SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
September 25, 1996
CHILDROBICS, INC.
(Exact Name of Registrant as Specified in its Charter)
New York 0-25110 11-3163443
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
200 Smith Street
Farmingdale, New York 11735
(Address of principal executive offices)
Registrant's Telephone Number, including
area code: (516) 694-0999
(Former Address, if changed since last report)
Item 1. Changes in Control of Registrant
Merger Agreement
Pursuant to an Agreement of Merger (the "Agreement of
Merger"), Just Kiddie Rides, Inc., a New York corporation ("JKR"), merged into
Just Kiddie Acquisition Corp. (the "Acquisition Corp."), a wholly-owned
subsidiary of Childrobics, Inc. (the "Company") on September 30, 1996 (the
"Merger"), and Gerard A. Reda, who, prior to the Merger, was the owner of 85% of
the outstanding shares of common stock, without par value, of JKR ("JKR Common
Stock"), became entitled to receive, as consideration for the JKR Common Stock
held by Mr. Reda, pursuant to the Agreement of Merger, 4,250,000 shares of
common stock, par value $.01 per share, of the Company (the "Common Stock"),
which will represent 41% of the outstanding shares of Common Stock outstanding
as of September 30, 1996 (based on 5,355,000 shares of Common Stock outstanding
as of September 30, 1996, plus 5,000,000 shares of Common Stock to be issued
pursuant to the Agreement of Merger), among other things, in exchange for his
shares of JKR Common Stock.
Pursuant to the Agreement of Merger, the Company agreed to
issue an aggregate of 5,000,000 shares of Common Stock, promissory notes in the
aggregate principal amount of $750,000, and a non-competition payment to Mr.
Reda in the amount of $250,000 in exchange for all of the JKR Common Stock.
The foregoing summary of the Merger and related transactions
is incomplete and is qualified in its entirety by reference to the copy of the
Agreement of Merger filed as Exhibit 1 annexed hereto.
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Employment Agreement
On September 30, 1996, the Company entered into an Employment
Agreement (the "Employment Agreement") with Gerard A. Reda, pursuant to which
Mr. Reda agreed to serve as the Company's President and Chief Executive Officer
for a term of five years commencing on the date thereof (the "Commencement
Date"). In addition to certain employee benefits, the Company agreed to pay Mr.
Reda an annual salary at the rate of $250,000, subject to adjustment upon terms
agreed upon by the Board of Directors of the Company (the "Board") and Mr. Reda,
after the first anniversary of the Commencement Date. Mr. Reda shall also be
granted options at the discretion of the Board based upon the performance of the
Company and the performance of Mr. Reda. In addition, pursuant to the Employment
Agreement, the Company elected Mr. Reda to serve as a member of the Board.
The foregoing summary of the Employment Agreement is
incomplete and is qualified in its entirety by reference to the copy of the
Employment Agreement filed as Exhibit 2 annexed hereto.
Financing Agreement
On October 3, 1996, the Company, and its wholly-owned
subsidiaries, Acquisition Corp., Turnpike Amusement Distributing, Inc.,
Amusement Associates, Inc., Group Coin Associates, Inc., and Tunnels & Tubes,
Inc., as borrowers, entered into a Financing Agreement (the "Financing
Agreement") with Sterling Commercial Capital, Inc. ("Sterling"), Norwood Venture
Corp. ("Norwood") and Vega Capital Corp. ("Vega" and, collectively, with
Sterling and Norwood, the "Lender"), pursuant to which the Lender agreed to
provide the Company with financing in the principal amount of $1,500,000. In
exchange for such financing, the Company agreed, among other things, to execute
and deliver to the Lender, for a purchase price of Ten
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Dollars ($10), a warrant (the "Financing Warrant"), representing the right to
purchase 5,000,000 shares of Common Stock on a fully diluted basis at any time
on or before September 30, 2003 at an aggregate exercise price of $100. (If
exercised in full, the Lender would hold 32.6% of the outstanding shares of
Common Stock, based upon 15,355,000 shares of Common Stock then outstanding.)
The foregoing summary of the Financing Agreement is incomplete
and is qualified in its entirety by reference to the copy of the Financing
Agreement filed as Exhibit 3 annexed hereto.
Employment Termination and Option Termination Agreement
On September 30, 1996, the Company consummated the Employment
Termination and Option Termination Agreement (the "Termination Agreement") which
the Company entered into on July 3, 1996 with the Company's three former
executive officers and directors (filed as Exhibit 1 to the Company's Form 8-K
having a Report Date of July 3, 1996). Pursuant to the terms of the Termination
Agreement, such officers terminated their employment agreements with the Company
and resigned as officers of the Company and members of the Board.
Item 2. Acquisition or Disposition of Assets
Agreement of Sale with respect to Fun Station USA of Lynbrook, Inc.
On September 25, 1996, the Company entered into an Agreement
of Sale (the "Lynbrook Agreement") with Express Vending Corporation
("Express Vending") pursuant to which the Company sold all of the issued and
outstanding shares of Fun Station USA of Lynbrook, Inc., a wholly-owned
subsidiary of the Company, which operated the Company's
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playcenter in Lynbrook, New York ("Lynbrook Playcenter"), to Express Vending for
aggregate consideration as follows:
(a) Five Thousand Dollars ($5,000) on September 25, 1996
upon execution of the Lynbrook Agreement;
(b) Forty-Five Thousand Dollars ($45,000) on September 25,
1996 upon closing of the sale of the Lynbrook Playcenter;
(c) One Hundred Thousand Dollars ($100,000) evidenced by
a promissory note fully payable two (2) years from
the closing of the sale of the Lynbrook Playcenter;
(d) One Hundred Fifty Thousand Dollars ($150,000) by the
assumption of existing debt; and
(e) Either One Hundred Thousand Dollars ($100,000) by the
delivery of Twenty Five Thousand (25,000) shares of
restricted common stock of the parent corporation of
Express Vending or Twenty Five Thousand Dollars
($25,000) at the sole discretion of Express Vending,
due within six (6) months after the date of closing
of the sale of the Lynbrook Playcenter, subject to
certain conditions.
The foregoing summary of the Lynbrook Agreement is incomplete
and is qualified in its entirety by reference to the copy of the Lynbrook
Agreement filed as Exhibit 4 annexed hereto.
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Agreement of Sale with respect to Fun Zones of Danbury, Inc.
On September 25, 1996, the Company entered into an Agreement
of Sale with Express Vending (the "Danbury Agreement") pursuant to which the
Company sold all of the issued and outstanding shares of Fun Zones of Danbury,
Inc., a wholly-owned subsidiary of the Company, which operated the Company's
playcenter in Danbury, Connecticut ("Danbury Playcenter"), to Express Vending
for aggregate consideration as follows:
(a) Five Thousand Dollars ($5,000) on September 25, 1996
upon execution of the Danbury Agreement;
(b) Ninety-Five Thousand Dollars ($95,000) evidenced by a
short term promissory note fully payable within
thirty (30) days from the date of closing of the sale
of the Danbury Playcenter;
(c) Fifty Thousand Dollars ($50,000) evidenced by:
(i) A promissory note in the amount of Twenty Five
Thousand Dollars ($25,000) fully payable within six
(6) months from the date of closing of the
sale of the Danbury Playcenter;
(ii) A promissory note in the amount of Twenty
Five Thousand Dollars ($25,000) fully
payable within nine (9) months from the date
of closing of the sale of the Danbury
Playcenter;
(d) Fifty Thousand Dollars ($50,000) by the assumption of
existing debt; and
(e) Either One Hundred Thousand Dollars ($100,000) by the
delivery of Twenty Five Thousand (25,000) shares of
restricted common stock of the parent corporation of
Express Vending or Fifty Thousand Dollars ($50,000) at
the sole discretion of Express Vending, due within twelve
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(12) months after the date of closing of the sale of the
Danbury Playcenter.
The foregoing summary of the Danbury Agreement is incomplete
and is qualified in its entirety by reference to the copy of the Danbury
Agreement filed as Exhibit 5 annexed hereto.
Agreement of Sale with respect to Kids Kingdom Amusement, Inc.
On September 25, 1996, the Company entered into an Agreement
of Sale with Express Vending (the "Kids Agreement") pursuant to which the
Company sold all of the issued and outstanding shares of Kids Kingdom Amusement,
Inc., a wholly-owned subsidiary of the Company, which operated the Company's
playcenter in Medford, New York ("Kids Playcenter"), to Express Vending for
aggregate consideration as follows:
(a) Five Thousand Dollars ($5,000) on September 25, 1996
upon execution of the Danbury Agreement;
(b) Twenty Thousand Dollars ($25,000) evidenced by a
short term promissory note and fully payable within
thirty (30) days from the date of closing of the sale
of the Kids Playcenter;
(c) One Hundred Twenty Five Thousand Dollars ($125,000)
evidenced by:
(i) A promissory note in the amount of Fifty
Thousand Dollars ($50,000) fully payable within
six (6) months from the date of closing of the
sale of the Kids Playcenter;
(ii) A promissory note in the amount of
Seventy-Five Thousand Dollars ($75,000)
fully payable within twelve (12) months from
the date of closing of the sale of the Kids
Playcenter;
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(d) Two Hundred Fifty Thousand Dollars ($250,000) by the
assumption of existing debt.
The foregoing summary of the Kids Agreement is incomplete and
is qualified in its entirety by reference to the copy of the Kids Agreement
filed as Exhibit 6 annexed hereto.
Employment Termination and Option Termination Agreement.
On September 30, 1996, in connection with the consummation of
the Termination Agreement with Salvatore Casaccio, the Company's former
Chairman, Chief Executive Officer and a Director of the Company; A. Joseph
Melnick, the Company's former President, Chief Operating Officer, Chief
Financial Officer and a Director of the Company; and Richard Bartlett, the
Company's former Executive Vice President and a Director of the Company
(collectively, the "Officers"), the Company transferred to Mr. Casaccio, all of
the outstanding shares of stock of Bayridge Playrobics, Inc., Third Avenue
Playrobics, Inc., and East Side Playrobics, Inc., the Company's subsidiaries
which operate the Company's playcenters in Bayside, Brooklyn and Manhattan, New
York, respectively.
On September 30, 1996, the Company entered into the Second
Amendment to the Termination Agreement (the "Second Amendment"), pursuant to
which the Company agreed to transfer to Mr. Casaccio all of the assets of the
Company which are used in the operation of the Company's playcenter located at
Avenue U in Brooklyn, New York, subject to consents to be obtained in connection
therewith. In addition, pursuant to the Second Amendment, the Company also
agreed to transfer to Messrs. Casaccio and Bartlett, the Company's stock in Fun
Station USA of Staten Island, Inc. ("FSSI"), the Company's subsidiary which
operates the Company's playcenter in Staten Island, New York, subject to certain
restrictions on transfer, and
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until such time as the Company is able to consummate such transfer, granted a
limited revocable proxy with respect to the shares of FSSI held by the Company.
The foregoing summary of the Second Amendment is incomplete
and is qualified in its entirety by reference to the copy of the Termination
Agreement filed as Exhibit 7 annexed hereto.
Merger Agreement
On September 30, 1996, Just Kiddie merged into Acquisition
Corp., with Acquisition Corp. continuing as the surviving corporation under the
name "Just Kiddie Rides, Inc." In connection with the Merger all of the issued
and outstanding shares of JKR Common Stock, held by the shareholders of JKR,
including Gerard A. Reda, the current President and a Director of the Company,
was exchanged for 5,000,000 shares of Common Stock and the sum of $750,000,
evidenced by promissory notes payable over a term of five (5) years following
the Merger.
The foregoing summary of the Merger is incomplete and is
qualified in its entirety by reference to the copy of the agreement filed
as Exhibit 1 annexed hereto.
Item 5. Other Events
Consulting Agreements
On October 3, 1996, the Company entered into five-year
consulting agreements with each of Messrs. Douglas Fox and Conrad Gunther,
pursuant to which the Company agreed to pay each of Messrs. Fox and Gunther a
monthly retainer of $2,500 plus expenses, agreed to grant to each of Messrs. Fox
and Gunther ten-year options to purchase 500,000 shares of Common Stock at an
exercise price of $.10 per share and to pay each of Messrs. Fox and Gunther
additional compensation in connection with special projects.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
1. Merger Agreement, dated September 30, 1996,
among Just Kiddie Rides, Inc., Gerard A. Reda, Just Kiddie Acquisition
Corp., and Childrobics, Inc.
2. Employment Agreement, dated September 30,
1996, between Childrobics, Inc. and Gerard A. Reda.
3. Financing Agreement, dated October 3, 1996,
by and among Sterling Commercial Capital, Inc., Norwood Venture Corp., Vega
Capital Corp., Childrobics, Inc., Just Kiddie Rides, Inc., Turnpike Amusement
Distributing, Inc., Amusement Associates, Inc., Group Coin Associates, Inc., and
Tunnels & Tubes, Inc.
4. Agreement of Sale, dated September 25, 1996,
between Childrobics, Inc. and Express Vending Corporation with respect to
Fun Station USA of Lynbrook, Inc., excluding exhibits.
5. Agreement of Sale, dated September 25, 1996,
between Childrobics, Inc. and Express Vending Corporation with respect to
Fun Zones of Danbury, Inc., excluding exhibits.
6. Agreement of Sale, dated September 25, 1996,
between Childrobics, Inc. and Express Vending Corporation with respect to
Kids Kingdom Amusement, Inc., excluding exhibits.
7. Second Amendment to Employment Termination
and Option Termination Agreement, dated September 30, 1996, among Salvatore
Casaccio, A. Joseph Melnick, Richard Bartlett, and Childrobics, Inc.
8. Press Release issued by Childrobics, Inc.
on October 4, 1996.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
October 8, 1996
CHILDROBICS, INC.
By: /s/ Gerard A. Reda
------------------------------
Gerard A. Reda
President
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