SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ___________________
Commission File Number: 0-20510
AMERICAN STUDIOS, INC.
(Exact name of registrant as specified in its charter)
North Carolina 56-1758321
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
11001 Park Charlotte Boulevard, Charlotte, NC 28273
(Address of principal executive office)
(Zip Code)
(704) 588-4351
(Registrant's telephone number, including area code)
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 _______
APPLICABLE ONLY TO CORPORATE ISSUES:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at June 30, 1996
Common Stock, $.001 par value 21,433,160
<PAGE>
AMERICAN STUDIOS, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page No.
<S> <C>
Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 1
Consolidated Statements of Operations -
Thirteen Weeks Ended and Twenty-Six Weeks Ended June 30, 1996
and July 2, 1995 2
Consolidated Statements of Shareholders' Equity -
Twenty-Six Weeks Ended
June 30, 1996 and July 2, 1995 3
Consolidated Statements of Cash Flows -
Twenty-Six Weeks Ended
June 30, 1996 and July 2, 1995 4
Condensed Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders 11
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
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AMERICAN STUDIOS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
----------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash $122 $1,681
Accounts receivable:
Trade 692 809
Employees, principally travel advances 41 183
Income tax receivable 0 1,365
Inventories 2,568 3,027
Prepaid expenses and other 186 491
----------------- -------------
Total current assets 3,609 7,556
PROPERTY, PLANT AND EQUIPMENT, NET 26,579 30,010
NON-COMPETE AGREEMENTS AND OTHER INTANGIBLE ASSETS 4,161 4,485
DEFERRED TAX ASSET 1,307 1,301
OTHER ASSETS 560 478
----------------- -------------
TOTAL $36,216 $43,830
================= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term obligations $9,941 $7,240
Trade accounts payable 3,806 4,324
Commissions payable to Wal-Mart Stores, Inc. 1,058 2,232
Salaries, commissions and bonuses 1,586 1,809
Taxes (other than income) 1,379 1,974
Income Tax payable 1,097 -
Self-insurance reserves 2,793 2,447
Other 855 753
----------------- -------------
Total current liabilities 22,515 20,779
----------------- -------------
LONG TERM DEBT 5,589 10,380
SHAREHOLDERS' EQUITY:
Preferred stock - $1.00 par value (authorized 1,000,000 shares; no
shares issued) - -
Common stock - $.001 par value (authorized 70,000,000 shares;
outstanding 21,433,160 shares) 21 21
Additional paid-in capital 12,794 12,794
Retained deficit (4,779) (223)
Cumulative foreign currency translation adjustments 76 79
----------------- -------------
Total shareholders' equity 8,112 12,671
----------------- -------------
TOTAL $36,216 $43,830
================= =============
</TABLE>
See condensed notes to consolidated financial statements.
1
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AMERICAN STUDIOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THIRTEEN TWENTY-SIX
WEEKS ENDED WEEKS ENDED
------------------------ --------------------------
June 30, July 2, June 30, July 2,
1996 1995 1996 1995
----------- ------------- ---------- --------------
<S> <C> <C> <C> <C>
NET SALES $24,318 $24,669 $43,915 $43,347
COST OF SALES 20,788 21,938 39,305 38,177
----------- ------------- -------------- ---------
GROSS PROFIT 3,530 2,731 4,610 5,170
GENERAL AND ADMINISTRATIVE EXPENSES 3,679 4,884 8,010 8,967
AMORTIZATION OF NON-COMPETE AGREEMENTS
AND OTHER INTANGIBLE ASSETS 162 171 324 339
FOREIGN EXCHANGE LOSSES (GAINS) - (79) (6) 49
----------- ------------- -------------- ---------
LOSS BEFORE INTEREST (311) (2,245) (3,718) (4,185)
INTEREST 388 11 838 32
----------- ------------- -------------- ---------
LOSS BEFORE INCOME TAXES (699) (2,256) (4,556) (4,217)
INCOME TAX BENEFIT - (944) - (1,772)
----------- ------------- -------------- ---------
NET LOSS ($699) ($1,312) (4,556) (2,445)
=========== ============= ============== ==========
NET LOSS PER COMMON SHARE ($0.03) ($0.06) ($0.21) ($0.11)
=========== ============= ============= ==========
CASH DIVIDEND PER COMMON SHARE - $0.02 - 0.04
=========== ============= ============ ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
AND COMMON STOCK EQUIVALENTS 21,433,160 21,376,716 21,433,160 21,400,574
=========== ============== ============ ===========
</TABLE>
See condensed notes to consolidated financial statements.
<PAGE>
AMERICAN STUDIOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
FOR THE TWENTY-SIX WEEKS ENDED
---------------------------------------------------------------------------------------------
RETAINED CUMULATIVE TOTAL
COMMON STOCK ADDITIONAL EARNINGS TRANSLATION SHAREHOLDERS'
-----------------------
SHARES AMOUNT PAID-IN CAPITAL (DEFICIT) ADJUSTMENTS EQUITY
----------- ------------- --------------- ---------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994 21,426,465 $21 $12,871 $6,626 $ 7 $19,525
NET LOSS (2,445) (2,445)
ISSUANCE OF COMMON STOCK UNDER THE
THE EMPLOYEE STOCK PURCHASE PLAN 25,420 49 49
CASH DIVIDEND DECLARED ($.04
PER SHARE) (856) (856)
ACQUISITION OF COMPANY STOCK (54,000) (161) (161)
FOREIGN CURRENCY TRANSLATION
ADJUSTMENT 36 36
============ ======= ============ =============== ======= ===============
BALANCE AT JULY 2, 1995 21,397,885 $21 $12,759 $3,325 $43 $16,148
============ ======= ============ =============== ======= ===============
BALANCE AT DECEMBER 31, 1995 21,433,160 $21 $12,794 ($223) $79 $12,671
NET LOSS (4,556) (4,556)
FOREIGN CURRENCY TRANSALATION
ADJUSTMENT (3) (3)
============ ======= =========== =============== ======= ===============
BALANCE AT JUNE 30, 1996 21,433,160 $21 $12,794 ($4,779) $76 $8,112
============ ======= =========== =============== ======= ===============
</TABLE>
3
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AMERICAN STUDIOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
TWENTY-SIX
WEEKS ENDED
---------------------------------
June 30, July 2,
1996 1995
--------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($4,556) ($2,445)
--------------- ----------------
Adjustments to reconcile net loss to net cash used by operating activities
Deferred income tax benefit (6) 65
Depreciation of property, plant and equipment 3,326 1,475
Amortization of intangible assets 324 338
Foreign exchange losses (gains) (6) 49
Increase in valuation allowance 100 -
Other 236 -
Change in operating assets and liabilities net of effects from purchase of
CVS, Inc.:
Decrease (increase) in accounts receivable 1,624 (466)
Decrease (increase) in inventories 459 (123)
Decrease in prepaid expenses and other assets 223 286
Decrease in accounts payable and accrued liabilities (965) (1,655)
--------------- ----------------
Total adjustments 5,315 (31)
--------------- ----------------
Net cash used by operating activities 759 (2,476)
--------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (231) (7,049)
Payment for purchase of CVS, Inc. - (460)
--------------- ----------------
Net cash used in investing activities (231) (7,509)
--------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITES:
Net borrowings under revolving credit facility 859 3482
Principal payments under notes payable (2,473) (500)
Principal payments under capital lease obligations (476) -
Dividends paid - (856)
Issuance of common stock under the employee stock purchase plan - 49
Acquisition of company stock - (161)
---------------- ---------------
Net cash provided by (used in) financing activities (2,090) 2,014
--------------- ----------------
EFFECT OF EXCHANGE RATE ON CASH 3 (51)
--------------- ----------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,559) (8,022)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,681 9,058
--------------- ----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $122 $1,036
=============== ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for income taxes $5 $1,216
=============== ================
Cash paid during the period for interest $876 $32
=============== ================
</TABLE>
4
<PAGE>
AMERICAN STUDIOS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
With respect to the significant accounting policies of American Studios, Inc.
(the "Company"), reference is made to Note 1 of the financial statements in the
Company's Form 10-K for the year ended December 31, 1995. These financial
statements should be read in conjunction with the financial statements and notes
thereto included in such Form 10-K.
In the opinion of the Company's management, the accompanying unaudited interim
financial statements reflect all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of the results for the interim
periods presented. Interim results are not necessarily indicative of results for
the entire year.
Principles of Consolidation - The accompanying financial statements include the
accounts of the Company, its wholly owned subsidiary, ASI Distribution, Inc.
(presently inactive) and its 99.99% owned subsidiary American Studios de Mexico,
S.A. de C.V. All significant intercompany transactions have been eliminated.
5
<PAGE>
NOTE 2 - LONG TERM DEBT AND CAPITAL LEASES
Long-term debt and capital leases obligations are summarized as follows (in
000's):
<TABLE>
<CAPTION>
<S> <C> <C>
Long-term debt: 1996 1995
Revolving credit facility due January 31, 1997, bearing interest
at lender's prime rate, which at June 30, 1996 was 8.25% $ 4,555 $ 3,696
Collateralized note payable, 8.00%, due in monthly installments
of $41,438, including interest through 1998 986 1,191
Collateralized note payable, 8.00%, due in monthly installments
of $54,945, including interest through 1998 1,354 1,623
Notes payable, at prime, in one installment, due on
December 31, 1996 500 500
Collateralized note payable, at prime, due in monthly installments
of $500,000 through 1996 2,170 4,169
Capital lease obligations:
Leases of certain digital imaging technology systems and sales/portrait
order entry stations with lease periods expiring
through 2000, at interest of 7.69% 4,220 4,781
Leases of certain digital imaging technology systems with lease
periods expiring through 1999, at interest of 8.5% 1,664 1,660
Lease of certain copier equipment with lease period expiring in 2001 48
Lease of certain film processing equipment with lease period
expiring in 1998 33 -
Total debt 15,530 17,620
Less current portion due within one year 9,941 7,240
Long-term debt and capital loan obligation, net of current portion $ 5,589 $ 10,380
</TABLE>
Aggregate principal payments for the next five years are as follows:
1996 $ 9,941
1997 2,680
1998 2,212
1999 687
2000 10
Total $ 15,530
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Overview
American Studios, Inc.'s net loss for the second quarter, ending June 30, 1996,
of $699,000 was a 46.7% improvement over the second quarter of 1995's net loss
of $1.3 million. Sales decreased 1.4% to $24.3 million as compared to $24.7
million in 1995. The improvement in operating results is due to increased gross
margin in the Fashion Photography operations, increased efficiency in portrait
processing, along with reduced general and administrative expenses. Management
believes that net sales were negatively impacted by a generally weak retail
market and continued competitive pressures.
The Company incurred a net loss of $4.6 million for the first two quarters of
1996 as compared to a net loss of $2.4 million for the same period in 1995. Net
sales increased 1.3% to $43.9 million as compared to $43.3 million for the same
period in 1995. The larger net loss was due to lower gross profits and higher
general and administrative costs incurred principally in the first quarter of
1996. The increase in net sales was due to an increase in Fashion Photography
sales being partially offset by lower sales in Traveling Studio and Permanent
Studio operations.
Permanent Studio Operations
For the second quarter of 1996 in permanent studio operations, gross margin
improved 0.3% due to improved labor productivity, lower promotion expenses, and
decreased product costs. These costs were substantially offset by a significant
decline in customers per promotion and higher depreciation expense associated
with the digital imaging systems and sales/portrait order systems. Net sales
were negatively impacted by the reduction in customers per promotion but
partially offset by a 7.7% increase in average sales per customer and a 24.6%
increase in the number of promotions. Cost of sales per customer increased 7.3%
in the second quarter of 1996 as compared to the second quarter of 1995. The
higher costs per customer were a result of lower labor productivity due
principally to the decline in customers per promotion.
Traveling Studio Operations
For the second quarter of 1996 in traveling studio operations, gross margin
declined 3.4% as compared to the second quarter of 1995 principally due to a
21.1% decline in customers per promotion and a 5.9% decrease in sales average
per customer. This product line had approximately the same number of promotions
in the second quarter of 1996 as compared to 1995. Net sales decreased 21.9%
principally due to an overall reduction in volume noted above. Cost of sales per
customer decreased 3.0% in the second quarter of 1996 versus the second quarter
of 1995. The cost reductions were achieved by lower promotion expenses, improved
labor productivity, and reduced studio costs.
Fashion Photography Operations
For the second quarter of 1996, fashion photography operations gross margin
improved 34.9% as compared to the second quarter of 1995 due to a 150% increase
in promotions, 10.9% increase in customers per promotion, and a 32.2% reduction
in cost of sales per customer in the second quarter of 1996 over the second
quarter of 1995. The average sales per customer was
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approximately the same in the second quarter of 1996 as in 1995. The reduction
in cost of sales per customer was achieved through reduced supplies expense,
improved labor productivity, and lower recruiting costs.
General and Administrative Expenses - General and administrative expenses were
$3.7 million, or 15.1% of net sales for the second quarter of 1996 as compared
to $4.9 million, or 19.8% of net sales for the second quarter of 1995. The
decrease in general and administrative expenses is principally due to (i) a
result of the Company's restructuring of field and corporate management, (ii)
reduced communications costs, and (iii) lower insurance costs.
Interest Expense - Interest expense was $388,000 for the second quarter of 1996,
as compared to $11,000 for the same period in 1995. The increase in interest
expense for the first quarter of 1996 is primarily due to borrowings on the
Company's revolving credit facility to support working capital needs, and
long-term capital lease and note obligations to finance the Company's digital
imaging and electronic order entry systems.
Income Tax Benefit - During the second quarter of 1995, the Company recognized
income tax benefits totaling approximately $0.9 million relating principally to
operating losses incurred during the period. Historically, during quarters in
which the Company experiences a loss, the Company has recognized income tax
benefits at an effective tax rate of 40%; however, during the second quarter of
1996, there was no income tax benefit due to the Company's utilization of net
operating loss carrybacks as a result of the 1995 net loss.
Seasonality
Like the business of many retailers, the Company's business is seasonal, with
its highest sales historically occurring in the fourth quarter and its lowest
sales historically occurring in the first quarter. The fourth quarter accounted
for approximately 35% of the Company's net sales in 1995 and the first quarter
accounted for approximately 18% of the Company's net sales in 1995.
Liquidity and Capital Resources
Net working capital at June 30, 1996 was a negative $18.9 million; cash was $
0.1 million. During the second quarter of 1996, net working capital increased $
0.4 million over the first quarter of 1996 due to a decrease in borrowings under
the revolving credit facility, a decrease in the current portion of long term
debt, and reduced trade payables which were partially offset by a reduction in
cash, income tax receivable, and inventories.
The Company believes that cash flow from operations and borrowings under its
existing revolving credit facility will be adequate to fund the Company's
operating requirements for 1996. The Company plans to continue to examine
appropriate cost cutting measures, its method of operating in certain Wal-Mart
stores, non-profitable areas of its operations and ways to continue to improve
its operating and portrait processing efficiency. However, the Company's ability
to meet its liquidity needs for 1996 will depend principally on the success of
management's efforts to increase sales and reduce cost.
On November 1, 1995, the Company obtained a new secured revolving credit
facility that expires on January 31, 1997 from its commercial bank lender. The
Company and the commercial bank amended this facility on March 26, 1996 to,
among other things, modify certain financial covenants to facilitate the
Company's compliance therewith and to reduce the maximum amount available
thereunder. The
8
<PAGE>
maximum amount available under this facility, as amended, including amounts
available for letters of credit issued in connection with the Company's worker's
compensation insurance arrangements, is $14.5 million through March 31, 1996,
$13.5 million from April 1, 1996 through May 31, 1996, $13.0 million from June
1, 1996 through July 31, 1996, $11.5 million from August 1, 1996 through October
31, 1996, $9.5 million from November 1, 1996 through November 30, 1996 and $8.5
million from December 1, 1996 until maturity. As of June 30, 1996, the Company
had obligations of approximately $4.6 million under this facility and the bank
had issued letters of credit under this facility in the aggregate amount of
approximately $2.3 million in connection with the Company's workmen's
compensation insurance arrangements. The Company's obligations under the
facility are secured by a first priority security interest in all of the
Company's assets (other than certain equipment used in the Company's digital
imaging systems with regard to which the Company had granted a first security
interest to a vendor prior to obtaining the facility), including any federal and
state tax refunds.
The interest rate under the facility is the bank's prime rate. The Company has
agreed to deposit all of its funds into an account with the bank. The facility
contains certain financial covenants of the Company relating to minimum tangible
net worth and debt to tangible net worth and interest coverage ratios. In
addition, the facility contains covenants of the Company that, among other
things, prohibit capital expenditures or acquisitions without the bank's
consent, limit operating lease expense, restrict the Company's ability to incur
additional debt or liens and require the Company to maintain a majority of its
senior management. At June 30, 1996, the Company was in compliance with the
covenants under the facility.
The Company obtained several long-term leases and a secured long-term note
totaling $9.7 million from several vendors to finance certain equipment
associated with the Company's digital imaging systems and sales/portrait order
entry stations during 1995. At June 30, 1996, the Company had obligations of
approximately $8.2 million under such arrangements discussed above.
In November 1995, the Company entered into a short-term note financing
arrangement with its primary supplier evidenced by a promissory note in the
principal amount of $4.1 million and a security agreement pursuant to which the
Company's obligations under such note are secured by a security interest in all
inventories of supplies sold by such supplier to the Company. The principal
amount of the note is payable in monthly payments of $500,000 beginning March
1996 until paid, together with monthly payments of interest at Citibank's prime
rate on the outstanding principal balance. At June 30, 1996, the Company had
obligations of approximately $2.2 million under the short-term financing
arrangement.
At the end of the second quarter of 1996, total capital expenditures to date
were approximately $500,000. The Company's present expectation is that these and
other capital expenditures will be approximately $750,000 for 1996. This
estimate does not include any expenditures by the Company for any additional
digital imaging systems.
The Company's 1991 and 1992 federal income tax returns are presently being
examined by the Internal Revenue Service. Although the results of such
examination cannot be predicted with certainty, management believes that
additional assessments, if any, arising from this examination will not have a
material effect on the Company's financial position or future results of
operations.
The statements herein as to the Company's beliefs concerning, and plans for, the
future are forward-looking statements that involve a number of risks and
uncertainties. In addition, to the other factors discussed herein, among other
factors that could cause actual results to differ materially are the following
(i) the Company's inability to increase net sales, (ii) the Company's inability
to attract customers in a sufficient number and/or achieve a sufficient sales
average to enable the Company to
9
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offset the costs associated with its operations, (iii) the Company's inability
to control the variable costs of its operations, (iv) the Company's inability to
maintain satisfactory portrait processing operations in terms of costs and
quality, (v) the adverse impact on the Company of strategies pursued by its
competitors and (vi) the unsatisfactory resolution of the claims, investigations
and lawsuits and the examination discussed herein. Other factors that could
cause actual results to differ materially from those set forth in such
forward-looking statements include the risks and uncertainties detailed in the
Company's most recent Form 10-K and other filings with the Securities and
Exchange Commission. All such factors could have an adverse effect on the
Company's results of operations and liquidity needs for 1996.
10
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Maters to a Vote of Security Holders
The annual meeting of shareholders was held in Charlotte, North Carolina on
Thursday, May 16, 1996. Of the 21,433,160 shares of Common Stock outstanding on
the record date, 19,213,280 shares were presented in person or by proxy. Those
shares were voted on the following matters as set forth below:
A. Election of Directors:
Randy J. Bates Bradley P. Cost
For: 18,314,573 For: 18,986,041
Against: 0 Against: 0
Abstentions: 898,707 Abstentions: 227,239
Broker Non-Votes 0 Broker Non-Votes 0
R. Kent Smith John D. Ferrell
For: 18,984,054 For: 19,111,846
Against: 0 Against: 0
Abstentions: 229,226 Abstentions: 101,434
Broker Non-Votes 0 Broker Non-Votes 0
Norman V. Swenson Alan P. Shaw
For: 19,109,859 For: 19,111,846
Against: 0 Against: 0
Abstentions: 103,421 Abstentions: 101,434
Broker Non-Votes 0 Broker Non-Votes 0
Joseph P. Bolger J. Robert Wren, Jr.
For: 19,111,876 For: 18,179,883
Against: 0 Against: 0
Abstentions: 101,404 Abstentions: 1,033,397
Broker Non-Votes 0 Broker Non-Votes 0
B. Approval of certain amendments to the American Studios, Inc. Equity
Compensation Plan:
For: 17,179,876
Against: 1,990,856
Abstentions: 42,548
Broker Non-Votes 0
C. Proposal to ratify the election of Deloitte & Touche, LLP as independent
auditors of the Company for 1996:
For: 19,035,866
Against: 35,420
Abstentions: 141,994
Broker Non-Votes 0
11
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10(a) Non qualified stock option award agreement
under the American Studios, Inc. Equity Compensation Plan
with J. Robert Wren dated November 1, 1995.
Exhibit 10(b) Non qualified stock option award agreement
under the American Studios, Inc. Equity Compensation Plan
with R. Kent Smith dated November 1, 1995.
Exhibit 10(c) Non qualified stock option award agreement
under the American Studios, Inc. Equity Compensation Plan
with R. Kent Smith dated May 17, 1996.
Exhibit 10(d) Employment and Non-compete Agreement by and
between the Company and Shawn W. Poole, dated May 20,
1996.
(b) None.
12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN STUDIOS, INC.
Date: August 13, 1996 By:/s/ J. Robert Wren, Jr.
J. Robert Wren, Jr.
Chief Executive Officer
Date: August 13, 1996 By:/s/ Shawn W. Poole
Shawn W. Poole
Executive Vice President/Chief
Financial Officer (Principal Financial Officer
and Accounting Officer)
13
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NONQUALIFIED STOCK OPTION AWARD AGREEMENT
UNDER THE AMERICAN STUDIOS, INC.
EQUITY COMPENSATION PLAN
THIS AWARD AGREEMENT is entered into effective as of the 1st day of
November, 1995 (the "Effective Date"), by and between AMERICAN STUDIOS, INC., a
North Carolina corporation (the "Company"), and J. ROBERT WREN (the "Optionee").
WHEREAS, the Optionee is a valuable and trusted employee of the
Company; and
WHEREAS, the Committee considers it desirable and in the best interests
of the Company that the Optionee be given an opportunity to acquire a
proprietary interest in the Company as an incentive to advance the interests of
the Company and in recognition of the Optionee's prior contribution to the
Company; and
WHEREAS, the Committee desires to grant the Optionee a nonqualified
stock option to purchase shares of the common stock of the Company (the
"Stock"), in accordance with the American Studios, Inc. Equity Compensation Plan
(the "Plan") adopted by the Company effective as of February 7, 1995
(capitalized terms used herein which are not otherwise defined herein shall have
the meanings ascribed to them under the Plan); and
WHEREAS, this Award Agreement memorializes the grant of a nonqualified
stock option to Optionee that was made on November 1, 1995 (the "Option Grant
Date").
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
1. Grant of Nonqualified Stock Option. The Company hereby grants to the
Optionee on the Option Grant Date a nonqualified stock option (the "Option") to
purchase 150,000 shares of Stock (the "Shares") at the purchase price of $1.375
per share in the manner and subject to the terms and conditions hereinafter
provided.
2. Time of Exercise of Option. The Option shall become exercisable in
full beginning February 1, 1996, and, subject to the termination provisions set
forth in Section 5 below, to the extent the Option has become exercisable, it
may be exercised, in whole or in part, at any time and from time to time but not
later than November 1, 2005 (the "Exercise Period").
3. Method of Exercise. The Option shall be exercised by written notice
directed to the Committee, a form of which is attached hereto as Exhibit A and
incorporated herein by reference, accompanied by payment, in cash or by
certified check payable to the order of the Company, of the price specified in
Section 1 above for the number of Shares specified in the notice. As soon as
practicable following receipt of such notice from the Optionee, the Committee
shall notify the Optionee of any payment or other allocation
<PAGE>
required under Section 4 below. Upon notice from the Committee that the Optionee
has paid the price specified in Section 1 above and paid or made any allocation
required under Section 4 below, the Company shall make immediate delivery of
such Shares; provided that if any law or regulation requires the Company to take
any action with respect to the Shares specified in such notice before the
issuance thereof, then the date of delivery of such Shares shall be extended for
the period necessary to take such action.
4. Payment to Satisfy Withholding Obligations. Notwithstanding any
other provision of this Award Agreement, any rights of the Optionee to exercise
the Option shall be conditioned upon the Optionee forwarding to the Company, in
addition to the price per share specified in Section 1 above, cash payment of an
amount equal to the amount the Company is required by law or regulation of any
governmental authority, whether federal, state or local, domestic or foreign, to
withhold in connection with such exercise of the Option, if any, as determined
by the Committee in its discretion. The amount of such payment shall be
communicated to the Optionee by the Committee as soon as practicable following
the Committee's receipt of the notice specified in Section 3. In lieu of payment
specified in this Section 4, the Committee may in its discretion agree with the
Optionee to another means of satisfying the Company's withholding obligation in
connection with the exercise of the Option.
5. Termination of Option. Except as otherwise stated herein, the
Option shall terminate and cease to be exercisable upon the
first to occur of the following:
(a) the date all Shares available for purchase under this
Award Agreement have been so purchased; or
(b) upon the expiration of the Exercise Period set forth in
Section 2 above.
6. Rights Prior to Exercise of Option. The Optionee shall have no
rights as a shareholder with respect to the Shares except to the extent he has
exercised the Option, paid the Option price for such Shares, and received
delivery of such Shares as herein provided.
7. Non-Transferable. During the Optionee's lifetime, the Option shall
be exercisable only by him and neither it nor any right thereunder shall be
transferable except by will or laws of descent and distribution (and shall be
exercisable by such transferee only as provided in Sections 2 and 5 above), or
be subject to attachment, execution or other similar process. In the event of
any attempt by the Optionee to alienate, assign, pledge, hypothecate or
otherwise dispose of the Option or any right hereunder, except as provided for
herein, or in the event of the levy of any attachment, execution or similar
process upon the rights or interest hereby conferred, the Committee may
terminate the Option by notice to the Optionee, and the Option shall thereupon
become null and void.
8. Binding Effect. This Award Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
9. Gender and Number. All terms used in this Award Agreement shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
context may require.
2
<PAGE>
10. Terms and Conditions of Plan. The terms and conditions included in
the Plan are incorporated by reference herein, and to the extent that any
conflict may exist between any term or provision of this Award Agreement and any
term or provision of the Plan as in effect from time to time, such term or
provision of the Plan shall control.
11. Additional Terms or Conditions. The additional terms and conditions
as set forth on the following riders attached hereto are incorporated herein and
made a part of this Award Agreement as if set forth herein: None .
12. Entire Agreement. This Award Agreement (including the Plan which is
incorporated herein by reference and all additional riders incorporated pursuant
to Section 11 above) sets forth all of the promises, agreements, conditions,
understandings, warranties and representations between the parties hereto with
respect to the Option and the Shares, and there are no promises, agreements,
conditions, understandings, warranties or representations, oral or written,
express or implied, between them with respect to the Option or the Shares other
than as set forth therein or herein. This Award Agreement supersedes and
replaces any and all prior agreements between the parties hereto with respect to
the Option or the Shares. This Award Agreement is, and is intended by the
parties to be, an integration of any and all prior agreements or understandings,
oral or written, with respect to the Option and the Shares.
13. Invalid or Unenforceable Provision. The invalidity or
unenforceability of any particular provision of this Award Agreement shall not
affect the other provisions hereof, and this Award Agreement shall be construed
in all respects as if such invalid or unenforceable provision were omitted.
14. Governing Law. This Award Agreement shall be construed and enforced
in accordance with the laws of North Carolina.
15. Miscellaneous.
(a) Neither the granting of the Option, the exercise thereof
nor any other provision of this Award Agreement shall be construed as conferring
upon the Optionee any right to continue in the employment of the Company, or as
interfering with or restricting in any way the right of such corporations to
terminate such employment at any time.
(b) The Company, the Committee and any employees or agents
thereof are relieved from any liability for the non-issuance or non-transfer, or
any delay in the issuance or transfer, of any of the Shares which results from
the inability of the Company to obtain, or in any delay in obtaining, from each
regulatory body having jurisdiction all requisite authority to issue or transfer
the Stock of the Company in satisfaction of the Option if counsel for the
Company deems such authorization necessary for the lawful issuance or transfer
of any such Shares.
(c) The Optionee represents and warrants that no Shares
acquired by exercise of the Option shall be sold or otherwise disposed of in
violation of any federal or state securities law or
3
<PAGE>
regulation. Certificates evidencing the Shares issuable upon exercise of the
Option may contain a legend regarding resale limitations, including the
requirement that the Optionee deliver an opinion of counsel to the Company.
(d) The Option shall be exercised in accordance with the terms
of the Plan and such administrative regulations as the Committee may from time
to time adopt. All decisions of the Committee with respect to the
interpretation, construction and application of the Plan and/or this Award
Agreement shall be conclusive and binding upon the Optionee and all other
persons.
(e) The Committee shall be entitled to amend this Award
Agreement at any time provided that the Award Agreement, as amended, is
consistent with the provisions of the Plan.
(f) The Optionee represents, warrants and covenants that he
has not relied upon the Committee, the Company, or an employee or agent of the
Company with respect to any tax consequences related to the grant or exercise of
the Option, or the disposition of Shares purchased pursuant to exercise of the
Option. The Optionee acknowledges that, as a result of the grant and/or exercise
of the Option, the Optionee may incur substantial tax liability. The Optionee
assumes full responsibility for all such consequences and the filing of all tax
returns and elections the Optionee may be required to or find desirable to file
in connection therewith. In the event any valuation of the Option or Shares
purchased pursuant to its exercise must be made under federal or state tax laws
and such valuation affects any return or election of the Company, the Optionee
agrees that the Company may determine such value and that the Optionee will
observe any determination so made by the Company in all returns and elections
filed by the Optionee.
(Signatures on Following Page)
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Award Agreement
to be executed effective as of the day and year first above written.
AMERICAN STUDIOS, INC.
By: /s/ Robert Kent Smith
R. Kent Smith - President
OPTIONEE:
/s/ J. Robert Wren, Jr. (SEAL)
Print Name: J. Robert Wren, Jr.
5
<PAGE>
EXHIBIT A
American Studios, Inc.
11001 Park Charlotte Blvd.
Charlotte, NC 28273
Attention: Stock Option/Compensation Committee
Re: Exercise of Option
Dear Committee Members:
Pursuant to the terms and conditions of the Nonqualified Stock Option
Award Agreement effective as of _________________, 19__ (the "Award Agreement")
between _____________________________ and American Studios, Inc. (the
"Company"), I hereby agree to purchase _______ shares of the Common Stock of the
Company and tender payment in full for such shares in accordance with the terms
of the Award Agreement.
I hereby reaffirm that the representations and warranties made in the
Award Agreement are true and correct on the date hereof as if made on the date
hereof.
Very truly yours,
------------------------------------
Print Name:__________________________
Date:________________
6
<PAGE>
NONQUALIFIED STOCK OPTION AWARD AGREEMENT
UNDER THE AMERICAN STUDIOS, INC.
EQUITY COMPENSATION PLAN
THIS AWARD AGREEMENT is entered into effective as of the 1st day of
November, 1995 (the "Effective Date"), by and between AMERICAN STUDIOS, INC., a
North Carolina corporation (the "Company"), and R. KENT SMITH (the "Optionee").
WHEREAS, the Optionee is a valuable and trusted employee of the
Company; and
WHEREAS, the Committee considers it desirable and in the best interests
of the Company that the Optionee be given an opportunity to acquire a
proprietary interest in the Company as an incentive to advance the interests of
the Company and in recognition of the Optionee's prior contribution to the
Company; and
WHEREAS, the Committee desires to grant the Optionee a nonqualified
stock option to purchase shares of the common stock of the Company (the
"Stock"), in accordance with the American Studios, Inc. Equity Compensation Plan
(the "Plan") adopted by the Company effective as of February 7, 1995
(capitalized terms used herein which are not otherwise defined herein shall have
the meanings ascribed to them under the Plan); and
WHEREAS, this Award Agreement memorializes the grant of a nonqualified
stock option to Optionee that was made on November 1, 1995 (the "Option Grant
Date").
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
1. Grant of Nonqualified Stock Option. The Company hereby grants to the
Optionee on the Option Grant Date a nonqualified stock option (the "Option") to
purchase 31,000 shares of Stock (the "Shares") at the purchase price of $1.375
per share in the manner and subject to the terms and conditions hereinafter
provided.
2. Time of Exercise of Option. The Option shall become exercisable in
full beginning February 1, 1996, and, subject to the termination provisions set
forth in Section 5 below, to the extent the Option has become exercisable, it
may be exercised, in whole or in part, at any time and from time to time but not
later than November 1, 2005 (the "Exercise Period").
3. Method of Exercise. The Option shall be exercised by written notice
directed to the Committee, a form of which is attached hereto as Exhibit A and
incorporated herein by reference, accompanied by payment, in cash or by
certified check payable to the order of the Company, of the price specified in
Section 1 above for the number of Shares specified in the notice. As soon as
practicable following receipt of such notice from the Optionee, the Committee
shall notify the Optionee of any payment or other allocation required under
Section 4 below. Upon notice from the Committee that the Optionee has paid the
price specified in Section 1 above and paid or made any allocation
<PAGE>
required under Section 4 below, the Company shall make immediate delivery of
such Shares; provided that if any law or regulation requires the Company to take
any action with respect to the Shares specified in such notice before the
issuance thereof, then the date of delivery of such Shares shall be extended for
the period necessary to take such action.
4. Payment to Satisfy Withholding Obligations. Notwithstanding any
other provision of this Award Agreement, any rights of the Optionee to exercise
the Option shall be conditioned upon the Optionee forwarding to the Company, in
addition to the price per share specified in Section 1 above, cash payment of an
amount equal to the amount the Company is required by law or regulation of any
governmental authority, whether federal, state or local, domestic or foreign, to
withhold in connection with such exercise of the Option, if any, as determined
by the Committee in its discretion. The amount of such payment shall be
communicated to the Optionee by the Committee as soon as practicable following
the Committee's receipt of the notice specified in Section 3. In lieu of payment
specified in this Section 4, the Committee may in its discretion agree with the
Optionee to another means of satisfying the Company's withholding obligation in
connection with the exercise of the Option.
5. Termination of Option. Except as otherwise stated herein, the Option
shall terminate and cease to be exercisable upon the first to occur of the
following:
(a) the date all Shares available for purchase under this
Award Agreement have been so purchased; or
(b) upon the expiration of the Exercise Period set forth in
Section 2 above.
6. Rights Prior to Exercise of Option. The Optionee shall have no
rights as a shareholder with respect to the Shares except to the extent he has
exercised the Option, paid the Option price for such Shares, and received
delivery of such Shares as herein provided.
7. Non-Transferable. During the Optionee's lifetime, the Option shall
be exercisable only by him and neither it nor any right thereunder shall be
transferable except by will or laws of descent and distribution (and shall be
exercisable by such transferee only as provided in Sections 2 and 5 above), or
be subject to attachment, execution or other similar process. In the event of
any attempt by the Optionee to alienate, assign, pledge, hypothecate or
otherwise dispose of the Option or any right hereunder, except as provided for
herein, or in the event of the levy of any attachment, execution or similar
process upon the rights or interest hereby conferred, the Committee may
terminate the Option by notice to the Optionee, and the Option shall thereupon
become null and void.
8. Binding Effect. This Award Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
9. Gender and Number. All terms used in this Award Agreement shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
context may require.
2
<PAGE>
10. Terms and Conditions of Plan. The terms and conditions included in
the Plan are incorporated by reference herein, and to the extent that any
conflict may exist between any term or provision of this Award Agreement and any
term or provision of the Plan as in effect from time to time, such term or
provision of the Plan shall control.
11. Additional Terms or Conditions. The additional terms and conditions
as set forth on the following riders attached hereto are incorporated herein and
made a part of this Award Agreement as if set forth herein: None .
12. Entire Agreement. This Award Agreement (including the Plan which is
incorporated herein by reference and all additional riders incorporated pursuant
to Section 11 above) sets forth all of the promises, agreements, conditions,
understandings, warranties and representations between the parties hereto with
respect to the Option and the Shares, and there are no promises, agreements,
conditions, understandings, warranties or representations, oral or written,
express or implied, between them with respect to the Option or the Shares other
than as set forth therein or herein. This Award Agreement supersedes and
replaces any and all prior agreements between the parties hereto with respect to
the Option or the Shares. This Award Agreement is, and is intended by the
parties to be, an integration of any and all prior agreements or understandings,
oral or written, with respect to the Option and the Shares.
13. Invalid or Unenforceable Provision. The invalidity or
unenforceability of any particular provision of this Award Agreement shall not
affect the other provisions hereof, and this Award Agreement shall be construed
in all respects as if such invalid or unenforceable provision were omitted.
14. Governing Law. This Award Agreement shall be construed and enforced
in accordance with the laws of North Carolina.
15. Miscellaneous.
(a) Neither the granting of the Option, the exercise thereof
nor any other provision of this Award Agreement shall be construed as conferring
upon the Optionee any right to continue in the employment of the Company, or as
interfering with or restricting in any way the right of such corporations to
terminate such employment at any time.
(b) The Company, the Committee and any employees or agents
thereof are relieved from any liability for the non-issuance or non-transfer, or
any delay in the issuance or transfer, of any of the Shares which results from
the inability of the Company to obtain, or in any delay in obtaining, from each
regulatory body having jurisdiction all requisite authority to issue or transfer
the Stock of the Company in satisfaction of the Option if counsel for the
Company deems such authorization necessary for the lawful issuance or transfer
of any such Shares.
(c) The Optionee represents and warrants that no Shares
acquired by exercise of the Option shall be sold or otherwise disposed of in
violation of any federal or state securities law or
3
<PAGE>
regulation. Certificates evidencing the Shares issuable upon exercise of the
Option may contain a legend regarding resale limitations, including the
requirement that the Optionee deliver an opinion of counsel to the Company.
(d) The Option shall be exercised in accordance with the terms
of the Plan and such administrative regulations as the Committee may from time
to time adopt. All decisions of the Committee with respect to the
interpretation, construction and application of the Plan and/or this Award
Agreement shall be conclusive and binding upon the Optionee and all other
persons.
(e) The Committee shall be entitled to amend this Award
Agreement at any time provided that the Award Agreement, as amended, is
consistent with the provisions of the Plan.
(f) The Optionee represents, warrants and covenants that he
has not relied upon the Committee, the Company, or an employee or agent of the
Company with respect to any tax consequences related to the grant or exercise of
the Option, or the disposition of Shares purchased pursuant to exercise of the
Option. The Optionee acknowledges that, as a result of the grant and/or exercise
of the Option, the Optionee may incur substantial tax liability. The Optionee
assumes full responsibility for all such consequences and the filing of all tax
returns and elections the Optionee may be required to or find desirable to file
in connection therewith. In the event any valuation of the Option or Shares
purchased pursuant to its exercise must be made under federal or state tax laws
and such valuation affects any return or election of the Company, the Optionee
agrees that the Company may determine such value and that the Optionee will
observe any determination so made by the Company in all returns and elections
filed by the Optionee.
(Signatures on Following Page)
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Award Agreement
to be executed effective as of the day and year first above written.
AMERICAN STUDIOS, INC.
By: /s/ J. Robert Wren, Jr.
J. Robert Wren, Jr., Chief Executive Officer
OPTIONEE:
/s/ R. Kent Smith (SEAL)
Print Name: R. Kent Smith
5
<PAGE>
EXHIBIT A
American Studios, Inc.
11001 Park Charlotte Blvd.
Charlotte, NC 28273
Attention: Stock Option/Compensation Committee
Re: Exercise of Option
Dear Committee Members:
Pursuant to the terms and conditions of the Nonqualified Stock Option
Award Agreement effective as of _________________, 19__ (the "Award Agreement")
between _____________________________ and American Studios, Inc. (the
"Company"), I hereby agree to purchase _______ shares of the Common Stock of the
Company and tender payment in full for such shares in accordance with the terms
of the Award Agreement.
I hereby reaffirm that the representations and warranties made in the
Award Agreement are true and correct on the date hereof as if made on the date
hereof.
Very truly yours,
------------------------------------
Print Name:__________________________
Date:________________
6
<PAGE>
NONQUALIFIED STOCK OPTION AWARD AGREEMENT
UNDER THE AMERICAN STUDIOS, INC.
EQUITY COMPENSATION PLAN
THIS AWARD AGREEMENT is entered into effective as of the 17th day of
May, 1996 (the "Effective Date"), by and between AMERICAN STUDIOS, INC., a North
Carolina corporation (the "Company"), and R. KENT SMITH (the "Optionee").
WHEREAS, the Optionee is a valuable and trusted employee of the
Company; and
WHEREAS, the Committee considers it desirable and in the best interests
of the Company that the Optionee be given an opportunity to acquire a
proprietary interest in the Company as an incentive to advance the interests of
the Company and in recognition of the Optionee's prior contribution to the
Company; and
WHEREAS, the Committee desires to grant the Optionee a nonqualified
stock option to purchase shares of the common stock of the Company (the
"Stock"), in accordance with the American Studios, Inc. Equity Compensation Plan
(the "Plan") adopted by the Company effective as of February 7, 1995
(capitalized terms used herein which are not otherwise defined herein shall have
the meanings ascribed to them under the Plan); and
WHEREAS, this Award Agreement memorializes the grant of a nonqualified
stock option to Optionee that was made on May 17, 1996 (the "Option Grant
Date").
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
1. Grant of Nonqualified Stock Option. The Company hereby grants to the
Optionee on the Option Grant Date a nonqualified stock option (the "Option") to
purchase 69,000 shares of Stock (the "Shares") at the purchase price of $1.375
per share in the manner and subject to the terms and conditions hereinafter
provided.
2. Time of Exercise of Option. The Option shall become exercisable in
full beginning August 17, 1996, and, subject to the termination provisions set
forth in Section 5 below, to the extent the Option has become exercisable, it
may be exercised, in whole or in part, at any time and from time to time but not
later than May 17, 2006 (the "Exercise Period").
3. Method of Exercise. The Option shall be exercised by written notice
directed to the Committee, a form of which is attached hereto as Exhibit A and
incorporated herein by reference, accompanied by payment, in cash or by
certified check payable to the order of the Company, of the price specified in
Section 1 above for the number of Shares specified in the notice. As soon as
practicable following receipt of such notice from the Optionee, the Committee
shall notify the Optionee of any payment or other allocation required under
Section 4 below. Upon notice from the Committee
<PAGE>
that the Optionee has paid the price specified in Section 1 above and paid or
made any allocation required under Section 4 below, the Company shall make
immediate delivery of such Shares; provided that if any law or regulation
requires the Company to take any action with respect to the Shares specified in
such notice before the issuance thereof, then the date of delivery of such
Shares shall be extended for the period necessary to take such action.
4. Payment to Satisfy Withholding Obligations. Notwithstanding any
other provision of this Award Agreement, any rights of the Optionee to exercise
the Option shall be conditioned upon the Optionee forwarding to the Company, in
addition to the price per share specified in Section 1 above, cash payment of an
amount equal to the amount the Company is required by law or regulation of any
governmental authority, whether federal, state or local, domestic or foreign, to
withhold in connection with such exercise of the Option, if any, as determined
by the Committee in its discretion. The amount of such payment shall be
communicated to the Optionee by the Committee as soon as practicable following
the Committee's receipt of the notice specified in Section 3. In lieu of payment
specified in this Section 4, the Committee may in its discretion agree with the
Optionee to another means of satisfying the Company's withholding obligation in
connection with the exercise of the Option.
5. Termination of Option. Except as otherwise stated herein, the Option
shall terminate and cease to be exercisable upon the first to occur of the
following:
(a) the date all Shares available for purchase under this
Award Agreement have been so purchased; or
(b) upon the expiration of the Exercise Period set forth in
Section 2 above.
6. Rights Prior to Exercise of Option. The Optionee shall have no
rights as a shareholder with respect to the Shares except to the extent he has
exercised the Option, paid the Option price for such Shares, and received
delivery of such Shares as herein provided.
7. Non-Transferable. During the Optionee's lifetime, the Option shall
be exercisable only by him and neither it nor any right thereunder shall be
transferable except by will or laws of descent and distribution (and shall be
exercisable by such transferee only as provided in Sections 2 and 5 above), or
be subject to attachment, execution or other similar process. In the event of
any attempt by the Optionee to alienate, assign, pledge, hypothecate or
otherwise dispose of the Option or any right hereunder, except as provided for
herein, or in the event of the levy of any attachment, execution or similar
process upon the rights or interest hereby conferred, the Committee may
terminate the Option by notice to the Optionee, and the Option shall thereupon
become null and void.
8. Binding Effect. This Award Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
9. Gender and Number. All terms used in this Award Agreement shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
context may require.
2
<PAGE>
10. Terms and Conditions of Plan. The terms and conditions included in
the Plan are incorporated by reference herein, and to the extent that any
conflict may exist between any term or provision of this Award Agreement and any
term or provision of the Plan as in effect from time to time, such term or
provision of the Plan shall control.
11. Additional Terms or Conditions. The additional terms and conditions
as set forth on the following riders attached hereto are incorporated herein and
made a part of this Award Agreement as if set forth herein: None .
12. Entire Agreement. This Award Agreement (including the Plan which is
incorporated herein by reference and all additional riders incorporated pursuant
to Section 11 above) sets forth all of the promises, agreements, conditions,
understandings, warranties and representations between the parties hereto with
respect to the Option and the Shares, and there are no promises, agreements,
conditions, understandings, warranties or representations, oral or written,
express or implied, between them with respect to the Option or the Shares other
than as set forth therein or herein. This Award Agreement supersedes and
replaces any and all prior agreements between the parties hereto with respect to
the Option or the Shares. This Award Agreement is, and is intended by the
parties to be, an integration of any and all prior agreements or understandings,
oral or written, with respect to the Option and the Shares.
13. Invalid or Unenforceable Provision. The invalidity or
unenforceability of any particular provision of this Award Agreement shall not
affect the other provisions hereof, and this Award Agreement shall be construed
in all respects as if such invalid or unenforceable provision were omitted.
14. Governing Law. This Award Agreement shall be construed and enforced
in accordance with the laws of North Carolina.
15. Miscellaneous.
(a) Neither the granting of the Option, the exercise thereof
nor any other provision of this Award Agreement shall be construed as conferring
upon the Optionee any right to continue in the employment of the Company, or as
interfering with or restricting in any way the right of such corporations to
terminate such employment at any time.
(b) The Company, the Committee and any employees or agents
thereof are relieved from any liability for the non-issuance or non-transfer, or
any delay in the issuance or transfer, of any of the Shares which results from
the inability of the Company to obtain, or in any delay in obtaining, from each
regulatory body having jurisdiction all requisite authority to issue or transfer
the Stock of the Company in satisfaction of the Option if counsel for the
Company deems such authorization necessary for the lawful issuance or transfer
of any such Shares.
3
<PAGE>
(c) The Optionee represents and warrants that no Shares
acquired by exercise of the Option shall be sold or otherwise disposed of in
violation of any federal or state securities law or regulation. Certificates
evidencing the Shares issuable upon exercise of the Option may contain a legend
regarding resale limitations, including the requirement that the Optionee
deliver an opinion of counsel to the Company.
(d) The Option shall be exercised in accordance with the terms
of the Plan and such administrative regulations as the Committee may from time
to time adopt. All decisions of the Committee with respect to the
interpretation, construction and application of the Plan and/or this Award
Agreement shall be conclusive and binding upon the Optionee and all other
persons.
(e) The Committee shall be entitled to amend this Award
Agreement at any time provided that the Award Agreement, as amended, is
consistent with the provisions of the Plan.
(f) The Optionee represents, warrants and covenants that he
has not relied upon the Committee, the Company, or an employee or agent of the
Company with respect to any tax consequences related to the grant or exercise of
the Option, or the disposition of Shares purchased pursuant to exercise of the
Option. The Optionee acknowledges that, as a result of the grant and/or exercise
of the Option, the Optionee may incur substantial tax liability. The Optionee
assumes full responsibility for all such consequences and the filing of all tax
returns and elections the Optionee may be required to or find desirable to file
in connection therewith. In the event any valuation of the Option or Shares
purchased pursuant to its exercise must be made under federal or state tax laws
and such valuation affects any return or election of the Company, the Optionee
agrees that the Company may determine such value and that the Optionee will
observe any determination so made by the Company in all returns and elections
filed by the Optionee.
(Signatures on Following Page)
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Award Agreement
to be executed effective as of the day and year first above written.
AMERICAN STUDIOS, INC.
By:_/s/ J Robert Wren, Jr.____________
J. Robert Wren, Jr., Chief Executive Officer
OPTIONEE:
By:/s/ R. Kent Smith_____________(SEAL)
Print Name: R. Kent Smith______________
5
<PAGE>
EXHIBIT A
American Studios, Inc.
11001 Park Charlotte Blvd.
Charlotte, NC 28273
Attention: Stock Option/Compensation Committee
Re: Exercise of Option
Dear Committee Members:
Pursuant to the terms and conditions of the Nonqualified Stock Option
Award Agreement effective as of _________________, 19__ (the "Award Agreement")
between _____________________________ and American Studios, Inc. (the
"Company"), I hereby agree to purchase _______ shares of the Common Stock of the
Company and tender payment in full for such shares in accordance with the terms
of the Award Agreement.
I hereby reaffirm that the representations and warranties made in the
Award Agreement are true and correct on the date hereof as if made on the date
hereof.
Very truly yours,
------------------------------------
Print Name:__________________________
Date:________________
6
<PAGE>
EMPLOYMENT AND NONCOMPETE AGREEMENT
THIS EMPLOYMENT AND NONCOMPETE AGREEMENT ("Agreement"), made and
entered into as of the 20th day of May 1996, by and between Shawn W. Poole, an
individual resident of Lincolnton, North Carolina ("Employee"), and AMERICAN
STUDIOS, INC., a North Carolina corporation with its principal executive offices
located in Charlotte, North Carolina (the "Company").
W I T N E S S E T H
WHEREAS, the Company desires to employ Employee as an Executive Vice
President and its Chief Financial Officer and Employee desires to be employed by
the Company in this position.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants contained herein, the parties hereto agree as follows:
1. Employment. Subject to the terms and conditions stated herein, and
in consideration of Employee's obligations and covenants, including without
limitation, those obligations and covenants set forth in Section 10 hereof, the
Company agrees to employ Employee on an active and full-time basis, and Employee
accepts such employment, as Executive Vice President and Chief Financial Officer
of the Company, subject to the order, supervision and direction of the Board of
Directors of the Company (the "Board of Directors") and the Chief Executive
Officer of the Company (the "CEO").
2. Duties. Employee shall serve the Company as Executive Vice President
and Chief Financial Officer and shall devote his full business time, skill and
best efforts to the business of the Company and faithfully perform such
executive, administrative and supervisory duties as may be prescribed by the
Board of Directors, the CEO. Employee shall act at all times in compliance, in
all material respects, with all policies, rules and decisions adopted from time
to time by the Board of Directors of which Employee shall have received written
notice. The Board of Directors and the CEO shall deal with the Employee in good
faith and shall not require that Employee be required to relocate his residence,
travel to the extent that he must spend more nights away from home than are
reasonably required to further the Company's business, or perform tasks which
would be demeaning or degrading to one in his position.
3. Term of Employment. The term of Employee's employment by the Company
hereunder shall commence as of the date hereof and shall continue for a period
of three (3) years after such commencement date (the "Term of Employment").
4. Base Compensation. The base annual compensation rate
<PAGE>
to be paid to Employee for the services to be rendered hereunder ("Base Rate")
throughout the Term of Employment, except to the extent adjusted as provided
below, shall be One Hundred and Twenty-Five Thousand Dollars ($125,000.00),
payable in equal biweekly installments, subject to applicable federal and state
income and social security tax withholding requirements. Employee's Base Rate
may be reviewed from time to time by the CEO and the Board of Directors or a
committee thereof and adjusted upward as Employee's performance, the performance
of the Company and other pertinent factors warrant.
5. Stock Options, Insurance Cost, Moving Expenses and Loan.
(a) Employee will be granted an option to purchase 100,000
shares of the Company's common stock on the date of commencement of employment,
having an exercise price equal to the fair market value, as defined in the
Company's Equity Compensation Plan, of the Company's common stock on the date of
grant. Such option shall be treated as a nonqualified stock option for federal
income tax purposes. Such option shall terminate on a date that is 10 years
following the date of grant; provided, however, that if Employee's employment
with the Company is terminated prior to such date, in which event such option
shall terminate three months following such termination, unless such termination
occurs as a result of employee's death or disability in which event such options
shall terminate 12 months following such termination. Such options shall become
exercisable in four equal annual increments on each of the first, second, third
and fourth anniversaries of the date of grant, unless there shall be a "change
of control" as such term shall be defined in the document granting such option,
at which time the option shall become exercisable.
(b) The Company agrees to pay to Employee, monthly, the excess
of Employee's cost of health care insurance from his previous employer under
COBRA over the cost Employee would have paid for similar coverage under the
Company's health care insurance program, until Employee becomes eligible for
coverage under the Company's health care insurance program.
(c) The Company agrees to pay to or on behalf of Employee the
actual cost of the sales commission on Employee's residence in Lincolnton, NC as
well as the actual moving costs associated with a move from such residence in
Lincolnton to a location closer to the Company's headquarters in Charlotte, NC;
provided, however, that such move shall take place between June 30, 1996 and
December 31, 1998 and that such sales commission and moving costs shall not
exceed $20,000 in the aggregate.
(d) On the date of commencement of employment the
2
<PAGE>
Company shall lend Employee the sum of $7,500, interest free, for a period of
one year.
6. Termination Without Cause. The Board of Directors or the CEO may
terminate Employee's employment at any time, without cause, but in the event of
a termination other than a Termination for Cause, as hereinafter defined, the
Company will pay, either in a lump sum or in 26 equal bi-weekly payments, at the
option of the Company, the then Base Rate to Employee as additional
compensation. In the event the Company does not offer to renew this Agreement at
the end of the Term of Employment upon the same or better terms and conditions,
such termination of this Agreement and Employee's employment shall be deemed a
termination other than a Termination for Cause.
If Employee's employment with ASI is terminated at any time following a Change
in Control Event, as defined below, or if Employee's employment by ASI is
terminated prior to a Change in Control Event at the request of any individual
or entity acquiring ownership and control of ASI, Employee shall be entitled to
receive, in a lump sum payable within ten (10) days of such termination, two (2)
times the Employee's then Base Rate as additional compensation.
Each of the following events shall constitute a Change in Control Event:
(bullet) Any person or entity of whatsoever nature, including without
limitation an individual, corporation, partnership, limited liability
company or trust, either singly or together with that person's or
entity's affiliates or associates (as "affiliate" or "associate" are
defined in connection with Rule 12b-2 of the Securities Exchange Act of
1934) is or becomes the beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934), directly or indirectly, of
securities of ASI representing fifty percent or more of the then
outstanding securities entitled to vote in the election of directors of
ASI and in any filing made under Section 13(d) of the Securities
Exchange Act of 1934 or otherwise states an intention to acquire or
exercise control of ASI or to otherwise influence management.
(bullet) A public announcement is made of a tender or exchange offer by any
person or entity, including without limitation an individual, company,
corporation, partnership, limited liability company or trust, for fifty
percent or more of the outstanding shares of ASI entitled to vote in
the election of directors, and the Board of Directors approves or fails
to oppose that tender or exchange offer in its statements in Schedule
14D-9 under the Exchange Act.
3
<PAGE>
(bullet) The stockholders of ASI approve a merger or consolidation of ASI with
any other corporation or partnership (or, if no such approval is
required, the consummation of such a merger or consolidation of ASI),
other than a merger or consolidation that would result in the
securities of ASI entitled to vote in the election of directors
outstanding immediately before the consummation thereof continuing to
represent (either by remaining outstanding or by being converted into
voting shares of the surviving entity or of a parent of the surviving
entity) fifty percent or more of the combined voting power of the
voting shares of the surviving entity (or its parent) outstanding
immediately after that merger or consolidation.
7. Termination for Cause.
(a) The Board of Directors or the CEO shall have the right at
any time, without advance notice, to terminate Employee's employment for cause,
as hereinafter defined ("Termination for Cause").
(b) Termination for Cause shall mean termination because of
Employee's death, inability to perform his duties hereunder, theft from the
Company, embezzlement of the Company's funds, falsification of the Company's
records, fraud committed against the Company, commission of a felonious criminal
act involving the Company or while engaged in conduct of the Company's business,
incompetence due to the use of or reporting to work under the influence of
alcohol, narcotics, other unlawful drugs or controlled substances, legal
incapacity, insanity, act or acts involving dishonesty or misconduct which have
or may reasonably be expected to have a material adverse effect on the business
or reputation of the Company, breach of fiduciary duty to the Company, willful
and substantial failure to perform stated duties or lawful directives of the
Board of Directors, the CEO or other officer of the Company designated by the
CEO, or material breach of any provision of this Agreement, including without
limitation voluntary termination of this Agreement.
(c) In the event of a Termination for Cause, Employee shall
have no right thereafter to receive any compensation or other benefits from the
Company, except for COBRA, rights under stock option grants.
(d) The provisions of Section 10 hereof shall continue to be
binding on the parties hereto notwithstanding the termination without cause or
Termination for Cause of Employee.
4
<PAGE>
8. Fringe Benefits. Employee shall be entitled to receive such fringe
benefits, including vacation and employee benefit plans, if any, as are set
forth on Exhibit A hereto.
9. Expenses. The Company shall reimburse Employee for those expenses
that are incurred by him in connection with the performance of his duties under
this Agreement, are reasonably related to the business of the Company and have
been approved, generally or specifically, verbally or in writing, by the CEO.
10. Noncompetition, Secrecy and Inventions.
(a) Employee specifically acknowledges and agrees that his
employment with the Company will bring him in personal contact with accounts and
customers of the Company, and will enable him to acquire valuable information as
to the nature and character of the business of the Company and the requirements
of the accounts and customers of the Company. Employee acknowledges and agrees
that in the event he were to become employed by some other employer or enter the
same or similar business as the Company on his own or in conjunction with others
in competition with the Company, such personal contacts with the customers and
accounts of the Company and the knowledge of such valuable information would
give to Employee an unfair competitive advantage.
Throughout the Term of Employment and for a period of two (2)
years thereafter (Employee's Term of Employment and the two-year period
thereafter, together, the "Term of the Covenants"), Employee shall not, directly
or indirectly, as principal, agent, manager, employee, partner, shareholder,
director, officer, consultant or otherwise, participate in or engage in the
Lines of Business, as hereinafter defined; provided, however, that Employee may
own up to one percent (1%) of the outstanding securities of any corporation
which is engaged in the Lines of Business, so long as such securities are traded
on a national securities exchange or are included in the National Association of
Securities Dealers Quotation System. "Lines of Business" for purposes of this
Section 10 shall mean the provision of portrait photography services through
itinerant or traveling operations or permanent studios or any other portrait
photography service, the processing or developing of photographic film in
connection with such provision and any other lines of business in which the
Company may engage during the Term of Employment.
(b) In performing the covenants set forth in this Section 10
(all of the covenants of Employee set forth in this Section 10, together, the
"Covenants Not to Compete"), Employee shall not, without limitation, during the
Term of the Covenants
5
engage in the Lines of Business with any of the following:
1. any client, account or customer of the Company, or any subsidiary or
affiliate of the Company, that has done business with the Company or
such affiliate or subsidiary within two (2) years of the date of any
alleged competitive act by Employee;
2. any client, account or customer of the Company, or any subsidiary or
any affiliate of the Company, that has transacted any business with
the Company within the twelve months preceding the date of this
Agreement;
3. Wal-Mart Stores, Inc.;
4. any affiliate of Wal-Mart Stores, Inc., including without limitation
Sam's Wholesale Club, HYPERMART*USA and Wal-Mart SuperCenters
("Wal-Mart Affiliate");
5. PCA International, Inc.;
6. CPI Corp.;
7. Lifetouch National School Studios, Inc.;
8. any Wal-Mart Stores, Inc. store that does business with the Company
during the Term of the Covenants;
9. any Wal-Mart Affiliate store that does business with the Company
during the Term of the Covenants;
10. any Wal-Mart Stores, Inc. store with which the Board of Directors
reasonably expects to do business during the Term of the Covenants;
11. any Wal-Mart Affiliate store with which the Board of Directors
reasonably expects to do business during the Term of the Covenants;
12. the Wal-Mart Stores, Inc. stores and Wal-Mart Affiliate stores with
which the Company is doing business as of the date of this Agreement;
13. Cifra, S.A. de C.V.;
14. Aurrera, S.A. de C.V., a subsidiary of Cifra, S.A. de C.V.;
15. any other subsidiary of Cifra, S.A. de C.V.;
16. any employee or former employee of the Company, whose employment with
the Company terminated less than two (2) years prior to Employee's
association with such employee or former employee, within a ten-mile
radius of any Wal-Mart Stores, Inc. store or any store in which the
Company has engaged in the Lines of Business within six (6) months
prior to Employee's engaging in the Lines of Business; or
17. any person or entity in the geographic areas listed in paragraph 10(c)
hereinbelow.
(c) In performing the Covenants Not to Compete, Employee shall
not, without limitation, during the Term of the Covenants engage in the Lines of
Business in any of the following
6
<PAGE>
geographic areas:
1. The United States of America;
2. The State of Alabama;
3. The State of Arizona;
4. The State of Arkansas;
5. The State of California;
6. The State of Colorado;
7. The State of Connecticut;
8. The State of Delaware;
9. The District of Columbia;
10. The State of Florida;
11. The State of Georgia;
12. The State of Idaho
13. The State of Illinois;
14. The State of Indiana;
15. The State of Iowa;
16. The State of Kansas;
17. The State of Kentucky;
18. The State of Louisiana;
19. The State of Maine;
20. The State of Maryland;
21. The State of Massachusetts;
22. The State of Michigan;
23. The State of Minnesota;
24. The State of Mississippi;
25. The State of Missouri;
26. The State of Montana
27. The State of Nebraska;
28. The State of Nevada
29. The State of New Hampshire;
30. The State of New Jersey;
31. The State of New Mexico
32. The State of New York;
33. The State of North Carolina;
34. The State of North Dakota;
35. The State of Ohio;
36. The State of Oklahoma;
37. The State of Oregon;
38. The State of Pennsylvania;
39. The Commonwealth of Puerto Rico;
40. The State of Rhode Island;
41. The State of South Carolina;
42. The State of South Dakota;
43. The State of Tennessee;
44. The State of Texas;
45. The State of Utah
46. The State of Vermont;
47. The State of Virginia;
48. The State of Washington;
49. The State of West Virginia;
7
<PAGE>
50. The State of Wisconsin;
51. The State of Wyoming;
52. Mexico; or
53. Counties in each State of the United States where
the Company has customers.
(d) As applied to the categories of persons, firms and
entities and geographic areas covered by the Covenants Not to Compete, the
provisions of paragraphs 10(b) and 10(c), respectively, shall be completely
severable and independent, and any invalidity or unenforceability thereof as
applied to any of such persons, firms or entities or geographic areas shall not
affect the validity or enforceability thereof as applied to any one or more of
the other persons, firms or entities or geographic areas.
(e) Throughout the Term of the Covenants, Employee shall not
directly or indirectly cause or attempt to cause any supplier or customer of the
Company, or any of its subsidiaries or affiliates, or any governmental body or
public agency, not to do business with the Company or such subsidiary or
affiliate or to transfer all or part of its business from the Company, or such
subsidiary or affiliate, or otherwise interfere or attempt to interfere with any
business relationship between the Company, or any of its subsidiaries or
affiliates, and any of such suppliers, customers, government bodies or public
agencies, unless directed by the Board of Directors of the Company to so do.
(f) Employee acknowledges that irreparable injury will result
to the Company from any breach of the Covenants Not to Compete and there is no
adequate remedy at law to redress a breach or threatened breach of the Covenants
Not to Compete. As a result of the foregoing, Employee agrees that the parties
seeking to enforce any of such provisions shall be entitled to an injunction or
other equitable relief against Employee to restrain him from such breach, and
Employee waives any claim or defense that the Company has an adequate remedy at
law for any such breach; provided, however, that nothing contained herein shall
prohibit the Company, or any subsidiary or affiliate of the Company, from
pursuing any other remedy it may have, including without limiting the generality
of the foregoing the recovery of damages.
(g) If any court determines that any provision of this Section
10, or any part thereof, is invalid or unenforceable, the remainder of this
Section 10 shall not thereby be affected and shall be given full effect, without
regard to the invalid portions. If any court determines that any provision of
this Section 10, or any part thereof, is unenforceable because of the duration
or geographic scope of such provision, the parties agree
8
<PAGE>
that such court shall have the power to reduce the duration or scope of such
provision, as the case may be, and the parties agree to request the court to
exercise such power, and, in its reduced form, such provision shall then be
enforceable and shall be enforced. The provisions of this Section 10 shall
survive the termination of this Agreement, for whatever reason.
(h) At all times, both during and after the termination of his
employment, Employee shall keep and retain in confidence and shall not, without
the prior written consent of the Company, disclose to any persons, firm or
corporation or otherwise use for his own benefit or the benefit of another any
of the proprietary, confidential or secret information or trade secrets of the
Company. Further, Employee and the Company agree to keep confidential the terms
and conditions of this Agreement except for such disclosure as may be required
(i) in the event of a breach of this Agreement, (ii) compulsion by law or court
order, or (iii) as may be required by any applicable provision of law.
(i) In consideration of employment, and the compensation paid
to Employee as an employee of the Company, Employee hereby recognizes as the
exclusive property of, and assigns, transfers and conveys to, the Company
without further consideration each invention, discovery or improvement
(hereinafter collectively referred to as "inventions") made, conceived,
developed or first reduced to practice by Employee (whether alone or jointly
with others) during the Term of Employment or within one (1) year thereafter
which relates in any way to Employee's work at the Company or any of its
subsidiaries or affiliates. Employee will communicate to the Company current
written records of all such inventions, which records shall be and remain the
property of the Company. Upon request by the Company, Employee will at any time
execute documents assigning to the Company, or its designees, any such invention
or any patent application or patent granted therefor, and will execute any
papers relating thereto. Employee also will give all reasonable assistance to
the Company, or its designee, regarding any litigation or controversy in
connection with his inventions, patent applications, or patents, all expenses
incident thereto to be assumed by the Company.
11. Governing Law. This Agreement shall be construed and governed under
the laws of the State of North Carolina.
12. Binding Nature. Except as expressly provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors and assigns. The obligations and covenants of
Employee are personal in nature and, as such, are not assignable by him.
9
<PAGE>
13. Entire Agreement; Prior Oral Agreement; Amendment. This Agreement
contains the entire agreement of the parties with respect to the matters set
forth herein and supersedes all prior written and prior or contemporaneous oral
agreements or understandings of the parties hereto. This Agreement confirms and
sets forth the prior oral agreement of the parties as to the terms and
conditions of Employee's employment by the Company stated herein, including
without limitation, the obligations and covenants of Employee set forth in
Section 10 hereof, and Employee's agreement to enter into a written employment
agreement with the Company, as of the date his employment by the Company
commenced, stating such terms and conditions. This Agreement may be changed or
amended only by an agreement in writing signed by both parties hereto.
14. Severability, Invalidity or Unenforceability. The severability,
invalidity or unenforceability of any paragraph or part of any paragraph herein
shall not in any way affect the validity or enforceability of any other
paragraph or any part of any other paragraph.
15. Prior Agreements and Covenants of Employee. Employee hereby
warrants and represents that he is not a party to any agreement or binding
obligation, oral or written, that would prevent his employment by the Company,
and Employee's execution of this Agreement and his fulfillment of his duties and
obligations hereunder do not and will not violate the provisions of any
agreement, contract, loan document or other binding written or oral obligation.
16. Notices. Any notice, offer, acceptance or other document required
or permitted to be given pursuant to any provisions of this Agreement shall be
in writing, signed by or on behalf of the person giving the same, and (as
elected by the person giving such notice) delivered by hand or mailed to the
parties at the following addresses by registered or certified mail, postage
prepaid, return receipt requested, or by a third party company or governmental
entity providing delivery services in the ordinary course of business, which
guarantees delivery on a specified date:
If to Employee: Shawn W. Poole
811 N. Oak Street
Lincolnton, NC 28092
If to the Company: American Studios, Inc.
11001 Park Charlotte Blvd.
Charlotte, North Carolina 28273
Attention: J. Robert Wren, Jr.
10
<PAGE>
With copies to: Elizabeth G. Wren
PETREE STOCKTON, L.L.P.
3500 One First Union Center
Charlotte, North Carolina 28202
or to such other address as any party hereto may designate by complying with the
provisions of this Section 16.
Such notice shall be deemed given (i) as of the date of written
acknowledgment by Employee or an officer of the Company if delivered by hand,
(ii) seventy-two (72) hours after deposit in United States mail if sent by
registered or certified mail or (iii) on the delivery date guaranteed by the
third party delivery service if sent by such service.
Rejection or other refusal to accept or inability to deliver because of
changed address of which no notice has been received shall not affect the date
upon which the notice is deemed to have been given pursuant hereto.
Notwithstanding the foregoing, no notice of change of address shall be effective
until the date of receipt hereof.
IN WITNESS WHEREOF, Shawn W. Poole has set his hand and seal hereto and
American Studios, Inc. has caused this Agreement to be executed and sealed in
its name by its duly authorized officials as of the day and year first above
written.
Employee:
/S/ Shawn W. Poole______ (SEAL)
SHAWN W. POOLE
Company:
AMERICAN STUDIOS, INC.
By: /s/ J. Robert Wren, Jr._____
J. Robert Wren, Jr.
CEO
11
<PAGE>
EXHIBIT A
FRINGE BENEFITS
1. Employee shall be entitled to fifteen (15) days paid vacation in
during the first year of employment and twenty (20) days paid vacation each year
of employment thereafter. Vacation time is not cumulative.
2. Employee shall be entitled to sick leave in accordance with the
plans and procedures established by the Board of Directors.
3. Employee shall be entitled to such life insurance and disability
insurance or other disability benefits, if any, as are provided by the Company
to its employees from time to time.
4. Employee shall be entitled to receive benefits as are afforded to
other similarly situated employees.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> JAN-1-1996 JAN-1-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996
<CASH> 564 122
<SECURITIES> 0 0
<RECEIVABLES> 2,024 733
<ALLOWANCES> 0 0
<INVENTORY> 2,604 2,568
<CURRENT-ASSETS> 5,638 3,609
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 40,018 36,216
<CURRENT-LIABILITIES> 24,957 22,515
<BONDS> 0 0
0 0
0 0
<COMMON> 21 21
<OTHER-SE> 8,790 8,091
<TOTAL-LIABILITY-AND-EQUITY> 40,018 36,216
<SALES> 19,597 43,915
<TOTAL-REVENUES> 19,597 43,915
<CGS> 18,517 39,305
<TOTAL-COSTS> 18,517 39,305
<OTHER-EXPENSES> 4,487 8,328
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 450 838
<INCOME-PRETAX> (3,857) (4,556)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (3,857) (4,556)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,857) (4,556)
<EPS-PRIMARY> (0.18) (0.21)
<EPS-DILUTED> (0.18) (0.21)
</TABLE>
