As filed with the Securities and Exchange Commission on December 23, 1996
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
__________________________
GRAND TOYS INTERNATIONAL, INC.
(Exact name of Registrant as Specified in its Charter)
Nevada 87-0454155
(State or Other Jursidiction (I.R.S. Employer
or Organization) Identification No.)
1710 Route Transcanadienne
Dorval, Quebec, Canada H9P 1H7
(514) 685-2180
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
_________________
Stephen Altro
President
Grand Toys International, Inc.
1710 Route Transcanadienne
Dorval, Quebec, Canada H9P 1H7
(514)685-2180
(Name, Including Zip Code, and Telephone Number, Including Area Code, of
Agent for Service)
_________________
Copies of all communications, including all communications sent to the Agent
for Service, should be sent to:
Paul J. Pollock, Esq.
Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, NY 10020-1104
(212) 835-6000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered in connection with dividend or
interest reinvestment plans, check the following box:|X|
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
Title of Shares Amount to Proposed Maximum Proposed Maximum Amount of
to be Registered Registered Offering Price Aggregate Offering Registration
Per Unit (1) Price(1) Fee
- -------------------------------------------------------------------------------
Common Stock, 183,486 shares $1.125 $206,421.75 $71.18
$.001 par value
- -------------------------------------------------------------------------------
(1) Estimate solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) using the average of the high and low prices
reported on the Nasdaq SmallCap Stock Market for the Registrant's Common
Stock on December 16, 1996.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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Subject to Completion
Dated December 23, 1996
PROSPECTUS
GRAND TOYS INTERNATIONAL, INC.
183,486 Shares of Common Stock,
Par Value $ 0.001 Per Share
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY INVOLVE RISK. SEE "RISK FACTORS"
ON PAGE 5.
__________________________
This Prospectus relates to the offering by the Selling Stockholders named
herein (the "Selling Stockholders") of up to an aggregate of 183,486 shares of
Common Stock, par value $0.001 per share, of Grand Toys International, Inc. (the
"Company") covered by this Prospectus, which may be offered and sold from time
to time by the Selling Stockholders. The Company will not receive any proceeds
from the sale of the shares by the Selling Stockholders. The shares offered
hereby were acquired by the Selling Stockholders in connection with the
settlement of a legal proceeding involving the Company. See "Plan of
Distribution."
The Common Stock is quoted on the Nasdaq SmallCap Stock Market ("NASDAQ")
under the symbol "GRIN." On December 13, 1996 the closing bid and ask prices of
the Common Stock, as reported on NASDAQ, were $1.094 and $1.125, respectively.
The Selling Stockholders may from time to time sell the shares of the
Common Stock offered hereby pursuant to this Prospectus. The shares of stock
offered hereby may be sold by the Selling Stockholders in ordinary brokerage
transactions, in transactions in which brokers solicit purchases, in negotiated
transactions or in a combination of such methods of sale, at market prices
prevailing at the time of sale, at prices relating to such prevailing market
prices or at negotiated prices. See "Plan of Distribution." The Common Stock
offered hereby is not subject to any underwriting agreement. Each Selling
Shareholder and any brokers or dealers through or to whom the shares of Common
Stock offered hereby may be sold may be deemed "underwriters" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"), in which event
all brokerage commissions or discounts and other compensation received by such
brokers or dealers may be deemed underwriting compensation. All expenses of
registration incurred in connection with this offering are being borne by the
Company, but all selling and other expenses which may be incurred by the Selling
Stockholders will be borne by such Selling Stockholders. None of the securities
offered pursuant to this Prospectus have been registered prior to the filing of
the Registration Statement of which this Prospectus is a part.
This Prospectus also relates to such additional securities as may be issued
to the Selling Stockholders because of future stock dividends, stock
distributions, stock splits or similar capital readjustments.
___________
The date of this Prospectus is , 1996.
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This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. These documents are available upon request from
Grand Toys International, Inc., 1710 Route Transcanadienne, Dorval, Quebec,
Canada H9P 1H7, Attention Ron Goldenberg, Executive Vice President and Chief
Financial Officer (Telephone: (514) 685-2180). In order to ensure timely
delivery of the documents, potential investors should allow five to eight
business days for delivery. See "Incorporation of Certain Information by
Reference."
AVAILABLE INFORMATION
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus. If given or made, such representations must not be relied upon
as having been authorized by the Company or any Selling Shareholder. This
Prospectus shall not constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in any state in which
such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities law of any such state.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company with the Commission, including the
reports and other information incorporated by reference into this Prospectus,
can be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Square, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices located at the Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
materials can be obtained from the public reference section of the Commission,
450 Fifth Street, N.W. Washington, D.C. 20549 at prescribed rates or from the
Commission's Internet web site at http:\\www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the
securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which were
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration Statement. Any
statements contained herein concerning the provisions of any document filed as
an exhibit to the Registration Statement or otherwise filed with the Commission
are not necessarily complete, and in each instance reference is made to the copy
of such document so filed. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission
are incorporated herein by reference:
(i) Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995;
(ii) Current Report on Form 8-K filed January 24, 1996;
(iii)Quarterly Reports on Form 10-QSB for the quarters ended
September 30, 1996, June 30, 1996, and March 31, 1996; and
(iv) The description of the Company's capital stock contained in
the Company's registration statement filed under Section 12
of the Exchange Act, including any amendment or report filed
for the purpose of updating such description filed with the
Commission pursuant to Section 13 of the Exchange Act.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the securities offered hereby shall be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the date of filing of such documents.
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<PAGE>
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all documents which are incorporated by reference herein, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests should be directed to
Ron Goldenberg, Executive Vice President and Chief Financial Officer, at the
Company's principal executive offices.
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THE COMPANY
Grand Toys International, Inc. (the "Company"), through its Canadian
operating subsidiary, Grand Toys Ltd. ("Grand Canada"), has been engaged in the
toy business in Canada for over 35 years and currently distributes a wide
variety of toys throughout Canada. Grand Canada's toy business consists of two
areas of operation: (i) the importation and distribution throughout Canada, on
an exclusive basis, of a wide variety of well-known toy products designed and
manufactured throughout the world; and (ii) the sale of toy products featuring
popular characters licensed to the Company. Through a United States subsidiary,
Grand Group Inc. ("Grand US"), the Company had commenced sales of a proprietary
line of toy products in the United States and abroad in the first quarter of
1994. Due to continued operating losses and a lack of sufficient capital, Grand
US ceased operations in September 1995. On January 4, 1996 an order for relief
under Chapter 7 of the United States Bankruptcy Code was entered against Grand
US. A trustee was appointed at that time to supervise the liquidation of Grand
US's remaining assets.
On October 24, 1996, the Company announced that it had entered into a
distribution agreement with Pyramid Handbags Inc. ("Pyramid"). Under the terms
of the agreement, Grand Canada will distribute Pyramid's product line, which
includes backpacks, handbags, duffels, belt bags, small leather goods, umbrellas
and rainwear throughout Canada on an exclusive basis. The Company has
established a new subsidiary, Grand Concepts, Inc. ("Grand Concepts"), to market
this new product line, and similar products. Grand Concepts also secured the
rights to use the Star Wars(registered trademark symbol) license on the new
product line.
Grand Canada is the wholly-owned subsidiary of Grand Toys (U.S.) Ltd.,
which itself is a subsidiary of the Company. Grand Canada imports for
distribution in Canada select toys from toy manufacturers who design, develop
and manufacture such toys. These toys are generally the same products that such
manufacturers market and sell in other countries. In determining which toys to
import, Grand Canada examines such factors as consumer acceptance of the
particular toys in other countries, Canadian consumer tastes based on similar
toys distributed previously in Canada and the potential demand for such toys by
Grand Canada's customers, which is partly determined in advance by exhibiting
products to its customers prior to ordering the product from the toy
manufacturer.
Grand Canada's product line includes products featuring well-known
character properties created by others. In order to obtain the right to
manufacture and sell toy products featuring such character properties, Grand
Canada enters into license agreements with the owners of such properties. Under
the terms of the character property license agreements, Grand Canada pays
royalties to licensers that generally range from 5% to 12% of sales of the toys
utilizing such character properties. Generally, Grand Canada's character
property license agreements provide it with the exclusive right to sell only
specific products featuring the particular character property and limit the
territory in which such products may be sold in Canada. Typically, each such
license agreement extends for one to three years and may be renewed upon payment
of certain minimum guarantees or the attainment of specified sales levels during
the term of the license.
Grand Canada has written license and distribution arrangements with two of
the approximately fifteen toy manufacturers from whom it imports toys for
distribution in Canada. Grand Canada selects products from a master product list
provided to it by the manufacturer. The purchase price, depending on the
arrangement with the supplier, consists of a fixed payment for each toy, a
royalty fee based on gross sales of the products by Grand Canada in Canada or a
combination of the two. Pursuant to these agreements, Grand Canada obtains the
exclusive right to import and distribute throughout Canada the toy products
selected by it. Where agreements have been entered into, they generally extend
for one to five years and are generally exclusive for a specified product or
product line. Generally, under such agreements and arrangements, Grand Canada is
responsible for arranging and paying for shipping and other related costs and
expenses. Delivery of products generally takes approximately one to five weeks.
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USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
shares of Common Stock offered hereby. All of the proceeds from the sale of the
shares of the Company's Common Stock offered hereby will be received by the
Selling Stockholders. The Company will pay all of the expenses of the offering.
RISK FACTORS
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER, AMONG OTHER THINGS, THE FOLLOWING FACTORS
CONCERNING THE BUSINESS OF THE COMPANY AND THIS OFFERING.
In addition to reviewing the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1995, the following factors should be considered
carefully in evaluating the Company and its business before purchasing the
Common Stock offered hereby.
History of Losses. Although for the nine months ended September 30, 1996,
the Company had net income of $835,019, the Company incurred losses before taxes
and extraordinary items for the years ended December 31, 1995, 1994, 1993 and
1992 of $2,971,804, $4,395,927, $278,611 and $17,936, respectively. There can be
no assurance that the Company will be profitable in the future.
Possible Conflicts of Interest. Certain relationships among the Company,
its management and affiliates create various potential and actual conflicts of
interest. Although it is the Company's policy that all material affiliated
transactions and loans will be made or entered into on terms that are no less
favorable to the Company than those that can be obtained from unaffiliated third
parties and that such transactions must be approved by a majority of the
directors who do not have an interest in the transaction, certain situations may
arise in the future where such persons would be required to determine whether
actions that could benefit or negatively impact the Company, could negatively
impart or benefit the personal interests of that person.
Dependence on Existing Management. The success of the Company is dependent
on the expertise, experience and continued services of Stephen Altro, a director
and the President of the Company, David Mars, a director and the Vice Chairman
of the Company and Ron Goldenberg, a director and the Executive Vice President
and Chief Financial Officer of the Company. Most decisions concerning the
conduct of the Company's business are made or significantly influenced by such
persons. The loss or interruption of the services of such persons could have a
material adverse effect on the Company. The Company does not maintain "key man"
insurance on the life of any such persons. The Company has entered into
employment agreements, expiring on October 31, 1998, with each of Messrs. Altro,
Mars and Goldenberg, which employment agreements include, among other things,
provisions restricting such persons from competing with the Company during the
term of their employment and for a period of two years thereafter if their
employment with the Company is terminated for cause or voluntarily by such
persons. In the event of the loss of any such persons, no assurances can be
given that the Company will be able to obtain the services of adequate
replacement personnel.
Control by Certain Existing Shareholders. Messrs. Alto, Mars and
Goldenberg, directors and executive officers of the Company, together with an
executive officer of Grand Canada (together with members of their immediate
families) beneficially own approximately 42.64% of the Company's currently
issued and outstanding stock. In addition, the foregoing persons beneficially
own options to purchase an aggregate of 3,402,554 shares of Common Stock, which
options, if exercised in full, together with the shares of Common Stock
currently beneficially owned, would represent approximately 60.21% of the
Company's issued and outstanding capital stock. Further, of these, options to
purchase 2,127,554 shares are intended to represent an aggregate of 24.16% of
the issued and outstanding capital stock on a fully diluted basis and are
therefore subject to increase or decrease based upon changes in the number of
shares of the Company's Common Stock from time to time outstanding. These
adjustment provisions would have the effect of protecting these shareholders, in
part, from dilution as a result of the subsequent issuances of stock by the
Company.
By virtue of the number of shares of Common Stock and options to purchase
Common Stock owned by Messrs. Altro, Mars and Goldenberg, such persons will have
the ability to determine the election of all the Company's directors and control
most corporate actions. Messrs. Mars, Altro and Goldenberg could therefore vote
against certain corporate activities that could benefit the other shareholders
of the Company, or in favor of certain actions that could benefit them but not
be in the best interests of the Company's other shareholders, such as any merger
or acquisition or other takeover proposition offers the Company could in the
future receive from third parties.
Shares Eligible for Future Sale; Outstanding Options and Warrants. There
are currently 7,704,500 shares of Common Stock of the Company outstanding and
options and warrants to acquire an additional 6,687,554 shares of Common Stock
are also outstanding. The voting power of each holder of Common stock would be
diluted by the issuance of these additional shares of Common Stock are also
outstanding. Moreover, the prevailing market price for the Common Stock may be
materially and adversely affected by the addition of a substantial number of
shares of Common Stock, including the shares offered hereby, into the market or
by the registration under the Securities Act for the sale of the shares
underlying such options and warrants.
Risks of Acquisitions. The Company may at times become involved in
discussions with potential acquisition candidates. However, there can be no
assurances that the Company will identify and/or consummate any acquisitions, or
that such acquisitions, if completed, will be successful. In addition, should
the Company consummate an acquisition, such acquisition could have an adverse
effect on the Company's liquidity and earnings.
New Products. As a result of changing consumer preferences, many products
in the toy industry are successfully marketed for only one or two years. In the
event a new product does not receive sufficient market acceptance, the Company
may be required to sell inventory, if any exists, of such products at a
substantial discount. Accordingly, the success of the Company is dependent in
large part on its ability to secure the rights to distribute new products and to
secure new character and well-known brand name licenses for existing or new
product lines. There can be no assurance, however, that any new products will be
successful or meet with the same success as the Company's existing products.
Government Regulation. The Company is subject to the provisions of various
laws, certain of which have been enacted by the Federal Government of Canada and
others which have been enacted by the government of the Province of Quebec and
other Canadian provinces. The laws of Canada, to which the Company is subject,
include the Hazardous Products Act which empowers the government to protect
children from hazardous toys and other articles. Under that legislation the
government has the authority to exclude from the market those articles which are
found to be hazardous. The Company is also subject to the Consumer Packaging and
Labeling Act enacted by the government of Canada, which legislation prohibits
the importing into Canada of prepackaged items and which prohibits the sale or
import or advertising in Canada of items which have misleading information on
their label.
Competition. Competition in the toy industry is intense. Many other
companies involved in such businesses in Canada and the United States have
greater financial resources than the Company, and larger sales forces, greater
name recognition, larger facilities for product development and products that
may be more competitively priced than the Company's products.
Maintenance Criteria for NASDAQ Securities; Disclosure Relating to
Low-Priced Stocks. In order to continue to be included on NASDAQ, a company
currently must maintain $2 million in total assets, a $200,000 market value of
the public float and $1 million in total capital and surplus. In addition,
continued inclusion requires two market-makers, at least 300 holders of the
Common Stock and a minimum bid price of $1 per share; provided, however, that if
a company falls below such minimum bid price, it will remain eligible for
continued inclusion in NASDAQ if the market value of the public float is at
least $1 million and the Company has $2 million in capital and surplus.
On November 6, 1996, the Board of Directors of the National Association of
Securities Dealers, Inc., approved proposed changes to the maintenance standards
for securities listed on NASDAQ. The changes would (i) increase the required
market value of public float from $200,000 to $1,000,000; (ii) require
maintenance of $2 million in Net Tangible Assets (defined to mean total assets
less total liabilities and goodwill) or net income of $500,000 in two of the
last three
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<PAGE>
years or a market capitalization of $35 million. In addition, the changes
would impose corporate governance standards consisting of (i) a minimum of two
independent directors; (ii) an audit committee, a majority of the members of
which are independent directors; (iii) an annual shareholder meeting; and (iv)
shareholder approval for certain corporate actions. These proposed changes will
become effective if, after the expiration of the thirty-day comment period, they
are approved by the Commission.
The failure to meet these maintenance criteria in the future may result in
the discontinuance of the inclusion of the Company's Common Stock on NASDAQ. In
such event, trading, if any, in the Company's Common Stock may then continue to
be conducted on the electronic bulletin board operated by the National
Association of Securities Dealers, Inc. or on the "pink sheets." As a result, an
investor may find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, the shares of the Company's Common Stock.
In addition, the Company would be subject to a rule promulgated by the
Commission that, if the Company fails to meet certain criteria set forth in such
rule, imposes various sales practice requirements on broker-dealers who sell
securities governed by the rule to persons other than established customers and
accredited investors. For these types of transactions, the broker-dealer must
make a special suitability determination for the purchaser and have received the
purchaser's written consent to the transactions prior to sale. Consequently, the
rule may have an adverse effect on the ability of broker-dealers to sell the
Company's Common Stock, which may affect the ability of purchasers of the Shares
offered hereby to sell the Company's Common Stock in the secondary market.
The Commission has also adopted rules that define a "penny stock." Although
the Common Stock is currently outside the definitional scope of a penny stock
under the new rules, in the event the Company's Common Stock were subsequently
characterized as a penny stock, broker-dealers dealing in the Company's Common
Stock will be subject to the disclosure rules for transactions involving penny
stocks. The additional burdens imposed upon broker-dealers may discourage
broker-dealers from effecting transactions in penny stocks which could reduce
the liquidity of the Company's Common Stock. These new rules could then have a
material adverse effect on the trading market for the Company's Common Stock.
No Dividends. The Company has not paid any cash or other dividends on its
Common Stock and does not expect to declare or pay any cash dividends in the
foreseeable future. In addition, the Company's current credit agreement with its
bank restricts the payment of any dividends without the bank's prior consent.
FORWARD LOOKING STATEMENTS
To the extent identified therein, certain of the documents incorporated
herein by reference contain statements that are forward looking statements that
involve risks and uncertainties. Accordingly, as described therein, no
assurances can be given that the actual events and results will not be
materially different from the anticipated events and results described in the
forward looking statements.
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SELLING STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock by the Selling Stockholders identified
below prior to this offering, the maximum number of shares of Common Stock to be
sold in this offering by each of the Selling Stockholders pursuant to this
Prospectus and the beneficial ownership of the Company's Common Stock by the
Selling Stockholders after this offering, assuming that all shares of Common
Stock offered hereby are sold.
Maximum
Shares Number of Shares
Beneficially Shares To Beneficially
Owned Prior Be Sold In Owned After
to Offering This Offering (1)
--------------- ----------------
Name of Number Percent Offering Number Percent
Beneficial Owner
- ------------------ ------- ------ ------------ -------- ------
Roger W. Lehmann 50,958 * 50,958 -0- *
c/o Edison Corporate Center
3100 Woodbridge Ave.
Suite 102
Edison, NJ 08837
Michael I. Satten 50,958 * 50,958 -0- *
26 Cow Lane
Kings Point, NY 11024
Stephanie Janis, Inc. 50,958 * 50,958 -0- *
64 West 15th Street
Suite 3E
New York, NY 10011
Robert S. Stoll 30,612 * 30,612 -0- *
Stoll, Miskin, Prevido
& Hoffman
6110 The Empire State
Building
New York, NY 10118
________
* Less than 1%
(1)...Assumes the sale of all shares of Common Stock registered hereunder,
although none of the Selling Stockholders are under any obligation known to the
Company to sell any shares.
The Selling Stockholders acquired the Common Stock offered hereby pursuant
to a Settlement Agreement resulting from the lawsuit entitled Roger W. Lehmann
and Michael I. Satten v. Stephen Altro, David Mars, Lawrence Bernstein, Grand
Toys International, Inc. and Grand Toys, Ltd. Messrs. Lehmann and Statten are
two inventors who had royalty agreements with Grand US. One of the agreements
had been personally guaranteed by Messrs. Mars, Altro and Bernstein, the former
president of the Company and Grand US, and the Company. Plaintiffs had sued
based upon, among other things, for breach of contract and claimed damages
between $1 million and $5 million. In addition to the subject shares of Common
Stock, the Selling Stockholders received a cash payment pursuant to the
settlement.
None of the Selling Stockholders nor any of their respective affiliates is
an officer, director, employee or affiliate of the Company.
The Company will pay the expenses of registering the shares of Common Stock
being sold hereunder which are estimated to be $5,351.97.
PLAN OF DISTRIBUTION
The Company's Common Stock is quoted on NASDAQ under the symbol "GRIN." The
Selling Stockholders may from time to time sell all or a portion of the shares
of Common Stock offered hereby in transactions on NASDAQ, in the
over-the-counter market, in privately-negotiated transactions or a combination
of such methods of sale, in each case at market prices prevailing at the time of
sale, at prices related to
<PAGE>
such prevailing market prices or at negotiated prices. The shares of Common
Stock offered hereby may be sold directly or through broker-dealers. If shares
of Common Stock are sold through broker-dealers, the Selling Shareholders may
pay brokerage commissions and charges. The methods by which the shares of Common
Stock offered hereby may be sold include (a) a block trade (which may involve
crosses) in which the broker or dealer so engaged will attempt to sell the
securities as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its own account pursuant to
this Prospectus; (c) exchange distributions and/or secondary distributions in
accordance with the rules of The NASDAQ Stock Market; (d) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (e)
privately negotiated transactions.
The Common Stock offered hereby will be sold by the Selling Stockholders
acting as principal for their own account, and the Company will receive no
proceeds from this offering. The Selling Stockholders will pay all applicable
stock transfer taxes, transfer fees and brokerage commissions or discounts. The
Company has agreed to bear the cost of preparing the Registration Statement of
which this Prospectus is a part and all filing fees and legal and accounting
expenses in connection with registration of the shares of Common Stock offered
hereby under federal and state securities laws.
The Selling Stockholders and any broker-dealers through or to whom the
shares of Common Stock offered hereby may be sold may be deemed "underwriters"
within the meaning of the Securities Act, in which event, all brokerage
commissions or discounts and other compensation received by such broker-dealer
may be deemed to be underwriting discounts or commissions under the Securities
Act. The Selling Stockholders may indemnify any broker-dealer that participates
in transactions involving the sale of shares of Common Stock against certain
liabilities, including liabilities under the Securities Act.
There can be no assurance that the Selling Stockholders will sell any or
all of the shares of Common Stock offered hereby.
LEGAL MATTERS
The legality of the shares offered hereby has been passed upon for the
Company by Piper & Marbury L.L.P., 1251 Avenue of the Americas, New York, New
York 10020-1104.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in this Prospectus and Registration Statement, have been audited by
KPMG, independent auditors, to the extent indicated in their reports thereon
also incorporated by reference. Such consolidated financial statements have been
incorporated herein by reference in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
<PAGE>
================================== ==================================
No person has been 183,486 Shares
authorized by the Company to
give any information or to make
any representations other than
those contained in this
Prospectus in connection with
the offer contained in this
Prospectus, and if given or
made, such information or GRAND TOYS INTERNATIONAL, INC.
representations may not be
relied upon as having been
authorized by the Company. This Common Stock
Prospectus does not constitute
an offer to sell or a
solicitation of an offer to buy
any of the securities in any
jurisdiction in which such offer
or solicitation is not
authorized, or in which the
person making such offer or PROSPECTUS
solicitation is not qualified to
do so, or to any person to whom
it is unlawful to make such
offer or solicitation. Neither
the delivery of this Prospectus
nor any sale made hereunder
shall create an implication that
there has been no change in the
affairs of the Company since the
date hereof.
_____________________________
, 1996
TABLE OF CONTENTS
...... Page
Available Information......2
Incorporation of Certain
Documents by Reference..2
The Company................4
Use of Proceeds............5
Risk Factors...............5
Forward Looking Statements.7
Selling Stockholders.......8
Plan of Distribution.......8
Legal Matters..............9
Experts....................9
================================== ==================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses in connection with
this Registration Statement. The Company will pay all expenses of the
offering. All of such expenses are estimates, other than the filing
fees payable to the Securities and Exchange Commission.
SEC Registration Fee...............................$ 68.97
Nasdaq Listing Fees................................ -0-
Legal Fees and Expenses............................ 5,000.00
Transfer Agent and Registrar Fees.................. 283.00
TOTAL............................................$ 5,351.97
Item 15. Indemnification of Directors and Officers.
The rights of the Company or its shareholders to sue any director or
officer of the Company for misconduct in conducting the affairs of the Company
as an officer or director is limited by Article XII of the Company's Articles of
Incorporation and Nevada statutory law to cases for damages resulting from
breaches of fiduciary duties involving acts or omissions involving intentional
misconduct, fraud, knowing violations of the law or the unlawful payment of
dividends. Ordinary negligence is not a ground for such a suit. The statute does
not limit the liability of directors or officers for monetary damages under the
federal securities laws. The Company also has the obligation, pursuant to
Article IX of the Company's Amended and Restated Bylaws, to indemnify any and
all of its directors or officers or former directors or officers or any person
who may have served at its request as a director or officer of another
corporation in which the Company owns shares of capital stock or of which it is
a creditor against expenses actually and necessarily incurred by any such person
in connection with the defense of any action, suit or proceeding in which such
person is made a party, by reason of being or having been a director or officer
of the Company, or of such other corporation, except in relation to matters as
to which any such person shall be adjudged in such action, suit or proceeding to
be liable for negligence or misconduct in the performance of duty.
The Company maintains a directors' and officers' liability insurance policy
covering certain liabilities that may be incurred by directors and officers in
connection with the performance of their duties. The entire premium for such
insurance is paid by the Company. Accordingly, indemnification may occur for
liabilities arising under the Securities Act. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted for directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions or otherwise, the Company has been advised that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
<PAGE>
Item 16. Exhibits.
Exhibit No. Description
3 Bylaws of the Company
5 Opinion of Piper & Marbury L.L.P. regarding the legality of the
securities being registered (contains Consent of Counsel).*
24.1 Consent of Piper & Marbury L.L.P. (see Exhibit 5)*
24.2 Consent of KPMG
* to be filed by amendment
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(d) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act, as amended;
<PAGE>
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement; and
(iii)To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement;
(2) That for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement or Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in Dorval, Quebec, Canada, on this day of December, 1996.
GRAND TOYS INTERNATIONAL, INC.
By: /s/ Stephen Altro
Stephen Altro, President and Director
By: /s/ Ron Goldenberg
Ron Goldenberg, Executive Vice-President and Director
In accordance with the requirements of the Securities Act, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated. Each person whose signature appears below authorizes and
appoints each of Stephen Altro and Ron Goldenberg, and each of them severally,
acting alone and without the other, as his attorney-in-fact to sign on his
behalf individually and in the capacity stated below all amendments and
post-effective amendments to this Registration Statement as either such
attorney-in-fact may deem necessary or appropriate.
Signature Title Date
President and Director
/s/ stephen Altro (Principal Executive December 19, 1996
Stephen Altro Officer)
/s/ David Mars Vice Chairman December 19, 1996
David Mars and Director
/s/ Ron Goldenberg Executive Vice President,
Ron Goldenberg Chief Financial Officer,
Secretary, Treasurer and December 19, 1996
Director (Principal
Financial and Accounting
Officer)
/s/ James B. Rybakoff Director December 19, 1996
James B. Rybakoff
/s/ Elliot Bier Director December 19, 1996
Elliot Bier
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
3 Bylaws of the Company
5 Opinion of Piper & Marbury L.L.P.
regarding the legality of the
securities being registered (contains
Consent of Counsel).*
24.1 Consent of Piper & Marbury L.L.P.*
(see Exhibit 5).
24.2 Consent of KPMG
* to be filed by amendment
<PAGE>
EXHIBIT 3
AMENDED AND RESTATED BYLAWS OF
GRAND TOYS INTERNATIONAL, INC.
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the above-named
corporation shall be located at 115 Taurus Circle, Reno, Nevada 89511.
Section 2. Other Offices. The corporation may also have offices at such
other places both within and without the State of Nevada as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place. All Meetings of the stockholders for any purpose
shall be held at such time and place, either within or without the State of
Nevada, as shall be designated from time to time by the Board of Directors and
stated in the notice of the Meeting or in a duly executed waiver of notice
thereof.
Section 2. Annual Meeting. Annual Meetings of stockholders, shall be held
on the First Monday in June if not a legal holiday, and, if a legal holiday,
then on the next business day following, at 10:00 A.M., or at such other date
and time as shall be designated from time to time by the Board of Directors. For
the purposes of these bylaws a "business day" shall mean any day other than a
Saturday, a Sunday or a day on which banking institutions in The City of New
York, New York are authorized or obligated by law or executive order to be
closed. At the annual Meeting, holders of the corporation's voting stock, shall
elect, by a plurality vote, a Board of Directors and transact such other
business as may properly be brought before the Meeting.
Section 3. Notice of Annual Meeting. Written notice of the annual Meeting,
stating the place, date and time of the Meeting, shall be given to each
stockholder entitled to vote at such Meeting not less than ten (10) nor more
than sixty (60) days before the date of the Meeting.
Section 4. List of Stockholders. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least five (5) days before
every Meeting of stockholders, a complete list of the stockholders entitled to
vote at the Meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the Meeting, during ordinary business hours, for a period
of at least five (5) days prior to the Meeting, either at a place within the
city where the Meeting is to be held, which place shall be specified in the
notice of the Meeting or, if not so specified, at the place where the Meeting is
to be held. The list shall also be produced and kept at the time and place of
the Meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 5. Special Meetings. Special Meetings of the stockholders for any
purpose or purposes, unless otherwise prescribed by statute or by the articles
of incorporation, may be called by the President and shall be called by the
President or the Secretary at the request in writing of a majority of the Board
of Directors or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed Meeting.
Section 6. Notice of Special Meetings. Written notice of a special Meeting,
stating the place, date and time of the Meeting and the purpose or purposes for
which the Meeting is called, shall be given not less than ten (10) nor more than
sixty (60) days before the date of the Meeting, to each stockholder entitled to
vote at such Meeting.
Section 7. Limit on Business at Special Meetings. Business transacted at
any special Meeting of stockholders shall be limited to the purposes stated in
the notice.
Section 8. Quorums. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all Meetings of stockholders for the
transaction of business, except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any Meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the Meeting from time to time, without notice other than announcement at
the Meeting of the time and place of such adjourned Meeting, until a quorum
shall be present by proxy or represented by proxy. At any adjourned Meeting at
which a quorum shall be present or represented by proxy, any business may be
transacted which might have been transacted at the Meeting as originally called.
If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned Meeting, a notice of
the adjourned Meeting shall be given to each stockholder of record entitled to
vote at the Meeting.
Section 9. Voting at Meetings. When a quorum is present at any Meeting, the
vote of the holders of a majority of the stock having voting power, present in
person or represented by proxy, shall decide any question brought before such
Meeting, unless the question is one upon which by express statutory provision or
provision of the certificate of incorporation a different vote is required, in
which case such express provision shall govern and control the decision of such
question.
Section 10. Voting Power. Unless otherwise provided in the articles of
incorporation, each stockholder shall at every Meeting of the stockholders be
entitled to one (1) vote in person or by proxy for each share of the capital
stock having voting power held by such stockholder, but no proxy shall be shall
be valid after the expiration of 6 months from the date of its creation, unless
it is coupled with an interest, or unless the stockholder specifies in it the
length of time for which it is to continue in force, which may not exceed 7
years from the date of its creation.
Section 11. Written Consent Without Meeting. Unless otherwise provided in
the articles of incorporation, any action required to be taken at any annual or
special Meeting of stockholders of the corporation, or any action which may be
taken at any annual or special Meeting of such stockholders, may be taken
without a Meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders 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 were present and voted. Prompt notice of the taking of
corporate action without a Meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business of the corporation shall be managed
by, or under the direction of, its Board of Directors which may exercise all
such powers of the corporation and do all such lawful acts and things as are not
by statute, the articles of incorporation or these bylaws, directed or required
to be exercised or done by the stockholders.
Section 2. Election and Tenure. The number of directors
which shall constitute the whole board shall be a minimum of one (1). The
number of directors shall be determined by the Board of Directors or by the
stockholders at any Meeting. Except as provided in Section 3 of this Article
III, each director shall hold office until his successor or successors are
elected and shall qualify or until his earlier resignation or removal.
Section 3. Vacancies and Newly Created Directorships. Vacancies and newly
created directorships resulting from any increase in the authorized number of
directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office for the remainder of the term of the directors whom they
replaced and until their successors are duly elected and qualified, or until
their earlier resignation or removal. If there are no directors in office, then
an election of directors may be held in the manner provided by statute.
Section 4. Place of Meetings. The Board of Directors of the corporation may
hold Meetings, both regular and special, either within or without the State of
Nevada.
Section 5. Annual Meetings. The first Meeting of each newly elected Board
of Directors shall be held immediately after the annual Meeting and no notice of
such Meeting shall be necessary to the newly elected directors in order legally
to constitute the Meeting, provided a quorum shall be present.
Section 6. Regular Meetings. Regular Meetings of the Board of Directors may
be held without notice at such time and at such place as shall from time to time
be determined by the board.
Section 7. Special Meetings. Special Meetings of the Board of Directors may
be called by the President on two (2) days' notice to each director, either
personally, by mail, by telegram, by telex or by facsimile transmission; special
Meetings shall be called by the President in like manner and on like notice upon
the written request of a majority of the directors then in office. Any notice
may be given by the Secretary and need not state the purpose or purposes of the
Meeting unless otherwise required by these bylaws.
Section 8. Quorum and Adjournments. At all Meetings of the
board, a majority of the directors shall constitute a quorum for the
transaction of business, and the act of a majority of the directors present at
any Meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute or by the
articles of incorporation. If a quorum shall not be present at any Meeting of
the Board of Directors, the directors present thereat may adjourn the Meeting
from time to time without notice other than announcement at the Meeting until a
quorum shall be present.
Section 9. Action by Consent. Any action required or permitted to be taken
at any Meeting of the Board of Directors or of any committee thereof may be
taken without a Meeting if all members of the Board of Directors or committee,
as the case may be, consent thereto in writing and the writing is filed with the
minutes of the proceedings of the board or committee.
Section 10. Meetings by Telephone or Similar Communications Equipment.
Members of the Board of Directors or any committee designated by the Board of
Directors may participate in a Meeting of the Board of Directors or any
committee by means of telephone conference or similar method of communications
by which all persons participating in the Meeting can hear each other, and such
participation in a Meeting shall constitute presence in person at the Meeting.
Section 11. Compensation. Unless otherwise restricted by the articles of
incorporation or these bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each Meeting of the Board of Directors and may be paid
a fixed sum for attendance at each Meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee Meetings.
Section 12. Removal of Directors. Unless otherwise restricted by statute or
by the articles of incorporation, any director or the entire Board of Directors
may be removed, with or without cause, by the holders of not less than
two-thirds of the shares entitled to vote at an election of directors.
Section 13. Resignation of Directors. Any director may resign at any time
by giving written notice to the Board of Directors, the President or the
Secretary of the corporation. Unless otherwise specified in such notice, a
resignation shall take effect upon the delivery thereof to the Board of
Directors or the designated officer. It shall not be necessary for a resignation
to be accepted before it becomes effective.
ARTICLE IV
COMMITTEES
Section 1. Designation. The Board of Directors may, by resolution passed by
a majority of the whole board, designate one (1) or more committees, each
committee to consist of one (1) or more of the directors of the corporation. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any Meeting of
the committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any Meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the Meeting in the place of any such
absent or disqualified member.
Section 2. Powers. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the Board
of Directors as provided in Section 78.196 of the Nevada General Corporation
Law, fix any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the corporation or the
conversion into, or the exchange of such shares for, shares of any other class
or classes or any other series of the same or any other class or classes of
stock of the corporation), adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation of a dissolution
or amending these bylaws; and, unless the resolution or the certificate of
incorporation expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock or to
adopt a certificate of ownership and merger. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the Board of Directors.
Section 3. Minutes and Reports. Each committee shall keep regular minutes
of its Meetings and report the same to the Board of Directors when required.
ARTICLE V
NOTICES
Section 1. Form and Delivery. Whenever, under the provisions of statutes,
the certificate of incorporation or these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram, telex or facsimile
transmission at such director's address as it appears in the corporation's
records.
Section 2. Waiver. Whenever any notice is required to be given under the
provisions of statutes, the certificate of incorporation or these bylaws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent to receipt of the notice.
Section 3. Attendance at Meetings as Waiver of Notice. Any stockholder who
attends a Meeting of stockholders in person or is represented at that Meeting by
proxy without protesting, at the commencement of the Meeting, the lack of notice
to him or any director who attends a Meeting of the Board of Directors without
protesting, at the commencement of the Meeting, the lack of notice to him shall,
in each case, be conclusively deemed to have waived notice of that Meeting.
ARTICLE VI
OFFICERS
Section 1. Designation. The officers of the corporation shall be chosen by
the Board of Directors and shall be a President, a Treasurer and a Secretary.
The Board of Directors may also choose one or more Vice Presidents and one or
more Assistant Treasurers and Assistant Secretaries. Any number of offices may
be held by the same person, unless the certificate of incorporation or these
bylaws otherwise provide.
Section 2. Election. The Board of Directors at its annual Meeting shall
choose a President, a Treasurer and a Secretary and may choose such other
officers as it deems appropriate.
Section 3. Powers and Other Duties. The officers shall exercise such powers
and perform such duties as shall be determined from time to time by the Board of
Directors.
Section 4. Salaries. The salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors.
Section 5. Term of, and Removal from, Office. The officers of the
corporation shall hold office until their successors are chosen and qualified.
Any officer elected or appointed by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the corporation shall be filled by the Board
of Directors.
Section 6. The President. The President shall be the chief executive
officer and chairman of the Board of Directors of the corporation. The President
shall preside at all Meetings of the stockholders and the Board of Directors,
shall have general and active management of the day-to-day operations of the
corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect.
The President shall, under the seal of the corporation, execute bonds,
mortgages and other contracts requiring a seal except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the corporation.
Section 7. The Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular Meetings or when the Board of Directors so requires, an account of
all the Treasurer's transactions and of the financial condition of the
corporation.
If required by the Board of Directors, the Treasurer shall give the
corporation a bond (which shall be renewed every six (6) years) in such sum and
with such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of the Treasurer's office and for the
restoration to the corporation, in case of the Treasurer's death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under the Treasurer's
control belonging to the corporation.
Section 8. Vice Presidents. The Vice Presidents or Executive Vice
Presidents, if any, shall perform such duties and have such powers as the Board
of Directors may from time to time prescribe.
Section 9. The Secretary. The Secretary shall attend all Meetings of the
Board of Directors and all Meetings of the stockholders and record all the
proceedings of the Meetings of the Board of Directors and of the stockholders in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. The Secretary shall give, or cause to be
given, notice of all Meetings of the stockholders and special Meetings of the
Board of Directors and shall perform such other duties as may be prescribed by
the Board of Directors or the President, under whose supervision he shall be.
The Secretary shall have custody of the corporate seal of the corporation and
the Secretary or an Assistant Secretary shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by the
Secretary's signature or by the signature of such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the seal
of the corporation and to attest the affixing by the Secretary's signature.
Section 10. The Assistant Treasurers and Secretaries. The Assistant
Treasurer and Assistant Secretary (or, if there is more than one, the Assistant
Treasurers and Assistant Secretaries in the order designated by the Board of
Directors or, if there be no such designation, then in the order of their
election) shall, in the absence of the Treasurer or Secretary, or in the event
of the Treasurer's or Secretary's inability or refusal to act, perform the
duties and exercise the powers of the Treasurer or Secretary and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
ARTICLE VII
CERTIFICATES FOR SHARES
Section 1. Form and Signatures. The shares of the corporation shall be
represented by a certificate or shall be uncertificated. Certificates shall be
signed by, or in the name of the corporation by, the President and the Treasurer
or Secretary or an Assistant Treasurer or Assistant Secretary of the
corporation.
Upon the face or back of each stock certificate issued to represent any
partly paid shares, or upon the books and records of the corporation in the case
of uncertificated partly paid shares, shall be set forth the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
If the corporation shall be authorized to issue more than one (1) class of
stock or more than one (1) series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock; provided that, except as
otherwise provided in Section 78.195(5) of the State of Nevada General
Corporation Law, in lieu of the foregoing requirements, there may be set forth
on the face or faces of the certificate which the corporation shall issue to
represent such class or series of stock a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
Within a reasonable time after the issuance or transfer of uncertificated
stock, the corporation shall send to the registered owner thereof a written
notice containing the information required to be set forth or stated on
certificates pursuant to Sections 78.195, 78.242(3) or 78.365(1) of the Nevada
General Corporation Law or a statement that the corporation will furnish without
charge to each stockholder who so requests the powers, designations, preferences
and relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights.
Section 2. Signature on Certificates. Any or all of the signatures on a
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a new
certificate or certificates or uncertificated shares to be issued in place of
any certificate or certificates theretofore issued by the corporation alleged to
have been lost, stolen or destroyed. When authorizing such issue of a new
certificate or certificates or uncertificated shares, the Board of Directors may
require the owner or his legal representative to give the corporation a bond in
such sum as it may direct as indemnity against the corporation with respect to
the certificate alleged to have been lost, stolen or destroyed.
Section 4. Transfers of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Upon receipt of proper transfer instruments from the
registered owner of uncertificated shares, such uncertificated shares shall be
canceled and issuance of new equivalent uncertificated shares or certificated
shares shall be made to the person entitled thereto and the transaction shall be
recorded upon the books of the corporation.
Section 5. Record Date. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any Meeting of stockholders or
any adjournment thereof, to express consent to corporate action in writing
without a Meeting, to receive payment of any dividend or other distribution or
allotment of any rights, to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty (60) nor less than ten (10) days before the date of such Meeting
nor more than sixty (60) days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a Meeting of
stockholders shall apply to any adjournment of the Meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned Meeting.
Section 6. Registered Stockholders. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the owner of shares,
and shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by statute.
ARTICLE VIII GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the outstanding capital stock of the
corporation, subject to the provisions of the statutes or the articles of
incorporation, may be declared by the Board of Directors at any regular or
special Meeting of directors and dividends may be paid in cash, property or in
shares of the capital stock.
Section 2. Reserves. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, for equalizing dividends, for
repairing or maintaining any property of the corporation or for such other
purpose as the directors shall think conducive to the interest of the
corporation and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 3. Annual Statement. The Board of Directors shall present at each
annual Meeting or special Meeting of the stockholders, when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the corporation.
Section 4. Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the Board of Directors.
Section 6. Corporate Seal. The corporate seal shall have inscribed thereon
the name of the corporation, the year of its organization and the words
"Corporate Seal, Nevada." The seal may be used by causing it or a facsimile
thereof to be impressed, affixed, reproduced or otherwise.
ARTICLE IX
INDEMNIFICATION
The corporation shall indemnify any and all of its Directors or Officers or
former Directors or Officers or any person who may have served at its request as
a Director or Officer of another corporation in which it owns shares of capital
stock or of which it is a creditor against expenses actually and necessarily
incurred by them in connection with the defense of any action, suit or
proceeding in which they, or any of them, are made parties, or a party, by
reason of being or having been Directors or Officers or a Director or Officer of
the corporation, or of such other corporation, except, in relation to matters as
to which any such Director or Officer or former Director or Officer or person
shall be adjudged in such action, suits or proceedings to be liable for
negligence or misconduct, in the performance of duty. Such indemnification shall
not be deemed exclusive of any others' rights to which those indemnified may be
entitled, under bylaw, agreement, vote or stockholders or otherwise.
ARTICLE X
AMENDMENTS
These bylaws may be altered, amended or repealed or new bylaws may be
adopted by the stockholders or by the Board of Directors, when such power is
conferred upon the Board of Directors by the certificate of incorporation, at
any regular Meeting of the stockholders or of the Board of Directors or at any
special Meeting of the stockholders or of the Board of Directors if notice of
such alteration, amendment, repeal or adoption of new bylaws is contained in the
notice of such special Meeting. If the power to adopt, amend or repeal bylaws is
conferred upon the Board of Directors by the certificate of incorporation, it
shall not divest or limit the power of the stockholders to adopt, amend or
repeal bylaws.
<PAGE>
Exhibit 24.2
The Board of Directors
Grand Toys International, Inc.
We consent to the use of our report incorporated herein by reference and
to the reference to our firm under the heading "Experts" in the prospectus.
KPMG
Saint-Laurent, Canada
December 19, 1996
<PAGE>
