[EXHIBIT 10.1.3]
AGREEMENT
This writing sets forth the basic economic terms of an agreement,
entered into as of this 27th day of October, 2003, by and between
Miracle Entertainment, Inc., ("MEMI") a Toronto, Ontario
corporation, on the one hand, and Film And Music Entertainment,
Inc., ("FAME") a Nevada corporation, on the other hand, with
respect to the purchase by FAME of Miracle Productions, Inc.,
("MPI") a California corporation.
We have agreed as follows:
1. MEMI is the owner of 100% of the issued and outstanding shares of
MPI.
2. The assets of MPI include those listed in the Exhibits attached
to the Recommendations of Xxxxx Xxxxx and Xxxxxxx Xxxxx, a copy
of which is attached hereto and deemed a part of this agreement.
Such Recommendations shall govern the remaining economic terms of
this agreement. On the closing date of this agreement, the share
price for FAME is $0.20 per share, and the 20 million shares set
forth herein have a market cap value of $4,000,000. MEMI
represents that the value of the assets set forth in Exhibits A and
B, as well as the value of the ongoing relations of MPI is $4,000,000.
MEMI hereby agrees to sell to FAME 100% of the shares of MPI. In
consideration of such shares granted by MEMI to F AME,
3. FAME agrees to pay to MEMI and its affiliates 20 million shares,
payable 20 million shares to MEMI.
4. Xxxx Xxxx, in his dual capacity as Chairman of MEMI, MPI and FAME
has asked for control of the Board of Directors and all officer
positions in the combined company. By this agreement, Xxxx Xxxx
has asked and the following persons have agreed to comply with
the removal of: I) Xxxxxxx Xxxxx as a corporate director and
treasurer off FAME; 2) Xxxxxxxx Xxxxxx as corporate director and
secretary of FAME; and, 3) Xxxxxxx Xxxxxxxxx and Xxxxxx Xxxxx as
corporate directors. Meyer, Lotman, Xxxxxxxxx and Xxxxx shall be
indemnified and held harmless as defined in the indemnity
provisions of the By-laws of the Company against their actions as
directors and/or officers up to and through the date of their
removal. As they remain ready, willing and able to render
reasonable services of the combined companies, their existing
agreements shall be deemed ratified in their entirety with
equivalent non-officer/director positions provided to them
without a gap in their employment, and the obligations as
directors and/or officers shall be deemed wholly fulfilled in a
manner entirely acceptable and reasonably approved by the
combined companies.
5. A more formal agreement shall be subject to the reasonable
review of SEC attorneys for both parties as to form, but the
economic terms of this agreement shall be controlling. The
6. Majority Shareholders and Board of Directors off FAME have
accepted the terms of this agreement as to substance as set forth
in the attached resolution.
Executed this 31 st day of October 2003 in Los Angeles,
California. Our signatures below shall indicate our acceptance of
the foregoing.
Film And Music Entertainment, Inc. Miracle Entertainment, Inc.
/s/Xxxxxxx Xxxxx /s/Xxxx Xxxx
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By: Xxxxxxx Xxxxx By: Xxxx Xxxx
Its: Chairman & Treasurer Its: President
/s/Xxxxxxxx X. Xxxxxx
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By: Xxxxxxxx X. Xxxxxx
Its: Director & Secretary
Myrob Properties, Inc
/s/Xxxxxxx Xxxxxxxxx
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By: Xxxxxxx Xxxxxxxxx
Its: Director
/s/Xxxxxx Xxxxx
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By: Xxxxxx Xxxxx Its: Director
Memorandum
To: Boards of Directors
Miracle Entertainment & Film & Music Entertainment
From: Xxxxxxx Xxxxx & Xxxxx Xxxxx
Re: Proposed division purchase
Date: October 25, 2003 -..3/27 last draft
Miracle Entertainment, Inc., a Toronto, Ontario corporation
("MEMI") has been attempting to finance a series of feature
films, and the financing efforts have been frustrated by existing
capital structure and lack of adequate resources. The real estate
holding structure of Film & Music Entertainment, Inc., a Nevada
corporation ("FAME") provides potential solutions. At your
instructions, we have developed a structure, pursuant to which
the capital structure of FAME and the project resources ofMEMI
can be optimized.
1. There are a series of projects (the "Projects"), intended for
potential development, finance, production or distribution. We
have acknowledged that lack or resources and capital structure
of MEMI have been an impediment to the commercial exploitation
of the Projects. We recommend that the assets be placed into a
wholly owned subsidiary, for the purpose of commercialization of
assets on the terms discussed in this memorandum.
2. Ist Miracle Entertainment, Inc., a New York corporate ("MEMI-
NY") subsidiary of Miracle Entertainment, Inc., a Toronto,
Ontario corporation, and Miracle Productions, Inc. ("MPI") is a
California corporate subsidiary of MEMI.
3. We recommend the California operating account(s) for MEMI shall
be confirmed in the name of MPI, and be deemed assets of MPI.
4. We recommend that the assets set forth in the Projects list
(i.e., Exhibit A) and the other MEMI assets set forth in Exhibit
B be transferred to MPI, and that any stock to be issued as
consideration for such transfers be issued directly to MEMI.
Therefore, 100% of the initial common stock of MPI would be owned
by MEMI, as well as 100% of any additional shares issued in
consideration of the assets set forth in Exhibits A and B.
5. The development projects include screenplays, and we have
tentatively agreed on potential values. The values set forth in
the Projects list (Exhibit A) would be deemed advances against
the values of the screenplays in their current condition. The
sums set forth in Exhibit A shall be deemed the purchase price by
FAME to MEMI for a grant of all of MEMI's rights in the projects,
and MEMI shall have a further right to 2% of the net profits of
any pictures produced based on the screenplays, with net profits being
defined, accounted, computed and paid according to MEMl's current
definitions of net profits.
6. The production projects are packages, which include screenplays
with attached talent and partial funding, and we have tentatively
agreed on potential values for such packages. The values set
forth in the Projects list (Exhibit A) would be deemed advances
against the values of the projects in their current condition. The
sums set forth in Exhibit A shall be deemed the purchase price by
FAME to MEMI for a grant of all of MEMI's rights in the production
projects, and MEMI shall have a further right to 5% of the net
profits of any pictures produced based on the packages, with net
profits being defined, accounted, computed and paid according to
MEMI's current definitions of net profits.
7. The distribution projects are packages, which include produced
screenplays which have been fully funded and which have been
and/or are being produced, and we have tentatively agreed on
potential values for such packages. The values set forth in the
Projects list (Exhibit A) would be deemed advances against the
values of the projects in their current condition. The sums set
forth in Exhibit A shall be deemed the purchase price by FAME to
MEMI for a grant of all of MEMl's rights in the distribution
projects, and MEMI shall have a further right to
50% of the FAME net profits of any pictures produced based on the
packages, with net profits being defined, accounted, computed and
paid according to MEMI's current definitions of net profits.
8. FAME would be responsible for any third party payments based on
the Exhibit A projects such third party payments to be made before
MEMI receives its share of net profits. Net
profits are receipts after deductionof I) distribution
costs, expenses and fees by FAME or third parties for distribution.
2) then, after deduction of recoupment and third party production
payments,including finance charges, royalties, participations,
taxes, overhead and other expenses, and 3) after all other contractual
and/or legal obligations (see MEMI's distribution agreement and
production agreements for a more complete definition of net profits).
9. Jungle Juice is a project developed by MEMI, which has
completion and is now subject to third party disputes, and
will remain the sole property ofMEMI. FAME shall have
receive distribution rights to the film and a fIrst option
-last refusal to acquire all of MEMl's producers' share in
or to such pictures.
10. There are certain notes and cash interests of MEMI,
including the balance of a $1.25 million loan, a $600,000
promissory note, a $75,000 Xxxxxxx Xxxxxxx payment,
$100,000 in Global Sports and $100,000 Global Media
repayments, which shall remain the sole property of MEMI.
11. We agreed thatMEMI-NY's valuation of Celebration shall be
deemed to be $333.333, based on our understanding that
there will be a $1 million investment by UKFS and Buccaneer
in the third party foreign sales agency.
12. The parties acknowledge that there are relationships between
MEMI and third parties. such as a print and advertising
discussion with Xxx Xxxxxxx, a print and advertising
discussion with Xxxxxx X. Xxxxx, production finance agreement
with Xxxxx Savor. Clay Kahlker and CMX, as well as certain
persons and lor entities engaged in ongoing conversations with
Xxxx Xxxx, Xxxxx Xxxxx. Xxxxx Xxxx and others within the MEMI
organization.
13. We recommend that the total value of the Projects is roughly
$4.0 million.Based on our understanding that there are
approximately 100,000,0Q0 Fames shares issued and
outstanding and that they are trading at $0.20 each for a
value of $20,000.000 and that FAME should pay to MEMI-NY or
MEMI 20 million new. Regulation 144 common shares. on the
same terms and conditions as FAME.s directors. shares to Xxxxxxx
Xxxxxxxxx. Xxxxxx Xxxxx, Xxxxxxx Xxxxx and Xxxxxxxx Xxxxxx.
14. We acknowledge the existence of a UCC-I filed on behalf of
MEMI' s former landlord on Sunset Boulevard. however. we
recommend that the assets listed as encumbered should be
revisted to accurately reflect that as of this date MEMI
has no contractual or monetary right in "The Biggest Fan..
or "Hollywood Dream Camp.
15. We recommend that Xxxx Xxxx be Chairman of the company after
completion of the transaction. and that he be given reasonable
authority to appoint at least 51% of the Board of Directors,
subject only to reasonable due diligence as required by due
diligence procedure as set forth in SEC regulations.
17. We recommend that the Boards of both companies confirm the
FAME obligation to Xxxxxxxxx. Xxxxx and Xxxxxx for use and
restrictions on use of certain real estate assets of FAME
18. We recommend that the Board of both companies confirm the
FAME obligation to finance at least one film for Xxxxxxxxx &
Xxxxx to direct. at least for so long as the real estate
assets referenced in Paragraph 17 are available to
collateralize such film production.
19. We recommend that any outstanding obligations for the 1.1.20
acre Xxxxxxx property be paid as quickly as possible. and that
both FAME. Xxxx and Xxxxxxxxx continue to pursue full
collateralized funding for the 1.120 acres as quickly as possible.
20. We recommend that the option executed July 25, 2003 any for
the 37 acre Cabazon dinosaur property be extended.
21. We recommend that the following are appointed
* President/CEO
* COO
* CFO
* Corporate Secretary
* Treasurer
* Accountant
* Auditors
The preceding represents the recommendations of Xxxxx Xxxxx and
Xxxxxxx Xxxxx based on their review of the relative positions
and financial conditions ofMPI. MEMI and FAME. Although not
experts in evaluations, we have reviewed the companies based on
their assets, their respective market capitalization's,
liquidation values, and their value as an ongoing business, and
believe that our conclusions are based on a reasonable weighting
of the variable between the above evaluation techniques. Further,
as we are neither attorneys nor accountants, we recommend the
Boards have all relevant agreements reviewed by appropriate
professionals. Executed this 27th day of October 2003 in Los
Angeles, California.
Xxxxx Xxxxx Consultant Xxxxxxx Xxxxx Chairman
Exhibit A
Projects
Development
Title Description Value
Cheeseheads Kenwood Xxxxxxx sports script $100,000
Flesh Trade Xxxxxxx X'Xxxx script $100,000
Blood & Bone Whiter Xxxxxxx Xxx Xxxxx action script $100,000
Shade of Pale Xxxxx Xxxxxxx Can/UK co-prod Xxxx $100,000
Experiment Xxxx script for $200,000
Dante's Descent Calico Xxxx Xxxx script for Russia $200,000
Xxxx Xxxx Xxxx script for Thailand $200,000
Production
Red Giants Xxxx Xxxx film for Russia $1,000,000
Silent Partner Xxxxxx Xxxxx project for Russia $250,000
My First Wedding Xxxxx Xxxxxxx Can/UK co-prod $100,000
Distribution
Jungle Juice Nearly completed film in litigation $50,000
Passing of the Four Finished Horror movie $100,000
Tournament of Dreams St Option on film in post $50,000
Petersbug-Cannes Night Finished Xxxx Xxxx Film $500,000
We Called it A Day Xxxx Xxxxxxx project for distrib $250,000
Total $3,300,000
Exhibit B
Asset Description Value
MPI Bank Account $350,000
Celebration Interest Foreign Sales Agency $333,333
Exhibit A Assets $3,300,000
Xxx Xxxxxxx print and ad funding
Xxxxxx X. Xxxxx print and ad funding
CMX production funding, including current negotiations to finance
Exhibit A projects based on stock and assets of F AME
Xxxxx Savor, Xxxx X. production funding, including current
negotiations to finance Exhibit A projects based on
stock and assets of F AME
KMPG production and distribution funding
Subtotal $3,983,333
Subtotal for Asset Purchase = 20 million cornrnon shares
Exhibit C
Excluded from purchase: Such assets to be made available on first
opportunity I last negotiation basis
St. Petersburg - Cannes Express
Tournament of Dreams
Jungle Juice
Totally excluded from purchase (i.e., remaining in Miracle):
Miracle company loan
Miracle promissory note
Xxxxxxx assets and obligations Global assets and obligations
Global media assets and obligations
