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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended March 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from_______________to______________
Commission file number 0-16730
ALL-COMM MEDIA CORPORATION
---------------------------------
(Exact name of registrant as specified in its charter)
Nevada 88-0085608
- -------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
400 Corporate Pointe, Suite 780
Culver City, California 90230
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Registrant's telephone number, including area code: (310) 342-2800
--------------
Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
--------------------------------------
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- ---
As of May 12, 1997, there were 11,426,764 shares of the Registrant's common
stock outstanding.
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ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
FORM 10-QSB REPORT
MARCH 31, 1997
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page
----
<S> <C>
Item 1 Interim Condensed Consolidated Financial Statements
(unaudited)
Condensed Consolidated Balance Sheets -
March 31, 1997 and June 30, 1996 3
Condensed Consolidated Statements of Operations -
Three and Nine months ended March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows -
Nine months ended March 31, 1997 and 1996 5
Notes to Interim Condensed Consolidated
Financial Statements 6-11
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-18
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports of Form 8-K
(a) Exhibits 19-20
(b) Reports on Form 8-K 20
Signatures 21
Exhibit 10.18 Demand Promissory Note, February 26, 1997, by
and between All-Comm Media Corporation and Jones,
Day, Reavis & Pogue
Exhibit 10.19 Security Agreement between Milberg Factors, Inc. and
Metro Services Group, Inc.
Exhibit 10.20 Severance Agreement with Barry Peters
Exhibit 10.21 Severance Agreement with E. William Savage
Exhibit 10.22 Form of Private Placement Purchase Agreement and
Convertible Note
Exhibit 11.1 Statements Regarding Computation of Net Loss Per Share
Exhibit 27.1 Financial Data Schedule
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- ------------------------------------------------------------------------
ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
June 30, 1996
ASSETS March 31, 1997 (as restated)
- ------ --------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 482,660 $ 1,393,044
Accounts receivable, net of allowance for doubtful accounts of
$26,000 at March 31 and $34,906 at June 30 4,609,997 2,681,748
Land held for sale at cost 921,465
Other current assets 198,066 107,658
------------ -----------
Total current assets 5,290,723 5,103,915
Property and equipment at cost, net 769,283 299,045
Intangible assets at cost, net 15,627,719 7,851,060
Other assets 100,285 47,046
------------ -----------
Total assets $ 21,788,010 $13,301,066
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Short-term borrowings $ 787,676 $ 500,000
Promissory notes, current portion 504,303
Trade accounts payable 3,638,251 470,706
Accrued salaries and wages 473,998 706,039
Other accrued expenses 913,639 758,112
Income taxes payable 17,880 10,000
Long-term obligations to related party, current portion 816,667 583,333
Related party payable 425,000
------------ -----------
Total current liabilities 7,152,414 3,453,190
Notes payable on repurchase of Series C Preferred Stock 1,000,000
Notes payable to related parties 997,857
Promissory notes, less current portion 203,171
Long-term obligations to related parties less current portion 991,666 1,516,667
Other liabilities 221,731 80,315
------------ -----------
Total liabilities 10,566,839 5,050,172
------------ -----------
Commitments and contingencies:
Redeemable convertible preferred stock, $.01 par value; consisting of 6,200
shares of Series B Convertible Preferred Stock issued and outstanding at
June 30, none at March 31; 2,000 shares of Series C Convertible
Preferred Stock issued and outstanding at June 30, none at March 31 1,306,358
-----------
Stockholders' equity:
Convertible preferred stock, $.01 par value; 50,000 shares authorized,
8,200 redeemable shares outstanding at June 30, none at March 31 - -
Common stock - authorized 6,250,000 shares of $.01 par value at
June 30, 1996, increased in August 1996 to 36,250,000;
11,438,564 and 3,198,534 shares issued, respectively 114,386 31,985
Additional paid-in capital 30,079,065 13,173,520
Receivables from stockholders (1,999,500)
Accumulated deficit (16,837,311) (6,125,500)
Less 11,800 shares of common stock in treasury, at cost (135,469) (135,469)
------------ -----------
Total stockholders' equity 11,221,171 6,944,536
------------ -----------
Total liabilities and stockholders' equity $ 21,788,010 $13,301,066
============ ===========
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
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ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1997 1996 1997 1996
------------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Revenues $ 6,300,538 $3,723,945 $ 16,146,217 $10,609,781
----------- ---------- ------------ -----------
Operating costs and expenses:
Salaries and benefits 3,660,568 3,124,469 10,487,878 9,055,015
Non-recurring compensation expense
on option grants 1,650,000
Direct costs 1,847,493 203,822 3,789,313 526,345
Restructuring costs 1,019,474 1,019,474
Selling, general and administrative 812,262 469,479 2,178,910 1,395,650
Professional fees 215,410 148,291 544,058 364,066
Amortization of intangible assets 208,149 90,061 511,945 271,363
----------- ---------- ------------ -----------
Total operating costs and expenses 7,763,356 4,036,122 20,181,578 11,612,439
----------- ---------- ------------ -----------
Loss from operations (1,462,818) (312,177) (4,035,361) (1,002,658)
----------- ---------- ------------ -----------
Other income (expense):
Discounts on warrant exercises (5,088,703) (5,088,703)
Withdrawn public offering costs (1,307,472) (1,307,472)
Gain from sale of land 90,021
Interest income 437 840 14,972 6,854
Interest expense (105,082) (97,911) (353,246) (293,903)
----------- ---------- ------------ -----------
Sub total (6,500,820) (97,071) (6,644,428) (287,049)
----------- ---------- ------------ -----------
Loss before income taxes (7,963,638) (409,248) (10,679,789) (1,289,707)
Provision for income taxes (8,083) (12,628) (32,022) (38,703)
----------- ---------- ------------ -----------
Net loss $(7,971,721) $ (421,876) $(10,711,811) $(1,328,410)
=========== ========== ============ ===========
Net loss attributable to common
stockholders* $(7,971,721) $ (421,876) $(20,538,331) $(1,328,410)
=========== ========== ============ ===========
Net loss per common share $(.96) $(.14) $(3.64) $(.44)
=========== ========== ============ ===========
Weighted average common and common
equivalent shares outstanding 8,291,764 3,047,543 5,639,573 3,027,624
=========== ========== ============ ===========
</TABLE>
* The nine months ended March 31, 1997 includes the impact of non-recurring
dividends on preferred stock for (a) $8.5 million non-cash dividend on
conversion of Series B Preferred Stock; (b) $573,000 on repurchase of Series C
Preferred Stock; and (c) periodic non-cash accretions on preferred stock (see
Note 9).
See Notes to Condensed Consolidated Financial Statements.
4
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ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Operating activities:
Net cash used in operating activities $(1,671,411) $ (117,647)
----------- ----------
Investing activities:
Net proceeds from sale of land 860,443
Proceeds from issuances of warrants 5,000
Purchases of property and equipment (424,918) (82,313)
Payments relating to acquisition of Alliance and SD&A (58,050)
Acquisition of Metro, net of cash acquired of $349,446 185,963
----------- ----------
Net cash provided by (used in) investing activities 626,488 (140,363)
----------- ----------
Financing activities:
Repayment on line of credit (504,000)
Proceeds from bank loans and line of credit 875,000 350,000
Repayments of bank loans (10,419) (49,694)
Proceeds from land option 150,000
Repayments of notes payable other (54,000)
Repayment of acquisition debt (291,667) (750,000)
Proceeds from exercises of common stock warrants 65,625 120,000
----------- ----------
Net cash provided by (used in) financing activities 134,539 (233,694)
----------- ----------
Net decrease in cash and cash equivalents (910,384) (491,704)
Cash and cash equivalents at beginning of period 1,393,044 1,217,772
----------- ----------
Cash and cash equivalents at end of period $ 482,660 $ 726,068
=========== ==========
</TABLE>
Supplemental schedule of non cash investing and financing activities:
In October 1995, in accordance with the acquisition agreement between Alliance
Media Corporation and the former owner of SD&A the purchase price was increased
by $92,702.
In October 1995, the Company issued 6,250 shares of common stock in settlement
of a liability of $26,250.
Deferred financing costs of $60,000 remained unpaid at December 31, 1995.
In September 1996, the Company issued 96,748 shares of common stock, valued at
$425,000, as an earn out payment to the former owner of SD&A for achieving
certain targeted earnings for the fiscal year ended June 30, 1996.
In October 1996, the Company issued 1,814,000 shares of its common stock and
$1,000,000 face value in debt to acquire 100% of the outstanding stock of Metro
Services Group, Inc. The debt was discounted to $920,000.
On December 23, 1996, the Company issued 3,168,857 shares of its common stock
and $1,000,000 face value in debt as part of a recapitalization. 6,200 shares
of Redeemable Series B Preferred Stock were converted into 2,480,000 common
shares; 2,000 shares of Redeemable Series C Preferred Stock were repurchased for
$1,000,000 in notes; warrants for 3,000,000 shares were exchanged for 600,000
common shares and $145,753 in accrued interest was converted into 88,857 common
shares. (See Note 9).
In February 1997, the Company entered into a promissory note payable for legal
services totaling $207,950.
In March 1997, the Company entered into promissory notes payable for executive
management settlement agreements totaling $499,000.
At March 31, 1997, $1,999,500 was receivable from stockholders on warrant
exercises.
See Notes to Condensed Consolidated Financial Statements.
5
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ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
- -------------------------
The accompanying unaudited Interim Condensed Consolidated Financial
Statements include the accounts of All-Comm Media Corporation and Subsidiaries
(the "Company"). They have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the fiscal year
ending June 30, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the fiscal year ended June 30, 1996. Certain
reclassifications have been made in the fiscal 1996 interim financial statements
to conform with the fiscal 1997 presentation. Certain amounts have been
reclassified to conform with industry standards.
2. NET LOSS PER COMMON SHARE
- -----------------------------
Net loss per common share is computed based upon the weighted average number
of shares outstanding during the periods presented and common stock equivalents
unless antidilutive. The net loss is reduced by dividends to preferred
stockholders to determine the net loss attributable to common stockholders.
Primary and fully diluted loss per share are the same in the periods presented.
For the nine months ended March 31, 1997, preferred dividends included
periodic non-cash increases to accrete the carrying value up to the redemption
value, as well as non-recurring dividends incurred as part of the
recapitalization described in Note 9.
3. ACQUISITION OF METRO SERVICES GROUP, INC.
- ---------------------------------------------
Effective as of October 1, 1996, the Company acquired Metro Services Group,
Inc. ("Metro") pursuant to a merger agreement. In exchange for all of the then
outstanding shares of Metro, the Company issued 1,814,000 shares of its common
stock valued at $7,256,000 and promissory notes (the "Notes") totaling
$1,000,000. The Notes, which have a stated interest rate of 6%, were discounted
to $920,000 to reflect an estimated effective interest rate of 10%. The Notes
are due and payable, together with interest thereon, on June 30, 1998, subject
to earlier repayment, at the option of the holder, upon completion by the
Company of a public offering of its equity securities. The Notes are
convertible on or before maturity, at the option of the holder, into shares of
common stock at a conversion rate of $5.38 per share. Metro develops and markets
information-based services, used primarily in direct marketing by a variety of
commercial and tax-exempt organizations, principally in the United States.
The acquisition was accounted for using the purchase method of accounting.
The purchase price was allocated to assets acquired based on their estimated
fair value. This treatment resulted in approximately $7.3 million of costs in
excess of net assets acquired, after recording covenants not to compete of
$650,000 and proprietary software of $250,000. Such excess is being amortized
over the expected period
6
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of benefit of forty years. The covenants and software are amortized over their
expected benefit periods of three and five years respectively.
The operating results of this acquisition are included in the consolidated
results of operations from the date of acquisition. The following summary,
prepared on a pro forma basis, combines the consolidated results of operations
as if Metro had been acquired as of the beginning of the periods presented,
after including the impact of certain adjustments, such as amortization of
intangibles and increased interest on acquisition debt. The net loss for the
nine months ended March 31, 1997 includes the non-cash compensation expense of
$1,650,000 recorded on the grant of options in September, 1996, as well as the
$5.1 million in warrant discounts and $979,000 in restructuring costs, as
discussed in notes 8, 11 and 12.
<TABLE>
<CAPTION>
Unaudited
-----------------
For the nine months ended March 31,
1997 1996
---- ----
<S> <C> <C>
Revenues $ 18,360,000 $16,721,000
Net loss $(10,733,000) $(1,309,000)
Loss per common share $ (1.72) $ (.27)
</TABLE>
The unaudited pro forma information is provided for informational purposes
only. It is based on historical information and is not necessarily indicative
of future results of operation of the combined entities.
4. CREDIT FACILITIES
- ---------------------
In December 1996, Stephen Dunn & Associates, Inc. ("SD&A"), a wholly-owned
subsidiary of the Company, renewed its credit facility with a commercial bank,
increasing its line of credit commitment from $500,000 to a maximum of $750,000.
Interest on the outstanding principal is payable monthly at the bank's reference
rate plus 1/2%. The line must be repaid in full for at least thirty
consecutive days during each twelve month period and it matures on September 30,
1997, renewable at the discretion of the bank. Outstandings on the line of
credit totaled $746,000 at March 31, 1997.
The credit facility also provides for a term loan totaling $125,000 payable
in 35 equal monthly principal installments of $3,473 beginning January 31, 1997.
Interest is payable monthly at the bank's reference rate plus 3/4%. The
outstanding principal balance as of March 31, 1997 is $114,581.
In April, 1997, Metro entered into a two-year renewable credit facility with
a lender for a line of credit commitment of up to a maximum of $1,500,000.
Interest on outstanding principal will be payable monthly at the Chase Manhattan
reference rate plus 1 1/2%.
5. PROMISSORY NOTES
- --------------------
On February 26, 1997, the Company entered into a demand promissory note in
the amount of $207,950, payable to a law firm for professional services related
to the Company's withdrawn public offering. (See note 10). Interest is payable
monthly at the rate of 7% per annum. As of March 31, 1997, no payments had been
made on the note. In May 1997, the note and accumulated interest thereon were
repaid in full.
7
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In March 1997, as part of a restructuring, the Company entered into two non-
interest bearing promissory notes with two former executive officers. (See Note
11).
6. INCOME TAXES
- ----------------
In the three months ended March 31, 1997 and 1996, the income tax provision
totaled $8,000 and $13,000, respectively. In the nine month periods ended March
31, 1997 and 1996, the income tax provisions totaled $32,000 and $39,000,
respectively. The current period provisions resulted from state and local
income taxes incurred on taxable income at the operating subsidiary level which
could not be offset by losses incurred at the corporate level.
7. GAIN FROM SALE OF LAND
- --------------------------
The Company, through its wholly-owned subsidiary, All-Comm Holdings, Inc.,
owned approximately seven acres of undeveloped land in Laughlin, Nevada, which
had a carrying value of $921,465 as of June 30, 1996. During fiscal 1996, Clark
County, Nevada authorities passed a bond measure, resulting in a special
assessment to fund improvements which would benefit the land. The principal
balance assessed to the Company totaled $154,814 plus interest at 6.4% and was
payable in semi-annual installments over twenty years. The principal was
capitalized by the Company in fiscal 1996. On August 16, 1996, the land was
sold by auction to, and liability assumed by, an unaffiliated third party for
$952,000 in cash, resulting in a net gain after commissions and other selling
costs of approximately $90,000.
8. STOCK OPTIONS
- -----------------
On September 26, 1996, the Board of Directors approved the increase in the
number of shares available under the 1991 Stock Option Plan by 600,000 shares,
to 1,450,000, and granted options exercisable for 300,000 shares of common
stock, par value $.01 per share (the "Common Stock") to each of the Company's
Chief Executive Officer and Chief Operating Officer. Options exercisable for
the first 150,000 shares were granted to each such officer at an exercise price
of $2.50 per share and the remaining 150,000 each were granted at an exercise
price of $3.00 per share. On December 23, 1996, the $3.00 options were to be
canceled subject to successful completion of an underwritten public offering, as
part of the recapitalization described in Note 9. As described in Note 10, the
Offering was not consummated and, accordingly, the options were not canceled.
The options vest and are exercisable immediately and expire on July 1, 2001.
Although the Company intended to grant the options in May, 1996, when the market
price of the stock was $2.50, at September 26, 1996, the date of Board
ratification, the market price was $5.50. Accordingly, the Company recorded a
non-recurring, non-cash charge of $1,650,000 to compensation expense for the
difference between market price and exercise price of the options for 600,000
shares.
9. RECAPITALIZATION
- --------------------
On December 23, 1996, the Company and certain of its securityholders effected
a recapitalization of the Company's capital stock, whereby: (i) the Company's
Series B Convertible Preferred Stock, par value $.01 per share (the "Series B
Preferred Stock"), was converted, in accordance with its terms without the
payment of additional consideration, into 2,480,000 shares of Common Stock;
(ii) the Company's Series C Convertible Preferred Stock, par value $.01 per
share (the "Series C Preferred Stock"), was repurchased for promissory notes in
an aggregate principal amount of $1.0 million, which
8
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promissory notes bore interest at a rate of 8% per annum and were repayable on
demand at any time from and after the date of the consummation of an
underwritten public offering by the Company of Common Stock, but in any event
such notes originally matured June 7, 1998 but were paid in full in April, 1997;
(iii) all accrued interest on the Series B Preferred Stock and the Series C
Preferred Stock was converted into 88,857 shares of Common Stock; (iv) warrants
related to the Series C Preferred Stock, currently exercisable for 3,000,000
shares of Common Stock, were exchanged for 600,000 shares of Common Stock; and
(v) options held by two of the Company's principal executive officers to
purchase 300,000 shares of common stock were to be canceled at no cost to the
Company, subject to successful completion of an underwritten offering. The
Offering was not consummated and, accordingly, the options were not canceled.
Upon conversion of the Series B Preferred Stock and accumulated interest thereon
into Common Stock on December 23, 1996, the Company incurred a non-cash, non-
recurring dividend for the difference between the conversion price and the
market price of the Common Stock, totaling $8.5 million. Upon repurchase of the
Series C Preferred Stock, the Company incurred a non-recurring dividend of
$573,000 for the difference between the repurchase price and the accreted book
value of the stock at December 23, 1996. These dividends do not impact net
income (loss), but do impact net income (loss) attributable to common
stockholders in the calculation of earnings per share.
10. WITHDRAWAL OF REGISTRATION STATEMENT
- -----------------------------------------
On October 17, 1996, the Company filed a Form SB-2 registration statement
(the "Registration Statement") with the Securities and Exchange Commission. The
Registration Statement related to an underwritten public offering (the
"Offering") of 2,100,000 shares of Common Stock, of which 1,750,000 shares were
being offered by the Company and 350,000 were being offered by certain
stockholders of the Company. It also related to the sale of 1,381,056 shares of
Common Stock by certain selling stockholders on a delayed basis. Due to market
conditions, on February 11, 1997, the Company withdrew the Registration
Statement. As the Company had intended to refile the Registration Statement,
Offering costs incurred through December 31, 1996, of $1.1 million were deferred
as of December 31, 1996. Subsequently, the Company elected to pursue other
sources of financing and chose not to refile the Registration Statement. As
such, in the quarter ended March 31, 1997, the Company expensed $1.3 million in
Offering costs, including those deferred at December 31, 1996, as well as
additional costs incurred from January 1, 1997 through the date of the
withdrawal.
11. RESTRUCTURING COSTS
-------------------
During the quarter ended March 31, 1997, the Company effected certain
corporate restructuring steps, including the decision to reduce corporate
staffing and close its Culver City corporate office, as well as making two
executive management changes. In this connection, restructuring expenses of
$1,019,000 were recorded, including $65,000 in estimated office closing costs
and $954,000 in executive management and other settlement costs. The executive
management settlement agreements include two non-interest bearing promissory
notes with face values of $290,000 and $250,000, respectively, payable in equal
installments over eighteen months starting in May, 1997. These notes have been
discounted to $268,000 and $231,000, respectively, to reflect effective interest
rates of 10%.
9
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12. DISCOUNTS ON WARRANT EXERCISES
------------------------------
In March 1997, to obtain $2.1 million in working capital and reduce the
overhang associated with the existence of such warrants, the Company accepted
offers from certain warrant-holders to exercise their warrants for 3,152,500
shares of common stock at discounted exercise prices. The Company recognized
the dates of acceptance as new measurement dates and, accordingly, recorded non-
cash charges totaling $5.1 million in March 1997 to reflect the market value of
the discounts. Of the total proceeds from exercise of warrants, $1,999,500 was
not received by the Company by March 31, 1997 and was, therefore, classified as
receivables from stockholders which reduced stockholders' equity at March 31,
1997. These amounts were received in full in April 1997.
13. RESTATEMENTS FOR CORRECTIONS OF ERRORS
- -------------------------------------------
The financial statements for the three months ended September 30, 1996 and
year ended June 30, 1996 were restated for corrections of two errors.
As originally filed, the financial statements for the three months ended
September 30, 1996 did not include compensation expense for the stock options
granted to officers (as discussed in Note 8), as the Company intended the
options to be granted in May 1996 when the market price of the stock was $2.50.
The net loss attributable to common stockholders for the three months ended
September 30, 1996 was originally reported at $344,481 and related net loss per
share was $(0.11).
Subsequently, in accordance with Securities and Exchange Commission
requirements it was determined that the grant of these options was not effective
until ratification by the Board on September 26, 1996, when the market price was
$5.50. Accordingly, the Company amended the financial statements for the three
months ended September 30, 1996 to record a non-recurring, non-cash charge of
$1,650,000 for compensation expense in connection with the grant of these
options, which increased the net loss for the quarter to $1,994,481 and net loss
per share to $(0.62).
Additionally, as originally filed, the Company reported its Convertible
Preferred Stock as equity. The Preferred Stock contained two provisions for
mandatory redemption, which the Company had considered remote and not within the
control of the holders. Subsequently, in accordance with the Securities and
Exchange Commission requirements, these securities were reclassified as
mezzanine financing and the September 30, 1996 and June 30, 1996 financial
statements were restated accordingly. In conjunction with this, previously
recorded dividends of $66,500 for the three months ended September 30, 1996 were
reclassified as interest and the net loss of $277,981 increased to $344,481.
Previously recorded dividends of $17,490 for the year ended June 30, 1996 were
reclassified as interest and the net loss of $1,076,833 increased to $1,094,373.
These was no impact on earnings per share, as the dividends had previously
increased the net loss attributable to common stockholders.
14. SUBSEQUENT EVENTS
- ----------------------
As of March 31, 1997, the Company had not made its February 19, 1997 and
March 19, 1997 payments, totaling an aggregate of $140,389, on its debt payable
to the former owner of SD&A. These payments were made in full on April 1, 1997.
10
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In April 1997, the Company obtained $2,046,000, net of fees, from the private
placement of 6% convertible notes, with a face value of $2,200,000. The notes
are payable with interest on April 15, 1999, if not previously converted. The
notes are convertible into shares of the Company's Common Stock at the lesser of
$2.50 per share or 83% of the average closing bid price of the Common Stock
during the last five trading days prior to conversion.
Also in April 1997, the Company repaid in full $1 million in promissory notes
plus interest payable to the former holders of the Company's Series C Preferred
Stock. Although these notes were repaid in April, 1997, they are classified as
non-current liabilities in the March 31, 1997 balance sheet, as funds for their
repayment came from the long-term debt and warrant exercises described
previously.
As discussed in Note 5, in May 1997, the Company repaid in full a demand
promissory note payable to a law firm.
15. NEW ACCOUNTING PRONOUNCEMENT
- ---------------------------------
The Financial Accounting Standards Board recently issued FASB Statement No.
128, "Earnings Per Share" which is effective for financial statements for both
interim and annual periods ending after December 15, 1997. Earlier application
is not permitted; however, restatement of all prior-period earnings per share
data presented is required. The Company has not yet determined the effect FASB
Statement No. 128 will have on its financial statement; however, the adoption
is not expected to have a material impact on the financial position or results
of operations of the Company.
11
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
-------------
Introduction
- ------------
This discussion summarizes the significant factors affecting the consolidated
operating results, financial condition and cash flows of the Company for the
three and nine month periods ended March 31, 1997. This should be read in
conjunction with the financial statements and notes thereto, included in this
Report on Form 10-QSB and the Company's financial statements and notes thereto,
included in the Company's Annual Report on Form 10-K for the year ended June 30,
1996. As more fully described in Note 3 to the consolidated financial
statements included in such Form 10-K, on April 25, 1995, the Company purchased
100% of the stock of Alliance Media Corporation which had simultaneously
acquired Stephen Dunn & Associates, Inc. ("SD&A").
From April 25, 1995 through September 30, 1996, the Company operated as a
direct marketing services provider with its initial concentration in a
telemarketing and telefundraising company that specializes in direct marketing
services for the arts, educational and other cultural organizations. As more
fully described in Note 3 to the condensed consolidated financial statements
included in this Form 10-QSB, effective October 1, 1996 the Company purchased
100% of the stock of Metro Services Group, Inc. ("Metro"). This acquisition is
reflected in the consolidated financial statements using the purchase method of
accounting starting October 1, 1996. Metro develops and markets information-
based services used primarily in direct marketing by a variety of commercial and
tax-exempt organizations.
Results of Operations for the Three Months Ended March 31, 1997, Compared to the
- --------------------------------------------------------------------------------
Three Months Ended March 31, 1996
- ---------------------------------
Revenues of $6,301,000 in the three months ended March 31, 1997 (the "current
period") increased by $2,577,000 over revenues of $3,724,000 in the three months
ended March 31, 1996 (the "prior period"). $2,624,000 of the increase was
attributable to the inclusion of Metro revenues in the current period. Revenues
from on-site telemarketing and telefundraising campaigns totaled $2,881,000 and
$3,134,000, respectively, or 78% and 84% of telemarketing and telefundraising
revenues in the current and prior periods, respectively. The decrease in on-
site revenues was principally due to later start dates in the current period for
certain recurring annual campaigns. Revenues from off-site campaigns totaled
$796,000 and $590,000, respectively, or 22% and 16% of telemarketing and
telefundraising revenues, respectively, in the current and prior periods. The
increase in off-site revenues resulted from a fifty percent increase in capacity
at the Berkeley Calling Center in September, 1996. During the three months
ended March 31, 1997 and 1996, the Company's margins relating to off-site
campaigns were generally higher than margins relating to on-site campaigns.
Salaries and benefits of $3,661,000 in the current period increased by
$537,000 over the prior period total of $3,124,000. Salaries and benefits
decreased as a percentage of revenues, from 84% in the prior period, to 58% in
the current period. Of the dollar increase, $565,000 was attributable to the
inclusion of Metro in the current period. SD&A salaries and benefits decreased
$26,000 in the current period, largely due to the delays in on-site campaign
start dates compared to the prior period. Parent company administrative
salaries decreased by $2,000 in the current period as compared to the prior
period, principally due to staff head count reductions offset by salary
increases for certain executive management.
12
<PAGE>
Direct costs of $1,847,000 in the current period increased by $1,643,000 over
direct costs of $204,000 in the prior period. Metro direct costs, principally
costs of lists rented on behalf of clients, totaled $1,614,000 in the current
period. This was offset by an increase in telemarketing and telefundraising
costs of $29,000, primarily attributable to increased postage and telephone
costs as a result of more off-site campaigns in the current period.
Restructuring costs of $1,019,000 were incurred in the current period, as the
Company effected certain corporate restructuring steps, including reducing
corporate staff and closing its Culver City corporate office, as well as making
two executive management changes. In this connection, executive management and
other settlement costs of $954,000 and estimated office closing costs of $65,000
were recorded in March 1997.
Selling, general and administrative expenses of $812,000 in the current
period increased by $343,000 over comparable expenses of $469,000 in the prior
period. Of the net increase, $95,000 was attributable to SD&A and $298,000 to
the inclusion of Metro. Corporate administration decreased by $50,000. At
SD&A, increases of $40,000 were attributable to administrative costs, including
depreciation, rent, utilities and insurance, associated with the expansion of
the Berkley Calling Center and administration and regulatory costs relating to
SD&A's new Canadian campaign. Further increases in computer costs, supplies and
depreciation resulted from the purchase and installation of new computer
hardware and software at on-site campaigns. Printing, postage, telephone and
promotion costs increased at SD&A due to corporate promotion requirements, as
well as a January 1997 marketing effort. At the parent company level, the
$50,000 decrease was principally due to expenses incurred in the prior year for
evaluation of a potential acquisition, which was not consummated, and
investigation of related financing sources which were not obtained.
Professional fees of $215,000 in the current period, including $89,000 from
Metro, increased by $67,000 over professional fees of $148,000 in the prior
period. Corporate professional fees increased $44,000 due principally to fees
incurred in investigating and reviewing alternate financing proposals after
withdrawal of the Company's underwritten public offering, as discussed below.
Professional fees at SD&A decreased by $66,000 compared to the prior period,
principally due to legal and accounting costs incurred in several renegotiations
of the debt payable to the former owner of SD&A in the prior period.
Amortization of intangible assets of $208,000 in the current period increased
by $118,000 over amortization of $90,000 in the prior period. Of the increase,
$113,000 is attributable to the amortization of costs in excess of net tangible
assets acquired in the Metro acquisition, including amortization of $650,000 in
covenants not to compete and $250,000 in proprietary software amortized over
three and five years, respectively. The remaining costs are amortized over
their expected period of benefit of forty years. Amortization of the goodwill
and a covenant-not-to-compete associated with the Alliance and SD&A acquisitions
on April 25, 1995 increased in the current period due to an increase in goodwill
of $850,000 as of June 30, 1996 for payments made to the former owner of SD&A
resulting from achievement of defined results of operations of SD&A for the year
then ended.
Discounts on warrant exercises of $5,089,000 were incurred in the current
period. To reduce the overhang associated with the existence of such warrants
and to obtain working capital subsequent to the withdrawal of its underwritten
public offering, the Company accepted offers from certain warrant-holders to
exercise their warrants for 3,152,500 shares of Common Stock at discounted
exercise prices. The Company recognized the dates of acceptances as new
measurement dates and, accordingly, recorded the non-cash charges to reflect the
market value of the discounts.
13
<PAGE>
Withdrawn public offering costs of $1,307,000 were recorded in the current
period. In October 1996, the Company filed a registration statement on Form SB-
2 with the Securities and Exchange Commission relating to an underwritten public
offering of 2,100,000 shares. In February, 1996 the Company withdrew the
registration statement. As the Company had intended to refile the registration
statement, offering costs of $1,122,000 incurred through December 31, 1996 had
been deferred as of that date. Subsequently, the Company chose not to refile
the registration statement. As such, in the current period the Company expensed
all such costs.
Interest expense of $105,000 in the current period increased by $7,000, net,
compared to $98,000 in the prior period. In the current period, increases of
$26,000 resulted from interest payable on notes due to the former owners of
Metro, $20,000 due to amounts payable on promissory notes payable to the fomer
holders of the Company's Series C Redeemable Preferred Stock and $7,000 of other
minor items. This was offset by reductions of $46,000 due to principal payments
on the SD&A seller debt and reductions in the interest rate.
The provision for income taxes of $8,000 in the current period decreased by
$5,000 compared to $13,000 in the prior period. Despite consolidated losses
from continuing operations, the current period provision resulted from state and
local taxes incurred on taxable income at Metro, which could not be offset by
losses incurred at the parent company level.
Results of Operations for the Nine Months Ended March 31, 1997, Compared to the
- -------------------------------------------------------------------------------
Nine Months Ended March 31, 1996
- --------------------------------
Revenues of $16,146,000 in the nine months ended March 31, 1997 (the "current
period") increased by $5,536,000 over revenues of $10,610,000 in the nine months
ended March 31, 1996 (the "prior period"). $5,359,000 of the increase was
attributable to the inclusion of Metro revenues in the current period, starting
October 1, 1996. Revenues from on-site telemarketing and telefundraising
campaigns totaled $8,665,000 and $8,866,000, respectively, or 80% and 84% of
revenues in the current and prior periods, respectively. Revenues from off-site
campaigns totaled $2,122,000 and $1,744,000, respectively, or 20% and 16% of
revenues, respectively, in the current and prior periods. The increase in off-
site revenues resulted from a fifty percent increase in capacity at the Berkeley
Calling Center in September, 1996. During the nine months ended March 31, 1997
and 1996, the Company's margins relating to off-site campaigns were generally
higher than margins relating to on-site campaigns.
Salaries and benefits of $10,488,000 in the current period increased by
$1,433,000 over the prior period total of $9,055,000. Of the increase,
$1,107,000 was attributable to the inclusion of Metro in the current period.
SD&A salaries and benefits increased $374,000 in the current period, largely due
to salary increases and commencement of on-site campaigns for new clients in the
current period (which generally require a higher labor expense in the early
years). These increases were partially offset by a $48,000 reduction in parent
company administrative salaries in the current period as compared to the prior
period, due to staff reductions as well as salary reductions during the three
months ended September 30, 1996. In addition, in the current period, the
Company incurred a non-recurring, non-cash charge of $1,650,000 to compensation
expense relating to options granted to two principal executive officers. Such
charge was incurred because the exercise price of each option, which was based
upon the market price of the common stock on May 30, 1996 (the date which the
Company intended as the effective date of the grant) rather than the market
price on September 26, 1996 (the actual effective date of the grant), was lower
than the market price of the common stock on September 26, 1996.
14
<PAGE>
Direct costs of $3,789,000 in the current period increased by $3,263,000 over
direct costs of $526,000 in the prior period. Metro direct costs, principally
costs of lists rented on behalf of clients, totaled $3,240,000 in the current
period. This was offset by an increase in telemarketing and telefundraising
costs of $23,000, primarily attributable to increased postage and telephone
costs as a result of more off-site campaigns in the current period.
Restructuring costs of $1,019,000 were incurred in the current period due to
corporate restructuring, as previously discussed.
Selling, general and administrative expenses of $2,179,000 in the current
period increased by $783,000, over expenses of $1,396,000 in the prior period.
Of the net increase, $277,000 was attributable to SD&A and $519,000 to the
inclusion of Metro, offset by a decrease of $13,000 in corporate administration.
At SD&A, travel and related expenses increased by $83,000 in the current period
principally as a result of bringing campaign managers to Los Angeles for
training on SD&A's new on-site software. Of the SD&A increase, $38,000 resulted
principally from an increase in printing, promotion and advertising expenses
related to new marketing efforts and $83,000 was incurred for rent, business
taxes and insurance associated with moving and expanding the Berkeley Calling
Center, a new Canadian campaign and other. The remaining net increase of
$73,000 was principally due to increases in shipping expenses for new on-site
computers, as well as related increases in computer supplies, telephone, postage
and other. At the parent company level, the net $13,000 decrease included a
$95,000 decrease related to acquisitions which were not consummated and
investigation of related financing sources which were not obtained in the prior
period. This was offset by increases in public relations expenses of $58,000
due to the hiring of a new firm in the current period and rent related expense
of $10,000 due to higher parking and utility charges in the current period. The
remaining net increase of $14,000 in the current period resulted principally
from higher director fees, travel and other.
Professional fees of $544,000 in the current period, including $157,000 from
Metro, increased by $180,000 over professional fees of $364,000 in the prior
period. Corporate professional fees increased by $69,000 in the current period
and included a non-recurring charge of approximately $76,000 in consulting fees
attributable to the value of warrants acquired by former consultants during the
period, offset by minor miscellaneous net decreases of $7,000. Professional
fees at SD&A decreased by $46,000 compared to the prior period, principally due
to legal and accounting costs incurred in several renegotiations of the debt
payable to the former owner of SD&A in the prior period.
Amortization of intangible assets of $512,000 in the current period increased
by $241,000 over amortization of $271,000 in the prior period. Of the increase,
$226,000 is attributable to the amortization of costs in excess of net tangible
assets acquired in the Metro acquisition, including amortization of $650,000 in
covenants not to compete and $250,000 in proprietary software amortized over
three and five years, respectively. The remaining costs are amortized over
their expected period of benefit of forty years. Amortization of the goodwill
and a covenant-not-to-compete associated with the Alliance and SD&A acquisitions
on April 25, 1995 increased in the current period due to an increase in goodwill
of $850,000 as of June 30, 1996 for payments made to the former owner of SD&A
resulting from achievement of defined results of operations of SD&A for the year
then ended.
Discounts on warrant exercises of $5,089,000 and withdrawn public offering
costs of $1,307,000 were recorded in the current period, as previously
discussed.
The Company recorded a net gain of $90,000 from the sale of the its
undeveloped parcel of land in Laughlin, Nevada in August 1996, which gain was
recorded net of commissions and related selling expenses.
15
<PAGE>
Interest expense of $353,000 in the current period increased by $59,000
compared to $294,000 in the prior period. Of the net increase, $53,000 was
attributable to interest payable on notes due to the former owners of Metro,
$127,000 due to amounts payable to the former holders of the Series B Preferred
Stock and Series C Preferred Stock in the current period and $22,000 on
promissory notes payable to the former holders of the Series C Preferred Stock
and $3,000 of other minor items. This was offset by reductions of $146,000 due
to principal payments on the SD&A seller debt and reductions in the interest
rate.
The provision for income taxes of $32,000 in the current period decreased by
$7,000 compared to $39,000 in the prior period. Despite consolidated losses
from continuing operations, the provision resulted from state and local taxes
incurred on taxable income at the operating subsidiary level which could not be
offset by losses incurred at the parent company level.
Capital Resources and Liquidity
- -------------------------------
At March 31, 1997 and June 30, 1996, on a consolidated basis the Company had
cash and cash equivalents of $483,000 and $1,393,000, respectively, and accounts
receivable net of allowances of $4,610,000 and $2,682,000, respectively.
The Company generated net losses of $10,712,000 in the current nine month
period and used net cash in operating activities of $1,671,000. These losses in
the current period included a non-recurring, non-cash charge of $1,650,000 to
compensation expense relating to options granted to two former executive
officers of the Company, as well as $1,019,000 in corporate restructuring costs
designed to substantially reduce corporate overhead and improve profitability of
future operations. The loss also included $1,307,000 in costs incurred on the
Company's withdrawn registration statement and $5,089,000 in non-cash discounts
on offers accepted from certain warrant holders to induce the exercise of their
warrants to provide the Company with working capital and reduce market overhang.
Due to seasonal decreases in revenues and certain related expenses between
the fourth and third fiscal quarters, at March 31, 1997, accounts receivable
relating to the SD&A operation decreased $836,180 and trade accounts payable and
accrued liabilities decreased $279,000 compared to levels at June 30, 1996.
Primarily due to the seasonal nature of annual subscription renewal
campaigns, telemarketing/telefundraising revenues are expected to increase
during the fourth fiscal quarter. Historically, the fourth fiscal quarter is
the Company's strongest for telemarketing/telefundraising revenues. Starting in
October 1996, the Company recognized results of operations of Metro. The fourth
calendar quarter, which is the Company's second fiscal quarter, has historically
been Metro's strongest. At March 31, 1997, Metro accounts receivable and
payable had increased $926,000 and $500,000 , respectively, over levels at
October 1, 1996 (acquisition date) due to increases in its business. The
Company cannot predict the degree to which, on a consolidated basis, these
trends will continue.
In the current period, net cash of $626,000 was provided from investing
activities. The Company received proceeds of $860,000 from the sale of its land
in Laughlin, Nevada, which was net of commissions and related selling expenses.
Upon the acquisition of Metro, the Company received $186,000 in cash, net of
acquisition costs paid. Purchases of property and equipment of $425,000
resulted primarily from the Company's relocation and expansion of its Berkeley
calling center in August 1996 and purchases of computer equipment at Metro and
SD&A.
16
<PAGE>
The Company intends to continue to expand its business by investing up to
approximately $1.0 million for technology, computer systems, software and
equipment. Financing for this expansion has been obtained from the issuance of
convertible notes and the exercise of outstanding warrants.
In the current period financing activities provided $135,000. SD&A had a
$500,000 line of credit with a bank which was fully drawn as of June 30, 1996.
In December, 1996, SD&A obtained an increase in the line under a revised credit
facility which includes a line of credit up to $750,000 and a term loan totaling
$125,000. As of March 31, 1997, $746,000 was outstanding under the credit
facility and $115,000 under the term loan. In April, 1997, Metro entered into a
two-year renewable credit facility with a lender for a line of credit commitment
up to a maximum of $1,500,000.
In connection with the Metro acquisition, which was affected as of October 1,
1996, the Company issued promissory notes to the former shareholders of Metro in
an aggregate principal amount of $1.0 million. Such notes bear interest at 6%
per annum, are scheduled to mature June 30, 1998 and are convertible at the
option of the holders thereof into 185,874 shares of Common Stock.
As described in footnote 9 to the consolidated financial statements included
in this Report on Form 10-QSB, on December 23, 1996, the Company and certain of
its stockholders effected a recapitalization of the Company's capital stock,
whereby: (i) the Company's Series B Convertible Preferred Stock, par value $.01
per share (the "Series B Preferred Stock"), was converted, in accordance with
its terms without the payment of additional consideration, into 2,480,000 shares
of Common Stock; (ii) the Company's Series C Convertible Preferred Stock, par
value $.01 per share (the "Series C Preferred Stock"), was repurchased for
promissory notes in an aggregate principal amount of $1.0 million, which
promissory notes bear interest at a rate of 8% per annum and are repayable on
demand at any time from and after the date of the consummation of an
underwritten public offering by the Company of Common Stock, but in any event
such notes mature June 7, 1998; (iii) all accrued interest on the Series B
Preferred Stock and the Series C Preferred Stock was converted into 88,857
shares of Common Stock; (iv) warrants related to the Series C Preferred Stock,
currently exercisable for 3,000,000 shares of Common Stock, were exchanged for
600,000 shares of Common Stock; and (v) options held by two of the Company's
principal executive officers to purchase 300,000 shares of common stock were to
be canceled at no cost to the Company, subject to completion of an underwritten
public offering. The Offering was not consummated and, accordingly, the options
were not canceled. Upon conversion of the Series B Preferred Stock and
accumulated interest thereon into Common Stock on December 23, 1996, the Company
incurred a non-cash, non-recurring dividend for the difference between the
conversion price and the market price of the Common Stock, totaling $8.5
million. Upon repurchase of the Series C Preferred Stock, the Company incurred
a non-recurring dividend of $573,000 for the difference between the repurchase
price and the accreted book value of the stock at December 23, 1996. The
dividends do not impact net income (loss), but do impact net income (loss)
attributable to common stockholders in the calculation of earnings per share.
On October 17, 1996, the Company filed a Form SB-2 registration statement
(the "Registration Statement") with the Securities and Exchange Commission. The
Registration Statement related to an offering of 2,100,000 shares of Common
Stock, of which 1,750,000 shares were being offered by the Company and 350,000
were being offered by certain stockholders of the Company (the "Offering"). It
also related to the delayed sale of 1,381,056 shares of Common Stock by certain
selling stockholders. Due to market conditions, on February 11, 1997, the
Company withdrew the Registration Statement. As the Company had intended to
refile the Registration Statement, Offering costs incurred through December 31,
1996, of $1.1 million were deferred as of December 31, 1996. Subsequently, the
Company elected to pursue other sources of financing and chose not to refile the
Registration Statement. As such,
17
<PAGE>
in the quarter ended March 31, 1997, the Company expensed $1.3 million in
Offering costs, including those deferred at December 31, 1996, as well as
additional costs incurred from January 1, 1997 through the date of the
withdrawal.
On February 26, 1997, the Company entered into a demand promissory note in
the amount of $207,950, payable to a law firm for professional services related
to the Company's withdrawn public offering. Interest was payable monthly at the
rate of 7% per annum. In May, 1997, the note was repaid in full.
In March 1997, as part of its corporate restructuring, the Company entered
into non-interest bearing promissory notes payable to two former executive
officers, with face values of $290,000 and $250,000, respectively, payable in
equal monthly installments over eighteen months starting in May 1997.
In March 1997, the Company accepted offers from certain warrant holders for
the exercise of warrants for 3,152,500 shares of common stock at discounted
exercise prices. In April 1997, the Company obtained $2,046,000, net of fees,
from the private placement of 6% convertible notes, with a face value of
$2,200,000. The notes are payable with interest on April 15, 1999, if not
previously converted. The notes are convertible into shares of the Company's
Common Stock at the lesser of $2.50 per share or 83% of the average closing bid
price of the Common Stock during the last five trading days prior to conversion.
The proceeds of $3.9 million from the notes and warrant exercises will be used
for capital expenditures, debt and registration cost repayment and general
corporate purposes.
As of March 31, 1997, the Company had not made its February 19, 1997 and
March 19, 1997 payments, totaling an aggregate of $140,389, on its debt payable
to the former owner of SD&A. These payments were made in full on April 1, 1997.
Additional contingent payments in connection with the acquisition of SD&A,
based on the achievement of certain defined earnings levels, may be due at the
end of fiscal 1997 and 1998, which will continue to increase amortization
expense in subsequent years.
The Company believes that the funds available from operations, including the
operations of Metro, exercise of warrants and issuances of convertible notes,
the new Metro credit line and increase in SD&A credit line should be adequate to
finance its operations, pay its accrued registration costs and enable the
Company to meet operating requirements and interest and debt obligations through
its fiscal year ending June 30, 1998. In conjunction with the Company's
acquisition and growth strategy, additional financing may be required to
complete any such acquisitions and to meet potential contingent acquisition
payments. There can be no assurance, however, that such capital, if required,
will be available on terms acceptable to the Company, if at all.
New Accounting Pronouncement
- ----------------------------
The Financial Accounting Standards Board recently issued FASB Statement No.
128, "Earnings Per Share" which is effective for financial statements for both
interim and annual periods ending after December 15, 1997. Earlier application
is not permitted; however, restatement of all prior-period earnings per share
data presented is required. The Company has not yet determined the effect FASB
Statement No. 128 will have on its financial statement; however, the adoption
is not expected to have a material impact on the financial position or results
of operations of the Company.
18
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
a) Exhibits
<TABLE>
<CAPTION>
Exhibit Exhibit
Number Item --------------
- -------- ---------------------------------------- (See Notes) (*)
<C> <S> <C>
2.1 Agreement and Plan of Merger dated as B (2.1)
of October 1, 1996 between All-Comm
Media Corporation, Metro Services
Group, Inc., Metro Merger Corp. and the
Shareholders named therein
3.1 Certificate of Designation for Series C A (3.7)
Convertible Preferred Stock
10.1 Form of promissory note of All-Comm B (2.1)
Media Corporation issued to former
shareholders of Metro Services Group,
Inc. (included in Exhibit 2.1)
10.2 Form of Registration Rights Agreement B (2.1)
dated as of October __, 1996 between
All-Comm Media Corporation and the
Shareholders named therein (included in
Exhibit 2.1)
10.3 Amendment No. 1 to the Registration C
Rights Agreement dated as of October 9,
1996
10.4 Form of Employment Agreement between B (2.1)
Metro Services Group, Inc. and Mr. J.
Jeremy Barbera (included in Exhibit 2.1)
10.5 Form of Employment Agreement between B (2.1)
Metro Services Group, Inc. and Mr.
Robert M. Budlow (included in Exhibit
2.1)
10.6 Form of Employment Agreement between B (2.1)
Metro Services Group, Inc. and Ms.
Janet Sautkulis (included in Exhibit
2.1)
10.7 Form of Series C Convertible Preferred A (10.26)
Stock Private Placement Purchase
Agreement
10.8 Form of Warrant Certificate Issued to A (10.26)
holders of Series C Convertible
Preferred Stock (included in Exhibit
10.7)
10.9 Form of letter dated September 10, 1996 C
rescinding Private Placement Agreement
dated June 7, 1996
10.10 Form of Series B Conversion Agreement A (10.30)
10.11 Form of Warrant Cancellation Agreement A (10.31)
10.12 Form of Series C Repurchase and A (10.32)
Exchange Agreement
10.13 Form of Option Cancellation Agreement A (10.33)
10.14 Form of Amended and Restated Series B A (10.34)
Conversion Agreement
10.15 Form of Amended and Restated Series C A (10.35)
Repurchase and Exchange Agreement
10.16 Form of Amended and Restated Option A (10.36)
Cancellation Agreement
10.17 Loan Agreement and Credit Facility, D
dated December 27, 1996, by and between
Stephen Dunn & Associates, Inc. and 1st
Business Bank
10.18 Demand Promissory Note dated February E
26, 1997
10.19 Security Agreement between Milberg E
Factors, Inc. and Metro Services
Group, Inc.
10.20 Severance Agreement with Barry Peters E
10.21 Severance Agreement with E. William E
Savage
10.22 Form of Private Placement Purchase E
Agreement and Convertible Note
11.1 Statement Regarding Computation of Net E
Loss Per Share
27.1 Financial Data Schedule E
</TABLE>
19
<PAGE>
Notes relating to Exhibits
A Incorporated by reference to the Company's Registration Statement on Form SB-
2, filed on October 17, 1996.
B Incorporated by reference to the Company's Report on Form 8-K dated October
11, 1996.
C Incorporated by reference to the Company's Report on Form 10-QSB for the
quarter ended September 30, 1996.
D Incorporated by reference to the Company's Report on Form 10-QSB for the
quarter ended December 31, 1996.
E Filed herewith.
* Numbers in parentheses next to any of the above letters A and B refer to the
exhibit numbers within each document from which the Exhibit is incorporated by
reference herein.
b) Reports on Form 8-K
None
20
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ALL-COMM MEDIA CORPORATION
(Registrant)
By: /s/ J. Jeremy Barbera
--------------------------------------
J. Jeremy Barbera
Chairman and Chief Executive Officer
By: /s/ Scott Anderson
--------------------------------------
Scott Anderson
Chief Financial and Accounting Officer
Date: May 12, 1997
21
<PAGE>
EXHIBIT 10.18
DEMAND PROMISSORY NOTE
US$207,949.78 February 26, 1997
FOR VALUE RECEIVED, ALL-COMM MEDIA CORPORATION, a Nevada corporation
having its principal place of business at 400 Corporate Pointe, Suite 780,
Culver City, California 90230 (the "Obligor"), hereby promises to pay ON DEMAND
to the order of Jones, Day, Reavis & Pogue (the "Firm") at its office located at
599 Lexington Avenue, New York, New York 10022, or at such other office as Firm
shall notify to Obligor (the "Payment Office") the principal sum of TWO HUNDRED
SEVEN THOUSAND, NINE HUNDRED FORTY NINE 78/100 UNITED STATES DOLLARS (U.S.
$207,949.78) or the then outstanding and unpaid principal amount hereof (the
"Indebtedness"), and to pay interest on the unpaid principal amount hereof from
time to time outstanding until paid in full at the interest rates, at the times
and in the manner provided for below.
Section 1. The Indebtedness. This Note evidences indebtedness of the
----------------------------
Obligor to the Firm not due and payable in full in respect of fees for
professional services rendered to the Obligor in the State of New York, and
related disbursements, in connection with, inter alia, the Obligor's recently
----------
withdrawn public offering of common stock. The Obligor acknowledges and agrees
that such professional services were contracted for in the State of New York,
have been accepted by Obligor and have been fully and satisfactorily performed,
and that the professional fees therefor, and disbursements made and incurred by
the Firm in connection therewith, are reasonable in relation to the services the
Firm performed for the Obligor, and that pursuant to the conditions upon which
the Firm undertook representation of the Obligor, such fees and disbursements
are now due and payable in full without reduction or offset, and that the Firm's
representation of the Obligor has been satisfactorily completed and no further
professionals services are required to be performed by the Firm for the Obligor
or its affiliates. The Obligor acknowledges and agrees that it has no claims or
counterclaims, defenses or offsets against the Firm in connection with the
professional services rendered by the Firm to the Obligor. The Obligor agrees
that the existing $10,000 retainer paid by the Obligor to the Firm may, at the
Firm's sole discretion and at any time or from time to time, be set off and
applied in whole or in part against the Indebtedness evidenced hereby (with the
Obligor remaining liable for the remaining unpaid amounts evidenced hereby) or
applied to reimburse the Firm for its costs and expenses (including the time
expended by attorneys within the Firm at their standard hourly rates) incurred
or accrued in enforcing this Note or in preserving its rights hereunder.
Section 2 Payments. All payments hereunder for principal, interest
-------------------
and other amounts shall be made in U.S. dollars and in immediately available
funds, to Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York
10022, Attn: Robert L. Cunningham (the "Payment Office") no later than 2:00 p.m.
New York City time on the date when due.
Section 3 Interest.
--------------------
(a) The Obligor agrees to pay interest in respect of the unpaid
principal balance of the Indebtedness outstanding from time to time, from March
31, 1997 until payment in full, at a rate per annum (calculated on the basis of
a 365-day year) equal to 7%. Interest shall be payable on the last business day
of each calendar month, and on each date of repayment or prepayment of all or
part of the Indebtedness.
(b) Following demand by the Firm for repayment of the Indebtedness,
interest shall accrue on the Indebtedness in its entirety at the rate of 12% per
annum and shall be payable on demand.
Section 4 Payment of the Note Prior to Demand. The Obligor may
----------------------------------------------
prepay the outstandiing principal of this Note, in whole or in part, without
penalty or premium. The payment amount shall be due and payable together with
accrued interest to the date of payment on the amount so paid, and all other
amounts then due.
Section 5 Miscellaneous.
---------------------------
(a) This Note shall be binding on the Obligor and its transferees,
successors and assigns and shall inure to the benefit of the Firm and its
transferees, successors and assigns. The Obligor may not assign or delegate any
of its obligations or agreements hereunder. No amendment, modification or
waiver of this Note shall be effective unless it is in writing and signed by the
Firm and the Obligor.
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(b) Unless otherwise indicated, all notices and other communications
in connection with this Note shall be in writing and shall be effective, if
mailed, five days after deposit in the mails, airmail postage prepaid, if sent
by telefax, when sent with electronic confirmation received, or if by courier of
messenger, when delivered against a receipt, in each case, to the Obligor's
address set forth below, or to the firm at its Payment Office. Either party may
change its address for notices by written notice to the other.
(c) Section headings are for convenience of reference and shall not be
construed as part of this Note.
(d) The Obligor will indemnify and hold the Firm harmless for, and pay
in U.S. dollars, all losses, claims, taxes, costs, fees and expenses, including
attorneys' fees including without limitation the fees of attorneys at the Firm
at their standard hourly rates, incurred by the Firm in connection with the
enforcement of this Note by the Firm or the preservation of its rights
hereunder. This provision shall survive repayment of the Indebtedness and
cancellation of this Note.
(e) All payments hereunder shall be made without setoff or
counterclaim, and free and clear of, and without deduction for or on account of,
any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, and all interest, penalties and other
liabilities with respect thereto (collectively, "Taxes"), now or hereafter
imposed, levied, collected, withheld or assessed by any jurisdiction, or any
department, agency, state, political subdivision or taxing authority thereof or
therein. If any Taxes are so levied or imposed, the Obligor agrees to pay the
full amount thereof, and such additional amounts as may be necessary so that
each net payment received by the Firm will be not less than the amount provided
for herein. The Obligor will furnish to the Firm within 30 days after each
payment of Taxes is due, originals or certified copies of tax receipts
evidencing such payment by the Obligor. This provision shall survive repayment
of the Indebtedness and cancellation of this Note.
(f) THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES. [READ, UNDERSTOOD AND AGREED: /s/ BP ]
---------------
(g) THE OBLIGOR IRREVOCABLY WAIVES ANY AND ALL REQUIREMENTS OF DEMAND,
PRESENTMENT, PROTEST, NOTICE OF DISHONOR OR FURTHER NOTICE OF ANY KIND IN
CONNECTION WITH THIS NOTE. [READ, UNDERSTOOD AND AGREED: /s/ BP ]
---------------
(h) THE OBLIGOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A JURY TRIAL IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE. [READ, UNDERSTOOD AND
AGREED: /s/ BP ] In any action or proceeding arising out of or relating
---------------
to this Note, the Obligor hereby irrevocably submits to the non-exclusive
jurisdiction of the courts of the State of New York and the federal courts in
New York City, and agrees that effective service of process may be made on the
Obligor by mailing same to the Obligor's address set forth below. The Firm may
serve process in any other manner permitted by applicable law. The Obligor
hereby irrevocably waives any objection to the laying of venue in the aforesaid
courts, and any claim of an inconvenient forum. The Obligor agrees that a final
judgment in any such action or proceeding shall be conclusive, and may be
enforced in any other jurisdiction or in any other permitted manner. [READ,
UNDERSTOOD AND AGREED: /s/ BP ]
--------------
IN WITNESS WHEREOF, the Obligor has executed and delivered this Note
as of the date first above written.
ALL-COMM MEDIA CORPORATION
By: /s/ Barry Peters
Address -------------------------------------
Attn: Chief Executive Officer Barry Peters, Chairman and Chief Executive
400 Corporate Pointe, Suite 780 Officer
Culver City, CA 90230
Facsimile: (310) 342-2800 Subscribed and sworn to before me this 27th
day of February
By: /s/ Carol L. Gilmore
------------------------------------
Carol L. Gilmore, Notary Public, State of
New York
23
<PAGE>
EXHIBIT 10.19
Milberg Factors, Inc.
99 Park Avenue
New York, New York 10016
SECURITY AGREEMENT
------------------
(Accounts Receivable - Financing)
Gentlemen:
We propose the following arrangements with you, effective as of the date of
your acceptance, wherein yu may make loans and advances to us in accordance with
the terms, provisions and conditions hereinafter stated:
1. As security for all such loans and advances (both referred to as
"Advances"), and for all other debts, liabilities and obligations of every
nature whatsoever now or hereafter owing from the undersigned to you, the
undersigned hereby sells, assigns, transfers, sets over, hypothecates and
pledges to you at your office in the City of New York, with absolute recourse to
us, and grants you a security interest in all Receivables (as hereinafter
defined) and all general intangibles (as such term is defined in the Uniform
Commercial Code) and all intellectual property including but not limited to
lists, data, computer memory and software, now or hereafter owned by us. For
the purposes of this agreement the term "Receivables" means and includes all
accounts, accounts receivable, contract rights, instruments, documents, chattel
paper and leases, and any and all other forms of claims or obligations owing to
us, whether secured or unsecured, all proceeds thereof including insurance
thereon and all or rights as to any merchandise which is represented thereby
(delivered or undelivered) including all of our rights of stoppage in transit,
replevin and reclamation and as an unpaid vendor or lienor. You shall be
privileged to enjoy all the rights and remedies of the seller of such goods and
shall be and become subrogated to all guaranties and securities possessed by us
or due to come into our hands, but you shall not be liable in any manner for
exercising or refusing to exercise any rights thereby bestowed. From time to
time at you request, but not less than weekly, we shall provide you with
schedules describing all Receivables created or acquired by us, in form
satisfactory to you, and shall execute and deliver to you at your office in the
City of New York, written assignments of such Receivables to you and shall
furnish at the same time copies of customers' invoices or the equivalent,
together with original shipping or delivery receipts for all merchandise sold
and/or the original of all contracts, mortgages and other documents executed by
the customers and/or all notes, bills, acceptances or other evidences of their
indebtedness, duly endorsed in blank by us, and at the end of every month a
detailed open item Accounts Receivable Trial Balance indicating each customer's
name, address and owing by individual invoice and/or any other information or
documents you may call upon us from time to time to submit, but your failure to
request any or all of the foregoing or our failure to deliver same shall not
affect your security interest in or rights to Receivables.
2. At the time of assignment of Receivables and periodically thereafter,
you may in your sole and absolute discretion make Advances to us which, in the
aggregate at any time outstanding, will not exceed the lesser of (i)
$1,500,000.00 (the "Maximum Revolving Amount"), or (ii) eighty percent (80%)
(the "Advance Percentage") of the net face amount of all Eligible Receivables
(as hereinafter defined), less such reserves as you may deem reasonably proper
and necessary from time to time, and you will charge the amount of each such
advance to our account. Notwithstanding the above, it is understood that you
may, at our request, from time to time advance a sum that is more or less than
the sum determined by application of the above percentage of Eligible
Receivables and may, in fact, make Advances at a time when there are no Eligible
Receivables. You may, or we shall upon request from you, at any time notify
customers that Receivables have been assigned to you. You may collect
Receivables directly in your own name or our name and charge the collection
costs and expenses to our account. But, until you give us other instructions,
we shall continue to make collection of all Receivables for you. All payments
on account of Receivables shall be your specific property; we shall receive
them as your trustee and we shall immediately deliver them to you in their
original form. After allowing four (4) banking days for collection time, you
will credit all such payments to our account and, subject to the provisions of
this Agreement, you will at our request remit to us any net balance standing to
our credit on your books, or any part thereof. In consideration for your
agreement to make the loans referenced above, upon the execution of this
Agreement and upon each anniversary of its effective date, we shall, in addition
to the payment of the other fees stated herein, pay you a yearly facility fee
equal to one and one-half percent (1 1/2%) of the Maximum Revolving Amount in
effect on such date; it being understood that we may, upon
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<PAGE>
written notice to you, elect to reduce the Maximum Revolving Amount at any time,
any such reduction being irrevocable.
3. Interest hereunder upon the net balance of our account due at the close
of each day, which will be due and payable at the close of each month, shall be
based upon the highest publicly announced "reference", "prime", or "base"
interest rate of Chase Manhattan Bank (the "Prime Rate") (which is now 8 1/2%
per annum) plus one and one-half percent (1 1/2%) (the "Effective Rate"). The
effective rate shall be increased or decreased as the case may be for each
increase or decrease in the Prime Rate in an amount equal to such increase or
decrease in the Prime Rate; each change to be effective as at the first day of
the month after the related change in such Prime Rate; but in no event shall the
Effective Rate of interest hereunder be less than 8% per annum, nor shall
interest charged hereunder be less than $60,000.00 in any contract year, nor in
excess of the maximum rate you are permitted to charge by law. However, upon
the occurrence of an Event of Default by the undersigned under this Agreement,
any supplement hereto or any related agreement and subsequent to any termination
of this Agreement pursuant to paragraph 11 hereof, interest upon the net balance
of our account due at the close of each day shall be payable at a fluctuating
interest rate per annum equal to the Effective Rate plus four percent (4%), but
not in excess of the maximum rate permitted by law. Interest shall be
calculated on the basis of actual days elapsed and on a 360 day year. Nothing
herein shall limit or restrict your right to adjust advance formulas upward or
downward and eligibility requirements based upon your lending criteria which is
established in your sole discretion and on your own collateral evaluations. You
will account monthly to us and each monthly accounting will be final, binding
and conclusive upon us unless we give you written notice by registered mail of
specified exceptions thereto within 30 days of its date. Such notice shall only
be deemed an objection to those items specifically objected to therein. All
interest is payable to you daily but shall be charged to our account monthly as
a cash advance made by you to us for our account.
4. "Eligible Receivables" shall mean and include each Receivable which
--------------------
conforms to the following criteria: (a) shipment of the merchandise or the
rendition of services has been completed; (b) no return, rejection or
repossession of the merchandise has occurred; (c) merchandise or services shall
not have been rejected or disputed by the customer and there shall not have been
asserted any offset, defense or counterclaim; (d) it continues to be in full
conformity with the representations and warranties made by the undersigned to
you with respect thereto; (e) you are, and continue to be, satisfied with the
credit standing of the customer in relation to the amount of credit extended;
(f) it is documented by an invoice in a form approved by you and shall not be
unpaid more than 90 days from the date of invoice; (g) less than 25% of the
unpaid amount of invoices due from such customer and its affiliates remain
unpaid more than 90 days from the date of invoice; (h) it is not evidenced
by chattel paper or an instrument any kind with respect to or in payment of the
Receivable unless such instrument is duly endorsed to and in your possession or
represents a check in payment of a Receivable; (i) if the customer is located
outside of the United States, the goods which gave rise to such Receivable were
shipped after receipt by us from or on behalf of the customer of an irrevocable
letter of credit, assigned and delivered to you and confirmed by a financial
institution acceptable to you and is in form and substance acceptable to you
payable in the full amount of the Receivable in United States dollars at a place
of payment located within the United States; (j) such Receivable is not subject
to any lien other than in your favor; (k) it does not arise out of transactions
with any employee, officer, agent, director, stockholder or affiliate of the
undersigned; (l) it is payable to the undersigned; (m) it does not arise out of
a bill and hold sale prior to shipment or a sale to any customer to whom we are
indebted; (n) it is net of any returns, discounts, claims, credits and
allowances; (o) if the Receivable arises out of contracts between the
undersigned and the United States, any state, or any department, agency or
instrumentality of any of them, we have so notified you, in writing, prior to
the creation of such Receivable, and, if you so request, there has been
compliance with any governmental notice or approval requirements, including
without limitation, compliance with the Federal Assignment of Claims Act; (p) it
is a good and valid account representing an undisputed bona fide indebtedness
incurred by the customer therein named, for a fixed sum as set forth in the
invoice relating thereto with respect to an unconditional sale and delivery upon
the stated terms of goods sold by the undersigned, or work, labor and/or
services rendered by the undersigned; and (q) it is otherwise satisfactory to
you as determined in good faith by you in the reasonable exercise of your
discretion. We warrant and agree as to each such Receivable that: (i) we have
good title thereto and good right to sell, negotiate, pledge and assign the same
to you: and (ii) all documents delivered to you in connection therewith will be
genuine. If any Eligible Receivable is later deemed ineligible, you shall have
the right to demand payment therefor, but such demand or payment therefor shall
not be deemed a reassignment and title to all Receivables, Eligible and
ineligible, will remain in you until all of our obligations to you have been
fully satisfied. Any merchandise which is returned by customers or otherwise
recovered, or held subject to bill and hold invoices, shall be set aside, marked
in your name,
25
<PAGE>
held by us as your trustee and insured by us for your benefit, and shall remain
a part of your security until the amount of Receivables represented thereby has
been paid to you. We shall notify you promptly of all returns and recoveries of
merchandise and of all disputes and claims, and we shall settle or adjust all
disputes and claims at no expense to you, but no discount, credit or allowance
shall be granted to any customer and no returns of merchandise shall be accepted
by us without your prior consent, except in the ordinary course of business and
involving less than $25,000.00 in any separate instance. You will always retain
the right to settle or adjust disputes and claims directly with customers for
amounts and upon terms which you consider advisable and the right to dispose of
merchandise returns as you see fit, all without liability to us. In all cases
you will credit our account with only the net amounts received by you in payment
of Receivables. We exonerate you from any liability for any loss, depreciation
or other damage to Receivables unless caused by your willful and malicious act.
We agree to execute and authorize you to execute in our name, such further
instruments (including financing and continuation statements) as may be required
or permitted by any law relating to notices of or affidavits in connection with
assignments of accounts receivable or other security granted to you by us and to
cooperate with you in the filing or recording and renewal thereof.
5. During the term of this Agreement, we shall not sell, negotiate,
pledge, assign or grant or permit to exist any security interest, lien or
encumbrance in, any Receivables, general intangibles, goods or inventory (other
than sales of inventory in the ordinary course of business) to anyone other than
you without your prior consent, nor shall we grant or permit to exist without
your prior consent any mortgage, pledge, security interest, encumbrance or lien
or any kind upon any of our property, except liens for taxes not yet due, liens
incidental to our business which were not incurred in connection with the
borrowing of money or obtaining of advances or credit and which do not detract
from the value of our assets or impair the use thereof in the operation of our
business. We shall immediately place notations upon our books of account to
disclose the assignment of all Receivables to you. You will be entitled to hold
all sums at any time standing to our credit on your books and all of our
property at any time in your possession, or upon or in which you have a lien or
security interest, as security for all of our obligations (direct or indirect,
absolute or contingent, under this Agreement or otherwise) at any time owing to
you and to each corporation which is at any time your parent, subsidiary or
affiliate. Such obligations shall include, without limitation, all loans,
advances, debts, liabilities, obligations covenants and duties owing by us to,
all obligations (direct or indirect, absolute or contingent under this Agreement
or otherwise) for purchases made us from other clients factored or financed by
you or any such parent, subsidiary or affiliate, no matter how or when arising
and whether due or to become due, and further including all interest, fees,
charges, expenses and attorney's fees chargeable to our account or incurred in
connection with our account whether provided for herein or in any other
agreement between us, and you shall have the right to charge to our account the
amounts of all such obligations and pay over such amounts to such parent,
subsidiary or affiliate.
6. All advances and all other amounts chargeable to our account under this
Agreement shall be payable by us on the termination of this Agreement; recourse
to security will not be required at any time. We hereby waive presentment and
protest of any instrument and notice thereof, notice of default and all other
notices to which we might otherwise be entitled. We shall perform all steps
requested by you to create and maintain in your favor valid first security
interests in and valid first assignments of and/or liens on all Receivables and
all other security held by or for you and shall upon your request and at
reasonable intervals also furnish you with statements showing our financial
condition and the results of our operations and annually, at our expense, we
shall furnish you with audited operating statements and balance sheets prepared
by independent certified public accountants acceptable to you and accompanied by
the unqualified report of such accountants and on each anniversary hereof, a
list of our shareholders, officers and directors. We warrant that we and any
guarantors of our obligations hereunder are solvent and will so remain during
the term of this Agreement. You will have the right at all times to have access
to inspect, audit and make extracts from all of our records, files and books of
account. We appoint your officers or any other person whom you may designate as
our attorney with power to endorse our name on any checks, notes, acceptances,
money orders, drafts or other forms of payment or security that may come in your
possession; to sign our name on any invoice or bill of lading relating to any
Receivable, on drafts against customers, on schedules of assignments of
Receivables, on notices of assignment, on financing statements under the Uniform
Commercial Code and other public records, on verification of accounts and on
notices to customers; to notify the post office authorities to change the
address for delivery of our mail to an address designated by you; to receive,
open and dispose of all mail addressed to us; to send requests for verifications
of accounts to customers; and to do all other things you deem necessary to carry
out this Agreement. We hereby ratify and approve all acts of the attorney and
neither you nor the attorney will be liable for
26
<PAGE>
any acts of commission or omission, nor for any error of judgment or mistake of
fact or law. This power, being coupled with an interest, is irrevocable so long
as any money remains due to you from us.
7. We agree to keep our books, records and accounts on a current basis in
accordance with generally accepted accounting principles, practices and
procedures in the United States of America in effect from time to time ("GAAP")
and in a manner satisfactory to you at our own cost and expense. All
assignments of Receivables to you by is shall be deemed to include all of our
right, title and interest to all of our books, records, files and all other data
and documents relating to each Receivable. If any tax by any governmental
authority is or may be imposed on or as a result of any transaction between us,
or in respect to sales or the merchandise affected by such sales, which you are
or may be required to withhold or pay, we agree to indemnify and hold you
harmless in respect of such taxes, and we will repay you the amount of any such
taxes which shall be charged to our account; and until we shall furnish you with
an indemnity therefor satisfactory to you (or supply you with evidence
satisfactory to you that due provision for the payment thereof has been made),
you may hold without interest any balance standing to our credit and you shall
retain your security interest in any and all collateral held by you. We hereby
represent and warrant during the term of this Agreement that (a) we have
submitted to you the address of our chief executive office (set fort below) and
the addresses of our other places of business and will promptly notify you in
writing of any closing of existing or opening of new places of business; (b) no
significant change in management or ownership will be made; (c) we will not
guarantee or endorse the obligations of any person1 firm or corporation, except
in the ordinary course of business, enter into any merger or consolidation, or
purchase or otherwise acquire the obligations, assets or stock of any person,
firm, corporation or other enterprise; (d) we will not incur indebtedness for
borrowed money, except to you; (e) we shall not at any time permit our Tangible
Net Worth (as customarily defined under GAAP) to be less than 250,000.00 and (f)
we shall not at any time permit our Working Capital (as customarily defined
under GAAP) to be less than $150,000.00.
8. We hereby further represent, warrant and covenant to you that: (a) the
execution, delivery and performance of this Agreement any supplements hereto and
all related documents, if any, the borrowing of the loans and advances hereunder
and thereunder, if any, and the grants of security interests hereunder and
thereunder if any, do not and will not (i) violate the provisions of any
applicable law. statute, rule, regulation, order or decree to which we are
subject, (ii) conflict with, result in a breach of, or constitute a default
under, our certificate of incorporation or by-laws, or any indenture, agreement
or other instrument to which we are a party, or by which we or any of our
property may be bound, or (iii) result in or require the creation or imposition
of any security interest, mortgage, pledge or other lien upon any property now
owned or hereafter acquired by us other than the security interests granted to
you hereunder; (b) the operation of our business is and will remain in
compliance in all material respects with all applicable laws including all
applicable environmental laws and regulations and all applicable state and
federal laws and regulations: (c) based upon the Employee Retirement Income
Security Act of 1974 ("ERISA") and the regulations and published interpretations
thereunder: (i) we have not engaged in any Prohibited Transactions as defined in
Section 406 of ERISA and Section 4975 of the Internal Revenue Code, as amended,
(ii) we have met all applicable minimum funding requirements under Section 302
of ERISA in respect of our plans, (iii) we have no knowledge of any event or
occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any employee benefit
plan(s), (iv) we have no fiduciary responsibility for investments with respect
to any plan existing for the benefit of persons other than our employees and (v)
we have not withdrawn, completely or partially, from any multiemployer pension
plan so as to incur liability under the Multiemployer Pension Plan Amendments
Act of 1980; (d) we are a corporation duly incorporated, validly existing and in
good standing under the laws of the state of our incorporation and are and will
remain duly licensed and qualified to do business and are in good standing in
all other states where the nature of our business makes licensing or
qualification as a foreign corporation necessary; (e) there are no pending or
threatened investigations, actions or proceedings before or by any court,
govemmental department, commission, board, bureau or administrative agency which
if adversely determined would materially affect our condition, business or
operation; (f) we own and have good and marketable title to all of the goods and
chattels and other assets real and personal in which a lien or security interest
is given to you under your security agreements free and clear of all liens,
charges and encumbrances other than liens set forth on any schedule annexed to
said agreements; (g) we have filed all required tax returns and paid applicable
United States federal, state and local taxes, if any, other than taxes not yet
due or which may hereafter be paid without penalty, and have no knowledge of any
deficiency or additional assessment in connection therewith not provided for on
our books and will continue to do so during the term hereof; (h) we are (i) in
compliance with, and (ii) have procured and are now in possession of, all
licenses or permits required by any
27
<PAGE>
applicable federal, state or local law or regulation for the operation of our
business in each jurisdiction wherein we are now conducting or propose to
conduct business; (i) we are not in default in the payment of the principal of
or interest on any indebtedness for borrowed money or under any instrument or
agreement under and subject to which any indebtedness for borrowed money has
been issued and no event has occurred under the provisions of any such
instrument or agreement which with or without the lapse of time or the giving of
notice, or both, constitutes or would constitute, an event of default
thereunder; (j) we will promptly inform you of: (i) the commencement of all
proceedings and investigations by or before any governmental or nongovernmental
body and all actions and proceedings in any court or before any arbitrator
against or in any way concerning any of our properties, assets or business,
which might singly or in the aggregate, have a materially adverse effect on us,
(ii) any amendment of our certificate of incorporation or by-laws, (iii) any
change in our business, assets, liabilities, financial condition, results of
operations or business prospects which has had or might have any materially
adverse effect on us, (iv) any default or Event of Default hereunder or any
event which with the passage of time or giving of notice or both would
constitute a default or Event of Default, (v) any default or any event which
with the passage of time or giving of notice or both would constitute a default
under any agreement for the payment of money to which we are a party or by which
we or any of our properties may be bound or which would have a material adverse
effect on our business, operations, property or financial condition, (vi) any
change in the location of our places of business, and (vii) any change in our
corporate name; (k) all financial, projections prepared by us or at our
direction and delivered to you will represent, at the time of delivery to you,
our best estimate of our future financial performance and will be based upon
assumptions which are valid in light of the then current business conditions;
and (l) all balance sheet and income statements which have been delivered to you
fairly, accurately and properly state our financial condition and there has been
no material adverse change in our financial condition as reflected in such
statements since the date of the latest thereof and such statements do not fail
to disclose any fact or facts which might materially and adversely affect our
financial condition.
9. We irrevocably waive the right to: (i) direct the application of any
and all payments at any time or times hereafter received by you from or on our
behalf and we do hereby irrevocably agree that you shall have the continuing
exclusive right to apply and reapply any and all payments received at any time
or times hereafter against our debts and obligations hereunder in such manner as
you may deem advisable notwithstanding any entry by you upon any of your books
and records: (ii) pay any management fees or make any similar payments or
declare any dividends, except dividends payable exclusively in our stock or
redeem any of our stock or make any other payments in respect of our stock that
are the equivalent to dividends or stock redemption payments, to any shareholder
or affiliate as long as any debts and obligations hereunder remain outstanding
without your express prior written consent; and (iii) issue any guarantees of
the obligations of any third person or entity as long as any debts and
obligations hereunder remain outstanding, without your express prior written
consent.
10. Since the transactions hereunder will take place at your office in the
City of New York, this Agreement and all transactions, assignments and transfers
hereunder, and all rights of the parties, shall be governed as to validity,
construction, enforcement and in all other respects by the laws of the State of
New York. Each of the parties to this Agreement expressly submits and consents
to the jurisdiction of the courts of the State of New York, in the County of New
York, with respect to any controversy arising out of or relating to this
Agreement or any amendment or supplement hereto or to any transactions in
connection herewith and each of the parties to this Agreement hereby waives
personal service of any summons or complaint or other process or papers to be
issued in any action or proceeding involving any such controversy and hereby
agrees that service of such summons or complaint or process may be made by
registered or certified mail to the other party at the address appearing herein;
failure on the part of either party to appear or answer within thirty (30) days
of such mailings of such summons, complaint or process shall constitute a
default entitling the other party to enter a judgment or order as demanded or
prayed for therein to the extent that said Court or duly authorized officer
thereof may authorize or permit.
11. This Agreement shall have an initial term of two years from its
effective date and shall thereafter be automatically renewed for successive
periods of two years unless terminated by us at the conclusion of its initial
term or any renewal term by giving you at least sixty (60) days prior written
notice; provided, however, that you may terminate it at any tune during the
initial term or any. renewal term by giving us at least sixty (60) days prior
written notice. The mailing of a registered or certified letter of notice
addressed by one party to the other at its usual address shall constitute
sufficient notice, and the termination shall be effective on the appropriate
date specified in such letter. Upon the effective date of termination all
outstanding Advances and all other moneys chargeable to our
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account under this Agreement, supplements hereto, or otherwise, shall become
immediately due and payable without further notice or demand. Your rights with
respect to obligations owing to you prior to the effective date of termination
will not be affected by termination, and all of the provisions of this
Agreement, including without limitation, all of our representations, warranties,
covenants and agreements and all other provisions binding upon us contained
herein, shall continue operative until all such obligations have been fully
satisfied or indemnified in a manner satisfactory to you.
12. To the extent you receive any payment or payments by or on our behalf
which payment or payments, or any part thereof, are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to
be'repaid to us, our estate, trustee, receiver, custodian or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such payment or repayment, the obligation or part thereof
which has been paid, reduced or satisfied by the amount so repaid shall be
reinstated and included within the liabilities as of the date such initial
payment, reduction or satisfaction occurred and same shall be secured by our
assets in which you have been granted a lien or security interest.
13. The occurrence of any one or more of the following events shall
constitute an "Event of Default": (a) default in the payment or performance,
when due or payable, of any payment required under this Agreement or under any
future agreement or supplement with you or under any agreement to which we are a
party with third parties; (b)any warranty, representation, or other statement
made or furnished to you by us or on our behalf or by any guarantor of our
obligations hereunder or in connection herewith or in any instrument furnished
in compliance with or in reference to this Agreement proves to have been false
or misleading in any material respect when made or furnished or becomes false in
any material respect; (c) we fail or neglect to perform, keep or observe any
term, provision, condition. covenant, warranty or representation contained in
this Agreement or in any other agreement between us or any rider or supplement
which is required to be performed, kept or observed by us; (d) any statement,
report, financial statement, or certificate made or delivered by us, or by any
of our officers, employees or agents, to you is not true and correct in any
material respect; (e) the imposition of a lien or encumbrance on any of our
assets, including the Receivables, or the making of any levy, seizure or
attachment on all or any of our assets, including the Receivables; (f) any
material adverse change in our financial condition or the financial condition of
any guarantor of our obligations hereunder; (g) we or any guarantor of our
obligations hereunder become insolvent, or unable to meet our debts, as they
mature, or fail, suspend or go out of business or a case is commenced under the
Bankruptcy Code or an order for relief in a case under the Bankruptcy Code is
entered with respect to us or any such guarantor, or a custodian or receiver (or
other court designee performing the functions of a receiver) is appointed for or
takes possession of either our or any such guarantor's assets or affairs; (h) we
or any guarantor of our obligations hereunder cease to conduct our business as
now conducted or are enjoined, restrained or in any way prevented by court,
governmental or administrative order from conducting all or any material part of
our business affairs; (i) a notice of any lien. levy or assessment is filed of
record with respect to all or any of our assets by the United States, or any
department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, including, without limitation, the
Pension Benefit Guaranty Corporation, if any taxes or debts owing at any time or
times hereafter to any one of them becomes a lien or encumbrance upon any of the
Receivables or any of our other assets and the same is not released within
thirty (30) days after the same becomes a lien or encumbrance; (j) you shall in
good faith deem yourself insecure or unsafe; (k) any guaranty given you with
respect to our obligations, is limited or terminated or otherwise deemed
unenforceable or invalid; (1) death of a guarantor of our obligations hereunder
or in connection herewith, which guaranty is not replaced by a guarantor,
acceptable to you in your sole discretion; or (m) we shall fail to pay our taxes
when due unless such taxes are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been provided on
our books.
Upon the occurrence of an Event of Default you may, at your option,
terminate this Agreement, any supplement or rider hereto and any agreement
related hereto, and all Advances and other debts and obligations to you shall be
immediately due and payable. Without further demand and upon five (5) days
notice (which we agree constitutes reasonable notice) you may, at your option,
sell and deliver any or all Receivables and any or all other Security held by or
for you, at public or private sale, for cash, upon credit or otherwise, at such
prices and upon such terms as you may deem advisable, in New York or at such
other place or places as you may designate, at your sole discretion, and you may
be the purchaser at any such sale, if it is public, free from any right of
redemption which is also waived by us, or you may otherwise recover upon the
Receivables in any commercially reasonable manner as you, in your sole
discretion deem advisable. The proceeds of any sale shall be applied first to
all costs and expenses
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of sale, including attorneys' fees, and second to the payment (in whatever order
you elect) of all of our obligations to you, whether absolute or contingent, or
whether due or to become due, and whether under this Agreement or otherwise.
Such obligations shall include damages sustained by reason of any default by us.
You will return any surplus to us and we shall remain liable to you for any
deficiency. Failure by you to exercise any right, remedy or option under this
Agreement or any related agreement or delay by you in exercising the same will
not operate as a waiver; no waiver by you will be effective unless it is
confirmed in writing and then only to the extent specifically stated. In
addition to all other sums due you, we will pay you all costs and expenses
incurred by you, including a reasonable allowance for attorneys' fees and
internal collection efforts, to obtain or enforce payment of Receivables,
Advances, interest, or other charges due you hereunder or under any related
agreement. Both you and we waive all right to a trial by jury in any litigation
relating to transactions under this Agreement, supplements hereto and any
related agreements and we agree not to assert any counterclaim of any nature in
any such litigation. Your rights and remedies under this Agreement will be
cumulative and not exclusive of any other right or remedy which you may have
under the Uniform Commercial Code or other provisions of law; nothing herein
contained shall limit or otherwise affect any other existing or future lien,
security interest, or right to which you may be entitled. This Agreement cannot
be changed or terminated orally, is our entire contract, and is for the benefit
of and binding upon the parties hereto and their respective successors and
assigns.
14. We will pay all of your out-of-pocket costs and expenses, including
without limitation reasonable attorneys' fees and disbursements and appraisers,
in connection with the preparation, execution and delivery of this Agreement,
supplements hereto and related agreements, if any, and as they may be amended
from time to time hereafter, and in connection with the prosecution or defense
of any action, contest, dispute, suit or proceeding concerning any matter in any
way arising out of, related to, or connected with this Agreement, supplements
hereto and related agreements. We will also pay all of your out-of-pocket costs
and expenses, including without limitation reasonable attorneys' fees and
disbursements, in connection with (a) the preparation, execution and delivery of
any waiver, amendment or consent proposed or executed in connection with the
transactions contemplated by this Agreement and any supplements hereto and
related agreements, (b) your obtaining performance of our obligations under this
Agreement and any supplements hereto and related agreements, including, but not
limited to, the enforcement or defense of your security interests, assignments
of rights and liens hereunder and under any supplements hereto and related
agreements as valid first security interests, (c) any attempt to inspect,
verify, protect collect, sell, liquidate or otherwise dispose of any security
held by you, and (d) any consultations in connection with any of the foregoing.
We shall also pay your customary charges for all services performed by you for
us at our request and all banking facility charges incurred in connection with
the opening and operation of our account with you. In addition, and not as a
limitation of the above, we shall pay you $500 per month to perform any
collateral monitoring namely any field examination, collateral analysis or other
business analysis, the need for which is determined by you and for which
monitoring is undertaken by you or for your benefit, plus all costs and
disbursements incurred by you in the performance of such examinations or
analysis. All charges, costs and expenses reflected therein, together with all
filing, recording and search fees, taxes and interest payable by us to you shall
be payable on demand and may be charged by you to our account.
Very truly yours,
METRO SERVICES GROUP, INC.
Attest:
By: /s/ Jeremy Barbera
/s/ Claudia Barbera ---------------------------------------
- ------------------------------ Jeremy Barbera, Chief Executive Officer
Claudia Barbera, Secretary
Date: April , 1997
--------------------------------------
Accepted at New York, New York Address: 333 Seventh Avenue
--------------------------------------
MILBERG FACTORS, INC. New York, NY 10001
--------------------------------------
By:
- --------------------------------------
Theodore M. O'Lear, Sr. Vice President
Date: April , 1997
- --------------------------------------
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EXHIBIT 10.20
SEVERANCE AGREEMENT WITH BARRY PETERS
This agreement (the "Agreement) by and between ALL-COMM MEDIA
CORPORATION, a Nevada Corporation, having an address at 400 Corporate Pointe,
Suite 780, Culver City, CA 90230 (the "Company"), and BARRY PETERS, having an
address at 680 Harbor Street, Unit #6, Venice, California, 90291 (the
"Executive"), dated as of March 31, 1997, supersedes and rescinds the Employment
Agreement, dated effective on July 1, 1995, by and between the Company and the
Executive (the "Employment Agreement").
THIS AGREEMENT INCLUDES A GENERAL RELEASE OF ALL CLAIMS.
WHEREAS, the Company and the Executive entered into the Employment
Agreement which, among other things, sets forth the terms and conditions of the
Executive's employment and the rights and obligations of both parties.
WHEREAS, circumstances have changed since the signing of the Employment
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual promises
herein contained, it is agreed as follows:
1. VOLUNTARY RESIGNATION
By executing this Agreement, the Executive resigns from his position as
Chairman and Chief Executive Officer of the Company, effective April 14, 1997
(the "Termination Date"). In addition, the Executive resigns, effective
immediately, as a director of the Company, and as a director and/or officer of
each subsidiary of the Company for which the Executive serves as a director
and/or officer.
2. CONSIDERATION
As severance for the termination of the Employment Agreement, the Company
shall pay to the Executive $390,000.00, without offset, in cash; $100,000.00 of
which shall be paid upon execution of this Agreement and the balance shall be
paid in eighteen (18) equal monthly payments commencing May 14, 1997 and
continuing on the 14th day of each month thereafter until paid. In the event
that any monthly payment is more than ten (10) days late, the entire unpaid
balance shall accelerate and be due and payable and such unpaid balance shall
from then on until paid bear interest at the simple annual rate of 10%. In
addition, upon execution of this Agreement, the Company shall pay the Executive
the sum of $46,066.00 in cash, representing his unpaid salary net of advances
through the Termination Date. The Company shall withhold any deductions
required by federal or California state law from the $46,066.00 payment. In
addition, upon execution of this Agreement, the Company shall pay the Executive
the sum of $780.55 in cash as reimbursement for his reimbursable business
expenses through the Termination Date. The Executive shall receive medical
benefits for himself and his immediate family, pursuant to the Executive's
rights under COBRA, at the Company's expense, for a period of one (1) year after
the Termination Date. The obligation to pay the $290,000 in installment
payments shall be evidenced by a promissory note ("Promissory Note") in the form
set out in Exhibit "A" hereto.
3. STOCK OPTIONS
The Company and the Executive acknowledge that the only rights, options
or warrants to purchase shares of capital stock of the Company that the
Executive owns, of record and beneficially are: (i) an option (the "First
Option") to acquire 150,000 shares of common stock of the Company at an exercise
price of $2.00 per share pursuant to a Non-qualified Stock Option Agreement
dated as of December 1, 1995 (the "First Option Agreement), and (ii) an option
to acquire 300,000 shares of common stock of the Company; of which 150,000
shares are at an exercise price of $2.50 per share and 150,000 shares of which
are at an exercise price of $ 3.00 per share pursuant to a Non-qualified Stock
Option Agreement, dated as of September 26, 1996 (the "Second Option" and
together with the First Option, the "Options"). The Company hereby agrees that
the First Option shall automatically be amended
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to provide that the provisions terminating the First Option ninety (90) days
after termination of the Executive's relationship to the Company as an employee
of, or consultant to, the Company, or any of its subsidiaries or affiliates
shall be deleted, and the only time limiting the exercise of the First Option
shall be seven (7) years from the date of the First Option Agreement. The
Company confirms that the Option Cancellation Agreement, dated as of November
20, 1996 between the Company, the Executive, and Barry Peters, is of no force
and effect, in as much as the offering contemplated by such Option Cancellation
Agreement was not consummated. The Company agrees to file forthwith after the
Termination Date a Registration Statement on Form S-8 or Form S-3 governing the
resale of the shares of common stock (the "Underlying Shares") issuable upon
exercise of the First Option and the Second Option from time to time and to have
such Registration Statement declared effective by the Securities and Exchange
Commission no later than ninety (90) days after the Termination Date at the
Company's expense. Failure by the Company to have such a Registration Statement
declared effective within the time prescribed shall cause the Lock-Up
Restrictions (as defined below) to immediately, upon the expiration of such
prescribed time period to be of no further force and effect as such restrictions
apply to the Executive. In the event that a Registration statement on Form S-8
with respect to the Registration of the Underlying shares is not declared
effective by the Securities and Exchange Commission within Ninety (90) days of
the Termination Date the Executive shall be entitled to exercise the First and
Second options by tendering a two year non-interest bearing promissory note and
shall be entitled to include any or all of the Options or Underlying shares
owned by the Executive on any Registration Statement registering shares of the
Company's common stock, and with respect to which the Options and Underlying
Shares are eligible to be included, filed by the Company in the future at the
Company's expense. The Executive shall be entitled to make one demand to the
Company to register all Options and Underlying Shares owned by the Executive
provided that any such demand for registration shall only be made commencing
nine (9) months after the Termination Date. Provided that the S-8 registration
is filed and becomes effective within the specified Ninety (90) day period, the
Executive agrees that he will not for a period of twelve (12) months after the
Termination Date, directly or indirectly, sell, offer, offer to sell, contract
to sell, make a short sale of, loan, grant any option for the sale of, transfer,
or otherwise dispose of more than 40,000.00 of the Underlying Shares, or any
other securities convertible into or exercisable or exchangeable for common
stock which may be acquired by the Executive ("Securities") during any 90 day
period, directly or indirectly, other than (i) as a gift, or to trusts for the
benefit of family members of the Executive, provided that the transferee thereof
agrees in writing to be bound by this Agreement, or by will or the laws of
descent and distribution, provided that prior to such transfer of the Securities
the transferee agrees in writing to be bound by this Agreement, or (ii) with the
prior written consent of the Company. This does not include shares of the
Company's common stock owned by the Executive on the Termination Date. (Any
transaction covered by the foregoing restriction is referred to as a "Transfer"
and the foregoing Restriction is referred to as the "Lock-up Restriction"). This
Agreement shall not apply to or restrict a Transfer of Any Securities from the
Executive to a third party in an non-public transaction, provided that the
Transfer otherwise complies with applicable securities laws, that such third
party agrees in writing to be bound by all of the provisions of this Agreement,
and that such third party receives the approval of the Company's Board of
Directors for such transfer, which approval will not be unreasonably withheld.
The Company agrees to maintain the effectiveness of any such Registration
Statement, including by filing any amendment or supplement thereto as may be
required by the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, for so long as the Executive shall own any Options or
underlying shares. The Company agrees to use its best efforts to have the
resale of such Options and/or Underlying Shares qualified under any applicable
"Blue Sky" laws.
The exercise of any option is not subject to approval by the option
committee or any other person or group of persons. The Executive may elect to
exercise any Option by tendering shares of the Company's common stock at market
price to pay for the exercise of Options.
4. RETURN OF MATERIALS
The Executive shall immediately. return to the Company all confidential,
technical, financial, and business information, including lists of customers,
files, prices, memoranda and records, credit cards, cardkey passes, door and
file keys, computer access codes, computer equipment, computer programs,
software information systems, and all other physical or personal property which
the Executive received or prepared or helped prepare in connection with his
employment, except that the Executive is hereby transferred ownership to the
Micron Transport Computer furnished to the Executive by the Company, without
charge or cost to the Executive.
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5. CONFIDENTIALITY - RESTRICTIVE COVENANT
During the period the Executive is receiving severance pursuant to this
Agreement and at all times thereafter, the Executive will keep confidential and
shall not disclose to any third party or use on his own behalf or on behalf of
any third party in any manner or for any reason, without the Company's prior
written consent, any trade secrets or confidential Company information not
generally available to the public, as defined in the Uniform Trade Secrets Act.
6. DENIAL OF ANY VIOLATIONS
This Agreement and General Release shall not in any way be construed as
an admission by the Company that it has acted wrongfully with respect to the
Executive or any other person, or that the Executive has any rights whatsoever
against the Company, and the Company specifically disclaims any liability to or
wrongful acts against the Executive or any other person, on the part of itself,
its employees or its agents.
7. MUTUAL GENERAL RELEASE AND DISCHARGE
Except for the rights and obligations created by this Agreement, the
Company and the Executive, for themselves and their respective trustees
directors, officers, agents, attorneys, insurers, employees, stockholders,
representatives, assigns, successors, past and present, and each of them, and
any persons or entities acting by, through, under or in concert with each or any
of them (the "Releasing Parties"), hereby and forever release and discharge each
other, and their respective trustees, directors, officers, agents, attorneys,
insurers, employees, stockholders, representatives, assigns, successors, past
and present, and each of them, and any persons or entities acting by, through,
under or in concert with each or any of them, from any and all causes of action,
accountings, obligations, indebtedness, damages, losses, claims, suits, costs,
liabilities, expenses, attorneys fees, allegations and demands, whether known or
unknown, now existing or that might arise hereafter, based on, or arising out
of, any circumstances whatsoever.
The Releasing Parties acknowledge that they have been advised by legal
counsel, or are otherwise familiar, with the provisions of California Civil Code
Section 1542 which provides as follows:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
The Releasing Parties, being aware of said code section, hereby expressly
waive any rights they might have thereunder, as well as under any other statutes
or common law principles of similar effect.
8. RESCISSION
The Executive and the Company acknowledge that the contractual
relationship between them arising out of the Employment Agreement as well as the
obligations and rights arising under the Employment Agreement is and are
rescinded and is and are null and void and will have no future effect and that
Executive and the Company will have no future employment or contractual
obligation, except as to those which arise out of this Agreement.
9. INDEMNIFICATION; INSURANCE
The Company shall indemnify, defend, and hold harmless the Executive
against all liability, demands, claims, costs, losses. damages, administrative
proceedings and/or orders, recoveries, assessments, settlements, and expenses
(including interest, penalties, attorneys fees, accounting fees, expert witness
fees, costs and expenses of any sort) incurred by the Executive, known or
unknown, contingent or otherwise, directly or indirectly, arising out of
Employee's activities as an officer, director, shareholder, employee and/or
agent of the Company, or any of its affiliates or subsidiaries, to the fullest
extent permitted by Nevada Corporation Law, and the Company's Articles of
Incorporation and By-laws.
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To the extent the Company maintains or acquires, any insurance policies
(including directors and officers insurance, sexual harassment insurance and
commercial general liability insurance) specifically insuring officers and
director's of the Company against claims, the Executive shall be entitled to
coverage thereunder as an insured.
10. FURTHER AGREEMENTS
(a) The Executive hereby agrees to fully cooperate with the Company
(including making himself available to give testimony) in connection with any
present or future dispute or litigation in which the Company is a party. The
Executive understands that he should not communicate with any person or entity
with whom the Company has a dispute or litigation with respect to facts or
circumstances surrounding such dispute or litigation. The Executive shall
deliver to the Company at least five (5) business days prior written notice if
he is called to give testimony in connection with any such dispute or
litigation. As compensation for the rendering of any services by the Executive
called for in this paragraph, the Company shall pay employee the sum of $500.00
per all or any part of each half day (4 hours) so spent together with expenses.
(b) The Company and the Executive acknowledge and agree that the
Executive, subject to Paragraph 5 hereof, shall be free to publicly cite and
discuss his prior affiliation with, the responsibility and services performed
for, and the activities of the Company in any reasonable manner and at such
times as the Executive reasonably believes will be helpful to him in furthering
his personal and professional obligations.
(c) From and after the date of this Agreement the Executive shall not
make any statements or remarks, directly or indirectly, to any persons, whether
or not such persona are involved, in the business of the Company or its
subsidiaries, of a disparaging nature with respect to the Company, its
directors, officers, employees, agents or customers or their respective
affiliates or the Company's business or operations. From and after the date of
this Agreement the Company shall not, and the Company shall cause its officers,
directors and employees not to make any statements or remarks of a disparaging
nature with respect to the Executive.
(d) The Company shall issue no press releases or make any public
statements using the Executive's name without the prior written consent of the
Executive.
(e) The Company agrees to reimburse the Executive the sum $17,000.00 as
and for attorneys fees incurred to Stephen D. Johnson which be paid upon
execution of this Agreement. Additionally, the Company shall pay directly to
Stephen D. Johnson upon execution of this Agreement the sum of $7,500.00 which
is due and owing for services performed for the Company in connection with a
previous contemplated public offering.
(f) The Company shall continue lease payments, insurance coverage, and
providing maintenance for Executive's automobile, or any substantially
equivalent replacement automobile, for one (1) year after the Termination Date.
11. COMPLETE AGREEMENT
This instrument, including exhibits, constitutes and contains the entire
agreement and understanding concerning the Executive's employment, voluntary
resignation, general release of all claims and other subject matters addressed
herein between the Company and the Executive, and it supersedes and replaces all
prior negotiations and all agreements proposed or otherwise, whether written or
oral, including the Employment Agreement, concerning the subject matter hereof.
12. SEVERABILITY OF INVALID PROVISIONS
The provisions or this Agreement are severable, and if a court or an
arbitrator of competent jurisdiction holds any provision of this Agreement to be
illegal or unenforceable or invalid in whole or in part for any reason, the
validity and enforceability of the remaining provisions, or portions of them,
will not be affected and they shall remain in full force and effect. This
Agreement shall survive the termination of any arrangements contained herein.
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13. CHOICE OF LAW
This Agreement and the rights and obligations of the Company and the
Executive, shall be construed and enforced in accordance with the laws of the
State of California without regard to the principles of conflict of laws.
14. CHOICE OF FORUM
Any dispute that arises under, or out of , or relates to this Agreement
(whether contract or tort) shall be resolved exclusively in the Culver Municipal
Court or the Los Angeles County Superior Court, according to the subject matter
jurisdiction of the dispute. The Company and the Executive stipulate that this
Agreement shall be deemed to have been entered into in Culver City, California.
15. CONSTRUCTION OF AGREEMENT
The Company and the Executive and their attorneys have participated fully
in the review and revision of this Agreement. Any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
apply in interpreting this agreement.
16. COUNTERPART EXECUTION - EFFECT
This Agreement may be executed in counterparts, and each counterpart,
when executed, shall have the efficacy of a signed original.
17. LITIGATION - COSTS AND EXPENSES
In any litigation, arbitration, or other proceeding by which one party
either seeks to enforce its rights under this Agreement (whether in contract or
tort) or seeks a declaration of rights or obligations under this Agreement, or
raises a factual or legal issue arising out of the Agreement, the prevailing
party shall be awarded reasonable attorneys fees, together with any costs of
suit and expenses, incurred in order to litigate or resolve or appeal the
dispute and/or to enforce the final judgment, whether or not the matter is
dismissed (voluntarily or involuntarily), settled, or proceeds to judgment or
verdict.
18. MODIFICATION
This Agreement may be supplemented, amended, or modified only by the
mutual agreement of the Company and the Executive. No supplement, amendment, or
modification of this Agreement shall be binding unless it is in writing and
signed by both the Company and the Executive.
19. TIME
Time is of the Essence in respect to all provisions of this Agreement
that specify a time for performance; provided however, that the foregoing shall
not be construed to limit or deprive a party of the benefits of any grace or use
period allowed in this Agreement.
20. WAIVER
No waiver of a breach, failure of any condition, or right or remedy
contained in or granted by the provisions of this Agreement shall be effective
unless it is in writing and signed by the party waiving the breach, failure,
right or remedy. No waiver or any breach, failure, right or remedy shall be
deemed a waiver of any other breach, failure, right or remedy, whether or not
similar, nor shall any waiver constitute a continuing waiver unless the writing
so specifies.
21. FULL UNDERSTANDING AND VOLUNTARY ACCEPTANCE
The Company and the Executive represent and agree that it/he fully
understands its/his right to discuss all aspects of this Agreement including the
general release with its/his private attorney, that it/he has availed
itself/himself, to this right, that it/he has carefully read and fully
understands all of the provisions of this Agreement, and that it/he is
voluntarily entering into this Agreement.
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22. HEADINGS - NOT BINDING
The use of headings in this Agreement is only for ease of reference and
the headings have no affect and are not to be considered part or a term of this
agreement.
23. NECESSARY ACTS, FURTHER ASSURANCES
The Company and the Executive shall execute and deliver such further
documents and instruments and shall take such other actions as may be reasonably
required or appropriate to evidence or carry out the intent and purposes of this
Agreement.
24. RATIFICATION AND ENTRY IN MINUTES
The Board of Directors of the Company shall ratify the Agreement and
cause the Agreement and Promissory note to be entered into the minutes of the
Company.
/s/ Barry Peters
------------------------------------------------
BARRY PETERS (the Executive)
ALL-COMM MEDIA CORPORATION (the Company)
BY: /s/ Jeremy Barbera
----------------------------------------------
Name: Jeremy Barbera Title: Chairman and CEO
36
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PROMISSORY NOTE
EXHIBIT "A"
-----------
$290,000.00 Culver City, California. April 14, 1997
For value received, ALL-COMM MEDIA CORPORATION, a corporation organized
under the laws of the State of Nevada (the "Maker"), promises to pay to BARRY
PETERS, or order, at 680 Harbor Street, Unit #6, Venice, California, or at such
other place the holder hereof may hereafter designate, the principal amount of
Two Hundred Ninety Thousand Dollars ($290,000.00), without interest, payable in
installments of Sixteen Thousand One Hundred Eleven Dollars and Eleven Cents
($16,111.11), or more, on the fourteenth (14th) of each month for Eighteen (18)
months beginning May 14, 1997 and continuing until October 14, 1998 on which day
the unpaid balance shall be due and payable.
The Maker of this Note waives diligence, presentment, protest and demand
and notice of protest, notice of demand, notice of dishonor, and notice of non
payment of this Note. The obligations of the Maker under this note shall be
absolute and the Maker waives any and all rights to offset, deduct or withhold
any payments or charges under this Note for any reason whatsoever.
Should any installment payment be more than ten (10) days late, the entire
balance of this Note shall be immediately due at the option of the holder of
this note, and upon such default, the entire unpaid balance of this Note shall
immediately bear simple annual interest at the rate of ten (10%) percent. Time
is of the essence of this Note.
Principal and interest shall be payable in lawful money of the United
States.
This Note, and the rights and obligations of the interested parties hereto,
shall be construed and enforced in accordance with the laws of the State of
California, without regard to the principles of conflict of laws.
Any dispute that arises out of this Note shall be exclusively resolved in
the appropriate California state court (Municipal or Superior) located Los
Angeles County, California.
In any litigation, arbitration, or other proceeding by which one interested
party to this Note seeks to enforce its/his rights under this Note (whether in
contract or tort) or seeks a declaration of rights or obligations under this
Note, or raises a factual or legal issue arising out of this Note, the
prevailing party shall be awarded reasonable attorneys fees, together with any
costs of suit or expenses incurred in order to resolve or litigate or appeal the
dispute, and/or to enforce the final judgment, whether or not the matter is
dismissed (voluntarily or involuntarily), settled, or proceeds to judgment or
verdict.
ALL-COMM MEDIA CORPORATION
By: /s/ Jeremy Barbera
------------------------------
Name: Jeremy Barbera
Title: Chairman and CEO
Address: 333 7th Ave., 20th Floor
New York, New York 10001
37
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EXHIBIT 10.21
SEVERANCE AGREEMENT WITH E. WILLIAM SAVAGE
This agreement (the "Agreement) by and between ALL-COMM MEDIA
CORPORATION, a Nevada Corporation, having an address at 333 7th Avenue, 20th
Floor, New York, New York 10001 (the "Company"), and E. WILLIAM SAVAGE, having
an address at P.O. Box 9729, Marina Del Rey, California, 90295 (the
"Executive"), dated as of March 31, 1997, supersedes and rescinds the Employment
Agreement, dated as of September 20, 1995, by and between the Company and the
Executive (the "Employment Agreement").
THIS AGREEMENT INCLUDES A GENERAL RELEASE OF ALL CLAIMS.
WHEREAS, the Company and the Executive entered into the Employment
Agreement which, among other things, sets forth the terms and conditions of the
Executive's employment and the rights and obligations of both parties.
WHEREAS, circumstances have changed since the signing of the Employment
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual promises
herein contained, it is agreed as follows:
1. VOLUNTARY RESIGNATION
By executing this Agreement, the Executive resigns from his position as
Executive Vice President of the Company, effective April 18, 1997 (the
"Termination Date"). In addition, the Executive resigns, effective immediately,
as a director of the Company and as a director and/or officer of each subsidiary
of the Company for which the Executive currently serves as a director and/or
officer.
2. CONSIDERATION
As severance for the termination of the Employment Agreement, the Company
shall pay to the Executive $350,000, in cash, less $64,261 previously advanced
by the Company to the Executive; $35,739.00 of which shall be paid upon
execution of this Agreement and the remaining $250,000 shall be paid in eighteen
(18) equal monthly payments commencing May 14, 1997 and continuing on the 14th
day of each month thereafter until paid. In the event that any monthly payment
is more than ten (10) days late, the entire unpaid balance shall accelerate and
be due and payable and such unpaid balance shall from then on until paid bear
interest at the simple annual rate of 10%. In addition upon execution of this
Agreement, the Company shall pay the Executive the sum of $38,423.00 in cash,
representing his unpaid salary through the Termination Date. The Company shall
withhold any deductions required by federal or California state law from the
$38,423.00 payment. In addition, upon execution of this Agreement, the Company
shall pay the Executive the sum of $13,366.00 for paid vacation time not taken
by the Executive. The Company shall withhold any deductions required by federal
or California state law from the $13,366.00 payment. In addition, upon
execution of this Agreement, the Company shall pay the Executive the sum of
$154.00 in cash as reimbursement for his reimbursable business expenses through
the Termination Date. The Executive shall receive medical benefits for himself
and his immediate family, pursuant to the Executive's rights under COBRA, at the
Company's expense, for a period of one (1) year after the Termination Date. The
obligation to pay the $250,000 in installment payments shall be evidenced by a
promissory note ("Promissory Note") in the form set out in Exhibit "A" hereto.
3. STOCK OPTIONS
The Company and the Executive acknowledge that the only rights, options
or warrants to purchase shares of capital stock of the Company that the
Executive owns, of record and beneficially are: (i) an option (the "First
Option") to acquire 150,000 shares of common stock of the Company at an exercise
price of $2.00 per share pursuant to a Non-qualified Stock Option Agreement
dated as of December 1, 1995 (the "First Option Agreement), and (ii) an option
to acquire 300,000 shares of common stock of the Company; of which 150,000
shares are at an exercise price of $2.50 per share and 150,000 shares of which
are at an exercise price of $3.00 per share pursuant to
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a Non-qualified Stock Option Agreement, dated as of September 26, 1996 (the
"Second Option" and together with the First Option, the "Options"). The Company
hereby agrees that the First Option shall automatically be amended to provide
that the provisions terminating the First Option ninety (90) days after
termination of the Executive's relationship to the Company as an employee of, or
consultant to, the Company, or any of its subsidiaries or affiliates shall be
deleted, and the only time limiting the exercise of the First Option shall be
seven (7) years from the date of the First Option Agreement. The Company
confirms that the Option Cancellation Agreement, dated as of November 20, 1996
between the Company, the Executive, and E. William Savage, is of no force and
effect, in as much as the offering contemplated by such Option Cancellation
Agreement was not consummated. The Company agrees to file forthwith after the
Termination Date a Registration Statement on Form S-8 or Form S-3 governing the
resale of the shares of common stock (the "Underlying Shares") issuable upon
exercise of the First Option and the Second Option from time to time and to have
such Registration Statement declared effective by the Securities and Exchange
Commission no later than ninety (90) days after the Termination Date at the
Company's expense. Failure by the Company to have such a Registration Statement
declared effective within the time prescribed shall cause the Lock-Up
Restrictions (as defined below) to immediately, upon the expiration of such
prescribed time period to be of no further force and effect as such restrictions
apply to the Executive. In the event that a Registration statement on Form S-8
with respect to the Registration of the Underlying shares is not declared
effective by the Securities and Exchange Commission within Ninety (90) days of
the Termination Date the Executive shall be entitled to exercise the First and
Second options by tendering a two year non-interest bearing promissory note and
shall be entitled to include any or all of the Options or Underlying shares
owned by the Executive on any Registration Statement registering shares of the
Company's common stock, and with respect to which the Options and Underlying
Shares are eligible to be included, filed by the Company in the future at the
Company's expense. The Executive shall be entitled to make one demand to the
Company to register all Options and Underlying Shares owned by the Executive
provided that any such demand for registration shall only be made commencing
nine (9) months after the Termination Date. Provided that the S-8 registration
is filed and becomes effective within the specified Ninety (90) day period, the
Executive agrees that he will not for a period of twelve (12) months after the
Termination Date, directly or indirectly, sell, offer, offer to sell, contract
to sell, make a short sale of, loan, grant any option for the sale of, transfer,
or otherwise dispose of more than 40,000.00 of the Underlying Shares, or any
other securities convertible into or exercisable or exchangeable for common
stock which may be acquired by the Executive ("Securities") during any 90 day
period, directly or indirectly, other than (i) as a gift, or to trusts for the
benefit of family members of the Executive, provided that the transferee thereof
agrees in writing to be bound by this Agreement, or by will or the laws of
descent and distribution, provided that prior to such transfer of the Securities
the transferee agrees in writing to be bound by this Agreement, or (ii) with the
prior written consent of the Company. This does not include shares of the
Company's common stock owned by the Executive on the Termination Date. (Any
transaction covered by the foregoing restriction is referred to as a "Transfer"
and the foregoing Restriction is referred to as the "Lock-up Restriction"). This
Agreement shall not apply to or restrict a Transfer of Any Securities from the
Executive to a third party in an non-public transaction, provided that the
Transfer otherwise complies with applicable securities laws, that such third
party agrees in writing to be bound by all of the provisions of this Agreement,
and that such third party receives the approval of the Company's Board of
Directors for such transfer, which approval will not be unreasonably withheld.
The Company agrees to maintain the effectiveness of any such Registration
Statement, including by filing any amendment or supplement thereto as may be
required by the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, for so long as the Executive shall own any Options or
underlying shares. The Company agrees to use its best efforts to have the
resale of such Options and/or Underlying Shares qualified under any applicable
"Blue Sky" laws.
The exercise of any option is not subject to approval by the option
committee or any other person or group of persons. The Executive may elect to
exercise any Option by tendering shares of the Company's common stock at market
price to pay for the exercise of Options.
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4. RETURN OF MATERIALS
The Executive shall immediately. return to the Company all confidential,
technical, financial, and business information, including lists of customers,
files, prices, memoranda and records, credit cards, cardkey passes, door and
file keys, computer access codes, computer equipment, computer programs,
software information systems, and all other physical or personal property which
the Executive received or prepared or helped prepare in connection with his
employment, except that the Executive is hereby transferred ownership to the
Micron Desktop Computer furnished to the Executive by the Company, without
charge or cost to the Executive.
5. CONFIDENTIALITY - RESTRICTIVE COVENANT
During the period the Executive is receiving severance pursuant to this
Agreement and at all times thereafter, the Executive will keep confidential and
shall not disclose to any third party or use on his own behalf or on behalf of
any third party in any manner or for any reason, without the Company's prior
written consent, any trade secrets or confidential Company information not
generally available to the public, as defined in the Uniform Trade Secrets Act.
6. DENIAL OF ANY VIOLATIONS
This Agreement and General Release shall not in any way be construed as
an admission by the Company that it has acted wrongfully with respect to the
Executive or any other person, or that the Executive has any rights whatsoever
against the Company, and the Company specifically disclaims any liability to or
wrongful acts against the Executive or any other person, on the part of itself,
its employees or its agents.
7. MUTUAL GENERAL RELEASE AND DISCHARGE
Except for the rights and obligations created by this Agreement, the
Company and the Executive, for themselves and their respective trustees
directors, officers, agents, attorneys, insurers, employees, stockholders,
representatives, assigns, successors, past and present, and each of them, and
any persons or entities acting by, through, under or in concert with each or any
of them (the "Releasing Parties"), hereby and forever release and discharge each
other, and their respective trustees, directors, officers, agents, attorneys,
insurers, employees, stockholders, representatives, assigns, successors, past
and present, and each of them, and any persons or entities acting by, through,
under or in concert with each or any of them, from any and all causes of action,
accountings, obligations, indebtedness, damages, losses, claims, suits, costs,
liabilities, expenses, attorneys fees, allegations and demands, whether known or
unknown, now existing or that might arise hereafter, based on, or arising out
of, any circumstances whatsoever.
The Releasing Parties acknowledge that they have been advised by legal
counsel, or are otherwise familiar, with the provisions of California Civil Code
Section 1542 which provides as follows:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
The Releasing Parties, being aware of said code section, hereby expressly
waive any rights they might have thereunder, as well as under any other statutes
or common law principles of similar effect.
8. RESCISSION
The Executive and the Company acknowledge that the contractual
relationship between them arising out of the Employment Agreement as well as the
obligations and rights arising under the Employment Agreement is and are
rescinded and is and are null and void and will have no future effect and that
Executive and the Company will have no future employment or contractual
obligation, except as to those which arise out of this Agreement.
40
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9. INDEMNIFICATION; INSURANCE
The Company shall indemnify, defend, and hold harmless the Executive
against all liability, demands, claims, costs, losses. damages, administrative
proceedings and/or orders, recoveries, assessments, settlements, and expenses
(including interest, penalties, attorneys fees, accounting fees, expert witness
fees, costs and expenses of any sort) incurred by the Executive, known or
unknown, contingent or otherwise, directly or indirectly, arising out of
Employee's activities as an officer, director, shareholder, employee and/or
agent of the Company, or any of its affiliates or subsidiaries, to the fullest
extent permitted by Nevada Corporation Law, and the Company's Articles of
Incorporation and By-laws.
To the extent the Company maintains or acquires, any insurance policies
(including directors and officers insurance, sexual harassment insurance and
commercial general liability insurance) specifically insuring officers and
director's of the Company against claims, the Executive shall be entitled to
coverage thereunder as an insured.
10. FURTHER AGREEMENTS
(a) The Executive hereby agrees to fully cooperate with the Company
(including making himself available to give testimony) in connection with any
present or future dispute or litigation in which the Company is a party. The
Executive understands that he should not communicate with any person or entity
with whom the Company has a dispute or litigation with respect to facts or
circumstances surrounding such dispute or litigation. The Executive shall
deliver to the Company at least five (5) business days prior written notice if
he is called to give testimony in connection with any such dispute or
litigation. As compensation for the rendering of any services by the Executive
called for in this paragraph, the Company shall pay employee the sum of $500.00
per all or any part of each half day (4 hours) so spent together with expenses.
(b) The Company and the Executive acknowledge and agree that the
Executive, subject to Paragraph 5 hereof, shall be free to publicly cite and
discuss his prior affiliation with, the responsibility and services performed
for, and the activities of the Company in any reasonable manner and at such
times as the Executive reasonably believes will be helpful to him in furthering
his personal and professional obligations.
(c) From and after the date of this Agreement the Executive shall not
make any statements or remarks, directly or indirectly, to any persons, whether
or not such persona are involved, in the business of the Company or its
subsidiaries, of a disparaging nature with respect to the Company, its
directors, officers, employees, agents or customers or their respective
affiliates or the Company's business or operations. From and after the date of
this Agreement the Company shall not, and the Company shall cause its officers,
directors and employees not to make any statements or remarks of a disparaging
nature with respect to the Executive.
(d) The Company shall issue no press releases or make any public
statements using the Executive's name without the prior written consent of the
Executive.
(e) The Company agrees to reimburse the Executive the sum $3,500.00 as
and for attorneys fees which be paid upon execution of this Agreement.
(f) The Company shall continue lease payments, insurance coverage, and
providing maintenance for Executive's automobile, or any substantially
equivalent replacement automobile, for one (1) year after the Termination Date.
(g) The Company shall pay its American Express bill for which the
Executive has given a personal guaranty.
11. COMPLETE AGREEMENT
This instrument, including exhibits, constitutes and contains the entire
agreement and understanding concerning the Executive's employment, voluntary
resignation, general release of all claims and other subject matters addressed
herein between the Company and the Executive, and it supersedes and replaces all
prior
41
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negotiations and all agreements proposed or otherwise, whether written or oral,
including the Employment Agreement, concerning the subject matter hereof.
12. SEVERABILITY OF INVALID PROVISIONS
The provisions or this Agreement are severable, and if a court or an
arbitrator of competent jurisdiction holds any provision of this Agreement to be
illegal or unenforceable or invalid in whole or in part for any reason, the
validity and enforceability of the remaining provisions, or portions of them,
will not be affected and they shall remain in full force and effect. This
Agreement shall survive the termination of any arrangements contained herein.
13. CHOICE OF LAW
This Agreement and the rights and obligations of the Company and the
Executive, shall be construed and enforced in accordance with the laws of the
State of California without regard to the principles of conflict of laws.
14. CHOICE OF FORUM
Any dispute that arises under, or out of , or relates to this Agreement
(whether contract or tort) shall be resolved exclusively in the Culver Municipal
Court or the Los Angeles County Superior Court, according to the subject matter
jurisdiction of the dispute. The Company and the Executive stipulate that this
Agreement shall be deemed to have been entered into in Culver City, California.
15. CONSTRUCTION OF AGREEMENT
The Company and the Executive and their attorneys have participated fully
in the review and revision of this Agreement. Any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
apply in interpreting this agreement.
16. COUNTERPART EXECUTION - EFFECT
This Agreement may be executed in counterparts, and each counterpart,
when executed, shall have the efficacy of a signed original.
17. LITIGATION - COSTS AND EXPENSES
In any litigation, arbitration, or other proceeding by which one party
either seeks to enforce its rights under this Agreement (whether in contract or
tort) or seeks a declaration of rights or obligations under this Agreement, or
raises a factual or legal issue arising out of the Agreement, the prevailing
party shall be awarded reasonable attorneys fees, together with any costs of
suit and expenses, incurred in order to litigate or resolve or appeal the
dispute and/or to enforce the final judgment, whether or not the matter is
dismissed (voluntarily or involuntarily), settled, or proceeds to judgment or
verdict.
18. MODIFICATION
This Agreement may be supplemented, amended, or modified only by the
mutual agreement of the Company and the Executive. No supplement, amendment, or
modification of this Agreement shall be binding unless it is in writing and
signed by both the Company and the Executive.
19. TIME
Time is of the Essence in respect to all provisions of this Agreement
that specify a time for performance; provided however, that the foregoing shall
not be construed to limit or deprive a party of the benefits of any grace or use
period allowed in this Agreement.
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20. WAIVER
No waiver of a breach, failure of any condition, or right or remedy
contained in or granted by the provisions of this Agreement shall be effective
unless it is in writing and signed by the party waiving the breach, failure,
right or remedy. No waiver or any breach, failure, right or remedy shall be
deemed a waiver of any other breach, failure, right or remedy, whether or not
similar, nor shall any waiver constitute a continuing waiver unless the writing
so specifies.
21. FULL UNDERSTANDING AND VOLUNTARY ACCEPTANCE
The Company and the Executive represent and agree that it/he fully
understands its/his right to discuss all aspects of this Agreement including the
general release with its/his private attorney, that it/he has availed itself/
himself, to this right, that it/he has carefully read and fully understands all
of the provisions of this Agreement, and that it/he is voluntarily entering into
this Agreement.
22. HEADINGS - NOT BINDING
The use of headings in this Agreement is only for ease of reference and
the headings have no affect and are not to be considered part or a term of this
agreement.
23. NECESSARY ACTS, FURTHER ASSURANCES
The Company and the Executive shall execute and deliver such further
documents and instruments and shall take such other actions as may be reasonably
required or appropriate to evidence or carry out the intent and purposes of this
Agreement.
24. RATIFICATION AND ENTRY IN MINUTES
The Board of Directors of the Company shall ratify the Agreement and
cause the Agreement and Promissory note to be entered into the minutes of the
Company.
/s/ E. William Savage
---------------------------------------------------
E. WILLIAM SAVAGE (the Executive)
ALL-COMM MEDIA CORPORATION (the Company)
BY: /s/ Jeremy Barbera
-----------------------------------------------
Name: Jeremy Barbera Title: Chairman & CEO
43
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PROMISSORY NOTE
EXHIBIT "A"
-----------
$250,000.00 Culver City, California. April 18, 1997
For value received, ALL-COMM MEDIA CORPORATION, a corporation organized
under the laws of the State of Nevada (the "Maker"), promises to pay to E.
WILLIAM SAVAGE, or order, at P.O. Box 9729, Marina Del Ray, California 90295, or
at such other place the holder hereof may hereafter designate, the principal
amount of Two Hundred Fifty Thousand Dollars ($250,000.00), without interest,
payable in installments of Thirteen Thousand Eight Hundred Eighty Eight Dollars
and Eighty Eight Cents ($13,888.88), or more, on the fourteenth (14th) of each
month for Eighteen (18) months beginning May 14, 1997 and continuing until April
l4, 1998 on which day the unpaid balance shall be due and payable.
The Maker of this Note waives diligence, presentment, protest and demand
and notice of protest, notice of demand, notice of dishonor, and notice of non
payment of this Note. The obligations of the Maker under this note shall be
absolute and the Maker waives any and all rights to offset, deduct or withhold
any payments or charges under this Note for any reason whatsoever.
Should any installment payment be more than ten (10) days late, the entire
balance of this Note shall be immediately due at the option of the holder of
this note, and upon such default, the entire unpaid balance of this Note shall
immediately bear simple annual interest at the rate of ten (10%) percent. Time
is of the essence of this Note.
Principal and interest shall be payable in lawful money of the United
States.
This Note, and the rights and obligations of the interested parties hereto,
shall be construed and enforced in accordance with the laws of the State of
California, without regard to the principles of conflict of laws.
Any dispute that arises out of this Note shall be exclusively resolved in
the appropriate California state court (Municipal or Superior) located Los
Angeles County, California.
In any litigation, arbitration, or other proceeding by which one interested
party to this Note seeks to enforce its/his rights under this Note (whether in
contract or tort) or seeks a declaration of rights or obligations under this
Note, or raises a factual or legal issue arising out of this Note, the
prevailing party shall be awarded reasonable attorneys fees, together with any
costs of suit or expenses incurred in order to resolve or litigate or appeal the
dispute, and/or to enforce the final judgment, whether or not the matter is
dismissed (voluntarily or involuntarily), settled, or proceeds to judgment or
verdict.
ALL-COMM MEDIA CORPORATION
By: /s/ Jeremy Barbera
------------------------------
Name: Jeremy Barbera
Title: Chairman & CEO
Address: 333 7th Ave., 20th Floor
New York, New York 10001
44
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EXHIBIT 10.22
FORM OF
PRIVATE PLACEMENT PURCHASE AGREEMENT
------------------------------------
April __, 1997
All-Comm Media Corporation
333 Seventh Avenue
New York, New York 10001
re: Purchase of Notes
-----------------
Gentlemen:
I. The undersigned ("Subscriber") has reviewed the filings which All-Comm Media
Corporation (the "Company") has made with the Securities Exchange Commission
during the past 12 months. The Company represents and warrants to the
Subscriber that all such filings are correct and accurate in all material
respects and in all material respects state all facts necessary to make such
filings not misleading. Subscriber has had the opportunity to discuss the
Company's affairs with the Company's officers.
II. Sale of Notes.
A. The Company hereby sells to Subscriber, and Subscriber hereby purchases
from the Company the principal amount of Convertible Notes ("Notes") set
forth opposite its name below. The purchase price for each Note is equal to
the principal amount thereof and is payable in cash concurrently with the
execution and delivery hereof.
B. The Notes are in the form of Exhibit A annexed hereto.
C. The term "Purchasers" as used herein means subscribers who in the
aggregate are on this day purchasing Notes in the aggregate principal
amount of $________ under agreements of the same tenor as this Agreement.
III. The Company shall forthwith pay to Mueller Trading Company a finders fee
equal to 7% of all cash amounts paid by Purchasers for the Notes.
IV. The prior written consent of the holders of a majority in interest of the
Notes shall be required before the Company effects any offering of securities
under Regulation D or Regulation S or under any other exemption from
registration requirements under the Securities Act of 1933. This paragraph
shall cease to be effective on the later to occur of December 31, 1997 or the
90th day after the effectiveness of the Registration Statement (as hereinafter
defined).
V. Registration.
A. The Company will file before the 30th day after the date of this
Agreement, a registration statement on Form S-3 (the "Registration
Statement") for the public sale by Subscriber of the shares which are
issuable on conversion of the Notes. The shares to be covered by the
Registration Statement are collectively referred to as the "registered
shares."
B. The Company shall use its diligent efforts to cause the Registration
Statement to become effective not later than 90 days after the date of
filing, and to remain effective for two years. The registration shall be
accompanied by blue sky clearances in such states as Subscriber may
reasonably request.
C. The Company shall pay all expenses of the registration hereunder, other
than Subscriber's underwriting discounts.
D. The Company shall supply to Subscriber a reasonable number of copies of
all registration materials and prospectuses. The Company and Subscriber
shall execute and deliver to each other indemnity agreements which are
conventional in registered offerings of this type. The Subscriber shall
reasonably cooperate with the Company in the preparation and filing of the
Registration Statement and appropriate amendments thereto.
E. Subscriber may transfer a proportionate part of its registration rights
to transferees of the Notes or portions thereof.
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VI. Certain Representations.
A. Subscriber represents and warrants that it is purchasing the Notes
solely for investment solely for its own account and not with a view to or
for the resale or distribution thereof.
B. Subscriber understands that it may sell or otherwise transfer the Notes
or the shares issuable on conversion of the Notes only if such transaction
is duly registered under the Securities Act of 1933, as amended, under the
Registration Statement or otherwise, or if Subscriber shall have received
the favorable opinion of counsel to the holder, which opinion shall be
reasonably satisfactory to counsel to the Company, to the effect that such
sale or other transfer may be made in the absence of registration under the
Securities Act of 1933, as amended, and registration or qualification in
every applicable state. The certificates representing the aforesaid
securities will be legended to reflect these restrictions, and stop
transfer instructions will apply. Subscriber realizes that the Notes are
not a liquid investment.
C. Subscriber has not relied upon the advice of a "Purchaser
Representative" (as defined in Regulation D of the Securities Act) in
evaluating the risks and merits of this investment. Subscriber has the
knowledge and experience to evaluate the Company and the risks and merits
relating thereto.
D. Subscriber represents and warrants that Subscriber is an "accredited
investor" as such term is defined in Rule 501 of Regulation D promulgated
pursuant to the Securities Act of 1933, as amended, and shall be such on
the date any shares are issued to the holder; Subscriber acknowledges that
Subscriber is able to bear the economic risk of losing Subscriber's entire
investment in the shares and understands that an investment in the Company
involves substantial risks; Subscriber has the power and authority to enter
into this agreement, and the execution and delivery of, and performance
under this agreement shall not conflict with any rule, regulation, judgment
or agreement applicable to the Subscriber; and Subscriber has invested in
previous transactions involving restricted securities.
VII. This Agreement may not be changed or terminated except by written
agreement. It shall be binding on the parties and on their personal
representatives and permitted assigns. It sets forth all agreements of the
parties. It shall be enforceable by decrees of specific performance (without
posting bond or other security) as well as by other available remedies.
VIII. This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Nevada. The federal and state courts sitting in the State
of Nevada shall have exclusive jurisdiction over all matters relating to this
Agreement. Trial by jury is expressly waived.
IX. All notices, requests, service of process, consents, and other
communications under this Agreement shall be in writing and shall be deemed to
have been delivered (i) on the date personally delivered, or (ii) one day after
properly sent by Federal Express, addressed to the respective parties at their
address set forth in this Agreement, or (iii) upon being transmitted by
facsimile so long as a confirmation copy is simultaneously forwarded by Federal
Express, in each case addressed to the respective parties at their address set
forth in this Agreement. Either party hereto may designate a different address
by providing written notice of such new address to the other party hereto as
provided above.
X. Each party hereto shall be responsible for its own expenses with regard to
the negotiation and execution of this Agreement.
SUBSCRIBER:_____________________ AGREED:
Signature ALL-COMM MEDIA CORPORATION
type or print name:_____________
Address:________________________ By:_____________________________
Fax No._________________________ Title:
Social Security No:_____________
Principal Amount of Notes: $_____________
46
<PAGE>
EXHIBIT A
THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS NOTE AND/OR THE COMMON STOCK ISSUABLE UPON CONVERSION
THEREOF, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ALL-COMM MEDIA
CORPORATION, THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
$__________________
CONVERTIBLE NOTE
(the "Note")
ALL-COMM MEDIA CORPORATION
ALL-COMM MEDIA CORPORATION, a Nevada corporation (hereinafter called the
"Corporation"), for value received, hereby promises to pay to the order of
________________________ (hereinafter the "Holder") the principal sum of
$__________ on April 15, 1999, together with interest accruing at the rate of 6%
per annum and payable at maturity or, if earlier, upon conversion. Principal
and interest shall be payable at the address of the Holder.
I. This Note is one of a duly authorized issue of Convertible Notes of the
Corporation (designated herein as the "Notes"), and is being issued under
Private Placement Purchase Agreements of similar tenor between the Corporation
and the Holder (the "Subscription Agreement"). The Holders of the Notes are
referred to herein collectively as "Purchasers."
II. Conversion Rights.
A. The Holder shall have the right at any time or times prior to maturity,
in its sole discretion, to convert the principal amount of this Note and/or
the accrued interest thereon, in whole or in part, into a number of shares
(the "Conversion Shares") of the Corporation's common stock (the "Common
Stock" equal to the amount converted divided by the Conversion Price. The
Conversion Price means a price per share equal to the lesser of $2.50 per
share or 83% of the average closing bid price of the Common Stock during
the last five trading days prior to conversion.
B. The Note shall be convertible at any time only to the extent that Holder
would not as a result of such exercise beneficially own more that 4.99% of
the then outstanding Common Stock. Beneficial ownership shall be defined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934. The
opinion of counsel to Holder shall prevail in the event of any dispute on
the calculation of Holder's beneficial ownership.
C. In the event that the Holder elects to exercise its conversion rights
hereunder, it shall give to the Corporation written notice of such election
(which may be by fax) and shall surrender this Note to the Corporation for
cancellation against payment of interest accrued through the date of
conversion. Conversion shall be effective upon such notice provided that
the Note is surrendered within a reasonable time thereafter.
D. In the event that the Holder proposes to convert all or any portion of
the principal or interest of this Note at a time when the conversion price
would be less than $1.50, the Corporation shall at its option be entitled
to redeem all or any portion of the Note proposed to be converted. Such
option shall be exercisable by paying to the Holder, within three business
days after the date of such proposed conversion, 117% of the amount of
principal proposed to be converted and 117% of the amount of interest
proposed to be converted.
E. The Corporation shall at all times reserve and keep available out of its
authorized and unissued common shares, solely for issuance upon the
conversion of the Note as herein provided, such number of common shares as
shall from time to time be issuable upon the conversion of the Note.
47
<PAGE>
III. Adjustments to Conversion Rights.
A. In case the Corporation shall issue common stock as a dividend upon
common stock or in payment of a dividend thereon, shall subdivide the
number of outstanding shares of its common stock into a greater number of
shares or shall contract the number of outstanding shares of its common
stock into a lesser number of shares, the number of Conversion Shares to
which the Holder is entitled to receive pursuant to Section 2 shall be
adjusted, effective at the close of business on the date such common
shares are to be issued, so that the Conversion Shares shall be equal to
the product obtained by multiplying the Conversion Shares in effect
immediately prior to the close of business on such date by a fraction, the
denominator of which shall be the number of shares of common stock
outstanding immediately prior to such dividend, subdivision, or
contraction, and the numerator of which shall be the number of shares of
common stock outstanding immediately after such dividend, subdivision or
contraction.
B. If any capital reorganization or reclassification of the common stock,
or consolidation, or merger of the Corporation with or into another
corporation, or the sale or conveyance of all or substantially all of its
assets to another corporation shall be effected, then, as a condition
precedent of such reorganization or sale, the following provision shall be
made: The Holder of the Note shall from and after the date of such
reorganization or sale have the right to receive (in lieu of the shares of
common stock of the Corporation immediately theretofore receivable with
respect to such Note, upon the exercise of conversion rights), such shares
of stock, securities or assets as would have been issued or payable with
respect to or in exchange for the number of outstanding shares of such
common stock immediately theretofore receivable with respect to such Note.
In any such case, appropriate provision shall be made with respect to the
rights and interests of the Holders to the end that such conversion rights
(including, without limitation, provisions for appropriate adjustments)
shall thereafter be applicable, as nearly as may be practicable in
relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise thereof.
IV. Registration Rights and Certain Remedies. The Subscription Agreements
provide for the filing by the Company of a registration statement for the sale
of the shares issuable on conversion of this Note. Notwithstanding anything to
the contrary set forth herein: if the registration statement hereinafter
referred to is not effective by the 110th day after the date hereof, then, in
addition to the Subscriber's other remedies:
A. the interest rate under the Notes shall be increased to 18% per annum
(or, if less, the highest rate permitted by law) until the registration
statement is declared effective, and
B. at Subscriber's option, the Notes shall not be repaid by the Company
and shall remain convertible and accrue interest, until such date as is
designated by Subscriber but not later than 180 days after the
effectiveness of the registration statement.
V. Purchase for Investment. The Holder, by acceptance hereof, acknowledges
that the Note (and the Common Stock into which the Note is convertible) has not
been registered under the Act, covenants and agrees with the Corporation that
such Holder is taking and holding this Note (and the Common Stock into which the
Note is convertible) for investment purposes and not with a view to, or for sale
in connection with, a distribution thereof and that this Note (and the Common
Stock into which the Note is convertible) may not be assigned, hypothecated or
otherwise disposed of in the absence of an effective registration statement
under the Act or an opinion of counsel for the Holder, which counsel shall be
reasonably satisfactory to the Corporation, to the effect that such disposition
is in compliance with the Act, and represents and warrants that such Holder is
an "accredited investor" that such Holder has, or with his representative has,
such knowledge and experience in financial and business matters to be capable of
evaluating the merits and risks in respect of this Note (and the Common Stock
into which the Note is convertible) and is able to bear the economic risk of
such investment.
VI. Events of Default and Acceleration of the Note.
An "event of default" with respect to this Note shall exist if any of the
following shall occur:
A. The Corporation shall breach or fail to comply with any provision of
this Note and such breach or failure shall continue for thirty (30) days
after written notice by any Holder of any Note to the Corporation.
48
<PAGE>
B. A receiver, liquidator or trustee of the Corporation or of a
substantial part of its properties shall be appointed by court order and
such order shall remain in effect for more than sixty (60) days; or the
Corporation shall be adjudicated bankrupt or insolvent; or a substantial
part of the property of the Corporation shall be sequestered by court
order and such order shall remain in effect for more than sixty (60) days;
or a petition to reorganize the Corporation under any bankruptcy,
reorganization or insolvency law shall be filed against the Corporation
and shall not be dismissed within sixty (60) days after such filing.
C. The Corporation shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any bankruptcy,
reorganization or insolvency law, or shall consent to the filing of any
petition against it under any such law.
D. The Corporation shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts generally as
they become due, or consent to the appointment of a receiver, trustee or
liquidator of the Corporation, or of all or any substantial part of its
properties.
If an event of default shall occur, the Holder may, in addition to such Holder's
other remedies, by written notice to the Corporation, declare the principal
amount of this Note, together with all interest accrued thereon, to be due and
payable immediately. Upon any such declaration, such amount shall become
immediately due and payable and the Holder shall have all such rights and
remedies provided for under the terms of this Note and the Stock Pledge
Agreement.
VII. Miscellaneous.
A. All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by telegram,
recognized overnight mail carrier, telex or other standard form of
telecommunications, or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows: (a) if to the Holder, to
such address as such Holder shall furnish to the Corporation in accordance
with this Section, or (b) if to the Corporation, to it at its headquarters
office, or to such other address as the Corporation shall furnish to the
Holder in accordance with this Section.
B. THIS NOTE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEVADA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE.
C. The Corporation waives protest, notice of protest, presentment,
dishonor, notice of dishonor and demand.
D. If any provision of this Note shall for any reason be held to be
invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision hereof, but this Note shall be construed as if
such invalid or unenforceable provision had never been contained herein.
E. The waiver of any event of default or the failure of the Holder to
exercise any right or remedy to which it may be entitled shall not be
deemed a waiver of any subsequent event of default or of the Holder's
right to exercise that or any other right or remedy to which the Holder is
entitled.
F. The Holder of this Note shall be entitled to recover his legal and
other costs of collecting on this Note, and such costs shall be deemed
added to the principal amount of this Note.
G. In addition to all other remedies to which the Holder may be entitled
hereunder, Holder shall also be entitled to decrees of specific
performance without posting bond or other security.
IN WITNESS WHEREOF, the Corporation has caused this Note to be duly executed on
the date first written above.
ATTEST: ALL-COMM MEDIA CORPORATION .
______________________________ By: ________________________________
Name: Name:
Title: Title:
49
<PAGE>
EXHIBIT 11.1
STATEMENTS REGARDING COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
-------- --------
1997 1996 1997 1996
------------ ----------- ------------- ------------
<S> <C> <C> <C> <C>
Net loss per share was calculated as follows:
Net loss $(7,971,721) $ (421,876) $(10,711,811) $(1,328,410)
Periodic non-cash accretions on redeemable
convertible preferred stock (786,803)
Non-cash, non-recurring dividends on
conversions of redeemable preferred B stock (8,466,412)
Non-recurring dividends on repurchase of
redeemable preferred C stock (573,305)
Net loss attributable to common stockholders (7,971,721) (421,876) (20,538,331) (1,328,410)
Primary:
Weighted average common shares outstanding 8,291,764 3,047,543 5,639,573 3,027,624
Incremental shares under stock options computed
under the treasury stock method using the
average market price of the issuer's
common stock during the periods 425,862 194,714 324,331 99,128
Weighted average common and common
equivalent shares outstanding unless antidilutive 8,291,764 3,047,543 5,639,573 3,027,624
Net loss per common share (0.96) (.14) (3.64) (.44)
Fully diluted:
Weighted average common shares outstanding 8,291,764 3,047,543 5,639,573 3,027,624
Incremental shares under stock options computed
under the treasury stock method using the
market price of the issuer's common stock at
the end of the periods if higher than the average
market price 425,862 194,714 324,331 99,128
Weighted average common and common
equivalent shares outstanding unless antidilutive 8,291,764 3,047,543 5,639,573 3,027,624
Net loss per common share (0.96) (.14) (3.64) (.44)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF ALL-COMM MEDIA CORPORATION AS OF
AND FOR THE NINE MONTHS ENDED MARCH 31, 1997 INCLUDED IN THIS REPORT ON FORM
10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 482,660
<SECURITIES> 0
<RECEIVABLES> 4,635,997
<ALLOWANCES> (26,000)
<INVENTORY> 0
<CURRENT-ASSETS> 5,290,723
<PP&E> 915,295
<DEPRECIATION> (146,012)
<TOTAL-ASSETS> 21,788,010
<CURRENT-LIABILITIES> 7,112,414
<BONDS> 0
0
0
<COMMON> 114,386
<OTHER-SE> 11,146,785
<TOTAL-LIABILITY-AND-EQUITY> 21,788,010
<SALES> 16,146,217
<TOTAL-REVENUES> 16,146,217
<CGS> 3,789,313
<TOTAL-COSTS> 3,789,313
<OTHER-EXPENSES> 16,392,265
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 353,246
<INCOME-PRETAX> (10,679,789)
<INCOME-TAX> (32,022)
<INCOME-CONTINUING> (10,711,811)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,711,811)
<EPS-PRIMARY> (3.64)
<EPS-DILUTED> (3.64)
</TABLE>
