SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 21, 1998
INOVISION CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 1-8987 06-1043736
(State or other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
Business Address:
Unit 103, Port Lewes, Delaware 19958
Mailing Address:
c/o Proskauer Rose LLP, 1585 Broadway, New York, New York 10036
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (212) 969-3000
Former Name or Former Address, if Changed Since Last Report: Not applicable
<PAGE>
Item 5. Other Events
On September 21, 1998, the Board of Directors of Inovision Corporation,
a Delaware corporation (the "Company"), approved the making of a final
distribution, in the aggregate amount of $2,747,888, to the holders of record of
the shares of the Company's Common Stock, par value $.01 per share, on November
9, 1994, the date on which the Company's stock transfer books were closed (the
"Record Date Holders"). On September 24, 1998, the Company transferred the full
amount of the final distribution to American Stock Transfer and Trust Co.
("AST"), the former stock transfer agent for the Company's Common Stock and the
paying agent for the final distribution. The Company also transferred to AST all
amounts held by the Company on behalf of Record Date Holders who had failed to
claim payment of the liquidating distribution paid in November 1994. Payment of
the final distribution was mailed on September 28, 1998 to Record Date Holders
entitled to receive the distribution and was accompanied by the Letter to
Holders included as Exhibit 99 to this Current Report on Form 8-K (this
"Report"). In connection with the dissolution of the Company and the payment of
the final distribution, the Company entered into (a) the letter agreement, dated
September 21, 1998, among the Company, AST and (solely for the purposes of
Sections 5, 6 and 8 thereof) Frogtown Holdings, Inc., included as Exhibit 10(f)
to this Report, and (b) the Assignment and Assumption Agreement, dated as of
September 21, 1998, by and between the Company and Frogtown Holdings, Inc.,
included as Exhibit 10(g) to this Report. On September 28, 1998, the Company
filed a Certificate of Dissolution (included as Exhibit 3(d) to this Report)
with the Secretary of State of the State of Delaware. As a result of the
transactions described herein, the Company has no assets and no stockholders
and, pursuant to the Certificate of Dissolution, the Company has dissolved.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Inovision Corporation has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
INOVISION CORPORATION
Date: September 28, 1998 By: /s/ Austin O. Furst, Jr.
--------------------------
Austin O. Furst, Jr.
Chairman of the Board
(Principal Executive Officer)
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<PAGE>
EXHIBITS
Exhibit Number Exhibits Page
- -------------- -------- ----
3(d) Certificate of Dissolution 5
10(f) Letter Agreement, dated September 21, 1998, 6
among the Company, American Stock Transfer
and Trust Co. and (solely for the purposes
of Sections 5, 6 and 8 thereof Frogtown
Holdings, Inc.
10(g) Assignment and Assumption Agreement, dated 12
as of September 21, 1998, by and between
the Company and Frogtown Holdings, Inc.
99 Letter to Holders, dated September 28, 1998 15
STATE OF DELAWARE
CERTIFICATE OF DISSOLUTION
Inovision Corporation
- --------------------------------------------------------------------------------
corporation organized and existing under the General corporation Law of the
state of Delaware.
DOES HEREBY CERTIFY AS FOLLOWS:
The dissolution of said Corporation
--------------------------------------------------------
- --------------------------------------------------------------------------------
has been duly authorized by the Board of Directors and Stockholders in
accordance with subsections (a) and (b) of Section 275 of the General
Corporation Law of the State of Delaware.
The date the dissolution was authorized is September 21, 1998
-----------------------------------.
The following is a list of the names and addresses of the directors of the said
corporation:
NAME ADDRESS
Austin O. Furst, Jr. #103, Port Lewes, Lewes, DE
- -------------------------------- ----------------------------------------
Klaus Eppler 1585 Broadway, New York, NY
- -------------------------------- ----------------------------------------
Stephen L. Einhorn 575 Eighth Ave., New York, NY
- -------------------------------- ----------------------------------------
Donald Sting 84 Turtleback Rd., New Canaan, CT
- -------------------------------- ----------------------------------------
The following is a list of the name and addresses of the officers of the said
corporation:
NAME OFFICE ADDRESS
Austin O. Furst, Jr. Chairman/President #103 Port Lewes, Lewes, DE
- ---------------------- ---------------------- ----------------------------
- ---------------------- ---------------------- ----------------------------
- ---------------------- ---------------------- ----------------------------
- ---------------------- ---------------------- ----------------------------
BY: /s/ Austin O. Furst, Jr.
TITLE OF OFFICER: Chairman/ President
ATTEST: /s/ Nora Ann Price
Secretary (or Assistant Secretary)
Inovision Corporation
c/o Proskauer Rose LLP
1585 Broadway
New York, New York 10036
September 21, 1998
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Exchange Department
Gentlemen and Ladies:
Pursuant to the Plan of Complete Liquidation and Dissolution (the
"Plan") of Inovision Corporation, a Delaware corporation (the "Company"), a
liquidating distribution in the amount of $2.50 per share (the "Liquidating
Distribution") was made to the persons who were the holders of record (the
"Holders") of the Company's Common Stock (the "Shares") on November 9, 1994 (the
"Liquidation Record Date") and the Company's stock transfer books were closed on
the Liquidation Record Date. The Company is now making a final distribution in
an amount anticipated to be approximately $0.07 per Share to the Holders (the
"Final Distribution"), to be paid in accordance with this Agreement on or about
September 18, 1998. The actual amount per Share shall be specified by the
Company in written notice to AST prior to September 23, 1998 and shall be
carried out to fractional cents and rounded up or down as provided herein. The
final dissolution of the Company pursuant to the Plan is anticipated to take
place on or before September 30, 1998.
American Stock Transfer & Trust Company ("AST") is hereby appointed as
paying agent for the purpose of distributing the Final Distribution to all of
the Holders, on the terms and conditions hereinafter set forth. AST is also
hereby appointed as the agent of the Company to hold amounts of the Liquidating
Distribution and the Final Distribution that have not been claimed by Holders
("Unclaimed Amounts") and to make escheat filings, when required in accordance
with applicable state law ("Escheat Filings").
1. AST agrees to act as paying agent in connection with the payment
of the Final Distribution in accordance with the terms of this Agreement. AST
also agrees to act as the agent of the Company to hold all Unclaimed Amounts and
make Escheat Filings in accordance with the terms of this Agreement. AST shall
take such reasonable action as may from time to
<PAGE>
time be requested by the Company or its representatives in connection with the
matters contemplated by this Agreement.
2. On or prior to September 28, 1998, AST shall effect the mailing
to each Holder that has surrendered the stock certificate or certificates
representing such Holder's Shares (at such Holder's last known address) of a
copy of the cover letter provided by the Company (the "Final Distribution Cover
Letter") and a check for the amount of the Final Distribution (if any) payable
to such Holder. On or prior to September 28, 1998, AST shall also effect the
mailing of a copy of the Final Distribution Cover Letter, but no check, to each
Holder that has failed to surrender the stock certificate or certificates
representing such Holder's Shares (a "Non- Responding Holder") at such
Non-Responding Holder's last known address. AST shall certify to the Company,
prior to September 30, 1998, that both such mailings have been completed.
3. AST shall maintain, on a continuing basis, a list of all Holders
who have cashed checks mailed to them in connection with the Final Distribution,
the date of processing, the date of payment for such checks, the aggregate
amount of cash actually paid to Holders by AST in the Final Distribution, and
all Holders who have not cashed checks mailed to them in connection with the
Final Distribution. Insofar as required by any governmental agency or authority,
AST shall provide all information to and file Form 1099B for all Holders with
the Internal Revenue Service. AST shall also maintain, on a continuing basis, a
list of all Holders who have not surrendered certificates for their Shares or
claimed any payment due to them in the Liquidating Distribution or the Final
Distribution.
4. No later than September 23, 1998, the Company shall remit to AST
the amount required to pay the Final Distribution. Payments of the Final
Distribution shall be rounded down to the nearest whole cent in the case of the
aggregate amount due to Frogtown Holdings, Inc., a Delaware corporation
("Frogtown"), and rounded up to the nearest whole cent in the case of the
aggregate amount due to each other Holder; provided, however, that no portion of
the Final Distribution shall be paid to any Holder who would receive less than
$1.00 in the aggregate.
5. No later than September 23, 1998, the Company shall remit to AST
$828,795 (the "Lump Sum"). The parties hereby agree that, as of the date of this
Agreement, the amount of the Lump Sum is equal to the aggregate Unclaimed
Amounts with respect to the Liquidating Distribution. AST shall be entitled to
deduct from the Lump Sum: (a) a fee of Twenty-Five Thousand Dollars ($25,000)
for the services of AST under this Agreement, payable immediately upon receipt
of the Lump Sum by AST under this Agreement and (b) the out-of-pocket mailing
and check processing costs incurred by AST in connection with the services
performed by AST under this Agreement and, subject to the reasonable approval of
the Company Representative (as defined in Section 9 below) in the case of
expenses in excess of $1,000 in the aggregate, other reasonable out-of-pocket
expenses incurred by AST in the performance of its duties under this Agreement,
payable as such expenses are incurred.
2
<PAGE>
6. After making the deductions described in Section 5 above, AST
shall hold the remaining Amounts from the Final Distribution (which shall be
deemed to include the amount of the Final Distribution payable to Non-Responding
Holders and other Holders who have not cashed checks mailed to them in the Final
Distribution) subject to the obligation, which AST hereby undertakes, (a) to pay
any Unclaimed Amount to the Holder entitled thereto if claimed by such Holder
prior to the date such amount is paid to applicable state authorities in
accordance with applicable state escheat law and (b) to pay all remaining
Unclaimed Amounts to the applicable state authorities when required in
accordance with applicable state escheat law. In the event that, as of any date,
the Aggregate Amount Payable (as hereinafter defined) exceeds the Amount Held
(as hereinafter defined), AST shall give written notice to Frogtown at the
address set forth in Section 8 below, specifying the amount of such excess, and
Frogtown shall, within twenty calendar days, remit such excess to AST by check
made out to AST at the address for AST given above. The "Aggregate Amount
Payable" shall mean, as of any date, the sum (without duplication) of (a) all
Unclaimed Amounts claimed by the Holders entitled thereto (and not theretofore
paid to such Holders or to any state pursuant to any Escheat Filing), (b) all
Unclaimed Amounts required to be paid to the applicable state authorities in
accordance with Escheat Filings to be made by AST within the next succeeding
thirty days, (c) any expenses payable but not yet paid pursuant to Section 5,
and (d) any theretofore unpaid interest or penalties incurred as a result of the
failure to make any Escheat Filing to the extent required in accordance with
applicable state law prior to September 30, 1998 (the amount of any such
interest or penalties being a "Reimbursable Amount"). The "Amount Held" shall
mean, as of any date, the sum (without duplication) of (a) all Unclaimed Amounts
then held by AST, plus (b) accrued interest on the Unclaimed Amounts held by AST
from time to time through such date at a rate of 4 percent per annum to the
extent such interest has not therefore been (i) paid to Frogtown pursuant to
Section 8 below or (ii) used by AST to pay any Unclaimed Amount to Holders or
any expenses payable pursuant to Section 5 above or to pay any Unclaimed Amount
or Reimbursable Amount to any state authorities pursuant to any Escheat Filing.
Interest that accrues on the Unclaimed Amounts pursuant to this Section 6 shall
be deemed for federal and state income tax purposes to have been earned by
Frogtown.
7. The Company hereby assigns to AST, and AST hereby assumes, all
of the Company's obligations to pay Unclaimed Amounts to Holders and to
applicable state authorities in accordance with applicable state escheat law and
to make any and all Escheat Filings when required in accordance with applicable
state law. AST shall pay and be responsible for any interest or penalties
incurred as a consequence of the failure to make any Escheat Filing when
required in accordance with applicable state law after September 23, 1998.
8. On the last business day of December 1999 and December 2000, AST
shall deliver to the Company Representative and Frogtown a written report
showing, as of such date, (a) the Amount Held, (b) the amount of the Liquidating
Distribution and the Final Distribution not theretofore paid to Holders or to
state authorities pursuant to Escheat Filings and (c) any known unpaid
Reimbursable Amounts, and expenses payable but not yet paid pursuant to Section
5 above. If the amount referred to in clause (a) of the preceding exceeds the
sum of the
3
<PAGE>
amounts referred to in clauses (b) and (c) of the preceding sentence, then AST
shall pay such excess to Frogtown by check delivered to Frogtown concurrently
with such report. If the amount referred to in clause (a) of the first sentence
of this Section 8 is less than the sum of the amounts referred to in clauses (b)
and (c) of this Section 8, then Frogtown shall, within twenty calendar days
following delivery of such report, pay such deficit to AST by check made out to
AST at the address for AST given above. The address for Frogtown shall be c/o
Vogel & Co., 972 Post Road, Darien, Connecticut 06820 (fax - 203/655-2221; voice
- - 203/655-2200). Frogtown may, by written notice to AST, change the address
given for it in this Section 8. Frogtown shall have the right to enforce the
provisions of this Section 8 and Sections 5 and 6 in its own name on its own
behalf.
9. The "Company Representative" shall be Mr. George Vogel or
another person designated in writing by Mr. George Vogel or Mr. Austin O. Furst,
Jr. AST shall report to the Company Representative, no later than the last
business day of each calendar month, commencing with the month of October, 1998,
the amount paid to Holders pursuant to the Final Distribution or in respect of
any Unpaid Amounts through such date, the amounts paid to state authorities
through such date, any out-of-pocket expenses incurred by AST and any Escheat
Filings made through such date. The address for Mr. George Vogel shall be Vogel
& Co., 972 Post Road, Darien, Connecticut 06820 (fax 203.655.2221; voice
203.655.2200), or such other address as Mr. Vogel shall designate by written
notice given to AST.
9. As agent of the Company hereunder, AST:
(a) shall have no duties or obligations other than those
specifically set forth herein;
(b) will be regarded as making no representations as to the
matters described in the Final Distribution Cover Letter or the Plan;
(c) shall not be obligated to take any legal action hereunder
which might in AST's judgment involve any expenses or liability,
unless AST shall have been furnished with indemnity reasonably
satisfactory to it;
(d) may rely on and shall be protected in acting in reliance upon
any certificate, instrument, opinion, notice, letter, telegram or
other document or security delivered to AST and reasonably believed by
AST to be genuine and to have been signed by the proper party or
parties;
(e) may rely on and shall be protected in acting upon the written
or oral instruction of Mr. Austin O. Furst, Jr. or of Mr. George Vogel
or any Company Representative designated by Mr. Furst or Mr. Vogel;
and
4
<PAGE>
(f) may consult with counsel satisfactory to AST (including
counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection in respect of such
action taken, suffered or omitted by AST hereunder in good faith and
in accordance with the opinion of such counsel.
10. This Agreement and appointment of AST as agent of the Company
shall be construed and enforced in accordance with the laws of the State of New
York and shall inure to the benefit of, and the obligations created hereby shall
be binding upon, the successors and assigns of the parties hereto. This
Agreement may not be modified orally.
11. This Agreement and all of the obligations hereunder shall be
assumed by any and all successors and assigns of the Company.
5
<PAGE>
Please acknowledge receipt of this letter and confirm the arrangements
herein provided by signing and returning the enclosed copy.
Very truly yours,
INOVISION CORPORATION
By:/s/ Austin O. Furst, Jr.
------------------------
Name: Austin O. Furst, Jr.
Title: Chairman of the Board
FROGTOWN HOLDINGS, INC.
(solely for the purposes of Sections 5, 6 and 8 hereof)
By:/s/ Austin O. Furst, Jr.
------------------------
Name: Austin O. Furst, Jr.
Title: President
Accepted and agreed to:
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By: /s/ George Karfunkel
------------------------
Name: George Karfunkel
Executive Vice President
6
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of September 21, 1998, by
and between Inovision Corporation, a Delaware corporation (the "Company"), and
Frogtown Holdings, Inc., a Delaware corporation (the "Majority Stockholder").
W I T N E S S E T H:
WHEREAS, the Company adopted a Plan of Complete Liquidation and
Dissolution effective November 9, 1994 (the "Plan"), pursuant to which the
Company will distribute the remainder of its assets to the holders of record
(the "Holders") of the shares of Common Stock of the Company that were issued
and outstanding on November 9, 1994 (the "Shares") in a final distribution (the
"Final Distribution") and file a Certificate of Dissolution with the Secretary
of State of the State of Delaware;
WHEREAS, certain of the Company's assets cannot easily be liquidated or
distributed to the Holders and certain of the Company's liabilities are of an
ongoing or contingent nature.
WHEREAS, the Majority Stockholder is the Holder of approximately 82.05%
of the Shares;
NOW THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto hereby agree as follows:
1. Assignment of Settlement Rights. The Company hereby sells,
assigns, transfers, sets over and conveys to the Majority Stockholder, and the
Majority Stockholder hereby accepts, all of the Company's rights in and to: (a)
royalties from the motion picture "Benji, the Hunted," and (b) payments arising
out of a settlement agreement with ITC Productions, Inc., Computer Graphics
Laboratories, Inc., and GCL Studios, Inc. relating to the potential production
of an animated motion picture featuring music by the Beatles.
2. Transfer of Name. The Company hereby agrees with the Majority
Stockholder that upon the filing of the Certificate of Dissolution, all rights
of the Company in and to the name "Inovision Corporation" shall be transferred
to the Company's designee, Hilltop Ventures, Inc. pursuant to an assignment
reasonably satisfactory to the Majority Shareholder.
3. Agreement with American Stock Transfer. The Company and American
Stock Transfer & Trust Co. ("AST") are entering into an Agreement, dated
September 21, 1998, pursuant to which the Majority Stockholder is a party for
the purposes of Sections 5, 6 and 8 thereof (the "AST Agreement"). Pursuant to
the AST Agreement, the Company is transferring to AST all amounts held by it in
respect of Unclaimed Amounts (as defined in the AST Agreement)
<PAGE>
with respect to the Liquidating Distribution (as defined in the AST Agreement)
and all amounts payable in the Final Distribution. The Majority Stockholder
hereby confirms, for the benefit of the Company and the Holders, its obligations
under the AST Agreement.
4. Indemnification and Certain Other Liabilities. The Majority
Stockholder and Furst Holdings, Inc. hereby confirm their obligations under the
letter, dated November 9, 1994, from the Majority Stockholder and Furst
Holdings, Inc. to the Company to indemnify persons (and such persons' heirs,
executors, administrators, successors and assigns) who would be entitled to
indemnification from the Company for certain matters to the fullest extent that
the Company would be permitted to indemnify such persons under Delaware law. The
Majority Stockholder and Furst Holdings, Inc. hereby further confirm that they
will waive all rights they may have to claim contribution from other Holders in
the event that a claim is made against the Majority Stockholder or Furst
Holdings, Inc. for liabilities of the Company. The Majority Stockholder hereby
assumes all liabilities of the Company to pay legal and accounting fees and
expenses payable after the date hereof in respect of services performed for the
Company, and all liabilities of the Company with respect to Delaware franchise
taxes to the extent not paid on or prior to the date of filing the Certificate
of Dissolution.
5. Agreed Value of Assignments and Assumptions. The parties agree
that the fair value of the aggregate of the assignments and assumption of
liabilities and obligations hereunder, and the amount to be credited to the
Company in the computation of the amount payable to the Majority Stockholder in
the final distribution to be made to holders of the shares of common stock of
the Company that were issued and outstanding on November 9, 1994, is $412,500.
6. Binding on Successors and Assigns. The parties hereby agree that
this Assignment and Assumption Agreement shall inure to the benefit of, and be
binding upon, the successors and assigns of the Company and the Majority
Stockholder.
<PAGE>
7. Governing Law. This Assignment and Assumption Agreement shall be
governed by the law of the State of New York, without regard to the principles
of conflicts of law thereof.
IN WITNESS WHEREOF, each of the undersigned parties have caused this
Assignment and Assumption Agreement to be duly executed by its duly authorized
representative as of the date first above written.
INOVISION CORPORATION
By: /s/ Austin O. Furst, Jr.
------------------------
Name: Austin O. Furst, Jr.
Title: Chairman of the Board
FROGTOWN HOLDINGS, INC.
By: /s/ Austin O. Furst, Jr.
------------------------
Name: Austin O. Furst, Jr.
Title: President
Confirmed with Respect to Paragraph 4
FURST HOLDINGS, INC.
By: /s/ Austin O. Furst, Jr.
------------------------
Name: Austin O. Furst, Jr.
Title: President
Inovision Corporation
c/o Proskauer Rose LLP
1585 Broadway
New York, NY 10036
September 28, 1998
To the Holders of Record
of Common Stock of
Inovision Corporation
Outstanding on November 9, 1994
Dear Holder:
Inovision Corporation, a Delaware corporation formerly known as Vestron, Inc.
(the "Company"), is paying a second and final distribution (the "Final
Distribution") under its Plan of Complete Liquidation and Dissolution which
became effective November 9, 1994 (the "Plan"). If you have previously
surrendered your stock certificate(s) and you were the holder of record of at
least 14 shares of Common Stock of the Company on November 9, 1994, a check for
the amount of your Final Distribution is enclosed. If no check is enclosed, you
have not to date surrendered your stock certificate(s) and you should promptly
follow the procedures outlined on the second page of this letter.
Pursuant to the Plan, the holders of record (the "Holders") of the shares of
Common Stock of the Company that were issued and outstanding on November 9, 1994
(the "Shares") received a liquidating distribution of $2.50 per Share in cash
(the "Liquidating Distribution") and the Company's stock transfer books were
closed as of November 9, 1994. In order to receive the Liquidating Distribution,
Holders were required to surrender the stock certificate(s) representing their
Shares to the Company.
As described in the Plan, the Company will now distribute its remaining assets
to Holders in the Final Distribution and be dissolved. The amount of the Final
Distribution is $0.073352 per Share, or an aggregate of $2,747,888. No Final
Distribution will be paid to any Holder if the aggregate amount payable to such
Holder in the Final Distribution would be less than $1.00. On or before
September 30, 1998, the Company will file a Certificate of Dissolution with the
Secretary of State of the State of Delaware.
<PAGE>
Each Holder should consult his or her tax advisor concerning his or her
particular tax situation and the tax consequences of receiving the Final
Distribution (including, in the case of a Holder who will recognize a loss from
the liquidation, the proper tax year for claiming such loss).
If no check is enclosed, you have not to date surrendered your stock
certificate(s). Neither the Liquidating Distribution nor the Final Distribution
will be paid to you if you do not surrender the stock certificate(s)
representing your Shares. In order to surrender your stock certificates, you
should first contact American Stock Transfer & Trust Company, the former
transfer agent for the Company's Common Stock, 40 Wall Street, 46th Floor, New
York, NY 10005, Exchange Department (phone 718/921-8209; fax 718/331-1852) to
request a letter of transmittal form. Once you have completed the letter of
transmittal and surrendered your stock certificates, a check in the amount of
the Liquidating Distribution and the Final Distribution payable to you will be
mailed to you at the address designated by you, unless such amounts have already
been paid to state authorities pursuant to applicable state escheat laws. No
interest is payable on the Liquidating Distribution or the Final Distribution.
Attached as Exhibit A to this letter is a brief description of certain
agreements entered into in connection with the final disposition of the
Company's assets and how the amount of the Final Distribution was calculated.
Copies of the Company's Annual Report on Form 10-K for the year ended December
31, 1997, its quarterly report on Form 10-Q for the quarterly period ended June
30, 1998, and its current report on Form 8-K relating to the Final Distribution
may be obtained, without charge, by writing to American Stock Transfer & Trust
Company at the above address.
Very truly yours,
INOVISION CORPORATION
By /s/ Austin O. Furst, Jr.
------------------------
Austin O. Furst, Jr.
Chairman of the Board
<PAGE>
Exhibit A
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Calculation of Final Distribution Amount
----------------------------------------
The Plan of Complete Liquidation and Dissolution which became effective November
9, 1994 (the "Plan") provides for one final distribution under which all
remaining assets of the Company are liquidated and paid to the Holders. All
Holders other than Frogtown Holdings, Inc. (the "Majority Stockholder") will
receive only cash in payment of the Final Distribution. The Majority Stockholder
has entered into an Assignment and Assumption Agreement with the Company dated
as of September 21, 1998 pursuant to which: (a) the Company transferred the
"Settlement Rights" described below to the Majority Stockholder and transferred
the Company's rights to its name to the Majority Stockholder's designee; (b) the
Company transferred to the Majority Stockholder its rights to receive interest
on unclaimed amounts with respect to the Liquidating Distribution and the Final
Distribution prior to the payment of such amounts to Holders or state escheat
authorities; and (c) the Majority Stockholder undertook certain obligations to
American Stock Transfer & Trust Co. ("AST") as described below in connection
with this mailing to Holders, the payment of the Final Distribution and the
payment of unclaimed amounts with respect to the Liquidating Distribution and
the Final Distribution to Holders or to state escheat authorities. The Company
and the Majority Stockholder agreed that for purposes of the Final Distribution
the net aggregate amount to be credited to the Company in consideration of the
assignments and assumptions of obligations is $412,500.
Under an agreement between the Company and the Majority Stockholder made in
connection with the adoption of the Plan, the Majority Stockholder was required
to make a payment to the Company (the "Overage Amount") if the Cash Receipts in
respect of certain In Kind Assets substantially exceeded the $120,000 at which
those assets were valued for purposes of the Liquidating Distribution during the
period beginning with the transfer of the In Kind Assets and ending in August
1998. The Majority Stockholder has certified to the Company that the amount of
such receipts were less than the $120,000 and accordingly no Overage Amount is
due to the Company.
The Company's assets at the time of the declaration of the Final Distribution
consisted of cash and certain rights (referred to as "Settlement Rights") to
receive (i) between $282,500 and $332,500 (depending on the amount of taxes that
are payable) in January 2000 (or in certain cases, earlier) as a result of the
settlement of a litigation relating to the production of an animated motion
picture featuring music by the Beatles and (ii) 30% of all royalties generated
by the motion picture, "Benji, the Hunted," until the amount of royalties so
received reaches $3.0 million, pursuant to a settlement agreement with the
producers of such film. The Benji settlement has so far resulted in royalties of
approximately $1.6 million being received by the Company.
A-1
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The Company also entered into an agreement with AST and the Majority Stockholder
(the "AST Agreement"), pursuant to which, among other things, the Company
transferred to AST the cash held by it to cover unclaimed amounts in connection
with the Liquidating Distribution (the "Unclaimed Liquidating Distribution
Amount"), and AST assumed all liabilities to pay such unclaimed amounts to
Holders or to state escheat authorities. The AST Agreement authorizes AST to
deduct its fees and its expenses from the Unclaimed Liquidating Distribution
Amount, subject to the right to recover such amounts from the Majority
Stockholder when needed to pay claims of Holders or to pay to state escheat
authorities.
The Company's principal liability as of September 28, 1998, after payment of
certain expenses and franchise taxes, was the obligation to pay an aggregate
amount of $828,795 to Holders or to state escheat authorities in respect of
unclaimed amounts of the Liquidating Distribution.
Including the transfers of the Settlement Rights and the Unclaimed Liquidating
Distribution Amount as described above, and payment of certain expenses and
franchise taxes, the assets of the Company consisted of $2,747,888, the
aggregate amount of the Final Distribution. This amount less the $412,500
credited to the Majority Stockholder, was then paid by the Company to AST for
distribution to Holders.
In calculating the amount per share, the Company included in the total amounts
of the Final Distribution the amount credited to the Majority Stockholder
pursuant to the Assignment and Assumption Agreement ($412,500) and eliminated
from the number of Shares the aggregate number of Shares held by the Holders who
would by reason of holding less than 14 shares be entitled to less than $1.00 in
the Final Distribution. Payments of the Final Distribution are rounded up to the
nearest whole cent in the case of the aggregate amount due to each Holder other
than the Majority Stockholder, and rounded down to the nearest whole cent in the
case of the aggregate amount due to the Majority Stockholder.
A-2
