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 year ended December 31, 1998
( ) 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
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(Name of small business issuer in its charter)
Nevada 87-0485307
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
21 MAPLE AVENUE, BAY SHORE, NEW YORK 11706-8752
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (516) 206-2674
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( ) No(x)
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, 1998. 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 July 13,
1999 of $0.625 was $6,541,266. As of July 13, 1999, the issuer
had 10,466,026 shares of its common stock issued and outstanding.
Documents incorporated by reference: None.
Transitional Small Business Disclosure Format: Yes ( ) No (x)
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Business Development:
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 ("AMSH") on September 20,
1995. On August 21, 1995, AMSH acquired 100% of the capital
stock of Infinet, Inc., a Delaware corporation ("Infinet"). On
May 15, 1997, the Board of Directors of the Company authorized a 1
for 10 reverse stock split. On January 14, 1998, the Company
acquired 100% of the capital stock of Sunset Interactive Network,
Inc., a newly formed Delaware corporation ("SIN"). As used in
this document, the "Company" refers to AMSH and its subsidiaries,
Infinet and SIN (effective January 14, 1998), unless the context
indicates otherwise.
Business of Issuer:
During the last three years, the Company had attempted to
publish magazines that featured sports with a nostalgia spirit.
These efforts were not successful. No revenues were realized from
operations and expenses were incurred during these efforts.
In April 1999, a new management team was recruited to review
the Company's business strategy and to implement the revised
business strategy. AMSH is now focused on providing sports and
educational content utilizing all available technologies of the
Internet, media, advanced telecommunications and storage
technologies.
The Company intends to focus its efforts initially on
covering America's five major professional sports: baseball,
basketball, football, hockey and soccer. Major league sports are
a dominating interest to the American public, who not only have 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
originally conceived to chronicle the heritage of American sports
history, and to become recognized as 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, the increased growth of the general sports marketplace,
as well as the worldwide development of, and desire for, American
sports products.
Product Development:
Initial investment will be focused in three areas: the
www.SportsInfo.com Internet site, sports camps, and additional
products that utilize available technology which are consistent
with our focus on information and education.
The www.SportsInfo.com site will be where fans can come to
get access to content which will be fan, player, and education
focused. Current sports-related web-sites focus more on teams,
scores and news. We want to personalize the fan's web experience.
Features may include the ability to customize the site to showcase
the fan's favorite teams, feature articles on players,
instructional material, and online chats with players, coaches,
and other sports personalities. In addition, we are considering
an e-commerce site where fans can purchase authenticated sports
memorabilia. We believe that the www.SportsInfo.com site will be
supported over time through the combination of advertising and
merchandizing revenues. Version 1.0 of the Company's
www.SportsInfo.com Internet site is planned for the fourth quarter
of 1999.
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The Company intends to operate baseball, softball, and soccer
camps, initially in the NY metro area. Robert C. Dromerhauser, VP-
Marketing is a co-owner of baseball and softball camps. The
Company may acquire existing camps or build new camps.
Ultimately, we would look at expansion both geographically and by
adding other popular sports. These instructional camps will be an
integral part of our business strategy as they allow the Company
to fulfill the education part of its mission. The expertise and
content gathered can be exported to the wwww.SportsInfo.com site.
Participants in the instructional camps will be exposed to the
Company's other product offerings and will become part of the
Company's customer base.
There is additional investment being made to develop
proprietary products which utilize technology to enhance the
delivery of sports content. These products are in various stages
of development. While still under development and market testing,
features may include video clips, instructional material, games,
and links to the www.SportsInfo.com and other sites. The link to
the www.SportsInfo.com site will serve to build repeat traffic.
During the last two years, a minimal amount was spent on
research and development activity. No patents were applied for
and copyrights were not sought. In the first and second quarters
of 1999, with the new business strategy which calls for the use of
technology, the Company has spent approximately $400,000 on
research and development activity. The Company will seek to
secure patent and copyright protection for any intellectual
property developed.
The Company may seek to acquire the rights to licensed
property either on its own or in partnership with other companies.
The final determination will be made after further meetings with
potential partners and licensors. The acquisition of licenses
with professional sports leagues is a major undertaking requiring
both capital and execution capability. There can be no assurance
that the Company will be able to acquire rights to licensed
property either on its own or in partnership with other companies.
Marketing and Distribution:
Since April 1999, the Company has been developing its
marketing strategies, which includes working closely with
potential strategic business partners and capitalizing on the
relationships that have been established by the management team
over the course of their careers. In order to reach its intended
customer, the sports oriented consumer, 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, the Internet and other
organizations and associations. Preliminary discussions are
underway to explore ways to promote the www.SportsInfo.com site
via local radio stations, merchandisers who supply stadium events,
a hosted TV sports show, and similar types of multimedia
dissemination.
Competition:
There is significant competition for the business the Company
intends to pursue. On the Internet side, web users with an
interest in sports can go to web sites sponsored by the major
television networks (ABC, CBS, CNN, FOX, NBC), specialty sports
networks (ESPN, The Golf Channel, SpeedVision) and professional
sports leagues (MLB, MLS, NASCAR, (W)NBA, NFL, NHL, (L)PGA). Many
of the existing participants in the sports web site business are
significantly better capitalized than the Company, have
significantly larger facilities, and employ a larger number of
personnel who have more experience than the Company's employees.
The competition for instructional sports camps is different as the
competition is largely fragmented. Here, the challenge will be
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entering new markets where the local competitor has been
entrenched for some time.
The Company intends to compete by providing the fan with an
experience that is different from that otherwise available through
the application of current and emerging technology. There will be
a focus on bringing the fan closer to the player through direct
and indirect means. We believe that judicious use of technology
will always provide the fan with a higher value experience.
Employees:
During 1998, the Company had two employees. In 1999, the
Company recruited five additional employees. The Company
periodically retains outside consultants to perform certain
corporate administrative tasks. In the business plan, it is
contemplated that additional employees will be added as funding
permits.
ITEM 2. DESCRIPTION OF PROPERTY
The Company does not own, and does not anticipate
acquiring, any real estate, principal plants and/or other
property. During 1998, the Company operated its corporate offices
from office facilities provided by its Chairman on a month-to-
month basis without charge. Currently, the Company occupies its
Bay Shore, New York corporate offices at a monthly rent of $1,250
through October, 1999.
ITEM 3. LEGAL PROCEEDINGS
On June 30, 1996, a default judgment was entered against
Infinet, the Company's wholly owned subsidiary, and certain of the
Company's principal stockholders by Craig Pearson, a former
shareholder of Fans Publishing, Inc., alleging breach of
contractual commitments and other matters. Effective October 14,
1997, on behalf of himself and the Company, Mr. Nerlino entered
into a proposed settlement agreement whereby the Company is
obligated to pay $100,000 in cash and is also obligated to issue
225,000 shares of its common stock. As a result, the Company
recorded a charge to operations of $122,500 in 1997.
The $100,000 is payable, without interest, in two
installments: $5,000 within 120 days of the agreement and $95,000
by October 14, 2000. The common stock was to be issued within 30
days of the effective date of the agreement. Since the first cash
installment was paid in November 1998 and the common stock was
issued in June 1998, the Company became in default of the
agreement. Should any legal action be initiated against the
Company due to its late payment default, the Company will
vigorously defend itself. As a result of the default, the Company
recorded the balance due as a current liability.
On August 2, 1996, the Company became a defendant in a case
involving one of its current stockholders, Robert T. Wheeler. The
stockholder was seeking a refund of approximately $200,000, the
original amount invested in the Company's common stock. On
November 2, 1998, the Company entered into a settlement agreement
with the Mr. Wheeler. The Company is obligated to pay $50,000,
without interest, 18 months from the effective date of the
agreement, and has issued 50,000 shares of its common stock to Mr.
Wheeler. As a result, the Company recorded a charge to operations
of $56,000 in 1998 and classified the remaining liability as long-
term.
The Company is delinquent in paying many of its outstanding
debts and has been notified by some creditors that they have
already initiated or may pursue legal remedies. The Company
believes that all amounts are appropriately accrued in its
financial statements. Since the Company does not currently have
the financial resources to satisfy these debts, it intends to
negotiate settlements with its creditors in the near term. It is
not possible to predict the ultimate outcome of these matters.
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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, 1998.
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 Over the Counter Electronic Bulletin Board
under the symbol "ASPH" since September 20, 1995. In May 1997,
he Company effectuated a 1 for 10 reverse stock split at which
time the symbol was changed to "AMSH". 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. All prices are on a
post-split basis. The information set forth below for the year
ended December 31, 1997 was provided by the National Quotation
Bureau, Inc. The information set forth below for the year ended
December 31, 1998 was provided by America Online.
Year Ended December 31, 1997:
Quarter High Low
1 $0.04 $0.04
2 0.05 0.01
3 2.00 0.05
4 0.25 0.125
Year Ended December 31, 1998:
Quarter High Low
1 $1.125 $0.031
2 0.75 0.0625
3 0.9375 0.125
4 1.032 0.50
(b) Holders:
There were approximately 483 shareholders of record on July
13, 1999 of the Company's common stock with a par value of $0.01.
(c) Dividends:
The Company has never paid cash dividends on its common
stock. Payment of dividends is within the discretion of the
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.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview:
Although the Company has incurred a significant amount of
start-up costs, since the Company has not generated any revenue
from operations, it is still considered to be in the development
stage.
Statement of Operations -
Years Ended December 31, 1998 and 1997:
During the year ended December 31, 1998, general and
administrative expenses and lawsuit settlement costs were $553,266
and $56,000, respectively. During the year ended December 31,
1997, general and administrative expenses and lawsuit settlement
costs were $248,904 and $122,500, respectively.
During the years ended December 31, 1998 and 1997, the
Company had net losses of $609,239 and $371,404, respectively.
As of December 31, 1998 and 1997, the Company was a
development stage company that had not yet generated any revenues
from operations. The Company expects to incur continuing general
and administrative expenses, without any commensurate operating
revenues, until such time as it is able to commence revenue-
generating operations. The generation of revenue will be
dependent upon the Company raising substantial working capital
from the sales of equity securities and or obtaining funds from
loan proceeds, and operating revenues. There can be no
assurances, however, that the Company will ultimately be
successful in raising the necessary capital and in establishing
itself as a sports information and services provider.
Financial Condition - December 31, 1998:
The Company incurred a net loss of $609,239 for the year
ended December 31, 1998, resulting in an accumulated deficit of
$2,766,093. Management of the Company is developing a business
plan summarizing its strategy for the next several years. This
plan is now focused on providing U.S. sports and educational
content utilizing all available technologies of the Internet,
media, advanced telecommunications and storage technologies. Under
this plan, significant cash will be required through December 1999
to pay off current debt and fund its implementation. The
intention is to raise capital through the sale of its equity
securities and/or to seek outside private sources of financing.
In connection with this, the Company has issued approximately
$550,000 in non-interest bearing demand promissory notes to
various parties, including officers of the Company, in the first
and second quarters of 1999. Approximately $400,000 has been
spent during 1999 on product development. The Company intends to
continue spending on product development. Significant additional
cash will be required.
There can be no assurance that the Company will be successful
in its attempts to raise sufficient capital essential to its
survival. To the extent the Company is unable to raise the
necessary operating capital, it will not be able to implement its
business plan, and it will become necessary to curtail or cease
operations. Additionally, even if the Company does raise
sufficient operating capital, there can be no assurances that the
net proceeds will be sufficient enough to enable it to develop its
business to a level where it will generate profits and cash flows
from operations. These matters raise substantial doubt about the
Company's ability to continue as a going concern.
During the year ended December 31, 1998, the Company issued
6,975,200 common shares for cash proceeds, for the acquisition of
SIN, in settlement of lawsuits and notes payable, and for services
rendered by its employees and outside consultants, which were
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valued at $390,794. During the year ended December 31, 1997, the
Company issued 1,375,000 common shares for services rendered by
its employee and an outside consultant, which were valued at
$57,500.
The Company currently has six employees. In the business
plan, it is contemplated that additional employees will be added
as funding permits. Management of the Company intends to sustain
operations during the year ending December 31, 1999, with the cash
resources generated by the continuing sale of common stock,
issuance of stock for services, and through management's ability
to control discretionary expenditures. During the year ended
December 31, 1998, 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.
Year 2000 Compliance:
The Year 2000 issue is the result of computer programs being
written using two digits (rather than four) to define the applicable year.
Computer programs that have time-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including among other things, a temporary inability to process transactions,
send invoices or engage in other normal business activities. The Company
maintains internal equipment and contracts with third-party vendors for
the provision of certain information technology and other services.
The Company is currently reviewing the potential impact of
the year 2000 on the processing of date-sensitive information by
the Company's internal computer equipment and the computer
systems and equipment of the third-party vendors on which the
Company's business relies. There is no current estimate of the
potential cost to resolve Year 2000 issues that may arise. There
can be no assurance that the Company will be able to address, in a
timely fashion, all potential Year 2000 problems, or that the
systems of the third-party vendors upon which the Company's
business relies (and the maintenance and operation of which are
not within the control of the Company) will be Year 2000 compliant
or will become Year 2000 compliant in a timely manner. Any Year
2000 problems could impact the provision of products or services
to the Company's customers and could subject the Company to the
risk of litigation, lost revenues and loss of current or future
customers.
Forward-Looking Statements:
This Annual Report on Form 10-KSB contains forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities Act
of 1933, as amended. For this purpose, any statements contained herein
that are not statements of historical fact may be deemed to be forward-
looking statements. Without limiting the foregoing, the words "believes,"
"anticipates," "plans," "expects" and similar expressions are intended
to identify forward-looking statements. Such forward-looking statements
represent management's current expectations and are inherently uncertain.
Investors are warned that actual results may differ from management's
expectations.
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
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On June 14, 1999, Michelle M. Gelinas, CPA (the "Former
Accountant") declined to stand for reappointment as the
independent public accountant for American Sports History
Incorporated. The Former Accountant reported on the financial
statements for the fiscal years ended December 31, 1997 and 1996.
The reports of the Former Accountant did not contain any adverse
opinion or a disclaimer of opinion, and were not qualified or
modified as to any uncertainty (except as to the Company's
"ability to continue as a going concern"), audit scope or
accounting principle.
During the Company's two most recent fiscal years and
subsequent interim periods through the date of this report, there
were no disagreements with the Former Accountant on any matter of
accounting principles or practice, financial statement disclosure,
or auditing scope or procedure, which disagreements if not
resolved to the satisfaction of the Former Accountant would have
caused it to make reference thereto in its report on the financial
statements for such years.
At its board meeting on June 14, 1999, the Board of Directors
of the Company engaged the accounting firm of Hays & Company as
its new independent accountants, effective June 14, 1999.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF EXCHANGE ACT
The following table and text sets forth the name and ages of
all directors and executive officers of the Company and their
positions and offices with the Company as of July 13, 1999. At
December 31, 1998, Vincent M. Nerlino was the sole Director and
held the offices of President, Chief Executive Officer, and
Secretary. During 1998, Peter Klamka was a Director of the
Company from January till June 1998. All of the directors will
serve until the next annual meeting of shareholders and until
their successors are elected and qualified, or until their 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 law is also provided.
Name Age Positions Director Since
Vincent M. Nerlino 64 Chairman May, 1995
Herbert J. Hefke 53 President & Chief April, 1999
Executive Officer, and
Director
Kenneth O. Roko 49 Secretary & Chief April, 1999
Operating Officer, and
Director
Arthur J. Dromerhauser 37 Director April, 1999
Robert C. Dromerhauser 36 VP-Marketing, and April, 1999
Director
Jeffrey Hwang 45 Chief Financial n.a.
Officer
Arthur J. Dromerhauser and Robert C. Dromerhauser are brothers.
There are no other family relationships among directors and executive
officers.
Biographies of Directors and/or officers:
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Vincent M. Nerlino - Mr. Nerlino has been a Director since
May, 1995. He became Chairman in April, 1999 when additional
officers were hired. Previously, he was President, Chief
Executive Officer, and Secretary. Prior to acquiring control of
the Company in May, 1995, 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. As Chairman,
Mr. Nerlino will preside over regular meetings of the Board of
Directors and help set the strategic direction of the Company.
Herbert J. Hefke, President and Chief Executive Officer,
joined the Company in April, 1999. Mr. Hefke retired as a
Managing Director of Morgan Guaranty Trust Company and head of
Global Human Resources for J.P. Morgan & Co. Inc. after twenty-nine
years of service. He is currently on the Board of Directors for
J.P. Morgan Services Inc. in Wilmington, Delaware and the Long
Island Aquarium in Bay Shore, New York. Mr. Hefke will be
overseeing the general operations, assuming responsibility for
management along with the development of new customers,
advertising and investor relations.
Kenneth O. Roko, Secretary and Chief Operating Officer,
joined the Company in April, 1999. Mr. Roko brings a background
of strategic planning, technological development, analysis,
implementation and vast Internet experience from his work at US
Agency for International Development, where he was employed for
the last ten years. Mr. Roko is President & CEO and Director of
NGN Technology, Inc., a technology consulting company which also
provides services to the Company. He will be overseeing AMSH's
strategic planning of business, coordinating varied technology
based Company initiatives to insure unified operation and
sustainability, the establishing of allied relationships with
domestic and international technology partners.
Arthur J. Dromerhauser, Investor Relations, has been a
consultant with the Company since July, 1998. He is President of
Dromerhauser Consultants, a management consulting firm. Mr.
Dromerhauser has been a private investor for several years. He is
responsible for all investor matters, is involved in capital
raising activities, and is involved in setting the Company's
business strategy.
Robert C. Dromerhauser, Vice President of Marketing, joined
the Company on April, 1999. Mr. Dromerhauser brings the seasoned
relationships and the valued insights of a former professional
baseball player with the New York Mets and Baltimore Orioles. He
is the co-owner with Mr. Bud Harrelson of the Buddy Harrelson
Baseball & Softball Academy. Mr. Dromerhauser is responsible for
securing advertisers, creating relationships with professional and
amateur sports associations (active and retired), and assisting in
the securing of access to licensed media for incorporation in the
Company's content portfolio.
Jeffrey Hwang, Chief Financial Officer, joined the Company on
June, 1999. Mr. Hwang was a Vice President in Capital Markets &
Syndicate at J.P. Morgan & Co. where he raised capital for high
technology and other corporate clients. He joined J.P. Morgan &
Co. in 1980. Prior to receiving his M.B.A. degree from Harvard
Business School, Mr. Hwang was an auditor with Price Waterhouse &
Co. He is responsible for all financial matters other than
Investor Relations.
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.
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ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation Table:
Long-Term
Annual Compensation Compensation
(a) (b) (c) (d) (e)
Name All Other
Principal Position Year Salary ($) Options/SARs (#) Compensation
Vincent M. Nerlino 1998 200,000 (1) 1,200,000 $12,000 (1)
Chairman 1997 200,000 (1) $12,000 (1)
1996 200,000 (1) 500,000 (2) $12,000 (1)
(1) As per employment agreement. Amounts accrued for but only
partially paid in the form of 1,100,000, 1,250,000 and 3,000,000
shares of common stock issued to Mr. Nerlino in 1996, 1997 and
1998, respectively. The shares were valued at $50,000, $55,000
and $120,000, respectively.
(2) Issued in 1996, rescinded in 1998 upon issuance of new stock
options.
Option Grants:
Stock options were granted to the following Directors and
officers during 1998 and through July 1, 1999.
Percent of
of Total Number of
Options Securities Exercise Value for
Name Granted to Underlying Price Options on
Director Options Per Expiration Date of
and Officers Granted* Share Date Grant (3)
Vincent M. Nerlino 18.3% 1,200,000 $1.00 11/19/08 $72,000
Herbert J. Hefke 15.3% 1,000,000 $1.00 11/19/08 $60,000
Kenneth O. Roko(1) 18.3% 1,200,000 $0.12 11/19/08 $72,000
Authur J. Dromerhauser(2) 18.3% 1,200,000 $1.00 11/19/08 $72,000
Robert C. Dromerhauser(2) 18.3% 1,200,000 $1.00 11/19/08 $72,000
Jeffrey Hwang 11.5% 750,000 $1.00 6/15/09 $90,000
* Stock options granted to Directors and officers vest over a three year period.
(1) Stock options granted to NGN Technology, Inc. for which
Kenneth O. Roko is deemed to have control as its President & Chief
Executive Officer.
(2) Stock options granted to Dromerhauser Consultants for which
Arthur J. Dromerhauser and Robert C. Dromerhauser are deemed to
have control.
(3) Present value of the options on the date of grant calculated
using an option pricing model.
Year-end Option Values:
The following table sets forth certain information concerning
the number and value of unexercised options held by each officer and director
on December 31, 1998. No stock options were exercised during 1998.
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Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year End at Fiscal Year End (3)
Name Unexerciseable Exercisable Unexerciseable Exercisable
Vincent M. Nerlino 1,200,000 0 $0 n.a.
Herbert J. Hefke 1,000,000 0 $0 n.a.
Kenneth O. Roko (1) 1,200,000 0 $0 n.a.
Arthur J. Dromerhauser (2) 1,200,000 0 $0 n.a.
Robert C. Dromerhauser (2) 1,200,000 0 $0 n.a.
(1) Stock options granted to NGN Technology, Inc. for which Kenneth O. Roko
is deemed to have control as its President & Chief Executive Officer.
(2) Stock options granted to Dromerhauser Consultants for which Arthur J.
Dromerhauser and Robert C. Dromerhauser are deemed to have control.
(3) Represents the difference between the fair market value of the
common stock at fiscal year end as determined by the Board of
Directors of the Company ($0.12 per share) and the option exercise
price.
Employment Agreements:
The Company entered into a five-year employment agreement
with Vincent M. Nerlino beginning on January 1, 1996 and
terminating on December 31, 2000, pursuant to which Mr. Nerlino
served as the Company's Chairman, President and Chief Executive
Officer. Mr. Nerlino is currently serving only as Chairman. The
employment agreement provides for annual base compensation of
$200,000 and an annual bonus based on pretax operating profits.
The Company is obligated to 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 annual base
compensation. In lieu of cash payments for employment services,
the Company issued 3,000,000 and 1,250,000 shares of its common
stock valued at $120,000 and $55,000 to Mr. Nerlino during the
years ended December 31, 1998 and 1997, respectively, as partial
payment under the contract. Mr. Nerlino`s employment agreement is
currently being renegotiated.
In the second quarter of 1999, the Company entered into three-
year employment agreements with additional members of management,
Herbert J. Hefke, Kenneth O. Roko, Arthur J. Dromerhauser, Robert
C. Dromerhauser, and Jeffrey Hwang. Under the terms of the
employment agreements, each executive will receive an annual base
salary of $90,000. A portion of the base salaries may be paid in
common stock in lieu of cash. In light of the Company's current
financial condition, in the initial contract year the five
employees have agreed to accept a total of 520,000 shares of
common stock and $190,000 of cash. Additionally, the base
salaries may be increased based on certain performance milestones
and must be approved by the Company's President, Chief Executive
Officer and Board of Directors. The agreements may be terminated
with or without cause. As an incentive to enter into an
agreement, in the second quarter of 1999, Jeffrey Hwang received
200,000 shares of common stock and 750,000 stock options, with an
exercise price of $1.00, that vest in equal installments over
three years commencing June 2000.
Board of Directors:
Directors of the Company are reimbursed for travel expenses
incurred in attending Board meetings. During the fiscal year ended
11
<PAGE>
December 31, 1998, 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 performing similar functions
during the fiscal year ended December 31, 1998.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information regarding
the beneficial ownership of the common stock as of July 13, 1999.
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.
Amount and Nature of Percent of
Name and Address* of Beneficial Ownership Shares of
Beneficial Owner Stock Stock Options** Common Stock
Management:
Vincent M. Nerlino 4,501,750 (1) n.a. 43.0%
Herbert J. Hefke 580,000 n.a. 5.5%
Kenneth O. Roko 230,000 (2) n.a. 2.2%
Arthur J. Dromerhauser 348,750 (3) n.a. 3.3%
Robert C. Dromerhauser 268,750 (3) n.a. 2.6%
Jeffrey Hwang 230,000 n.a. 2.2%
All Directors and 6,159,250 n.a. 58.8%
Officers as a Group (6 persons)
* Business address of the Company is 21 Maple Avenue, Bay Shore,
NY 11706-8752
** While stock options have been granted, none are exercisable at
July 13, 1999 or within 60 days thereof.
(1) Includes 675,000 shares of common stock owned by Jeane Hays
Nerlino, the wife of Vincent M. Nerlino, and 811,000 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 824,500 shares of common stock owned by various
members of Mr. Nerlino's extended family over which Mr. Nerlino
does not exercise voting or investment power.
(2) Stock includes stock granted to NGN Technology, Inc. for which
Kenneth O. Roko is deemed to have control as its President & Chief
Executive Officer.
(3) Stock includes stock granted to Dromerhauser Consultants for
which Arthur J. Dromerhauser and Robert C. Dromerhauser are deemed
to have control.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
12
<PAGE>
Jean Nerlino, the spouse of Vincent M. Nerlino, Chairman, was
involved in transactions with the Company. For services rendered,
Jean Hays Nerlino was issued stock in lieu of cash during 1998.
Jean Hays Nerlino also advanced funds to the Company for working
capital needs during 1997 and 1998.
Effective November 18, 1998, the Company entered into a
business and consulting services agreement with NGN Technology,
Inc. ("NGN"). In connection with the agreement, Kenneth O. Roko,
NGN's Chief Executive Officer, will serve as an officer and a
member of the Company's Board of Directors and assist in the
implementation of the Company's technological strategies in order
to establish the Company as a major contributor and presence on
the Internet. Under the terms of the agreement, the Company
issued 200,000 shares of its common stock to NGN and has also
granted 1,200,000 stock options with an exercise price of $.12 per
share. The Company is also obligated to pay $50,000 to NGN, upon
completion of the Company's new strategic business plan. In
addition, the Company is obligated to pay NGN certain additional
compensation based on specified future performance.
In the first half of 1999, Herbert J. Hefke, President & CEO
of the Company, Arthur J. Dromerhauser, a director of the Company,
and Jeffrey Hwang, Chief Financial Officer, advanced funds to the
Company in the form of a demand note payable. Robert C.
Dromerhauser is co-owner of the Buddy Harrelson Baseball &
Softball Academy ("BHBSA"). During 1999, BHBSA utilized the
Company's offices and advanced funds to the Company.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K:
No report on Form 8-K were filed by the Company during the
last calendar quarter of 1998.
Exhibits:
Copies of the following documents are included as exhibits to
this report pursuant to Item 601 of Regulation S-B.
EXHIBIT TABLE
Exhibit SEC Ref. Title of Document Location
No.
1 (2) Agreement between National Sep/Fm10-KSB
Logistics, Inc. and Infinet, Inc. Ex. No. 2
dated August 21, 1995. (A)
2 (3)(i) Articles of incorporation of Sep/Fm10-KSB
National Logistics, Inc. filed in Ex. 3.1
the office of the Secretary of
State of the State of Nevada on
August 9, 1990. (A)
3 (3)(i) Amendment to the Articles of Sep/Fm10-KSB
Incorporation of National Ex. No.3.2
Logistics, Inc. to change the name
of the corporation to Fans
Holdings, Inc., filed in the office
13
<PAGE>
of the Secretary of State of the
State of Nevada on June 30, 1995. (A)
4 (3)(i) Amendment to the Articles of Sep/Fm10-KSB
Incorporation of Fans Holdings, Ex. No. 3.3
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. (A)
5 (3)(i) Bylaws of National Logistics, Inc. (A) Sep/Fm10-KSB
Ex. No. 3.4
6 (10) Agreement between American Sports Aug/Fm10-KSB
History Incorporated and Sunset Ex. No. 10.3
Interactive Network dated January
14, 1998. (B)
7 (10) Employment agreement between This Filing
American Sports History
Incorporated and Vincent M. Nerlino
dated January 2, 1996.
8 (10) American Sports History Incorporated This Filing
Employment Agreement.
9 (10) Agreement between American Sports This Filing
History Incorporated and NGN
Technology, Inc. dated November 18,
1998.
10 (10) American Sports History Incorporated This Filing
Qualified Stock Option Agreement.
11 (10) American Sports History Incorporated This Filing
Unqualified Stock Option Agreement.
12 (16) Letter addressed to the Securities Jun/Fm8-K
and Exchange Commission from Ex. No. 16.2
Michelle Gelinas, CPA, dated June
14, 1999. (C)
13 (21) Infinet, Inc. - incorporated in the
state of Delaware.
Sunset Interactive Network, Inc. -
incorporated in the state of
Delaware.
14 (27) Financial Data Schedule (D) n.a.
(A) These exhibits are included in the Company's annual report on
Form 10-KSB, for the fiscal year ended December 31, 1995, and
filed with the Securities and Exchange Commission on September 9,
1996, and are incorporated herein by reference. The reference
under the column "Location" is to the exhibit number in the report
on Form 10-KSB.
(B) This exhibit is included in the Company's annual report on
Form 10-KSB, for the fiscal year ended December 31, 1997, and
filed with the Securities and Exchange Commission on August 26,
1998, and is incorporated herein by reference. The reference
under the column "Location" is to the exhibit number in the report
on Form 10-KSB.
(C) This exhibit is included in the Company's current report on
Form 8-K, dated June 14, 1999, and filed with the Securities and
Exchange Commission on June 18, 1999, and is incorporated by
herein by reference.
(D) The Financial Data Schedule for the year ended December 31,
1998, is presented only in the electronic filing with the
Securities and Exchange Commission.
14
<PAGE>
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: July 14, 1999 By: /s/ HERBERT J. HEFKE
------------------------
Herbert J. Hefke
President & Chief Executive Officer
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: July 14, 1999 By: /s/ VINCENT M. NERLINO
--------------------------
Vincent M. Nerlino
Chairman and Director
July 14, 1999 By: /s/ HERBERT J. HEFKE
------------------------
Herbert J. Hefke
President, Chief Executive Officer
and Director
July 14, 1999 By: /s/ KENNETH O. ROKO
-----------------------
Kenneth O. Roko
Secretary, Chief Operating Officer
and Director
July 14, 1999 By: /s/ ARTHUR J. DROMERHAUSER
------------------------------
Arthur J. Dromerhauser
Director
July 14, 1999 By: /s/ ROBERT C. DROMERHAUSER
------------------------------
Robert C. Dromerhauser
VP-Marketing and Director
July 14, 1999 By: /s/ JEFFREY HWANG
---------------------
Jeffrey Hwang
Chief Financial Officer
15
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
AND CUMULATIVE FROM MAY 1, 1995
INDEX
INDEPENDENT AUDITOR'S REPORT F-1
INDEPENDENT AUDITOR'S REPORT F-2
CONSOLIDATED BALANCE SHEET, December 31, 1998 F-3
CONSOLIDATED STATEMENTS OF OPERATIONS, years ended
December 31, 1998 and 1997 and cumulative from May 1, 1995 F-4
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT, years ended
December 31, 1997 and 1998 F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS, years ended
December 31, 1998 and 1997 and cumulative from May 1, 1995 F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-7 - F-15
16
<PAGE>
Board of Directors and Stockholders
American Sports History Incorporated
Bay Shore, New York
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying consolidated balance sheet of
American Sports History Incorporated and subsidiaries (the
"Company") (a development stage company) as of December 31, 1998,
and the related consolidated statements of operations,
stockholders' deficit and cash flows for the year 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 audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of American Sports History Incorporated and
subsidiaries as of December 31, 1998 and the results of their
operations and cash flows for the year then ended in conformity
with generally accepted accounting principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 1 to the consolidated financial
statements, the Company's significant operating losses,
significant continuous capital requirements and the uncertainty
with respect to its ability to pay debts as they become due,
raises substantial doubt about the Company's ability to continue
as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of
these uncertainties.
/s/ Hays & Company
July 14, 1999
New York, New York
F-1
<PAGE>
Board of Directors and Stockholders
American Sports History Incorporated
INDEPENDENT AUDITOR'S REPORT
I have audited the accompanying consolidated statements of
operations, stockholders' deficit and cash flows of American
Sports History Incorporated and subsidiaries (the "Company") (a
development stage company) for the year ended December 31, 1997.
These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion
on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the results of
operations and cash flows of American Sports History Incorporated
and subsidiaries for the year ended December 31, 1997 in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 1 to the consolidated financial
statements, the Company's significant operating losses,
significant continuous capital requirements and the uncertainty
with respect to its ability to pay debts as they become due,
raises substantial doubt about the Company's ability to continue
as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of
these uncertainties.
/s/ Michelle M. Gelinas
Certified Public Accountant
June 30, 1998
Chatham, New Jersey
F-2
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Current assets
Cash $ 3,344
Total current assets 3,344
Other assets 2,667
$ 6,011
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued expenses $336,034
Due to officer 402,541
Loans from stockholder 117,056
Notes payable and accrued interest 80,375
Liability from settlement of lawsuit 95,000
Total current liabilities 1,031,006
Liability from settlement of lawsuit 50,000
Total liabilities 1,081,006
Commitments and contingencies (Notes 1, 4, 5, 7, 8, 9 and 10)
Stockholders' deficit
Common stock, $.01 par value;
25,000,000 shares authorized,
9,746,026 shares issued and outstanding 97,460
Additional paid-in capital 1,593,638
Accumulated deficit ($2,681,696 accumulated
during the development stage) (2,766,093)
Total stockholders' deficit (1,074,995)
$ 6,011
See notes to consolidated financial statements.
F-3
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31, Cumulative
from May 1,
1998 1997 1995
Revenue
Interest income $ 27 $ - $ 495
Expenses
General and administrative 553,266 248,904 2,422,835
Lawsuit settlements 56,000 122,500 178,500
Write-off of advances for
terminated acquisition - - 80,856
609,266 371,404 2,682,191
Net loss $(609,239) $(371,404) $(2,681,696)
Basic and diluted net loss
per share $ (0.08) $ (0.18)
Weighted average number of 7,527,867 2,114,576
common shares outstanding
See notes to consolidated financial statements.
F-4
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
YEARS ENDED DECEMBER 31, 1997 AND 1998
Common stock Addional Total
paid-in Accumulated stockholders'
Shares Amount capital deficit deficit
Balance, January 1, $ 13,958,262 $13,958 $1,216,513 $(1,785,450) $ (554,979)
1997
Effect of 1 for 10
reverse stock split (12,562,436) - - - -
Common stock issured
for services 1,375,000 13,750 43,750 - 57,500
Net loss - - - (371,404) (371,404)
Balance,
December 31, 1997 2,770,826 27,708 1,260,263 (2,156,854) (868,883)
Sale of common stock 246,000 2,460 54,540 - 57,000
Common stock issued
for purchase of
Sunset Interactive
Network, Inc. 500,000 5,000 10,000 - 15,000
Common stock issued
for repayment of
note payable 50,000 500 1,000 - 1,500
Common stock issued
towards settlement
of various lawsuits 275,000 2,750 25,750 - 28,500
Stock options
issued to non-employees
for services - - 12,333 - 12,333
Common stock issued
for services 5,904,200 59,042 229,752 - 288,794
Net loss - - - (609,239) (609,239)
Balance,
December 31, 1998 $ 9,746,026 $97,460 $1,593,638 $(2,766,093) $(1,074,995)
See notes to consolidated financial statements.
F-5
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31, Cumulative
from May 1,
1998 1997 1995
INCREASE (DECREASE) IN
CASH
Cash flows from operating
activities
Net loss $(609,239) $(371,404) $(2,681,696)
Adjustments to reconcile
net loss to net cash used
in operating activities
Write-off of prepaid royalty - - 137,500
Amortization expense 2,896 - 2,896
Write-off of deposit 30,000 - 30,000
Impairment of goodwill 14,437 - 14,437
Common stock issued for
partial settlement of
lawsuit 6,000 - 6,000
Stock options issued to
non-employees for services 12,333 - 12,333
Common stock issued for
services 288,794 57,500 829,302
Changes in assets and
liabilities
Prepaid taxes - 3,442 3,442
Other assets - - (5,000)
Liability from settlement 45,000 122,500 167,500
of lawsuits
Accounts payable and accrued
expenses 30,046 (2,785) 276,261
Due to officer 78,242 157,630 402,541
Accrued interest 14,148 - 14,148
Net cash used in
operating activities (87,343) (33,117) (790,336)
Cash flows from financing
activities
Proceeds from issuance of
notes - - 23,400
Loans from stockholder 33,680 33,116 117,056
Issuance of common stock 57,000 - 630,964
Liability from sale of common
stock rescinded - 22,260
Net cash provided by financing 90,680 33,116 793,680
activities
Net increase (decrease) in cash 3,337 (1) 3,344
Cash, beginning of period 7 8 -
Cash, end of period $ 3,344 $ 7 $ 3,344
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
Goodwill acquired in common stock purchase of Sunset Interactive
Network, Inc. $ 15,000
Common stock issued for partial payment of lawsuit liability $ 22,500
Common stock issued for repayment of note payable $ 1,500
See notes to consolidated financial statements.
F-6
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
AND CUMULATIVE FROM MAY 1, 1995
1 Basis of presentation and management's plan
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 ("AMSH"
or the "Company") on September 20, 1995. On August 21, 1995,
AMSH acquired 100% of the capital stock of Infinet, Inc.
("Infinet"). For accounting purposes, the acquisition of
Infinet by AMSH has been treated as a recapitalization of
Infinet, with Infinet as the acquirer (reverse acquisition).
AMSH had no assets or operations prior to May 1995. The
historical financial statements prior to August 21, 1995 are
those of Infinet. Although the Company has incurred a
significant amount of start-up costs, since the Company has
not generated any revenue from operations, it is still
considered to be in the development stage.
The Company incurred a net loss of $609,239 for the year
ended December 31, 1998, resulting in an accumulated deficit
of $2,766,093. Management of the Company is developing a
business plan summarizing its strategy for the next several
years. This plan is now focused on providing U.S. sports and
educational content utilizing all available technologies of
the Internet, media, advanced telecommunications and storage
technologies. Under this plan, significant cash will be
required through December 1999 to pay off current debt and
fund its implementation. The intention is to raise capital
through the sale of its equity securities and/or to seek
outside private sources of financing. In connection with
this, the Company has issued approximately $550,000 in non-
interest bearing demand promissory notes to various parties,
including officers of the Company, in the first and second
quarters of 1999. Significant additional cash will be
required.
There can be no assurances that the Company will be
successful in its attempts to raise sufficient capital
essential to its survival. To the extent the Company is
unable to raise the necessary operating capital, it will not
be able to implement its business plan, and it will become
necessary to curtail or cease operations. Additionally, even
if the Company does raise sufficient operating capital, there
can be no assurances that the net proceeds will be sufficient
enough to enable it to develop its business to a level where
it will generate profits and cash flows from operations.
These matters raise substantial doubt about the Company's
ability to continue as a going concern. However, the
accompanying consolidated 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.
F-7
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
AND CUMULATIVE FROM MAY 1, 1995
2 Significant accounting policies
Principles of consolidation
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All
significant intercompany transactions and balances have been
eliminated in consolidation.
Start-up and organization costs
The Company accounts for start-up costs in accordance with
Statement of Position 98-5, "Reporting on the Costs of Start-
up Activities" ("SOP 98-5"), issued by the American Institute
of Certified Public Accountants. SOP 98-5 requires the cost
of start-up activities, including organization costs, to be
expensed as incurred.
Impairment of long-lived assets
The Company reviews its long-lived assets, including goodwill
resulting from business acquisitions, for impairment whenever
events or changes in circumstances indicate that the carrying
amount of the assets may not be fully recoverable. To
determine recoverability of its long-lived assets, the
Company evaluates the probability that future undiscounted
net cash flows, without interest charges, will be less than
the carrying amount of the assets. If such assets are
considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the
assets exceed the fair value of the assets.
Basic and diluted net loss per share
The Company displays earnings per share in accordance with
Statement of Financial Accounting Standards No.128, "Earnings
Per Share" ("SFAS 128"). SFAS 128 requires dual presentation
of basic and diluted earnings per share. Basic earnings per
share includes no dilution and is computed by dividing the
net loss available to common stockholders by the weighted
average number of common shares outstanding for the period.
Outstanding stock options, warrants and other potential stock
issuances have not been considered in the computation of
diluted net loss per share since the effect of their
inclusion would be antidilutive.
Common stock split
On May 15, 1997, the Board of Directors of the Company
authorized a 1 for 10 reverse stock split. As of that date,
the total number of common shares issued and outstanding was
reduced from 13,958,262 (no stock was issued by the Company
between January 1, 1997 and May 15, 1997) to 1,395,826, and
related par value was increased to $.01 per common share from
$.001 per common share.
All references to the number of common shares and per share
amounts in the consolidated statements of operations and
notes to the consolidated financial statements have been
restated to reflect the effect of the split for all periods
presented.
F-8
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
AND CUMULATIVE FROM MAY 1, 1995
2 Significant accounting policies (continued)
Stock options
Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123")
establishes a fair value-based method of accounting for stock
compensation plans. The Company has chosen to adopt the
disclosure requirements of SFAS 123 and continue to record
stock compensation for its employees in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25"). Under APB 25, charges
are made to operations in accounting for stock options
granted to employees when the option exercise prices are
below the fair market value of the common stock at the grant
date. Options granted to non-employees are recorded in
accordance with SFAS 123.
Use of estimates
In preparing consolidated financial statements in conformity
with generally accepted accounting principles, management
makes estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the
consolidated financial statements, as well as the reported
amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Fair value of financial instruments
Carrying amounts of certain of the Company's financial
instruments including cash, and accounts payable and accrued
expenses approximate fair value due to their relatively short
maturities. Due to officer, loans from stockholder, notes
payable and liability from settlement of lawsuit are recorded
at carrying value with terms as disclosed elsewhere in the
notes to consolidated financial statements. It is not
practical to estimate the fair value of these amount because
of the uncertainty of the timing of the payments.
Income taxes
The Company accounts for income taxes using the liability
method, which requires the determination of deferred tax
assets and liabilities based on the differences between the
financial and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which differences
are expected to reverse. The net deferred tax asset is
adjusted by a valuation allowance, if, based on the weight of
available evidence, it is more likely than not that some
portion or all of the net deferred tax asset will not be
realized.
Reclassifications
Certain reclassifications have been made to the consolidated
financial statements shown for the prior years in order to
conform to the current year's classifications.
F-9
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
AND CUMULATIVE FROM MAY 1, 1995
3 Acquisition of Sunset Interactive Network, Inc.
On January 14, 1998, the Company entered into an agreement
with Sunset Interactive Network, Inc. ("SIN"), a newly formed
Delaware corporation, to purchase 100% of SIN's capital stock
in exchange for the issuance of 500,000 shares of the
Company's common stock, valued at $15,000. SIN was a newly
formed corporation with no operations, and accordingly, the
Company recorded goodwill of $15,000.
SIN was registered as an interactive media company whose
objective was to provide entertainment information through
the World Wide Web utilizing recognized celebrity names. The
Company intended to establish a web site for its proposed
sports magazine and market entertainment products through the
worldwide web. However, SIN required significant capital to
commence operations. In the fourth quarter of 1998, in
conjunction with the development of its new business plan,
management decided not to further develop SIN. As a result,
management determined that the goodwill related to the
acquisition of SIN was impaired and, accordingly, a provision
for impairment of $14,437 was recorded.
4 Transactions with related parties
Loans from stockholder
From time to time, one of the Company's stockholders (the
stockholder is also the Chairman's spouse) has advanced the
Company funds used for working capital purposes and paid
expenses on behalf of the Company. Such advances have no
scheduled repayment terms and no stated interest rate. Loans
from stockholder amounted to $117,056 at December 31, 1998.
Periodically the Company has also engaged such stockholder to
provide services to the Company and in return, the Company
issued common stock in payment for such services (Note 7).
Notes payable and accrued interest
Notes payable of $80,375 at December 31, 1998, represent
loans made to the Company by stockholders and amounts owed to
professional service firms for services rendered. These notes
are due on demand and bear interest at 10% per annum. Total
interest cost incurred for the years ended December 31, 1998
and 1997 was approximately $8,000 and $5,000, respectively.
Due to officer
Due to officer of $402,541 at December 31, 1998 represents
amounts owed to the Company's Chairman. These amounts
consist principally of unpaid salary, are non-interest
bearing and have no scheduled repayment terms. The Company
is currently renegotiating the Chairman's employment contract
(Note 9), as well as the amounts owed to him. Additionally,
during 1998, the Company shared office facilities with its
Chairman without charge.
F-10
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
AND CUMULATIVE FROM MAY 1, 1995
5 Other assets
Deposits
On January 30, 1996, the Company issued 120,000 shares of its
restricted common stock towards the acquisition of a film
library consisting of 16 hours of sports footage film and
license rights to use 36 hours of footage from Historical
Footage film library (not related to sports). As stipulated
in the contract, 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 were not sufficient to generate
$600,000 of proceeds to the seller. The Company valued the
120,000 shares of common stock issued at estimated fair value
of $.25 per share, and recorded the aggregate value of such
shares of $30,000 as a deposit for the film library. In the
fourth quarter of 1998, in conjunction with the development
of its new business plan, management decided not to pursue
the purchase of the film library. As a result, no additional
shares of stock were issued and the $30,000 deposit was
written off. The Company is currently negotiating a revision
to the original contract with the owner of the film library.
No final conclusion has been reached and no additional
adjustments have been made in the consolidated financial
statements.
6 Accounts payable and accrued expenses
Accounts payable and accrued expenses consist of the
following at December 31, 1998:
Trade accounts payable $ 293,774
Liability for rescinded stock 22,260
Royalty payable 20,000
$ 336,034
7 Stockholders' deficit
Common stock
During the year ended December 31, 1997, the Company issued
1,375,000 shares of its common stock as follows:
- 1,250,000 shares were issued to the Company's Chairman (as
partial payment under his employment contract, Note 9), which
resulted in a charge to operations of approximately $55,000.
- 125,000 shares were issued to a consultant for services
provided.
During the year ended December 31, 1998, the Company issued
6,975,200 shares of its common stock as follows:
- 246,000 shares were issued to approximately 25 individuals
for cash proceeds of $57,000.
F-11
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
AND CUMULATIVE FROM MAY 1, 1995
7 Stockholders' deficit (continued)
Common stock (continued)
- 500,000 shares were issued to purchase 100% of Sunset
Interactive Network, Inc.'s common stock (Note 3).
- 50,000 shares were issued as partial repayment of an
outstanding note payable.
- 275,000 shares were issued toward the settlement of various
lawsuits (Note 9).
- 3,000,000 shares were issued to the Company's Chairman (as
partial payment under his employment contract, Note 9) and 800,000
shares were issued to three officers/directors of the Company,
which resulted in an aggregate charge to operations of $189,000.
- 300,000 shares were issued to the Chairman's spouse for
services performed which resulted in a charge to operations of
$10,500.
- 1,804,200 shares were issued to various consultants and
professional service firms for services provided during 1998
(including 200,000 shares to Next Generation Networks Technology,
Inc., 400,000 shares to Gerard Management Inc., 100,000 shares to
Robert P. Maerz and 50,000 shares to Penn & Cobb Productions,
Inc., see Note 10), which resulted in a charge to operations of
$89,294.
Stock options
In 1998, the Company granted a total of 5,850,000 stock
options, which remain outstanding at December 31, 1998.
50,000 of these options are exercisable immediately and
5,800,000 options vest in equal installments over three years
commencing November 1999. No stock options were granted in
1997. The following table summarizes information about fixed
stock options outstanding at December 31, 1998:
Options outstanding
Weighted-
average
Number remaining Options
Options Outstanding contractual exercisable
Exercise price at 12/31/98 life (in years) at 12/31/98
$ .12 1,200,000 10 -
$ 1.00 4,650,000 10 50,000
5,850,000 50,000
The Company applies APB No. 25 and related interpretations in
accounting for options issued to employees. Stock-based
employee compensation cost, if recorded under SFAS 123, would
have increased the Company's net loss by approximately $4,000
or $(.00) per share in 1998.
F-12
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
AND CUMULATIVE FROM MAY 1, 1995
7 Stockholders' deficit (continued)
Stock options (continued)
The fair value of options granted during 1998 are estimated
on the date of grant using the Black-Scholes option-pricing
model with the following assumptions: (1) expected volatility
approximated 300%, (2) risk-free interest rate of $4.8%, and
(3) expected lives of 10 years.
8 Benefit from income taxes
The tax effects of temporary differences and net operating
loss carryforwards that give rise to deferred tax assets or
liabilities at December 31, 1998 are summarized as follows:
Net operating loss carryforward $ 700,000
Other items 160,000
Valuation allowance on net deferred tax asset (860,000)
Deferred tax asset, net $ -
The Company has provided for a full valuation allowance on
the net deferred tax asset due to the uncertainty of its
realization.
There were no provisions for income taxes during the years
ended December 31, 1998 and 1997 due to the Company's net
losses since inception. The Company has federal net operating
loss carryforwards of approximately $2,000,000, which are
available to offset future taxable income, if any, expiring
through 2018. These losses are subject to substantial
limitations as a result of IRC Section 382 rules governing
changes in control. The Company has not filed federal or
state tax returns since its inception.
9 Commitments and contingencies
Employment agreements
The Company entered into a five-year employment agreement
with Vincent M. Nerlino beginning on January 1, 1996 and
terminating on December 31, 2000, pursuant to which Mr.
Nerlino served as the Company's Chairman, President and Chief
Executive Officer. Mr. Nerlino is currently serving only as
Chairman. The employment agreement provides for annual base
compensation of $200,000 and an annual bonus based on pretax
operating profits. The Company is obligated to 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 annual base compensation. In lieu of cash payments for
employment services, the Company issued 3,000,000 and
1,250,000 shares of its common stock valued at $120,000 and
$55,000 to Mr. Nerlino during the years ended December 31,
1998 and 1997, respectively, as partial payment under the
contract (Note 7). Mr. Nerlino`s employment agreement is
currently being renegotiated.
F-13
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
AND CUMULATIVE FROM MAY 1, 1995
9 Commitments and contingencies (continued)
Employment agreements (continued)
In the second quarter of 1999, the Company entered into three-
year employment agreements with five additional members of
senior management. Under the terms of the employment
agreements, each executive will receive an annual base salary
of $90,000. A portion of the base salaries may be paid in
common stock in lieu of cash. In light of the Company's
current financial difficulties, in the initial contract year
the five employees have agreed to accept a total of 520,000
shares of common stock and $190,000 of cash. Additionally,
the base salaries may be increased based on certain
performance milestones and must be approved by the Company's
President, Chief Executive Officer and Board of Directors.
The agreements may be terminated with or without cause. As
an incentive to enter into an agreement, in the second
quarter of 1999, one of the officers received 200,000 shares
of common stock and 750,000 stock options, with an exercise
price of $1.00, that vest in equal installments over three
years commencing June 2000.
Legal proceedings
On June 30, 1996, a default judgment was entered against
Infinet, the Company's wholly-owned subsidiary, and certain
of the Company's principal stockholders by a former
shareholder of Fans Publishing Inc., alleging breach of
contractual commitments and other matters. Effective October
14, 1997, on behalf of himself and the Company, Mr. Nerlino
entered into a proposed settlement agreement whereby the
Company is obligated to pay $100,000 in cash and is also
obligated to issue 225,000 shares of its common stock. As a
result, the Company recorded a charge to operations of
$122,500 in 1997.
The $100,000 is payable, without interest, in two
installments: $5,000 within 120 days of the agreement and
$95,000 by October 14, 2000. The common stock was to be
issued within 30 days of the effective date of the agreement.
Since the first cash installment was paid in November 1998
and the common stock was issued in June 1998, the Company
became in default of the agreement. Should any legal action
be initiated against the Company due to its late payment
default, the Company will vigorously defend itself. As a
result of the default, the Company recorded the balance due
as a current liability.
On August 2, 1996, the Company became a defendant in a case
involving one of its current stockholders. The stockholder
was seeking a refund of approximately $200,000, the original
amount invested in the Company's common stock. On November
2, 1998, the Company entered into a settlement agreement with
the stockholder. The Company is obligated to pay $50,000,
without interest, 18 months from the effective date of the
agreement, and has issued 50,000 shares of its common stock
to the stockholder. As a result, the Company recorded a
charge to operations of $56,000 in 1998 and classified the
remaining liability as long-term.
The Company is delinquent in paying many of its outstanding
debts and has been notified by several creditors that they
have already initiated or may pursue legal remedies. The
Company believes that all amounts are appropriately accrued
in its financial statements. Since the Company does not
currently have the financial resources to satisfy these
debts, it intends to negotiate settlements with its creditors
in the near term. It is not possible to predict the ultimate
outcome of these matters.
F-14
<PAGE>
AMERICAN SPORTS HISTORY INCORPORATED AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
AND CUMULATIVE FROM MAY 1, 1995
10 Consulting agreements
Next Generation Networks Technology, Inc.
Effective November 18, 1998, the Company entered into a
business and consulting services agreement with Next
Generation Networks Technology, Inc. ("NGN"). In connection
with the agreement, Kenneth O. Roko, NGN's Chief Executive
Officer, will serve as an officer and a member of the
Company's Board of Directors and assist in the implementation
of the Company's technological strategies in order to
establish the Company as a major contributor and presence on
the Internet.
Under the terms of the agreement, the Company issued 200,000
shares of its common stock to NGN and has also granted
1,200,000 stock options with an exercise price of $.12 per
share (Note 7). The Company is also obligated to pay $50,000
to NGN, upon completion of the Company's new strategic
business plan. In addition, the Company is obligated to pay
NGN certain additional compensation based on specified future
performance.
Gerard Management Inc.
Effective January 5, 1998, the Company entered into a
business and consulting services agreement with Gerard
Management Inc. ("GMI"). Under the terms of the agreement,
GMI will provide Internet strategy consulting as well as
programming and basic maintenance of the Company's website in
exchange for 400,000 shares of the Company's common stock
(Note 7). The agreement shall terminate on January 4, 2000,
unless terminated earlier in accordance with the agreement.
Robert P. Maerz and Penn & Cobb Productions, Inc.,
Effective February 28, 1998, the Company entered into
business and consulting agreements with Robert P. Maerz and
Penn & Cobb Productions, Inc. Under the terms of the
agreements, the consultants will help create and implement
the Company's business plan as well as market the Company
throughout the media and entertainment industry. 100,000 and
50,000 shares were issued to Robert P. Maerz and Penn & Cobb
Productions, Inc., respectively, in accordance with the
consulting agreements (Note 7). The agreements terminate
upon satisfactory completion of the services as set forth in
the agreement.
F-15
Exhibit No. 7
American Sports History Incorporated
1998 Form 10-KSB
File No. 33-55254-46
EMPLOYMENT CONTRACT
FOR
CHIEF EXECUTIVE OFFICER
American Sports History, Inc., a Nevada Corporation, whose
address is 18-1 Heritage Dr., Chatham, New Jersey, 07928,
hereinafter referred to as Employer, and Vincent M. Nerlino, an
individual whose address is 18-1 Heritage Dr., Chatham, New
Jersey, 07928, hereinafter referred to as Employee.
WITNESSETH:
WHEREAS,
Employer seeks to employ Employee as Chairman of the Board and
Chief Executive Officer (CEO) to manage, preside, direct and
supervise the company at the direction of the Board of Directors.
WHEREAS,
Employee is desirous of performing the job as Chairman of the
Board and Chief Executive Officer and is willing to commit to
perform such functions such as fund raising, directing mergers
and acquisitions and to hire, manage, direct, promote, and
supervise the employees and efforts as dictated by the Board of
Directors.
NOW THEREFORE, in consideration of the foregoing and mutual
promises herein set forth, the parties hereby agree as follows:
ARTICLE 1. TERM OF EMPLOYMENT - RENEWAL
Specified Period
Section 1.01. Employer hereby employs Employee and
Employee hereby accepts employment with Employer for a period of
five (5) years beginning on December 15, 1995 and terminating on
December 15, 2000.
Automatic Renewal
Section 1.02. This agreement shall be renewed
automatically for succeeding terms of two (2) years unless either
party gives notice to the other at least ninety (90) days prior
to the expiration of the current term.
"Employment Term" Defined
Section 1.03. As used herein, the phrase "employment
term" refers to the entire period of employment of Employee by
Employer hereunder, whether for the periods provided above, or
whether terminated earlier as hereinafter provided or extended by
mutual agreement between Employer and Employee.
ARTICLE 2. DUTIES AND OBLIGATIONS OF EMPLOYEE
General Duties
Section 2.01. Employee shall serve as the President, Chief
Executive Officer and Chairman of the Board of Directors of
Employer. In his capacity as Chairman, President and Chief
Executive Officer, Employee shall do and perform all services,
acts, or things necessary or advisable to manage and conduct the
business of Employer, including the hiring and firing of all
employees other than the officers elected by the Board of
Directors, subject to all times to the policies set by Employer's
Board of Directors, and to the consent of the Board of Directors
at such time only when required by the terms of this contract.
Matters Requiring Consent of Board of Directors
Section 2.02. Employee shall not, without specific
approval of Employer's Board of Directors do or contract to do
any of the following:
(a) Borrow on behalf of Employer during any one fiscal
year an amount in excess of $2 million dollars.
(b) Purchase capital equipment for amounts in excess of
$1 million dollars unless approved by the Board of Directors.
(c) Sell any single capital asset of Employer having a
market value in excess of $1,000,000.00 or a total of capital
assets during a fiscal year having a market value in excess of
$5,000,000.00.
(d) Terminate the services of any other officer of
Employer or hire any replacement of any officer whose services
have been terminated if that officer falls within the ambit of
one whose employment requires approval by the Board of Directors.
(e) Commit Employer to the expenditure of more than
$5,000,000.00 or amount equal to 10% of the prior fiscal years
gross revenues, whichever is more, in the development and sale of
new products or services.
Devotion to Employer's Business
Section 2.03. (a) Employee shall devote adequate time,
ability, and attention to the business of the Employer during the
term of this contract when required.
(b) The expenditure of reasonable amounts of time for
educational, charitable, or professional activities shall not be
deemed a breach of this agreement if those activities do not
materially interfere with the services required under this
agreement and shall not require the prior written consent of
Employer's Board of Directors.
(c) This agreement shall not be interpreted to prohibit
Employee from making personal investments or conducting private
business affairs or private consulting or business ventures if
those activities do not materially interfere with the services
required under this agreement. However, after this date,
Employee shall not directly or indirectly acquire a significant
interest in any business competing directly with the business of
Employer. Employer acknowledges that Employee has and intends to
continue other active business interests subject to the terms of
Section 2.03 and 2.04.
Competitive Activities
Section 2.04. During the term of this contract Employee
shall not, directly, either as an employee, employer, consultant,
agent, principal, partner, significant stockholder, corporate
officer, director, or in any other individual or representative
capacity, engage or participate in any business that is in direct
competition with the business of Employer.
Trade Secrets
Section 2.05. (a) The parties acknowledge and agree that
during the term of this agreement in the course of the discharge
of his duties hereunder, Employee shall have access to and become
acquainted with information concerning the operation and
processes of Employer, including without limitation, financial,
personal, sales, scientific and other information that is owned
by Employer and regularly used in the operation of Employer's
business, and that such information constitutes Employer's trade
secrets.
(b) Employee specifically agrees that he shall not
knowingly or willfully misuse, misappropriate, or disclose any
such trade secrets, directly or indirectly, to any other person
or use them in any way, either during the term of this agreement
or at any other time thereafter, except as is required in the
course of his employment hereunder or as requested by a
governmental agency with proper authority.
(c) Employee acknowledges and agrees that the sale or
unauthorized use or disclosure of any of Employer's trade secrets
obtained by Employee during the course of his employment under
this agreement, including information concerning Employer's
current or any future and proposed work, services, or products
the facts that any such work, services, or products are planned,
under consideration, or in production, as well as any
descriptions thereof, constitute unfair competition. Employee
promises and agrees not to engage in any unfair competition with
Employer during the term of this agreement.
(d) Employee further agrees that all files, records,
documents, drawings, specifications, equipment, and similar items
relating to Emloyer's business, whether prepared by Employee or
others, are and shall remain exclusively the property of Employer
and that they shall be removed from the premises of Employer only
in the ordinary course of business for Employee to perform the
services under this agreement.
Services as Consultant
Section 2.06. Following the employment term or Employee's
retirement, and if the employment term has not been terminated
for cause, Employee shall make his advice and counsel available
to Employer for such a period as Employer and Employee agree
upon. The Terms of such services to be negotiated at such time
as required. The parties agree that the advice and counsel shall
not entail full-time service and shall be consistent with
Employee's retirement status.
ARTICLE 3. OBLIGATIONS OF EMPLOYER
General Description
Section 3.01. Employer shall provide Employee with the
compensation, incentives, benefits, and business expense
reimbursement specified elsewhere in this agreement.
Office and Staff
Section 3.02. Employer shall provide Employee with private
offices, full-time secretary, office assistants and equipment,
supplies, telephones, and other facilities and services suitable
to Employee's position and adequate for the performance of his
duties. The location of offices and suitability shall be as
mutually agreed upon by the Board of Directors and Employee from
time to time.
Indemnification of Losses of Employee
Section 3.03. Employer shall defend, indemnify, and hold
harmless Employee from and against any loss, liability, cost, or
expense, including, but not limited to all attorney's fees, which
may be incurred by Employee in connection with his employment,
affiliation or otherwise with Employer or its subsidiaries and
affiliates. If Employer has not adequately provided for such
defense when required, Employee shall be fully reimbursed for all
reasonable cost of attorney(s) that may be employed or retained
for the defense and/or counsel of Employee.
ARTICLE 4. COMPENSATION OF EMPLOYEE
Section 4.01. (a) As compensation for the services to be
performed hereunder, employee shall receive a salary at the rate
of $200,000.00 per annum, payable not less than once per month
during the employment term, plus 1% of the gross revenues,
payable quarterly.
(b) Employee may receive additional increases in salary as
may be determined by Employer's Board of Directors in its sole
discretion. Year 2= $250,000.00; Year 3 = $300,000.00, Year 4 =
$300,000.00, Year 5 = $500,000.00
Deferred Compensation
Section 4.02. If Employee remains in the employ of Employer
until age 65, or an earlier retirement on mutual written consent
of both Employee and Employer, Employer agrees to pay to Employee
additional compensation, commencing with his first full month of
retirement, at the annual rate of 80 percent of the highest
annual salary when he has received up to age 65, payable in equal
monthly installments on the last day of each month during
Employee's entire lifetime. If employee is disabled as
referenced in Paragraph 4.03, then he shall be considered having
been employed for this paragraph until age 65, at which time he
shall be deemed qualified for retirement and receive full
benefits pursuant to section 4.02.
Salary Continuation During Disability
Section 4.03. In addition to benefits that might be
available under workers compensation laws, if Employee for any
reason whatsoever becomes disabled so that he is unable to
perform all the duties prescribed herein, Employer agrees to pay
Employee 80 percent of Employee's annual salary, payable in the
same manner as provided for the payment of salary herein, for the
next fifteen (15) fiscal years. Should Employee's disability
arise out of the course and scope of employment or related in any
way (in the broadest definition), the salary continuation
provided for herein shall be at a rate of 90 percent of
Employee's salary until age 66. Employer shall have the option
of satisfying those salary continuation benefits by purchase of a
disability or other insurance policy providing equal or greater
benefits of Employee. Employer is not relieved of its
obligations in the event of nonpayment by the issuer of any such
insurance.
Tax Withholding
Section 4.04. Employer shall have the right to deduct or
withhold from the compensation due to Employee hereunder any and
all sums required for federal income and Social Security taxes
and all state or local taxes now applicable or that may be
enacted and become applicable in the future.
ARTICLE 5. EMPLOYEE INCENTIVES
Section 5.01. (a) Employer agrees to pay Employee a bonus
in the form of a percentage of profits according to the following
terms: 5% of all pretax profits over $200,000.00 for fiscal year
1996; 5% of all pretax profits in excess of $1.0 million for
fiscal year 1997; 5% of all pretax profits in excess of $1.5
million for fiscal year 1998; 5% of all pretax profits in excess
of $2 million for fiscal year 1999; and 5% for all pretax profits
in excess of $2.5 million for fiscal year 2000; and 5% of all
pretax profits in excess of $3 million for the fiscal year 2001
pro rata.
(b) If the employment term is terminated by Employer for
cause, and is so deemed to be so in a court of law, Employee
shall not be entitled to any portion of the annual profit-sharing
payment for the fiscal year in which that termination occurs.
However, if this contract should expire or be terminated for
reasons other than cause, Employee shall be entitled to a pro
rata portion of the annual profit-sharing payment based on the
number of months during the fiscal year that he was employed.
(c) For the purpose of determining the amount of the
annual profit-sharing bonus, the pretax profits of Employer shall
be determined by the firm of independent certified accountants
then employed by Employer. Pretax profits for this calculation
only shall be made prior to payment of bonus. (Section 5.01(a))
and minus allocations paid to any affiliate organization.
Stock Option Bonus
Section 5.02. (a) Employee is hereby granted a one time
option to acquire 2,000,000 shares of Employers preferred stock @
$.01 each. Employee is granted an additional annual option to
acquire 1,000,000 shares of Employer's common stock for each year
of employment pursuant to this agreement. Employee is granted an
additional option to purchase an additional 1,000,000 shares of
the Employers common stock, for every one (1) million dollars of
pretax profit as reported. Employee has a right to exercise
these options in whole or in part. Employee shall pay an
exercise price on pre share basis in an amount equivalent to the
lowest bid price as quoted publicly during the year in which the
option were earned. The number of shares subject to this option
shall be proportionately adjusted for any change in the stock
structure of the Employee, because of share dividends,
recapitalization, reorganizations, mergers, or otherwise. The
option is assignable and may be exercised during the term of
employment under this agreement, provided however, that in the
event that the employment under this agreement if terminated by
Employer for reasons other than cause against Employee, Employee
shall retain the right to exercise any unused portion of the
option until two (2) years after the termination date provided by
this contract. The option may be exercised in whole and in part,
but may only be exercised in lots of 5,000 shares. Employee
shall not have any of the rights of, nor be treated as a
shareholder with respect to the shares subject to this option
until he has exercised that option and has become the shareholder
of record of these shares.
ARTICLE 6. EMPLOYEE BENEFITS
Annual Vacation
Section 6.01. Employee shall be entitled to fifteen (15)
working days vacation time each year without loss of
compensation. In the event that Employee is unable for any
reason to take the total amount of vacation time authorized
herein during any year, he may accrue that time and add it to
vacation time for any following year OR may receive a cash
payment therefor in an amount equal to the amount of annual
salary attributable to that period of time. Additionally, for
each year of this contract, five (5) working days vacation shall
be added to the annual vacation until a maximum of thirty (30)
working days are attained.
Illness
Section 6.02. Employee shall be entitled to twenty (20)
days per year as sick leave with full pay. Sick leave may be
accumulated up to a total of one hundred (100) days which may be
taken or the Employer will pay Employee for sick days unused and
accumulated upon termination.
Automobile Allowance
Section 6.03. Employer shall provide Employee with an
automobile allowance payable in monthly increments of $1,000.00
each month.
Death Benefits
Section 6.04. If Employee should die during the employment
term or after his retirement and if Employee has surviving spouse
at that time, Employer agrees to pay the spouse the sum of
$10,000.00 per month for five (5) years. If Employer does not
have a surviving spouse at the time of death, Employer agrees to
pay Employee's designee or estate the sum of $250,000.00 within
sixty days (60) of certified proof of death.
Medical Coverage
Section 6.05. Employer agrees to maintain insurance and
include Employee and eligible family members in the coverage of
all medical, major medical hospital, dental, and eye care.
Employer agrees to maintain the coverage at a minimum of health
benefits as set forth above to cover all doctors, hospital, and
associated cost minus a maximum annual $1,000.00 contribution by
Employee.
Life Insurance
Section 6.06. (a) Employer agrees to obtain a life
insurance policy on the life of Employee if reasonably insurable
in the face amount of $2,000,000.00. Employer further agrees to
make that insurance policy payable to the beneficiary or
beneficiaries designated by Employee. Employer agrees to pay all
premiums on the policy during the term of employment provided
herein or any extension to this agreement. At time of
retirement, or disability, Employer shall assign all rights and
interest in the policy to the Employee at no additional cost.
(b) Employee agrees to submit to a physical examination
at any time requested by Employer for the purpose of Employer's
obtaining "keyman" life insurance on the life of Employee for the
benefit of Employer; provided, however, that Employer shall bear
the entire cost of the examination and any resulting insurance
associated thereto.
ARTICLE 7. BUSINESS EXPENSES
Use of Credit Card
Section 7.01. (a) All business expenses reasonably incurred
by Employee in promoting and supervising the business of Employer
including expenditures for entertainment, gifts and travel, are
to be paid for, insofar as possible, by the use of credit cards
in the name of Employer which will be furnished to Employee and
paid for by Employer.
(b) Employee shall document expenses to a reasonably
practicable extent.
Reimbursement of Other Business Expenses
Section 7.02. Employer shall promptly reimburse Employee
for all other reasonable business expenses incurred by Employee
in connection with the business of Employer.
ARTICLE 8. TERMINATION OF EMPLOYMENT
Termination for Cause
Section 8.01. (a) Employer reserves the right to terminate
this agreement if Employee willfully and substantially breaches
or habitually neglects the duties which he is required to perform
under the terms of this agreement and is so found to have done so
in a U.S. court of law in accordance with the laws of California.
(b) Employer may at its option terminate this agreement
for the reasons stated in this section by giving thirty (30) days
written notice of intent to terminate to Employee without
prejudice to any other remedy to which Employer may be entitled
either at law, in equity, or under this agreement subject to
provisions of Section 8.01 c, d, and e.
(c) The notice of intent to terminate required by this
section shall specify the grounds for the termination and shall
be supported by a statement of (all) relevant facts.
(d) Termination under this section shall be considered "for
cause" for the purposes of this agreement, if upheld by a court
of law as defined herein.
(e) If notification of intent to terminate is given to
Employee, then Employee shall have sixty (60) days after the
effective date of notice of intent to terminate to cure any
sustantiated deficiency. If deficiency is cured, then notice of
intent shall be null an void at such time. A sixty (60) day
extension is automatically given when and if requested by
Employee, if more time is required to substantiate or evaluate
the cause for which the original notice of intent to terminate
was given.
Termination Without Cause
Section 8.02. (a) This agreement shall be terminated upon
the death of Employee.
(b) Employer reserves the right to terminate this agreement
not less than twelve (12) months after Employees suffers any
physical or mental disability that would prevent the performance
of the duties under this agreement. Such a termination shall be
effected by giving sixty (60) days' written notice of termination
to Employee. Termination pursuant to this provision shall not
prejudice Employee's rights to continue compensation pursuant to
Section 4.02 and 4.03 of this agreement.
(c) Termination under this section shall not be considered
"for cause" for the purposes of this agreement.
Effect of Merger, Transfer of Assets, or Dissolution
Section 8.03. This agreement shall not be terminated by any
merger, transfer, voluntary or involuntary dissolution of
Employer for any reason.
Employer Breach or Voluntary Termination
Section 8.04. Notwithstanding any provision of this
agreement, if Employer breaches or voluntarily terminates this
agreement and such breach of voluntary termination is upheld by
binding arbitration, the entire agreement will be considered
fully vested and employer shall pay Employee a minimum amount
equal to four (4) years annual salary at the then current rate of
compensation or the total amount due under this contract
whichever is greater within thirty (30) days. All stock options
and bonuses of any and all kind pursuant to Section 5 shall
remain in full force and effect. Failure to pay within the time
period shall cause an additional breach of the contract and all
sums due shall immediately accumulate interest in the total sum
due at the maximum interest rate allowable by the governing law.
Termination by Employee
Section 8.05. Employee may terminate his obligations under
this agreement by giving Employer at least six (6) months notice
in advance. If Employer doesn't with Employee to remain for any
portion thereof, then Employer must pay for the same as if the
Employee worked the entire extent of the notice period.
Section 8.06. This agreement may be terminated forthwith by
Employee in the event that Employer is placed into receivership,
bankruptcy, or insolvency proceedings that are commenced by or
against Employer, or if an assignment for the benefit of
creditors occurs, or upon the voluntary winding up or liquidation
of its business by Employer thereto, whether or not with the aid
and assistance of any court.
Termination by Mutual Consent
Section 8.07. Employment may be terminated by the Board of
Directors for any reason whatsoever, as long as this Agreement
remains in effect for the duration of the term with not material
adverse changes to the Employee.
ARTICLE 9. GENERAL PROVISIONS
Section 9.01. Any notices to be given hereunder by either
party to the other shall be in writing any may be transmitted by
personal delivery or by mail, registered or certified, postage
prepaid with return receipt requested. Mailed notices shall be
addressed to the parties at the addresses appearing in the
introductory paragraph of this agreement, but each party may
change that address by written notice in accordance with this
section. Notices delivered personally shall be deemed
communicated as of the date or actual communication, mailed
notices shall be deemed communicated as of the date of
acknowledged and signed receipt by the receiving party.
Governing Law; Arbitration
Section 9.02. This agreement, entered into in Las Vegas,
Nevada shall be governed by the laws of the United States of
America and the State of Nevada, without reference to conflict of
law principles. Any dispute or disagreement arising between
Employer and Employee in connection with any interpretation of
the terms of this agreement or the compliance or noncompliance
therewith, or the validity or enforceability thereof, which is
not satisfied to the mutual satisfaction of Employer and Employee
within sixty (60) days (or such longer period as may be mutually
agreed upon) from the date that either party informs the other in
writing that such dispute or disagreement exists, shall be
finally settled, under the Commercial Arbitration Rules of
American Arbitration Association in effect on the date that such
notice is given. The arbitration proceedings shall be conducted
in Las Vegas, Nevada. The arbitration award shall be final and
binding upon the parties, and judgment may be entered thereon,
upon the application of either party, by any court having
jurisdiction. Each party shall bear the cost of preparing and
presenting its case, and the
cost of the arbitration, including fees and expenses of the
arbitrator(s), will be shared equally by the parties unless the
award otherwise provides.
Section 9.03. If any action at law or in equity is
necessary to enforce or interpret the terms of this agreement,
the prevailing party shall be entitled to reasonable attorney's
fees, costs, and necessary disbursements in addition to any other
relief to which that party may be entitled. This provision shall
be construed as applicable to the entire contract.
General Terms and Conditions
Section 9.04. This agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto
with respect to the employment of Employee by Employer and
contains all of the covenants and agreements between the parties
with respect to that employment if any manner whatsoever. Each
party to this agreement acknowledges that no representation,
inducements, promises, or agreements, orally or otherwise have
been made by any party, or anyone acting on behalf of any party,
which are not embodied herein, and that no other agreement,
statement, or promise not contained in this agreement shall be
valid or binding on either party.
Section 9.05. The provisions of this agreement Sections
3.03, 4.02, 4.03, 5.01, 5.02, 6.04 and 6.06, shall survive the
termination of this agreement other than if justified termination
for cause pursuant to Section 8.01.
Section 9.06. Any consent required under this agreement
shall not be unreasonably withheld or delayed.
Modifications
Section 9.07. Any modification of this agreement will be
effective only if it is in writing and signed by the party to be
charged.
Effect of Waiver
Section 9.08. The failure of either party to insist on
strict compliance with any of the terms, covenants, or conditions
of this agreement by the other party shall not be deemed a waiver
of that term, covenant, or condition. nor shall any waiver or
relinquishment of any right or power at any one time or times be
deemed a waiver or relinquishment of that right or power for all
or any other times.
Section 9.09. Both parties agree that any breach of this
agreement by the other party may cause irreparable damage that,
in the event of such breach, in addition to any and all remedies
at law, such party shall have the right to injunctive relief,
specific performance, or other equitable relief to prevent the
continuous violations of these terms.
Partial Invalidity
Section 9.10. If any provision in this agreement is held by
a court of competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions shall nevertheless
continue in full force without being impaired or invalidated in
any way.
Sums Due Deceased Employee
Section 9.11. If Employee dies prior to the expiration of
the terms of his employment, any sums that may be due him from
Employer under this agreement as of the date of death shall be
paid to Employee's executors, administrators, heirs, personal
representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this
agreement to be effective, valid, and binding upon the parties,
their successors and assigns as of the date below as executed by
their duly authorized representatives.
Accepted and Agreed:
American Sports History, Inc.
By: /s/ Vincent M. Nerlino, President & CEO
Employer Authorized Signature
Date: 1/2/96
By: /s/ Vincent M. Nerlino
Employee Signature
Vincent M. Nerlino
Date: 1/2/96
Exhibit No. 8
American Sports History Incorporated
1998 Form 10-KSB
File No. 33-55254-46
AGREEMENT FOR EMPLOYMENT OF EXECUTIVE
Date:
I. PARTIES
American Sports History, Inc., hereinafter "Company",
and
___________________, hereinafter "Executive",
Hereby enter into this Agreement for Employment of
Executive, hereinafter "Agreement" on and as of the above
date.
II. EMPLOYMENT OF EXECUTIVE
Company hereby agrees to initially employ Executive as its
_________________________ and Executive hereby accepts such
employment in accordance with the terms of this Agreement
and the terms of employment applicable to other Executive
officers and regular employees of the Company. If the terms
of this Agreement and terms of employment applicable to
regular employees conflict, the terms of this Agreement
shall control.
This Agreement is effective upon ratification and approval
by the Company's Board of Directors.
III. EXECUTIVE DUTIES
Executive shall perform all of the duties typical of the
office held by the Executive as described in the bylaws of
the Company and such other duties or projects as may be
assigned by the Chief Executive Officer of the Company, if
any, or the Board of Directors of the Company.
The Company recognizes that the Executive has outside
interests and opportunities that can result in substantial
additional opportunities to the Company. As a result, the
Company acknowledges that the Executive needs to manage
those activities, but not to the detriment of the Company's
initiatives. The Executive will give time priority to the
Company's initiatives if and when a resource conflict
arises. If a possible problem develops, the Executive will
coordinate its resolves as soon as possible with the Chief
Executive Officer of the Company.
Executive shall perform all duties hereunder in a
professional, ethical, and business like manner.
IV. EXECUTIVE COMPENSATION
Executive will be paid as follows:
An initial annual base salary of $ 90,000. The initial
offering to the Executive is a combination of cash and stock
in the amount of $ xx,xxx and xx,xxx shares respectively.
The cash payment to the Executive is payable on the 1st day
of each quarter; the stock payment is made to the Executive
(or his assign) within the first quarter of employment.
This amount may be increased based on certain performance
milestones outlined in other corporate documents outlining
Executive remuneration. In all cases, changes in this
agreement can only be made by mutual consent of the
Executive and President/CEO and by approval of the Board of
Directors.
In addition, the Executive will be reimbursed for all
expenses related to the performance of his duties. These
expenses will include phone, express mail, personal car use,
parking, incidental entertainment, and other expenses that
arise out of the Executive's position and responsibilities.
The Executive is authorized to submit expenses up to a limit
of $ 1500 per month, provided that receipts for expenses for
over $ 25.00 are submitted on a quarterly basis. Expenses
that will increase the amount submitted in excess of $ 1500
for anyone specific month must be pre-approved prior to
expenses being incurred. This pre-approval must be granted
by the President/CEO of the Company. Approved will be
reimbursed to the Executive on a semi-annual basis.
Executives of American Sports History, Inc. will be eligible
for additional compensation above and beyond those specified
in this Executive Employee Agreement and may take the form
of cash, bonus, stocks, stock options, or any other forms,
to be determined by the Board of Directors.
It is the responsibility of the Executive to notify the
Company regarding the names and/or assigns that should be
used in the issuance of all stock, stock options.
V. EXECUTIVE BENEFITS
PERSONAL DAYS
The Company recognizes that Executive time off is crucial to
health, mind and productive energies. The Executive also
realizes that the responsibilities of the position do not
conform to a "normal" workday or work week. However, the
Company does want to insure that the Executive receives
adequate time for family and rest. The Company authorizes
the Executive to consider 48 days per year as personal days,
in addition to normal corporate holidays, provided that the
Executive uses prudent judgement when selecting days to use
as personal days based on work in progress and priorities.
TRAVEL
Refer to Company travel policy for specific restrictions on
fares, hotels, and daily allowances for expenses.
For travel and other business expenses that require airfare,
loading, car rental and other expenses, the Executive will
submit an expense reports according to the provisions of the
Company's Travel Expense policy. Among other provisions of
the policy, these travel expenses must be pre-approved prior
to incurring the expense. The Executive acknowledges that
expenses submitted that are not pre-approved may not be
reimbursed. These expenses are those incurred for specific
meetings, conventions, research and development, and other
functions related to Company business.
The Executive will incur travel expenses for Board Meetings,
shareholder meetings, and other official meetings of
American Sports History, Inc. related to business
opportunities. These expenses are automatically covered and
do not require pre-approval.
The Company recognizes that considerable travel may be
required and perhaps for extended periods of time. The
Company authorizes the payment of travel and reasonable
expenses for the Executive and immediate family members to
accompany the Executive on one business trip per year, with
a maximum reimbursable stay of 7 consecutive days. As
stated above, this expense must be pre-approved by corporate
management, and clearly is dependent on corporate funds
availability.
HEALTH AND LIFE INSURANCE
The Executive agrees to be responsible for life and health
insurance. This provision may change dependent on the
availability of a corporate group medical and hospital plan
for the Company and group life insurance for Executives at
no charge to Executives. Should this plan materialize, the
Executive has the option of selecting or not selecting to
participate.
VI. TERM OF EMPLOYMENT
The Initial Term of this Agreement shall commence on the
above date and shall continue in effect until June 15th,
2002. Thereafter, the Agreement shall be renewed upon the
mutual agreement of Executive and Company's Board of
Directors.
This Agreement may be terminated by Executive at Executive's
discretion by providing at least thirty (30) days prior
written notice to Company. In the event of termination by
Executive pursuant to this subsection, Company may
immediately relieve Executive of all duties and immediately
terminate this Agreement, provided that Company shall pay
Executive at the then applicable base salary rate to the
termination date included in Executive's original
termination notice.
This Agreement may be terminated without cause by the
Company at Company's discretion by providing at least one
hundred eighty (180) days prior written notice to the
Executive. In the event of termination by Company, the
Executive will immediately be relieved of all duties and
responsibilities provided that Company shall pay the
Executive at the then applicable base salary rate for one
hundred eighty (180) days after the effective date of
termination included in the Company's original termination
notice.
This Agreement may be terminated by Company with cause by
the Company should Executive performance be determined to be
unacceptable or incompatible with Company goals and
objectives. The process would include providing sixty (60)
days written notice to Executive outlining the performance
deficiencies in the Executive's performance. After sixty
(60) days, if Executive performance does not meet the
criteria or resolve the deficiencies outlined in the
previous notice, this agreement may be terminated by Company
by providing thirty (30) days prior written notice to the
Executive. Company may immediately relieve Executive of all
duties and immediately terminate this Agreement, provided
that Company shall pay Executive at the then applicable
salary rate to the termination date included in the thirty
(30) days notice.
Should this agreement not be renewed upon its termination,
the Company shall remunerate Executive in an amount
equivalent to three (3) months of the effective salary. All
performance and other compensations will become immediately
due and payable.
In all cases of termination of this Agreement by Company for
non-cause or non renewal of this agreement, the Executive
will receive any cash or stock bonuses due to Officers of
the Company based on the Officer compensation plan in effect
at the date of termination. In case of termination of this
Agreement by Executive or termination of this Agreement by
Company for cause, the Executive forfeits any participation
in cash and/or stock bonuses due to Officers of the Company
based on the Officer compensation plan in effect at the date
of termination.
Notices of termination to this agreement originating by the
Company must be approved by the Board of Directors, or if
originating from Executive, accepted by the Board of
Directors.
VII. NON COMPETE
In the event of termination from the Company for any reason,
the Executive agrees not to engage in any public or private
commercial venture that competes directly with the products
and/or services of the Company for a period of two (2)
years.
All materials, contacts, and business plans of the Company
are considered "Trade Secret" and Company proprietary and
confidential. As a consequence, the Executive will not
divulge Company information to competitors or potential
competitors of Company products, services, or strategies.
VIII. NOTICES
Any notice required by this Agreement or given in connection
with it, shall be in writing and shall be given to the
appropriate party by personal delivery or by certified mail:
If to the Company:
American Sports History, Inc.
Mr. Herbert (Bert) J. Hefke
President/CEO
21 Maple Avenue
Bay Shore, NY 11706
If to the Executive:
IX. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the
parties. This Agreement cannot be modified except in
writing signed by both parties.
X. APPLICABLE LAW
This Agreement shall be construed and enforced in accordance
with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
_____________________________ _______________
Date
_____________________________ _______________
American Sports History, Inc. Date
Mr. Herbert J. Hefke
President/CEO
07/27/99NGN TECHNOLOGY, INC / AMSHI TERM SHEET/AGREEMENT
Page 6 of 1
Exhibit No. 9
American Sports History Incorporated
1998 Form 10-KSB
File No. 33-55254-46
CONFIDENTIAL TERM SHEET
BETWEEN
NEXT GENERATION NETWORKS TECHNOLOGY INC., A DELAWARE CORPORATION,
AND
AMERICAN SPORTS HISTORY, INC., A DELAWARE CORPORATION
This Term Sheet has been prepared to detail the terms of a
business and consulting services agreement between American
Sports History, Inc. ("AMSHI") and Next Generation Networks
Technology, Inc. ("NGN TECHNOLOGY"). The terms presented below
have been discussed and agreed upon as a result of meetings held
between AMSHI and NGN TECHNOLOGY to collaborate in good faith
for the betterment of AMSHI , the last collective meeting being
held on October 10th, 1998 in New York, NY with Vincent Nerlino,
President/CEO, AMSHI, Anthony Conti representing and advisor to
AMSHI, Bert Hefke, representing and advisor to AMSHI, Rob
Dromerhauser, representing and advisore to AMSHI, Jeanne Nerlino,
Board of Directors, AMSHI; Kenneth Roko, President/CEO, NGN
TECHNOLOGY; Martin Stillman, President/CEO, Myriad Management
Services, Inc; and Michael Steiner, President/CEO, IFSL, Ltd. ,
with subsequent meetings between Vince Nerlino and Kenneth Roko
in New Jersey, and subsequent telephone conversations between
Vince Nerlino and Kenneth Roko, and Bert Hefke and Kenneth Roko.
Any definitive agreement will be subject to the agreement of the
corporations' CEOs as empowered by their Board of Directors to
enter into such agreements, as reflected in actually executed
documents, the signing of mutual non disclosure/non circumvention
agreements, the receipt by NGN Technology, Inc. of the agreed
upon cash payment by AMSHI at signing of this contract, and
receipt of stock and cash remuneration as outlined herein.
I. EXPECTATIONS, PERFORMANCE, and GENERAL DEFINTIONS:
A. NGN TECHNOLOGY:
Upon execution of this term sheet and subsequent agreement,
NGN Technology will work as a member of the AMSHI Board of
Directors on a non exclusive basis on a multitude of projects
and initiatives with the objectives of increasing revenues
through the implementation of appropriate technologies
consistent with strategic goals, setting operational and
capital expense budgets with predetermined production and
income objectives, development of the AMSHI business plan;
establishing alliances with content and technology providers
to expedite exposure and growth of AMSHI's business plan, and
providing the technical strategic direction and research and
development to establish AMSHI as a major contributor and
presence on the Internet and related content provider
industries domestically and internationally, increasing market
penetration and client base, increasing the product base of
services, and increasing the shareholder value of AMSHI.
B. AMSHI:
Upon execution of this term sheet and subsequent agreement,
AMSHI will work with NGN TECHNOLOGY and provide NGN TECHNOLOGY
the flexibility and autonomy, subject to Board of Directors'
approval, to pursue technical, content, and international
partners/acquisitions as appropriate; to discuss, with various
AMSHI associates, business strategies and vision; to take the
lead on technology; and to include NGN TECHNOLOGY in all
decisions as appropriately required as its role on the Board
of Directors. It is understood by the parties that AMSHI will
work in good faith with NGN TECHNOLOGY in all opportunities
brought to the attention of AMSHI and securing joint
development agreements with companies identified that can
provide the complementary marketing, content, and technologies
identified during the co-development and implementation of the
AMSHI strategic business plan. AMSHI agrees to convey to NGN
TECHNOLOGY, as remuneration, the line items described in the
Term Sheet included with this agreement and to hold this
agreement binding upon the parties. Remuneration of stock
will be conveyed to NGN TECHNOLOGY prior to December 15th,
1998; remuneration of cash payment will be made as outlined in
the Term Sheet; remuneration on successful acquisitions and
stock performance will be detailed in a more comprehensive
benefits package for the Board of Directors, but will follow a
program similar to one outlined in the Term Sheet.
C. NON-PERFORMANCE / IRRECONCILABLE DIFFERENCES:
All activities and responsibilities outlined in this document
provide the basis for a relationship built in the spirit of
good faith by NGN TECHNOLOGY and AMSHI. However, it is
possible that a party wishes to terminate this agreement due
to irreconcilable differences. This provision allows a
parties to terminate this agreement provided that proper
notice (advanced written notice received via registered letter
by the other party 120 days before the effective date of the
termination) is given to the other party.
Based upon its participation on and tenure to date on the
Board of Directors, NGN TECHNOLOGY stock in AMSHI (received at
signing of agreement and any accumulated stock
bonus/incentives due up to the time of termination received
from the Board of Directors' incentive plan, and any stock or
cash bonus/incentives due to work in progress up to the
effective date of termination) can be repurchased by the AMSHI
Board of Directors according to the following schedule:
Note: "current market price" is defined as the selling price
for AMSHI stock on either the effective date of termination or
date of notice, whichever is higher
a. After 1 YEAR: 66% of the current market
price
b. After 2 YEARS: 77% of the current market
price
c. After 3 YEARS: 100% of the current
market price
It is clear that both the NGN TECHNOLOGY and AMSHI management
team will work effectively and collaboratively in good faith;
there are no expectations that any problems will occur that
would precipitate such an action.
II. PREQUISITES:
Prior to signing an agreement with NGN Technology, NGN
Technology has asked that
the following items be concluded or in process:
1. Coming to closure on all pending AMSHI legal arguments and
litigations.
2. Remuneration to Myriad Management Services for work
performed on behalf of AMSHI that has resulted in the
introduction of AMSHI to NGN Technology.
3. Agreement in writing that AMSHI will substantially increase
the number of authorized shares of AMSHI by January 1, 1998 to
support an acquisition strategy that will be outlined in the yet
to be developed AMSHI business plan. These shares, as well as a
major portion of existing outstanding shares, will be used for
acquisitions to be made during the first and second quarters of
calendar 1999.
4. Provide in writing to NGN Technology that upon approval by
AMSHI's Board of Directors of the AMSHI business plan to be
prepared by NGN Technology and execution of this agreement, NGN
Technology, as a member of the Board of Directors, has permission
to act on behalf of AMSHI to openly discuss use of the
corporation's stock in pursuit of an acquisition and consistent
with the business plan strategy. Discussions of this nature will
be coordinated and approved by the Chief Executive Officer and
vote of the Board of Directors for finalization and before formal
commitment letters can be presented to the intended recipient(s).
As of this date, November 16th, 1998, I have been informed
that all of the items above are in some form of process and
that there is agreement to those items that have been
identified as strategically critical to AMSHI success
(specifically, items 1,3, and 4). Item 2 is in process; it
will be concluded prior to the presentation of the AMSHI
business plan (approximately December 20th, 1998).
III. REMUNERATION TO NGN TECHNOLOGY:
1. AMSHI common shares of stock:
a. Signing of agreement: 1,400,000 shares of AMSHI stock
Breakdown of stock to be issued:
Open market shares 200,000
Options at $ 0.12 per share 1,200,000
2. CASH PAYMENT
Milestone schedule for cash payment:
Amount t/b paid
a. At signing of this agreement $10,000
b. Completion of AMSHI business plan and receipt of
funding for AMSHI operations/strategy $40,000
Note: Payments to NGN Technology may be made in
$ 10,000 increments up until the $ 40,000 balance is
paid if each incremental funding received for AMSHI
operations cannot support the payment of the full
balance due.
3. NGN TECHNOLOGY EXPENSES MADE ON BEHALF OF AMSHI
a. Expenses for attending meetings and other approved expenses
incurred on behalf of AMSHI will be paid by AMSHI (Due 15 days
after expenses are submitted by NGN TECHNOLOGY to AMSHI).
b. Payment for ongoing general NGN Technology operating
expenses related to activities supporting AMSHI (to be further
defined in the AMSHI business plan and costs to be
identified/budgeted with operating capital requirements of
AMSHI).
4. BONUS and PERFORMANCE INCENTIVES
The compensation plan described below is similar to plan that
will be included in a proposed incentive plan for all members
of the AMSHI Board of Directors to remunerate Board members
for successes in various AMSHI initiatives.
CASH PAYMENT to each AMSHI Board Member on each successful
acquisition:
X% of the value of the acquisition: (Note:
recommended 1% be paid out in
total cash, or some combination of cash and secured
note).
STOCK OPTIONS PAYMENT to each AMSHI Board Members for each
successful acquisition:
X% of the value of the acquisition: (Note: stock
options at the prevalent closing
price at the time of the acquisition).
5. TIME OF ESSENCE:
All cash and stock payments mentioned above, creation of a
position as Chief Operating Officer with a voting seat on
the AMSHI Board of Directors, immediate Board approval for
first phase authorization of additional shares of AMSHI
stock that will be used to implement AMSHI's acquisition
strategy (details to be identified in the business plan),
and permissions granted to NGN Technology, Inc. to act on
behalf of AMSHI (pending Board of Directors approval)
concerning acquisitions. are time sensitive and time of
the essence issues. Time sensitive payment and closure on
the items above are necessary by December 15th, 1998 or, at
NGN Technology's sole and exclusive option, NGN Technology
can extend the time of essence period for all items to
January 4th, 1999 after which time this contract can be
cancelled at NGN Technology's sole and exclusive discretion.
6. NOTICES:
NGN Technology's legal counsel will provide notice to AMSHI
on or before December 15th, 1998 concerning its intention to
extend the Time of Essence due date.
7. FREE AND CLEAR and DISCLOSURE OF PENDING BOARD ACTIONS:
AMSHI indemnifies and holds NGN Technology harmless in any
unconcluded litigation and/or future claims resulting from
actions and/or covenants performed prior to the execution of
this agreement. NGN Technology is not involved in any
unclosed and pending legal manners resulting from
litigation started or acts occurring before the signing of
this agreement. AMSHI will provide NGN TECHNOLOGY by
December 1st, 1998 copies of previous Board of Directors
minutes and official records of AMSHI for the past 12 months
and any information of unclosed or pending Board or
corporate actions prior to November 24th, 1998.
IV: MISCELLANEOUS PROVISIONS:
A. REASONABLE EXPENSES: AMSHI agrees to reimburse NGN
TECHNOLOGY for business expenses made on behalf of the AMSHI
corporate strategic objectives. NGN TECHNOLOGY will submit
expense vouchers as expenses are incurred, with adequate
justification for the expense. Receipts will not be
necessary for expenses up to and including $ 49.99;
receipts for hotel, air, and entertainment will be required.
The expenses will be paid within 15 days of submission of an
invoice. The expenses allowed include: telephone calls,
meeting arrangements and expenses, travel, entertainment,
attendance at conferences, and other expenses as deemed
necessary. Labor rates for NGN Technology, Inc.
participating staff will be included in the business plan
for funding at a rate equivalent to $ 75 per hour; NGN
Technology staff will be used prudently and only upon
consensus of the Board of Directors of AMSHI in support of
business plan overall objectives.
B. CASH AND STOCK PAYMENTS: This agreement is conditional
upon payment by AMSHI to NGN TECHNOLOGY of the cash and
stock payments and other critical components discussed as
outlined as time of essence in Section III item 4. In the
event that AMSHI fails to meet its payment to NGN TECHNOLOGY
of cash and stock or any provision described according to
the time of essence requirements stated in Section 4 Item 4,
this agreement between AMSHI and NGN TECHNOLOGY can be
cancelled at any time at NGN TECHNOLOGY's sole and exclusive
discretion, and NGN TECHNOLOGY will pursue damages for
expenses incurred, remuneration due, and legal fees
necessary to pursuit actions through the appropriate legal
channels.
C. REPRESENTING AMSHI INTERESTS: The Board of Directors
and President/CEO of AMSHI permit NGN TECHNOLOGY to act on
AMSHI's behalf on activities related to the scope of this
agreement and open negotiations with companies identified by
NGN TECHNOLOGY for the purpose of formulating joint
development, technology, and revenue sharing agreements,
subject to reporting to the President/CEO of AMSHI per the
terms and conditions outlined herein.
D. NGN TECHNOLOGY and AMSHI PROPRIETARY BUSINESS PLANS and
CONTACTS: Through the performance of their duties under
this agreement, NGN TECHNOLOGY and AMSHI will be revealing
some specific details concerning their proprietary business
plans, business models, contacts, and technology innovations
and strategies. This information is being released to the
mutual benefit of the parties in formulating the business
plan for AMSHI and for the benefit of AMSHI stockholders.
NGN TECHNOLOGY reserves the right to release only that
amount of information about its overall operations as it
deems essential to meet our mutual goals. Any information
shared between AMSHI and NGN TECHNOLOGY is held in highest
confidentiality and bound by the terms of the non-
disclosure/non-circumvention agreement to be signed by the
parties on November 24th, 1998, unless prior approval is
granted and received for the release of such information
from the other party.
V. CONFIDENTIALITY:
AMSHI and NGN TECHNOLOGY, by virtue of this business
agreement, agree to the terms and conditions herein and
abide by confidentiality to hold private information
exclusive and inclusive to the parties for the protection of
each other's trade secrets, strategies, and other
information deemed appropriate for protection of
intellectual and corporate property.
Authorized and Approved:
I, individually, am duly authorized to sign this document on
behalf of the
other shareholders in our respective corporations.
/s/ Kenneth O. Roko /s/ Vincent M.
Nerlino
Kenneth O. Roko, President/CEO Vincent M. Nerlino,
President/CEO
NEXT GENERATION NETWORKS AMERICAN SPORTS HISTORY, INC.
TECHNOLOGY, INC.
11/18/98 11/21/98
DATE DATE
Exhibit No. 10
American Sports History Incorporated
1998 Form 10-KSB
File No. 33-55254-46
AMERICAN SPORTS HISTORY INCORPORATED
QUALIFIED STOCK OPTION AGREEMENT
This Stock Option Agreement is made this _______ day of
__________, 199___ between American Sports History Incorporated
(the "Company"), and the Employee, ______________________________
(the "Option Holder").
R E C I T A L S
A. The Board of Directors has adopted, and the shareholders
of the Company have approved, the 1998 Stock Incentive Plan as
amended (the "Plan") for the granting to selected executives and
key employees of the Company and its subsidiaries of options to
purchase shares of the Common Stock of the Company.
B. Pursuant to the Plan, the Company has determined that it
is to the advantage and best interest of the Company and its
shareholders to grant an option to the Option Holder covering
shares of the Company's Common Stock as an inducement to remain
in the service of the Company and as an incentive for increased
effort during such service, and has approved the execution of
this Stock Option Agreement between the Company and the Option
Holder.
C. The option granted hereby is intended to qualify as an
"incentive stock option", in regard to Employees, under Section
422A of the Internal Revenue Code of 1954, as amended.
NOW THEREFORE, the parties hereto agree as follows:
1. The Company grants to the Option Holder the right and
option to purchase on the terms and conditions hereinafter set
forth, all or any part of an aggregate of ____________ shares of
the Common Stock of the Company at the purchase price of $______
per share, which was determined to be 100% of the Fair Market
Value of the stock, having an "Effective Date" of the _______ day
of ______________, 199___, and exercisable from time to time in
accordance with the provisions of this Agreement during a period
expiring on the tenth anniversary of the Effective Date of this
Agreement (the "Expiration Date").
2. The Option Holder may not purchase any shares by
exercise of this Option between the Effective Date of this
Agreement and the first anniversary date thereof. Thereafter,
shares may be purchased by exercise of this Option on or after
the respective anniversary of the Effective Date in the amounts
indicated as follows:
Cumulative
Anniversary Percentage Percentage
Date Exercisable Exercisable
1st 33 1/3% 33 1/3%
2nd 33 1/3% 66 2/3%
3rd 33 1/3% 100%
At any time after the third such anniversary date of this
Agreement, but no later than the Expiration Date, the Option
Holder may purchase all or any part of the shares subject to this
Option which the Option Holder theretofore has not exercised. In
each case the number of shares which may be purchased shall be
calculated to the nearest full share and shall not be for fewer
than 100 shares. The foregoing limitations shall similarly apply
to the transferees of the Option Holder by will or by the laws of
descent or distribution, so that said transferees shall be
entitled (provided they act within twelve (12) months after the
death of the Option Holder but in no event later than the
Expiration Date) to purchase by exercise of this Option all or
any portion of the shares subject to this Option which the Option
Holder could have purchased by the exercise of the option at the
time of the Option Holder's death but with respect to which this
Option was not previously exercised, and no more. This Option
may be exercised during the lifetime of the Option Holder only by
the Option Holder, or within twelve (12) months after his death
by his transferees by will or the laws of the descent or
distribution, and not otherwise, regardless of any community
property interest therein of the spouse of the Option Holder, or
such spouse's successors in interest. If the spouse of the
Option Holder shall have acquired a community property interest
in this Option, the Option Holder, or Option Holder's permitted
successors in interest, may exercise the option on behalf of the
spouse of the Option Holder or such spouse's successors in
interest.
3. Each exercise of this Option shall be by means of a
written notice of exercise delivered to the Secretary of the
Company, specifying the number of shares to be purchased and
accompanied by payment to the Company of the full purchase price
of the shares to be purchased payable in cash or certified or
cashier's check payable to the order of the company. Alternative
payments may be made only upon specific approval of the Board of
Directors as specified in the Plan.
Subject to approval of the Board of Directors, an employee
may pay for any shares of Common Stock with respect to which an
Option has been exercised by tendering to the Company other
shares of Common Stock at the time of the exercise of such
Option, provided, however, that at the time of such exercise, the
Company shall have a Committee consisting of two (2) or more
disinterested directors who shall approve the payment for option
shares with other shares. The certificates representing such
other shares of Common Stock must be accompanied by stock power
duly executed with signature guaranteed. The value of Common
Stock must be accompanied by a stock power duly executed with
signature guaranteed . The value of Common Stock so tendered
shall be determined by the committee in its sole discretion. The
Committee may, in its sole and absolute discretion, refuse any
tender of shares of Common Stock in which case it shall deliver
the tendered shares of Common Stock back to the employee and
notify the employee of such refusal.
4. The fair market value of a share of Common Stock shall
be determined for purposes of this Agreement by reference to the
most recent sale price of the Company's Common Stock and such
other factors as the Board of Directors of the Committee may deem
appropriate to reflect the then fair market thereof, unless such
shares are publicly traded on a stock exchange or otherwise, in
which case such value shall be determined by reference to the
closing price of such share on the principal stock exchange on
which such shares are traded, or, if such shares are not then
traded on a principal stock exchange, the mean between the bid
and asked price of a share as supplied by the National
Association of Securities Dealers through NASDAQ (or its
successor in function), in each case as reported by The Wall
Street Journal, for the business day immediately preceding the
date on which the option is exercised.
5. The Option granted hereby and all rights hereunder, to
the extent such rights shall not have been exercised, shall
terminate and become null and void if the Option Holder ceases
for any reason whatsoever to be an employee of the Company or of
a subsidiary corporation (as defined in Section 425(f) of the
Internal Revenue Code of 1954, as amended) excepting only that
(i) in the event that such cessation of his employment shall be
due to Option Holder's voluntary resignation with the consent of
the Board of Directors of the Company or such subsidiary,
expressed in the form of a resolution, or to the retirement of
the Option Holder under the provisions of any Pension or
Retirement Plan of the Company or of such subsidiary then in
effect, the Option Holder may at any time within a period of
three (3) months after the date he so ceases to be an employee of
any such corporation, and not thereafter, exercise the option
granted hereby to the extent such option was exercisable by him
on the date of such cessation of such employment, and (ii) in the
event of the death or permanent disability (as defined in Section
105(d) (4) of the Code) of the Option Holder while in the employ
of the company or of such subsidiary, the option granted hereby
may be exercised within twelve (12) months after the date of such
death or permanent disability to the extent that the Option
Holder was entitled to exercise such option on the date of such
death or permanent disability. During the period after death, the
Option may, to the extent that it remained unexercised be
exercised by the person or persons to whom the Option Holder's
rights under the option granted hereby shall pass by any reason
of the death of the Option Holder, whether by will or by the
applicable laws of descent and distribution; provided, however,
that in no event may the option granted hereby be exercised to
any extent by anyone after the expiration date specified in
paragraph 1 above. The employment of the Option Holder shall be
deemed to continue during any leave of absence which has been
authorized by the Company, provided that no exercise of this
option may take place during any such authorized leave of absence
excepting only during the first three (3) months thereof.
6. No shares issuable upon the exercise of this Option
shall be issued and delivered unless and until there shall have
been full compliance with all applicable registration
requirements of the Securities Act of 1933, all applicable
listing requirements of any national securities exchange on which
shares of the same class are then listed and any other
requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery.
Without limiting the foregoing, the undersigned hereby
agrees that unless and until the shares of stock covered by the
Plan have been registered with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, he will
purchase all shares of stock to be issued upon exercise of this
option for investment and not for resale or for distribution and
that upon each exercise of any portion of this option the person
entitled to exercise the same shall, upon the request of the
Company, furnish evidence satisfactory to the Company (including
a written and signed representation) to that effect in form and
substance satisfactory to the Company, including an
indemnification of the Company in the event of any violation of
the Securities Act of 1933 by such person. Furthermore, the
Company may, if it deems appropriate, affix a legend to
certificates representing shares of stock purchased upon exercise
of options indicating that such shares have not been registered
with the Securities and Exchange Commission and may so notify its
Transfer Agent, and may take such other action as it deems
necessary or advisable to comply with any other regulatory or
governmental requirements.
7. If Option Holder or Option Holder's permitted successors
in interest disposes of shares of Common Stock acquired pursuant
to the exercise of this Option, the Company shall have the right
to require Option Holder or Option Holder's permitted successor
in interest to pay the Company the amount of any taxes, which the
Company may be required to withhold with respect to such shares.
8. This Option and the rights and privileges granted hereby
shall not be transferred, assigned, pledged or hypothecated in
any way, whether by operation of the law or otherwise, except by
will or the laws of descent and distribution. Upon any attempt
so to transfer, assign, pledge, hypothecate or otherwise dispose
of this option or any right or privileges granted hereby contrary
to the provisions hereof, this Option and all rights and
privileges contained herein shall immediately become null and
void and of no further force or effect.
9. If the outstanding shares of the Common Stock of the
Company are increased, decreased, changed into, or exchanged for
a different number or kind of shares or securities of the Company
through reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, an appropriate and
proportionate adjustment (to be conclusively determined by the
Board of Directors of the Company) shall be made in the number
and kind of securities receivable upon the exercise of this
Option, without change in the total price applicable to the
unexercised portion of this Option but with a corresponding
adjustment in the price for each unit of any security covered by
this Option.
Upon the dissolution or liquidation of the Company, or upon
a reorganization, merger or consolidation of the Company with one
or more corporations as a result of which the Company is not the
surviving corporation, or upon the sale of substantially all the
property or more than 80% of the then outstanding stock of the
Company to another corporation, this Option shall terminate,
unless express written provision be made in connection with such
transaction for (i) the immediate exercisability of this Option,
(ii) the assumption of this Option or the substitution therefor
of a new option covering the stock of a successor employer
corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to number and kind of shares and prices, such
adjustments to be conclusively determined by the Board of
Directors of the Company; or (iii) the continuance of the Plan by
such successor corporation in which event this Option shall
remain in full effect under the terms so provided.
Adjustments under this paragraph 9 shall be made by the
Board of Directors, whose determination as to what adjustments
shall be made, and the extent thereof, shall be final, binding
and conclusive. No fractional shares of stock shall be issued
under the Plan on any such adjustment.
10. Nothing herein contained shall affect the right of the
Option Holder to participate in and receive benefits under and in
accordance with the then current provisions of any pension,
insurance profit sharing or other employee welfare plan or
program of the Company or of any subsidiary of the Company.
11. Neither the Option Holder nor any other person legally
entitled to exercise this option shall be entitled to any of the
rights or privileges of a shareholder of the Company in respect
of any shares issuable upon any exercise of this option unless
and until a certificate or certificates representing such shares
shall have been actually issued and delivered to him.
12. The Option hereby granted is subject to, and the
Company and the Option holder agrees to be bound by, all of the
terms and conditions of the Company's 1998 Stock Incentive Plan,
as the same shall be amended from time to time in accordance with
the terms thereof, but no such amendment shall adversely affect
the Option Holder's rights under this option without the prior
written consent of Option Holder.
13. This option has been executed and delivered the day and
year first above written at Sun Valley, California, and the
interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the state of California.
AMERICAN SPORTS HISTORY INCORPORATED
By: ______________________________
VINCENT M. NERLINO
Chairman and Chief Executive
Officer
______________________________
Option Holder
Exhibit No. 11
American Sports History Incorporated
1998 Form 10-KSB
File No. 33-55254-46
AMERICAN SPORTS HISTORY INCORPORATED
NON-QUALIFIED STOCK OPTION AGREEMENT
This Stock Option Agreement is made this ______ day of
________________, 1998, between American Sports History
Incorporated (the "Company"), and _______________________ (the
"Option Holder").
R E C I T A L S
A. The Board of Directors has determined that it is to the
advantage and best interest of the Company and its shareholders
to grant an option to the Option Holder covering shares of the
Company's Common Stock as an inducement to remain in the service
of the Company and as an incentive for increased effort during
such service, and has approved the execution of this Stock Option
Agreement between the Company and the Option Holder.
B. The option granted hereby is to an independent
contractor and is not intended to qualify as an "incentive stock
option," in regard to Employees, under Section 422A of the
Internal Revenue Code of 1954, as amended.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Company grants to the Option Holder the right and
option to purchase on the terms and conditions hereinafter set
forth, all or any part of an aggregate of ______________ shares
of the Common Stock of the Company at the purchase price of
$______ per share, and exercisable from time to time in
accordance with the provisions of this Agreement during a period
expiring on the tenth anniversary from the date of this Agreement
(the "Expiration Date").
2. The Option Holder may not purchase any shares by exercise
of this Option between the Effective Date of this Agreement and
the first anniversary date thereof. Thereafter, shares may be
purchased by exercise of this Option on or after the respective
anniversary of the Effective Date in the amounts indicated as
follows:
Cumulative
Anniversary Percentage Percentage
Date Exercisable Exercisable
1st 33 1/3% 33 1/3%
2nd 33 1/3% 66 2/3%
3rd 33 1/3% 100%
At any time after the third such anniversary date of this
Agreement, but no later than the Expiration Date, the Option
Holder may purchase all or any part of the shares subject to this
Option which the Option Holder theretofore has not exercised.
The number of shares which may be purchased shall be calculated
to the nearest full share and shall not be for fewer than 100
shares. The foregoing limitations shall similarly apply to the
transferees of the Option Holder by will or by the laws of
descent or distribution, so that said transferees shall be
entitled (provided they act within twelve (12) months after the
death of the Option Holder but in no event later than the
Expiration Date) to purchase by exercise of this Option all or
any portion of the shares subject to this Option which the Option
Holder could have purchased by the exercise of the option at the
time of the Option Holder's death but with respect to which this
Option was not previously exercised, and no more. This Option
may be exercised during the lifetime of the Option Holder only by
the Option Holder, or within twelve (12) months after his death
by his transferees by will or the laws of the descent or
distribution, and not otherwise, regardless of any community
property interest therein of the spouse of the Option Holder, or
such spouse's successors in interest. If the spouse of the
Option Holder shall have acquired a community property interest
in this Option, the Option Holder, or Option Holder's permitted
successors in interest, may exercise the option on behalf of the
spouse of the Option Holder or such spouse's successors in
interest.
3. Each exercise of this Option shall be by means of a
written notice of exercise delivered to the Secretary of the
Company, specifying the number of shares to be purchased and
accompanied by payment to the Company of the full purchase price
of the shares to be purchased. The purchase price of the shares
upon exercise of an option shall be paid (i) in cash or by
certified or cashier's check payable to the order of the Company,
(ii) by delivery of shares of Common Stock of the Company already
owned by and in the possession of the option holder, or (iii) by
a promissory note made by option holder in favor of the Company,
upon the terms and conditions determined by the Board of
Directors and secured by the shares issuable upon exercise
complying with applicable law (including, without limitation,
state, corporate and federal margin requirements), or any
combination thereof. Shares of Common Stock used to satisfy the
exercise price of this Option shall be valued at their fair
market value determined as of the close of the business day
immediately preceding the date of exercise.
4. The fair market value of a share of Common Stock shall
be determined for purposes of this Agreement by reference to the
most recent sale price of the Company's Common Stock and such
other factors as the Board of Directors may deem appropriate to
reflect the then fair market thereof, unless such shares are
publicly traded on a stock exchange or otherwise, in which case
such value shall be determined by reference to the closing price
of such share on the principal stock exchange on which such
shares are traded, or, if such shares are not then traded on a
principal stock exchange, the mean between the bid and asked
price of a share as supplied by the National Association of
Securities Dealers through NASDAQ (or its successor in function),
in each case as reported by The Wall Street Journal, for the
business day immediately preceding the date on which the option
is exercised.
5. No shares issuable upon the exercise of this Option
shall be issued and delivered unless and until there shall have
been full compliance with all applicable registration
requirements of the Securities Act of 1933, as amended, all
applicable listing requirements of any national securities
exchange on which shares of the same class are then listed and
any other requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery.
Without limiting the foregoing, the undersigned hereby
agrees that unless and until the shares of stock covered by this
Option have been registered with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, he will
purchase all shares of stock to be issued upon exercise of this
Option for investment and not for resale or for distribution and
that upon each exercise of any portion of this Option the person
entitled to exercise the same shall, upon the request of the
Company, furnish evidence satisfactory to the Company (including
a written and signed representation) to that effect in form and
substance satisfactory to the Company, including an
indemnification of the Company in the event of any violation of
the Securities Act of 1933 by such person. Furthermore, the
Company may, if it deems appropriate, affix a legend to
certificates representing shares of stock upon exercise of
options indicating that such shares have not been registered with
the Securities and Exchange Commission and may so notify its
Transfer Agent, and may take such other action as it deems
necessary or advisable to comply with any other regulatory or
governmental requirements.
6. If Option Holder or Option Holder's permitted successors
in interest disposes of shares of Common Stock acquired pursuant
to the exercise of this Option, the Company shall have the right
to require Option Holder or Option Holder's permitted successor
in interest to pay the Company the amount of any taxes, which the
Company may be required to withhold with respect to such shares.
7. This Option and the rights and privileges granted hereby
shall not be transferred, assigned, pledged or hypothecated in
any way, whether by operation of the law or otherwise, except by
will or the laws of descent and distribution. Upon any attempt
so to transfer, assign, pledge, hypothecate or otherwise dispose
of this option or any right or privileges granted hereby contrary
to the provisions hereof, this Option and all rights and
privileges contained herein shall immediately become null and
void and of no further force or effect.
8. If the outstanding shares of the Common Stock of the
Company are increased, decreased, changed into, or exchanged for
a different number or kind of shares or securities of the Company
through reorganization, recapitalization,reclassification, stock
dividend, stock split or reverse stock split, an appropriate and
proportionate adjustment (to be conclusively determined by the
Board of Directors of the Company) shall be made in the number
and kind of securities receivable upon the exercise of this
Option, without change in the total price applicable to the
unexercised portion of this Option but with a corresponding
adjustment in the price for each unit of any security covered by
this Option.
Upon the dissolution or liquidation of the Company, or upon
a reorganization, merger or consolidation of the Company with one
or more corporations as a result of which the Company is not the
surviving corporation, or upon the sale of substantially all the
property or more than 80% of the then outstanding stock of the
Company to another corporation, this Option shall terminated,
unless express written provision be made in connection with such
transaction for (i) the immediate exercisability of this Option,
(ii) the assumption of this Option or the substitution therefore
of a new option covering the stock of a successor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as
to number and kind of shares and prices, such adjustments to be
conclusively determined by the Board of Directors of the Company.
Adjustments under this paragraph 8 shall be made by the Board of
Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and
conclusive. No fractional shares shall be issued under any such
adjustment.
9. Neither the Option Holder nor any other person legally
entitled to exercise this option shall be entitled to any of the
rights or privileges of a shareholder of the Company in respect
of any shares issuable upon any exercise of this Option unless
and until a certificate or certificates representing such shares
shall have been actually issued and delivered to him.
10. This Option has been executed and delivered the day and
year first above-written at Chatham, New Jersey, and the
interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of New Jersey.
AMERICAN SPORTS HISTORY
INCORPORATED
By:_________________________________
VINCENT M. NERLINO
Chairman of the Board and
Chief Executive Officer
By:_________________________________
Option Holder
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 3,344
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,344
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,011
<CURRENT-LIABILITIES> 1,031,006
<BONDS> 0
0
0
<COMMON> 97,460
<OTHER-SE> 1,593,638
<TOTAL-LIABILITY-AND-EQUITY> 6,011
<SALES> 0
<TOTAL-REVENUES> 27
<CGS> 0
<TOTAL-COSTS> 609,266
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (609,239)
<INCOME-TAX> 0
<INCOME-CONTINUING> (609,239)
<DISCONTINUED> 0
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<NET-INCOME> (609,239)
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