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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
/X/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ___________
Commission file number: 33-55254-46
AMERICAN SPORTS HISTORY INCORPORATED
- --------------------------------------------------------------------------------
(Name of small business issuer in its charter)
Nevada 87-0485307
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
18-I Heritage Drive, Chatham, New Jersey 07928
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (201) 635-0665
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
None
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.Yes /X/ No / /
(continued)
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Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. /X/
The issuer had no revenues from continuing operations for its most recent
fiscal year ended December 31, 1995.
The aggregate market value of the voting stock held by non-affiliates of
the registrant, based on the average of the closing bid and ask prices on April
29, 1996 of $2.00 and $4.50, respectively, was $14,181,739.
As of April 29, 1996, the issuer had 11,631,112 shares of its common stock
issued and outstanding or to be issued.
Documents incorporated by reference: None.
Transitional Small Business Disclosure Format:
Yes / / No /X/
Total sequentially numbered pages in this document: 37.
Exhibit index page number: 26.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Organization:
The Company was incorporated in the state of Nevada on August 9, 1990 as
National Logistics, Inc. National Logistics, Inc. changed its name to Fans
Holdings, Inc. on June 30, 1995, and subsequently to American Sports History
Incorporated ("ASH") on September 20, 1995. On August 21, 1995, ASH acquired
100% of the capital stock of Infinet, Inc., a Delaware corporation ("Infinet").
As used in this document, the "Company" refers to ASH and its subsidiary,
Infinet, unless the context indicates otherwise.
Business:
ASH entered into an Agreement dated August 21, 1995, pursuant to which it
acquired from Infinet's sole stockholder, Jeane Hays Nerlino, 100% of the
capital stock of Infinet, in exchange for 5,000,000 shares of ASH's restricted
common stock. The 5,000,000 shares of common stock represented approximately
83.3% of the issued and outstanding shares of ASH's common stock, which is the
only class of its equity securities issued and outstanding. At the direction of
Mrs. Nerlino, the 5,000,000 shares of common stock were issued to her husband,
Vincent M. Nerlino, and as a result, Mr. Nerlino may thus be deemed to have
acquired control of ASH from David R. Yeaman and Krista Castleton, the previous
officers and directors of ASH, and from Capital General Corporation, both of
whom may be deemed to have been the Company's "parents" and "promoters" pursuant
to the rules and regulations promulgated under the Securities Act of 1933. Mr.
Yeaman and Ms. Castleton control and have beneficial ownership of the shares of
common stock owned directly and indirectly by Capital General Corporation, and
exercise shared voting power and shared investment power with respect to such
shares.
In conjunction with its acquisition by ASH, Infinet transferred
substantially all of its assets (consisting primarily of marketable securities)
and certain of its liabilities, the net carrying value of which was
approximately $119,000, to its former sole stockholder, thereby reducing
outstanding accrued liabilities to the stockholder by the same amount.
For accounting purposes, the acquisition of Infinet by ASH has been treated
as a recapitalization of Infinet, with Infinet as the acquiror (reverse
acquisition). ASH had no assets or operations prior to May 1995. The historical
financial statements prior to August 21, 1995 are those of Infinet. The
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business of Infinet has historically been investing and consulting, but in
conjunction with its acquisition by ASH, the Company commenced the business of
publishing a variety of nostalgic sports magazines effective May 1, 1995.
Accordingly, the historical operations of Infinet have been classified as
discontinued operations. Although planned principal operations have commenced,
since the Company has not yet generated any revenues from operations, the
Company is still considered to be in the development stage.
ASH had previously entered into an Agreement dated May 24, 1995, to acquire
100% of the outstanding capital stock of Fans Publishing, Inc., an Arizona
corporation ("Fans"), the publisher of "DIAMOND" magazine, a nostalgic baseball
magazine, of which Mr. Nerlino was a director and 21% shareholder and Ronald J.
Bianchi was an officer, director and 10% shareholder. Infinet had made
non-interest bearing advances to Fans aggregating $431,751 ($434,671 at December
31, 1994) to finance its operations. In addition, ASH made advances to Fans for
operating expenses of $80,856 during 1995. It was subsequently determined that
the acquisition of Fans by ASH was not feasible due to the deteriorating
financial condition of Fans. Accordingly, the advances to Fans by Infinet and
ASH were determined to be uncollectible and were charged to operations during
the year ended December 31, 1995. This transaction was never consummated and no
shares of ASH's common stock were issued. However, in anticipation of the
completion of this transaction, the previous officers and directors of ASH
resigned effective May 31, 1995, and Mr. Nerlino was appointed as the sole
director and President of ASH.
The Company agreed to pay Capital General Corporation a fee of $150,000 for
services rendered with respect to the abandoned acquisition of Fans and the
completed acquisition of Infinet, of which $85,000 was paid during the year
ended December 31, 1995. The Company also issued 200,000 shares of common stock
to Capital General Corporation for additional services rendered during 1995,
which were valued at $2,000. The aggregate fee to Capital General Corporation of
$152,000 was charged to operations during the year ended December 31, 1995.
Product Development Strategy:
The Company intends to focus its efforts on becoming a multi-media
publishing company with its primary focus on producing historical sports
magazines covering America's five major professional sports: football, baseball,
basketball, hockey and soccer. Major league sports are a dominating interest to
the American public, who not only has a passion for the current season's
highlights, but also a profound fascination with historical statistics, former
players and nostalgic moments from past famous games. The Company was conceived
to chronicle the heritage of American sports history, and to become recognized
as
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the definitive source for historical sports content by sport enthusiasts of all
ages. The Company intends to capitalize on the current trend in sports nostalgia
and the increased growth of the general sports marketplace, as well as the
worldwide development of, and desire for, American sports products. The Company
also intends to market sports memorabilia, and through its entertainment
division, to produce sports-related videos and television productions.
The Company intends to launch GRIDIRON, a historical chronicle focusing on
the 75 years of the National Football League as its first publication. This
magazine is expected to premiere in late 1996 as a monthly publication. Subject
to the availability of working capital, during 1997 the Company plans to develop
and launch magazines for baseball ("BASES"), basketball ("REPLAY"), hockey
("SLAPSHOT") and soccer ("CORNER KICK").
The Company has copyrighted the custom-designed logos that have been
designed for each magazine. The Company intends to file a trademark application
for "American Sports History," and intends to trademark each of the previously
stated magazine names once publication has commenced. In addition, once
publication has commenced, the Company intends to copyright each issue and each
story contained therein.
The Company will require a minimum of approximately $5,000,000 of operating
capital through December 1997 to implement its business plan of publishing a
variety of nostalgic sports magazines. The Company intends to attempt to raise
this operating capital through the sale of its equity securities. However, there
can be no assurances that the Company will be successful in raising sufficient
operating capital on a timely basis, at an acceptable cost, and under acceptable
terms and conditions in order to implement its business plan. To the extent that
the Company is unable to raise the necessary operating capital, it will not be
able to implement its business plan, and it will have to curtail or cease
operations. In addition, even if the Company does raise sufficient operating
capital through the sale of its equity securities, there can be no assurances
that the net proceeds will be sufficient to enable the Company to develop its
new line of business to a level where it will generate profits and cash flows
from operations.
Marketing and Distribution:
In order to reach its intended customer, the sports-oriented retail
consumer who purchases several magazines per month, management intends to
utilize promotional advertising that will be coordinated both independently and
cooperatively with other sports publications, radio and television media, sports
events, consumer products, specialty retail distributors and other organizations
and associations.
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The Company intends to introduce a broad-based subscriber acquisition
program, which will include direct to consumer communications through various
media, and which may include a video premium offer. The Company anticipates that
the standard cost for an annual subscription for the football magazine
"GRIDIRON" will be $24.95. Individual copies are expected to sell for $3.95 at
retail.
The Company also intends to offer a subscription program in conjunction
with participating major league teams. A brochure offering a subscription will
be handed out at the end of each game to patrons leaving the stadium. In
addition, single copies of the Company's magazines will be sold in each
stadium's souvenir concession stores. Public announcements by the announcers in
the stadiums and messages on the stadium's electronic scoreboards will be
utilized to inform fans about the Company's magazines. Major league teams will
receive a commission based on subscriptions received as a result of this
program.
The Company has identified several national specialty distributors to
assist in positioning the Company's magazines in various specialty direct retail
outlets (baseball and memorabilia shops, local and national retail stores
(sporting goods and equipment stores), as well as other retail environments
throughout the United States and possibly foreign points of distribution. These
distributors will be responsible for the marketing of this specialty direct
program, as well as the distribution of the Company's magazines. This program,
if and when implemented, will augment the Company's efforts in the areas of
direct mail and subscription services and national newsstand distribution.
Whenever possible, the specialty retail program will be based on a
non-return policy, although the Company expects that it may have to offer some
type of a billing program. General newsstand distribution will generally be on a
standard return basis. Depending on return policies and the specific market, the
Company expects that its wholesale price will range from 40% to 50% of the
expected newsstand price of $3.95.
The Company will also be reviewing opportunities in the areas of bundling
and cross-promotions programs containing magazines, T-shirts and coupons.
License Agreements:
On January 12, 1996, the Company entered into a Licensing Agreement with
the National Football League Alumni, Inc. ("NFLA") for a period of six years
ending on December 31, 2001, to utilize certain NFLA marks. The Company will pay
NFLA a royalty equal to 8% of net sales, with a minimum royalty over the six
year term of
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$1,500,000. The Company issued 300,000 shares of the its common stock with a
stipulated value of $5.00 per share to the NFLA as payment for the $1,500,000
minimum royalty, and agreed to issue up to an additional 300,000 shares to cover
future royalty payments to the NFLA. The Company is obligated to file a
registration statement covering such shares with the Securities and Exchange
Commission, which has not yet been done.
On May 28, 1996, the Company entered into a Licensing Agreement with Gage
Marketing Group, LLC ("Gage"), an exclusive agent for NFLA, for a period of five
years ending on May 14, 2001. The Company paid $100,000 for the right to be the
presenting sponsor of the January 1996 Alumni Player of the Year Awards Dinner.
Gage granted the Company the rights to the video footage of that dinner. Gage
also granted the Company the right to sponsor future dinners and market the
video footage of those dinners. The Company will pay Gage a royalty equal to 8%
of net sales, with a minimum royalty over the five year term of $1,250,000. The
Company issued 250,000 shares of its common stock with a stipulated value of
$5.00 per share to Gage as payment for the $1,250,000 minimum royalty. Upon
request by Gage, the Company is obligated to file a registration statement
covering such shares with the Securities and Exchange Commission. The Company
also agreed to pay $600,000 in cash for the rights to be the presenting
sponsorship of the dinner, payable $100,000 by September 15, 1996, $100,000 by
November 15, 1996, and $100,000 on each of September 1, 1997, 1998, 1999 and
2000.
On January 30, 1996, the Company entered into a Purchase Agreement with
Vernon Nobles to acquire a film library consisting of 16 hours of sports footage
film and the license rights to use 36 hours of footage from the Historic Footage
film library (which is unrelated to sports). The Company agreed to pay $600,000
by issuing 120,000 shares of the Company's restricted common stock with a
stipulated value of $5.00 per share. The Company also agreed to issue up to an
additional 120,000 shares of common stock in the event that the initial 120,000
shares are not sufficient to generate $600,000 in proceeds to the seller.
Competition:
There is significant competition among sports magazines, including such
well known and widely circulated magazines as "Sports Illustrated," "Sport"
and "Inside Sports." All of these magazines are published by entities which are
significantly better capitalized than the Company, which have significantly
larger facilities, and which employ a larger number of personnel who have more
experience than the Company's employees. In addition, the Company is in
competition with other magazines which provide reading entertainment and which
may divert the spending of discretionary income from purchasing the Company's
magazines.
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The Company intends to compete against other sports magazines by providing
a unique, high-quality product focusing on historical professional sporting
events and personalities.
Employees:
As of June 30, 1996, the Company had 3 employees, all of whom were
full-time employees. (see "ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT"). The
Company periodically retains outside consultants to perform certain corporate
administrative tasks.
ITEM 2. DESCRIPTION OF PROPERTY
The Company does not currently own, and does not anticipate acquiring, any
real estate, principal plants and/or other property.
The Company occupies its Scottsdale, Arizona editorial offices on a
month-to-month basis at a monthly rent of $1,043. The Company currently operates
its corporate offices from office facilities provided by its President on a
month-to-month basis without charge.
ITEM 3. LEGAL PROCEEDINGS
On June 30, 1996, a Default Judgment was entered against Infinet, the
Company's wholly-owned subsidiary, and Vincent M. Nerlino, the President and
principal shareholder of the Company. Mr. Nerlino has filed a Motion to Set
Aside the Entry of Default (the "Motion") and Infinet filed a similar motion on
September 4, 1996. Mr. Nerlino has filed briefs on his Motion and is currently
awaiting the setting of a date for a hearing on such Motion.
The entry of the Default Judgment is the result of a Cross-Complaint filed
by William Brin, former President of Fans Publishing, Inc., against Infinet,
Jeane Hays Nerlino, the wife of Vincent M. Nerlino and the former sole
stockholder of Infinet, and Vincent M. Nerlino, a former director and
shareholder of Fans Publishing, Inc., among others, in Superior Court of
Arizona, Maricopa County, Case No. CV 95-18275. The Cross-Complaint seeks
indemnification should any award be obtained in the underlying suit (the
"Complaint") together with punitive and compensatory damages according to proof
and attorneys' fees.
The Complaint was filed by Dr. Craig B. Pearson against Fans Publishing,
Inc., Mr. Nerlino, Mrs. Nerlino, Mr. Brin, Mr. Bianchi and others, alleging,
among other things, fraudulent sale
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of securities, breach of contract, fraud and breach of fiduciary duties. Dr.
Pearson is seeking, among other things, actual damages of $600,000, punitive
damages, and attorneys' fees.
The court proceeding is in an early stage and no discovery procedures have
begun. The Company, Infinet, Mr. Nerlino, Mrs. Nerlino and Mr. Bianchi deny any
wrongdoing and intend to vigorously defend their actions. However, there is no
assurance that they will be successful in their respective defenses. The Company
is in the development stage and has minimal resources so that any substantial
settlement or verdict against the Company, Mr. Nerlino and/or Mr. Bianchi would
have a material adverse effect on the Company.
On August 2, 1996, attorneys for Robert T. Wheeler ("Wheeler") notified the
Company that a complaint would be filed against it, Mr. Nerlino and Mrs.
Nerlino, among others, in the Superior Court of the State of Arizona in and for
the County of Maricopa, unless Wheeler's $200,000 equity investment in the
Company, plus interest and costs, was immediately returned. Wheeler is demanding
rescission of his investment based upon an allegation that the Company failed to
timely register Wheeler's securities with the Securities and Exchange
Commission. Settlement negotiations are currently being held between the Company
and Wheeler. However, there is no assurance that this matter will be
satisfactorily resolved without a lawsuit being filed. Although the Company
denies any wrongdoing and, if a lawsuit is filed, it will vigorously defend
against it, there is no assurance that the Company will be successful in its
defense. A verdict again the Company, if a lawsuit is filed in this matter,
would have a material adverse effect upon the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of its security holders
during the fourth quarter of the fiscal year ended December 31, 1995.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) Market Information:
The Company's common stock has been traded in the over-the-counter market
on the NASD's Electronic Bulletin Board under the symbol "ASPH" since September
20, 1995. Prior to that date, there was no market for the Company's common
stock. The trading market is limited and sporadic and should not be deemed to
constitute an "established trading market." The following table sets forth the
range of bid prices for the common stock during the periods indicated, and
represents inter-dealer prices, which do not include retail mark-ups and
mark-downs, or any commission to the broker-dealer, and may not necessarily
represent actual transactions. The information set forth below was provided by
the National Quotation Bureau, Inc.
Fiscal Year Ended December 31, 1995:
<TABLE>
<CAPTION>
Quarter High Low
- --------- ----- -----
<S> <C> <C>
3 (1) $2.00 $.001
4 2.50 .01
</TABLE>
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(1) For the period September 20, 1995 through September 30, 1995.
(b) Holders:
<TABLE>
<CAPTION>
Approximate number of
of Record Holders (as
Title of Class of April 29, 1996)
-------------- ------------------
<S> <C>
Common stock, $.001 par value 436 (1)
</TABLE>
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(1) Included in the number of stockholders of record are three record holders
who hold 500,100 shares of common stock as nominees or under "street name."
(c) Dividends:
The Company has never paid cash dividends on its common stock. Payment of
dividends is within the discretion of the
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Company's board of directors and will depend, among other factors, on earnings
and debt service requirements, as well as the operating and financial condition
of the Company. At the present time, the Company's anticipated working capital
requirements are such that it intends to follow a policy of retaining earnings
in order to finance the development of its business. Accordingly, the Company
does not expect to pay a cash dividend within the foreseeable future (see "ITEM
6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION").
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview:
Effective August 21, 1995, ASH acquired Infinet. For accounting purposes,
the acquisition of Infinet by ASH has been treated as a recapitalization of
Infinet, with Infinet as the acquiror (reverse acquisition). The historical
financial statements prior to August 21, 1995 are those of Infinet. The business
of Infinet has historically been investing and consulting, but in conjunction
with its acquisition by ASH, the Company commenced efforts to publish a variety
of nostalgic sports magazines. Accordingly, the historical operations of Infinet
have been classified as discontinued operations. Although planned principal
operations have commenced, since the Company has not yet generated any revenues
from operations, the Company is still considered to be in the development stage.
Statements of Operations -
Years Ended December 31, 1994 and 1995:
During the year ended December 31, 1995, general and administrative
expenses were $306,061, including 3,632,500 shares of common stock issued to
consultants, employees and officers (see "ITEM 10. EXECUTIVE COMPENSATION -
Summary Compensation Table"), which were valued at $222,925. In addition,
consulting fees were $152,000, consisting of the $150,000 fee payable to Capital
General Corporation for services rendered, and 200,000 shares of common stock
issued to Capital General Corporation which were valued at $2,000.
As a result of the Company's determination during 1995 that the acquisition
of Fans was not feasible, advances to Fans by ASH and Infinet of $80,856 and
$431,751, respectively, were charged to operations during the year ended
December 31, 1995.
During the year ended December 31, 1995, the Company had a net loss of
$1,169,908, consisting of a net loss from continuing
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operations of $970,406 and a net loss from discontinued operations of $199,502.
During the year ended December 31, 1994, the Company had net income of $436,882,
consisting of net income from discontinued operations of $436,882.
As of December 31, 1995, the Company was a development stage company that
had not yet generated any revenues from operations. The Company expects to incur
significant continuing general and administrative expenses, including
compensation and fees to officers and directors, without any commensurate
operating revenues, until such time as it is able to commence revenue-
generating operations. The commencement of such revenue- generating operations
will require that the Company raise substantial working capital, most likely
from the sale of its equity securities, and then publish at least one nostalgic
sports magazine. There can be no assurances, however, that the Company will
ultimately be successful in raising the necessary capital and in publishing one
or more nostalgic sports magazine.
Financial Condition - December 31, 1995:
The Company will require a minimum of approximately $5,000,000 of operating
capital through December 1997 to implement its business plan of publishing a
variety of nostalgic sports magazines. The Company intends to attempt to raise
this operating capital through the sale of its equity securities. However, there
can be no assurances that the Company will be successful in raising sufficient
operating capital on a timely basis, at an acceptable cost, and under acceptable
terms and conditions in order to implement its business plan. To the extent that
the Company is unable to raise the necessary operating capital, it will not be
able to implement its business plan, and it will have to curtail or cease
operations. In addition, even if the Company does raise sufficient operating
capital through the sale of its equity securities, there can be no assurances
that the net proceeds will be sufficient to enable the Company to develop its
new line of business to a level where it will generate profits and cash flows
from operations.
During the year ended December 31, 1995, the Company sold 663,612 shares of
common stock for $266,456, which included detachable warrants to purchase
663,612 shares of common stock at an exercise price of $.75 per share for a one
year period commencing October 6, 1995. In addition, during the year ended
December 31, 1995, the Company issued 3,632,500 shares of common stock for
services rendered to employees, consultants and officers (including 200,000
shares to Capital General Corporation), which were valued at $222,925 (see "ITEM
10. EXECUTIVE COMPENSATION - Summary Compensation Table").
The Company agreed to pay Capital General Corporation a fee
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of $150,000 for services rendered with respect to the abandoned acquisition of
Fans and the completed acquisition of Infinet, of which $85,000 was paid during
the year ended December 31, 1995. The Company also issued 200,000 shares of
common stock to Capital General Corporation for additional services rendered
during 1995, which were valued at $2,000. The aggregate fee to Capital General
Corporation of $152,000 was charged to operations during the year ended December
31, 1995.
As a result of the determination that the acquisition of Fans was not
feasible, ASH made a rescission offer to certain purchasers of its common stock.
Purchasers who had paid $24,900 for 49,800 shares elected to accept such
rescission offer. The obligation resulting from the rescission of the sale of
these shares has been recorded as a liability at December 31, 1995.
Management of the Company believes that it will be able to sustain limited
operations during the year ending December 31, 1996, with the cash resources
generated by the continuing sale of small amounts of common stock, and through
management's ability to control discretionary expenditures. Except for the
Company's employment agreement with its President and the contract with Gage,
the Company has no fixed expenses. During the year ended December 31, 1995, the
Company did not pay any compensation to officers in cash, and the Company
intends to continue to defer the cash payment of compensation to officers until
such time as the Company has adequate working capital and/or cash flow. The
Company intends to continue to issue shares of its common stock to officers,
employees and consultants for services rendered to conserve working capital.
ITEM 7. FINANCIAL STATEMENTS
The financial statements are listed at "Index to Financial Statements" in
this document.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Effective May 31, 1995, the Company dismissed Smith & Company, Salt Lake
City, Utah, as the Company's independent accountants, and engaged Hollander,
Gilbert & Co., Los Angeles, California, as the Company's new independent
accountants. The dismissal of Smith & Company and the retention of Hollander,
Gilbert & Co. was approved by the unanimous consent of the Company's Board of
Directors on May 31, 1995. Prior to the engagement of Hollander, Gilbert & Co.,
the Company did not consult with such firm regarding the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on
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the Company's financial statements.
Smith & Company audited the Company's financial statements for the years
ended December 31, 1993 and 1994, and issued unqualified opinions for each of
such years. During the years ended December 31, 1993 and 1994, and the period
from January 1, 1995 to May 30, 1995, there were no disagreements with Smith &
Company on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Smith & Company, would have caused such firm to make
reference to the subject matter of the disagreements in connection with its
reports on the Company's financial statements.
The Company has provided Smith & Company with a copy of the disclosures
contained herein, and has requested that it furnish the Company with a letter
addressed to the Securities and Exchange Commission stating whether it agrees
with the statements made by the Company in response to Item 304(a) regarding its
involvement with the Company as independent accountants and, if not, stating the
respects in which it does not agree. A copy of Smith & Company's letter is
attached as an exhibit to this report.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table and text sets forth the names and ages of all directors
and executive officers of the Company and their positions and offices with the
Company as of June 30, 1996. All of the directors will serve until the next
annual meeting of shareholders and until their successors are elected and
qualified, or until their earlier death, retirement, resignation or removal. A
brief description of the business experience of each director and executive
officer during the past five years and an indication of directorships held by
each director in other companies subject to the reporting requirements under the
federal securities laws is also provided.
<TABLE>
<CAPTION>
Name Age Positions Director Since
- ---- --- --------- --------------
<S> <C> <C> <C>
Vincent M. Nerlino 61 President, Chief May 31, 1995
Executive Officer,
Chief Financial
Officer, Secretary
and Director
Ronald J. Bianchi 50 Vice President, August 1, 1996
Editor-in-Chief
and Director
Ronald Cooper 42 Vice President
and Publisher
</TABLE>
There are no family relationships among directors and executive officers.
Biographies of Directors and/or Officers:
Vincent M. Nerlino - Mr. Nerlino has been President, Chief Executive
Officer, Chief Financial Officer, Secretary and a Director since May 31, 1995.
Prior to acquiring control of the Company, Mr. Nerlino was a registered
securities representative providing investment and financial advice from 1975
until 1995, and served as a vice president with Paine Webber, an associate
director with Bear Stearns & Co., Inc. and senior vice president with
Oppenheimer & Co., Inc. Mr. Nerlino was previously a director and shareholder of
Fans Publishing, Inc. (see "ITEM 1. DESCRIPTION OF BUSINESS - Business" and
"ITEM 3. LEGAL PROCEEDINGS" for information regarding Fans Publishing, Inc. and
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related litigation involving Mr. Nerlino).
Ronald J. Bianchi - Mr. Bianchi has been Vice President and Editor-in-Chief
since August 21, 1995, and has been a Director since August 1, 1996. Prior to
joining the Company, Mr. Bianchi accumulated 25 years of experience in the
communications industry, including positions as both a journalist and in public
relations. He was the former editor of the Arlington (VA) News and a columnist
for the Phoenix (AZ) Gazette, as well as Cox Publications' Arizona Spirit. Prior
to joining the Company, Mr. Bianchi was a co-founder of "DIAMOND" magazine,
which featured articles of nostalgic baseball history and players and which was
published by Fans Publishing, Inc. Mr. Bianchi was previously an officer,
director and shareholder of Fans Publishing, Inc. (see "ITEM 1. DESCRIPTION
OF BUSINESS - Business" and "ITEM 3. LEGAL PROCEEDINGS" for information
regarding Fans Publishing, Inc. and related litigation involving Mr. Bianchi).
Ronald Cooper - Mr. Cooper has been Vice President and Publisher since June
28, 1996. Prior to joining the Company, Mr. Cooper spent 18 years in the
magazine publishing business, including publisher of Arizona Living Magazine,
associate publisher and advertising director for Skymall, and director of
advertising for Phoenix Magazine.
Compliance with Section 16(a) of the Exchange Act:
The Company does not have any securities registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, and accordingly, the Company's
officers, directors and affiliates are not required to file any Forms 3, 4
and/or 5.
16
<PAGE> 17
ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation Table
<TABLE>
<CAPTION>
Name and Annual Compensation
Principal -------------------
Position Salary Other
- -------- ------ -----
<S> <C> <C>
Vincent M. Nerlino $ -0- $13,425 (1)
President, Chief Executive
Officer, Chief Financial
Officer and Secretary
Ronald J. Bianchi -0- 10,000 (2)
Vice President and
Editor-in-Chief
Ronald Cooper -0- 1,000 (3)
Vice President and
Publisher
</TABLE>
- ----------------------
(1) Consists of 1,342,500 shares of common stock issued to Mr. Nerlino as
consideration for his entering into his employment agreement that were valued at
$13,425 (see "Employment Agreement").
(2) Consists of 1,000,000 shares of common stock issued to Mr. Bianchi for
services rendered during 1995 that were valued at $10,000.
(3) Consists of 100,000 shares of common stock issued to Mr. Cooper for services
rendered during 1995 that were valued at $1,000.
Employment Agreement:
The Company entered into a employment agreement with Vincent M. Nerlino for
a period of five years beginning on January 1, 1996 and ending on December 31,
2000, pursuant to which Mr. Nerlino will serve as the Company's President and
Chief Executive Officer. The employment agreement provides for base annual
compensation of $200,000 and an annual bonus of 7.5% of pretax operating profits
in excess of $200,000 in 1996, $1,000,000 in 1997, $1,500,000 in 1998,
$2,000,000 in 1999 and $2,500,000 in 2000. Mr. Nerlino will also be provided
with an automobile allowance of $1,000 per month. At the conclusion of the
employment agreement, Mr. Nerlino will receive a one-year consulting contract
at the most recent year's base annual compensation. As an inducement for
Mr. Nerlino to enter into the
17
<PAGE> 18
employment agreement, the Company issued 1,342,500 shares of common stock to
Mr. Nerlino which were valued at $13,425 and charged to operations at
December 31, 1995.
Stock Option Plan:
Effective June 28, 1996, the Board of Directors adopted the 1996 Stock
Incentive Plan (the "Plan"), which the Company intends to submit to the
stockholders for approval within one year from the date of adoption. The Plan
provides for the grant to the Company's employees, officers and/or directors of
stock options that qualify as incentive stock options under Section 422A of the
Internal Revenue Code of 1986, as amended. The Plan provides for the grant of
stock options to purchase up to an aggregate of 1,000,000 shares of common
stock. Options may be granted for terms of up to 10 years. Options are to be
granted at exercise prices at least equal to the fair market value of the
Company's common stock at the date of grant (110% of the fair value in the case
of options granted to greater than 10% shareholders). Option are subject to
early forfeiture upon termination of employment with the Company. The Plan
terminates on June 28, 2006.
The members of the Board of Directors control in excess of 50% of the
currently outstanding shares of common stock, and intend to vote for the
adoption of the Plan when it is submitted to the stockholders for approval. As a
result of the expected adoption of the Plan, on June 28, 1996, the Company
granted stock options to purchase shares of common stock as set forth below. All
stock options granted are incentive stock options unless otherwise noted.
<TABLE>
<CAPTION>
Shares Subject Exercise Expiration
Option Holder to Option Price Date
- ------------- --------- ----- ----
<S> <C> <C> <C>
Vincent M. Nerlino 200,000 $.55 6/28/01
Vincent M. Nerlino
(non-statutory) 300,000 .50 6/28/06
Ronald J. Bianchi 200,000 .50 6/28/06
Ronald Cooper 50,000 .50 6/28/06
</TABLE>
Board of Directors:
Directors of the Company are reimbursed for travel expenses incurred in
attending such meetings. During the fiscal year ended December 31, 1995, there
were no meetings of the Board of Directors, with all corporate actions being
approved by the unanimous written consent of the Board of Directors. The Company
had no audit, nominating or compensation committees or committees
18
<PAGE> 19
performing similar functions during the fiscal year ended December 31, 1995.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As used in this section, the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Securities Exchange Act of 1934 as
consisting of sole or shared voting power (including the power to vote or direct
the vote) and/or sole or shared investment power (including the power to dispose
of or direct the disposition of) with respect to a security through any
contract, arrangement, understanding, relationship or otherwise, subject to
community property laws.
As of April 29, 1996, the Company had authorized 25,000,000 shares of its
common stock, $.001 par value, of which 11,631,112 shares were issued and
outstanding or to be issued.
The following table sets forth certain information regarding the beneficial
ownership of the common stock as of April 29, 1996. Listed below is the name and
address of each beneficial owner of more than 5% of the Company's common stock
known to the Company, the number of shares of common stock beneficially owned by
each such person or entity, and the percent of the Company's common stock so
owned. Also listed below are the number of shares of common stock of the Company
beneficially owned, and the percentage of the Company's common stock owned, by
each officer and director and by all officers and directors of the Company as a
group. Each such person or entity has sole voting or investment power with
respect to the shares of common stock, except as otherwise indicated. Beneficial
ownership consists of a direct interest in the shares of common stock, except as
otherwise indicated.
19
<PAGE> 20
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent of Shares
of Beneficial Owner Beneficial Ownership of Common Stock
- ------------------- -------------------- ---------------
<S> <C> <C>
Vincent M. Nerlino 6,667,500 (1) 55.0%
18-I Heritage Drive
Chatham, NJ 07928
Ronald J. Bianchi 1,200,000 (2) 10.1%
18-I Heritage Drive
Chatham, NJ 07928
Ronald Cooper 150,000 (3) 1.3%
18-I Heritage Drive
Chatham, NJ 07928
All Directors and
Officers as a
Group (3 persons) 8,017,500 (4) 64.8%
</TABLE>
- -------------------
(1) Includes 500,000 shares of common stock issuable upon exercise of stock
options (see "ITEM 10. EXECUTIVE COMPENSATION Stock Option Plan"), 2,225,000
shares of common stock owned by Jeane Hays Nerlino, the wife of Vincent M.
Nerlino, and 1,500,000 shares of common stock owned by Vincent M. Nerlino as
custodian for Michael Nerlino, who is the minor son of Vincent M. and Jeane Hays
Nerlino. Excludes 440,000 shares of common stock, including 20,000 shares of
common stock issuable upon the exercise of 20,000 common stock purchase
warrants, owned by various members of Mr. Nerlino's extended family over which
Mr. Nerlino does not exercise voting or investment power.
(2) Includes 200,000 shares of common stock issuable upon exercise of a stock
option (see "ITEM 10. EXECUTIVE COMPENSATION - Stock Option Plan").
(3) Includes 50,000 shares of common stock issuable upon exercise of a stock
option (see "ITEM 10. EXECUTIVE COMPENSATION - Stock Option Plan").
(4) Includes 750,000 shares of common stock issuable upon exercise of stock
options (see "ITEM 10. EXECUTIVE COMPENSATION - Stock Option Plan").
Changes in Control:
There are no contractual or other arrangements known to the Company which
may later result in a change in control of the Company.
20
<PAGE> 21
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ASH entered into an Agreement dated August 21, 1995, pursuant to which it
acquired from Infinet's sole stockholder, Jeane Hays Nerlino, 100% of the
capital stock of Infinet, in exchange for 5,000,000 shares of ASH's restricted
common stock. The 5,000,000 shares of common stock represented approximately
83.3% of the issued and outstanding shares of ASH's common stock, which is the
only class of its equity securities issued and outstanding. At the direction of
Mrs. Nerlino, the 5,000,000 shares of common stock were issued to her husband,
Vincent M. Nerlino, and as a result, Mr. Nerlino may thus be deemed to have
acquired control of ASH from David R. Yeaman and Krista Castleton, the previous
officers and directors of ASH, and from Capital General Corporation, both of
whom may be deemed to have been the Company's "parents" and "promoters" pursuant
to the rules and regulations promulgated under the Securities Act of 1933. Mr.
Yeaman and Ms. Castleton control and have beneficial ownership of the shares of
common stock owned directly and indirectly by Capital General Corporation, and
exercise shared voting power and shared investment power with respect to such
shares.
ASH had previously entered into an Agreement dated May 24, 1995, to acquire
100% of the outstanding capital stock of Fans Publishing, Inc., an Arizona
corporation ("Fans"), the publisher of "DIAMOND" magazine, a nostalgic baseball
magazine, of which Mr. Nerlino was a director and 21% shareholder and Ronald J.
Bianchi was an officer, director and 10% shareholder. Infinet had made
non-interest bearing advances to Fans aggregating $431,751 ($434,671 at December
31, 1994) to finance its operations. In addition, ASH made advances to Fans for
operating expenses of $80,856 during 1995. It was subsequently determined that
the acquisition of Fans by ASH was not feasible due to the deteriorating
financial condition of Fans. Accordingly, the advances to Fans by Infinet and
ASH were determined to be uncollectible and were charged to operations during
the year ended December 31, 1995. This transaction was never consummated and no
shares of ASH's common stock were issued. However, in anticipation of the
completion of this transaction, the previous officers and directors of ASH
resigned effective May 31, 1995, and Mr. Nerlino was appointed as the sole
director and President of ASH.
The Company agreed to pay Capital General Corporation a fee of $150,000 for
services rendered with respect to the abandoned acquisition of Fans and the
completed acquisition of Infinet, of which $85,000 was paid during the year
ended December 31, 1995. The Company also issued 200,000 shares of common stock
to Capital General Corporation for additional services rendered during 1995,
which were valued at $2,000. The aggregate fee to Capital General Corporation of
$152,000 was charged to operations during the year ended December 31, 1995.
In conjunction with its acquisition by ASH, Infinet transferred
substantially all of its assets (consisting primarily of marketable securities)
and certain of its liabilities, the net carrying value of which was
approximately $119,000, to its former sole stockholder, thereby reducing
outstanding accrued liabilities to the stockholder by the same amount.
During the year ended December 31, 1995, the Company issued shares of
common stock to related parties as set forth below. For additional information
regarding shares of common stock issued to officers, see "ITEM 10. EXECUTIVE
COMPENSATION - Summary Compensation Table" and "ITEM 11. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
<TABLE>
<CAPTION>
Shares of Common
Recipient Stock Issued
--------- ------------
<S> <C>
Vincent M. Nerlino (reverse acquisition) 5,000,000
Vincent M. Nerlino (employment agreement) 1,342,500
Jeane Hays Nerlino (services rendered) 250,000
Ronald J. Bianchi (services rendered) 1,000,000
Ronald Cooper (services rendered) 100,000
Capital General Corporation (services
rendered) 200,000
International Investment Associates
(services rendered) 600,000
</TABLE>
21
<PAGE> 22
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
Number Description of Document
------ -----------------------
2 Agreement between National Logistics, Inc. and Infinet, Inc. dated
August 21, 1995
3.1 Articles of Incorporation of National Logistics, Inc. filed in the
office of the Secretary of State of the State of Nevada on August 9,
1990
3.2 Amendment to the Articles of Incorporation of National Logistics,
Inc. to change the name of the corporation to Fans Holdings, Inc.,
filed in the office of the Secretary of State of the State of Nevada
on June 30, 1995
3.3 Amendment to the Articles of Incorporation of Fans Holdings, Inc. to
change the name of the corporation to American Sports History
Incorporated, filed in the office of the Secretary of State of the
State of Nevada on September 20, 1995
3.4 Bylaws of National Logistics, Inc.
10.1 Licensing Agreement between American Sports History Incorporated and
the National Football League Alumni, Inc. dated January 12, 1996
10.2 Purchase Agreement between American Sports History Incorporated and
Vernon Nobles dated February 2, 1996
10.3 Licensing Agreement between American Sports History Incorporated and
Gage Marketing Group, LLC dated May 28, 1996
10.4 American Sports History 1996 Stock Incentive Plan
16 Letter addressed to the Securities and Exchange Commission from
Smith & Company dated July 21, 1995
21 Subsidiaries of the Registrant: Infinet, Inc. - incorporated in the
state of Delaware
27 Financial Data Schedule (electronic filing only)
22
<PAGE> 23
(b) Reports on Form 8-K: Three months ended December 31,
1995 - None.
23
<PAGE> 24
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
AMERICAN SPORTS HISTORY INCORPORATED
------------------------------------
(Registrant)
Date: September 6, 1996 By: /s/ VINCENT M. NERLINO
-------------------------
Vincent M. Nerlino
President
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Date: September 6, 1996 By: /s/ VINCENT M. NERLINO
-------------------------
Vincent M. Nerlino
President and Director
(Chief Executive,
Financial and Accounting
Officer)
Date: September 6, 1996 By: /s/ RONALD J. BIANCHI
-------------------------
Ronald J. Bianchi
Vice President and
Director
24
<PAGE> 25
AMERICAN SPORTS HISTORY INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
The following documents are filed as part of this report:
Page Numbers
------------
Report of Independent Auditors -
Hollander, Gilbert & Co. 28
Consolidated Balance Sheets -
December 31, 1994 and 1995 29
Consolidated Statements of Operations -
Years ended December 31, 1994 and
1995, and cumulative from May 1, 1995 30
Consolidated Statements of Shareholders'
Equity (Deficiency) -
Years ended December 31, 1994 and 1995 31
Consolidated Statements of Cash Flows -
Years ended December 31, 1994 and
1995, and cumulative from May 1, 1995 32
Notes to Consolidated Financial Statements -
Years ended December 31, 1994
and 1995, and cumulative from May 1, 1995 33-37
25
<PAGE> 26
AMERICAN SPORTS HISTORY INCORPORATED
INDEX TO EXHIBITS
Exhibit
Number Description of Document
- ------ -----------------------
2 Agreement between National Logistics, Inc.
and Infinet, Inc. dated August 21, 1995
3.1 Articles of Incorporation of National
Logistics, Inc. filed in the office of the
Secretary of State of the State of Nevada
on August 9, 1990
3.2 Amendment to the Articles of Incorporation
of National Logistics, Inc. to change the
name of the corporation to Fans Holdings,
Inc., filed in the office of the Secretary
of State of the State of Nevada on June 30,
1995
3.3 Amendment to the Articles of Incorporation
of Fans Holdings, Inc. to change the name
of the corporation to American Sports
History Incorporated, filed in the office
of the Secretary of State of the State of
Nevada on September 20, 1995
3.4 Bylaws of National Logistics, Inc.
10.1 Licensing Agreement between American Sports
History Incorporated and the National
Football League Alumni, Inc. dated January
12, 1996
10.2 Purchase Agreement between American Sports
History Incorporated and Vernon Nobles
dated February 2, 1996
10.3 Licensing Agreement between American Sports
History Incorporated and Gage Marketing
Group, LLC dated May 28, 1996
10.4 American Sports History 1996 Stock Incentive
Plan
16 Letter addressed to the Securities and
Exchange Commission from Smith & Company
dated July 21, 1995
26
<PAGE> 27
AMERICAN SPORTS HISTORY INCORPORATED
INDEX TO EXHIBITS (CONTINUED)
Exhibit
Number Description of Document
- ------ -----------------------
21 Subsidiaries of the Registrant:
Infinet, Inc. - incorporated in the
state of Delaware
27 Financial Data Schedule (electronic
filing only)
27
<PAGE> 28
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
American Sports History Incorporated
We have audited the consolidated balance sheets of American Sports History
Incorporated and subsidiary (A Development Stage Company) as of December 31,
1994 and 1995, and the related consolidated statements of operations,
shareholders' equity (deficiency) and cash flows for the years then ended and
cumulative from May 1, 1995. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audits in accordance with general 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
misstatements. 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of American Sports
History Incorporated and subsidiary (A Development Stage Company) as of December
31, 1994 and 1995, and the results of their operations, shareholders' equity
(deficiency) and cash flows for the years then ended and cumulative from May 1,
1995, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Notes 2 and 5 to the
financial statements, the Company's significant operating loss, significant
capital requirements and the uncertainty with respect to the outcome of legal
proceedings raise substantial doubt about the Company's ability to continue as
going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
Hollander, Gilbert & Co.
Los Angeles, California
May 30, 1996,
except for Note 5 on legal
proceedings, as to which the
date is August 2, 1996
28
<PAGE> 29
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1995
<TABLE>
<CAPTION>
1994 1995
---- ----
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ 6,600 $ 6,626
Advances to related party (Note 3) 434,671
Other assets 3,442 8,442
Net assets of discontinued operations (consisting
primarily of marketable securities) 709,830
----------- -----------
TOTAL CURRENT ASSETS 1,154,543 15,068
----------- -----------
$ 1,154,543 $ 15,068
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 115,000 $ 85,839
Liability from sales of common stock subsequently
rescinded (Note 6) 24,900
Net liabilities of discontinued operations 419,687
Income taxes payable from discontinued operations 72,000 32,000
----------- -----------
TOTAL CURRENT LIABILITIES 606,687 142,739
----------- -----------
SHAREHOLDERS' EQUITY (DEFICIENCY) (Note 6)
Common stock, $.001 par value; authorized - 25,000,000 shares;
issued and outstanding - 5,000,000 shares (pro forma) at
December 31, 1994 and 10,296,112 shares at December 31, 1995 5,000 10,297
Additional paid-in capital (4,000) 485,084
Retained earnings (accumulated deficit) (deficit of $538,655
accumulated since May 1, 1995) 546,856 (623,052)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY) 547,856 (127,671)
----------- -----------
$ 1,154,543 $ 15,068
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
29
<PAGE> 30
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994 AND 1995
AND CUMULATIVE FROM MAY 1, 1995
<TABLE>
<CAPTION>
Cumulative
from
May 1,
1994 1995 1995
----------- ----------- -----------
REVENUES
<S> <C> <C> <C>
Interest $ $ 262 $ 262
----------- ----------- -----------
EXPENSES
General and administrative 306,061 306,061
Consulting fees ( Note 3) 152,000 152,000
Write-off of advances to terminated acquisition (Note 3) 80,856 80,856
Write-off of advances to related party (Note 3) 431,751
----------- ----------- -----------
TOTAL EXPENSES 970,668 538,917
----------- ----------- -----------
LOSS FROM CONTINUING OPERATIONS (970,406) (538,655)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS,
NET OF INCOME TAXES 436,882 (199,502)
----------- ----------- -----------
NET INCOME (LOSS) $ 436,882 $(1,169,908) $ (538,655)
=========== =========== ===========
NET INCOME (LOSS) PER COMMON SHARE
Loss from continuing operations $ $ (.13)
Income (loss) from discontinued operations .07 (.03)
----------- -----------
Net income (loss) $ .07 $ (.16)
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 6,000,000 7,720,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
30
<PAGE> 31
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED DECEMBER 31, 1994 AND 1995
<TABLE>
<CAPTION>
Retained
Common Stock Earnings
-------------------------- Additional (Accumulated
Shares Amount Paid-in Capital Deficit) Total
---------- --------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1993 5,000,000 $ 5,000 $ (4,000) $ 109,974 $ 110,974
Net income 436,882 436,882
---------- --------- --------- ----------- -----------
BALANCE, December 31, 1994 5,000,000 5,000 (4,000) 546,856 547,856
Shares issued to pre-merger shareholders 1,000,000 1,000 4,000 5,000
Shares issued for services 3,632,500 3,633 219,292 222,925
Sale of common stock 663,612 664 265,792 266,456
Net loss (1,169,908) (1,169,908)
---------- --------- --------- ----------- -----------
BALANCE, December 31, 1995 10,296,112 $ 10,297 $ 485,084 $ (623,052) $ (127,671)
========== ========= ========= =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
31
<PAGE> 32
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994 AND 1995
AND CUMULATIVE FROM MAY 1, 1995
<TABLE>
<CAPTION>
Cumulative
from
May 1,
1994 1995 1995
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Loss from continuing operations $ $(970,406) $(538,655)
Adjustments to reconcile loss from continuing operations
to net cash provided by (used in) operating activities:
Write-off of advances to related party 431,751
Depreciation 4,779
Shares of common stock issued for services 222,925 222,925
Changes in operating assets and liabilities:
Other assets (5,000) (5,000)
Income taxes payable from discontinued operations 72,000 (40,000)
Accounts payable and accrued expenses 115,000 25,939 36,000
--------- --------- ---------
Net cash provided by (used in) continuing operations 191,779 (334,791) (284,730)
Net cash provided by discontinued operations 56,340 40,541
--------- --------- ---------
Net cash provided by (used in) operating activities 248,119 (294,250) (284,730)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in advances to related party, net (394,671) 2,920
Purchases of furniture and equipment (5,000)
--------- --------- ---------
Net cash provided by (used) in investing activities (399,671) 2,920
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes 150,000
Sale of common stock 266,456 266,456
Liability from sales of common stock subsequently rescinded 24,900 24,900
--------- --------- ---------
Net cash provided by financing activities 150,000 291,356 291,356
--------- --------- ---------
NET INCREASE IN CASH (1,552) 26 6,626
CASH, Beginning of period 8,152 6,600
--------- --------- ---------
CASH, End of period $ 6,600 $ 6,626 $ 6,626
========= ========= =========
</TABLE>
SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
During 1995, Infinet transferred marketable equity securities with a market
value of $105,000 and a carrying value of $234,375 to a creditor as repayment of
outstanding liabilities of $105,000.
On August 21, 1995, Infinet transferred its cash, investments and furniture and
equipment and its note payable and certain other liabilities to its sole
stockholder, thereby reducing outstanding liabilities due to the stockholder by
the same amount.
See accompanying notes to consolidated financial statements.
32
<PAGE> 33
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization -The Company was incorporated in the State of Nevada on
August 9, 1990 as National Logistics, Inc. National Logistics, Inc.
changed its name to Fans Holdings, Inc. on June 30, 1995, and
subsequently to American Sports History Incorporated ("ASH") on
September 20, 1995. On August 21, 1995, ASH acquired 100% of the
capital stock of Infinet, Inc. ("Infinet"). As used in this document,
the "Company" refers to ASH and its subsidiary, Infinet, unless the
context indicates otherwise.
Basis of Presentation - ASH entered into an Agreement dated August 21,
1995, pursuant to which it acquired from Infinet's sole shareholder,
Jeane Hays Nerlino 100% of the capital stock of Infinet, in exchange
for 5,000,000 shares of ASH's restricted common stock representing
approximately 83.3% of the issued and outstanding shares of ASH's
common stock. At the direction of Mrs. Nerlino, the 5,000,000 shares of
common stock were issued to her husband, Vincent M. Nerlino and, as a
result, Mr. Nerlino may thus be deemed to have acquired control of ASH
from David R. Yeaman and Krista Castleton, the previous officers and
directors of ASH, and from Capital General Corporation, both of whom
may be deemed to have been the Company's "parents" and "promoters"
pursuant to the rules and regulations promulgated under the Securities
Act of 1933. Mr. Yeaman and Ms. Castleton control and have beneficial
ownership of the shares of common stock owned directly and indirectly
by Capital General Corporation, and exercise shared voting power and
shared investment power with respect to such shares.
For accounting purposes, the acquisition of Infinet by ASH has been
treated as a recapitalization of Infinet, with Infinet as the acquiror
(reverse acquisition). ASH had no assets or operations prior to May
1995. The historical financial statements prior to August 21, 1995 are
those of Infinet. The business of Infinet has historically been
investing and consulting, but in conjunction with its acquisition by
ASH, the Company commenced the business of publishing a variety of
nostalgic sports magazines effective May 1, 1995. Accordingly, the
historical operations of Infinet have been classified as discontinued
operations. Although planned principal operations have commenced, since
the Company has not generated any revenues from operations, the Company
is still considered to be in the development stage.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
Income Taxes - The Company utilizes the asset and liability approach
for financial accounting and reporting for income taxes. If it is more
likely than not that some portion or all of a deferred tax asset will
not be realized, a valuation allowance is recognized.
Net Income (Loss) per Common Share - In August 1995, the Company issued
new shares of common stock in consideration for the acquisition of
Infinet, in a transaction which has been accounted for as a
33
<PAGE> 34
reverse acquisition. As a result, net income (loss) per common share is
presented on a pro forma basis, and has been calculated as if the
previously issued and the new common shares had been outstanding during
the years ended December 31, 1994 and 1995.
2. GOING CONCERN
Significant Operating Loss - The Company incurred a net loss of
$1,169,908 for the year ended December 31, 1995, resulting in an
accumulated deficit of $623,052 and a shareholders' deficiency of
$127,671.
Significant Capital Requirements - The Company will require a minimum
of $5,000,000 of operating capital through December 1997 to implement
its business plan of publishing a variety of nostalgic sports
magazines. The Company intends to attempt to raise this operating
capital through the sale of its equity securities. However, there can
be no assurances that the Company will be successful in raising
sufficient operating capital on a timely basis, at an acceptable cost,
and under acceptable terms and conditions in order to implement its
business plan. To the extent that the Company is unable to raise the
necessary operating capital, it will not be able to implement its
business plan, and it will have to curtail or cease operations. In
addition, even if the Company does raise sufficient operating capital
through the sale of its equity securities, there can be no assurances
that the net proceeds will be sufficient to enable the Company to
develop its new line of business to a level where it will generate
profits and cash flows from operations.
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. The
financial statements do not include any adjustments relating to the
recoverability of the recorded assets or the classification of the
liabilities that might be necessary should the Company be unable to
continue as a going concern.
3. TRANSACTIONS WITH RELATED PARTIES
In conjunction with the acquisition of Infinet, Infinet also
distributed its cash, investments and furniture and fixtures and its
note payable and certain other liabilities, the net carrying value of
which was approximately $119,000 as of July 31,1995, to its sole
shareholder, Jeane Hays Nerlino, thereby reducing outstanding accrued
liabilities due to the shareholder by the same amount.
ASH had previously entered into an Agreement dated May 24, 1995 to
acquire 100% of the outstanding capital stock of Fans Publishing, Inc.,
an Arizona corporation. ("Fans"), the publisher of "DIAMOND" magazine,
a nostalgic baseball magazine, of which Mr. Nerlino was a director and
21% shareholder and Ronald J. Bianchi was an officer, director and 10%
shareholder. Infinet had made non-interest bearing advances to Fans
to finance its operations totaling $431,751 ($434,671 at December 31,
1994). In addition, ASH made advances to Fans for operating expenses of
$80,856 during 1995. It was subsequently determined that the
acquisition was not feasible due to the deteriorating financial
condition of Fans. Accordingly, the advances to Fans by Infinet and ASH
were determined to be uncollectible and were charged to operations
during the year ended December 31,
34
<PAGE> 35
1995. This transaction was never consummated and no shares of ASH's
common stock were issued. However, in anticipation of the completion of
this transaction, the previous officers and directors of ASH resigned
effective May 31, 1995, and Mr. Nerlino was appointed as the sole
director and President of ASH.
The Company agreed to pay Capital General Corporation a fee of $150,000
and 200,000 shares of its common stock valued at $2,000 for services
rendered with respect to the Company's terminated acquisition of Fans
and the completed acquisition of Infinet.
4. INCOME TAXES
There were no provisions for income taxes for the years ended December
31, 1994 and 1995. The Company has federal tax net operating loss carry
forwards of approximately $620,000 which is available to offset future
taxable income, expiring through 2010. The utilization of such carry
forwards will be limited by the change in ownership. The Company has
not recorded any deferred tax asset as a result of the net operating
loss carry forwards as it has provided a 100% allowance against this
asset.
5. COMMITMENTS AND CONTINGENCIES
Employment Agreement - The Company entered into a five year employment
agreement with Vincent Nerlino beginning on January 1, 1996 and
terminating on December 31, 2000 pursuant to which Mr. Nerlino serves
as the Company's President and Chief Executive Officer. The employment
agreement provides for base annual compensation of $200,000 and an
annual bonus of 7.5% of pretax operating profits in excess of $200,000
in 1996, $1,000,000 in 1997, $1,500,000 in 1998, $2,000,000 in 1999 and
$2,500,000 in 2000. The Company shall provide Mr. Nerlino with an
automobile allowance of $1,000 per month. At the conclusion of the
employment agreement, Mr. Nerlino will receive a one-year consulting
contract at the most recent year's base annual compensation. As an
inducement for Mr. Nerlino to enter into the employment agreement, the
Company issued him 1,342,500 shares of its common stock valued at
$13,425, which was charged to operations at December 31, 1995.
Legal Proceedings - On June 30, 1996, a default judgment was entered
against Infinet, Inc. ("Infinet"), a wholly-owned subsidiary of the
Company, and against Vincent Nerlino, the Company's President/Director
and principal shareholder. Mr. Nerlino has filed a Motion to Set Aside
the Entry of Default (the "Motion") and Infinet filed a similar motion
on September 4, 1996. Mr. Nerlino has filed briefs on his motion and is
currently awaiting the setting of a date for a hearing on such motion.
The entry of the default judgment is the result of a Cross-Complaint
filed by William Brin, former President of Fans Publishing, Inc.
("Fans"), against Infinet, Jeane Hays Nerlino, the wife of Vincent
Nerlino and the former sole shareholder of Infinet, and Mr. Nerlino, a
former director and shareholder of Fans, in Superior Court of Arizona.
The Cross-Complaint seeks indemnification should any award be obtained
in the underlying suit (the "Complaint") together with punitive and
compensatory damages according to proof and attorneys' fees. The
Complaint was filed by Dr. Craig B. Pearson against Mr. Nerlino, Mrs.
Nerlino, Mr. Brin, Mr. Bianchi and others alleging, among other things,
a fraudulent sale of securities, breach of contract, fraud and breach
of fiduciary duties. Dr. Pearson is seeking, among other things, actual
damages of $600,000, punitive damages and attorneys' fees. The
35
<PAGE> 36
court proceeding is in an early stage and no discovery procedures have
begun. The Company, Infinet, Mr. Nerlino, Mrs. Nerlino and Mr. Bianchi
deny any wrongdoing and intend to vigorously defend their actions.
However, there is no assurance that they will be successful in their
respective defenses. The Company is in the development stage and has
minimal resources so that any substantial settlement or verdict against
the Company, Mr. Nerlino and/or Mr. Bianchi would have a material
adverse effect on the Company.
On August 2, 1996, attorneys for Robert Wheeler ("Wheeler") notified
the Company that a complaint would be filed against it, Mr. Nerlino and
Mrs. Nerlino, among others, in the Superior Court of the State of
Arizona in and for the County of Maricopa, unless Wheeler's $200,000
equity investment in the Company, plus interest and costs, was
immediately returned. Wheeler is demanding rescission of his investment
based upon an allegation that the Company failed to timely register
Wheeler's securities with the Securities and Exchange Commission.
Settlement negotiations are currently being held between the Company
and Wheeler. However, there is no assurance that this matter will be
satisfactorily resolved without a lawsuit being filed. Although the
Company denies any wrongdoing and, if a lawsuit is filed, it will
vigorously defend against it, there is no assurance that the Company
will be successful in its defense. A verdict against the Company, if a
lawsuit is filed, would have a material adverse effect on the Company.
6. SHAREHOLDERS' EQUITY (DEFICIENCY)
The authorized capital stock of the Company consists of 25,000,000
shares of common stock with $.001 par value.
Private Placements - During 1995, the Company raised, net of rescission
described below, $266,456 from the sale of 663,612 shares of its common
stock in private placements. The shares sold included warrants to
purchase a total of 663,612 shares of common stock at an exercise price
of $.75 per share which are exercisable during a one year period
commencing October 6, 1995. The warrants are callable at the Company's
option on 30 day prior written notice.
As a result of the determination that the acquisition of Fans was not
feasible, the Company made a rescission offer to certain purchasers of
its common stock. Purchasers who had paid $24,900 for 49,800 shares
elected to accept the such rescission offer. The obligation resulting
from the rescission of the sale of these shares has been recorded as a
liability at December 31, 1995.
Shares Issued for Services - During the year ended December 31, 1995,
the Company issued an aggregate of 3,632,500 shares of common stock
valued at $222,925 for various employment, legal and consulting
services rendered to the Company. Included in those shares were
1,342,500 shares issued to Mr. Nerlino (see Note 5), 250,000 shares
issued to Jeane Hays Nerlino for creating and designing logos for the
Company, 200,000 shares issued to Capital General Corporation (see Note
3), 1,000,000 shares issued to Ronald Bianchi, the Company's Vice
President and editor-in-chief, 100,000 shares issued to Ronald Cooper,
the Company's Vice President of Publishing and 600,000 shares issued to
International Investment Associates for services consisting of
planning, preparing and negotiating certain contracts and seeking other
strategic relations for the Company.
36
<PAGE> 37
7. SUBSEQUENT EVENTS
On January 12, 1996, the Company entered into a licensing agreement
with National Football League Alumni, Inc. ("NFLA") relating to the
Company's use of certain trademarks owned or beneficially owned by
NFLA. The license agreement is for the period beginning January 1, 1996
and ending on December 31, 2001. The Company will pay NFLA an amount
equal to eight percent (8%) of all "Net Sales" of licensed products
sold during the term of the license agreement ("Royalty") with a
minimum Royalty of $1,500,000. The Company issued 300,000 shares of its
common stock and agreed to issue additional shares, not to exceed
300,000 shares, to cover future Royalty payments to NFLA. The Company
is obligated to file a registration statement covering such shares with
the Securities and Exchange Commission, which has not yet been done.
On May 28, 1996, the Company entered into a licensing agreement with
Gage Marketing Group, LLC ("Gage"), an exclusive agent for the NFLA.
The Company paid $100,000 for the right to be the presenting sponsor of
the January 1996 Alumni Player of the Year Awards Dinner. Gage granted
the Company rights to the video footage of that dinner. Gage also
granted the Company the rights to sponsor future dinners and market the
video footage of those dinners. The initial term is for the period
beginning May 15, 1996 and ending on May 14, 2001. The Company will pay
Gage an amount equal to eight percent (8%) of all "Net Sales" of
licensed products ("Royalty") with a minimum Royalty of $1,250,000. The
Company issued 250,000 shares of its common stock to cover future
Royalty payments to Gage and agreed to pay $600,000 in cash for the
rights to be the presenting sponsorship of the dinners, payable
$100,000 by September 15, 1996, $100,000 by November 15, 1996 and
$100,000 on each of September 1, 1997, 1998, 1999 and 2000. Upon
request by Gage, the Company is obligated to file a registration
statement covering such shares with the Securities and Exchange
Commission.
On January 30, 1996, the Company acquired a film library consisting of
16 hours of sports footage film and license rights to use 36 hours of
footage from the Historic Footage film library (not related to sports)
in exchange for 120,000 shares of the Company's common stock. The
Company also agreed to issue up to an additional 120,000 shares of
common stock in the event that the initial 120,000 shares are not
sufficient to generate $600,000 proceeds to the seller.
37
<PAGE> 1
EXHIBIT 2
AGREEMENT
THIS AGREEMENT, made and entered into in Las Vegas, Nevada sets forth the plan
of reorganization as of the 21st day of August 1995, by and between NATIONAL
LOGISTICS, INC., a Nevada corporation, herein called "NLI", and INFINET, Inc.,
a Delaware corporation, hereinafter called "SELLER".
PLAN OF REORGANIZATION
This plan of reorganization shall be a reorganization within the meaning of
IRC(1987), Section 368(a)(l)(B) as amended. NLI shall acquire 100% of all
right, title and interest in the common stock of SELLER in exchange solely for
a part of NLI's voting common stock. It is understood and agreed by the parties
that the transaction contemplated herein is termed a "shell transaction" or
reverse merger/acquisition, the purpose of which is to provide a public trading
market for The shares of NLI/SELLER once the acquisition transaction is
completed.
AGREEMENT
In order to consummate the foregoing plan of reorganization and in
consideration of the mutual benefits to be derived therefrom and the mutual
agreements hereinafter contained, NLI and Seller approve and adopt this
agreement and plan of reorganization and mutually covenant and agree with each
other as follows:
SHARES TO BE TRANSFERRED AND SHARES TO BE ISSUED
On the closing date, set herein to be August 21, 1995, NLI shall issue
5,000,000 shares of NLI's common stock bearing a restricted legend. As of the
date hereof there are issued and outstanding one million (1,000,000) shares of
common stock. It is understood by SELLER that NLI is presently authorized to
issue 25,000,000 shares of common stock.
In exchange for the NLI's stock being issued to SELLER as above described,
SELLER shall on the closing date and contemporaneously with such issuance of
NLI's common stock deliver to NLI 100% of all right, title and interest in
SELLER.
All negotiations relative to this agreement and transactions contemplated
hereby have been conducted with the assistance of CAPITAL GENERAL CORPORATION,
who is acting as broker, finder and consultant on behalf of both NLI and
SELLER. Both NLI and SELLER agree to hold harmless and indemnify CAPITAL
GENERAL CORPORATION, from any and all claim, demand, cause of action or suit
raised or filed in connection with the operation or promotion of NLI and/or
SELLER and the trading of NLI/SELLER's shares. NLI and SELLER jointly agrees
to pay CAPITAL GENERAL CORPORATION $75,000.00 payable on closing date, and
$75,000.00 payable on or before 30 days after closing, for a total of $150,000.
REPRESENTATIONS AND WARRANTIES OF SELLER
No representation or warranty by NLI in this agreement, nor any statement,
certificate, schedule or exhibit hereto furnished or to be
<PAGE> 2
furnished by or on behalf of SELLER to this agreement nor any document or
certificate delivered to NLI pursuant to this agreement or in connection with
actions contemplated hereby, contains or shall contain any untrue statement of
material fact or omits or shall omit a material fact necessary to make the
statement contained therein not misleading.
SELLER understands and agrees that NLI is without substantial assets or
liabilities and with its public shareholders is thus defined herein as a public
"shell" corporation. SELLER understands and agrees that NLI is a "shell"
corporation and makes no claim on any assets owned by NLI previous to the
closing contemplated herein.
There are no legal, administrative or other proceedings, or other claims,
judgements, Injunctions or restrictions, either threatened, pending or
outstanding against or involving NLI or SELLER which are known, or which they
have reasonable grounds to know, of any basis for such proceedings, or other
claims, judgments, injunctions or restrictions, except as made a part of this
Agreement or otherwise disclosed herein. However, SELLER acknowledges and
represents that he is aware of the risks of being a public company and
understands and agrees that regulatory efforts regarding public shell
transactions similar to the transaction contemplated Herein has been and is
currently being exerted by some states, the U.S. Securities and Exchange
Commission and the National Association of Securities Dealers, Inc. NASD). NLI
agrees to provide any supplemental information which may be requested by Seller
relating to any matter discussed herein.
NLI/SELLER understands and agrees that once this transaction is
completed, it will be a public company subject to the extensive, complex state,
federal and NASD securities regulations incumbent on public companies. In
particular, the parties understand and agree that a Form 8- K must be filed
with the United States Securities and Exchange Commission within fifteen days
after closing which filing requires that audited financial statements be filed
within sixty days after the filing of the g-K and that such responsibility
shall not be the responsibility of CAPITAL GENERAL CORPORATION, its officers,
directors or employees nor the existing officers of NLI, but the sole
responsibility of the new officers and directors of NLI.
SELLER acknowledges that they have carefully evaluated their financial
resources and investment position and the risks associated with this
transaction and acknowledges that they are able to bear the economic risks of
this transaction. SELLER further acknowledges that their knowledge and
expertise in financial business matters in general, and investments in
particular, qualifies them as sophisticated investors, and therefore capable of
evaluating the merits and risks of this transaction.
SELLER acknowledges receipt of sufficient information, setting forth the
relevant terms, conditions and disclosures of NLI, as well as such other
information as SELLER deems necessary or appropriate as a prudent sophisticated
and knowledgeable investor in evaluating the acquisition of NLI's shares and
making this Agreement. SELLER acknowledges that NLI has made available the
opportunity to obtain additional information to verify the accuracy of the
information contained herein and to evaluate the
<PAGE> 3
merits and risks of this transaction. SELLER acknowledges that they have had
the opportunity to ask questions of NLI and CAPITAL GENERAL and have received
satisfactory answers from NLl, CAPITAL GENERAL, or its affiliates, associates
or employees concerning the terms and conditions of this transaction.
SELLER covenants and warrants that the shares of common stock of NLI to be
received by them pursuant to this agreement are being acquired for their own
account and for investment and not with the present view toward the sale or
distribution thereof and will not be disposed of except (i) pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
or (ii) another transaction, which, in the opinion of counsel acceptable to
NLI, is exempt from registration under the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
thereunder. In order to effectuate the covenants of this paragraph, an
appropriate endorsement will be placed on the certificates for shares of common
stock of NLI delivered to SELLER pursuant to this Agreement and stop transfer
instructions shall be placed with the transfer agent for the securities.
SELLER is aware that the shares distributed to him will not have been
registered pursuant to the Securities Act of 1933, as amended; and, therefore,
under current interpretations and applicable rules, particularly Rule 144, he
will probably have to retain such shares for a period of at least two (2) years
and at the expiration of such two-year period his sale may be confined to
brokerage transactions of limited amounts requiring a notification filing on
Form 144 with the Securities and Exchange Commission and such disposition may
be available only if NLI is current in its filings with the Securities and
Exchange Commission and SELLER is aware of Rule 144 issued by the Securities
and Exchange Commission under the Securities Act of 1933, as amended, and the
other limitations imposed thereby on their disposition of NLI's shares.
SELLER is aware that there can be no assurance regarding the individual tax
consequences of this transaction, nor can there be any assurance that the
Internal Revenue Code or the regulation promulgated thereunder will not be
amended in such manner as to deprive SELLER of any tax benefit that might
otherwise be received. SELLER is relying upon the advise of their personal tax
advisor with respect to the tax aspects of this transaction.
SELLER acknowledges that it is his responsibility to comply with the
appropriate state and federal securities laws, as well as NASD rules and
regulations, particularly secondary trading requirements. SELLER agrees to list
NLI in either Moody's Investor Services or Standard and Poor's, exempting
secondary trading of NLI's stock in those states providing for such secondary
trading exemption.
REPRESENTATIONS AND WARRANT[ES OF NLI
To the knowledge of the officers of NLI, NLI is not a party to nor bound by any
agreement, deed, lease, power of attorney or other instrument other than which
is herein disclosed.
<PAGE> 4
NLI represents and warrants that it is a corporation duly organized, validly
existing and in good standing under the laws of the state of Colorado and that
the execution and performance of this agreement and the issuance of stock
contemplated hereby have been authorized by the board of directors of NLI. The
shares of NLI's common stock to be delivered pursuant to this agreement, when
so delivered, will have been duly and validly authorized and issued by NLI and
will be fully-paid and nonassessable.
SELLER hereby further acknowledges and agrees that no representations or
warranties have been made by NLI or CAPITAL GENERAL CORPORATION as to the
benefits to be derived by SELLER in completing this transaction. It is
expressly understood and agreed that neither CAPITAL GENERAL CORPORATION nor
NLI or its officers or agents have made any warranty or agreement, expressed or
implied, as to the tax or securities consequences of the transactions
contemplated by this agreement or the tax or securities consequences of any
action pursuant to or growing out of this agreement.
ACTIONS PRIOR TO CLOSING
SELLER shall duly comply with all applicable laws as may be required for the
valid and effective transfer of property, assets and business contemplated by
this agreement.
The representations and warranties made by NLI in this agreement or given on
its behalf hereunder shall be substantially accurate in all material respects
on and as of the closing date with the same effect as though such
representations and warranties had been made or given on and as of the closing
date.
SELLER shall perform and comply with all its obligations under this agreement
which are to be performed and complied with by it prior to or on the closing
date including the delivery of its documents specified herein.
This Agreement shall have been approved by the boards of directors of both NLI
and SELLER.
LAW GOVERNING
This Agreement may not be modified or terminated orally, and shall be construed
and interpreted according to the laws of the State of Nevada and enforced in
its courts.
Any and all disputes and controversies of every kind and nature between the
parties hereto arising out of or relating to this Agreement relating the
existence, construction, validity, interpretation or meaning, performance,
non-performance, enforcement, operation, breach, continuance or termination
thereof shall be subject to an arbitration mutually agreeable to the parties
or, in the absence of such mutual agreement, then subject to arbitration in
accordance with the rules of the American Arbitration Association. It is the
intent of the parties hereto and the purpose of this provision to make the
submission to arbitration of any
<PAGE> 5
dispute or controversy arising hereunder an express condition precedent to any
legal or equitable action or proceeding of any nature whatsoever.
ASSIGNMENT. AMENDMENT AND MODIFICATION
This agreement shall not be assigned by any party without the written consent
of the other. NLI and SELLER may amend, modify and supplement this agreement in
such manner as may be agreed upon by them in writing.
TERMINATION AND ABANDONMENT
This agreement may be terminated and the transactions provided for by the
agreement may be abandoned without liability on the part of any party to any
other, at any time before the closing date by mutual consent of NLI and SELLER.
In the event of termination and abandonment by any party as herein provided,
written notice shall forthwith be given to the other party, and each party
shall pay its own expenses incident to preparation for the consummation of this
agreement and the transaction contemplated hereunder. In the event that this
Agreement has not been completed by the closing date or within thirty days
thereafter, this Agreement and the transactions contemplated hereby shall be
deemed to have been abandoned and neither party shall be under any further
obligation to the other. In the event of such termination or abandonment,
SELLER shall forfeit any deposits, payments or other consideration tendered in
connection with the execution of this Agreement, unless otherwise expressly
provided herein.
NOTICES
All notices, requests, demands and other communications hereunder shall be
deemed to have been duly given, if delivered by hand or mailed, certified or
registered mail with postage prepaid:
(a) If to NLI:
1800 E. Sahara, Suite 107
Las Vegas, Nevada 89104
(1) If to SELLER:
18-I Heritage Drive
Chatham, NJ 07928
ENTIRE AGREEMENT
This instrument embodies the entire agreement between the parties hereto with
respect to the transactions contemplated herein, and there have been and are no
agreements, representation or warranties between the parties other than those
set forth or provided for herein. Any announcements, amendments or
modifications shall be set forth in writing and approved by the parties hereto.
This agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
FURTHER DOCUMENTS
<PAGE> 6
NLI and SELLER agree to execute any and all other documents and to take such
other action or corporate proceedings as may be necessary or desirable to carry
out the terms hereof.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be duly
executed all as of the day and year first above written.
NATIONAL LOGISTICS, INC. ("NLI")
Attest: ___________________ By: /s/ Vincent Nerlino
------------------------
INFINET, INC. ("SELLER")
By: /s/ Vincent Nerlino
------------------------
Authorized Signer
<PAGE> 1
EXHIBIT 3.1
FILED IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF NEVADA
AUG 09 1990
ARTICLES OF INCORPORATION OF NATIONAL LOGISTICS, INC.
I THE UNDERSIGNED natural person of the age of 21 years or more, acting as
incorporator of a corporation under the Private Corporations provisions of 78-
010, et seq., NEVADA REVISED STATUTES, (hereinafter referred to as the
"N.R.S."), adopt the following Articles of Incorporation for such Corporation:
ARTICLE I: NAME
The name of the Corporation is NATIONAL LOGISTICS, INC.
ARTICLE II: PRINCIPAL OFFICE
The initial principal office of the Corporation shall be located at 216 South
Fourth Street, Las Vegas, Nevada, 89106, and/or such other place as the
directors shall designate.
ARTICLE III: DURATION
The period of duration of the Corporation is perpetual.
ARTICLE IV: PURPOSES AND POWERS
The purposes for which the corporation. is organized are to engage in any
activity or business not in conflict with the laws of the State of Nevada or of
the United. States of America, and without limiting the generality of the
foregoing, specifically, to have and to exercise all the powers now or
hereafter conferred by the laws of the State of Nevada upon corporations
organized and any and all acts amendatory thereof and supplemental thereto.
ARTICLE V: AUTHORIZED SHARES
The aggregate number of shares which the Corporation shall have authority to
issue is 25,000,000 shares, having a par value of $0.00l (1 mill) per share.
The stock shall be designated as Class "A" voting common stock and shall have
the same rights and preferences. The common stock shall not be divided into
classes and may not be issued in series. Fully paid stock of this Corporation
shall not be liable for any further call or assessment. The total
capitalization of the Corporation shall be $25,000
ARTICLE VI: PRE-EMPTIVE RIGHTS
No stockholder of the Corporation shall, because of his ownership of stock,
have a pre-emptive or other right to purchase, subscribe for or take part of
any of the notes, debentures, bonds or other securities convertible into or
carrying options for warrants to purchase stock of the Corporation issued,
optioned or sold by it after its incorporation, except as may be otherwise
stated in these Article of Incorporation or by an amended certificate of said
Articles duly filed, may at any time be issued, optioned for sale and sold or
disposed of by the Corporation pursuant to the resolution of its Board of
<PAGE> 2
Directors to such person, persons or organizations and upon such terms as may
to such Board of Directors seem proper, without first offering such stock or
securities or any part thereof to existing stockholders, except as required in
Article V of these Articles of Incorporation.
ARTICLE VII: VOTING OF SHARES
Each outstanding share of the class "A" common stock of the Corporation shall
be entitled to one vote on each matter submitted to a vote at a meeting of the
stockholders. Each shareholder shall be entitled to vote his or its shares in
person or by proxy, executed in writing by such shareholder or by its duly
authorized attorney in fact. At each election for directors, every shareholder
entitled to vote at such election shall have the right to vote in person or by
proxy, the number of shares owned by him or it for as many persons as there are
directors to be elected and for whose election he or it has the right to vote,
but the shareholder shall have no right, whatsoever, to accumulate his or its
votes with regard to such election.
ARTICLE VIII: DIRECTORS
The governing board of this Corporation shall be called directors, and the
number of directors may from time to time be specified by the By-laws of the
Corporation at not less than one, nor more than fifteen. When the By-laws do
not specify the number of directors, the number of directors shall be three
(3), or equal to the number of shareholders should there be less than three
initial shareholders. The name of the initial director, being also the
incorporator and sole shareholder, is:
NAME ADDRESS
LESLIE H. SHAW 3760 So. Highland Dr. #300, Salt Lake City, UT 84106
which director shall hold office until the first Meeting of the
shareholders of the Corporation and until his or her successors have been duly
elected and qualified. Directors need not be residents of the State of Nevada
or shareholders of the Corporation.
ARTICLE IX: INCORPORATOR
The name and address of the sole incorporator and sole initial shareholder of
this Corporation is.'
NAME ADDRESS
LESLIE H. SHAW 3760 So. Highland Dr. #300, Salt Lake City, UT 84106
Dated this 8th day of February 1990
/s/ Leslie H. Shaw
--------------------------
Incorporator
<PAGE> 3
State of Utah )
) ss
County of Salt Lake)
Personally appeared before me this 8th day of February 1990, Leslie H. Shaw,
signer of the foregoing instrument who being by me first duly sworn declared
that she is the person who signed the foregoing as incorporator' and that the
statements contained therein are true.
/s/ Krista Castleton
--------------------------
Notary Public
Residing in: Salt Lake
<PAGE> 1
EXHIBIT 3.2
FILED IN THE OFFICE OF THE SECRETARY OF STATE OF THE
STATE OF NEVADA
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After issuance of Stock)
NATIONAL LOGISTICS INC.
Name of Corporation
We the undersigned, Vincent M. Nerlino, President and Vincent M. Nerlino,
Secretary of National Logistics, Inc. Corporation do hereby certify: That the
Board of Directors o said corporation of a meeting duly convened held May 18,
1995 adopted a resolution to amend the original Articles of Incorporation.
ARTICLE I
The name of the corporation is Fans Holdings, Inc.
The number of shares outstanding and entitled to vote on an amendment of the
Articles of Incorporation is 100 That the said change(s) and amendment have
been consented to and approved by a majority of stockholders holding at least a
majority of such class of outstanding and entitled to vote thereon.
/s/ Vincent M. Nerlino
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Vincent M. Nerlino, 6/29/95
President
/s/ Vincent M. Nerlino
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Vincent M. Nerlino, 6/29/95
SAC CEO Chairman
ACKNOWLEDGEMENT:
STATE OF NEW JERSEY
COUNTY OF MORRIS
On June 29, 1995, personally appeared before me, a Notary Public, Kathleen M.
Rex, acknowledged he Vincent M. Nerlino, executed the above instrument on
behalf of said Corporation.
/s/ Kathleen M. Rex
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Kathleen M. Rex
Notary Public
Kathleen M. Rex
Notary Public of New Jersey
My Commission Expires May 6, 1997
<PAGE> 1
EXHIBIT 3.3
FILED IN THE OFFICE OF THE SECRETARY OF STATE OF NEVADA
SEPT 20 1995
AMENDMENT TO THE
ARTICLES OF INCORPORATION
OF
FANS HOLDINGS, INC.
WHEREAS, there was issued by the Secretary of State a Charter as of August 9,
1990, consituting and creating FANS HOLDINGS, INC. (formerly NATIONAL
LOGISTICS, INC.), a corporation now organized under the laws of the State of
Nevada1 with its principal place of business in Scottsdale, Arizona, and a
capital stock of Twenty-Five Thousand Dollars ($25,000.00), divided in
Twenty-Five Million (25,000,000) shares of a par value of one mill (1/10 cent)
each, empowering it to engage in the business of venture capital and investing
in high risk enterprises,
THEREFORE, the undersigned, being the President and also the Secretary of FANS
HOLDINGS, INC., hereby certifies that, by resolutions duly adopted by the
Board of Directors and by written action of a majority of the Shareholders of
the Company, effective as of August 25, 1995, the Company adopted the following
amendment to its Articles of Incorporation:
That Article I be amended and changed to read as follows:
Name: The name of the Corporation is AMERICAN SPORTS HISTORY INCORPORATED.
WHEREFORE, they pray that the Articles of Incorporation of FANS HOLDINGS, INC.
be so amended.
DATED this 5th day of September, 1995.
/s/ Vincent Nerlino
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Vincent Nerlino
President and Secretary
<PAGE> 2
STATE OF NEW JERSEY)
) :ss
County of Morris )
On this 5th day of September, 1995, before me, a notary public, personally
appeared Vincent Nerlino, known to me to be the person whose name is subscribed
to the within document, and acknowledge that he executed the sale.
/s/ Kathleen M. Rex
- ---------------------------
Notary Public
KATHLEEN M. REX
Notary Public of New Jersey My Commission Expires May 6, 1997
<PAGE> 1
EXHIBIT 3.4
BYLAWS
OF
NATIONAL LOGISTICS, INC.
ARTICLE I
OFFICE
The Board of Directors shall designate and the Corporation shall maintain a
principal office. The location of the principal office may be changed by the
Board of Directors. The Corporation may also have offices in such other places
as the Board may from time to time designate.
The location of the principal office of the Corporation shall be:
216 South Fourth Street, Las Vegas, Nevada, 89101.
ARTICLE II
SHAREHOLDERS MEETING
Section 1. Annual Meetings. The annual meeting of the shareholders of the
Corporation shall be held at such place within or without the State of Nevada
as shall be set forth in compliance with these Bylaws. The meeting shall be
held on the 19th day of July of each year beginning at 10:00. If such day is a
legal holiday, the meeting shall be on the next business day. This meeting
shall be for the election of Directors and for the transaction of such other
business as may properly come before it.
Section 2. Special Meetings. Special meetings of shareholders, other than
those regulated by statute, may be called at any time by the President, or a
majority of the Directors, and must be called by the President upon written
request of the holders of 50% of the outstanding shares entitled to vote at
such special meeting. Written notice of such meeting stating the place, the
date and hour of the meeting, the purpose or purposes for which it is called,
and the name of the person by whom or at whose direction the meeting is called
shall be given. The notice shall be given to each shareholder of record in
the same manner as notice of the annual meeting. No business other than that
specified in the notice of the meeting shall be transacted at any such special
meeting.
Section 3. Notice of Shareholder Meetings. The Secretary shall give 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, which
shall be delivered not less than ten nor more than fifty days before the date
of the meeting, either personally or by mail 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 books of the Corporation, with
postage thereon prepaid.
Section 4. Place of Meeting. The Board of Directors may designate any place,
either within or without the State of Nevada, as the place of meeting for any
annual meeting or for any special meeting called by the Board of Directors. A
waiver of notice signed by all shareholders entitled to vote at a meeting may
<PAGE> 2
designate any place, either within or without the State of Nevada, as the place
for the holding of such meeting. If no designation is made, or if a special
meeting be otherwise called, the place of meeting shall be the principal office
of the Corporation.
Section 5. Record Date. The Board of Directors may fix a date not less than
ten nor more than fifty days prior to any meeting as the record date for the
purpose of determining shareholders entitled to notice of and to vote at such
meetings of the shareholders. The transfer books may be closed by the Board of
Directors for a stated period not to exceed fifty days for the purpose of
determining shareholders entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other purpose.
Section 6. Quorum. A majority of the outstanding shares of the Corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding
shares are represented at a meeting, a majority of the shares so represented
may adjourn the meeting from time to time without further notice. At a meeting
resumed after any such adjournment at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. The shareholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of shareholders in such number that less than a
quorum remain.
Section 7. Voting A holder of an outstanding share, entitled to vote at a
meeting, may vote at such meeting in person or by proxy. Except as may
otherwise be provided in the Articles of Incorporation, every shareholder shall
be entitled to one vote for each share standing in his name on the record of
shareholders. Except as herein or in the Articles of Incorporation otherwise
provided, all corporate action shall be determined by 50% of the votes cast at
a meeting of shareholders by the holders of share entitled to vote thereon.
Section 8. Proxies. At all meetings of shareholders, a shareholder may vote in
person or by proxy executed in writing by the shareholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the I Secretary of
the Corporation before or at the time of the meeting. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise provided
in the proxy.
Section 9. Informal Action by Shareholders. Any action required to be taken
at a meeting of the shareholders, or any action which may be taken at a meeting
of the shareholders, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors. The Board of Directors may adopt
such rules and regulations for the conduct of their meetings and the management
of the Corporation as they deem proper.
Section 2. Number, Tenure and Qualifications. The number of Directors of
the
<PAGE> 3
Corporation shall be three. Each Director shall hold office until the next
annual meeting of shareholders and until his successor shall have been elected
and qualified. Directors need not be residents of the State of Nevada or
shareholders of the Corporation.
Section 3. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than by this Bylaw, immediately following
after and at the same place as the annual meeting of shareholders. The Board of
Directors may provide, by resolution, the time and place for the holding of
additional regular meetings without other notice than this resolution.
Section 4. Special Meetings. Special meetings of the Board of Directors may
be called by order of the Chairman of the Board, the President, or by one-third
of the Directors. The Secretary shall give notice of the time, place and
purpose or purposes of each special meeting by mailing the same at least two
days before the meeting or by telephoning or telegraphing the same at least one
day before the meeting to each Director.
Section 5. Quorum. A majority of the members of the Board of Directors shall
constitute a quorum for the transaction of business, but less than a quorum may
adjourn any meeting from time to time until a quorum shall be present,
whereupon the meeting may be held, as adjourned, without further notice. At
any meeting at which every Director shall be present, even though without any
notice, any business may be transacted.
Section 6. Manner of Acting. At all meetings of the Board of Directors, each
Director shall have one vote. The act of a majority present at a meeting shall
be the act of the Board of Directors, provided a quorum is present.
Section 7. Vacancies. A vacancy in the Board of Directors shall be deemed to
exist in case of death, resignation, or removal of any Director, or if the
authorized number of Directors be increased, or if the shareholders fail at any
meeting of shareholders at which any Director is to be elected, to elect the
full authorized number to be elected at that meeting.
Section 8. Removals. Directors may be removed at any time by a vote of the
shareholders holding 50% of the shares outstanding and entitled to vote. Such
vacancy shall be filled by the Directors then in office, though less than a
quorum, to hold office until the next annual meeting or until his successor is
duly elected and qualified, except that any directorship to be filled by reason
of removal by the shareholders may be filled by election by the shareholders at
the meeting at which the Director is removed. No reduction of the authorized
number of Directors shall have the effect of removing any Director prior to the
expiration of his term of office.
Section 9. Resignation. A Director may resign at any time by delivering
written notification thereof to the President or Secretary of the Corporation.
Resignation shall become effective upon its acceptance by the Board of
Directors; provided, however, that if the Board of Directors has not acted
thereon within ten days from the date of its delivery, the resignation shall
upon the tenth day be deemed accepted.
Section 10. Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
<PAGE> 4
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a Director
who voted in favor of such action.
Section 11. Compensation. By resolution of the Board 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 therefore.
Section 12. Emergency Power. When, due to a national disaster or death, a
majority of the Directors are incapacitated or otherwise unable to attend the
meetings and function as Directors, the remaining members of the Board of
Directors shall have all the powers necessary to function as a complete Board,
and for the purpose of doing business and filling vacancies shall constitute a
quorum, until such time. as all Directors can attend or vacancies can be filled
pursuant to these Bylaws.
Section 13. Chairman. The Board of Directors may elect from its own number a
Chairman of the Board, who shall preside at all meetings of the Board of
Directors, and shall perform such other duties as may be prescribed from time
to time by the Board of Directors.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be a President, one
or more Vice-Presidents, a Secretary, a Treasurer, a General Manager, and a
General Counsel, each of whom shall be elected by a majority of the Board of
Directors. Such other officers and assistant officers as may be deemed
necessary may be elected or appointed by the Board of Directors. In its
discretion, the Board of Directors may leave unfilled for any such period as it
may determine any office except those of President and Secretary. Any two or
more offices may be held by the same person, except the offices of President
and Secretary. Officers may or may not be directors or shareholders of the
Corporation.
Section 2. Election and Term of Office. The officers of the Corporation to
be elected by the Board of Directors shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of the shareholders. If the election of officers shall not be held as
soon thereafter as convenient. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided.
Section 3. Resignation. Any officer may resign at any time by delivering a
written resignation either to the President or to the Secretary Unless
otherwise specified therein, such resignation shall take effect upon delivery.
<PAGE> 5
Section 4. Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the Corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an
officer or agent shall require 50% vote of the Board of Directors, exclusive of
the officer in question if he is also a Director.
Section 5. Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, or if a new office shall be created,
such vacancy may be filled by the Board of Directors far the unexpired portion
of the term.
Section 6. President. The President shall be the chief executive and
administrative officer of the company. He shall preside at all meetings of the
stockholders and, in the absence of the Chairman of the Board, at meetings of
the Board of Directors. He shall exercise such duties as customarily pertain
to the office of President and shall have general and active supervision over
the property, business, and affairs of the company and over its several
officers. He may appoint officers, agents, or employees other than those
appointed by the Board of Directors. He may sign, execute and deliver in the
name of the company powers of attorney, contracts, bonds and other obligations,
and shall perform such other duties as may be prescribed from time to time by
the Board of Directors or by the Bylaws.
Section 7. Vice-President. The Vice-President shall have such powers and
perform such duties as may be assigned to him by the Board of Directors or the
President. In the absence or disability of the President, the Vice-President
designated by the Board or the President shall perform the duties and exercise
the powers of the President. A Vice-President may sign and execute contracts
and other obligations pertaining to the regular course of his duties.
Section 8. Secretary. The Secretary shall, subject to the direction of a
designated Vice-President, keep the minutes of all meetings of the stockholders
and of the Board of Directors and, to the extent ordered by the Board of
Directors or the President, the minutes of meetings of all committees. He
shall cause notice to be given of meetings of stockholders, of the Board of
Directors, and of any committee appointed by the Board. He shall have custody
of the corporate seal and general charge of the records, documents and papers
of the company not pertaining to the performance of the duties vested in other
officers, which shall at all reasonable times be open to the examination of any
Director. He may sign or execute contracts with the President or Vice-President
thereunto authorized in the name of the company and affix the seal of the
company thereto. He shall perform such other duties as may be prescribed from
time to time by the Board of Directors or by the Bylaws. He shall be sworn to
the faithful discharge of his duties. Assistant Secretaries shall assist the
Secretary and shall keep and record such minutes of meetings as shall be
directed by the Board of Directors.
Section 9. Treasurer. The Treasurer shall, subject to the direction of a
designated Vice-President, have general custody of the collection and
disbursement of funds of the company. He shall endorse on behalf of the
company for collection checks, notes and other obligations, and shall deposit
the same to the credit of the company in such bank or banks or depositories as
the Board
<PAGE> 6
of Directors may designate. He may sign, with the President or such other
persons as may be designated for the purpose by the Board of Directors, all
bills of exchange or promissory notes of the company. He shall enter or cause
to be entered regularly in the books of the company full and accurate account
of all monies received and paid by him on account of the company; shall at all
reasonable times exhibit his books and accounts to any Director of the company
upon application at the office of the company during business hours; and,
whenever required by the Board of Directors or the President, shall render a
statement of his accounts. He shall perform such other duties as may be
prescribed from time to time by the Board of Directors or by the Bylaws. He
shall give bond for the faithful performance of his duties in such sum and with
or without such surety as shall be approved by the Board of Directors.
Section 10. General Counsel. The General Counsel shall advise and represent
the company generally in all legal matters and proceedings, and shall act as
counsel to the Board of Directors and the Executive Committee. The General
Counsel may sign and execute pleadings, powers of attorney pertaining to legal
matters, and any other contracts and documents in the regular course of his
duties.
Section 11. General Manager. The Board of Directors may employ and appoint a
General Manager who may, or may not, be one of the officers or Directors of the
corporation. He shall be the chief operating officer of the corporation and,
subject to the directions of the Board of Directors, shall have general charge
of the business operations of the corporation and general supervision over its
employees and agents. He shall have the exclusive management of the business
of the corporation and of all of its dealings, but at all times subject to the
control of the Board of Directors. Subject to the approval of the Board of
Directors or the Executive Committee, he shall employ all employees of the
corporation, or delegate such employment to subordinate officers, or such
division chiefs, and shall have authority to discharge any person so employed.
He shall make a report to the President and Directors quarterly, or more often
if required to do so, setting forth the result of the operations under his
charge, together with suggestions looking to the improvement and betterment of
the condition of the corporation, and to perform such other duties as the Board
of Directors shall require.
Section 12. Other Officers. Other officers shall perform such duties and have
such powers as may be assigned to them by the Board of Directors.
Section 13. Salaries. The salaries or other compensation of the officers of
the corporation shall be fixed from time to time by the Board-of Directors,
except that the Board of Directors may delegate to any person group of persons
the power to fix the salaries or other compensation of subordinate officers or
agents. No officer shall be prevented from receiving any such salary or
compensation by reason of the fact that he is also a Director of the
corporation.
Section 14. Surety Bonds. In case the Board of Directors shall so require,
any officer or agent of the corporation shall execute to the corporation a bond
in such sums and with such surety or sureties as the Board of Directors may
direct, conditioned upon the faithful performance of his duties to the
corporation, including responsibility for negligence and for the accounting for
all property, monies or securities of the corporation which may come into his
<PAGE> 7
hands.
ARTICLE V
COMMITTEES
Section 1. Executive Committee. The Board of Directors may appoint from among
its members an Executive Committee of not less than two nor more than seven
members, one of whom shall be the President, and shall designate one of such
members as Chairman. The Board may also designate one or more of its members
as alternates to serve as members of the Executive Committee in the absence of
a regular member or members. The Board of Directors reserves to itself alone
the power to declare dividends, issue stock, recommend to stockholders any
action requiring their approval, change the membership of any committee at any
time, fill vacancies therein, and discharge any committee either with or
without cause at any time. Subject to the foregoing limitations, the
Executive Committee shall possess and exercise all other powers of the Board of
Directors during the intervals between meetings.
Section 2. Other Committees. The Board of Directors may also appoint from
among its own members such other committees as the Board of Directors may
determine, which shall in each case consist of not less than two Directors, and
which shall have such powers and duties as shall from time to time be
prescribed by the Board. The President shall be a member ex officio of each
committee appointed by the Board of Directors. A majority of the members of
any committee may fix its rules of procedure.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loan or advances shall be contracted on behalf of the
corporation, no negotiable paper or other evidence of its obligation under any
loan or advance shall be issued in its name, and no property of the corporation
shall be mortgaged, pledged, hypothecated or transferred as security for the
payment of any loan, advance, indebtedness of liability of the corporation
unless and except as authorized by the Board of Directors. Any such
authorization may be general or confined to specific instances.
Section 3. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the Board of Directors may
select, or as may be selected by any officer or agent authorized to do so by
the Board of Directors.
Section 4. Checks and Drafts. All notes, drafts, acceptances, checks,
endorsements and evidences of indebtedness of the corporation shall be signed
by such officer or officers or such agent or agents of the corporation and in
such manner as the Board of Directors from time to time may determine.
Endorsements for deposit to the credit of the corporation in any of its duly
authorized depositories shall be made in such manner as the Board of Directors
from time to
<PAGE> 8
time may determine.
Section 5. Bonds and Debentures. Every bond or debenture issued by the
corporation shall be evidenced by an appropriate instrument which shall be
signed by the President or a Vice-President and by the Treasurer or by the
Secretary, and sealed with the seal of the corporation. The seal may be
facsimile, engraved or printed. Where such bond or debenture is authenticated
with the manual signature of an authorized officer of the corporation or other
trustee designated by the indenture of trust or other agreement under which
such security is issued, the signature of any of the corporation's officers
named thereon may be facsimile. In case any officer who signed, or whose
facsimile signature has been used on any such bond or debenture, shall cease to
be an officer of the corporation for any reason before the same has been
delivered by the corporation, such bond or debenture may nevertheless be
adopted by the corporation and issued and delivered as though the person who
signed it or whose facsimile signature has been used thereon had not ceased to
be such officer.
ARTICLE VII
CAPITAL STOCK
Section 1. Certificate of Share. The shares of the corporation shall be
represented by certificates prepared by the Board of Directors and signed by
the President or the Vice-President and by the Secretary, and sealed with the
seal of the corporation or a facsimile. The signatures of such officers upon a
certificate may be facsimiles if the certificate is countersigned by a
transfer agent or registered by a registrar other than the corporation itself
or one of its employees. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the person to whom
the shares represented thereby are issued, with the number of shares and date
of issue, shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except that in case
of a lost, destroyed or mutilated certificate, a new one may be issued therefor
upon such terms and indemnity to the corporation as the Board of Directors may
prescribe.
Section 2. Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the secretary of the
corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
Section 3. Transfer Agent and Registrar. The Board of Directors shall have
power to appoint one or more transfer agents and registrars for the transfer
and registration of certificates of stock of any class, and may require that
stock certificates shall be countersigned and registered by one or more of such
transfer agents and registrars.
Section 4. Lost or Destroyed Certificates. The corporation may issue a new
certificate to replace any certificate theretofore issued by it alleged to have
<PAGE> 9
been lost or destroyed. The Board of Directors may require the owner of such a
certificate or his legal representative to give the corporation a bond in such
sum and with such sureties as the Board of Directors may direct to indemnify
the corporation as transfer agents and registrars, if any, against claims that
may be made on account of the issuance of such new certificates. A new
certificate may be issued without requiring any bond.
Section 5. Consideration for Shares. The capital stock of the corporation
shall be issued for such consideration, but not less than the par value
thereof, as shall be fixed from time to time by the Board of Directors. In the
absence of fraud, the determination of the Board of Directors as to the value
of any property or services received in full or partial payment of shares shall
be conclusive.
Section 6. Registered Shareholders. The company shall be entitled to treat
the holder of record of any share or shares of stock as the holder thereof, in
fact, and shall not be bound to recognize any equitable or other claim to or on
behalf of this company any and all of the rights and powers incident to the
ownership of such stock at any meeting, and shall have power and authority to
execute and deliver proxies and consents on behalf of this company in
connection with the exercise by this company of the rights and powers incident
to the ownership of such stock. The Board of Directors, from time to time, may
confer like powers upon any other person or persons.
ARTICLE VIII
INDEMNIFICATION
Section 1. Indemnification. No officer or Director shall be personally
liable for any obligations of the corporation or for any duties or obligations
of the corporation or for any duties or obligations arising out of any acts or
conduct of said officer or Director performed for or on behalf of the
corporation. The corporation shall and does hereby indemnify and hold harmless
each person and his heirs and administrators who shall serve at any time
hereafter as a Director or officer of the corporation from and against any and
all claims, judgments and liabilities to which such persons shall become
subject by reason of his having heretofore or hereafter been a Director or
officer of the corporation, or by reason of any action alleged to have
heretofore or hereafter taken or omitted to have been taken by him as such
Director or officer, and shall reimburse each such person for all legal and
other expenses reasonably incurred by him in connection with any such claim or
liability, including power to defend such person from all suits or claims as
provided for under the provisions of the Nevada Business Corporation Act;
provided, however, that no such person shall be indemnified against, or be
reimbursed for, any expense incurred in connection with any claim or liability
arising out of his own negligence or willful misconduct. The rights accruing
to any person under the foregoing provisions of this section shall not exclude
any other right to which he may lawfully be entitled, nor shall anything herein
contained restrict the right of the corporation to indemnify or reimburse such
person in any proper case, even though not specifically herein provided for.
The corporation, its directors, officers, employees and agents shall be fully
protected in taking any action or making any payment, or in refusing so to do
in reliance upon the advice of counsel.
Section 2. Other Indemnification. The indemnification herein provided shall
<PAGE> 10
not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer or employee, and shall inure to the benefit of the heirs, executors and
administrators of such person.
Section 3. Insurance. The corporation may purchase and maintain insurance on
behalf of any person who is or was a Director, officer or employee of the
corporation, or is or was serving at the request of the corporation as a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
liability under the provisions of this section or of the general Corporation
Law of Nevada.
Section 4. Settlement by Corporation. The right of any person to be
indemnified shall be subject always to the right of the corporation by its
Board of Directors, in lieu of such indemnity, to settle any such claim,
action, suit or proceeding at the expense of the corporation by the payment of
the amount of such settlement and the costs and expenses incurred in connection
ion therewith.
ARTICLE IX
WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or Director of
the corporation under the provisions of these Bylaws, or under the provisions
of the Articles of Incorporation, or under the provisions of the Nevada
Business Corporation Act, a waiver thereof in writing signed by the person or
person entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice Attendance at
any meeting shall constitute a waiver of notice of such meetings, except where
attendance is for the express purpose of objecting to the legality of that
meeting.
ARTICLE X
AMENDMENTS
These bylaws may be altered, amended repealed, or new bylaws adopted by 50% of
the entire Board of Directors at any regular or special meeting. Any bylaw
adopted by the Board may be repealed or changed by action of the shareholders.
ARTICLE XI
FISCAL YEAR
The fiscal year of the corporation shall be fixed and may be varied by
resolution of the Board of Directors.
ARTICLE XII
DIVIDENDS
The Board of Directors may at any regular or special meeting, as they deem
advisable, declare dividends payable out of the surplus of the corporation.
<PAGE> 11
ARTICLE XIII
CORPORATE SEAL
The seal of the corporation shall be in the form of a circle and shall bear the
name of the corporation and the year of incorporation per sample affixed
hereto.
<PAGE> 1
EXHIBIT 10.1
LICENSING AGREEMENT
LICENSEE: American Sports History, Inc. DATE
ADDRESS: 18-I Heritage Drive NO.
Chatham, NJ 07928 LICENSE NO.
National Football Alumni, Inc. ("NFLA") is the owner, or beneficial owner (as
the case may be), of the trademarks listed in Section 1. (a) herein and
referred to as the "NFLA MARKS."
Licensee, whose name and address is set forth above, desires to utilize certain
of the NFLA Marks in accordance with the terms and conditions of this agreement
("License") in conjunction with the publication of NFL related sports history
magazine and related multi-media products including, but not limited to, video
and C.D.ROM.
Therefore, in consideration of the mutual premises, covenants and undertakings
hereinafter contained, the parties hereto agree as follows:
1. DEFINITIONS. For purposes of this License, the following definitions shall
be operative:
(a) The "NFLA Marks" are the following:
NATIONAL FOOTBALL LEAGUE ALUMNI (Block Letters) and NATIONAL FOOTBALL
LEAGUE ALUMNI (and Logo Design as set forth on Attachment A).
(b) The "Territory" is the United States.
(c) The "Initial Term" is the period beginning January 1, 1996 and ending
on the 31st day of December, 2001 unless sooner terminated in accordance with
the provisions hereof.
(d) "Fiscal Year" is the period beginning on April 1 of any year and
ending on March 31 of the following year during the Initial or Renewal Term
hereof.
(e) "Premiums" are products bearing NFLA Marks sold or given away for
purposes of promoting, publicizing or increasing the sale of any other product
or service, including incentives for sales force, trade or consumer promotions,
or any similar merchandising method.
(f) "Licensed Sales" means all sales of Licensed Products directly to or
for retail outlets, mail order, catalogs, or other channels of trade where the
Licensed Products are ultimately sold to consumers. Licensed sales do not
include the sale of Licensed Products as Premiums, which requires separate
agreements executed by NFLA with both the manufacturer and user of the Premium.
Licensee will not use or knowingly permit the use of, and will exercise due
care that its customers likewise will refrain from the use of Licensed Products
as Premiums.
(g) "Net Sales" means the total dollar amount of gross sales of all
Licenses Products (including, without limitation, any irregulars, seconds,
etc.) at the invoiced selling price loss reasonable and customary quantity
discounts,
<PAGE> 2
as actually calculated on the invoice, and returns actually made or allowed. No
deductions shall be made for costs incurred in manufacturing, selling,
distributing, or advertising (including cooperative and promotional allowances)
the Licensed Products, or for uncollectible accounts, taxes, cash discounts,
commissions or similar allowances. In the case of sales to or use of Licensed
Products by a company associated with Licensee or any other sales to related
companies, the sales price shall be the price regularly charged to the
Licensee's independent bona fide customers.
2. GRANT OF LICENSE.
(a) The "Licensed Marks" are the NFLA Marks, as defined above. No license
is granted hereunder for any other marks owned by NFLA.
(b) The "Licensed Products" are set forth on Attachment B hereto.
(c) NFLA hereby grants to Licensee the right to use the Licensed Marks on
Licensed Products for Licensed Sales in the Territory during the Initial Term
and any Renewal Term hereof in accordance with the provisions and conditions of
this License.
3. RATE AND TERMS OF PAYMENT.
(a) Rate: Licensee will pay NFLA an amount equal to eight percent (8%)
of all "Net Sales" of Licensed Products sold during the Term ("Royalty"). The
minimum Royalty for the Initial Term of this License is $1,500,000 ("Minimum
Guarantee").
(b) Licensee shall pay the Royalty described in subparagraph 3(a) as
follows:
I. Within three weeks of the execution of this License, Licensee
shall cause 300,000 shares of its common stock, $.001 par value (the "Shares"),
to be valued at $5.00 per share, to be issued to the NFLA. The Shares shall be
registered by the Licensee with all necessary federal and state agencies and
shall upon registration be freely tradeable except for the contractual
restrictions imposed upon the NFLA by this License.
II. As the Royalty becomes due, on a quarterly basis during the
initial Term of this License, the NFLA shall be entitled to redeem from
Licensee, liquidate or retain, at its sole discretion, for its own account a
pro rata number of Shares necessary to satisfy the royalty due for said
quarter.
III. Within fifteen days (15) of the end of each quarter, the NFLA
shall notify the Licensee in writing as to whether the NFLA will redeem, sell
or retain the Shares to satisfy the Royalty due for that quarter. Said notice
shall be sent and received prior to the NFLA's exercise of its rights with
respect to said Shares. It is agreed and understood that the NFLA will work
with the Licensee to direct any such trades.
IV. Within thirty days (30) of the end of the fourth quarter of each
year of this License, Licensee and the NFLA shall review the sufficiency of the
Shares remaining to satisfy future royalty payments. If it is determined that
the Shares remaining will not be sufficient to satisfy future royalty payments,
<PAGE> 3
then Licensee, and the NFLA will agree upon an additional number of shares, not
to exceed 300,000 additional shares, to be deposited with the NFLA to cover
future royalty payments (the "Additional Shares"). Licensee shall register and
qualify these Additional Shares with the appropriate federal and state
agencies. These Additional Shares shall be subject to the same terms and
conditions as the shares originally issued. This provision shall also apply to
any renewal terms.
V. [paragraph deleted]
VI. In the event that the Shares and/or Additional Shares issued to
the NFLA are more than is required to satisfy the Royalty payments called for
under this Licence, then upon the completion or termination of the original
term of this Agreement, the NFLA shall retain the extra shares.
(c) Consummation of Sale. For the purpose of determining Royalties, Net
Sales shall be deemed to have been consummated at the time of invoicing or
billing for said Licensed Products.
(d) Accounting. On or before the 15th day of each month, Licensee shall
submit on forms to be furnished by NFLA full and accurate statements showing
the quantity, description and Net Sales for each of the Licensed Products sold
or distributed during the preceeding month. Such monthly statements shall be
submitted whether or not they reflect any sales. All information so furnished
shall be treated as confidential by NFLA. The receipt or acceptance by NFLA of
any of the statements pursuant to this License or of any Royalties paid
hereunto (or the redemption, liquidation or retention of Shares hereunder)
shall not preclude NFLA from questioning the correctness thereof at any time.
In the event that any inconsistencies or mistakes are discovered in such
statements or payment, if verifiable, they shall immediately be rectified and
the appropriate payment made by the Licensee.
4. RENEWAL TERM. If Licensee performs its obligations during the Initial Term,
and it desires to renew the License, it should notify NFLA in writing by
November 1, 2001. If NFLA accepts Licensee's offer to renew, said renewal shall
be for a period of one year ("Renewal Term") from the date of termination of
the Initial Term. Licensee may seek additional Renewal Term upon timely request
to NFLA, within 60 days of the expiration of the current Renewal Term, and
acceptance by NFLA.
5. EXCLUSIVITY. This License is non-exclusive. NFLA reserves all rights not
expressly granted to Licensee hereunder.
6. QUALITY CONTROL/PRODUCT APPROVAL. Licensee agrees to submit samples of all
Licensed Products to NFLA at no cost for review and approval which will not be
unreasonably withheld prior to any use, sale or other distribution to the
public. Licensee agrees not to distribute any Licensed Products until such
approvals of final samples are received in writing from NFLA. Licensee further
agrees to submit all examples of proposed use of NFLA Marks on Licensed
Products, or advertising or promotion thereof for review and approval prior to
use, sale or other distribution.
(a) Licensee agrees that the Licensed products it manufactures and/or
sells shall meet or exceed the quality and specifications of the final samples
approved by NFLA. Licensee agrees to remove from public sale or distribution
any
<PAGE> 4
previously approved Licensed Product to which NFLA rescinds approval.
(b) Licensee agrees that any proposed change to Licensed Products,
involving the graphics or any change in the use of the NFLA Marks, or any
alteration in the product structure, design or quality of the Licensed Product,
shall be submitted to NFLA for approval prior to any use, sale or other
distribution of Licensed Products.
(c) Licensee agrees to maintain such reasonable manufacturing, servicing,
sales and quality standards as NFLA may, from time to time, issue.
(d) Licensee agrees that NFLA or its duly authorized representative may
inspect the manufacturing premises and Licensed Products of Licensee during all
reasonable hours of operation upon reasonable notice during the Initial or
Renewal Term of this License to assure that the Licensed Products are being
produced, advertised, promoted and sold in accordance with this License.
(e) Licensee will not deviate from the standards of quality of approved
samples. Departure from such quality standards constitutes a breach of a
material term of this License. NFLA may purchase at Licensee's expense any
Licensed Products found in the marketplace which in NFLA's judgment are
inconsistent with approved quality standards and bill such costs to Licensee.
Licensee must also pay all Royalties otherwise due on sales on nonconforming
goods. NFLA also may require Licensee to recall any Licensed Products not
consistent with approved quality Standards.
7. RECORDS AND AUDITS.
(a) Licensee agrees to keep accurate books of account and records
covering all transactions relating to this License. NFLA and its duly
authorized representative shall have the right at all reasonable hours of the
day, given a three day notice (working days), to examine such books of account
and records and all other documents and material in Licensee's possession or
under its control with respect to the subject matter and terms of the License,
and shall have free and full access thereto for such purposes. All such books
of account and records shall be kept available for at least three years after
termination of the License. Licensee will designate a symbol or number which
will be used exclusively in connection with Licensed Products and with no other
articles which Licensee may manufacture, sell or distribute.
(b) Should an audit by NFLA and/or its duly authorized representative
disclose a payment deficiency of more than Two Percent (2%) between the amount
found to be due NFLA and the amount Licensee actually paid or reported, the
cost of the audit will be paid by Licensee along with the amount of the
deficiency together with interest at a rate of one and one-half percent (1.5%)
per month unless otherwise prohibited by law from the date such deficiency
became due until the date of the payment. Payment shall be due in cash within
15 days after notification of the deficiency.
8. TERMINATION. Without prejudice to any other rights, NFLA shall have the
right to terminate this License upon written notice to Licensee at any time if:
(a) Licensee shall not have begun the bona fide manufacture,
distribution, and sale of all of the Licensed Products hereunder within three
(3) months from
<PAGE> 5
the commencement of the Initial or Renewal Terms;
(b) Licensee shall fail to continue for a period of thirty (30) days the
bona fide manufacture, distribution, and sale of all of the Licensed Products
throughout the Territory during the Initial or Renewal Term;
(c) Licensee shall fail to make any payment due hereunder or fail to
deliver any statement required hereunder within ten (10) days after notice of
much failure by NFLA;
(d) Licensee shall be unable to pay its liabilities when due, or shall
make any assignment for the benefit of creditors, or shall file any petition
under any federal or state bankruptcy statute, or be adjudicated as bankrupt or
insolvent, or if any receiver is appointed for its business or property, or if
any trustee in bankruptcy shall be appointed under the laws of the United
States government or of the several states;
(e) Licensee shall fail to generate Net Sales providing the Minimum
Guarantee specified in Paragraph 3(b);
(f) Licensee shall fail to provide access to books of accounts and
records maintained hereunder;
(g) any governmental agency finds that the Licensed Products are
defective in any way, manner or form;
(h) Licensee shall manufacture, sell, distribute or promote, whichever
first occurs, any of the Licensed Products without the prior written approval
of NFLA as provided in Paragraph 6 hereof or if Licensee shall continue to
manufacture, sell, distribute or promote any of the Licensed Products after
such written approval has been rescinded by NFLA or has expired;
(i) Licensee fails to deliver to NFLA or to maintain in full force and
effect the insurance coverage required under this License;
(j) Licensee makes a material misrepresentation or omission in this
License; or
(k) Licensee shall fail to perform any other material term of this
License.
It is expressly agreed and understood that in the event of any condition
of default by Licensee (other than the condition listed in Section 8.(c)
herein), Licensee shall have thirty days to cure such remedy after receiving
notice of default from the NFLA.
9. SURVIVAL OF RIGHTS AND OBLIGATIONS. Termination or expiration of this
License shall not impair any rights of NFLA or obligations of Licensee,
including but not limited to payments, statements of account, disposal of
inventory, indemnification, and insurance.
10. GOOD WILL. Licensee recognizes the great value of the good will
associated with the NFLA Marks and acknowledges that such good will belongs to
the NFLA, and that such NFLA Marks have secondary meaning. Licensee agrees that
it will
<PAGE> 6
not, during this License or thereafter, attack the property rights of the NFLA
in and to the NFLA Marks, or attack the validity of this License. Licensee
shall not use the NFLA Marks, in whole or in part, as a corporate name or trade
name. Licensee shall not join any names, symbols or designs with the NFLA
Marks. Licensee shall not disparage the NFLA, its officers, directors,
employees or members, or use the NFLA Marks in any immoral or scandalous way.
11. INJURY TO REPUTATION. In the event Licensee disparages the NFLA, its
officers, directors, employees or members, or uses the NFLA Marks in an
immoral, scandalous or disparaging manner, this License shall automatically
terminate, and Licensee must immediately destroy its entire inventory of
Licensed Products and any associated advertising or promotional material.
12. PROTECTION OF RIGHTS
(a) NFLA owns, or is the beneficial owner of, all rights to the NFLA
Marks. Licensee's use thereof is for the benefit of NFLA, and Licensee shall
not acquire any rights therein. In the event NFLA desires to secure copyright
and/or trademark registrations for the NFLA Marks, Licensee will furnish
specimens free of charge and evidence of first sale dates and other pertinent
information. Licensee will be deemed to have assigned to NFLA all rights to
the NFLA Marks which Licensee may have or may obtain, and Licensee will execute
all required confirmatory instruments.
(b) All art work involving any of the NFLA Marks shall, notwithstanding
its creation or use by Licensee, be the property of NFLA and shall be delivered
to NFLA at the termination of this License. Any copyright in said art work is
hereby assigned to NFLA.
(c) Each Licensed Product shall bear such copyright and/or trademark
notices as NFLA may require to facilitate its trademark protection program.
(d) If Licensee acquires knowledge of the unauthorized manufacture, sale
or distribution of Licensed Products or of any products which bear the NFLA
Marks or anything similar to the NFLA Marks, Licensee will so advise NFLA. NFLA
shall have the option to prosecute any such use, and Licensee shall assist in
the prosecution of such action. If requested by NFLA, Licensee shall join in
the prosecution of such action at NFLA's expense.
13. DISPOSAL OF INVENTORY. After expiration or termination of this License,
Licensee shall have no further right to manufacture, advertise, distribute,
sell or otherwise deal in any Licensed Products or other products which utilize
the NFLA Marks except as hereinafter provided. Except for termination pursuant
to Section 11, Licensee may dispose of Licensed Products which are on hand or
in process at the tine of such expiration or termination for a period of ninety
(90) days thereafter, provided all statements and payments then due are first
made. Licensee will also make all statements and payments due in accordance
with Paragraph 3 for the ninety (90)-day disposal period. Any disposal of
Licensed Products other than in accordance with this paragraph may conflict
with other commitments made by NFLA, injure NFLA's business relationships, and
interfere with its contractual relations, which injuries are not readily
calculable in monetary terms, in addition to causing NFLA irrevocable harm, and
Licensee hereby consents to the entry of preliminary and permanent injunctive
relief and
<PAGE> 7
a product recall for any disposal of Licensed products other than as provided
herein. However, such remedies shall not be exclusive of other legal or
equitable remedies otherwise available to NFLA. Licensee shall also refrain
from further use of the NFLA Marks or of any further reference to them, direct
or indirect, or any simulation thereof, except as provided in this paragraph.
14. FINAL STATEMENT. Sixty (60) days before the expiration of this License,
Licensee will furnish to NFLA a statement showing the number and description of
Licensed Products on hand or in process. NFLA reserves the right to make an
independent accounting of on-hand Licensed Products. If this License is
terminated pursuant to Section 11, such statement shall be furnished within ten
(10) days after termination.
15. EFFECT OF EXPIRATION OR TERMINATION. After expiration or termination of
this License for whatever reason, Licensee will refrain from further use of the
NFLA Harks or any further reference to them, and each of them direct or
indirect, or any simulation of the NFLA Marks, except as provided in Paragraph
13. Licensee agrees that the NFLA Marks possess a special, unique and
extraordinary character which makes difficult the assessment of the monetary
damage sustained by unauthorized use. Licensee recognizes that irreparable
injury would be caused by unauthorized use and agrees that injunctive and other
equitable relief would be appropriate in the event of a breach of this License,
provided, however, that such remedy shall not be exclusive of other legal
remedies otherwise available to NFLA.
16. LIABILITY AND INDEMNIFICATION.
(a) Liability. It is expressly understood between the parties hereto that
by virtue of the right granted by NFLA to
[line(s) missing]
by NFLA. Licensee agrees to indemnify and hold harmless the NFLA, its officers,
directors and members, from any and all liability or expenses arising from the
use of the NFLA Marks as permitted under the License and any claims, demands,
causes of action or judgments related to Licensee's design, manufacture,
promotion or sale of the Licensed Products. Licensee undertakes to conduct the
defense of any lawsuit arising from or related to the Licensed Products at its
own expense, it being understood, however, that NFLA has the option to
participate in the defense of any such lawsuit.
(b) Insurance. Licensee further agrees to add the NFLA as a named
insured under any liability policies it obtains for the Licensed Products.
Licensee shall maintain such liability policies throughout the Initial or
Renewal Term of this License and shall provide NFLA with evidence of its
payment of insurance premiums for such policies each time the premiums become
due. The policies shall cover liability due to any personal injuries or
property damage arising from the use of the Licensed Products in the amount of
at least one million dollars ($1,000,000) per occurrence. Licensee shall
furnish NFLA with a certificate of insurance which shall provide that no
cancellations, revisions or modifications of coverage of the policy will be
effective against NFLA unless NFLA receives a thirty (30)-day prior written
notice thereof. Any failure on Licensee's part to abide by the above provisions
regarding insurance shall result in immediate termination of the License.
<PAGE> 8
17. NOTICES. All notices and statements to be given and all payments to be
made hereunder shall be given or made at the respective addresses of the
parties as set forth above unless notification of a change of address is given
in writing. Any notice shall be sent by registered or certified mail, FAX or
mailgram, and shall be deemed to have been given at the time it is sent.
18. NO JOINT VENTURE. Nothing contained herein shall be construed to place
the parties in the relationship of partners, joint ventures, or agents, and
Licensee shall have no power to obligate or bind NFLA in any manner whatsoever,
and NFLA in no way represents itself as guarantor of the quality of any
products produced by Licensee pursuant to this License.
19. ARBITRATION. Any dispute or disagreement between the Parties hereto
arising out of or relating to this License shall be settled by arbitration in
Florida under the rules then in effect of the American Arbitration Association
and judgment upon the award may be entered in any court having jurisdiction.
20. PLAYERS. It is understood that the NFLA does not have the right to use
the name or likeness of any player in connection with a commercial product in
such a manner as to constitute an endorsement of such product by the player
unless so authorized by the player. Licensee agrees that it will not exercise
the rights granted in this Licence in any manner that will constitute an
endorsement of such product by the player unless so authorized by the player.
21. NO WAIVER/ASSIGNMENT, ETC. The Agreement and any rights herein granted
thereby are personal to Licensee and any assignment, sublicensing or other
encumbrance is void without NFLA's prior written consent. This License
constitutes the entire agreement and understanding between the parties hereto
and cancels, terminates, and supersedes any prior agreement or understanding
relating to the subject matter hereof between Licensee and the NFLA. None of
the provisions of this agreement can he waived or modified except expressly in
writing signed by both parties, and there are no representations, promise,
agreements, warranties, covenants, or undertakings other than those contained
herein. This agreement shall be construed in accordance with the laws of the
State of Florida.
22. EXECUTION. Licensee will be considered by NFLA to have made an offer to
enter into this License only by its signature below by an officer, partner, or
individual duly authorized to sign, and payment of the Royalty as provided for
in Section 3 above.
This License is binding upon NFLA upon signature by its Executive Director or
an officer authorized by him to sign in his behalf, and approval by NFL
Properties, Inc. pursuant to the Licensing Agent Agreement and Deed or Trust
entered into on ___________ a copy of which is attached hereto as Attachment C.
LICENSEE: AMERICAN SPORTS HISTORY, INCORPORATED
BY: /s/ Vincent Nerlino DATE: January 12, 1996
-----------------------------------------
Vincent Nerlino, President, Chairman, CEO
<PAGE> 9
NATIONAL FOOTBALL LEAGUE ALUMNI, INC.
BY: /s/ Frank Krauser DATE: January 12, 1996
-----------------------------------------
Frank Krauser, Executive Director/CEO
APPROVED BY NATIONAL FOOTBALL LEAGUE PROPERTIES, INC.
BY: _________________________________________ DATE: ________________
<PAGE> 1
EXHIBIT 10.2
PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 3Oth day of January 1996, by and
between American Sports History, Inc., (hereinafter referred to as "ASPH"), a
Nevada corporation duly authorized to do business in the State of California,
with its principle place of business at 18-I Heritage Dr., Chatham, New Jersey
07928, and Vernon Nobles, (hereinafter referred to as "Nobles"), who resides at
636 Wilcox, Hancock Park, California 90004.
WITNESSETH:
WHEREAS, Nobles has agreed to sell ASPH interest of whatever nature he owns in
certain film libraries more particularly (but not fully) described in Exhibit
"A" and Exhibit "B" attached hereto and made part hereof for all purposes,
effective as of the date of this Purchase and Sale Agreement, and under the
following terms and conditions:
1. Purchase Price.
In consideration for ASPH purchasing the referenced property, ASPH shall pay
the sum of Six Hundred Thousand and No/100 Dollars ($600,000), with said
payment being made in common stock valued at Five dollars ($5.00) per share.
The common stock is to be ASPH's Class A Common Stock of ASPH. Said stock will
be unregistered and stamped with a restricted legend.
The Six Hundred Thousand and No/100 Dollars ($600,000) shall be payable in One
Hundred Twenty Thousand (120,000) Shares of Common Stock, par value $.001. If
it is determined that the Shares are not sufficient to satisfy payment, then
ASPH and Nobles shall agree upon an additional number of Shares, not to exceed
120,000 additional Shares, to be deposited with Nobles.
2. Closing.
The completion of the contemplated transaction is herein designated as the
Closing which shall take place on or before January 30, 1996, or such other
date as the parties shall mutually agree upon.
3. Warranties and Representations of ASPH.
3.1 Corporate Organization.
ASPH is a corporation duly organized, validly existing and in good standing
under the laws of Nevada and is duly qualified to do business and has full
power and authority to carry on its current business and to purchase, own, and
sell its assets and properties.
3.2 Corporate Authority.
The execution and delivery of the Agreement and the carrying out of the
provisions hereof have been fully authorized by the Board of Directors of ASPH.
3.3 Binding Nature.
This Agreement shall be, when duly executed and delivered, a legal and binding
<PAGE> 2
obligation of ASPH enforceable in accordance with its terms.
3.4 No representation or warranty by ASPH in this Agreement contains, nor will
it contain, any untrue statement or omission, nor will it omit to state a
material fact necessary to make the statements contained herein not misleading.
All representations and warranties made by ASPH on this Agreement shall be true
and correct as of the Closing date.
3.5 Litigation.
There are no pending, nor, to the best knowledge and belief of ASPH, threatened
actions or proceedings before any court of administrative agency or other
authority which might or will materially or adversely affect ASPH's ability or
right to perform all of ASPH's obligations hereunder.
4. Warranties and Representations of Noble.
4.1 Property Title.
Noble hereby warrants and represent that he has good and marketable title to
the properties and/or property interests, which are the subject to this
Agreement, and that the properties and/or property interests are free and clear
from any liens, or other obligations, and that there is no litigation pending
or threatened against said properties and/or property interest.
4.2 Authority to Sign.
Noble warrants and represent that he has full authority, as owner of the
properties and/or property interest, to enter into this Agreement with ASPH.
4.3 Binding Nature.
This Agreement shall be, when duly executed and delivered, a legal and binding
obligation enforceable in accordance with its terms.
4.4 Warranties and Representations.
No representation or warranty by Noble in this Agreement contains, nor will it
contain, any untrue statement or omission, nor will it omit to state material
fact necessary to make the statements contained herein not misleading. All
representations and warranties made by Noble in this Agreement shall be true
and correct as of the Closing with the same force and effect as if they had
been made on and as of such date.
4.5 Litigation.
There are no pending, nor, to the best knowledge and belief of Noble,
threatened actions or proceedings before any court of administrative agency or
other authority which might or will materially or adversely affect Nobles'
obligation hereunder.
5. Miscellaneous.
5.1 Sales Tax.
<PAGE> 3
Any sales taxes which may be payable in connection with the transfer of the
assets described shall be borne solely by Noble.
5.2 Notices and Communication.
Any notice, payment request, instruction, or other document to he delivered
hereunder shall he deemed sufficiency given if in writing and delivered
personally or mailed by Certified Mail, postage prepaid, if to ASPH addressed
to ASPH at the address first set forth above, and if addressed to Noble at the
address first set forth above, unless in each case ASPH or Noble shall have
notified the other in writing of a different address.
5.3 Non-Waiver.
No delay or failure on either part in exercising any right hereunder, and no
partial or single exercise thereof will constitute a waiver of such right or
any other right hereunder.
5.4 Headings.
Headings in this Agreement are for convenience only and are not to be used for
interpreting or construing any provision hereof.
5.5 Governing Law.
This Agreement shall be construed in accordance with and governed by the laws
of the State of Nevada.
5.6 Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same instrument.
5.7 Binding Nature.
The provisions of this Agreement shall he binding upon and inure to the benefit
of each of the parties hereto and their respective successors and assigns.
5.8 Survival of Representations and Warranties.
Except as otherwise expressly provided in this Agreement or the Exhibit "A" and
Exhibit "B" attached, the representations and warranties ASPH and Noble
extended hereunder shall survive the Closing. Each party against whom liability
is asserted under the provisions of this Agreement shall he given the
opportunity to participate, directly or through its authorized representative,
at their cost and expense, in the conduct of any negotiations relating to the
statements of any liability or any other proceeding instituted by any third
party against either ASPH or Noble as the case may be, giving rise to alleged
breach.
5,9 Expenses.
Except as otherwise expressly provided herein, each party shall pay all of its,
<PAGE> 4
own expenses incidental to the negotiations and preparation of the
documentation relating to this Agreement and for entering into and carrying out
the terms and conditions of this Agreement and consummating the transactions,
irrespective of whether the transactions contemplated shall he consummated.
5.10 Payment of Taxes.
All fees, costs, charges, and expenses payable to any federal, state, or
municipal authority, including without limitations, all filing fees,
documentary stamps and transfer, sales and other taxes required to be paid, or
imposed in connection with transfer of any of Nobles' assets pursuant to the
terms of this Agreement shall be paid by Noble.
5.11 Amendments, Successors and Assigns.
This Agreement may he amended only by an instrument signed by the authorized
representatives of the parties hereto. Neither party may assign any of its
rights, obligations, or liabilities arising hereunder without the prior written
consent of the other, except as otherwise provided herein, and any such
assignment or attempted assignment shall be null and void.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their authorized representatives as of the date first above
written.
AMERICAN SPORTS HISTORY INC. VERNON NOBLES
By: /s/ Vincent Nerlino By: /s/ Vernon Nobles
___________________________ __________________________
Vincent Nerlino Vernon Nobles
2/2/96 2/2/96
Attest:
By: ___________________________ By: __________________________
<PAGE> 5
SCHEDULE "A"
A. 16 Hours of Sports Footage Film Library - V. Nobles
B. Fully paid license rights to utilize 36 hours of footage from the
Historic Footage film library (not related to Sports).
<PAGE> 6
SCHEDULE "B" - ASPH REVENUE FORECAST OF VIDEO LIBRARIES
<TABLE>
<CAPTION>
(MILLIONS)
YEAR 1 YEAR 2 YEAR 3 TOTAL
<S> <C> <C> <C> <C> <C>
A. SPORTS FOOTAGE .5 1.0 2.0 3.5
B. HISTORIC FOOTAGE .5 1.5 2.5 4.5
---- ---- ---- ----
1.0 2.5 4.5 8.0
</TABLE>
<PAGE> 1
EXHIBIT 10.3
LICENSING AGREEMENT
LICENSEE AMERICAN SPORTS HISTORY, INC.
ADDRESS 18-I Heritage Drive
Chatham, NJ 07928
LICENSOR GAGE MARKETING GROUP, LLC
ADDRESS 10000 Highway 55
Minneapolis, MN 55441
Gage Marketing Group, LLC (GMG) a Minnesota limited liability company, is the
exclusive agent for the NFL Alumni under a contract, a copy of which is
attached to this agreement as Attachment C. American Sports History, Inc.,
(ASHI), a Nevada corporation, is engaged in this business of marketing
products relating to the history of American Sports, principally through the
publication of NFL, MLB, NHL and other related sports history magazines,
videos, and CD Roms. Prior to the signing of this Agreement, the parties
entered into an arrangement whereby ASHI paid $100,000 for the right to be the
presenting sponsor of the January 1996 ALUMNI PLAYER OF THE YEAR AWARDS DINNER.
The parties wish to continue this relationship by granting ASHI rights to the
video footage of the 1996 dinner. They also wish to continue the relationship
whereby ASHI continues to sponsor future dinners and market the video footage
of those future dinners.
Therefore, in consideration of the mutual promises, covenants and undertakings
hereinafter contained, the parties hereto agree as follows:
1. DEFINITIONS. For purposes of this License, the following definitions shall
be operative:
(a) The "Initial Term" is the period beginning May 15, 1996 and ending on the
14th day of May, 2001 unless sooner terminated in accordance with the
provisions hereof.
(b) "Licensed Sales" means all sales of "Licensed Products" or products
derived therefrom, such as still photographs, directly or indirectly to, or
for, retail outlets, mail order, or other channels of distribution.
(c) "Net Sales" means the total dollar amount of gross sales of all Licensees
Products (excluding, without limitation, any irregulars, seconds, etc.) at the
invoiced selling price less reasonable and customary quantity discounts, as
actually calculated on the invoice, and returns actually made or allowed. No
deductions shall be made for costs incurred in manufacturing, selling,
distributing, or advertising (including cooperative and promotional allowances)
the Licensed Products or for uncollectible accounts, taxes, cash discounts,
commissions or similar allowances. In' the case of sales to or use of Licensed
Products by a company associated with Licensee or any other sales to related
companies, the sales price shall be the price regularly charged to the
Licensee's independent bona fide customers in accordance with Generally
Accepted Accounting Principles ("GAAP").
2. GRANT OF LICENSE.
(a) The "Licensed Products" are GMG's rights to the video footage of the Annual
Alumni Dinner as more fully described on Attachment A. No license is granted
<PAGE> 2
hereunder for any other products.
(b) The "Presenting Sponsorship" is the right, as described more fully on
Attachment B, to be the presenting sponsor of the NFL ALUMNI PLAYER OF THE YEAR
AWARDS DINNER (the "Dinner").
(c) GMG grants to ASHI the right to use the Licensed Products for sales during
the Initial Term and Renewal Term, if any, in accordance with the provisions
and conditions of this License, and to be the presenting sponsor of the Dinners
to be held during 1997, 1998, 1999 and 2000.
3. RATES AND TERMS OF PAYMENT.
(a) Rate: ASHI will pay GMG an amount equal to eight percent (8%) of all "Net
Sales"' of Licensed Products from GMG, in accordance with GAAP, sold or rented
during the Term ("Royalty").
(b) Minimum Royalty: GMG will receive a Minimum Royalty for the video and
related products of $1,250,000 consisting of 250,000 unregistered common shares
of ASHI valued at $5.00 per share and will receive $600,000 in cash for the
Presenting Sponsorship of the Dinner for a total of $1,850,000 payable as
follows:
I. $100,000 paid February 1, 1996.
II. $100,000 cash will be paid on or before September 1, 1996, and $100,000
will be paid on or before November 15, 1996. $100,000 will be paid in cash on
September 1 for 1997, 1998, 1999, and 2000.
III. Licensee shall cause 250,000 shares of its unregistered common stock to
be issued GMG within 3 weeks following the execution of this License. The
shares will have a par value per share of $.001. The shares will have an agreed
initial accounting value of $5.00 per share. If, at any time after the date
hereof, ASHI proposes to offer its Common Shares for sale in a public offering
and to register such securities under the Securities Act or 1933, it will give
written notice to GMG of its intentions to do so, and, on the request of GMG,
will use its best efforts to cause ASHI Common Shares held by GMG to he
included in such registration statement proposed to be filed by ASHI. If such
public offering is underwritten and in the good faith judgment of the managing
underwriter of such offering the inclusion of the ASHI Common Shares held by
GMG covered by the request for registration would interfere with the successful
marketing of the ASHI Common Shares offered to the public by ASHI, the ASHI
Common Shares held by GMG may be excluded from the public offering. On one
occasion only, commencing one year after the date hereof, upon request by GMG,
ASHI will take all necessary steps to register or qualify any ASHI Common
Shares held by GMG for registration der the Securities Act of 1933 and such
state securities laws as GMG shall reasonably request. The costs and expenses
directly related to any registration requested by GMG (except for any
underwriting commissions applicable to the sale of such shares) shall be borne
directly by ASHI. ASHI shall keep effective and maintain any such registration
or qualification for such period as may be necessary for GMG to sell such ASHI
Common Shares.
IV. GMG shall have the right to liquidate 15,000 free-trading shares per
month. GMG may liquidate additional shares so long as it does not adversely
effect the
<PAGE> 3
per share market price of such shares.
(c) Consummation of Sale. For the purpose of determining Royalties, Net Sales
shall be deemed to have been consummated at the time of invoicing or billing
for said Licensed Products Less returns.
(d) Accounting. On or before the 30th day following each fiscal quarter (and
45 days following fiscal year end), Licensee shall submit on forms to be
furnished by GMG full and accurate statements showing the quantity, description
and Net sales of each of the Licensed Products sold or distributed during the
preceding fiscal quarter. Such statements shall be submitted whether or 'not
they reflect any sales. All information so furnished shall be treated as
confidential by GMG. The receipt or acceptance by GMG of any of the statements
pursuant to this License or of any Royalties paid hereunto (or the redemption,
liquidation or retention of Shares hereunder) shall not preclude GMG from
questioning the correctness thereof at any time. In the event that any
inconsistencies or mistakes are discovered in such statements or payment, if
verifiable, they shall immediately be rectified and the appropriate payment
made by Licensee.
4. RENEWAL TERM. If Licensee performs its obligations during the Initial
Term, and it desires to renew the License, it should notify GMG in writing by
November 1, 2001. If GMG accepts Licensee's offer to renew, said renewal shall
be for a period of one year ("Renewal Term") from the date of termination of
the Initial Term. Licensee may seek additional Renewal Terms upon timely
request to GMG, within 60 days of the expiration of the current Renewal and
acceptance by GMG.
5. EXCLUSIVITY. This License is exclusive with respect to Licensed Products.
GMG reserves all rights not expressly granted to Licensee hereunder.
6. ADVERTISING (SUBLICENSING). GMG reserves the rights to disapprove of
sublicensees of Licensee provided it is in conflict with current national
advertising of the NFL Alumni.
7. RECORDS AND AUDITS.
(a) Licensee agrees to keep accurate books of account and records covering all
transactions relating to this License. GMG and its duly authorized
representative shall have the right at all reasonable hours of the day, given a
3 day notice (working days), to examine such books of account and records and
all other documents and material in Licensee's possession or under its control
with respect to the subject matter and terms of the License, and shall have
free and full access thereto for such purposes. All such books of account and
records shall be kept available for at least three years after termination of
the Licence. Licensee will designate a symbol or number which will be used
exclusively in connection with Licensed Products and with no other articles
which Licensee may manufacture, sell or distribute.
(b) Should an audit by GMG and/or its duly authorized representative disclose
a payment deficiency of more than Two Percent (2%) between the amount found to
be due GMG and the amount Licensee actually paid or reported, the cost of the
audit will be paid by Licensee along with the amount of the deficiency together
with interest at a rate of one and one-half percent (1.5%) per month, unless
<PAGE> 4
otherwise prohibited by law, from the date such deficiency became due until the
date of the payment. Payment shall be due in cash within 15 days after
notification of the deficiency.
8. TERMINATION. Without prejudice to any other rights, GMG shall have the
right to terminate this License upon written notice to Licensee at any time if:
(a) Licensee shall fail to continue for a period of thirty (30) days the bona
fide manufacture, distribution, and sale of all of the Licensed Products during
the Initial or Renewal Term;
(b) Licensee shall fail to make any payment due hereunder or fail to deliver
any statement required hereunder within ten (10) days after notice of such
failure by GMG;
(c) Licensee shall be unable to pay its liabilities when due, or shall make
any assignment for the benefit of creditors, or shall file any petition under
any federal or state bankruptcy statute, or be adjudicated as bankrupt or
insolvent, or if any receiver is appointed for its business or property, or if
any trustee in bankruptcy shall be appointed under the laws of the United
States government or of the several states;
(d) Licensee shall fail to provide access to books of account and records
maintained hereunder;
(e) Licensee shall fail to perform any other material term of this License. It
is expressly agreed and understood that in the event of any condition of
default by Licensee (other than the condition listed in Section 8.(c) herein),
Licensee shall have thirty days to cure such remedy after receiving notice of
default from GMG.
(f) GMG's license with the NFL Alumni (copy attached as Exhibit C) is
terminated so that GMG no longer sponsors the Dinner or if GMG and the NFLA
agree not to hold the dinner. In the event of termination under this section,
ASHI will continue to pay royalties to GMG with respect to previous dinners
that were held and related videos that were made under this contract. GMG will
return to ASHI 62,500 shares or $312,500 cash, at the option of GMG, for each
dinner (i.e. January of 1997, 1998, 1999, and 2000) that is not held, and any
and all advanced cash payments made for any dinner not held (e.g. The $100,000
payments made each September are attributable to the Dinner scheduled for the
following January).
9. SURVIVAL OF RIGHTS AND OBLIGATIONS. Termination or expiration of this
License shall not impair any rights of GMG or obligations of Licensee,
including but not limited to payments, statements of account and insurance.
10. INJURY TO REPUTATION. In the event Licensee disparages GMG, its officers,
directors, employees or members, or uses Licensed Products in an immoral,
scandalous or disparaging manner, this License shall automatically terminate,
and Licensee must immediately destroy its entire inventory of Licensed Products
and any associated advertising or promotional material.
11. FINAL STATEMENT. Sixty (60) days before the expiration Of this License,
Licensee will furnish to GMG a statement showing the number and description of
<PAGE> 5
Licensed Products on hand or in process. GMG reserves the right to make an
independent accounting of on-hand Licensed Products at GMG's expense. if this
License is terminated pursuant to Section 11, such statement shall be furnished
within ten (10) days after termination.
12. LIABILITY AND INDEMNIFICATION. It is expressly understood between the
parties hereto that by virtue of the right granted by GMG to Licensee, no
liability of any nature whatsoever shall be incurred by GMG. Licensee agrees to
indemnify and hold harmless the GMG, its officers, directors and members, from
any and all liability or expenses arising from the use of Licensed Products as
permitted under the License and any claims, demands, causes of action or
judgments related to Licensee's design, manufacture, promotion or sale of the
Licensed Products. Licensee undertakes to conduct the defense of any lawsuit
arising from or related to the Licensed Products at its own expense, it being
understood, however that GMG has the option to participate in the defense of
any such lawsuit.
13. NOTICES. All notices and statements to be given and all payments to be
made hereunder shall be given or made at the respective addresses of the
parties as set forth above unless notification of a change of address is given
in writing. Any notice shall be sent by registered or certified mall, FAX or
mailgram, and shall be deemed to have been given at the time it is sent.
14. NO JOINT VENTURE. Nothing contained herein shall be construed to place
the parties in the relationship of partners, joint ventures, or agents, and
Licensee shall have no power to obligate or bind GMG in any manner whatsoever,
and GMG in no way represents itself as guarantor of the quality of any products
produced by Licensee pursuant to this License
15. ARBITRATION. Any dispute or disagreement between the parties hereto
arising out of this License shall be settled by arbitration in Nevada under the
rules then in effect of the American Arbitration Association and judgment upon
the award may be entered in any court having jurisdiction.
16. PLAYERS. It is understood that GMG does not have the right to use the
name or Likeness of any player in connection with a commercial product in such
a manner as to constitute an endorsement of such product by the player unless
so authorized by the player. Licensee agrees that it will not exercise the
rights granted in this License in any manner that will constitute an
endorsement of such product by the player unless so authorized by the player.
17. NO WAIVER/ASSIGNMENT, ETC. The Agreement and any rights herein granted
thereby are personal to Licensee any and assignment, sublicensing, or other
encumbrance is void without GMG's prior written consent. This License
constitutes the entire agreement and understanding between the parties hereto
and cancels, terminates, and supersedes any prior agreement or understanding
relating to the subject matter hereof between Licensee and GMG. None of the
provisions of this Agreement can be waived or modified except expressly in
writing signed by both parties, and there are no representations, promises,
agreements, warranties, covenants, or undertakings other than those contained
herein. This agreement shall be construed in accordance with the laws of the
State of Nevada.
18. EXECUTION. Licensee will be considered by GMG to have made an offer to
<PAGE> 6
enter into this License only by its signature below by an officer, partner, or
individual duly authorized to sign, and payment of the Royalty as provided for
in Section 3 above.
This License is binding upon GMG upon signature by an officer authorized to
sign.
LICENSEE: AMERICAN SPORTS HISTORY, INCORPORATED
BY: /s/ Vincent Nerlino DATE: May 27, 1996
-------------------------------------------
Vincent Nerlino, President, Chairman, CEO
LICENSOR: GAGE MARKETING GROUP, LLC.
BY: /s/ Thomas Belle DATE: May 28, 1996
-------------------------------------------
Thomas Belle, Executive Vice President
ATTACHMENT "A" - LICENSED PRODUCTS
The Licensed Products referred to herein are the exclusive historical
documentation in the form of video film footage of the NATIONAL FOOTBALL LEAGUE
ALUMNI ANNUAL PLAYER OF THE YEAR AWARDS DINNER. This Dinner is organized and
directed by GMG under contract with the NFL Alumni (see Attachment C attached).
The video contains (and will contain) footage of actual football games which
belong to NFL Films, footage of entertainers at the Dinner, and may contain
similar items such as team Logos, which GMG has not licensed. ASHI must obtain
all legally required approvals and licenses from such entities and individuals
with respect to the use of their intangible property rights, however, Gage
represents that the NFL has waived any additional payment beyond a pre-existing
royalty between ASHI and the NFLA. The cost of producing the video will be
borne by ASHI.
ATTACHMENT "B"- PRESENTING SPONSORSHIP
The "Presenting Sponsorship" referred to herein is the right of ASHI to be the
presenting sponsor of the Dinner.
<PAGE> 1
EXHIBIT 10.4
AMERICAN SPORTS HISTORY INCORPORATED
1996 STOCK INCENTIVE PLAN
1. GENERAL PROVISIONS
1.1 Purpose.
The 1996 Stock Incentive Plan (the "Plan") is intended to allow designated
officers and employees (all of whom are sometimes collectively referred to
herein as "Employees") and certain Non-Employee Directors of American Sports
History Incorporated ("ASH") and its Subsidiaries which it may have from time
to time (ASH and such Subsidiaries are referred to herein as the "Company") to
receive certain options ("Stock Options") to purchase ASH's common stock, $.001
par value ("Common Stock"), and to receive grants of Common Stock subject to
certain restrictions ("Awards"). As used in this Plan, the term "Subsidiary"
shall mean each corporation which is a "subsidiary corporation" of ASH within
the meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended
(the "Code"). The purpose of this Plan is to provide Employees with
equity-based compensation incentives to make significant and extraordinary
contributions to the long-term performance and growth of the Company, and to
attract and retain Employees of exceptional ability.
1.2 Administration.
1.2.1 The Plan shall be administered by the Compensation Committee (the
"Committee") of, or appointed by, the Board of Directors of ASH (the "Board").
Each member of the Committee shall be a "disinterested person" as that term is
defined in Rule 16b-3 promulgated by the Securities and Exchange Commission
(the "Commission") pursuant to the Securities Exchange Act of 1934 (the
"Exchange Act"), but no action of the Committee shall be invalid if this
requirement is not met. The Committee shall select one of its members as
Chairman and shall act by vote of a majority of a quorum, or by unanimous
written consent. A majority of its members shall constitute a quorum. The
Commit-tee shall be governed by the provisions of ASH's By-Laws and of Nevada
law applicable to the Board, except as otherwise provided herein or determined
by the Board.
1.2.2 The Committee shall have full and complete authority, in its discretion,
but subject to the express provisions of the Plan: to approve the Employees
nominated by the management of the Company to be granted Awards or Stock
Options; to determine the number of Awards or Stock Options to be granted to an
Employee; to determine the time or times at which Awards or Stock Options shall
be granted; to establish the terms and conditions upon which Awards or Stock
Options may be exercised; to remove or adjust any restrictions and conditions
upon Awards or Stock Options; to specify, at the time of grant, provisions
relating to exercisability of Stock Options and to accelerate or otherwise
modify the exercisability of any Stock Options; and to adopt such rules and
regulations and to make all other determinations deemed necessary or desirable
for the administration of
the Plan. All interpretations and constructions of the Plan by the Committee,
and all of its actions hereunder, shall be binding and conclusive on all
persons for all purposes.
<PAGE> 2
1.2.3 The Company hereby agrees to indemnify and hold harmless each Committee
member and each employee of the Company, and the estate and heirs of such
Committee member or employee, against all claims, liabilities, expenses,
penalties, damages or other pecuniary losses, including legal fees, which such
Committee member or employee, his or her estate or heirs may suffer as a result
of his or her responsibilities, obligations or duties in connection with the
Plan, to the extent that insurance, if any, does not cover the payment of such
items. No member of the Committee or the Board shall be liable for any action
or determination made in good faith with respect to the Plan or any Award or
Stock Option granted pursuant to the Plan.
1.3 Eligibility and Participation.
Employees eligible under the Plan shall be approved by the Committee from those
Employees who, in the opinion of the management of the Company, are in
positions which enable them to make significant and extraordinary contributions
to the long-term performance and growth of the Company. In selecting Employees
to whom Stock Options or Awards may be granted, consideration shall be given to
factors such as employment position, duties and responsibilities, ability,
productivity, length of service, morale, interest in the Company and
recommendations of supervisors. No member of the Committee shall be eligible to
participate under the Plan or under any other Company plan if such
participation would contravene the standard of paragraph 1.2.1 above relating
to "disinterested persons."
1.4 Shares Subject to the Plan.
The maximum number of shares of Common Stock that may be issued pursuant to the
Plan shall be 1,000,000, subject to adjustment pursuant to the provisions of
paragraph 4.1. If shares of Common Stock awarded or issued under the Plan are
reacquired by the Company due to a forfeiture or for any other reason, such
shares shall be cancelled and thereafter shall again be available for purposes
of the Plan. If a Stock Option expires, terminates or is cancelled for any
reason without having been exercised in full, the shares of Common Stock not
purchased thereunder shall again be available for purposes of the Plan.
2. PROVISIONS RELATING TO STOCK OPTIONS
2.1 Grants of Stock Options.
The Committee may grant Stock Options in such amounts, at such times, and to
such Employees nominated by the management of the Company as the Committee, in
its discretion, may determine. Stock Options granted under the Plan shall
constitute "incentive stock options" within the meaning of Section 422 of the
Code, if so designated by the Committee on the date of grant. The Committee
shall also have the discretion to grant Stock Options which do not constitute
incentive stock options, and any such Stock Options shall be designated non-
statutory stock options by the Committee on the date of grant. The aggregate
fair market value (determined as of the time an incentive stock option is
granted) of the Common Stock with respect to which incentive stock options are
exercisable for the first time by any Employee during any one calendar year
(under all plans of the Company and any parent or Subsidiary of the Company)
may not exceed the maximum amount permitted under Section 422 of the Code
(currently $100,000.00). Non-statutory stock options shall not be subject to
the limitations relating to incentive stock options contained in the preceding
<PAGE> 3
sentence. Each Stock Option shall be evidenced by a written agreement (the
"Option Agreement") in a form approved by the Committee, which shall be
executed on behalf of the Company and by the Employee to whom the Stock Option
is granted, and which shall be subject to the terms and conditions of this
Plan. In the discretion of the Committee, Stock Options may include provisions
(which need not be uniform), authorized by the Committee in its discretion,
that accelerate an Employee's rights to exercise Stock Options following a
"Change in Control," upon termination of such Employee employment by the
Company without "Cause" or by the Employee for "Good Reason," as such terms are
defined in paragraph 3.1 hereof. The holder of a Stock Option shall not be
entitled to the privileges of stock ownership as to any shares of Common Stock
not actually issued to such holder.
2.2 Purchase Price.
The purchase price (the "Exercise Price") of shares of Common Stock subject to
each Stock Option ("Option Shares") shall equal the fair market value ("Fair
Market Value") of such shares on the date of grant of such Stock Option.
Notwithstanding the foregoing, the Exercise Price of Option Shares subject to
an incentive stock option granted to an Employee who at the time of grant owns
stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of any parent or Subsidiary shall be at
least equal to 110% of the Fair Market Value of such shares on the date of
grant of such Stock Option. The Fair Market Value of a share of Common Stock on
any date shall be equal to the closing price (or if no closing price is
reported, the average of the last bid and asked prices) of the Common Stock for
the last preceding day on which ASH's shares were traded, and the method for
determining the closing price shall be determined by the Committee.
2.3 Option Period.
The Stock Option period (the "Term") shall commence on the date of grant of the
Stock Option and shall be ten years or such shorter period as is determined by
the Committee. Notwithstanding the foregoing, the Term of an incentive stock
option granted to an Employee who at the time of grant owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or of any parent or Subsidiary shall not exceed five years. Each Stock
Option shall provide that it is exercisable over its term in such periodic
installments as the Committee in its sole discretion may determine. Such
provisions need not be uniform. Notwithstanding the foregoing, but subject to
the provisions of paragraphs 1.2.2 and 2.1, Stock Options granted to Employees
who are subject to the reporting requirements of Section 16(a) of the Exchange
Act ("Section 16 Reporting Persons") shall not be exercisable until at least
six months and one day from the date the Stock Option is granted.
2.4 Exercise of Options.
2.4.1 Each Stock Option may be exercised in whole or in part (but not as to
fractional shares) by delivering it for surrender or endorsement to the
Company, attention of the Corporate Secretary, at the principal office of the
Company, together with payment of the Exercise Price and an executed Notice and
Agreement of Exercise in the form prescribed by paragraph 2.4.2. Payment may be
made (i) in cash, (ii) by cashier's or certified check, (iii) by surrender of
previously owned shares of the Company's Common Stock valued pursuant to
paragraph 2.2 (if
<PAGE> 4
the Committee authorizes payment in stock in its discretion), (iv) by
withholding from the Option Shares which would otherwise be issuable upon the
exercise of the Stock Option that number of Option Shares having an aggregate
fair market value (determined in the manner prescribed by paragraph 2.2) as of
the date of the exercise of the Stock Option equal to the exercise price of the
Stock Option, if such withholding is authorized by the Committee in its
discretion, or (v) in the discretion of the Committee, by the delivery to the
Company of the optionee's promissory note secured by the Option Shares, bearing
interest at a rate sufficient to prevent the imputation of interest under
Sections 483 or 1274 of the Code, and having such other terms and conditions as
may be satisfactory to the Committee.
2.4.2 Exercise of each Stock Option is conditioned upon the agreement of the
Employee to the terms and conditions of this Plan and of such Stock Option as
evidenced by the Employee's execution and delivery of a Notice and Agreement of
Exercise in a form to be determined by the Committee in its discretion. Such
Notice and Agreement of Exercise shall set forth the agreement of the Employee
that: (a) no Option Shares will be sold or otherwise distributed in violation
of the Securities Act of 1933 (the "Securities Act") or any other applicable
federal or state securities laws, (b) each Option Share certificate may be
imprinted with legends reflecting any applicable federal and state securities
law restrictions and conditions, (c) the Company may comply with said
securities law restrictions and issue "stop transfer" instructions to its
Transfer Agent and Registrar without liability, (d) if the Employee is a
Section 16 Reporting Person, the Employee will furnish to the Company a copy of
each Form 4 or Form 5 filed by said Employee and will timely file all reports
required under federal securities laws, and (e) the Employee will report all
sales of Option Shares to the Company in writing on a form prescribed by the
Company.
2.4.3 No Stock Option shall be exercisable unless and until any applicable
registration or qualification requirements of federal and state securities
laws, and all other legal requirements, have been fully complied with. The
Company will use reasonable efforts to maintain the effectiveness of a
Registration Statement under the Securities Act for the issuance of Stock
Options and shares acquired thereunder, but there may be times when no such
Registration Statement will be currently effective. The exercise of Stock
Options may be temporarily suspended without liability to the Company during
times when no such Registration Statement is currently effective, or during
times when, in the reasonable opinion of the Committee, such suspension is
necessary to preclude violation of any requirements of applicable law or
regulatory bodies having jurisdiction over the Company. If any Stock Option
would expire for any reason except the end of its term during such a
suspension, then if exercise of such Stock Option is duly tendered before its
expiration, such Stock Option shall be exercisable and exercised (unless the
attempted exercise is withdrawn) as of the first day after the end of such
suspension. The Company shall have no obligation to file any Registration
Statement covering resales of Option Shares.
2.5 Continuous Employment.
Except as provided in paragraph 2.7 below, an Employee may not exercise a Stock
Option unless from the date of grant to the date of exercise such Employee
remains continuously in the employ of the Company. For purposes of this
paragraph 2.5, the period of continuous employment of an Employee with the
Company shall be deemed to include (without extending the term of the Stock
<PAGE> 5
Option) any period during which such Employee is on leave of absence with the
consent of the Company, provided that such leave of absence shall not exceed
three months and that such Employee returns to the employ of the Company at the
expiration of such leave of absence. If such Employee fails to return to the
employ of the Company at the expiration of such leave of absence, such
Employee's employment with the Company shall be deemed terminated as of the
date such leave of absence commenced. The continuous employment of an Employee
with the Company shall also be deemed to include any period during which such
Employee is a member of the Armed Forces of the United States, provided that
such Employee returns to the employ of the Company within 90 days (or such
longer period as may be prescribed by law) from the date such Employee first
becomes entitled to discharge. If an Employee does not return to the employ of
the Company within 90 days (or such longer period as may be prescribed by law)
from the date such Employee first becomes entitled to discharge, such
Employee's employment with the Company shall be deemed to have terminated as of
the date such Employee's military service ended.
2.6 Restrictions on Transfer.
Each Stock Option granted under this Plan shall be transferable only by will or
the laws of descent and distribution. No interest of any Employee under the
Plan shall be subject to attachment, execution, garnishment, sequestration, the
laws of bankruptcy or any other legal or equitable process. Each Stock Option
granted under this Plan shall be exercisable during an Employee's lifetime only
by such Employee or by such Employee's legal representative.
2.7 Termination of Employment.
2.7.1 Upon an Employee's Retirement, Disability or death, (a) all Stock
Options to the extent then presently exercisable shall remain in full force and
effect and may be exercised pursuant to the provisions thereof, including
expiration at the end of the fixed term thereof, and (b) unless otherwise
provided by the Committee, all Stock Options to the extent not then presently
exercisable by such Employee shall terminate as of the date of such termination
of employment and shall not be exercisable thereafter.
2.7.2 Upon the termination of the employment of an Employee with the Company
for any reason other than the reasons set forth in paragraph 2.7.1 hereof, (a)
all Stock Options to the extent then presently exercisable by such Employee
shall remain exercisable only for a period of 90 days after the date of such
termination of employment (except that the 90-day period shall be extended to
12 months if the Employee shall die during such 90-day period), and may be
exercised pursuant to the provisions thereof, including expiration at the end
of the fixed term thereof, and (b) unless otherwise provided by the Committee,
all Stock Options to the extent not then presently exercisable by such Employee
shall terminate as of the date of such termination of employment and shall not
be exercisable thereafter.
2.7.3 For purposes of this Plan:
(a) "Retirement" shall mean an Employee's retirement from the employ of the
Company on or after the date on which such Employee attains the age of sixty-
five (65) years; and
<PAGE> 6
(b) "Disability" shall mean total and permanent incapacity of an Employee, due
to physical impairment or legally established mental incompetence, to perform
the usual duties of such Employee's employment with the Company, which
disability shall be determined: (i) on medical evidence by a licensed physician
designated by the Committee, or (ii) on evidence that the Employee has become
entitled to receive primary benefits as a disabled employee under the Social
Security Act in effect on the date of such disability.
2.8 Grants of Options to Non-Employee Directors.
Each member of the Board who is not an Employee (a "Non-Employee Director:),
whether or not such member is a member of the Committee, shall automatically be
granted non-statutory Stock Options to purchase 10,000 shares of Common Stock
on each anniversary of such Non-Employee Director's continuous service on the
Board. The term of each such Stock Option granted to a Non-Employee Director
shall commence on the date of grant and shall be for ten years thereafter. Each
such Stock Option granted to a Non-Employee Director shall first be exercisable
six months and one day from the later of the date of grant or the date of
shareholder approval of this Plan, and thereafter shall be exercisable at any
time until the expiration of its term, whether or not the Non-Employee Director
is a member of the Board at the time of exercise or later enters the employ of
the Company. Notwithstanding the foregoing or any other provision of this Plan,
all unexercised Stock Options held by a Non-Employee Director shall
automatically terminate as of the date his or her directorship is terminated,
if such directorship is terminated on account of any act of fraud,
embezzlement, misappropriation or conversion of assets or opportunities of the
Company. Upon termination of such Stock Options, such Non-Employee Director
shall forfeit all rights and benefits under this Plan. Notwithstanding the
provisions of paragraph 4.4, the provisions of this paragraph 2.8 may not be
amended more than once every six months, other than to comport with changes in
the Code or the regulations thereunder. The Committee shall not grant any
Awards to Non-Employee Directors and shall have no discretion as to (a) the
selection of Non-Employee Directors to whom Stock Options may be granted, (1))
the number of Stock Options granted to any Non-Employee Director, (c) the times
at which or the periods within which Stock Options may be granted to, or
exercised by, Non-Employee Directors, or (d) except to the limited extent
provided in paragraph 2.2, the price at which any Stock Option granted to a
Non-Employee Director may be exercised. Except as specifically set forth in
this paragraph 2.8, Stock Options granted to Non-Employee Directors will be
governed by all of the other terms and provisions of this Plan.
3. PROVISIONS RELATING TO AWARDS
3.1 Grant of Awards.
Subject to the provisions of the Plan, the Committee shall have full and
complete authority, in its discretion, but subject to the express provisions of
this Plan, to (i) grant Awards pursuant to the Plan, (ii) determine the number
of shares of Common Stock subject to each Award ("Award Shares"), (iii)
determine the terms and conditions (which need not be identical) of each Award,
including the consideration (if any) to be paid by the Employee for such Common
Stock, which may, in the Committee's discretion, consist of the delivery of the
Employee's promissory note meeting the requirements of paragraph 2.4.1, (iv)
establish and modify performance criteria for Awards, and (v) make all of the
<PAGE> 7
determinations necessary or advisable with respect to Awards under the Plan.
Each award under the Plan shall consist of a grant of shares of Common Stock
subject to a restriction period (after which the restrictions shall lapse),
which shall be a period commencing on the date the award is granted and ending
on such date as the Committee shall determine (the "Restriction Period"). The
Committee may provide for the lapse of restrictions in installments, for
acceleration of the lapse of restrictions upon the satisfaction of such
performance or other criteria or upon the occurrence of such events as the
Committee shall determine, and for the early expiration of the Restriction
Period upon an Employee's death, Disability or Retirement as defined in
paragraph 2.7.3, or, following a Change of Control, upon termination of an
Employee's employment by the Company without "Cause" or by the Employee for
"Good Reason," as those terms are defined herein. For purposes of this Plan:
A "Change of Control" shall be deemed to occur (a) on the date the Company
first has actual knowledge that any person (as such term is used in Sections
13(d) and 14(d) (2) of the Exchange Act) has become the beneficial owner (as
defined in Rule 13(d)-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 40% or more of the combined voting power
of the Company's then outstanding securities, or (b) on the date the
shareholders of the Company approve (i) a merger of the Company with or into
any other corporation in which the Company is not the surviving corporation or
in which the Company survives as a subsidiary of another corporation, (ii) a
consolidation of the Company with any other corporation, or (iii) the sale or
disposition of all or substantially all of the Company's assets or a plan of
complete liquidation.
"Cause," when used with reference to termination of the employment of an
Employee by the Company for "Cause," shall mean:
(a) the Employee's continuing willful and material breach of his or her duties
to the Company after he or she receives a demand from the Chief Executive of
the Company specifying the manner in which he or she has willfully and
materially breached such duties, other than any such failure resulting from
Disability of the Employee or his or her resignation for "Good Reason," as
defined herein; or
(b) the conviction of the Employee of a felony; or
(c) the Employee's commission of fraud in the course of his or her employment
with the Company, such as embezzlement or other material and intentional
violation of law against the Company; or
(d) the Employee's gross misconduct causing material harm to the Company.
"Good Reason" shall mean any one or more of the following, occurring following
or in connection with a Change of Control and within 90 days prior to the
Employee's resignation, unless the Employee shall have consented thereto in
writing:
(a) the assignment to the Employee of duties inconsistent with his or her
executive status prior to the Change of Control or a substantive change in the
officer or officers to whom he or she reports from the officer or officers to
whom he or she reported immediately prior to the Change of Control; or
<PAGE> 8
(b) the elimination or reassignment of a majority of the duties and
responsibilities that were assigned to the Employee immediately prior to the
Change of Control; or
(c) a reduction by the Company in the Employee's annual base salary as in
effect immediately prior to the Change of Control; or
(d) the Company's requiring the Employee to be based anywhere outside a
35-mile radius from his or her place of employment immediately prior to the
Change of Control, except for required travel on the Company's business to an
extent substantially consistent with the Employee's business travel obligations
immediately prior to the Change of Control; or
(e) the failure of the Company to grant the Employee a performance bonus
reasonably equivalent to the same percentage of salary the Employee normally
received prior to the Change of Control, given comparable performance by the
Company and the Employee; or
(f) the failure of the Company to obtain a satisfactory Assumption Agreement
(as defined in paragraph 4.12 of the Plan) from a successor, or the failure of
such successor to perform such Assumption Agreement.
3.2 Incentive Agreements.
Each Award granted under the Plan shall be evidenced by a written agreement (an
"Incentive Agreement") in a form approved by the Committee and executed by the
Company and the Employee to whom the Award is granted. Each Incentive Agreement
shall be subject to the terms and conditions of the Plan and other such terms
and conditions as the Committee may specify.
3.3 Waiver or Restrictions.
The Committee may modify or amend any Award under the Plan or waive any
restrictions or conditions applicable to such Awards; provided, however, that
the Committee may not undertake any such modifications, amendments or waivers
if the effect thereof materially increases the benefits to any Employee, or
adversely affects the rights of any Employee without his or her consent.
3.4 Terms and Conditions of Awards.
3.4.1 Upon receipt of an Award of shares of Common Stock under the Plan, even
during the Restriction Period, an Employee shall be the holder of record of the
shares and shall have all the rights of a shareholder with respect to such
shares, subject to the terms and conditions of the Plan and the Award.
3.4.2 Except as otherwise provided in this paragraph 3.4, no shares of Common
Stock received pursuant to the Plan shall be sold, exchanged, transferred,
pledged, hypothecated or otherwise disposed of during the Restriction Period
applicable to such shares. Any purported disposition of such Common Stock in
violation of this paragraph 3.4.2 shall be null and void.
3.4.3 If an Employee's employment with the Company terminates prior to the
expiration of the Restriction Period for an Award, subject to any provisions of
the Award with respect to the Employee's death, Disability or Retirement, or
<PAGE> 9
Change of Control, all shares of Common Stock subject to the Award shall be
immediately forfeited by the Employee and reacquired by the Company, and the
Employee shall have no further rights with respect to the Award. In the
discretion of the Committee, an Incentive Agreement may provide that, upon the
forfeiture by an Employee of Award Shares, the Company shall repay to the
Employee the consideration (if any) which the Employee paid for the Award
Shares on the grant of the Award. In the discretion of the Committee, an
Incentive Agreement may also provide that such repayment shall include an
interest factor on such consideration from the date of the grant of the Award
to the date of such repayment.
3.4.4 The Committee may require under such terms and conditions as it deems
appropriate or desirable that (i) the certificates for Common Stock delivered
under the Plan are to be held in custody by the Company or a person or
institution designated by the Company until the Restriction Period expires,
(ii) such certificates shall bear a legend referring to the restrictions on the
Common Stock pursuant to the Plan, and (iii) the Employee shall have delivered
to the Company a stock power endorsed in blank relating to the Common Stock.
4. MISCELLANEOUS PROVISIONS
4.1 Adjustments Upon Change in Capitalization.
4.1.1 The number and class of shares subject to each outstanding Stock Option,
the Exercise Price thereof (but not the total price), the maximum number of
Stock Options that may be granted under the Plan, the minimum number of shares
as to which a Stock Option may be exercised at any one time, and the number and
class of shares subject to each outstanding Award, shall be proportionately
adjusted in the event of any increase or decrease in the number of the issued
shares of Common Stock which results from a split-up or consolidation of
shares, payment of a stock dividend or dividends exceeding a total of 5% for
which the record dates occur in any one fiscal year, a recapitalization (other
than the conversion of convertible securities according to their terms), a
combination of shares or other like capital adjustment, so that (i) upon
exercise of the Stock Option, the Employee shall receive the number and class
of shares such Employee would have received had such Employee been the holder
of the number of shares of Common Stock for which the Stock Option is being
exercised upon the date of such change or increase or decrease in the number of
issued shares of the Company, and (ii) upon the lapse of restrictions of the
Award Shares, the Employee shall receive the number and class of shares such
Employee would have received if the restrictions on the Award Shares had lapsed
on the date of such change or increase or decrease in the number of issued
shares of the Company.
4.1.2 Upon a reorganization, merger or consolidation of the Company with one
or more corporations as a result of which ASH is not the surviving corporation
or in which ASH survives as a wholly-owned subsidiary of another corporation,
or upon a sale of all or substantially all of the property of the Company to
another corporation, or any dividend or distribution to shareholders of more
than 10% of the Company's assets, adequate adjustment or other provisions shall
be made by the Company or other party to such transaction so that there shall
remain and/or be substituted for the Option Shares and Award Shares provided
for herein, the shares, securities or assets which would have been issuable or
payable in respect of or in exchange for such Option Shares and Award Shares
then remaining, as if the Employee had been the owner of such shares as of the
<PAGE> 10
applicable date. Any securities so substituted shall be subject to similar
successive adjustments.
4.2 Withholding Taxes.
The Company shall have the right at the time of exercise of any Stock Option,
the grant of an Award, or the lapse of restrictions on Award Shares, to make
adequate provision for any federal, state, local or foreign taxes which it
believes are or may be required by law to be withheld with respect to such
exercise ("Tax Liability"), to ensure the payment of any such Tax Liability.
The Company may provide for the payment of any Tax Liability by any of the
following means or a combination of such means, as determined by the Committee
in its sole and absolute discretion in the particular case: (i) by requiring
the Employee to tender a cash payment to the Company, (ii) by withholding from
the Employee's salary, (iii) by withholding from the Option Shares which would
otherwise be issuable upon exercise of the Stock Option, or from the Award
Shares on their grant or date of lapse of restrictions, that number of Option
Shares or Award Shares having an aggregate fair market value (determined in the
manner prescribed by paragraph 2.2) as of the date the withholding tax
obligation arises in an amount which is equal to the Employee's Tax Liability
or (iv) by any other method deemed appropriate by the Committee. Satisfaction
of the Tax Liability of a Section 16 Reporting Person may be made by the method
of payment specified in clause (iii) above only if the following two conditions
are satisfied:
(a) the withholding of Option Shares or Award Shares and the exercise of the
related Stock Option occur at least six months and one day following the date
of grant of such Stock Option or Award; and
(b) the withholding of Option Shares or Award Shares is made either (i)
pursuant to an irrevocable election ("Withholding Election") made by such
Employee at least six months in advance of the withholding of Options Shares or
Award Shares, or (ii) on a day within a ten-day "window period" beginning on
the third business day following the date of release of the Company's quarterly
or annual summary statement of sales and earnings.
Anything herein to the contrary notwithstanding, a Withholding Election may be
disapproved by the Committee at any time.
4.3 Relationship to Other Employee Benefit Plans.
Stock Options and Awards granted hereunder shall not be deemed to be salary or
other compensation to any Employee for purposes of any pension, thrift, profit-
sharing, stock purchase or any other employee benefit plan now maintained or
hereafter adopted by the Company.
4.4 Amendments and Termination.
The Board of Directors may at any time suspend, amend or terminate this Plan.
No amendment, except as provided in paragraph 2.8, or modification of this Plan
may be adopted, except subject to stockholder approval, which would: (a)
materially increase the benefits accruing to Employees under this Plan, (b)
materially increase the number of securities which may be issued under this
Plan (except for adjustments pursuant to paragraph 4.1 hereof), or (c)
materially modify the
<PAGE> 11
requirements as to eligibility for participation in the Plan.
4.5 Successors in Interest.
The provisions of this Plan and the actions of the Committee shall be
binding upon all heirs, successors and assigns of the Company and of Employees.
4.6 Other Documents.
All documents prepared, executed or delivered in connection with this Plan
(including, without limitation, Option Agreements and Incentive Agreements)
shall be, in substance and form, as established and modified by the Committee;
provided, however, that all such documents shall be subject in every respect to
the provisions of this Plan, and in the event of any conflict between the terms
of any such document and this Plan, the provisions of this Plan shall prevail.
4.7 No Obligation to Continue Employment.
This Plan and grants hereunder shall not impose any obligation on the Company
to continue to employ any Employee. Moreover, no provision of this Plan or any
document executed or delivered pursuant to this Plan shall be deemed modified
in any way by any employment contract between an Employee (or other employee)
and the Company.
4.8 Misconduct of an Employee.
Notwithstanding any other provision of this Plan, if an Employee commits fraud
or dishonesty toward the Company or wrongfully uses or discloses any trade
secret, confidential data or other information proprietary to the Company, or
intentionally takes any other action materially inimical to the best interests
of the Company, as determined by the Committee, in its sole and absolute
discretion, such Employee shall forfeit all rights and benefits under this
Plan.
4.9 Term of Plan.
This Plan was adopted by the Board effective June 28, 1996. No Stock
Options or Awards may be granted under this Plan after June 28, 2006.
4.10 Governing Law.
This Plan shall be construed in accordance with, and governed by, the laws of
the State of California.
4.11 Shareholder Approval.
No Stock Option shall be exercisable, or Award granted, unless and until the
Shareholders of the Company have approved this Plan and all other legal
requirements have been fully complied with.
4.12 Assumption Agreements.
The Company will require each successor, (direct or indirect, whether by
<PAGE> 12
purchase, merger, consolidation or otherwise), to all or substantially all of
the business or assets of the Company, prior to the consummation of each such
transaction, to assume and agree to perform the terms and provisions remaining
to be performed by the Company under each Incentive Agreement and Stock Option
and to preserve the benefits to the Employees thereunder. Such assumption and
agreement shall be set forth in a written agreement in form and substance
satisfactory to the Committee (an "Assumption Agreement"), and shall include
such adjustments, if any, in the application of the provisions of the Incentive
Agreements and Stock Options and such additional provisions, if any, as the
Committee shall require and approve, in order to preserve such benefits to the
Employees. Without limiting the generality of the foregoing, the Committee may
require an Assumption Agreement to include satisfactory undertakings by a
successor:
(a) to provide liquidity to the Employees at the end of the Restriction Period
applicable to Common Stock awarded to them under the Plan, or on the exercise
of Stock Options;
(b) if the succession occurs before the expiration of any period specified in
the Incentive Agreements for satisfaction of performance criteria applicable to
the Common Stock awarded thereunder, to refrain from interfering with the
Company's ability to satisfy such performance criteria or to agree to modify
such performance criteria and/or waive any criteria that cannot be satisfied as
a result of the succession;
(c) to require any future successor to enter into an Assumption Agreement; and
(d) to take or refrain from taking such other actions as the Committee may
require and approve, in its discretion.
The Committee referred to in this paragraph 4.12 is the Committee appointed by
a Board of Directors in office prior to the succession then under
consideration.
4.13 Compliance With Rule 16B-3.
Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3. To the extent that any provision of the Plan or
action by the Committee fails to so comply, it shall be deemed null and void,
to the extent permitted by law and deemed advisable by the Committee.
IN WITNESS WHEREOF, this Plan has been executed effective as of the 28th day of
June, 1996.
AMERICAN SPORTS HISTORY INCORPORATED
By: /s/ Vincent M. Nerlino
--------------------------------
Vincent M. Nerlino, President
<PAGE> 1
EXHIBIT 16
July 21, 1995
SECPS Letter file
U.S. Securities and Exchange Commission
Mail Stop 9-5
450 Fifth Street, Northwest
Washington, D.C. 20549
RE: Fans Holdings, Inc.
SEC File No.33-5525446
Ladies and Gentlemen:
We have read Item 4 of the Form 8-K for Fans Holdings, Inc. dated May 31, 1995
and agree with the statements contained therein.
Very truly yours,
Smith & Company
By: /s/ William R. Denney
-------------------------
William R. Denney
WRD\kow
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