<PAGE> 1
As filed with the Securities & Exchange Commission on December 3, 1996
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10
TEXAS EQUIPMENT CORPORATION
(Name of Small Business Issuer in its charter)
NEVADA
(State or other jurisdiction of incorporation or
organization)
62-1459870
(IRS Employer Identification Number)
c/o Mr. Paul Condit, President
Texas Equipment Co., Inc.
1305 Hobbs Highway,
Seminole, Texas 79360
(Address of principal executive offices)
1-915-758-3643
(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act:
<TABLE>
<CAPTION>
Title of Each Class Name of Each Exchange on Which
to be so registered Each Class is to be Registered
------------------- ------------------------------
<S> <C>
------------------- ------------------------------
------------------- ------------------------------
</TABLE>
Securities to be registered under Section 12(g) of the Act:
Common stock, par value $0.001 per share
----------------------------------------
Exhibit Index is at Page 22
------
1
<PAGE> 2
TABLE OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF BUSINESS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
OPERATIONS
ITEM 3. DESCRIPTION OF PROPERTY
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND
CONTROL PERSONS
ITEM 6. EXECUTIVE COMPENSATION
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
ITEM 8. DESCRIPTION OF SECURITIES
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE
REGISTRANT'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
ITEM 2. LEGAL PROCEEDINGS
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
PART III
ITEM 1. INDEX TO EXHIBITS
2
<PAGE> 3
PART F/S
FINANCIAL STATEMENTS
3
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Certified Public Accountants F-2
Balance Sheets F-3
Statements of Operations F-5
Statements of Stockholders' Equity F-6
Statements of Cash Flow F-7
Notes to Financial Statements F-9
Financial Schedules F-22
Schedule I - Consolidating Balance Sheet, December 31, 1995 F-23
Schedule II - Consolidating Statement of Operations, Year Ended December 31, 1995 F-25
Schedule III - Consolidating Balance Sheet, September 30, 1996 (Unaudited) F-26
Schedule IV - Consolidating Statement of Operations, Nine Months Ended
September 30, 1996 (Unaudited) F-28
</TABLE>
F-1
<PAGE> 5
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Texas Equipment Co., Inc.
1305 Hobbs Highway
Seminole, Texas 79360
We have audited the accompanying balance sheets of Texas Equipment Co., Inc. as
of December 31, 1995 and 1994, and the related statements of operations,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above presents fairly, in
all material respects, the financial position of Texas Equipment Co., Inc. as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The consolidating financial statements
included on Schedules I and II are presented for the purpose of additional
analysis and are not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
KILLMAN, MURRELL AND COMPANY, P.C.
Odessa, Texas
November 11, 1996
F-2
<PAGE> 6
TEXAS EQUIPMENT CO., INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- SEPTEMBER 30,
1994 1995 1996
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash and Temporary Cash Investments $ 508,463 $ 250,031 $ 1,221,060
Accounts Receivable -
Trade 261,116 213,777 738,359
Employees and Other 24,043 14,051 20,889
Inventories, at the lower of cost (principally
specific identification and
average cost) or market value - Note 2 6,003,182 6,439,238 7,272,077
------------ ------------ ------------
TOTAL CURRENT ASSETS 6,796,804 6,917,097 9,252,385
------------ ------------ ------------
LAND, BUILDINGS AND
EQUIPMENT, at cost - Note 3 1,761,131 2,182,355 2,125,413
Less Accumulated Depreciation (569,109) (737,475) (804,985)
------------ ------------ ------------
NET LAND, BUILDINGS AND
EQUIPMENT 1,192,022 1,444,880 1,320,428
------------ ------------ ------------
OTHER ASSETS
Finance Receivables - Note 4 492,824 693,674 839,694
Cash Surrender Value of Insurance 200,986 228,550 240,939
Other Assets 83,885 73,585 109,305
Goodwill, net of accumulated
amortization of $28,604,
$41,318, and $50,853,
respectively 162,094 149,380 139,845
Related Party Receivables 118,525 117,542 132,018
------------ ------------ ------------
TOTAL OTHER ASSETS 1,058,314 1,262,731 1,461,801
------------ ------------ ------------
TOTAL ASSETS $ 9,047,140 $ 9,624,708 $ 12,034,614
============ ============ ============
</TABLE>
The accompanying notes are an
integral part of these financial
statements.
(Continued)
F-3
<PAGE> 7
TEXAS EQUIPMENT CO., INC.
BALANCE SHEETS
(CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- SEPTEMBER 30,
1994 1995 1996
---------- ---------- -------------
(Unaudited)
<S> <C> <C> <C>
CURRENT LIABILITIES
Notes Payable - Note 8 $ 91,914 $ 300,000 $ 300,000
Current Maturities of
Long-Term Debt - Note 9 680,979 271,447 267,130
Accounts Payable Trade -
John Deere Company 2,261,094 3,096,801 3,769,240
Other 576,234 436,952 854,419
Accrued Expenses - Note 10 353,065 308,226 422,057
Customer Deposits 54,966 -- 72,035
Deferred Tax Liability - Note 7 423,300 377,300 377,300
------------ ------------ ------------
TOTAL CURRENT LIABILITIES 4,441,552 4,790,726 6,062,181
------------ ------------ ------------
LONG-TERM DEBT, net of current
maturities - Note 9 1,438,889 1,195,378 974,430
DEFERRED TAX LIABILITY - Note 7 104,800 152,000 152,000
COMMITMENTS AND CONTINGENCIES -
Notes 4, 6, 11 and 12 -- -- --
------------ ------------ ------------
TOTAL LIABILITIES 5,985,241 6,138,104 7,188,611
------------ ------------ ------------
STOCKHOLDERS' EQUITY
Preferred Stock, No Par Value.
Authorized 3,000,000; Issued
and Outstanding 424,999 in 1994 and
596,305 in 1995 and 1996 424,999 596,305 596,305
Common Stock, No Par Value.
Authorized 1,000,000; Issued and
Outstanding 100,000 100,000 100,000 100,000
Paid in Capital -- -- 927,613
Retained Earnings 2,633,377 2,886,776 3,318,562
------------ ------------ ------------
3,158,376 3,583,081 4,942,480
Less Treasury Shares - 40,000
Shares of Common Stock, at cost (96,477) (96,477) (96,477)
------------ ------------ ------------
TOTAL STOCKHOLDERS' EQUITY 3,061,899 3,486,604 4,846,003
------------ ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 9,047,140 $ 9,624,708 $ 12,034,614
============ ============ ============
</TABLE>
The accompanying notes are an
integral part of these financial
statements.
F-4
<PAGE> 8
TEXAS EQUIPMENT CO., INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
---------------------------- -----------------------------
1994 1995 1995 1996
------------ ------------ ------------ -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES $ 20,964,570 $ 25,031,608 $ 18,132,323 $ 19,507,714
COST OF REVENUES 18,046,846 21,648,257 15,887,604 16,949,797
------------ ------------ ------------ ------------
GROSS PROFIT 2,917,724 3,383,351 2,244,719 2,557,917
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
Commissions, Salaries, and
Employee Benefits 1,647,859 1,821,616 1,313,093 1,080,664
Amortization and Depreciation 173,418 181,080 135,811 114,651
Collection and Bad Debt Expense 84,998 139,505 102,238 70,696
Other Operating Expenses 873,578 793,698 630,908 679,771
------------ ------------ ------------ ------------
Total Selling, General and
Administrative Expenses 2,779,853 2,935,899 2,182,050 1,945,782
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest Income 187,720 181,008 150,874 110,974
Interest Expense (237,212) (243,122) (187,613) (75,792)
Other Income 14,680 31,355 43,221 15,566
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 103,059 416,693 69,151 662,883
INCOME TAXES - Note 7 44,428 163,294 35,000 231,097
------------ ------------ ------------ ------------
NET INCOME $ 58,631 $ 253,399 $ 34,151 $ 431,786
============ ============ ============ ============
</TABLE>
The accompanying notes are an
integral part of these financial
statements.
F-5
<PAGE> 9
TEXAS EQUIPMENT CO., INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK TOTAL
--------------- ----------------- PAID IN RETAINED TREASURY STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS SHARES EQUITY
------ ------ ------ ------ ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993 224,910 $ 224,910 100,000 $ 100,000 $ -- $2,574,746 $ (96,477) $2,803,179
Stock Bonus Plan Issuance 200,089 200,089 -- -- -- -- -- 200,089
Net Income -- -- -- -- -- 58,631 -- 58,631
------- ---------- ------- ---------- ---------- ---------- ---------- ----------
Balance, December 31, 1994 424,999 424,999 100,000 100,000 -- 2,633,377 (96,477) 3,061,899
Stock Bonus Plan Issuance 171,306 171,306 -- -- -- -- -- 171,306
Net Income -- -- -- -- -- 253,399 -- 253,399
------- ---------- ------- ---------- ---------- ---------- ---------- ----------
Balance, December 31, 1995 596,305 596,305 100,000 100,000 -- 2,886,776 (96,477) 3,486,604
Parent Company Contribution-
September 17, 1996 -- -- -- -- 927,613 -- -- 927,613
Net Income (Unaudited) -- -- -- -- -- 431,786 -- 431,786
------- ---------- ------- ---------- ---------- ---------- ---------- ----------
Balance, September 30, 1996 596,305 $ 596,305 100,000 $ 100,000 $ 927,613 $3,318,562 $ (96,477) $4,846,003
======= ========== ======= ========== ========== ========== ========== ==========
(Unaudited)
</TABLE>
The accompanying notes are an
integral part of these financial statements
F-6
<PAGE> 10
TEXAS EQUIPMENT CO., INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
---------------------------------- ------------------------
1994 1995 1995 1996
------------- ---------- ------------ ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Income $ 58,631 $ 253,399 $ 34,151 $ 431,786
Adjustments to Reconcile Net Income
to Net Cash from Operating Activities
Amortization and Depreciation 173,418 181,080 135,811 114,651
Loss on Disposal of Assets 11,728 -- -- 3,502
Deferred Taxes (92,800) 1,200 -- --
Increase in Finance Receivable (97,073) (200,850) (151,977) (146,020)
Increase in Preferred Stock 200,089 171,306 -- --
Changes in Current Assets and Liabilities
(Increase) Decrease in Accounts
Receivable 445,455 57,331 (618,407) (531,420)
(Increase) Decrease in Inventories 1,002,860 (436,056) (479,192) (832,839)
Increase (Decrease) in Accounts
Payable (2,179,130) 696,425 1,281,177 1,089,906
Increase (Decrease) in Accrued
Liabilities (14,835) (44,839) 88,773 113,831
Increase (Decrease) in Customer
Deposits 52,368 (54,966) 212,201 72,035
------------ ------------ ------------ ------------
NET CASH FLOW PROVIDED
(USED) BY OPERATING
ACTIVITIES (439,289) 624,030 502,537 315,432
------------ ------------ ------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of Land, Buildings and Equipment (152,895) (421,224) (343,072) (30,336)
Proceeds from Sale of Equipment 47,214 -- -- 46,170
Increase in Cash Surrender Value of Insurance (28,579) (27,564) (20,673) (12,389)
(Increase) Decrease in Related Party Receivables (66,999) 983 60,662 (14,476)
(Increase) Decrease in Other Assets (80,540) 10,300 7,999 (35,720)
------------ ------------ ------------ ------------
NET CASH FLOWS (USED) BY
INVESTING ACTIVITIES (281,799) (437,505) (295,084) (46,751)
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an
integral part of these financial
statements.
(Continued)
F-7
<PAGE> 11
TEXAS EQUIPMENT CO., INC.
STATEMENTS OF CASH FLOWS
(CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
---------------------------- ----------------------------
1994 1995 1995 1996
---------- ------------ ------------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
CASH FLOW FROM FINANCING ACTIVITIES
Proceed from Note Borrowings $ 2,048,243 $ 1,203,569 $ 617,839 $ 410,279
Repayment of Note Borrowings (1,150,704) (1,648,526) (882,721) (635,544)
Capital Contribution -- -- -- 927,613
------------ ------------ ------------ ------------
Net Cash Flow Provided (Used) By
Financing Activities 897,539 (444,957) (264,882) 702,348
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH 176,451 (258,432) (57,429) 971,029
CASH AT THE BEGINNING OF THE PERIOD 332,012 508,463 508,463 250,031
------------ ------------ ------------ ------------
CASH AT THE END OF THE PERIOD $ 508,463 $ 250,031 $ 451,034 $ 1,221,060
============ ============ ============ ============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash Paid During the Period For:
Interest Expense $ 238,576 $ 199,549 $ 129,678 $ 87,484
============ ============ ============ ============
Income Taxes $ 225,533 $ 33,240 $ 37,228 $ 203,699
============ ============ ============ ============
</TABLE>
The accompanying notes are an
integral part of these financial
statements.
F-8
<PAGE> 12
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 1: NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Texas Equipment Co., Inc. ("TEC"), a Texas corporation, is a retailer of John
Deere and other agricultural equipment with its headquarters in Seminole, Texas.
TEC's market area is approximately one hundred (100) square miles surrounding
Seminole, Texas, which includes large tracts of lands in the South Plains of
Texas and in Eastern New Mexico. In excess of ninety percent (90%) of equipment
sales are made to customers participating in agriculture; therefore, TEC has a
concentration of customers in a geographic area and in a single industry and is
tied to a sole supplier (John Deere) for a significant portion of its new
equipment purchases.
The summary of significant accounting policies of TEC is presented to assist in
understanding TEC's financial statements. The financial statements and notes are
representations of TEC's management, who is responsible for their integrity and
objectivity. These accounting policies conform to generally accepted accounting
principles and have been consistently applied in the preparation of the
financial statements.
Accounting Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Inventories
Inventories are stated at the lower of cost or market value. Cost is determined
using the specific identification method for new and used agricultural equipment
and average cost for parts.
Buildings and Equipment
Depreciation of buildings and equipment is provided principally on the
straight-line method using estimated useful lives ranging from five to forty
years.
Major renewals and betterments are added to the property accounts while the cost
of repairs and maintenance is charged to operating expenses in the period
incurred. Cost of assets retired or otherwise disposed of and the applicable
accumulated depreciation are removed from the accounts, and the resultant gain
or loss, if any, is reflected in operations.
Cash Surrender Value of Insurance
The insurance policies carried on the lives of current and former officers of
TEC had a face value of $1,800,000 at December 31, 1995 and September 30, 1996.
Borrowings against the cash surrender values as of these dates were $170,104 and
$181,240, respectively.
Goodwill Amortization
Goodwill is being amortized on a straight-line basis over a period of fifteen
(15) years.
(Continued)
F-9
<PAGE> 13
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 1: NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED):
Finance Receivables
TEC has entered into retail finance agreements with two credit corporations
whereby TEC's customers can finance selected purchases from TEC, and TEC
guarantees a portion of the financed balance. A portion of the financed balance
is not remitted to TEC but is held by the finance companies to insure the
payment of amounts financed. At such time as the amounts are repaid to the
credit corporation, the withheld amounts may be remitted to TEC.
John Deere Payable
John Deere Company provides various inventory financing arrangements for its
dealers, and, at times the payment terms extended beyond a twelve month period;
however, all amounts due the John Deere Company are reflected as current
liabilities since the debt was incurred to acquire inventory.
Income Taxes
TEC records income tax expense using the liability method of accounting for
deferred income taxes. Under the liability method, deferred tax assets and
liabilities are recognized for the expected future tax consequences of temporary
differences between the financial statement and income tax bases of TEC's assets
and liabilities. An allowance is recorded when it is more likely than not that
any or all of a deferred tax asset will not be realized. The provision for
income taxes includes taxes currently payable plus the net change during the
year in deferred tax assets and liabilities recorded by TEC.
Concentration of Credit Risk
TEC places its cash and temporary cash investments with high credit quality
financial institutions. At times such investments may be in excess of FDIC
insurance limits. At December 31, 1995 and September 30, 1996, the deposit
exceeding FDIC insurance limits were $758,000 and $1,653,000, respectively.
Fair Value of Financial Instruments
Unless otherwise indicated, the fair values of all reported assets and
liabilities which represent financial instruments (none of which are held for
trading purposes) approximate the carrying values of such amounts.
Capital Stock
TEC's articles of incorporation provide for the following stock issues:
- Two classes of common stock with no par value
- One million (1,000,000) authorized voting common shares
- One million (1,000,000) authorized non-voting common shares
- Three million (3,000,000) authorized, no par value, non-voting
preferred shares, with a dividend rate of six percent (6%) per
annum, noncumulative
(Continued)
F-10
<PAGE> 14
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 1: NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED):
At December 31, 1994 and 1995, and September 30, 1996, TEC had issued no
non-voting common shares and the Board of Directors of TEC had not declared
dividends on the non-voting preferred stock.
Cash Flow Statement
TEC considers cash and temporary cash investments as cash equivalents for
purposes of the statement of cash flows.
NOTE 2: INVENTORIES
At December 31, 1994 and 1995, and September 30, 1996 (unaudited) inventories
consisted of:
<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C>
New Equipment $ 3,051,095 $ 3,301,682 $ 3,327,106
Used Equipment 1,197,708 1,426,894 2,335,095
Parts 1,754,379 1,710,662 1,609,876
----------- ----------- -----------
$ 6,003,182 $ 6,439,238 $ 7,272,077
=========== =========== ===========
</TABLE>
Substantially all of the inventories are pledged as security for accounts
payable to John Deere or various notes payable.
NOTE 3: LAND, BUILDINGS AND EQUIPMENT
At December 31, 1994 and 1995, and September 30, 1996 (unaudited), land,
buildings and equipment consisted of:
<TABLE>
<CAPTION>
1994 1995 1996
------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C>
Land and Buildings $ 853,590 $ 1,146,818 $ 1,159,411
Vehicles 435,548 435,548 348,271
Furniture and Fixtures 282,996 383,032 394,869
Equipment and Tools 188,997 216,957 222,862
------------ ------------ ------------
1,761,131 2,182,355 2,125,413
Less Accumulated Depreciation (569,109) (737,475) (804,985)
------------ ------------ ------------
Net $ 1,192,022 $ 1,444,880 $ 1,320,428
============ ============ ============
Depreciation Expense $ 160,705 $ 168,366 $ 105,116
============ ============ ============
</TABLE>
F-11
<PAGE> 15
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 4: FINANCE RECEIVABLES
At December 31, 1994 and 1995, and September 30, 1996 (unaudited), the finance
receivables were as follows:
<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C>
John Deere Credit $ 310,667 $ 462,817 $ 634,527
Agricredit Acceptance 182,157 230,857 205,167
---------- ---------- ----------
$ 492,824 $ 693,674 $ 839,694
========== ========== ==========
</TABLE>
The applicable outstanding financed balances for each program were as follows:
<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C>
John Deere Credit $21,735,745 $24,459,979 $21,823,102
Agricredit Acceptance 5,363,557 5,144,230 4,216,035
----------- ----------- -----------
$27,099,302 $29,604,209 $26,039,137
=========== =========== ===========
</TABLE>
In accordance with credit agreements, these finance companies withhold one
percent (1%) of each financed contract accepted from TEC. When the finance
company experiences a loss on a contract, the loss is charged against TEC's
finance receivable. TEC's credit risk is limited to the finance receivables;
however, on an annual basis, the finance receivable is compared to the total
outstanding credit balances and if the finance receivable is greater than the
required amount (3% to 4% of outstanding credit balance), the overage may be
remitted to TEC.
NOTE 5: EMPLOYEE BENEFIT PLANS
Effective January 1, 1993, TEC adopted its "Stock Bonus Plan" (the "Plan").
Contributions to the Plan are at the discretion of the employer subject to
certain limitations imposed by the federal tax code. The Plan covers
substantially all full time employees and the covered employees become vested in
the employer's contribution at the rate of twenty percent (20%) per year after
three years of service. TEC's shareholders authorized the issuance of preferred
stock in 1993 for the exclusive use in funding the Plan. Contributions to the
Plan aggregated $200,089 and $171,306 in 1994 and 1995, respectively.
In March, 1994, TEC adopted a flexible health benefit plan (a cafeteria plan)
which covers substantially all full time employees on the 90th day following
commencement of employment. The health benefit plan is a minimum funded plan
with specific and aggregate stop loss insurance provided for to limit the
overall exposure to TEC. The specific stop loss is $20,000 per employee at
December 31, 1995 and September 30, 1996. The expense associated with the health
benefit plan aggregated $18,142 and $208,346 for 1994 and 1995, respectively.
On September 20, 1994, TEC adopted the "TEXAS EQUIPMENT COMPANY, INC. 401(K)
PLAN" (the "401(k) Plan") which covers all employees that have attained the age
of twenty-one (21) years and have one year of service. Contributions by TEC are
discretionary, and TEC has made no contributions to the 401(k) Plan from
inception to September 30, 1996.
F-12
<PAGE> 16
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 6: DEALER AGREEMENTS
TEC has entered into the following dealer agreements with the John Deere
Company:
- John Deere Agricultural Dealer Agreement
- John Deere Commercial Products Dealer Agreement
- John Deere Lawn and Garden Dealer Agreement
- John Deere Lawn and Grounds Care Sales Center Agreement
- John Deere Agricultural Dealer Leasing Agreement
- John Deere Agricultural Dealer Finance Agreement
These dealer agreements can be, in general, terminated by the death of the major
shareholder of TEC, close out or sale of a substantial portion of TEC's
business, default by TEC under any chattel mortgage or other security agreement
with the John Deere Company, TEC receiving a written termination notice from
John Deere Company at least one hundred eighty (180) days prior to the effective
date of notification, or mutual consent of TEC and John Deere Company.
For the years ended December 31, 1994 and 1995, sales of John Deere new
equipment, parts and warranty services aggregated 46% and 55% of total revenue,
respectively.
In addition, TEC has the following dealer agreements in effect:
- Farm Plan - FPC Financial
- K-Imports, Inc.
- Wil-Rich, a division of TIC United Corp.
- Yetter Manufacturing Company
- Hardi Inc.
- NEDA Financial, Ltd., L.P.
- West Texas Lee Co., Inc.
- AGCO Marketing Group
(Continued)
F-13
<PAGE> 17
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 6: DEALER AGREEMENTS (CONTINUED)
These agreements include various provisions, including the guaranty of payment
by TEC and termination clauses. The agreement with FPC Financial (the "Farm
Plan") provides TEC a method to collect accounts receivables for parts, service
and small whole good sales in three days; however, TEC has guaranteed the
repayment to FPC Finance for its customers included under the merchant
authorized and special guaranty farm plan programs. At December 31, 1995 and
September 30, 1996, TEC was contingently liable under these programs in the
amount of $109,752 and $83,145, respectively.
NOTE 7: INCOME TAXES
At December 31, 1994 and 1995, the income tax expense (benefit) consists of the
following components:
<TABLE>
<CAPTION>
1994 1995
--------- --------
<S> <C> <C>
Current $ 137,228 $162,094
Deferred (92,800) 1,200
--------- --------
Total Income Expense $ 44,428 $163,294
========= ========
</TABLE>
The following reconciles income tax expense reported in the statements of
operations to income taxes that would be obtained by applying the statutory tax
rate (34%) to income before income taxes:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Expected Income Tax Expense
at 34% $ 35,040 $141,676
Officers' Insurance 4,597 8,677
Penalties and Other 4,791 12,941
-------- --------
$ 44,428 $163,294
======== ========
</TABLE>
The deferred tax liability in the accompanying balance sheets consists of the
following components:
<TABLE>
<CAPTION>
Current 1994 1995
-------- --------
<S> <C> <C>
Inventories $407,300 $430,300
Other Deferred Liabilities 84,400 32,600
Other Deferred Assets (68,400) (85,600)
-------- --------
Total Current 423,300 377,300
-------- --------
Long-Term
Accumulated Depreciation 51,700 55,600
Goodwill Amortization 39,200 50,800
Other 13,900 45,600
-------- --------
Total Long-Term 104,800 152,000
-------- --------
Total $528,100 $529,300
======== ========
</TABLE>
F-14
<PAGE> 18
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 8: NOTES PAYABLE
A summary of notes payable at December 31, 1994 and 1995, and September 30, 1996
(unaudited), is as follows:
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
Note payable to a credit corporation, $ 41,089 $ -- $ --
payable in monthly installments of $1,700, due
March 1, 1995, secured by equipment
10% note payable to a bank, payable on demand 50,825 -- --
and if no demand made, February 10, 1995,
secured by inventory, accounts receivable,
and equipment
11.25% note payable to a bank, payable on demand -- 300,000 300,000
or if no demand is made then $100,000 principal
reduction at December 15, 1996, secured by
equipment, vehicles, and company stock
------------ ------------ ------------
$ 91,914 $ 300,000 $ 300,000
============ ============ ============
</TABLE>
NOTE 9: LONG-TERM DEBT
A summary of long-term debt at December 31, 1994 and 1995, and September 30,
1996 (unaudited), is as follows:
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
(Unaudited)
<C> <C> <C> <C>
9.9% note payable to a credit corporation $ 18,368 $ 6,427 $ --
payable in two installments of $5,700 before
November 1, 1993 and monthly installments of
$1,102 including interest due June 1, 1996,
secured by equipment
9.9% note payable to a credit corporation 72,142 5,876 --
payable in monthly installments of $4,439
including interest due January 1, 1996,
secured by equipment
12% note payable to an individual payable in 4,500 -- --
two annual installments of $5,000 and $4,500,
respectively, plus interest, due January 5, 1995,
secured by equipment
</TABLE>
(Continued)
F-15
<PAGE> 19
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 9: LONG-TERM DEBT (CONTINUED)
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
6.5% note payable to a bank, payable upon demand $ 200,000 $ -- $ --
or if no demand on June 17, 1995, secured by
equipment
9.9% note payable to a credit corporation, 11,660 -- --
payable in monthly installments of $405, including
interest, due October 15, 1997, secured by equipment
8.4% note payable to a credit corporation, payable in 29,430 26,044 14,671
monthly installments of $619, including interest, due
December 1, 1998, secured by equipment
10.4% variable interest rate note payable to a credit 1,113 -- --
corporation, payable in monthly installments of $564,
including interest, due June 1, 1995, secured by
equipment
12% note payable to an individual, payable in monthly 33,989 30,397 28,262
installments of $600, including interest due on March 1,
2002, secured by company stock
12% note payable to an individual, payable in monthly 36,686 33,466 31,268
installments of $600, including interest, due on
January 1, 2003, secured by company stock
10.5% note payable to individuals, payable in five 10,000 5,000 5,000
annual installments of $5,000, plus interest, due
December 1, 1997, secured by real estate
3.0% note payable to a credit corporation, payable in 11,872 5,790 1,949
monthly installments of $490, including interest,
due January 14, 1997, secured by vehicle
8.5% note payable to a credit corporation, payable in 6,282 1,232 --
monthly installments of $417, due on April 15, 1996,
secured by vehicle
8.9% note payable to a credit corporation, payable in 14,141 7,111 --
monthly installments of $622, including interest,
due on January 15, 1997, secured by vehicle
</TABLE>
(Continued)
F-16
<PAGE> 20
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 9: LONG-TERM DEBT (CONTINUED)
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
8.9% note payable to a credit corporation, payable in $ 71,443 $ -- $ --
annual installments of $18,195, including interest,
due March 20, 1999, secured by equipment
9.2% note payable to a credit corporation, payable in 113,729 13,027 9,002
annual installments of $147,127, including interest,
due March 20, 1999, secured by equipment
10% note payable to a bank, payable in monthly 51,364 23,089 11,489
installments of $1,450, including interest, due
August 1, 1999, secured by real estate
12.5% note payable to a bank, payable in monthly 12,444 -- --
installments of $750, including interest, due
July 8, 2019, secured by real estate
Base rate (11.25% in 1995) note payable to a bank, 363,088 275,135 205,525
payable in monthly installments of $10,000, including
interest, due June 16, 1998, secured by real estate,
inventory, and accounts receivable
9.9% note payable to a credit corporation, 22,715 -- --
payable in monthly installments of $1,237, including
interest, due September 1, 1996, secured by equipment
8.4% note payable to a credit corporation, payable in 648 -- --
monthly installments of $653, including interest, due
March 1, 1995, secured by equipment
8.0% note payable to a credit corporation, payable in 59,179 -- --
monthly installments of $1,270, including interest,
due September 1, 1999, secured by equipment
8.0% note payable to a credit corporation, payable in 63,358 -- --
monthly installments of $1,359, including interest,
due September 1, 1999, secured by equipment
8.0% note payable to a credit corporation, payable in 64,977 53,010 --
monthly installments of $1,394, including interest,
due September 1, 1999, secured by equipment
</TABLE>
(Continued)
F-17
<PAGE> 21
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 9: LONG-TERM DEBT (CONTINUED)
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
8.0% note payable to a credit corporation, payable in $ 64,977 $ -- $ --
monthly installments of $1,394, including interest,
due September 1, 1999, secured by equipment
8.0% note payable to a credit corporation, payable in 63,358 -- --
monthly installments of $1,359, including interest,
due September 1, 1999, secured by equipment
8.0% note payable to a credit corporation, payable in 68,419 -- --
monthly installments of $1,468, including interest,
due September 1, 1999, secured by equipment
8.4% variable rate note payable to a credit corporation, 7,422 5,001 3,048
payable in monthly installments of $246, including
interest, due October 1, 1999, secured by equipment
1% over Prime (8.25% at 1995) variable interest 450,631 425,245 405,027
rate note payable to an individual, payable in monthly
installments of $5,000, including interest, due
September 28, 2012, secured by real estate
10.4% note payable to a credit corporation, payable in 11,042 2,905 --
monthly installments of $742, including interest,
due August 20, 1999, secured by equipment
8.4% note payable to a credit corporation payable in 11,742 8,365 5,951
monthly installments of $353, including interest, due
March 1, 1998, secured by equipment
10% note payable to an individual, payable in annual 6,000 4,000 4,000
installments of $2,000, including interest, due
October 19, 1998, secured by real estate
10% note payable to an individual, payable in annual -- 10,000 10,000
payments of $11,200, including interest, due
December 15, 1996, secured by real estate
11.4% note payable to a credit corporation, -- 60,000 --
payable in monthly payments of $1,563, including
interest, due January 1, 2008, secured by equipment
10% note payable to a credit corporation, -- 94,000 90,000
payable in annual installments of $13,400, including
interest, due February 1, 2002, secured by real
estate
</TABLE>
(Continued)
F-18
<PAGE> 22
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 9: LONG-TERM DEBT (CONTINUED)
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
Unaudited)
<S> <C> <C> <C>
9.9% note payable to a credit corporation, $ 73,763 $ 7,579 $ 3,977
payable in monthly installments of $5,812, including
interest, due June 1, 1999, secured by equipment
9.9% note payable to a credit corporation, payable in -- 79,890 79,890
annual installments of $21,020, including interest,
due September 20, 2002, secured by equipment
11.4% note payable to a credit corporation, -- 7,048 --
payable in monthly installments of 540, including
interest, due October 1, 1997, secured by equipment
11.4% note payable to a credit corporation, -- 7,775 --
payable in monthly installments of $393, including
interest, due October 1, 1997, secured by equipment
11.9% note payable to a credit corporation, -- 31,494 --
payable in monthly installments of $920, including
interest, due June 15, 1999, secured by equipment
11.9% note payable to a credit corporation, -- 20,719 5,289
payable in monthly installments of $802, including
interest, due June 1, 1998, secured by equipment
10.15% note payable to a credit corporation, payable in 26,385 23,116
monthly installments of $620, including interest, due
June 1, 2000, secured by equipment
11.4% note payable to a credit corporation, -- 8,662 6,765
payable in monthly installments of $286, including
interest, due December 15, 1998, secured by equipment
11.4% note payable to a credit corporation, -- 12,049 4,625
payable in monthly installments of $397, including
interest, due December 15, 1998, secured by equipment
9.9% note payable to a credit corporation, payable in -- -- 31,649
annual installments of $9,663, including interest,
due April 20, 2000, secured by equipment
</TABLE>
(Continued)
F-19
<PAGE> 23
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 9: LONG-TERM DEBT (CONTINUED)
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
10.9% note payable to a credit corporation, $ -- $ -- $ 35,200
payable in annual installments of $10,858, including
interest, due April 1, 2001, secured by equipment
10.4% note payable to a credit corporation, -- -- 23,589
payable in monthly installments of $1,736, including
interest, due April 1, 2001, secured by equipment
10% note payable to an individual, payable on demand -- -- 21,028
Borrowings against cash surrender value life insurance 89,386 170,104 181,240
policies
2,119,868 1,466,825 1,241,560
Less Current Maturities 680,979 271,447 267,130
------------ ------------ ------------
$ 1,438,889 $ 1,195,378 $ 974,430
============ ============ ============
</TABLE>
Aggregate maturities of long-term debt for the five years ending in the year
2000 are as follows:
<TABLE>
<CAPTION>
Years Ending
December 31,
------------
<S> <C>
1996 $ 271,447
1997 273,584
1998 208,605
1999 106,865
2000 74,487
Thereafter 531,837
----------
$1,466,825
==========
</TABLE>
F-20
<PAGE> 24
TEXAS EQUIPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO THE UNAUDITED PERIOD)
DECEMBER 31, 1994 AND 1995
NOTE 10: ACCRUED EXPENSES
Accrued expenses were comprised of the following:
<TABLE>
<CAPTION>
December 31, September 30,
------------------------------ --------------
1994 1995 1996
------------ ------------ --------------
(Unaudited)
<S> <C> <C> <C>
Salaries and Commissions $ 99,761 $ 48,852 $ 63,842
Interest 13,545 53,131 41,439
Income Taxes 37,228 166,082 229,400
State Taxes 17,809 24,687 33,000
Payroll Taxes 75,104 9,026 8,136
Property Taxes 69,000 -- 43,000
Other 40,618 6,448 3,240
------------ ------------ ------------
$ 353,065 $ 308,226 $ 422,057
============ ============ ============
</TABLE>
NOTE 11: INTERIM FINANCIAL DATA (UNAUDITED)
The balance sheet of September 30, 1996 and the statements of operations, cash
flows and shareholders' equity for the nine month period ended September 30,
1996 and the statements of operations and cash flows for the nine month period
ended September 30, 1995, are unaudited. In the opinion of management, these
statements have been prepared on the same basis as the audited financial
statements and includes all adjustments, consisting only of normal recurring
adjustments necessary to state fairly the information set forth therein. The
data disclosed in the notes to financial statements for this period is
unaudited. Operating results for the nine months ended September 30, 1996 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1996.
NOTE 12: MERGER
On September 17, 1996, all of the outstanding stock of TEC was acquired by
Marinex Multimedia Corporation. Marinex Multimedia Corporation subsequently
changed its name to Texas Equipment Corporation. The merger was accounted for as
a pooling-of-interest and consolidating balance sheets and statements of
operation for the merged entity are presented on Schedules I through IV.
F-21
<PAGE> 25
SCHEDULES
F-22
<PAGE> 26
TEXAS EQUIPMENT CORPORATION SCHEDULE I
(FORMERLY MARINEX MULTIMEDIA CORPORATION)
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1995
ASSETS
<TABLE>
<CAPTION>
TEXAS MARINEX
EQUIPMENT MULTIMEDIA CONSOLIDATING
CO., INC. CORPORATION TOTAL ELIMINATIONS TOTAL
--------- ----------- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and Temporary Cash
Investments $ 250,031 $ 88,536 $ 338,567 -- $ 338,567
----------- ----------- ----------- -----------
Accounts Receivable -
Trade 213,777 -- 213,777 -- 213,777
Employees and Other 14,051 -- 14,051 -- 14,051
Inventories 6,439,238 -- 6,439,238 -- 6,439,238
TOTAL CURRENT
ASSETS 6,917,097 88,536 7,005,633 -- 7,005,633
----------- ----------- ----------- -----------
LAND, BUILDINGS AND
EQUIPMENT, at cost 2,182,355 76,866 2,259,221 -- 2,259,221
Less Accumulated Depreciation (737,475) (21,630) (759,105) -- (759,105)
----------- ----------- ----------- -----------
NET LAND, BUILDINGS
AND EQUIPMENT 1,444,880 55,236 1,500,116 -- 1,500,116
----------- ----------- ----------- -----------
OTHER ASSETS
Finance Receivables 693,674 -- 693,674 -- 693,674
Cash Surrender Value of Insurance 228,550 -- 228,550 -- 228,550
Other Assets 73,585 7,860 81,445 -- 81,445
Goodwill 149,380 -- 149,380 -- 149,380
Related Party Receivables 117,542 -- 117,542 -- 117,542
----------- ----------- ----------- -----------
TOTAL OTHER ASSETS 1,262,731 7,860 1,270,591 -- 1,270,591
----------- ----------- ----------- -----------
TOTAL ASSETS $ 9,624,708 $ 151,632 $ 9,776,340 $ -- $ 9,776,340
=========== =========== =========== ========= ===========
</TABLE>
(Continued)
F-23
<PAGE> 27
TEXAS EQUIPMENT CORPORATION SCHEDULE I
(CONTINUED)
(FORMERLY MARINEX MULTIMEDIA CORPORATION)
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
TEXAS MARINEX
EQUIPMENT MULTIMEDIA CONSOLIDATING
CO., INC. CORPORATION TOTAL ELIMINATIONS TOTAL
--------- ----------- ----- ------------ -------------
<S> <C> <C> <C> <C> <C>
CURRENT LIABILITIES
Notes Payable $ 300,000 $ -- $ 300,000 $ -- $ 300,000
Current Maturities of
Long-Term Debt - Note 8 271,447 100,000 371,447 371,447
Accounts Payable Trade -
John Deere Company 3,096,801 -- 3,096,801 -- 3,096,801
Other 436,952 7,830 444,782 -- 444,782
Accrued Expenses 308,226 250,892 559,118 -- 559,118
Deferred Tax Liability 377,300 -- 377,300 -- 377,300
----------- ----------- ----------- ----------- -----------
TOTAL CURRENT
LIABILITIES 4,790,726 358,722 5,149,448 -- 5,149,448
----------- ----------- ----------- ----------- -----------
LONG-TERM DEBT, net of
current maturities 1,195,378 -- 1,195,378 -- 1,195,378
DEFERRED TAX LIABILITY 152,000 -- 152,000 -- 152,000
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES 6,138,104 358,722 6,496,826 -- 6,496,826
----------- ----------- ----------- ----------- -----------
STOCKHOLDERS' EQUITY
(DEFICIT)
Preferred Stock 596,305 -- 596,305 (596,305) --
Common Stock 100,000 4,510 104,510 (83,150) 21,360
Paid in Capital -- 232,016 232,016 582,978 814,994
Retained Earnings (Deficit) 2,886,776 (443,616) 2,443,160 -- 2,443,160
----------- ----------- ----------- ----------- -----------
3,583,081 (207,090) 3,375,991 (96,477) 3,279,514
Less Treasury Shares -
40,000 Shares of
Common Stock, at cost (96,477) -- (96,477) 96,477 --
----------- ----------- ----------- ----------- -----------
TOTAL STOCK-
HOLDERS' EQUITY
(DEFICIT) 3,486,604 (207,090) 3,279,514 -- 3,279,514
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 9,624,708 $ 151,632 $ 9,776,340 $ -- $ 9,776,340
=========== =========== =========== =========== ===========
</TABLE>
F-24
<PAGE> 28
TEXAS EQUIPMENT CORPORATION SCHEDULE II
(FORMERLY MARINEX MULTIMEDIA CORPORATION)
CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
MARINEX
TEXAS EQUIPMENT MULTIMEDIA CONSOLIDATING
CO., INC. CORPORATION TOTAL
--------------- ------------ -------------
<S> <C> <C> <C>
REVENUES $ 25,031,608 $ 353,264 $ 25,384,872
COST OF REVENUES 21,648,257 -- 21,648,257
------------ ------------ ------------
GROSS PROFIT 3,383,351 353,264 3,736,615
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 2,935,899 839,731 3,775,630
OTHER INCOME (EXPENSE)
Interest Income 181,008 -- 181,008
Interest Expense (243,122) -- (243,122)
Other Income 31,355 -- 31,355
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME
TAXES 416,693 (486,467) (69,774)
INCOME TAXES 163,294 -- 163,294
------------ ------------ ------------
NET INCOME (LOSS) $ 253,399 $ (486,467) $ (233,068)
============ ============ ============
</TABLE>
F-25
<PAGE> 29
TEXAS EQUIPMENT CORPORATION SCHEDULE III
(FORMERLY MARINEX MULTIMEDIA CORPORATION)
CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1996
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
TEXAS MARINEX
EQUIPMENT MULTIMEDIA CONSOLIDATING
CO., INC. CORPORATION TOTAL ELIMINATIONS TOTAL
--------- ----------- ----- ------------ -------------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and Temporary Cash
Investments $ 1,221,060 $ 882,545 $ 2,103,605 $ -- $ 2,103,605
Accounts Receivable -
Trade 738,359 102,711 841,070 -- 841,070
Employees and Other 20,889 -- 20,889 -- 20,889
Inventories 7,272,077 -- 7,272,077 -- 7,272,077
----------- ----------- ----------- ----------- -----------
TOTAL CURRENT
ASSETS 9,252,385 985,256 10,237,641 -- 10,237,641
----------- ----------- ----------- ----------- -----------
LAND, BUILDINGS AND
EQUIPMENT, at cost 2,125,413 102,962 2,228,375 -- 2,228,375
Less Accumulated Depreciation (804,985) (32,260) (837,245) -- (837,245)
----------- ----------- ----------- ----------- -----------
NET LAND, BUILDINGS
AND EQUIPMENT 1,320,428 70,702 1,391,130 -- 1,391,130
----------- ----------- ----------- ----------- -----------
OTHER ASSETS
Investment -- 927,613 927,613 (927,613) --
Finance Receivables 839,694 -- 839,694 -- 839,694
Cash Surrender Value of Insurance 240,939 -- 240,939 -- 240,939
Other Assets 109,305 7,860 117,165 -- 117,165
Goodwill 139,845 -- 139,845 -- 139,845
Related Party Receivables 132,018 -- 132,018 -- 132,018
----------- ----------- ----------- ----------- -----------
TOTAL OTHER ASSETS 1,461,801 935,473 2,397,274 (927,613) 1,469,661
----------- ----------- ----------- ----------- -----------
TOTAL ASSETS $12,034,614 $ 1,991,431 $14,026,045 $ (927,613) $13,098,432
=========== =========== =========== =========== ===========
</TABLE>
(Continued)
F-26
<PAGE> 30
TEXAS EQUIPMENT CORPORATION SCHEDULE III
(CONTINUED)
(FORMERLY MARINEX MULTIMEDIA CORPORATION)
CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1996
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
TEXAS MARINEX
EQUIPMENT MULTIMEDIA CONSOLIDATING
CO., INC. CORPORATION TOTAL ELIMINATIONS TOTAL
--------- ----------- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
CURRENT LIABILITIES
Notes Payable $ 300,000 $ -- $ 300,000 $ -- $ 300,000
Current Maturities of
Long-Term Debt 267,130 -- 267,130 -- 267,130
Accounts Payable Trade -
John Deere Company 3,769,240 -- 3,769,240 -- 3,769,240
Other 854,419 28,842 883,261 -- 883,261
Accrued Expenses 422,057 1,009 423,066 -- 423,066
Customer Deposit 72,035 -- 72,035 -- 72,035
Deferred Tax Liability 377,300 -- 377,300 -- 377,300
----------- ----------- ----------- ----------- -----------
TOTAL CURRENT
LIABILITIES 6,062,181 29,851 6,092,032 -- 6,092,032
----------- ----------- ----------- ----------- -----------
LONG-TERM DEBT, net of
current maturities 974,430 -- 974,430 -- 974,430
DEFERRED TAX LIABILITY 152,000 -- 152,000 -- 152,000
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES 7,188,611 29,851 7,218,462 -- 7,218,462
----------- ----------- ----------- ----------- -----------
STOCKHOLDERS' EQUITY
(DEFICIT)
Preferred Stock 596,305 -- 596,305 (596,305) --
Common Stock 100,000 7,842 107,842 (83,150) 24,692
Paid in Capital 927,613 3,189,434 4,117,047 (344,635) 3,772,412
Retained Earnings (Deficit) 3,318,562 (1,235,696) 2,082,866 -- 2,082,866
----------- ----------- ----------- ----------- -----------
4,942,480 1,961,580 6,904,060 (1,024,090) 5,879,970
Less Treasury Shares -
40,000 Shares of
Common Stock, at cost (96,477) -- (96,477) 96,477 --
----------- ----------- ----------- ----------- -----------
TOTAL STOCK-
HOLDERS' EQUITY
(DEFICIT) 4,846,003 1,961,580 6,807,583 (927,613) 5,879,970
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $12,034,614 $ 1,991,431 $14,026,045 $ (927,613) $13,098,432
=========== =========== =========== =========== ===========
</TABLE>
F-27
<PAGE> 31
TEXAS EQUIPMENT CORPORATION SCHEDULE IV
(FORMERLY MARINEX MULTIMEDIA CORPORATION)
CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
MARINEX
TEXAS EQUIPMENT MULTIMEDIA CONSOLIDATING
CO., INC. CORPORATION TOTAL
--------------- ----------- -------------
<S> <C> <C> <C>
REVENUES $ 19,507,714 $ 107,637 $ 19,615,351
COST OF REVENUES 16,949,797 293,678 17,243,475
------------ ------------ ------------
GROSS PROFIT (LOSS) 2,557,917 (186,041) 2,371,876
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,945,782 683,032 2,628,814
OTHER INCOME (EXPENSE)
Interest Income 110,974 27,005 137,979
Interest Expense (75,792) (5,250) (81,042)
Licensing Fee Settlement -- 55,238 55,238
Other Income 15,566 -- 15,566
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME
TAXES 662,883 (792,080) (129,197)
INCOME TAXES 231,097 -- 231,097
------------ ------------ ------------
NET INCOME (LOSS) $ 431,786 $ (792,080) $ (360,294)
============ ============ ============
</TABLE>
F-28
<PAGE> 32
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Texas Equipment Corporation is a Nevada corporation whose sole assets are
its 100% ownership of two operating subsidiaries: Texas Equipment Co., Inc. of
Seminole, Texas and Marinex Multimedia Corporation of New York, New York. Texas
Equipment Co., Inc. is engaged in the retail sales, servicing and repair of
farm equipment in Southwest Texas. Marinex Multimedia Corporation is a producer
of proprietary content based entertainment and information properties,
including a CD-ROM only magazine and several sites on the world wide web. This
discussion has been organized to review separately, where appropriate, the
Company's Farm Equipment Operations, the Multimedia Services operations and the
consolidated totals.
TEXAS EQUIPMENT CO., INC.
Texas Equipment Co., Inc. ("Texas Equipment"), a Texas corporation, is a
duly licensed retailer of John Deere & Company ("Deere") agricultural equipment
products with its headquarters on a 13.94 acres tract in Seminole, Texas.
Organized in 1987, Texas Equipment has smaller facilities in Pecos and Plains,
Texas.
The Company carries a full line of Deere products, concentrating on items
especially needed in the dry plains of southwest Texas and maintains
substantial inventories of parts. Combines, tractors, planters and sprayers
constitute the bulk of the new product mix and parts are maintained for older
equipment. Due to the drier climates of southwest Texas the Company does not
expect lawn and grounds care divisions to contribute significantly to sales.
The Company finances many of the purchase of its customers through its
participation in the John Deere "Farm Plan" administered through John Deere
Credit. The Company also uses AgriCredit to augment the credit facilities
provided by Deere & Company.
MARINEX MULTIMEDIA CORPORATION
Marinex Multimedia Corporation is a digital content provider for the new
electronic media that are transforming today's entertainment and media
industries. Marinex has joined the digital revolution with its episodic
entertainment and on-line properties, developed for global distribution via
the Internet's growing World Wide Web and the expanding base of
CD-ROM-equipped computers. Descriptive information about the Company's core
products are set forth below.
Trouble & Attitude is a CD-ROM-only magazine targeted to the upscale
18-to-44-year-old audience for whom the computer is emerging as a leading
entertainment and information medium. Trouble & Attitude was conceived as
a randomly accessible
4
<PAGE> 33
television-style magazine augmented by music, speech, and text.
Distributors of Trouble & Attitude have included International Periodical
Distributors and Warner Publisher Services. Warner Publisher Services has
indicated that it no longer intends to distribute the magazine. Trouble &
Attitude was licensed in the United Kingdom by IDG Communications, Ltd. As
of the date of this filing, IDG Communications, Ltd., has terminated the
licensing agreement by payment to the Company of approximately $58,000.
This one time payment represents virtually all of the revenues for the
quarter. IDG has indicated that it no longer intends to be engaged in the
CD-ROM Magazine business. A quarterly publication, Trouble & Attitude is
also available on the Internet through a promotional site, Trouble &
Attitude On-Line (http://www.trouble.com).
The Biz (http://www.bizmag.com) features interviews with entertainment
industry personalities; downloadable movie trailers, celebrity soundbites,
and music videos; press releases from Entertainment Wire; weekly
entertainment columns, features, and reviews; the 24-hour Reuters/Variety
On-line Entertainment Report; and weekly statistics such as box office
grosses and television ratings.
Marinex's primary goal has been to create compelling original
entertainment properties which can be successfully branded and commerically
exploited in more traditional media such as television, books, and film.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERALLY
On September 17, 1996, the Company acquired Texas Equipment Co., Inc., an
authorized John Deere dealer with three facilities in southwest Texas and
headquartered in Seminole, Texas. Prior to the acquisition, the operations of
the Company were exclusively those of its multimedia subsidiary, Marinex
Multimedia Corporation. The discussion of results of operations has been
organized to review separately, where appropriate, the Company's Farm Equipment
Operations, the Multimedia Services operations and the consolidated totals.
During the period ending September 30, 1995, the Company was not engaged in
operations except for its search for a suitable acquisition candidate.
Therefore, comparisons to that period would not be meaningful.
RESULTS OF OPERATIONS
CONSOLIDATED BASIS
5
<PAGE> 34
Compared to the three month period ended versus the same period of 1995, the
Company's revenues declined 3.6% to $5,826,9178 from $6,037,413. Losses for the
quarter increased approximately 25% from $(344,357) as opposed to $(274,547)
for the same period last year. Year to date losses show significant improvement
from last year as the current year to date losses total $(360,294) versus
$(430,370) for the same period last year. Much of these losses are attributable
to the failure of the multimedia operations to generate significant revenues
and its continued negative earnings. Texas Equipment losses from the third
quarter in 1996 contributed $(92,877) after tax benefits as compared to
$(101,843) for the same period of 1995. Third quarter earnings are typically
low as equipment sales suffer since this quarter falls between planting and
harvesting seasons. Revenues for the farm equipment operations in the third
quarter tend to be for smaller items, add on, and maintenance. Revenues were
helped by receipt of a one time cancellation payment of $55,238 received by the
multimedia subsidiary.
Comparison of 3 Months ended September 30 1996 with 3 Months ended September 30
1995.
For the three month period ending September 30, 1996, the Company showed
revenues of $5,826,918 as opposed to $6,037,413 for 1995, representing a nearly
4% decline. Gross profit declined as well, from $532,812 to $441,556. The loss
for the quarter increased from $(274,547) to $(344,357).
TEXAS EQUIPMENT CO., INC.
Texas Equipment Co., Inc. ("Texas Equipment") is a duly licensed retailer of
John Deere and farm equipment products with its headquarters in Seminole,
Texas. It has smaller facilities in Pecos and Plains, Texas and seeks to add
additional facilities by acquisition. The Company maintains an inventory of
tractors, cultivators, planters, sprayers and other farm equipment, as well as
parts, supplies and expendibles. Servicing is available at all locations.
Financing of equipment is largely conducted through the credit facilities of
John Deere & Company, although some financing is also available through
Agricredit.
The Company has enjoyed its best nine month period ending since its inception.
Current assets have improved to $9,252,385 from $6,917,097 at 1995 year end.
Total assets have improved by 25 % to $12,034,614 from the end of last year.
Revenues to date have totaled $19,507,714 as compared to $25,031,608 for all of
1995. Gross profit for the nine month period was $2,557,917 as compared to
$2,244,719 for the same nine month period ending in 1995. The year has been
profitable so far with net income of $431,786 as compared to $253,399 for all
of 1995. The acquisition of the Texas Equipment Co., Inc. subsidiary was
consummated on September 17, 1996.
Nine months ended September 30, 1996 compared to the nine months ended
September 30, 1995
6
<PAGE> 35
For the nine month period ended September 30, 1996 revenues were
$19,507,714, up approximately seven percent from the $18,132,323. Cost of
revenues were roughly commensurate, showing a 6.7 percent increase from
$15,887,604 in 1995 to $16,949,797 in 1996. Gross profit improved nearly 14
percent to $2,557,917 as compared to $2,244,719 for the same period of
1995.
Selling, general and administrative expenses were reduced almost 11
percent to $1,945,782 from $2,182,050. The largest portion of this
decrease, $232,429, was reflected by lower commissions, salaries and
employee benefits. Interest expense also improved from $187,613 to $75,792.
Overall, the result was a substantial improvement in net income of over
1200 percent from $34,151 to $431,786.
The Company also recognized a capital contribution of $927,613 by
reason of capital obtained in connection with the Company's acquisition by
Marinex Multimedia Corporation. Largely as a result of this capital
infusion the Company experienced a net increase in cash to $971,029 from
(57,429) for the same period last year. At the end of the nine month
period, cash totaled $1,221,060 as compared to $451,034 for the same period
of 1995 and $250,031 for the year ended 1995. Interest expense was reduced
from $129,678 to $87,484. Income taxes increased to $203,699 from $37,228.
A Form 8-K has been filed as of November 21, 1996 which sets forth the 1994 and
1995 year end audits of the Texas Equipment Co., Inc. subsidiary and includes
unaudited figures for the nine month period ending September 30, 1996.
Results of Operations - Marinex Multimedia Corporation:
The Company concluded a merger accounted as a pooling of interests in
February 1996, accordingly such operations presented reflect the operations
of Marinex Multimedia Corporation and Hard Funding, Inc.
Quarter ended September 30, 1996 compared to the Quarter ended September
30, 1995
Net revenue increased 76% to $72,104 in the quarter ended September 30,
1996 (the "1996 Quarter") compared to $40,811 for the quarter ended
September 30, 1995 (the "1995 Quarter"). The increase in revenues is
attributed to the release of the July CD-ROM magazine. During 1995 Quarter
the Company they began developing and promoting their two Internet
properties. Predominately most of the $40,811 in revenues in the 1995
Quarter came from the CD-ROM magazine. The Company has obtained sufficient
capital to fund the production of their on-line entertainment and media
properties as well as the CD-ROM magazine to produce such products on a
consistent basis in the future.
The expenses increased by 82% to $398,589 for the 1996 Quarter from
$218,237 for
7
<PAGE> 36
the 1995 Quarter primarily due to the increase in production costs relating
to The East Village, which is currently updated daily from bi-weekly and
general and administrative costs attributed to the Company being a public
entity and the increased volume of activity associated with the three
product. The Company continues to seek new business venues.
In September 1996, the Company received a $55,238 settlement for the
release from a licensing arrangement with a Company in the United Kingdom
for the use of the Company's interactive media products.
Nine months ended September 30, 1996 compared to the nine months ended
September 30, 1995
Net revenue decreased 37% to $107,637 for the nine months ended September
30, 1996 (the "1996 Period") compared to $169,597 for the nine months ended
September 30, 1995 (the "1995 Period"). The decrease in revenues is
attributed to the lack of acceptance of their on-line entertainment and
media properties and the CD-ROM magazine. The sales of the CD-ROM magazine
have declined from issue to issue. Distributors have indicated a waning
interest in CD-ROM Magazines in general and one distributor has informed
the Company that they are not interested in distributing the next issue.
Predominately most of the $128,786 in revenues in the 1995 Period came from
the CD-ROM magazine. The 1996 Period revenues are primarily revenues from
the CD-ROM magazine and recently a marginal amount from its Internet
properties as advertising.
The expenses increased by 52% to $976,710 for the 1996 Period as compared
to $638,839 for the 1995 Period. The increase in expenses was can be
attributed to; an increase in advertising and marketing of $34,000,
increased production costs of $206,000 due to the hiring of key personnel
to for creating the on-line media/entertainment products and the CD-ROM
magazine on a consistent basis and positioning for growth due to pursuing
an increased number business venues and an increase general and
administrative costs of $100,000, due to being a public entity and
continuing to seek new business venues.
MULTIMEDIA OPERATIONS
Long term continuation of these projects may require strategic partnerships or
joint venturing arrangements with larger, better established companies. With
the capital available to the Company, it is unrealistic to assume that the
projects could be continued beyond the next year without significant revenue
growth. The Web continues to be plagued by relatively slow transmission, ease
of entry, lack of a demonstrable and commercially viable Internet audience, and
technological limitations The Internet may be completely revamped in the next
few years, including streaming audio and streaming video applications, but
these advances may or may not benefit the traditional subscription
8
<PAGE> 37
and advertising revenue models upon which the Company's properties and similar
businesses are based.
The Company generated an increase in cash of $793,000 for the 1996 Period
as compared to as decrease in cash of $15,000 for the 1995 Period. The
primary reason for the increase in cash for the 1996 Period was the
proceeds from sale of common stock.
The working capital position improved for the 1996 Quarter to $956,000 from
a working capital deficit for the 1995 Quarter of $167,000. The improvement
of the working capital position is primarily a result of the sale of common
stock as described hereafter.
In February 1996, the Company entered into a Reg S agreement for the sale
of 2,525,000 shares of common stock for $2,525,000 in installments through
May 1996. In addition, the Company received another $700,000 of funds from
the sale of 507,246 shares of common stock as of July 1996, pursuant to a
new agreement with the same subscriber.
During September 1996, the Company merged with Texas Equipment Co., Inc.,
through the issuance of common stock, which is accounted for as a pooling
of interest. The Company advanced $927,000 for TEC to actively pursue the
acquisition of other John Deere dealerships. The management discussion and
analysis will be updated for the financial information relating to TEC by
the filing of an amendment to this Form-10QSB.
The Company deems its present facilities and equipment adequate for its
immediate needs and it has no material commitments for capital
expenditures. The Company believes its present liquidity and cash flow are
adequate for its current needs. There can be no assurance, however, that
additional financing, whether from debt or equity, will be available to the
Company when needed on commercially reasonable terms, or at all.
The Company's management believes that inflation has not had a significant
impact on its business during the past two years.
OUTLOOK
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
Statements under the "Outlook" heading that are forward looking or relate to
future operating periods are subject to important risks and uncertainties that
could cause actual results to differ materially. Please see the cautionary
language at the end of the section.
9
<PAGE> 38
FARM EQUIPMENT OPERATIONS
As a John Deere dealer, the fortunes of the Company's farm equipment operations
are necessarily tied to the performance of John Deere and Company, Inc.
("Deere") with respect to products, pricing and overall competitiveness. It is
not surprising, therefore, that the farm equipment operations have enjoyed its
best 9 month period to date in 1996 since the performance of Deere has been
exceptional during that period as well. According to Deere, growing worldwide
demand for agricultural commodities coupled with the existing low levels of
world grain stocks have resulted in strong prices for grains and oilseeds.
Additionally, the new "freedom to farm" bill has further strengthened United
States farm income by establishing substantial transition payments to
participating farmers while reducing restrictions on farm acreage utilization.
The Company hopes to capitalize on these factors in the Southwest Texas markets
as well. Located in the plains of west Texas, it is uniquely situated in farm
land producing the largest yields of cotton, peanuts, corn, onions, potatoes,
peppers, melons, and leafy vegetables. Management believes that it is the
largest distributor of peanut harvesting equipment in the country. Accustomed
to dry weather conditions, farm land in and around the permian basin is well
irrigated. The permian basin is also the home of much Texas oil and natural gas
production and the local economy is therefore somewhat more independent of the
economic fluctuations that are typical of farming operations. Although the
year has been dry, the timing of the rains alleviated the worst of the
potential problems so that many of the Company's customers are experiencing
bountiful harvests.
The NAFTA Treaty has provided expanding markets in Mexico, allowing Texas
Equipment to explore new markets for farm equipment and parts. As existing
equipment is replaced by newer, technologically advanced equipment, the lease
return and used equipment will become available for resale. The Company's
operations are relatively near the Mexican border and management has had
discussions with Mexican Deere dealers with regards to possible future business
arrangements, although there are no agreements or understandings to date.
In addition, technological changes in farm equipment may lead to a retooling
of the industry. In 1996 Deere's 9000 series combines began the use of a yield
mapping system. This "precision farming" capability links satellite derived
data with respect to "micro" areas (of just a few square yards). Factors such
as moisture content and crop yields are measured against onboard data derived
so that an entire field can potentially be maximized. Yields can and often do
vary widely within the same field. Corn yields, for example, may vary as much
as 100 bushels per acre. The satellite data is assessed and ultimately fed
into onboard computers built into the equipment for precise manipulation of
such factors as moisture, fertilizer and pesticide. Deere has indicated that
the same technology will likely be extended to tractors, planters and sprayers
as well in the near future.
10
<PAGE> 39
To a lesser extent, management believes that changes in the macroeconomic
outlook for farming will positively affect the business. Farmer income
continues to improve and grain levels are near record lows. It is estimated
that food production will triple over the next thirty years. Pacific rim
incomes are rising at a time that major participants, such as China, are
shifting from a net exporter of grain to a substantial importer.
Finally, management believes that the trends in the retail distribution of farm
equipment will be towards a consolidation of retail dealers as the capital cost
of maintaining inventories of parts and equipment continues to rise. A variety
of new programs, such as John Deere Personal Service (which permits the
customer to search for parts through a computerized database), signal a
substantial change in the historical methods of doing business. The ability of
"corner store" dealerships to effectively compete in these changing markets is
questionable. Management believes that growth opportunities through acquisition
will exist as the retail farm equipment industry consolidates and becomes more
global.
MULTIMEDIA OPERATIONS
All multimedia operations and activities are conducted through the New York
subsidiary, which is engaged in the business of creation of digital content,
including a CD-ROM-only magazine entitled "Trouble & Attitude"; a site on the
world wide web known generally as "The Biz Entertainment CyberNetwork"
(http://www/bizmag.com); and a site on the world wide web known generally as
"The East Village" (http://www/eastvillage.com). The web site properties can
also be accessed through Time-Warner's Pathfinder site.
Essentially, the Company's publishing operations are subject to two distinct
sets of risks: those associated with the publishing industry in general and
those associated with the Company's chosen means of distribution media. The
CD-ROM magazine "Trouble & Attitude" has now distributed three issues and
anticipates a fourth issue by the end of the next quarter. Distributor's
interest in CC-ROM magazines may be declining and at least one distributor,
Time Warner, has indicated that it has no further interest in distributing
Trouble and Attitude.
Although both distribution media, CD-ROM and the World Wide Web, are relatively
new and unproven means of distributing proprietary content based entertainment,
management believes that its products carry the obvious advantages of video
clip enhancement to articles, audio sampling of recent releases of established
recording artists, capability of downloading, hyperlinks to other sites of
interest, and immediate update. Also, these methods of delivery are
environmentally friendly and relatively inexpensive to produce and deliver to
vast numbers.
The approach used by the Company was to create Web delivered entertainment and
information. The East Village is a "cyber soap opera" through which it was
hoped that a regular audience could be cultivated. These persons would access
the site on an ongoing basis to obtain updates as to the story line and
characters. Unlike many Web applications,
11
<PAGE> 40
the content would be evolving and dynamic from week to week. Once the audience
was cultivated, its demographics could then be used to sell advertising,
products or services, or even subscriptions. Management believes that such an
audience is developing, although at a slower than hoped for pace.
Notwithstanding, recent newspaper articles, including the Wall Street Journal,
have questioned the near term viability of the entire Internet advertising
model.
Even allowing for the slow incubation of this market, revenues from the
Pathfinder site for the past quarter have been disappointing. Management of the
subsidiary has sought alternatives to the present arrangements but has not
obtained a satisfactory replacement. While web oriented business endeavors have
mushroomed over the past year, management is unaware of any content based
business, which is exclusively distributed through the world wide web, that is
presently profitable. Although the vast reach of the web obviously holds the
promise for practically limitless reach, it is uncertain as to when, or if,
content based website businesses in general or the Company's website
businesses in particular, will achieve profitability. The Company now is
considering ways to reallocate resources to more traditional and proven
entertainment and media business activities.
SAFE HARBOR CAUTIONARY STATEMENT
The Company's businesses include Farm Equipment sales and servicing in a
very limited and typically dry geographical area of Southwest Texas and
Multimedia Services including content based business including a CD-ROM
Magazine and content over the world wide web. Forward-looking statements
relating to the farm equipment business involve certain factors that are
subject to change, including: the many interrelated factors that affect
farmers' confidence, including demand for agricultural products, world grain
stocks, commodities prices, weather, animal diseases, crop pests, harvest
yields, real estate values and government farm programs; general economic
conditions; legislation relating to agriculture, products, the environment,
commerce and infrastructure; actions of competitors in the various industries
in which the Company competes; the ability to obtain adequate sources of supply
from John Deere & Company; the general competitiveness of John Deere & Company
with respect to new products, competitive pricing, and availability of parts
and supplies; ability to finance new and used equipment; interest and currency
exchange rates; accounting standards; and other risks and uncertainties. In
addition, the multimedia businesses are subject to many additional risks such
as the uncertainty of consumer acceptance of the Company's multimedia
properties or of world wide web oriented businesses in general; the expense of
maintenance of the businesses without present profitability or any assurance of
profitability at any time in the future; the risk that the content provided by
the Company will fall from favor by reason of shifting preferences, trends, or
fashions; the relatively unlimited potential for new multimedia, CD-ROM, or
world wide web entrants and new competitors for content based and non-content
based applications of multimedia on CD-ROM or the world wide web; the unproven
ability to generate advertising revenues or subscription, click through, or
visit revenues from the Company's products; the
12
<PAGE> 41
competitiveness of any content based endeavor from existing and well financed
print, radio, and television media; the ongoing difficulty in procuring
sufficient bandwidth, compression or delivery of data over the world wide web;
the uncertainty of the ability of the world wide wide to deliver prompt service
as additional users load the system; the abilities of management to adjust to
and predict the shifting trends in this new, uncertain and unproved industry;
and the typical uncertainties associated with any publication business.
Further information concerning the Company and its businesses, including
factors that potentially could materially affect the Company's financial
results, is contained in the Company's filings with the Securities and
Exchange Commission.
ITEM 3. DESCRIPTION OF PROPERTY
Texas Equipment Corporation owns and operates three retail/office
complexes in Southwest Texas as well as certain properties that are not being
used in the business such as farm land and rental property.
The Corporate headquarters is located in Seminole, Gaines County, Texas on
a 13.94 acre tract on Highway 62-180. The improvements consist of several
buildings housing corporate and retail operations. Building 1 is of steel frame
construction with sheet metal walls and roof with concrete flooring. It's
finished interior is carpet and panel walls with drop acoustic ceiling. 5900
square feet is executive office space, and retail; 22,624 square feet showroom,
shop and parts department. Building 2 is a 14,817 square foot area made of
steel and sheet metal and concrete flooring containing a shop, paint and wash
area. A separate building (3) is a 7200 square foot steel and sheet metal
storage building. All buildings are in good condition with the exception of
some older storage buildings. United Bank of Seagrave currently holds a
mortgage on this property.
A regional retail complex is located on a 6.25 acre tract in Plains,
Yoakum County, Texas on Highway 82. Improvements include a 7493 square foot
steel, sheet metal and concrete block and concrete floor office, sales and
parts building. The interior is finished. Also are two shop and storage
buildings, steel and sheet metal, containing 8100 and 5580 square feet
respectively. The property is secured by a privately held mortgage.
The third retail outlet is located in Pecos, Reeves County, Texas.
Containing just over 1 acre, the property consists of three buildings of steel,
sheet metal and concrete block construction. A 7140 square foot building with
finished interior houses the offices and retail operations. A 5000 square foot
shop and 2340 square foot storage building are also located on the property.
This property is included in a security instrument which also covers 313 acres
of farmland located in Reeves County owned by Texas Equipment Corporation.
Texas Equipment owns a 640 acre tract of farm land in Gaines County, Texas.
Equitable Life Insurance Company has a current mortgage on this property.
A small building located in Denver City, Reeves County, Texas was part of
a larger retail complex is now rented out and is being marketed for sale.
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<PAGE> 42
The Marinex Multimedia subsidiary currently rents a loft from the Soho
Building, located at 110 Greene Street, New York, NY. Rent is $3,750 per month.
The lease has 10 remaining months until expiration and has renewal options.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of October 1, 1996 by (i)
each person who is known by the Company to own beneficially more than five
percent (5%) of the Company' outstanding common stock; (ii) each of the
Company's officers and directors; and (iii) all directors and officers of the
Company as a group.
<TABLE>
<CAPTION>
Name of Shares of Common Approximate
Beneficial Stock Beneficially Percentage
Owner Owned Owned
- ----- ------------------ -----
<S> <C> <C>
John T. Condit 5,616,666 22.7%
c/o Domicile Property Management
601 Howard Street
San Antonio, TX 78212
Paul J. Condit II 5,616,666 22.7%
c/o Domicile Property Management
601 Howard Street
San Antonio, TX 78212
Jeffrey E. Condit 5,616,666 22.7%
c/o Domicile Property Management
601 Howard Street
San Antonio, TX 78212
Jonathan Braun 1,140,000 4.6%
70 Huntsville Road
Katonah, NY 10536
</TABLE>
1. John T. Condit, Paul J. Condit II and Jeffrey E. Condit are brothers
and are the sons of Mr. Paul Condit, the Company's President, Chief Executive
Officer and a Director.
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<PAGE> 43
2. Mr. Braun has an Option to Acquire up to 25% of the issued and
outstanding shares of one of the Company's subsidiaries, Marinex Multimedia
Corporation, a New York corporation, upon the happening on certain events as
set forth in the Acquisition Agreement which is included as an exhibit to this
filing.
- ---------------------
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
The following persons are the directors and executive officers of the
Company and have served in such capacities since the formation of the Company.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Paul Condit 63 President, Director
Chief Financial Officer
John T. Condit 32 Secretary/Treasurer
Chief Financial Officer
Director
Jonathan Braun 45 Director
President of Marinex Multimedia
</TABLE>
All directors and officers of the Company are elected annually to serve for one
year or until their successors are duly elected and qualified.
Paul Condit, 63, is President, Chief Executive Officer and a director. He has a
B.S. degree from Oklahoma State University and has been in the farm equipment
business for 23 years. Mr. Condit owned and operated a predecessor company and
has managed Texas Equipment since its inception in 1987.
John Condit, 32, serves as a Director and Chief Financial Officer of Texas
Equipment and will serve as Secretary of the Company. He obtained a BBA degree
from Texas Tech University in 1986. For the past five years, he has been
President of Domicile Property Management, Inc., a real estate acquisition and
management firm, in San Antonio, Texas.
Jonathan Braun, 45, a former journalist, has over 20 years experience in public
relations and consulting and has served as his Chairman of the Board since its
inception in January 1995. From 1992 until establishing Marinex Multimedia
Corporation in 1995, Mr. Braun has been engaged in the public relations and
consulting business through a company called Marinex, Inc., a Delaware
corporation. That company has been dissolved.
15
<PAGE> 44
From 1991 to 1992, Mr. Braun was president of DWJ International, a subsidiary
of the PR firm DWJ Associates, which pioneered the production and distribution
of video news releases and corporate identity videos.
In the 1970's he was an associate editor of the Sunday supplement Parade,
managing editor of New York Jewish Week, and feature writer for the New York
Sunday News Magazine. Mr. Braun's journalistic coups have included exclusive
on-location interviews with Iran's Empress Farah and Jacques Cousteau, an early
opinion-shaping article about the plight of Vietnam-era veterans and a
news-making expose about corruption at the highest levels of the Soviet
government--which triggered an investigative series in Fortune.
Mr. Braun has a master's degree from Columbia University's Graduate School of
Journalism and a B.A. from the City College of New York, where he graduated
magna cum laude and was elected to the Phi Beta Kappa honor society.
ITEM 6. EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
Fiscal Annual Compensation Other
Name/Position Year Salary($) Bonus($) Compensation($)
<S> <C> <C> <C> <C>
Paul Condit 1995 $29,630 $180,260
President
John Condit 1995 0 0 0
Chief Financial
Officer
Jonathan Braun(1) 1995 $26,667
Director
</TABLE>
(1) Mr Braun also 100,000 stock options exerciseable at $4.00 per share subject
to shareholder approval.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company was incorporated in the State of Nevada as "Hard Funding, Inc." on
August 14, 1990 as a Nevada Corporation to be a "blank check" corporation whose
sole business was to purchase, merge with or acquire a business or assets from
another company.
Hard Funding, Inc. filed a Registration Statement with the Atlanta Regional
Office of the United States Securities and Exchange Commission (the
"Commission") on Form SB-2, which registration statement was declared effective
as of October 26, 1993. Pursuant thereto, Hard Funding published a prospectus
dated October 26, 1993 (the "Prospectus")
16
<PAGE> 45
with respect to certain of its securities. On November 8, 1993, the Company
completed its initial public offering by selling to its underwriter,
Westminster Securities Corporation, all 8,500 shares plus the overallotment
shares, for a total of 9,775 shares. As a result of the initial public
offering, the Company received net offering proceeds, after deducting offering
expenses, in the amount of $34,327. An additional 340 shares were issued to the
underwriter as a portion of the underwriting compensation.
On February 12, 1996, Hard Funding acquired Marinex through a process generally
referred to as a "reverse merger." Hard Funding, with its 510,115 shares
outstanding, caused 4,000,000 shares of its authorized but unissued shares to
be issued to the shareholders of Marinex in exchange for all of the outstanding
shares of Marinex. As a result of the acquisition, the officers and directors
of Hard Funding resigned and were replaced by the officers and directors of
Marinex Multimedia Corporation; namely, Mr. Jonathan Braun and Mr. Charles
Platkin. Messrs. Braun and Platkin remain as officers and directors of the
multimedia subsidiary and Mr. Braun remains a director of the Company. Both
Messrs. Braun and Platkin own shares in the Company.
As of September 17, 1996, the Company acquired a second subsidiary, Texas
Equipment Co., Inc., by issuing 16,850,000 shares of its authorized but
unissued stock to Messrs. John Condit, Paul Condit, II and Jeffrey Condit in
exchange for all of the outstanding shares of that Company. As a result of the
transaction, Mr. Platkin resigned as an officer and director of the Company
although he remains as an officer and director of the the multimedia
subsidiary. Mr. Paul Condit and Mr. John Condit were elected members of the
Board of Directors and as officers. Messrs. John Condit, Paul Condit, II and
Jeffrey Condit are the sons of the Company's President and CEO, Mr. Paul
Condit. The Condit family now controls 68.2% of the outstanding common stock of
the Company.
ITEM 8. DESCRIPTION OF SECURITIES
The Company is authorized to issue Twenty Five Million (25,000,000) shares of
common stock, $.001 par value per share, of which 24,704,886 shares were issued
and outstanding as of the date of this filing. Each outstanding share of
common stock entitles the holder to one vote, either in person or by proxy, on
all matters that may be voted upon by the owners thereof at meetings of the
stockholders.
The holders of common stock (i) have equal rights to dividends from funds
legally available therefore, when, as and if declared by the Board of Directors
of the Company; (ii) are entitled to share ratably in all of the assets of the
Company available for distribution to holders of common stock upon liquidation,
dissolution or winding up of the affairs of the Company; (iii) do not have
preemptive, subscription or conversion rights, and (iv) are entitled to one
non-cumulative vote per share on all matters on which shareholders may vote at
all meetings of shareholders.
All shares of common stock which are the subject of this offering, when issued,
will be fully paid for and non-assessable, with no personal liability attaching
to the ownership
17
<PAGE> 46
thereof. The holders of shares of common stock of the Company do not have
cumulative voting rights, which means that the holders of more than 50% of such
outstanding shares, voting for the election of directors, can elect all
directors of the Company if they so choose and, in such event, the holders of
the remaining shares will not be able to elect any of the Company's directors.
Dividends
The Company has not declared any dividends since inception, and has no present
intention of paying any cash dividends on its common stock in the foreseeable
future. The payment by the Company of dividends, if any, in the future, rests
within the discretion of its Board of Directors and will depend, among other
things, upon the Company's earnings, its capital requirements and its financial
condition, as well as other relevant factors.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
Prior to the date hereof, there has been a limited and sporadic trading market
for the Company's Common Stock, which presently trades on the NASD Bulletin
Board under the symbol "TEXQ." After its initial public offering in 1993,
there was very little trading until the first quarter of 1996. According to
information furnished by the National Quotation Bureau, the high and low bid
and high and low ask quotations for each quarter of the 1996 is as follows:
<TABLE>
<CAPTION>
1995 Closing Bid Closing Ask
- ---- ----------- -----------
high low high low
<S> <C> <C> <C> <C>
March 31 7 6 10 9
June 28 7 7 9 9
September 29 7 7 9 9
December 29 7 7 9 9
<CAPTION>
1996 Closing Bid Closing Ask
- ---- ----------- -----------
high low high low
<S> <C> <C> <C> <C>
March 29 8 7 9 9
June 28 10 5.25 11 6.25
</TABLE>
18
<PAGE> 47
<TABLE>
<S> <C> <C> <C> <C>
September 30 6.75 1 8.25 3.00
</TABLE>
These market quotations represent inter-dealer prices, without retail markup,
mark down or commission and do not necessarily represent actual transactions.
As of November 25, 1996, there were approximately 300 holders of record of the
Company's common stock. The Company has not paid any dividends, redeemed,
repurchased or otherwise retired any of its capital stock.
ITEM 2. LEGAL PROCEEDINGS
None. The Company is not a party to any litigation, and has no knowledge of any
threatened litigation against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None. The auditor for Hard Funding, Inc., resigned and was replaced by the
auditor for Marinex Multimedia Corporation as set forth in a Form 8-K filed May
21, 1996. Both auditors furnished letters, attached to the Form 8-K, to the
effect that there were no material disagreements with the Company or its
management as to accounting and financial disclosures.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The Company entered into a subscription agreement with Varna Management, Ltd.
as of February 12, 1996 under the terms of which 2,525,000 shares were sold at
a subscription price of $1.00. On June 6, 1996, the Company entered into a
Subscription Agreement with Alstro Holdings Limited for the sale of 250,000
shares at a subscription price of $1.00 per share. As of July 11, 1996, the
Company entered into another Subscription Agreement with Varna Management, Ltd.
Covering 507,246 shares at a price of $1.38 per share. These sales are claimed
to be exempt from registration under the Act pursuant to Section 4(2) thereof
and Regulation S.
In addition, the Company issued 12,525 shares to Saxmundham in July, 1996 for
services rendered to the Company. The Company has permitted its subsidiary,
Marinex Multimedia Corporation, a New York corporation, to issue option
agreements to the executive officers of Marinex, Messrs. Jonathan Braun and
Charles Platkin, which permit the officers to reacquire up to 50% of the issued
and outstanding shares of the subsidiary upon the happening of certain
specified events. The Company has also issued a option to acquire 250,000
shares for a purchase price of $1.00 to its counsel, Charles W. Barkley,
19
<PAGE> 48
in consideration of legal and other services. The Company has agreed to
register the shares to Messrs. Braun, Platkin and Barkley.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has adopted an indemnification provision which limits the
personal liability of each director and other persons serving the same
purposes, whether by or in the right of the corporation or otherwise for
monetary damages by breach of any duty as a director shall be eliminated to the
fullest extent permitted by Nevada law and such persons shall be indemnified to
the fullest extent permitted. The Company has agreed to continue this
indemnification for former officers and directors and others as well.
In the opinion of the Securities and Exchange Commission such
indemnification by the Company and the Underwriter is against public policy as
expressed in the Act and is therefore unenforceable. It would therefore be
incumbent upon the Company to challenge the ruling of the Securities and
Exchange Commission in a court of competent jurisdiction in order to fully
exercise the rights contained in the indemnification paragraphs of the
indemnification agreement. There can be no assurance that any such challenge
will be ultimately successful.
PART III
ITEM 1. INDEX TO EXHIBITS
PART F/S
20
<PAGE> 49
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, as amended,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunder duly authorized, on the 3rd day of
December, 1996.
By: /s/ Paul Condit
------------------------------
Paul Condit, President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been duly signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
SIGNATURES TITLE DATE
<S> <C> <C>
Principal Executive Officer:
/s/ Paul Condit President December 3, 1996
- ----------------------------
Paul Condit
Chief Financial Officer:
/s/ John Condit Treasurer December 3, 1996
- ----------------------------
John Condit
A Majority of the Board of Directors:
/s/ Paul Condit Director December 3, 1996
- ----------------------------
Paul Condit
/s/ John Condit Director December 3, 1996
- ----------------------------
John Condit
Director , 1996
- ---------------------------- -------- --
Jonathan Braun
</TABLE>
21
<PAGE> 50
EXHIBIT INDEX
<TABLE>
<CAPTION>
Item number as per Page
Item 601(a) of S-K Number
- ------------------ ------
<S> <C>
3(a) Articles of Incorporation
3(b) By-Laws
10(a) Acquisition Agreement for Texas Equipment Co., Inc.
10(b) Subscription Agreement with Varna Management
10(c) Subscription Agreement with Alstro Holdings
10(d) Subscription Agreement with Varna Management
10(e) Option Agreement with Jonathan Braun
10(f) Option Agreement with Charles Platkin
10(g) Option Agreement with Charles Barkley
10(h) Employment Agreement with Jonathan Braun
10(i) Employment Agreement with Charles Platkin
10(j) Contract with John Deere Company
21(a) List of Subsidiaries
</TABLE>
22
<PAGE> 1
EXHIBIT 3(a)
CERTIFICATE OF INCORPORATION
OF
HARD FUNDING, INC.
The undersigned, being a person of full age, do hereby makes and
acknowledge this Certificate of Incorporation for the purpose of forming a
corporation under the General Corporation Law of the State of Nevada.
ARTICLE I
The name of the corporation shall be HARD FUNDING, INC.
ARTICLE II
The purposes for which the corporation is organized are:
(a) to engage in acquisitions or the acquisition of suitable enterprises;
(b) to engage in any other lawful enterprise, service or activity for
which corporations may be organized under the General Corporation Law of the
State of Nevada, in addition to or in lieu of the purposes hereinabove set
forth in paragraph (a) of this Article.
ARTICLE III
Duration of the corporation shall be perpetual.
ARTICLE IV
The corporation shall have authority to issue 25,000,000 shares of
capital stock at a par value of $0.001 per share.
ARTICLE V
The minimum amount of consideration to be received by the corporation for
its shares before it shall commence business is $1,000.00 in cash or property
of equivalent value.
ARTICLE VI
The address of the initial registered office of the corporation is:
Crowell, Susich, Owen & Tackes, Ltd.
510 West Fourth Street
P.O. Box 1000
Carson City, NV 89702
The name of the initial registered agent of the corporation at such address is
Crowell, Susich, Owen & Tackes, Ltd.
23
<PAGE> 2
ARTICLE VII
The number of directors constituting the initial board of directors shall
be one (1) and the name and address of the person who is to serve as director
until the first meeting of shareholders, or until his successor is elected and
qualified is Harold Scott, 727 South Central Expressway, Richardson, Texas
75080.
ARTICLE VIII
The name and address of each incorporator is as follows:
Charles W. Barkley
805 Cameron Brown Building
Charlotte, Mecklenburg County, NC 28204.
ARTICLE IX
The Shareholders shall not have pre-emptive rights in any subsequent
issues of capital stock and shall not have cumulative voting rights.
IN WITNESS WHEREOF, the undersigned, being all of the incorporators
hereinabove named, dies hereby make this Certificate for the purpose of forming
a corporation pursuant to the General Corporation Laws of the State of Nevada
and does hereby certify that the facts hereinabove set forth are true and
correct and have accordingly set hereunto my hand and seal this 6th day of
August, 1990.
/s/ Charles W. Barkley
-----------------------------------
Charles W. Barkley, Incorporator
805 Cameron Brown Building
Charlotte, Mecklenburg County, NC 28204.
24
<PAGE> 3
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
I, Donna Young Reed, a Notary Public is and for Mecklenburg County and
State aforesaid, do hereby certify that Charles Barkley personally appeared
before me this day and acknowledged the due execution of the foregoing Articles
of Incorporation.
WITNESS my hand and notarial seal, this 6th day of August, 1990.
Donna Young Reed
-----------------------------
Notary Public
My Commission Expires:
March 31, 1994
[NOTARIAL SEAL]
25
<PAGE> 4
STATE OF NEVADA
BEFORE THE SECRETARY OF STATE
ARTICLES OF AMENDMENT TO THE CHARTER OF
HARD FUNDING, INC.
The undersigned corporation hereby executes these Articles of Amendment
pursuant to the General Corporation Law of the State of Nevada for the purpose
of amending its Charter as follows:
1. The name of the corporation is Hard Funding, Inc.
2. The corporation hereby amends its name from Hard Funding, Inc.
to Marinex Multimedia Corporation.
3. The date of the adoption of this amendment is February 12, 1996.
4. The number of shares outstanding and the number of shares entitled to
vote thereon is 510,115.
5. The number of shares voting for the amendment is 500,000 and the
number against is zero (0). Therefore, the amendment was approved and consented
to by the majority vote of the stockholders.
6. There is only one class of stock, common voting stock.
7. This amendment does not give rise to dissenters' rights or other
shareholder's rights in that the only amendment is the change of name.
IN WITNESS WHEREOF, these Articles are signed by the President and
Secretary of the corporation this 12th day of February, 1996.
Hard Funding, Inc.
by: /s/ Deborah Salerno
---------------------------
President
ATTEST:
/s/ Charles Barkley
- ----------------------
Corporate Secretary (Corporate Seal)
26
<PAGE> 5
STATE OF NEVADA
BEFORE THE SECRETARY OF STATE
ARTICLES OF AMENDMENT TO THE CHARTER OF
MARINEX MULTIMEDIA CORPORATION
The undersigned corporation hereby executes these Articles of Amendment
pursuant to the General Corporation Law of the State of Nevada for the purpose
of amending its Charter as follows:
1. The name of the corporation is Marinex Multimedia Corporation.
2. The corporation hereby amends its name from Marinex Multimedia
Corporation to Texas Equipment Corporation.
3. The date of the adoption of this amendment is September 24, 1996.
4. The number of shares outstanding and the number of shares entitled to
vote thereon is 24,975,000.
5. The number of shares voting for the amendment is 16,850,000 and the
Amendment was therefore approved and consented to by the majority vote of the
stockholders.
6. There is only one class of stock, common voting stock.
7. This amendment does not give rise to dissenters' rights or other
shareholder's rights in that the only amendment is the change of name.
IN WITNESS WHEREOF, these Articles are signed by the President and
Secretary of the corporation this 24th day of September, 1996.
MARINEX MULTIMEDIA CORPORATION
by:
--------------------------
President
ATTEST:
- ---------------------
Corporate Secretary (Corporate Seal)
27
<PAGE> 1
EXHIBIT 3(b)
BY-LAWS
OF
HARD FUNDING, INC.
ARTICLE I
IDENTIFICATION
Section 1. Principal Office. The principal office of the corporation
shall be at such place as the Board of Directors shall establish.
Section 2. Registered Office. The registered office of the corporation
required by law to be maintained in the State of Nevada may be, but need not
be, identical with the principal office.
Section 3. Other Offices. The corporation may have offices at such other
places, either within or without the State of Nevada, as the Board of Directors
may designate or as the affairs of the corporation may require from time to
time.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Place of Meetings. All meetings of the shareholders shall be
held at the principal office of the corporation, or at such other places,
either within or without the State of Nevada, as shall be designated on the
notice of the meeting or agreed upon by a majority of the shareholders entitled
to vote thereat.
Section 2. Annual Meetings. The annual meeting of the shareholders shall
be held at a time fixed by the Board of Directors on the tenth Friday following
the end of the fiscal year, if such is not a legal holiday, or on the first
following business day thereafter that is not a legal holiday. Failure to hold
the annual meeting of shareholders shall not invalidate or affect any action
thereafter taken by the shareholders or incumbent directors.
Section 3. Substitute Annual Meeting. If the annual meeting shall not be
held on the day designated by these By-Laws, a substitute annual meeting may be
called in accordance with the provisions of Section 4 of this Article II. A
meeting so called shall be designated and treated for all purposes as the
annual meeting.
Section 4. Special Meetings. Special meetings of the shareholders may be
called at any time by the President, Secretary or Board of Directors of the
corporation, or by any
28
<PAGE> 2
shareholder pursuant to the written request of the holders of not less than
one-tenth of all the shares entitled to vote at the meeting.
Section 5. Notice of Meetings. Written or printed notice stating the
time and place of the meeting shall be delivered not less than ten nor more
than fifty days before the date of any shareholders' meeting, either personally
or by mail, by or at the direction of the President, the Secretary, or other
person calling the meeting, to each shareholder of record entitled to vote at
such meeting; provided that such notice must be given not less than twenty days
before the date of any meeting at which a merger or consolidation is to be
considered. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the shareholder at this
address as it appears on the record of shareholders of the corporation, with
postage thereon prepaid.
In the case of a special meeting, the notice of meeting shall specifically
state the purpose or purposes for which the meeting is called; but, in the case
of an annual or substitute annual meeting, the notice of meeting need not
specifically state the business to be transacted thereat unless such a
statement is required by the provisions of the Nevada Business Corporation Act.
When a meeting is adjourned for thirty days or more, notice of the
adjourned meeting shall be given as in the case of an original meeting. When a
meeting is adjourned for less than thirty days in any one adjournment, it is
not necessary to give any notice of the adjournment is taken.
Section 6. Voting Lists. At least ten days before each meeting of
shareholders the Secretary of the corporation shall prepare an alphabetical
list of the shareholders entitled to vote at such meeting or any adjournment
thereof, with the address of and number of shares held by each, which list
shall be kept on file at the registered office of the corporation for a period
of ten days prior to such meeting, and shall be subject to inspection by any
shareholder at any time during the usual business hours. This list shall also
be produced and kept open at the time and place of the meeting and shall be
subject to inspection by any shareholders during the whole time of the meeting.
Section 7. Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders, except that at a substitute
annual meeting of shareholders the number of shares there represented either in
person or by proxy, even though less than a majority, shall constitute a quorum
for the purpose of such meeting.
The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawing of enough
shareholders to leave less than a quorum.
In the absence of a quorum at the opening of any meeting of shareholders,
such meeting may be adjourned from time to time by a vote of the majority of
the shares voting
29
<PAGE> 3
on the motion to adjourn, and at any adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at the
original meeting.
Section 8. Proxies. Shares may be voted either in person or by one or
more agents authorized by a written proxy executed by the shareholder or by his
duly authorized attorney in fact. A proxy is not valid after the expiration,
unless the person executing it specifies therein the length of time for which
it is to continue in force, or limits its use to a particular meeting, but no
proxy shall be valid after ten years from the date of its execution.
Section 9. Voting of Shares. Subject to the provisions of Section 4 of
Article III, each outstanding share entitled to vote shall be entitled to one
vote on each matter submitted to a vote at a meeting of shareholders.
Except in the election of directors as governed by the provisions of
Section 3 of Article III, the vote of a majority of the shares voted on any
matter at a meeting of shareholders at which a quorum is present shall be the
act of the shareholders on that matter, unless the vote of a greater number is
required by law or by the charter or By-Laws of this corporation.
Shares of its own stock owned by the corporation, directly or indirectly,
through a subsidiary corporation or otherwise, shall not be voted and shall not
be counted in determining the total number of shares entitled to vote, except
that shares held in a fiduciary capacity may be voted and shall be counted to
the extent provided by law.
Section 10. Informal Action by Shareholders. Any action which may be
taken at a meeting of the shareholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all
of the persons who would be entitled to vote upon such action at a meeting, and
filed with the Secretary of the corporation to be kept as part of the corporate
records.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The Incorporator has been vested with all
duties of the Board of Directors pursuant to Nevada General Corporation Law
78.120, until such time as a Board of Directors has been elected, pursuant to
the Articles of Incorporation. Upon appointment of the Board of Directors, the
business and affairs of the corporation shall be managed by its Board of
Directors.
Section 2. Number, Term and Qualifications. The number of directors
constituting the Board of Directors shall be not less than the minimum number
required by law. The corporation may have one director for so long as it has
only one shareholder; the corporation must have at least two directors for so
long as it has two shareholders; and, in the event the corporation has three
or more shareholders, the corporation shall
30
<PAGE> 4
have a minimum of three directors. Each director shall hold office until his
death, resignation, retirement, removal, disqualification or his successor
shall have been elected and qualified. Directors need not be residents of the
State of Nevada or shareholders of the corporation.
Section 3. Election of Directors. Except as provided in Section 6 of
this Article III, the directors shall be elected at the annual meeting of
shareholders; and those persons who receive the highest number of votes shall
be deemed to have been elected. If any shareholder so demands, the election of
directors shall be by ballot.
Section 4. No Cumulative Voting. There shall be no rights for any
shareholder entitled to vote at an election of directors to have the right to
vote the number of shares standing of record in his name for as many persons as
there are directors to be elected and for whose election he has a right to
vote, or to cumulate his votes by giving one candidate as many votes as the
number of such candidates.
Section 5. Removal. Any director may be removed at any time with or
without cause by a vote of the shareholders holding a majority of the
outstanding shares entitled to vote at an election of directors. However,
unless the entire Board is removed, an individual director shall not be removed
when the number of shares voting against the proposal for removal would be
sufficient to elect a director if such shares could be voted cumulatively at an
annual election. If any directors are so removed, new directors may be elected
at the same meeting.
Section 6. Vacancies. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining directors
even though less than a quorum, or by the sole remaining director. A director
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office. Any directorship to be filled by reason of an increase
in the authorized number of directors shall be filled only by election at an
annual meeting or at a special meeting of shareholders called for that purpose.
Section 7. Chairman of Board. There may be a Chairman of the Board of
Directors elected by the directors from their number at any meeting of the
Board. The Chairman shall preside at all meetings of the Board of Directors
and perform such other duties as may be directed by the Board.
Section 8. Compensation. The Board of Directors may compensate directors
for their services as such and may provide for the payment of any or all
expenses incurred by directors in attending regular and special meetings of the
Board.
ARTICLE IV
MEETING OF DIRECTORS
31
<PAGE> 5
Section 1. Regular Meetings. A regular meeting of the Board of Directors
shall be held immediately after, and at the same place as, the annual meeting
of shareholders. Failure to hold the annual meeting shall not invalidate or
affect any action thereafter taken by the shareholders or directors. In
addition, the Board of Directors may provide, by resolution, the time and
place, either within or without the State of Nevada, for the holding of
additional regular meetings.
Section 2. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the President or any two directors. Such
a meeting may be held either within or without the State of Nevada, as fixed
by the person or persons calling the meeting.
Section 3. Notice of Meetings. Regular meetings of the Board of
Directors may be held without notice. The person or persons calling a special
meeting of the Board of Directors shall, at least two days before the meeting,
give notice thereof by any usual means of communication. Such notice need not
specify the purpose for which the meeting is called.
Section 4. Waiver of Notice. Any director may waive notice of any
meeting. The attendance by a director at a meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
Section 5. Quorum. A majority of the number of directors fixed by these
By-Laws shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 6. Manner of Acting. Except as otherwise provided in these
By-Laws, the act of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors.
Section 7. Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his contrary vote is recorded or his dissent is otherwise entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
Secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
Section 8. Informal Action by Directors. Action taken by a majority of
the directors without a meeting is nevertheless Board action if written consent
to the action in question is signed by all the directors and filed with the
minutes of the proceedings of the Board, whether done before or after the
action so taken.
32
<PAGE> 6
Section 9. Committees of the Board. The Board of Directors, by
resolution adopted by a majority of the number of directors fixed by these
By-Laws, may designate three or more directors to constitute an Executive
Committee and other committees, each of which, to the extent authorized by law
and provided in such resolution, shall have and may exercise all of the
authority of the Board of Directors in the management of the corporation. The
designation of any committee and the delegation thereto of authority shall not
operate to relieve the Board of Directors, or any member thereof, of any
responsibility or liability imposed upon it or him by law.
ARTICLE V
OFFICERS
Section 1. Officers of the Corporation. The Incorporator has been
vested with all duties of the Board of Directors pursuant to Nevada General
Corporation Law 78.120, until such time as a Board of Directors has been
elected under the Articles of Incorporation. Prior to appointment of a Board
of Directors, the Incorporator shall have all duties typically associated with
officers of the corporation. Upon appointment of a Board of Directors, the
Board may appoint officers. The officers of the corporation may consist of a
President, a Secretary, a Treasurer and such officers as the Board of Directors
may from time to time elect. Any two or more offices may be held by the same
person, but no officer may act in more than one capacity where action of two or
more officers is required.
Section 2. Election and Term. The officers of the corporation shall be
elected by the Board of Directors and each officer shall hold office until his
death, resignation, retirement, removal, disqualification or his successor
shall have been elected and qualified.
Section 3. Compensation of Officers. The compensation of all officers of
the corporation shall be fixed by the Board of Directors and no officer shall
serve the corporation in any other capacity and receive compensation therefor
unless such additional compensation be authorized by the Board of Directors.
Section 4. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever in its
judgment the best interest of the corporation will be served thereby; but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed.
Section 5. Bonds. The Board of Directors may by resolution require any
officer, agent or employee of the corporation to give bond to the corporation,
with sufficient sureties, conditioned on the faithful performance of the duties
of his respective office or position, and to comply with such other conditions
as may from time to time be required by the Board of Directors.
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<PAGE> 7
Section 6. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all meetings of
the shareholders. He shall sign, with the Secretary, and Assistant Secretary,
or any other proper officer of the corporation thereunto authorized by the
Board of Directors, certificates for shares of the corporation, any deeds,
mortgages, bonds, contracts, or other instruments which the Board of Directors
has authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the corporation, or shall be required
by law to be otherwise signed or executed; and in general he shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 7. Vice-President. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice-Presidents in the
order of their length of service as Vice-Presidents, unless otherwise
determined by the Board of Directors, shall perform the duties of the
President, and when so acting shall have all the powers of and be subject to
all the restrictions upon the President. Any Vice-President may sign, with the
Secretary or an Assistant Secretary, certificates for shares of the
corporation; and shall perform other duties as from time to time may be
assigned to him by the President or Board of Directors.
Section 8. Secretary. The Secretary shall: (a) keep the minutes of the
meetings of shareholders, of the Board of Directors and of all Executive
Committees in one or more books provided for the purpose; (b) see that all
notices are duly given in accordance with the provisions of these By-Laws or as
required by law; (c) be custodian of the corporate records and of the seal of
the corporation and see that the seal of the corporation is affixed to all
documents the execution of which on behalf of the corporation under its seal is
duly authorized; (d) keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder; (e)
sign with the President, or a Vice-President, certificates for shares of the
corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors; (f) keep or cause to be kept in the State of Nevada at
the corporation's registered office or principal place of business a record of
the corporation's shareholders, giving the names and addresses of all
shareholders and the number and class of shares held by each, and prepare or
cause to be prepared voting lists prior to each meeting of shareholders as
required by law; and (g) in general perform all duties incident to the office
of secretary and such other duties as from time to time may be assigned to him
by the President or by the Board of Directors.
Section 9. Assistant Secretaries. In the absence of the Secretary or in
the event of his death, inability or refusal to act, the Assistant Secretaries
in the order of their length of service as Assistant Secretary, unless
otherwise determined by the Board of Directors, shall perform the duties of the
Secretary, and when so acting shall have all the powers of and be subject to
all the restrictions upon the Secretary. They shall perform such other duties
as may be assigned to them by the Secretary, by the President or by the Board
of
34
<PAGE> 8
Directors. Any Assistant Secretary may sign, with the President or a
Vice-President, certificates for shares of the corporation.
Section 10. Treasurer. The Treasurer shall (a) have charge and custody
of and be responsible for all funds and securities of the corporation; receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
depositories as shall be selected in accordance with the provisions of Section
4 of Article VII of these By-Laws; (b) prepare, or cause to be prepared, a true
statement of the corporation's assets and liabilities as of the close of each
fiscal year, all in reasonable detail, which statement shall be made and filed
at the corporation's registered office or principal place of business in the
State of Nevada within four months after the end of such fiscal year and
thereat kept available for a period of at least ten years; and (c) in general
perform all of the duties incident to the office of treasurer and such other
duties as from time to time may be assigned to him by the President or by the
Board of Directors, or by these By-Laws.
Section 11. Assistant Treasurers. In the absence of the Treasurer or in
the event of his death, inability or refusal to act, the Assistant Treasurers
in the order of their length of service as Assistant Treasurer, unless
otherwise determined by the Board of Directors, shall perform the duties of the
Treasurer, and when so acting shall have all the powers of and be subject to
all the restrictions upon the Treasurer. They shall perform such other duties
as may be assigned to them by the Treasurer, by the President, or by the Board
of Directors.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute or deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 3. Checks and Drafts. All checks, drafts or other orders for the
payment of money, issued in the name of the corporation, shall be signed by
such officer or officers, agent or agents, of the corporation and in such
manner as shall from time to time be determined by resolution of the Board of
Directors.
Section 4. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
depositories as the Board of Directors may select.
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<PAGE> 9
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. The Board of Directors (or persons
acting in similar capacities pursuant to Nevada General Corporation Law 78.120)
shall have authority to issue uncertificated shares if it chooses to do so. If
the Board determines that certificates should be issued, certificates
representing shares of the corporation shall be in such form as shall be
determined by the Board of Directors. If certificates are used, the
corporation shall issue and deliver to each shareholder certificates
representing all fully paid shares owned by him. Certificates shall be signed
by the President or a Vice-President and by the Secretary or Treasurer or an
Assistant Secretary or an Assistant Treasurer. All certificates for shares
shall be consecutively numbered or otherwise identified. The name and address
of the person to whom the shares represented thereby are issued, with the
number and class of shares and the date of issue, shall be entered on the stock
transfer books of the corporation.
Section 2. Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of the record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary, and on surrender
for cancellation of the certificate for such shares, if certificates have been
issued.
Section 3. Lost Certificate. The Board of Directors may direct a new
certificate to be issued in place of any certificate therefore issued by the
corporation claimed to have been lost or destroyed, upon receipt of an
affidavit of such fact from the person claiming the certificate of stock to
have been lost or destroyed. When authorizing such issue of a new certificate,
the Board of Directors shall require that the owner of such lost or destroyed
certificate, or his legal representative, give the corporation a bond in such
sum as the Board may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate claimed to have been
lost or destroyed, except where the Board of Directors by resolution finds that
in the judgment of the directors the circumstances justify omission of a bond.
Section 4. Closing Transfer Books and Fixing Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of shareholders
for any other proper purpose, the Board of Directors may provide that the stock
transfer books shall be closed for a stated period but not to exceed, in any
case, fifty days. If the stock transfer books shall be closed for the purpose
of determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten days immediately
preceding such meeting.
36
<PAGE> 10
In lieu of closing the stock transfer books, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such record date in any case to be not more than fifty days and,
in case of a meeting of shareholders, not less than ten days immediately
preceding the date on which the particular action, requiring such determination
of shareholders, is to be taken.
If the stock transfer books are not closed and no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholder or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof except where the determination has been
made through the closing of the stock transfer books and the stated period of
closing has expired.
Section 5. Holder of Record. The corporation may treat as absolute owner
of shares the person in whose name the shares stand of record on its books just
as if that person had full competency, capacity and authority to exercise all
rights of ownership irrespective of any knowledge or notice to the contrary or
any description indicating a representative, pledge or other fiduciary relation
or any reference to any other instrument or to the rights of any other person
appearing upon its record or upon the share certificate except that any person
furnishing to the corporation proof of his appointment as a fiduciary shall be
treated as if he were a holder of record of its shares.
Section 6. Treasury Shares. Treasury shares of the corporation shall
consist of such shares as have been issued and thereafter acquired but not
canceled by the corporation. Treasury shares shall not carry voting or
dividend rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. The Board of Directors may from time to time
declare, and the corporation may pay, dividends on its outstanding shares in
cash, property or its own shares pursuant to law and subject to the provisions
of its charter.
Section 2. Seal. The corporate seal of the corporation shall consist of
concentric circles between which is the name of the corporation and in the
center of which is inscribed SEAL; and such seal, as impressed on the margin
hereof, is hereby adopted as the corporate seal of the corporation.
Section 3. Waiver of Notice. Whenever any notice is required to be given
to any shareholder or director by law, by the charter or by these By-Laws, a
waiver thereof in
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<PAGE> 11
writing signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be equivalent to the giving of such
notice.
Section 4. Indemnification. Any person who at any time serves or has
served as an incorporator, director, officer, employee or agent of the
corporation, or in such capacity at the request of the corporation for any
other corporation, partnership, joint venture, trust or other enterprise, shall
have a right to be indemnified by the corporation to the fullest extent
permitted by the Nevada General Corporation Law. Such indemnification may
include indemnification against (a) reasonable expenses, including attorneys'
fees, actually and necessarily incurred by him in connection with any
threatened, pending or completed action, suit or proceedings, whether civil,
criminal, administrative or investigative, and whether or not brought by or on
behalf of the corporation, seeking to hold him liable by reason of the fact
that he is or was acting in such capacity, and (b) reasonable payments made by
him in satisfaction of any judgment, money decree, fine, penalty or settlement
for which he may have become liable in any such action, suit or proceeding.
The Board of Directors of the corporation shall take all such action as
may be necessary and appropriate to authorize the corporation to pay the
indemnification required by this By-Law, including without limitation, to the
extent needed, making a good faith evaluation of the manner in which the
claimant for indemnity acted and of the reasonable amount of indemnity due him
and giving notice to, and obtaining approval by, the shareholders of the
corporation.
Any person who at any time after the adoption of this By-Law serves or has
served in any of the aforesaid capacities for or on behalf of the corporation
shall be deemed to be doing or to have done so in reliance upon, and as
consideration for, the right of indemnification provided herein. Such right
shall inure to the benefit of the legal representatives of any such person and
shall not be exclusive of any other rights to which such person may be entitled
apart from the provision of this By-Law.
Section 5. Fiscal Year. The fiscal year of the corporation shall be
fixed by the Board of Directors.
Section 6. Amendments. Except as otherwise provided herein, these
By-Laws may be amended or repealed and new by-laws may be adopted by the
affirmative vote of a majority of the directors at any regular or special
meeting of the Board of Directors.
No by-law adopted or amended by the shareholders shall be amended or
repealed by the Board of Directors, except to the extent that such by-law
expressly authorizes its amendment or repeal by the Board of Directors.
The provisions of the Nevada Revised Statutes including NRS 78.378 to
78.3793 shall not apply nor any similar provision unless mandatory.
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<PAGE> 12
These bylaws have been adopted this 10th day of March, 1995.
/s/
----------------------------------
39
<PAGE> 1
EXHIBIT 10(a)
AGREEMENT
CONCERNING THE EXCHANGE OF COMMON STOCK
BETWEEN
TEXAS EQUIPMENT CO., INC.
AND
MARINEX MULTIMEDIA CORPORATION
INDEX
<TABLE>
<S> <C> <C> <C>
ARTICLE I - EXCHANGE OF SECURITIES ...................... 6
1.1 - Issuance of Shares ................................. 6
1.2 - Exemption from Registration ........................ 6
1.3 - Covenants Not to Compete ........................... 6
1.4 - Assignment of Copyrights ........................... 6
1.5 - Reservation of Shares .............................. 6
1.6 - ReConstitution of Board; Resignation of Officers and
- Directors .......................................... 7
1.7 - Proceeds of Marinex ................................ 7
1.8 - Rights of Registration ............................. 7
1.9 - Agreement Binding Upon Shareholders ................ 8
1.10 - Operation of Marinex - New York .................... 8
1.11 - Employment Agreements of Braun and Platkin;
Option to Acquire Additional Interest in
Marinex - New York ................................ 8
1.12 - Employee Stock Options ............................. 10
</TABLE>
40
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
ARTICLE II - REPRESENTATIONS AND WARRANTIES
OF TEXAS EQUIPMENT .............................. 10
2.1 - Organization ......................................... 10
2.2 - Capital .............................................. 11
2.3 - Subsidiaries ......................................... 11
2.4 - Directors and Officers ............................... 11
2.5 - Financial Statements ................................. 11
2.6 - Absence of Changes ................................... 13
2.7 - Absence of Undisclosed Liabilities ................... 13
2.8 - Tax Returns .......................................... 13
2.9 - Investigation of Financial Condition ................. 13
2.10 - Patents, Trade Names and Rights ...................... 14
2.11 - Compliance with Laws ................................. 14
2.12 - Litigation ........................................... 14
2.13 - Authority ............................................ 14
2.14 - Ability to Carry Out Obligations ..................... 14
2.15 - Full Disclosure ...................................... 15
2.16 - Assets ............................................... 15
2.17 - Material Contracts; John Deere & Company ............. 15
2.18 - Indemnification of Officers and Directors ............ 15
2.19 - Retention of Public Relations Firm ................... 16
2.20 - Additional Warranties of Texas Equipment ............. 16
ARTICLE III - REPRESENTATIONS AND WARRANTIES
OF MARINEX ..................................... 16
3.1 - Organization ......................................... 16
3.2 - Capital .............................................. 17
3.3 - Subsidiaries ......................................... 17
3.4 - Directors and Officers ............................... 18
3.5 - Financial Statements ................................. 18
3.6 - Updated Financial Statements ......................... 18
3.7 - Absence of Undisclosed Liabilities ................... 18
3.8 - Tax Returns .......................................... 18
3.9 - Investigation of Financial Condition ................. 19
3.10 - Patents, Trade Names and Rights ...................... 19
3.11 - Compliance with Laws ................................. 19
3.12 - Litigation ........................................... 19
3.13 - Authority ............................................ 19
3.14 - Ability to Carry Out Obligations ..................... 19
3.15 - Full Disclosure ...................................... 20
3.16 - Assets ............................................... 20
3.17 - Material Contracts ................................... 20
3.18 - Market for Company Stock ............................. 20
</TABLE>
41
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
3.19 - Registration of Shares .............................. 20
3.20 - Additional Warranties of Marinex .................... 21
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
OF TEXAS EQUIPMENT SHAREHOLDERS ............. 21
4.1 - Share Ownership ..................................... 21
4.2 - Investment Intent ................................... 22
4.3 - Legend .............................................. 23
ARTICLE V - COVENANTS ................................... 23
5.1 - Investigative Rights ............................... 23
5.2 - Conduct of Business ................................ 23
ARTICLE VI - CONDITIONS PRECEDENT TO MARINEX'S
PERFORMANCE ................................. 23
6.1 - Conditions ......................................... 23
6.2 - Accuracy of Representations ........................ 24
6.3 - Performance ........................................ 24
6.4 - Absence of Litigation .............................. 24
6.5 - Officer's Certificate .............................. 24
6.6 - Legal Opinion ...................................... 24
6.7 - Auditor's Opinion .................................. 24
ARTICLE VII - CONDITIONS PRECEDENT TO TEXAS
EQUIPMENT'S PERFORMANCE ..................... 24
7.1 - Conditions ......................................... 24
7.2 - Accuracy of Representations ........................ 25
7.3 - Performance ........................................ 25
7.4 - Absence of Litigation .............................. 25
7.5 - Current Status ..................................... 25
7.6 - Directors of Marinex .............................. 25
7.7 - Officers of Marinex ................................ 25
7.8 - Assets of Marinex .................................. 26
7.9 - Officer's Certificate .............................. 26
7.10 - Legal Opinion ...................................... 26
ARTICLE VIII - CLOSING ..................................... 26
8.1 - Closing ............................................ 26
</TABLE>
42
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
ARTICLE IX - MISCELLANEOUS ............................. 27
9.1 - Captions and Headings .............................. 27
9.2 - No Oral Change ...................................... 27
9.3 - Non-Waiver .......................................... 27
9.4 - Time of Essence ..................................... 27
9.5 - Entire Agreement .................................... 27
9.6 - Choice of Law ....................................... 27
9.7 - Counterparts ........................................ 28
9.8 - Notices ............................................. 28
9.9 - Binding Effect ...................................... 28
9.10 - Mutual Cooperation .................................. 28
9.11 - Brokers ............................................. 28
9.12 - Announcements ....................................... 28
9.13 - Expenses ............................................ 29
9.14 - Survival of Representations and 29
Warranties .......................................... 29
9.15 - Exhibits ............................................ 29
- Signatures .......................................... 29
</TABLE>
43
<PAGE> 5
AGREEMENT
THIS AGREEMENT made this 17th day of September, 1996, by and between
MARINEX MULTIMEDIA CORPORATION, a Nevada corporation ("Marinex" or
"Marinex Nevada"), and TEXAS EQUIPMENT CO., INC., a Texas Corporation
("Texas Equipment").
WHEREAS, Marinex desires to acquire all of the shares of common stock
of Texas Equipment in exchange for an aggregate of 16,850,000
authorized but unissued shares of the common stock of Marinex, par
value $0.001;
WHEREAS, Texas Equipment is a privately held Texas corporation engaged
in the retail distribution of farm equipment, with all its issued and
outstanding shares being held in equal amounts by the three children of
its founder, Mr. Paul Condit;
WHEREAS, Marinex is a publicly held company (NASD Bulletin Board
symbol "MRNX") having become public by a transaction in February, 1996.
Marinex has one subsidiary, Marinex Multimedia Corp., a New York
corporation, ("Marinex -New York") with offices in New York, New York;
WHEREAS, all business operations and activities (other than those
connected with the securities and corporate laws) are conducted through
the New York subsidiary, which is engaged in the business of creation
of digital content, including a CD-ROM-only magazine entitled "Trouble
& Attitude"; a site on the world wide web known generally as "The Biz
Entertainment CyberNetwork" (http://www/bizmag.com); and a site on the
world wide web known generally as "The East Village"
(http://www/eastvillage.com). The web site properties can also be
accessed through Time-Warner's Pathfinder site. Thus, the public
company remains a holding company without business operations whose
sole asset is its ownership of the operating New York subsidiary. For
clarity, the public holding company may be referred to as Marinex
Nevada and the operating multimedia subsidiary will be referred to as
Marinex New York; and
WHEREAS, Texas Equipment desires to assist Marinex in acquiring all of
the issued and outstanding shares of Texas Equipment pursuant to the
terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants
and representations contained herein, THE PARTIES AGREE AS FOLLOWS:
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<PAGE> 6
ARTICLE I
EXCHANGE OF SECURITIES
1.1 Issuance of Shares. Subject to all the terms and conditions of
this Agreement, Marinex agrees to exchange 16,850,000 fully paid and
nonassessable unregistered shares of its $0.001 par value common stock
("Marinex Shares") in exchange for all of the shares of Texas
Equipment, including all issued and outstanding common stock of Texas
Equipment. Marinex Shares shall be exchanged pro rata for the Shares
of Texas Equipment held by the existing Shareholders, whose names are
set forth in Exhibit 1.1A hereto. The Marinex Shares will be issued
directly to holders of the Texas Equipment Shares on the Closing Date.
1.2 Exemption from Registration. The parties hereto intend that
the Marinex Shares to be issued to the holders of the Texas Equipment
Shares shall be exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Act"), pursuant to Section
4(2) of the Act and the rules and regulations promulgated thereunder.
1.3 Covenants Not To Compete. At closing, Marinex shall enter into
a binding covenants not to compete with Mr. Charles Platkin and Mr.
Jonathan Braun, the current executive officers of Marinex, the terms
of which shall bar the Employee from engaging in a business that
directly competes with the farm equipment distribution business of the
Company, within the continental United States and Mexico, for a period
of at least twenty four months from the date of acquisition.
1.4 Assignment of Copyrights. To the best of its knowledge, Texas
Equipment is not infringing upon or otherwise acting adversely to the
right or claimed right of any person with respect to all copyrighted or
trademarked material or other propriety or incorporeal rights, and
products used in its business. The Company has not been notified that
it is in violation of or infringing upon any third party's rights in or
to any copyrighted or trademarked material.
1.5 Reservation of Shares. The parties agree that an option for
250,000 common voting shares (in addition to the amount to be exchanged
to Texas Equipment shareholders) at an option price of $1.00 shall be
issued to the Company's counsel, Charles Barkley, Attorney at Law, 3001
Planters Walk Court, Charlotte, NC 28210-8025, or his designees, in
consideration of attorneys fees and investment banking fees in
connection with his assistance in the introduction, negotiation and
structuring of the acquisition. The option shall be valid for a period
of five years from the Closing Date. Upon payment of the exercise
price of $1.00, the Company shall cause 250,000 shares to be issued
45
<PAGE> 7
from the authorized but unissued capital stock of the Company.
The Company agrees to reserve sufficient shares at all times during the
life of the option with which to fulfill its obligations hereunder.
Neither party has engaged any other finders, consultants, or investment
bankers with respect to the consummation of this Agreement.
1.6 Reconstitution of Board; Resignation of Officers and Directors. At
the Closing (contemplated to occur on or about September 13,
1996), the Board of Directors of the Company shall consist of three
board members of which two board members will be designees of Texas
Equipment and one designee of Platkin and Braun or designee for a
minimum of two years. A resolution will also be submitted for
shareholder approval which provides, among other things, for a nine
member board of directors of which the Texas Equipment shareholders
agree to vote for three designees appointed by Braun and Platkin and
Braun and Platkin agree to vote for the designees of Texas Equipment
for the remaining board seats.
Contemporaneously with the acquisition, the remaining officers,
directors, counsel and accountants for Marinex shall tender their
resignations, from all capacities, of the Company. The existing
Directors shall appoint successors at the direction of Texas
Equipment's shareholders and then shall immediately resign. All
existing officers of Marinex shall tender their resignations, from all
capacities, and the newly appointed Directors shall appoint new
officers.
1.7 Proceeds of Marinex. At closing, all existing current
liabilities of Marinex Nevada shall be paid off and approximately
$100,000 will be paid to existing noteholders, leaving cash assets of
approximately $1.85 Million. The net cash on the date of closing will be
divided equally between Marinex - Nevada and Marinex - New York for
working capital purposes. If the amount available to Marinex - Nevada is
less than $925,000 on the Closing Date, the Transaction may be canceled
by the Shareholders of Texas Equipment. Closing proceeds shall be made
payable to Texas Equipment Co., Inc.
All funds are presently in accounts in the name of the Marinex - New
York on a "seven day" CD rollover, which permits withdrawals without
penalty each Friday. Closing shall be set so that the withdrawal may be
conducted on Friday. The Officers of Marinex - New York shall present to
Texas Equipment at closing either an irrevocable wire transfer
instruction or an official, certified, or bank check in favor of Marinex
- Nevada, or shall make such other transfer arrangements as permit the
transfer of the funds without penalty.
1.8 Rights of Registration. The parties respectively acknowledge
the restrictions upon sale of private stock as provided for in
Commission Rules 144 and 145.
46
<PAGE> 8
1.9 Agreement Binding Upon Shareholders. By accepting the shares
of Marinex offered hereby, each Shareholder of Texas Equipment
acknowledges the existence of this Agreement and covenants as follows:
(a) that the terms and conditions of this Agreement are binding
upon the Shareholder to the same extent as if the shareholder had been
a signatory hereto;
(b) that the shares of Marinex distributed to shareholder shall be
appropriately legended;
(c) the shareholder waives any dissenter's rights, rights of
appraisal, or other remedies available under any applicable state or
federal law by reason of the acquisition contemplated hereunder;
(d) the shareholder waives any rights or claims which might
otherwise exist under any right of action for any shareholder
derivative suit, claims of corporate mismanagement, malfeasance, or
negligence, claims for rescission, and any and all other claims against
Texas Equipment, Marinex, and their respective officers, directors,
accountants, attorneys and agents which result from the consummation of
this Agreement.
1.10 Operation of Marinex - New York. Marinex - New York will be
governed after the acquisition under the guidance of a three member
Board of Directors which shall include Mr. Charles S. Platkin, Mr.
Jonathan Braun (or their designees) and a third member designated by
Marinex - Nevada. Mr. Braun and Mr. Platkin shall continue in their
respective capacities as officers of Marinex - New York subject to the
employment provisions contained elsewhere herein.
Each member of the Board of Directors of Marinex New York
will be elected for a five year term or the longest period permitted
by law, which may not be altered except upon exercise of the options
and voting trusts to Messrs. Braun and Platkin as set forth herein.
1.11 Employment Agreements of Braun and Platkin; Option to Acquire
Additional Interest in Marinex - New York. Jonathan Braun and Charles
S. Platkin presently have extensive Employment Agreements with Marinex
- Nevada. Braun and Platkin hereby agree to cancel, release and waive
all remaining rights under those Employment Agreements. Management and
control of Marinex - Nevada shall be conferred initially upon the
designees of Texas Equipment and thereafter in accordance with the
votes of the shareholders. In addition, Messrs. Braun and Platkin will
execute covenants not to compete as contained in 1.3.
47
<PAGE> 9
In further consideration of the cancellation of the Employment
Agreements with the public, parent company, a stock option in the
wholly owned subsidiary Marinex - New York will be issued to Mr.
Jonathan Braun and Mr. Charles S. Platkin. This option will permit
Messrs. Braun and Platkin to purchase 25% ownership each (for a total
of 50%) in Marinex New York for an exercise price of $1.00. The option
may be exercised, in the sole discretion of the Option holder, upon the
happening of one or more of the following corporate events:
(a) Bona Fide offer to purchase the interest of Braun and/or Platkin
or any sale of an interest in excess of 10% in Marinex New York;
(b) Bankruptcy, insolvency, receivership, dissolution or liquidation
of Texas Equipment or any other action under which Texas Equipment seeks
legal or equitable relief from its creditors;
(c) Reorganization, recombination, declaration of a stock dividend
of Marinex - New York stock by Marinex - Nevada;
(d) Sale or spin out of either subsidiary;
(e) Merger under which control of Marinex - Nevada is changed or
acquisition under which shares totaling more than 25% of the
outstanding stock of Marinex - Nevada is issued;
(f) Any event which requires approval of 2/3 or more of the
shareholders of the Company or which constitutes a fundamental change
under Nevada corporate law, as amended;
(g) Public offering of shares totaling 10% or more of Marinex -
New York, including securities which convert into shares such as
warrants, options, convertible debentures or debt instruments and other
convertible securities.
(h) Upon dilution of the holdings of the present Marinex - Nevada
shareholders (as of the day before the Closing Date) by more than 20%
during the first two years following the Closing Date (or a series of
actions which, when combined, cause such dilution) which, unless the
issuances were issued at no more than a 50% discount from the average
bid price for the thirty day period prior to the issuance;
(i) or any other similar event or occurrence that fundamentally
alters the nature of the relationship between Braun and/or Platkin and
the Company.
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<PAGE> 10
Upon the options have been triggered by any of the above
occurrences, then the Option shall remain open and exerciseable for a
period of five years. For purposes of this paragraph, the shares
issued pursuant to the existing options to Charles Barkley and
pursuant to the Marinex Employees Stock Option Plan shall be excluded
from the computations.
In consideration of the cancellation of Employment Agreements as
to Marinex Nevada, attached Employment Agreements will be executed by
Marinex New York to Mr. Braun and Mr. Platkin under which Messrs.
Braun and Platkin will serve Marinex - New York in capacities
identical to those now served on behalf of Marinex - Nevada.
Upon the exercise of the option by Messrs. Platkin and Braun,
Marinex Nevada will enter into a voting trust agreement whereby all of
the shares of Marinex - New York held by Marinex Nevada will be voted,
in equal amounts, by Messrs. Braun and Platkin, or their designee, for
15 years (or the longest period allowed by law), renewable in ten year
increments (or the longest period allowed by law).
1.12 Employee Stock Options. The Company also agrees to maintain the
existing employee stock option plan including the Company's obligation
to register the shares and to provide for shares to fund the plan, up
to 475,000 shares initially. The employee stock option plan is
dedicated to existing Marinex employees, agents, consultants, actors
and shareholders and includes an option price of $4.00 per share.
Since all authorized but unissued shares presently available will be
depleted in connection with the Transaction, Texas Equipment agrees to
increase the authorized capital in an amount at least sufficient to
fund the employee stock option shares. To the extent that shareholder
permission is required to effect the stock option plan, then the Texas
Equipment shareholders agree to vote all of their shares in favor of
the adoption, ratification and/or continuation of the plan and to
submit the matter to a vote of shareholders within 20 days of the
Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TEXAS EQUIPMENT
Texas Equipment hereby represents and warrants to Marinex that:
2.1 Organization. Texas Equipment is a corporation duly organized
on December 14, 1987, validly existing and in good standing under the
laws of Texas, has all necessary corporate powers to own its properties
and to carry on its business as now owned and operated by it, and is
duly qualified to do
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<PAGE> 11
business and is in good standing in each of the states where its
business requires qualification.
2.2 Capital. The authorized capital stock of Texas Equipment
consists solely of 100,000 of $ no par value common stock, of which
60,000 shares are issued and outstanding. Marinex shares will be
issued prorata to the shareholders listed in the Shareholder's List
which shall be included as an Exhibit to this Agreement. All of the
issued and outstanding shares of Texas Equipment are duly and validly
issued, fully paid and nonassessable. There are no outstanding
subscriptions, options, rights, warrants, debentures, instruments,
convertible securities or other agreements or commitments obligating
Texas Equipment to issue or to transfer from treasury any additional
shares of its capital stock of any class.
2.3 Subsidiaries. Texas Equipment has no subsidiaries, affiliated
companies or other associated entities and does not own any interest in
any other enterprise. Texas Equipment shall become a wholly owned
subsidiary of Marinex by exchanging all authorized, issued, and
outstanding shares to Marinex in consideration of this Exchange
Agreement.
2.4 Directors and Officers. Exhibit 2.4 hereto contains the names
and titles of all directors and officers of Texas Equipment as of the
date of this Agreement. It is contemplated that the present officers
and directors, auditors and agents of Texas Equipment will remain in
their respective capacities subsequent to the Transaction.
2.5 Financial Statements. Texas Equipment has not yet procured
audited financial statements but that the firm of Killman, Murrel has
been engaged to audit Texas Equipment. In lieu of audited financial
statements, Texas Equipment has furnished unaudited statements for the
years 1992 through 1995, a copy of which is incorporated herein by
reference and included as Exhibit 2.5.
Texas Equipment has engaged Killman, Murrell & Company, CPAs, of
Odessa, Texas to prepare audited financial statements within the time
allowed by Form 8-K in accordance with the requirements of Regulation
S-X as promulgated by the Securities & Exchange Commission. At closing,
Texas Equipment shall furnish a statement from the auditors to the
effect that a sufficient examination has been conducted to determine
that the financial statements of Texas Equipment are auditable and that
they have no basis to believe that a materially adverse adjustment will
be required to any of the unaudited financial statements previously
furnished to Marinex.
Texas Equipment management warrants that the figures fairly
present the financial position of Texas Equipment as of the dates of
the balance
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<PAGE> 12
sheets included in the financial statements and the results
of operations for the periods indicated. The unaudited statement
presented to Marinex management indicated, inter alia, December 31,
1995 figures as follows:
Assets $ 8,518,611
Stockholder's Equity 3,008,311
Revenues $25,015,591
Net After Tax Income 600,000.
The parties acknowledge that the figures contained in four of the
1995 columns, assets, stockholder's equity, revenues or net income,
have been relied upon by Marinex management and form a material aspect
upon which the Transaction has been agreed upon. In the event that the
audited figures (including adjustments required by Regulation S-X for
financial statement presentation) for any of the four 1995 columns fall
10% or more below the represented figures, then the Texas Equipment
shareholders agree to return shares on a pro rata basis to the Marinex
treasury as follows. The actual percentage shortfall of the column with
the greatest percentage difference shall be used. The excess shortfall
shall be multiplied by the number of shares issued to Texas Equipment
Shareholders. The product will equal the number of shares to be
returned by Texas Equipment shareholders.
Texas Equipment has also furnished internal unaudited accounting
records as of July 31, 1996 indicating assets in excess of $10 Million
and shareholder's equity of $3,988,000. The Company represents that it
expects to be profitable in 1996 with revenues in excess of $25
Million with net pretax income in excess of $1.7 Million. If the
audited figures for the fiscal year ended December 31, 1996 exhibit a
shortfall of greater than 10% for either revenues or earnings,
additional shares will be returned to the treasury of the Company on
the same basis as stated above. In making the computations, only the
operational performance of Texas Equipment for the year ending December
31, 1996 will be considered and charges or losses related to Marinex
Nevada or Marinex New York shall not be pooled or otherwise included.
By way of example, if the largest shortfall in any column equals
15%, then the computations shall be determined as follows:
15% (total shortfall of the column
with the largest percentage shortfall)
-10% The permissible deviation from the submitted numbers
----
5% Impermissible difference
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<PAGE> 13
16,850,000 Shares issued
X .05 Impermissible Difference
----------
842,500 Shares to be returned to Treasury
Thus, each Texas Equipment Shareholder would be required to return
a prorata share of the number derived and each Texas Equipment
Shareholder hereby agrees to authorize management to cancel a
sufficient number of shares to effect the intents of this paragraph.
There will be no shortfall, however, if the downward adjustment is
matched by an upward adjustment greater than 10% in either the net
income or stockholder's equity columns.
All parties are aware that the financial statements presented
would support the requirements for the listing of the Company's
securities on the NASDAQ exchange and it is the intention of the
parties to promptly file for such listing.
2.6 Absence of Changes. Since the date of Texas Equipment's most
recent financial statements included in Exhibit 2.5, there has not been
any undisclosed changes in the financial condition or operations of
Texas Equipment, except for changes in the ordinary course of business,
which changes have not in the aggregate been materially adverse.
Notwithstanding, a parcel of real estate has been reconveyed in
anticipation of this Agreement.
2.7 Absence of Undisclosed Liabilities. As of the date of Texas
Equipment's most recent balance sheet included in Exhibit 2.5, Texas
Equipment did not have any material debt, liability or obligation of
any nature, whether accrued, absolute, contingent or otherwise, and
whether due or to become due, that is not reflected in such balance
sheet.
2.8 Tax Returns. Within the times and in the manner prescribed by
law, Texas Equipment has filed all federal, state and local tax returns
required by law and has paid all taxes, assessments and penalties due
and payable except for those for which returns are not yet due. The
provisions for taxes, if any, reflected in Exhibit 2.5 are adequate for
the periods indicated. There are no present disputes as to taxes of
any nature payable by Texas Equipment. In addition, there are no
deficiencies, past or present, in any withholding, sales, or similar
taxes which invoke fiduciary capacities. There are presently no offer
and compromise agreements pertaining to work out arrangements, payouts
or similar timed payments for state or federal employee withholding
taxes, sales taxes, unemployment taxes, or other noncompliance with
respect to withholding or tax liabilities.
2.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein,
Marinex and its legal counsel, accountants and representatives have
met with Texas Equipment's accountants and representatives to discuss
the financial condition
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<PAGE> 14
of Texas Equipment. Texas Equipment has made available to Marinex all
books and records of Texas Equipment and there are no separate books
and records, undisclosed accounts, payments, or any transactions that
are not in accordance with generally accepted accounting techniques or
which violate the Foreign Corrupt Practices Act, or similar state or
federal law. The Texas Equipment shareholders shall also prepare and
sign standard due diligence and officer/director questionnaires, which
all parties agree form a material basis for this
Agreement.
2.10 Patents, Trade Names and Rights. To the best of its
knowledge, Texas Equipment is not infringing upon or otherwise acting
adversely to the right or claimed right of any person with respect to
patents, trade names and rights.
2.11 Compliance with Laws. Texas Equipment has complied with, and
is not in violation of, applicable federal, state or local statutes,
laws and regulations (including, without limitation, and to the
knowledge of the officers of The Texas Equipment, any applicable
building, zoning or other law, ordinance or regulation) affecting its
properties or the operation of its business.
2.12 Litigation. Texas Equipment is not a defendant to any suit,
action, arbitration or legal, administrative or other proceeding, or
governmental investigation which is pending or, to the best knowledge
of Texas Equipment, threatened against or affecting Texas Equipment
which could have a materially adverse impact on Texas Equipment or its
business, assets or financial condition. There have been no threats or
demands, outside the ordinary course Texas Equipment, with respect to
threatened litigation or other malfeasance or nonfeasance. Texas
Equipment is not in default with respect to any order, writ, injunction
or decree of any federal, state, local or foreign court, department,
agency or instrumentality applicable to it. Texas Equipment is not
engaged in any material lawsuits to recover monies due it.
2.13 Authority. The Board of Directors of Texas Equipment has
authorized the execution of this Agreement and the consummation of the
transactions contemplated herein, and Texas Equipment has full power
and authority to execute, deliver and perform this Agreement, and this
Agreement is a legal, valid and binding obligation of Texas Equipment
and is enforceable in accordance with its terms and conditions.
2.14 Ability to Carry Out Obligations. The execution and delivery
of this Agreement by Texas Equipment and the performance by Texas
Equipment of its obligations hereunder in the time and manner
contemplated will not cause, constitute or conflict with or result in
(a) any breach or violation of any of the provisions of or constitute
a default under any license, indenture, mortgage, instrument, article
of incorporation, bylaw, or other agreement or instrument to
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<PAGE> 15
which Texas Equipment is a party, or by which it may be bound, nor will
any consents or authorizations of any party other than those hereto be
required; (b) an event that would permit any party to any agreement or
instrument to terminate it or to accelerate the maturity of any
indebtedness or other obligation of Texas Equipment; or (c) an event
that would result in the creation or imposition of any lien, charge
or encumbrance on any asset of Texas Equipment.
2.15 Full Disclosure. None of the representations and warranties
made by Texas Equipment herein or in any exhibit, certificate or
memorandum furnished or to be furnished by Texas Equipment, or on its
behalf, contains or will contain any untrue statement of material fact
or omit any material fact the omission of which would be misleading.
2.16 Assets. Texas Equipment has good and marketable title to all
of its properties, free and clear of all liens, claims and
encumbrances, except as otherwise indicated in Exhibit 2.5. Texas
Equipment presently has three retail farm equipment sales locations in
Pecos, Plains and Seminole, Texas.
2.17 Material Contracts; John Deere & Company. Texas Equipment
has no material contracts other than distribution agreements with John
Deere & Company. Texas Equipment is a distributor of farm machinery and
equipment through John Deere & Company ("Deere"); has good relations
with Deere and is in compliance and good standing with all material
terms, conditions and agreements with Deere. Texas Equipment represents
that Deere has been apprised of its intention to become acquired by a
public company; to advance a business plan under which the present
company seeks acquisitions of Deere distributors in the United States
and abroad; and Texas Equipment has received verbal assurance from
Deere to the effect that Deere has no objection to any of these
activities. Nothing contained in this Agreement or the related Exhibits
shall cause a default in any of the agreements with Deere.
Texas Equipment also has agreements and relationships with area
banks for a variety of routine services, including the financing of
certain debt, all as shown on the financial statements and in the
regular course of business. Although these relationships change from
time to time, Texas Equipment has no reason to presently suspect or
actual knowledge that any changes in those arrangements are
forthcoming.
2.18 Indemnification of Officers and Directors. The parties
acknowledge and agree that prior to execution of this Agreement, each
party had separately adopted resolutions and bylaws affording
indemnification, to the fullest extent permitted by law, of all
officers, directors, promoters, attorneys and other responsible
persons, past or present. The parties hereby agree that each shall,
to the fullest extent permitted by law, retain and maintain such
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<PAGE> 16
indemnification provisions with respect to its officers and directors
and that each party shall hereafter continuously maintain the fullest
indemnification of officers and directors, past, present and future, as
permitted by law, including officers and directors in Marinex - Nevada,
Marinex - New York, and Texas Equipment and specifically Messrs. Braun
and Platkin.
2.19 Retention of Public Relations Firm. For at least two years
from the date of acquisition, Marinex Nevada shall retain public
relations personnel experienced in handling investor relations and
related securities matters. This person or firm capacities may be, but
need not be, the persons that have previously served in those
capacities.
2.20 Additional Warranties of Texas Equipment. Texas Equipment
hereby represents and warrants that:
(a) It is a corporation in good standing in its jurisdictions and has the
authority to perform under this Agreement and Texas Equipment has the ability
to obtain audited financial statements as required by Regulation S-X, with no
material deviations from generally accepted accounting principles and that the
financial statements shall have an unqualified opinion of its auditor;
(b) It has not entered into the operation of any business, acquired any
properties, entered into any leases or entered into any contracts which would
materially affect its financial condition except as disclosed;
(c) It has not executed a presently binding Letter of Intent, Acquisition
Agreement, Merger Agreement, or similar agreement with any other company, firm,
entity, or individual, nor has it entered into any finders, investment banking
or similar corporate finance consulting contract;
(d) The consummation of the transactions contemplated by this Agreement,
including the closing thereupon, shall not cause a breach of any other contract
or agreement.
(e) It has furnished to Marinex full disclosure, has divulged true,
accurate and complete information with respect to all items requested, is in
compliance with applicable law, and is not a party defendant to any material
litigation or governmental investigation;
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MARINEX
Marinex represents and warrants to Texas Equipment that:
55
<PAGE> 17
3.1 Organization. Marinex is a corporation duly organized, validly
existing and in good standing under the laws of Nevada, has all
necessary corporate powers to own its properties and to carry on its
business as now owned and operated by it, and has not been qualified to
do business in any other state, including New York.
3.2 Capital. The authorized capital stock of Marinex Multimedia
Corporation, formerly known as Hard Funding, Inc., consists of
25,000,000 shares of common stock, par value $0.001 of which
approximately 7,800,000 shares of common stock are currently issued and
outstanding, of which 9,775 shares were sold to the public in the
initial public offering pursuant to the Company's Public Offering, as
filed with the Atlanta Regional Office of the Securities and Exchange
Commission on a Form SB-2 Registration Statement.
A total of 9,775 shares of voting common stock, as defined in the
Prospectus, were sold pursuant thereto and an additional 340 shares
were issued to the underwriter as a portion of the underwriting
compensation. Hard Funding had an authorized capital consisting of
25,000,000 voting common shares, par value $.001 per share. Following
the Hard Funding offering, 510,115 shares were issued and outstanding.
On February 12, 1996, Hard Funding acquired Marinex through a
process generally referred to as a "reverse merger." Hard Funding,
with its 510,115 shares outstanding, caused 4,000,000 shares of its
authorized but unissued shares to be issued to the shareholders of
Marinex in exchange for all of the outstanding shares of Marinex.
As a result of the combination, the Marinex New York shareholders
obtained control of 89% of the outstanding voting shares of Hard
Funding. Marinex became a wholly owned subsidiary of Hard Funding. To
avoid confusion in the marketplace, Hard Funding then changed its name
to Marinex Multimedia Corporation. All business operations and
activities (other than those connected with the securities and corporate
laws) are conducted through the New York subsidiary. All of the issued
and outstanding shares are duly and validly issued, fully paid and
nonassessable. There are no outstanding subscriptions, options, rights,
warrants, debentures, instruments, convertible securities or other
agreements, commitments or obligations of Marinex to issue or to
transfer from treasury any additional shares of its capital stock of any
class, except as heretofore sold, transferred and reserved in connection
with the public offering, the Exchange Agreement of February 12, 1996,
the Regulation S offerings of February 12, 1996 and June, 1996, and
private offerings exempt from registration.
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<PAGE> 18
3.3 Subsidiaries. Marinex has one subsidiary, Marinex Multimedia
Corporation, ("Marinex - New York") a corporation duly organized on
January 6, 1995, validly existing and in good standing under the laws
of New York. Marinex - New York has all necessary corporate powers to
own its properties and to carry on its business as now owned and
operated by it, and is duly qualified to do business and is in good
standing in each of the states where its business requires
qualification.
Marinex - New York intends to continue to be engaged in the digital
content business and related business endeavors in the United States
and elsewhere.
3.4 Directors and Officers. The names and titles of all directors
and officers of Marinex as of the date of this Agreement are: Jonathan
Braun, President and Secretary and Charles S. Platkin, President. The
Company presently has two Directors, being Mr. Braun and Mr. Platkin.
It is expected that Mr. Braun and Mr. Platkin will continue to serve as
directors of Marinex - New York as set forth below.
3.5 Financial Statements. The financial statements filed with
Forms 10-KSB and 10-QSB have been prepared in accordance with generally
accepted accounting principles and practices consistently followed by
Marinex throughout the period indicated, and fairly present the
financial position of Marinex as of the date of the balance sheet
included in the financial statements and the results of operations for
the period indicated. Marinex - Nevada shall be solely responsible for
the preparation and filing of all required reports from the Closing
date at the sole expense of Marinex - Nevada, although the officers of
Marinex - New York will provide all reasonable assistance and
documentation with respect to the portion of the filings pertaining to
Marinex - New York.
3.6 Updated Financial Statements. An unaudited financial statement
for the period ending September 30, 1996 shall be prepared by the
Company and shall be furnished to management in connection with
preparation of the Company's Form 10-QSB for the period ending
September 30, 1996 as soon as received.
3.7 Absence of Undisclosed Liabilities. As of the date of the
updated financial statements, Marinex - Nevada did not have any material
debt, liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, that is not
reflected in such balance sheet.
3.8 Tax Returns. Within the times and in the manner prescribed by
law, Marinex has filed all federal, state and local tax returns
required by law, and has paid all taxes, assessments, and penalties due
and payable. The provision for taxes, if any, reflected in the
updated financial statements, are
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adequate for the period indicated. There are no present disputes as
to taxes of any nature payable by Marinex.
3.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein,
Texas Equipment and its legal counsel and accountants has had the
opportunity to meet with Marinex's legal counsel and accountants to
discuss the financial condition of Marinex. Marinex has made available
to Texas Equipment all books and records of Marinex.
3.10 Patents, Trade Names and Rights. To the best of its
knowledge, Marinex is not infringing upon or otherwise acting adversely
to the right or claimed right of any person with respect to any of the
foregoing.
3.11 Compliance with Laws. Marinex has complied with, and is not
in violation of, applicable federal, state or local statutes, laws and
regulations (including, without limitation, any applicable building,
zoning or other law, ordinance or regulation) affecting its properties
or the operation of its business.
3.12 Litigation. Marinex is not a party to any material suit,
action, arbitration or legal, administrative or other proceeding, or
governmental investigation which is pending or, to the best knowledge
of Marinex threatened against or affecting Marinex or its business,
assets or financial condition. Marinex is not in default with respect
to any order, writ, injunction or decree of any federal, state, local
or foreign court, department, agency or instrumentality applicable to
it. Marinex is not engaged in any material lawsuits to recover monies
due it.
3.13 Authority. The Board of Directors of Marinex has authorized
the execution of this Agreement and the consummation of the
transactions contemplated herein, and Marinex has full power and
authority to execute, deliver and perform this Agreement, and this
Agreement is a legal, valid and binding obligation of Marinex and is
enforceable in accordance with its terms and conditions.
3.14 Ability to Carry Out Obligations. The execution and delivery
of this Agreement by Marinex and the performance by Marinex of its
obligations hereunder in the time and manner contemplated will not
cause, constitute or conflict with or result in (a) any breach or
violation of any of the provisions of or constitute a default under any
license, indenture, mortgage, instrument, article of incorporation,
bylaw, or other agreement or instrument to which Marinex is a party, or
by which it may be bound, nor will any consents or authorizations of
any party other than those hereto be required; (b) an event that would
permit any party to any agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation of
Marinex; or (c) an event that would
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result in the creation or imposition of any lien, charge or
encumbrance on any asset of Marinex.
3.15 Full Disclosure. None of the representations and warranties
made by Marinex herein or in any exhibit, certificate or memorandum
furnished or to be furnished by Marinex or on its behalf, contains or
will contain any untrue statement of material fact or omit any material
fact the omission of which would be misleading.
3.16 Assets. Marinex has good and marketable title to all of its
property, free and clear of all liens, claims and encumbrances.
3.17 Material Contracts. Marinex has no other undisclosed
material contracts with any other party and no other agreement shall be
breached by the entry of this Acquisition Agreement.
3.18 Market for Company Stock. Marinex has been advised that from
time to time up to six (6) NASD members have made markets in the
Company's common stock pursuant to the Rules and regulations of the
NASD. The Company's stock has been given the symbol "MRNX" and is
trading from time to time on the NASD bulletin board. While the Company
has no arrangements or understanding with any market maker to make or
maintain any market, the Company has no knowledge of any intention to
terminate making markets in the securities by any of its present market
makers.
3.19 Registration of Shares. The Company at its expense will
register all of the presently held shares of Braun and Platkin, and the
shares to be issued to Barkley (including shares underlying options) on
or before February 12, 1997. If the shares are not registered pursuant
to an effective registration statement by February 12, 1997, then the
Company agrees to buy back 57,000 of the shares held by Mr. Braun and
57,000 of the shares held by Mr. Platkin on February 13, 1997. The
price per share will be the greater of (a) $2.00 or (b) 50% of the
lowest average published bid price for the 10 business days preceding
the buy back. If the shares are not registered thereafter, a buy back
of an equal amount at the same pricing formula will occur on the first
business day of each quarter thereafter until
(a) all of the remaining shares are registered by an
effective registration statement and freely tradable (except as to
restrictions on affiliates); or
(b) The restrictive legend on the shares have been removed
and the shares are eligible to be freely traded by Rule 144 or
similar exemption from the registration requirements; or
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(c) all shares have been purchased.
Notwithstanding, it is the intention of the parties that all
shares will be registered (or otherwise freely tradable) at the
soonest possible time and Marinex - Nevada will use its best
efforts to effect such registration. Marinex - Nevada and its
officers and directors will use their best efforts to effectuate
the provisions of this paragraph 3.19. Time is of the essence.
3.20 Additional Warranties of Marinex,
Marinex hereby represents and warrants to Texas Equipment:
(a) That the representations in its securities filings were
materially true and accurate as of the filing date and management knows
of no facts or circumstance which now renders any portion thereof
materially false, nor which would require disclosure through press
release, Form 8-K or otherwise;
(b) It has not entered into the operation of any business,
acquired any properties, entered into any leases or entered into any
contracts which would materially affect its financial condition except
as disclosed and all leases and contracts to the multimedia business,
including the leased premises, are in the name of the Marinex - New
York entity and are not co-signed or guaranteed by Marinex - Nevada;
(c) It has not executed a presently binding Letter of Intent,
Acquisition Agreement, Merger Agreement, or similar agreement with any
other company, firm, entity, or individual;
(d) The consummation of this transaction, including the execution
of the Definitive Agreement, or closing thereupon, shall not cause a
breach of any other contract or agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TEXAS EQUIPMENT
SHAREHOLDERS
By execution of Exhibit 1.2 hereto, the Texas Equipment will
represent, among other things, that:
4.1 Share Ownership. The Texas Equipment shareholders hold the
number of Texas Equipment Shares set forth in Exhibit 1.1A hereto.
Such shares are owned of record and beneficially by each holder thereof
and are not subject to any lien, encumbrances, hypothecation or pledge.
Each Texas
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Equipment shareholder has the authority to exchange such shares
pursuant to this Agreement.
4.2 Investment Intent. Each Texas Equipment shareholder
understands that the Marinex Shares are being offered for exchange in
reliance upon the exemption provided in Section 4(2) of the Act for
nonpublic offerings and that:
(a) The Marinex Shares are being acquired for the account of
each Texas Equipment shareholder, for investment purposes only, and
not with a view to, or for sale in connection with, any distribution
thereof and with no present intention of distributing or reselling any
part of the Marinex Shares;
(b) Each Texas Equipment shareholder will not dispose of the
Marinex Shares or any portion thereof unless and until counsel for
Marinex shall have determined that the intended disposition is
permissible and does not violate the Act or any applicable state
securities laws, or the rules and regulations thereunder;
(c) Marinex has made all documentation pertaining to all
aspects of the Exchange Offer available to him and to his qualified
representatives, if any, and has offered such person or persons any
opportunity to discuss the Exchange Offer with the officers of Marinex;
(d) Each Texas Equipment shareholder has relied solely upon
Marinex's Prospectus dated October 26, 1993, the filings with the SEC
subsequent to that date and any independent investigations made by such
shareholder or his representatives;
(e) Each Texas Equipment shareholder is knowledgeable and
experienced in making and evaluating investments of this nature and
desires to accept the Marinex Shares on the terms and conditions set
forth;
(f) Each Texas Equipment shareholder is able to bear the
economic risk of an investment in the Marinex Shares;
(g) Each Texas Equipment shareholder understands that an
investment in the Marinex Shares is not liquid, and such shareholder
has adequate means of providing for current needs and personal
contingencies and has no need for liquidity in this investment;
(h) Each Texas Equipment shareholder agrees to abide by the
terms of this Agreement, including the provisions hereof contained in
Section 2 pertaining to the surrender of stock in the event that audited
financial statements of Texas Equipment reveal a material variance
from the 1995 unaudited figures
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submitted to Marinex and the similar provisions in the event
that the 1996 projections of Texas Equipment prove materially
overstated. Each Shareholder waives all rights to dissent, appraisal
and suit as per paragraph 1.9 (d).
4.3 Legend. Each Texas Equipment shareholder acknowledges that the
certificates evidencing the Marinex Shares acquired pursuant to this
Agreement will have a legend placed thereon stating that the Marinex
Shares have not been registered under the Act or any state securities
laws and setting forth or referring to the restrictions on
transferability and sale of the Marinex Shares.
ARTICLE V
COVENANTS
5.1 Investigative Rights. From the date of this Agreement until
the Closing Date, each party shall provide to the other party, and such
other party's counsel, accountants, auditors and other authorized
representatives, full access during normal business hours and upon
reasonable advance written notice to all of each party's properties,
books, contracts, commitments and records for the purpose of examining
the same. Each party shall furnish the other party with all
information concerning each party's affairs as the other party may
reasonably request.
5.2 Conduct of Business. Prior to Closing, Marinex and Texas
Equipment shall each conduct its business in the normal course and
shall not sell, pledge or assign any assets without the prior written
approval of the other party, except in the normal course of business.
Neither party shall amend its Articles of Incorporation or Bylaws
(except as may be described in this Agreement), declare dividends,
redeem or sell stock or other securities, incur additional or
newly-funded liabilities, acquire or dispose of fixed assets, change
employment terms, enter into any material or long-term contract,
guarantee obligations of any third party, settle or discharge any
balance sheet receivable for less than its stated amount, pay more on
any liability than its stated amount, or enter into any other
transaction other than in the normal course of business.
ARTICLE VI
CONDITIONS PRECEDENT TO MARINEX'S PERFORMANCE
6.1 Conditions. Marinex's obligations hereunder shall be subject
to the satisfaction at or before the Closing of all the conditions set
forth in this Article VI. Marinex may waive any or all of these
conditions in whole or in part
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without prior notice; provided, however, that no such waiver
of a condition shall constitute a waiver by Marinex of any other
condition of or any of Marinex's other rights or remedies, at law or in
equity, if Texas Equipment shall be in default of any of its
representations, warranties or covenants under this Agreement.
6.2 Accuracy of Representations. Except as otherwise permitted by
this Agreement, all representations and warranties by Texas Equipment
in this Agreement or in any written statement that shall be delivered
to Marinex by Texas Equipment under this Agreement shall be true and
accurate on and as of the Closing Date as though made at that time.
6.3 Performance. Texas Equipment shall have performed, satisfied
and complied with all covenants, agreements and conditions required by
this Agreement to be performed or complied with by it on or before the
Closing Date.
6.4 Absence of Litigation. No action, suit or proceeding before
any court or any governmental body or authority, pertaining to the
transaction contemplated by this Agreement or to its consummation,
shall have been instituted or threatened against Texas Equipment on or
before the Closing Date. The Company has no knowledge of any threatened
litigation, claims or demands, except as disclosed in their unaudited
financial statements.
6.5 Officer's Certificate. Texas Equipment shall have delivered to
Marinex a certificate dated the Closing Date and signed by the
President of Texas Equipment certifying that each of the conditions
specified in Sections 6.1 through 6.7 hereof have been fulfilled.
6.6 Legal Opinion. Marinex shall have received an opinion of
Michael H. Carper, Attorney at Law, substantially in the form attached
hereto as Exhibit 6.6, dated as of the Closing Date.
6.7 Auditor's Opinion. Marinex shall have received an opinion of
Killman, Murrell & Company, CPAs, to the effect that the books and
records of Texas Equipment are auditable in form and substance as
required by Regulation S-X within the time permitted by law.
ARTICLE VII
CONDITIONS PRECEDENT TO TEXAS EQUIPMENT 'S PERFORMANCE
7.1 Conditions. Texas Equipment's obligations hereunder shall be
subject to the satisfaction at or before the Closing of all the
conditions set forth in this Article VII. Texas Equipment may waive
any or all of these conditions
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in whole or in part without prior notice; provided, however,
that no such waiver of a condition shall constitute a waiver by Texas
Equipment of any other condition of or any of Texas Equipment other
rights or remedies, at law or in equity, if Marinex shall be in default
of any of its representations, warranties or covenants under this
Agreement.
7.2 Accuracy of Representations. Except as otherwise permitted by
this Agreement, all representations and warranties by Marinex in this
Agreement or in any written statement that shall be delivered to Texas
Equipment by Marinex under this Agreement shall be true and accurate on
and as of the Closing Date as though made at that time.
7.3 Performance. Marinex shall have performed, satisfied and
complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by it on or before the
Closing Date.
7.4 Absence of Litigation. No action, suit or proceeding before
any court or any governmental body or authority, pertaining to the
transaction contemplated by this Agreement or to its consummation,
shall have been instituted or threatened against Marinex on or before
the Closing Date.
7.5 Current Status. Marinex shall have prepared and filed with the
Securities and Exchange Commission all periodic reports required to be
filed prior to the closing date by Section 13 or 15(d), or otherwise
required under the Securities Exchange Act of 1934, as amended.
7.6 Directors of Marinex. Effective on Closing, Marinex shall have
fixed the size of its Board of Directors of not less than three nor
more than nine directors. The Texas Equipment shareholders agree, for a
period of two years hereafter, to vote in favor of designees of Mr.
Charles Platkin and Mr. Jonathan Braun for 1/3 of the available Board
seats. For a period of two years hereafter, Mr. Charles Platkin and Mr.
Jonathan Braun agree to vote in favor of designees of Texas Equipment
for 2/3 of the available Board seats. Each of the present directors of
Marinex shall have submitted his resignation as a director of Marinex
effective on the Closing Date and shall be reappointed, if at all, in
accordance with the above.
7.7 Officers of Marinex. Effective on the Closing Date, Marinex
shall elect new officers of Marinex to consist of, at least, the
following persons:
Paul Condit Chief Executive Officer
John Condit Secretary
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7.8 Assets of Marinex. On the Closing Date, the assets of Marinex
are expected to include, net of all current liabilities, at least
$1,850,000 in cash; and no shall be no unpaid liabilities except in the
ordinary course of business.
7.9 Officer's Certificate. Marinex shall have delivered to Texas
Equipment a certificate dated the Closing Date and signed by the
President of Marinex certifying that each of the conditions specified
in Sections 7.1 through 7.8 hereof have been fulfilled.
7.10 Legal Opinion. Texas Equipment shall have received an opinion
of Charles Barkley, Attorney at Law, substantially in the form attached
hereto as Exhibit 7.10, dated as of the Closing Date.
ARTICLE VIII
CLOSING
8.1 Closing. The closing this transaction shall be held at the
offices of Marinex Communications, The Soho Building, Suite 800, 110
Greene Street, New York, NY 10012 or such other place as shall be
mutually agreed upon, at any mutually agreeable time prior to September
13, 1996. At the closing:
(a) Texas Equipment shall deliver to Marinex copies of
Exhibit 1.2 executed by all of its shareholders together with
certificates or stock powers representing all of the outstanding Texas
Equipment Shares duly endorsed to Marinex;
(b) Marinex shall deliver to each Texas Equipment shareholder
certificates representing the number of Marinex Shares for which the
Texas Equipment Shares have been exchanged, pursuant to the share
computations set forth in Exhibit 1.1A hereto;
(c) Marinex shall deliver (i) an officer's certificate dated
the Closing Date, that all representations, warranties, covenants and
conditions set forth in this Agreement on behalf of Marinex are true
and correct as of, or have been fully performed and complied with by,
the Closing Date and (ii) the legal opinion of its counsel as set forth
in Exhibit 7.10;
(d) Marinex shall deliver a signed consent and/or Minutes of
the Meetings of the Board of Directors and Shareholders of Marinex
approving this Agreement and each matter to be approved by the
directors of Marinex under this Agreement;
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(e) Texas Equipment shall deliver (i) an officer's certificate
dated the Closing Date, that all representations, warranties, covenants
and conditions set forth in this Agreement on behalf of Texas Equipment
are true and correct as of, or have been fully performed and complied
with by, the Closing Date and (ii) the legal opinion of its counsel;
and
(f) Texas Equipment shall deliver a signed consent and/or
minutes of the directors of Texas Equipment approving this Agreement
and each matter to be approved by the directors of Texas Equipment
under this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 Captions and Headings. The article and paragraph headings
throughout this Agreement are for convenience and reference only and
shall not define, limit or add to the meaning of any provision of this
Agreement.
9.2 No Oral Change. This Agreement and any provision hereof may
not be waived, changed, modified or discharged orally, but only by an
agreement in writing signed by the party against whom enforcement of
any such waiver, change, modification or discharge is sought.
9.3 Non-Waiver. The failure of any party to insist in any one or
more cases upon the performance of any of the provisions, covenants or
conditions of this Agreement or to exercise any option herein contained
shall not be construed as a waiver or relinquishment for the future of
any such provisions, covenants or conditions. No waiver by any party
of one breach by another party shall be construed as a waiver with
respect to any other subsequent breach.
9.4 Time of Essence. Time is of the essence of this Agreement and
of each and every provision.
9.5 Entire Agreement. This Agreement contains the entire Agreement
and understanding between the parties hereto and supersedes all prior
agreements and understandings.
9.6 Choice of Law. This Agreement and its application shall be
governed by the laws of the State of Nevada.
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9.7 Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
9.8 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be
deemed to have been duly given on the date of service if served
personally on the party to whom notice is to be given, or on the third
day after mailing if mailed to the party to whom notice is to be given,
by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
Marinex Multimedia Corporation
Attention: Charles Platkin
110 Greene Street, Suite 800
New York, NY 10012
Texas Equipment Co., Inc.
Attention: Mr. Paul Condit
Texas Equipment, Inc.
1305 Hobbs Highway
Seminole, TX 79360
9.9 Binding Effect. This Agreement shall inure to and be binding
upon the heirs, executors, personal representatives, successors and
assigns of each of the parties to this Agreement.
9.10 Mutual Cooperation. The parties hereto shall cooperate with
each other to achieve the purpose of this Agreement and shall execute
such other and further documents and take such other and further
actions as may be necessary or convenient to effect the transaction
described herein.
9.11 Brokers. The parties hereto represent that no broker has
brought about this Agreement, and no finder's fee has been paid or is
payable by Marinex except as to legal and investment banking fees to
Charles Barkley or his designees. Each party hereto shall indemnify
and hold the other harmless against any and all claims, losses,
liabilities or expenses which may be asserted against it as a result of
its dealings, arrangements or agreements with any other such broker.
9.12 Announcements. The parties will consult and cooperate with
each other as to the timing and content of any public announcements
regarding this Agreement.
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9.13 Expenses. Each party will pay its own legal, accounting and
other out of pocket expenses incurred in connection with this
Agreement, whether or not this Agreement is consummated.
9.14 Survival of Representations and Warranties. The
representations, warranties, covenants and agreements of the parties
set forth in this Agreement or in any instrument, certificate, opinion
or other writing providing for in it, shall survive the Closing.
9.15 Exhibits. As of the execution hereof, the parties have
provided each other with the exhibits described herein. Any material
changes to the exhibits shall be immediately disclosed to the other
party.
AGREED AND ACCEPTED as of the date first above written.
MARINEX MULTIMEDIA CORPORATION,
A NEVADA CORPORATION
By:
-------------------------------------
Charles S. Platkin President
ATTEST:
---------------------------
Jonathan Braun
Corporate Secretary
TEXAS EQUIPMENT CO., INC.
BY:
----------------------------------
ATTEST:
---------------------------
Corporate Secretary
[corporate seal]
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EXHIBIT 10(b)
Name of Subscriber Varna Management, Ltd, and/or its assigns
Providence House
East Hill Street
P.O. Box N-3944
Nassau, Bahamas
SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION
THE SECURITIES BEING SUBSCRIBED TO HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER APPLICABLE STATE SECURITIES
LAWS DUE TO THE APPLICATION OF REGULATION S PROMULAGED BY THE U.S. SECURITIES
AND EXCHANGE COMMISSION UNDER THE PROVISIONS OF THE SECURITIES ACT OF 1933, AS
AMENDED.
FURTHER, THE SECURITIES BEING SUBSCRIBED TO MAY NOT BE TRANSFERRED EXCEPT
PURSUANT TO TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR
COMPLIANCE THEREWITH.
Board of Directors
Marinex Multimedia Corp
The Soho Building
110 Greene Street, Suite 800
New York, NY 10012
Gentlemen:
1. SUBSCRIPTION AND CONSIDERATION FOR PURCHASE. The undersigned and/or
its assigns or designees (collectively the "Purchaser") hereby elects to
purchase a minimum total of 507,246 shares of Common Stock (the "Shares"), par
value $.001, of Marinex Multimedia Corp. ("Marinex"), a Nevada corporation
(the "Company") set forth above at a purchase price per share of $1.00; as
indicated below, however, after the Purchaser has concluded the initial
purchase of 525,000 share, the Purchaser may in its sole discretion, elect not
to purchase all or any part thereof, of the remaining shares to be purchased.
If the Purchaser elects to purchase less than the Minimum Number of Shares
remaining to be purchased, the Company may, upon five days written notice,
rescind the agreement, but only with respect to the remaining shares to be
purchased. The Purchaser, upon receipt of the written notice, shall have five
days in which to cure any default hereunder.
The purchase of Shares shall occur in the following stages:
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<PAGE> 2
<TABLE>
<CAPTION>
Date of Purchase Minimum Number of Shares Purchase Price
- ---------------- ------------------------ --------------
<S> <C> <C>
02/09/96 525,000 $ 525,000.00
03/01/96 500,000 $ 500,000.00
03/22/96 500,000 $ 500,000.00
04/12/96 500,000 $ 500,000.00
05/03/96 500,000 $ 500,000.00
</TABLE>
2. PAYMENT. Purchaser shall pay the purchase price for the Shares, at or
before the date of purchase, by delivering good funds in United States dollars
in the form of a wire transfer into the designated trust account maintained by
the Company's outside counsel.
3. UNDERSTANDING OF THE PURCHASER. The Purchaser and/or its assigns
acknowledge, understand and agree that:
(a) TRANSFER AGENT INSTRUCTIONS. The Company's transfer agent will be
instructed to issue one or more share certificates evidencing the Shares,
leaving a customary Regulation S legend on the reverse side thereof, in the
name of the Purchaser or its assign. The transfer agent will be given stop
transfer instructions restricting the transfer of the Shares, to any "U.S.
person" as such term is defined in Regulation S. for a period of twelve (12)
months, (the "Restricted Period") (see paragraph below). The Shares are subject
to the restrictions on transfer provided in Regulation S, the terms and
conditions of which are incorporated herein by reference, plus any additional
time periods necessary to complete the Restricted Period. The Company warrants
that no other instructions have been or will be given to the transfer agent,
and that the Shares shall be otherwise freely tradeable on the Company's books
and records.
At the close of the Restricted Period the Company shall provide to its
transfer agent a legal opinion prepared by the Company's outside counsel
opining that the restricted legend may appropriately be removed from the
Shares, should such a legal opinion be required by the transfer agent in order
to lift the restricted legend, and provided that such a legal opinion is
permissible under the laws and circumstances in existence at that time. In no
event shall such legal opinion be unduly withheld by the Company. The
responsibility for removal of the restrictive legend shall be solely the
Company's. All fees related to transfer of the Shares to Purchaser, including
but not limited to the cost of obtaining a legal opinion, shall be borne by the
Company. The Shares shall be issued in that name set forth under the signature
line below. Nothing in
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this section shall affect in any way Purchaser's obligation and agreement to
comply with all applicable securities laws upon resale of the Shares.
(b) SHARES NOT REGISTERED. The Shares have not been registered under the
Securities Act of 1933 (the "Act"), as amended, or any applicable State Law.
The Shares may not be sold, offered for sale, transferred, pledged,
hypothecated, or otherwise disposed of except in compliance with the Act. The
Company has no obligation, and does not intend, to cause any of the Shares sold
in this offering, to be registered under the Act, or to comply with any
exemption under the Act that would permit a sale or sales of the Shares. The
Purchaser must bear the economic risk of the investment in the Shares in the
Restricted Period. Purchaser acknowledges that he is subject to the
restrictions on transfer described herein Company will issue stock transfer
orders with the stock transfer orders with the Company's transfer agent to
enforce such restrictions.
(c) No Federal or State (U.S.A.) agency has made any findings or
determination as to the fairness of an investment in the Company, or any
recommendation or endorsement of this investment.
4. Delivery of Share Certificates. A certificate in the form specified in
Section 3 above evidencing the Shares subscribed shall be delivered to the
Purchaser outside the United States (or to a law firm, brokerage firm, or other
professional fiduciary for delivery to the Purchaser outside the United States)
on a delivery versus payment basis at such place as shall be mutually agreed at
closing; provided that such certificates shall be made available for inspection
by the purchaser or its agents at such reasonable time as the Purchaser may
request prior to closing.
5. Representation and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company as follows:
(a) Purchaser is not organized under the laws of any jurisdiction within
the United States and was not formed for the purpose of investing in securities
sold under Regulation S. Purchaser is not a subsidiary of a corporation
organized in the United States, and is not otherwise a "U.S. Person" as that
term is defined in Section 902 of Regulation S.
(b) At the time the buy order for the Shares was originated, Purchaser was
outside the United States and was outside the United States as of the date of
the execution and delivery of this agreement to the Company.
(c) Purchaser is buying the Shares for its own account or for the account
of persons each of whom have entered into offshore subscription agreements in a
form substantially identical to this agreement, and is not purchasing the
shares for the account or benefit of any U.S. Person
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<PAGE> 4
(d) Purchaser's commitment to investments that are not readily marketable
is not disproportionate to his Net Worth, and his investment in the Shares will
not cause such overall commitment to become excessive.
(e) Purchaser has the financial ability to bear the economic risk of this
investment, has adequate means for providing for his current needs and personal
contingencies, and has no need for liquidity in this investment.
(f) Purchaser has evaluated the high risk of investing in the Shares and
has such knowledge and experience in financial and business matters in general
and in particular with respect to this type of investment that he is capable of
evaluating the merits and risks of an investment in the Shares.
(g) Purchaser has been given the opportunity to ask questions of and
receive answers from the company concerning the terms and conditions of this
investment, and to obtain additional information necessary to verify the
accuracy of the information desire in order to evaluate this investment, and in
evaluating the suitability of an investment in the Shares. Purchaser has not
relied upon any representations or any information (whether oral or written)
other than that furnished by the company or its representatives.
(h) Purchaser has had the opportunity to discuss with professional legal,
tax and financial advisers the suitability of an investment of the Shares for
its particular tax and financial situation, and all information that has been
provided to the company concerning Purchaser and his financial position is
correct and complete as of the date set forth below, and if there should be any
material change in such information prior to his admission as a shareholder of
the Company, will immediately provide such information to the Company.
(i) The residents set forth below is the true and correct residence, and
purchaser has no present intention of becoming a resident or domicilary of any
other country.
(j) In making the decision to purchase the Shares, Purchaser has relied
solely upon independent investigations made by him or on his behalf.
(k) If the Purchaser is acting in this transaction as a distributor, as
defined under Regulation S, then he will be reselling the shares only in an
offshore transaction and will advise the ultimate Purchaser, or any other
distributor to whom he sells the Shares, that they will be subject to the same
restrictions on resale to which he is subject under said Regulation S.
Otherwise, as the ultimate Purchaser in this offering, Purchaser is acquiring
the Shares solely for his own personal account, for invesment purpose only, and
is not purchasing with a view to, or for, the resale, distribution,
subdivision, or fractionalization thereof.
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<PAGE> 5
(l) Purchaser is neither a member of nor is affiliated with or employed by
a member of the National Association of Securities Dealers, Inc. nor is
employed by or affiliated with a broker-dealer registered with the U.S.
Securities and Exchange Commission (the "SEC") nor with any similar agency of
any state.
(m) The offer leading to the sale and the sale evidenced hereby were made
in "offshore transaction" for purposes of Regulation S. "Offshore transaction"
as defined under Regulation S is any offer or sale of securities if (A) the
offer is not made to a person in the United States, or the Company and any
person acting on its behalf reasonably believes that the Purchaser is outside
the United States: or (B) the transaction is executed in, on or through the
facilities of "designated offshore securities market", and neither the Company
nor any person acting on its behalf knows that the transaction has been
prearranged with the Purchaser in the United States. "Designated offshore
securities market" is defined under Regulation S to be the Eurobond Market, as
regulated by the Association of International Bond Dealers; the Amsterdam Stock
Exchange; the Australian Stock Exchange Ltd.; the Beurse de Bruxelles; the
Frankfurt Stock Exchange; the Stock Exchange of Hong Kong Limited; the
International Stock Exchange; the Bourse de Luxembourg; the Borsa Calori di
Milan; the Montreal Stock Exchange; the Toronto Stock Exchange; The Vancouver
Stock Exchange; the Zurich Stock Exchange. In regards of this representation
and warranty, and notwithstanding the above, offers and sales of securities to
persons excluded from the definition of "U.S. Person" are offshore
transactions.
A "U.S. Person" for purposes of Regulation S is (I) any natural person
resident in the United States; (ii) any partnership or corporation organized or
incorporated under the laws of the United States; (iii) any estate of which any
executor or administrator is a U.S. person; (iv) any trust of which any
trustee is a U.S. person; (v) any agency or branch of a foreign entity located
in the United States; (vi) any non-discretionary or similar account other than
an estate or trust held by a dealer or other fiduciary organized, incorporated,
or if an individual, resident in the United States; (vii) any discretionary or
similar account (other than in a state of trust) held a dealer or other
fiduciary organized, incorporation, or if an individual, resident in the United
States; (viii) any partnership or corporation if (A) organized or incorporated
under the laws of any foreign jurisdiction; and (B) formed by a U.S. person
principally for the purpose of investing in securities not registered under the
Securities Act unless it is organized or incorporated and owned by accredited
investors who are not natural persons, estates or trusts.
(n) Neither the Purchaser nor any affiliate, nor any person acting on
their behalf, has made any "directed selling efforts" in the United States as
defined in Regulation S as "any activity taken for the purpose of or that could
be reasonably expected to have the effect of conditioning the market in the
United States for any of the securities being purchased hereby.
(o) The Purchaser understands that the Company is the issuer of the
securities which are the subject of this Agreement and that, for purposes of
Regulation S, a
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<PAGE> 6
"distributor" is any underwriter, dealer or other person who participates
pursuant to a contractual arrangement, in the distribution of securities
offered or sold in reliance on Regulation S and that the "affiliate" is any
partner, officer, or director of any person, directly or indirectly, controlled
by or under common control with the person in question. In this regard, the
Purchaser shall not, during the Restricted Period, act as a distributor,
either directly or through an affiliate, nor shall the Purchaser sell,
transfer, hypothecate, or otherwise convey the Shares or any interest therein
other than to a non-U.S. person (and in such case shall provide evidence to
the satisfaction of the Company and its Transfer Agent that such resale was
made in a bona-fide offshore).
(p) Purchaser acknowledges that the Shares have not been registered under
the Act and are being offered and sold to Purchaser in reliance upon the
exemption provided by Regulation S from the registration requirements of the
Act, and Purchaser acknowledges, for a period of at least forty (40) days, or
for any greater period as required by this agreement, following the completion
of the Company's acquisition of Shares under this agreement, Purchaser must not
and will not allowed to resell the Shares in the United States or to a U.S.
Person.
(q) Purchaser is not an "affiliate" of the Company as defined in Rule
144(a) of the SEC and, following purchase of the Shares, neither Purchaser nor
any affiliate of Purchaser will be an affiliate of the Company.
The foregoing representations, warranties, agreements, undertakings and
acknowledgments are made by the undersigned with the intent that they be relied
upon in determining its suitability as a Purchaser of the Shares. In addition,
the undersigned agrees to notify the Company immediately of any change in any
representations, or other information. If the Purchaser is other than a natural
person, the foregoing and following representations and warranties are being
made by and refer to such entity and the individual or individuals executing
this Subscription Agreement and Investor Representations have due authority to
bind and obligate such entity hereby. If more than one person is signing this
Agreement, each representation, warranty and undertaking herein shall be a
joint and several representation, warranty and undertaking of each such person.
If the Purchaser is a partnership, corporation, trust or other entity, the
Purchaser further represents and warrants that (I) there has been enclosed with
this Agreement appropriate evidence of the authority of the individual
executing this Agreement to act on the behalf of the Purchaser, (ii) the entity
was not specifically formed to acquire the Shares, (iii) the entity was not
organized, nor resides, nor do the persons owning or controlling such entity
reside in, the United States. If the Purchaser is a partnership, the Purchaser
further represents that the funds to make this investment were not derived from
additional capital contributions of the partners of such partnerships.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY TO THE PURCHASER. The
Company hereby represents and warrants to the Purchaser that it is being
acquired by a "reporting issuer" as defined by Rule 902 of Regulation S. The
Company further represents and warrants that: (I) it is a corporation in good
standing in all Jurisdictions in
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<PAGE> 7
which it conducts its business; (ii) its is current in all of its required
filings with the SEC and all other regulatory bodies, both states and federal
in which regard the Company will furnish to the Purchaser letters from the
Company's attorney and the Company's independent public accountant confirming
these facts as true; (iii) it will take all steps necessary to register to sell
its Common Stock under the Blue Sky statutes in the states of California and
Florida as quickly as practicable; (iv) upon financial requirements being met
the Company make application for listing on NASDAQ, (v) it has sufficient
authorized stock to issue the shares being subscribed by the Purchaser
hereunder; and (vi) upon proper payment and receipt of the purchase price,
acceptance of the Purchaser's subscription therefor and issuance and delivery
to the Shares being subscribed to hereunder to Purchaser, such Shares shall be
deemed fully paid, validly issued, and non-assessable.
The Company represents to Purchaser that it will have in place, at the
time this agreement is executed and for a period of at least two years after
execution of the agreement, key man insurance policies on the Company's
President, Chief Executive Officer and Chief Operating Officer.
The Company further represents and warrants to the Purchaser that it has
the authority under its corporate charter as amended, and under applicable
state and federal corporate and securities laws to enter into the contemplated
transaction, and that the signatories hereto have been duly authorized in
accordance with its corporate charter and by laws, which authority has not been
suspended, modified or revoked as of the date hereof.
Neither the Company nor any person acting on its behalf, has made any
"directed selling efforts" in the United States, as defined in Regulation S to
be: any activity undertaken for the purpose of, or that could reasonable be
expected to have the effect of, conditioning the market in the United States
for any of the securities being purchased hereby.
7. INDEMNITY BY PURCHASER. The Purchaser understands and acknowledges
that the Company, its officers, directors, attorneys and agents are relying
upon the representations, warranties and agreements made by the Purchaser to
and with the Company herein and, thus hereby agrees to indemnify the Company,
its officers and directors, agents, attorneys, and employees, and agrees to
hold each of them harmless against any and all loss, damage, liability or
exposure, including reasonable attorneys fee, that it or any of them may
suffer, sustain, or incur by reason of or in connection with any
misrepresentation or breach of warranty or agreement made by the Purchaser
under this Agreement, or in connection with the sale or distribution by the
Purchaser of the Shares in violation of the Act or any other applicable law.
8. RESTRICTED PERIOD/CLOSING
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<PAGE> 8
(a) As set forth in Regulation S, the "Restricted Period" means a
period that commences on the later of the date upon which the securities were
first offered to persons other than distributors in reliance upon Regulation S
or each Date of Purchase (pursuant to paragraph 1 of this agreement), and in
this case, expires six (6) months thereafter, provided, further, that in a
continuous offering, the restricted period shall commence upon completion of
the distribution, as determined and certified by the managing underwriter or
person performing similar functions.
(b) The closing of this offering shall occur on the date of execution
of the Agreement or the date of acceptance of this offer by the Company,
whichever is later. Notwithstanding the foregoing, the Company shall have the
right to make a determination based upon the advice of its counsel as to
matters relating to the restricted period and the closing of the offering for
purposes of Company in respect of removal of transfer restrictions.
9. LIMITATION ON PERCENTAGE HELD BY PURCHASER. Upon the Purchaser's
request, the Company shall provide to the Purchaser, its agents, assigns or
designees, a statement as to the number of the Company's outstanding shares of
Common Stock.
10. CONDITIONS TO COMPANY'S OBLIGATION TO SELL. Seller's obligation to
sell the Shares is conditioned upon Purchaser's receipt and acceptance of this
agreement covering the purchase of the Shares duly executed by an authorized
representative of the Company, and accepted by the Company's Board of
Directors, if such acceptance is required, and delivery of good funds as
payment in full for the purchaser of the Shares to the Purchaser's closing
depository.
11. CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE. The Purchaser's
obligation to purchase the Shares is conditioned upon:
(a) Purchaser's receipt and acceptance of this agreement for all the
Shares, as evidenced by execution of this agreement by the Purchaser, and
delivery to Purchaser of certificates evidencing the Shares, bearing no legend
except the Regulation S legend as described herein; and
(b) The absence of any event or circumstance that could reasonably be
expected to have a material adverse effect on the Company or on the market
price of the Company's Common Stock. The Purchaser shall have the right to
rescind the agreement should any such event come to pass during the pendency of
this agreement.
12. MISCELLANEOUS PROVISIONS.
(a) INVESTOR RELATIONS MATERIALS. The Company shall provide investor
relations materials including, but not limited to, brochures, press releases
and copies of the Company's SEC filings, to the Purchaser at the Purchaser's
request.
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<PAGE> 9
(b) NEWSLETTER. The Company shall provide its monthly newsletter to the
Purchaser. Such newsletter shall contain current information concerning the
business of the Company and shall be approved for shareholder distribution.
(c) FURTHER ASSURANCES. At any time and from time to time after the date
of this Agreement, each party shall execute such additional instruments and
take such other and further action as may be reasonably be requested by any
other party to confirm or perfect title to any property transferred hereunder
or otherwise to carry out the intent and purpose of this Agreement.
(d) WAIVER. Any failure on the part of any party hereunder to comply with
any of their obligations, agreement or conditions hereunder may be waived in
writing by the party to whom such compliance is owed; however, waiver on one
occasion does not operated to effectuate a waiver on any other occasion.
(e) BROKERS. The Purchaser represents to the Company that no broker has
acted in their behalf in connection with this agreement. Each party agrees to
indemnify, save, defend, and hold the other party harmless from and against any
fee, loss or expense arising out of claims by brokers and shall obtain the
release of any and all claims which they may have or which may accrue against
the non-employing parties.
(f) ENTIRE AGREEMENT. This Agreement and all exhibits, schedules and
written memoranda attached hereto or otherwise referred to herin, constitutes
the entire agreement between the parties and supersedes and cancels any other
agreement, representation or communication, whether oral or written, between
the parties hereto relating to the transactions evidenced hereby and the
subject matter hereof.
(g) HEADINGS. The article and paragraph headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada.
(i) COUNTERPARTS. This agreement may be executed simultaneously in two or
more counterpart, each of which shall be deemed an original, but all of which
together shall constitute on and the same instrument.
(j) NO ORAL MODIFICATION. The Agreement may be modified solely in
writing, and only after the mutual agreement of the parties affected thereby.
(k) SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties, covenants contained herein shall survive the date
and execution of this Agreement.
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<PAGE> 10
(l) APPOINTMENT OF TRANSFER AGENT AND AUDITOR. The Company may appoint a
new transfer agent and independent auditor, of its own choosing, as soon as
practicable after the first Date of Purchaser under this agreement.
INDIVIDUAL SUBSCRIBERS
Name as you want it on the
Certificate for Share Name of Subscriber (typed or printed)
-------------------------------------
Date: Signature of Subscriber
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<PAGE> 1
EXHIBIT 10(c)
Name of Subscriber Alstro Holdings Limited
P. O. Box 146
Road Town
Tortola, British Virgin Islands
SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION
THE SECURITIES BEING SUBSCRIBED TO HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER APPLICABLE STATE SECURITIES
LAWS DUE TO THE APPLICATION OF REGULATION S PROMULAGED BY THE U.S. SECURITIES
AND EXCHANGE COMMISSION UNDER THE PROVISIONS OF THE SECURITIES ACT OF 1933, AS
AMENDED.
FURTHER, THE SECURITIES BEING SUBSCRIBED TO MAY NOT BE TRANSFERRED EXCEPT
PURSUANT TO TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR
COMPLIANCE THEREWITH.
Board of Directors
Marinex Multimedia Corp
The Soho Building
110 Greene Street, Suite 800
New York, NY 10012
Gentlemen:
1. SUBSCRIPTION AND CONSIDERATION FOR PURCHASE. The undersigned and/or
its assigns or designees (collectively the "Purchaser") hereby elects to
purchase a minimum total of 2,525,000 shares of Common Stock (the "Shares"),
par value $.001, of Marinex Multimedia Corp. ("Marinex"), a Nevada corporation
(the "Company") set forth above at a purchase price per share of $1.00;
The purchase of Shares shall occur in the following stages:
<TABLE>
<CAPTION>
Date of Purchase Minimum Number of Shares Purchase Price
- ---------------- ------------------------ --------------
<S> <C> <C>
05/15/96 250,000 $ 250,000.00
</TABLE>
2. PAYMENT. Purchaser shall pay the purchase price for the Shares, at or
before the date of purchase, by delivering good funds in United States dollars
in the form of a wire transfer into the designated trust account maintained by
the Company's outside counsel.
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<PAGE> 2
3. UNDERSTANDING OF THE PURCHASER. The Purchaser and/or its assigns
acknowledge, understand and agree that:
(a) TRANSFER AGENT INSTRUCTIONS. The Company's transfer agent will be
instructed to issue one or more share certificates evidencing the Shares,
leaving a customary Regulation S legend on the reverse side thereof, in the
name of the Purchaser or its assign. The transfer agent will be given stop
transfer instructions restricting the transfer of the Shares, to any "U.S.
person" as such term is defined in Regulation S. for a period of twelve (12)
months, (the "Restricted Period") (see paragraph below). The Shares are subject
to the restrictions on transfer provided in Regulation S, the terms and
conditions of which are incorporated herein by reference, plus any additional
time periods necessary to complete the Restricted Period. The Company warrants
that no other instructions have been or will be given to the transfer agent,
and that the Shares shall be otherwise freely tradeable on the Company's books
and records.
At the close of the Restricted Period the Company shall provide to its
transfer agent a legal opinion prepared by the Company's outside counsel
opining that the restricted legend may appropriately be removed from the
Shares, should such a legal opinion be required by the transfer agent in order
to lift the restricted legend, and provided that such a legal opinion is
permissible under the laws and circumstances in existence at that time. In no
event shall such legal opinion be unduly withheld by the Company. The
responsibility for removal of the restrictive legend shall be solely the
Company's. All fees related to transfer of the Shares to Purchaser, including
but not limited to the cost of obtaining a legal opinion, shall be borne by the
Company. The Shares shall be issued in that name set forth under the signature
line below. Nothing in this section shall affect in any way Purchaser's
obligation and agreement to comply with all applicable securities laws upon
resale of the Shares.
(b) SHARES NOT REGISTERED. The Shares have not been registered under the
Securities Act of 1933 (the "Act"), as amended, or any applicable State Law.
The Shares may not be sold, offered for sale, transferred, pledged,
hypothecated, or otherwise disposed of except in compliance with the Act. The
Company has no obligation, and does not intend, to cause any of the Shares sold
in this offering, to be registered under the Act, or to comply with any
exemption under the Act that would permit a sale or sales of the Shares. The
Purchaser must bear the economic risk of the investment in the Shares in the
Restricted Period. Purchaser acknowledges that he is subject to the
restrictions on transfer described herein Company will issue stock transfer
orders with the stock transfer orders with the Company's transfer agent to
enforce such restrictions.
(c) No Federal or State (U.S.A.) agency has made any findings or
determination as to the fairness of an investment in the Company, or any
recommendation or endorsement of this investment.
4. Delivery of Share Certificates. A certificate in the form specified in
Section 3 above evidencing the Shares subscribed shall be delivered to the
Purchaser
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<PAGE> 3
outside the United States (or to a law firm, brokerage firm, or other
professional fiduciary for delivery to the Purchaser outside the United States)
on a delivery versus payment basis at such place as shall be mutually agreed at
closing; provided that such certificates shall be made available for inspection
by the purchaser or its agents at such reasonable time as the Purchaser may
request prior to closing.
5. Representation and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company as follows:
(a) Purchaser is not organized under the laws of any jurisdiction within
the United States and was not formed for the purpose of investing in securities
sold under Regulation S. Purchaser is not a subsidiary of a corporation
organized in the United States, and is not otherwise a "U.S. Person" as that
term is defined in Section 902 of Regulation S.
(b) At the time the buy order for the Shares was originated, Purchaser was
outside the United States and was outside the United States as of the date of
the execution and delivery of this agreement to the Company.
(c) Purchaser is buying the Shares for its own account or for the account
of persons each of whom have entered into offshore subscription agreements in a
form substantially identical to this agreement, and is not purchasing the
shares for the account or benefit of any U.S. Person
(d) Purchaser's commitment to investments that are not readily marketable
is not disproportionate to his Net Worth, and his investment in the Shares will
not cause such overall commitment to become excessive.
(e) Purchaser has the financial ability to bear the economic risk of this
investment, has adequate means for providing for his current needs and personal
contingencies, and has no need for liquidity in this investment.
(f) Purchaser has evaluated the high risk of investing in the Shares and
has such knowledge and experience in financial and business matters in general
and in particular with respect to this type of investment that he is capable of
evaluating the merits and risks of an investment in the Shares.
(g) Purchaser has been given the opportunity to ask questions of and
receive answers from the company concerning the terms and conditions of this
investment, and to obtain additional information necessary to verify the
accuracy of the information desire in order to evaluate this investment, and in
evaluating the suitability of an investment in the Shares. Purchaser has not
relied upon any representations or any information (whether oral or written)
other than that furnished by the company or its representatives.
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<PAGE> 4
(h) Purchaser has had the opportunity to discuss with professional legal,
tax and financial advisers the suitability of an investment of the Shares for
its particular tax and financial situation, and all information that has been
provided to the company concerning Purchaser and his financial position is
correct and complete as of the date set forth below, and if there should be any
material change in such information prior to his admission as a shareholder of
the Company, will immediately provide such information to the Company.
(i) The residents set forth below is the true and correct residence, and
purchaser has no present intention of becoming a resident or domicilary of any
other country.
(j) In making the decision to purchase the Shares, Purchaser has relied
solely upon independent investigations made by him or on his behalf.
(k) If the Purchaser is acting in this transaction as a distributor, as
defined under Regulation S, then he will be reselling the shares only in an
offshore transaction and will advise the ultimate Purchaser, or any other
distributor to whom he sells the Shares, that they will be subject to the same
restrictions on resale to which he is subject under said Regulation S.
Otherwise, as the ultimate Purchaser in this offering, Purchaser is acquiring
the Shares solely for his own personal account, for invesment purpose only, and
is not purchasing with a view to, or for, the resale, distribution,
subdivision, or fractionalization thereof.
(l) Purchaser is neither a member of nor is affiliated with or employed by
a member of the National Association of Securities Dealers, Inc. nor is
employed by or affiliated with a broker-dealer registered with the U.S.
Securities and Exchange Commission (the "SEC") nor with any similar agency of
any state.
(m) The offer leading to the sale and the sale evidenced hereby were made
in "offshore transaction" for purposes of Regulation S. "Offshore transaction"
as defined under Regulation S is any offer or sale of securities if (A) the
offer is not made to a person in the United States, or the Company and any
person acting on its behalf reasonably believes that the Purchaser is outside
the United States: or (B) the transaction is executed in, on or through the
facilities of "designated offshore securities market", and neither the Company
nor any person acting on its behalf knows that the transaction has been
prearranged with the Purchaser in the United States. "Designated offshore
securities market" is defined under Regulation S to be the Eurobond Market, as
regulated by the Association of International Bond Dealers; the Amsterdam Stock
Exchange; the Australian Stock Exchange Ltd.; the Beurse de Bruxelles; the
Frankfurt Stock Exchange; the Stock Exchange of Hong Kong Limited; the
International Stock Exchange; the Bourse de Luxembourg; the Borsa Calori di
Milan; the Montreal Stock Exchange; the Toronto Stock Exchange; The Vancouver
Stock Exchange; the Zurich Stock Exchange. In regards of this representation
and warranty, and notwithstanding the above, offers and sales of
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<PAGE> 5
securities to persons excluded from the definition of "U.S. Person" are
offshore transactions.
A "U.S. Person" for purposes of Regulation S is (I) any natural person
resident in the United States; (ii) any partnership or corporation organized or
incorporated under the laws of the United States; (iii) any estate of which any
executor or administrator is a U.S. person; (iv) any trust of which any
trustee is a U.S. person; (v) any agency or branch of a foreign entity located
in the United States; (vi) any non-discretionary or similar account other than
an estate or trust held by a dealer or other fiduciary organized, incorporated,
or if an individual, resident in the United States; (vii) any discretionary or
similar account (other than in a state of trust) held a dealer or other
fiduciary organized, incorporation, or if an individual, resident in the United
States; (viii) any partnership or corporation if (A) organized or incorporated
under the laws of any foreign jurisdiction; and (B) formed by a U.S. person
principally for the purpose of investing in securities not registered under the
Securities Act unless it is organized or incorporated and owned by accredited
investors who are not natural persons, estates or trusts.
(n) Neither the Purchaser nor any affiliate, nor any person acting on
their behalf, has made any "directed selling efforts" in the United States as
defined in Regulation S as "any activity taken for the purpose of or that could
be reasonably expected to have the effect of conditioning the market in the
United States for any of the securities being purchased hereby.
(o) The Purchaser understands that the Company is the issuer of the
securities which are the subject of this Agreement and that, for purposes of
Regulation S, a "distributor" is any underwriter, dealer or other person who
participates pursuant to a contractual arrangement, in the distribution of
securities offered or sold in reliance on Regulation S and that the "affiliate"
is any partner, officer, or director of any person, directly or indirectly,
controlled by or under common control with the person in question. In this
regard, the Purchaser shall not, during the Restricted Period, act as a
distributor, either directly or through an affiliate, nor shall the Purchaser
sell, transfer, hypothecate, or otherwise convey the Shares or any interest
therein other than to a non-U.S. person (and in such case shall provide
evidence to the satisfaction of the Company and its Transfer Agent that such
resale was made in a bona-fide offshore).
(p) Purchaser acknowledges that the Shares have not been registered under
the Act and are being offered and sold to Purchaser in reliance upon the
exemption provided by Regulation S from the registration requirements of the
Act, and Purchaser acknowledges, for a period of at least forty (40) days, or
for any greater period as required by this agreement, following the completion
of the Company's acquisition of Shares under this agreement, Purchaser must not
and will not allowed to resell the Shares in the United States or to a U.S.
Person.
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<PAGE> 6
(q) Purchaser is not an "affiliate" of the Company as defined in Rule
144(a) of the SEC and, following purchase of the Shares, neither Purchaser nor
any affiliate of Purchaser will be an affiliate of the Company.
The foregoing representations, warranties, agreements, undertakings and
acknowledgments are made by the undersigned with the intent that they be relied
upon in determining its suitability as a Purchaser of the Shares. In addition,
the undersigned agrees to notify the Company immediately of any change in any
representations, or other information. If the Purchaser is other than a natural
person, the foregoing and following representations and warranties are being
made by and refer to such entity and the individual or individuals executing
this Subscription Agreement and Investor Representations have due authority to
bind and obligate such entity hereby. If more than one person is signing this
Agreement, each representation, warranty and undertaking herein shall be a
joint and several representation, warranty and undertaking of each such person.
If the Purchaser is a partnership, corporation, trust or other entity, the
Purchaser further represents and warrants that (I) there has been enclosed with
this Agreement appropriate evidence of the authority of the individual
executing this Agreement to act on the behalf of the Purchaser, (ii) the entity
was not specifically formed to acquire the Shares, (iii) the entity was not
organized, nor resides, nor do the persons owning or controlling such entity
reside in, the United States. If the Purchaser is a partnership, the Purchaser
further represents that the funds to make this investment were not derived from
additional capital contributions of the partners of such partnerships.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY TO THE PURCHASER. The
Company hereby represents and warrants to the Purchaser that it is being
acquired by a "reporting issuer" as defined by Rule 902 of Regulation S. The
Company further represents and warrants that: (I) it is a corporation in good
standing in all Jurisdictions in which it conducts its business; (ii) its is
current in all of its required filings with the SEC and all other regulatory
bodies, both states and federal in which regard the Company will furnish to the
Purchaser letters from the Company's attorney and the Company's independent
public accountant confirming these facts as true; (iii) it will take all steps
necessary to register to sell its Common Stock under the Blue Sky statutes in
the states of California and Florida as quickly as practicable; (iv) upon
financial requirements being met the Company make application for listing on
NASDAQ, (v) it has sufficient authorized stock to issue the shares being
subscribed by the Purchaser hereunder; and (vi) upon proper payment and receipt
of the purchase price, acceptance of the Purchaser's subscription therefor and
issuance and delivery to the Shares being subscribed to hereunder to Purchaser,
such Shares shall be deemed fully paid, validly issued, and non-assessable.
The Company represents to Purchaser that it will have in place, at the
time this agreement is executed and for a period of at least two years after
execution of the agreement, key man insurance policies on the Company's
President, Chief Executive Officer and Chief Operating Officer.
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<PAGE> 7
The Company further represents and warrants to the Purchaser that it has
the authority under its corporate charter as amended, and under applicable
state and federal corporate and securities laws to enter into the contemplated
transaction, and that the signatories hereto have been duly authorized in
accordance with its corporate charter and by laws, which authority has not been
suspended, modified or revoked as of the date hereof.
Neither the Company nor any person acting on its behalf, has made any
"directed selling efforts" in the United States, as defined in Regulation S to
be: any activity undertaken for the purpose of, or that could reasonable be
expected to have the effect of, conditioning the market in the United States
for any of the securities being purchased hereby.
7. INDEMNITY BY PURCHASER. The Purchaser understands and acknowledges
that the Company, its officers, directors, attorneys and agents are relying
upon the representations, warranties and agreements made by the Purchaser to
and with the Company herein and, thus hereby agrees to indemnify the Company,
its officers and directors, agents, attorneys, and employees, and agrees to
hold each of them harmless against any and all loss, damage, liability or
exposure, including reasonable attorneys fee, that it or any of them may
suffer, sustain, or incur by reason of or in connection with any
misrepresentation or breach of warranty or agreement made by the Purchaser
under this Agreement, or in connection with the sale or distribution by the
Purchaser of the Shares in violation of the Act or any other applicable law.
8. RESTRICTED PERIOD/CLOSING
(a) As set forth in Regulation S, the "Restricted Period" means a period
that commences on the later of the date upon which the securities were first
offered to persons other than distributors in reliance upon Regulation S or
each Date of Purchase (pursuant to paragraph 1 of this agreement), and in this
case, expires six (6) months thereafter, provided, however, that all offers and
sales by a distributor of an in a continuous offering, the restricted period
shall commence upon completion of the distribution, as determined and certified
by the managing underwriter or person performing similar functions.
(b) The closing of this offering shall occur on the date of execution of
the Agreement or the date of acceptance of this offer by the Company, whichever
is later. Notwithstanding the foregoing, the Company shall have the right to
make a determination based upon the advice of its counsel as to matters
relating to the restricted period and the closing of the offering for purposes
of Company in respect of removal of transfer restrictions.
9. LIMITATION ON PERCENTAGE HELD BY PURCHASER. Upon the Purchaser's
request, the Company shall provide to the Purchaser, its agents, assigns or
designees, a statement as to the number of the Company's outstanding shares of
Common Stock.
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<PAGE> 8
10. CONDITIONS TO COMPANY'S OBLIGATION TO SELL. Seller's obligation to
sell the Shares is conditioned upon Purchaser's receipt and acceptance of this
agreement covering the purchase of the Shares duly executed by an authorized
representative of the Company, and accepted by the Company's Board of
Directors, if such acceptance is required, and delivery of good funds as
payment in full for the purchaser of the Shares to the Purchaser's closing
depository.
11. CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE. The Purchaser's
obligation to purchase the Shares is conditioned upon:
(a) Purchaser's receipt and acceptance of this agreement for all the
Shares, as evidenced by execution of this agreement by the Purchaser, and
delivery to Purchaser of certificates evidencing the Shares, bearing no legend
except the Regulation S legend as described herein; and
(b) The absence of any event or circumstance that could reasonably be
expected to have a material adverse effect on the Company or on the market
price of the Company's Common Stock. The Purchaser shall have the right to
rescind the agreement should any such event come to pass during the pendency of
this agreement.
12. MISCELLANEOUS PROVISIONS.
(a) INVESTOR RELATIONS MATERIALS. The Company shall provide investor
relations materials including, but not limited to, brochures, press releases
and copies of the Company's SEC filings, to the Purchaser at the Purchaser's
request.
(b) NEWSLETTER. The Company shall provide its monthly newsletter to
the Purchaser. Such newsletter shall contain current information concerning the
business of the Company and shall be approved for shareholder distribution.
(c) FURTHER ASSURANCES. At any time and from time to time after the
date of this Agreement, each party shall execute such additional instruments and
take such other and further action as may be reasonably be requested by any
other party to confirm or perfect title to any property transferred hereunder
or otherwise to carry out the intent and purpose of this Agreement.
(d) WAIVER. Any failure on the part of any party hereunder to comply
with any of their obligations, agreement or conditions hereunder may be waived
in writing by the party to whom such compliance is owed; however, waiver on one
occasion does not operated to effectuate a waiver on any other occasion.
(e) BROKERS. The Purchaser represents to the Company that no broker
has acted in their behalf in connection with this agreement. Each party agrees
to indemnify, save, defend, and hold the other party harmless from and against
any fee, loss
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<PAGE> 9
or expense arising out of claims by brokers and shall obtain the release of any
and all claims which they may have or which may accrue against the
non-employing parties.
(f) ENTIRE AGREEMENT. This Agreement and all exhibits, schedules and
written memoranda attached hereto or otherwise referred to herein, constitutes
the entire agreement between the parties and supersedes and cancels any other
agreement, representation or communication, whether oral or written, between
the parties hereto relating to the transactions evidenced hereby and the
subject matter hereof.
(g) HEADINGS. The article and paragraph headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada.
(i) COUNTERPARTS. This agreement may be executed simultaneously in two or
more counterpart, each of which shall be deemed an original, but all of which
together shall constitute on and the same instrument.
(j) NO ORAL MODIFICATION. The Agreement may be modified solely in
writing, and only after the mutual agreement of the parties affected thereby.
(k) SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties, covenants contained herein shall survive the date
and execution of this Agreement.
(l) APPOINTMENT OF TRANSFER AGENT AND AUDITOR. The Company may appoint a
new transfer agent and independent auditor, of its own choosing, as soon as
practicable after the first Date of Purchaser under this agreement.
INDIVIDUAL SUBSCRIBERS
Name as you want it on the
Certificate for Share Name of Subscriber (typed or printed)
-------------------------------------
Date: Signature of Subscriber
87
<PAGE> 1
EXHIBIT 10(d)
Name of Subscriber Varna Management, Ltd, and/or its assigns
Providence House
East Hill Street
P. O. Box N-3944
Nassau, Bahamas
SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION
THE SECURITIES BEING SUBSCRIBED TO HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER APPLICABLE STATE SECURITIES
LAWS DUE TO THE APPLICATION OF REGULATION S PROMULAGED BY THE U.S. SECURITIES
AND EXCHANGE COMMISSION UNDER THE PROVISIONS OF THE SECURITIES ACT OF 1933, AS
AMENDED.
FURTHER, THE SECURITIES BEING SUBSCRIBED TO MAY NOT BE TRANSFERRED EXCEPT
PURSUANT TO TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR
COMPLIANCE THEREWITH.
Board of Directors
Marinex Multimedia Corp
The Soho Building
110 Greene Street, Suite 800
New York, NY 10012
Gentlemen:
1. SUBSCRIPTION AND CONSIDERATION FOR PURCHASE. The undersigned and/or
its assigns or designees (collectively the "Purchaser") hereby elects to
purchase a minimum total of 507,246 shares of Common Stock (the "Shares"), par
value $.001, of Marinex Multimedia Corp. ("Marinex"), a Nevada corporation
(the "Company") set forth above at a purchase price per share of $1.38.
The purchase of Shares shall occur in the foloowing stages:
<TABLE>
<CAPTION>
Date of Purchase Minimum Number of Shares Purchase Price
- ---------------- ------------------------ --------------
<S> <C> <C>
07/11/96 507,246 $ 700,000.00
</TABLE>
2. PAYMENT. Purchaser shall pay the purchase price for the Shares, at or
before the date of purchase, by delivering good funds in United States dollars
in the form of a wire transfer into the designated trust account maintained by
the Company's outside counsel.
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3. UNDERSTANDING OF THE PURCHASER. The Purchaser and/or its assigns
acknowledge, understand and agree that:
(a) TRANSFER AGENT INSTRUCTIONS. The Company's transfer agent will be
instructed to issue one or more share certificates evidencing the Shares,
leaving a customary Regulation S legend on the reverse side thereof, in the
name of the Purchaser or its assign. The transfer agent will be given stop
transfer instructions restricting the transfer of the Shares, to any "U.S.
person" as such term is defined in Regulation S. for a period of twelve (12)
months, (the "Restricted Period") (see paragraph below). The Shares are subject
to the restrictions on transfer provided in Regulation S, the terms and
conditions of which are incorporated herein by reference, plus any additional
time periods necessary to complete the Restricted Period. The Company warrants
that no other instructions have been or will be given to the transfer agent,
and that the Shares shall be otherwise freely tradeable on the Company's books
and records.
At the close of the Restricted Period the Company shall provide to its
transfer agent a legal opinion prepared by the Company's outside counsel
opining that the restricted legend may appropriately be removed from the
Shares, should such a legal opinion be required by the transfer agent in order
to lift the restricted legend, and provided that such a legal opinion is
permissible under the laws and circumstances in existence at that time. In no
event shall such legal opinion be unduly withheld by the Company. The
responsibility for removal of the restrictive legend shall be solely the
Company's. All fees related to transfer of the Shares to Purchaser, including
but not limited to the cost of obtaining a legal opinion, shall be borne by the
Company. The Shares shall be issued in that name set forth under the signature
line below. Nothing in this section shall affect in any way Purchaser's
obligation and agreement to comply with all applicable securities laws upon
resale of the Shares.
(b) SHARES NOT REGISTERED. The Shares have not been registered under the
Securities Act of 1933 (the "Act"), as amended, or any applicable State Law.
The Shares may not be sold, offered for sale, transferred, pledged,
hypothecated, or otherwise disposed of except in compliance with the Act. The
Company has no obligation, and does not intend, to cause any of the Shares sold
in this offering, to be registered under the Act, or to comply with any
exemption under the Act that would permit a sale or sales of the Shares. The
Purchaser must bear the economic risk of the investment in the Shares in the
Restricted Period. Purchaser acknowledges that he is subject to the
restrictions on transfer described herein Company will issue stock transfer
orders with the stock transfer orders with the Company's transfer agent to
enforce such restrictions.
(c) No Federal or State (U.S.A.) agency has made any findings or
determination as to the fairness of an investment in the Company, or any
recommendation or endorsement of this investment.
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4. Delivery of Share Certificates. A certificate in the form specified in
Section 3 above evidencing the Shares subscribed shall be delivered to the
Purchaser outside the United States (or to a law firm, brokerage firm, or other
professional fiduciary for delivery to the Purchaser outside the United States)
on a delivery versus payment basis at such place as shall be mutually agreed at
closing; provided that such certificates shall be made available for inspection
by the purchaser or its agents at such reasonable time as the Purchaser may
request prior to closing.
5. Representation and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company as follows:
(a) Purchaser is not organized under the laws of any jurisdiction within
the United States and was not formed for the purpose of investing in securities
sold under Regulation S. Purchaser is not a subsidiary of a corporation
organized in the United States, and is not otherwise a "U.S. Person" as that
term is defined in Section 902 of Regulation S.
(b) At the time the buy order for the Shares was originated, Purchaser was
outside the United States and was outside the United States as of the date of
the execution and delivery of this agreement to the Company.
(c) Purchaser is buying the Shares for its own account or for the account
of persons each of whom have entered into offshore subscription agreements in a
form substantially identical to this agreement, and is not purchasing the
shares for the account or benefit of any U.S. Person.
(d) Purchaser's commitment to investments that are not readily marketable
is not disproportionate to his Net Worth, and his investment in the Shares will
not cause such overall commitment to become excessive.
(e) Purchaser has the financial ability to bear the economic risk of this
investment, has adequate means for providing for his current needs and personal
contingencies, and has no need for liquidity in this investment.
(f) Purchaser has evaluated the high risk of investing in the Shares and
has such knowledge and experience in financial and business matters in general
and in particular with respect to this type of investment that he is capable of
evaluating the merits and risks of an investment in the Shares.
(g) Purchaser has been given the opportunity to ask questions of and
receive answers from the company concerning the terms and conditions of this
investment, and to obtain additional information necessary to verify the
accuracy of the information desire in order to evaluate this investment, and in
evaluating the suitability of an investment in the Shares. Purchaser has not
relied upon any representations or any
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information (whether oral or written) other than that furnished by the company
or its representatives.
(h) Purchaser has had the opportunity to discuss with professional legal,
tax and financial advisers the suitability of an investment of the Shares for
its particular tax and financial situation, and all information that has been
provided to the company concerning Purchaser and his financial position is
correct and complete as of the date set forth below, and if there should be any
material change in such information prior to his admission as a shareholder of
the Company, will immediately provide such information to the Company.
(i) The residents set forth below is the true and correct residence, and
purchaser has no present intention of becoming a resident or domicilary of any
other country.
(j) In making the decision to purchase the Shares, Purchaser has relied
solely upon independent investigations made by him or on his behalf.
(k) If the Purchaser is acting in this transaction as a distributor, as
defined under Regulation S, then he will be reselling the shares only in an
offshore transaction and will advise the ultimate Purchaser, or any other
distributor to whom he sells the Shares, that they will be subject to the same
restrictions on resale to which he is subject under said Regulation S.
Otherwise, as the ultimate Purchaser in this offering, Purchaser is acquiring
the Shares solely for his own personal account, for invesment purpose only, and
is not purchasing with a view to, or for, the resale, distribution,
subdivision, or fractionalization thereof.
(l) Purchaser is neither a member of nor is affiliated with or employed by
a member of the National Association of Securities Dealers, Inc. nor is
employed by or affiliated with a broker-dealer registered with the U.S.
Securities and Exchange Commission (the "SEC") nor with any similar agency of
any state.
(m) The offer leading to the sale and the sale evidenced hereby were made
in "offshore transaction" for purposes of Regulation S. "Offshore transaction"
as defined under Regulation S is any offer or sale of securities if (A) the
offer is not made to a person in the United States, or the Company and any
person acting on its behalf reasonably believes that the Purchaser is outside
the United States: or (B) the transaction is executed in, on or through the
facilities of "designated offshore securities market", and neither the Company
nor any person acting on its behalf knows that the transaction has been
prearranged with the Purchaser in the United States. "Designated offshore
securities market" is defined under Regulation S to be the Eurobond Market, as
regulated by the Association of International Bond Dealers; the Amsterdam Stock
Exchange; the Australian Stock Exchange Ltd.; the Beurse de Bruxelles; the
Frankfurt Stock Exchange; the Stock Exchange of Hong Kong Limited; the
International Stock Exchange; the Bourse de Luxembourg; the Borsa Calori di
Milan; the Montreal Stock Exchange; the Toronto
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Stock Exchange; The Vancouver Stock Exchange; the Zurich Stock Exchange. In
regards of this representation and warranty, and notwithstanding the above,
offers and sales of securities to persons excluded from the definition of
"U.S. Person" are offshore transactions.
A "U. S. Person" for purposes of Regulation S is (I) any natural person
resident in the United States; (ii) any partnership or corporation organized or
incorporated under the laws of the United States; (iii) any estate of which any
executor or administrator is a U.S. person; (iv) any trust of which any
trustee is a U.S. person; (v) any agency or branch of a foreign entity located
in the United States; (vi) any non-discretionary or similar account other than
an estate or trust held by a dealer or other fiduciary organized, incorporated,
or if an individual, resident in the United States; (vii) any discretionary or
similar account (other than in a state of trust) held a dealer or other
fiduciary organized, incorporation, or if an individual, resident in the United
States; (viii) any partnership or corporation if (A) organized or incorporated
under the laws of any foreign jurisdiction; and (B) formed by a U. S. person
principally for the purpose of investing in securities not registered under the
Securities Act unless it is organized or incorporated and owned by accredited
investors who are not natural persons, estates or trusts.
(n) Neither the Purchaser nor any affiliate, nor any person acting on
their behalf, has made any "directed selling efforts" in the United States as
defined in Regulation S as "any activity taken for the purpose of or that could
be reasonably expected to have the effect of conditioning the market in the
United States for any of the securities being purchased hereby.
(o) The Purchaser understands that the Company is the issuer of the
securities which are the subject of this Agreement and that, for purposes of
Regulation S, a "distributor" is any underwriter, dealer or other person who
participates pursuant to a contractual arrangement, in the distribution of
securities offered or sold in reliance on Regulation S and that the "affiliate"
is any partner, officer, or director of any person, directly or indirectly,
controlled by or under common control with the person in question. In this
regard, the Purchaser shall not, during the Restricted Period, act as a
distributor, either directly or through an affiliate, nor shall the Purchaser
sell, transfer, hypothecate, or otherwise convey the Shares or any interest
therein other than to a non-U.S. person (and in such case shall provide
evidence to the satisfaction of the Company and its Transfer Agent that such
resale was made in a bona-fide offshore).
(p) Purchaser acknowledges that the Shares have not been registered under
the Act and are being offered and sold to Purchaser in reliance upon the
exemption provided by Regulation S from the registration requirements of the
Act, and Purchaser acknowledges, for a period of at least forty (40) days, or
for any greater period as required by this agreement, following the completion
of the Company's acquisition of Shares under this agreement, Purchaser must not
and will not allowed to resell the Shares in the United States or to a U.S.
Person.
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(q) Purchaser is not an "affiliate" of the Company as defined in Rule
144(a) of the SEC and, following purchase of the Shares, neither Purchaser nor
any affiliate of Purchaser will be an affiliate of the Company.
The foregoing representations, warranties, agreements, undertakings and
acknowledgments are made by the undersigned with the intent that they be relied
upon in determining its suitability as a Purchaser of the Shares. In addition,
the undersigned agrees to notify the Company immediately of any change in any
representations, or other information. If the Purchaser is other than a natural
person, the foregoing and following representations and warranties are being
made by and refer to such entity and the individual or individuals executing
this Subscription Agreement and Investor Representations have due authority to
bind and obligate such entity hereby. If more than one person is signing this
Agreement, each representation , warranty and undertaking herein shall be a
joint and several representation, warranty and undertaking of each such person.
If the Purchaser is a partnership, corporation, trust or other entity, the
Purchaser further represents and warrants that (I) there has been enclosed with
this Agreement appropriate evidence of the authority of the individual
executing this Agreement to act on the behalf of the Purchaser, (ii) the entity
was not specifically formed to acquire the Shares, (iii) the entity was not
organized, nor resides, nor do the persons owning or controlling such entity
reside in, the United States. If the Purchaser is a partnership, the Purchaser
further represents that the funds to make this investment were not derived from
additional capital contributions of the partners of such partnerships.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY TO THE PURCHASER. The
Company hereby represents and warrants to the Purchaser that it is being
acquired by a "reporting issuer" as defined by Rule 902 of Regulation S. The
Company further represents and warrants that: (I) it is a corporation in good
standing in all Jurisdictions in which it conducts its business; (ii) its is
current in all of its required filings with the SEC and all other regulatory
bodies, both states and federal in which regard the Company will furnish to the
Purchaser letters from the Company's attorney and the Company's independent
public accountant confirming these facts as true; (iii) it will take all steps
necessary to register to sell its Common Stock under the Blue Sky statutes in
the states of California and Florida as quickly as practicable; (iv) upon
financial requirements being met the Company make application for listing on
NASDAQ, (v) it has sufficient authorized stock to issue the shares being
subscribed by the Purchaser hereunder; and (vi) upon proper payment and receipt
of the purchase price, acceptance of the Purchaser's subscription therefor and
issuance and delivery to the Shares being subscribed to hereunder to Purchaser,
such Shares shall be deemed fully paid, validly issued, and non-assessable.
The Company represents to Purchaser that it will have in place, at the
time this agreement is executed and for a period of at least two years after
execution of the agreement, key man insurance policies on the Company's
President, Chief Executive Officer and Chief Operating Officer.
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The Company further represents and warrants to the Purchaser that it has
the authority under its corporate charter as amended, and under applicable
state and federal corporate and securities laws to enter into the contemplated
transaction, and that the signatories hereto have been duly authorized in
accordance with its corporate charter and by laws, which authority has not been
suspended, modified or revoked as of the date hereof.
Neither the Company nor any person acting on its behalf, has made any
"directed selling efforts" in the United States, as defined in Regulation S to
be: any activity undertaken for the purpose of, or that could reasonable be
expected to have the effect of, conditioning the market in the United States
for any of the securities being purchased hereby.
7. INDEMNITY BY PURCHASER. The Purchaser understands and acknowledges
that the Company, its officers, directors, attorneys and agents are relying
upon the representations, warranties and agreements made by the Purchaser to
and with the Company herein and, thus hereby agrees to indemnify the Company,
its officers and directors, agents, attorneys, and employees, and agrees to
hold each of them harmless against any and all loss, damage, liability or
exposure, including reasonable attorneys fee, that it or any of them may
suffer, sustain, or incur by reason of or in connection with any
misrepresentation or breach of warranty or agreement made by the Purchaser
under this Agreement, or in connection with the sale or distribution by the
Purchaser of the Shares in violation of the Act or any other applicable law.
8. RESTRICTED PERIOD/CLOSING
(a) As set forth in Regulation S, the "Restricted Period" means a period
that commences on the later of the date upon which the securities were first
offered to persons other than distributors in reliance upon Regulation S or
each Date of Purchase (pursuant to paragraph 1 of this agreement), and in this
case, expires twelve (12) months thereafter, provided, further, that in a
continuous offering, the restricted period shall commence upon completion of
the distribution, as determined and certified by the managing underwriter or
person performing similar functions.
(b) The closing of this offering shall occur on the date of execution of
the Agreement or the date of acceptance of this offer by the Company, whichever
is later. Notwithstanding the foregoing, the Company shall have the right to
make a determination based upon the advice of its counsel as to matters
relating to the restricted period and the closing of the offering for purposes
of Company in respect of removal of transfer restrictions.
9. LIMITATION ON PERCENTAGE HELD BY PURCHASER. Upon the Purchaser's
request, the Company shall provide to the Purchaser, its agents, assigns or
designees, a statement as to the number of the Company's outstanding shares of
Common Stock.
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10. CONDITIONS TO COMPANY'S OBLIGATION TO SELL. Seller's obligation to
sell the Shares is conditioned upon Purchaser's receipt and acceptance of this
agreement covering the purchase of the Shares duly executed by an authorized
representative of the Company, and accepted by the Company's Board of
Directors, if such acceptance is required, and delivery of good funds as
payment in full for the purchaser of the Shares to the Purchaser's closing
depository.
11. CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE. The Purchaser's
obligation to purchase the Shares is conditioned upon:
(a) Purchaser's receipt and acceptance of this agreement for all the
Shares, as evidenced by execution of this agreement by the Purchaser, and
delivery to Purchaser of certificates evidencing the Shares, bearing no legend
except the Regulation S legend as described herein; and
(b) The absence of any event or circumstance that could reasonably be
expected to have a material adverse effect on the Company or on the market
price of the Company's Common Stock. The Purchaser shall have the right to
rescind the agreement should any such event come to pass during the pendency of
this agreement.
12. MISCELLANEOUS PROVISIONS.
(a) INVESTOR RELATIONS MATERIALS. The Company shall provide investor
relations materials including, but not limited to, brochures, press releases
and copies of the Company's SEC filings, to the Purchaser at the Purchaser's
request.
(b) NEWSLETTER. The Company shall provide its monthly newsletter to
the Purchaser. Such newsletter shall contain current information concerning the
business of the Company and shall be approved for shareholder distribution.
(c) FURTHER ASSURANCES. At any time and from time to time after the
date of this Agreement, each party shall execute such additional instruments and
take such other and further action as may be reasonably be requested by any
other party to confirm or perfect title to any property transferred hereunder
or otherwise to carry out the intent and purpose of this Agreement.
(d) WAIVER. Any failure on the part of any party hereunder to comply
with any of their obligations, agreement or conditions hereunder may be waived
in writing by the party to whom such compliance is owed; however, waiver on one
occasion does not operated to effectuate a waiver on any other occasion.
(e) BROKERS. The Purchaser represents to the Company that no broker
has acted in their behalf in connection with this agreement. Each party agrees
to indemnify, save, defend, and hold the other party harmless from and against
any fee, loss
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or expense arising out of claims by brokers and shall obtain the release of any
and all claims which they may have or which may accrue against the
non-employing parties.
(f) ENTIRE AGREEMENT. This Agreement and all exhibits, schedules and
written memoranda attached hereto or otherwise referred to herin, constitutes
the entire agreement between the parties and supersedes and cancels any other
agreement, representation or communication, whether oral or written, between
the parties hereto relating to the transactions evidenced hereby and the
subject matter hereof.
(g) HEADINGS. The article and paragraph headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada.
(i) COUNTERPARTS. This agreement may be executed simultaneously in two or
more counterpart, each of which shall be deemed an original, but all of which
together shall constitute on and the same instrument.
(j) NO ORAL MODIFICATION. The Agreement may be modified solely in
writing, and only after the mutual agreement of the parties affected thereby.
(k) SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties, covenants contained herein shall survive the date
and execution of this Agreement.
(l) APPOINTMENT OF TRANSFER AGENT AND AUDITOR. The Company may appoint a
new transfer agent and independent auditor, of its own choosing, as soon as
practicable after the first Date of Purchaser under this agreement.
INDIVIDUAL SUBSCRIBERS
Name as you want it on the
Certificate for Share Name of Subscriber (typed or printed)
/s/
-------------------------------------
Date: Signature of Subscriber
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EXHIBIT 10(e)
OPTION AGREEMENT OF JONATHAN BRAUN
THIS OPTION AGREEMENT dated this __ day of _____ 1996 between Marinex
Multimedia Corporation, a New York Corporation, "Company", and Jonathan Braun,
a citizen and resident of New York, New York, "Agent", in consideration of the
mutual covenants herein contained and other good and valuable considerations,
the receipt and sufficiency of which is hereby acknowledged under the following
terms and conditions:
RECITALS
1. The Company has entered into that certain Acquisition Agreement of even
date herewith under the terms of which the parent of the Company has acquired
all of the outstanding stock of Texas Equipment Corporation, Inc., a Texas
corporation. The Acquisition Agreement is hereby incorporated by reference.
2. Under the terms of the Acquisition Agreement, the multimedia operations
of the combined entity will be exclusively conducted through its subsidiary,
Marinex Multimedia Corporation, a New York corporation located at The Soho
Building, Suite 800, 110 Greene Street, New York, NY 10012.
3. Agent is an officer and director of the subsidiary corporation and is
experienced in the operations and business of the subsidiary.
4. As part of the Acquisition Agreement, all parties have agreed to confer
upon Agent an Option to acquire shares of the subsidiary representing 24% of
the total issued and outstanding shares as of the date of exercise.
5. "Texas Equipment" shall refer to the entity described in the
Acquisition Agreement. "Marinex - New York" shall refer to the Company.
"Marinex - Nevada" shall refer to Marinex Multimedia Corporation, a Nevada
corporation, and the 100% owner of the Company.
IT IS MUTUALLY AGREED
1. Issuance of Option. In connection with the Acquisition Agreement, the
Company hereby issues a stock option to Agent or his designees to acquire a
number of its shares equal to 25% of the total issued and outstanding shares
as of the date of exercise. The option price shall be One Dollar. The option
may be exercised, in the sole discretion of the Option holder, upon the
happening of one or more of the following corporate events:
(a) Bona Fide offer to purchase the interest of Agent; or the
interest of the parent Company; or any other shareholder; or any sale
of an interest in excess of 10% in Marinex New York;
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(b) Bankruptcy, insolvency, receivership, dissolution or
liquidation of Texas Equipment or any other action under which Texas
Equipment seeks legal or equitable relief from its creditors;
(c) Reorganization, recombination, declaration of a stock dividend
of Marinex -New York stock by Marinex - Nevada;
(d) Sale or spin out of either subsidiary;
(e) Merger under which more control of Marinex - Nevada is changed
or acquisition under which shares totaling more than 25% of the
outstanding stock of Marinex - Nevada is issued;
(f) Any event which requires approval of 2/3 or more of the
shareholders of the Company or which constitutes a fundamental change
under Nevada corporate law, as amended;
(g) Public offering of shares totaling 10% or more of Marinex -
New York, including securities which convert into shares such as
warrants, options, convertible debentures or debt instruments and other
convertible securities.
(h) Upon dilution of the holdings of the present Marinex - Nevada
shareholders (as of the day before the Closing Date) by more than 20%
during the first two years following the Closing Date (or a series of
actions which, when combined, cause such dilution) which, unless the
issuances were issued at no more than a 50% discount from the average
bid price for the thirty day period prior to the issuance;
(i) or any other similar event or occurrence that fundamentally
alters the nature of the relationship between Braun and/or Platkin and
the Company.
Upon the exerciseability of the Option being triggered by any of the above
occurrences, then the Option shall remain open and exerciseable for a period of
five years and the option shall be valid for a period of five years from the
date of this Agreement.
2. Authorized Shares. The Company has authorized sufficient quantities of
common stock with which to fulfill its obligations to issue the shares
underlying this Option and shall continue to maintain sufficient quantities of
authorized but unissued common stock throughout the life of this Option.
3. No Redeemable Feature. The Company shall not have the right to redeem
this Option or any of the underlying shares.
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4. Restricted Shares. Upon exercise, the share issued to Agent shall be
restricted shares, properly legended, and will be subject to such resale
limitations as may be imposed by law.
5. Exercise of Option. Subject to the provisions of this Agreement, upon
payment of $1.00, Agent shall have the right to purchase from the Company the
number of shares of Common Stock equal to 25% of all issued and outstanding
shares of common voting stock. Exercise shall occur by surrender to the Company
of a letter or other form of election, together with full payment to the
Company. Upon receipt of full payment and properly completed documentation, the
Company shall then issue such fully paid and nonassessable shares of Common
Stock as are represented by the exercise. The rights of purchase shall be
exerciseable at the election of the registered holder thereof, in their
entirety on an all or none basis.
6. Countersignature and Registration. The Company shall maintain books
for the transfer and registration of the Option and the underlying shares.
Upon the initial issuance of Option, the Company shall issue and register the
Option (and/or underlying Shares) in the names of the respective holders
thereof.
7. Transfers and Exchanges. The Company shall transfer, from time to
time, any outstanding Option and/or underlying shares upon the books to be
maintained by the Company for that purpose, upon surrender thereof for transfer
properly endorsed or accompanied by appropriate instructions for transfer.
Upon any such transfer, a new Option shall be issued to the transferee and the
surrendered Option shall be canceled by the Company. Options so canceled shall
be delivered to the Company from time to time upon request.
8. Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the initial issuance of the Common Stock issuable upon the
exercise of the Options; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue or delivery of any certificates for the Common
Stock in a name other than that of the registered holder of the Option in
respect of which such shares are issued, and in such case the Company not shall
be required to issue or deliver any certificates for the Common Stock or any
Option until the person requesting the same has paid to the Company the amount
of such tax or has established to the Company's satisfaction that such tax has
been paid.
9. Mutilated or Missing Warrants. In case any of the Option and/or
underlying shares shall be mutilated, lost, stolen or destroyed, the Company
may in its discretion issue and the Company shall countersign and deliver in
exchange and substitution for and upon cancellation of the mutilated Option
and/or underlying shares, or in lieu of and substitution for the Option and/or
shares lost, stolen or destroyed, a new Option and/or shares of like tenor and
representing an equivalent right or interest, but only upon receipt
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of evidence satisfactory to the Company of such loss, theft or destruction of
such Option and/or shares and indemnity, if requested, also satisfactory to
them.
10. Fractional Interest. The Company shall not be required to issue
fraction shares of Common Stock on the exercise of the Options.
11. AntiDilution Features. In determining the amount of shares to be
issued to Agent, there shall be taken into account all unexercised Options
(other than the matching Option given this same date), warrants, convertible
debentures or other securities or instruments that are convertible into common
voting stock.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
MARINEX MULTIMEDIA CORPORATION
By:
------------------------------
Authorized Officer
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EXHIBIT 10(f)
OPTION AGREEMENT OF CHARLES STUART PLATKIN
THIS OPTION AGREEMENT dated this __ day of _____ 1996 between Marinex
Multimedia Corporation, a New York Corporation, "Company", and Charles Stuart
Platkin, a citizen and resident of New York, New York, "Agent", in
consideration of the mutual covenants herein contained and other good and
valuable considerations, the receipt and sufficiency of which is hereby
acknowledged under the following terms and conditions:
RECITALS
1. The Company has entered into that certain Acquisition Agreement of even
date herewith under the terms of which the parent of the Company has acquired
all of the outstanding stock of Texas Equipment Corporation, Inc., a Texas
corporation. The Acquisition Agreement is hereby incorporated by reference.
2. Under the terms of the Acquisition Agreement, the multimedia operations
of the combined entity will be exclusively conducted through its subsidiary,
Marinex Multimedia Corporation, a New York corporation located at The Soho
Building, Suite 800, 110 Greene Street, New York, NY 10012.
3. Agent is an officer and director of the subsidiary corporation and is
experienced in the operations and business of the subsidiary.
4. As part of the Acquisition Agreement, all parties have agreed to confer
upon Agent an Option to acquire shares of the subsidiary representing 24% of
the total issued and outstanding shares as of the date of exercise.
5. "Texas Equipment" shall refer to the entity described in the
Acquisition Agreement. "Marinex - New York" shall refer to the Company.
"Marinex - Nevada" shall refer to Marinex Multimedia Corporation, a Nevada
corporation, and the 100% owner of the Company.
IT IS MUTUALLY AGREED
1. Issuance of Option. In connection with the Acquisition Agreement, the
Company hereby issues a stock option to Agent or his designees to acquire a
number of its shares equal to 25% of the total issued and outstanding shares
as of the date of exercise. The option price shall be One Dollar. The option
may be exercised, in the sole discretion of the Option holder, upon the
happening of one or more of the following corporate events:
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(a) Bona Fide offer to purchase the interest of Agent; or the
interest of the parent Company; or any other shareholder; or any sale
of an interest in excess of 10% in Marinex New York;
(b) Bankruptcy, insolvency, receivership, dissolution or
liquidation of Texas Equipment or any other action under which Texas
Equipment seeks legal or equitable relief from its creditors;
(c) Reorganization, recombination, declaration of a stock dividend
of Marinex - New York stock by Marinex - Nevada;
(d) Sale or spin out of either subsidiary;
(e) Merger under which more control of Marinex - Nevada is changed
or acquisition under which shares totaling more than 25% of the
outstanding stock of Marinex - Nevada is issued;
(f) Any event which requires approval of 2/3 or more of the
shareholders of the Company or which constitutes a fundamental change
under Nevada corporate law, as amended;
(g) Public offering of shares totaling 10% or more of Marinex -
New York, including securities which convert into shares such as
warrants, options, convertible debentures or debt instruments and other
convertible securities.
(h) Upon dilution of the holdings of the present Marinex - Nevada
shareholders (as of the day before the Closing Date) by more than 20%
during the first two years following the Closing Date (or a series of
actions which, when combined, cause such dilution) which, unless the
issuances were issued at no more than a 50% discount from the average
bid price for the thirty day period prior to the issuance;
(i) or any other similar event or occurrence that fundamentally
alters the nature of the relationship between Braun and/or Platkin and
the Company.
Upon the exerciseability of the Option being triggered by any of the above
occurrences, then the Option shall remain open and exerciseable for a period of
five years and the option shall be valid for a period of five years from the
date of this Agreement.
2. Authorized Shares. The Company has authorized sufficient quantities of
common stock with which to fulfill its obligations to issue the shares
underlying this Option and shall continue to maintain sufficient quantities of
authorized but unissued common stock throughout the life of this Option.
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3. No Redeemable Feature. The Company shall not have the right to redeem
this Option or any of the underlying shares.
4. Restricted Shares. Upon exercise, the share issued to Agent shall be
restricted shares, properly legended, and will be subject to such resale
limitations as may be imposed by law.
5. Exercise of Option. Subject to the provisions of this Agreement, upon
payment of $1.00, Agent shall have the right to purchase from the Company the
number of shares of Common Stock equal to 25% of all issued and outstanding
shares of common voting stock. Exercise shall occur by surrender to the Company
of a letter or other form of election, together with full payment to the
Company. Upon receipt of full payment and properly completed documentation, the
Company shall then issue such fully paid and nonassessable shares of Common
Stock as are represented by the exercise. The rights of purchase shall be
exerciseable at the election of the registered holder thereof, in their
entirety on an all or none basis.
6. Countersignature and Registration. The Company shall maintain books
for the transfer and registration of the Option and the underlying shares.
Upon the initial issuance of Option, the Company shall issue and register the
Option (and/or underlying Shares) in the names of the respective holders
thereof.
7. Transfers and Exchanges. The Company shall transfer, from time to
time, any outstanding Option and/or underlying shares upon the books to be
maintained by the Company for that purpose, upon surrender thereof for transfer
properly endorsed or accompanied by appropriate instructions for transfer.
Upon any such transfer, a new Option shall be issued to the transferee and the
surrendered Option shall be canceled by the Company. Options so canceled shall
be delivered to the Company from time to time upon request.
8. Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the initial issuance of the Common Stock issuable upon the
exercise of the Options; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue or delivery of any certificates for the Common
Stock in a name other than that of the registered holder of the Option in
respect of which such shares are issued, and in such case the Company not shall
be required to issue or deliver any certificates for the Common Stock or any
Option until the person requesting the same has paid to the Company the amount
of such tax or has established to the Company's satisfaction that such tax has
been paid.
9. Mutilated or Missing Warrants. In case any of the Option and/or
underlying shares shall be mutilated, lost, stolen or destroyed, the Company
may in its discretion issue and the Company shall countersign and deliver in
exchange and substitution for and
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upon cancellation of the mutilated Option and/or underlying shares, or in lieu
of and substitution for the Option and/or shares lost, stolen or destroyed, a
new Option and/or shares of like tenor and representing an equivalent right or
interest, but only upon receipt of evidence satisfactory to the Company of such
loss, theft or destruction of such Option and/or shares and indemnity, if
requested, also satisfactory to them.
10. Fractional Interest. The Company shall not be required to issue
fraction shares of Common Stock on the exercise of the Options.
11. AntiDilution Features. In determining the amount of shares to be
issued to Agent, there shall be taken into account all unexercised Options
(other than the matching Option given this same date), warrants, convertible
debentures or other securities or instruments that are convertible into common
voting stock.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
MARINEX MULTIMEDIA CORPORATION
By:
--------------------------------
Authorized Officer
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EXHIBIT 10(g)
OPTION AGREEMENT OF CHARLES BARKLEY
THIS OPTION AGREEMENT dated this 17th day of September, 1996 between
Marinex Multimedia Corporation, a Nevada Corporation, "Company", and Charles
Barkley, a citizen and resident of Charlotte, North Carolina, "Agent", in
consideration of the mutual covenants herein contained and other good and
valuable considerations, the receipt and sufficiency of which is hereby
acknowledged under the following terms and conditions:
RECITALS
1. The Company has entered into that certain Acquisition Agreement of even
date herewith under the terms of which the parent of the Company has acquired
all of the outstanding stock of Texas Equipment Corporation, Inc., a Texas
corporation. The Acquisition Agreement is hereby incorporated by reference.
2. Under the terms of the Acquisition Agreement, the Company has
authorized an Option to Barkley for the purchase of up to 250,000 shares of
common voting stock of the Company upon payment of an option price of $0.01 per
share.
3. The Company has engaged Agent as its exclusive investment banking and
special securities counsel with respect to the Acquisition. is an officer and
director of the subsidiary corporation and is experienced in the operations and
business of the subsidiary.
IT IS MUTUALLY AGREED
1. Issuance of Option. In connection with the Company's exchange of
16,850,000 shares of common voting stock for all of the issued and outstanding
stock of Texas Equipment Corporation, Inc., the Company hereby issues a stock
option to Barkley or his designees to acquire up to 250,000 shares of the
Company's common voting stock, par value $0.001. The option price shall be One
Cent ($0.01) per share and shall have a term of five years from the date of
this Agreement.
2. Authorized Shares. The Company has authorized sufficient quantities of
common stock with which to fulfill its obligations to issue the shares
underlying this Option and shall continue to maintain sufficient quantities of
authorized but unissued common stock throughout the life of this Option.
3. No Redeemable Feature. The Company shall not have the right to redeem
this Option or any of the underlying shares.
4. Duty to Register Underlying Shares. The Company agrees to use its best
efforts to register the shares of common stock issuable upon the exercise of
the Option by the filing of an appropriate Registration Statement with the
Securities & Exchange
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Commission. The Company will exert its best efforts to obtain effectiveness of
the registration statement on or prior to the 12th day of February, 1997.
Registration shall be at the Company's expense and shall be made in any manner
whereby the underlying shares become freely tradable (subject only to
restrictions upon resales by affiliates, if applicable). The duty to register
the underlying shares shall be an ongoing duty and the parties acknowledge that
time is of the essence.
To effect the intents of this Paragraph, the Company shall obtain the
consent of the three shareholders of Texas Equipment Corporation, Inc. (or
other principal shareholders owning or controlling 50.1% or more of the
outstanding voting shares of the Company) to the effect that said registration
will be promptly undertaken.
In addition to the rights above, and to the extent that any such shares
are not registered as agreed above, the Company hereby confers unto Barkley
"piggyback" registration rights under which any remaining shares of Common
Stock will be registered, at Company expense, at the time of registration of
any other of the Company's securities, or the securities of any affiliate,
officer, director or shareholder.
The obligation to register the Option and/or shares underlying the Option
shall terminate in the event that the securities become freely tradable by:
(a) all of the remaining shares are registered by an effective
registration statement or similarly effective exemption and are freely tradable
(except as to restrictions on affiliates); or
(b) The restrictive legend on the shares have been removed and the shares
are eligible to be freely traded by Rule 144 or similar exemption from the
registration requirements.
5. Adjustments. Subject to the provisions of this paragraph, the Option
Price and number of shares of Common Stock as to which the Option may be
exercised shall be subject to adjustment from time to time as set forth
hereinafter. If at any time or from time to time, the Company shall, by
subdivision, consolidation, or reclassification of shares, or otherwise, change
as a whole the outstanding shares of the Common Stock into a different number
or class of shares, the number and class of shares as so changed shall replace
the shares outstanding immediately prior to such change, and the price and
number of shares purchasable under the Option immediately prior to the date on
which such change shall become effective shall be proportionately adjusted.
6. Exercise of Option. Subject to the provisions of this Agreement,
Barkley (or the holder of the Option or any portion thereof) shall have the
right to purchase from the Company a number of shares of Common Stock up to a
maximum of 250,000 shares of common voting stock by tendering to the Company
payment of $0.01 per share. Exercise shall occur by surrender to the Company of
a letter or other form of election, together with full payment to the Company.
Upon receipt of full payment and properly completed
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documentation, the Company shall then issue such fully paid and nonassessable
shares of Common Stock as are represented by the exercise. The rights of
purchase shall be exerciseable at the election of the registered holder
thereof, either in their entirety or from time to time for part only. In the
event that the Option is exercise in an amount less than all of the shares
optionable hereunder, a revised Option Agreement may be issued to reflect the
remaining number of shares subject to the Option.
7. Countersignature and Registration. The Company shall maintain books
for the transfer and registration of the Option and the underlying shares.
Upon the initial issuance of Option, the Company shall issue and register the
Option (and/or underlying Shares) in the names of the respective holders
thereof.
8. Transfers and Exchanges. The Company shall transfer, from time to
time, any outstanding Option and/or underlying shares upon the books to be
maintained by the Company for that purpose, upon surrender thereof for transfer
properly endorsed or accompanied by appropriate instructions for transfer.
Upon any such transfer, a new Option shall be issued to the transferee and the
surrendered Option shall be canceled by the Company. Options so canceled shall
be delivered to the Company from time to time upon request.
9. Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the initial issuance of the Common Stock issuable upon the
exercise of the Options; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue or delivery of any certificates for the Common
Stock in a name other than that of the registered holder of the Option in
respect of which such shares are issued, and in such case the Company not shall
be required to issue or deliver any certificates for the Common Stock or any
Option until the person requesting the same has paid to the Company the amount
of such tax or has established to the Company's satisfaction that such tax has
been paid.
10. Mutilated or Missing Warrants. In case any of the Option and/or
underlying shares shall be mutilated, lost, stolen or destroyed, the Company
may in its discretion issue and the Company shall countersign and deliver in
exchange and substitution for and upon cancellation of the mutilated Option
and/or underlying shares, or in lieu of and substitution for the Option and/or
shares lost, stolen or destroyed, a new Option and/or shares of like tenor and
representing an equivalent right or interest, but only upon receipt of evidence
satisfactory to the Company of such loss, theft or destruction of such Option
and/or shares and indemnity, if requested, also satisfactory to them.
11. Fractional Interest. The Company shall not be required to issue
fraction shares of Common Stock on the exercise of the Options.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
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MARINEX MULTIMEDIA CORPORATION
(a Nevada Corporation)
By:
----------------------------
Authorized Officer
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EXHIBIT 10(h)
EMPLOYMENT AGREEMENT
JONATHAN BRAUN
AND MARINEX MULTIMEDIA CORPORATION
AGREEMENT, dated as of the 1st day of June, 1996, among Marinex Multimedia
Corporation, a Nevada corporation, having a place of business at 110 Greene
Street, New York, New York 10012 ("Company"), and Jonathan Braun, an individual
residing at 70 Huntville Road, Katonah, NY 10563 ("Executive")
WHEREAS, the Company desires to employ Executive as its President; and
WHEREAS, Executive is willing to accept such employment by the Company,
all in accordance with provisions hereinafter set forth; and
NOW, THEREFORE, in consideration of the promises and mutual
representations, covenants and agreements set forth herein, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Term: The term of this Agreement shall be for a period of five (5)
years commencing effective on the date hereof, and terminating on the fifth
anniversary date hereof subject to earlier termination as provided herein or
unless extended by mutual consent of the parties.
2. Employment: (A) Subject to the terms and conditions and for the
compensation hereinafter set forth, the Company hereby agrees to employ
Executive for and during the term of this Agreement. Executive is hereby
employed by the Company as its President with primary responsibility for the
general management of the Corporation's affairs and its day to day operations,
with the requisite authority to so manage. The Company shall not require
Executive to be employed in any location other than metropolitan New York City
unless he consents in writing to such location.
(B) During the term of this Agreement, Executive shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; he shall be provided with the prerequisites
customarily associated with the position of President of the Company.
(C) Executive understands that the Company may obtain key man life and/or
disability insurance on his person of which the Company will be the
beneficiary. Executive agrees to sign all necessary insurance and to make
himself available for any medical examination reasonably required by such
insurer.
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3. Compensation:
(A) Salary: During the term of this Agreement, the Company agrees to pay
Executive, and Executive agrees to accept, an annual salary of not less than
Two Hundred Forty Thousand Dollars ($240,000) per year, payable in accordance
with the Company's policies, for all services rendered by Executive hereunder.
Executive may waive any portion of his salary. Any such waiver shall be
retroactive only and shall not be prospective.
(B) Bonus: As additional compensation, the Company may pay Executive a periodic
bonus as determined by the Board of Directors.
(C) Increases: The annual salary is subject to periodic increases at the
discretion of the Board of Directors with such increases to take effect no
later than on each anniversary date of this Agreement and which shall not be
less than ten percent (10%) each year.
(D) Performance Compensation: Executive will receive ten percent (10%) of the
Company's annual profits, payable within four (4) months of the end of each of
the Company's fiscal years ending within the term of this Agreement. For the
purposes of this Agreement "Profits" shall be an amount equal to the Company's
net income before income taxes for the employment year in question, determined
in accordance with generally accepted accounting principles plus any amounts
deducted by the Company during the relevant year for depreciation of property
and equipment or interest expense, less any nonrecurring or infrequent items
(e.g. sale of property or equipment) which increased net income before income
taxes, plus any nonrecurring or infrequent items which increased net income
before income taxes.
4. Expenses: The Company shall reimburse Executive for all reasonable and
actual business expenses incurred by him in connection with his service to the
Company, upon submission by him of appropriate vouchers and expense account
reports, including but not limited to automobile which automobile expenses
shall not exceed the sum of Thirty Five Thousand Dollars ($35,000) per year.
5. Benefits:
(A) Insurance: In addition to the salary and bonus to be paid to Executive
hereunder, the Company shall maintain family medical and dental insurance, life
insurance in the amount of not less than Two Hundred Fifty Thousand Dollars
($250,000) on the life of Executive and for which executive shall designate the
beneficiary(ies), and long term disability providing monthly disability
insurance disability benefits to Executive of not less than Fifty Four Thousand
Dollars ($54,000). Executive and his dependents shall be entitled to
participate in such other benefits as are extended to active executive
employees of the Company and their dependents including but not limited to
pension, retirement, profit-sharing, 401(k), stock option, bonus and incentive
plans, group insurance,
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hospitalization, medical or other benefits made available by the Company to its
employees generally.
(B) Vacation: Executive shall be entitled to take up to six (6) weeks of paid
vacation annually at a time mutually convenient to the Company and Executive in
any one year shell accumulate to his benefit in the succeeding years and, to
the extent not previously used as of the termination of Executive's period of
active employment, Executive shall be paid in cash in lieu of such unused
vacation.
6. Restricted Covenants: (A) Executive recognizes and acknowledges that
the Company, through the expenditure of considerable time and money, has
developed and will continue to develop in the future, information concerning
customers, clients, marketing, business and operational methods of the Company
and its customers or clients, contracts, financial or other data, technical
data or any other confidential or proprietary information possessed, owned or
used by the Company, and that the same are confidential and proprietary, and
are "confidential information" of the Company. In consideration of his
employment by the Company hereunder, Executive agrees that he will not, without
the consent of the Board, make any disclosure of confidential information now
or hereafter possessed by the Company to any person, partnership, corporation
or entity either during or after the term hereunder, except to employees of the
Company or its subsidiaries or affiliates, as may be necessary in the regular
course of the Company's business and except as may be required pursuant to any
court order, judgment or decision from any court of competent jurisdiction. The
foregoing shall not apply to information which is in the public domain on the
date hereof; which, after it is disclosed to Executive by the Company is
published or becomes part of the public domain through no fault of Executive;
which is known to Executive prior to disclosure thereof to him by the Company
as evidenced by his written records; or, after Executive is no longer employed
by the Company, which is thereafter disclosed to Executive in good faith by a
third party who was not under any obligation of confidence or secrecy to the
Company with respect to such information at the time of disclosure to him. The
provisions of this Section shall continue in full force and effect
notwithstanding any termination of Executive's employment under this Agreement
for a period of six (6) months following said termination of employment.
(B) Except in the ordinary course of his duties as President, or in the
furtherance of the business of the Company, during the period from the date of
this Agreement until twelve (12) months following the date on which his
employment with the Company is terminated, Executive will not, directly or
indirectly:
(i) persuade or attempt to persuade any person or entity which is or was
a customer, client or supplier of the Company on the date on which Executive's
employment with the Company is terminated to cease doing business with the
Company, or to reduce the amount of business it does with the company;
(ii) solicit for himself or any other person or entity other than the
Company the business of any person or entity which is a customer or client of
the Company, or was its
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customer or client within six (6) months prior to the termination of his
employment by the Company, with respect to the clearing or execution or
securities;
(iii) persuade or attempt to persuade any employee of the Company, or any
individual who was an employee of Company during the six (6) month period prior
to the termination of this Agreement, to leave Company's employ, or to become
employed by any person or entity other than the Company; or
(iv) engage in a business that directly competes with the properties of
the Company in those geographic areas in which said properties are offered.
Provided however, that the foregoing shall not prohibit Executive from
creating, developing, marketing and turning to an economic gain any original
entertainment properties.
(C) Executive acknowledges that the restrictive covenants (the
"Restrictive Covenants") contained in this Section 6 are a condition of his
employment and are reasonable and valid in geographical and temporal scope and
in all other respects. If any court determines that any of the Restrictive
Covenants, or any part of any of the Restrictive Covenants, is invalid or
unenforceable, the remainder of the Restrictive Covenants and parts thereof
shall not thereby be affected and shall be given full effect, without regard to
the invalid portion. If any court determines that any of the Restrictive
Covenants, or any pert thereof, is invalid or unenforceable because of the
geographic or temporal scope of such provision, such court shall have the power
to reduce the geographic or temporal scope of such provision, as the case may
be, and, in its reduced form, such provision shall then be enforceable.
(D) If Executive breaches, or threatens to breach, any of the Restrictive
Covenants, the Company, in addition to and not in lieu of any other rights and
remedies it may have at law or in equity, shall have the right to injunctive
relief; it being acknowledged and agreed to by Executive that any such breach
or threatened breach would cause irreparable and continuing injury to the
Company and that money damages would not provide an adequate remedy to the
Company.
7. Termination:
(A) Death: In the event of Executive's death during the term of his
employment, Executive's designated beneficiary, or in the absence of such
beneficiary designation, his estate shall be entitled to payment of Executive's
salary from date of death to the entitled to payment of Executive's salary from
date of death to the expiration of one (1) year thereafter. In addition,
Executive's beneficiary and/or dependents shall be entitled, for the same one
year period to continuation, at the Company's expense, of such benefits as are
than being provided to them under Section 5(A) hereof, and any additional
benefits as may be provided to dependents of the Company's executive officers
in accordance with the terms of the Company's policies and practices. In
addition, any options granted to Executive which have not, by the terms of the
options, vested shall be
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deemed to have vested as of the date of his death and shall thereafter be
exercisable by Executive's beneficiary or estate for the maximum period of time
allowed for exercise thereof under the terms of the option.
(B) Disability:
(a) In the event Executive, by reason of physical or mental incapacity,
shall be disabled for a period of at least twelve (12) consecutive months, the
Company shall have the option at any time thereafter, to terminated Executive's
employment hereunder for disability. Such termination will be effective thirty
(30) days after the Board gives written notice of such termination to
Executive, unless Executive shall have returned to the performance of his
duties prior to the effective date of the notice. All obligations of the
Company hereunder shall cease upon the effectiveness of such termination,
provided that such termination shall not affect or impair any rights Executive
may have under any policy of long term disability insurance or benefits then
maintained on his behalf by the Company. In addition, for a period of one (1)
year following termination of Executive's employment for disability, Executive
and his dependents, as the case may be, shall continue to receive the benefits
set forth under subparagraph 5(A) hereof, as well as such benefits as are
extended to the Company's active executive employees and their dependents
during such period. Any options granted to Executive which have not, by the
terms of the option, vested shall be deemed to have vested at the termination
and shall thereafter be exercisable by Executive, his beneficiary, conservator
or estate, as applicable, for the maximum period of time allowed for exercise
thereof under the terms of the option.
(b) "Incapacity" as used herein shall mean the inability of Executive due
to physical or mental illness, injury or disease to substantially perform his
normal duties as Chief Executive Officer. Executive's salary as provided for
hereunder shall continue to be paid during any period of incapacity prior to
and including the date on which Executive's employment is terminated for
disability.
(C ) By The Company For Cause:
(a) The Company shall have the right, before the expiration of the term of
this Agreement, to terminate this Agreement and to discharge Executive for
cause (hereinafter "Cause"). For the purposes of this Agreement, the term
"Cause" shall mean Executive's conviction of a felony related to the Company's
business.
(b) If the Company elects to terminate Executive's employment for Cause
under ( C)(a) above, such termination shall be effective fifteen (15) days
after the Company gives written notice of such termination to Executive.
(D) By Executive for Reason:
Executive shall have the right to terminate his employment at any time for
"good reason" (herein designated and referred to as "Reason"). The term Reason
shall mean (i)
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the failure to elect or appoint, or re-elect or re-appoint, Executive to, or
removal or improperly attempted removal of Executive from, his position as
President or superior positions with the Company, except in connection with the
proper termination of Executive's employment by reason of Cause, Death or
Disability; (ii) a reduction in Executive's overall compensation other than
this discretionary bonus under Section 3(B) above or an adverse change in the
nature or scope of the authorities, powers, function or duties normally
attached to Executive's position with the Company; (iii) the Company's failure
or refusal to perform any obligations required to be performed in accordance
with this Agreement after a reasonable notice and an opportunity to cure same;
and (iv) a Change in Control of the Company, as defined herein, occurs.
(E) Severance: (a) In the event Executive's employment hereunder shall
be terminated by Executive for Reason or by the Company for other than Death or
Disability: (1) Executive shall thereupon receive as severance pay in a lump
sum the amount of salary and bonuses which Executive would have received if the
terms of this agreement were for a period of fifteen years; and (2) Executive's
(and his dependents') participation in any and all life, disability, medical
and dental insurance plans shall be continued, or equivalent benefits provided
to him or them by the Company, at no cost to him or them, for a period of two
years from the termination; and (3) any options granted to Executive which have
not, by the terms of the options, vested shall be deemed to have vested at the
termination, and shall thereafter be exercisable for the maximum period of time
allowed for exercise thereof under the terms of the option; and (b) an election
by Executive to terminate his employment under the provisions of this paragraph
shall not be deemed a voluntary termination of employment of Executive for the
purpose of interrupting the provisions of any of the Company's employee benefit
plans, programs or policies.
(F) Resignation: In the event Executive resigns without Reason prior to
the expiration hereof, he shall receive any unpaid fixed salary through such
resignation date, and such benefits to which he is entitled by law.
(G) Extension of Benefits: Any extension of benefits following the
termination of employment provided for herein shall be deemed to be in addition
to, and not in lieu of, any period for benefits continuation provided for by
law at the Company's , Executive's or his dependents' expense.
(H) Change in Control: For purposes hereof, a Change in Control shall be
deemed to have occurred (i) if there has occurred a "change in control" as such
term is used in Item 1(a) of Form 8-K promulgated under the Securities Exchange
Act of 1934, as amended at the date hereof ("Exchange Act"), (ii) if there has
occurred a change in control as the term "control" is defined in Rule 12b-2
promulgated under the Exchange Act, or (iii) when a majority of the directors
elected at any annual or special meeting of stockholders are not individuals
nominated by Executive and Charles Stuart Platkin.
8. Indemnification: Company hereby indemnifies and holds Executive
harmless to the extent of any and all claims, suits, proceedings, damages,
losses or
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liabilities incurred by Executive and arising out of any acts or decisions done
or made in the authorized scope of his employment hereunder without regard to
whether or not such claims, etc. arise during or after the Executive's
employment with the Company. Company hereby agrees to pay all expenses,
including any and all attorney's fees, actually incurred by Executive in
connection with the investigation of any such matter, the defense of any such
action, suit or proceeding and in connection with any appeal thereon including
the cost of court settlements. Nothing contained herein shall entitle Executive
to indemnification by Company in excess of that permitted under applicable law.
9. Waiver: No delay or omission to exercise any right, power or remedy
accruing to either party hereto shall impair any such right, power or remedy or
shall be construed to be a waiver of or an acquiescence to any breach hereof.
No waiver of any breach hereof shall be deemed to be a waiver of any other
breach hereof theretofore or thereafter occurring. Any waiver of any provision
hereof shall be effective only to the extent specifically set forth in the
applicable writing. All remedies afforded to either party under this Agreement,
by law or otherwise, shall be cumulative and not alternative and shall not
preclude assertion by either party of any other rights or the seeking of any
other rights or remedies against the other party.
10. Governing Law: The validity of this Agreement or of any of the
provisions hereof shall be determined under and according to the laws of the
State of New York, and this Agreement and its provisions shall be construed
according to the laws of the State of New York, without regard to the
principles of conflicts of law.
11. Notice: Any notices, demands or other communications required or
permitted to be given in connection with this Agreement shall be given in
writing, shall be transmitted to the appropriate party by hand delivery, by
certified mail, return receipt requested, postage prepaid or by telegram, telex
or electronic means and shall be addressed to a party at such party's address
shown on the first page hereof. A party may designate by written notice given
to the other parties a new address to which any notice, demand or other
communication hereunder shall thereafter be given. Each notice, demand or other
communication transmitted in the manner described in this Section 11 shall be
deemed to have been given and received for all purposes at the time it shall
have been (I) delivered to the addressee as indicated by the return receipt (if
transmitted by mail), the affidavit of the messenger (if transmitted by hand
delivery) or the answer back or call back (if transmitted by telegram, telefax
or other electronic means) or (ii) presented for delivery during normal
business hours, if such delivery shall not have been accepted for any reason.
12. Assignments: This Agreement shall be binding upon and inure to the
benefit of the parties and each of their respective successors, assigns, heirs
and legal representatives, provided, however, that Executive may not assign or
delegate his obligation, responsibilities and duties hereunder except as
permitted by the Company's by-laws, custom, practice, policies or the Board of
Directors. Company may not assign this Agreement without the prior written
consent of Executive.
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13. Miscellaneous: This Agreement contains the entire understanding
between the parties hereto and supersedes all other oral and written agreements
or understandings between them with respect to the subject matter hereof. No
modification or addition hereto or waiver or cancellation of any provision
shall be valid except by a writing signed by the party to be charges therewith.
14. Obligations of a Continuing Nature: It is expressly understood and
agreed that the covenants, agreements and restrictions undertaken by or imposed
on Executive and the Company hereunder, which are stated to exist or continue
after termination of Executive's employment with the Company, shall exist and
continue irrespective of the method or circumstances of such termination for
the respective periods of time set forth herein.
15. Severability: The parties agree that if any of the covenants,
agreement or restrictions contained herein is held to be invalid by any court
of competent jurisdiction, such holding will not invalidate any of the other
covenants, agreements and/or restrictions herein contained and such invalid
provisions shall be severable so that the invalidity of any such provision
shall not invalidate any others.
16. Venue; Jurisdiction: The Company and Executive hereby agree that any
action, proceeding or claim against either of them arising out of, or relative
in any way to this Agreement shall be brought and enforced in any of the courts
of the State of New York in New York County, New York, or the United States
District Court for the Southern District of New York, and irrevocable submits
to such jurisdiction. The Company and Executive hereby waive any objection to
such jurisdiction and that such courts represent an inconvenient forum. Any
process or summons to be served upon the Company or Executive may be served by
transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to the Company and to Executive at their
respective addresses set forth on the first page hereof or such other address
as one party may so notify the other party. Such mailing shall be deemed
personal service and shall be legal and binding upon the Company and Executive
in any action, proceeding or claim.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
EXECUTIVE
By: /s/Jonathan Braun
-------------------------
MARINEX MULTIMEDIA CORPORATON
By: /s/ Paul Condit
------------------------
/s/ John Condit
------------------------
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EXHIBIT 10(i)
EMPLOYMENT AGREEMENT
CHARLES STUART PLATKIN
AND MARINEX MULTIMEDIA CORPORATION
AGREEMENT, dated as of the 1st day of June, 1996, among Marinex Multimedia
Corporation, a Nevada corporation, having a place of business at 110 Greene
Street, New York, New York 10012 ("Company"), and Charles Stuart Platkin, an
individual residing at 17 East 17th Street, New York, NY 10003 ("Executive")
WHEREAS, the Company desires to employ Executive as its President; and
WHEREAS, Executive is willing to accept such employment by the Company,
all in accordance with provisions hereinafter set forth; and
NOW, THEREFORE, in consideration of the promises and mutual
representations, covenants and agreements set forth herein, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Term: The term of this Agreement shall be for a period of five (5)
years commencing effective on the date hereof, and terminating on the fifth
anniversary date hereof subject to earlier termination as provided herein or
unless extended by mutual consent of the parties.
2. Employment: (A) Subject to the terms and conditions and for the
compensation hereinafter set forth, the Company hereby agrees to employ
Executive for and during the term of this Agreement. Executive is hereby
employed by the Company as its President with primary responsibility for the
general management of the Corporation's affairs and its day to day operations,
with the requisite authority to so manage. The Company shall not require
Executive to be employed in any location other than metropolitan New York City
unless he consents in writing to such location.
(B) During the term of this Agreement, Executive shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; he shall be provided with the prerequisites
customarily associated with the position of President of the Company.
(C) Executive understands that the Company may obtain key man life and/or
disability insurance on his person of which the Company will be the
beneficiary. Executive agrees to sign all necessary insurance and to make
himself available for any medical examination reasonably required by such
insurer.
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3. Compensation:
(A) Salary: During the term of this Agreement, the Company agrees to pay
Executive, and Executive agrees to accept, an annual salary of not less than
Two Hundred Forty Thousand Dollars ($240,000) per year, payable in accordance
with the Company's policies, for all services rendered by Executive hereunder.
Executive may waive any portion of his salary. Any such waiver shall be
retroactive only and shall not be prospective.
(B) Bonus: As additional compensation, the Company may pay Executive a periodic
bonus as determined by the Board of Directors.
(C) Increases: The annual salary is subject to periodic increases at the
discretion of the Board of Directors with such increases to take effect no
later than on each anniversary date of this Agreement and which shall not be
less than ten percent (10%) each year.
(D) Performance Compensation: Executive will receive ten percent (10%) of the
Company's annual profits, payable within four (4) months of the end of each of
the Company's fiscal years ending within the term of this Agreement. For the
purposes of this Agreement "Profits" shall be an amount equal to the Company's
net income before income taxes for the employment year in question, determined
in accordance with generally accepted accounting principles plus any amounts
deducted by the Company during the relevant year for depreciation of property
and equipment or interest expense, less any nonrecurring or infrequent items
(e.g. sale of property or equipment) which increased net income before income
taxes, plus any nonrecurring or infrequent items which increased net income
before income taxes.
4. Expenses: The Company shall reimburse Executive for all reasonable and
actual business expenses incurred by him in connection with his service to the
Company, upon submission by him of appropriate vouchers and expense account
reports, including but not limited to automobile which automobile expenses
shall not exceed the sum of Thirty Five Thousand Dollars ($35,000) per year.
5. Benefits:
(A) Insurance: In addition to the salary and bonus to be paid to Executive
hereunder, the Company shall maintain family medical and dental insurance, life
insurance in the amount of not less than Two Hundred Fifty Thousand Dollars
($250,000) on the life of Executive and for which executive shall designate the
beneficiary(ies), and long term disability providing monthly disability
insurance disability benefits to Executive of not less than Fifty Four Thousand
Dollars ($54,000). Executive and his dependents shall be entitled to
participate in such other benefits as are extended to active executive
employees of the Company and their dependents including but not limited to
pension, retirement, profit-sharing, 401(k), stock option, bonus and incentive
plans, group insurance,
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hospitalization, medical or other benefits made available by the Company to its
employees generally.
(B) Vacation: Executive shall be entitled to take up to six (6) weeks of paid
vacation annually at a time mutually convenient to the Company and Executive in
any one year shell accumulate to his benefit in the succeeding years and, to
the extent not previously used as of the termination of Executive's period of
active employment, Executive shall be paid in cash in lieu of such unused
vacation.
6. Restricted Covenants: (A) Executive recognizes and acknowledges that
the Company, through the expenditure of considerable time and money, has
developed and will continue to develop in the future, information concerning
customers, clients, marketing, business and operational methods of the Company
and its customers or clients, contracts, financial or other data, technical
data or any other confidential or proprietary information possessed, owned or
used by the Company, and that the same are confidential and proprietary, and
are "confidential information" of the Company. In consideration of his
employment by the Company hereunder, Executive agrees that he will not, without
the consent of the Board, make any disclosure of confidential information now
or hereafter possessed by the Company to any person, partnership, corporation
or entity either during or after the term hereunder, except to employees of the
Company or its subsidiaries or affiliates, as may be necessary in the regular
course of the Company's business and except as may be required pursuant to any
court order, judgment or decision from any court of competent jurisdiction. The
foregoing shall not apply to information which is in the public domain on the
date hereof; which, after it is disclosed to Executive by the Company is
published or becomes part of the public domain through no fault of Executive;
which is known to Executive prior to disclosure thereof to him by the Company
as evidenced by his written records; or, after Executive is no longer employed
by the Company, which is thereafter disclosed to Executive in good faith by a
third party who was not under any obligation of confidence or secrecy to the
Company with respect to such information at the time of disclosure to him. The
provisions of this Section shall continue in full force and effect
notwithstanding any termination of Executive's employment under this Agreement
for a period of six (6) months following said termination of employment.
(B) Except in the ordinary course of his duties as President, or in the
furtherance of the business of the Company, during the period from the date of
this Agreement until twelve (12) months following the date on which his
employment with the Company is terminated, Executive will not, directly or
indirectly:
(i) persuade or attempt to persuade any person or entity which is or was
a customer, client or supplier of the Company on the date on which Executive's
employment with the Company is terminated to cease doing business with the
Company, or to reduce the amount of business it does with the company;
(ii) solicit for himself or any other person or entity other than the
Company the business of any person or entity which is a customer or client of
the Company, or was its
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customer or client within six (6) months prior to the termination of his
employment by the Company, with respect to the clearing or execution or
securities;
(iii) persuade or attempt to persuade any employee of the Company, or any
individual who was an employee of Company during the six (6) month period prior
to the termination of this Agreement, to leave Company's employ, or to become
employed by any person or entity other than the Company; or
(iv) engage in a business that directly competes with the properties of
the Company in those geographic areas in which said properties are offered.
Provided however, that the foregoing shall not prohibit Executive from
creating, developing, marketing and turning to an economic gain any original
entertainment properties.
(C) Executive acknowledges that the restrictive covenants (the
"Restrictive Covenants") contained in this Section 6 are a condition of his
employment and are reasonable and valid in geographical and temporal scope and
in all other respects. If any court determines that any of the Restrictive
Covenants, or any part of any of the Restrictive Covenants, is invalid or
unenforceable, the remainder of the Restrictive Covenants and parts thereof
shall not thereby be affected and shall be given full effect, without regard to
the invalid portion. If any court determines that any of the Restrictive
Covenants, or any pert thereof, is invalid or unenforceable because of the
geographic or temporal scope of such provision, such court shall have the power
to reduce the geographic or temporal scope of such provision, as the case may
be, and, in its reduced form, such provision shall then be enforceable.
(D) If Executive breaches, or threatens to breach, any of the Restrictive
Covenants, the Company, in addition to and not in lieu of any other rights and
remedies it may have at law or in equity, shall have the right to injunctive
relief; it being acknowledged and agreed to by Executive that any such breach
or threatened breach would cause irreparable and continuing injury to the
Company and that money damages would not provide an adequate remedy to the
Company.
7. Termination:
(A) Death: In the event of Executive's death during the term of his
employment, Executive's designated beneficiary, or in the absence of such
beneficiary designation, his estate shall be entitled to payment of Executive's
salary from date of death to the entitled to payment of Executive's salary from
date of death to the expiration of one (1) year thereafter. In addition,
Executive's beneficiary and/or dependents shall be entitled, for the same one
year period to continuation, at the Company's expense, of such benefits as are
than being provided to them under Section 5(A) hereof, and any additional
benefits as may be provided to dependents of the Company's executive officers
in accordance with the terms of the Company's policies and practices. In
addition, any options granted to Executive which have not, by the terms of the
options, vested shall be
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deemed to have vested as of the date of his death and shall thereafter be
exercisable by Executive's beneficiary or estate for the maximum period of time
allowed for exercise thereof under the terms of the option.
(B) Disability:
(a) In the event Executive, by reason of physical or mental incapacity,
shall be disabled for a period of at least twelve (12) consecutive months, the
Company shall have the option at any time thereafter, to terminated Executive's
employment hereunder for disability. Such termination will be effective thirty
(30) days after the Board gives written notice of such termination to
Executive, unless Executive shall have returned to the performance of his
duties prior to the effective date of the notice. All obligations of the
Company hereunder shall cease upon the effectiveness of such termination,
provided that such termination shall not affect or impair any rights Executive
may have under any policy of long term disability insurance or benefits then
maintained on his behalf by the Company. In addition, for a period of one (1)
year following termination of Executive's employment for disability, Executive
and his dependents, as the case may be, shall continue to receive the benefits
set forth under subparagraph 5(A) hereof, as well as such benefits as are
extended to the Company's active executive employees and their dependents
during such period. Any options granted to Executive which have not, by the
terms of the option, vested shall be deemed to have vested at the termination
and shall thereafter be exercisable by Executive, his beneficiary, conservator
or estate, as applicable, for the maximum period of time allowed for exercise
thereof under the terms of the option.
(b) "Incapacity" as used herein shall mean the inability of Executive due
to physical or mental illness, injury or disease to substantially perform his
normal duties as Chief Executive Officer. Executive's salary as provided for
hereunder shall continue to be paid during any period of incapacity prior to
and including the date on which Executive's employment is terminated for
disability.
(C) By The Company For Cause:
(a) The Company shall have the right, before the expiration of the term of
this Agreement, to terminate this Agreement and to discharge Executive for
cause (hereinafter "Cause"). For the purposes of this Agreement, the term
"Cause" shall mean Executive's conviction of a felony related to the Company's
business.
(b) If the Company elects to terminate Executive's employment for Cause
under (C)(a) above, such termination shall be effective fifteen (15) days
after the Company gives written notice of such termination to Executive.
(D) By Executive for Reason:
Executive shall have the right to terminate his employment at any time for
"good reason" (herein designated and referred to as "Reason"). The term Reason
shall mean (i)
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the failure to elect or appoint, or re-elect or re-appoint, Executive to, or
removal or improperly attempted removal of Executive from, his position as
President or superior positions with the Company, except in connection with the
proper termination of Executive's employment by reason of Cause, Death or
Disability; (ii) a reduction in Executive's overall compensation other than
this discretionary bonus under Section 3(B) above or an adverse change in the
nature or scope of the authorities, powers, function or duties normally
attached to Executive's position with the Company; (iii) the Company's failure
or refusal to perform any obligations required to be performed in accordance
with this Agreement after a reasonable notice and an opportunity to cure same;
and (iv) a Change in Control of the Company, as defined herein, occurs.
(E) Severance: (a) In the event Executive's employment hereunder shall
be terminated by Executive for Reason or by the Company for other than Death or
Disability: (1) Executive shall thereupon receive as severance pay in a lump
sum the amount of salary and bonuses which Executive would have received if the
terms of this agreement were for a period of fifteen years; and (2) Executive's
(and his dependents') participation in any and all life, disability, medical
and dental insurance plans shall be continued, or equivalent benefits provided
to him or them by the Company, at no cost to him or them, for a period of two
years from the termination; and (3) any options granted to Executive which have
not, by the terms of the options, vested shall be deemed to have vested at the
termination, and shall thereafter be exercisable for the maximum period of time
allowed for exercise thereof under the terms of the option; and (b) an election
by Executive to terminate his employment under the provisions of this paragraph
shall not be deemed a voluntary termination of employment of Executive for the
purpose of interrupting the provisions of any of the Company's employee benefit
plans, programs or policies.
(F) Resignation: In the event Executive resigns without Reason prior to
the expiration hereof, he shall receive any unpaid fixed salary through such
resignation date, and such benefits to which he is entitled by law.
(G) Extension of Benefits: Any extension of benefits following the
termination of employment provided for herein shall be deemed to be in addition
to, and not in lieu of, any period for benefits continuation provided for by
law at the Company's , Executive's or his dependents' expense.
(H) Change in Control: For purposes hereof, a Change in Control shall be
deemed to have occurred (i) if there has occurred a "change in control" as such
term is used in Item 1(a) of Form 8-K promulgated under the Securities Exchange
Act of 1934, as amended at the date hereof ("Exchange Act"), (ii) if there has
occurred a change in control as the term "control" is defined in Rule 12b-2
promulgated under the Exchange Act, or (iii) when a majority of the directors
elected at any annual or special meeting of stockholders are not individuals
nominated by Executive and Jonathan Braun.
8. Indemnification: Company hereby indemnifies and holds Executive
harmless to the extent of any and all claims, suits, proceedings, damages,
losses or
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liabilities incurred by Executive and arising out of any acts or decisions done
or made in the authorized scope of his employment hereunder without regard to
whether or not such claims, etc. arise during or after the Executive's
employment with the Company. Company hereby agrees to pay all expenses,
including any and all attorney's fees, actually incurred by Executive in
connection with the investigation of any such matter, the defense of any such
action, suit or proceeding and in connection with any appeal thereon including
the cost of court settlements. Nothing contained herein shall entitle Executive
to indemnification by Company in excess of that permitted under applicable law.
9. Waiver: No delay or omission to exercise any right, power or remedy
accruing to either party hereto shall impair any such right, power or remedy or
shall be construed to be a waiver of or an acquiescence to any breach hereof.
No waiver of any breach hereof shall be deemed to be a waiver of any other
breach hereof theretofore or thereafter occurring. Any waiver of any provision
hereof shall be effective only to the extent specifically set forth in the
applicable writing. All remedies afforded to either party under this Agreement,
by law or otherwise, shall be cumulative and not alternative and shall not
preclude assertion by either party of any other rights or the seeking of any
other rights or remedies against the other party.
10. Governing Law: The validity of this Agreement or of any of the
provisions hereof shall be determined under and according to the laws of the
State of New York, and this Agreement and its provisions shall be construed
according to the laws of the State of New York, without regard to the
principles of conflicts of law.
11. Notice: Any notices, demands or other communications required or
permitted to be given in connection with this Agreement shall be given in
writing, shall be transmitted to the appropriate party by hand delivery, by
certified mail, return receipt requested, postage prepaid or by telegram, telex
or electronic means and shall be addressed to a party at such party's address
shown on the first page hereof. A party may designate by written notice given
to the other parties a new address to which any notice, demand or other
communication hereunder shall thereafter be given. Each notice, demand or other
communication transmitted in the manner described in this Section 11 shall be
deemed to have been given and received for all purposes at the time it shall
have been (I) delivered to the addressee as indicated by the return receipt (if
transmitted by mail), the affidavit of the messenger (if transmitted by hand
delivery) or the answer back or call back (if transmitted by telegram, telefax
or other electronic means) or (ii) presented for delivery during normal
business hours, if such delivery shall not have been accepted for any reason.
12. Assignments: This Agreement shall be binding upon and inure to the
benefit of the parties and each of their respective successors, assigns, heirs
and legal representatives, provided, however, that Executive may not assign or
delegate his obligation, responsibilities and duties hereunder except as
permitted by the Company's by-laws, custom, practice, policies or the Board of
Directors. Company may not assign this Agreement without the prior written
consent of Executive.
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13. Miscellaneous: This Agreement contains the entire understanding
between the parties hereto and supersedes all other oral and written agreements
or understandings between them with respect to the subject matter hereof. No
modification or addition hereto or waiver or cancellation of any provision
shall be valid except by a writing signed by the party to be charges therewith.
14. Obligations of a Continuing Nature: It is expressly understood and
agreed that the covenants, agreements and restrictions undertaken by or imposed
on Executive and the Company hereunder, which are stated to exist or continue
after termination of Executive's employment with the Company, shall exist and
continue irrespective of the method or circumstances of such termination for
the respective periods of time set forth herein.
15. Severability: The parties agree that if any of the covenants,
agreement or restrictions contained herein is held to be invalid by any court
of competent jurisdiction, such holding will not invalidate any of the other
covenants, agreements and/or restrictions herein contained and such invalid
provisions shall be severable so that the invalidity of any such provision
shall not invalidate any others.
16. Venue; Jurisdiction: The Company and Executive hereby agree that any
action, proceeding or claim against either of them arising out of, or relative
in any way to this Agreement shall be brought and enforced in any of the courts
of the State of New York in New York County, New York, or the United States
District Court for the Southern District of New York, and irrevocable submits
to such jurisdiction. The Company and Executive hereby waive any objection to
such jurisdiction and that such courts represent an inconvenient forum. Any
process or summons to be served upon the Company or Executive may be served by
transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to the Company and to Executive at their
respective addresses set forth on the first page hereof or such other address
as one party may so notify the other party. Such mailing shall be deemed
personal service and shall be legal and binding upon the Company and Executive
in any action, proceeding or claim.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
EXECUTIVE
By: /s/Charles Stuart Platkin
--------------------------------
MARINEX MULTIMEDIA CORPORATON
By: /s/ Paul Condit
--------------------------------
/s/ John Condit
--------------------------------
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<PAGE> 1
[LOGO]
JOHN DEERE COMPANY
AUTHORIZED AGRICULTURAL DEALER
AGREEMENT
The Dealer whose signature appears on the last page hereby applies to the
undersigned John Deere Company (the "Company") for appointment as a John Deere
Authorized Agricultural Dealer for its Agricultural Line, and agrees that the
relationship between him and the Company will be governed by the Terms of
Appointment on the succeeding pages of this booklet. When it executes this
Agreement, the Company accepts the Dealer's application and also agrees to be
bound by the Terms of Appointment. This Agreement shall be effective upon
execution by the Company and shall as of that date supersede any prior
Agricultural Dealer Agreement between the parties hereto.
The Company distributes certain John Deere agricultural machines and equipment,
certain of its JDM and certain allied agricultural machines, which together are
classified by the Company as its Agricultural Line. These items, and
attachments and service parts for them, are collectively referred to as
"Goods." While the Company also distributes other types of equipment, this
Agreement pertains only to Goods. The Dealer is an independent retail merchant
who purchases Goods for resale for the principal benefit of the Dealer. It is
agreed that except as otherwise provided herein, individual orders, sales and
shipments of Goods are governed by the Company's published Conditions of Sale
in effect from time to time.
The Dealer accepts as his area of responsibility the town in which his place of
business is located and vicinity.
<PAGE> 2
TERMS OF APPOINTMENT / 1.
TERMS OF APPOINTMENT
1. OBLIGATIONS During the period of the Dealer's appointment as a
OF THE PARTIES John Deere Authorized Agricultural Dealer, the parties
accept the following obligations and duties:
(a) The Company agrees to accept orders placed by the
Dealer for Goods which the Company contemplates
will be shipped during the period of appointment,
subject to the Company's Conditions of Sale. Even
though an order has been accepted, the Company has the
right to refuse to ship Goods and shall have no
liability to the Dealer for such refusal or for any
delay or other failure to ship or deliver Goods as
provided in the Conditions of Sale or Section 4
hereof.
(b) The Company agrees that the Dealer will have the
benefit of any Finance Plans, Lease Plans, Floor
Plans, Parts Return Programs, Sales or Incentive
Programs or similar plans or programs which it, from
time to time, makes available to other Authorized
Agricultural Dealers. Such plans or programs may
contain standards, conditions or requirements of
uniform application which the Dealer must meet in
order to use or benefit from them. State or local
laws or regulations may require variations from
standard plans or programs.
(c) Without limiting the right of the Company to
choose those with whom it deals, the Company
may sell, loan or lease Goods as follows without
restriction:
(i) To Federal, state and local governments.
(ii) To educational institutions and agricultural
experiment stations.
(iii) To its competitors (for test purposes).
(iv) To equipment manufacturers.
(v) To its own employees.
(vi) Repossessed Goods (new or used).
(vii) To accounts classified by the Company as
national accounts.
(d) The Dealer agrees to use his best efforts to
promote, sell and service Goods. The Dealer
further agrees to achieve sales objectives and market
penetration within Dealer's Area of Responsibility
satisfactory to the Company and will maintain:
(i) A place of business approved by the Company,
with adequate space and facilities devoted to
sales, service, display and storage of Goods,
with appropriate identification for a Dealer
selling Goods;
(ii) Competent management and a sufficient staff of
well trained personnel devoted to the sale and
service of Goods and will cooperate with the
Company by sending such personnel to
conferences and training schools provided by
the Company;
(iii) Adequate working capital and capitalization;
(iv) Service equipment, an adequate stock of
service parts and those appropriate special
tools necessary to promptly fulfill the
warranty obligations of both the Dealer and the
Company, product improvement programs and the
non-warranty service needs of users of Goods in
his Area of Responsibility.
(e) The purpose of the Dealer's obligations provided
for in Section 1 (d) is to assure that best efforts
and adequate resources are being committed to the sale
of Goods and to the performance of this Agreement. If
the Dealer undertakes to carry another major product
line or engage in another major business activity,
either of which involves an important commitment of
effort and resources, the Dealer agrees to make such
separation of the personnel, facilities, capital and
other resources devoted to that business as is
satisfactory to the Company.
(f) The Dealer agrees to thoroughly canvass his area
of responsibility, to actively promote the sale
of all Goods which are usable in his area of
responsibility, and to maintain an inventory of Goods
in proportion to the sales possibilities in such area.
(g) The Dealer agrees to cooperate with the Company in
implementing those programs recommended by the Company
with respect sales, service and parts promotion,
advertising, record keeping, and parts management
which the Dealer agrees will be beneficial to his
operations.
<PAGE> 3
TERMS OF APPOINTMENT / 2.
(h) The Dealer agrees to participate in the Company's
Transfer and Reacquisition Program described in the
Dealers Terms Schedule. The Dealer acknowledges
that the intent of this program, and his participation
in it from time to time, is to facilitate overall
dealer retail sales and to assist in maintaining
dealer inventories and the Company's receivables at
reasonable levels and that each such effect is to the
mutual benefit of the Dealer and the Company.
(i) In order that a satisfactory level of dealer
performance may be obtained, the Dealer agrees to
cooperate with the Company in periodic reviews of the
performance of his obligations under this Agreement
and to take appropriate action to correct deficiencies
discussed in such reviews.
(j) The Dealer agrees to maintain his principal place
of business at the location set forth on the signature
page of this Agreement, and will not, either directly
or indirectly, establish, maintain, or operate a
facility at any other location for displaying,
selling, renting, leasing, or servicing of new or used
goods, without the prior written approval of the
Company.
2. IMMEDIATE While it is the hope and expectation of the parties
that this Agreement will create a mutually profitable
and satisfactory relationship, the success of an
equipment dealership depends to a substantial degree
on the ability, energy and integrity of the
individual or group of associates who operate it.
Adequate financial resources are also essential. The
Company may, therefore, immediately cancel the
Dealer's appointment by giving notice to the Dealer at
any time after the happening of any of the
following:
(a) Death of an individual proprietor, partner, major
shareholder, or the manager of the dealership;
(b) Withdrawal of an individual proprietor, partner,
major shareholder, or the manager of the dealership
or a substantial reduction in interest of a partner
or major shareholder, without the prior written
consent of the Company;
(c) Closeout or sale of a substantial part of the
Dealer's business related to the handling of Goods,
the commencement of dissolution or liquidation of the
Dealer if a partnership or corporation, or a change,
without the prior written approval of the Company, in
the location of the Dealer's principal place of
business under this Agreement;
(d) Default by the Dealer under any Chattel Mortgage
or other Security Agreement between the Dealer and the
Company;
(e) Revocation or discontinuance of any guaranty of
the Dealer's present or future obligations to the
Company.
The Dealer shall promptly notify the Company in
writing of the occurrence of any of the events
enumerated in Subsection (a) or (b).
3. TERMINATION ON Unless the Dealer's appointment is canceled under
SPECIFIED DATE Section 2, it shall continue until it is terminated by
one or both of the parties as provided in this Section
3. The Dealer's appointment may be terminated at any
time:
(a) by the mutual written consent of the parties, with
the effective date of such termination to be such as
may be mutually agreed upon; or
(b) by written notice given by the Company to the
Dealer are least one hundred eighty (180) days
prior to the effective date specified in such notice
if the Company determines that the Dealer's area of
responsibility does not afford sufficient sales
potential to continue to reasonably support an
authorized dealer or if the Company believes the
Dealer is not fulfilling the requirements of his
appointment despite the opportunity to correct or to
take appropriate action toward correcting deficiencies
in his operations which have been called to his
attention by the Company; or
(c) by written notice given by the Dealer to the
Company at least one hundred eighty (180) days prior to
the effective date specified in such notice; or
(d) by the execution of a new Authorized Dealer
Agreement between the parties which is intended to
supersede this Agreement, or by the Dealer's failure to
execute a new Authorized Dealer Agreement within 30
days after it has been offered by the Company.
<PAGE> 4
TERMS OF APPOINTMENT / 3.
4. EFFECT OF Cancellation of the Dealer's appointment under Section
CANCELLATION 2, or termination of such appointment under Section 3,
OR TERMINATION means that the obligations and duties of the parties
OF APPOINTMENT under Section 1 no longer apply. In either event, the
Company may refuse to fill accepted orders which have
not been shipped at the time of such cancellation or
termination. The Company may, but shall not be
obligated to, accept orders for Goods which the Company
contemplates will be shipped after the cancellation or
the effective date of termination of the Dealer's
appointment. Acceptance, shipment and terms
applicable to such accepted orders will be subject to
the Conditions of Sale then in effect. Submission or
acceptance of orders and shipment or acceptance of
goods does not have the effect of renewing or
reinstating the obligations of Section 1 and shall not
be construed as an extension or renewal of the period
of appointment or as a recision of any notice of
cancellation or termination. If the Dealer's period of
appointment is canceled or terminated and no new
Authorized Dealer Agreement is entered into, neither
party shall be entitled to any compensation or
reimbursement for loss of prospective profits,
anticipated sales or other losses occasioned by the
termination of the relationship, except as provided in
this Agreement. If the Dealer's appointment is
canceled or terminated, the Company may negotiate
and/or enter a Dealer Agreement with another party for
the Dealer's area of responsibility.
5. DEATH OF DEALER: If the Dealer's appointment is canceled because of the
COOPERATION death of one of the persons enumerated in Section 2(A),
WITH SURVIVORS it is agreed:
(A) That in order to facilitate orderly settlement of
the estate of the deceased and allow the heirs and/or
surviving associates (partners or shareholders) of the
deceased who have or will obtain a controlling
interest in the dealership to rearrange their affairs
and determine whether they wish to liquidate or to
continue to operate the dealership, the Company will,
for a period of at least 180 days after such death, be
willing to make shipments of orders previously received
and accept new orders from the Dealer corporation or
Dealer's estate and/or surviving partners, as the case
may be. The Company's obligations under this Section
to accept orders and make shipment shall be subject to
the provisions of Section 1(A) and the Company's
Conditions of Sale then in effect. Such obligations
are also subject to the Company's being satisfied that
the person executing any new order is legally
authorized to do so and that, with regard to the new
order or the shipment, the Dealer corporation or
Dealer's estate and/or surviving partners are legally
bound by these Terms of Appointment, the Conditions of
Sale, the Chattel Mortgage or the Security Agreement
executed by the Dealer and any filed Financing
Statements executed in connection therewith.
(b) That if such heirs and/or surviving associates
wish to continue operating the dealership, the Company
will cooperate with them in their effort to arrange to
do so, and will offer to execute a new Dealer Agreement
with the Dealer corporation or the heirs (or the
Dealer's estate, if appropriate due to anticipated
length of administration) and/or the surviving partners
if it believes them to be capable of carrying out the
obligations thereunder, and if the Company believes that
the area of responsibility assigned to the Dealer
affords sufficient sales potential to continue to
support an authorized Dealer. The Company will inform
the heirs and/or surviving associates in writing as
promptly as possible as to whether or not the Company
elects to offer a new Dealer Agreement to them, and if
the Company so elects, the major conditions, including
credit or financial conditions, if any, under which the
Company would deem them capable of carrying out the
obligations of the Dealer
<PAGE> 5
TERMS OF APPOINTMENT / 4.
Agreement. Any written commitment by the Company to the
Dealer which identifies the person(s) who will be acceptable
to the Company to operate the dealership will be honored by
the Company, provided the conditions set forth herein and
any other major conditions specified by the Company are met.
(c) That the Company shall have discharged its
obligations under Subsections (a) and (b) and may
discontinue shipments to the Dealer corporation, Dealer's
estate, or surviving partners, as the case may be, under any
of the following conditions:
(i) The Company informs the Dealer corporation or the
heirs and/or surviving partners of the deceased in
writing (by notification sent to the Dealer
corporation, the Dealer's estate, the heirs, or
one of the surviving partners, as is appropriate
in the circumstances) that it will not execute a
new Dealer Agreement and 180 days shall have
elapsed since such death.
(ii) The Company receives written notification that the
Dealer corporation or the heirs and/or
surviving partners of the deceased do not wish to
enter into a new Dealer Agreement.
(iii) The heirs and/or surviving associates of the
deceased cannot agree on appropriate
arrangements for carrying on the business.
(iv) Any of the events enumerated in Subsections (d)
and (e) of Section 2 has occurred or shall occur.
6. REPURCHASE If any of the following events occur, the Company
OF GOODS agrees to buy and the Dealer agrees to sell Goods as
provided in Section 7:
(a) The Dealer's appointment is canceled under Section
2 (and in the case of cancellation because of death of one
of the persons enumerated in Section 2(a), one of the
conditions enumerated in Section 5(c) has occurred).
(b) The Dealer's appointment is terminated under
Section 3(a), 3(b) or 3(c); or
(c) The Dealer has not executed a new Authorized
Dealer Agreement within 30 days after it has been offered by
the Company.
The Company shall be relieved of this obligation if a
default occurs or has occurred under an Chattel Mortgage or
Security Agreement between the Company and the Dealer, and
the Company elects to exercise its rights under such Chattel
Mortgage or Security Agreement to take possession of Goods.
7. TERMS OF Except where otherwise provided by the laws of the
REPURCHASE state where the Dealer is located, if the Company becomes
obligated to repurchase Goods under Section 6, then the
Company will buy and the Dealer will sell (or may sell
subject to Subsection (c)) free and clear of all liens and
encumbrances the following Goods, provided they were either
originally purchased by the Dealer from the Company or
purchased from other dealers with the written approval of
the Company, and are listed in the Company's published price
list for the category of Goods, in effect on the date of
cancellation or termination of the Dealer's appointment.
(a) All current complete machines and attachments in the
Dealer's possession unsold (which category excludes all
items listed in the JDM Price List or the John Deere Parts
Price List) which are new, unused, complete and in good
condition. The prices to be paid for such items will be the
invoice prices (but not more than current dealer prices),
plus freight from the factory to the Dealer's location at
truckload (24,000#) rates for items on which freight was
paid by the Dealer, less any discounts from invoice price
which have been allowed and less the reduction in value,
if any, resulting from deterioration.
(b) All current parts in the Dealer's possession unsold
which are new, unused, in
<PAGE> 6
TERMS OF APPOINTMENT / 5.
good condition and are resalable as new parts without
repackaging or reconditioning. The price to be paid for
such items will be the current wholesale price as listed in
the John Deere Parts Price List, less a discount of:
(i) 15% on items on the current returnable list
furnished by the Company under the parts return
program; and
(ii) 50% on all other items.
(c) Such current JDM products in the Dealer's
possession unsold which the Dealer may elect to sell to the
Company and which are new, unused, in good condition and are
resalable as new products without repackaging or
reconditioning. The Company shall have no obligation to
repurchase such products unless the Dealer furnishes the
Company with a list of the products which wishes to sell to
the Company within thirty (30) days after the effective date
of cancellation or termination of his appointment. The
price to be paid for such products will be the current
wholesale price listed in the JDM Price List less a discount
of:
(i) 50% on products identified by an asterisk;
(ii) 15% on items listed as returnable under the
Company's parts return policy; and
(iii) 25% on all other JDM products.
At the written request of the Company, the Dealer will
list, tag, pack, load and transport all repurchased Goods to
the nearest location regularly maintained by the Company for
the storage of such Goods or to such closer location as may
be designated by the Company or pay for the cost of
transportation to such location. The risk of loss shall be
on the Dealer until the vehicle transporting such Goods
reaches the designated destination. Should the Dealer fail
to fulfill the above obligation within 60 days after he has
been requested to do so, the Company may enter the Dealer's
premises, perform these duties and charge the Dealer's
account for any expenses incurred in so doing.
The Company may pay for repurchased Goods in cash or by
giving the Dealer credit to be applied to any indebtedness
then owned by the Dealer to the Company or to any other
company having a corporate affiliation with the Company
whether or not such indebtedness is then due and payable.
If there is still a balance owing by the Dealer after the
price of the repurchased Goods, less any Company incurred
expenses of recovery, including all reasonable attorney's
fees and legal expenses, has been credited to the Dealer,
such balance shall be immediately due and payable to the
Company regardless of the original terms of payment thereon.
Amounts payable to the Dealer under this Section will
not be paid until the Dealer has complied with all
applicable laws governing bulk transfers of inventory. Any
volume discount paid or payable to the Dealer shall be
subject to adjustment, in accordance with the Company's
Schedule of Volume Discount (Agricultural), for Goods
repurchased by the Company.
8. PREPARATION Unless and until the Dealer's appointment has been
OF GOODS, canceled or terminated, and the Company has discontinued
WARRANTY AND shipment of Goods to the Dealer, the following provisions
POSTDELIVERY apply:
SERVICE
(a) The Company's published Service Administration
Manual (hereafter called "Manual") designates John Deere New
Equipment Warranties applicable to various types of sales
and some leases of new Goods and to certain used Goods. As
to all transactions specified in the Manual, the Dealer
agrees to extend the designated warranties to retail
purchasers and lessees, and to use retail purchase orders,
delivery receipts, lease agreements and other forms
specified in the Manual. The Dealer agrees to be solely
responsible for any warranties given by him to his customers
which exceed the warranty provided by the Company and for
any liability in cases where the Dealer has failed to use
the prescribed forms in the manner specified.
(b) The Dealer agrees to properly assemble and prepare
all new Goods sold, leased, or rented by him and shall
perform such inspections, adjustments and service prior to
delivery to users as required in the Manual to insure proper
operation of the Goods. The Dealer agrees to instruct users
in the proper use, safe operation, and maintenance of such
Goods, to review the warranty provisions, and
<PAGE> 7
TERMS OF APPOINTMENT / 6.
to furnish each user with the appropriate operator's manuals
furnished by the Company. The Dealer will also perform the
postdelivery inspections and adjustments, prescribed in the
Manual, on such Goods.
(c) The Dealer agrees and is authorized to perform all
warranty service on new Goods and on used Goods for which
the Company becomes obligated pursuant to the John Deere New
Equipment Warranties, including Goods not sold, leased or
rented by him, if presented with proper evidence that the
Goods are entitled to warranty service under the John Deere
New Equipment Warranties. The Dealer shall also perform
product improvements on such Goods when requested to do so
by the Company. Warranty service and product improvements
will be performed in the manner and for the compensation
specified in the Manual in effect at the time the service is
performed. The Dealer will notify the Company of all
warranty claims in accordance with the Manual.
9. VOLUME Subject to the terms and conditions of the Schedule of
DISCOUNT Volume Discount (Agricultural) issued by the Company, the
Company will pay or credit to the Dealer on or after 30
November a volume discount computed in accordance with
the Schedule.
10. USE OF The Dealer agrees not to use the names "John Deere" or
TRADEMARKS, "Deere" or any other trade names or trademarks owned by the
NAMES AND Company or any of its affiliated corporations as a part of
SIGNS his firm, trading or corporate name, and shall not display
or use such trade names or trademarks except in a form or
manner approved by the Company. The Dealer further agrees
that if he ceases to be an Authorized Dealer, he will remove
all signs bearing such trade names and trademarks used in
connection with any business conducted by him and will
remove from his vehicles any distinctive John Deere vehicle
identification.
11. MAILING LIST The Dealer agrees to supply to the Company and keep current
FOR THE FURROW as to names and addresses, a mailing list of all full-time
farmers in his area of responsibility. The Dealer should
also include in his mailing list part-time farmers who have
income from other sources, absentee owners, schools,
bankers, agricultural representatives, and others who may
influence agricultural equipment purchases in his area of
responsibility. This mailing list shall become the sole
property of the Company and the Company shall have no
liability to the Dealer for any use it makes of such mailing
list. The Dealer authorizes the Company to mail THE FURROW
to those on the mailing list. The Company will furnish THE
FURROW (both regular and special editions) free of charge
but the Dealer agrees to reimburse the Company for postage.
The Company shall advise the Dealer in advance of any other
use it makes of such list during the Dealer's period of
appointment.
12. DEALER NOT The Dealer is not an employee, agent or representative of
AN AGENT the Company for any purpose other than giving the Company's
warranty as provided in Section 8; he has no other authority
to bind the Company by any representations, statements,
agreements, or in any manner whatsoever. In performing
service work as provided in Section 8, the Dealer is an
independent contractor and assumes full responsibility for
such work.
13. AMENDMENT OF This Agreement cannot be altered or amended, or any of its
AGREEMENT provisions waived, on behalf of the Company except in
writing by a duly authorized officer of the Company. The
Company may amend these Terms of Appointment at any time
without the consent of the Dealer if the same amendment is
made to the Terms of Appointment of all other Authorized
Agricultural Dealer Agreements with the Company. Any such
amendment shall be effective on the date specified in a
notice mailed to all Authorized Agricultural Dealers, which
date shall be at least one hundred eighty (180) days
following the date of such mailing.
14. ASSIGNMENT This Agreement cannot be assigned by the Dealer without the
prior written consent of the Company.
15. METHOD OF Without limitation on any other method of giving notice, the
GIVING NOTICE deposit of written notice in the United States mails, in an
envelope certified or registered with postage prepaid and
addressed to the Dealer at the address shown herein, or to
the
<PAGE> 8
TERMS OF APPOINTMENT / 7.
Company at the office designated herein, shall
constitute notice pursuant to this Agreement.
16. SECURITY IN The Dealer has or concurrently herewith will execute
GOODS in favor of the Company a Chattel Mortgage or other
Security Agreement on his inventory of John Deere Goods
and certain other items as outlined therein. The
Dealer will execute such additional Security Agreements
and Financing Statements, and amendments and additions
thereto or to existing instruments, as the Company
requests, in order that it may have at all times a
first lien in Goods in the Dealer's possession securing
his indebtedness to the Company.
17. ENTIRE No promise or representation not contained herein was
AGREEMENT an inducement to either party or was relied on by
either party in entering into this Agreement. The
Dealer understands that, except as provided in Section
13, no agent or employee of the Company has authority
to vary or add to the provisions of this Agreement, or
make any representation going beyond its provisions.
<PAGE> 9
JOHN DEERE AUTHORIZED AGRICULTURAL DEALER AGREEMENT
The Dealer agrees to operate only from the following authorized location:
- ------------------------------------------------------------------------------
1305 Hobbs Highway
- ------------------------------------------------------------------------------
Seminole, Texas 79360
- ------------------------------------------------------------------------------
Texas Equipment Co., Inc.
- ------------------------------------------------------------------------------
Dealer (Firm Name)
Seminole, Texas
- ------------------------------------------------------------------------------
Address
[X] Corporation By /s/
[ ] Partnership -------------------------------------------------
[ ] Proprietorship Title President
------------------------------------------------
(Authorized officer, owner or partner)
Date 15 March 1993
-------------
-----------------------------------------------------
Signature of -----------------------------------------------------
Other Partner(s)
-----------------------------------------------------
Received, subject to acceptance at the Company's
Office in Dallas, Texas
JOHN DEERE COMPANY - a Division of Deere & Company
By C.A. Phillips Title Territory Manager
---------------------- --------------------
Accepted:
JOHN DEERE COMPANY - a Division of Deere & Company
10650 Harry Hines Blvd. Dallas Texas
------------------------------------------------------
(Address) (City) (State)
By /s/ W R Hubleud Title General Manager
---------------------- -----------------------
Date 22 April 93
-----------
<PAGE> 1
EXHIBIT 21(a)
List of Subsidiaries
The Company has two subsidiaries:
1. Texas Equipment Co., Inc., a Texas corporation headquartered at 1305
Hobbs Highway, Seminole, TX, 79380.
2. Marinex Multimedia Corporation, a New York corporation, headquartered
at 110 Greene Street, Suite 800, New York, New York, 10012.
127
