UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
GENERAL FORM REGISTRATION OF
SECURITIES OF SMALL BUSINESS
Under Section 12(g) of the Securities Exchange Act of 1934
GMC HOLDING CORPORATION
FLORIDA 59-2502215
(State of incorporation) (I.R.S. Employer Identification No.)
Address of principal Executive offices: 250 Bird Road, Suite 104
Coral Gables, Florida 33146
Issuer's telephone number: (305) 446-4704
Securities to be registered under Section 12(g) of the Act:
Title of each class Name of each exchange on which
to be so registered: each class is to be registered:
15,000,000 common shares NASDAQ (Bulletin Board)
<PAGE>
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 1. Description of Business
GMC Holding Corporation ("GMC," the "Company," or the "Issuer") was
organized under the laws of the State of Florida on October 20, 1982 as "Here
Comes Grandma, Inc." The Company's name was changed to "GMC Holding Corporation"
on December 10, 1997. The Issuer is a diversified public company in the business
of producing and merchandising direct response television programming and
selling a wide variety of products, including those marketed under license,
through television commercials and infomercials.
Either through licensing agreements and contracts to provide other
companies with air time to broadcast television commercials on Access America
and the American Independent Network, networks reaching in excess of 56 million
homes, the Issuer has acquired a number of products and advertisers. These
include, but are not limited to the following: (1) a golf instructional video,
hosted by Senior PGA player Bruce Devlin; (2) a significant contract with Salton
Maxim Housewares, Inc., a California based houseware products manufacturer, to
supply new infomercials advertising that company's products, such as the Booxie,
an exciting new children's product that will be touted in an informercial
featuring Bill Dana, a well-known actor and television personality; and (3) an
services agreement with IDT Corporation of Hackensack, New Jersey, a leading
provider of low-cost international telecommunications. The IDT contract calls
for GMC to broadcast 30 second television commercials describing IDT's steeply
discounted long distance telephone service. GMC will also air commercials using
its modern broadcast facilities to offer IDT's internet access at a much lower
rate than many other leading internet companies, such as America Online.
GMC will provide television viewers with a unique line of proven
categories of products. Rather than employ a traditional stage for the display
of merchandise, the Company is using "state of the art" production facilities to
create visually attractive sets designed to emphasize and highlight the products
being displayed and sold. GMC employ its $4 million in media air time
inventory through The American Independent Television Network and America
Access to market useful and relatively inexpensive consumer products. Through
its reserved media time, the Company will have immediate access to a combined
affiliate list of 193 television stations nationwide, with a broadcast reach
into over 56 million homes.
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Through the vast inventory of media time, GMC intends to commence its
initial direct response spots in August of 1998. The first product, already in
inventory and licensed to GMC, will be a series of ten videos entitled "Golf
911", hosted by senior PGA professional Bruce Devlin, winner of over 60 PGA
tournaments during his golfing career. Mr. Devlin, who is chairman of the
advisory board of the senior PGA, is known worldwide as an expert teacher with
respect to the game of golf. The Company is also in the process of developing
other categories of instructional videos, such as tennis, educational children's
videos, and health and fitness tapes.
The Company has never been in bankruptcy (either voluntary or
involuntary) or in receivership. A restructuring of the Company's equities
occurred on December 18, 1997. In this transaction, the Issuer's outstanding
common shares were reduced from 9,815,492 to 2,700,492 shares. An additional
7,115,000 of the original 9,815,492 common shares were returned to the Company.
No governmental regulations directly affect the manufacture, marketing
and sale of any of the Issuer's products. GMC Holding Corporation has a total of
five employees. These include Mr. G. Michael Khoury, the CEO; Chris Evans, Esq.,
the General Counsel; Ms. Patrice Burns, Vice President of Customer and Investor
Relations; and other experienced professionals in the areas of advertising,
sales, and market analysis and development.
During the past year, approximately $40,000 has been spent upon
development activities. These activities include, but are not limited to, the
performance of marketing studies to identify target customer groups, a detailed
analysis of the Company's customers and their responses to potential products
and marketing approaches, cost studies and research with respect to what
services will be likely needed in the future, and an estimate as to their costs
and availability.
Item 2. Management's Plan of 0peration
A. Current Operations
GMC Holding Corporation's executive offices are located at 250 Bird
Road, Suite 104, Coral Gables, Florida 33146.
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<PAGE>
B. Corporate Assets
The Company has several significant corporate assets. The major
property owned by GMC is a $4,000,000 block of television time on Access America
and the American Independent Network. These networks reach approximately 56
million households throughout the United States and Canada.
The Company's other assets and contracts were briefly described in
Item I above (Description of Business).
C. Customer Market and Marketing Plan
Television continues to grow as a powerful and ubiquitous medium. This
is particularly true in light of the recent advances in communications
technology. Television home shopping is already a $4 billion market, with a
firmly established dynamic consumer audience. Although television home shoppers
only account for approximately 2 per cent of all shopping activity, almost a
third of the population spends a total of $80 billion annually on mail order and
catalog shopping. The Company intends to build its customer base from both of
these customer groups.
According to Fortune magazine, technology-based marketing systems, such
as television home shopping is expected to increase from its current share of
the market, considered to be approximately 2.8 per cent of America's $2.1
trillion per year retail marketplace to approximately 15 per cent of all retail
marketing and sales by the year 2000. Changing consumer attitudes are likely to
contribute to the growing home shopping industry. According to a recent survey
completed by Yankelovich Partners, consumers are becoming increasingly impatient
with traditional shopping in stores and are unwilling to spend significant
blocks of their scarce free time purchasing items displayed and carried in
stores.
For this reason, GMC is positioned to take advantage of present and
emerging interactive broadcast technologies. By late summer of 1998, the Company
intends to commence daily programming marketing products it will advertise under
contract or license on the Independent Television Network. The network will
provide the Company with an immediate operational infrastructure, an established
marketing and sales force (using an "800" number to handle sales orders or
requests for information),
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<PAGE>
and a significant base of viewers who are comfortable ordering merchandise in
this manner. The unique concept and product line offered by GMC with respect to
such products as the instructional sports videos are particularly well-suited
for the Access America network, an outlet in which the Company presently owns $4
million in broadcast time.
D. Immediate Cash Requirements and Growth Projections
The primary costs in GMC's operating budget arise from the development
of stage sets employed in the infomercial broadcasts on the Access America cable
channel and the payment of license fees to obtain products to market. The total
cost of goods sold for the first 12 months of operation is projected to be
approximately one million dollars.
The Company's estimated fixed and variable costs are set forth in
Exhibit A of Item 13 of this Registration Statement. The Company does not plan
or expect to purchase any significant equipment to carry out its projected
operations. The Company currently has five employees. At the end of the initial
year of operations, management projects that the Company will have as many as 11
full-time employees, in addition to as many as 4 part-time employees.
Item 3. Description of Property
The Issuer does not own any real property. Its offices are leased and
are located at 250 Bird Road,, Suite 104, Coral Gables, Florida 33146. The
Company's headquarters are located near Interstate 95 in a Class A office
building with modern facilities and ample parking. The Company's office lease
(the "Lease") expires in October of 1998, but is renewable at GMC's option on an
annual basis. Monthly rental of the office space is curTently $1,159. The Lease
contains a standard cost of living provision tied directly to the Consumer Price
Index.
Neither the Company's Bylaws nor its Articles of Incorporation (the
"Articles") limits the types of investments the Issuer may make. The policy,
however, may be changed by a majority vote of the Company's shareholders, but
must be reflected by a formal amendment to the Company's Articles. However,
because the primary purpose
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<PAGE>
of the Company is to develop, license, and market a diversified line of
products, it is unlikely that the Company's shareholders would elect to invest
in real estate. This is also true of the investments in real estate mortgages,
developed or undeveloped properties, securities of other companies, or other
investments not described herein.
Item 4. Security Ownership in Certain Beneficial Owners and Management
(Applicable to the Beneficial Owners and Management Owning More Than
Five Percent of Any Class of Securities)
Title of Class Name and Address Amount and Percent of Class
of Beneficial Owner Nature of
Beneficial Owner
Common Shares G. Michael Khoury 1,300,000 shares 48.1%
held in name of
G. Michael Khoury
Item 5. Directors, Executive Officers, Promoters and Control Persons
(a) Identify directors and executive officers:
1. G. Michael Khoury - Mr. Khoury is the Chairman of the Board of
Directors and the Chief Executive Officer of GMC Holding Corporation. He is also
a Director. Mr. Khoury has held each of these positions since May 1, 1997. His
position as a director expires on April 30, 2000. At that time, he may stand for
re-election. Mr. Khoury serves as CEO of the Company at the pleasure of the
Board of Directors. He has wide experience organizing, staffing and running
companies in the automotive industry, fiberglass fabrication, construction and
other retail businesses. His background in budgeting, administration, and cost
control in a variety of retail business environments will be useful in
implementing the quality control measures to assure that GMC is efficiently run.
2. Chris M. Evans - Mr. Evans, who is 48, is the general counsel and
Secretary of the Company. He also serves as a Director. Mr. Evans's position
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<PAGE>
as a director expires on April 30, 1999. He will then be eligible to be
re-nominated and re-elected to a new two year term. Mr. Evans has been corporate
secretary since May 1, 1997 and general counsel since August 1, 1997. Prior to
becoming general counsel for the GMC Holding Corporation, Mr. Evans practiced
corporate law in Virginia and Washington, D.C. His practice encompassed
providing banking and financial transaction advice to corporate clients and
trial of commercial and contract litigation in state and federal courts. Mr.
Evans received a B.A. in political science from Tulane University and earned his
law degree from the same institution in 1981. He attended the University of
Texas at Austin as a Lyndon B. Johnson fellow. There, he earned a Master's
Degree in Public Affairs specializing in finance and cost accounting. Before
becoming a partner in a small Washington, D.C. law firm, Mr. Evans served as
general counsel for a Virginia-based electronics and aerospace firm.
3. Patrice Burns - Ms. Burns serves as Vice President of Investor
Relations for the Company. She is also a director. Ms. Burns has held both an
officer position and has been a director of the Company since May 1, 1997. Her
term on the Board of Directors ends on April 30, 2000. Patrice Burns is 38 years
old and earned a B.S. degree in marketing from St. John's University. Patricia
Burns has previously served as senior Vice President for Prime Charter, Ltd., a
New York investment firm, and has worked as an account executive with other
major investment banks and securities firms, including Paine Webber, Smith
Barney, and Drexel, Burnham & Lambert. From 1984 through 1987, Patrice Burns was
the Marketing and Product Manager for Ferrero U.S.A., Inc., one of the largest
confectioners in the world. There, she managed, administered and coordinated all
new product introduction campaigns with 54 brokers nationwide.
4. John D. Henson - Mr. Henson is 75 and serves as the Company's Chief
Financial Officer. He is also a corporate director. His term as director ends on
April 30, 1999. He was appointed the Company's CFO by the Issuer's Board of
Directors in May 1, 1997 and was also elected by the shareholders' as a director
on that date. Mr. Henson earned a Master's degree in Business Administration at
the American Graduate School of International Finance (also known as the
"Thunderbird School") and a bachelor's degree from the Pharmacy School of the
University of New Mexico. As a former foreign service executive with the U.S.
Department of State, Mr. Henson directed the largest A.I.D. Commodity
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<PAGE>
Acquisition program in the world. He also developed and administered import
programs for the entire East Asia Region. For nearly three decades, John Henson
advised foreign governments, banks and private sector businesses with respect to
international trade policies and practices.
5. Sonnai L. Rohrbeck - Ms. Rohrbeck, who is 47, is an outside Director
and product consultant. She was elected to GMC's Board of Directors on May 1,
1997 and will serve as a director until April 30, 2000. Sonnai Rohrbeck is a
C.P.A. and was previously Vice President of Marketing with Here Comes Grandma,
Inc., GMCs predecessor. Ms. Rohrbeck has significant experience in negotiating
with vendors and suppliers.
(b) Family Relationships and Legal Proceedings
G. Michael Khoury, Chairman and CEO of GMC Holding Corporation, is the
uncle of Patrice Burns, a corporate Vice President and a director. Other than
this relationship, no family relationships currently exist between or among
directors, executive officers, or persons nominated or chosen to become
directors or executive officers. No material legal proceedings have occurred
during the life of the Issuer or during the operation of its predecessor
company. Moreover, no officer, director, promoter or control person has been
involved in any material legal proceeding, such as bankruptcy, a criminal
proceeding, or otherwise, during the past five years.
Item 6. Executive Compensation
(a) SUMMARY COMPENSATION TABLE
Annual Compensation
- -------------------
Name and
Principal Other Annual
Position Year Salary($) Bonus($) Compensation
- -------- ---- --------- -------- ------------
G. Michael Khoury (CEO) 1997 0 (deferred) 0 0
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<PAGE>
<TABLE>
<CAPTION>
Long Term Compensation
- ----------------------
Awards Payouts
- ------ ----------------------------
Securities LTIP All
Restricted Stock Awards(s) Underlying Options/SAR's Payouts Other Comp.
- -------------------------- ------------------------ ------- -----------
<S> <C> <C> <C>
Shareholder: G. Michael Khoury N/A N/A N/A
was provided with 1,300,000 shares
of common stock valued at $2 per
share or $2,600,000 in deferred value),
all of which was restricted under
Rule 144.
Chris M. Evans received N/A N/A N/A
25,000 restricted shares
of Rule 144 stock as compensation
for legal services (valued at
$2.00 per share in deferred
value).
Patrice Burns received N/A N/A N/A
20,000 restricted shares
of Rule 144 stock as compensation
for financial consulting
services (valued at $2.00
per share in deferred
value).
John D. Henson received N/A N/A N/A
10,000 restricted shares
of Rule 144 stock as compensation
for consulting services
(valued at $2.00 per share in
deferred value).
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Long Term Compensation
- ----------------------
Awards Payouts
- ------ ----------------------------
Securities LTIP All
Restricted Stock Awards(s) Underlying Options/SAR's Payouts Other Comp.
- -------------------------- ------------------------ ------- -----------
<S> <C> <C> <C>
Sonnai L. Robrbeck received N/A N/A N/A
25,000 restricted shares of Rule
144 stock as compensation for
consulting and marketing services
(valued at $2.00 per share in
deferred value).
</TABLE>
No executive officer received compensation in excess of $ 100,000. No
director fees were paid during the last fiscal year. No stock appreciation
rights or long-term incentive plan was formally in place during the 1997 fiscal
year. Certain officers and directors did, however, receive stock or stock
options as compensation for their professional services. These are shown above.
Item 7. Certain Relationships and Related Transactions
(a) Completed Transactions.
On December 18, 1998 (the "Restructuring Date"), management entered
into a restructuring of its shares to return a significant number of its common
stock to the Company. In so doing, the Company would have additional equity to
make new acquisitions, thereby benefitting all shareholders. Before the
Restructuring Date, the company had 9,815,497 shares issued and 15,000,000
common shares authorized. The shareholders affected by the restructuring, all of
whom are directors, and the share position of each after the Restructuring Date,
are as follows:
Shareholdings Before Shs Returned
Shareholder the Restructuring Date Current Ownership to Company
- ----------- ---------------------- ----------------- ----------
Patrice Burns 100,000 restricted 20,000 restricted 80,000
(officer and common shares common shares
director)
Chris Evans 300,000 restricted 25,000 restricted 275,000
(officer and common shares common shares
director)
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<PAGE>
Shareholdings Before Shs Returned
Shareholder the Restructuring Date Current Ownership to Company
- ----------- ---------------------- ----------------- ----------
John Henson 100,000 restricted 10,000 restricted 90,000
(officer and common shares common shares
director)
G. Michael 6,500,000 restricted 1,300,000 restricted 5,200,000
Khoury (officer common shares common shares
and director)
Sonnai Rohrbeck 2,000,000 restricted 25,000 restricted 1,800,000
(director only) common shares common shares
(b) Proposed Transactions.
There are currently no proposed transactions at this time.
(c) Consideration for Promoters.
The Company has issued no shares to any promoters.
Item 8. Legal Proceedings
The company is not a party to any pending legal proceeding.
Item 9. Market for Common Equity and Related Stockholder Matters
(a) Market information
GMC Holding Corporation is currently traded on the NASDAQ-OTC Bulletin
Board. Its trading symbol is GHCM. The high sales price for the last two
quarters for 1997 (the only quarters in which the stock was traded publicly) was
$3 per share. The low sales price for the last two quarters for 1997 was $2.50
per share.
(b) Holders.
There are 390 holders of 1,615,661 shares of unrestricted common stock.
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<PAGE>
Eight shareholders currently hold 1,671,831 shares of restricted common
stock.
(c) Dividends.
No cash dividends have been declared by management. Dividends are not
restricted in any manner by the Articles of Incorporation or the bylaws of the
Company, but, according to Florida law, may only be voted by the Board of
Directors and paid from retained earnings.
Item 10. Recent Sales of Unregistered Securities
No unregistered securities have been sold.
Item 11. Description of Securities
(a) Common or Preferred Stock.
The amount and frequency of dividend payments will be determined by the
Company's Board of Directors. The Compensation and Dividend Committee of the
Board of Directors has determined that dividends shall be paid annually, if at
all, and shall be paid out of retained earnings not dedicated to plant and
corporate expansion, acquisitions, and general and administrative costs.
The Company's common stock also has no preemptive, conversion or
liquidation rights. No provision in the Company's charter or bylaws prevents,
delays, or otherwise defers a possible change in control of the Issuer.
GMC Holding Corporation currently has no debt securities or preferred
stock and has no plans at this time to register any such securities.
Item 12. Indemnification of Directors and Officers
Article IV of the Company's bylaws provides that any director or
officer of the Company who is threatened to be or is made a party of any pending
or filed
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<PAGE>
action, suit, or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is, or was, a director,
officer, employee or agent of the Company, or served at the request of the
Company as a director, officer, employee, trustee or agent to any other
corporation, partnership, joint venture, trust or other entity, shall be
indemnified against expenses, including attorney's fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
any such action, suit or proceeding to the full extent allowed by Florida law.
Such expenses shall be advanced as incurred upon receipt of an undertaking to
repay such amount if such person is found not be entitled to such
indemnification pursuant to the Company's bylaws.
The Company is currently negotiating with several major liability
carriers to obtain a policy of errors and omission liability insurance to cover
purported acts of commission or omission from which such a claim might arise
with respect to director or officer liability. Otherwise, no statute, charter
provisions or other arrangements exist that insures or indemnifies a controlling
person, director, or officer with respect to potential liability in his or her
capacity as a control person, officer or director.
Item 13. Financial Statements
Audited financial statements for the Company were prepared by Ida C.
Ovies, C.P.A., P.A., 2307 Douglas Road, Suite 400, Miami, Florida 33145, the
Company's outside independent auditor. These financial reports comply with the
requirements of Article 2 of Regulation S-X (17 CFR 210.2) and are attached
hereto as Exhibit A.
Item 14. Changes In and Disagreements With Accountants on Accounting an
Financial Disclosure
Management of the Company takes no exception and has no material
disagreement with the statements of the accountants and the matters expressed in
the accounting report.
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<PAGE>
Item 15. Financial Statements and Exhibits
The following exhibits are filed and incorporated by reference:
Description of Exhibit Exhibit No.
- ---------------------- -----------
Financial Statements referenced A
in Item 13.
Corporate Documents Pertaining
to Here Comes Grandma, Inc.,
predecessor to GMC Holding Corporation:
(i) Letter of December 16, 1997 from the B
Florida Department of State certifying the
filing of Articles of Amendment changing
the name of Here Comes Grandma, Inc. to
GMC Holding Corporation
(ii) Articles of Incorporation for Here C
Comes Grandma, Inc., predecessor to GMC
Holding Corporation
(iii) Bylaws of Here Comes Grandma, Inc., D
predecessor to GMC Holding Corporation
Opinion of Counsel Concerning the Legality E
of the Securities Being Registered
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<PAGE>
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
GMC HOLDING CORPORATION
Registrant
BY: /s/ G. Michael Khoury
-----------------------------
G. Michael Khoury
Chairman and CEO
Date: June 4, 1998
<PAGE>
GMC HOLDING CORPORATION
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORTS
DECEMBER 31, 1997, DECEMBER 31, 1996 AND DECEMBER 31, 1995
<PAGE>
[LOGO]
IDA C. OVIES, C.P.A., P.A.
INDEPENDENT AUDITORS' REPORT
To the Stockholder of
GMC HOLDING CORPORATION
We have audited the accompanying balance sheet of GMC HOLDING CORPORATTON,
formerly HERE COMES GRANDMA, INC. (a development stage company) as of December
31, 1997, December 31, 1996 and December 31, 1995, and the related statements of
expenses and accumulated deficit, 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 of these
financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the accompanying financial statements present fairly in all
material respects, the financial position of GMC HOLDING CORPORATION, as of
December 31, 1997, December 31, 1996 and December 31, 1995, and the results of
its operations and cash flows for the years then ended in conformity with
generally accepted accounting principles.
The Company is in its development stage, and still inactive. It has accumulated
losses of $177,730 at December 31, 1997. Since the Company was spun-off from its
parent, its deficit has been financed by advances from stockholders. The
successful completion of the Company's business plan, and ultimately, the
attainment of profitable operations is dependent upon future events, including
adequate financing. There is no assurance that the plan will materialize. These
conditions raise substantial doubt as to the Company's ability to continue as a
going concern.
IDA C. OVIES
- ----------------------------
Certified Public Accountants
January 8, 1998
2307 Douglas Road. Ste. 400 - Miami, F1, 33145
Tel. (305) 447-8801 - Fax (305) 447-8770
<PAGE>
GMC HOLDING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
December 31, December 31, December 31,
1997 1996 1995
---- ---- ----
ASSETS
Current Assets
Cash ............................... $ 32,134 $ 0 $ 0
Prepaid marketing costs ............ 128,333 0 0
Prepaid broadcast time ............. 4,000,000 0 0
4,160,467 0 0
Property and Equipment ............. 14,245 14,245 6,745
Less: accumulated depreciation ..... (4,020) (1,987) (788)
10,225 12,258 5,957
Other Assets
Sample and designs ................. 69,339 69,339 69,339
$ 4,240,031 $ 81,597 $ 75,296
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accrued expenses ................... 143,220 $ 0 $ 0
Other Liabilities
Shareholder loans .................. 98,165 54,691 4,898
Stockholders' Equity
Preferred "B" shares, $.01 par value 2,973
Common Stock, 15,000,000 shares
authorized, 2,700,492 shares
issued and outstanding $.001 par
value ............................. 2,700 9,815 9,815
Paid in capital .................... 5,070,703 158,560 158,560
Subscribed stock ................... (900,000)
Accumulated deficit ................ (177,730) (141,669) (97,977)
3,998,646 26,706 70,398
$4,240,031 $ 1,597 $ 75,296
See accompanying auditors' report,
<PAGE>
GMC HOLDING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Year Year
ended ended ended Cummulative
December 31, December 31, December 31, From
1997 1996 1995 Inception
---- ---- ---- ---------
Cash flows from operating
activities:
<S> <C> <C> <C> <C>
Net loss ...................... $ (36,061) $ (43,692) $ (6,230) $(177,730)
Adjustments to reconcile net
loss to cash flows used
by operating activities:
Depreciation and amortization 2,033 1,199 635 12,920
Amortization of prepaid
marketing expenses ......... 11,667 11,667
Write off assets transfered
from Parent Company at
spin-off ................... 80,321
(Increase) decrease in current
assets:
Increase in prepaid expenses (140,000) (140,000)
Increase (decrease) in current
liabilities:
Increase in accrued expenses 143,221 143,221
Net cash used by operating
activities ................... (19,140) (42,493) (5,595) (69,601)
Cash flows from investing
activities:
Acquisition of furniture and
equipment .................... 0 (7,500) (4,600) (14,245)
Net cash used by investing
activities ................... 0 (7,500) (4,600) (14,245)
Cash flows from financing
activities:
Proceeds from sale of stock ... 8,00O 8,010
Shareholder advances .......... 43,274 49,993 10,195 107,970
Net cash provided by
financing activities ......... 51,274 49,993 10,195 115,980
Net increase in cash .......... 32,134 0 0 32,134
Cash, beginning of period ..... 0 0 0 0
Cash, end of period ........... $ 32,134 $ 0 $ 0 $ 32,134
</TABLE>
See accompanying auditors' report.
<PAGE>
GMC HOLDING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF EXPENSES AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
Year Year Year
ended ended ended Cummulative
December 31, December 31, December 31, From
1997 1996 1995 Inception
---- ---- ---- ---------
<S> <C> <C> <C> <C>
Costs and Expenses
General and administrative
expenses .................... $ 34,028 $ 42,493 $ 5,595 $ 164,810
Depreciation and amortization. 2,033 1,199 635 12,920
Net Loss ..................... (36,061) (43,692) (6,230) (177,730)
Accumulated Deficit beginning (141,669) (97,977) (91,747) 0
Accumulated Deficit, ending .. $(177,730) $(141,669) $ (97,977) $(177,730)
</TABLE>
See accompanying auditors' report.
<PAGE>
GMC HOLDING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDER'S EQUITY
YEAR ENDED DECEMBER 31,1997
<TABLE>
<CAPTION>
Number
of Common Preferred Common Paid-in Subscribed Accumulated
Shares B Shares Stock Capital Stock Deficit Total
------ -------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1994 ...................... 9,815,492 $ 0 $ 9,815 $ 158,560 $ 0 (91,747) $ 76,628
Net loss for Year ended
December 31, 1995 .......... (6,230) (6,230)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance December 31, 1995 .. 9,815,492 0 9,815 158,560 0 (97,977) 70,398
Net loss for Year ended
December 31, 1996 ........ (43,692) (43,692)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31 1996 9,815,492 0 9,815 158,560 0 (141,669) 26,706
Shares issued for cash ..... 5,000 5 7,995 8,000
Shares issued in escrow-
for options granted
re-services ............... 500,000 500 899,500 (900,000) 0
Common shares retired in
exchange for preferred
B shares .................. (7,620,000) 2,313 (7,620) 5,307 0
Preferred B shares
issued in exchange for
prepaid broadcast time .... 660 3,999,340 4,000,000
Net loss for Year ended
December 31, 1997 ........ (36,061) (36,061)
----------- ----------- ----------- ----------- ----------- ----------- ------------
Balance at December 31,
1997 ...................... 2,700,492 $ 2,973 $ 2,700 $ 5,070,703 $ (900,000) $ (177,730) $ 3,998,646
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
Read accompanying auditor's report.
<PAGE>
GMC HOLDING CORPORATION
FORMERLY HERE COMES GRANDMA, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
Accounting policies and operations
Organization - The Company was organized in October, 1982, for the purpose of
designing, developing, importing, distributing and marketing of infantwear,
dolls, doll wearing apparel, plushed stuffed animals and children's books. On
November, 1998, the Company was spun-off from its parent, Grandma, Inc.
The Company has been inactive since its spin-off from its parent in November,
1988.
Use of estimates - The preparation of financial statements in accordance to
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenue and expenses during the reported
periods. Actual results could differ from, those estimates.
Estimates that are susceptible to change in the near term include evaluation of
recoverability of intangible assets.
Property and Equipment - Property and equipment is recorded at cost and
depreciated over its estimated useful life - 7 years.
Sample and Design Costs - The Company capitalizes all cost of samples and
designs and will amortize these costs over its estimated useful life when sales
begin.
Prepaid Marketing Costs-
Prepaid marketing cost represents the cost of the financial and marketing
services to be received by the Company in connection with a service agreement
entered to in November 18, 1997 (See Accrued Expenses). The cost of the services
are being amortized over the term of the agreement, one year.
Prepaid Broadcast Time-
Prepaid broadcast time represents prepaid air time with Access America Network
to be used for advertising of the Company's products and services. The Company
plans to use the airtime within the next year, and will be expensing the cost as
it is used.
<PAGE>
GMC HOLDING CORPORATION
FORMERLY HERE COMES GRANDMA, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
Accrued Expenses
Accrued expenses at December 31, 1997 consist of the following:
Accrued marketing Fees $140,0OO(a)
Other accrued expenses 3,220
--------
$143,220
a) On November 18, 1997 the Company entered into an agreement with an
unrelated party where this party will provide the Company financial
public relations services, assist in the development of a secondary
trading of its common stock, and advise on investment banking matters.
The agreement is for a one year term, renewable for another year.
As consideration for the services the Company is obliged to pay a
$15,000 fee in cash, issue 50,000 shares of common stock valued at
$2.50 a share, and grant an option to buy 500,OO0 shares of common
stock at $1.80 per share, to be exercised in no more than 150 days.
At December 31, 1997, the Company had granted the stock option, and
the option had been exercised (See Subscribed Stock),
Shareholder Loans
Shareholder advances represent monies loaned by a shareholder of the Company at
various dates to cover expenses. These advances have no specific repayment term
and bear no interest.
Preferred Shares "B" Shares
On December 18, 1997, the Company entered into an agreement with an unrelated
party to acquire $4,000,000 in prepaid airtime on a Network to broadcast
advertising material promoting the sale of its products in exchange for 413,000
shares free trading of the Company's common shares, and 66,000 shares of
preferred "B" shares convertible into shares of common stock at a rate of 10:1
effective June 18, 1999.
On December 10, 1997 several stockholders of the Company surrendered 7,620,000
shares cf common stock to the Company in exchange for 231,300 shares of new
preferred "B" shares.
<PAGE>
GMC HOLDING CORPORATION
FORMERLY HERE COMES GRANDMA, INC.
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
Preferred Shares "B" Shares (Continued)
These preferred shares have a par value of $.01 per share, and are convertible
into shares of common stock at a rate of 10:1 effective December 18, 1998.
Subscribed Stock
The Company granted an option to buy 500,000 of the Company's common stock at
$1.80 per share, as part of an agreement with a Company that is to provide
financial and marketing services (See Accrued Expenses). The options were
exercised in December of 1997, the 500,000 shares of common stock were issued in
escrow to be sold to the public. The Company will receive the option exercise
price as the stock sells from the sales proceeds.
Deficit
Accumulated deficit at December 31, 1997, December 31, 1996 and December 31,
1995 of $177,730, $141,669 and $97,977, respectively, represent losses incurred
during the development stage.
Income Taxes
No credit for income taxes has been provided in the accompanying finarcial
statements because realization of such income tax benefits is not reasonably
assured. The Company will recognize the benefit from such carry forward losses
in the future, if and when they are realized, in accordance with the applicable
provisions of accounting principles for income taxes.
At December 31, 1997 the Company had a net operating loss carry forward for
income tax purposes of approximately $177,000.
Going Concern
The Company is in its development stage, and still inactive. It has accumulated
deficits of $177,730, $141,669 and $97,977, as of December 31, 2997, December
31, 1996 and December 31, 1995, respectively.
<PAGE>
GMC HOLDING CORPORATION
FORMERLY HERE COMES GRANDMA, INC
A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
Going Concern (Continued)
Since the Company was spun-off from its parent, its deficit has been financed by
advances from stockholders. The successful completion of the Company's business
plan, and ultimately, the attainment of profitable operations is dependent upon
future events, including adequate financing. There is no assurance that the plan
will materialize.
These conditions raise substantial doubt as to the Company's ability to continue
as a going concern.
Commitments and Related Party Transactions
The Company subleases its office space from a shareholder under a one year
lease. Rent paid under such lease during the year ended December 31, 1997,
December 31, 1996 and 1995 was $8,979, $13,903 and $14,238, respectively.
The minimum rental commitment under such lease at December 31, 1997 was as
follows:
CY 1998 $ 13,572
<PAGE>
FLORIDA DEPARTMENT OF STATE
Sandra B. Mortham
Secretary of State
December 16, 1997
GMC HOLDING CORPORATION
250 BIRD ROAD
SUITE 104
CORAL GABLES, FL 33146
Re: Document Number G06139
----------------------
The Articles of Amendment to the Articles of Incorporation of HERE COMES
GRANDMA, INC. which changed its name to GMC HOLDING CORPORATION, a Florida
corporation, were filed on December 10, 1997.
Should you have any questions regarding this matter, please telephone (850)
487-6050, the Amendment Filing Section.
Cheryl Coulliette
Document Specialist
Division of Corporations Letter Number: 797AO0058965
Division of Corporations - P.O. BOX 6327 - Tallahassee, Florida 32314
ARTICLES OF INCORPORATION
OF
HERE COMES GRANDMA, INC.
- --------------------------------------------------------------------------------
THE UNDERSIGNED, ACTING AS INCORPORATOR OF A CORPORATION UNDER THE FLORIDA
GENERAL CORPORATION ACT, ADOPTS THE FOLLOWING ARTICLES OF INCORPORATION:
FIRST: The name of the corporation is HERE COMES GRANDMA, INC.
SECOND: The period of its duration is perpetual.
THIRD: The date and time of the commencement of the corporate existence
shall be the date of the filing of these Articles by the Department of State.
FOURTH: The purpose or purposes for which the corporation is organized is
to engage in the transaction of any or all lawful business for which the
corporation may be incorporated under the provisions of the Florida General
Corporation Act.
FIFTH: The aggregate number of shares which the corporation shall have
authority to issue is ONE THOUSAND (1,000) shares of capital stock, having a par
value of $.01 per share.
SIXTH: The number of directors constituting the initial Board of Directors.
of the corporation is three (3) and the names and addresses of the persons who
are to serve as director until the first annual meeting of shareholders or until
a successor is elected and shall qualify is:
G. Michael Khoury
23635 South Federal Highway
Princeton, Florida 33032
<PAGE>
L. Sonnai Frock
1540 Ouayside Terrace
Miami, Florida 33138
Robert Genin
1542 Quayside Terrace
Miami, Florida 33138
SEVENTH: The name and address of the incorporator, the initial registered
agent and the initial registered office is:
JONATHAN B. REISMAN, ESQ.
Suite 808
1401 Brickell Avenue
Miami, Florida 33131
DATED: October 25, 982
/s/ Jonathan B. Reisman, Esq.
--------------------------------
JONATHAN B. REISMAN, ESQ.
Incorporator and Initial
Registered Agent
STATE OF FLORIDA)
) SS:
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this 25th day of
October, 1982, by Jonathan B. Reisman.
/s/
--------------------------------
NOTARY PUBLIC, STATE OF
FLORIDA AT LARGE
My commission expires:
NOTARY PUBLIC STATE OF FLORIDA AT LARGE
My commission expires Oct. 4, 1983
Bonded Thru General Ins. Underwriters
BY-LAWS
OF
HERE COMES GRANDMA, INC.
(a Florida corporation)
ARTICLE I
STOCK CERTIFICATES
1.1 Issuance. Every holder of shares in this corporation shall be entitled
to have a certificate representing all shares to which he is entitled. No
certificate shall be issued for any share until such share is fully paid.
1.2 Form. Certificates representing shares in this corporation shall be
numbered and registered in the order in which they are issued and shall be
signed by the president or vice president and secretary or an assistant
secretary and may be sealed with the seal of this corporation or facsimiles if
the certificate is manually signed on behalf of a transfer agent or registrar,
other than the corporation itself or in employee of the corporation. In case any
officer who signed or whose facsimile signature has been placed upon such a
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer at the date of its issuance.
Every certificate representing shares which are restricted as to sale
disposition or other of such shares shall state that such shares are restricted
as to transfer and shall set forth or unfairly summarize upon the certificate,
or shall state that the corporation will furnish to any shareholder, upon
request and without charge, a full statement of such restrictions.
<PAGE>
Each certificate representing shares shall state upon the face thereof: the
name of the corporation; that the corporation is organized under the laws of
this State; the name of the person or persons to whom it is issued; the number
and class of shares, and the designation of the series, if any, which such
certificate represents; and the par value of each share represented by such
certificate, or statement that the shares are without par value.
1.3 Transfer of Stock. The stock of the corporation shall be assignable and
transferable on the books of the corporation only by the person in whose name it
appears on said books, his legal representatives or by his duly authorized
agent. In case of transfer by attorney, the power of attorney, duly executed and
acknowledged, shall be deposited with the secretary. In all cases of transfer,
the former certificate must be surrendered and cancelled before a new
certificate is issued.
1.4 Lost, Stolen or Destroyed Certificates. If a shareholder has claimed to
have lost or destroyed a certificate or certificates of stock issued by the
corporation, the Board of Directors may direct, at its discretion, a new
certificate or certificates issued, upon the making of an affidavit of the fact
by the person claiming the certificate of stock to be lost or destroyed, and
upon the deposit of a bond or other indemnity in such amount and with such
surety, if any, as the Board may require.
2
<PAGE>
ARIICLE III
MEETINGS OF SHAREHOLDERS
2.1 Annual Meeting. The annual meeting of the shareholders of this
corporation shall he held sixty (60) days after the receipt of the financial
statements of the preceding fiscal year at a place designated by the Board of
Directors of the corporation. The annual meeting of the shareholders for any
year shall be held no later than thirteen (13) months after the last preceding
annual meeting of shareholders. Business transacted at the annual meeting shall
include the election of directors of the corporation.
2.2 Special Meetings. Special meetings of the shareholders shall be held
when directed by the president or the Board of Directors or when requested in
writing by the holders of not less than ten percent (10%) of the shares entitled
to vote at the meeting. A meeting requested by shareholders shall be called for
a date not less than ten (10) nor more than sixty (60) days after the request is
made, unless the shareholders requesting the meeting designate a later date. The
call for the meeting shall be by the secretary, unless the president or the
Board of Directors shall designate another person to do so.
2.3 Place. Both annual and special meetings of shareholders may be held
within or without the State of Florida.
2.4 Notice. Written notice stating the place, day and hour of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) nor more than sixty
(60) days before the meeting, either
3
<PAGE>
personally or by first class mail, by or at the direction of the president, the
secretary or the officer or the person calling the meeting to each shareholder
of record entitled to vote at such meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail addressed to the
shareholder at his address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid.
2.5 Notice of Adjourned Meeting. When a meeting is adjourned to another
time or place, it shall not be necessary to give any notice of the adjourned
meeting if the time and place to which the meeting is adjourned are announced at
the meeting to which the adjournment is taken, and at the adjournment meeting,
any business may be transacted that might have been transacted on the original
date of the meeting. If, however, after the adjournment, the Board of Directors
fixes a new record date for the adjourned meeting, a notice of the adjourned
meeting shall be given as provided in this section to each shareholder of record
on the new record date entitled to vote at such meeting.
2.6 Closing of 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
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, sixty (60) 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 (10) days immediately preceding such
meeting.
4
<PAGE>
In lieu of closing the stock transfer books, the Board of Directors may fix
in advance a date as the record date for any determination of shareholders, such
date in any case to be not more than sixty (60) days and, in case of a meeting
of shareholders, not less than ten (10) days prior to 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 or to vote at a meeting of
shareholders, 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.
Once 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, unless the Board of Directors fixes a new
record date for the adjourned meeting.
2.7 Shareholder Quorum and Voting. The majority of the shares entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of shareholders. When a specified item of business is required to be voted on by
a class or series of stock, a majority of the shares of such class or series
shall constitute a quorum for the transaction of such items of business by that
class or series.
If a quorum is present, an affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on the subject matter shall be
the act of the shareholders unless otherwise provided by law.
5
<PAGE>
After a quorum has been established at the shareholders' meetings, the
subsequent withdrawal of shareholders, so as to reduce the number of
shareholders entitled to vote at the meeting below the number required for a
quorum, shall not affect the validity of any action taken at the meeting or any
adjournment thereof.
2.8 Conduct of Meeting. The meeting of the shareholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting, the chairman of the board, if any; the president; a vice president;
or, if none of the foregoing is in office, present and acting, by a chairman to
be chosen by the shareholders. The secretary of the corporation, or in his
absence, an assistant secretary, shall act as secretary of every meeting, but if
neither the secretary nor an assistant secretary is present, the chairman of the
meeting shall appoint a secretary of the meeting.
2.9 Voting of Shares. Except as otherwise provided in the Articles of
Incorporation, each outstanding share, regardless of class, shall be entitled to
one (1) vote on each matter submitted to a vote at the meeting of shareholders.
Treasury shares, shares of stock of this corporation owned by another
corporation (the majority of the voting stock of which is owned or controlled by
this corporation), and shares of stock of this corporation held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any such
meeting and shall not be counted in determining the total munber of outstanding
shares at any given time.
A shareholder may vote either in person or by proxy executed in writing by
the shareholder or his duly authorized attorney-in-fact.
At each election for directors, every shareholder entitled to vote at
election shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many
6
<PAGE>
persons as there are directors to be elected at that time and for whose election
he has a right to vote.
Such shareholder shall not have the right to accumulate his votes by giving
one candidate as many votes as the number of directors to be elected at that
time multiplied by the number of his shares, or by distributing such votes on
the same principle among any number of such candidates.
Shares standing in the name of another corporation, dornestic or foreign,
may be voted by the officer, agent or proxy designated by the by-laws of the
corporate shareholder; or in the absence of any applicable by-laws, by such
person as the Board of Directors of the corporate shareholder may designate.
Proof of such designation may be made by presentation of a certified copy of the
by-laws or other instrument of the corporate shareholder. In the absence of any
such designation, or in the case of conflicting designation by the corporate
shareholder, the chairman of the board, president, any vice president, secretary
and treasurer of the corporate shareholder sball be presumed to possess, in that
order, authority to vote such shares.
Shares held by an administrator, executor, guardian or conservator may be
voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority so to do be
continued in an appropriate order of the court by which such receiver was
appointed.
7
<PAGE>
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter, the pledgee or his nominee shall be entitled to vote the shares so
transferred.
On and after the date on which written notice of redemption or redeemable
shares has been mailed to the holders thereof in a sum sufficient to redeem such
shares has been deposited with a bank or trust company with irrevocable
instruction and authority to pay the redemption price to the holders thereof
upon surrender of certificates therefore, such shares shall not be entitled to
vote on any matter and shall not be deemed to be outstanding shares.
2.10 Proxies. Every shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting or a
shareholder's duly authorized attorney-in-fact may authorize another person or
persons to act for him by proxy.
Every proxy must be signed by the shareholder or his attorney-in-fact. A
signed proxy is presumed valid. No proxy shall be valid after the expiration of
eleven (11) months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the shareholder executing it.
except as otherwise provided by law.
The authority of the holder of a proxy to act shall not be revoked by the
incompetence or death of the shareholder who executed the proxy unless, before
the authority is exercised, written notice of an adjudication of such
incompetence or such death is received by the corporate officer responsible for
maintaining the list of shareholders.
If a proxy for the same shares confers authority upon two or more persons
and does not otherwise provide, a majority of them present at the meeting, or if
only one is present, then that one may exercise all the powers conferred by the
proxy; but if the proxy holders present at the
8
<PAGE>
meeting are are equally divided as to the right and manner of voting in any
particular case, the voting of the shares shall be prorated.
If a proxy expressly provides, any proxy holder may appoint in writing a
substitute to act in his p1ace.
2.11 Action by Shareholders Without a Meeting. Any action required by law,
these Bylaws or the Articles of Incorporation of this corporation, to be taken
at any annual or special meeting of shareholders of the corporation, or any
action which may be taken at any annual or special meeting of such shareholders,
may be taken without a meeting, without prior notice and without vote, if a
consent in writing setting forth the action so taken shall be signed by the
shareholders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon as a class, such written consent shall
be required by the holders of a majority of the shares of each class of shares
entitled to vote as a class thereon and of the total shares entitled to vote
thereon.
Within ten (10) days after obtaining such authorization by written consent,
notice shall be given to those shareholders who have not consented in writing.
The notice shall fairly summarize the material features of the authorized action
and, if the action be a merger, consolidation or sale or exchange of assets for
which the dissenters' rights are provided for by law, the notice shall contain a
clear statement of the right of shareholders dissenting therefrom to be paid the
fair value of their shares upon compliance with the further provisions of law
regarding the rights of dissenting shareholders.
9
<PAGE>
ARTICLE III.
DIRECTORS
3.1 Function. All corporate powers shall be exercised by or under the
authority of, and the business and affairs of the corporation shall be managed
under the direction of the Board of Directors ("Board" or "Board of Directors").
3.2 Qualification. Directors need not be residents of this state or
shareholders of this corporation.
3.3 Compensation. The Board of Directors shall have the autbority to fix
the compensation of directors.
3.4 Duties of Directors. A director shall perform his duties as a director,
including his duties as a member of any committee of the Board upon which he may
serve, in good faith, in a manner he reasonably believes to be in the best
interests of the corporation and with such care as an ordinarily prudent person
in a like position would use under similar circumstances.
In performing his duties, a director shall be entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, in each case prepared or presented by:
a. One or more officers or employees of the corporation whom the director
reasonable believes to be reliable and competent in the matter
presented;
b. Counsel, public accountants or other persons as to matters which the
director reasonable believes to be within such person's professional
or expert competence; or
10
<PAGE>
c. A committee of the Board upon which he does not serve, duly designated
in accordance with the provisions of the Articles of Incorporation or
the By-laws, as to matters within its designated authority, which
committee the director reasonable believes to merit competence.
A director shall not be considered to be acting in good faith if he has
knowledge of the matter in question that would cause such reliance described
above to be unwarranted.
A person who performs his duties in compliance with this section shall have
no liability by reason of being or having been a director of this corporation.
3.5 Number. This corporation shall have a minimum of one (1) director and a
maximum of fifteen (15) directors. The number of directors may be increased or
decreased from time to time by amendment to these By-laws, but no decrease shall
have the effect of shortening the terms of any incumbent director.
3.6 Election and Term. Each person named in the Articles of Incorporation
or by the Incorporator as a member of the initial Board of Directors shall hold
office until the first annual meeting of shareholders, and until a shall have
been elected and qualified or until his earlier resignation, removal from office
or death.
At the first annual meeting of the shareholders and at each annual meeting
thereafter, the shareholders shall elect directors to hold office until the next
succeeding annual meeting. Each director shall hold office for the term for
which he is elected and until his successor shall have been elected and
qualified or until his earlier resignation, removal from office or death.
3.7 Vacancies. Any vacancies occurring in the Board of Directors, including
any vacancy created by reason of an increase in the number of directors, may be
filled by the
11
<PAGE>
affirmative vote of the majority of the remaining directors though less than a
quorum of the Board of Directors. A director elected to fill a vacancy shall
hold office only until the next election of directors by the shareholders.
3.8 Removal of Directors. At a meeting of the shareholders called expressly
for that purpose, any director or the entire Board of Directors may be removed,
with or without cause, by a vote of the holders of a majority of the shares then
entitled to vote at an election of directors.
3.9 Quorum in Voting. A majority of the number of directors fixed by these
By-laws shall constitute a quorum for the transaction of business. 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.
3.10 Board Committees. The Board of Directors may, by resolution adopted by
a majority of the Board, designate and appoint one or more of the following
which shall be of member so the Board of Directors:
a. Executive Committee. The Board of Directors may elect from among
its members an Executive Committee to whom may be delegated, from time to
time and until further order of the Board of Directors, any or all of the
powers of said Board in connection with the affairs of the corporation.
b. Standing and Other Committees. The The Board of Directors may
appoint standing or such other committees of directors, officers or
otherwise as deemed desirable including, but not limited to: (1) Nominating
Committee; (2) Finance Committee; (3) Audit Committee; (4) Compensation
Committee.
12
<PAGE>
Standing committees shall have the responsibilities and duties as set forth
by the Board and shall have their members appointed by the Board of Directors
from within or without its own membership, at any meeting held for that purpose.
In every case, standing committees shall be subject to the general supervision
of the Board of Directors to whom each of them shall make a report not less
often than annually, containing such recommendations as its membership deems
necessary, appropriate or desirable. Other committees, temporary or continuing,
shall act with respect to such special or general problems as the Board of
Directors may, from time to time, determine. Any or all of such other committee
or committees may be terminated at any time by the Board of Directors.
3.11 Place of Meetings. Regular and special meetings by the Board of
Directors may he held within or without the State of Florida. Meeting shall be
held at such place as shall be deemed by the Board.
3.12 Time, Notice and Call of Meetings. Regular meetings of the Board of
Directors shall be held immediately following the annual shareholders meeting.
Written notice of the time and place of special meetings of the Board of
Directors shall be given to each director by either, personal delivery,
facsimile, telegram or cablegram at least two (2) days before the meeting or by
notice mailed to the director at least five (5) days before the meeting.
Notice of a meeting of the Board of Directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and waiver of any and all obligations to the place of the meeting,
the time of the meeting or the manner in which it has been called or
13
<PAGE>
convened, except when a director states, at the beginning of the meeting, any
objection to the transaction of business because the meeting is not lawfully
called or convened.
Neither the business to be transacted at nor the purpose of any regular or
special meeting of the Board of Directors need be specified in the notice of
waiver of notice of such meeting.
A majority of the directors present, whether or not a quorum exists, may
adjourn any meeting of the Board of Directors to another time and place. Notice
of any such adjourned shall be given to the directors who were not present at
the time of the adjournment and, unless the time and place of the adjourned
meeting are announced at the time of the adjournment, to the other directors.
Meetings of the Board of Directors may be called by the chairman of the
board, by the president of the corporation or by any one or more directors.
Members of the Board of Directors may participate in a meeting of such
Board by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time. Participation by such means shall constitute presence in person
at a meeting.
3.13 Action Without a Meeting. Any action required to be taken at a meeting
of the directors of the corporation, or any action which may be taken at a
meeting of the directors or a committee thereof, may be taken without a meeting
if a consent in writing, setting forth the action so to be taken, signed by all
of the directors or all the members of the committee, as the case may be, is
filed in the minutes of the proceedings of the Board or of the committee. Such
consent shall have the same effect as a unanimous vote.
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ARTICLE IV
INDEMNIFICATION
Each person who at any time is, or shall have been, a director,
officer, employee or agent of the corporation, and is threatened to be or is
made a party of any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is, or was, a director, officer, employee or agent of the corporation,
or served at the request of the corporation as a director, officer, employee,
trustee or agent of another corporation, partnership, joint venture, trust or
other enterprise, shall be indemnified against expenses (including attorneys'
fees) judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with any such action, suit or proceeding to the
full extent allowed under the Florida Statutes and such expenses shall be
advanced as incurred upon receipt of an undertaking to repay such amount if such
person is found not to be entitled to such indemnification pursuant to such
Section. The foregoing right of indemnification shall in no way be exclusive of
any other rights or indemnification to which any such director, officer,
employee or agent may be entitled under any other bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
ARTICLE V
OFFICERS
5.1 Officers. The officers of this corporation consist of a president,
one or more vice presidents, a secretary and a treasurer, each of whom shall be
elected by the Board of Directors. Such other officers and assistant officers
and agents as may be deemed necessary may be elected or appointed by the Board
15
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of Directors from time to time. Any two or more offices may be held by the same
person. The failure to elect a president, vice president, secretary or treasurer
shall not affect the existence of this corporation.
5.2 Duties. The officers of the corporation shall have the following
duties:
a. President. The president shall be the chief executive officer of the
corporation, shall have general and active management of business and affairs of
the corporation subject to the directions of the Board of Directors, and shall
preside at all meetings of the shareholders.
b. Vice President. The vice presidents shall perform such duties as
shall, from time to time, be prescribed by the Board of Directors or the
president, and in the absence of the president shall act in the order of their
seniority, unless otherwise prescribed by the Board.
c. Secretary. The secretary shall have custody of, and shall maintain,
all of the corporate records except the financial records, shall record the
minutes of all meetings of the shareholders and Board of Directors, send out all
notices of meetings, and perform such other duties as may be prescribed by the
Board of Directors or the president.
d. Treasurer. The treasurer shall have custody of all corporate funds
and financial records, shall keep full and accurate accounts of receipts and
disbursements and render accounts therof at the annual meetings of the
shareholders and whenever else required by the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or the
president.
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5.3 Removal of Officers. 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 interests of the corporation will be served thereby.
Any officer or agent elected by the shareholders may be removed only by
vote of the shareholders, unless the shareholders shall have authorized the
directors to remove such officer or agent.
Any vacancy, however occurring, in any office may be filled by the Board of
Directors, unless the By-laws shall have expressly reserved such powers to the
shareholders.
Removal of any officer shall by without prejudice to the contract rights,
if any, of the person so removed; however, election or appointment of an officer
or agent shall not of itself create contract rights.
5.4 Compensation of Officers. The officers shall receive such salary or
compensation as may be determined by the Board of Directors.
ARIICLE VI
BOOKS AND RECORDS
6.1 Books and Records. This corporation shall keep correct and complete
books and records of account and shall keep minutes of the proceedings of its
shareholders, Board of Directors and committees of directors.
This corporation shall keep at its registered office or principal place of
business, or at the office of its transfer agent or registrar, a record of its
shareholders, giving the names and
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addresses of all the shareholders and the number, or class and series, if any,
of the shares held by each.
Any books, records and minutes may be in written form or in any other form
capable of being converted into written form within a reasonable time.
6.2 Shareholders' Inspection Rights. Any person who shall have been a
holder of record of shares or of voting trust certificates therefore at least
six (6) months immediately proceding his demand or shall be the holder of record
of, or the holder of record of voting trust certificates for, at least five
percent (5%) of the outstanding shares of any class or series of the
corporation, upon written demand stating the purpose thereof, shall have the
right to examine, in person or by agent or attorney, at any reasonable time or
times, for any purposes if relevant, books and records of account, minutes and
records of shareholders and to make extracts therefrom.
6.3 Financial Information. Not later than four (4) months after the close
of each fiscal year, this corporation shall prepare a balance sheet showing in
reasonable detail the financial conditions of the corporation as the close of
its fiscal year, and a profit and loss statement showing the results of the of
the corporation during its fiscal year.
Upon written request of any shareholder or holder of voting trust
certificates for shares of the corporation, the corporation shall mail to such
shareholder or holder of voting trust certificates a copy of the most recent
such filed balance sheet and profit and loss statement.
The balance sheets and profit and loss statements shall be filed in the
registered office of the corporation in this State, shall be kept for at least
five (5) years and shall be subject to inspection during the business hours by
any shareholder or holder of voting trust certificates, in person or by agent.
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ARTICLE VII
DIVIDENDS
The Board of Directors of this corporation may, from time to time, declare,
and the corporation may pay, dividends on its shares in cash, property or its
own shares, except when the corporation is insolvent or when the payment thereof
would be contrary to any restrictions contained, in the Articles of
Incorporation and shall be subject to the provisions of Chapter 607, Florida
Sutates.
ARTICLE VIII
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of this corporation
and the year and state of its incorporation.
ARTICLE IX
AMENDMENT
These By-Laws may be repealed or amended, and new by-laws may be adopted by
either the Board of Directors or the shareholders, but the Board of Directors
may not amend or repea1 any By-law adopted by the shareholders if the
shareholders specifically provide that such By-law is not subject to amendment
or repeal by the directors. No such amendment may teminate the right to
indemnification and advancement of expenses provided for herein to any person
covered at any time by such provisions.
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Chris M. Evans
Attorney At Law
1674 Oaktree Court
Reston, Virginia 20194
(703) 478-3291 - Fax (703) 478-3497
May 15, 1998
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: GMC Holding Corporation
-----------------------
Dear Sir or Madam:
I serve as securities counsel for GMC Holding Corporation. The company was
incorporated under the laws of the State of Florida on January 20, 1961. It is
currently an active corporation, is current in its filings, and is in good
standing with the Division of Corporations of the Department of State of the
State of Florida.
I have reviewed all pertinent material corporate documents and records with
respect to GMC Holding Corporation and am of the opinion that the outstanding
unrestricted shares of the company's authorized and issued common stock have
been properly issued. Moreover, I am of the opinion that the restricted shares
of the company's common stock were lawfully issued for legitimate services
rendered to the corporation or for other valid and valuable consideration.
This opinion is effective only as to the date issued and covers no other
matters other than those specifically opined to herein.
Very truly yours,
/s/ Chris M. Evans
---------------------------
Chris M. Evans
cc: Mr. G. Michael Khoury, CEO and
Chairman of GMC Holding Corporation
[ACCESS AMERICA LETTERHEAD]
May 19, 1998
Mr.s George Khoury and Barry Sytner
Sent via fax to 305 446 4429 and 310 246 1612
Dear George and Barry:
This letter will confirm in principle, our intention to enter into a joint
venture between Access America and GMC Holdings, Inc.
The purpose of this joint venture is two fold: firstly, to identify and secure
existing infomercials/products suitable for airing; secondly, to establish a
time-bank of up to $15,000,000, to be used expressly to air the
infomercials/products selected.
The revenues generated by the infomercials/products will be split among the
parties in this joint venture. The actual split ratio of each
infomercial/product will be determined prior to its first telecast. Also, Access
America will make the final judgement as to the suitability of each
infomercial/product for air.
Sincerely,
/s/ Dick Wharton
Richard Wharton
Vice President
ADVERTISING AGREEMENT
THIS AGREEMENT is made as of the 9th day of June, 1998 ("Effective Date"),
by and between IDT Corporation ("IDT"), a Delaware Corporation, having its
offices at 190 Main Street, Hackensack, NJ 07601 and GMC Holdings Inc. ("GMC"),
a Florida Corporation, having its offices at 250 Bird Road, Coral Gables, FL
33146.
WHEREAS, IDT is the owner and provider of various telecommunications
services;
WHEREAS, GMC is the supplier of national television air time ("TV");
WHEREAS, GMC agrees to advertise IDT's telecommunications Services on TV
according to the terms set forth herein;
NOW THEREFORE, in consideration of the covenants set forth herein the
parties hereto agree as follows:
WITNESSETH:
I. OBLIGATIONS
1. IDT is the owner and provider of various telecommunications Services
(collectively referred to as "SERVICES") and retains all rights to
Customers which it provides its SERVICES.
2. GMC agrees to provide IDT with national TV air time for the advertisement
of the SERVICES having a value of up to four (4) million dollars, as well
as other marketing, advertising and promotional efforts.
3. GMC shall have sole responsibility for any and all production costs and
expenses associated with the TV advertisement owed to NEILA Corp.
4. IDT shall provide GMC with all information and content to be placed in the
advertisements.
5. GMC shall create the advertisements with the information provided by IDT.
IDT agrees to provide GMC with the samples of existing advertising
materials. GMC shall receive IDT's prior written approval prior to airing
any such advertisement. GMC shall bear all costs and expenses in the
creation and airing of the advertisements.
6. GMC agrees that Stanley Ralph Ross shall direct and produce the TV
advertisement according to IDT's specifications.
7. GMC agrees that in the event the TV advertisement fails to meet IDT's
written approval, the TV advertisement will be corrected until such
approval is received.
8. GMC agrees to provide IDT with seven (7) days written notice prior to
running each TV advertisement.
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9. Within forth-eight (48) hours of running each TV advertisement, GMC agrees
to provide IDT with a notarized Affidavit of Performance, attested to by an
officer of GMC.
10. IDT shall provide SERVICES to Customers who purchase the SERVICES as a
direct result of GMC's advertising and marketing efforts (GMC's Customers).
GMC shall purchase from IDT three (3) toll-free sign-up telephone numbers
("Toll Free Numbers"), through which all GMC's Customer purchases shall be
tracked and reported to GMC in a monthly statement.
11. GMC agrees to provide a telemarketing sales force to answer the Toll Free
Numbers and solicit the SERVICES. GMC assumes all costs and
responsibilities associated with the telemarketing sales force. GMC agrees
to indemnify and hold IDT harmless for all claims or damages arising out of
GMC's telemarketing sales force.
12. GMC agrees not to misrepresent IDT or any of its SERVICES and agrees to
indemnify and hold IDT harmless for any and all costs or damages arising
out of any such misrepresentations.
13. All SERVICES shall remain the exclusive property of IDT, and GMC acquires
no interest therein.
14. GMC agrees not to interfere with or cause any third party to interfere with
IDT's intellectual property rights. IDT's trademarks, tradenames,
copyrights, logos and patents shall remain the exclusive property of IDT.
15. GMC agrees to indemnify and hold IDT harmless for any and all claims and
damages which may arise out of GMC's Customers fraudulent usage of IDT's
SERVICES.
II. PAYMENT OF TERMS
1. Commission Payment Cycle
For the term of this Agreement, GMC shall be paid commissions on or about the
fifteenth day of each month. Each monthly commission shall be calculated only
for Agreements actually entered into by IDT on money received. In the event that
any of GMC's Customers delays or forfeits payment to either IDT or the carrier
for any reason, IDT is in no way financially responsible to GMC for any delayed
or lost commissions.
2. Commission Calculations
GMC shall receive 15% of gross profits, which shall be defined as gross
revenues, minus direct costs incurred, collected by IDT from GMC's Customers and
shall be calculated from monies that IDT actually receives from GMC's Customers
who were not previously IDT Customers. Any and all fraudulent usage and
charge-backs made by GMC's Customers shall be deducted from GMC's commissions.
GMC will be entitled to any and all above stated commissions for as long as the
rates negotiate by GMC remain the same or are lowered for as long as this
Agreement with GMC is in effect and GMC is not in breach thereof.
3. Rates
All rate schedules and terms for the IDT's SERVICES shall be attached as
schedules hereto and shall be incorporated into this Agreement.
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IV. FUTURE POSSIBILITIES
1. Change in IDT Procedure
Any change in billing, pricing, choice of carrier, or any other procedure will
be made at the absolute and final discretion of IDT. GMC will be notified of
changes and of any resulting effect to GMC's or IDT's mutual obligations.
2. Terms and Cancellation of this Agreement
The term of this agreement is for a one (1) year period, and will be reviewed or
canceled by IDT in writing thirty days prior to the end of the term on a month
to month basis. IDT may cancel this agreement in the event that the GMC is not
meeting its obligations a defined in this Agreement.
3. Force Majeure
IDT's obligations under this Agreement are subject to, and neither party shall
be liable for service interruptions, delays, failures to perform, damages,
losses or destruction, or malfunction of any equipment or any consequence
thereof caused or occasioned by, or due to fire, flood, water, the elements,
labor disputes or shortages, utility curtailments, power failures, explosions,
civil disturbances, governmental actions, shortages of equipment for supplies,
unavailability of transportation, acts or omissions of third parties, or any
other cause beyond the party's reasonable control.
4. NO WARRANTIES
ALL SERVICES PROVIDED BY IDT ARE PROVIDED "AS IS." IDT DISCLAIMS ALL WARRANTIES
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTIBILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR USE.
V. LEGAL FORMALITIES
1. Changes to Agreement
This document contains the entire agreement between IDT and the GMC. Any
amendment to this agreement must be made in writing and signed by both parties.
2. Confidentiality
GMC acknowledges that in the course of performing its obligations hereunder it
will receive information which is confidential and/or proprietary to IDT, and
GMC agrees that neither it nor its employees and independent contractors will
use such confidential and/or proprietary information except in performance of
this Agreement and will not disclose such information to third parties.
3. Non-Compete
GMC agrees not to compete with IDT and not to deal with or attempt to transfer,
lure, solicit, or otherwise cause any of IDT's customers or employees to become
customers or employees of GMC during the term of this agreement and for a period
of one year after the termination of this Agreement.
4. Non-Waiver
IDT's failure to require GMC's performance of any provision of this agreement
shall in no way affect the right of IDT to later enforce such provision.
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5. No Partnership
The parties to this Agreement are independent contractors. Neither party is an
agent or Representative of the other party. Nothing in this Agreement shall be
deemed to create a partnership, joint venture or other relationship.
6. Indemnification
GMC agrees to indemnify and hold IDT harmless for any and all negligent acts or
omissions which is any way misrepresent IDT or its services in any way or GMC
misrepresents any prospective telecommunications companies or their services in
any way.
7. Non-Assignability
This agreement is personal to IDT and the GMC and is not assignable without the
prior written consent of IDT.
8. Governing Law
This agreement shall be governed and the legal relationship of obligations of
IDT and the GMC determined in accordance with the laws of the State of New
Jersey, USA. Both parties consent that venue and jurisdiction are proper in the
State of New Jersey, County of Bergen.
9. Authority
Each party represents and warrants that i) the signatory shown below has the
authority to bind the party on whose behalf he/she is signing to the terms of
this Agreement; ii) the execution and delivery of this Agreement and performance
of such party's obligations hereunder have been duly authorized; and iii) the
Agreement is a valid and legal Agreement binding on such parties and enforceable
in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Advertising Agreement to
be executed as of the date set forth above.
IDT CORPORATION GMC
/s/ Michael Fischberger /s/ G. Michael Khoury
- --------------------------- ---------------------------
Signature Signature
Michael Fischberger G. Michael Khoury
- --------------------------- ---------------------------
Name Name
SR. VP President
- --------------------------- ---------------------------
Title Title
6/9/98
- --------------------------- ---------------------------
Date Date
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SCHEDULE A
Rate Schedule
- -------------
GMC Shall sell IDT's Domestic Long Distance Services at a rate of 8.9 cents per
minute. Sixty (60) days after a GMC Customer purchases IDT's Internet Services
and is still an active Customer, GMC shall receive a one-time only $25.00 fee
for active GMC Customers who purchase IDT's Internet Services when calling one
of the Toll Free Numbers.
All rates are subject to change by IDT and shall not apply to any pre-existing
IDT Customers.
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement ("Agreement"), date as of _____, 1998, is by
and between GMC HOLDINGS, INC. ("GMC"), on the one hand, and SALTON MAXIM
HOUSEWARES, INC. ("Salton") and SAM PERLMUTTER, INC. ("SPI") (collective,
"Salton") on the other hand, as follows:
RECITALS
WHEREAS, GMC has pre-paid media time to be aired on free and cable
television and Salton is the licensor/marketing entity of the Booxie,
trademarked and copywritten reversible soft book(s) with a patent pending
("Booxie") and Flush 'N' Shut, trademarked and patent protected toilet fixture
product containing Hush 'N Flush which is also a trademark and patent protected
product. Booxie, Flush 'N' Shut and Hush 'N' Flush are sometimes collectively
referred to herein as the "Product" or "Products"); and
NOW, THEREFORE, the parties are desirous of entering into an agreement on
the following terms and conditions:
AGREEMENT
1. GMC shall provide Two Hundred Fifty Dollars ($250,000.00) worth of
pre-paid media time which shall be allocated between the Products.
2. Salton shall provide the Products as well as the fulfillment entity and
the commercials to be used on the pre-paid media time.
3. The parties hereto shall equally divide the proceeds from the direct
sales stemming from "direct response" commercials aired on the pre-paid media
time supplied by GMC, excluding costs charged form shipping and handling, which
shall go to Salton and its fulfillment entity.
4. GMC shall provide, as reasonably available, the time schedule for the
pre-paid time.
5. Upon receipt of the accounting and payment by the fulfillment entity,
Salton shall pay GMC its share of revenues for all sales pursuant such
accounting. Said payment shall be made within fifteen (15) days of end of each
calendar month in which Salton receives such accounting and payment. It is
understood that payment shall be made only on actual receipt of monies from the
fulfillment entity and only with respect to sales related to the direct response
commercials aired on the pre-paid media time supplied by GMC.
<PAGE>
6. It is understood that SALTON is selling the Products through other
markets, including all media and retail outlets, and this Agreement shall only
concern such revenues which are derived from the direct response sales provided
in the pre-paid media time contributed by GMC. GMC is engaged in the marketing
of merchandising other the Products and SALTON shall have no interest therein.
7. The parties represent that they have the right to enter into this
Agreement and they are authorized to perform these obligations required of them
under this Agreement. Each party indemnifies the other from any claim by any
third party, including reasonable attorneys' fees to defend such indemnified
party hereunder.
8. This Agreement shall not be construed as a partnership or agency.
9. This Agreement may be terminated upon the occurrence of any of the
following:
a. When the Two Hundred Fifty Thousand Dollars ($250,000.00) worth of
pre-paid media time is exhausted;
b. Either party materially breaches the terms hereof, in which event
the non-breaching party shall, at its option, have the right to terminate
this Agreement; or
c. By the mutual written agreement of the parties.
10. Salton shall grant to GMC an option to extend this Agreement upon GMC's
commitment to provide an additional Five Hundred Thousand Dollars ($500,000.00)
worth of pre-paid media time, and said option shall be exercised in writing
within thirty (30) days from the date of termination of the Agreement.
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
date and year set forth below.
GMC INC. SALTON MAXIM HOUSEWARES, INC.
By: /s/ G. Michael Khoury By: /s/ Leon Destrawn
--------------------------- ---------------------------
LEON DESTRAWN
Its: President Its: President
---------------------------
SAM PERLMUTTER, INC.
By: /s/ Sam Perlmutter
---------------------------
Sam Perlmutter
Its: President
