of the parties within thirty (30)
days after the receipt by such counsel of the last signed copy, and such counsel
shall cause one such conformed copy to be filed in the principal office of such
counsel.
11.14 Reservation of Rights. The failure of any party at any time or times
hereafter to require strict performance by any other party of any of the
warranties, representations, covenants, terms, conditions and provisions
specified in this Agreement shall not waive, affect of diminish any right of
such party failing to require strict performance to demand strict compliance and
performance therewith and with respect to any other provisions, warranties,
terms, and conditions specified in this Agreement. Any waiver of any default
shall not waive or affect any other default, whether prior or subsequent
thereto, and whether the same or of a different type. None of the
representations, warranties, covenants, conditions, provisions and terms
specified in this Agreement shall be deemed to have been waived by any act or
knowledge of any party, its agents, trustees, officers, or employees and any
such waiver shall be made only by an instrument in writing, signed by the
waiving party and directed to any non-waiving party specifying such waiver, and
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each party reserves such party's rights to insist upon strict compliance
herewith at all times.
11.15 Survival of Covenants, Representations and Warranties. All covenants,
representations, and warranties made by each party to this Agreement shall be
deemed made for the purpose of inducing the other party to enter into and
execute this Agreement. The representations, warranties, and covenants specified
in this Agreement shall survive the Closing and shall survive any investigation
by either party whether before or after the execution of this Agreement. The
covenants, representations, and warranties of the Seller and Purchaser are made
only to and for the benefit of the other and shall not create or vest rights in
other persons.
11.16 Concurrent Remedies. No right or remedy specified in this Agreement
conferred on or reserved to the parties is exclusive of any other right or
remedy specified in this Agreement or by law or equity provided or permitted;
but each such right and remedy shall be cumulative of, and in addition to, every
other right and remedy specified in this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise, and may be enforced concurrently
therewith or from time to time. The termination of this Agreement for any reason
whatsoever shall not prejudice any right or remedy, which any party may have,
either at law, in equity, or pursuant to the provisions of this Agreement.
11.17 Force Majeure. If any party is rendered unable, completely or
partially, by the occurrence of an event of "force majeure" (hereinafter
defined) to perform such party's obligations created by the provisions of this
Agreement, such party shall give to the other party prompt written notice of the
event of "force majeure" with reasonably complete particulars concerning such
event; thereupon, the obligations of the party giving such notice, so far as
those obligations are affected by the event of "force majeure," shall be
suspended during, but no longer than, the continuance of the event of "force
majeure." The party affected by such event of "force majeure" shall use all
reasonable diligence to resolve, eliminate and terminate the event of "force
majeure" as quickly as practicable. The requirement that an event of "force
majeure" shall be remedied with all reasonable dispatch as hereinabove
specified, shall not require the settlement of strikes, lockouts or other labor
difficulties by the party involved, contrary to such party's wishes, and the
resolution of any and all such difficulties shall be handled entirely within the
discretion of the party concerned. The term "force majeure" as used herein shall
be defined as and mean any act of God, strike, civil disturbance, lockout or
other industrial disturbance, act of the public enemy, war, blockage, public
riot, earthquake, tornado, hurricane, lightening, fire, public demonstration,
storm, flood, explosion, governmental action, governmental delay, restraint or
inaction, unavailability of equipment, and any other cause
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or event, whether of the kind enumerated specifically herein, or otherwise,
which is not reasonably within the control of the party claiming such
suspension.
11.18 Consent to Agreement. By executing this Agreement, each party, for
itself represents such party has read or caused to be read this Agreement in all
particulars, and consents to the rights, conditions, duties and responsibilities
imposed upon such party as specified in this Agreement. Each party represents,
warrants and covenants that such party executes and delivers this Agreement of
its own free will and with no threat, undue influence, menace, coercion or
duress, whether economic or physical. Moreover, each party represents, warrants,
and covenants that such party executes this Agreement acting on such party's own
independent judgment and upon the advice of such party's counsel.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed on
the date first written above.
ClubCharlie.com, Inc., Charlie Chance Productions,
a Nevada corporation a Canadian corporation
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
------------------- -------------------
Its: President Its: President
By: By:
------------------- -------------------
Its: Secretary Secretary
19
AGREEMENT OF EMPLOYMENT
THIS AGREEMENT OF EMPLOYMENT ("Agreement") is made and entered into in
duplicate this ___ day of August, 1999, by and between CLUBCHARLIE.COM, INC., a
Nevada corporation ("Employer"), and GLENN CHILTON ("Employee").
RECITALS
(a) Employer is a corporation duly organized and validly existing pursuant
to the laws of the State of Nevada.
(b) Employer is in the business of producing and marketing children and
family films and independent motion pictures both domestically and
internationally.
(c) Employer desires to employ Employee, and Employee desires to serve as
President of Employer and to do and perform any and all services, acts and
things specified hereinafter.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES, COVENANTS AND
UNDERTAKINGS HEREIN CONTAINED AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE
OBLIGATED LEGALLY AND EQUITABLY, THE PARTIES AGREE WITH EACH OTHER AS FOLLOWS:
ARTICLE I.
TERM OF EMPLOYMENT
Section 1.1 Specified Term. Employer hereby employs Employee and Employee
hereby accepts employment with Employer for a period of five (5) years
commencing as of August __, 1999.
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Section 1.2 Automatic Renewal of Term. The term of this Agreement shall be
renewed automatically for succeeding periods of one (1) year each unless either
party gives to the other party notice, at least ninety (90) days prior to the
expiration of any such term, of the noticing party's intention not to renew the
term of this Agreement. For each additional successive one (1) year term
provided for in this Section 1.2, the compensation paid by Employer to Employee
shall be renegotiated for such term.
Section 1.3 "Employment Term" Defined. As specified herein, the phrases
"term of employment," "employment term," and "term of this Agreement" refer to,
and shall mean, be defined as and include, any and all renewals of the term of
this Agreement.
ARTICLE II.
DUTIES AND OBLIGATIONS OF EMPLOYEE
Section 2.1 General Duties. Employee shall serve as the President of
CLUBCHARLIE.COM, INC., a Nevada corporation. In Employee's capacity as the
President of Employer, Employee shall do and perform all services, acts, or
things necessary or appropriate to manage and conduct the business of
supervising, directing and controlling the activities and affairs and officers
of Employer. The duties to be performed by Employee shall be determined from
time to time by the Board of Directors of Employer ("Board").
Section 2.2 Matters Requiring Consent of Board. Employee, without specific
approval of the Board, shall not do or contract to do any of the following:
(1) Borrow on behalf of Employer during any one fiscal year an amount in
excess of One Thousand Dollars ($1,000.00);
(2) Permit any customer or client of Employer to become indebted to
Employer in an amount in excess of One Hundred Thousand Dollars
($100,000.00);
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(3) Purchase capital equipment for amounts in excess of the amounts
budgeted for expenditure by the Board;
(4) Terminate the services of any other officer of Employer or hire any
replacement of any officer of Employer who's services have been terminated;
or
(5) Obligate Employer to the expenditure of more than Ten Thousand Dollars
($10,000.00).
Section 2.3 Competitive Activities. During the term of this Agreement
Employee shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer, director,
or in any other individual or representative capacity, engage or participate in
any business that is in competition in any manner whatsoever with the business
of Employer.
Section 2.4 Uniqueness of Employee's Services. Employee hereby represents
and agrees that the services to be performed pursuant to the provisions of this
Agreement are of a special, unique, unusual, extraordinary, and intellectual
character that gives those services a peculiar value, the loss of which cannot
be reasonably or adequately compensated in damages in an action at law.
Employee, therefore, expressly agrees that Employer, in addition to any other
rights or remedies that Employer may possess, shall be entitled to injunctive
and other equitable relief to prevent or remedy a breach of this Agreement by
Employee.
Section 2.5 Indemnification for Negligence or Misconduct. Employee shall
save Employer harmless from and against and shall indemnify Employer for any
liability, loss, costs, expenses or damages howsoever caused by reason of any
injury (whether to body, property, or personal or business character or
reputation) sustained by any person or to any person or to property by reason of
any act, neglect, default or omission of Employee, and Employee shall pay any
and all amounts to be paid or discharged in case of an action for any such
damages or injuries. No provision of this section is intended to, nor shall any
provision of this section, relieve Employer from Employer's own act, omission or
negligence.
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ARTICLE III.
OBLIGATIONS OF EMPLOYER
Section 3.1 General Description. Employer shall provide Employee with the
compensation, incentives and benefits specified elsewhere in this Agreement.
Section 3.2 Office and Staff. Employer shall provide Employee with
equipment, supplies, facilities and services, suitable to Employee's position
and adequate for the performance of Employee's duties created by the provisions
of this Agreement.
Section 3.3 Reimbursement of Business Expenses. Employee is authorized to
incur reasonable business expenses for promoting the business of Employer,
including expenditures for entertainment, gifts, and travel. This reimbursement
shall include gasoline used by Employee for business travel. Employer will
reimburse Employee from time to time for all such business expenses provided
that Employee presents to Employer's Comptroller the account book and documents
when and as required by this section.
(a) Employee shall maintain an account book in which Employee shall record,
at or near the time each expenditure is made, the amount of the expenditure, the
time, place, and designation of the type of the entertainment and travel or
other expense, or the date and description of the gift, the business reason for
the expenditure and the nature of the business benefit derived or expected to be
derived as a result of the expenditure, and the names, occupations, addresses,
and other information, sufficient to establish the business relationship to
Employer, concerning each person who was entertained or given a gift.
(b) Employee shall also obtain and retain documentary evidence (such as
receipts or paid bills), which state sufficient information to establish the
amount, date, place, and the essential character of the expenditure, for each
expenditure of $25 or more (except for transportation charges if not readily
available) and for lodging while traveling away from home.
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(c) The foregoing account book and documentary evidence shall be delivered
to Employer whenever requested by Employer and thereafter shall be retained by
Employer.
Section 3.4 Repayment by Employee of Disallowed Business Expenses. In the
event that any expenses paid for Employee or any reimbursement of expenses paid
to Employee shall, on audit or other examination of Employer's income tax
returns, be determined not to be allowable deductions from Employer's gross
income, and in the further event that any such determination is acceded to by
the Employer or made final by the appropriate federal or state taxing authority
or a final judgment of a court of competent jurisdiction, and no appeal is taken
from the judgment or the applicable period for filing notice of appeal has
expired, Employee shall repay to Employer the amount of the disallowed expenses.
Section 3.5 Indemnification for Negligence or Misconduct. Employer shall
save Employee harmless from and against and shall indemnify Employee for any
liability, loss, costs, expenses or damages howsoever caused by reason of any
injury (whether to body, property, or personal or business character or
reputation) sustained by any person or to any person or to property by reason of
any act, neglect, default or omission of Employer, and Employer shall pay any
and all amounts to be paid or discharged in case of an action for any such
damages or injuries. No provision of this section is intended to, nor shall any
provision of this section, relieve Employee from that Employee's own act,
omission or negligence.
ARTICLE IV.
COMPENSATION OF EMPLOYEE
Section 4.1 Annual Salary. As compensation for the services to be rendered
by Employee pursuant to provisions of this Agreement, Employer shall pay
Employee an annual salary in the amount of One Hundred and Fifty Thousand U.S.
Dollars (U.S.$150,000), payable in equal bi-monthly installments of Six Thousand
Two Hundred and Fifty Dollars ($6,250). The compensation paid by Employer to
Employee will be reviewed and adjusted each year of this contract as negotiated
and agree to by both parties based on the performance of the company and the
employee, market conditions and the
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changing roles and responsibilities of the employee. Each successive one (1)
year term provided for in Section 1.2 of this Agreement shall also be
renegotiated for such term.
Section 4.2 Tax Withholding. Employer shall have the right to deduct or
withhold from the compensation due and payable to Employee pursuant to the
provisions of this Agreement any and all amounts required for federal income and
Social Security taxes and all state or local taxes now applicable or which may
be enacted and may become applicable in the future.
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ARTICLE V.
EMPLOYEE BENEFITS
Section 5.1 Annual Vacation.
(a) During the employment term, Employee shall be entitled to an annual
vacation leave of thirty (30) days each year without loss of compensation. In
the event that Employee is unable for any reason to take the total amount of
vacation time authorized herein during any year, he may accrue that time and add
it to vacation time for any following year.
(b) In lieu of vacation leave, Employee may elect to receive payment for
all or any part of the vacation leave to which Employee is entitled, in which
case the vacation leave shall be valued at the amount of salary earned by
Employee during an equivalent period of time during the fiscal year in which
such vacation leave accrued.
Section 5.2 Automobile. During the employment term, Employee shall be
entitled to the use of an automobile, to be leased by Employer. Employer shall
not be required to spend more than Six Hundred Dollars ($600.00) a month
pursuant to such lease. Except as otherwise specified in this Agreement, all
ordinary and routine expenses incurred in connection with the lease and business
use of such automobile shall be paid by Employer. The automobile shall be
selected by Employee, with the concurrence of Employer. Employee shall take
proper care of such automobile, and shall be responsible for all damage to same
resulting from any misuse or neglect. Employer shall also, at its own expense,
provide comprehensive insurance coverage for such automobile, specifying
Employee as a named insured.
Section 5.3 Paid Holidays. Employee shall be entitled to a holiday with
full pay on each New Year's Day, President's Day, Memorial Day, Independence
Day, Labor Day, Veteran's Day, Thanksgiving Day and Christmas Day during the
term of this Agreement.
Section 5.4 Illness. During the employment term, Employee shall be entitled
to ten (10) days per year as sick leave with full pay. Sick leave shall not be
accumulated.
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Section 5.5 Health Care Benefits. Employer shall include Employee in the
hospital, surgical, and medical benefit plan adopted and maintained by Employer.
Section 5.6 Other Benefits. Employee shall receive all other benefits of
employment available generally to other employees of the Employer.
ARTICLE VI.
PROPERTY RIGHTS OF THE PARTIES
Section 6.1 Confidentiality of Trade Secret Data.
(a) Employee agrees that all information communicated to him with respect
to the work conducted by or for Employer, whether or not that information was
directly or intentionally communicated, is confidential. Employee also agrees
that all information, conclusions, recommendations, reports, advice, or other
documents generated by Employee pursuant to this Agreement is confidential.
Employee further acknowledges and agrees that all confidential data described
herein is and constitutes trade secret information that belongs wholly to and is
the exclusive property of Employer.
(b) Employee promises and agrees that he shall not disclose any
confidential information to any other person unless specifically authorized in
writing by Employer to do so. If Employer gives Employee written authorization
to make any disclosure, Employee shall do so only within the limits and to the
extent of that authorization.
(c) Employee shall use his best efforts to prevent inadvertent disclosure
of any confidential information to any third party by using the same care and
discretion that he uses with similar data he designates as confidential.
(d) Employee acknowledges and agrees that all information concerning the
work conducted by Employer and any future and proposed products of Employer is
and constitutes an exceptionally valuable trade secret of Employer. That
information includes,
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among other matters, the facts that any particular work or project is planned,
under consideration, or in production, as well as any descriptions of any
existing, pending, or proposed work.
Section 6.2 Use and Disclosure of Confidential Data. Employee shall not use
any confidential information or circulate it to any other person, except when
specifically authorized in advance by Employer.
Section 6.3 Copies of Confidential Information. Employee agrees that copies
of confidential information may not be made without the express written
permission of Employer and that all such copies shall be returned to Employer
along with the originals.
Section 6.4 Ownership of Customer Records.
(a) All records of the accounts of customers and debtors, disks, files,
ledgers, tapes and other storage devices and any and all records and books
relating in any manner whatsoever to the customers of Employer, including, but
not limited to, credit reports or memorandum, reports of transactions made to
Employer, and demographic or economic data discovered by Employee during the
term of this Agreement, whether prepared by Employee or otherwise coming into
Employee's possession, shall be the exclusive property of Employer regardless of
who actually purchased the original book, record, tape, disk or other storage
device.
(b) All such books, records, disks, and storage devices shall be
immediately returned to Employer by Employee on any termination of the
employment term.
(c) If Employee produces any record, book, ledger, tape, disk, or similar
storage device to be used for record keeping, Employee shall immediately notify
Employer, who shall then immediately reimburse Employee.
Section 6.5 Soliciting Customers After Termination of Employment.
(a) Employee acknowledges and agrees that the names and addresses of
Employer's
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customers and debtors constitute trade secrets of Employer and that the sale or
unauthorized use or disclosure of any Employer's trade secrets obtained by
Employee during his employment with Employer constitutes unfair competition.
(b) For a period of two (2) years immediately following the termination of
his employment with Employer, Employee shall not directly or indirectly make
known to any person the names or addresses of any of the customers of Employer
or any other information pertaining to those customers, or call on, solicit,
take away, or attempt to call on, solicit, or take away any of the customers of
Employer on whom Employee called on or with whom Employee became acquainted
during his employment with Employer, either for himself or for any other person.
Section 6.6 Unfair Competition. Employee acknowledges and agrees that the
sale or unauthorized use or disclosure of any of Employer's trade secrets
obtained by Employee during the course of his employment pursuant to the
provisions of this Agreement, including information concerning Employer's
current or any future and proposed work, services, or products, the facts that
any such work, services, or products are planned, under consideration, or in
production, as well as any descriptions thereof, constitute unfair competition.
Section 6.7 No Unfair Competition. Employee promises and agrees not to
engage in any unfair competition with Employer at any time, whether during or
following the completion of his employment with Employer.
ARTICLE VII.
TERMINATION OF EMPLOYMENT
Section 7.1 Termination for Cause.
(a) Employer reserves the right to terminate this Agreement if Employee
willfully breaches or habitually neglects the duties which he is required to
perform pursuant to the provisions of this Agreement; or commits such acts of
dishonesty, fraud, misrepresentation or other acts of moral turpitude as would
prevent the effective performance of his duties.
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(b) Employer, at its option, may terminate this Agreement for the reasons
stated in this section by giving written notice of termination to Employee
without prejudice to any other remedy to which Employer may be entitled either
at law, in equity, or pursuant to the provisions of this Agreement.
(c) The notice of termination required by this section shall specify the
ground for the termination and shall be supported by a statement of relevant
facts.
(d) Termination pursuant to this section shall be considered "for cause"
for the purposes of this agreement.
Section 7.2 Termination Without Cause.
(a) This Agreement shall be terminated upon the death of Employee.
(b) Employer reserves the right to terminate this Agreement not less than
three (3) months after Employee suffers any physical or mental disability that
would prevent the performance of his duties pursuant to the provisions this
Agreement. Such a termination shall be effected by giving thirty (30) days'
written notice of termination to Employee or to a duly appointed representative
of Employee.
(c) Employer may terminate this Agreement upon the destruction of
Employer's premises by fire or otherwise, or upon the discontinuance of
Employer's business due to any cause whatsoever.
(d) Termination under this section shall not be considered "for cause" for
the purposes of this Agreement.
Section 7.3 Effect of Merger, Transfer of Assets, or Dissolution.
(a) This Agreement shall not be terminated by any voluntary or involuntary
dissolution of Employer resulting from either a merger or consolidation in which
Employer is not the consolidated or surviving corporation, or a transfer of all
or substantially all of the assets of Employer.
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(b) In the event of any such merger or consolidation or transfer of assets,
Employer's rights, benefits, and obligations hereunder may be assigned to the
surviving or resulting corporation or the transferee of Employer's assets.
Section 7.4 Payment Upon Termination. Notwithstanding any provision of this
Agreement, if Employer terminates this Agreement without cause, it shall pay
Employee an amount equal to the net present value of the remaining obligation of
the current contract with a minimum of twelve (12) months salary at the then
current rate of compensation.
Section 7.5 Termination by Employee. Employee may terminate his obligations
pursuant to this Agreement by giving Employer at least sixty (60) days written
notice in advance.
Section 7.6 Duty of Employee Upon Termination. Upon the termination of
employment for any reason whatsoever, Employee shall deliver to Employer, at
Employee's place of business, any automobile or other equipment or supplies
furnished to Employee by Employer.
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ARTICLE VIII.
GENERAL PROVISIONS
Section 8.1 Recovery of Litigation Costs. In the event any party shall
institute any action or proceeding to enforce any provision of this Agreement to
seek relief from any violation of this Agreement, or to otherwise obtain any
judgment or order relating to or arising from the subject matter of this
Agreement, each prevailing party shall be entitled to receive from each losing
party such prevailing party's actual attorneys' fees and costs incurred to
prosecute or defend such action or proceeding, including, but not limited to,
actual attorneys' fees and costs incurred preparatory to such prosecution and
defense. Moreover, while a court of competent jurisdiction may assist in
determining whether or not the fees actually incurred are reasonable under the
circumstances then existing, that court is not to be governed by any judicially
or legislatively established fee schedule, and said fees and costs are to
include those as may be incurred on appeal of any issue and all of which fees
and costs shall be included as part of any judgment, by cost bill or otherwise,
and where applicable, any appellate decision rendered in or arising out of such
action or proceeding. For purposes of this Agreement, in any action or
proceeding instituted by a party, the prevailing party shall be that party in
any such action or proceeding (i) in whose favor a judgment is entered, or (ii)
prior to trial, hearing or judgment any other party shall pay all or any portion
of amounts claimed by the party seeking payment, or such other party shall
eliminate the condition, cease the act, or otherwise cure the act of commission
or omission claimed by the party initiating such action or proceeding.
Section 8.2 Governmental Rules and Regulations. The provisions of this
Agreement are subject to any and all present and future orders, rules and
regulations of any duly constituted authority having jurisdiction of the
relationship and transactions contemplated by the provisions of this Agreement.
Section 8.3 Notices. All notices, requests, demands or other communications
pursuant to this Agreement shall be in writing or by telex or facsimile
transmission and shall be deemed to have been duly given (i) on the date of
service if delivered in person or by telex or facsimile transmission (with the
telex or facsimile confirmation of
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transmission receipt acting as confirmation of service when sent and provide
telexed or telecopied notices are also mailed by first class, certified or
registered mail, postage prepaid); or (ii) seventy-two (72) hours after mailing
by first class, registered or certified mail, postage prepaid, and properly
addressed as follows:
If to Employee: GLENN CHILTON
36 Edmund Avenue, Second Floor
Toronto, Ontario
M4V 1H3
If to Employer: CLUBCHARLIE.COM, INC.
1104 - 10717 Wilshire Boulevard
Los Angeles, California 90024
Phone: (310) 779 - 8232
Telecopier: (310) 471 - 8203
With a copy to: STEPP & BEAUCHAMP LLP
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Telecopier: 949.660.9010
or at such other address as the party affected may designate in a written notice
to such other party in compliance with this section.
Section 8.4 Entire Agreement. This Agreement is the final written
expression and the complete and exclusive statement of all the agreements,
conditions, promises, representations, warranties and covenants between the
parties with respect to the subject matter of this Agreement, and this Agreement
supersedes all prior or contemporaneous agreements, negotiations,
representations, warranties, covenants, understandings and discussions by and
between and among the parties, their respective representatives, and any other
person with respect to the subject matter specified in this Agreement. This
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Agreement may be amended only by an instrument in writing which expressly refers
to this Agreement and specifically states that such instrument is intended to
amend this Agreement and is signed by each of the parties. Each of the parties
represents, warrants and covenants that in executing this Agreement that such
party has (i) relied solely on the terms, conditions and provisions specified in
this Agreement and (ii) placed no reliance whatsoever on any statement,
representation, warranty, covenant or promise of any other party, or any other
person, not specified expressly in this Agreement, or upon the failure of any
party or any other person to make any statement, representation, warranty,
covenant or disclosure of any nature whatsoever. The parties have included this
section to preclude (i) any claim that any party was in any manner whatsoever
induced fraudulently to enter into, execute and deliver this Agreement, and (ii)
the introduction of parol evidence to vary, interpret, supplement or contradict
the terms, conditions and provisions of this Agreement.
Section 8.5 Severability. In the event any part of this Agreement, for any
reason, is declared to be invalid, such decision shall not affect the validity
of any remaining portion of this Agreement, which remaining portion shall remain
in complete force and effect as if this Agreement had been executed with the
invalid portion of this Agreement eliminated, and it is hereby declared the
intention of the parties that the parties would have executed the remaining
portion of this Agreement without including any such part, parts or portion
which, for any reason, hereafter may be declared invalid.
Section 8.6 Captions and Interpretation. Captions of the sections of this
Agreement are for convenience and reference only, and the words contained in
those captions shall in no way be held to explain, modify, amplify or aid in the
interpretation, construction or meaning of the provisions of this Agreement. The
language in all parts to this Agreement, in all cases, shall be construed in
accordance with the fair meaning of that language was prepared by all parties
and not strictly for or against any party.
Section 8.7 Further Assurances. Each party shall take any and all action
necessary, appropriate or advisable to execute and discharge such party's
responsibilities and obligations created by the provisions of this Agreement and
to further effectuate and carry out the intents and purposes of this Agreement
and the relationship contemplated by the provisions of this Agreement.
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Section 8.8 Number and Gender. Whenever the singular number is used in this
Agreement, and when required by the context, the same shall include the plural,
and vice versa; the masculine gender shall include the feminine and the neuter
genders, and vice versa; and the word "person" shall include corporation, firm,
trust, joint venture, trust, estate, municipality, governmental agency, sole
proprietorship, political subdivision, fraternal order, club, league, society,
organization, joint stock company, association partnership or other form of
entity.
Section 8.9 Execution in Counterparts. This Agreement shall be prepared in
multiple copies and forwarded to each of the parties for execution. All of the
signatures of the parties may be affixed to one copy or to separate copies of
this Agreement and when all such copies are received, and signed by all the
parties, those copies shall constitute one agreement which is not otherwise
separable or divisible. Counsel for Employer shall keep all of such signed
copies and shall conform one copy to show all of those signatures and the dates
thereof and shall mail a copy of such conformed copy to each of the parties
within thirty (30) days after the receipt by such counsel of the last signed
copy, and shall cause one such conformed copy to be filed in the principal
office of such counsel.
Section 8.10 Successors and Assigns. This Agreement shall inure to the
benefit of and obligate the undersigned parties and their respective successors
and assigns. Whenever, in this Agreement, a reference to any party is made, such
reference shall be deemed to include a reference to the successors and assigns
of such party. The provisions of this section notwithstanding, no provision of
this section shall be construed or interpreted as a consent to the assignment or
delegation by any party of such party's respective rights and obligation created
by the provisions of this Agreement.
Section 8.11 Reservation of Rights. The failure of any party at any time
hereafter to require strict performance by the other party of any of the
warranties, representations, covenants, terms, conditions and provisions
specified in this Agreement shall not waive, affect or diminish any right of
such party failing to require strict performance to demand strict compliance and
performance therewith and with respect to any other provisions,
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warranties, terms and conditions specified in this Agreement, and any waiver of
any default shall not waive or affect any other default, whether prior or
subsequent thereto, and whether the same or of a different type. None of the
representations, warranties, covenants, conditions, provisions and terms
specified in this Agreement shall be deemed to have been waived by any act or
knowledge of either party or such party's agents, officers or employees, and any
such waiver shall be made only by an instrument in writing, signed by the
waiving party and directed to the non-waiving party specifying such waiver. Each
party reserves such party's rights to insist upon strict compliance with the
provisions of this Agreement at all times.
Section 8.12 No Breach of Existing Agreements. Each party hereby
represents, warrants and covenants, upon the execution of this Agreement, such
party is not a party to any oral or written agreement which may be breached by
such party's execution of this Agreement.
Section 8.13 Concurrent Remedies. No right or remedy specified in this
Agreement conferred on or reserved to the parties is exclusive of any other
right or remedy specified in this Agreement or by law or equity provided or
permitted; but each such right and remedy shall be cumulative of, and in
addition to, every other right and remedy specified in this Agreement or now or
hereafter existing at law or in equity or by statute or otherwise, and may be
enforced concurrently therewith or from time to time. The termination of this
Agreement for any reason whatsoever shall not prejudice any right or remedy
which either party may have, either at law, in equity or pursuant to the
provisions of this Agreement.
Section 8.14 Time. Time is of the essence of this Agreement and each and
all of the provisions of this Agreement.
Section 8.15 Choice of Law and Consent to Jurisdiction. This Agreement
shall be deemed to have been entered into in the County of Los Angeles, State of
California, and all questions concerning the validity, interpretation or
performance of any of the terms, conditions and provisions of this Agreement or
of any of the rights or obligations of the parties, shall be governed by, and
resolved in accordance with, the laws of the State of
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California. Any and all actions or proceedings, at law or in equity, to enforce
or interpret the provisions of this Agreement may be litigated in courts having
situs within the County of Los Angeles, State of California, and each party
hereby consents to the jurisdiction of any local, state or federal court located
within the County of Los Angeles, State of California and consents any service
of process in such action or proceeding may be made by personal service upon
such party wherever such party may be then located, or by certified or
registered mail directed to such party at such party's last known address.
Section 8.16 Assignability. Neither party shall sell, assign, transfer,
convey or encumber this Agreement or any right or interest in this Agreement or
pursuant to this Agreement, or suffer or permit any such sale, assignment,
transfer or encumbrance to occur by operation of law without the prior written
consent of the other party. In the event of any sale, assignment, transfer or
encumbrance consented to by such other party, the transferee or such
transferee's legal representative shall agree with such other party in writing
to assume personally, perform and be obligated by the covenants, obligations,
terms, conditions and provisions specified in this Agreement.
Section 8.17 Force Majeure.
(a) If any party is rendered unable, completely or partially, by the
occurrence of an event of "force majeure" (hereinafter defined) to perform such
party's obligations created by the provisions of this Agreement, other than the
obligation to make payments of money, such party shall give to the other party
prompt written notice of the event of "force majeure" with reasonably complete
particulars concerning such event; thereupon, the obligations of the party
giving such notice, so far as those obligations are affected by the event of
"force majeure," shall be suspended during, but no longer than, the continuance
of the event of "force majeure." The party affected by such event of "force
majeure" shall use all reasonable diligence to resolve, eliminate and terminate
the event of "force majeure" as quickly as practicable.
(b) The requirement an event of "force majeure" shall be remedied with all
reasonable dispatch as hereinabove specified, shall not require the settlement
of strikes, lockouts or other labor difficulties by the party involved, contrary
to such party's wishes,
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and the resolution of any and all such difficulties shall be handled entirely
within the discretion of the party concerned.
(c) The term "force majeure" as used herein shall be defined as and mean
any act of God, strike, lockout or other industrial disturbance, act of the
public enemy, war, blockage, public riot, lightening, fire, storm, flood,
explosion, governmental action, governmental delay, restraint or inaction,
unavailability or equipment, and any other cause or event, whether of the kind
enumerated specifically herein, or otherwise, which is not reasonably within the
control of the party claiming such suspension.
Section 8.18 Consent to Agreement. By executing this Agreement, each party,
for itself represents such party has read or caused to be read this Agreement in
all particulars, and consents to the rights, conditions, duties and
responsibilities imposed upon such party as specified in this Agreement. Each
party represents, warrants and covenants that such party executes and delivers
this Agreement of its own free will and with no threat, undue influence, menace,
coercion or duress, whether economic or physical. Moreover, each party
represents, warrants, and covenants that such party executes this Agreement
acting on such party's own independent judgment.
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IN WITNESS WHEREOF the parties have executed this Agreement of Employment
in duplicate and in multiple counterparts, each of which shall have the force
and effect of an original, on the date specified in the preamble of this
Agreement.
"EMPLOYER" "EMPLOYEE"
CLUBCHARLIE.COM, INC.,
a Nevada corporation
By: /s/ [ILLEGIBLE] /s/ GLENN CHILTON
------------------------ ------------------------
GLENN CHILTON
Its: Director
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AGREEMENT OF EMPLOYMENT
THIS AGREEMENT OF EMPLOYMENT ("Agreement") is made and entered into in
duplicate this day ___ of August, 1999, by and between CLUBCHARLIE.COM, INC., a
Nevada corporation ("Employer"), and ZEE BATAL ("Employee").
RECITALS
(a) Employer is a corporation duly organized and validly existing pursuant
to the laws of the State of Nevada.
(b) Employer is in the business of producing and marketing children and
family films and independent motion pictures both domestically and
internationally.
(c) Employer desires to employ Employee, and Employee desires to serve as
President of Employer and to do and perform any and all services, acts and
things specified hereinafter.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES, COVENANTS AND
UNDERTAKINGS HEREIN CONTAINED AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE
OBLIGATED LEGALLY AND EQUITABLY, THE PARTIES AGREE WITH EACH OTHER AS FOLLOWS:
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ARTICLE I.
TERM OF EMPLOYMENT
Section 1.1 Specified Term. Employer hereby employs Employee and Employee
hereby accepts employment with Employer for a period of five (5) years
commencing as of August ___, 1999.
Section 1.2 Automatic Renewal of Term. The term of this Agreement shall be
renewed automatically for succeeding periods of one (1) year each unless either
party gives to the other party notice, at least ninety (90) days prior to the
expiration of any such term, of the noticing party's intention not to renew the
term of this Agreement. For each additional successive one (1) year term
provided for in this Section 1.2, the compensation paid by Employer to Employee
shall be renegotiated for such term.
Section 1.3 "Employment Term" Defined. As specified herein, the phrases
"term of employment," "employment term," and "term of this Agreement" refer to,
and shall mean, be defined as and include, any and all renewals of the term of
this Agreement.
ARTICLE II.
DUTIES AND OBLIGATIONS OF EMPLOYEE
Section 2.1 General Duties. Employee shall serve as the President of
CLUBCHARLIE.COM, INC., a Nevada corporation. In Employee's capacity as the
President of Employer, Employee shall do and perform all services, acts, or
things necessary or appropriate to manage and conduct the business of
supervising, directing and controlling the activities and affairs and officers
of Employer. The duties to be performed by Employee shall be determined from
time to time by the Board of Directors of Employer ("Board").
Section 2.2 Matters Requiring Consent of Board. Employee, without specific
approval of the Board, shall not do or contract to do any of the following:
(1) Borrow on behalf of Employer during any one fiscal year an amount in
excess of One Thousand Dollars ($1,000.00);
(2) Permit any customer or client of Employer to become indebted to
Employer in an amount in excess of One Hundred Thousand Dollars
($100,000.00);
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<PAGE>
(3) Purchase capital equipment for amounts in excess of the amounts
budgeted for expenditure by the Board;
(4) Terminate the services of any other officer of Employer or hire any
replacement of any officer of Employer who's services have been terminated;
or
(5) Obligate Employer to the expenditure of more than Ten Thousand Dollars
($10,000.00).
Section 2.3 Competitive Activities. During the term of this Agreement
Employee shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer, director,
or in any other individual or representative capacity, engage or participate in
any business that is in competition in any manner whatsoever with the business
of Employer.
Section 2.4 Uniqueness of Employee's Services. Employee hereby represents
and agrees that the services to be performed pursuant to the provisions of this
Agreement are of a special, unique, unusual, extraordinary, and intellectual
character that gives those services a peculiar value, the loss of which cannot
be reasonably or adequately compensated in damages in an action at law.
Employee, therefore, expressly agrees that Employer, in addition to any other
rights or remedies that Employer may possess, shall be entitled to injunctive
and other equitable relief to prevent or remedy a breach of this Agreement by
Employee.
Section 2.5 Indemnification for Negligence or Misconduct. Employee shall
save Employer harmless from and against and shall indemnify Employer for any
liability, loss, costs, expenses or damages howsoever caused by reason of any
injury (whether to body, property, or personal or business character or
reputation) sustained by any person or to any person or to property by reason of
any act, neglect, default or omission of Employee, and Employee shall pay any
and all amounts to be paid or discharged in case of an action for any such
damages or injuries. No provision of this section is intended to, nor shall any
provision of this section, relieve Employer from Employer's own act, omission or
negligence.
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<PAGE>
ARTICLE III.
OBLIGATIONS OF EMPLOYER
Section 3.1 General Description. Employer shall provide Employee with the
compensation, incentives and benefits specified elsewhere in this Agreement.
Section 3.2 Office and Staff. Employer shall provide Employee with
equipment, supplies, facilities and services, suitable to Employee's position
and adequate for the performance of Employee's duties created by the provisions
of this Agreement.
Section 3.3 Reimbursement of Business Expenses. Employee is authorized to
incur reasonable business expenses for promoting the business of Employer,
including expenditures for entertainment, gifts, and travel. This reimbursement
shall include gasoline used by Employee for business travel. Employer will
reimburse Employee from time to time for all such business expenses provided
that Employee presents to Employer's Comptroller the account book and documents
when and as required by this section.
(a) Employee shall maintain an account book in which Employee shall record,
at or near the time each expenditure is made, the amount of the expenditure, the
time, place, and designation of the type of the entertainment and travel or
other expense, or the date and description of the gift, the business reason for
the expenditure and the nature of the business benefit derived or expected to be
derived as a result of the expenditure, and the names, occupations, addresses,
and other information, sufficient to establish the business relationship to
Employer, concerning each person who was entertained or given a gift.
(b) Employee shall also obtain and retain documentary evidence (such as
receipts or paid bills), which state sufficient information to establish the
amount, date, place, and the essential character of the expenditure, for each
expenditure of $25 or more (except for transportation charges if not readily
available) and for lodging while traveling away from home.
(c) The foregoing account book and documentary evidence shall be delivered
to Employer whenever requested by Employer and thereafter shall be retained by
Employer.
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<PAGE>
Section 3.4 Repayment by Employee of Disallowed Business Expenses. In the
event that any expenses paid for Employee or any reimbursement of expenses paid
to Employee shall, on audit or other examination of Employer's income tax
returns, be determined not to be allowable deductions from Employer's gross
income, and in the further event that any such determination is acceded to by
the Employer or made final by the appropriate federal or state taxing authority
or a final judgment of a court of competent jurisdiction, and no appeal is taken
from the judgment or the applicable period for filing notice of appeal has
expired, Employee shall repay to Employer the amount of the disallowed expenses.
Section 3.5 Indemnification for Negligence or Misconduct. Employer shall
save Employee harmless from and against and shall indemnify Employee for any
liability, loss, costs, expenses or damages howsoever caused by reason of any
injury (whether to body, property, or personal or business character or
reputation) sustained by any person or to any person or to property by reason of
any act, neglect, default or omission of Employer, and Employer shall pay any
and all amounts to be paid or discharged in case of an action for any such
damages or injuries. No provision of this section is intended to, nor shall any
provision of this section, relieve Employee from that Employee's own act,
omission or negligence.
ARTICLE IV.
COMPENSATION OF EMPLOYEE
Section 4.1 Annual Salary. As compensation for the services to be rendered
by Employee pursuant to provisions of this Agreement, Employer shall pay
Employee an annual salary in the amount of One Hundred and Fifty Thousand U.S.
Dollars (U.S.$150,000), payable in equal bi-monthly installments of Six Thousand
Two Hundred and Fifty Dollars ($6,250). The compensation paid by Employer to
Employee will be reviewed and adjusted each year of this contract as negotiated
and agreed to by both parties based on the performance of the company and the
employee, market conditions and the changing roles and responsibilities of the
employee. Each successive one (1) year term provided for in Section 1.2 of this
Agreement shall also be renegotiated for such term.
Section 4.2 Tax Withholding. Employer shall have the right to deduct or
withhold from the compensation due and payable to Employee pursuant to the
provisions of this Agreement any and all amounts required for federal income and
Social Security taxes and all state or local taxes now applicable or which may
be enacted and may become applicable in the future.
5
<PAGE>
ARTICLE V.
EMPLOYEE BENEFITS
Section 5.1 Annual Vacation.
(a) During the employment term, Employee shall be entitled to an annual
vacation leave of thirty (30) business days each year without loss of
compensation. In the event that Employee is unable for any reason to take the
total amount of vacation time authorized herein during any year, he may accrue
that time and add it to vacation time for any following year.
(b) In lieu of vacation leave, Employee may elect to receive payment for
all or any part of the vacation leave to which Employee is entitled, in which
case the vacation leave shall be valued at the amount of salary earned by
Employee during an equivalent period of time during the fiscal year in which
such vacation leave accrued.
Section 5.2 Automobile. During the employment term, Employee shall be
entitled to the use of an automobile, to be leased by Employer. Employer shall
not be required to spend more than Six Hundred Dollars ($600.00) a month
pursuant to such lease. Except as otherwise specified in this Agreement, all
ordinary and routine expenses incurred in connection with the lease and business
use of such automobile shall be paid by Employer. The automobile shall be
selected by Employee, with the concurrence of Employer. Employee shall take
proper care of such automobile, and shall be responsible for all damage to same
resulting from any misuse or neglect. Employer shall also, at its own expense,
provide comprehensive insurance coverage for such automobile, specifying
Employee as a named insured.
Section 5.3 Paid Holidays. Employee shall be entitled to a holiday with
full pay on each New Year's Day, President's Day, Memorial Day, Independence
Day, Labor Day, Veteran's Day, Thanksgiving Day and Christmas Day during the
term of this Agreement.
6
<PAGE>
Section 5.4 Illness. During the employment term, Employee shall be entitled
to ten (10) days per year as sick leave with full pay. Sick leave shall not be
accumulated.
Section 5.5 Health Care Benefits. Employer shall include Employee in the
hospital, surgical, and medical benefit plan adopted and maintained by Employer.
Section 5.6 Other Benefits. Employee shall receive all other benefits of
employment available generally to other employees of the Employer.
ARTICLE VI.
PROPERTY RIGHTS OF THE PARTIES
Section 6.1 Confidentiality of Trade Secret Data.
(a) Employee agrees that all information communicated to him with respect
to the work conducted by or for Employer, whether or not that information was
directly or intentionally communicated, is confidential. Employee also agrees
that all information, conclusions, recommendations, reports, advice, or other
documents generated by Employee pursuant to this Agreement is confidential.
Employee further acknowledges and agrees that all confidential data described
herein is and constitutes trade secret information that belongs wholly to and is
the exclusive property of Employer.
(b) Employee promises and agrees that he shall not disclose any
confidential information to any other person unless specifically authorized in
writing by Employer to do so. If Employer gives Employee written authorization
to make any disclosure, Employee shall do so only within the limits and to the
extent of that authorization.
(c) Employee shall use his best efforts to prevent inadvertent disclosure
of any confidential information to any third party by using the same care and
discretion that he uses with similar data he designates as confidential.
7
<PAGE>
(d) Employee acknowledges and agrees that all information concerning the
work conducted by Employer and any future and proposed products of Employer is
and constitutes an exceptionally valuable trade secret of Employer. That
information includes, among other matters, the facts that any particular work or
project is planned, under consideration, or in production, as well as any
descriptions of any existing, pending, or proposed work.
Section 6.2 Use and Disclosure of Confidential Data. Employee shall not use
any confidential information or circulate it to any other person, except when
specifically authorized in advance by Employer.
Section 6.3 Copies of Confidential Information. Employee agrees that copies
of confidential information may not be made without the express written
permission of Employer and that all such copies shall be returned to Employer
along with the originals.
Section 6.4 Ownership of Customer Records.
(a) All records of the accounts of customers and debtors, disks, files,
ledgers, tapes and other storage devices and any and all records and books
relating in any manner whatsoever to the customers of Employer, including, but
not limited to, credit reports or memorandum, reports of transactions made to
Employer, and demographic or economic data discovered by Employee during the
term of this Agreement, whether prepared by Employee or otherwise coming into
Employee's possession, shall be the exclusive property of Employer regardless of
who actually purchased the original book, record, tape, disk or other storage
device.
(b) All such books, records, disks, and storage devices shall be
immediately returned to Employer by Employee on any termination of the
employment term.
(c) If Employee produces any record, book, ledger, tape, disk, or similar
storage device to be used for record keeping, Employee shall immediately notify
Employer, who shall then immediately reimburse Employee.
8
<PAGE>
Section 6.5 Soliciting Customers After Termination of Employment.
(a) Employee acknowledges and agrees that the names and addresses of
Employer's customers and debtors constitute trade secrets of Employer and that
the sale or unauthorized use or disclosure of any Employer's trade secrets
obtained by Employee during his employment with Employer constitutes unfair
competition.
(b) For a period of two (2) years immediately following the termination of
his employment with Employer, Employee shall not directly or indirectly make
known to any person the names or addresses of any of the customers of Employer
or any other information pertaining to those customers, or call on, solicit,
take away, or attempt to call on, solicit, or take away any of the customers of
Employer on whom Employee called on or with whom Employee became acquainted
during his employment with Employer, either for himself or for any other person.
Section 6.6 Unfair Competition. Employee acknowledges and agrees that the
sale or unauthorized use or disclosure of any of Employer's trade secrets
obtained by Employee during the course of his employment pursuant to the
provisions of this Agreement, including information concerning Employer's
current or any future and proposed work, services, or products, the facts that
any such work, services, or products are planned, under consideration, or in
production, as well as any descriptions thereof, constitute unfair competition.
Section 6.7 No Unfair Competition. Employee promises and agrees not to
engage in any unfair competition with Employer at any time, whether during or
following the completion of his employment with Employer.
ARTICLE VII.
TERMINATION OF EMPLOYMENT
Section 7.1 Termination for Cause.
(a) Employer reserves the right to terminate this Agreement if Employee
willfully breaches or habitually neglects the duties which he is required to
perform pursuant to the provisions of this Agreement; or commits such acts of
dishonesty, fraud, misrepresentation or other acts of moral turpitude as would
prevent the effective performance of his duties.
(b) Employer, at its option, may terminate this Agreement for the reasons
stated in this section by giving written notice of termination to Employee
without prejudice to any other remedy to which Employer may be entitled either
at law, in equity, or pursuant to the provisions of this Agreement.
9
<PAGE>
(c) The notice of termination required by this section shall specify the
ground for the termination and shall be supported by a statement of relevant
facts.
(d) Termination pursuant to this section shall be considered "for cause"
for the purposes of this agreement.
Section 7.2 Termination Without Cause.
(a) This Agreement shall be terminated upon the death of Employee.
(b) Employer reserves the right to terminate this Agreement not less than
three (3) months after Employee suffers any physical or mental disability that
would prevent the performance of his duties pursuant to the provisions this
Agreement. Such a termination shall be effected by giving thirty (30) days'
written notice of termination to Employee or to a duly appointed representative
of Employee.
(c) Employer may terminate this Agreement upon the destruction of
Employer's premises by fire or otherwise, or upon the discontinuance of
Employer's business due to any cause whatsoever.
(d) Termination under this section shall not be considered "for cause" for
the purposes of this Agreement.
Section 7.3 Effect of Merger, Transfer of Assets, or Dissolution.
(a) This Agreement shall not be terminated by any voluntary or involuntary
dissolution of Employer resulting from either a merger or consolidation in which
Employer is not the consolidated or surviving corporation, or a transfer of all
or substantially all of the assets of Employer.
(b) In the event of any such merger or consolidation or transfer of assets,
Employer's rights, benefits, and obligations hereunder may be assigned to the
surviving or resulting corporation or the transferee of Employer's assets.
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Section 7.4 Payment Upon Termination. Notwithstanding any provision of this
Agreement, if Employer terminates this Agreement without cause, it shall pay
Employee an amount equal to the net present value of the remaining obligation of
the then current contract with a minimum of twelve (12) months salary at the
then current rate of compensation.
Section 7.5 Termination by Employee. Employee may terminate his obligations
pursuant to this Agreement by giving Employer at least sixty (60) days written
notice in advance.
Section 7.6 Duty of Employee Upon Termination. Upon the termination of
employment for any reason whatsoever, Employee shall deliver to Employer, at
Employee's place of business, any automobile or other equipment or supplies
furnished to Employee by Employer.
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ARTICLE VIII.
GENERAL PROVISIONS
Section 8.1 Recovery of Litigation Costs. In the event any party shall
institute any action or proceeding to enforce any provision of this Agreement to
seek relief from any violation of this Agreement, or to otherwise obtain any
judgment or order relating to or arising from the subject matter of this
Agreement, each prevailing party shall be entitled to receive from each losing
party such prevailing party's actual attorneys' fees and costs incurred to
prosecute or defend such action or proceeding, including, but not limited to,
actual attorneys' fees and costs incurred preparatory to such prosecution and
defense. Moreover, while a court of competent jurisdiction may assist in
determining whether or not the fees actually incurred are reasonable under the
circumstances then existing, that court is not to be governed by any judicially
or legislatively established fee schedule, and said fees and costs are to
include those as may be incurred on appeal of any issue and all of which fees
and costs shall be included as part of any judgment, by cost bill or otherwise,
and where applicable, any appellate decision rendered in or arising out of such
action or proceeding. For purposes of this Agreement, in any action or
proceeding instituted by a party, the prevailing party shall be that party in
any such action or proceeding (i) in whose favor a judgment is entered, or (ii)
prior to trial, hearing or judgment any other party shall pay all or any portion
of amounts claimed by the party seeking payment, or such other party shall
eliminate the condition, cease the act, or otherwise cure the act of commission
or omission claimed by the party initiating such action or proceeding.
Section 8.2 Governmental Rules and Regulations. The provisions of this
Agreement are subject to any and all present and future orders, rules and
regulations of any duly constituted authority having jurisdiction of the
relationship and transactions contemplated by the provisions of this Agreement.
12
<PAGE>
Section 8.3 Notices. All notices, requests, demands or other communications
pursuant to this Agreement shall be in writing or by telex or facsimile
transmission and shall be deemed to have been duly given (i) on the date of
service if delivered in person or by telex or facsimile transmission (with the
telex or facsimile confirmation of transmission receipt acting as confirmation
of service when sent and provide telexed or telecopied notices are also mailed
by first class, certified or registered mail, postage prepaid); or (ii)
seventy-two (72) hours after mailing by first class, registered or certified
mail, postage prepaid, and properly addressed as follows:
If to Employee: ZEE BATAL
1104 - 10717 Wilshire Boulevard
Los Angeles, California 90024
If to Employer: CLUBCHARLIE.COM, INC.
1104 - 10717 Wilshire Boulevard
Los Angeles, California 90024
Phone: (310) 779 - 8232
Telecopier: (310) 471 - 8203
With a copy to: STEPP & BEAUCHAMP LLP
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Telecopier: 949.660.9010
or at such other address as the party affected may designate in a written notice
to such other party in compliance with this section.
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Section 8.4 Entire Agreement. This Agreement is the final written
expression and the complete and exclusive statement of all the agreements,
conditions, promises, representations, warranties and covenants between the
parties with respect to the subject matter of this Agreement, and this Agreement
supersedes all prior or contemporaneous agreements, negotiations,
representations, warranties, covenants, understandings and discussions by and
between and among the parties, their respective representatives, and any other
person with respect to the subject matter specified in this Agreement. This
Agreement may be amended only by an instrument in writing which expressly refers
to this Agreement and specifically states that such instrument is intended to
amend this Agreement and is signed by each of the parties. Each of the parties
represents, warrants and covenants that in executing this Agreement that such
party has (i) relied solely on the terms, conditions and provisions specified in
this Agreement and (ii) placed no reliance whatsoever on any statement,
representation, warranty, covenant or promise of any other party, or any other
person, not specified expressly in this Agreement, or upon the failure of any
party or any other person to make any statement, representation, warranty,
covenant or disclosure of any nature whatsoever. The parties have included this
section to preclude (i) any claim that any party was in any manner whatsoever
induced fraudulently to enter into, execute and deliver this Agreement, and (ii)
the introduction of parol evidence to vary, interpret, supplement or contradict
the terms, conditions and provisions of this Agreement.
Section 8.5 Severability. In the event any part of this Agreement, for any
reason, is declared to be invalid, such decision shall not affect the validity
of any remaining portion of this Agreement, which remaining portion shall remain
in complete force and effect as if this Agreement had been executed with the
invalid portion of this Agreement eliminated, and it is hereby declared the
intention of the parties that the parties would have executed the remaining
portion of this Agreement without including any such part, parts or portion
which, for any reason, hereafter may be declared invalid.
Section 8.6 Captions and Interpretation. Captions of the sections of this
Agreement are for convenience and reference only, and the words contained in
those captions shall in no way be held to explain, modify, amplify or aid in the
interpretation, construction or meaning of the provisions of this Agreement. The
language in all parts to this Agreement, in all cases, shall be construed in
accordance with the fair meaning of that language was prepared by all parties
and not strictly for or against any party.
Section 8.7 Further Assurances. Each party shall take any and all action
necessary, appropriate or advisable to execute and discharge such party's
responsibilities and obligations created by the provisions of this Agreement and
to further effectuate and carry out the intents and purposes of this Agreement
and the relationship contemplated by the provisions of this Agreement.
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Section 8.8 Number and Gender. Whenever the singular number is used in this
Agreement, and when required by the context, the same shall include the plural,
and vice versa; the masculine gender shall include the feminine and the neuter
genders, and vice versa; and the word "person" shall include corporation, firm,
trust, joint venture, trust, estate, municipality, governmental agency, sole
proprietorship, political subdivision, fraternal order, club, league, society,
organization, joint stock company, association partnership or other form of
entity.
Section 8.9 Execution in Counterparts. This Agreement shall be prepared in
multiple copies and forwarded to each of the parties for execution. All of the
signatures of the parties may be affixed to one copy or to separate copies of
this Agreement and when all such copies are received, and signed by all the
parties, those copies shall constitute one agreement which is not otherwise
separable or divisible. Counsel for Employer shall keep all of such signed
copies and shall conform one copy to show all of those signatures and the dates
thereof and shall mail a copy of such conformed copy to each of the parties
within thirty (30) days after the receipt by such counsel of the last signed
copy, and shall cause one such conformed copy to be filed in the principal
office of such counsel.
Section 8.10 Successors and Assigns. This Agreement shall inure to the
benefit of and obligate the undersigned parties and their respective successors
and assigns. Whenever, in this Agreement, a reference to any party is made, such
reference shall be deemed to include a reference to the successors and assigns
of such party. The provisions of this section notwithstanding, no provision of
this section shall be construed or interpreted as a consent to the assignment or
delegation by any party of such party's respective rights and obligation created
by the provisions of this Agreement.
15
<PAGE>
Section 8.11 Reservation of Rights. The failure of any party at any time
hereafter to require strict performance by the other party of any of the
warranties, representations, covenants, terms, conditions and provisions
specified in this Agreement shall not waive, affect or diminish any right of
such party failing to require strict performance to demand strict compliance and
performance therewith and with respect to any other provisions, warranties,
terms and conditions specified in this Agreement, and any waiver of any default
shall not waive or affect any other default, whether prior or subsequent
thereto, and whether the same or of a different type. None of the
representations, warranties, covenants, conditions, provisions and terms
specified in this Agreement shall be deemed to have been waived by any act or
knowledge of either party or such party's agents, officers or employees, and any
such waiver shall be made only by an instrument in writing, signed by the
waiving party and directed to the non-waiving party specifying such waiver. Each
party reserves such party's rights to insist upon strict compliance with the
provisions of this Agreement at all times.
Section 8.12 No Breach of Existing Agreements. Each party hereby
represents, warrants and covenants, upon the execution of this Agreement, such
party is not a party to any oral or written agreement which may be breached by
such party's execution of this Agreement.
Section 8.13 Concurrent Remedies. No right or remedy specified in this
Agreement conferred on or reserved to the parties is exclusive of any other
right or remedy specified in this Agreement or by law or equity provided or
permitted; but each such right and remedy shall be cumulative of, and in
addition to, every other right and remedy specified in this Agreement or now or
hereafter existing at law or in equity or by statute or otherwise, and may be
enforced concurrently therewith or from time to time. The termination of this
Agreement for any reason whatsoever shall not prejudice any right or remedy
which either party may have, either at law, in equity or pursuant to the
provisions of this Agreement.
Section 8.14 Time. Time is of the essence of this Agreement and each and
all of the provisions of this Agreement.
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<PAGE>
Section 8.15 Choice of Law and Consent to Jurisdiction. This Agreement
shall be deemed to have been entered into in the County of Los Angeles, State of
California, and all questions concerning the validity, interpretation or
performance of any of the terms, conditions and provisions of this Agreement or
of any of the rights or obligations of the parties, shall be governed by, and
resolved in accordance with, the laws of the State of California. Any and all
actions or proceedings, at law or in equity, to enforce or interpret the
provisions of this Agreement may be litigated in courts having situs within the
County of Los Angeles, State of California, and each party hereby consents to
the jurisdiction of any local, state or federal court located within the County
of Los Angeles, State of California and consents any service of process in such
action or proceeding may be made by personal service upon such party wherever
such party may be then located, or by certified or registered mail directed to
such party at such party's last known address.
Section 8.16 Assignability. Neither party shall sell, assign, transfer,
convey or encumber this Agreement or any right or interest in this Agreement or
pursuant to this Agreement, or suffer or permit any such sale, assignment,
transfer or encumbrance to occur by operation of law without the prior written
consent of the other party. In the event of any sale, assignment, transfer or
encumbrance consented to by such other party, the transferee or such
transferee's legal representative shall agree with such other party in writing
to assume personally, perform and be obligated by the covenants, obligations,
terms, conditions and provisions specified in this Agreement.
Section 8.17 Force Majeure.
(a) If any party is rendered unable, completely or partially, by the
occurrence of an event of "force majeure" (hereinafter defined) to perform such
party's obligations created by the provisions of this Agreement, other than the
obligation to make payments of money, such party shall give to the other party
prompt written notice of the event of "force majeure" with reasonably complete
particulars concerning such event; thereupon, the obligations of the party
giving such notice, so far as those obligations are affected by the event of
"force majeure," shall be suspended during, but no longer than, the continuance
of the event of "force majeure." The party affected by such event of "force
majeure" shall use all reasonable diligence to resolve, eliminate and terminate
the event of "force majeure" as quickly as practicable.
(b) The requirement an event of "force majeure" shall be remedied with all
reasonable dispatch as hereinabove specified, shall not require the settlement
of strikes, lockouts or other labor difficulties by the party involved, contrary
to such party's wishes, and the resolution of any and all such difficulties
shall be handled entirely within the discretion of the party concerned.
17
<PAGE>
(c) The term "force majeure" as used herein shall be defined as and mean
any act of God, strike, lockout or other industrial disturbance, act of the
public enemy, war, blockage, public riot, lightening, fire, storm, flood,
explosion, governmental action, governmental delay, restraint or inaction,
unavailability or equipment, and any other cause or event, whether of the kind
enumerated specifically herein, or otherwise, which is not reasonably within the
control of the party claiming such suspension.
Section 8.18 Consent to Agreement. By executing this Agreement, each party,
for itself represents such party has read or caused to be read this Agreement in
all particulars, and consents to the rights, conditions, duties and
responsibilities imposed upon such party as specified in this Agreement. Each
party represents, warrants and covenants that such party executes and delivers
this Agreement of its own free will and with no threat, undue influence, menace,
coercion or duress, whether economic or physical. Moreover, each party
represents, warrants, and covenants that such party executes this Agreement
acting on such party's own independent judgment.
18
<PAGE>
IN WITNESS WHEREOF the parties have executed this Agreement of Employment
in duplicate and in multiple counterparts, each of which shall have the force
and effect of an original, on the date specified in the preamble of this
Agreement.
"EMPLOYER" "EMPLOYEE"
CLUBCHARLIE.COM, INC.,
a Nevada corporation
By: /s/ [ILLEGIBLE] /s/ ZEE BATAL
------------------- -------------------
Its: Director ZEE BATAL
19
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<TOTAL-LIABILITY-AND-EQUITY> 150,007
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 104,494
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (104,494)
<EPS-BASIC> 0
<EPS-DILUTED> (0.03)
</TABLE>
BARRY L. FRIEDMAN Letterhead
February 10, 2000
Office of Small Business
Securities and Exchange Commission
450 5th Street N.W.
Washington, D.C. 20549
Mailstop: 4-6, SEC
Attention: Sherri Johnson
Re: ClubCharlie.com, Inc.
Dear Ms. Johnson:
I am the former accountant for ClubCharlie.com, Inc. a Nevada corporation
("Company"). I have reviewed the Company's Registration Statement on Form 10-SB
and the Company's Amendment No. 1 to Registration Statement on Form 10-SB
("Amendment No. 1"). I agree with the Company's disclosures in "Item 3. Changes
in and Disagreements with Accountants" of Amendment No. 1 regarding the change
in certifying accountants.
BARRY L. FRIEDMAN P.C.
/s/ Barry L. Friedman
Barry L. Friedman
