SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS UNDER THE 1934 ACT
MAGICINC.COM
(Name of Small Business Issuer in Its Charter)
DELAWARE 65-0494581
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1509 Southeast Second Court, Fort Lauderdale, Florida 33301
(Address of Principal Executive Offices) (Zip Code)
(954) 764-0579
(Issuer's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Exchange Act: None
Securities to be registered under Section 12(g) of theExchange Act:
Title of Each Class to be so registered:
Common Stock ($0.0001 Par Value)
Name of Each Exchange on Which Each Class is to be Registered: N/A
This form is being filed with the Securities & Exchange Commission in order to
become a reporting company under the Exchange Act of 1934 and to reestablish the
Company's quotation on the OTC Bulletin Board in compliance with the National
Association of Securities Dealers, Inc. Rules 6530 and 6540 to limit quotations
on the OTC Bulletin Board to securities of companies that report their current
financial information to the SEC, banking, or insurance regulators.
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TABLE OF CONTENTS
Page No.
PART I
Item 1. Description of Business...............................................1
Item 2. Management's Discussion and Analysis or Plan of Operation.............4
Item 3. Description of Property...............................................8
Item 4. Security Ownership of Certain Beneficial Owners and Management........9
Item 5. Directors, Executive Officers, Promoters and Control Persons..........9
Item 6. Executive Compensation...............................................11
Item 7. Certain Relationships and Related Transactions.......................12
Item 8. Description of Securities............................................12
PART II
Item 1. Market for Common Equity and Related Stockholder Matters.............13
Item 2. Legal Proceedings....................................................14
Item 3. Changes in and Disagreements with Accountants........................14
Item 4. Recent Sales of Unregistered Securities..............................14
Item 5. Indemnification of Directors and Officers............................18
PART F/S
Financial Statements..........................................................19
PART III
Item 1. Index to Exhibits...................................................00
Signatures....................................................................00
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
A. Corporate Organization
As used herein, the term "Company" refers to Magicinc.com, a Delaware
corporation, and its predecessors, unless the context indicates otherwise. The
Company was originally incorporated in 1961 in Delaware as Magic Fingers, Inc.
The Company originally designed, manufactured and distributed a patented
vibrating massage device for installation in hotel and motel beds. In 1979, the
Company began attempts to diversify its operations and sought opportunities in
other industries.
In April 1994, Company entered into an agreement and plan of reorganization to
acquire in a reverse merger a 100% interest in Flash Entertainment, Inc.
("Flash"), a Florida film production and distribution corporation, which
included a wholly owned subsidiary, No Bull Distribution, Inc., a Florida film
distribution company, and the rights to three feature length films, "No More
Dirty Deals," "Shakma," and "Shoot" for 20,000,000 shares of common stock (pre
reverse split). Pursuant to the reorganization, Flash acquired approximately 79%
of the Company's outstanding stock and assumed management of Company. Current
management obtained controlling ownership of the Company, pursuant to the
reorganization, in April of 1994.
In May 1995, certain Company insiders attempted an unsuccessful hostile
takeover. Legal action was initiated by Gordon Scott Venters, President and CEO
of the Company, and a trustee was assigned to the Company who appointed a new
board of directors and was then released on August 2, 1995. As a result, the
Company became dormant and conducted minimal business operations until December
9, 1996, when a new Board was elected. The Company then began developing and
implementing a plan of operations designed to restructure and eliminate the
substantial debt of the Company. The last of the Company's "old debt" was
settled on December 5, 1999, leaving the Company free to pursue its present plan
of operations. The Company adopted its present name in April of 1999.
On December 9, 1996, the Company reorganized its Board of Directors. The
reorganization was carried out to bring about a change in the Company's focus.
Prior management had allowed the Company to become dormant and minimal business
had been conducted. The Company had substantial debt and no significant
operations.
In an effort to revitalize the Company, new management undertook an aggressive
program to rid the Company of its debt. The debt consisted of a judgment entered
against the Company in favor of Adolph Malinek Ges. M.B.H., an Austrian
Corporation, in the 15th Circuit Court, Palm Beach, Florida, Case No.
CL94-6263AJ in the amount of $247,205.35; a promissory note payable to HDT
Properties, Inc. in the sum of $100,000; and a promissory note payable to Dr.
H.K. Terry in the amount of $200,000.
On February 15, 1996, the Company entered into a secured promissory note (the
"Note") in the principal amount of $200,000 plus 18% interest per year, a Loan
Agreement, a Security Agreement, and a Stock Pledge Agreement. This was done in
connection with a Note that was due on February 15, 1996 to Dr. H.K. Terry, a
principal stockholder of the Company. Dr. Terry also received 6,250 shares of
the Company as additional consideration with 1,875 of such shares having
registration rights. The note was secured by all of the assets of the Company
and was personally guaranteed by Gordon Scott Venters, the Company's President,
CEO and a Director, with an aggregate of 45,976 shares of Common Stock of the
Company owned by Messrs. G.S. Venters and R.B. Venters. The Note and Loan
Agreement was subsequently modified to extend the maturity date of the note to
June 15, 1998 and in consideration for the modification, the Company pledged an
additional 10,274 Shares to Dr. Terry. As of December 5, 1999, Dr. Terry was a
shareholder of record of 254,650 shares of Magicinc. Common shares.
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On December 9, 1996, the Company issued a note in the principal amount of
$20,000 plus 10% interest to Dr. Terry. The Note matured June 15, 1998. The Note
was personally guaranteed by Gordon Scott Venters and secured by a pledge of
6,250 shares of Common Stock by the Company to secure its obligations under the
Note. (See "Recent Sales of Unregistered Securities").
On November 19, 1999, the Company obtained a release of the February 15, 1996
secured promissory note and the amendment to said promissory note and loan
agreement in exchange for the issuance of 75,000 shares of the Company's common
stock, issued to Dr. Terry at par value ($.0001). (See "Recent Sales of
Unregistered Securities").
On January 5, 1998, the Company entered into an agreement with Adolf Malinek
Gesellschaft M.B.H. Wien, Austria in regards to a judgment settlement agreement.
The terms of this agreement called for the issuance of 100,000 shares of the
Company's Common Stock and a cash payment of $50,000. On November 22, 1999, the
Company delivered the $50,000 cash component and proper legal opinion concluding
the terms of the settlement agreement. A Satisfaction of Judgment, Case #
CL94-6263AJ for the sum of $247,205.35, was received by the company on December
7, 1999. (See "Recent Sales of Unregistered Securities").
On August 23, 1999, the Company entered into a settlement agreement with HDT
Properties, Inc. et. Al., for the release of the Secured Convertible Promissory
Note, the UCC-1 filing and the return of all business related elements to the
Company in exchange for the issuance of 100,000 shares of the Company's common
stock, and a cash payment to HDT Properties in the amount of $50,000. The
Company has issued the shares and paid HDT Properties, Inc. the $50,000 and
secured a termination statement and release agreement from HDT Properties with
respect to the UCC-1 filing and the Secured Convertible Promissory Note. The
UCC-3 release has been filed. (See "Recent Sales of Unregistered Securities").
On February 9, 1999, the Company entered into an agreement with Castle Hill
Productions ("Castle Hill") wherein the Company granted to Castle Hill the
exclusive world wide rights to three feature films owned by the Company. The
films were "Shakma," "Shoot," and "No More Dirty Deals." Castle Hill paid to the
Company a total of $48,750 for distribution rights to these three films in
perpetuity. The sale of the distribution rights to these three films ended the
Company's involvement in the movie business. The Company is no longer actively
involved in the movie business.
Business of the Company
General
The Company is a developmental stage Internet entertainment company with plans
to engage in distribution, promotion and production of varied forms of
entertainment via the Internet.
The Company's current major focus is the development of its Internet
entertainment business. The Company owns two "registered domain names" on the
Internet. These are (i)Magicinternetwork.com. , Which the Company proposes to
use as its own Internet Service Provider (ISP) for its CyBars network, and (ii)
Cybars.com within which the Company intends to create an Internet link of
entertainment venues to Magicinternetwork.com for Internet broadcast and
ownership content by the Company.
The Company intends to focus its efforts on creating an independent Internet
entertainment network, magicinternetwork.com. (A registered domain name).
Contained within this network will be a diverse array of select entertainment
nightclub links using cybars.com (registered domain name) a live Internet
nightclub membership syndication utilizing CyBarCam Internet cameras.
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The Company websites, will contain graphically rich interactive "Cybar-Streets"
and "CybarClub's" in a virtual entertainment network linking major cities
throughout the country. These "Cybar-Streets" will contain numerous
entertainment venues in the form of Internet "CybarClub's." At these sites,
member patrons can literally go out "nightclubbing" from home computer terminals
linked to live camera feeds to local clubs. Future developments will attempt to
include Cybar Internet computer terminals in CybarClub's in major U.S. cities
creating direct interaction between members and patrons.
The Company intends to sell memberships in its Cybar network for $9.95 per month
with a three-month minimum membership required. The Company intends to market
Cybar Internet computer terminals to Bars and Nightclubs for a charge of $149
per month after installation. Installation costs will be approximately
$1,500.00. Once the Company's Cybar entertainment network is in operation, the
Company also intends to sell advertising to be featured on the Cybar Network.
Description of Products and Services
The Company is an Internet entertainment holding company. The Company currently
has no substantial operations or operating history. The Company is attempting to
create an independent Internet entertainment network, magicinternetwork.com.
Within this network the Company will attempt to create a diverse array of select
entertainment nightclub links through cybars.com, a live Internet nightclub
membership syndication utilizing CyBarCam Internet cameras.
The Company's plan is to create and maintain websites which will contain
graphically rich interactive "Cybar-Streets" and "CybarClub's" in a virtual
entertainment network linking major cities throughout the country. Under the
Company's plan, these Cybar-Streets would contain numerous entertainment venues
in the form of Internet "CybarClub's." Once these sites are developed and in
operation, member patrons can literally go out "nightclubbing" from home
computer terminals linked to live camera feeds to their local clubs. The Company
will seek to develop CyBar Internet computer terminals in CyBarClub's in major
U.S. cities, thus creating direct interaction between members and patrons.
In addition, the Company currently has an option to purchase an interest in
Quantum Entertainment, Inc., a Florida Corporation, which owns certain
production rights to a motion picture project entitled "Liberty City" and a
subsequent music soundtrack album. Gordon Scott Venters, President and CEO of
the Company and a Director of the Company owns a 50% interest in Quantum
Entertainment, Inc.
Distribution Methods
The Company through its magicinternetwork.com division has recently installed
its first CyBarCam in the Ft. Lauderdale-based blues club "The Poorhouse" and is
currently negotiating agreements for additional installations in clubs in the
downtown Ft. Lauderdale area. Robert P. Pignone, a Director of the Company is
the owner of "The Poorhouse." The Company will continue its efforts to negotiate
other links with other existing clubs nationwide for the planned future
independent "Magicinternetwork"website.
The Company is presently negotiating to obtain facilities where it can locate
its own Cybar which the Company plans to have serve as the home Cybar location
and live Internet corporate broadcast facility for its planned Cybar Network.
Each CyBar location will be linked to other CyBar locations via
magicinternetwork.com. Members will be able to interact with patrons and other
CyBar members while visiting the nightclub location of their choice from the
comfort of home. Members and patrons at a CyBar location will also be able to
interact with each other at other club locations or the same club via the club's
Internet computer terminals.
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Chat rooms, games, contests, promotions, and if desired, a private one-on-one
live video interaction via CyBarCam would all contribute to the unique club
experience. In addition, CyBarCam plans to provide added security for both
patrons and nightclub establishments.
Magicinternetwork.com intends to record, store and own all of the content
transmitted via the Cybar network for future broadcasts and licensing, as well
as providing for the Company's own network content and programming.
New Products
The Company is attempting to establish an Internet network utilizing live
CybarCam Internet broadcasts via CybarCams which will be located in the
Company's proposed CyBar franchise club locations. The Company will seek to
generate income from its entertainment network by charging monthly membership
fees to its cybars.com patrons. Patrons of the CyBar Network will be charged a
monthly membership fee of $9.95 with a three-month minimum membership period.
The Company has entered into an agreement to purchase Quantum Entertainment,
Inc. the owner of the majority rights to a motion picture project entitled
"Liberty City" and any subsequent music soundtrack album. Gordon Scott Venters,
President and CEO of the Company and a Director of the Company, owns a 50%
interest in Quantum Entertainment, Inc. If the option is exercised, the
Company's plan would be to integrate film and the Internet via its website. The
Company has plans to create a unique "brand of entertainment" encompassing all
areas of the independent entertainment industry.
Competition
The Internet industry is intensely competitive and there are many
well-established competitors such as Launch.com and MP3. These and other
competitors have substantially greater financial and other resources than the
Company. These companies may be better established in the entertainment
marketplace. Changes in consumer tastes, national, regional or local economic
conditions and demographic trends often affect the entertainment business. The
Company believes, however, that it is in a position to use its business plan to
develop intellectual properties with a long term residual value. There can be no
assurances, however, that the Company will be able to attain its business
strategy or to be profitable.
The market for online entertainment and entertainment products is new, rapidly
evolving and intensely competitive, and the Company expects competition to
intensify in the future. Barriers to entry are relatively low, and current and
new competitors can launch new sites at a relatively low cost using commercially
available software.
The Internet and production/distribution of online entertainment are highly
competitive businesses. In the production phase, competition affects the
Company's ability to obtain the services of preferred performers and other
creative and/or technical personnel. The Company competes with a number of
websites and Internet service providers who have substantially greater
resources, larger and more experienced production and distribution staffs and
established histories of successful production of Internet sites.
The Company also potentially faces competition from a number of large online
communities and services that have expertise in developing online commerce and
in facilitating online person-to-person interaction. Some of these potential
competitors are Amazon.com, AOL, and Microsoft Corporation. Other large
companies with strong brand recognition and experience in online commerce also
may seek to compete in the online
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entertainment delivery market.
Regulatory Overview
The Company is subject to the same federal, state and local laws as other
companies conducting business on the Internet. Today there are relatively few
laws specifically directed toward online services. However, due to the
increasing popularity and use of the Internet and online services, it is
possible that laws and regulations will be adopted with respect to the Internet
or online services. These laws and regulations could cover issues such as online
contracts, user privacy, freedom of expression, pricing, fraud, content and
quality of products and services, taxation, advertising, intellectual property
rights and information security. Applicability to the Internet of existing laws
governing issues such as property ownership, copyrights and other intellectual
property issues, taxation, libel, obscenity and personal privacy is uncertain.
Changes to existing laws or the passage of new laws intended to address Internet
issues could directly affect the way the Company does business or could create
uncertainty in the marketplace. This could reduce demand for the services of the
Company or increase the cost of doing business as a result of litigation costs
or increased service delivery costs, or could otherwise harm the Company's
business. In addition, because the Company's services are accessible worldwide,
and the Company facilitates sales of goods to users worldwide, foreign
jurisdictions may claim that the Company is required to comply with their laws.
In some jurisdictions, the Company may be required to collect value-added or
other taxes on its fees. The Company's failure to comply with foreign laws could
subject it to penalties ranging from fines to bans on its ability to offer its
services.
Reports to Security Holders
The Company's annual report will contain audited financial statements. The
Company is not required to deliver an annual report to security holders and will
not voluntarily deliver a copy of the annual report to the security holders. The
Company intends to, from this date forward, file all of its required information
with the Securities and Exchange Commission ("SEC"). Prior to this form being
filed there were not other forms filed. The Company plans to file its 10KSB,
10QSB, and all other forms that may be or become applicable to the Company with
the SEC.
The public may read and copy any materials that are filed by the Company with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington,
D.C. 20549. The Public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The statements and forms
filed by the Company with the SEC have also been filed electronically and are
available for viewing or copy on the SEC maintained Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC. The Internet address for this
site can be found at http://www.sec.gov. Additional information can be found
concerning the Company on the Internet at http://www.magicinc.com.
Employees
The Company currently has three full time employees in management and two part
time employees. The Company typically enters into independent contractor
agreements or work for hire agreements with individuals to provide professional
services on an as needed basis.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
The Company is a developmental stage Internet entertainment company with plans
to engage in distribution, promotion and production of varied forms of
entertainment via the Internet. The Company's current major focus is the
development of its Internet entertainment business. . The Company owns two
"registered domain names" on the Internet. These are (i)Magicinternetwork.com. ,
Which the Company proposes to use as its own Internet Service Provider (ISP) for
its CyBars network, and (ii) Cybars.com within which the Company intends to
create an Internet link of entertainment venues to Magicinternetwork.com for
Internet broadcast and ownership content by the Company.
RESULTS OF OPERATIONS
The following discussion and analysis provides information that the Company's
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial condition. The discussion should
be read in conjunction with the financial statements and footnotes that appear
elsewhere in this report. In 1999, the Company changed its year end from a
calendar year to a fiscal year ending October 31. The analysis herein compares
the calendar year ending December 31, 1998 with the fiscal year ending October
31, 1999.
Years ended December 31, 1998 and October 31, 1999.
Sales. Net sales for the year ended October 31, 1999 increased to $46,240
from $7,220 for the year ended December 31, 1998, an increase of 640%. The
increase in revenues was attributable, in part, to the licensing of distribution
rights in perpetuity to three feature films which were owned by the Company for
the sum of $48,750. This was a one time payment for distribution rights to the
films. The Company has no further rights to use or market these films.
Losses. Net losses before taxes and an extraordinary gain realized as a
result of debt restructuring for the year ended October 31, 1999 decreased to
$115,399 from $242,520 for the year ended December 31, 1998, a decrease of 53%.
As a result of the debt restructuring efforts during fiscal 1999, the Company
realized an extraordinary gain of $259,500. This gain on debt restructuring
resulted in a net income to the Company of $144,101 for the fiscal year ending
October 31, 1999. The substantial decrease in losses was primarily from the
reduction of expenses due to arrangements and agreements signifying the final
stages of the Company's restructuring and settlement agreements of the Company's
major creditors.
The Company hopes to break even or to operate at a slight profit during the
next fiscal year as a result of the intended launching of its
Magicinternetwork.com entertainment network. There can be no assurance that the
Company will achieve or maintain profitability or that revenues will be
generated or that growth can be sustained in the future.
Expenses. Selling, general and administrative expenses for the fiscal year
ended October 31, 1999, decreased to $161,639 from $238,237 for the year ended
December 31, 1998, a decrease of 33%. The decrease in selling general and
administrative expenses was the result of the change to a fiscal year and the
resultant statement covering only a ten-month period, and primarily from the
reduction of expenses due to arrangements and agreements with the Company's
major creditors coupled with a significant reduction in legal, accounting and
administrative costs which were incurred in arranging the settlement agreements.
Depreciation and amortization expenses for the years ended October 31, 1999
and December 31, 1998 were negligible, being $234 and $147, respectively.
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Cost of Sales. Cost of sales for the years ending October 31, 1999 and
December 31, 1998 were $0.00 for each year.
Impact of Inflation. The Company believes that inflation has had a
negligible effect on operations over the past three years. The Company believes
that it can offset inflationary increases in its costs and labor expenses by
increasing sales and improving operating efficiencies.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated no significant cash flow from general operations during
the years ended October 31, 1999 and December 31, 1998 respectively. Cash flow
generated from financing activities for the years ending October 31, 1999 and
December 31, 1998 were $57,104 and $133,875, respectively.
The Company has funded its cash needs over the past two years through the
issuance of its common stock for cash. The Company intends to cover its cash
needs over the next twelve months through the sale of additional shares of its
common stock pursuant to a registration statement or an appropriate exemption
from registration. In order to support existing and proposed operations, bank,
private and/or equity financing will be necessary. However, there is no
guarantee that the Company will be able to raise additional funds from borrowing
or the sale of its securities.
Debt Settlement
During 1999, the Company was able to settle $547,205.35 in debt for total cash
payments of $100,000 and issuance of 175,000 shares of the common stock of the
Company. (See "Description of Properties").
Capital expenditures
The Company made no significant capital expenditures on property or equipment
over the periods covered by this report. The only planned capital expenditure is
further website development. The Company has budgeted $150,000 for this
development and the Company intends to contract for the completion of this work
at such time as funds are available to do so.
Income Tax Expense (Benefit)
The Company has no income tax benefit(s) resulting from net operating losses to
offset operating profit.
Going Concern
The Company has had no sales and has suffered recurring losses from operations
which raises substantial doubt about its ability to continue as a going concern.
Management's plan in regards to these matters is to seek further equity funding
to allow the Company to grow its fledgling Internet entertainment network,
Magicinternetwork.com. However, in order to support ongoing operations for the
next twelve-month period, additional financing must be obtained either through
sale of equity, management contributions, or borrowing.
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ITEM 3. PROPERTY
The Company currently rents approximately 2,100 square feet of office space in
Ft. Lauderdale, Florida, which houses its executive and administrative offices.
The properties are rented on a month to month basis at $1000.00 per month. In
December of 1999, the Company began verbal negotiations for the purpose of
upgrading its current facilities from a 2100 sq. ft. corporate office to an
8,500 sq. ft. studio facility complete with a club facility with a Beer and Wine
liquor license, located in the heart of Ft. Lauderdale, Florida. If the
negotiations result in the Company obtaining the additional space, the Company
is considering a plan to also build a recording studio and a videotape facility
at the new location. The Company has made a verbal offer to purchase the
building for $475,000.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information concerning the ownership of
the Company's Common Stock as of March 1, 2000, with respect to: (i) each person
known to the Company to be the beneficial owner of more than 5 percent of the
Company's Common Stock, (ii) all directors; and (iii) directors and executive
officers of the Company as a group. The notes accompanying the information in
the table below are necessary for a complete understanding of the figures
provided below. As of March 1, 2000, there were 5,704,415 post 1 for 40 reverse
split shares of outstanding common stock.
<TABLE>
<CAPTION>
Title of Class Name and Address of Beneficial Amount and Nature Percent of Class
Owner of Beneficial
Ownership
<S> <C> <C> <C>
Common Stock Par Gordon Scott Venters 825,000 14.4%
Value $0.0001 2100 S. Ocean Dr. #8CD
Ft. Lauderdale, Fl 33316
Common Stock Par John M. Venters 123,009 2.1%
Value $0.0001 2100 S. Ocean Dr. #8CD
Ft. Lauderdale, Fl 33316
Common Stock Par Todd Nugent 90,000 1.5%
Value $0.0001 1291 Claret St.
Ft. Meyers, Fl 33919
Common Stock Par John J. Kearney 100,000 1.7%
Value $0.0001 2611 E. 14th St.
Ft. Lauderdale, Fl 33304
Common Stock Par Robert P. Pignone 100,000 1.7%
Value $0.0001 1316 N.E. Fourth St.
Ft. Lauderdale, Fl 33301
Common Stock Par Robert M. Ingria 100,000 1.7%
Value $0.0001 310 174th St #2419
Sunny Isles Beach, Fl 33160
Common Stock Par Elizabeth L. Rogers 435,000 7.6%
Value $0.0001 119 N.W. 21st Court
Ft. Manors, Fl 33311
Common Stock Par Directors and Officers as a Group 1,363,009 23.8%
Value $0.0001 (6 individuals)
</TABLE>
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Changes in Control. There are currently no arrangements in place that will
result in a change in control of the Company.
ITEM 5. DIRECTORS, OFFICERS, PROMOTERS, AND CONTROL PERSONS
The directors, executive officers, control persons, and significant employees of
the Company, their respective ages, and positions with the Company are as
follows:
Name Age Positions
Gordon Scott Venters 38 Director, CEO, President, Secretary
John M. Venters 74 Treasurer
Todd Nugent 39 Director
John J. Kearney 62 Director
Robert P. Pignone 40 Director
Robert M. Ingria 46 Director
Gordon Scott Venters, 38, served as the Company's President, Chief Executive
Officer and a Director from March 15, 1994 to May 19, 1995 and from December 9,
1996 to the present. His term of office as a director is to serve until the next
regularly scheduled shareholder's meeting, or until his successor is elected and
qualified. From May 19, 1996 until December 9, 1996 he served as President of
Quantum Entertainment Company in Los Angeles, California. From 1990 to 1993, Mr.
Venters served as the President and CEO of Flash Entertainment, Inc. an
independent feature film company, the predecessor of the Company during which
time he was the Executive Producer of the feature film "No More Dirty Deals" and
for five music videos. Mr. Venters has also served as the President and a
Director of Quantum Entertainment, Inc. Since March 22, 1996. From 1989 to 1990,
Mr. Venters was the Executive Producer of two full-length feature length
"Shakma" and "Shoot. Mr. Venters has also been a financial advisor and a
registered stockbroker with F.D. Roberts Securities (1987-1989) and with
Prudential-Bache Securities, Inc. Mr. Venters is the son of John MacKenzie
Venters who serves as the Company's Treasurer.
John MacKenzie Venters, 74, has served as Treasurer for the Company since
December 1996. Mr. Venters has been a licensed General Contractor, Architect and
Instructor of Design since 1950 and has taught at the Art Institute of Fort
Lauderdale since 1978. Mr. Gordon Scott Venters is the son of John
MacKenzieVenters. Mr. Venters was elected to serve as Treasurer until such time
as he resigns or a replacement is elected.
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Robert Michael Ingria, 46, was elected a Director of the Company in December of
1999, to serve until his successor is duly elected and qualified. Since February
1995 he has worked as a producer with RMI Entertainment Company, a film
production company located in Sunny Isles, Florida. From October 1997 to August
1998 he served as president of Ocean Drive Entertainment Company in Miami,
Florida. From December 1997 to December 1998, he served as president of
Millennium Telemedia, Inc. of Miami, Florida. He is a native of Miami, Florida
who has graduated from the Fine Arts Program in Motion Pictures and Art from
Florida State University with honors. For over 20 years, Mr. Ingria has been
involved with the entertainment and motion picture industry and been a member of
the Florida Motion Picture and Television Association. He has built, and
operated Quadradial Recording Studios, Video Production Facilities and Motion
Picture facilities in South Florida for fifteen years. He has written, produced
and directed all forms of film and video projects including 3 motion pictures,
over 30 music videos, infomercials for multi-million dollar grossing direct
response programs, corporate videos and television commercials.
John J. Kearney, 62, was elected a Director of the Company in June 1999 to serve
until his successor is duly elected and qualified. Mr. Kearney has been involved
for many years in the Florida entertainment industry. From 1989 to1999, Mr.
Kearney was the owner of the "Squeeze" nightclub in Ft. Lauderdale, Florida.
From 1979 to 1984 he was the owner of Rosebuds, a nightclub in Ft. Lauderdale,
Florida, and from 1977 to1983 he was the owner of the Candy Store nightclub on
Ft. Lauderdale Beach.
Robert P. Pignone 40, has served as a Director of the Company since June 1999.
He is elected to serve until his successor is duly elected and qualified. Mr.
Pignone has been the owner of the "Poorhouse" a successful blues nightclub owner
in downtown Ft. Lauderdale, Florida since 1995. From 1991 to 1995 he was the
owner of Tavern 213 in Ft. Lauderdale, Florida.
Todd Waddell Nugent, 39, has served as a Director of the Company since 1996 and
will serve until his successor is duly elected and qualified. He has served as
the Company's Chief Executive Officer from July 17, 1996 to December 9, 1996 and
a Director and the President of the Company's Entertainment Film Partners
division since December 9, 1996. From June 1995 to March 1996, Mr. Nugent served
as the Chief Executive Officer of Stradigi, Inc., a telecommunications group.
Mr. Nugent was a co-founder of Multi-Channel Video Programming, Inc., a DBS
system, where he served as its Chief Executive Officer from February 1994 to
March 1995. From 1986 to February 1993, Mr. Nugent was a broker with Royal
Alliance and Associates, Inc., a registered broker/dealer.
ITEM 6. EXECUTIVE COMPENSATION
Compensation of Executives
The following table provides summary information for the years 1999, 1998 and
1997 concerning cash and non-cash compensation paid or accrued by the Company to
or on behalf of the president and Chief Executive Officer. Except as indicated
below, no officer or employee of the Company received a total salary and bonus
exceeding $100,000 during the periods reflected.
10
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<TABLE>
<CAPTION>
Summary Compensation Table
Name Period Salary Bonus
and ($) ($) Other Annual Restricted Stock Options All Other LTIP
Principal Compensation Awards SARs Payouts Compensation
Position ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gordon 1997 40,000 -0- -0- 500,000 -0- 500,000 -0-
Scott shares shares
Venters
1998 40,000 200,000
shares
1999 40,000 125,000
shares
</TABLE>
Employment Agreements
Gordon Scott Venters. Effective October 1, 1997, the Company entered into a
three year Employment Agreement with Gordon Scott Venters, the Company's
President and CEO, whereby Mr. Venters receives a salary of $75,000 for the
first year ("First Year Salary"), $100,000 for the second year, and $133,000 for
the third year. Mr. Vetters was paid only $40,000 per year in each of the years
1997, 1998, and 1999. The balance of the salary due to Mr. Venters under the
terms of his employment contract are accrued to date, but not paid. Mr. Venters
is also entitled to receive two weeks paid vacation for the first year and four
weeks paid vacation for the following two years. In the event of Mr. Venters'
disability for a period of more than two weeks, Mr. Venters will receive 50% of
his compensation for a period of up to three months.
John MacKenzie Venters Effective June 15, 1999 the Company entered into a one
year employment agreement with John MacKenzie Venters. John MacKenzie Venters
will be Treasurer of the Company and devote part time to the books, record
keeping, issuance of checks and other financial controls of the Company. Mr.
Venters will receive fifty thousand (50,000) shares of the Company's common
shares pursuant to the said contract.
Robert Michael Ingria Effective June 15, 1999 the Company entered into a one
year employment agreement with Robert Michael Ingria. Robert Michael Ingria will
serve jointly with Gordon Scott Venters as president of Magicinternetwork.com
and MagicStudios and will devote full time to the management and development of
productions. Mr. Ingria will receive seventy five thousand (75,000) shares of
the Company's common shares pursuant to the contract. In addition, Mr. Ingria
will serve as a Director of the Company and will receive twenty five thousand
(25,000) additional shares per year for his service as a Director.
John J. Kearney. Effective June 15, 1999 the Company entered into a one year
employment agreement with John J. Kearney. Mr. Kearney will serve jointly with
Robert P. Pignone as president of the Company's MagicMusic Label Division and
devote full time to the management and development of the MagicMusic Label. Mr.
Kearney will receive seventy five thousand (75,000) shares of the Company's
common shares pursuant to the employment agreement. In addition, Mr. Kearney
will serve as a Director of the Company and will receive twenty five thousand
(25,000) additional shares annually for service as a Director of the Company.
Robert P. Pignone. Effective June 15, 1999 the Company entered into a one year
employment agreement with Robert P. Pignone. Mr. Pignone will serve jointly with
John J. Kearney as president of the Company's MagicMusic Label Division and
devote full time to the management and development of the MagicMusic Label. Mr.
Pignone will receive seventy five thousand (75,000) Shares of the Company's
common shares pursuant to the agreement. In addition, Mr. Pignone will serve as
a Director on the Board of Directors of the Company and receive twenty five
thousand shares (25,000) of additional shares per year for such service.
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Compensation of Directors
All members of the Company's Board of Directors will receive, on an annual
basis, 25,000 shares of common stock of the Company as payment for their service
on the Company's Board of Directors.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 28, 1999, and amended on June 15, 1999 the Company entered into an
agreement with Quantum Entertainment, Inc. ("Quantum"), a Florida corporation,
to acquire all of the outstanding shares of Quantum in exchange for certain
rights and payment of $50,000 and 50,000 shares of the Company's common
restricted stock. Quantum owns 100% of the exclusive worldwide distribution
rights to the feature film project "Liberty City". Quantum owns 70% of the gross
proceeds after print, advertising and distribution costs up to the first $5
million. It will receive 60% of the gross proceeds up to $7.5 million and then
50% till perpetuity. Gordon Scott Venters is the President and CEO as well as a
majority shareholder of Quantum Entertainment, Inc.
ITEM 8. DESCRIPTION OF SECURITIES
Common Stock. The Company is presently authorized to issue 50,000,000 shares of
$0.0001 par value common stock. The Company presently has 5,704,415 shares
issued and outstanding. Holders of shares of Common Stock are entitled to share,
on a ratable basis, such dividends as may be declared by the Board of Directors
out of funds legally available therefor. Upon liquidation, dissolution or
winding up of the Company, after payment to creditors and holders of any
outstanding shares of preferred stock, if applicable, the assets of the Company
will be divided pro rata on a per share basis among the holders of the Common
Stock.
The holders of Common Stock are entitled to one vote per share for the election
of directors and with respect to all other matters submitted to a vote of
shareholders. Shares of Common Stock do not have cumulative voting rights, which
means that the holders of more than 50% of such shares voting for the election
of directors can elect 100% of the directors if they choose to do so and, in
such event, the holders of the remaining shares so voting will not be able to
elect any directors.
Upon any liquidation, dissolution or winding-up of the Company, the assets of
the Company, after the payment of the Company's debts and liabilities and any
liquidation preferences of, and unpaid dividends on, any class of preferred
stock then outstanding, will be distributed pro-rata to the holders of the
Common Stock. The holders of the Common Stock do not have preemptive or
conversion rights to subscribe for any securities of the Company and have no
right to require the Company to redeem or purchase their shares. The holders of
Common Stock are entitled to share equally in dividends if, as and when declared
by the Board of Directors of the Company, out of funds legally available
therefor, subject to the priorities accorded any class of preferred stock which
may be issued. A consolidation or merger of the Company, or a sale, transfer or
lease of all or substantially all of the assets of the Company, which does not
involve distribution by the Company of cash or other property to the holders of
Common Stock, will not be deemed to be a liquidation, dissolution or winding up
of the Company.
Preferred Stock. There are no shares of preferred stock authorized, as of the
date hereof.
12
<PAGE>
Transfer Agent. The Company's Transfer and Warrant Agent is Continental Stock
Transfer & Trust Company, Two Broadway, New York, New York 10004.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND OTHER SHAREHOLDER MATTERS
Price Range of Common Stock
The Company's Common Stock was traded on the OTC Bulletin Board under the symbol
"MAGC" from 1961 until it was delisted on January 19, 2000. Upon this filing
becoming effective with the Securities and Exchange Commission, the Company will
attempt to become re-listed as a fully reporting (OTC:BB) public company. The
following table sets forth the high and low bid quotations for the Company's
common stock for the periods listed. These quotations reflect prices between
dealers; they do not include retail markups, markdowns, and commissions and may
not necessarily represent actual transactions.
Year Quarter Ending High Low
1997 March 31 $0.25 $0.25
June 30 $0.50 $0.25
September 30 $1.75 $0.50
December 31 $0.50 $0.25
1998 March 31 $1.00 $0.25
June 30 $0.00 $0.00
September 30 $0.02 $0.02
December 31 $0.02 $0.02
1999 March 31 $0.00 $0.00
June 30 $0.87 $0.43
September 30 $0.75 $0.16
December 31 $0.53 $0.07
March 1, 2000, there were 471 shareholders of record of the common stock of the
Company The holders of the Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. Holders of
the Common Stock have no preemptive rights and no right to convert their Common
Stock into any other securities. There are no redemption or sinking fund
provisions applicable to the Common Stock.
13
<PAGE>
Dividends. The Company has not declared any cash dividends since inception and
does not anticipate paying any dividends in the foreseeable future. The payment
of dividends is within the discretion of the Board of Directors and will depend
on the Company's earnings, capital requirements, financial condition, and other
relevant factors. There are no restrictions that currently limit the Company's
ability to pay dividends on its Common Stock other than those generally imposed
by applicable state law.
ITEM 2. LEGAL PROCEEDINGS
On June 27, 1996, a judgment was entered against the Company in favor of Adolph
Malinek Ges. M.B.H., an Austrian Corporation, in the 15th Circuit Court, Palm
Beach, Florida, Case No. CL94-6263AJ in the amount of $247,205.35; A
Satisfaction of Judgment, Case # CL94-6263AJ for the judgment amount of
$247,205.35, was received by the company on December 7, 1999 and has been
entered in the 15th Circuit Court in Palm Beach, Florida. (See "Recent Sales of
Unregistered Securities").
The Company is currently not a party to any other legal proceedings, as a
plaintiff or defendant.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company has had no changes in or disagreements with its accountants in its
two most recent fiscal or any later interim period.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The following is a list of all securities sold by the Company within the last
three years including, where applicable, the identity of the person who
purchased the securities, title of the securities, and the date sold are
outlined below. All shares are adjusted to reflect a 1 for 40 reverse split
effected on February 17, 1999. On July 21, 1997, the company issued a total of
353,000 shares of its common stock at $0.20 to $0.25 per share to the following
individuals for cash pursuant to section 4(2) of the Securities Act of 1933 in
an isolated private transaction by the Company which did not involve a public
offering. The Company made this offering based on the following factors: (1) The
issuance was an isolated private transaction by the Company which did not
involve a public offering; (2) there were only 13 offerrees who were issued
stock for cash; (3) the offerees did not resell the stock but continued to hold
it for at least two years; (4) there were no subsequent or contemporaneous
public offerings of the stock; (5) the stock was not broken down into smaller
denominations; and (6) the negotiations for the sale of the stock took place
directly between the offerees and the Company.
Name Price Number of Shares
Dr. H. K. Terry $0.20 125,000
$0.25 30,000
Mary Law $0.25 15,000
George Price $0.25 20,000
Jay Schenck $0.25 50,000
Ron Perranonski $0.25 20,000
Elliot Butts $0.25 10,000
Larry Wright $0.25 10,000
Fred Roberts $0.25 15,000
Russell Wright $0.25 30,000
Bill Kenthan $0.25 4,000
Ted Mozino $0.25 10,000
John Bardette $0.25 4,000
Jane Adams $0.25 10,000
14
<PAGE>
On August 4, 1997, the company issued a total of 438,860 shares of its common
stock at $0.0001 per share to the following individuals for services rendered to
the Company pursuant to section 4(2) of the Securities Act of 1933 in an
isolated private transaction by the Company which did not involve a public
offering. The Company made this offering based on the following factors: (1) The
issuance was an isolated private transaction by the Company which did not
involve a public offering; (2) there were only nine offerrees who were issued
stock for services rendered to the Company; (3) the offerees did not resell the
stock but continued to hold it for at least two years; (4) there were no
subsequent or contemporaneous public offerings of the stock; (5) the stock was
not broken down into smaller denominations; and (6) the negotiations for the
sale of the stock took place directly between the offerees and the Company.
Name Number of Shares Type of Service
David Charlip 50,000 Legal
Brett Burnstein 26,360 Film Distribution
Chicky McDaniels 20,000 Consulting
Robert Venters 50,000 Guarantee of Promissory Note
Richard Greene 25,000 Legal
Scott Venters 175,000 Officer and Director
Elizabeth Rogers 25,000 Officer and Director
Todd Nugett 25,000 Officer and Director
John Venters 42,500 Officer and Director
15
<PAGE>
On September 18, 1997, the Company issued 16,524 shares of common stock to Dr.
H.K. Terry at $0.0001 as compensation for Dr. Terry's personal guarantee of a
loan made to the Company. The shares were issued pursuant to section 4(2) of the
Securities Act of 1933 in an isolated private transaction by the Company which
did not involve a public offering. The Company made this offering based on the
following factors: (1) The issuance was an isolated private transaction by the
Company which did not involve a public offering; (2) there was only one offerree
who was issued stock for his personal guarantee of a loan made to the Company;
(3) the offeree did not resell the stock but has continued to hold it for over
two years; (4) there were no subsequent or contemporaneous public offerings of
the stock; (5) the stock was not broken down into smaller denominations; and (6)
the negotiations for the sale of the stock took place directly between the
offeree and the Company.
On November 11, 1997, the Company issued 2,000 shares of common stock to Scott
Lawrence at $0.0001 per share as compensation for services involved in the
repair of company equipment. The Company also issued 20,000 shares of common
stock at $0.25 per share to George Price and 100,000 shares of common stock at
$0.25 per share to Jay Schenck for cash. These shares were issued pursuant to
section 4(2) of the Securities Act of 1933 in an isolated private transaction by
the Company which did not involve a public offering. The Company made this
offering based on the following factors: (1) The issuance was an isolated
private transaction by the Company which did not involve a public offering; (2)
there were only three offerrees who were issued stock for cash or services; (3)
the offerees did not resell the stock but have continued to hold it for over two
years; (4) there were no subsequent or contemporaneous public offerings of the
stock; (5) the stock was not broken down into smaller denominations; and (6) the
negotiations for the sale of the stock took place directly between the offerees
and the Company.
On April 2, 1998, the Company issued 1,875 shares of common stock to Dr. H.K.
Terry at $0.0001 per share as compensation for granting an extension on a
promissory note; 7,500 shares of common stock at $0.0001 to Michael Hyde for
legal services; and 100,000 shares of common stock at $0.0001 to Adolph Malinek
Gesselshaft, an Austrian Corporation in settlement of a Judgment. The shares
were issued pursuant to section 4(2) of the Securities Act of 1933 in an
isolated private transaction by the Company which did not involve a public
offering. The Company made this offering based on the following factors: (1) The
issuance was an isolated private transaction by the Company which did not
involve a public offering; (2) there were only three offerrees who were issued
stock for debt adjustment, guarantee of a loan made to the Company or services
to the company; (3) the offerees did not resell the stock but have continued to
hold it for over twenty two months; (4) there were no subsequent or
contemporaneous public offerings of the stock; (5) the stock was not broken down
into smaller denominations; and (6) the negotiations for the sale of the stock
took place directly between the offerees and the Company.
On May 4, 1998, the Company issued 25,000 shares of common stock at $0.0001 per
share to Todd Nugent; 25,000 shares of common stock at $0.0001 per share to John
M. Venters;325,000 shares of common stock at $0.0001 per share to Elizabeth
Rogers; and 525,000 shares of common stock at $0.0001 per share to Gordon Scott
Venters for services rendered as officers and directors of the Company. The
shares were issued pursuant to section 4(2) of the Securities Act of 1933 in an
isolated private transaction by the Company which did not involve a public
offering. The Company made this offering based on the following factors: (1) The
issuance was an isolated private transaction by the Company which did not
involve a public offering; (2) there were only four offerrees who was issued
stock for personal services to the Company as Officers and Directors; (3) the
offerees did not resell the stock but have continued to hold it for over twenty
one months; (4) there were no subsequent or contemporaneous public offerings of
the stock; (5) the stock was not broken down into smaller denominations; and (6)
the negotiations for the sale of the stock took place directly between the
offerees and the Company.
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<PAGE>
On May 7, 1998, the Company issued 5,000 shares of common stock at $0.0001 per
share to Ted Kieta for granting an option for rights to a screenplay. These
shares were issued pursuant to the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. The shares were issued pursuant to
section 4(2) of the Securities Act of 1933 in an isolated private transaction by
the Company which did not involve a public offering. The Company made this
offering based on the following factors: (1) The issuance was an isolated
private transaction by the Company which did not involve a public offering; (2)
there was only one offerree who was issued stock for his personal guarantee of a
loan made to the Company; (3) the offeree did not resell the stock but has
continued to hold it for over twenty one months; (4) there were no subsequent or
contemporaneous public offerings of the stock; (5) the stock was not broken down
into smaller denominations; and (6) the negotiations for the sale of the stock
took place directly between the offeree and the Company.
In April and May of 1998, the company issued a total of 85,500 shares of its
common stock at $0.25 to $0.50 per share to the following individuals for cash
pursuant to section 4(2) of the Securities Act of 1933 in an isolated private
transaction by the Company which did not involve a public offering. The Company
made this offering based on the following factors: (1) The issuance was an
isolated private transaction by the Company which did not involve a public
offering; (2) there were only 12 offerrees who were issued stock for cash; (3)
the offerees did not resell the stock but have continued to hold it for over
twenty one months; (4) there were no subsequent or contemporaneous public
offerings of the stock; (5) the stock was not broken down into smaller
denominations; and (6) the negotiations for the sale of the stock took place
directly between the offerees and the Company.
Name Price Number of Shares
Christian Trefz $0.50 10,000
Larry Wright $0.25 8,000
Chris Hyde $0.25 12,000
J. Lloyd Woods $0.25 2,500
Ivy Kimmel $0.25 2,500
B.L. & Brenda Stalnaker $0.25 20,000
Cora Ebert Camaeron $0.25 2,500
Nina Flinn $0.25 2,500
Ilene Armour $0.25 2,500
Winjo Enterprises $0.25 5,000
David Petit $0.25 8,000
Paul Elgart $0.25 10,000
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<PAGE>
On November 30, 1998, the Company issued 2,000 shares of common stock at $0.0001
per share to AIBC Investment Corp.; and 38,000 shares of common stock at $0.0001
per share to William Burdette for settlement of a contract dispute. These shares
were issued pursuant to the exemption from registration provided by Section 4(2)
of the Securities Act of 1933.The shares were issued pursuant to section 4(2) of
the Securities Act of 1933 in an isolated private transaction by the Company
which did not involve a public offering. The Company made this offering based on
the following factors: (1) The issuance was an isolated private transaction by
the Company which did not involve a public offering; (2) there were only two
offerrees who was issued stock for settlement of a contract dispute with the
Company; (3) the offerees did not resell the stock but have continued to hold it
for over fifteen months; (4) there were no subsequent or contemporaneous public
offerings of the stock; (5) the stock was not broken down into smaller
denominations; and (6) the negotiations for the sale of the stock took place
directly between the offerees and the Company.
On December 23, 1998, the Company issued 11,000 shares of common stock at
$0.0001 per share to Michael Peters for settlement of a contract dispute. These
shares were issued pursuant to the exemption from registration provided by
Section 4(2) of the Securities Act of 1933.The shares were issued pursuant to
section 4(2) of the Securities Act of 1933 in an isolated private transaction by
the Company which did not involve a public offering. The Company made this
offering based on the following factors: (1) The issuance was an isolated
private transaction by the Company which did not involve a public offering; (2)
there was only one offerree who was issued stock for his personal guarantee of a
loan made to the Company; (3) the offeree did not resell the stock but has
continued to hold it for over two years; (4) there were no subsequent or
contemporaneous public offerings of the stock; (5) the stock was not broken down
into smaller denominations; and (6) the negotiations for the sale of the stock
took place directly between the offeree and the Company.
In November and December of 1998, the company issued a total of 140,000 shares
of its common stock at $0.50 per share to the following individuals for cash
pursuant to section 4(2) of the Securities Act of 1933 in an isolated private
transaction by the Company which did not involve a public offering. The Company
made this offering based on the following factors: (1) The issuance was an
isolated private transaction by the Company which did not involve a public
offering; (2) there were only eight offerrees who were issued stock for cash;
(3) the offerees did not resell the stock but continued to hold it for over
fifteen months; (4) there were no subsequent or contemporaneous public offerings
of the stock; (5) the stock was not broken down into smaller denominations; and
(6) the negotiations for the sale of the stock took place directly between the
offerees and the Company.
Name Number of Shares
Douglas Newland 10,000
Jet Potato Seed 20,000
Paul Elgart 10,000
George Price 10,000
Chris Hyde 10,000
Dean Buescher 40,000
Imogene H. Redmon 10,000
Clayton Verboon Unlimited 30,000
18
<PAGE>
In January of 1999, the Company issued 50,000 shares of common stock at $0.50
per share to Orange Buick; 10,000 shares of common stock at $0.50 per share to
Christian Trefz and 20,000 shares of common stock at $0.50 per share to Case
Holding Corporation for cash pursuant to section 4(2) of the Securities Act of
1933 in an isolated private transaction by the Company which did not involve a
public offering. The Company made this offering based on the following factors:
(1) The issuance was an isolated private transaction by the Company which did
not involve a public offering; (2) there were only three offerees who were
issued stock for cash; (3) the offerees stated an intention not resell the stock
and have continued to hold it for over one year; (4) there were no subsequent or
contemporaneous public offerings of the stock; (5) the stock was not broken down
into smaller denominations; and (6) the negotiations for the sale of the stock
took place directly between the offerees and the Company.
On April 5, 1999, the Company issued a total of 500,000 shares of its common
stock pursuant to a Private Placement memorandum dated April 1, 1999 to the
individuals listed below. The Company issued the shares pursuant to Rule 504
under Regulation D of the Securities Act of 1933. The Company issued the shares
to investors who were given a Private Placement Memorandum and offered the
opportunity to inspect the books and records of the Company. The Company relied
on the following facts in determining that Rule 504 Regulation D was available:
(a) the Company was not subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act; (b) the Company was engaged in the production and
distribution of entertainment products was neither a development stage Company
with no specific business plan or purpose nor a Company whose plan was to merge
with an unidentified Company; (c) the aggregate offering price did not exceed
one million dollars ($1,000,000) and (d) the Company filed a Form D within 15
days of the first sale of the shares subject to the offering.
Name Price Number of Shares
Martin Rothstein $0.17 100,000
Milton Barbarosh $0.17 100,000
Peter Troiano $0.17 50,000
Steven Krause $0.17 50,000
$0.03 200,000
On June 24, 1999, the Company issued 40,000 shares of common stock at $0.0001
per share to Todd Nugent; 50,000 shares of common stock at $0.0001 per share to
John M. Venters;85,000 shares of common stock at $0.0001 per share to Elizabeth
Rogers; and 25,000 shares of common stock at $0.0001 per share to Gordon Scott
Venters for services rendered as officers and directors of the Company. These
shares were issued pursuant to the exemption from registration provided by
Section 4(2) of the Securities Act of 1933.The shares were issued pursuant to
section 4(2) of the Securities Act of 1933 in an isolated private transaction by
the Company which did not involve a public offering. The Company made this
offering based on the following factors: (1) The issuance was an isolated
private transaction by the Company which did not involve a public offering; (2)
there were only four offerrees who was issued stock for services as Officers and
Directors of the Company; (3) the offerees did not resell the stock but have
19
<PAGE>
continued to hold it since it was acquired, a period of over seven months; (4)
there were no subsequent or contemporaneous public offerings of the stock; (5)
the stock was not broken down into smaller denominations; and (6) the
negotiations for the sale of the stock took place directly between the offerees
and the Company.
On August 13, 1999, the Company issued 100,000 shares of common stock at $0.0001
per share to John J. Kearney; and 100,000 shares of common stock at $0.0001 per
share to Robert Pignone for services rendered as officers and directors and
employees of the Company. These shares were issued pursuant to the exemption
from registration provided by Section 4(2) of the Securities Act of 1933.The
shares were issued pursuant to section 4(2) of the Securities Act of 1933 in an
isolated private transaction by the Company which did not involve a public
offering. The Company made this offering based on the following factors: (1) The
issuance was an isolated private transaction by the Company which did not
involve a public offering; (2) there were only two offerrees who were issued
stock for services as Officers, Directors and Employees of the Company; (3) the
offerees did not resell the stock but have continued to hold it since it was
acquired, a period of over six months; (4) there were no subsequent or
contemporaneous public offerings of the stock; (5) the stock was not broken down
into smaller denominations; and (6) the negotiations for the sale of the stock
took place directly between the offerees and the Company.
On September 27, 1999, the Company issued 150,000 shares of common stock at
$0.0001 per share to A-Z Professional Consultants for consulting services
pursuant to a written consulting agreement. These shares were issued pursuant to
the exemption from registration provided by Section 4(2) of the Securities Act
of 1933.The shares were issued pursuant to section 4(2) of the Securities Act of
1933 in an isolated private transaction by the Company which did not involve a
public offering. The Company made this offering based on the following factors:
(1) The issuance was an isolated private transaction by the Company which did
not involve a public offering; (2) there was only one offered who was issued
stock for consulting services to the Company; (3) the offered did not resell the
stock but has continued to hold it since it was acquired, a period of five
months; (4) there were no subsequent or contemporaneous public offerings of the
stock; (5) the stock was not broken down into smaller denominations; and (6) the
negotiations for the sale of the stock took place directly between the offered
and the Company.
On November 1, 1999, the Company issued 60,000 shares of common stock at $0.0001
per share to Richard Suber for consulting services pursuant to a written
compensation plan. These shares were issued pursuant to Rule 701 under the
Securities Act of 1933.
On November 19, 1999 the Company issued 75,000 shares of common stock at $0.0001
per share to Dr. H.K. Terry in exchange for cancellation of debt owed to Dr.
Terry pursuant to a promissory note. These shares were issued pursuant to the
exemption from registration provided by Section 4(2) of the Securities Act of
1933. The shares were issued pursuant to section 4(2) of the Securities Act of
1933 in an isolated private transaction by the Company which did not involve a
public offering. The Company made this offering based on the following factors:
(1) The issuance was an isolated private transaction by the Company which did
not involve a public offering; (2) there was only one offered who was issued
stock for his cancellation of debt owed to him by the Company; (3) the offered
did not resell the stock but has continued to hold it since the date of
acquisition; (4) there were no subsequent or contemporaneous public offerings of
the stock; (5) the stock was not broken down into smaller denominations; and (6)
the negotiations for the sale of the stock took place directly between the
offered and the Company.
Magicinc.com currently has entered into a Series A Subordinated Convertible
Debenture up to $900,000.(US). The agreement was entered into October 20th, 1999
and approved by the Board of Directors of the Company. The agreement consists of
three Debenture instruments each not exceeding the principal face amount of
20
<PAGE>
$300,000.(US) with three Colorado Corporations, HLT. Holdings, L.L.C., M&B
Trading, L.L.C. and BVH Holdings, L.L.C.. The Debenture agreement allows for the
conversion of shares in the Company at 75% of the closing bid price for the
three trading days prior to conversion. In addition, the Company issued 250,000
shares of security stock currently held in escrow with council representing the
above mentioned companies. As of December 5, 1999, the Company, has currently
accepted a $150,000 Series A Subordinated Convertible Debenture from HLT.
Holdings, L.L.C. The accepted unconverted Debentures bear an interest rate of 5%
per annum. The Debentures were issued pursuant to section 4(2) of the Securities
Act of 1933 in an isolated private transaction by the Company which did not
involve a public offering.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Title 8 Section 145 of the Delaware Statutes provides for indemnification of a
corporation's officers and directors in certain situations where they might
otherwise personally incur liability, judgments, penalties, fines and expenses
in connection with a proceeding or lawsuit to which they might become parties
because of their position with the Company.
In accordance with the provisions referenced above, the Company shall indemnify
to the fullest extent permitted by its bylaws, and in the manner permissible
under the laws of the State of Delaware, any person made, or threatened to be
made, a party to an action or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that he is or was a
director or officer of the Company, or served any other enterprise as director,
officer or employee at the request of the Company. The Board of Directors, in
its discretion, shall have the power on behalf of the Company to indemnify any
person, other than a director or officer, made a party to any action, suit or
proceeding by reason of the fact that he/she is or was an employee of the
Company.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities ( other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceedings) is asserted by such
director, officer, or controlling person in connection with any securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issues.
.
[THIS SECTION INTENTIONALLY LEFT BLANK]
21
<PAGE>
PART F/S
The Company's financial statements for the fiscal year ended October 31, 1999
are attached hereto as F- 1 through F-__.
INDEX TO FINANCIAL STATEMENTS
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
<PAGE>
INDEX TO FIANCIAL STATEMENTS
PAGE
Independent Auditor's Report F-2
Balance Sheet F-3
Income Statement F-4
Statement of Cash Flows F-5
Statement of Changes in Stockholders' Equity F-6
Statement of Cash Flows F-7
Statement of Operations F-8
Notes to Financial Statements F-9
22
<PAGE>
Cronin & Company
Certified Public Accountants
1574 Eagle Nest Circle
Winter Springs, Florida 32708
Board of Directors and Shareholders
Magicinc.com
Ft. Lauderdale, Florida
We have audited the accompanying balance sheet of Magicinc.com as of October 31,
1999 and December 31, 1998 and the related statements of income, cash flows and
stockholders' equity for the ten months and year then ended. The financial
statements are the responsibility of the directors. Our responsibility Is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
except as described in the following paragraph. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures In
the financial statements. An audit also includes assessing the ;accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all
material respects, the financial position of Magicinc.com as of October 31, 1999
and December 31, 1998 and the results of its operations, its cash flows and
changes In stockholders' equity for the ten months and year then ended in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. The Company has Incurred operating losses of $
5,360,000 through October 31, 1999. As a result of these continued losses, the
Company has been unable to generate sufficient cash flow from its operating
activities to support current operations. The Company's ability to generate
sufficient future cash flows from its operating activities in order to sustain
future operations cannot be determined at this time. The Company has primarily
funded its operations through the sale of its common stock and proceeds of debt
borrowings. There can be no assurance that the Company will be able to do so In
the future, and if so, provide it with sufficient capital and on terms favorable
to the Company. These uncertainties raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements do not Include
any adjustments that might arise from the outcome of these uncertainties.
December 3, 1999
/s/ Crinion & Company
Crinion & Company
Certified Public Accountants
F-2
<PAGE>
<TABLE>
MAGICINC.COM
(formerly known as MAGIC FINGERS, INC.)
Balance Sheet
October 31, 1999 and December 31, 1998
<CAPTION>
ASSETS
Oct. 31, 1999 Dec. 31, 1998
<S> <C> <C>
Current Assets:
Cash & Cash Equivalents $ 20,515 $ 2,061
Receivables-Subscriptions on Convertible Debentures 150,000 0
------------- --------------
Total Current Assets 170,515 2,061
Property & Equipment-Net 351 586
Total Assets $ 170,866 $ 2,647
============= ==============
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable-Trade $ 24,370 $ 14,500
Accrued Officer's Salary Under Employment Agreement 186,111 100,000
Fully Paid But Unissued Common Stock 0 40,000
Liability to Issue Common Stock 5,250 0
------------ --------------
Total Current Liabilities 215,731 154,500
Long Term Debt-Other 250,804 372,837
Related Parties 21,908 34,000
Total Liabilities 488,443 561,337
Stockholders' Equity:
Common Stock 3,944,024 Shares Issued (317,577) 4,926,349
Deficit Accumulated During Development Stage Quasi 0 (5,485,349)
--------------- -------------
Reorganization October 31, 1999
Total Stockholders' Equity (Deficit) (317,577) (558,690)
Total Liabilities & Stockholders' Equity $ 170,866 $ 2,647
============== ============
</TABLE>
F-3
<PAGE>
<TABLE>
MAGICINC.COM
(formerly known as MAGIC FINGERS, INC.)
Income Statement
October 31, 1999 and December 31, 1998
<CAPTION>
Ten Months Fiscal Year
Ended Ended
Oct 31, 1999 Dec. 31, 1998
<S> <C> <C>
Net Sales $ 46,240 $ 7,220
Costs Applicable to Sales & Revenue 0 0
------------- ------------
Gross Profit 46,240 7,220
Selling, General & Administrative Expenses 161,639 238,237
Interest 0 11,503
------------- ------------
Net Income (Loss) Before Taxes & Extraordinary $ (115,399) (242,520)
Item
Extraordinary Item-Gain Realized Upon Debt 259,500 197,205
------------ ------------
Restructuring
Net Income (Loss) Before Taxes 144,101 (45,315)
Income Tax Expense (Benefit) 0 0
------------ ------------
Net Income (Loss) Per Share $ 0.05 $ (0.02)
============ ==========
Weighted Average Shares Outstanding 3,096,906 2,080,917
============ =========
</TABLE>
F-4
<PAGE>
<TABLE>
MAGICINC.COM
(formerly known as MAGIC FINGERS, INC.)
Statement of Cash Flows
October 31, 1999 and December 31, 1998
<CAPTION>
Ten Months Fiscal Year
Ended Ended
Oct 31, 1999 Dec. 31, 1998
<S> <C> <C>
Operating Activities:
Net Loss $ 144,101 $ (45,315)
Non-Cash Expenses Included in Net Income:
Depreciation & Amortization 234 147
Extraordinary Item ( 259,300) (197,205)
Adjustments to Reconcile Net Loss to Cash
Provide (Consumed) by Operating Activities :
Increase in Accounts Payable & Accruals 95,981 109,402
-------------- --------------
Cash Consumed by Operating Activities ( 19,184) (132,971)
Financing Activities:
Proceeds From the Issuance of Common Stock 57,104 133,875
(Payment) of Long Term Debt (7,270) 0
Proceeds of Long Term Debt 0 0
(Payment) of Long Term Debt-Related Parties (12,196) 0
Proceeds of Long Term Debt-Related Parties 0 0
-------------- --------------
Cash Generated by Financing Activities 37,638 133,875
Net Decrease in Cash 18,545 904
Cash & Cash Equivalent-Beginning 2,061 1,157
-------------- --------------
Cash & Cash Equivalent-Ending 20,515 $ 2,061
============== ==============
</TABLE>
F-5
<PAGE>
<TABLE>
MAGICINC. COM
( Formerly known as MAGIC FINGER, INC )
Statement of Change in Stockholders' Equity
October 31, 1999 and December 31, 1999
- ----------------------------------------------------------------------------------------------------
<CAPTION>
Common Stock
Paid-In Accumulated
Shares Capital Deficit
<S> <C> <C> <C>
Balance January, 1998 1,463,158 $ 4,832,381 $(5,439,724)
Shares Issued in Exchange for Cash 225,500 93,875
Shares Issued as Part of Debt 100,000
Settlement Agreements
Shares Issued for Services 465,366
Shares Issued Through Employment 500,000
Agreement
Net Loss December 31, 1998 (45,315)
------------- ---------------- ------------
Balance December 31, 1998 2,754,024 $ 4,926,256 $(5,485,039)
Stock Issued for Services 610,000 0
Shares Issued in Exchange for Cash 580,000 97,104
Reclassification of Paid in Capital Due (5,3403937) 5,340,937
to Quasi Reorganization
Net Income October 31, 1999 144,102
------------- ------------------- ------------
Balance October 31, 1999 3,944,024 $ (317,577) $ 0
============= =================== ============
</TABLE>
F-6
<PAGE>
<TABLE>
MAGICINC.COM
(formerly known as MAGIC FINGERS, INC.)
Statement of Cash Flows
October 31, 1999 and December 31, 1998
<CAPTION>
Oct 31,1999 Dec 31,1999 Oct 31,1998
10 Months 12 Months 10 Months
<S> <C> <C> <C>
Deficit During Development Stage 144,101 (45,315) (3,587)
Depreciation Expense 234 147 147
Stock Issued for Product & Services
Extraordinary Item (259,500) (197,205) (197,205)
A/P & accrued Expenses 95,981 109,402 109,402
---------- ---------- ----------
Cash Consumed by Operating Activities (19,184) (132,971) (91,243)
Issuance of Common Stock 57,104 133,875 82,875
Payment of Long Term Debt (7,270)
Proceeds of Long Term Borrowings
Repayment Made on Advances (12,196)
Advances From Related Parties
Cash Provided by Financing Activities 37,638 133,875 82,875
Advances to Related Parties
Repayment Received
Cash Consumed by Investing Activities 0 0 0
Change in Cash 18,454 904 (8,368)
Beginning Cash 2,061 1,157 1,157
----------- --------- ---------
Ending Cash 20,515 2,061 7,211
=========== ========= ==========
</TABLE>
F-7
<PAGE>
<TABLE>
MAGICINC.COM
(formerly known as MAGIC FINGERS, INC.)
Statement of Operations
October 31, 1999 and December 31, 1998
<CAPTION>
Oct. 31, 1999 Dec. 31, 1998 Oct 31, 1998
10 Months 12 Months 10 Months
<S> <C> <C> <C> <C>
Net Sales $ 46,240 $ 7,220 $ 7,220
Costs Applicable to Sales & Revenue 0 0 0
Gross Profit 46,240 7,220 7,220
100.0% 100.0% 100.0%
Selling, General & Administrative Expenses 161,639 238,237 196,509
Interest 0 11,503 11,503
------ ------ ------
(Loss) Before Other Income, Income Taxes & (115,399) (242,520) (200,792)
Extraordinary Item
Extraordinary Item-Gain Realized Upon Debt 259,500 197,205 197,205
------- ------- -------
Restructuring
(Loss) Before Income Taxes & Extraordinary Item 144,101 (45,315) (3,587)
Income Taxes 0 0 0
------------ ------------- ------------
Net Income (Loss) $ 144,101 $ (45,315) (5,439,724) $ (3,587)
=============== ================ ============
Basic Net Income (Loss) Per Share $ 0.0465 (0.0218) (0.0018)
Weighted Average Common Shares Outstanding 3,096,906 2,080,917 1,993,034
SFAS 123 compensation adjustment
Proforma Loss
Proforma Loss Per Share
Proforma Loss
Proforma Loss Per Share
Deferred tax asset:
Federal (51,444) 16,177 1,941,981 1,958,159
State (7,205) 2,2566 271,986 274,252
</TABLE>
F-8
<PAGE>
MAGICINC.COM
(formerly known as MAGIC FINGERS, INC.)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Years Ended December 31,1998 and October 31,1999
Change In Accounting Year
Beginning January 1, 1999, the Company changed it accounting reporting period
from a calendar year ending December 31 to a fiscal year ending October 31. The
financial statements, accordingly, present the results of operations, changes in
stockholders' equity and cash flows for the ten month transition period ended
October 31, 1099 and the twelve months ended December 31, 1998.
Quasi-Reorganization
As of October 31, 1999 the Company concluded its period of reorganization by
reaching a settlement agreement with all its significant creditors. The Company
has elected to state its October 31, 1999 balance sheet as a
"quasi-organization". These rules require the revaluation of all assets and
liabilities to their current values through a current charge to earnings and the
elimination of any deficit in retained earnings by charging paid-in-capital. The
Company will report future earnings as retained earnings from November 1, 1999
forward.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statement and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from the estimates.
Cash & Cash Equivalents
For financial statement presentation purposes, the Company considers those
short-term, highly liquid investments with original maturities of three months
or less to be cash or cash equivalents.
Property & Equipment
Property and equipment are recorded at cost. Depreciation is computed using the
straight line method over the estimated useful lives of the assets, generally 5
years. Expenditures for renewals and betterments are capitalized. Expenditures
for minor items, repairs and maintenance are charged to operations as incurred,
Gain or loss upon sale or retirement due to obsolescence is reflected in the
operating results in the period the event takes place.
Revenue Recognition
Sales are recognized when a product is delivered or shipped to the customer and
all material conditions relating to the sale have been substantially performed.
Film production costs are capitalized as film cost inventory and are amortized
using the individual film forecast computation method over the licensing period.
Stock Based Compensation
Stock based compensation is accounted for by using the intrinsic value based
method in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"). The Company has adopted
Statements of Financial Accounting Standards No. 123, "Accounting for Stock
Based Compensation", ("SFAS 123") which allows companies to either continue to
account for stock based compensation to employees under APB 25, or adopt a fair
value based method of accounting. The Company has elected to continue to account
for stock based compensation to employees under APB 25 but has made the
required SFAS 123 pro forma disclosures in accordance with SFAS 123.
F-9
<PAGE>
MAGICINC.COM
(formerly known as MAGIC FINGERS, INC.)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Years Ended December 31,1998 and October 31, 1999
Summary of Accounting Principles (Cont'd)
Fair Value of Financial Instrument!@
Statements of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial instruments," requires disclosure of fair value information
about financial Instruments. Fair value estimates discussed herein are based
upon certain market assumptions and pertinent information available to
management as of October 31, 1999. The respective carrying value of certain
on-balance sheet financial instruments approximated their fair values. These
financial instruments include cash and cash equivalents, marketable securities,
trade receivables, accounts payable and accrued expenses. Fair values were
assumed to approximate carrying values for these financial instruments since
they are short term in nature and their carrying amounts approximate fair values
or they are receivable or payable on demand. The fair value of the Company's
notes payable is estimated based upon the quoted market prices for the same or
similar issues or on the current rates offered to the Company for debt of the
same remaining maturities. The carrying value approximates the fair value of the
notes payable,
Earnings Per Common Share
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 128 "Earnings Per Share" ("SFAS 128'). SFAS 128 replaces the
previous "primary" and "fully diluted" earnings per share with "basic" and
"diluted" earnings per share. Unlike "primary" earnings per share that included
the dilutive effects of options, warrants and convertible securities, "basic"
earnings per share reflects the actual weighted average of shares issued and
outstanding during the period. "Diluted" earnings per share are computed
similarly to "fully diluted" earnings per share. In a loss year, the calculation
for "basic" and "diluted" earnings per share is considered to be the same as
the impact of potential common shares is antidilutive.
Income Taxes
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109") which
requires recognition of estimated income taxes payable or refundable on income
tax returns for the current year and for the estimated future tax effect
attributable to temporary differences and carry forwards. Measurement of
deferred income tax is based an enacted tax laws including tax rates, with the
measurement of deferred income tax assets being reduced by available tax
benefits not expected to be realized.
Impairment of Long Lived Assets
The Company adopted Statement of Financial Accounting Standards No. 121,
"accounting for the Impairment of Long Lived Assets and for Long Lived Assets to
be Disposed of," ("SFAS 121"). SFAS 121 requires impairment losses to be
recorded on long lived assets used in operations and goodwill when indications
of impairment are present and the un-discounted cash flows estimated to be
generated by those assets are less than the carrying amount of the asset.
Recent Accounting Pronouncements
Effective for periods beginning after December 15, 1997, the Financial
Accounting Standards Board Issued Statement of Financial Accounting Standards
No. 131, "Disclosure about Segments of an Enterprise and Related Information."
("SFAS 131"), SFAS 131 establishes standards for the way that public companies
report information about operating segments in annual financial statements and
requires reporting of selected information about operating statements in interim
financial statements issued to the public. The Company has not determined the
impact the adoption of this new accounting standard will have on its future
financial statements and disclosures.
F-10
<PAGE>
MAGICINC.COM
(formerly known as MAGIC FINGERS, INC.)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Years Ended December 31,1998 and October 31, 1999
1. The Company:
Magicinc.com (the Company) is a Delaware corporation formed in 1961 under the
name Magic Fingers, Inc. The Company changed its name in 1999. Through the
periods ended October 31, 1999 and December 31. 1998, the Company has devoted
substantially all its efforts to reorganizing its financial affairs and settling
its debt obligations. It has not engaged in any substantial operations.
2. Notes Payable & Long Term Debt:
In January, 1998 the Company settled the first of three troubled debt
obligations. Significant concessions were granted by the creditors that resulted
in the recognition of Extraordinary Gain on the settlement of these debts. The
Company's common stock has been valued at fair market value, if recent trading
data existed, where it was included as part of the settlement. A summary of
these obligations and their respective settlements is as follows:
<TABLE>
<CAPTION>
Carrying Value Total Extraordinary Extraordinary
Note or Settlement on Restructuring Amount of Gain Recognized Gain Recognized
Obligation Date Date Settlement Year ended 12/31/98 Year ended 10/31/99
<S> <C> <C> <C> <C> <C>
A January 5, 1998 $ 247,205 $ * 50,000 $ 197,205 $ 0
B August 23, 1999 220,000 **10,500 0 209,500
C November 10, 1999 100,000 60,000 0 50,000
Totals $ 567,2O5 $ 110,500 $197,205 $ 259,500
</TABLE>
Includes 100,000 shares of common stock
Includes 75,000 shares of common stock
3. Income Taxes:
The Corporation has approximately $ 5,300,000 in net operating loss carryovers
available to reduce future income taxes. These carryovers may be utilized
through the year 2014. The Company has adopted SFAS 109 which provides for the
recognition of a deferred tax asset based upon the value the loss carryforwards
will have to reduce future income taxes and management's estimate of the
probability of the realization of these tax benefits. A summary of the deferred
tax asset presented on the accompanying balance sheet is as follows:
<TABLE>
<CAPTION>
Oct. 31, 1999 Dec. 31, 1998
------------- -------------
<S> <C> <C>
Federal Deferred Tax Asset Relating to Net Operating Losses $ 1,906,715 $ 1.958,160
State Deferred Tax Asset Relating to Net operating Loss" 267,047 274,252
Less Valuatlon Allowance (2,173,762) (2,232,411)
----------- ------------
Total Deferred Tax Assets 0 0
=========== ============
</TABLE>
4. Commitments:
Facilities
The Company rents its office location on a month-to-month basis from John
Venters, the Company's treasurer. Rent expense for the year ended October 31,
1999 was $ 6,000.
F-11
<PAGE>
MAGICINC.COM
(formerly known as MAGIC FINGERS, INC.)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Years Ended December 31,1998 and October 31, 1999
(Notes to Financial Statements Cont'd)
Employment Agreements
The Company is also obligated under several employment agreements, to provide
minimum cash compensation to the contracted employees. In addition to the cash
compensation, the employees are also entitled to receive approximately 800,000
shares of common stock through stock grants and options to acquire the
Company's common stock at $ 0.0001 per share. the following table summarizes
these arrangements:
<TABLE>
<CAPTION>
Commencement Initial Clause Change in
Name Position Date Term Annual Stock Salary Control
Cash Options Continuation Arrangement
Compensation Granted Period
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
G. Scott Venters President/Chief Executive Oct. 1, 1997 3 Years $ 75,000 750,000 None No
Officer
John Venters Treasurer June 1, 1999 1 Year 0 50,000 None No
</TABLE>
Mr. Scott Venters' agreement allows for increases in year two to $ 100,000 and
year three to $ 133,000. The earned portion of Mr. Venters' compensation is
carried as a current payable and reflects any payments made through December 31,
1998 and October 31. 1999. The amount owing on those dates was $100,000 and
$186,111 respectively.
Consulting Agreements
The Company is obligated, under two business consulting agreements, to pay an
aggregate of 400,000 shares of common stork and $ 99,000 in cash. 100,000 shares
of the stock have been issued. The balance of 300,000 shares are to be issued
monthly over the following 10 months beginning November 19, 1999. In November,
1999 the Company paid $ 16,500 under one of these agreements. The balance of
$82,500 is to be paid in monthly installments of $ 11,000 with the final
installment of $ 5,500 due 240 days after October 20, 1999. This fee is to be
paid and deducted from the proceeds of any Debenture remitted to the Company.
5. Stockholders' Equity:
Stock Issued for Services:
During 1999 and 1998, the Company issued an aggregate of 1,575,366 common
shares, or about 40% of outstanding common stock at October 31, 1999, for
professional services, consulting and employment. There was no valuation
reflected due to the fact that only a limited trading market exists.
Stock Issued in Payment of Long Term Debt:
During 1998-1999 the Company also issued or promised to issue 175,000 shares of
its common stock as part of the settlement agreements in satisfaction of
$467,000 of its long term debt. This transaction has been recorded at the value
of the stock at the date of agreement where a fair market value could be
determined.
Stock Based Compensation:
Stock based compensation is accounted for by using the intrinsic, value based
method in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"). The Company has adopted
Statements of Financial Accounting Standards No. 123, "Accounting for Stock
Based Compensation, ("SFAS 123") which allows companies to either continue to
account for stock based compensation to employees under APB 25, or adopt a fair
value based method of accounting. The company has elected to continue to account
for stock based compensation to employees under APB 25. APB 25 recognizes
compensation expense for options granted to employees only when the market price
of the stock exceeds the grant exercise price at the date of the grant. The
amount reflected as compensation expense is measured as the difference between
the exercise price and the market value at the date of the grant.
F-12
<PAGE>
MAGICINC.COM
(formerly known as MAGIC FINGERS, INC.)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Years Ended December 31,1998 and October 31, 1999
(Notes to Financial Statements Cont'd)
SFAS 123 requires pro forma disclosures regarding net income and earnings per
share as if the compensation expense had been determined in accordance with the
fair value based method described in SFAS 123. The Company estimates the fair
value of each stock option at the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions for grants issued
in 1998 and 1999
Dividend Yield None
Expected Life 2 Years
Expected Volatility 68%
Risk Free Interest Rate 6%
A Summary of employee and non employee options and warrants granted and
exercised for each of the fiscal years ended December 31, 1998 and October 31,
1999 is presented below:
1998 1999
Weighted Weighted
Average Average
Shares Exercise Price Shares Exercise
Price
Balance at Beginning of Year 626.000 $ 0.0001 125,000 $ 0.0001
Grants Made During Year:
Employment Agreements 0 - 0 -
Other 0 - 0 -
Less Options Exercised
During Year 500.000 0.0001 0 -
Less Options That Expired
During Year 0 - 0 -
-------- --------- -------- ------
Amount of Options Outstanding
at End of Fiscal Year 125,000 $ 0.0001 125,000 $0.0001
======== ========= ======== ======
Options Exercisable at Year End None $ N/A 125,000 0.0001
Weighted Average Fair Value of
Options Granted During Year $ N/A N/A
Summary information for Options outstanding at October 31, 1999 is as follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
Weighted Average
Range of Number Outstanding Remaining Weighted Average Amount Exercisable Weighted Average
Exercise Prices at Oct 31, 1999 Contractual Life Exercise Price at Oct 31,1999 Exercise Price
<S> <C> <C> <C> <C> <C>
$0.0001 125,000 11 Months $ 0.0001 125,000 $ 0.0001
</TABLE>
6. Related Party Transactions.
The Company is obligated to pay Mr. Venters, the Company's President and Chief
Executive Officer, under an employment agreement. The agreement is for a term of
three years beginning October 1, 1997, and consists of a base salary of $75,000;
$100,000 and $ 133,000 for years one, two and three respectively. The earned
portion of Mr. Venters' compensation is carried as a current payable to related
parties and reflects any payments made through December 31, 1998 and October 31,
1999. The amount owing on those dates was $100,000 and $180,111 respectively. In
addition to cash compensation, the Company also granted Mr. Venters the option
to purchase 750,000 shares of the Company's common stock at $0.0001 per share.
Mr. Venters also has option to acquire an additional 500,000 shares at $ 0.0001
per share upon the successful procurement of financing for the motion picture
"Liberty City". a summary is as follows:
F-13
<PAGE>
MAGICINC.COM
(formerly known as MAGIC FINGERS, INC.)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Years Ended December 31,1998 and October 31, 1999
(Notes to Financial statements Cont'd)
<TABLE>
<CAPTION>
Number of Securities Underlying Value of In-The-Money
Unexercised Options and SAR's Options and SAR's
at October 31, 1999 at October 31, 1999
Shares Acquired
Name and Position on Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
G. Scott Venters
President CEO None None 125,000 None $ 8,750 None
</TABLE>
The Company rents its office location on a month-to-month basis from John
Venters, the Company's treasurer. Rent expense for the year ended October 31,
1999 was $ 6,000.
7. Supplemental Cash Flow Information:
Selected non cash investing and financing activities are summarized as follows:
1999 1998
Cash Paid for Interest $ 0 $ 11,563
Non Cash Equity Transactions:
Future issuance of Common Stock to
Retire Debt $ 5,250 $ 0
8. Subsequent Events:
In November, 1999 the Company received $ 130,500 (net of expenses of $19,500)
from its offering of 5% Senior Subordinated Convertible Redeemable Debentures.
These Debentures entitle the holder to convert incremental face amounts of
$10,000 into the Company's common stock at a 75% of the average closing bid
price of the three trading days prior to the election to convert. Accrued
interest may also be paid in the same fashion. At any time after 90 days, the
Company has the option to redeem the principal in whole or in increments of $
10,000 for 125% of the face amount. On November 10, 1999 $15,000 in face value
was converted by the Company into 128,000 shares of common stock under the
prescribed formula.
During November 1999, the Company paid $ 100,000 in full satisfaction of its
obligations under two settlement agreements.
9. Transition Period Due to Change in Fiscal Year:
During 1999, the Company changed its fiscal period from December 31 to October
31. Accordingly, the audited financial statements reflect operating results and
cash flows for a twelve month period and a ten month period ended December 31,
1998 and October 31, 1999, respectively. The following table presents the
comparative results of operations for the period ended October 31, 1998:
Revenues $ 7,220
Income Taxes 0
Net Loss Before Extraordinary item (200,792)
Extraordinary Item Gain From Debt Restructuring 197,205
Net Loss $ (3,587)
Net Loss Per Share Nil
Weighted Average Shares 1,993,034
F-14
<PAGE>
PART III
ITEM 1. EXHIBITS
(a) Exhibits. Exhibits required to be attached are listed in the Index to
Exhibits beginning on page 30 of this Form 10-SB/A under "Item 2.
Description of Exhibits."
[THIS SPACE LEFT INTENTIONALLY BLANK]
23
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, this 8th day of March, 2000.
Magicinc.com.
/s/ Gordon Scott Venters
---------------------------------------------
Gordon Scott Venters, Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Signatures Title Date
/s/ Director March 9, 2000
- ---------------------------
/s/ Director March 9, 2000
- ---------------------------
/s/ Director March 9, 2000
- ---------------------------
/s/ Director March 9, 2000
- ---------------------------
/s/ Director March 9, 2000
- ---------------------------
24
<PAGE>
ITEM 2. DESCRIPTION OF EXHIBITS
INDEX TO EXHIBITS
Exhibit
No. Page No. Description
2(i) 00 Articles of Incorporation of Magic Fingers, Inc. dated July
26, 1961
2(ii) 00 Articles of Merger for Magic Fingers Inc. Wherein Magic
Fingers, Inc., a New Jersey Corporation, incorporated on
December 24, 1959 is merged into MagicFingers, Inc., Dated
September 27, 1961.
2(iii) 00 Certificate of Reduction of Capital of Magic Fingers, Inc.,
filed May 1, 1963.
2(iv) 00 Articles of Amendment of Magic Fingers, Inc., filed January
13, 1978.
2(v) 00 Certificate of Correction to Articles of Amendment of Magic
Fingers, Inc., filed April 7, 1978.
2(vi) 00 Certificate of Renewal and Revival of Charter of Magic
Fingers, Inc., filed September 16, 1981.
2(vii) 00 Certificate of Renewal and Revival of Charter of Magic
Fingers, Inc., filed January 7, 1985.
2(viii) 00 Certificate of Restoration and Revival of Certificate of
Incorporation of Magic Fingers, Inc.,filed February 5, 1992.
2(ix) 00 Certificate of Amendment of Certificate of Incorporation of
Magic Fingers, Inc., filed February 27, 1992
2(x) 00 Certificate for Renewal and Revival of Charter of Magic
Fingers, Inc., filed April 29, 1997
2(xi) 00 Certificate for Renewal and revival of Charter of Magic
Fingers, Inc., filed April 23, 1999.
2(xii) 00 Certificate of Amendment of Certificate of Incorporation of
Magic Fingers, Inc., changing name to Magicinc.com, filed
April 23, 1999.
2(xiii) 00 By-Laws of Magic Fingers, Inc. (Magicinc.com) dated February
25, 1992.
3 00 5% Series A Senior Convertible Redeemable Debentures Due
October 20, 2001
6(i) 00 Motion Picture Agreement between Magic Fingers, Inc. and
Castle Hill Productions, Inc., dated March, 1998 re: Motion
Picture entitled "Shakma."
6(ii) 00 Agreement between Magic Fingers, Inc. and Castle Hill
Productions, Inc., dated February 12, 1999 licensing all
exclusive rights to Three Motion Pictures (Shakma, Shoot,
and No More Dirty Deals).
6(iii) 00 Consulting Agreement dated October 20, 1999 between
Magicinc.com and Commonwealth Partners NY, L.L.C.
6(iv) 00 Employment Contract for Gordon Scott Venters.
15 00 Financial Data Schedule "CE"
25
<PAGE>
CERTIFICATE OF INCORPORATION
OF
MAGIC FINGERS, INC.
FIRST. The name of the corporation is:
MAGIC FINGERS, INC.
SECOND. Its principal office In the State of Delaware is located at No. 100
West Tenth Street, in the City of Wilmington, County of New Castle. The name and
address of its resident agent Is The Corporation Trust Company, No. 100 West
Tenth Street,, Wilmington 99, Delaware.
THIRD. The nature of the business, or objects or purposes to be transacted,
promoted or carried on are:
To carry on the business of manufacturing, buying, selling and
generally dealing in and with massaging and vibrating machinery and
other machinery and equipment of all kinds, and machine shop, and
foundry and factory supplies, tools, electronics, electrical apparatus
of all kinds; to manufacture, buy, sell, import, export, trade or deal
in all or any kind of metals, metal products and by-products and
articles consisting of or partly consisting of metals of any sort; to
work and operate as welders, toolmakers, founders, buy, sell and
generally deal in all kinds of tools, machines, parts of machines,
devices , mechanisms and inventions of all kinds.
To design, manufacture, buy, sell and otherwise deal in and repair,
rebuild, weld, plate, oxidize, burnish, polish, smelt, assay, reduce
and otherwise to render service to or in connection with machines,
machinery, lathes, tools, hardware, equipment, forgings, bearings,
supplies, patterns, fittings, forms, molds, instruments, dies and
other all metal products and by-products thereof and all metals and
metal compounds, together with all forms of plastics and plastic
compounds, and any other articles that may conveniently be handled or
dealt with, in connection with any of the foregoing.
To manufacture, purchase or otherwise acquire, invest in, own,
mortgage, pledge, sell, assign and transfer or otherwise dispose of,
trade, deal in and deal with goods, wares and merchandise and personal
property of every class and description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to
undertake or assume the whole or any part of the obligations or
liabilities of any person, firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect
of, mortgage or otherwise dispose of letters patent of the United
States or any foreign country, patent rights, licenses and privileges,
inventions, improvements and processes, copyrights, trademarks and
trade names, relating to or useful in connection with any business of
this corporation.
To acquire by purchase, subscription or otherwise, and to receive,
hold, own, guarantee, sell, assign, exchange, transfer, mortgage,
pledge or otherwise dispose of or deal in and with any of the shares
of the capital stock, or any voting trust certificates in respect of
the shares of capital stock, scrip, warrants, rights, bonds,
debentures, notes, trust receipts, and other securities, obligations,
choses in action and evidences of indebtedness or interest issued or
created by any corporations, joint stock companies, syndicates,
associations, firms, trusts or persons, public or private, or by the
government of the United States of America, or by any foreign
government or by any state, territory, province, municipality or other
political subdivision or by any governmental agency, and as owner
thereof to possess and exercise all the rights, powers and privileges
of ownership, including the right to execute consents and vote
thereon, and to do any and all acts and things necessary or advisable
for the preservation, protection improvement and enhancement in value
thereof.
To enter into, make and perform contracts of every kind and
description with any person, firm, association, corporation,
municipality, county, state, body politic or government or colony or
dependency thereof.
26
<PAGE>
To borrow or raise moneys for any of the purposes of the corporation
and, from time to time without limit as to amount, to draw, make,
accept, endorse, execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures and other negotiable or
nonnegotiable instruments and evidences of indebtedness, and to secure
the payment of any thereof and of the interest thereon by mortgage
upon or pledge, conveyance or assignment in trust of the whole or any
part of the property of the corporation, whether at the time owned or
thereafter acquired, and to sell, pledge or otherwise dispose of such
bonds or other obligations of the corporation for its corporate
purposes.
To loan to any person, firm or corporation any of its surplus funds,
either with or without security.
To purchases hold, sell and transfer the shares of its own capital
stock; provided it shall not use its funds or property for the
purchase of its own shares of capital stock when such use would cause
any impairment of its capital except as otherwise permitted by law,
and provided further that shares of its own capital stock belonging to
it shall not be voted upon directly or indirectly.
To have one or more offices, to carry on all or any of its operations
and business and without restriction or limit as to amount to purchase
or otherwise acquire, hold, own, mortgage, sell, convey or otherwise
dispose of, real and personal property of every class and description
in any of the states, districts, territories or colonies of the United
States, and in any and all foreign countries, subject to the laws of
such state, district, territory, colony or country.
In general, to carry on any other businesses in connection with the
foregoing, and to have and exercise all the powers conferred by the
laws of Delaware upon corporations formed under the General
Corporation Law of the State of Delaware, and to do any or all of the
things hereinbefore set forth to the same extent as natural persons
might or could do.
The objects and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in nowise limited or restricted
by reference to, or inference from, the terms of any other clause in
this agreement, but the objects and purposes specified in each of the
foregoing clauses of this article shall be regarded as independent
objects and purposes.
FOURTH. The total number of shares of stock which the corporation shall
have authority to issue is four hundred thousand (400,000) and the par value of
each of such shares is Ten Cents (10(cent)) amounting in the aggregate to Forty
Thousand Dollars (40,000).
No stockholder of this corporation shall by reason of his holding shares or
any class have any preemptive or preferential right to purchase or subscribe to
any shares of any class of this corporation, now or hereafter to be authorized,
or any notes, debentures, bonds, or other securities convertible into or
carrying options or warrants to purchase shares of any class, now or hereafter
to be authorized, whether or not the issuance of any such shares, or such notes,
debentures, bonds or other securities, would adversely affect the dividend or
voting rights of such stockholder, other than such rights, if any, as the board
of directors, in its discretion from time to time may grant and at such price as
the board of directors in its discretion may fix; and the board of directors may
issue shame of any class of this corporation, or any notes, debentures, bonds or
other securities convertible into or carrying options or warrants to purchase
shares of any class, without offering any such shares of any class, either in
whole or in part, to the existing stockholders of any class.
FIFTH. The minimum amount of capital with which the corporation will
commence business is One Thousand Dollars ($1000.00).
SIXTH. The names and places of residence of the incorporators are as
follows:
27
<PAGE>
NAMES RESIDENCES
S.H. Livesay Wilmington, Delaware
J.F. Cook Wilmington, Delaware
S.S. Galaska Wilmington, Delaware
SEVENTH. The corporation in to have perpetual existence.
EIGHTH. The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
NINTH. In Furtherance and not In limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize, and cause to be executed mortgages and liens upon the
real and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish
any such reserve in the manner in which it was created.
By resolution passed by a majority of the whole board, to designate one or
more committees, each committee to consist of two or more of the directors of
the corporation, which, to the extent provided in the resolution or in the
by-laws of the corporation, shall have and may exercise the powers of the board
or directors in the management or the business and affairs of the corporation,
and my authorize the seal of the corporation to be affixed to all papers which
my require it. Such committee or committees shall have such name or names as may
be stated in the by-law of the corporation or as may be determined from tire to
time by resolution adopted by the board of directors.
When and as authorized by the affirmative vote of the holders or a majority
of the stock issued and outstanding having voting power given at a stockholders'
meeting duly called for that purpose, or when authorized by the written consent
of the holders of a majority of the voting stock issued and outstanding, to
sell, lease or exchange all of the property and assets of the corporation,
including its good will and its corporate franchises upon such terms and
conditions and for such consideration, which may be in whole or in part shares
of stock in, and/or other securities of, any other corporation or corporations,
as its board of directors shall deem expedient and for the best interests of the
corporation.
TENTH. The corporation shall indemnify any and all of its directors or
officers or former directors or officers or any person who may have served at
its request as a director or officer of another corporation in which it owns
shares of capital stock or of which it is a creditor against reasonable expenses
actually and necessarily incurred by them in connection with the defense of any
motion, suit or proceeding in which they or any of them, are made parties, or a
party by reason of being or having been directors or officers or a director or
officer of the corporations or of such other corporations except in relation to
matters as to which any such director or officer or former director or officer
or person shall be adjudged in such action, suit or proceeding to be liable for
negligence or misconduct in the performance of duty. Such indemnification shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled. The right of indemnification herain above stated shall under no
circumstances extend to or include indemnification for liabilities arising under
the Securities Act of 1933, as amended.
28
<PAGE>
ELEVENTH. No contract or other transaction between the corporation and any
other corporation, firm or individual shall be affected or invalidated by the
fact that any one or more of the directors or officers of this corporation is or
are interested in or is a director or officer, or are directors or officers of
such other corporation, or a member of such firm, and any director or directors,
or officer or officers, individually or jointly, may be a party or parties to or
may be interested in any contract, or transaction, of this corporation or in
which this corporation is interested, and no contract, act or transaction of
this corporation with any person or persons, firms or corporations, shall be
affected or invalidated by the fact that any director or directors, or officer
or officers, of this corporation is a party, or are parties to or interested in
such contract, act or transaction, or in any way connected with such person or
persons, firm or corporation, and each and every person who my become a director
or officer of this corporation is hereby relieved from any liability that might
otherwise exist from contracting with the corporation for the benefit of himself
or any firm or corporation in which he may be in anywise interested.
TWELFTH. Meetings of stockholders may be held outside the State of
Delaware, if the by-laws so provide. The books or the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation. Elections of directors
need not be by ballot unless the by-laws of the corporation shall so provide.
THIRTEENTH. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate or incorporation in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate, hereby declaring and
certifying that the facts herein stated are true, and accordingly have hereunto
set our hands and seals this 26th day of July A.D. 1961.
/s/ S.H. Livesay
- ------------------
S.H. Livesay
/s/ J. F. Cook
- ------------------
J.F. Cook
/s/ S.S. Galaska
- ------------------
S.S. Galaska
STATE OF DELAWARE )
)
COUNTY OF NEW CASTLE )
BE IT REMEMBERED that on this 26th day of July, A.D. 1961, personally came
before me, a Notary Public for the State of Delaware, S.H. Livesay, J.F. Cook
and S.S. Galaska, all of the parties to the foregoing certificate of
incorporation, known to me personally to be such, and severally acknowledged the
said certlficate to be the act and deed of the signers respectively and that the
facts therein stated are truly bet forth.
GIVEN under my hand and seal of office the day and year aforesaid.
/s/ Notary Public
-------------------
Notary Public
29
<PAGE>
AGREEMENT OF MERGER, dated this 27th day of September, 1961, made by and
between Magic Fingers, Inc., party of the first part, a corporation organized
and existing under and by virtue of the laws of the State of Delaware, and Magic
Fingers, Inc., Party of the second part, a corporation organized and existing
under and by virtue of the laws of the State of New Jersey.
WITNESSETH that:
WHEREAS, the said two corporations parties to this. agreement, deem it
advisable that the party of the first part, merge into itself the party of the
second part, and likewise, that the party of the second part be merged into the
party of the first part and
WHEREAS, the General Corporation Law of the State of Delaware permits the
merger into a corporation of the state of Delaware of corporations of other
states, and, likewise the provisions of Title 14, Corporations, General, Chapter
12, Revised Statutes of 1937, of the State of New Jersey, permit the merger of a
corporation of the State of New Jersey into a corporation of another state,
providing the corporations are organized for the purpose of carrying on business
of the same or of a similar nature, and
WHEREAS, the party of the first part, under its certificate of
incorporation, which was filed in the office of the Secretary of State of
Delaware, on the 28th day of July, 961, and was recorded in the office of the
Recorder of Deeds for New Castle County, on the 28th day of July, 1961, has an
authorized capital stock of four hundred thousand (400,000) shares of the par
value of ten cents ($ .10) each amounting in the aggregate to forty thousand
(40,000) of which it has, now outstanding ten thousand (10,000) shares; and
WHEREAS, the party of the second part, under its certificate of
incorporation which was filed In the office of the Secretary of State of New
Jersey on or about the 24th day of December, 1959, and recorded in the office of
the Clerk of Hudson County, New Jersey, on or about the 30th day of December,
1961, has an authorized capital stock of forty thousand dollars ($40,000)
divided into four hundred thousand (400,000) shares of Capital stock of the par
value of ten cents ($ .10) per share, of which there have been issued and are
outstanding one hundred and twenty-five thousand (125,000) shares, and
WHEREAS, the principal and registered office of the party of the second
part in the State of New Jersey, is at 15 Exchange Place in the City of Jersey
City, County of Hudson, and The Corporation Trust Company is the agent therein,
in charge thereof, and upon whom process against said corporation may be served
within said state, and
WHEREAS, the party of the first part, a corporation of the State of
Delaware, the surviving corporation, and the party of the second part, a
corporation of the State of New Jersey, are organized for the purpose of
carrying on business of the same or of a similar character, and
WHEREAS, none of the corporations, parties to this agreement, is a public
utility as defined in Title 48, Revised Statutes of New Jersey,
NOW THEREFORE the corporations parties to this agreement, by and between
their respective boards of directors, have agreed and do hereby agree, each with
the other, that the party of the first part merge into itself the party of the
second part, and likewise that the party of the second part, be merged into the
party of the first part, pursuant to the provisions of the General Corporation
Law of Delaware and the provisions of Title 14, Corporations, General, Chapter
12, Revised Statutes of 1937 of New Jersey, and do hereby agree upon and
prescribe the terms and conditions of said merger and the mode of carrying the
same into effect as follows:
30
<PAGE>
ARTICLE ONE.
The party of the first part hereby merge& into itself the party of the second
part, and likewise, the party of the second part is merged into the party of the
first part, which is the surviving corporation, and shall be governed by the
General Corporation Law of the State of Delaware, and which is hereinafter in
this agreement referred to as the surviving corporation.
ARTICLE TWO.
The terms and conditions of this merger, and the mode of carrying it into
effect, are as follows:
The by-laws of the party of the first part shall remain and be the by-laws of
the surviving corporation until the same shall be altered or amended according
to the provisions thereof and in the manner permitted by the statutes of the
State of Delaware, or by this agreement.
The board of directors of the surviving corporation, who shall merge the affairs
of said corporation for the first year after the effective date of this
agreement of marger, or until their successors are elected and shall have
qualified, shall consist of those persons who are now directors of the party of
the first part.
The first annual meeting of the stockholders of the surviving corporation, to be
held after the effective date of the merger, shall be the annual meeting
provided, or to be provided by the by-laws of the said corporation, for the year
1962.
All persons who at the date when the agreement of merger shall become effective
shall be the executive or administrative officers of the party of the first part
shall be and remain like officers of the surviving corporation, until the board
of directors of such corporation shall elect their respective successors.
The directors of each of the corporations, parties to this agreement, shall
enter into this agreement, whereupon it shall be signed by the directors of the
party of the first part under the corporate seal, and by the directors and
proper officers of the party of the second part, under the corporate seal. This
agreement shall then be submitted to the stockholders of each of the
corporations, parties to this agreement for adoption in accordance with the
requirements of the laws of their respective states of incorporation. If the
holders of at least two-thirds of all the capital stock, of each of said
corporations shall be in favor of the adoption of this agreement, that fact
shall be certified on the agreement by the secretary or assistant secretary of
the party of the first part and likewise, the secretary of the party of the
second part shall make and attach to the agreement this certificate of that
fact, under the corporate seal, and an originally executed copy of the agreement
shall be filed with the Secretary of State of Delaware and a conformed copy
certified by him shall be recorded in the office of the Recorder of Deeds of New
Castle County, Delaware, and an originally executed copy of the agreement shall
be filed with the Secretary of State of New Jersey.
A meeting of the board of directors of the surviving corporation shall be hold
as soon as practicable after the date on which this merger shall become
effective and may be called in the manner provided in the by-laws of the
surviving corporation for the calling of special meetings of the board of
directors and may be held at the time and place specified in the notice of the
meeting.
31
<PAGE>
The surviving corporation shall pay all expenses of carrying this agreement into
effect and of accomplishing this merger.
Upon the date when this agreement shall become effective, the separate existence
of the party of the second part shall cease, and the constituent corporation
shall be merged into the party of the first part, the surviving corporation, in
accordance with the provisions of this agreement which corporation shall possess
all the rights, privileges, powers and franchises as well of a public as of a
private nature and be subject to all the restrictions, disabilities, and duties
of each of the corporations, parties to this agreement, and all and singular,
the rights, privileges, powers and franchises of each of said corporations, and
all property, real, personal and mixed, and all debts due to each of such
corporations shall be vested in the surviving corporation; and all property,
rights and privileges, powers and franchises and all and every other interest
shall be thereafter as effectually the property of the surviving corporation as
they were of the respective constituent corporations, and the title of any real
estate, whether by deed or otherwise, vested in any of said corporation, parties
hereto, shall not revert or be in any way impaired by reason of this merger,
provided that all rights of creditors and all liens upon the property of any of
said corporations, parties hereto, shall be preserved unimpaired, and all debts,
liabilities and duties of the party of the second part shall thenceforth attach
to the said surviving corporation and may, be enforced against it to the same
extent as if said debts, liabilities and duties had been incurred or contracted
by it.
If at any time the surviving corporation shall consider or be advised that any
further assignments or assurances in law or any things are necessary or
desirable to vest in said corporation, according to the terms hereof, the title
of any property or rights of the party of the second part, the proper officers
and directors of said corporation shall and will execute and make all such
proper assignments and assurances and do all things necessary or proper to vest
title in such property or rights in the surviving corporation, and otherwise to
carry out the purposes of this agreement of merger.
ARTICLE THREE
The facts required to be set forth in a certificate of incorporation of a
corporation incorporated under the laws of the State of Delaware, which can be
stated in the case of the merger provided for in this agreement, are as follows:
1. The name of the surviving corporation is and shall be Magic Fingers,
Inc.
2. The principal office of the surviving corporation in the State of
Delaware is and shall be located at No. 100 West Tenth Street, in the
City of Wilmington, County of New Castle. The name and address of its
resident agent is The Corporation Trust Company, No. 100 West Tenth
Street, Wilmington, Delaware.
3. The nature of the business, or objects or purposes to be transacted,
promoted or carried on are:
To carry on the business of manufacturing, buying, selling and
generally dealing in and with massaging and vibrating machinery and
other machinery and equipment of all kinds, and machine shop, and
foundry and factory supplies, tools, electronics, electrical apparatus
of all kinds; to manufacture, buy, sell, import, export, trade or deal
in all or any kind of metals, metal products and by-products and
articles consisting of or partly consisting of metals of any sort; to
work and operate as welders, toolmakers, founders, buy, sell and
generally deal in all kinds of tools, machines, parts of machines,
devices , mechanisms and inventions of all kinds.
32
<PAGE>
To design, manufacture, buy, sell and otherwise deal in and repair,
rebuild, weld, plate, oxidize, burnish, polish, smelt, assay, reduce
and otherwise to render service to or in connection with machines,
machinery, lathes, tools, hardware, equipment, forgings, bearings,
supplies, patterns, fittings, forms, molds, instruments, dies and
other all metal products and by-products thereof and all metals and
metal compounds, together with all forms of plastics and plastic
compounds, and any other articles that may conveniently be handled or
dealt with, in connection with any of the foregoing.
To manufacture, purchase or otherwise acquire, invest in, own,
mortgage, pledge, sell, assign and transfer or otherwise dispose of,
trade, deal in and deal with goods, wares and merchandise and personal
property of every class and description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to
undertake or assume the whole or any part of the obligations or
liabilities of any person, firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect
of, mortgage or otherwise dispose of letters patent of the United
States or any foreign country, patent rights, licenses and privileges,
inventions, improvements and processes, copyrights, trademarks and
trade names, relating to or useful in connection with any business of
this corporation.
To acquire by purchase, subscription or otherwise, and to receive,
hold, own, guarantee, sell, assign, exchange, transfer, mortgage,
pledge or otherwise dispose of or deal in and with any of the shares
of the capital stock, or any voting trust certificates in respect of
the shares of capital stock, scrip, warrants, rights, bonds,
debentures, notes, trust receipts, and other securities, obligations,
choses in action and evidences of indebtedness or interest issued or
created by any corporations, joint stock companies, syndicates,
associations, firms, trusts or persons, public or private, or by the
government of the United States of America, or by any foreign
government or by any state, territory, province, municipality or other
political subdivision or by any governmental agency, and as owner
thereof to possess and exercise all the rights, powers and privileges
of ownership, including the right to execute consents and vote
thereon, and to do any and all acts and things necessary or advisable
for the preservation, protection improvement and enhancement in value
thereof.
To enter into, make and perform contracts of every kind and
description with any person, firm, association, corporation,
municipality, county, state, body politic or government or colony or
dependency thereof.
To borrow or raise moneys for any of the purposes of the corporation
and, from time to time without limit as to amount, to draw, make,
accept, endorse, execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures and other negotiable or
nonnegotiable instruments and evidences of indebtedness, and to secure
the payment of any thereof and of the interest thereon by mortgage
33
<PAGE>
upon or pledge, conveyance or assignment in trust of the whole or any
part of the property of the corporation, whether at the time owned or
thereafter acquired, and to sell, pledge or otherwise dispose of such
bonds or other obligations of the corporation for its corporate
purposes.
To loan to any person, firm or corporation any of its surplus funds,
either with or without security.
To purchases hold, sell and transfer the shares of its own capital
stock; provided it shall not use its funds or property for the
purchase of its own shares of capital stock when such use would cause
any impairment of its capital except as otherwise permitted by law,
and provided further that shares of its own capital stock belonging to
it shall not be voted upon directly or indirectly.
To have one or more offices, to carry on all or any of its operations
and business and without restriction or limit as to amount to purchase
or otherwise acquire, hold, own, mortgage, sell, convey or otherwise
dispose of, real and personal property of every class and description
in any of the states, districts, territories or colonies of the United
States, and in any and all foreign countries, subject to the laws of
such state, district, territory, colony or country.
In general, to carry on any other businesses in connection with the
foregoing, and to have and exercise all the powers conferred by the
laws of Delaware upon corporations formed under the General
Corporation Law of the State of Delaware, and to do any or all of the
things hereinbefore set forth to the same extent as natural persons
might or could do.
The objects and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in nowise limited or restricted
by reference to, or inference from, the terms of any other clause in
this agreement, but the objects and purposes specified in each of the
foregoing clauses of this article shall be regarded as independent
objects and purposes.
4. The total number of shares of stock which the surviving corporation
shall have authority to issue is four hundred thousand (400,000) and
the par value of each of such shares is ten cents ($.10) amounting in
the aggregate to forty thousand dollars ($40,000).
No stockholder of the surviving corporation shall by reason of
his holding shares of any class have any preemptive or preferential
right to purchase or subscribe to any shares of any class of this
corporation, now or hereafter to be authorized, or any notes,
debentures, bonds, or other securities convertible into or carrying
options or warrants to purchase shares of any class, now or hereafter
to be authorized, whether or not the issuance of any such shares, or
such notes, debentures, bonds or other securities would adversely
affect the dividend or voting rights of such stockholder, other than
such rights, if any, as the board of directors, in its discretion from
time to time may grant and at such price as the board of directors in
its discretion may fix; and the board of directors may issue shares of
any class of this corporation, or any notes, debentures, bonds, or
other securities convertible into or carrying options or warrants to
purchase shares of any class, without offering any such shares of any
class, either in whole or in part, to the existing stockholders of any
class.
5. The minimum amount of capital with which the surviving corporation
will commence business is one thousand dollars.
34
<PAGE>
6. The surviving corporation is to have perpetual existence.
7. The private property of the stockholders shall not be subject to the
payment of corporate debts to any extent whatever.
8. In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the surviving corporation shall be
expressly authorized:
o To make, alter or repeal the by-laws of the corporation.
o To authorize and cause to be executed mortgages and liens
upon the real and personal property of the corporation.
o To set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper
purpose and to abolish any such reserve in the manner in
which it was created.
By resolution passed by a majority of the whole board, to designate
one or more committees, each committee to consist of two or more of
the directors of the corporation, which, to the extent provided in the
resolution or in the bylaws of the corporation, shall have and may
exercise the powers of the board of directors in the management of the
business and affairs of the corporation, and may authorize the seal of
the corporation to be affixed to all papers which may require it. Such
committee or committees shall have such name or names as may be stated
in the by-laws of the corporation or as may be determined from time to
time by resolution adopted by the board of directors.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given
at a stockholders meeting duly called for that purpose, or when
authorized by the written consent of the holders of a majority of the
voting stock issued and outstanding, to sell, lease or exchange all of
the property and assets of the corporation, including its good will
and its corporate franchises, upon much terms and conditions and for
such consideration, which may be in whole or in part shares of stock
in, and/or other securities of, any other corporation or corporations,
as its board of directors shall deem expedient and for the best
interests of the corporation.
9. The surviving corporation shall indemnify any and all of its directors
or officers or former directors or officers or any person who may have
served at its request as a director or officer of another corporation
in which it owns shares of capital stock or of which it is a creditor
against reasonable expenses actually and necessarily incurred by them
in connection with the defense of any action, suit or proceeding in
which they, or any of them, are made parties, or a party by reason of
being or having been directors or officers or a director or officer of
ths corporation, or of such other corporation, except in relation to
matters as to which any such director or officer or former director or
officer or person shall be adjudged in such action, suit or proceeding
to be liable for negligence or misconduct in the performance of duty.
Such indemnification shall not be deemed exclusive of any other rights
to which those indemnified may be entitled. The right of
indemnification herein above stated shall under no circumstances
extend to or include indemnification for liabilities arising under the
Securities Act of 1933, as amended.
10. No contract or other transaction between the surviving corporation and
any other corporation, firm or individual shall be affected or
invalidated by the fact that any one or more of the directors or
officers of the surviving corporation is or are interested in or is a
director or officer, or are directors or officers of such other
corporation, or a member of such firm, and any director or directors
or officer or officers, individually or jointly, may be a party or
parties to or may be interested in any contract, or transaction, of
this corporation or in which this corporation is interested and no
contract, act or transaction of this corporation with any person or
35
<PAGE>
persons, firms or corporations, shall be affected or invalidated by
the fact that any director or directors, or officer or officers, of
this corporation is a party, or are parties, to or interested in such
contract, act or transaction; or in any way, connected with such
person or persons, firm or corporation, and each and every person who
may become a director or officer of this corporation is hereby
relieved from any liability that might otherwise exist from
contracting with the corporation for the benefit of himself or any
firm or corporation in which he may be in anywise interested.
11. Meetings of stockholders of the surviving corporation may be held
outside the State of Delaware, if the bylaws so provide. The books of
the corporation may be kept (subject to any provision contained in the
statutes) outside the State of Delaware at such place or places as may
be designated from time to time, by the board of directors, or In the
by-laws of the corporation. Elections of directors need not be by
ballot unless the by-laws of the corporation shall so provide.
12. The surviving corporation shall reserve the right to amend, alter,
change or repeal any provision contained in its certificate of
incorporation, in the manner now or hereafter prescribed by statute,
and all rights conferred upon stockholders herein are Sranted subject
to this reservation.
ARTICLE FOUR
The manner of converting the outstanding shares of the capital stock of the
constituent corporations into the shares or other securities of the surviving
corporation shall be to follows:
(a) Each share of the capital stock of the party of the second part
shall be converted into one share of the capital stock of the
surviving corporation, and each holder of shares of capital stock
of the party of the second part upon the surrender to the
surviving corporation, of one or more certificates for such
shares for cancellation, shall be entitled to receive one or more
certificates for a number of full shares of capital stock of the
surviving corporation equal to the number of shares reprinted by
the certificates so surrendered for cancellation by such holder.
(b) If at the time this Agreement of Merger shall become effective,
the party of the second part shall own any of the outstanding
shares of capital stock of the party of the first part, such
shares shall not be transferred, nor shall the beneficial
interest thereto pass to the surviving corporation, but such
shares of stock shall forthwith be surrendered for cancellation
and shall have the status of authorized but unissued stock of the
surviving corporation.
ARTICLE FIVE
The particulars required to be set forth in agreements of merger by Section
2, Chapter 12, Title 14, of the Revised Statutes of New Jersey:
1. The terms and conditions of the merger and the mode of carrying
it into affect are as set forth above in Article TWO above.
2. The name of the consolidated corporation (herein called the
surviving corporation) is and shall be Magic Fingers, Inc.
36
<PAGE>
3. The number, names mind places of residence of the first
directors of the consolidated corporation (herein called the
surviving corporation), who shall hold office until their
successors be chosen or appointed, according to the by-laws of
said corporation, are as follows:
NAME RESIDENCES
John J. Houghtaling 98 Brookfield Avenue, Glen Rock, N.J.
Alphonse Kenison Washington Spring Road, Palisades, N.Y.
Henry W. Sweeney 1112 Park Avenue, New York, N.Y.
The first officers of said corporation shall be a president, one or more
vice-presidents, a secretary, a treasurer and one or more assistant secretaries,
and assistant treasurers; and their nams and places of residence are as follows:
TITLE NAMES RESIDENCES
President John J. Houghtaling 98 Brookfield Avenue
Glen Rock, N.J.
Vice-President Vito DeSantis 98 Brookfield Avenue
Glen Rock, N.J.
Secretary Vito Desantis 98 Brookfield Avenue
Glen Rock, N.J.
Treasurer Jobn J. Houghtaling 98 Brookfield Avenue
Glen Rock, N.J.
4. The number of obares of capital stock of the consolidated
corporation (herein called the surviving corporation and the
classes into which the same are divided are as set forth above
in Article THREE.
5. The manner of converting the capital stock of each of the
merging corporations into the stock or obligations of the
consolidated corporation (herein called the surviving
corporation) are as set forth in Article FOUR above.
ARTICLE SIX
The surviving corporation shall have the right to amend, alter, change or
replace any provision contained in this Agreement of Merger which could be
contained in the certificate of incorporation of a corporation formed under the
laws of the State of Delaware in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are granted subject
to this reservation.
IN WITNESS WHEREOF, the said party of the first part pursuant to authority
duly given by its board of directors has caused these presents to be executed by
a majority of the directors and the corporate seal to be affixed.
MAGIC FINGERS, INC.
By: /s/ John J. Houghtaling
-----------------------
John J. Houghtaling
37
<PAGE>
/s/ Alphonse Kenison
-------------------------
Alphonse Kenison
/s/ Henry W. Sweeney
--------------------------
Henry W. Sweeney
(CORPORATE SEAL)
ATTEST:
/s/ Vito De Santis
- ------------------
Secretary (or assistant secretary)
IN WITNESS WHEREOF, the party of the second part pursuant to authority,
given by the board of directors, has caused these presents to be signed by the
directors under the corporate seal.
MAGIC FINGERS, INC.
By: /s/ John J. Houghtaling
-----------------------
John J. Houghtaling
/s/ Ruth D. Houghtaling
-----------------------
Ruth D. Houghtaling
/s/ Alphonse Kenison
-----------------------
Alphonse Kenison
(CORPORATE SEAL)
38
<PAGE>
THE ABOVE AGREEMENT OF MERGER, having been executed by a majority of the board
of directors of each corporate party thereto, and having been adopted separately
by the stockholders of each corporate party thereto, in accordance with the
provisions of the General Corporation Law of the State of Delaware, and the
provisions of Title 14, Corporations, General, Chapter 12, Revised Statutes of
1937, of the State of New Jersey, the President and Secretary of each corporate
party thereto do now hereby execute the said Agreement of Merger under the
corporate seals of their respective corporations, by authority of the directors
and stockholders thereof, as the respective act, deed and agreement of each of
said corporations, on this 27th day of September, 1961.
MAGIC FINGERS, INC.
(a Delaware Corporation)
/s/ John J. Houghtaling
---------------------------
President
/s/ Vito De Santis
---------------------------
Secretary
ATTEST:
/s/ Vito De Santis
- -----------------------
Secretary
MAGIC FINGERS, INC.
(a New Jersey corporation)
/s/ John J. Houghtaling
---------------------------
President
/s/ Vito De Santis
---------------------------
Secretary
ATTEST:
/s/ Vito De Santis
- ----------------------
Secretary
STATE OF NEW JERSEY )
)
COUNTY OF BERGEN )
BE IT REMEMBERED that on this 27th day of September A.D. 1961,
personally came before me __________________________________ a notary Public in
and for the county and state aforesaid, John J. Houghtaling, President of Magic
Fingers, Inc., a corporation of the State of Delaware and one of the
corporations described in and which executed the foregoing Agreement of Merger,
known to me personally to be such, and he the said John J. Houghtaling as such
President duly executed said Agreement of Merger before me and acknowledged said
Agreement of Merger to be the act, deed and agreement of said Magic Fingers,
Inc., that the signatures of the said President and the said Secretary of said
corporation to said foregoing Agreement of Merger are in the handwriting of the
said President and said Secretary of said Magic Fingers, Inc., and that the seal
affixed to said Agreement of Merger is the common corporate seal of said
corporation.
IN WITNESS WHEREOF I have hereunto set my hand and seal of office the
day and year aforesaid.
/s/ Notary Public
- ------------------------
Notary Public
NOTARY PUBLIC OF N.J.
My Commission Expires Feb. 26, 1966
39
<PAGE>
STATE OF NEW JERSEY )
)
COUNTY OF BERGEN )
BE IT REMEMBERED that on the 28th day of September, 1961, before mea
Notary public in the State of New Jersey personally appeared VITO DESANTIS, to
me known, who being by me duly sworn according to law, on his oath does depose
and make proof to my satisfaction that he is the Secretary of and well knows the
seal of MAGIC FINGERS, INC., a New Jersey corporation, one of the corporations
which executed the foregoing Agreement of Merger, that the seal affixed to the
said Agreement is the corporate seal of the said corporation, that it was so
affixed by order of the corporation; that JOHN J. HOUGHTALING is the President
of the said corporation; that he saw the said JOHN J. HOUGHTALING as such
President sign and execute said Agreement of Merger and affix said seal thereto,
and heard him declare that he signed and executed the same as the voluntary act
and deed of the said corporation, by its order and by authority of its Board of
Directors and the vote, in person or by proxy, of at least two thirds of all the
capital stock of said corporation issued and outstanding, for the uses and
purposes therein expresses, and that this deponent signed his name thereto, at
the same time, as a subscribing witness.
/s/ Vito De Santis
------------------
Vito De Santis
Subscribed and sworn to before
me, a Notary Public of the State
New Jersey, this 28th day of
September, A.D., 1961
/s/ Notary Public
- ----------------------
Notary Public of N.J.
I, VITO DE SANTIS, secretary of MAGIC FINGERS, INC., a corporation
organized and existing under the laws of the State of Delaware, hereby certify,
as such secretary and under the seal of the said corporation, that the Agreement
of Merger to which this certificate is attached, after having been first duly
signed by a majority of the directors of said corporation, as required by the
provisions of the General Corporation Law of Delaware, and all the Board of
Directors of Magic Fingers, Inc., a corporation of the State of New Jersey, is
required by the provisions of Title 14, Corporations, General, Chapter 12,
Revised Statutes of 1937 of New Jersey, was duly adopted pursuant to Section 228
of Title 8 of the Delaware Code of 1953, by the unanimous written consent of the
stockholders holding ten thnusand (10,000) shares of the capital stock of the
corporation, same being all of the shares issued and outstanding, and that a
signed copy of the consent is attached hereto and made. a part of the Agreement
of Merger, which Agreement of Merger was thereby duly adopted as the Act of the
stockholders of said Magic Fingers, Inc.
Witness my hand and the seal of Magic Fingers, Inc. on this 27th day of
September, 1961.
/s/ Vito De Santis
------------------
Secretary
40
<PAGE>
MAGIC FINGERS, INC.
THE UNDERSIGNED, being the holder of all of the issued and outstanding
shares of stock of MAGIC FINGERS, INC., a corporation organized and existing
under the laws of the State of Delaware, do hereby consent that the said
corporation merge into itself MAGIC FINGERS, INC., a corporation organized and
existing under the laws of the State of New Jersey, on the terms and conditions
and subject to the provisions of an agreement of merger entered into between the
board of directors of this corporation and the board of directors of said Magic
Fingers Inc., a corporation of the State of New Jersey, dated the, 27th day of
September, 1961, and do signify our consent and indicate that number of shares
held by the undersigned as follows:
NAME OF STOCKHOLDER NUMBER OF SHARES
------------------- ----------------
Magic Fingers, Inc. 10,000
MAGIC FINGERS, INC.
By: /s/ John J. Houghtaling
----------------------------
President
41
<PAGE>
CERTIFICATE OF THE SECRETARY OF
MAGIC FINGERS, INC.
(a New Jersey corporation)
RELATIVE TO VOTE OF STOCKHOLDERS
* * *
I, VITO DE SANTIS, Secretary of MAGIC FINGERS, INC. a corporation organized
and existing under Title 14, Corporations, General, Revised Statutes of 1937 of
New Jersey, do hereby certify in accordance with the provisions of Section
14:12-3 thereof:
1. That the foregoing Agreement of Merger between Magic Fingers, Inc., a
corporation organized and existing under the laws of New Jersey, and Magic
Fingers, Inc., a corporation organized and existing under the laws of the State
of Delaware, was duly authorized at a duly constituted, meeting of the board of
directors of said Magic Fingers, Inc. at which a quorum was present and acting
throughout and was thereupon signed by said directors under the corporate seal.
2. That said Agreement of Merger was thereafter duly submitted to the
stockholders of said Magic Fingers, Inc., at a meeting thereof held upon waiver
of notice for the purpose of taking the same into consideration.
3. That said Agreement was considered by the stockholders at said meeting
and a vote of the stockholders was taken by ballot for the adoption or rejection
of said Agreement, and that stockholders owning at least two-thirds of the
shares of the capital stock of said Magic Fingers, Inc. issued and outstanding,
voted in favor of the adoption of the said Agreement.
4. That the meeting of stockholders of said Magic Fingers, Inc., and the
said vote by ballot upon the adoption of said Agreement, were held and taken
separately from the meeting of stockholders and vote of any other corporation,
and said meeting and said votes were not held or taken in connection with, any
meeting of stockholders of any other corporation.
IN WITNESS WHEREOF, I have hereunto signed my name as secretary and affixed
the seal of said Magic Fingers, Inc., this 27th day of September, 1961.
/s/ Vito De Santis
----------------------
Secretary
42
<PAGE>
CERTIFICATE OF REDUCTION OF CAPITAL
OF
MAGIC FINGERS, INC.
(Pursuant to Section 244 of the General Corporation Law of Delaware)
MAGIC FINGERS, INC., a corporation organized and existing under the
provisions of the General Corpaation Law of the State of Delaware., the
Certificate of Incorporation of which was filed in the office of the Secretary
of State of Delaware on the 28th day of July, 1961, and recorded in the office
of the Recorder of Deeds for New Castle County, State of Delaware on the same
date DOES HEREBY CERTIFY:
1) That by resolution of the Board of Directors adopted at a duly convened
meeting, and with the consent of at least a majority of the stockholders given
at a meeting called and held pursuant to the Directors resolution and Section
244 of the General Corporation Law of the State of Delaware, the capital of this
Corporation shall be and hereby is reduced from $17,088,00 to $16,188.00.
2) That the manner in which said reduction is effected is by retiring 9000
shares of capital stock, par value 10(cent) per share, owned by the Corporation
and restoring such shares to the status or authorized but unissued stock.
3) That the assets of the Corporation remaining after such reduction are
sufficient to pay any debts, the payment of which has not been otherwise
provided for.
4) That this reduction has been adopted in accordance with Section 244 of
the General Corporation Law of Delaware.
IN WITNESS WHEREOF, the said MAGIC FINGERS, INC. has caused Its corporate
seal to be hereunto affixed and this certificate to be signed by John J.
Houghtaling, its President, and A. Bronley Smith, its Secretary, this 26th day
of April, A.D., 1963.
MAGIC FINGERS, INC.
/s/ John J. Houghtaling
------------------------
President
/s/ A. Bronley Smith
------------------------
Secretary
STATE OF NEW JERSEY )
)
COUNTY OF BERGEN )
BE IT REMEMBERED that on this 26th day of April A.D. 1963, personally
came before me the undersigned, a notary Public in and for the county and state
aforesaid, JOHN J. HOUGHTALING, President of MAGIC FINGERS, INC., a corporation
of the State of Delaware and of the corporation described in and which executed
the foregoing certificate, known to me personally to be such, and he the said
JOHN J. HOUGHTALING as such President duly executed said certificate before me
and acknowledged said certificate to be the act, deed and agreement of said
corporation, that the signatures affixed thereto are the signatures of the duly
elected President and Secretary of said corporation, and that the seal affixed
to said certificate is the common corporate seal of said corporation.
IN WITNESS WHEREOF I have hereunto set my hand and seal of office the
day and year aforesaid.
/s/ Lydia M. Erxmeyer
- -------------------------
Lydia M. Erxmeyer
NOTARY PUBLIC OF N.J.
My Commission Expires November 12, 1967
43
<PAGE>
CERTIFICATE OF AMENDMENT
OF
THE ARTICLES OF INCORPORATION
OF
MAGIC FINGERS, INC.
(Pursuant to Section 242 of the General Corporation Law
of The State of Delaware)
-----------------------------------------------
Magic Fingers, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware does hereby certify, pursuant to
Section 242 of said Law that at a meeting of the stockholders of said
corporation duly called for the purpose of amending the Articles of
Incorporation, and held on September 30, 1977, it was resolved by the holders of
a majority of the outstanding shares of common stock of the corporation, par
value 10(cent) per share, that Article Four of the Articles of Incorporation be
amended to read as follows:
"Article Four: The total number of shares which the corporation shall
have authority to issue is Five hundred thousand (500,000) and the par
value of each such share is Ten (10(cent)) cents, amounting in the
aggregate to $50,000."
IN WITNESS WHEREOF, Magic Fingers, Inc. has caused this instrument to be
signed by its president and attested to by its secretary and its corporate seal
affixed thereto this 16th day of January, 1978.
Magic Fingers, Inc.
By: /s/ John J. Houghtaling
-------------------------
John J. Houghtaling, President
ATTEST:
/s/ Rita M. Briur
- ---------------------
Secretary
STATE OF FLORIDA )
) SS:
COUNTY OF DADE )
On the 16th day of January, 1978, personally came before me a notary public in
and for the County and State aforesaid, John J. Houghtaling, president of Magic
Fingers, Inc., a corporation of the State of Delaware, and he duly executed the
foregoing certificate of amendment of the articles of incorporation of said
corporation before me and acknowledged said certificate to be his act and deed
and the act and deed of said corporation, that the facts stated therein are
true, and that the seal affixed to said certificate and attested by the
secretary of said corporation is the corporate seal of said corporation and was
affixed thereto by order of the Board of Directors.
/s/ Notary Public
- -------------------
Notary Public
44
<PAGE>
CERTIFICATE OF CORRECTION
PURSUANT TO SECTION 103(f)
OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
OF CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION
OF MAGIC FINGERS, INC.
Magic Fingers, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware does hereby certify, pursuant to
Section 103(f) of that law as follows:
1. On January 30, 1978 there was filed by the Secretary of State of the
State of Delaware a Certificate of Amendment of the Certificate of Incorporation
of Magic Fingers, Inc. amending Article Four of the Articles of Incorporation of
said corporation by increasing the authorized share capital of the corporation
from 400,000 shares of common stock, par value 10(cent) per share to 500,000
shares of common stock, par value 10(cent) per share.
2. Said certificate was in error in that the authorized capital should have
been increased from 400,000 shares of common stock to 2,000,000 shares of common
stock, par value 10(cent) per share.
3. In order to correct the error in such instrument, Magic Fingers, Inc.
does hereby file this Certificate of Correction of the Certificate of Amendment
of its Articles of Incorporation the effect of which shall be to correct the
amendment of Article Four of the Articles of Incorporation, effective as of
January 30, 1978 so that said corrected Article Four, as amended, shall read as
follows:
"Article Four: The total number of shares which the corporation shall
have authority to issue is Two million (2,000,000) and the par value
of each such share is Ten (10(cent)) cents, amounting in the aggregate
to $200,000."
IN WITNESS WHEREOF, Magic Fingers, Inc. has caused this instrument to be
signed by its president and attested to by its secretary and its corporate seal
to be affixed thereto this 14th day of March, 1978.
Magic Fingers, Inc.
By: /s/ John J. Houghtaling
--------------------------
John J. Houghtaling, President
STATE OF FLORIDA )
)
COUNTY OF DADE )
On the 14th day of March, 1978, personally came before me a notary public in and
for the County and State aforesaid, John J. Houghtaling, president of Magic
Fingers, Inc., a corporation of the State of Delaware, and he duly executed the
foregoing certificate of correction of the Certificate of amendment of the
articles of incorporation of said corporation before me and acknowledged said
certificate to be his act and deed and the act and dead of said corporation,
that the facts stated therein are true, and that the seal affixed to said
certificate and attested by the secretary of said corporation is the corporate
seal of said corporation and was affixed thereto by order of the Board of
Directors.
/s/ Notary Public
------------------
Notary Public
45
<PAGE>
Certificate
for Renewal and Revival of Charter
MAGIC FINGERS INC. ,a corporation organized under the laws of Delaware, the
certificate of incorporation of which was filed in the office of the Secretary
of State on the 26 day of July 1961 , and recorded inthe office of the Recorder
of Deeds for NEW CASTLE County, in Certificate of Incorporation
Record____________________, Vol. __________________, Page ________________, on
the 28th day of July, 1961 , the charter of which was voided for non- payment of
taxes, now desires to procure a restoration, renewal and revival of its charter,
and hereby certifies as follows:
1. The name of this corporation is MAGIC FINGERS INC.
2. Its registered office in the State of Delaware is located at 100 West
10th Street, City of WILMINGTON, 99 , County of NEW CASTLE and the name oand
address of its registered agent is CORPORATION TRUST COMPANY Corporation Trust
Center, 100 West 10th Street, Wilmington, Delaware
3. The date when the restoration, renewal, and revival of the charter of
this company is to commence is the 28th day of February A.D. 19 80 , at which
time its charter became inoperative and void for non-payment of taxes and this
certificate for renewal and revival is filed by authority of the duly elected
directors of the corporation in accordance with the laws of the State of
Delaware.
4. This corporation was duly organized and carried on the business
authorized by its charter until the 1st Day of March A.D. 19 80 , at which time
its charter became inoperative and void for non-payment of taxes and this
certificate of renewal and revival id filed by authority of the duly elected
directors of the corporation in accordance with the laws of the State of
Delaware.
46
<PAGE>
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section 312
of the General Corporation Law of the State of Delaware, as amended, providing
for the renewal, extension and restoration of charters, JOHN J. HOUGHTALING the
last and acting President, and RITA M. BREIR , the last and acting Secretary of
MAGIC FINGERS INC. , have Hereunto set their hands to this certificate this 21st
day of April, 1981
/s/ John J. Houghtaling
------------------------
ATTEST:
/s/ Rita M. Breier
------------------------
Rita M. Breier
47
<PAGE>
Certificate
for Renewal and Revival of Charter
MAGIC FINGERS INC. ,a corporation organized under the laws of Delaware, the
certificate of incorporation of which was filed in the office of the Secretary
of State on the 26 day of July 1961 , and recorded in the office of the Recorder
of Deeds for NEW CASTLE County, in Certificate of Incorporation
Record____________________, Vol. __________________, Page ________________, on
the 28th day of July, 1961 , the charter of which was voided for non-payment of
taxes, now desires to procure a restoration, renewal and revival of its charter,
and hereby certifies as follows:
1. The name of this corporation is MAGIC FINGERS INC.
2. Its registered office in the State of Delaware is located at Corporation
Trust Center 1209 Orange Street, City of WILMINGTON , County of NEW CASTLE and
the name oand address of its registered agent is CORPORATION TRUST COMPANY
Corporation Trust Center, 1209 Orange Street, Wilminton, Delaware 19801.
3. The date when the restoration, renewal, and revival of the charter of
this company is to commence is the 28th day of Feb. 1983 A.D. 19___, at which
time its charter became inoperative and void for non-paymenbt of taxes and this
certificate for renewal and revival is filed by authority of the duly elected
directors of the corporation in accordance with the laws of the State of
Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section 312
of the General Corporation Law of the State of Delaware, as amended, providing
for the renewal, extension and restroation of charters, JOHN J. HOUGHTALING the
last and acting President, and RITA M. BREIR , the last and acting Secretary of
MAGIC FINGERS INC. , have Hereunto set their hands to this certificate this 7th
day of December 1984
/s/ John J. Houghtaling
-----------------------
John J. Houghtaling
ATTEST: /s/ Rita M. Breier
-----------------------
Rita M. Breier
48
<PAGE>
CERTIFICATE OF RESTORATION AND REVIVAL OF
CERTIFICATE OF INCORPORATION
OF
MAGIC FINGERS INC.
Magic Fingers Inc., a corporation organized under the laws of Delaware, the
charter of which was voided for non-payment of taxes, now desires to procure a
restoration, renewal and revival of its charter, and hereby certifies as
follows:
1. The name of the corporation (hereinafter called the "Corporation") is
Magic Fingers Inc.
2. The corporation was organized under the provisions of the General
Corporation Law of the State of Delaware. The date of filing of its original
certificate of incorporation with the Secretary of State of the State of
Delaware is July 28, 1961.
3. The address, including the street, city, and county, of the registered
office of the corporation in the State of Delaware and the name of the
registered agent at such address are as follows: The Prentice-Hall Corporation
System, Inc. , 32 Loockerman Square, Suite L-100, Dover, Delaware 19901, County
of Kent.
4. The corporation hereby procures a restoration and revival of its
certificate of incorporation, which became inoperative by law on March 1, 1988
for failure to file annual reports and non-payment of taxes payable to the State
of Delaware.
5. The certificate of incorporation of the corporation, which provides for
and will continue to provide for, perpetual duration, shall, upon the filing of
this Certificate of Restoration and Revival of the Certificate of Incorporation
in the Department of State of the State of Delaware, be restored and revived and
shall become fully operative on February 29, 1988.
6. This Certificate of Restoration and Revival of the Certificate of
Incorporation is filed by authority of the duly elected directors as prescribed
by Section 312 of the General Corporation Law of the State of Delaware. Signed
and attested to on January 31, 1992.
/s/ Michael J. Paolini
-----------------------------
Michael J. Paolini, President
Attest:
/s/ Kimberly Paolini
- ---------------------------
Kimberly Paolini, Secretary
49
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
MAGIC FINGERS. INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is
Magic Fingers, Inc.
2. The certificate of incorporation is hereby amended as follows:
(a) By deleting Article FOURTH in its entirely and by substituting in
lieu thereof the following:
"FOURTH: The aggregate number of shares of all classes of the capital
stock which the corporation shall have authority to issue is fifty
million (50,000,000), of which thirty million (30,000,000) shares
shall be common stock, of the par value of $.0001 each and twenty
million (20,000,000) shares shall be Open Stock of the par value of
$.0001 each. Shares of Open Stock may be issued from time to time in
one or more classes or one or more series within any class thereof, in
any manner permitted by law, as determined from time to time by the
board of directors, and stated in the resolution or resolutions
providing for the issuance of such shares adopted by the board of
directors pursuant to the authority hereby vested in it, each class or
series to be appropriately designated, prior to the issuance of any
shares thereof, by some distinguishing letter, number, designation or
title. All shares of stock in such classes or series may be issued for
such consideration and have such voting powers, full or limited, or no
voting powers, and shall have such designations, preferences and
relative, participating, optional, or other special rights, and
qualifications, limitations or restrictions thereof, permitted by law,
as shall be stated and expressed in the resolution or resolutions
providing for the issuance of such shares adopted by the board of
directors pursuant to authority hereby vested in it. The number of
shares of stock of any class or series within any class, so set forth
in such resolution or resolutions may be increased (but not above the
total number of authorized shares) or decreased (but not below the
number of shares thereof then outstanding) by further resolution or
resolutions adopted by the board of directors pursuant to authority
hereby vested in it. The board of directors of the Corporation may
determine the times when, the terms under which the consideration for
which the Corporation shall issue, dispose of or receive subscriptions
for its shares, including treasury shares, or acquire its own shares.
Each share of Common Stock shall entitle the holder thereof to one
vote at every annual or special meeting of the stockholders of this
Corporation. There shall be no cumulative voting of stock in the
election of directors."
(b) By deleting article FIFTH in its entirety.
(c) By renumbering Articles SIXTH, SEVENTH, EIGHTH, and NINTH
respectively as Articles FIFTH, SIXTH, SEVENTH, and EIGHTH.
(d) By adding a new Article NINTH which shall read as follows:
"NINTH: No director shall be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as
a director, provided that nothing herein shall eliminate or limit the
liability of a director (i) for any breach of the director's duty
50
<PAGE>
of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or
a knowing violation of law., (iii) under Section 174 of the Delaware
General Corporation Law, or (iv) for arty transaction from which such
director derived an improper personal benefit. Nothing herein shall
eliminate or limit the liability of a director for any act or omission
occurring prior to the date on which this Article becomes effective."
(e) By deleting Article TENTH. in its entirety and by substituting in
lieu thereof the following:
"TENTH: The corporation shall, to the ful1 extent permitted by Section
145 of the Delaware General Corporation Law, as amended from time to
time, indemnify and advance expenses for all persons whom it may
indemnify and advance expenses for pursuant thereto."
3. The amendments of the certificate of -incorporation herein certified
have been duly adopted in accordance with the provisions of Sections 228 and 242
of the General Corporation Law of the State of Delaware. Prompt written notice
of the adoption of the amendments herein certified has been given to those
stockholders who have not consented in writing thereto, as provided in Section
228 of the General Corporation Law of the State of Delaware. Signed and attested
to on February 25, 1992.
/s/ Michael J. Paolini
-----------------------
MICHAEL J. PAOLINI, President
Attest: /s/ Kimberly Paolini
-----------------------
KIMBERLY PAOLINI, Secretary
51
<PAGE>
CERTIFICATE FOR RENEWAL
AND REVIVAL OF CHARTER
MAGIC Fingers, Inc., a corporation under the laws of Delaware, the charter
of which was voided for non- payment of taxes, now desires to procure a
restoration, renewal and revival of its charter, and hereby certifies as
follows:
1. The name of this corporation is Magic Fingers, Inc.
2. Its registered office in the State of Delaware is located at 1013
Centre Road, Wilmington, DE 19805, county of New Castle. The name
and address of its registered agent is Corporation Service
Company.
3. The date of filing of the original certificate of Incorporation
in Delaware was 7-28-61.
4. The date when restoration, renewal, and revival of the charter of
this company is to commence is the 28th day of February, same
being prior to the date of the expiration of the charter. This
renewal and revival of the charter of this corporation is to be
perpetual.
5. This corporation was duly organized and carried on the business
authorized by its charter until the 1st day of March A.D. 1997,
at which time its charter became inoperative and void for
non-payment of taxes and this certificate for renewal and revival
is filed by authority of the duly elected directors of the
corporation in accordance with the laws of the State of Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section 312
of the General Corporation Law of the State of Delaware, as amended, providing
for the renewal extension and restoration of charters. Gordon Scott Venters the
last and acting authorized officer hereunto set his/her hand to this certificate
this 22nd day of April 1997.
BY: /s/ Gordon Scott Venters
-------------------------
Gordon Scott Venters
TITLE OF OFFICER: President/CEO
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 04/29/1997
971138740 - 0570716
52
<PAGE>
CERTIFICATE FOR RENEWAL
AND REVIVAL OF CHARTER
MAGIC Fingers, Inc., a corporation under the laws of Delaware, the charter
of which was voided for non- payment of taxes, now desires to procure a
restoration, renewal and revival of its charter, and hereby certifies as
follows:
1. The name of this corporation is Magic Fingers, Inc.
2. Its registered office in the State of Delaware is located at 1013
Centre Road, Wilmington, DE 19805, county of New Castle. The name
and address of its registered agent is Corporation Service
Company.
3. The date of filing of the original certificate of Incorporation
in Delaware was 7-28-61.
4. The date when restoration, renewal, and revival of the charter of
this company is to commence is the 28th day of February, 1999
same being prior to the date of the expiration of the charter.
This renewal and revival of the charter of this corporation is to
be perpetual.
5. This corporation was duly organized and carried on the business
authorized by its charter until the 1st day of March A.D. 1999,
at which time its charter became inoperative and void for
non-payment of taxes and this certificate for renewal and revival
is filed by authority of the duly elected directors of the
corporation in accordance with the laws of the State of Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section 312
of the General Corporation Law of the State of Delaware, as amended, providing
for the renewal extension and restoration of charters. Gordon Scott Venters the
last and acting authorized officer hereunto set his/her hand to this certificate
this 24th day of April 1999.
BY: /s/ Gordon Scott Venters
---------------------------
Gordon Scott Venters
TITLE OF OFFICER: President/CEO
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 04/23/1999
991162445 - 0570716
53
<PAGE>
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
Magic Fingers, Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Magic Fingers, Inc.
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended
by changing the Article thereof numbered (1) so that, as amended, said Article
shall be and read as follows: The name of the corporation is MAGICINC.COM.
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and held
upon notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware at which meeting the necessary number of shares as required by
statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, said Magic Fingers, Inc. has caused this certificate to be
signed by Gordon Scott Venters, an Authorized Officer, this 24th day of April,
1999.
By: /s/ Gordon Scott Venters
-------------------------
Authorized Officer
Name: Gordon Scott Venters
-------------------------
Print or Type
Title: President/CEO
54
<PAGE>
AMENDED AND REVISED BY-LAWS
OF
MAGIC FINGERS INC.
(a Delaware corporation)
ARTICLE 1
SHAREHOLDERS
1. CERTIFICATES REPRESENTING SHARES. Certificates representing stock in the
corporation shall be signed by, or in the name of, the corporation by the
Chairman or a Vice-Chairman of the Board of Directors, if any, or by the
President or a Vice-President and by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer of the corporation. Any or all the
signatures on any such certificate may be a facsimile, in case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent. or
registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one class
of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate for stock or uncertified shares
in place of any certificate therefore issued by it alleged to have been lost,
stolen or destroyed , and the Board of Directors may require the owner of any
lost, stolen or destroyed certificate, or his legal representative to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against it on account of the alleged loss, theft or destruction
of any such certificate or the issuance of any such new certificate or
uncertified shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the General
Corporation Law, the Board of Directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
stock of the corporation shall be uncertified shares, the corporation shall be
uncertificated shares. Within a reasonable time after the issuance or transfer
of any uncertificated shares, the corporation shall send to the registered owner
thereof any written noticed prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to issue fractions of a share, If the corporation does not issue
fractions of a share it shall (a) arrange for the disposition of fractional
interests by those entitle thereto, (b) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined or (c) issue scrip or warrants in registered form (whether
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but script or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that the shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
4. STOCK TRANSFERS. Upon compliance with the provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
55
<PAGE>
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice or vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more then sixty nor less than ten days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the next day preceding the day
on which the notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be made by
hand or by certified or registered mail, return receipt requested. If no record
date has been fixed by the Board of Directors and prior action has been by the
Board of Directors is required by the General Corporation Law, the record date
for determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change ,
conversion, or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix a record date , which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the terms "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any provisions of law
may otherwise require.
56
<PAGE>
7. STOCKHOLDER MEETINGS.
-- TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the Board of Directors, provided, that the first
annual meeting shall be held on a date within thirteen months after the
organization of the corporation, and each successive annual meeting shall be
held on a date within thirteen months after the date of the preceding annual
meeting. A special meeting shall be held on the date and at the time fixed by
the Board of Directors.
-- PLACE. Annual meetings and special meetings shall be held at such place,
within or without the State of Delaware, as the Board of Directors may , from
time to time, fix. Whenever the Board of Directors shall fail to fix such place,
the meeting shall be held at the registered office of the corporation in the
State of Delaware.
-- CALL. Annual meetings and special meetings may be called by the Board of
Directors or by any officer instructed by the Board of Directors to call the
meeting.
--NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall, (if any other action which could be taken at a special meeting, is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is called. The notice of any meeting shall also include, or be
accompanied by, any additional statements, information or documents prescribed
by the General Corporation Law. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten days nor more than sixty days before the date of
the meeting, unless the lapse of the prescribed period of time shall have been
waived, and directed to each stockholder at his record address or at such other
address which may have furnished by request in writing to the Secretary of the
corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States mail. If a meeting is adjourned to
another time not more than thirty days hence, and/or to another place, and, if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the Board
of Directors, after adjournment, fix a new record date for the adjourned
meeting. Notice need not be given to any stockholder who submits a written
waiver of notice signed by him before or after the time stated therein.
Attendance of a stockholder at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when a stockholder attends the meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver or notice.
.. STOCKHOLDER LIST. The officer who has charge if the stock ledger of the
corporation shall prepare and make , at least ten days before every meeting of
stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city or other municipality or community where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not specified, at the place where the meeting is to be held. The
list shall also be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder who is present.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by this section or the
books of the corporation, or to vote at any meeting of stockholders.
--CONDUCT OF MEETING. Meetings of the stockholders shall be presided over
by one of the following officers in the order of seniority and if present and
acting - the Chairman of the Board, if any , the Vice-Chairman of the Board, if
any, the President, a Vice-President, or if none of the foregoing is in office
and present and acting, by a chairman to be chosen by the stockholders.
57
<PAGE>
The Secretary of the corporation, or in his absence, an Assistant Secretary,
shall act as secretary of every meeting, but if neither the Secretary nor an
Assistant Secretary is present the Chairman of the meeting shall appoint a
secretary of the meeting.
--PROXY PRESENTATION. Every stockholder may authorize another person or
persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting,
Every proxy must be signed by the stockholder or his attorney-in-fact. No proxy
shall be voted or acted upon after three years from its date unless such proxy
provides for a longer period. A duly executed proxy shall be irrevocable if it
states that it is irrevocable and, if, and only as long as, it is coupled with
an interest sufficient in law to support an irrevocable power. A proxy may be
made irrevocable regardless of whether the interest with which it is coupled is
an interest in the stock itself or an interest in the corporation generally.
--INSPECTORS. The Board of Directors, in advance of any meeting, may, but
need not, appoint one or more inspectors of election to act at the meeting or
any adjournment thereof. If any inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the Board of
Directors in advance of the meeting or at the meeting by the person presiding
thereat. Each inspector, if any before entering upon the discharge of his
duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability. The inspectors, if any, shall determine the number the number of
shares of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the person presiding at the meeting, the inspector or inspectors,
if any, shall make a report in writing of any challenge, question or matter
determined by him or them and execute a certificate of any fact found by him or
them.
--QUORUM. The holders of a majority of the outstanding shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
--VOTING. Each share of stock shall entitle the holder thereof to one vote.
The Board of Directors shall be elected by the plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Any other action shall be authorized by a
majority of the votes cast except where the General Corporation Law prescribes a
different percentage of votes and/or a different exercise of voting power, and
except as may be otherwise prescribed by the provisions of the certificate of
incorporation and these By-Laws. In the election of the Board of Directors, and
for any other action, voting need not be by ballot.
--STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the General
Corporation Law to be taken at any annual or special meeting of stockholders, or
any action which may be taken at any annual or special meeting of stockholders,
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having no less than the minimum number of votes
that would be necessary to authorize or take such action a t a meeting at which
at which all shares entitled to vote thereon were present and voted. Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing. Action taken pursuant to this paragraph shall be subject
to the provisions of Section 228 of the General Corporation Law.
58
<PAGE>
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITIONS. The business and affairs of the corporation
shall be managed by or under the direction of the Board of Directors of the
corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of one person. Thereafter the number of
directors constituting the entire board shall be four. Subject to the foregoing
limitation and except for the first Board of Directors, such number may be
fixed, from time to time, by action of the stockholders or of the Board of
Directors, or , if the number is not fixed, the number shall be four, The number
of directors may be increased or decreased by action of the stockholders or of
the Board of Directors.
3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors have been
elected and qualified or until their earlier resignation or removal. Any
director may resign at any time upon written notice to the corporation.
Thereafter, directors who are elected at an annual meeting of stockholders, and
directors who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors have been elected and qualified or until their
earlier resignation or removal. Except as the General Corporation Law may
otherwise require, in regards to the Board of Directors to arrange special
meetings or stockholders called for the election of directors and/or for the
removal of one or more directors and for the filling of any vacancy in that
connection, newly created directorships and any vacancies in the Board of
Directors, including unfilled vacancies resulting from the removal of directors
for cause or without cause , may be filled by the vote of a majority of the
remaining directors then in office, although less than a quorum, or by the sole
remaining director.
4. MEETINGS.
--TIME. Meetings shall be held at such time as the Board of Directors shall
fix, except that the first meeting of a newly elected Board of Directors shall
be held as soon after its election as the directors may conveniently assemble.
--PLACE. Meetings shall be held at such place within or without the State
of Delaware as shall be fixed by the Board of Directors.
Special meetings may be called by or at the direction of the Chairman of
the Board of Directors, if any , the Vice-Chairman of the Board of Directors, if
any, or the President, or of a majority of the directors in office.
--NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for
regular meetings for which the time and place have been fixed. Written, oral ,
or any other mode of notice of the time and place shall be given for special
meetings in sufficient time for the convenient assembly of the directors
thereat. Notice need not be given to any director or to any member of a
committee of directors who submits a written waiver of notice signed by him
before or after the time state therein. Attendance of any such person at a
meeting shall constitute a waiver of notice of such meeting, except when he
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the directors need be specified in any
written waiver of notice.
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--QUORUM AND ACTION. A majority of the whole Board of Directors shall
constitute a quorum except when a vacancy or vacancies prevents such majority,
whereupon a majority of the directors in office shall constitute a quorum,
provided such majority shall constitute at least one-third of the whole Board of
Directors. A majority of the directors present, whether or not a quorum is
present, may adjourn a meeting to another time and place. Except as herein
otherwise provided and except as otherwise provided by the General Corporation
Law, the vote of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors. The quorum and
voting provisions herein stated shall not be construed as conflicting with any
provisions of the General Corporation Law and which govern a meeting of
directors held to fill vacancies and newly created directorships in the Board of
Directors or action of disinterested directors.
Any member of the board of Directors or of any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors or of
any such committee, as the case may be, by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other.
5. CHAIRMAN OF THE MEETING. The Chairman of the Board of Directors, if any
and if present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairman of the Board of Directors, if any present and acting, or the
President, if present and acting, or any other director chosen by the Board of
Directors, shall preside.
6. REMOVAL OF DIRECTORS, Except as may otherwise be provided by the General
Corporation Law, any director, or the entire Board of Directors may be removed,
with or without cause, by the holders of the majority of the shares than
entitled to vote at an election of directors.
7. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board of Directors, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
Board of Directors may designate one or more of the directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of any member
of any such committee or committees , the member or members thereof present at
any meeting and not disqualified from voting, whether or not he or they
constitute a quorum , may unanimously appoint another member of the board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise the powers and authority of the
Board of Directors in the management of the business and affairs of the
corporation with the exception of any authority the delegation of which is
prohibited by section 141 of the General Corporation Law, and may authorize the
seal of the corporation to be affixed to all papers which may require it.
7. WRITTEN ACTION. Any action required or permitted to be taken at an y
meeting by the Board of Directors or any committee thereof may be taken without
a meeting if all of the members of the Board of Directors or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of the proceedings of the Board of Directors or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a Secretary,
a Treasurer, and if deemed necessary, expedient or desirable by the Board of
Directors, a Chairman of the Board, a Vice-Chairman of the Board , an Executive
Vice-President, one or more other Vice-Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers and such other officers with such
titles as the resolution of the Board of Directors choosing them shall
designate.
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Except as may otherwise be provided in the resolution of the Board of
Directors choosing him, no officer other than the Chairman or Vice-Chairman of
the Board of Directors, if any, need be a director. Any number of offices may be
held by the same person, as the directors may determine.
Unless otherwise provided in the resolution choosing him, each officer
shall be chosen for a term which shall continue until the meeting of the Board
of Directors following the next annual meeting of stockholders and until his
successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform such
duties in the management and operation of the corporation as shall be prescribed
in the resolutions of the Board of Directors designating and choosing such
officers and prescribing their authority and duties as are incident to their
office except to the extent that such resolutions may be inconsistent therewith.
The Secretary or an Assistant Secretary of the corporation shall record all the
proceedings of all meetings and actions in writing of stockholders, directors,
and committees of directors, and shall exercise such additional authority and
perform such additional duties as the Board of Directors shall assign to him.
Any officer may be removed, with or without a cause, by the Board of Directors.
Any vacancy in any office may be filled by the Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors shall
prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BY-LAWS
Subject to the provisions of the certificate of incorporation and the provisions
of the General Corporation Law, the power to amend , after, or repeal these
By-Laws and to adopt new By-Laws may be exercised by the Board of Directors or
by the Stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of the
amended and revised By-laws of MAGIC FINGERS, INC., a Delaware corporation, as
in effect on the date hereof.
Dated: 2/25/92
/s/ Kimberly Paolini
----------------------
Kimberly Paolini
Secretary of MAGIC
FINGERS, INC.
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DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY
SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT"), AND RULE 504 OF REGULATION
D PROMULGATED THEREUNDER.
A-001(a) US $300,000
MAGICINC.COM
5% SERIES A SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE DEBENTURE DUE OCTOBER
20,2001
THIS DEBENTURE of MagicInc.Com, a corporation duly organized and
existing under the laws of Delaware ("Company"), designated as its 5% Series A
Senior Subordinated Convertible Redeemable Debentures Due October 20, 2001, in
an aggregate principal face amount not exceeding Three Hundred Thousand Hundred
Dollars (U.S. $300,000), which Debentures are being, purchased at 100% of the
face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay to BVH Holdings, L.L.C.
the registered holder hereof and his authorized successors and permitted assigns
("Holder"), the aggregate principal face sum not to exceed Three Hundred
Thousand Dollars (U.S. $300,000) on October 20, 2001 ("Maturity Date"), and to
pay interest on the principal sum outstanding, at the rate of 5% per annum
commencing November 20, 1999 and due in full at the Maturity Date pursuant to
paragraph 4(b) herein. Accrual of outstanding principal sum has been made or
duly provided for. The interest so payable will be paid to the person in whose
name this Debenture is registered on the records of the Company regarding
registration and transfers of the Debentures ("Debenture Register"); provided,
however, that the Company's obligation to a transferee of this Debenture arises
only if such transfer, sale or other disposition is made in accordance with the
terms and conditions of the Securities Subscription Agreement dated as of
October 20, 1999 between the Company and BVH Holdings, L.L.C. ("Subscription
Agreement"). The principal of, and interest on, this Debenture are payable at
the address last appearing on the Debenture Register of the Company as
designated in writing by the Holder hereof from time to time. The Company will
pay the outstanding principal due upon this Debenture before or on the Maturity
Date, less any amounts required by law to be deducted or withheld, to the Holder
of this Debenture by check if paid more than 10 days prior to the Maturity Date
or by wire transfer and addressed to such Holder at the last address appearing
on the Debenture Register. The forwarding of such check or wire transfer shall
constitute a payment of outstanding principal hereunder and shall satisfy and
discharge the liability for principal on this Debenture to the extent of the sum
represented by such check or wire transfer. Interest shall be payable in Common
Stock (as defined below) pursuant to paragraph 4(b) herein.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand Dollars
(US$10,000) and integral multiples thereof. The Debentures are exchangeable for
an equal aggregate principal amount of debentures of different authorized
denominations, as requested by the Holders surrendering the same, but not less
than U.S. $10,000. No service charge will be made for such registration or
transfer or exchange, except that Holder shall pay any tax or other governmental
charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any amounts
required to be withheld under the applicable laws.
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3. This Debenture may be transferred or exchanged only in compliance with
the Securities Act of 1933, as amended ("Act") and applicable state securities
laws. Prior to due presentment for transfer of this Debenture, the Company and
any agent of the Company may treat the person in whose name this Debenture is
duly registered on the Company's Debenture Register as the owner hereof for all
other purposes, whether or not this Debenture be overdue, and neither the
Company nor any such agent shall be affected or bound by notice to the contrary.
Any Holder of this Debenture, electing to exercise the right of conversion set
forth in Section 4(a) hereof, in addition to the requirements set forth in
Section 4(a), and any prospective transferee of this Debenture, are also
required to give the Company written confirmation that the Debenture is being
converted ("Notice of Conversion") in the form annexed hereto as Exhibit 1.
4. (a) The Holder of this Debenture is entitled, at its option, at any time
immediately following execution of this Agreement and delivery of the Debenture
hereof, to convert all or any amount over $10,000 of the principal face amount
of this Debenture then outstanding into shares of Common Stock, $0.001 par value
per share, of the Company freely tradeable and without restrictive legend of any
kind ("Common Stock"), at a conversion price ("Conversion Price") for each share
of Common Stock equal to 75% of the average closing bid price of the Common
Stock of the Common Stock as reported on the National Association of Securities
Dealers Electronic Bulletin Board ("OTC Bulletin Board ") for the three (3)
trading days immediately preceding the date of receipt by the Company of a
Notice of Conversion ("Conversion Shares"). If the number of resultant
Conversion Shares would as a matter of law or pursuant to regulatory authority
require the Company to seek shareholder approval of such issuance, the Company
shall, as soon as practicable, take the necessary steps to seek such approval.
Such conversion shall be effectuated, as provided in a certain Escrow Agreement
executed simultaneously with this Debenture, by the Company delivering the
Conversion Shares to the Holder within 5 business days of receipt by the Company
of the Notice of Conversion. Once the Holder has received such Conversion
Shares, the Escrow Agent shall surrender the Debentures to be converted to the
Company, executed by the Holder of this Debenture evidencing such Holder's
intention to convert this Debenture or a specified portion hereof, and
accompanied by proper assignment hereof in blank. Accrued but unpaid interest
shall be subject to conversion. No fractional shares or scrip representing
fractions of shares will be issued on conversion, but the number of shares
issuable shall be rounded to the nearest whole share.
(b) Interest at the rate of 8% per annum shall be paid by issuing Common
Stock of the Company as follows: Based on the average closing bid price of the
Common Stock as reported on the OTC Bulletin Board for the three (3) trading
days immediately preceding the date of the monthly interest payment due ("Market
Price"), the Company shall issue to the Holder shares of Common Stock in an
amount equal to the total monthly interest accrued and due divided by 75% of the
Market Price ("Interest Shares"). The dollar amount of interest payable pursuant
to this paragraph 4(b) shall be calculated based upon the total amount of
payments actually made by the Holder in connection with the purchase of the
Debentures at the time any interest payment is due. If such payment is made by
check, interest shall accrue beginning 10 days from the date the check is
received by the Company. If such payment is made by wire transfer directly into
the Company's account, interest shall accrue beginning on the date the wire
transfer is received by the Company. Common Stock issued pursuant hereto shall
be issued pursuant to Rule 504 of Regulation D in accordance with the terms of
the Subscription Agreement and shall be freely tradeable and without restrictive
legend of any kind.
(c) At any time after 90 days the Company shall have the option to pay to
the Holder 125% of the principal amount of the Debenture, in full, to the extent
conversion has not occurred pursuant to paragraph 4(a) herein, or pay upon
maturity if the Debenture is not converted. The Company shall give the Holder 5
days written notice and the Holder during such 5 days shall have the option to
convert the Debenture or any part thereof into shares of Common Stock at the
Conversion Price set forth in paragraph 4(a) of this Debenture.
5. No provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the outstanding
principal of, and interest on, this Debenture at the time, place, and rate, and
in the form, herein prescribed.
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6. The Company hereby expressly waives demand and presentment for payment,
notice of non- payment, protest, notice of protest, notice of dishonor, notice
of acceleration or intent to accelerate, and diligence in taking any action to
collect amounts called for hereunder and shall be directly and primarily liable
for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including reasonable
attorneys' fees, which may be incurred by the Holder in collecting any amount
due under this Debenture.
8. If one or more of the following described "Events of Default" shall
occur and continue for 30 days, unless a different time frame is noted below:
(a) The Company shall default in the payment of principal or interest
on this Debenture; or
(b) Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate or
financial or other written statements heretofore or hereafter
furnished by or on behalf of the Company in connection with the
execution and delivery of this Debenture or the Subscription
Agreement shall be false or misleading in any material respect at
the time made or the Company shall violate any covenants in the
Subscription Agreement including but not limited to Section 5(b)
or I 0; or
(c) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture, the
Subscription Agreement or the Escrow Agreement and such failure
shall continue uncured for a period of thirty 0) days after
notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing its
inability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings
for its dissolution; (4) apply for or consent to the appointment
of a trustee, liquidator or receiver for its or for a substantial
part of its property or business; (5) file a petition for
bankruptcy relief, consent to the filing of such petition or have
filed against it an involuntary petition for bankruptcy relief,
all under federal or state laws as applicable; or
(e) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties
or assets of the Company; or
(g) Any money judgment, writ or warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars in
the aggregate shall be entered or filed against the Company or
any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days
or in any event later than five (5) days prior to the date of any
proposed sale thereunder; or
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(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings, or other proceedings for relief under any bankruptcy
law or any law for the relief of debtors shall be instituted
voluntarily by or involuntarily against the Company; or
(i) The Company shall have its Common Stock delisted from the
over-the-counter market or other market or exchange on which the
Common Stock is or becomes listed or trading in the Common Stock
shall be suspended for more than 10 consecutive days; or
(j) The Company shall not deliver to the Buyer the Common Stock
pursuant to paragraph 4 herein without restrictive legend within
5 business days.
Then, or at anytime thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a prioritized obligation of the Company.
However, no recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
10. In case any provision of this Debenture is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, and the validity and enforceability
of the remaining provisions of this Debenture will not in any way be affected or
impaired thereby.
11. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
12. This Debenture shall be governed by and construed in accordance with
the laws of Colorado applicable to contracts made and wholly to be performed
within the State of Colorado and shall be binding upon the successors and
assigns of each party hereto. The Holder and the Company hereby mutually waive
trial by jury and consent to exclusive jurisdiction and venue in the courts of
the State of Colorado. At either party's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
American Arbitration Association in Denver and pursuant to its rules. Upon
demand made by either party, each party agrees to submit to and participate in
such arbitration. This Agreement may be executed in counterparts, and the
facsimile transmission of an executed counterpart to this Agreement shall be
effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be duty
executed by an officer thereunto duly authorized.
Dated: October 20, 1999
MAGICINC.COM
By: /s/ Gordon Scott Venters
-------------------------
Gordon Scott Venters
Title: President
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DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY
SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT"), AND RULE 504 OF REGULATION
D PROMULGATED THEREUNDER.
A-001(a) US $300,000
MAGICINC.COM
5% SERIES A SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE DEBENTURE DUE OCTOBER
20,2001
THIS DEBENTURE of MagicInc.Com, a corporation duly organized and
existing under the laws of Delaware ("Company"), designated as its 5% Series A
Senior Subordinated Convertible Redeemable Debentures Due October 20, 2001, in
an aggregate principal face amount not exceeding Three Hundred Thousand Hundred
Dollars (U.S. $300,000), which Debentures are being, purchased at 100% of the
face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay to M&B Trading, L.L.C.
the registered holder hereof and his authorized successors and permitted assigns
("Holder"), the aggregate principal face sum not to exceed Three Hundred
Thousand Dollars (U.S. $300,000) on October 20, 2001 ("Maturity Date"), and to
pay interest on the principal sum outstanding, at the rate of 5% per annum
commencing November 20, 1999 and due in full at the Maturity Date pursuant to
paragraph 4(b) herein. Accrual of outstanding principal sum has been made or
duly provided for. The interest so payable will be paid to the person in whose
name this Debenture is registered on the records of the Company regarding
registration and transfers of the Debentures ("Debenture Register"); provided,
however, that the Company's obligation to a transferee of this Debenture arises
only if such transfer, sale or other disposition is made in accordance with the
terms and conditions of the Securities Subscription Agreement dated as of
October 20, 1999 between the Company and M&B Trading, L.L.C. ("Subscription
Agreement"). The principal of, and interest on, this Debenture are payable at
the address last appearing on the Debenture Register of the Company as
designated in writing by the Holder hereof from time to time. The Company will
pay the outstanding principal due upon this Debenture before or on the Maturity
Date, less any amounts required by law to be deducted or withheld, to the Holder
of this Debenture by check if paid more than 10 days prior to the Maturity Date
or by wire transfer and addressed to such Holder at the last address appearing
on the Debenture Register. The forwarding of such check or wire transfer shall
constitute a payment of outstanding principal hereunder and shall satisfy and
discharge the liability for principal on this Debenture to the extent of the sum
represented by such check or wire transfer. Interest shall be payable in Common
Stock (as defined below) pursuant to paragraph 4(b) herein.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand Dollars
(US$10,000) and integral multiples thereof. The Debentures are exchangeable for
an equal aggregate principal amount of debentures of different authorized
denominations, as requested by the Holders surrendering the same, but not less
than U.S. $10,000. No service charge will be made for such registration or
transfer or exchange, except that Holder shall pay any tax or other governmental
charges payable in connection therewith.
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2. The Company shall be entitled to withhold from all payments any amounts
required to be withheld under the applicable laws.
3. This Debenture may be transferred or exchanged only in compliance with
the Securities Act of 1933, as amended ("Act") and applicable state securities
laws. Prior to due presentment for transfer of this Debenture, the Company and
any agent of the Company may treat the person in whose name this Debenture is
duly registered on the Company's Debenture Register as the owner hereof for all
other purposes, whether or not this Debenture be overdue, and neither the
Company nor any such agent shall be affected or bound by notice to the contrary.
Any Holder of this Debenture, electing to exercise the right of conversion set
forth in Section 4(a) hereof, in addition to the requirements set forth in
Section 4(a), and any prospective transferee of this Debenture, are also
required to give the Company written confirmation that the Debenture is being
converted ("Notice of Conversion") in the form annexed hereto as Exhibit 1.
4. (a) The Holder of this Debenture is entitled, at its option, at any time
immediately following execution of this Agreement and delivery of the Debenture
hereof, to convert all or any amount over $10,000 of the principal face amount
of this Debenture then outstanding into shares of Common Stock, $0.001 par value
per share, of the Company freely tradeable and without restrictive legend of any
kind ("Common Stock"), at a conversion price ("Conversion Price") for each share
of Common Stock equal to 75% of the average closing bid price of the Common
Stock of the Common Stock as reported on the National Association of Securities
Dealers Electronic Bulletin Board ("OTC Bulletin Board ") for the three (3)
trading days immediately preceding the date of receipt by the Company of a
Notice of Conversion ("Conversion Shares"). If the number of resultant
Conversion Shares would as a matter of law or pursuant to regulatory authority
require the Company to seek shareholder approval of such issuance, the Company
shall, as soon as practicable, take the necessary steps to seek such approval.
Such conversion shall be effectuated, as provided in a certain Escrow Agreement
executed simultaneously with this Debenture, by the Company delivering the
Conversion Shares to the Holder within 5 business days of receipt by the Company
of the Notice of Conversion. Once the Holder has received such Conversion
Shares, the Escrow Agent shall surrender the Debentures to be converted to the
Company, executed by the Holder of this Debenture evidencing such Holder's
intention to convert this Debenture or a specified portion hereof, and
accompanied by proper assignment hereof in blank. Accrued but unpaid interest
shall be subject to conversion. No fractional shares or scrip representing
fractions of shares will be issued on conversion, but the number of shares
issuable shall be rounded to the nearest whole share.
(b) Interest at the rate of 8% per annum shall be paid by issuing Common
Stock of the Company as follows: Based on the average closing bid price of the
Common Stock as reported on the OTC Bulletin Board for the three (3) trading
days immediately preceding the date of the monthly interest payment due ("Market
Price"), the Company shall issue to the Holder shares of Common Stock in an
amount equal to the total monthly interest accrued and due divided by 75% of the
Market Price ("Interest Shares"). The dollar amount of interest payable pursuant
to this paragraph 4(b) shall be calculated based upon the total amount of
payments actually made by the Holder in connection with the purchase of the
Debentures at the time any interest payment is due. If such payment is made by
check, interest shall accrue beginning 10 days from the date the check is
received by the Company. If such payment is made by wire transfer directly into
the Company's account, interest shall accrue beginning on the date the wire
transfer is received by the Company. Common Stock issued pursuant hereto shall
be issued pursuant to Rule 504 of Regulation D in accordance with the terms of
the Subscription Agreement and shall be freely tradeable and without restrictive
legend of any kind.
(c) At any time after 90 days the Company shall have the option to pay to
the Holder 125% of the principal amount of the Debenture, in full, to the extent
conversion has not occurred pursuant to paragraph 4(a) herein, or pay upon
maturity if the Debenture is not converted. The Company shall give the Holder 5
days written notice and the Holder during such 5 days shall have the option to
convert the Debenture or any part thereof into shares of Common Stock at the
Conversion Price set forth in paragraph 4(a) of this Debenture.
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5. No provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the outstanding
principal of, and interest on, this Debenture at the time, place, and rate, and
in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for payment,
notice of non- payment, protest, notice of protest, notice of dishonor, notice
of acceleration or intent to accelerate, and diligence in taking any action to
collect amounts called for hereunder and shall be directly and primarily liable
for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including reasonable
attorneys' fees, which may be incurred by the Holder in collecting any amount
due under this Debenture.
8. If one or more of the following described "Events of Default" shall
occur and continue for 30 days, unless a different time frame is noted below:
(a) The Company shall default in the payment of principal or interest
on this Debenture; or
(b) Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate or
financial or other written statements heretofore or hereafter
furnished by or on behalf of the Company in connection with the
execution and delivery of this Debenture or the Subscription
Agreement shall be false or misleading in any material respect at
the time made or the Company shall violate any covenants in the
Subscription Agreement including but not limited to Section 5(b)
or I 0; or
(c) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture, the
Subscription Agreement or the Escrow Agreement and such failure
shall continue uncured for a period of thirty 0) days after
notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing its
inability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings
for its dissolution; (4) apply for or consent to the appointment
of a trustee, liquidator or receiver for its or for a substantial
part of its property or business; (5) file a petition for
bankruptcy relief, consent to the filing of such petition or have
filed against it an involuntary petition for bankruptcy relief,
all under federal or state laws as applicable; or
(e) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties
or assets of the Company; or
(g) Any money judgment, writ or warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars in
the aggregate shall be entered or filed against the Company or
any of its properties or other assets and shall remain unpaid,
unvacated,
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unbonded or unstayed for a period of fifteen (15) days or in any
event later than five (5) days prior to the date of any proposed
sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings, or other proceedings for relief under any bankruptcy
law or any law for the relief of debtors shall be instituted
voluntarily by or involuntarily against the Company; or
(i) The Company shall have its Common Stock delisted from the
over-the-counter market or other market or exchange on which the
Common Stock is or becomes listed or trading in the Common Stock
shall be suspended for more than 10 consecutive days; or
(j) The Company shall not deliver to the Buyer the Common Stock
pursuant to paragraph 4 herein without restrictive legend within
5 business days.
Then, or at anytime thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a prioritized obligation of the Company.
However, no recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
10. In case any provision of this Debenture is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, and the validity and enforceability
of the remaining provisions of this Debenture will not in any way be affected or
impaired thereby.
11. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
12. This Debenture shall be governed by and construed in accordance with
the laws of Colorado applicable to contracts made and wholly to be performed
within the State of Colorado and shall be binding upon the successors and
assigns of each party hereto. The Holder and the Company hereby mutually waive
trial by jury and consent to exclusive jurisdiction and venue in the courts of
the State of Colorado. At either party's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
American Arbitration Association in Denver and pursuant to its rules. Upon
demand made by either party, each party agrees to submit to and participate in
such arbitration. This Agreement may be executed in counterparts, and the
facsimile transmission of an executed counterpart to this Agreement shall be
effective as an original.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duty
executed by an officer thereunto duly authorized.
Dated: October 20, 1999
MAGICINC.COM
By: /s/ Gordon Scott Venters
--------------------------
Gordon Scott Venters
Title: President
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DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY
SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT"), AND RULE 504 OF REGULATION
D PROMULGATED THEREUNDER.
A-001(a) US $300,000
MAGICINC.COM
5% SERIES A SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE DEBENTURE DUE OCTOBER
20,2001
THIS DEBENTURE of MagicInc.Com, a corporation duly organized and
existing under the laws of Delaware ("Company"), designated as its 5% Series A
Senior Subordinated Convertible Redeemable Debentures Due October 20, 2001, in
an aggregate principal face amount not exceeding Three Hundred Thousand Hundred
Dollars (U.S. $300,000), which Debentures are being, purchased at 100% of the
face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay to HLKT Holdings,
L.L.C. the registered holder hereof and his authorized successors and permitted
assigns ("Holder"), the aggregate principal face sum not to exceed Three Hundred
Thousand Dollars (U.S. $300,000) on October 20, 2001 ("Maturity Date"), and to
pay interest on the principal sum outstanding, at the rate of 5% per annum
commencing November 20, 1999 and due in full at the Maturity Date pursuant to
paragraph 4(b) herein. Accrual of outstanding principal sum has been made or
duly provided for. The interest so payable will be paid to the person in whose
name this Debenture is registered on the records of the Company regarding
registration and transfers of the Debentures ("Debenture Register"); provided,
however, that the Company's obligation to a transferee of this Debenture arises
only if such transfer, sale or other disposition is made in accordance with the
terms and conditions of the Securities Subscription Agreement dated as of
October 20, 1999 between the Company and HLKT Holdings, L.L.C. ("Subscription
Agreement"). The principal of, and interest on, this Debenture are payable at
the address last appearing on the Debenture Register of the Company as
designated in writing by the Holder hereof from time to time. The Company will
pay the outstanding principal due upon this Debenture before or on the Maturity
Date, less any amounts required by law to be deducted or withheld, to the Holder
of this Debenture by check if paid more than 10 days prior to the Maturity Date
or by wire transfer and addressed to such Holder at the last address appearing
on the Debenture Register. The forwarding of such check or wire transfer shall
constitute a payment of outstanding principal hereunder and shall satisfy and
discharge the liability for principal on this Debenture to the extent of the sum
represented by such check or wire transfer. Interest shall be payable in Common
Stock (as defined below) pursuant to paragraph 4(b) herein.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand Dollars
(US$10,000) and integral multiples thereof. The Debentures are exchangeable for
an equal aggregate principal amount of debentures of different authorized
denominations, as requested by the Holders surrendering the same, but not less
than U.S. $10,000. No service charge will be made for such registration or
transfer or exchange, except that Holder shall pay any tax or other governmental
charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any amounts
required to be withheld under the applicable laws.
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3. This Debenture may be transferred or exchanged only in compliance with
the Securities Act of 1933, as amended ("Act") and applicable state securities
laws. Prior to due presentment for transfer of this Debenture, the Company and
any agent of the Company may treat the person in whose name this Debenture is
duly registered on the Company's Debenture Register as the owner hereof for all
other purposes, whether or not this Debenture be overdue, and neither the
Company nor any such agent shall be affected or bound by notice to the contrary.
Any Holder of this Debenture, electing to exercise the right of conversion set
forth in Section 4(a) hereof, in addition to the requirements set forth in
Section 4(a), and any prospective transferee of this Debenture, are also
required to give the Company written confirmation that the Debenture is being
converted ("Notice of Conversion") in the form annexed hereto as Exhibit 1.
4. (a) The Holder of this Debenture is entitled, at its option, at any time
immediately following execution of this Agreement and delivery of the Debenture
hereof, to convert all or any amount over $10,000 of the principal face amount
of this Debenture then outstanding into shares of Common Stock, $0.001 par value
per share, of the Company freely tradeable and without restrictive legend of any
kind ("Common Stock"), at a conversion price ("Conversion Price") for each share
of Common Stock equal to 75% of the average closing bid price of the Common
Stock of the Common Stock as reported on the National Association of Securities
Dealers Electronic Bulletin Board ("OTC Bulletin Board ") for the three (3)
trading days immediately preceding the date of receipt by the Company of a
Notice of Conversion ("Conversion Shares"). If the number of resultant
Conversion Shares would as a matter of law or pursuant to regulatory authority
require the Company to seek shareholder approval of such issuance, the Company
shall, as soon as practicable, take the necessary steps to seek such approval.
Such conversion shall be effectuated, as provided in a certain Escrow Agreement
executed simultaneously with this Debenture, by the Company delivering the
Conversion Shares to the Holder within 5 business days of receipt by the Company
of the Notice of Conversion. Once the Holder has received such Conversion
Shares, the Escrow Agent shall surrender the Debentures to be converted to the
Company, executed by the Holder of this Debenture evidencing such Holder's
intention to convert this Debenture or a specified portion hereof, and
accompanied by proper assignment hereof in blank. Accrued but unpaid interest
shall be subject to conversion. No fractional shares or scrip representing
fractions of shares will be issued on conversion, but the number of shares
issuable shall be rounded to the nearest whole share.
(b) Interest at the rate of 8% per annum shall be paid by issuing Common
Stock of the Company as follows: Based on the average closing bid price of the
Common Stock as reported on the OTC Bulletin Board for the three (3) trading
days immediately preceding the date of the monthly interest payment due ("Market
Price"), the Company shall issue to the Holder shares of Common Stock in an
amount equal to the total monthly interest accrued and due divided by 75% of the
Market Price ("Interest Shares"). The dollar amount of interest payable pursuant
to this paragraph 4(b) shall be calculated based upon the total amount of
payments actually made by the Holder in connection with the purchase of the
Debentures at the time any interest payment is due. If such payment is made by
check, interest shall accrue beginning 10 days from the date the check is
received by the Company. If such payment is made by wire transfer directly into
the Company's account, interest shall accrue beginning on the date the wire
transfer is received by the Company. Common Stock issued pursuant hereto shall
be issued pursuant to Rule 504 of Regulation D in accordance with the terms of
the Subscription Agreement and shall be freely tradeable and without restrictive
legend of any kind.
(c) At any time after 90 days the Company shall have the option to pay to
the Holder 125% of the principal amount of the Debenture, in full, to the extent
conversion has not occurred pursuant to paragraph 4(a) herein, or pay upon
maturity if the Debenture is not converted. The Company shall give the Holder 5
days written notice and the Holder during such 5 days shall have the option to
convert the Debenture or any part thereof into shares of Common Stock at the
Conversion Price set forth in paragraph 4(a) of this Debenture.
5. No provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the outstanding
principal of, and interest on, this Debenture at the time, place, and rate, and
in the form, herein prescribed.
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<PAGE>
6. The Company hereby expressly waives demand and presentment for payment,
notice of non- payment, protest, notice of protest, notice of dishonor, notice
of acceleration or intent to accelerate, and diligence in taking any action to
collect amounts called for hereunder and shall be directly and primarily liable
for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including reasonable
attorneys' fees, which may be incurred by the Holder in collecting any amount
due under this Debenture.
8. If one or more of the following described "Events of Default" shall
occur and continue for 30 days, unless a different time frame is noted below:
(a) The Company shall default in the payment of principal or interest
on this Debenture; or
(b) Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate or
financial or other written statements heretofore or hereafter
furnished by or on behalf of the Company in connection with the
execution and delivery of this Debenture or the Subscription
Agreement shall be false or misleading in any material respect at
the time made or the Company shall violate any covenants in the
Subscription Agreement including but not limited to Section 5(b)
or 10; or
(c) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture, the
Subscription Agreement or the Escrow Agreement and such failure
shall continue uncured for a period of thirty 0) days after
notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing its
inability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings
for its dissolution; (4) apply for or consent to the appointment
of a trustee, liquidator or receiver for its or for a substantial
part of its property or business; (5) file a petition for
bankruptcy relief, consent to the filing of such petition or have
filed against it an involuntary petition for bankruptcy relief,
all under federal or state laws as applicable; or
(e) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties
or assets of the Company; or
(g) Any money judgment, writ or warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars in
the aggregate shall be entered or filed against the Company or
any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days
or in any event later than five (5) days prior to the date of any
proposed sale thereunder; or
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(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings, or other proceedings for relief under any bankruptcy
law or any law for the relief of debtors shall be instituted
voluntarily by or involuntarily against the Company; or
(i) The Company shall have its Common Stock delisted from the
over-the-counter market or other market or exchange on which the
Common Stock is or becomes listed or trading in the Common Stock
shall be suspended for more than 10 consecutive days; or
(j) The Company shall not deliver to the Buyer the Common Stock
pursuant to paragraph 4 herein without restrictive legend within
5 business days.
Then, or at anytime thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a prioritized obligation of the Company.
However, no recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
10. In case any provision of this Debenture is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, and the validity and enforceability
of the remaining provisions of this Debenture will not in any way be affected or
impaired thereby.
11. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
12. This Debenture shall be governed by and construed in accordance with
the laws of Colorado applicable to contracts made and wholly to be performed
within the State of Colorado and shall be binding upon the successors and
assigns of each party hereto. The Holder and the Company hereby mutually waive
trial by jury and consent to exclusive jurisdiction and venue in the courts of
the State of Colorado. At either party's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
American Arbitration Association in Denver and pursuant to its rules. Upon
demand made by either party, each party agrees to submit to and participate in
such arbitration. This Agreement may be executed in counterparts, and the
facsimile transmission of an executed counterpart to this Agreement shall be
effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be duty
executed by an officer thereunto duly authorized.
Dated: October 20, 1999
MAGICINC.COM
By: /s/ Gordon Scott Venters
--------------------------
Gordon Scott Venters
Title: President
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"Shakma" Single Picture Agreement
AGREEMENT made this_____ day of March, 1998 by and between MAGIC FINGERS, INC.
1509 Southeast 2nd Court, Fort Lauderdale, Florida 33301 (hereinafter called
"Licensor") and CASTLE HILL PRODUCTIONS, INC., 1414 Avenue of the Americas, New
York, New York 10019, 15th Floor, U.S.A. (hereinafter called "Licensee").
WITNESSETH:
In consideration of the mutual covenant herein contained, Licensor and
Licensee agree as follows:
1) SUBJECT MATTER: The subject matter of SHAKMA starring Christopher Atkins and
Roddy McDowell this agreement is the motion picture (hereinafter called the
"Picture") described in Schedule "A" attached hereto and made a part hereof.
Whenever the term "Picture" is used herein, it shall be deemed to refer to the
picture licensed hereunder.
2) GRANT OF RIGHTS: Licensor hereby grants, sells and assigns to the Licensee
and the Licensee shall have and enjoy all rights in and to the Picture without
condition restriction or limitation of any kind, for the territory described in
Schedule "A" attached hereto and made a part hereof (hereinafter called the
"Territory") and for the term of this agreement described in Schedule "A"
attached hereto and made a part hereof (hereinafter called the "Term").
The rights granted hereunder to Licensee, without limiting the Generality
of the foregoing, include the following:
a) The sole and exclusive right to exhibit, distribute, market, advertise,
publicize and exploit the Picture and trailers thereof in any and all languages
and versions and reissues thereof and to license and to permit others to
exhibit, distribute, market, exploit, advertise and publicize the same and
reissue thereof throughout the Territory or any part there of, for any and all
purposes whatsoever (theatrical, non-theatrical, commercial, non- commercial,
sponsored, non-sponsored, sustaining, and in connection with the advertising
and/or exploitation of commercial products or otherwise), including but not
limited to distribution to the United States Army, Navy and other military or
Armed Services installations, and American Red Cross; home viewing, veterans
hospitals or similar facilities wherever situated throughout the world;
airplanes; ships at sea; schools; CATV; video cassettes and discs; on all gauges
of film and other surfaces and by every means, method or device (mechanical,
electrical or otherwise) known or which may hereafter be discovered, invented,
developed, devised or created, including but not limited to radio and television
in all forms and improvements thereof, now known or hereafter to be known,
including but not limited to "free television," "pay television," "subscription
television," whether wired or over-the- air.
b) The right but not the obligation to register the Picture for copyright
in the Territory, or any part thereof, it being agreed, however, that upon the
expiration of the Term of this agreement, the Licensee, upon Licensor's request,
will execute or cause to be executed an assignment of any such copyright.
c) The right to announce on the Picture and elsewhere that it is presented
by Licensee and/or Licensee's designees, and to use Licensee's own logo, name
and trademark on the Picture and to authorize others to use and attach their own
logos, names, and trademarks thereon.
d) The right to use all music, copyrighted or otherwise, contained in the
Picture in connection with the exhibition of the Picture for all purposes and in
all media embraced in the grant of rights herein made to the Licensee.
e) The right to use the names, pseudonyms, photographs, likenesses, acts,
poses, sound effects and voices of all artists appearing in the Picture, the
director thereof, the Licensor thereof, the musicians, writers, composers,
author, and others appearing in or connected with the production of the Picture,
in connection with the exhibition, distribution, marketing, advertising,
exploitation, and publicizing of the Picture in any or all parts of the
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Territory, and to write and publish articles concerning each thereof in
connection with the exploitation, publicizing, advertising and sale of the
Picture.
f) The right to telecast by any form of television, commercial messages
before, during or after the telecasting of the Picture.
g) The right to write, draw, illustrate, compose, prepare, publish and to
license and to authorize others to write, prepare, compose and publish synopses,
stories, illustrations and comic books in all forms and combinations including
but not limited to the right to utilize such synopses, stories, illustrations
and/or comic books and excerpts therefrom in newspapers, magazines and/or trade
periodicals in any and all parts of the Territory and the right to use excerpts
from the story or literary material; upon which the Picture is based in
documents, posters, road displays, press books and any and all other media.
h) The right in the name of the Licensee otherwise to institute and.
prosecute any and all actions or proceedings which Licensee may deem necessary
to institute; or prosecute for the purpose of establishing, maintaining or
preserving any of the rights herein granted or purported to be granted to
Licensee and similarly to defend any action or proceeding which may be brought
against Licensee, its licensees, contractees, or assignees with respect to the
Picture or any of the rights herein granted or purported to be granted to
Licensee or which in any manner questions or disputes any of the rights of
Licensee in and to the Picture or any of the rights herein granted. If legal
action results in the recovery by Licensee of any monies, such monies shall be
owned exclusively by Licensee.
i) The right to utilize in whole or in part without charge, any and all
artwork and other materials (negative or otherwise) used or prepared for any and
all versions of the Picture, whether for press books, brochures, advertising or
other publicity, together with access, without charge, to all such materials.
j) To the extent that Licensor has or can obtain such rights, the right to
use and exploit merchandising rights and commercial tie-in rights of any and
every kind or nature related to, arising out of, or in connection with the
Picture and/or the title thereof and/or music used therein and/or the characters
appearing therein and/or their names and characteristics and/or under a name
which incorporates any phrase, clause, sentence or expression which is used in
the Picture or which the general public associates with the Picture.
Merchandising rights include the right to produce, distribute, sell and exploit
so-called "premiums" (accessories, mailing pieces, labels or other items or
devices, by which any sponsor is able to call to the attention of the public
that the Picture is associated with or related to such sponsor's business,
products, or service); the publication of comic books or comic strips, the
making of endorsements, the making of costumes or parts of costumes, or the
manufacturing of any item which is related to or evolves from the Picture.
Licensee shall be entitled to twenty-five (25%) percent of the gross receipts.
k) Licensee shall have the right in its sole discretion to make any and all
changes and modifications in the Picture which Licensee shall determine to be
necessary or desirable.
3) DELIVERY OF THE PICTURE: Licensor shall supply Licensee with, and shall
deliver all materials of the Picture, to the extent and within the period
specified in "Materials" in Schedule "A" and as defined in Schedule "C",
"Delivery of Materials" attached hereto and by this reference made a part
hereof.
Delivery of the Picture shall mean the physical delivery to Licensee within
a period of not more than thirty (30) days from the date hereof (time being of
the essence) at such address or addresses as Licensee shall designate in
writing, at the sole cost and expense of Licensor and free and clear of any
liens, claims, charges, limitations, restrictions, encumbrances of any kind (i)
all of the schedules, details and information required to be delivered pursuant
to any provision of this agreement, and (ii) all of the physical materials and
items enumerated in the Schedules "A" and "C". Licensee shall have the right
during the thirty (30) day period (subject to laboratory and other delays beyond
its control) following the tendered delivery of each item to examine and inspect
same. Delivery will not be deemed complete within the meaninc, of this agreement
until delivery of all materials and items required to be delivered shall have
been effected and the aforesaid period of inspection shall have expired. Upon
the
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completion of such inspection and examination Licensee shall advise Licensor
wherein any such delivery is not proper or complete. If delivery shall not be
completed within the time, manner and in accordance with the requirements of
this agreement, Licensee (without prejudice to any other right or remedy which
may be available to it) may but shall not be obligated to (a) itself supply at
the cost of Licensor, or to require Licensor to promptly supply, such items or
materials which Licensor failed to supply in the first instance, or to (b)
require Licensor to refund any kind and all monies therefor paid to it until
Licensor shall effect complete and proper delivery, or to (c) terminate this
agreement and all of the obligations of Licensee hereunder, in which event,
Licensor will, upon demand, pay to Licensee a sum equal to the aggregate of all
payments to Licensor plus costs, expenditures and indebtedness incurred in
respect of the Picture.
4) PAYMENT: As full consideration of the rights herein granted, and of the
representations, warranties, and covenants herein made and/or agreed to be
granted and made, Licensee shall pay to Licensor the amount set forth in
Schedule "A."
5) DEFINITION OF GROSS RECEIPTS: The term cross receipts as used herein shau be
deemed to mean any and all moneys from any and all sources, paid to Licensee by
exhibitors lessees, or other users of the Picture. Included in such receipts
shall be moneys paid and received by Licensee from sub-distributors and/or
sub-licensees. The gross receipts shall also include all sums or damages
collected by reason of the infringement or interference by third persons of or
with the Picture, or any of the rights herein granted to Licensee, after
deducting therefrom ail expenses incurred in deriving such sums. No litigation
will be initiated relevant to infringement or interference by Licensee without
the prior written approval of Licenser, which approval will not be unreasonably
withheld.
6) DEDUCTION FROM GROSS RECEIPTS: All of the gross receipts derived from the
distribution of the Picture shall be applied, kept and retained by Licensee
until it shall have been reimbursed for its distribution fees (hereinafter set
forth) and it shall have recouped a sum equal to the total costs and charges
expended and incurred by Licensee as and for those out-of-pocket, third-party
costs (hereinafter Cloven as "Distribution Costs and Expenses"), which are
acceptable and standard in the industry and shall include: (a) cost of
laboratory work, including the manufacture of required preprint materials and
elements, prints, cassettes, trailers, re-editing, dubbing, etc.; (b)
advertising; (c) taxes: if applicable; (d) censorship charges; (e) shipping and
freight; (f) customs and duties for Canada; (g) publicity and promotion
expenses.
In the event that Licensor shall fail to deliver Licensee any of the
delivery items listed in Schedule "C" within ten (10) days after Licensee has
advised Licenser, in writing, of such deficiency, then, Licensee shall have the
riht to advance the cost of manufacturing such items and to recotip such costs
in the same manner as it recoups distribution costs and expenses as set forth
hereinafter.
7) DISTRIBUTION FEES
a) With regard to pay television, Licensee shall be entitled to
thirty-five (35%) percent of the gross receipts.
b) With regard to basic cable television, Licensee shall be entitled to
forty (40%) percent of the gross receipts.
c) With regard to prime time, network television, Licensee shall be
entitled to fifty (50%) percent of the gross receipts.
d) With regard to late night, network television, Licensee shall be
entitled to fifty (50%) percent of the gross receipts.
e) With regard to syndicated television, Licensee shall be entitled to
fifty (50%) percent of the gross receipts.
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f) With regard to home video distribution, Licensee shall be entitled to
thirty-five (35%) percent of the gross receipts.
g) With regard to distribution to Canada Licensee shall be entitled to
thirty-five (35%) percent of the gross receipts.
h) With regard to all other ancillary rights, Licensee shall be entitled
thirty-five (35%) percent of the gross receipts.
i) With regard to renewal of pay and basic cable television and/or home
video licenses, Licensee will be entitled to forty (40%) percent of
the gross receipts.
8) APPLICATION OF GROSS RECEIPTS: All gross receipts derived and collected by
Licensee from all distribution, sale and other disposition of the Picture, in
the Territory, during the Term said be applied in the following manner and
order:
a) First, to Licensee, as and for its distributions fees;
b) Next, after the continuing deductions set forth in a) above, to
Licensee, as and for its Distribution Costs and Expenses;
c) Next, after the continuing deductions set forth in a) and b) above, to
Licensee, as and for recoupment of the advance guaranty is paid to
Licensor, if any;
d) Next, after the continuing deductions set forth in a) and b) above, to
Licensee, the remaining monies shall be disbursed on a one-hundred
(100%) percent basis to Licensor.
9) LICENSOR WARRANTIES AND REPRESENTATIONS: As an inducement to Licensee to
enter into this agreement and make the payment provided for herein, Licensor
warrants and represents the following:
a) Licenser is the sole owner of, or controls the rights and licenses
granted and assigned, and has the right to enter into and perform this
agreement and grant, sell and assigns all of the exclusive rights and
licenses herein contained, including but not limited to literary and
music synchronization rights in connection with the Picture.
b) (DELETED)
c) Licensor warrants and represents there are no claims or litigation,
pending or threatened, concerning Licensor's rights or title as herein
sold and assigned. Licensor has not done, nor will Licensor do,
anything which may impair the rights sold old assigned.
d) That all obligations with respect to the Pictures including but
limiting, to all salaries, royalties, laboratory charges, recording
fees and the like, have heretofore been fully paid, and that Licensor
has obtained proper and effective licenses to record, synchronize
perform and to otherwise utilize throughout the Territory, all music
which has been used in the Picture and contained in the soundtracks
thereof that any and all residuals and/or other payments due
performers, unions, etc. shall be the sole responsibility of Licensor.
e) The Licensor controls the complete, entire and exclusive sound and
silent theatrical, non- theatrical and television rights for the
Territory in and to, the story upon which the Picture is based, the
screen adaptations thereof and all other materials tlaerein including
but not limited to dialogue, music and all titles, characters and text
thereof, together with the right to use, in publicizing, advertising
and exploiting the Picture, the names, characters, titles and text of
and from the literary material upon which the same are based, together
with the names of the authors thereof, as well as the names,
pseudonyms and likenesses of the actors or others appearing in
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or connected with the Picture; that all of such rights are controlled
by Licensor, together with the complete, absolute, entire and
unrestricted right of assignment thereof.
f) That the Picture and the synchronized sound thereof, do not infringe
upon the common law rights or copyrights or the literary, dramatic,
musical, patented performance rights or the trademarks or trade names
of any other party, and that nothing contained in the Picture violates
the private, civil or property rights or right of privacy, or any
other right of any other persons firm or corporation or otherwise.
g) That all motion picture rights, including but not limited to,
theatrical rights, non-theatrical, video cassette and television
rights in and to all material used in the Picture, the negatives,
prints, music, and records are free from mortgages, claims, debts,
charges and other encumbrances of any kind, nature and description,
insofar as the rights of the Licensee hereunder are concerned.
h) That neither the dialogue nor the photography of the Picture contains
any reference to or representation of any product, commodity or
service which could be construed as an advertisement or recommendation
of such product, commodity or service.
i) At the time of delivery of the Picture, the pre-print materials which
Licensor is delivering, to Licensee shall be in suitable condition for
the manufacture therefrom of commercially acceptable duplicate
pre-print and positive-print materials. If required by Licensee,
Licensor agrees to provide Licensee with access to such additional
pre-print materials with respect to the Picture as Licensor may have
in its possession.
10) ACCOUNTING: License agrees to keep complete and accurate accounts and
records of the distribution and marketing of the Picture. Licensee agrees that
all such books and records shall be open to the inspection of Licensor by
Certified Public Accountant and that Licensor's Certified Public Accountant
shall be entitled to make examinations and copies thereof during all reasonable
business hours, upon reasonable written notice to Licensee, no more than one
time during each calendar year of the Term.
During the first year of the Term hereof, Licensee shall provide
Licensor with quarterly statements of account; such statements shall include all
payments made by the close of the calendar quarter and shall be due sixty (60)
days after the close of said calendar quarter.
During the second and third years of the Term hereof, Licensee shall
provide Licensor with semi-annual statements of account; such statements shall
include all payments made by the close of said semi-annual period and shall be
due sixty (60) days after the close of said semi-annual period.
During the remainder of the Term hereof Licensee shall provide Licensor
with annual statements of account; such statements shall include all payments
made by the close of that year and shall be due sixty (60) days after the close
of that year.
11) INDEMNIFICATION: Each party hereto will, at its own cost and expense,
indemnify the other, its assignees, successors and licensees and hold them free
and harmless from any and all loss, damage, liability and expense, including
reasonable attorneys' fees, resulting from any breach or claimed breach of any
warranties, representations, covenants or agreements contained herein. The party
claiming indemnity shall furnish the indemnifying party with prompt notice of
the institution of any action or the making of any claim for which the
indemnifying party is responsible. Thereupon, the indemnifying party shall
undertake, against such action of claim. The party claiming indemnity shall have
the night, at its option, to participate, at its own expense, and by its own
attorneys in the defense of any litigation. Neither acceptance by Licensee of
the Picture, nor any termination of this agreement, nor election on the part of
the party claiming, indemnity to participate in the defense of any litigation
shall impair, modify or discharge the indemnifying party's obligations under
this paragraph.
12) NOTICES: All notices and other data required or desired to be given
hereunder by either party shall be deposited in the mails in the country of
origin postage prepaid, addressed to the other at the address set forth at the
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head of this agreement. Either party shall have the right to designate other or
different addresses for the giving, of any such notice by a notice given in
accordance with the provisions of this article.
13) ENTIRE AGREEMENT: This agreement constitutes the entire agreement between
the parties and may not be changed or modified, nor may any provision hereof be
waived except by an agreement in writing, signed by both parties hereto.
14) APPLICABLE LAW: This agreement shall be construed in accordance with, and
all questions with respect thereto, shall be determined by the laws of the State
of New York, U.S.A.
15) NO WAIVER: No waiver by either party of any breach of any provision of this
agreement shall be deemed to be a waiver of any preceding or succeeding breach
of the same or any other covenant or provision.
16) FORCE MAJEURE: Failure by either party to perform its obligations or delay
in such performance as a result of Acts of God, war, strikes, lock-outs,
shortened working hours, other industrial action, machine breakdown, fire,
flood, explosions, injunctions, judgments, adverse claims, or any other cause
beyond its reasonable control shall not constitute a breach of the terms of this
Agreement PROVIDED THAT such party shall use all reasonable endeavors to resume
the performance after the conditions (as aforesaid) causing such failure have
ceased.
17) RELATIONSHIP OF PARTIES: Nothing herein contained shall constitute a
partnership between, or joint venture by, the parties hereto or constitute
either party the agent of the other. Neither party shall hold itself out
contrary to the terms of this paragraph, and neither party shall become liable
by any representation contrary to the provisions hereof.
18) BINDING EFFECT: This agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their successors and assigns.
19) RECORDATION: Licensor agrees upon Licensee's request made of Licensor at any
time during the term of this agreement to execute a formal assignment of the
rights granted herein in favor of the Licensee, in form acceptable to the
Licensee's attorneys, and Licensee is hereby authorized at its own expense to
record said assignment.
20) SPECIAL PROVISIONS: Licensor and Licensee agree upon special provisions as
defined in Schedule "A".
IN WITNESS WHEREOF: the parties hereto have hereunto set their hands and seals
the day and year first above written.
"Licensor"
By: /s/
-------------------
"Licensee"
CASTLE HILL PRODUCTIONS, INC.
By:/s/
--------------------
"Licensor" Magic Fingers, Inc.
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SCHEDULE "A"
to agreement dated March , 1998 by and between
MAGIC FINGERS, INC.
and
CASTLE HILL PRODUCTIONS, INC.
1) PICTURE: SHAKMA
2) TERM: 15 years
3) RIGHTS: Video, sell Thru, Pay Cable after HBO and
Television
4) TERRITORY: United States and English Speaking Canada
5) LICENSE FEE: Home Video, Sell Thru, pay Cable after HBO,
35% Basic Cable, Free TV: 50%.
6) MATERIALS: see Schedule C
7) SPECIAL PROVISIONS:
No sub-distribution Fees
Distribution expense not to exceed $15,000,
over the life of the contract, without
Licensor's approval. Home Video (minimum
guarantee to Licensor of $7,500) Free TV
(minimum guarantee to Licensor of $10,000)
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SCHEDULE "C"
to agreement dated March , 1998 by and between
MAGIC FINGERS, INC.
and
CASTLE HILL PRODUCTIONS, INC.
A. Delivery Location:
1. Castle Hill Productions, Inc., 1414 Avenue of the Americas, 15th Floor, New
York, NY 10019.
B. Film Materials:
1. (DELETED)
2. (DELETED)
3. (DELETED)
4. (DELETED)
5. Color Interpositive Protection Master: Irrevocable access, and ability to
move to a laboratory mutually agreed upon to one (1) color corrected and
complete interpositive master of the Picture and trailer, conformed in all
respects to the Answer Print for protection purposes without scratches or
defects at such time as same becomes available, if ever.
6. (DELETED)
7. (DELETED)
8. (DELETED)
9. (DELETED)
10. (DELETED)
11. M&E Track: Irrevocable access to, and ability to move to a laboratory
mutually agreed upon to one (1) 35mm state of the art magnetic soundtrack
roaster including the music track and the 100% fully filled effects track on
separate channels where the effect track contains all effects including any
effects recorded on the dialogue guide track with no English dialogue in the M&E
tracks.
12. (DELETED)
13. (DELETED)
14. (DELETED)
C. Videotape Items:
1. (DELETED)
(a) (DELETED)
(b) (DELETED)
2. Digital Trailer and Movie Video Masters: One D2 individually manufactures
(conversions not acceptable) Trailer Video Master in the NTSC format (panned and
scanned if the Picture is in 1.85 ratio or in scope). Channels 3 and 4 shall
contain a 100% fully filled and synchronized M&E track in stereo (in mono if
non-stereo production). Textless background shall be attached to the tail of the
Master.
D. Publicity Materials:
1. (DELETED)
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2. Color Stills: All I available color stills depicting scenes in the Picture
with members of the cast (including principals appearing therein).
3. Color Slides: Minimum of 25 production color slides (35mm color
transparencies) depicting scenes in the Picture with members of the cast
(including principals) appearing therein.
4. Advertising Materials: All available advertising materials.
5. (DELETED)
E. Legal and Publicity Documents:
1. (DELETED)
2. (DELETED)
3. (DELETED)
4. (DELETED)
5. Feature Dialogue Continuity: Two (2) copies in the English language of a
detailed, final dialogue and action continuity in an acceptable format, of the
completed Picture.
6. Trailer Dialogue Continuity and Spotting List: Two (2) copies in the English
language of a detailed, final dialogue and action continuity in an acceptable
format, of the completed Trailer and Two (2) copies in the English language of a
detailed, final spotting list in an acceptable format, of the Trailer.
7. Synopsis: Three copies of a brief synopsis in English language (one
typewritten page in length) of the Picture and three (3) conics of a synopsis in
the English language (three typewritten pages in length) of the story of the
Picture.
8. Technical Crew: One (1) copy of a list of all technical personnel (including
their title or assignment) involved in the production of the Picture (as per
credit roll).
9. Screen Credit Obligations: Two (2) copies of the Screen Credit Obligations
for all individuals and entities affiliated with the Picture (as per credit
roll).
10. (DELETED)
11. (DELETED)
12. (DELETED)
13. (DELETED)
14. Music Cue Sheets: Two (2) Music Cue Sheets of the Picture.
15. (DELETED)
16. Notarized Assignment of Rights (Exhibit "A"): Three (3) original notarized
Assignment of rights in the Picture from Grantor to Castle Hill Productions,
Inc.
17. Copyright Certificate: Two (2) U.S. Copyright Registration Certificates
(stamped by the Library of Congress). If the copyright application has not yet
been received from the Library of Congress, then Grantor shall deliver a copy of
the Application PA Form, along with a copy of the cover letter and check that
accompanied the PA Form. Grantor agrees to deliver two (2) copies of the
Copyright Certificate to Castle Hill Productions, Inc. when received from the
Library of Congress.
18. (DELETED)
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19. Music Licenses: Copies of Music Licenses - synchronization and mechanical.
20. Composer's Agreement: Copies of all composer's agreement with respect to the
Picture.
21. Chain of Title: Complete chain of title materials suitable for filing with
the United States Library of Congress and reasonable suitable to Castle Hill
Productions, Inc. primary lender indicating that Grantor has full right, title
and interest in and to the Picture and all underlying property.
22. UCC Search: One current UCC search from the following states: (i)
California, (ii) New York; and (iii) the state of producer's principal place of
business. Each search report must show that the Picture is free and clear of any
and all liens. Castle Hill Productions, Inc. agrees to perform said search, the
cost of which shall be reimbursed by Grantor.
23. MPAA Certificate: MPAA certificate of Approval and rating with a receipt for
the Payment of the fee.
24. (DELETED)
25. Copyright Report: One current (no more than 60 days old) copyright report
showing that Grantor has good clear title to the picture and all underlying
rights.
26. (DELETED)
27. (DELETED)
28. Assignment of Rights (Schedule "D"): If Licensor grants Licensee pay cable
television rights, Licensee will execute and notarize two copies of the attached
Schedule "C".
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SCHEDULE "D"
to agreement dated March , 1998 by and between
MAGIC FINGERS, INC.
and
CASTLE HILL PRODUCTIONS, INC.
ASSIGNMENT OF RIGHTS
For good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, ("Assignor"), Magic Fingers, Inc. whose address is 1509 SE
Second Ct. Ft Laud. FL 33301 hereby grants, transfers and assigns to Castle Hill
Productions Inc. ("Assignee"), whose address is 1414 Avenue of the Americas, New
York, New York, 10019 and Assignee's successors and assigns, the sole and
exclusive rights under copyright to exhibit, distribute and otherwise exploit
the following motion picture by means of Non-Standard Television on the pay
television program services owned or controlled, directly or indirectly, by Home
Box Office and distributed within the United States and its territories,
commonwealths, possessions and trusteeships (including, but not limited to,
Puerto Rico, the United States Virgin Islands and Guam), and United States
military bases and embassies wherever located.
THE PICTURE:
The assignment is made for the sole purpose of permitting Assignee to enter
into the License Agreement dated as of with respect to such motion picture with
Home Box Office and, with respect to the motion picture, this Assignment is made
only for the period commencing on the date hereof and ending on .
As used herein, Non-Standard Television shall mean any and all forms of
television Exhibition, whether now existing, or developed in the future, other
than Exhibition by means of Standard Broadcast Television. Non- Standard
Television shall include, without limitations television Exhibition by means of
cable wire or fibre of any material, over-the-air pay or STV in any frequency
band, any and all forms of regular or occasional scrambled broadcast or other
transmission for taping, recording, or other storage on tape, disc or any other
electronic means of data retention for subsequent replay, master antenna,
satellite master antenna, low power transmission, high definition transmission,
closed-circuit transmission, radio (for purposes of simulcast only), tape,
cassette and disc delivery (but excluding distribution of Home Video Devices),
single and multichannel multi-point distribution service and satellite
transmission directly to TVROs, all on a subscription pay-per-view, license,
rental, sale or any other basis.
Assignor hereby appoints Assignee, its successors and assigns, as its
irrevocable Attorney-In-Fact with the right (but not the obligation) to (i)
obtain and secure copyright protection (and renewal and ex-tensions thereof) for
the property specified above; (ii) to enforce and protect all rights, licenses
and privileges granted herein or pursuant to the Agreement and granted under any
and all copyrights (and renewals and extensions thereof), and (iii) to prevent
any infringement of said copyright and to litigate, collect and receive all
damages arising from such infringement of such rights, licenses and privileges,
using the name of the Assignor (in the discretion of Assignee) and joining
Assignor as party plaintiff or defendant in any suit or proceeding (in the
discretion of Assignee). Assignor agrees to cooperate with Assignee in any suit
or action instituted by Assignee hereunder.
Assignor agrees to execute and deliver and cause to be executed and
delivered to Assignee any and all documents and instruments necessary to effect
and complete the transfer to Assignee or all rights granted pursuant to the
Agreement. In the event Assignor fails to execute and deliver such other
documents and instruments
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promptly upon demand therefor by Assignee, Assignee is hereby authorized and
appointed Attorney-In-Fact of and for the Assignor to make, execute and deliver
any and all such documents and instruments.
It is understood that Assignee's aforementioned powers as Attorney-In-Fact
of the Assignor are powers coupled with an interest and irrevocable.
This Assignment and the provisions hereof shall be binding, upon Assignor,
its successors and assigns.
This Assignment shall be subject to the terms and conditions of this
Agreement.
IN WITNESS WHEREOF, THE ASSIGINOR HAS DULY EXECUTED THIS ASSIGNMENT AS OF THE
DATE FIRST STATED ABOVE.
By: /s/
--------------------------
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3 Picture Agreement Castle Hill
AGREEMENT made this 12th day of February, 1999 by and between MAGIC FINGERS,
INCORPORATED, 1509 Southeast Second Court, Fort Lauderdale, Florida 33301,
Phone/Fax (954) 764-0579 (hereinafter called "Licensor") and CASTLE HILL
PRODUCTIONS, INC., 1414 Avenue of the Americas, New York, New York 10019, 15th
Floor, U.S.A. (hereinafter called "Licensee").
WITNESSETH:
In consideration of the mutual covenant herein contained, Licensor and
Licensee agree as follows:
1) SUBJECT MATTER: The subject matter of SHAKMA starring Christopher Atkins and
Roddy McDowell, "SHOOT" starring DeDee Pfeiffer and Miles O'Keeffe, and "NO MORE
DIRTY DEALS" starring Taimak and Von VonLindenberg this agreement is the motion
picture (hereinafter collectively called the "Picture") described in Schedule
"A" attached hereto and made a part hereof. Whenever the term "Picture" is used
herein, it shall be deemed to refer to the picture licensed hereunder.
2) GRANT OF RIGHTS: Licensor hereby grants, sells and assigns to the Licensee
and the Licensee shall have and enjoy all exclusive rights in and to the Picture
without condition restriction or limitation of any kind, for the territory
described in Schedule "A" attached hereto and made a part hereof (hereinafter
called the "Territory") and for the term of this agreement described in Schedule
"A" attached hereto and made a part hereof (hereinafter called the "Term").
The exclusive rights granted hereunder to Licensee, without limiting the
Generality of the foregoing, include the following:
a) The sole and exclusive right to exhibit, distribute, market, advertise,
publicize and exploit the Picture and trailers thereof in any and all languages
and versions and reissues thereof and to license and to permit others to
exhibit, distribute, market, exploit, advertise and publicize the same and
reissue thereof throughout the Territory or any part there of, for any and all
purposes whatsoever (theatrical, non-theatrical, commercial, non- commercial,
sponsored, non-sponsored, sustaining, and in connection with the advertising
and/or exploitation of commercial products or otherwise), including but not
limited to distribution to the United States Army, Navy and other military or
Armed Services installations, and American Red Cross; home viewing, veterans
hospitals or similar facilities wherever situated throughout the world;
airplanes; ships at sea; schools; CATV; video cassettes and discs; on all gauges
of film and other surfaces and by every means, method or device (mechanical,
electrical or otherwise) known or which may hereafter be discovered, invented,
developed, devised or created, including but not limited to radio and television
in all forms and improvements thereof, now known or hereafter to be known,
including but not limited to "free television," "pay television," "subscription
television," whether wired or over-the- air.
b) The right but not the obligation to register the Picture for copyright
throughout the world.
c) The right to announce on the Picture and elsewhere that it is presented
by Licensee and/or Licensee's designees, and to use Licensee's own logo, name
and trademark on the Picture and to authorize others to use and attach their own
logos, names, and trademarks thereon.
d) The right to use all music, copyrighted or otherwise, contained in the
Picture in connection with the exhibition of the Picture for all purposes and in
all media embraced in the grant of rights herein made to the Licensee.
e) The right to use the names, pseudonyms, photographs, likenesses, acts,
poses, sound effects and voices of all artists appearing in the Picture, the
director thereof, the Licensor thereof, the musicians, writers, composers,
author, and others appearing in or connected with the production of the Picture,
in connection with the
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exhibition, distribution, marketing, advertising, exploitation, and publicizing
of the Picture in any or all parts of the Territory, and to write and publish
articles concerning each thereof in connection with the exploitation,
publicizing, advertising and sale of the Picture.
f) The right to telecast by any form of television, commercial messages
before, during or after the telecasting of the Picture.
g) The right to write, draw, illustrate, compose, prepare, publish and to
license and to authorize others to write, prepare, compose and publish synopses,
stories, illustrations and comic books in all forms and combinations including
but not limited to the right to utilize such synopses, stories, illustrations
and/or comic books and excerpts therefrom in newspapers, magazines and/or trade
periodicals in any and all parts of the Territory and the right to use excerpts
from the story or literary material; upon which the Picture is based in
documents, posters, road displays, press books and any and all other media.
h) The right in the name of the Licensee otherwise to institute and.
prosecute any and all actions or proceedings which Licensee may deem necessary
to institute; or prosecute for the purpose of establishing, maintaining or
preserving any of the rights herein granted or purported to be granted to
Licensee and similarly to defend any action or proceeding which may be brought
against Licensee, its licensees, contractees, or assignees with respect to the
Picture or any of the rights herein granted or purported to be granted to
Licensee or which in any manner questions or disputes any of the rights of
Licensee in and to the Picture or any of the rights herein granted. If legal
action results in the recovery by Licensee of any monies, such monies shall be
owned exclusively by Licensee.
i) The right to utilize in whole or in part without charge, any and all
artwork and other materials (negative or otherwise) used or prepared for any and
all versions of the Picture, whether for press books, brochures, advertising or
other publicity, together with access, without charge, to all such materials.
j) The right to use and exploit merchandising rights and commercial tie-in
rights of any and every kind or nature related to, arising out of, or in
connection with the Picture and/or the title thereof and/or music used therein
and/or the characters appearing therein and/or their names and characteristics
and/or under a name which incorporates any phrase, clause, sentence or
expression which is used in the Picture or which the general public associates
with the Picture. Merchandising rights include the right to produce, distribute,
sell and exploit so-called "premiums" (accessories, mailing pieces, labels or
other items or devices, by which any sponsor is able to call to the attention of
the public that the Picture is associated with or related to such sponsor's
business, products, or service); the publication of comic books or comic strips,
the making of endorsements, the making of costumes or parts of costumes, or the
manufacturing of any item which is related to or evolves from the Picture.
Licensee shall be entitled to one-hundred (100%) percent of the gross receipts.
k) Licensee shall have the right in its sole discretion to make any and all
changes and modifications in the Picture which Licensee shall determine to be
necessary or desirable.
3) DELIVERY OF THE PICTURE: Licensor shall supply Licensee with, and shall
deliver all materials of the Picture, to the extent and within the period
specified in "Materials" in Schedule "A" and as defined in Schedule "C",
"Delivery of Materials" attached hereto and by this reference made a part
hereof.
Delivery of the Picture shall mean the physical delivery to Licensee within
a period of not more than thirty (30) days from the date hereof (time being of
the essence) at such address or addresses as Licensee shall designate in
writing, at the sole cost and expense of Licensor and free and clear of any
liens, claims, charges, limitations, restrictions, encumbrances of any kind (i)
all of the schedules, details and information required to be delivered pursuant
to any provision of this agreement, and (ii) all of the physical materials and
items enumerated in the Schedules "A" and "C". Licensee shall have the right
during the thirty (30) day period (subject to laboratory and other delays beyond
its control) following the tendered delivery of each item to examine and inspect
same. Delivery will not be deemed complete within the meaninc, of this agreement
until delivery of all materials and items required
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to be delivered shall have been effected and the aforesaid period of inspection
shall have expired. Upon the completion of such inspection and examination
Licensee shall advise Licensor wherein any such delivery is not proper or
complete. If delivery shall not be completed within the time, manner and in
accordance with the requirements of this agreement, Licensee (without prejudice
to any other right or remedy which may be available to it) may but shall not be
obligated to (a) itself supply at the cost of Licensor, or to require Licensor
to promptly supply, such items or materials which Licensor failed to supply in
the first instance, or to (b) require Licensor to refund any kind and all monies
therefor paid to it until Licensor shall effect complete and proper delivery, or
to (c) terminate this agreement and all of the obligations of Licensee
hereunder, in which event, Licensor will, upon demand, pay to Licensee a sum
equal to the aggregate of all payments to Licensor plus costs, expenditures and
indebtedness incurred in respect of the Picture.
4) PAYMENT: As full consideration of the rights herein granted, and of the
representations, warranties, and covenants herein made and/or agreed to be
granted and made, Licensee shall pay to Licensor the amount set forth in
Schedule "A."
5) LICENSOR WARRANTIES AND REPRESENTATIONS: As an inducement to Licensee to
enter into this agreement and make the payment provided for herein, Licensor
warrants and represents the following:
a) Licenser is the sole owner of, or controls the rights and licenses
granted and assigned, and has the right to enter into and perform this agreement
and grant, sell and assigns all of the exclusive rights and licenses herein
contained, including but not limited to literary and music synchronization
rights in connection with the Picture.
b) Licensor warrants and represents that the Picture has never been
released in the Territory in any medium, gauge or format to the best of their
knowledge and the exception of Schedule "B".
c) Licensor warrants and represents there are no claims or litigation,
pending or threatened, concerning Licensor's rights or title as herein sold and
assigned. Licensor has not done, nor will Licensor do, anything which may impair
the rights sold old assigned.
d) That all obligations with respect to the Pictures including but
limiting, to all salaries, royalties, laboratory charges, recording fees and the
like, have heretofore been fully paid, and that Licensor has obtained proper and
effective licenses to record, synchronize perform and to otherwise utilize
throughout the Territory, all music which has been used in the Picture and
contained in the soundtracks thereof that any and all residuals and/or other
payments due performers, unions, etc. shall be the sole responsibility of
Licensor.
e) The Licensor controls the complete, entire and exclusive sound and
silent theatrical, non- theatrical and television rights for the Territory in
and to, the story upon which the Picture is based, the screen adaptations
thereof and all other materials tlaerein including but not limited to dialogue,
music and all titles, characters and text thereof, together with the right to
use, in publicizing, advertising and exploiting the Picture, the names,
characters, titles and text of and from the literary material upon which the
same are based, together with the names of the authors thereof, as well as the
names, pseudonyms and likenesses of the actors or others appearing in or
connected with the Picture; that all of such rights are controlled by Licensor,
together with the complete, absolute, entire and unrestricted right of
assignment thereof.
f) That the Picture and the synchronized sound thereof, do not infringe
upon the common law rights or copyrights or the literary, dramatic, musical,
patented performance rights or the trademarks or trade names of any other party,
and that nothing contained in the Picture violates the private, civil or
property rights or right of privacy, or any other right of any other persons
firm or corporation or otherwise.
g) That all motion picture rights, including but not limited to, theatrical
rights, non-theatrical, video cassette and television rights in and to all
material used in the Picture, the negatives, prints, music, and records are
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<PAGE>
free from mortgages, claims, debts, charges and other encumbrances of any kind,
nature and description, insofar as the rights of the Licensee hereunder are
concerned.
h) That neither the dialogue nor the photography of the Picture contains
any reference to or representation of any product, commodity or service which
could be construed as an advertisement or recommendation of such product,
commodity or service.
i) At the time of delivery of the Picture, the pre-print materials which
Licensor is delivering, to Licensee shall be in suitable condition for the
manufacture therefrom of commercially acceptable duplicate pre-print and
positive-print materials. If required by Licensee, Licensor agrees to provide
Licensee with access to such additional pre-print materials with respect to the
Picture as Licensor may have in its possession.
6) INDEMNIFICATION: Each party hereto will, at its own cost and expense,
indemnify the other, its assignees, successors and licensees and hold them free
and harmless from any and all loss, damage, liability and expense, including
reasonable attorneys' fees, resulting from any breach or claimed breach of any
warranties, representations, covenants or agreements contained herein. The party
claiming indemnity shall furnish the indemnifying party with prompt notice of
the institution of any action or the making of any claim for which the
indemnifying party is responsible. Thereupon, the indemnifying party shall
undertake, against such action of claim. The party responsible for indemnity
shall have the night, at its option, to participate, at its own expense, and by
its own attorneys in the defense of any litigation. Neither acceptance by
Licensee of the Picture, nor any termination of this agreement, nor election on
the part of the party claiming, indemnity to participate in the defense of any
litigation shall impair, modify or discharge the indemnifying party's
obligations under this paragraph.
7) NOTICES: All notices and other data required or desired to be given hereunder
by either party shall be deposited in the mails in the country of origin postage
prepaid, addressed to the other at the address set forth at the head of this
agreement. Either party shall have the right to designate other or different
addresses for the giving, of any such notice by a notice given in accordance
with the provisions of this article.
8) ENTIRE AGREEMENT: This agreement constitutes the entire agreement between the
parties and may not be changed or modified, nor may any provision hereof be
waived except by an agreement in writing, signed by both parties hereto.
9) APPLICABLE LAW: This agreement shall be construed in accordance with, and all
questions with respect thereto, shall be determined by the laws of the State of
New York, U.S.A.
10) NO WAIVER: No waiver by either party of any breach of any provision of this
agreement shall be deemed to be a waiver of any preceding or succeeding breach
of the same or any other covenant or provision.
11) FORCE MAJEURE: Failure by either party to perform its obligations or delay
in such performance as a result of Acts of God, war, strikes, lock-outs,
shortened working hours, other industrial action, machine breakdown, fire,
flood, explosions, injunctions, judgments, adverse claims, or any other cause
beyond its reasonable control shall not constitute a breach of the terms of this
Agreement PROVIDED THAT such party shall use all reasonable endeavors to resume
the performance after the conditions (as aforesaid) causing such failure have
ceased. 12) RELATIONSHIP OF PARTIES: Nothing herein contained shall constitute a
partnership between, or joint venture by, the parties hereto or constitute
either party the agent of the other. Neither party shall hold itself out
contrary to the terms of this paragraph, and neither party shall become liable
by any representation contrary to the provisions hereof.
13) BINDING EFFECT: This agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their successors and assigns.
14) RECORDATION: Licensor agrees upon Licensee's request made of Licensor at any
time during the term of this agreement to execute a formal assignment of the
rights granted herein in favor of the Licensee, in form acceptable to the
Licensee's attorneys, and Licensee is hereby authorized at its own expense to
record said assignment.
90
<PAGE>
15) SPECIAL PROVISIONS: Licensor and Licensee agree upon special provisions as
defined in Schedule "A".
IN WITNESS WHEREOF: the parties hereto have hereunto set their hands and
seals the day and year first above written.
"Licensor"
By:/s/
-------------------
"Licensee"
CASTLE HILL PRODUCTIONS, INC.
By: /s/ Gordon Scott Venters
----------------------------
Pres. /CEO, Magic Fingers, Inc. "Licensor"
91
<PAGE>
SCHEDULE "A"
to agreement dated February 12, 1999 by and between
MAGIC FINGERS, INC.
1509 Southeast Second Court
Ft. Lauderdale, FL 33301
Phone/Fax: (954) 764-0579
and
CASTLE HILL PRODUCTIONS, INC.
1414 Avenue of the Americas
Suite1502
New York, NY 10019
Phone: (212) 888-0080
Fax: (212) 644-0956
1) PICTURES: "SHAKMA"
"SHOOT"
"NO MORE DIRTY DEALS"
2) TERM: Perpetuity
3) RIGHTS: All Rights
4) TERRITORY: Worldwide
5) LICENSE FEE: $50,000
6) PAYMENT SCHEDULE: $5,000 on execution. Balance of
$45,000 due upon delivery and
technical approval of all material.
7) MATERIALS: see Schedule C
8) SPECIAL PROVISIONS: At the point up until the time of sale, all
residuals are the responsibility ofLicensor.
Licensor must advise Licensee of any future
residuals due.
92
<PAGE>
SCHEDULE "B"
To agreement dated February 12, 1999 by and between
MAGIC FINGERS, INC.
1509 Southeast Second Court
Fort Lauderdale, FL 33301
Phone/fax:(954)-764-0579
and
CASTLE HILL PRODUCTIONS
1414 Avenue of the Americas
Suite 1502
New York, NY 10019
Phone:(212)-888-0080
Fax:(212)-644-0956
DISTRIBUTION TERRITORIES CURRENTLY SOLD
COUNTRY FILM RIGHTS START DATE END DATE
AUSTRALIA Shakma Free TV 5/11/92 5/11/99
BENELUX Shakma Video, TV 6/ /92 6/ /99
Shoot Video, TV 6/ /92 6/ /99
BRAZIL Shoot All 3/1/95 3/1/00
CHINA - HONG Shoot Video 12/31/99
KONG
CANADA Shakma Tv Pay TV, Video 3/ /9/8 3/ /2013
CHILE Shoot All 12/31/95 12/31/99
DOMESTIC US Shakma Tv Pay TV, Video 12/31/99
GERMANY Shoot All 11/17/92 11/17/02
(AUSTRALIA,
SWITZERLAND,
LIECHTENSTEIN,
LUXEMBOURG,
SUD TYROL)
GERMANY Shakma All 10/25/90 10/25/99
GREECE Shakma All 10/31/90 10/31/99
Shoot TV
HOLLAND Shoot All 11/17/92 11/17/02
HUNGARY Shakma All 10/31/90 10/31/00
IRELAND Shakma All 10/31/90 10/31/00
93
<PAGE>
COUNTRY FILM RIGHTS START DATE END DATE
INDIA Shakma All 1996 2001
NMDD All 12/31/99
JAPAN Shakma All 8/ /97 8/ /2002
MALAYSIA NMDD All 12/31/99
NEW ZEALAND Shakma All 5/11/92 5/11/99
PANAMA Shoot Video 12/31/01
SOUTH AFRICA NMDD All 12/31/99
TAIWAN NMDD All 12/31/99
THAILAND Shoot All 8/ /97 8/ /03
VENEZUELA Shoot All 12/31/99
NMDD All 12/31/99
94
<PAGE>
SCHEDULE "C"
to agreement dated February 12, 1999 by and between
MAGIC FINGERS, INC.
1509 Southeast Second Court
Fort Lauderdale, FL 33301
Phone/fax:(954)-764-0579
and
CASTLE HILL PRODUCTIONS, INC.
A. Delivery Location:
1. Castle Hill Productions, Inc., 1414 Avenue of the Americas, 15th Floor, New
York, NY 10019.
B. Film Materials:
1. Release Print: As available, one (1) 35mm composite release print of the
Picture and trailer. (For "SHAKMA" only).
2. M&E Track: Irrevocable access to, and ability to move to a laboratory
mutually agreed upon one (1) 35mm state of the art magnetic soundtrack master
including the music track and the 100% fully filled effects track on separate
channels where the effect track contains all effects including any effects
recorded on the dialogue guide track with no English dialogue in the M&E tracks.
C. Videotape Items:
1. Digital Trailer and Movie Video Masters: One D2 individually manufactures
(conversions not acceptable) Trailer Video Master in the NTSC format (panned and
scanned if the Picture is in 1.85 ratio or in scope). Channels 3 and 4 shall
contain a 100% fully filled and synchronized M&E track in stereo (in mono if
non-stereo production). Textless background shall be attached to the tail of the
Master.
D. Publicity Materials:
1. Color Stills: All I available color stills depicting scenes in the Picture
with members of the cast (including principals appearing therein).
2. Color Slides: Minimum of 25 production color slides (35mm color
transparencies) depicting scenes in the Picture with members of the cast
(including principals) appearing therein.
3. Advertising Materials: All available advertising materials.
E. Legal and Publicity Documents:
1. Feature Dialogue Continuity: Two (2) copies in the English language of a
detailed, final dialogue and action continuity in an acceptable format, of the
completed Picture.
2. Trailer Dialogue Continuity and Spotting List: Two (2) copies in the English
language of a detailed, final dialogue and action continuity in an acceptable
format, of the completed Trailer and Two (2) copies in the English language of a
detailed, final spotting list in an acceptable format, of the Trailer.
95
<PAGE>
3. Synopsis: Three copies of a brief synopsis in English language (one
typewritten page in length) of the Picture and three (3) conics of a synopsis in
the English language (three typewritten pages in length) of the story of the
Picture.
4. Technical Crew: One (1) copy of a list of all technical personnel (including
their title or assignment) involved in the production of the Picture (as per
credit roll).
5. Screen Credit Obligations: Two (2) copies of the Screen Credit Obligations
for all individuals and entities affiliated with the Picture (as per credit
roll).
6. Music Cue Sheets: Two (2) Music Cue Sheets of the Picture.
7. Notarized Assignment of Rights (Exhibit "A"): Three (3) original notarized
Assignment of rights in the Picture from Grantor to Castle Hill Productions,
Inc.
8. Copyright Certificate: Two (2) U.S. Copyright Registration Certificates
(stamped by the Library of Congress) for each of the Pictures.
9. Music Licenses: Copies of Music Licenses - synchronization and mechanical.
10. Composer's Agreement: Copies of all composer's agreement with respect to the
Picture.
11. Chain of Title: Complete chain of title materials suitable for filing with
the United States Library of Congress and reasonable suitable to Castle Hill
Productions, Inc. primary lender indicating that Grantor has full right, title
and interest in and to the Picture and all underlying property.
12. UCC Search: One current UCC search from the following states: (i)
California, (ii) New York; and (iii) the state of producer's principal place of
business. Each search report must show that the Picture is free and clear of any
and all liens. Castle Hill Productions, Inc. agrees to perform said search, the
cost of which shall be reimbursed by Grantor.
13. MPAA Certificate: MPAA certificate of Approval and rating with a receipt for
the Payment of the fee.
14. Copyright Report: One current (no more than 60 days old) copyright report
showing that Grantor has good clear title to the picture and all underlying
rights.
15. Assignment of Rights (Schedule "E"): If Licensor grants Licensee pay cable
television rights, Licensee will execute and notarize two copies of the attached
Schedule "C".
96
<PAGE>
SCHEDULE "E"
to agreement dated February 12, 1999 by and between
MAGIC FINGERS, INC.
1509 Southeast Second Court
Fort Lauderdale, FL 33301
Phone/fax:(954)-764-0579
and
CASTLE HILL PRODUCTIONS, INC.
ASSIGNMENT OF RIGHTS
For good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, ("Assignor"), Magic Fingers, Inc. whose address is 1509 SE
Second Ct. Ft Laud. FL 33301 hereby grants, transfers and assigns to Castle Hill
Productions Inc. ("Assignee"), whose address is 1414 Avenue of the Americas, New
York, New York, 10019 and Assignee's successors and assigns, the sole and
exclusive rights under copyright to exhibit, distribute and otherwise exploit
the following motion picture by means of Non-Standard Television on the pay
television program services owned or controlled, directly or indirectly, by Home
Box Office and distributed within the United States and its territories,
commonwealths, possessions and trusteeships (including, but not limited to,
Puerto Rico, the United States Virgin Islands and Guam), and United States
military bases and embassies wherever located.
THE PICTURE:
The assignment is made for the sole purpose of permitting Assignee to enter
into the License Agreement dated as of with respect to such motion picture with
Home Box Office and, with respect to the motion picture, this Assignment is made
only for the period commencing on the date hereof and ending on .
As used herein, Non-Standard Television shall mean any and all forms of
television Exhibition, whether now existing, or developed in the future, other
than Exhibition by means of Standard Broadcast Television. Non- Standard
Television shall include, without limitations television Exhibition by means of
cable wire or fibre of any material, over-the-air pay or STV in any frequency
band, any and all forms of regular or occasional scrambled broadcast or other
transmission for taping, recording, or other storage on tape, disc or any other
electronic means of data retention for subsequent replay, master antenna,
satellite master antenna, low power transmission, high definition transmission,
closed-circuit transmission, radio (for purposes of simulcast only), tape,
cassette and disc delivery (but excluding distribution of Home Video Devices),
single and multichannel multi-point distribution service and satellite
transmission directly to TVROs, all on a subscription pay-per-view, license,
rental, sale or any other basis.
Assignor hereby appoints Assignee, its successors and assigns, as its
irrevocable Attorney-In-Fact with the right (but not the obligation) to (i)
obtain and secure copyright protection (and renewal and ex-tensions thereof) for
the property specified above; (ii) to enforce and protect all rights, licenses
and privileges granted herein or pursuant to the Agreement and granted under any
and all copyrights (and renewals and extensions thereof), and (iii) to prevent
any infringement of said copyright and to litigate, collect and receive all
damages arising from such infringement of such rights, licenses and privileges,
using the name of the Assignor (in the discretion of Assignee) and joining
Assignor as party plaintiff or defendant in any suit or proceeding (in the
discretion of Assignee). Assignor agrees to cooperate with Assignee in any suit
or action instituted by Assignee hereunder.
Assignor agrees to execute and deliver and cause to be executed and
delivered to Assignee any and all documents and instruments necessary to effect
and complete the transfer to Assignee or all rights granted pursuant
97
<PAGE>
to the Agreement. In the event Assignor fails to execute and deliver such other
documents and instruments promptly upon demand therefor by Assignee, Assignee is
hereby authorized and appointed Attorney-In-Fact of and for the Assignor to
make, execute and deliver any and all such documents and instruments.
It is understood that Assignee's aforementioned powers as Attorney-In-Fact
of the Assignor are powers coupled with an interest and irrevocable.
This Assignment and the provisions hereof shall be binding, upon Assignor,
its successors and assigns.
This Assignment shall be subject to the terms and conditions of this
Agreement.
IN WITNESS WHEREOF, THE ASSIGINOR HAS DULY EXECUTED THIS ASSIGNMENT AS OF THE
DATE FIRST STATED ABOVE.
By:/s/
--------------------------
98
<PAGE>
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of October 20, 1999 between MagicInc.Com., a
Delaware corporation ("MAGC"), and Commonwealth Partners NY, L.L.C., with a
principal place of business at 117 E. 57th Street, Suite 44B, New York, New York
10022 ("CPNY").
WHEREAS:
(A MAGC has done a private placement of its Senior Series A Subordinated
Convertible Redeemable Debentures to BVH Holdings, L.L.C., HLKT Holdings, L.L.C.
and M & B Trading, L.L.C. ("Purchasers") pursuant to Securities Subscription
Agreements of even date between MAGC and Purchaser ("Agreement"); and
(B MAGC wishes to compensate CPNY for rendering consulting services in
connection with the Agreement and the private placement of its Debentures.
NOW THEREFORE, it is agreed.
1. Compensation. MAGC shall pay CPNY a consulting fee of
$99.000("Fee"),which Fee shall also cover expenses, as follows: $16,500 upon the
execution of the Agreement, $11,000 60 days from the execution of the Agreement,
and 7 payments of $11,000 each made 30 business days thereafter for an aggregate
period of 210 business days (i.e., $77,000), and $5,500 on the 240th business
day from the date the agreement is executed. CPNY shall be paid such Fee, in
cash, by the Purchasers who shall deduct the Fee from each of the Debentures
payments made to MAGC.
2. Miscellaneous. This Agreement (i) shall be governed by the laws of the
State of Colorado; (ii) may be executed in counterparts each of which shall
constitute an original; (iii) shall be binding upon the successors,
representatives, agents, officers and directors of the parties; and (iv) may not
be modified or changed except in a writing signed by all parties.
This Consulting Agreement has been executed as of the date first above
written.
MAGICINC.COM
By:/s/
------------------
COMMONWEALTH PARTNERS NY, LLC
By:/s/
------------------
99
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE
COMPANY'S DECEMBER 31, 1999 ANNUAL REPORT ON FORM 10-SB AND IS QUALIFIED IN
ITS ENTIRELTY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001109067
<NAME> MAGICINC.COM
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 10-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> OCT-31-1999
<EXCHANGE-RATE> 1
<CASH> 20,515
<SECURITIES> 0
<RECEIVABLES> 150,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 170,515
<PP&E> 745
<DEPRECIATION> (394)
<TOTAL-ASSETS> 170,866
<CURRENT-LIABILITIES> 215,731
<BONDS> 0
0
0
<COMMON> (317,577)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 170,866
<SALES> 46,240
<TOTAL-REVENUES> 46,240
<CGS> 0
<TOTAL-COSTS> 161,639
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (115,399)
<INCOME-TAX> 0
<INCOME-CONTINUING> (115,399)
<DISCONTINUED> 0
<EXTRAORDINARY> 259,500
<CHANGES> 0
<NET-INCOME> 144,101
<EPS-BASIC> .05
<EPS-DILUTED> .05
</TABLE>
