<PAGE>2
As filed with the Securities and Exchange Commission on October 10,
1996
Commission File Number: 333-8233
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
GRAND SLAM LICENSING, INC.
INDIANA 35- 1952027
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdictions Classification Code Number) Indemnification Number)
of incorporation
or organization)
401 Pennsylvania Parkway
Suite 390
Indianapolis, Indiana 46280
Telephone: (317) 575-5900
(Address and telephone number of registrant's principal executive offices
and principal place of business.)
Milton Thompson
401 Pennsylvania Parkway
Suite 390
Indianapolis, Indiana 46280
Telephone: (317) 575-5900
(Name, address and telephone number of agent for service.)
with copies to:
Jody M .Walker
Attorney At Law
7841 South Garfield Way
Littleton, Colorado 80122
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 133, check the following box: | x |
<PAGE>3
<TABLE>
CALCULATION OF REGISTRATION FEE
=============================================================
===============
<CAPTION>
Title of each Proposed Proposed Amount of
class of Amount to be offering aggregate registration
securities registered price offering price fee,<F3>
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.001 par value 65,000 1.50 $97,500 $33.62
A Warrants 200,000 .001<F2> $200 $.07
Common Stock<F4> 200,000 5.00 $1,000,000 $344.83
Common Stock<F5> 556,050 1.50 $ 834,075 $287.61
Common Stock<F6> 77,000 1.50 $ 115,500 $39.83
- ----------------------------------------------------------------------------
Total $2,047,275 $705.96
<FN>
<F1>Represents Shares of common stock necessary to effect the
distribution described in the Registration Statement.
<F2>Estimated solely for purposes of calculating the registration fee.
<F3>Represents 1/29 of 1% of the book value of the Shares of common
stock issuable being registered.
<F4>Represents Common Stock underlying the A Warrants being
registered hereunder on behalf of the Selling Securityholders.
<F5>Represents Common Stock being registered hereunder on behalf of
the Selling Securityholders.
<F6>Represents Common Stock to be issued upon conversion of the Class
C Preferred Shares and upon exercise of A Warrants underlying the Class
C Preferred Shares on behalf of a Selling Shareholder
</TABLE>
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>4
<TABLE>
<CAPTION>
GRAND SLAM LICENSING, INC.
Cross Reference Sheet between Items of Form S-1
and Prospectus Pursuant to 501(b) of Regulation S-K.
<S> <C>
Items in Form S-1 Location in Prospectus
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus Outside Front Cover Page.
2. Inside Front and outside Back Inside Front Cover Page;
Cover Pages of Prospectus Outside Back Cover Page;
3. Summary Information & Risk Factors Prospectus Summary;
Risk Factors.
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Selling Security Holders
8. Plan of Distribution Inside Front Cover Page;
Prospectus Summary;
The Distribution
9. Description of Common Stock Outside Front Cover Page
to be Registered Prospectus Summary;
Description of Securities
10. Interest of Named Experts Interest of Named Experts
and Counsel and Counsel.
11. Information with Respect to The Corporation; Legal
the Registrant Proceedings; Market
Information of Common
Shares; Financial Statements;
Selected Financial Data;
Management's Discussion and
Analysis of Financial
Condition, Management;
Certain Relationships and
Related Transactions;
Principal Shareholders.
12. Statement as to Indemnification Management -
Indemnification.
</TABLE>
<PAGE>5
PRELIMINARY PROSPECTUS DATED OCTOBER 4, 1996
SUBJECT TO COMPLETION
65,000 Common Shares to be distributed
556,050 Common Shares on behalf of Selling Shareholders
200,000 A Warrants
200,000 Common Shares underlying the A Warrants
77,000 Common Shares underlying the Class C Preferred Shares
(includes 7,000 Common Shares underlying A Warrants to be
issued upon conversion of Class C Preferred Shares)
GRAND SLAM LICENSING, INC.
Common Stock ($.001 Par Value)
As more fully set forth herein, Pratt, Wylce & Lords, Ltd., a Nevada
corporation ("Pratt"), proposes to distribute (the "Distribution") as soon as
practicable after the effective date of this registration statement
1996 as a dividend to its shareholders of record at the close of business on
July 21, 1995 (the "Record Date"), one share of the common stock, par
value $.001 per share (the "Common Stock") of Grand Slam Licensing,
Inc., an Indiana corporation (the "Company"), for each forty shares of Pratt
common stock, par value $.001 per share (the "Pratt Common Stock"), held
by each Pratt shareholder on the Record Date. Pratt will distribute 65,000
Common Shares (40.63% of the 160,000 shares of Common Stock owned
by it), which represents 4.89% of the Company's outstanding Common
Stock on the Record Date. The Distribution will be made by Pratt without
the payment of any consideration by its shareholders. No fractional shares
will be distributed. See "The Distribution." The Common Shares of the
Company owned by Pratt that are not being distributed are being registered
for sale by Pratt as a selling shareholder. The expenses of the Distribution
are estimated to be $33,705.96 and are to be paid by the Company.
Additionally, the Company is registering 556,050 common shares on behalf
of its selling security holders. The Company is registering 70,000
common shares to be issued upon conversion of the Class C Preferred
Stock on behalf of Selling Shareholders (which shall be converted prior to
the effectiveness of this registration) and 7,000 common shares to be
issued upon exercise of A Warrants which shall be issue upon conversion
of the Class C Preferred Stock. The Company is also registering 200,000
A Warrants and the stock underlying said warrants on behalf of its selling
security holders. The A Warrants are exercisable into one common share
at the purchase price of $5.00. The A Warrants shall be effective for a
period of two years from the effective date of the registration statement and
shall be redeemable by the Company at $.001 per A Warrant upon thirty
days notice.
The 556,050 common shares being registered on behalf of selling security
holders consist of 95,000 Common Shares on behalf of Pratt, Wylce &
Lords, Ltd., 80,800 Common Shares on behalf of the Company's officers
and directors, 329,200 Common Shares on behalf of shareholders who
purchased in a previous private placement and 16,900 Common Shares to
other unaffiliated shareholders. See "Selling Security Holders".
<PAGE>6
Prior to the date hereof, there has been no trading market for the Common
Stock or Warrants of the Company. The Company has agreed to use its
best efforts to apply for the quotation of its Common Stock on the Small
Cap of the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"). The Company currently cannot meet either the
net equity or the total asset test for qualification on NASDAQ. There can
be no assurance that the Common Stock will be quoted, that an active
trading and/or a liquid market will develop or, if developed, that it will be
maintained.
There are material risks in connection with the purchase of the securities.
See Risk Factors, page 8
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sales of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any state.
Available Information
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. office, a Registration Statement on
Form S-1 (Registration No. ) under the Securities Act of 1933, as
amended (the "Securities Act"), for the registration of the securities offered
hereby. This Prospectus omits certain of the information contained in the
Registration Statement, and reference is hereby made to the Registration
Statement and exhibits and schedules relating thereto for further information
with respect to the Company and the securities to which this Prospectus
relates. Statements contained herein concerning the provisions of any
document are not necessarily complete and, in each instance, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement. Each such statement is qualified in its entirety by such
reference. Items of information omitted from this Prospectus but contained
in the Registration Statement may be inspected without charge at the Public
Reference Room of the Commission, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549 and copies of such material can be obtained
from the Public Reference Section of the Commission, Washington, D.C.
20549 at prescribed rates.
<PAGE>7
Upon consummation of this offering and the Distribution, the Company will
become subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and in accordance therewith file reports and other
information with the Securities and Exchange Commission. The reports
and other information filed by the Company can be inspected and copied at
the public reference facilities maintained by the Commission in Washington,
D.C. and at the Chicago Regional Office, Northwestern Atrium Center, 500
W. Madison Street, Suite 1400, Chicago, Illinois 60621-2511 and the New
York Regional Office, 7 World Trade Center, New York, New York
10048. Copies of such material can be obtained from the Public Reference
Section of the Commission, Washington, D.C. 20549 at prescribed rates.
Reports to Security Holders
The Company will furnish to shareholders: (i) an annual report containing
financial information examined and reported upon by its certified public
accountants; (ii) unaudited financial statements for each of the first three
quarters of the fiscal year; and (iii) additional information concerning the
business and operations of the Company deemed appropriate by the Board
of Directors.
The approximate date on which this Prospectus is first being sent to holders
of Pratt Common Stock is , 1996.
<PAGE>8
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
TABLE OF CONTENTS
- -----------------------------------------------------------------------------
<S> <C>
PROSPECTUS SUMMARY 9
RISK FACTORS 14
THE DISTRIBUTION 18
SELLING SECURITY HOLDERS 19
USE OF PROCEEDS 23
THE COMPANY 24
BUSINESS ACTIVITIES 26
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION 28
Trends and Uncertainties
Capital and Source of Liquidity
Results of Operations
CERTAIN TRANSACTIONS 33
MANAGEMENT 34
Officers and Directors
Remuneration
Indemnification
PRINCIPAL SHAREHOLDERS 39
SHARES ELIGIBLE FOR FUTURE SALE 41
NASDAQ LISTING 41
DESCRIPTION OF SECURITIES 43
LEGAL MATTERS 45
LEGAL PROCEEDINGS 45
EXPERTS 45
INTERESTS OF NAMED EXPERTS AND COUNSEL 45
</TABLE>
<PAGE>9
- -----------------------------------------------------------------------------
PROSPECTUS SUMMARY
- -----------------------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information, financial statements and notes to the financial statements
including the notes thereto appearing elsewhere in this Prospectus.
<TABLE>
<S> <C>
THE COMPANY. The Company was incorporated in
Indiana on April 28, 1995
consolidating activities in the areas of
the acquisition of licenses to use
trademarks, logos, and photographic
likenesses on collectibles, the design
of those collectibles, the importation
of those collectibles, and the
marketing of the collectibles. The
Company also serves as a licensing
agent and a consultant to
manufacturers of other products
seeking licenses to use marks,
logos and photographic likenesses on
their products.
Prior to April 28, 1995, these
activities took place within
Grand Slam III, an Indiana limited
partnership, which also provided
contract advisor, negotiation, career
planning and general management
services for athletes, entertainers,
media personalities and others and
planning, management and
sponsorship development for events.
Grand Slam III remains in existence
for those purposes. See "The Company."
The Corporation's executive offices are
located at 401 Pennsylvania Parkway,
Suite 390, Indianapolis, Indiana 46280.
Telephone No. (317) 575-5900.
DESCRIPTION OF SECURITIES. The Corporation is authorized to
issue Fifty Million (50,000,000)
Common Shares, $.001 par value.
<PAGE>10
The Corporation authorized a
dividend to shareholders of record as of
May 15, 1995 of 250 Class A
Convertible Preferred Shares ("Class A
Preferred") and 800 Class B
Convertible Preferred Shares (Class B
Preferred"). The Class A Preferred
shall be convertible at a rate of 1,000
shares of common stock for each
share of Class A Preferred.
Conversion will be authorized upon the
first fiscal year that the Corporation
attains at least $1,000,000 in audited
after tax profits. Class B Preferred
shall be convertible at a rate of 1,000
shares of common stock for each share
of Class B Preferred. The Class B
Preferred shall be convertible upon
completion of the first fiscal year that
the Corporation attains audited after tax
profits of at least $3,000,000.
During September, 1995, the Corporation
authorized 1,000 Class C Preferred
Shares. Each Class C Preferred Share is
convertible, after four months from the
purchase date, into 100 Common Shares
and One "A" Warrant to purchase 10
additional Common Shares at $5.00 per
share. The Class C Preferred Stock is
not entitled to voting rights or
dividends. There are currently 700 Class C
Preferred Shares issued and outstanding.
Additionally, the Board of Directors of
the Corporation authorized a dividend
distribution of 200,000 A Warrants on a
pro rata basis to the shareholders of
record as of May 15, 1995. The A
Warrants shall be exercisable for a period
of two years from the effective date of
the registration statement. The A Warrants
shall be exercisable into Common Shares
of the Corporation at the exercise price
of $5.00 per Common Share.
See "Description of Securities."
THE DISTRIBUTION.
Securities Being Distributed 65,000 shares of the Company's
Common Stock.
<PAGE>11
Purpose of Distribution To enhance the Company's ability to
raise additional capital, if necessary,
in the future.
Shares of Common Stock
Outstanding
After Distribution 1,329,100 shares of Common Stock.
Distributing Company Pratt, Wylce & Lords, Ltd., a Nevada
corporation.
Distribution Ratio One share of Common Stock for
every Forty shares of Pratt
Common Stock owned of record on
May 31, 1996 (the "Record Date").
USE OF PROCEEDS The securities to which this
Prospectus relates are being
distributed to holders of Pratt
Common Stock as a dividend
and neither the Company nor Pratt
will receive any cash or other
proceeds in connection with the
Distribution.
Additionally this Prospectus relates to
securities being registered on behalf
of selling securityholders and the
Company will not receive any cash or
other proceeds in connection with the
subsequent sale. Any proceeds
received from the subsequent exercise
of the A Warrants shall be used
as working capital and to expand
operations.
RISK FACTORS There are material risks, such as
uncertainty of future financial results,
liquidity dependent on additional
capital and debt financing and risks
related to the pin sale industry, in
connection with the purchase of the
securities. See "Risk Factors."
MARKET FOR COMMON STOCK
AND A WARRANTS. Prior to the date hereof, there has been
no trading market for the Common
Stock or A Warrants of the Company.
The Company has agreed to use its
best efforts to apply for the quotation of
its Common Stock on the Small Cap of
the National Association of Securities
Dealers Automated Quotation System
<PAGE>12
("NASDAQ"). The Company currently
cannot meet either the net equity or the
total asset test for qualification on
NASDAQ. There can be no assurance
that the Common Stock will be quoted,
that an active trading and/or a liquid
market will develop or, if developed, that
it will be maintained. See "Risk
Factors" and "NASDAQ Listing."
RESALES BY SELLING
SHAREHOLDERS. This Prospectus relates to 626,050
Common Shares being registered on
behalf of selling securityholders.
The Company will not receive any
cash or other proceeds in connection
with the subsequent sale.
DIVIDEND POLICY The Company does not currently
intend to pay regular cash dividends
on its Common Stock; such policy
will be reviewed by the Company's
Board of Directors from time to time
in light of, among other things, the
Company's earnings and financial
position. See "Risk Factors."
TRANSFER AGENT The Company shall act as its own
Transfer Agent until after completion
of the Offering.
SELECTED FINANCIAL
INFORMATION. The selected financial information
presented below under the captions
and "Balance Sheet" as of the ten
months ended October 31, 1995 and
December 31, 1994 and "Statement of
Operations" for the ten months ended
October 31, 1995 and for the years
ended December 31, 1993 and 1995
are derived from the audited financial
statements of the Company.
The selected financial information
presented below under the captions
"Balance Sheet" as of July 31, 1996 and
1995 and the Statement of Operations
for the nine months ended July 31, 1996
and 1995 is derived from the unaudited
financial statements of the Company.
The Balance Sheet and Statement of
Operations have not been audited by
independent certified public accountants
<PAGE>13
however, in the opinion of management,
all adjustments (which include only
normal recurring adjustments) have been
made in order to present fairly the
operations for this period. See
"Management's Discussion and Analysis
of Financial Condition" and "Financial
Statements."
</TABLE>
<TABLE>
BALANCE SHEET
<CAPTION>
December 31, October 31, July 31,
1994 1995 1996
<S> <C> <C> <C>
Total Assets $45,924 $608,614 $742,080
Total Liabilities $36,625 $139,755 $481,080
Total Stockholders'
Equity (Deficit) $ 9,299 $468,859 $261,000
Total Liabilities &
Stockholders' Equity $45,924 $608,614 $742,080
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
From For Ten For Nine For Nine
inception For Year Months Months Months
(April, 1993) Ended Ended Ended Ended
to Dec. 31 Dec. 31, Oct. 31 July 31, July 31,
1993 1994 1995 1996 1995
<S> <C> <C> <C> <C> <C>
Revenues from continuing
operations $191,057 $178,099 $125,796 $404,325 $32,940
Income (Loss) from
continuing operations
(197,828) (73,644) (38,246) (229,803) (89,700)
Nonoperating Income
(Expense) (334,393) - - - (247,500)
Provision (Credit) For
Income Taxes - - - - -
Net income (loss)
(532,221) (73,644) (38,246) (227,627) (337,711)
Net income (loss) per common
share of outstanding stock
$ (0.53) $ (0.09) $ (0.05) $(0.17) $(0.32)
</TABLE>
<PAGE>14
- -----------------------------------------------------------------------------
RISK FACTORS
- -----------------------------------------------------------------------------
In analyzing this offering, prospective investors should read this entire
Prospectus and carefully consider, among other things, the following Risk
Factors:
Uncertainty of Future Financial Results. The Company has experienced
accumulated losses from operations to date and future financial results are
uncertain. As such, there can be no assurance that the Company can be
operated in a profitable manner. Profitability depends upon many factors,
including the success of the Company's marketing program, the
maintenance or reduction of expense levels and the success of the
Company's business activities. The Company has accumulated losses
from operations as of April 30, 1996 of $693,702 . Lacking future
profitable operations, the Company will require additional capital. Even if
the Company obtains future financing or revenues to expand operations,
increased production or marketing expenses would adversely affect liquidity
of the Company. See FINANCIAL STATEMENTS.
Liquidity Dependent on Additional Capital and Debt Financing. On a long
term basis, liquidity is dependent on increased revenues from operations,
additional infusions of capital and debt financing. The Company, to date,
has relied principally upon a revolving line of credit with an Indianapolis
financial institution for additional financing. The Company believes
that this additional financing in the short term will allow the Company to
increase its marketing and sales efforts and thereafter result in increased
revenue and greater liquidity in the long term. No other means of arranging
additional capital are contemplated at this time. However, there can be no
assurance that the Company would, if required, be able to obtain additional
equity or debt financing in the future, if at all.
Risks Relating to Sports Stoppages. Sports stoppages such as the baseball
and hockey strikes could have an adverse effect on the operations of the
Company. Even though the Company has attempted to diversity into
entertainment licenses and to emphasize individual, as opposed to term,
sports, there can be no assurance that such attempts will be successful in
offsetting the inherent risks associated with team sports stoppages.
Competition. There is significant competition in the collector pin and
souvenir industry, particularly the logo pin market. The Corporation will be
competing with established companies and other entities (many of which
may possess substantially greater resources than the Corporation). Almost
all of the companies with which the Corporation competes are substantially
larger, have more substantial histories, backgrounds, experience and
records of successful operations, greater financial, technical, marketing and
other resources, more employees and more extensive facilities than the
Corporation now has, or will have in the foreseeable future. It is also likely
that other competitors will emerge in the near future. There is no assurance
that the Corporation will continue to compete successfully with other
established collector pin and souvenir enterprises. The Corporation shall
<PAGE>15
compete on the basis of quality and on public taste in addition to a price
basis. Inability to compete successfully might result in increased costs,
reduced yields and additional risks to the investors herein. See THE
CORPORATION - Competition.
No Ability to Control Affairs of the Company. The majority shareholders
and the officers and directors of the Company as a group own over 60.79%
of all of the outstanding common shares of the Company. As a result, these
individuals have the ability to control the affairs of the Company.
Therefore, the success of the Company's operations is dependent upon the
management expertise, judgment and experience of its officers and
directors. See MANAGEMENT and PRINCIPAL SHAREHOLDERS.
Dependence on Key Individuals. The future success of the Company is
highly dependent upon the Company's ability to attract and retain qualified
key employees. Other than the employment agreement with Milton
Thompson, the Company has not yet entered into definitive employment
agreements with any such individuals. The inability to attract and retain
these individuals for the long term would have a material impact upon the
business of the Company. See COMPANY - Employees and
MANAGEMENT.
Lack of Experience of Management. The financial success of the Company
is partly dependent upon the management expertise and judgment of its
officers regarding the promotion of its products. The current officers all
have prior management experience with large and small businesses and
Milton Thompson, Harold Thompson and Joel Stein all have specific prior
experience in the specific type of product promotion being conducted by the
Company. The officers and directors will have the exclusive authority to
manage and control and make all decisions regarding the business and
affairs of the Company. There can be no assurance that management will
be able to successfully conduct the operations of the Company due to this
lack of experience.
The current officers of the Company devote all of their time to the affairs of
the Company. The remaining directors spend as much time as deemed
necessary on the corporate business affairs (estimated to be approximately
80% of their time) but are not required nor expected to devote their entire
time or efforts to the Company's business and affairs. Milton Thompson is
currently President, Treasurer and Director. Dennis DeYoung serves as Vice
President, Secretary and a Director, Harold Thompson and Joel Stein serve
as Directors.
Conflicts of Interest. Milton Thompson is general partner of Grand Slam
III, an affiliated company, Harold Thompson is responsible for
procurement, marketing and merchandising licensed products for Grand
Slam III and Joel Stein helped found Grand Slam III. As a result, conflicts
of interest may arise. The directors shall immediately notify the other
directors of any possible conflict which may arise due to their involvement
with other businesses. The interested directors in any conflict shall refrain
from voting on any matter in which a conflict of interest has arisen. The
Company has adopted a policy that any transactions with directors, officers
<PAGE>16
or entities of which they are also officers or directors or in which they have
a financial interest, will only be on terms which are fair and reasonable to
the Company and approved by a majority of the disinterested directors of
the Company's Board of Directors. For further discussion see
Management -
Conflicts of Interest Policy. There can be no assurance that such other
activities will not interfere with the officers' and directors' ability
to discharge their obligation herein.
Benefit to Management. Although currently, the officers and directors have
received minimal compensation and common shares for their services, the
Company may, in the future, compensate the Company's management with
substantial salaries and other benefits. Even though no compensation plan
has been proposed or agreed upon, the payment of future salaries and the
costs of these benefits may be a burden on the Company and may be a
factor in limiting or preventing the Company from achieving profitable
operations in the future. However, the Company would not continue to
compensate management with such substantial salaries and other benefits
under circumstances where to do so would have a material negative effect
on the Company's financial condition. See MANAGEMENT -
Remuneration.
Arbitrarily Determined Warrant Exercise Price. The exercise price of the A
Warrants being registered on behalf of the Selling Security holders was
established arbitrarily by the Company with no direct relationship to the
original offering price or the Company's assets, book value, shareholder's
equity or any other recognized criterion of value. Accordingly, the A
Warrants can be considered to have little or no value at the present time.
No Assurance of Public Market for Securities. There is no market for the
securities of the Company and there can be no assurance that an established
trading market (or any public market) will develop at the conclusion of this
Offering, or that if developed, it would be sustained, or that the securities
distributed hereunder may be resold at their original book value price or at
any other price. Any market for the securities of the Company that may
develop will, in all likelihood, be a substantially limited one.
Effect of Future Sales of Shares and Uncertainty of Market Development.
Upon completion of the distribution and a successful completion of the
registration of warrants herein the Company will have 1,329,100 common
shares outstanding, of which the Warrants and underlying Shares registered
in this Offering will be freely tradable without restriction or further
registration under the Securities Act of 1933 (the "Securities Act"). Upon
the effective date of this Registration Statement, 556,050 of the currently
1,329,100 restricted Shares subject to certain limitations of Rule 144 of the
Securities Act will become available for public sale. This does not include
any Common Shares underlying the Class A, Class B or Class C Preferred
Shares or A Warrants. No assurance can be given that the availability of
such Shares for sale will not have an adverse impact on the market price of
the Company's Shares, should one develop. Prior to this Offering, there
has been little public market for any securities of this Company.
<PAGE>17
Management of the Company cannot predict to what extent a secondary
market in the Shares will develop and provide liquidity for holders of the
Shares. See SALE OF SHARES PURSUANT TO RULE 144 and
MARKET INFORMATION ON
COMMON SHARES.
Possible Restrictions to Sales of Company Securities. After the
effectiveness of this registration statement and until the Company
obtains a listing on NASDAQ, if ever, the Company's securities will be
covered by a Rule 15c2-6 under the Securities Exchange Act of 1934 that
imposes additional sales practice requirements on broker-dealers who sell
such securities to persons other than established customers and accredited
investors (generally institutions with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 jointly with their spouse). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination of the purchaser and have received the purchaser's
written agreement to the transaction prior to the sale. In order to approve a
person's account for transactions in designated securities, the broker or
dealer must (i) obtain information concerning the person's financial
situation, investment experience and investment objectives; (ii) reasonably
determined, based on the information required by paragraph (i) that
transactions in designated securities are suitable for the person and that the
person has sufficient knowledge and experience in financial matters that the
person reasonably may be expected to be capable of evaluating the rights of
transactions in designated securities; and (iii) deliver to the person a
written statement setting forth the basis on which the broker or dealer made
the determination required by paragraph (ii) in this section, stating in a
highlighted format that it is unlawful for the broker or dealer to effect a
transaction in a designated security subject to the provisions of paragraph
(ii) of this section unless the broker or dealer has received, prior to the
transaction, a written agreement to the transaction from the person; and
stating in a highlighted format immediately preceding the customer signature
line that the broker or dealer is required to provide the person with the
written statement and the person should not sign and return the written
statement to the broker or dealer if it does not accurately reflect the
person's financial situation, investment experience and investment
objectives and obtain from the person a manually signed and dated copy of
the written statement. A designated security means any equity security
other than a security (i) registered, or approved for registration upon notice
of issuance on a national securities exchange that makes transaction reports
available pursuant to 17 CFR 11Aa3-1 (ii) authorized or approved for
authorization upon notice of issuance, for quotation in the NASDAQ
system; or . . . (iv) whose issuer has net tangible assets in excess of
$2,000,000 demonstrated by financial statements dated less than fifteen
months previously that the broker or dealer has reviewed and has a
reasonable basis to believe are true and complete in relation to the date of the
transaction with the person. Consequently, the rule may affect the ability
of broker-dealers to sell the Company's securities and also may affect the
ability of purchasers in this Offering to sell their shares in the secondary
market. See NASDAQ Listing - Broker-Dealer Sales of Company's
Securities.
<PAGE>18
Lack of Dividends. There can be no assurance that the continued operations
of the Company will result in any revenues or will be profitable. At the
present time, the Company intends to use any earnings which may be
generated to finance the growth of the Company's business. Accordingly,
while payment of dividends rests within the discretion of the Board of
Directors, the Company does not presently intend to pay dividends and
there can be no assurance that dividends will ever be paid. See DIVIDEND
POLICY.
Vulnerability to Fluctuations in Economy. Demand for the Company's
proposed products is dependent on, among other things, general economic
conditions which are cyclical in nature. Prolonged recessionary periods
may be damaging to the Company.
- ----------------------------------------------------------------------------
THE DISTRIBUTION
- ----------------------------------------------------------------------------
On April 12, 1995, the Company entered into a consulting agreement on
with Pratt, Wylce & Lords, Ltd. ("Pratt") to assist the Company in its
capitalization and the obtainment of additional financing. To date, Pratt
provided consulting services regarding capital structuring, initial equity
financing, and preparation of a registration statement. The term of the
agreement is for one year from April 12, 1995. As partial payment for
consulting services, the Company issued 165,000 of its Common Shares to
Pratt, of which 65,000 Common Shares are to be registered and distributed
to Pratt shareholders. Additionally, 32,000 Common Shares were issued to
Alan Filson, (issued prior to Mr. Filson becoming a director of Pratt). In
addition, Pratt has received cash compensation of $30,000 and Alan Filson
received cash compensation of $10,000.
After careful study and review and based upon the terms of its consulting
agreement with the Company, the Board of Directors of Pratt determined
that it would be in the best interests of Pratt and its shareholders to
distribute a portion of the Company's Common Shares held by Pratt to its
shareholders. In addition, the Company and Pratt determined that such a
distribution would be in the best interests of the Company. Pratt
shareholder's may realize economic benefits from the sale of any Common
Stock distribution if a market for the Company's Common Stock develops,
although there can be no assurances that any such market will result. Pratt
and the Company believe that the distribution to Pratt's shareholders, which
will result in an increased shareholder base of the Company, will be an
advantage to the Company at such time as the Company may require
additional capital and/or make application to NASDAQ Small Cap. The
increased shareholder base of approximately 1,321 shareholders represents
an increase in potential future purchasers of additional stock in any
subsequent offering or in the stock market if these individuals are satisfied
with the performance of the Company's operations.
<PAGE>19
Accordingly, after obtaining the approval of the independent directors on
Pratt's Board of Directors, the Board of Directors of Pratt declared a
dividend pursuant to which, as soon as practicable after the effective date of
the registration statement, 65,000 shares of the issued and outstanding
Common Stock of the Company, constituting 39.39% of the shares of
Common Stock owned by Pratt, will be distributed to the shareholders of
record of Pratt as of May 31, 1996 on the basis of one share of Common
Stock for each forty shares of Pratt Common Stock held. The shares of
Common Stock are being distributed by Pratt as a dividend to holders of
Pratt Common Stock and neither the Company nor Pratt will receive any
cash or other proceeds in connection with the Distribution. No fractional
shares of Common Stock will be issued. Pratt had approximately 1,321
shareholders of record on the Record Date. The Pratt Common Stock is
quoted over-the-counter under the symbol "PWLS".
In order to comply with certain provisions of Indiana corporate law, on
, 1996 (the "Payment Date') Pratt deposited the shares of Common
Stock to be distributed with Florida Atlantic Stock Transfer, Inc. (the
"Depositary"). The Depositary will hold such shares for the benefit of Pratt
shareholders on the Record Date. The terms of the agreement with the
Depositary provides that the shares will be released promptly after the
Registration Statement to which this Prospectus relates is declared effective
by the Commission. However, if the Registration Statement is not declared
effective prior to May 31, 1997, then, unless such date is changed by notice
to the Depositary from the Company, the Depositary shall return all such
shares to Pratt without effecting the distribution.
- ----------------------------------------------------------------------------
SELLING SECURITY HOLDERS
- ----------------------------------------------------------------------------
The Company shall register pursuant to this prospectus 626,050 Common
Shares currently outstanding for the account of the following individuals or
entities. The percentage owned prior to and after the offering reflects all of
the then outstanding common shares. The amount and percentage owned
after the offering assumes the sale of all of the Common Shares being
registered on behalf of the selling shareholders.
<TABLE>
<CAPTION>
Name Amount Total % Owned Amount % Owned
Being Number Prior to Owned After
Registered of Shares Offering After Offering
Offering
<S> <C> <C> <C> <C> <C>
Lisa Railing 10,000 10,000 .75% 0 0%
Kerry Kenna 3,000 3,000 .23% 0 0%
Frances Stewart 3,000 3,000 .23% 0 0%
Alan Fiering 3,000 3,000 .23% 0 0%
William Paton 9,000 9,000 .68% 0 0%
Elaine Paton 9,000 9,000 .68% 0 0%
<PAGE>20
William Paton
IRA 9,000 9,000 .68% 0 0%
Robert Gerner 3,000 3,000 .23% 0 0%
Lauren Tracy 3,000 3,000 .23% 0 0%
Thomas Hayden 3,000 3,000 .23% 0 0%
Robert Kemmerer 30,000 30,000 2.3% 0 0%
Robert & Alisa
DeStefano 3,000 3,000 .23% 0 0%
Lois Zoll 3,000 3,000 .23% 0 0%
Carol & Paul Rice 3,000 3,000 .23% 0 0%
RE Hunt Trust 3,000 3,000 .23% 0 0%
Johnny &
Barbara Wong 3,000 3,000 .23% 0 0%
Francis Hong 3,500 3,500 .26% 0 0%
Elizabeth Gheen 3,000 3,000 .23% 0 0%
Kellye Moore 3,000 3,000 .23% 0 0%
Julius & Jean
Richmond 6,000 6,000 .46% 0 0%
Chloe Green 3,000 3,000 .23% 0 0%
Robert Brown 5,000 5,000 .38% 0 0%
Shirley Jean
Carroll 3,000 3,000 .23% 0 0%
Myron Wolf 3,000 3,000 .23% 0 0%
Jeff McGuire 3,000 3,000 .23% 0 0%
Michael Tower 6,000 6,000 .46% 0 0%
Dominic & Julie
Cippola 3,000 3,000 .23% 0 0%
Bradley Mays 4,000 4,000 .30% 0 0%
Donald Burdsall 3,000 3,000 .23% 0 0%
Michael Campbell 3,000 3,000 .23% 0 0%
William Brady &
James Curtis 3,000 3,000 .23% 0 0%
Richard Roberts 3,000 3,000 .23% 0 0%
James Haines 3,334 3,334 .25% 0 0%
Domenic
Angelicchio 4,000 4,000 .30% 0 0%
Butch Cameron 3,000 3,000 .23% 0 0%
Thomas Kaminski 20,000 20,000 1.5% 0 0%
Greg Brown 5,000 5,000 .38% 0 0%
Joseph Kack 3,000 3,000 .23% 0 0%
Bradley Beck 5,333 5,333 .40% 0 0%
Clifford Jaebker 6,100 6,100 .46% 0 0%
William Taylor 6,000 6,000 .46% 0 0%
CarolAnn Mihalik 3,000 3,000 .23% 0 0%
Larry Konfirst 9,000 9,000 .68% 0 0%
Richard Payne 3,333 3,333 .25% 0 0%
Malcolm Thompson 3,000 3,000 .23% 0 0%
Ethel Thompson &
Verna Saunders 3,000 3,000 .23% 0 0%
Terrence Dooher 4,000 4,000 .30% 0 0%
Gerald Dooher 3,000 3,000 .23% 0 0%
Stephen Jones 3,000 3,000 .23% 0 0%
<PAGE>21
Karen & Donald
Matthews 3,000 3,000 .23% 0 0%
Nicholas Deets 10,000 10,000 .75% 0 0%
Charles Poulsen 3,500 3,500 .26% 0 0%
Ora Elliott 6,000 6,000 .46% 0 0%
William Thompson 3,000 3,000 .23% 0 0%
Gary Muncy 12,000 12,000 .90% 0 0%
Gavin Hart 6,000 6,000 .46% 0 0%
David Solotkin 6,000 6,000 .46% 0 0%
Daniel Carlson 3,000 3,000 .23% 0 0%
Robin Cipolla 3,000 3,000 .23% 0 0%
Fred Yde 3,000 3,000 .23% 0 0%
R.K. Hunter 3,000 3,000 .23% 0 0%
Roger Burch 6,000 6,000 .46% 0 0%
Steven Worland 3,000 3,000 .23% 0 0%
Donna Stocker 3,000 3,000 .23% 0 0%
Jay Rifkind 3,000 3,000 .23% 0 0%
Robert Kube 3,000 3,000 .23% 0 0%
Roger Vosti 3,000 3,000 .23% 0 0%
Mitsui & Betsy
Tatsugawa 4,000 4,000 .30% 0 0%
Stephen Jones 3,000 3,000 .23% 0 0%
James C. and Dorothy
Jane Filson Revocable
Living Trust 7,000 7,000 .53% 0 0%
Patrick J.
O'Toole 5,000 5,000 .38% 0 0%
Milton
Thompson<F1> 32,320 323,200 4.32% 290,880 21.89%
Dennis
DeYoung<F2> 32,320 323,200 4.32% 290,880 21.89%
Harold
Thompson<F3> 8,080 80,800 6.08% 72,720 5.47%
Joel Stein <F4> 8,080 80,800 6.08% 72,720 5.47%
Pratt, Wylce &
Lords, Ltd.<F5> 95,000 160,000 12.04% 0 0%
Alan Filson 34,150 34,150 2.57% 0 0%
Hugh & Marianne 70,000 70,000 5.27% 0 0%
Baker<F6>
<FN>
<F1> Milton Thompson is currently President, Treasurer and a Director of
the Company.
<F2>Dennis DeYoung is currently Vice President, Secretary and a Director
of the Company.
<F3> Harold Thompson is currently a Director of the Company.
<F4> Joel Stein is currently a Director of the Company.
<F5> Pratt, Wylce & Lords, Ltd. is distributing 65,000 of its common
shares to its shareholders. These common shares are being registered in
this Offering.
<PAGE>22
<F6>Assumes conversion of the Class C Preferred Shares owned by
Hugh and Marianne Baker prior to or at effective date of registration
statement.
The Company shall register pursuant to this prospectus the A Warrants and
the common shares underlying 200,000 A Warrants currently outstanding
for the account of the following individuals or entities. The percentage
owned prior to and after the offering reflects all of the then outstanding
warrants. The amount and percentage owned after the offering assumes the
sale of all of the A Warrants and does not include any Common Shares
underlying the A Warrants being registered on behalf of the selling security
holders.
</TABLE>
<TABLE>
<CAPTION>
Name and Amount Total Number Of % Amount %
Being Registered A Warrants Owned Owned Owned
Registered Owned Prior to After After
Offering Offering Offering
<S> <C> <C> <C> <C>
Milton Thompson
- 80,000 80,000 40% 0 0%
Dennis DeYoung
- 80,000 80,000 40% 0 0%
Harold Thompson
- 20,000 20,000 10% 0 0%
Joel Stein
- 20,000 20,000 10% 0 0%
</TABLE>
Additionally, the Corporation shall register pursuant
to this prospectus, the 7,000 Common Shares which may be issued upon
exercise of the 700 A Warrants which are issuable to Hugh and Marianne
Baker upon conversion of the Class C Preferred Stock into Common
Shares.
The A Warrants themselves are also being registered pursuant to this
prospectus and shall be freely tradable upon the effective date of this
registration statement. The Company does not intend to actively pursue a
market in the A Warrants.
- -----------------------------------------------------------------------------
USE OF PROCEEDS
- -----------------------------------------------------------------------------
The securities to which this Prospectus relates are being distributed to
holders of Pratt Common Stock as a dividend and neither the Company nor
Pratt will receive any cash or other proceeds in connection with the
Distribution.
<PAGE>23
Additionally, securities are being registered on behalf of the selling
securityholders and the Company will not receive any cash or other
proceeds in connection with the subsequent sale. Any proceeds received
from the subsequent exercise of the A Warrants shall be used as working
capital and to expand operations. Due to the uncertainty of the timing and
amount of actual funds which may received upon exercise of the A
Warrants, no specific breakdown of uses have been established by the
Company. The aggregate amount of proceeds if all of the A Warrants are
exercise is $1,000,000. If all of the A Warrants are exercised, the proceeds
shall be utilized over a twelve month period.
- ----------------------------------------------------------------------------
THE COMPANY
- ----------------------------------------------------------------------------
The Company. The Company was incorporated in Indiana on April 28,
1995 consolidating activities in the areas of the acquisition of licenses to use
trademarks, logos, and photographic likenesses on collectibles, the design
of those collectibles, the importation of those collectibles, and the marketing
of the collectibles. The Company also serves as a licensing agent and a
consultant to manufacturers of other products seeking licenses to use marks,
logos and photographic likenesses on their products. Prior to April 28,
1995, these activities took place within Grand Slam III, an Indiana limited
partnership, which also provided contract advisor, negotiation, career
planning and general management services for athletes, entertainers, media
personalities and others and planning, management and sponsorship
development for events. Grand Slam III remains in existence for those
purposes.
Grand Slam, an Indiana Limited Partnership was founded in 1982 to
provide professional representation primarily for athletes, but, also for
entertainers, other personalities and events. Grand Slam was terminated in
1988. Grand Slam II, a predecessor to Grand Slam III, an Indiana Limited
Partnership was created in 1988 to begin to aggressively seek licenses to
use logos and marks in the design, importation and manufacturing of
collectible pins and related jewelry. At the same time, Sports Ventures was
created, again as an Indiana Limited Partnership, by the same principals as
Grand Slam II, to maintain the original lines of business relating to
professional representation. In 1991, the principals determined to
reorganize and divide the assets of these two (2) partnerships , with the
athletes currently under contract going to the Sports Ventures successor,
Sport Ventures II, and the licenses going to a successor to Grand Slam II,
Grand Slam III. Grand Slam III retained the right and actively sought to
provide events in competition with Sports Ventures II.
Grand Slam III engaged in the provision of services to athletes, entertainers,
media professionals, other personalities and events in the areas of contract
development and negotiation, career, planning, general management,
solicitation of, and evaluation of endorsement and sponsorship proposals.
Grand Slam III also sought to acquire the rights (licenses) to use trademarks
<PAGE>24
and logos to use in the design and importation of its own line of collectibles,
including lapel pins, pin collector sets, key chains, earrings and related
items.
The Company's executive offices are located at 401 Pennsylvania
Parkway, Suite 390, Indianapolis, Indiana 46280. Telephone No. (317)
575-5900. These offices consist of 2,575 square feet provided, as a part of
a total agreement for $10,000 per month with Grand Slam III to provide
office space, storage, access to office equipment and management services.
Business Objective. The operations and objectives of the Company are
the acquisition of licenses from sports and entertainment entities and
personalities for the use of logos and other marks and individual
photographic images to manufacture lapel pins, photo pins and similar
collectible souvenir memorabilia.
Employees. As of the date of this prospectus, the Corporation has five full
time employees, one retained lawyer and one part time independent
contractor working on commission. See "RISK FACTORS." The
Corporation will, as operations demand, sub-contract the balance of its
personnel through independent contractors or hire additional employees.
Competition. There is significant competition in the collector pin and related
souvenir industry, particularly the logo pin market. The Corporation will be
competing with established companies and other entities (many of which
may possess substantially greater resources than the Corporation. Almost
all of the companies with which the Corporation competes are substantially
larger, have more substantial histories, backgrounds, experience and
records of successful operations, greater financial, technical, marketing and
other resources, more employees and more extensive facilities than the
Corporation now has, or will have in the foreseeable future. It is also likely
that other competitors will emerge in the near future. There is no assurance
that the Corporation will continue to compete successfully with other
established collector pin and related souvenir enterprises. The Corporation
shall compete on the basis of quality and on public taste in addition to a
price basis. Inability to compete successfully might result in increased
costs, reduced yields and additional risks to the investors herein.
Consulting Agreement. On April 12, 1995, Grand Slam II entered into a
consulting agreement on with Pratt, Wylce & Lords, Ltd. ("Pratt") to assist
Grand Slam III in its capitalization and the obtainment of additional
financing. On April 28, 1995, the consulting agreement was assigned to the
Company. To date, Pratt provided consulting services regarding
capital structuring, initial equity financing, and preparation of a
registration statement. The term of the agreement is for one year from
April 12, 1995. The agreement has been extended verbally by mutual
consent of the parties. To date, Pratt has received 160,000 Common
Shares valid at $1.50 per common share which represents 12.04% of the
currently outstanding common stock of the Company. As a result, Pratt
would be deemed to be an affiliate of the Company. Subsequent to the
distribution pursuant to this registration statement, Pratt shall be a
nonaffiliate owning 7.15% of the total outstanding common shares of the
Company. In addition, Pratt received total cash compensation of $30,000.
<PAGE>25
Pratt is to received further compensation of $25,000 upon filing of the
registration statement and $10,500 upon the effective date of the registration
statement. The $25,000 has been billed but not yet received by Pratt.
Alan Filson, (prior to becoming a director of Pratt) received cash
compensation of $10,000 and 32,000 Common Shares pursuant to the
consulting agreement.
- -----------------------------------------------------------------------------
BUSINESS ACTIVITIES
- -----------------------------------------------------------------------------
General. The Corporation's business focuses on the acquisition of
licenses from sports and entertainment entities and personalities for the use
of logos and other marks and individual photographic images to
manufacture lapel pins, photo pins and similar collectible souvenir
memorabilia. When licenses are acquired, the Corporation designs and
imports high end products under an exclusive arrangement with NAGAI Art
Industrial Company, Limited, a Far East manufacturer. This exclusive
agreement, although not a formal written agreement, affords the
Corporation exclusive access to the technology of NAGAI Art Industrial
Company, Ltd.'s manufacturing process within the United States. The
Corporation then distributes its products through a network of distributors
currently covering the entire United States and Canada.
Product Line. The Corporation's line of products consists of collector logo
lapel pins, collector photographic pins, pin collector set including logo pins
or a combination of logo pins, logo key chains, earrings, bottle openers
using logos or trademarks and related goods collectible items, such as water
bottles. The Corporation further serves as a Master Licensee and a
Licensing Agent for other intellectual properties, sub-licensing
manufacturers in other product categories. The following individual
licenses are material to the Corporation's results: NBA, USA Basketball,
The International Hockey League, The Rock & Roll Hall of Fame and
Museum, the Beatles, and Gibson Guitar.
The Corporation acquires licenses in the following categories of products:
Logo pins;
photo pins -- team and individual likenesses;
key chains and fobs;
earrings;
promotional pins;
sponsor pins;
collector sets;
commemorative pins (all star, anniversary year, etc.); and
limited edition sets.
The Corporation determines the wholesale price of its products by taking the
sum of the product cost, overhead, royalties, sales commission and margin.
The Corporation attempts to obtain a 15%-30% margin on volume orders
and a 30%-40% margin on high-end program. Royalties are approximately
9%-15% and commissions equal 8%-15%.
<PAGE>26
Currently fifty percent (50%) of the Corporation's revenues are sports
related and fifty percent (50%) of the Corporation's revenues are non-sports
related.
Distribution. The Corporation organizes the distribution of its products to
conform to the market of the particular license, sports or entertainment has
established the following primary channels of distribution:
1. Sports - For licensed sports products, six (6) independent
sales agencies have specific territorial and/or account assignments. In the
aggregate, these sales agencies create a strategic presence for the
Corporation's products all of the major markets in the United States. These
sales agencies brings current experience with other comparable product
lines, creating thereby access among retail buyers for the Corporation's
lines of collectibles.
Specialty marketing supplements the efforts of the independent dealers in
the Corporation's licenses sports product line in two (2) ways. First,
independent sales agencies, with specific experience, have been hired to
focus on particular markets. One such independent sales agency works
exclusively to place Corporation's products in mass merchants. At the
other end of the size continuum, an active telemarketing consultant services
the small store market by identifying and qualifying leads for the
independent dealers' follow up.
Venues, catalogue and television shopping markets and premium
sales to corporations are managed within the Corporation by the National
Sales Manager and the experienced consultants and staff supporting him.
2. Entertainment - The Corporation varied its distribution to
accommodate the marketing and purchasing practices of the market for
entertainment related products. In this segment of business, very specific
understanding and experience are essential. For this reason, the
Corporation established an exclusive distribution relationship with a major
entertainment products distributor, Baker and Taylor, to service all major
record and book store chains.
Labyrinth Sales, an independent sales representative,
conducts all other sales nationally. As a part of its sales effort, Labyrinth
utilizes specialists concentrating on gift market distribution and on mass
merchants. The Corporation has entered into a one year sales agreement
with Labyrinth to act as the Company's sales representative for the states of
Michigan, Kentucky, Ohio and West Virginia and the western part of the
State of Pennsylvania. Either party has the right to cancel the agreement for
just cause upon thirty (30) days written notice. Labyrinth has the full and
complete rights to present and take orders for the full line of the Company's
collectible log pins and photo pins and related jewelry products with the
exception of collector sets. The Company shall pay Labyrinth a 15% sales
commission on some of the items and 7% on the sales of a few of the items.
All payments are to be based upon the total amount collected in each month
and paid by the fifth day of the subsequent month.
<PAGE>27
Finally, the Corporation's national sales management staff
retains responsibility for distribution to major department stores, catalogue
sales and the growing television sales markets.
A network of independent dealers - Currently Ten (10) independent sales
representatives are strategically located with access to major markets in the
United States. Most are established representatives who also represent
other product lines, thus providing the opportunity for headway among
retail buyers.
Market Research. The Corporation employs market research in the areas of
new product opportunities; niche market development, ongoing research in
market share and competition to enhance management decisions,
advertising/promotion planning and customer service analysis (especially
among the growing network of retail outlets).
- ----------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- ----------------------------------------------------------------------------
Trends and Uncertainties. Inasmuch as a major portion of the Company's
activities is the obtainment of licenses to manufacture and market lapel pins,
photo pins and similar collectible souvenir memorabilia pins, the
Company's business operations may be adversely affected by competitors
and prolonged recessionary periods. The sale of the Company's products
are seasonal in that the Olympics and other major sports events are strong
buying periods..
The Company utilizes McGillvrey Ltd. as the importer for its products from
Pacific Rim manufacturers most notably Naigai, International of Japan who
has developed the photo likeness pin manufacturing process available
exclusively to the Company. Although there are several other
manufacturers which could be utilized, There can be no assurance that if
McGillvrey, Ltd. were unable to continue as the Company's source, that the
Company could obtain its injection molding at the same price level per
product.
The Company has been adding new accounts, representative groups,
expanding into new markets and channels of distribution in recent months.
See "Business Activities - Marketing Strategy" The continuation of
obtaining additional types of new business and markets is uncertain and the
continued success of any of the Company's new marketing strategies for
generating revenue is uncertain.
In addition, the future exercise of any of the A Warrants is uncertain based
on the current financial condition of the Company. The lack of future
exercise of the Warrants registered hereunder would negatively impact the
Company's ability to successfully expand operations.
<PAGE>28
Capital and Source of Liquidity. In June, 1995, the Company entered into
an agreement, which was modified on January 1, 1996 to a rate of $10,000
per month, with Grand Slam III for the provision of 2,575 square feet of
office space, storage, access to office equipment and management and
professional services. Other than the portion of this agreement related to
the provision of office space, the Company has no material commitments
for capital expenditures.
The Company's high cost of sales percentage and operating expenses in
comparison to sales throughout its operational history results, in this early
phase of the Company's history, from the costs of analysis of prospective
licenses to seek, the acquisition of licenses being which are determined to
have potential, and product development. An infrastructure had to be put in
place to perform these functions, including development of the analytical
capability to be able to project the performance of particular licenses for the
Company's products, in-house capability to assure full understanding of the
contractual requirements of any particular license, negotiation regarding
terms of the license and graphic design to allow for the application of marks
and logos in innovative ways to appeal to collectible purchasers and to
develop sales materials for use by sales agencies to appeal to the buyer of
collectibles, leading to added expense. The precondition to the acquisition
of a license is the payment of a substantial advance against guaranteed
royalties and the duration required to design products, something that
cannot be undertaken until the license is granted require expenditures will in
advance of any revenues. Once prototypes are developed, approval by the
Licensor is required before manufacture can begin and the orders, which
result in revenue, can be taken. If any redesign is necessary to receive the
licensor's approval, the production process can be extended even further.
With the infrastructure in place and the process of product development for
the initial range of products for the existing portfolio of licenses largely
completed, the percentage cost of sales and operating base should lower.
Plan of Operation. The Company has planned capital expenditures as
discussed in "Business Activities". The Company intends to use future
revenue and proceeds from future sales of its equity securities. The
Company established a line of credit on June 26, 1996 in the amount of
$100,000. The line of credit is evidenced by a note with interest on the
unpaid balance payable monthly at the prime rate of the bank plus 8.25%.
The line of credit is fully collateralized by a Treasury bill held by the bank
in an investment account. There can be no guarantee that the Company will
be
able to obtain the additional funds from any of the sources listed and will
not make the proposed acquisitions if said funds are not available.
The Company has developed the following to implement the marketing plan
of its products. During 1995 and the first quarter of 1996, the Company
has concentrated on the diversification of this inventory of licensed
properties and on the design and development of collectible products. With
success in acquiring new licenses and the introduction of products into the
market place, the Company expects to achieve increases in sales in the
coming months. Also, with the advent of the 1996 NBA Playoffs and an
emphasis on its licensed products and the convening of Dream Team to
prepare for the 1996 Olympics in Atlanta, sales for already existing licensed
<PAGE>29
products are expected to dramatically improve. The Company received
sales of $1,764, $3,476 and $272,883 for the NBA logo, NBA Pro Pix and
USA Basketball for the nine months ended July 31, 1996.
Based on its established channels of distribution, its recent marketing and
current and projected sales levels, the Company should begin to have
positive cash flow from operations in the fourth quarter of 1996 and
management is of the opinion that the Company will be able to generate
sufficient cash flows to support these operations during fiscal year 1996.
The Company is currently financing its sales with a combination of cash
generated from internal operations and additional equity financing. The
Company has recently raised $591,459 in the private placement of common
shares and $105,000 in the private placement of preferred shares. The
Company shall pursue additional equity or debt financing, if necessary, to
continue or expand operations.
For the nine months ended July 31, 1996, the Company purchased $12,839
of equipment. As a result, the Company had net cash used in investing
activities of $12,839 for the nine months ended July 31, 1996.
For the ten months ended October 31, 1995, the Company utilized $36,425
in the purchase and development of trademark and product development
costs. This resulted in net cash used in investing activities of $36,425 for
the ten months ended October 31, 1995.
For the nine months ended July 31, 1996, the Company received funds
from a line of credit which is evidenced by a note with interest on the unpaid
balance monthly at the prime rate of the bank plus 8.25%. Additionally,
the Company satisfied accrued interest with the issuance of common stock
of $1,768. As a result, the Company had net cash provided by financing
activities of $101,768.
For the ten months ended October 31, 1995, the Company received
$591,459 from the sale of its common stock and $47,822 from capital
contributions to partnership. The Company received $53,250 from a notes
payable. As a result, the Company had net cash provided by financing
activities of $692,531 for the ten months ended October 31, 1995.
For the year ended December 31, 1994, the Company received $76,520
from capital contributions to partnership. As a result, the Company had
net cash provided by financing activities of $692,531 for the year ended
December 31, 1994.
On a long term basis, liquidity is dependent on increased revenues from
operations, additional infusions of capital and debt financing. The
Company believes that additional capital and debt financing such as the line
of credit in the short term will allow the Company to increase its marketing
and sales efforts and thereafter result in increased revenue and greater
liquidity in the long term.
<PAGE>30
Results of Operations. The Company had a net loss from operations of
$227,627 for the nine months ended July 31, 1996. Amortization and
depreciation increased $9,828 due to the purchase of a computer system
used in the design and layout of new pins, advertising and layout.
Accounts receivable increased significantly by $259,952 due to the
increased sales over the prior period. Inventory increased by $195,656 as
the Company prepared for the Olympics and the projected increased NBA
sales. Larger quantities of inventory have been acquired to decrease unit
costs in the long run as the cost of goods is lower when the quantity of
goods increase. Prepaid expenses increased $15,178 and accrued expenses
increased $55,743 as the Company prepared for the Olympics and other
sporting finals. Accounts payable also increased by $203,582 as the
Company's distributors prepared for the Olympics and other sporting finals.
The Company had net cash used in operations of $398,904 for the nine
months ended July 31, 1996.
Sales increased from $32,940 for the nine months ended July 31, 1995 to
$404,325 for the same period in 1996. This increase was mainly due to the
sale of USA Basketball products of $272,883. Cost of sales increased
from $35,793 to $326,118 for those same period due to preparation for the
major sporting events such as the Olympics for the nine months ended July
31, 1996. Selling and marketing increased from $20,357 for the nine
months ended July 31, 1995 to $83,609 for the nine months ended July 31,
1996 as the Company attempted to increase visibility of its products for the
Olympics and other major sporting events. General and administrative
costs increase from $16,490 for the nine months ended July 31, 1995 to
$104,401 for the nine months ended July 31, 1996 due to additional
employees salaries. During this time frame, two (2) additional licenses, the
Beatles and Gibson Guitar, were also acquired requiring payment of an
advance against royalties and product development well ahead of any
potential of the sale of any products. Finally, expenses were incurred to
expand sales materials, generally and specifically in advance of the
Olympics and to increase the Company's sales force in preparation for the
Olympics and new entertainment lines. Additionally, management fees of
$120,000 were paid to a related party. Initial management fees covered the
infrastructure, including rent, use of equipment, supplies, management,
marketing, legal, sales management, product development and design and
inventory control the Company required. As of January 1, 1996, the
management fees were reduced as the Company brought most of the afore
mentioned functions in-house, leading to an corresponding increase in
operating costs. The remaining management fees cover marketing
consultation, additional legal consultation and advice, space and the use of
office equipment including computers and photocopiers.
The Company had a net loss from operations of $532,221 for the ten
months ended October 31, 1995 compared to a net loss of $73,644 for the
year ended December 31, 1994. Sales increased from $178,099 for the
year ended December 31, 1994 to $191,057 for the ten months ended
October 31, 1996. Cost of sales decreased from $121,359 for the year
ended December 31, 1994 to $91,567 (annualized to $109,880) for the ten
months ended October 31, 1995 due to the write-off of unsalable
merchandise in 1994. This merchandise related to a decision not to renew
the NFL license due to its high cost and the leveling of retail sales for team
<PAGE>31
sports products leading the Company to concentrate its team sports efforts
on the NSA and to extend its efforts in acquiring entertainment licenses.
Selling and marketing increased from $71,231 for the year ended December
31, 1994 to $122,163 for the ten months ended October 31, 1995 due to
advertising of $9,086, commissions of $17,679, consulting of $60,920,
royalties of $23,266, shipping & freight of $3,518, telephone of $2,524,
displays of $2,210, printing of $3,499 and other costs of $403. General
and administrative costs decreased from $59,153 for the year ended
December 31, 1994 to $38,153(annualized to $45,783) for the ten months
ended October 31, 1995 due to the reduction of shared expenses with GS
III. However, management fees of $137,000, (including payment of
shared expenses) were paid to a related party for the ten months ended
October 31, 1995 compared to $0.00 paid for the year ended December 31,
1994.
During April, 1995 the Company entered into a one year consulting
agreement with an entity whereby the entity would provide to the Company
financial consulting services. Pursuant to the agreement the entity agreed to
assist the Company in preparing a private placement memorandum to obtain
equity financing in the amount of up to $600,000 and to assist the Company
in completing a registration statement by which the common stock may
become tradable in a public market. In exchange for these services the
Company agreed to pay $65,000 in cash and to issue 160,000 shares of its
$.001 par value common stock to the consultant. During the third quarter of
1995, the Company began offering shares of its common stock at $1.50 per
share pursuant to the private placement. The Company issued 329,100
shares of common stock for cash aggregating $486,459, net of offering
expenses of $7,191 through October 31, 1995. The stock issued to the
consultant was valued at $240,000 ($1.50 per share) and such amount is
included in other income and expense in the accompanying statement of
operations. The Company issued an additional 32,000 shares valued at
$48,000 to an individual for consulting services provided in connection
with the private offering.
The Company had a net loss from operations of $74,644 for the year ended
December 31, 1994 compared to a net loss of $38,246 for the year ended
December 31, 1993. Sales increased from $125,796 for the year ended
December 31, 1993 to $178,099 for the year ended December 31, 1994.
Cost of sales increased from $72,847 for the year ended December 31,
1993 to $121,359 for the year ended December 31, 1994 due to increased
operations. Selling and marketing increased from $44,574 for the year
ended December 31, 1993 to $71,231 for the year ended December 31,
1994 due to increased operations. General and administrative costs
increased from $46,621 for the year ended December 31, 1993 to $59,153
for the year ended December 31, 1994 due to management's attempts to
obtain further capitalization and due to increased operations.
The Company is seeking to lower its operating expenses while expanding
operations and increasing its customer base and operating revenues. The
Company is focusing on decreasing administrative costs. The Company
has sought, and continues to seek, to lower its operating costs by (i)
creating an in-house infrastructure to service its needs for evaluation and
negotiation for the acquisition of licenses, marketing and sales and product
design and development; (ii) by looking at other alternatives for product
packaging, order fulfillment and inventory storage and (iii) by ordering in
larger quantities to assure the post possible unit cost for the acquisition of
<PAGE>32
inventory. However, increased marketing expenses will probably occur in
future periods as the Company attempts to further increase its marketing and
sales efforts.
- ----------------------------------------------------------------------------
CERTAIN TRANSACTIONS
- ----------------------------------------------------------------------------
Related Party Transactions. Effective May 15, 1995, the Company
entered into a management support agreement with Grand Slam III, an
affiliated limited partnership whereby Grand Slam III will supply support
services to the Company including the use of office space and equipment
and the use by the Company of employees of Grand Slam III in performing
administrative functions, planning and negotiation of license and sales
agreements. The contract provides for payments of $25,000 per month
plus 7% of gross revenues and expires on October 31, 1997. The contract
was modified effective January 1, 1996 to provide that certain employees of
Grand Slam III will become employees of the Company and to reduce the
fixed monthly payment to $10,000 per month. During the period from
May 15, 1995 to October 31, 1995, the Company made aggregate payments
under the contract of $164,819. The Company paid an additional $90,000
during the six months ended April 30, 1996.
Affiliated Company. Prior to April 28, 1995, Grand Slam III, an Indiana
Limited partnership engaged in the following lines of business:
representation, management and career planning for athletes, entertainers
and media personalities; planning management ad sponsorship development
for events; seeking licenses for the design, importation and marketing of
high end collectibles; serving as either a Master Licensee or a licensing
Agent for the owners of trademarks and logos; and, serving as a consultant
to manufacturers in other product categories seeking licenses from the
owners of trademarks.
On April 28, 1995, all of these licensing activities were organized into a
separate Indiana C Corporation, Grand Slam Licensing, Inc. Grand Slam
III remains in existence fulfilling its other business purposes. The
Company receives, under an agreement between the two (2) entities, some
management services, marketing support, use of space and access to office
equipment for which it reimburses Grand Slam III at the current rate of
$10,000 per month.
Consulting Agreement. The Company has entered into a consulting
agreement with Pratt, Wylce & Lords, Ltd. ("Pratt") to assist the Company
in its capitalization and the obtainment of additional financing. As partial
payment for consulting services, the Company issued 165,000 of its
Common Shares to Pratt, of which 65,000 Common Shares are to be
registered and distributed to Pratt shareholders. Additionally, 32,000
Common Shares were issued to a nominee of Pratt. In addition, Pratt
has received cash compensation of $30,000.
<PAGE>33
Distribution of Securities. On May 16, 1995, the Board of Directors
authorized the distribution of 200,000 common stock purchase warrants
exercisable at $5.00 plus one warrant for each share of common stock.
The warrants are exercisable for a period of 48 months from the date of
issue and are callable with 30 days notice at a price of $.001 per warrant.
These distributions shall be made to the owners of record of common stock
on the books of the Company as of May 15, 1995. The Warrants and the
common stock underlying said Class A Warrants are being registered in this
Offering.
Lockup Agreement. Pursuant to a written agreement in March 1996,
the principal shareholders and officers and directors (Milton Thompson,
Dennis DeYoung, Harold Thompson and Joel Stein) who received A
Warrants issued them pursuant to the Special Meeting of the Board of
Directors held on May 16, 1995 have agreed as follows:
In the event the shareholder exercises any warrants, the stock issued to the
shareholder pursuant to the exercise shall be locked in and restricted from
trading for a period of two years. A notice is to be placed on the face of
each stock certificate covered by the terms of the Agreement stating that the
transfer of the stock evidenced by the certificate is restricted until twenty-
four (24) months from the date of issuance. The shareholder also agrees
not to sell or otherwise transfer their interest in the warrants except to an
underwriter or other market makers in the stock once a market is
established. The shareholder further agrees that the total value in cash, or
other consideration, paid by the buyer to the seller shall not exceed $.01 per
warrant.
- ----------------------------------------------------------------------------
MANAGEMENT
- ----------------------------------------------------------------------------
Officers and Directors. Pursuant to the Articles of Incorporation, each
Director shall serve until the annual meeting of the stockholders, or until his
successor is elected and qualified. It is the intent of the Company to
support the election of a majority of "outside" directors at such meeting.
Directors may only be removed for "cause". The term of office of each
officer of the Company is at the pleasure of the Company's Board.
The principal executive officers and directors of the Company will be as
follows:
<TABLE>
<CAPTION>
Name Position Term(s) of Office
<S> <C> <C>
Milton O. Thompson, age 41 President, Treasurer Inception to
and Director present
Dennis DeYoung, age 50 Vice President, Secretary Inception to
Director present
<PAGE>34
Harold Thompson, age 52 Director Inception to
present
Joel K. Stein, age 39 Director Inception to
present
</TABLE>
Resumes:
Milton O. Thompson. Mr. Thompson serves as the Chairman, President
and Treasurer of the Corporation. Mr. Thompson devotes eighty percent
(80%) of his time to the Company's operations. Since 1989, Mr.
Thompson has served as the Managing General Partner of Grand Slam III,
L.P., a full sports and entertainment marketing and management company
representing athletes, entertainers, events, licensors and licensees.
Mr. Thompson received his Bachelor of Arts in Political Science and
Philosophy from Wittenberg University in 1976 and his Doctor of
Jurisprudence from Indiana University in 1979. Mr. Thompson's
experience ranges from negotiations relating to individuals, teams and
events. From 1985-1988, he served as the Vice President for Development
and the General Counsel for the Organizing Committee for Tenth Pan
American Games.
Mr. Thompson is currently the Chairman of the Indianapolis Foundation
and on the Board of Directors of American States Insurance Company, IWC
Resources, a public utility and the Indianapolis Indians Triple A Baseball
Team, among many others.
Dennis DeYoung. Mr. DeYoung serves as a Director, Vice President and
Secretary of the Corporation. Mr. DeYoung devotes forty percent (40%)
of his time to the Company's operations. Mr. DeYoung received a
Bachelor of Arts Degree with a concentration in Restaurant Management
from Washington State University in 1968. Since his graduation from the
University of California at Davis with a Masters in Business Administration
with a concentration in Finance in 1975, he has been actively involved in the
animal feed business as corporate treasurer and comptroller of Lowell
DeYoung Co., Inc., an agricultural business in the Pacific Northwest..
Mr. DeYoung serves on several boards of Washington State University
including the Board of Directors of the University's Foundation and the
Advisory Boards of the College of Business and Economics and the Athletic
Department.
Harold Thompson. Mr. Thompson is a Director of the Corporation. Mr.
Thompson graduated from Indiana University's School of Business in
1969. Mr. Thompson worked from 1969 to 1979 in merchandising,
marketing and purchasing for Ayr-Way, a midwestern mass merchandiser.
In 1979, Mr. Thompson became the Vice President for Sales and marketing
of the Unit-Step Corporation of Indianapolis. For the past five (5) years,
Mr. Thompson has been responsible for the day to day procurement,
marketing and merchandising function of the licensed products division of
Grand Slam III, L.P.
<PAGE>35
Joel K. Stein. Mr. Stein is currently a Director of the Corporation. Mr.
Stein received a Bachelor of Arts with a major in Sociology from Marquette
University in 1983. Mr. Stein served as the Assistant to the Vice President
and Corporate Counsel of the Organizing Committee for the Tenth Pan
American Games in 1987. In 1988, Mr. Stein helped found Grand Slam
II, L.P. Mr. Stein also worked as the Director of the Professional
Division of United Way of Central Indiana from 1988 to 1991.
From 1991 to present, Mr. Stein has served as the founding President of the
Hoosier Alliance Against Drugs, a not-for-profit corporation created by the
Indiana General Assembly to advance the private sector's involvement in
community based substance abuse prevention and education. Mr. Stein
implemented the Alliance's start-up, including a comprehensive fund raising
program which has generated in excess of $1.5 million to support programs
in all of Indiana's 92 countries.
Remuneration. Since inception, no cash compensation has been paid by
the Corporation to its officers and directors, during which there were two
(2) officers and four (4) directors:
The Company has entered into an Employment Agreement with Milton
Thompson as of January 1, 1996. The Employment Agreement terminates
on December 31, 1998. Pursuant to the employment agreement, Mr.
Thompson shall receive $35,000 per annum.
The Board of Directors and shareholders have approved a Non-Statutory
Stock Option Plan to attract and retain persons of experience and ability and
whose services are considered valuable and to encourage the sense of
proprietorship in such persons and to stimulate the active interest of such
persons in the development and success of the Corporation.
1. Persons Eligible to Participate in Non-Statutory Stock Option Plan.
The persons eligible for participation in the Plan as recipients of Non-
statutory Stock Options ("NSOs") shall include full-time and part-time
employees (as determined by the Committee) and officers of the Company
or of an Affiliated Corporation. In addition, directors of the Company or
any Affiliated Corporation who are not employees of the Company or an
Affiliated Corporation and any attorney, consultant or other adviser to the
Company or any Affiliated Corporation shall be eligible to participate in the
Plan. For all purposes of the Plan, any director who is not also a common
law employee and is granted an option under the Plan shall be considered an
"employee" until the effective date of the director's resignation or removal
from the Board of Directors, including removal due to death or disability.
The Committee shall have full power to designate, from among eligible
individuals, the persons to whom NSOs may be granted. A person who
has been granted an NSO hereunder may be granted an additional NSO or
NSOs, if the Committee shall so determine. The granting of an NSO shall
not be construed as a contract of employment or as entitling the recipient
thereof to any rights of continued employment.
<PAGE>36
2. Stock Reserved for the Plan. Subject to adjustment, a total of
750,000 shares of Common Stock, no par value per share ("Stock"), of the
Company shall be subject to the Plan. The Stock subject to the Plan shall
consist of unissued shares or previously issued shares reacquired and held
by the Company or any Affiliated Corporation, and such amount of shares
shall be and is hereby reserved for sale for such purpose. Any of such
shares which may remain unsold and which are not subject to outstanding
NSOs at the termination of the Plan shall cease to be reserved for the
purpose of the Plan, but until termination of the Plan, the Company shall at
all times reserve a sufficient number of shares to meet the requirements of
the Plan. Should any NSO expire or be canceled prior to its exercise in full,
the unexercised shares theretofore subject to such NSO may again be
subjected to an NSO under the Plan.
3. Option Price. The purchase price of each share of Stock placed
under NSO shall not be less than Eighty Five percent (85%) of the fair
market value of such share on the date the NSO is granted. The fair market
value of a share on a particular date shall be deemed to be the average of
either (i) the highest and lowest prices at which shares were sold on the date
of grant, if traded on a national securities exchange, (ii) the high and low
prices reported in the consolidated reporting system, if traded on a "last sale
reported" system, such as NASDAQ, for over the counter securities, or (iii)
the high bid and high asked price for other over-the-counter securities. If
no transactions in the Stock occur on the date of grant, the fair market value
shall be determined as of the next earliest day for which reports or
quotations are available. If the common shares are not then quoted on any
exchange or in any quotation medium at the time the option is granted, then
the Board of Directors or Committee will use its discretion in selecting a
good faith value believed to represent fair market value based on factors
then known to them. The cash proceeds from the sale of Stock are to be
added to the general funds of the Company.
4. Exercise Period. (a) The NSO exercise period shall be a term of
not more than ten (10) years from the date of granting of each NSO and
shall automatically terminate:
(i) Upon termination of the optionee's employment with the
Company for cause;
(ii) At the expiration of twelve (12) months from the date of
termination of the optionee's employment with the Company for any reason
other than death, without cause; provided, that if the optionee dies within
such nine-month period, subclause (iii) below shall apply; or
(iii) At the expiration of fifteen (15) months after the date of
death of the optionee.
(b) "Employment with the Company" as used in the Plan shall
include employment with any Affiliated Corporation, and NSOs granted
under the Plan shall not be affected by an employee's transfer of
employment among the Company and any Parent or Subsidiary thereof. An
optionee's employment with the Company shall not be deemed interrupted
or terminated by a bona fide leave of absence (such as sabbatical leave or
employment by the Government) duly approved, military leave or sick
leave.
<PAGE>37
Board of Directors Compensation. Members of the Board of
Directors may receive an amount yet to be determined annually for their
participation and will be required to attend a minimum of four meetings per
fiscal year. All expenses for meeting attendance or out of pocket expenses
connected directly with their Board representation will be reimbursed by the
Corporation. Director liability insurance may be provided to all members of
the Board of Directors. No differentiation is made in the compensation of
"outside directors" and those officers of the Corporation serving in that
capacity.
Indemnification. The Corporation shall indemnify to the fullest extent
permitted by, and in the manner permissible under the laws of the State of
Indiana, any person made, or threatened to be made, a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that he is or was a director or officer of the Corporation,
or served any other enterprise as director, officer or employee at the request
of the Corporation. The Board of Directors, in its discretion, shall have the
power on behalf of the Corporation to indemnify any person, other than a
director or officer, made a party to any action, suit or proceeding by reason
of the fact that he/she is or was an employee of the Corporation.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Corporation,
the Corporation has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Corporation of expenses incurred or paid by a director, officer or
controlling person of the Corporation in the successful defense of any
action, suit or proceedings) is asserted by such director, officer, or
controlling person in connection with any securities being registered, the
Corporation will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING
THE CORPORATION FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS
HELD TO BE AGAINST
PUBLIC POLICY BY THE SECURITIES AND EXCHANGE
COMMISSION AND IS THEREFORE
UNENFORCEABLE.
Conflicts of Interest Policy. The Company has adopted a policy that any
transactions with directors, officers or entities of which they are also
officers or directors or in which they have a financial interest, will only be
on terms fair and reasonable to the Company (based on competitive bids, if
appropriate, or on terms similar contracts with the Company by unaffiliated
entities) and approved by a majority of the disinterested directors of the
Company's Board of Directors. The Board of Directors resolved that the
Bylaws of the Company shall be amended to provide that no such
<PAGE>38
transactions by the Company shall be either void or voidable solely because
of such relationship or interest of directors or officers or solely because
such directors are present at the meeting of the Board of Directors of the
Company or a committee thereof which approves such transactions, or
solely because their votes are counted for such purpose if: (i) the fact of
such common directorship or financial interest is disclosed or known by the
Board of Directors or committee and noted in the minutes, and the Board or
committee authorizes, approves or ratifies the contract or transaction in good
faith by a vote for that purpose without counting the vote or votes of such
interested directors; or (ii) the fact of such common directorship or financial
interest is disclosed to or known by the shareholders entitled to vote and
they approve or ratify the contract or transaction in good faith by a majority
vote or written consent of shareholders holding a majority of the Common
Shares entitled to vote (the votes of the common or interested directors or
officers shall not be counted in any such vote of shareholders), or (iii) the
contract or transaction is fair and reasonable to the Company based on
competitive bids, if appropriate, and/or on terms consistent with similar
contracts with the Company by unaffiliated entities at the time it is
authorized or approved. In addition, interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors
of the Company or a committee thereof which approves such transactions.
Currently, there are only four directors. Milton Thompson and Harold
Thompson are brothers who own approximately 24% and 6% of the
Company's Common Shares. As a result, until such time as
additional directors are appointed or elected to the Board of Directors, and
even though the directors are aware of their fiduciary duty to the
shareholders, there can be no assurance that the utilization of the policy will
result in the resolution of any conflict of interest.
- -----------------------------------------------------------------------------
PRINCIPAL SHAREHOLDERS
- -----------------------------------------------------------------------------
There are currently 1,329,100 Common Shares outstanding. The following
tabulates holdings of shares of the Company by each person who, subject to
the above, at the date of this Prospectus, holds of record or is known by
Management to own beneficially more than 5.0% of the Common Shares
and, in addition, by all directors and officers of the Company individually
and as a group.
<TABLE> Shareholdings at Date of
This Prospectus
<CAPTION>
Amount of
Common Shares
Name and Address of Amount of to be owned
Beneficial Owner Common Shares after Offering
Currently Owned % and Distribution %
<S> <C> <C> <C> <C>
Milton Thompson 323,200 24.32% 290,880 21.89%
5008 Fieldstone Trail
Indianapolis, Indiana 46254
<PAGE>39
Dennis DeYoung 323,200 24.32% 290,880 21.89%
805 4th Street West
Kirkland, Washington 98072
Harold Thompson 80,800 6.06% 72,720 5.47%
1070 Fleetwood Drive
Indianapolis, Indiana 46208
Joel Stein 80,800 6.06% 72,720 5.47%
7002 Bluff Grove Circle
Indianapolis, Indiana 46254
Pratt, Wylce &
Lords, Ltd. 160,000 12.04% 0 FN1 0%
P.O. Box 1427
Idaho Springs, Colorado 80452
Hugh & Marianne
Baker 70,000 5.27% 0 0%
5780 Washington Boulevard
Indianapolis, Indiana 46220
All Directors & Officers
as a group (four) 808,000 60.79% 727,200 54.71%
</TABLE>
FN1 The table assumes that after the distribution of 65,000 Common
Shares by Pratt, Pratt will successfully sell the remaining 95,000 Common
Shares which are being registered on its behalf of Pratt as a selling
shareholder.
There are currently 200,000 A Warrants outstanding. The following
tabulates holdings of A Warrants of the Company by each person who,
subject to the above, at the date of this Prospectus, holds of record or is
known by Management to own beneficially more than 5.0% of the Common
Shares and, in addition, by all directors and officers of the Company
individually and as a group.
<TABLE>
<CAPTION>
Name Total Number Of % Amount %
A Warrants Owned Owned Owned
Owned Prior to After After
Offering Offering Offering
<S> <C> <C> <C> <C>
Milton Thompson 80,000 40% 0 0%
Dennis DeYoung 80,000 40% 0 0%
Harold Thompson 20,000 10% 0 0%
Joel Stein 20,000 10% 0 0%
<PAGE>40
All Officers and
Directors
As a Group (four) 200,000 100% 0 0%
</TABLE>
- ----------------------------------------------------------------------------
SHARES ELIGIBLE FOR FUTURE SALE
- ----------------------------------------------------------------------------
Upon completion of the Distribution, the Company will have 1,329,100
shares of Common Stock outstanding, 626,050 of which are being
registered on behalf of selling shareholders in this Offering. This does not
include any Common Stock issued upon exercise of the Class A or Class B
and 200,000 A Warrants currently being registered on behalf of selling
shareholders. Of these shares, 65,000 shares distributed in the Distribution
will be freely tradable without restriction or further registration under the
Securities Act, except for any shares purchased by an existing "affiliate" of
the Company, which will be subject to the resale limitations of Rule 144
under the Securities Act. The remaining shares, as well as other securities
which may be issued, in the future, in private transactions pursuant to an
exemption from the Securities Act are "restricted securities" and may be sold
in compliance with Rule 144 adopted under the Securities Act of 1933, as
amended. Rule 144 provides, in essence, that a person who has held
restricted securities for a period of two years may sell every three months in
a brokerage transaction or with a market maker an amount equal to the
greater of 1% of the Company's outstanding shares or the average weekly
trading volume, if any, of the shares during the four calendar weeks
preceding the sale. The amount of "restricted securities" which a person
who is not an affiliate of the Company may sell is not so limited:
nonaffiliates may each sell without limitation shares held for three years.
The Company will make application for the listing of its Shares in the
NASDAQ system or the American Stock Exchange. Sales under Rule 144
may, in the future, depress the price of the Company's Shares in the over-
the-counter market, should a market develop.
Prior to this offering there has been no public market for the Common Stock
of the Company. The effect, if any, of a public trading market or the
availability of shares for sale at prevailing market prices cannot be
predicted. Nevertheless, sales of substantial amounts of shares in the
public market could adversely effect prevailing market prices.
- -----------------------------------------------------------------------------
NASDAQ LISTING
- -----------------------------------------------------------------------------
No Assurance of Public Market on NASDAQ for the Securities. Prior to
the date hereof, there has been no trading market for the Common Stock of
the Company. The Company has agreed to use its best efforts to apply for
the quotation of its Common Stock on the Small Cap of the National
Association of Securities Dealers Automated Quotation System
("NASDAQ"). The Company will not meet the proposed criteria as of the
completion of the offering. In order to obtain the NASDAQ listing, the
<PAGE>41
Company must meet the following criteria: (i) have total assets in excess of
$4,000,000; (ii) have net equity in excess of $2,000,000; (iii) become a
reporting company under the Securities Exchange Act of 1934; (iv) have a
minimum of 300 shareholders; (v) have a public float of at least 100,000
shares and (vi) have a bid price of $3.00. The Company hopes to meet (i)
and (ii) upon the exercise of the warrants being registered in this offering.
There can be no assurance that any warrants will, in fact, be exercised.
Additionally, the Company shall file a Form 8-A immediately after the
effective date of this registration statement to meet the requirements of (iii).
After the effective date of this registration statement, the Company shall
meet the criteria in (iv). Immediately after the effective date of this
registration statement, the Company shall apply for the quotation of its
Common Stock on the over-the-counter market. There can be no
assurance, however, that the Common Stock will be quoted, that an active
trading and/or a liquid market will develop or, if developed, that it will be
maintained. The Company does not intend to apply for quotation of its
Common Stock on NASDAQ until it meets the above criteria.
Broker-Dealer Sales of Company Securities. Until the Company
successfully obtains a listing on the NASDAQ quotation system, if ever, the
Company's securities may be covered by Rule 15c2-6 under the Securities
Exchange Act of 1934 that imposes additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in
excess of $5,000,000 or individuals with net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 jointly with
their spouse). For transactions covered by the rule, the broker-dealer must
make a special suitability determination of the purchaser and have received
the purchaser's written agreement to the transaction prior to the sale. In
order to approve a person's account for transactions in designated
securities, the broker or dealer must (i) obtain information concerning the
person's financial situation, investment experience and investment
objectives; (ii) reasonably determine, based on the information required by
paragraph (i) that transactions in designated securities are suitable for the
person and that the person has sufficient knowledge and experience in
financial matters that the person reasonably may be expected to be capable
of evaluating the rights of transactions in designated securities; and (iii)
deliver to the person a written statement setting forth the basis on which the
broker or dealer made the determination required by paragraph (ii) in this
section, stating in a highlighted format that it is unlawful for the broker or
dealer to effect a transaction in a designated security subject to the
provisions of paragraph (ii) of this section unless the broker or dealer has
received, prior to the transaction, a written agreement to the transaction from
the person; and stating in a highlighted format immediately preceding the
customer signature line that the broker or dealer is required to provide the
person with the written statement and the person should not sign and return
the written statement to the broker or dealer if it does not accurately reflect
the person's financial situation, investment experience and investment
objectives and obtain from the person a manually signed and dated copy of
the written statement. A designated security means any equity security
other than a security (i) registered, or approved for registration upon notice
of issuance on a national securities exchange that makes transaction reports
available pursuant to 17 CFR 11Aa3-1 (ii) authorized or approved for
<PAGE>42
authorization upon notice of issuance, for quotation in the NASDAQ
system; or . . . (iv) whose issuer has net tangible assets in excess of
$2,000,000 demonstrated by financial statements dated less than fifteen
months previously that the broker or dealer has reviewed and has a
reasonable basis to believe are true and complete in relation to the date of the
transaction with the person. Consequently, the rule may affect the ability
of broker-dealers to sell the Company's securities and also may affect the
ability of purchasers in this Offering to sell their shares in the secondary
market.
- -----------------------------------------------------------------------------
DESCRIPTION OF SECURITIES
- -----------------------------------------------------------------------------
Qualification. The following statements constitute brief summaries of the
Corporation's Certificate of Incorporation and Bylaws, as amended. Such
summaries do not purport to be complete and are qualified in their entirety
by reference to the full text of the Certificate of Incorporation and Bylaws.
The Corporation's articles of incorporation authorize it to issue up to
50,000,000 Common Shares, $.001 par value per Common Share .
Shares of common stock purchased in this offering will be fully paid and
non-assessable.
The Corporation has authorized a dividend to shareholders of record as of
May 1, 1995 of 250 Class A Convertible Preferred Shares ("Class A
Preferred") and 800 Class B Convertible Preferred Shares (Class B
Preferred"). The Class A Preferred shall be convertible at a rate of 1,000
shares of common stock for each share of Class A Preferred. Conversion
will be authorized upon the first fiscal year that the Corporation attains at
least $1,000,000 in audited after tax profits. Class B Preferred shall be
convertible at a rate of 1,000 shares of common stock for each share of
Class B Preferred. The Class B Preferred shall be convertible upon
completion of the first fiscal year that the Corporation attains audited after
tax profits of at least $3,000,000. During September, 1995, the
Corporation authorized 1,000 Class C Preferred Shares. Each Class C
Preferred Share is convertible, after four months from the purchase date,
into 100 Common Shares and One "A" Warrant to purchase 10 additional
Common Shares at $5.00 per share. The Class C Preferred Stock is not
entitled to voting rights or dividends. There are currently 700 Class C
Preferred Shares issued and outstanding. Additionally, the Board of
Directors of the Corporation have authorized a dividend distribution of
200,000 A Warrants on a pro rata basis to the shareholders of record as of
May 15, 1995. The A Warrants shall be exercisable for a period of two
years from the effective date of the registration statement. The A Warrants
shall be exercisable into Common Shares of the Corporation at the exercise
price of $5.00 per Common Share.
There are presently outstanding 1,329,100 Common Shares, 250 Class A
Preferred Shares, 800 Class B Preferred Shares and 700 Class C Preferred
Shares.
<PAGE>43
Common Stock. Holders of Common Shares of the Corporation are
entitled to cast one vote for each share held at all shareholders meetings for
all purposes. Upon liquidation or dissolution, each outstanding Common
Share will be entitled to share equally in the assets of the Corporation
legally available for distribution to shareholders after the payment of all
debts and other liabilities. Common Shares are not redeemable, have no
conversion rights and carry no preemptive or other rights to subscribe to or
purchase additional Common Shares in the event of a subsequent offering.
All outstanding Common Shares are, and the shares offered hereby will be
when issued, fully paid and non-assessable.
There are no limitations or restrictions upon the rights of the Board of
Directors to declare dividends out of any funds legally available therefor.
The Corporation has not paid dividends to date and it is not anticipated that
any dividends will be paid in the foreseeable future. The Board of Directors
initially may follow a policy of retaining earnings, if any, to finance the
future growth of the Corporation. Accordingly, future dividends, if any,
will depend upon, among other considerations, the Corporation's need for
working capital and its financial conditions at the time.
"A" Warrants. The Board of Directors of the Corporation have authorized
a dividend distribution of 200,000 "A" Warrants on a pro rata basis to the
shareholders of record as of May 15, 1995. The "A" Warrants shall be
exercisable for a period of two years from the effective date of the
registration
statement. The "A" Warrants shall be exercisable into Common Shares of
the Corporation at the exercise price of $5.00 per Common Share. The
warrants will be callable with 30 days notice for a price of $.001 per
warrant.
Preferred Stock. The Corporation has authorized a dividend to
shareholders of record as of May 1, 1995 of 250 Class A Convertible
Preferred Shares ("Class A Preferred"). The Class A Preferred shall be
convertible at a rate of 1,000 shares of common stock for each share of
Class A Preferred. Conversion will be authorized upon the first fiscal year
that the Corporation attains at least $1,000,000 in audited after tax profits.
The Corporation has also authorized a dividend to shareholders of record as
of May 1, 1995 of 800 Class B Convertible Preferred Shares (Class B
Preferred"). Class B Preferred shall be convertible at a rate of 1,000 shares
of common stock for each share of Class B Preferred. The Class B
Preferred shall be convertible upon completion of the first fiscal year that
the Corporation attains audited after tax profits of at least $3,000,000.
During September, 1995, the Corporation authorized 1,000 Class C
Preferred Shares. Each Class C Preferred Share is convertible, after four
months from the purchase date, into 100 Common Shares and One "A"
Warrant to purchase 10 additional Common Shares at $5.00 per share. The
Class C Preferred Stock is not entitled to voting rights or dividends. There
are currently 700 Class C Preferred Shares issued and outstanding.
<PAGE>44
Transfer Agent. The Corporation shall act as its own transfer agent until
after the completion of the Offering.
- -----------------------------------------------------------------------------
LEGAL MATTERS
- -----------------------------------------------------------------------------
The due issuance of the Common Shares offered hereby will be opined
upon for the Company by in which opinion Counsel
will rely on the validity of the Certificate and Articles of Incorporation
issued by the State of Indiana, as amended and the representations by the
management of the Company that appropriate action under Indiana law has
been taken by the Company.
- -----------------------------------------------------------------------------
LEGAL PROCEEDINGS
- -----------------------------------------------------------------------------
The Company is not involved in any legal proceedings as of the date of this
Prospectus.
- -----------------------------------------------------------------------------
EXPERTS
- -----------------------------------------------------------------------------
The audited financial statements included in this Prospectus have been so
included in reliance on the report of Winter, Scheifley & Associates P.C.,
Certified Public Accountants, on the authority of such firm as experts in
auditing and accounting.
- -----------------------------------------------------------------------------
INTERESTS OF NAMED
EXPERTS AND COUNSEL
- -----------------------------------------------------------------------------
Corporate counsel is a member of a firm which the directors of the
Company
are also members. None of the other experts named in the Prospectus are
affiliated with the Company.
<PAGE>45
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Grand Slam Licensing, Inc.
We have audited the accompanying balance sheets of Grand Slam
Licensing, Inc. and its predecessor (see Note 1) as of October 31, 1995 and
December 31, 1994, and the related statements of operations,
stockholders' equity, and cash flows for the ten months ended October
31, 1995, the year ended December 31, 1994 and the period from inception,
(April 25, 1993) to December 31, 1993. 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 audits.
We conducted our audits 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 by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Grand Slam
Licensing, Inc. and its predecessor as of October 31, 1995 and December
31, 1994, and the results of its operations, and its cash flows for the
ten months ended October 31, 1995, the year ended December 31, 1994,
and the period from inception (April 26, 1993) to December 31, 1993, in
conformity with generally accepted accounting principles.
Winter, Scheifley & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
January 30, 1996
<PAGE>46
<TABLE>
Grand Slam Licensing, Inc.
<CAPTION>
Balance Sheets
October 31, 1995 and December 31, 1994
ASSETS
<S> <C>
<C>
1995 1994
Current assets: ----------- -----------
Cash and cash equivalents $ 411,523 $ -
Accounts receivable, trade, less
reserve for bad debts of $6,013 in 1994 23,873 15,963
Inventories 99,630 20,794
Prepaid expenses 15,107 -
Prepaid expenses - related party 27,813 9,167
----------- -----------
Total current assets 577,946 45,924
Other assets:
Product design costs 26,616 -
Trademarks 3,971 -
Organization costs 81 -
----------- -----------
$ 608,614 $ 45,924
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 26,625 $ -
Accounts payable, trade 66,591 36,625
Accrued expenses 19,914 -
----------- -----------
Total current liabilities 113,130 36,625
Long-term debt 26,625 -
Commitments (Note 5)
Stockholders' equity:
Preferred stock class A,
1, 000 shares authorized,
250 shares issued and outstanding - -
Preferred stock class B,
1, 000 shares authorized,
800 shares issued and outstanding - -
Preferred stock class C, $150 stated
value, 1,000 shares authorized,
700 shares issued and outstanding 105,000 -
Common stock, $.001 par value,
50,000,000 shares authorized,
1,329,100 and 808,000 shares
issued and outstanding 1,329 808
Additional paid-in capital 796,824 120,381
Subscriptions to common stock 64,500 -
----------- -----------
Accumulated deficit (498,794) (111,890)
----------- -----------
468,859 9,299
----------- -----------
$ 608,614 $ 45,924
=========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>48
<TABLE>
Grand Slam Licensing, Inc.
<CAPTION>
Statements of Operations
Ten Months Ended October 31, 1995 and
Year Ended December 31, 1994 and for the
Period from Inception (April 28, 1993 to December 31, 1993
1995 1994 1993
----------- ----------- --------
<S> <C> <C> <C>
Revenues:
Sales $ 191,057 $ 178,099 $ 125,796
Costs and expenses:
Cost of sales 91,567 121,359 72,847
Selling and marketing 122,165 71,231 44,574
General and administrative 38,153 59,153 46,621
Management fees paid to
related party 137,000 - -
----------- ----------- -----------
388,885 251,743 164,042
----------- ----------- ----------
Income (loss) from operations 197,828) (73,644) (38,246)
Other income and (expense):
Interest income 937 - -
Consulting expense associated with
private offering of securities (333,190) - -
Interest expense (2,140) - -
----------- ----------- -----------
(334,393) - -
Net income (loss) $ (532,221) $ (73,644) $(38,246)
=========== ========== ==========
Earnings (loss) per share:
Net income (loss) $ (0.5) $ (0.09) $ (0.05)
========== ========== ==========
Weighted average shares
outstanding 987,436 808,000 808,000
====== ====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>49
<TABLE>
Grand Slam Licensing, Inc.
<CAPTION>
Statement of Changes in Stockholders' Equity
Ten Months Ended October 31, 1995,
Year Ended December 31, 1994
and for the Period from Inception
(April 28, 1993) to December 31, 1993
Additional
Preferred Stock Common Stock Paid-In
ACTIVITY Shares Amount Shares Amount Capital
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1992
Assumed inception date
- $ - 808,000 $ 808 $ (6,539)
Capital contribution by partners
- - 50,400
Net (loss) for the year - - - - -
------- ------- ------- ------- ---------
Balance,
December 31, 1993 808,000 808 43,861
Capital contribution by partners 76,520
Net (loss) for the year - - - - (73,644)
------- ------- ------- ------- ----------
Balance,
December 31, 1994 808,000 808 120,381
Capital contribution
by partners 47,822
Common stock
issued for cash 329,100 329 486,130
Preferred stock
issued for cash 700 105,000 - - -
Common stock
issued for services - - 192,000 192 287,808
Common stock
subscribed for services - - - - -
Net (loss) for the period - - - - -
Reclassification
of partnership losses - - - - (145,317)
-------- --------- -------- ------- ----------
Balance,
October 31, 1995 700 $105,000 1,329,100 $1,329 $796,824
========= ======== ========= ======= ==========
</TABLE>
<PAGE>50
<TABLE>
Statement of Changes in Stockholders Equity
Continued
<CAPTION>
Stock Accumulated
ACTIVITY Subscriptions Deficit Total
<S> <C> <C> <C>
Balance, December 31, 1992
Assumed inception date $ - $ - $ (5,731)
Capital contribution by partners 50,400
Net (loss) for the year - (38,246) (38,246)
----------- ----------- ----------
Balance,
December 31, 1993 - (38,246) (38,246)
Capital contribution by partners 76,520
Net (loss) for the year - (73,644) (73,644)
----------- ----------- ----------
Balance,
December 31, 1994 - (111,890) 9,299
Capital contribution
by partners 47,822
Common stock
issued for cash - - 486,459
Preferred stock
issued for cash - - 105,000
Common stock
issued for services - - 288,000
Common stock
subscribed for services 64,500 - 64,500
Net (loss) for the period - (532,221) (532,221)
Reclassification
of partnership losses - 145,317 -
--------- ---------- -----------
Balance,
October 31, 1995 $64,500 $(498,794) $468,859
========= =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>51
<TABLE>
Grand Slam Licensing, Inc.
<CAPTION>
Statements of Cash Flows
Ten Months Ended October 31, 1995
and Year Ended December 31, 1994 and for the
Period from Inception (April 28, 1993 to December 31, 1993
1995 1994 1993
----------- ----------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $ (532,221) $ (73,644) $ (38,246)
Adjustments to reconcile net (loss) to net
cash provided by operating activities:
Amortization 5,757 - -
Common stock issued or
subscribed for services 352,500 - -
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable (7,910) 2,497 (18,460)
(Increase) decrease in inventory (78,836) (12,844) (1,950)
(Increase) decrease in prepaid
expenses (33,753) (5,833) (3,334)
Increase (decrease) in accounts
payable 29,966 13,304 11,590
Increase (decrease) in accrued liabilities 19,914 - -
----------- ----------- -----------
Total adjustments 287,638 (2,876) (12,154)
Net cash provided by (used in)
operating activities (244,583) (76,520) (50,400)
----------- ----------- -----------
Cash flows from investing activities:
Purchase and development of
Trademark and product development
costs (36,425) - -
----------- ----------- -----------
Net cash (used in) investing activities (36,425) - -
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from sale of common stock 591,459 - -
Capital contributions to partnership 47,822 76,520 50,400
Proceeds from notes payable 53,250 - -
----------- ----------- -----------
Net cash provided by (used in)
financing activities 692,531 76,520 50,400
----------- ----------- -----------
<PAGE>52
Increase (decrease) in cash 411,523 - -
Cash and cash equivalents,
beginning of period 73,644 - -
----------- ----------- -----------
Cash and cash equivalents,
end of period $ 485,167 $ - $ -
=========== ========== ===========
Supplemental cash flow information:
Cash paid for interest $ - $ - $ -
Cash paid for income taxes $ - $ - $ -
See accompanying notes to financial statements.
</TABLE>
<PAGE>53
Grand Slam Licensing, Inc.
Notes to Financial Statements
Note 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING
POLICIES
The Company was incorporated on April 26 , 1995, in the State of Indiana.
The Company is a successor to the commemorative pin business carried on
by Grand Slam III (GS III), an Illinois limited partnership formed in
April 1993. The partnership continues to operate its sports management
business and to fulfill certain general and administrative functions for
the Company (See Note 5 ). The financial statements consist of the
separate operations of the commemorative pin business of the partnership
for the period from January 1, 1993 to May 31, 1995 and the operations of
the company since its inception.
Inventories: Inventories are stated at the lower of cost or market. Cost
is determined using the first-in, first-out method. Inventory consists
principally of commemorative pins manufactured by others.
Fixed assets: The company uses office equipment owned by GS III (See
Note 5).
Product design costs: Costs of dies and photographic images used in the
design and production of the Company's commemorative pins are
capitalized and amortized to expense over a three year period. The
Company reviews the costs accumulated on an annual basis and charges off
unamortized balances associated with pins that are no longer being sold.
Net loss per share: The net loss per share is computed by dividing the
net loss for the period by the weighted average number of common shares
outstanding for the period. Common stock equivalents are excluded from
the computation as their effect would be anti-dilutive. Shares issued to
the Company's founders in May 1995 are considered to be outstanding
from the beginning of the periods presented.
Cash and cash equivalents: Cash and cash equivalents consist of cash and
other highly liquid debt instruments with original maturities of less than
three months.
Revenue recognition: The company recognizes revenue from the sale of its
products upon shipment.
Advertising costs: Advertising costs are charged to operations when
incurred. Advertising costs charged to operations were $9,086 for the ten
months ended October 31, 1995 and $2,045 and $970 respectively, for the
years ended December 31, 1994 and 1993.
Concentration of credit risk: Financial instruments that potentially
subject the Company to a concentration of credit risk consist principally
of cash and cash equivalents. During the year the Company did not
maintain cash deposits at financial institutions in excess of the
$100,000 limit covered by the Federal Deposit Insurance Corporation. The
<PAGE>54
Company has funds deposited in a money market account administered by
an investment company amounting to $400,000 at October 31, 1995. Such
amount is not covered by the Federal Deposit Insurance Corporation or any
other deposit insurance program and any decline in the value of the
underlying investment securities which collateralize the account, may
have a negative impact on the availability of these funds.
Note 2. LONG-TERM DEBT
Long-term debt consists of three promissory notes given in exchange for
cash aggregating $53,250. The notes and interest accrued at 12.5% per
annum are due in two annual installments on the anniversary dates of the
notes (June and July, 1996 and 1997).
Note 3. STOCKHOLDERS EQUITY
Common stock:
During the periods covered by these financial statements the Company
issued shares of common stock without registration under the Securities Act
of 1933. Although the Company believes that the sales did not involve a
public offering of its securities and that the Company did comply with the
safe harbor exemptions from registration under section 4(2), it could be
liable for rescission of the sales if such exemptions were found not to apply.
The Company has not received a request for rescission of shares nor does it
believe that it is probable that its shareholders would pursue rescission nor
prevail if such action were undertaken.
At inception, the Company issued 808,000 shares of its $.001 par value
common stock to four of its officers and/or directors in exchange for
certain assets of GS III. For the purpose of these financial statements,
these shares are considered to be outstanding as of beginning of the
periods presented and the value attributed thereto represents partnership
basis in certain net assets applicable to the pin business. Also, for
purpose of these financial statements, amounts necessary to fund the losses
of GS III applicable to the pin business have been shown as contributions
of capital in the accompanying statement of changes in stockholders' equity
for the years ended December 31, 1994 and 1993 and for the five month
period of partnership operation ended May 31, 1995.
During April, 1995 the Company entered into a one year consulting
agreement with an entity whereby the entity would provide to the Company
financial consulting services. Pursuant to the agreement the entity agreed to
assist the Company in preparing a private placement memorandum to obtain
equity financing in the amount of up to $600,000 and to assist the Company
in completing a registration statement by which the common stock may
become tradable in a public market. In exchange for these services the
Company agreed to pay $65,000 in cash and to issue 160,000 shares of its
$.001 par value common stock to the consultant. During the third quarter of
1995, the Company began offering shares of its common stock at $1.50 per
share pursuant to the private placement. The Company issued 329,100
shares of common stock for cash aggregating $486,459, net of offering
expenses of $7,191 through October 31, 1995. The stock issued to the
<PAGE>55
consultant was valued at $240,000 ($1.50 per share) and such amount is
included in other income and expense in the accompanying statement of
operations. The Company issued an additional 32,000 shares valued at
$48,000 to an individual for consulting services provided in connection
with the private offering.
During May 1995, the Company authorized the issuance of 200,000
common stock purchase warrants to shareholders of record on a pro rata
basis. The warrants are exercisable at $5.00 per share for a 24 month
period from the effective date of the registration statement and may be
redeemed prior to exercise upon 30 days notice for a price of $.001
per warrant.
During July and September of 1995 the Company entered into consulting
agreements with two prominent sports persons for their assistance in the
acquisition of additional licenses for the sale of pin products with top
athletes in the golf and tennis professions. As compensation for these
services, the Company will issue an aggregate of 43,000 shares of its
restricted common stock valued at $1.50 per share. An amount of $64,500
has been included as subscriptions to common stock with a corresponding
charge to selling and marketing expense in the accompanying financial
statements.
Preferred stock:
During May 1995 the Company authorized the issuance of 250 shares of
Class A preferred stock and 800 shares of Class B preferred stock on a pro
rata basis to shareholders of record on May 15, 1995. The Class A
preferred stock is convertible into 1,000 shares of common stock for each
preferred share upon the conclusion of the first fiscal year that the Company
attains at least $1,000,000 of after tax profits.. The Class B preferred stock
is convertible into 1,000 shares of common stock for each preferred share
upon the conclusion of the first fiscal year that the Company attains at least
$3,000,000 of after tax profits. Neither class of preferred stock is entitled
to voting rights or dividends. No value was placed on the preferred stock.
During September 1995, the Company authorized the issuance of 700
shares of Class C preferred stock to an individual in exchange for $105,000
in cash. Each Class C preferred share is convertible, after four months
from the purchase date, into 100 shares of common stock and a warrant to
purchase 10 additional shares of common stock at $5 .00 per share. The
Class C preferred stock is not entitled to voting rights or dividends.
Other: For purposes of these financial statements, the amounts necessary
to fund the losses of GS III applicable to its pin business for the period
from January 1, 1993 to May 31, 1995 have been shown as capital
contributions by the partners of GS III in the accompanying Statement of
Changes in Stockholders' Equity. Accumulated losses of the partnership
during the period from January 1, 1993 to May 31, 1995 amounting to
$145,317 have been charged to additional paid in capital at May 31, 1995 so
that the remaining accumulated deficit at October 31, 1995 represents only
the losses of the corporate entity.
<PAGE>56
Note 4. INCOME TAXES
The operations presented for the years ended December 31, 1994 and 1993
are those of GS III and are not attributed to the Company for federal and
state income tax purposes. The operations presented for the ten months
ended October 31, 1995 include GS III operations applicable to the
commemorative pin business from the period from January 1, 1995 to May
31, 1995 and are likewise excluded for income tax purposes. The Company
has adopted Financial Accounting Standards Board Statement No. 109,
Accounting for Income Taxes. Of the loss for the ten months ended October
31, 1995 approximately $485,900 will be available as an operating loss
carryforward for the Company expiring during 2010. The Company is
unable to predict future taxable income that would enable it to utilize the
loss carryforward and therefore the deferred tax asset attributable thereto of
approximately $165,000 is fully reserved.
Note 5. RELATED PARTY TRANSACTIONS
Effective May 15, 1995 the Company entered into a management support
agreement with GS III whereby GS III will supply support services to the
Company including the use of office space and equipment and the use by
the Company of employees of GS III in performing administrative
functions, planning and negotiation of license and sales agreements. The
contract provides for payments of $25,000 per month plus 7% of gross
revenues and expires on October 31, 1997. The contract was modified
effective January 1, 1996 to provide that certain employees of GS III
become employees of the Company and to reduce the fixed monthly
payment to $10,000 per month.
During the period from May 15, 1995 to October 31, 1995, the Company
made aggregate payments under the contract of $164,813 of which
$137,000 was charged to expense. The excess payments are classified as
prepaid expenses - related party in the accompanying balance sheet at
October 31, 1995.
During the years ended December 31, 1994 and 1993 and the five months
ended May 31, 1995, GS III incurred similar general and administrative
expenses as provided for in the management contract. For purposes of the
financial statements included herein, allocation of such costs between
the pin business and the sports management business carried on by GS III
was based upon the percentage of gross revenues provided by each
business activity. Allocation of these expenses to the pin business, of
which the Company is the successor, was as follows:
<TABLE>
<S> <C>
Five months ended May 31, 1995 $ 25,734
Year ended December 31, 1994 $ 71,212
Year ended December 31, 1993 $ 59,448
</TABLE>
<PAGE>57
Note 6. STOCK OPTION PLAN
During 1995, the Company adopted the 1995-1996 Non-Statutory Stock
Option Plan which provides for granting to the Company's officers,
directors, employees and certain other individuals who consult with or
advise the Company, options to acquire up to 750,000 shares of the
Company's common stock. The shares issuable under the 1995-1996 plan
are at a price not less than 85% of the fair market value of the stock on the
date of grant. The exercise periods of the options are not to exceed ten
years. No options have been granted pursuant to the plan as of October 31,
1995.
Note 7. SALES TO MAJOR CUSTOMERS
During the ten months ended October 31, 1995 and the years ended
December 31, 1994 and 1993, the Company made sales to customers that
comprise greater than 10% of total revenues as follows:
<PAGE>58
<TABLE>
Grand Slam Licensing, Inc.
<CAPTION>
Balance Sheets
July 31, 1996 and 1995
(unaudited)
ASSETS
<S> <C>
<C>
1996 1995
Current assets: ----------- -----------
Cash and cash equivalents $101,548 $ 62,423
Accounts receivable, trade, less
reserve for bad debts of
$6,013 in 1994 283,825 8,756
Inventories 295,286 67,048
Prepaid expenses 27,742 30,600
----------- -----------
Total current assets 708,401 268,827
Equipment 12,059 -
Other assets:
Product design costs 18,685 16,852
Trademarks 2,868 2,073
Organization costs 67 90
----------- -----------
$ 742,080 $ 187,832
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of
long-term debt $ - $ 26,625
Accounts payable, trade 270,173 19,213
Accrued expenses 75,657 909
Notes payable 135,250 -
----------- -----------
Total current liabilities 481,080 46,747
Long-term debt - 26,625
Commitments (Note 5)
Stockholders' equity:
Preferred stock class A,
1, 000 shares authorized,
250 shares issued and outstanding - -
Preferred stock class B,
1, 000 shares authorized,
800 shares issued and outstanding - -
Common stock, $.001 par value,
50,000,000 shares authorized,
1,329,100 and 808,000 shares
issued and outstanding 1,411 1,262
Additional paid-in capital 921,510 417,482
Subscriptions to common stock 64,500 -
<PAGE>59
Accumulated deficit (726,421) (304,284)
----------- -----------
261,000 114,460
----------- -----------
$ 742,080 $ 187,832
=========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>60
<TABLE>
Grand Slam Licensing, Inc.
<CAPTION>
Statements of Operations
Nine Months Ended July 31, 1996 and 1995
(unaudited)
1996 1995
----------- -----------
<S> <C> <C>
Revenues:
Sales $ 404,325 $ 32,940
Costs and expenses:
Cost of sales 326,118 35,793
Selling and marketing 83,609 20,357
General and administrative 104,401 16,490
Management fees paid to related party 120,000 50,000
----------- ---------
Income (loss) from operations (229,803) (89,700)
Other income and (expense):
Interest income 7,427 -
Consulting expense associated with
private offering of securities - (247,500)
Interest expense (5,251) (511)
----------- -----------
Net income (loss) $ (227,627) $ (337,711)
=========== ==========
Earnings (loss) per share:
Net income (loss) $ (0.17) $ (0.32)
=========== ==========
Weighted average shares
outstanding 1,356,433 1,049,278
=========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>61
<TABLE>
Grand Slam Licensing, Inc.
<CAPTION>
Statements of Cash Flows
Nine Months Ended July 31, 1996 and 1995
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $ (227,627) $ (337,711)
Adjustments to reconcile net (loss) to net
cash provided by operating activities:
Amortization & depreciation 9,828 -
Common stock issued or
subscribed for services - 247,500
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable (259,952) 5,233
(Increase) decrease in inventory (195,656) (57,628)
(Increase) decrease in prepaid
expenses 15,178 (30,600)
Increase (decrease) in accounts
payable 203,582 (759)
Increase (decrease) in accrued liabilities 55,743 909
---------- -----------
Total adjustments (171,277) 164,655
Net cash provided by (used in)
operating activities (398,904) (173,056)
----------- -----------
Cash flows from investing activities:
Purchase of equipment (12,839) -
Purchase and development of
trademark and product development
costs - (19,005)
----------- -----------
Net cash (used in) investing activities (12,839) (19,005)
----------- -----------
Cash flows from financing activities:
Notes payable 100,000 53,250
Proceeds from sale of common stock - 145,651
Accrued interest satisfied with common
stock 1,768 -
Capital contributions to the partnership - 57,980
----------- -----------
Net cash provided by financing activities 101,768 256,881
Increase (decrease) in cash (309,975) 64,820
<PAGE>62
Cash and cash equivalents,
beginning of period 411,523 2,397
---------- ----------
Cash and cash equivalents,
end of period $ 101,548 $ 62,423
========== ==========
Supplemental cash flow information:
Cash paid for interest $ 822 $ -
Cash paid for income taxes $ - $ -
See accompanying notes to financial statements.
</TABLE>
<PAGE>63
Grand Slam Licensing, Inc.
Notes to Financial Statements
Note 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING
POLICIES
The Company was incorporated on April 26 , 1995, in the State of Indiana.
The Company is a successor to the commemorative pin business carried on
by Grand Slam III (GS III), an Illinois limited partnership formed in
April 1993. The partnership continues to operate its sports management
business and to fulfill certain general and administrative functions for
the Company (See Note 5 ).
The financial statements consist of the commemorative pin business of the
Company for the nine month period ended July 31, 1996 and a nine month
period ended July 31, 1995 which is a combination of operations of the
partnership for the six months ended April 30, 1995 and the operations of
the Company for the three months ended July 31, 1995.
Inventories: Inventories are stated at the lower of cost or market. Cost
is determined using the first-in, first-out method. Inventory consists
principally of commemorative pins manufactured by others.
Fixed assets: The company uses office equipment owned or leased by GSIII
with the exception of a computer system used in the design and layout of
new pins, advertising and packaging. Depreciation is provided for on the
straight line method over the estimated useful life of the equipment.
Accumulated depreciation as of July 31, 1996 was $780.
Product design costs: Costs of dies and photographic images used in the
design and production of the Company's commemorative pins are
capitalized and amortized to expense over a three year period. The
Company reviews the costs accumulated on an annual basis and charges off
unamortized balances associated with pins that are no longer being sold.
Cash and cash equivalents: Cash and cash equivalents consist of cash and
other highly liquid debt instruments with original maturities of less than
three months. Included in the cash balance at July 31, 1996 is a Treasury
bill valued at $99,140, purchased June 26, 1996 with a maturity date of
September 26, 1996. The Company has pledged this Treasury bill as
collateral for a bank line of credit in the amount of $100,000 due September
26, 1996 (see note 2).
Advertising costs: Advertising costs are charged to operations when
incurred. Advertising costs were $11,664 for the nine months ended July
31, 1996 and $1,420 for the nine months ended July 31, 1995
Revenue recognition: The company recognizes revenue from the sale of its
products upon shipment.
Concentration of credit risk: Financial instruments that potentially
subject the Company to a concentration of credit risk consist principally
of cash and cash equivalents. During the year the Company did not
<PAGE>64
maintain cash deposits at financial institutions in excess of the
$100,000 limit covered by the Federal Deposit Insurance Corporation.
Net loss per share: The net loss per share is computed by dividing the net
loss for the period by the average number of common shares outstanding
for the period. Common stock equivalents are excluded from the
computation as their effect would be anti-dilutive. Shares issued to the
Company's founders on May 31, 1995 are considered to be outstanding
from the beginning of the periods presented.
Note 2. LONG-TERM DEBT AND NOTES PAYABLE
Long-term debt on July 31, 1995 consists of four promissory notes given in
exchange for cash aggregating $53,250. The notes and accrued interest at
12.5% per annum are due in two annual installments on the anniversary
dates of the notes. The Company redeemed two of the notes and accrued
interest in exchange for 12,000 shares of $.001 par value common stock on
May 1, 1996. The amount of the two notes converted to common stock
totaled $18,000 with accrued interest on $1,768. The first installment on
the two remaining notes was extended and the entire balance of $35,250 is
due in July 1997.
The Company established a line of credit on June 26, 1996 in the amount of
$100,000. The line of credit is evidenced by a note with interest on the
unpaid balance payable monthly at the prime rate of the bank plus 8.25%.
The line of credit is fully collateralized by a Treasury bill held by the bank
in an investment account.
Note 3. STOCKHOLDERS EQUITY
At inception, the Company issued 808,000 shares of its $.001 par value
common stock to four of its officers and/or directors in exchange for
certain assets of GS III. For the purpose of these financial statements,
these shares are considered to be outstanding as of beginning of the
periods presented and the value attributed thereto represents partnership
basis in certain net assets applicable to the pin business.
The Company issued 12,000 additional shares of stock during the nine
month period ended July 31, 1996 in exchange for two notes payable.
Further the Company issued 70,000 shares of stock and 700 warrants in
exchange for 700 shares of Class convertible preferred. Each warrant
entitles the holder to purchase 10 shares of common stock at $5.00 per
share.
Note 4. INCOME TAXES
The operations presented for the nine month period July 31, 1995 include
six months of GSIII and are not attributed to the Company for federal and
state income tax purposes. The Company has adopted Financial Accounting
Standards Board Statement No. 109, Accounting for Income Taxes. The
Company has an operating loss carryforward from the period ended October
31, 1995 approximately $485,900 (expiring during 2010). The Company
is unable to predict future taxable income and therefore the deferred tax asset
attributable thereto of approximately $165,000 is fully reserved.
<PAGE>65
Note 5. RELATED PARTY TRANSACTIONS
For the last two months of the period ended July 31, 1995, the Company
operated under an agreement with GSIII whereby GSIII supplied support
services to the Company including the use of office space, equipment and
the use of GSIII employees. During this two month period the agreement
required a payment of $25,000 per month plus 7% of net income. The
agreement was modified effective January 1, 1996 to provide that the certain
employees of GSIII become employees of the Company and to reduce the
fixed monthly fee to $10,000 per month. During the nine month period
ended July 31, 1995, the Company made aggregate payments under the
contract of $49,813 and accrued an additional $187. During the nine
month period ended July 31, 1996, the Company made aggregate payments
of $72,187, accrued an additional $20,000 and charged of an additional
$27,813 which was prepaid at the beginning of the period. The Company
owed GSIII a balance of $20,000 as of July 31, 1996.
Note 6. STOCK OPTION PLAN
During the nine month periods ended July 31, 1996 and 1995, the
Company did not grant any stock options under its Non-Statutory Stock
Option Plan.
<PAGE>66
PART II
INFORMATION NOT REQUIRED BY PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Other expenses in connection with this offering which will be paid
by Grand Slam Licensing, Inc. (hereinafter in this Part II referred to as the
"Company") are estimated to be substantially as follows:
<TABLE>
<CAPTION>
Amount
Payable
Item By Company
<S> <C>
S.E.C. Registration Fees $ 705.96
State Securities Laws (Blue Sky) Fees and Expenses 1,500.00
Printing and Engraving Fees 5,000.00
Legal Fees 15,000.00
Accounting Fees and Expenses 10,000.00
Transfer Agent's Fees 1,500.00
Total $33,705.96
</TABLE>
Item 14. Indemnification of Officers and Directors.
Indemnification. The Company shall indemnify to the fullest extent
permitted by, and in the manner permissible under the laws of the State of
Indiana, any person made, or threatened to be made, a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that he is or was a director or officer of the Company, or
served any other enterprise as director, officer or employee at the request of
the Company. The Board of Directors, in its discretion, shall have the
power on behalf of the Company to indemnify any person, other than a
director or officer, made a party to any action, suit or proceeding by reason
of the fact that he/she is or was an employee of the Company. The extent of
the indemnification shall be determined on a case by case basis and will be
dependent on the nature of the action, suit or proceeding and the specific
facts and circumstances surrounding the situation.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company, the
Company understands that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceedings) is asserted by such director, officer, or controlling person in
<PAGE>67
connection with any securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issues.
Item 15. Recent Sales of Unregistered Securities.
At inception, the Company issued 808,000 common shares to its officers
and directors (Milton Thompson - 323,000 common shares, Dennis
DeYoung 323,200 common shares, Harold Thompson 80,800 common shares and
Joel Stein - 80,800 common shares in exchange for certain assets and liabilities
of Grand Slam III, an affiliated limited partnership. The liabilities
assumed were more than the value of the assets and so the Company
received $808 and paid in capital of (6,539).
On May 16, 1995, the Company issued 160,000 common shares to Pratt,
Wylce & Lords, Ltd. and 32,000 common shares to Alan Filson for
consulting services pursuant to the terms of a consulting agreement filed as
an exhibit to the registration statement. The services were valued
at $1.50 per common share.
During May, 1995, the Company issued 250 Class A Preferred Stock and
800 Class B Preferred Stock on a pro rata basis to shareholders of record on
May 15, 1995 (Milton Thompson, Dennis DeYoung, Howard Thompson
and Joel Stein). These securities were issued to the shareholders as a
dividend and no direct amount of consideration was paid by the
shareholders.
During September 1995, the Company issued 700 Class C preferred stock
to Hugh & Marianne Baker in exchange for $105,000 in cash.
During July and September of 1995, the Company entered into consulting
agreements with two prominent sports persons for their assistance in the
acquisition of additional licenses for the sale of pin products with top
athletes in the golf and tennis professions. As compensation for these
services, the Company will issue an aggregate of 43,000 common shares
valued at $1.50 per common share.
The Company also pursued a private placement at $1.50 per common shares
during the third quarter of 1995 and issued a total of 329,100 to the
following individuals. These issuances were made in compliance with Rule
505, Regulation D of the Securities Act of 1933 by Registrant's
management, consultants and selected broker/dealers. No commissions or
other remuneration was paid to anyone other than a NASD selected
broker/dealer. No general solicitation was utilized. There was less than
35 nonaccredited investors. The determination of whether an
investor was accredited or nonaccredited was based on the responses in the
subscription agreement filled out by each investor.
<PAGE>68
<TABLE>
<CAPTION>
Date Amount of Amount
Issued Name Common Stock Paid
- -------- -------- -------------- ------------
<S> <C> <C> <C>
6/13/95 Malcolm Thompson 3,000 $4,500 cash
6/13/95 Ethel Thompson
& Verna Saunders 3,000 $4,500 cash
6/28/95 Richard Payne 3,333 $5,001 cash
7/3/95 Larry Konfirst 9,000 $13,500 cash
7/6/95 William Taylor 6,000 $9,000 cash
7/6/95 CarolAnn Mihalik 3,000 $4,500 cash
7/14/95 Clifford Jaebker 6,100 $9,150 cash
7/19/95 Greg Brown 5,000 $7,500 cash
7/19/95 Joseph Kack 3,000 $4,500 cash
7/19/95 Bradley Beck 5,333 $7,999.50 cash
7/20/95 Thomas Kaminski 20,000 $30,000 cash
7/24/95 Thomas Hayden 3,000 $4,500 cash
7/24/95 Lois Zoll 3,000 $4,500 cash
7/26/95 Kellye Moore 3,000 $4,500 cash
7/26/95 Domenic Angelicchio 4,000 $6,000 cash
7/26/95 Butch Cameron 3,000 $4,500 cash
7/28/95 Robert & Alisa DeStefano 3,000 $4,500 cash
7/31/95 James Haines 3,334 $5,001 cash
8/2/95 Richard Roberts 3,000 $4,500 cash
8/3/95 Robert Brown 5,000 $7,500 cash
8/4/95 Shirley Jean Carroll 3,000 $4,500 cash
8/4/95 Michael Campbell 3,000 $4,500 cash
8/4/95 William Brady
& James Curtis 3,000 $4,500 cash
8/7/95 Bradley Mays
8/7/95 Donald Burdsall 3,000 $4,500 cash
8/8/95 Kerry Kenna 3,000 $4,500 cash
8/8/95 Chloe Green 3,000 $4,500 cash
8/10/95 Lisa Railing 10,000 $15,000 cash
8/10/95 Jay Rifkind 3,000 $4,500 cash
8/16/95 Robert Kemmerer 30,000 $45,000 cash
8/16/95 Elizabeth Gheen 3,000 $4,500 cash
8/20/95 Lauren Tracy 3,000 $4,500 cash
8/21/95 Roger Vosti 3,000 $4,500 cash
8/21/95 Carol & Paul Rice 3,000 $4,500 cash
8/21/95 Johnny & Barbara Wong 3,000 $4,500 cash
8/21/95 Francis Hong 3,500 $5,250 cash
8/21/95 Julius & Jean Richmond 6,000 $9,000 cash
8/21/95 Michael Tower 6,000 $9,000 cash
8/21/95 Dominic & Julie Cippola 3,000 $4,500 cash
8/21/95 Terrence Dooher 3,000 $4,500 cash
8/22/95 Robert Kube 3,000 $4,500 cash
8/22/95 Myron Wolf 3,000 $4,500 cash
<PAGE>69
8/22/95 Jeff McGuire 3,000 $4,500 cash
8/24/95 RE Hunt Trust 3,000 $4,500 cash
8/24/95 Gerald Dooher 3,000 $4,500 cash
8/25/95 Gary Muncy 12,000 $18,000 cash
8/25/95 Stephen Jones 3,000 $4,500 cash
8/28/95 Daniel Carlson 3,000 $4,500 cash
8/28/95 Mitsui & Betsy Tatsugawa 4,000 $6,000 cash
8/29/95 Robert Gerner 3,000 $4,500 cash
8/29/95 Steven Worland 3,000 $4,500 cash
8/29/95 Donna Stocker 3,000 $4,500 cash
8/29/95 Roger Burch 3,000 $4,500 cash
8/31/95 Robin Cipolla 3,000 $4,500 cash
8/31/95 Fred Yde 3,000 $4,500 cash
8/31/95 R.K. Hunter 3,000 $4,500 cash
9/1/95 Karen & Donald Matthews 3,000 $4,500 cash
9/1/95 Gavin Hart 6,000 $9,000 cash
9/1/95 David Solotkin 6,000 $9,000 cash
9/6/95 William Paton 9,000 $13,500 cash
9/7/95 Alan Fiering 3,000 $4,500 cash
9/7/95 Nicholas Deets 10,000 $15,000 cash
9/7/95 Charles Poulsen 3,500 $5,250 cash
9/7/95 Ora Elliott 6,000 $9,000 cash
9/9/95 Elaine Paton 9,000 $13,500 cash
9/9/95 William Paton IRA 9,000 $13,500 cash
9/11/95 Frances Stewart 3,000 $4,500 cash
9/11/95 William Thompson 3,000 $4,500 cash
</TABLE>
Due to the integration rules of Section 502(a), all of the above issuances of
common stock would be deemed to be integrated and deemed to be part of
the same Regulation D offering (Section 505). As a result, the Company
obtained subscription agreements from all investors which indicated
whether or not the investors were accredited. There were a total
of 33 non-accredited investors. All of the above sales were made without
general solicitation. No commissions were paid to anyone other than
registered NASD broker-dealers. The total aggregate value of all of the
issuances were substantially less than $5,000,000.
<TABLE>
<CAPTION>
Exhibit Index.
<S> <C>
(1) Not Applicable
(2) Not Applicable
(3) Articles of Incorporation, Amendments and Bylaws
(4) Specimen certificate for Common Stock - to be filed
by amendment
(5) Consent and Opinion of Thompson & Stein regarding
legality
of securities registered under this Registration Statement
and to the references to such attorney in the Prospectus
filed as part of this Registration Statement
(6) Not Applicable
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10.1) Agreement to Provide Management, Professional and
Support Services between Grand Slam III and Grand Slam
Licensing, Inc., dated June 15, 1995 incorporated by
reference to Form S-1 filed July 17, 1996, file no. 333-
8233.
(10.2) Amendment to the Agreement to Provide Management,
Professional and Support Services, dated January 1, 1996
(10.3) Sales Agreement with Labyrinth Sales Company dated July
14, 1995 incorporated by reference to Form S-1 filed July
17, 1996, file no. 333- 8233.
(10.4) Merchandising Licensing Agreement
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Not Applicable
(18) Not Applicable
(19) Not Applicable
(20) Not Applicable
(21) Not Applicable
(22) Not Applicable
(23) Not Applicable
(24) Consent of Winter, Scheifley & Associates, P.C., Certified
Public Accountants for the Company
(25) Not Applicable
(26) Not Applicable
(27) Not Applicable
(28) Not Applicable
(99.1) Lease Agreement between Crowe-Lippe-Gillespie and
Sports Ventures II, an affiliate of Grand Slam III, dated
October 29, 1990
(99.2) Addendum to Office Lease
(99.3) Consulting Agreement with Pratt, Wylce & Lords, Ltd.
incorporated by reference to Form S-1 filed July 17, 1996,
file no. 333-8233.
(99.4) Lock Up Agreement
(99.5) Employment Agreement with Milton Thompson
incorporated by reference to Form S-1 filed July 17, 1996,
file no. 333-8233.
(99.6) Assignment by Grand Slam III of the Rights and
Responsibilities under its Agreement with Pratt, Wylce &
Lords, Ltd. to Grand Slam Licensing, Inc.
(99. 7) Letter re: Extension of Consulting Agreement with Pratt,
Wylce & Lords, Ltd.
</TABLE>
Item 17. Undertaking.
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
<PAGE>71
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b) (Section
230.424(b) of this chapter), if, in the aggregate, the changes in volume and
price represent no more than 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Delivery of Certificates.
The undersigned registrant hereby undertakes to provide to the
Transfer Agent at the closing, certificates in such denominations and
registered in such names as are required by the Transfer Agent to permit
prompt delivery to each purchaser.
(c) Indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions set forth in the Company's
Articles of Incorporation or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
<PAGE>72
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
Signatures
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form S-1 as amended to be
signed on its behalf by undersigned, thereunto duly authorized, in the city
of Indianapolis, State of Indiana on the 8th day of October, 1996.
Grand Slam Licensing, Inc.
/s/ Milton O. Thompson
--------------------------------
By: Milton O. Thompson,
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
on Form S-1 as amended has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
<S> <C> <C>
/s/ Milton O. Thompson 10/8/96
- ----------------------------- Chief Executive Officer ----------------
Milton O. Thompson Chief Financial Officer
Principal Accounting Officer
Controller
Director
/s/ Dennis DeYoung 10/8/96
- ----------------------------- Vice President/Secretary ----------------
Dennis DeYoung Director
/s/ Harold Thompson 10/8/96
- ---------------------------- Director ----------------
Harold Thompson
/s/ Joel K. Stein 10/8/96
- --------------------------- Director ----------------
Joel K. Stein
</TABLE>
ARTICLES OF INCORPORATION
The undersigned incorporator or incorporators, desiring to form a
corporation (hereinafter referred to as the "Corporation") pursuant to the
provisions of The Indiana Business Corporation Law, as amended
(hereinafter referred to as the "Act"), execute the following Articles of
Incorporation.
ARTICLE I
Name
The name of the Corporation is GRAND SLAM LICENSING, INC.
ARTICLE II
Purposes
The purposes for which the Corporation is formed are:
Section 1. General Purpose. To engage in the business of buying, selling,
trading, exclusively licensed pin collections to wholesale and retail
establishments and the public.
Section 2. Other Purposes. For the continuation of its business the
Corporation shall have the following other purposes:
(a) Capacity to Act. To have the capacity to act possessed by
natural persons, but to have authority to perform only such acts as are
necessary, convenient or expedient to accomplish the purpose for which it is
formed and such as are not repugnant to law.
(b) To Deal in Personal Property. To acquire (by purchase,
exchange, lease, or otherwise), hold, deal in and dispose of, alone, or in
syndicates or otherwise in conjunction with others, commodities and other
personal property of every kind, character and description whatsoever and
wheresoever situated, and any interest therein.
(c) To Deal in Real Property. To acquire, (by purchase, exchange,
lease, hire or otherwise), hold, own, improve, manage, operate, lease as
lessee, let as lessor, sell, convey or mortgage, either alone or in conjunction
with others, real estate of every kind, character and description, whatsoever
and wheresoever situated, and any interest therein.
(d) To Make Contracts. To enter into, make, perform and carry
out, or cancel and rescind contracts for any lawful purpose pertaining to
business.
(e) To Deal in Good Will. To acquire, (by purchase, exchange,
lease, hire or otherwise) all, or any part, of the good will, rights, property
and businesses or any person, entity, partnership association or
corporation, heretofore or hereafter engaged in any business similar to any
which the Corporation has power to conduct, to pay for the same in cash or
in stocks, bonds, or other obligation of the Corporation, or otherwise, to
hold utilitize and in any manor dispose of the whole or any part, of the
rights and property as acquired, and to assume in connection herewith any
liabilities of any such person, entity, partnership, association, or
corporation, and conduct in any lawful manner the whole, or any part of the
business thus acquired.
(f) To Enter into Partnership. To enter into any lawful
arrangement for sharing profits, union of interest, reciprocal association, or
cooperative association with any corporation, association, partnership,
individual, or other legal entity, for the carrying on or any business or
transaction deemed necessary, convenient, or incidental to carrying out any
of the purposes of the Corporation.
(g) Stock Options. To create, without restriction, rights, options,
warrants, and/or different classes of stock to purpose any or all of the
shares.
(h) To Raise Funds. To borrow or raise monies for any of the
purposes of the Corporation and, from time to time, without limits as to
amount, to draw, make, accept, endorse, execute, and issue promissory
notes, drafts, bills of exchange, warrants, bonds, debentures and other
negotiable instruments and evidence of indebtedness, and to secure the
payment thereof, and the interest thereof, by a mortgage on, or pledge,
conveyance, or assignment in trust of, the whole, or any part of the assets
of the Corporation, real, personal or mixed, including contract rights,
whether at the time owned or thereafter acquired, and to sell, pledge, or
otherwise dispose of such securities or other obligations of the Corporation
for its corporate purpose. Specially, the Corporation is authorized to sell
the certificates of indebtedness with terms different from those available to
the general public, to is officers and employees.
(i) Rights, Privileges and Powers. Subject to any limitations or
restrictions imposed by law, or by these Articles of Incorporation, to have
and exercise all the general right, privileges and powers specified in or
permitted under Section 3 of the Indiana General Act.
(j) General Clause. To do everything necessary, proper, advisable,
or convenient for the accomplishment of any of the purposes, or the
attainment of any of the objects of the furtherance of any of the powers
herein set forth, and to do every other act and thing incidental thereto or
connected therewith, which is not forbidden by the laws of the State of
Indiana, or by the provisions of the Articles of Incorporation.
ARTICLE III
Period of Existence
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
Resident Agent and Principal Office
Section 1. Resident Agent. The name and address of the Resident
Agent in change of the Corporation's principal office is Milton
O.Thompson, 401 Pennsylvania Parkway, Suite 390, Indianapolis, Indiana
46280.
Section 2. Principal Office. The post office address of the
principal office of the Corporation is 401 Pennsylvania Parkway, Suite 390,
Indianapolis, Indiana 46280.
ARTICLE V
Shares
Section 1. Number. The total number of shares which the
corporation has authority to issue is 50,000,000.
Section 2. Terms. The Capital stock of the corporation may be
divided into classes, kinds or series. More than one class, kind and series
may be authorized to be issued. Such shares may be issued by the
Corporation for such consideration or considerations as may be fixed by the
Board of Directions, and such consideration or considerations may be paid,
in whole or in part, in money, or in labor actually performed for, or services
actually rendered to the Corporation. The initial issue of shares of stock
will be issued according to the various subscription agreement entered into
by the corporation.
Section 3. Voting Rights of Shares. Except as otherwise provided
by law or by these articles, every shareholder shall have the right at every
shareholder's meeting to one(1) vote for each share of stock standing in his
name on the books of the Corporation.
Section 4. Restrictions on the Sale or Transfer of Stock. The
shares of stock of the Corporation may not be freely transferred unless
registered under the Securities Act of 1933 and any applicable state law or
unless an exemption from registration is available.
Section 5. Value of Stock. In the event that a shareholder desires
to sell his or her stock to the other shareholders, the Corporation, or an
outside party, the value of the stock will be determined by valuing the net
worth of the Corporation as determined by three (3) independent appraisers.
ARTICLE VI
Requirements Prior to Doing Business
The Corporation will not commence business until consideration of the
value of at least One Hundred Dollars ($100.00) has been received for the
issuance of shares.
ARTICLE VII
Directors
Section 1. Number of Directors. The initial Board of Directors is
composed of four (4) members. The number of Directors may be from time
to time fixed by the By-Laws of the Corporation at any number. In the
absence of a By-Law fixing the number of Directors, the number shall be
four (4).
Section 2. Names and Post Office Addresses of the Directors. The
names and post office addresses of the initial Board of Directors of the
Corporation are:
Name Number and Street or Building
Milton O. Thompson 401 Pennsylvania Parkway
Indianapolis, Indiana 46280
Dennis DeYoung 401 Pennsylvania Parkway
Indianapolis, Indiana 46280
Harold Thompson 401 Pennsylvania Parkway
Indianapolis, Indiana 46280
Joel K. Stein 40l Pennsylvania Parkway
Indianapolis, Indiana 46280
Section 3. Qualification of Directors. Directors need not be
shareholders of the Corporation.
ARTICLE VIII
Incorporator
The name and post office address of the incorporator of the Corporation is:
Name Address
Milton O. Thompson 401 Pennsylvania Parkway
Indianapolis, Indiana 46280
ARTICLE IX
Provisions For Regulations of Business and Conduct of
Affairs of Corporation
Section 1. Meeting of Shareholders. Meetings of the Shareholders
of the Corporation shall be held as may be specified in the respective
notices, waivers of notice, thereof.
Section 2. Meeting of Directors. Meetings of the Directors of the
Corporation shall be held at such place, within or without the State of
Indiana, as may be specified in the respective notices, waivers of notice,
thereof.
Section 3. Code of By-Laws. The Board of Directors of the
Corporation shall have the powers, without the assent or vote of the
Shareholders, to make, alter, amend or repeal the Code of By-Laws of the
Corporation, but the Affirmative vote or a majority of the members of the
Board of Directors, for the time being, shall be necessary to make such
Code or to effect any alternation, amendment or repeal thereof.
Section 4. Interest of Directors in Contracts. Any contract or other
transaction between the Corporation and one or more of its directors, or
between the Corporation and one or more of its Directors or between the
Corporation and any firm of which one or more of its Directors are
members or employees, or in which they are interested or between the
Corporation and any corporation or association of which one or more of the
Directors are stockholders, members, or directors, officers, or employees,
or in which they are interested, shall be valid for purposes, notwithstanding
the presence of such Director or Directors at the meeting of the Board of
Directors which acts upon, or in reference to, such contract or transaction
and notwithstanding his or her participation in such action. If the fact that
such interest shall be disclosed or known to the Board of Directors, and the
Board of Directors shall authorize, approve and ratify such contracts or
transaction by a vote of majority of the Directors present, such interested
Director or Directors are to be counted in determining whether a majority of
such quorum necessary to carry such vote. This section shall not be
construed to invalidate any contract or other transaction which would
otherwise be valid under the common and statutory law applicable thereto.
Section 5. Additional Powers of Directors. In addition to the
powers and authorities hereinabove or by statute expressly conferred, the
Board of Directors is hereby authorized to exercise all such acts and things
as may be exercised or done by a corporation organized and existing under
the provisions of the Act.
Section 6. Indemnification of Directors, Officers and Employees.
(a) Actions by Third Parties. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suite investigative (other than an
action by or in the right of the Corporation) by reason of the fact that he is
or was director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and
in a manner re reasonably believed to be in or not opposed to be the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful,
except that no indemnification shall be made in relation to matters as to
which he shall be adjudged in such action, suit or proceeding be liable for
negligence or misconduct in the performance of duty to the Corporation.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Corporation, and with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
lawful.
(b) Actions by or in the Right of the Corporation. The Corporation
shall indemnify any person who was or is a part or is threatened to be made
a party to any threatened pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorney's
fees) actually and reasonably incurred by him in connection with the defense
or settlement of such action or suit if he acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to
be liable for negligence or misconduct in the performance of his duty to the
Corporation.
(c) Indemnification as a Matter of Right or Discretion. Any such
director, officer, employee or agent who has been wholly successful, on the
merits or otherwise, with respect to any claim, suit or proceeding of the
character described herein shall be entitled to indemnification as of right
except as provided in the proceeding sentence, any indemnification
hereunder shall be made at the discretion of the Corporation, but only if the
Board of Directors, acting by a quorum consisting of directors who are not
parties to or who have been wholly successful with respect to such claim,
action, suit or proceeding, shall find that the director, officer, employee or
agent has met the standards of conduct set forth in the first sentence of this
subsection. The directors may request independent legal counsel (who may
be be regular counsel of the Corporation) to deliver to it their written
opinion as to whether such director, officer, employee or agent has met
such standards.
(d) Multiple Claims. If several claim, issues or matters of action are
involved, any such person may be entitled to indemnification as to some
matters even though he is not so entitled as to others.
(e) Advancement of Expenses. The Corporation may advance
expenses incurred in defending a civil or criminal action to, or where
appropriate may, at its expense undertake the defense of any such director,
officer, employee or agent upon receipt of an undertaking or on behalf of
such person to repay such expenses if it should ultimately be determined
that he is not entitled to indemnification under this section.
(f) Applicable Claims. The provisions of this section shall be
applicable to claims, actions, suits or proceedings made or commenced
before or after the adoption hereof and whether arising from acts of
omissions occurring before or after the adoption hereof.
(g) Indemnification of Article not Exclusive. The indemnification
provided by this section shall not be deemed exclusive of any other rights to
which those seeking indemnifications may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or a matter of law,
or otherwise both as to action in his official capacity and as to action in
another capacity whole holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
insure to the benefit of the heirs, executors and administrators of such a
person.
(h) Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director,
officer, employee or agent to the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of the
Corporation as director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity , or arising
out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of this
section.
Section 7. Board of Directors Voting Procedures. All amendment,
alterations, resolutions, or decisions voted upon by the Board of Directors
requires a majority vote before any such amendments, alterations,
resolutions or decisions can be passed and made effective.
Section 8. Amendment of Articles of Incorporation. The Corporation
reserves the right to alter, amend or repeal any provisions contained in these
Articles of Incorporation in the manner now or hereafter prescribed by the
provisions of the Act, or any other pertinent enactment of the General
Assembly of the State of Indiana, and all rights and powers conferred
hereby on shareholders, directors, and officers of the Corporation, are
subject to such reserved right.
Section 9. Consent in Lieu of Directors' Meetings. Any action
required or permitted to be taken at any meeting of the Board of Directors or
of any committee thereof, may be taken without a meeting, if prior to such
action, a written consent is signed by all such members of the Board of
Directors or of such committee, as the case may be, and such written
consent is filed with the minutes of proceedings of the Board of Directors or
of such committee.
IN WITNESS WHEREOF, the undersigned, being the incorporator
designated in Article VVIII, executed these Articles of Incorporation and
certify to the trust of the facts herein stated this _____ day of _________,
1995.
________________________
Milton O. Thompson
This instrument was prepared by Paul M. Pittman, Baker, Siegel & Page
333 E. Ohio St., Ste. 200, Indianapolis, Ind. 46204
BY-LAWS OF GRAND SLAM LICENSING,
INC.
ARTICLE I
Identification
Section 1. Name. The name of the Corporation shall be GRAND
SLAM LICENSING, INC. (hereinafter referred to as the "Corporation").
Section 2. Fiscal Year. The fiscal year of the Corporation shall
begin on January 1 and end on December 31.
Section 3. Principal Office and Resident Agent-Power to Change.
The post office address of the initial principal of the Corporation is 401
Pennsylvania Parkway, Suite 390, Indianapolis, Indiana 46280 and the
name and post office address of its initial Resident Agent in charge of such
office are Milton O. Thompson 410 Pennsylvania Parkway, Suite 390,
Indianapolis, Indiana 46280.. The location of its principal office, or the
designation of its registered agent, or both, may be changed at any time, or
from time to time, when authorized by the Board of Directors, with the
Secretary of State, on or before the day of any such change is to take effect,
or within five (5) days after the death of the Resident Agent or other
unforeseen termination of his agency, a certificate signed by any current
officer of the Corporation, and verified under oath by the officer signing the
same, stating the change to be made and reciting that such change is made
pursuant to authorization by the Board of Directors. A copy of such
certificate shall be inserted in the corporate record book immediately
following the By-Laws.
ARTICLE II
Capital Stock
Section 1. Consideration for Shares. The Board of Directors shall
cause the Corporation to issue the capital stock of the Corporation for such
consideration as has been fixed by such board in accordance with the
provisions of the Articles of Incorporation.
Section 2. Payment of Shares. Subject to the provisions of the
Articles of Incorporation, the consideration for the issuance of shares of the
capital stock of the Corporation may be paid, in whole or in part, in money,
in other property, tangible or intangible, or in labor actually performed for,
or services actually rendered to ,the Corporation; provided, however, that
upon the issuance of shares as a share dividend shall be deemed to be the
consideration for the issuance of such shares. When payment shall have
been received by the Corporation, or when surplus shall have been
transferred to capital upon the issuance of a share dividend, such share shall
be declared and taken to be fully paid and not liable to any further call or
assessment, and the holder thereof shall not be liable for any further
payments thereon. In the absence of fraud in the transaction, the judgment
of the Board of Directors as to the value of such property, labor or services
received as consideration, or the value placed by the Board of Directors
upon the Corporate assets in the event of a share dividend shall be
conclusive. Promissory notes or future services shall be accepted in
payment or part payment of any of the capital stock of the Corporation.
Section 3. Certificated for Shares. The Corporation shall issue to
each shareholder a certificate signed by the President, Vice-President,
Treasurer, and/or the Secretary of the Corporation certifying the number of
shares owned by him in the Corporation. Where such certificate is also
signed by a transfer agent or registrar, the signatures of the President, Vice-
President, Secretary or Treasurer may be facsimiles. The certificate shall
state the names or the registered holder, the number of shares represented
thereby, the par value, and whether such shares have been fully paid up.
The certificate shall be legibly stamped to indicate the per continuum which
has been paid up, and as further payments are made thereon the certificate
shall be stamped accordingly. If the Corporation issues more than one
class, every certificate issued shall state the kind and class of shares
represented thereby and the relative rights, interests, preferences and
restrictions of such class, or a summary thereof.
Section 4. Form of Certificates. The stock certificates to represent the
shares of the capital stock of this Corporation shall be in such form, not
inconsistent with the laws of the State of Indiana, as may be adopted by the
Board of Directors.
Section 5. Transfer of Stock. Title to a certificate and to the shares
represented thereby can be transferred only:
(a) By delivery of the certificate endorsed either in blank or to a
specified person by the person appearing by the certificate to be the owner
of the shares represented thereby, or
(b) By delivery of the certificate and a separate document containing
a written assignment of the certificate or a power or attorney to sell, assign
or transfer the same or the shares represented thereby, signed by the person
appearing by the certificate to be the owner of the shares represented
thereby. Such assignment or power of attorney may be either in blank or to
a specified person.
(c) The shares of stock of the Corporation may not be freely
transferred unless registered under the Securities Act of 1933 and any
applicable state law or unless an exemption from registration is available.
Section 6. Fixing or Record Dates. For the purpose of determining
shareholders entitled to vote at any meeting of shareholders or entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may
provide that the stock transfer books shall be closed for a stated period, not
exceeding 50 days, or may fix in advance a record date for such purpose,
which date may not be more than 50 days prior to the date of such meeting
or the date on which the action requiring such determination is to be taken.
ARTICLE III
Section 1. Place of Meetings. All meetings of shareholders shall be
held within this state and at the principal office of the Corporation, unless
otherwise provided in the Articles of Incorporation.
Section 2. Annual Meetings. The annual meeting of the shareholders
for the election of directors and for the transaction of such other business as
may properly come before the meeting, shall be held on March first of each
year, if such is not a legal holiday, and if a holiday, then on the first
following day that is not a legal holiday. If for any reason the annual
meeting of the shareholders shall not be held at the time herein provided, the
same may be held at anytime thereafter, but not later than (5) months after
the close of each fiscal year of the Corporation. Failure to hold the annual
meeting at the designated time shall not work any forfeiture or a dissolution
of the corporation.
Section 3. Special Meetings. Special meetings of the shareholders
may be called by the President, a Vice-President or by any members of the
Board of Directors.
Section 4. Simultaneous Communication Meetings. Any and all
shareholders may participate in an annual or special shareholder's meeting
by or through the use of any means or communication by which all
shareholders participating may simultaneously hear each other during the
meeting. A shareholder participating in a meeting by this means is deemed
present in person at the meeting.
Section 5. Notice of Meetings. A written or printed notice, stating the
place, day and hour of the meeting, and in case of a special meeting the
purpose or purposes for which the meeting is called, shall be delivered or
mailed by the secretary or by the officers or persons calling the meeting, to
each holder of the capital stock of the Corporation at the time entitled to
vote, at least (10) days before the date of the meeting. Notice of any such
meeting may be waived in writing by any shareholder if the waiver sets
forth in reasonable detail the purpose any purposes for which the meeting is
called, and the time and place thereof. Attendance at any meeting, in person
or by proxy shall constitute a waiver of notice of such meeting.
Section 6. Voting at Meetings. Except otherwise provided by the
provisions of the Articles of Incorporation, every shareholder shall have the
right at any shareholder's meeting of the Corporation to one vote for each
share of stock standing in his name on the books of the Corporation.
Section 7. Proxies. A shareholder may vote, either in person or by
proxy executed in writing by the shareholder or a duly authorized attorney-
in-fact. No proxy shall be valid after eleven (11) months from the date of
its execution, unless a longer time is expressly provided therein.
Section 8. Quorum. Unless otherwise provided by the Articles of
Incorporation, at any meeting of shareholders, a majority of the shares of
the capital stock outstanding and entitled by the Articles of Incorporation to
vote, represented in person or by proxy, shall constitute a quorum.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Board of Directors. The Board of Directors shall consist
of four (4) members who shall be elected annually by a majority of the
shares represented at the annual meeting of the shareholders. Such
directors shall hold office until the next annual meeting of shareholders and
until their successors are elected and qualified. Directors need not be
shareholders unless the Articles of Incorporation so require.
Section 2. Duties. The corporate power of this Corporation shall be
vested in the Board of Directors, who shall have the management and
control of the business of the Corporation. They shall employ such agents
and servants as they may deem advisable, and fix the rate of compensation
of all agents, employees, and officers.
Section 3. Resignation. A Director may resign at any time filing his
written resignation with the Secretary.
Section 4. Removal. At a meeting of shareholders called expressly for
that purpose, Directors may be removed in the manner provided in this
section, unless otherwise provided in the Articles of Incorporation. Any or
all of the members of the Board of Directors may be removed, with or
without cause, by a vote of the holder of a majority of the shares then
entitled to vote, at an election of Directors.
Section 5. Vacancies. In the case of any vacancies in the Board of
Directors through death, resignation, removal or other cause, the remaining
Directors by the affirmative vote of the majority thereof may elect a
successor to fill such vacancy until the next annual meeting and until his
successor is elected and qualified. Shareholders shall be notified of the
name, address, principal occupation and other pertinent information about
any Director elected by the Board of Directors to fill any vacancy.
Section 6. Annual Meetings. The Board of Directors shall meet each
year immediately after the annual meeting of the shareholders, at the place
where such meeting of the shareholders has been held, for the purpose of
organization, election of officers, and considering of any other business that
may be brought before the meeting. If such meeting is not held as above
provided, the election of officers may be held at any subsequent meeting of
the board at any place within or without the State of Indiana.
Section 7. Quorum. At any meeting of the Board of Directors, the
presence of a majority of the member of the board elected and qualified shall
constitute a quorum for the transaction of any business except the filling of
vacancies in the Board of Directors.
ARTICLE V
OFFICERS OF THE CORPORATION
Section 1. Officers. The officers of the Corporation shall consist of
a President, a Vice-President, a Secretary, and Treasurer. Any two or more
offices may be held by the same person, except that the duties of the
President and Secretary shall not be performed by the same person. The
Board of Directors by resolution may create and define the duties of the
other offices in the Corporation and shall elect and appoint persons to fill all
such offices. Election or appointment of an officer shall not of itself create
contract rights.
Section 2. Election and Removal. Officers shall be elected by the
Board of Directors at its annual meeting and shall hold office for one year or
until their respective successors have been elected and qualified. The Board
of Directors may remove an officer at any time, with or without cause.
Vacancies in offices occurring by reason of death, resignation, removal or
increase in the number of officers of the Corporation shall be filled by the
Board of Directors.
Section 3. Vacancies. Whenever any vacancies shall occur in any
office by death, resignation, increase in the number of offices of the
Corporation, or otherwise, the same shall be filled by the Board of
Directors, and the officer so elected shall hold office until his successor is
chosen and qualified.
Section 4. President. The President shall preside at all meetings of
shareholders and directors, discharge all the duties which revolve around a
presiding officer, and perform such other duties as this Code of By-Laws
provides, or the Board of Directors may prescribe. The President shall have
full authority to execute proxies on behalf of the Corporation, to vote stock
owned by it in any other corporation, and to execute, the Secretary powers
of attorney appointing other corporations, partnerships, or individuals the
agent of the corporation, all subject to the Indiana Business Corporation
Law, as amended; the Articles of Incorporation and this code of By-Laws.
Section 5. Vice-President. The Vice-President shall perform all duties
incumbent upon the President during any absence or disability of the
president and shall have such powers and perform such duties as this code
of By-Laws provides or as the Board of Directors may, from time to time,
prescribe or delegate.
Section 6. Secretary. The Secretary shall have the custody and care of
the records, minutes, and stock books of the Corporation. He shall attend
all meetings of the shareholders and Board of Directors and shall keep, or
cause to be kept in a book provided for the purpose, a true and complete
record of this proceedings of such meetings, and shall perform a like duty
for all standing committees appointed by the Board of Directors, when
required. He shall attend to the giving and serving of all notices of the
corporation, shall file and take charge of all papers and documents
belonging to the corporation and shall perform such duties as this Code of
By-Laws may require or the Board of Directors may prescribe.
Section 7. Treasurer. The Treasurer shall keep correct and complete
records or account, showing accurately at all times, the financial condition
of the Corporation. He shall be the legal custodian of all moneys, notes,
securities, and other valuables which he may from time to time come into
the possession of the Corporation. He shall immediately deposit all funds
of the corporation coming into his hand in some reliable bank or other
depository to be designated by the Board of Directors, and shall keep such
bank accounts in the manner of the Corporation. He shall furnish at
meetings of the Board of Directors, or whenever requested, a statement of
the financial condition of the Corporation, and shall perform such other
duties as the Code of By-Laws may require or the Board of Directors may
prescribe. The Treasurer may be required to furnish bond in such amount
as shall be determined by the Board of Directors.
Section 8. Delegation of Authority. In case of the absence of any
officer of the Corporation, or for any other reason that the Board of
Directors may deem sufficient, the Board of Directors may delegate the
powers or duties of such officers to any other officer or to any Director, for
the time being, provided a majority of the entire Board of Directors concurs
therein.
Section 9. Salaries. The salaries of the officers and employees shall
be fixed, from time to time, by the Board of Directors. No officer or
employee shall be prevented from receiving such salary by reason of the fact
that he is also a Director of the Corporation.
ARTICLE VI
Negotiable Instruments, Deeds, Contracts, Leases, Etc.
Section 1. Execution of Negotiable Instruments. All checks, drafts,
notes bonds, bills of exchange and orders for the payment of money of the
Corporation shall, unless otherwise directed by the Board of Directors, or
unless otherwise required by law, be executed in behalf of the Corporation
by the President or a Vice-President, or the Secretary, or the Treasurer.
Section 2. Execution of Deeds, Contracts, Etc. All deeds and
mortgages made by the Corporation and all contracts to which the
Corporation is a party shall, unless otherwise directed by the Board of
Directors, or unless required by law, be executed on behalf of the
Corporation by the President, or a Vice-President, or the Secretary or the
Treasurer.
ARTICLE VII
Indemnification of Directors and Officers
Section 1. Indemnification of Directors, Officers and Employees.
(a) Actions by Third Parties. The Corporation shall indemnify any
person who was or is a part or is threatened to be made a party to any
threatened, pending or completed action, suite or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was director,
officer, employee or age to the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorney's fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to be in the best
interests of the Corporation, and, with respect to an criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful,
except that no indemnification shall be made in relation to matters as to
which he shall be adjudged in such action, suit or proceeding be liable for
negligence or misconduct in the performance of duty to the Corporation.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith an din a manner which he reasonably believed to be in or not opposed
to the best interests of the Corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
lawful.
(b) Actions by or in the Right of the Corporation. The Corporation
shall indemnify any person who was or is a party or is threatened to be
made a party to any threatened pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorney's
fees) actually and reasonably incurred by him in connection with the defense
or settlement of such action or suit if he acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to
be liable for negligence or misconduct in the performance of his duty to the
Corporation.
(c) Indemnification as a Matter of Right or Discretion. Any such
director, officer, employee or agent who has been wholly successful, on the
merits or otherwise, with respect to any claim, suit or proceeding or the
character described herein shall be entitled to indemnification as of right
except as provided in the proceeding sentence. Any indemnification
hereunder shall be made at the discretion of the Corporation, but only if the
Board of Directors, acting by a quorum consisting of directors who are not
parties to or who have been wholly successful with respect to such claim,
action, suit or proceeding, shall find that the director, officer, employee or
agent has met the standards of conduct set forth in the first sentence of this
subsection. The directors may request independent legal counsel (who may
be regular counsel of the Corporation) to deliver to it their written opinion as
to whether such director, officer, employee or agent has met such
standards.
(d) Multiple Claims. If several claims, issues or matters of action are
involved, any such person may be entitled to indemnification as to some
matters even though he is not so entitled as to others.
(e) Advancement of Expenses. The Corporation may advance
expenses incurred in defending a civil or criminal action to, or where
appropriate may, at its expense undertake the defense of any such director,
officer, employee or agent upon receipt or an undertaking or on behalf of
such person to repay such expenses if it should ultimately be determined
that he is not entitled to indemnification under this section.
(f) Applicable Claims. The provisions of this section shall be
applicable to claims, actions, suits or proceedings made or commenced
before or after the adoption hereof and whether arising from acts or
omissions occurring before or after the adoption hereof.
(g) Indemnification of Article not Exclusive. The indemnification
provided by this section shall not be deemed exclusive of any other rights to
which those seeking indemniifications may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors as a matter or law,
or otherwise both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall insure
to the benefit of the heirs, executors and administrators of such a person.
(h) Insurance . The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of this
section.
ARTICLE VIII
AMENDMENTS OF BY-LAWS
The By-Laws may be altered or amended by the Board of Directors at
any meeting if notice of the intention to consider changes in the By-Laws is
contained in the Notice of such meeting or if such notice is waived by all
members of the Board either in writing or by attendance at the meeting.
Thompson & Stein
Milton O. Thompson Attorneys At Law Office: (317) 575-5660
Joel K. Stein A Professional Corporation Fax: (317) 575-5650
Charles A. Richmond
Michael D. Fox
Christopher W. Russell
October 8, 1996
Milton O. Thompson, Esq.
President
Grand Slam Licensing, Inc.
401 Pennsylvania Parkway
Suite 390
Indianapolis, Indiana 46280
Dear Mr. Thompson:
Pursuant to your request, I am writing to express my opinion regarding
GrandSlam Licensing, Inc.'s filing of a registration statement on Form S-1
(file no. 333-8823) and amendments thereto (which registration statement,
as amended at the time of its effectiveness is hereinafter called the
"Registration Statement"), covering shares of the Company's common
stock, $.001 par value, warrants for shares of such stock and shares
issuable pursuant to said warrants (which shares and warrants are
hereinafter called the "Securities").
On the basis of my examination of original copies, or copies certified to my
satisfaction, of the corporate records of the Company, agreements and other
instruments, certificates of public officials and such other documents as I
believed necessary as basis for the opinion hereinafter set forth.
On the basis of the foregoing, I am of the opinion that the securities have
been validly authorized and will, when sold as contemplated by the
Registration Statement, be legally issued, fully paid and non-assessible.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference made to me under the caption "Legal Matters"
in the prospectus constituting part of the Registration Statement.
Sincerely,
/s/ Charles A. Richmond
- -------------------------------------
Charles A. Richmond, Esq.
MERCHANDISING LICENSE AGREEMENT
1. LICENSOR: International Hockey League, Inc. ("Licensor")
1577 North Woodward Ave., Suite 212
Bloomfield Hills, Michigan 48304
Attn: Mr. Matt Strelo, Jennifer Riga
Phone: (810) 258-0580 Fax: (810) 258-0940
LICENSEE: Grand Slam Licensing, Inc. ("Licensee")
an Indiana corporation
401 Pennsylvania Parkway, Suite 390
Indianapolis, Indiana 46280
Attn: Mr. Harold Thompson, Milton O. Thompson
Phone: (317) 575-5900 Fax: (317) 575-5650
REPRESENTATIVE: Sony Signatures Inc. ("Representative")
Two Bryant Street
San Francisco, CA 94105
Phone: (415) 247-7400 Fax (415) 247-7407
2. PROPRIETARY SUBJECT MATTER: The names, symbols, emblems,
designs, logos and colors of the International Hockey League ("IHL") and
of the IHL teams (the current teams being listed on Exhibit B attached
hereto) and such other Proprietary Subject Matter as may be provided by
Licensor to Licensee from time to time ("Proprietary Subject Matter").
3. ARTICLES: The following products using, bearing or otherwise
relating to the Proprietary Subject Matter: Lapel pins and lapel pin collector
sets ("Articles").
4. TERRITORY: The United States of America, its territories and
possessions, and Canada ("Territory").
5. TERM: The Term shall commence on June 1, 1996 and expire on June
30, 1998, unless sooner terminated and provided in Exhibit A hereto
('Term").
6. EXCLUSIVITY (check one): X Non-exclusive license
Exclusive license
7. ROYALTY RATE: 9% of Net Sales (Royalty Rate).
8. ADVANCE: U.S. $7,000.00 (Advance), payable as follows:
$3,500.00 upon execution of formal contract by
licensee; and
$3,500.00 due on or before June 1, 1997.
9. GUARANTEE: U.S. $7,000.00 (Guarantee) due on or before June
1, 1997.
The Guarantee is payable on ore before June 1, 1997.
10. ADMINISTRATIVE FEE: U.S. $1,000.00 payable on execution of
this Agreement by (Administrative Fee).
11. CHANNELS OF DISTRIBUTION: Standard and Team (Channels of
Distribution).
12. EARLIEST IN-STORE DATE: July 1, 1996 (Earliest In-Store
Date).
13. SHIPPING DATE: August 1, 1996 (Shipping Date).
14. COPYRIGHT AND TRADEMARK NOTICES; LOGO; GENERAL
NOTICE:
Copyright: (To be provided)
All Rights Reserved
Trademark: (To be provided) or as applicable
Logo: The IHL Officially Licensed Product logo
General Notice: The IHL team insignias depicted on
this product are trademarks
whose licensing rights are exclusively
controlled by the Interna-
tional Hockey League and may not be
reproduced within its written
consent.
15. APPROVALS: All Articles and any related packaging and advertising
must be approved by Licensor in writing before distribution or sale by
Licensee. Such approvals or disapprovals are within Licensor's sole
discretion, and any submission not approved in writing is deemed
disapproved.
16. INSURANCE AMOUNT: $1,000,000.00.
17. SAMPLES: 12 of each Article.
18. ADDITIONAL TERMS: The attached Exhibit A (Standard Terms
and Conditions) is incorporated herein by this reference.
By signing below, Licensee affirms that it is in agreement with the
foregoing and that it has read and understands and agrees to be bound by
Exhibit A (Standard Terms and Conditions) attached hereto and forming a
part hereof. Licensee further agrees that this Agreement shall also serve as a
invoice to Licensee with respect to the amounts payable as set forth above
and Licensee agrees to pay such amounts to Representative as and when
specified above. This Agreement shall be binding upon Licensor until fully
executed and delivered.
ACCEPTED AND AGREED TO:
LICENSOR: LICENSEE:
INTERNATIONAL GRAND SLAM
LICENSING, INC.
HOCKEY LEAGUE, INC.
by:___________________________
by:_________________________
Print Name:____________________ Print
Name:_________________
Title:__________________________
Title:_______________________
Date:__________________________
Date:_________________________
ACKNOWLEDGED BY REPRESENTATIVE:
SONY SIGNATURES INC.
By: _____________________________
Print Name:_______________________
Title:_____________________________
Date:______________________
MERCHANDISING LICENSE AGREEMENT
1. LICENSOR: Apple Corps Limited (Licensor)
27 Ovington Square
London SW3 1LJ England
Attn: Neil Aspinall
Fax: (011) 44-171-225-0661
REPRESENTATIVE: Sony Signatures, Inc. (Representative)
Two Bryant Street
San Francisco, CA 94105
Phone: (415) 247-7400 Fax (415) 247-7407
LICENSEE: Grand Slam Licensing, Inc. (Licensee)
an Indiana corporation
401 Pennsylvania Parkway, Suite 390
Indianapolis, Indiana 46280
Attn: Mr. Harold Thompson, Milton O. Thompson
Phone: (317) 575-5900 Fax: (317) 575-5650
2. ARTIST: The musical group professional known as THE BEATLES
(Artist).
3. PROPRIETARY SUBJECT MATTER: The name(s), symbols, logos,
approved images, and approved licenses of the Artist (Proprietary Subject
Matter).
4. ARTICLES: The following products utilizing, bearing, or otherwise
relating to the Proprietary Subject Matter (Articles), and, for each of the
Articles, its initially listed billing price:
1. Collector Pins (size 1" to 2"), handpainted and handcrafts ($2.50).
2. Collector Pins (size 1" to 2"), containing a photograph of The Beatles
($3.50).
3. Limited Edition Collector Pin Sets.
4. Keychains (size 1" to 2") handpainted and handcrafted ($3.75).
5. Keychains (size 1" to 2"), containing a photograph of The Beatles
($4.00).
"Limited Edition" means no more than 20,000 reproductions (per image)
priced at not less than $10.00 or more than $100.00 for Collector Pin Sets;
prices may not be reduced in any case, but may be increased with
Licensor's written consent.
5. TERRITORY: The United of America (Territory).
6. TERM: The Term shall commence on January 1, 1996 and expire on
December 31, 1997, unless sooner terminated as provided in Exhibit A
hereto (Term).
7. EXCLUSIVITY (check one) X Non-exclusive license
____Exclusive license
(subject to Paragraphs 22 and 27 below).
8. ROYALTY RATE: 11% of Net Sales (Royalty Rate).
1% of Net Sales for PSM Protection and
Enhancement Fee Program.
9. ADVANCE: U.S. $30,000 (Advance).
The Advance is payable as follows:
U.S. $10,000 upon execution of this Agreement, receipt
of $5,000 of which is hereby acknowledged;
U.S. $10,000 due on or before September 1, 1996;
U.S. $10,000 due on or before September 1, 1997.
10. GUARANTEE: U.S. $30,000 (Guarantee).
11. CHANNELS OF DISTRIBUTION: Upstairs market and Standard
wholesale distribution (Channels of Distribution).
12. EARLIEST IN-STORE DATE: January 1, 1996 (Earliest In-Store
Date).
13. SHIPPING DATE: February 14, 1996 (Shipping Date).
14. COPYRIGHT AND TRADEMARK NOTICES:
Copyright: 199x Apple Corps Limited
All Rights Reserved
Trademark: The Beatles
Legend: A Beatles product licensed by Apple
Corps Limit
(or in the event that such legend cannot
practicably be applied,
such legend or such shorter legend as
may be specified by
Licensor from time to time).
15. APPROVALS: All Articles any related packaging and advertising must
be approved by Licensor in writing before distribution or sale of Licensee.
Such approvals or disapprovals are within Licensor's sole discretion, and
any submission not approved in writing is deemed disapproved.
16. INSURANCE AMOUNT: $1,000,000.00.
17. SAMPLES: 24 of each Article.
18. ADDITIONAL TERMS: The attached Exhibit A (Standard Terms and
Conditions) is incorporated herein by this reference.
By signing below, Licensee affirms that it is in agreement with the
foregoing and that it has read and understands and agrees to be bound by
Exhibit A (Standard Terms and Conditions) attached hereto and forming a
part hereof. Licensee further agrees that this Agreement shall also serve as a
invoice to Licensee with respect to the amounts payable as set forth above
and Licensee agrees to pay such amounts to Representative as and when
specified above. This Agreement shall be binding upon Licensor until fully
executed and delivered.
ACCEPTED AND AGREED TO:
LICENSOR: LICENSEE:
APPLE CORPS LIMITED GRAND SLAM
LICENSING, INC.
by:___________________________
by:_________________________
Print Name:____________________ Print
Name:_________________
Title:__________________________
Title:______________________
Date:__________________________
Date:_______________________
AMENDMENT TO THE AGREEMENT
TO
PROVIDE MANAGEMENT, PROFESSIONAL AND
SUPPORT SERVICES
This Agreement, entered into this 1st day of January, 1996 amends the
Agreement of June 15, 1995 between Grand Slam III, hereinafter referred
to as GS III, an Indiana partnership with offices located at 401
Pennsylvania Parkway, Suite 390, Indianapolis, Indiana 46280, and Grand
Slam Licensing, Inc., hereinafter referred to as GSL, an Indiana C
Corporation, with offices located at 401 Pennsylvania Parkway, Suite 390,
Indianapolis, Indiana 46280, for the provision of management, professional
and support services.
RECITALS
1. GS III and GSL entered into an Agreement on June 15, 1996 for GS III
to provide management, professional and support services to GSL.
2. As the demands associated with the identification of licenses to seek, the
acquisition of licenses, the negotiation of the terms of the licenses,
continued development of the GSL sales network, product development
and sales and marketing and other management and professional services
have increased, GSL requires a management staff of its own.
AGREEMENT
NOW THEREFORE, in consideration of these recitals and of the mutual
representations and covenants contained herein, the parties hereby agree to
amend their original agreement as follows:
1. SCOPE OF SERVICES: The scope of services provided by GS III to
GSL shall be reduced to the provision of: sufficient space for GSL to
design its logo and photo likeness collectible lapel pins, pin collector sets,
key chains and similar memorabilia products to conduct the marketing and
sales of its products; to provide office space for its management personnel
and, to store a reasonable amount of inventory and materials supporting
GSL's operations; and, such management and professional services as not
provided directly by GSL and as mutually agreed to by the parties.
2. COMPENSATION: The amount paid to GSIII by GSL shall be
forthwith reduced to $10,000 per month, payable on the first day of each
month, plus seven percent (7%) of the net revenues, calculated on revenues
actually received during the previous month and payable by the fifteenth day
of each month.
3. ALL OTHER TERMS AND CONDITIONS: All other terms and
conditions of the original Agreement shall ermine in force as stated in that
Agreement.
WHEREFORE, this Agreement has been executed as of the day and date
first written above:
GRAND SLAM III GRAND SLAM
LICENSING, INC.
by:___________________________ by:________________________
Milton O. Thompson, Esq. Charles A. Richmond
General Partner Assistant Recording Secretary
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated January 30, 1996 relating to the financial statements of
Grand Slam Licensing, Inc. and the reference to our firm under the caption
"EXPERTS" in the Registration Statement.
/s/ Winter, Scheifley & Associates, P.C.
----------------------------------------------------
Winter, Scheifley & Associates, P.C.
Certified Public Accountants
June 28, 1996
Englewood, Colorado
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> JUL-31-1996
<CASH> 101,548
<SECURITIES> 0
<RECEIVABLES> 238,825
<ALLOWANCES> 0
<INVENTORY> 295,286
<CURRENT-ASSETS> 708,401
<PP&E> 12,659
<DEPRECIATION> 0
<TOTAL-ASSETS> 742,080
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 1411
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 742,080
<SALES> 404,325
<TOTAL-REVENUES> 404,325
<CGS> 326,118
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,251
<INCOME-PRETAX> (227,627)
<INCOME-TAX> 0
<INCOME-CONTINUING> (227,627)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (227,627)
<EPS-PRIMARY> (.17)
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</TABLE>
LEASE AGREEMENT
STATE OF Indiana
COUNTY OF Hamilton
THIS AGREEMENT, made in multiple copies and entered into between
Crow-Lippe-Gillespie I, A Texas Limited Partnership herein designated as
Landlord, and Sports Ventures II, An Indiana Partnership herein designated
as Tenant.
WITNESSETH: That Landlord in consideration of the covenants and
agreements to be performed by Tenant and upon the terms and conditions
hereinafter stated does hereby lease, demise and let unto Tenant the
following described space as defined in Exhibits "A" and "B" (hereinafter
referred to as the "demised premises") in the building known as 401
Pennsylvania Parkway, (hereinafter known as the "Building") Suite 390,
Indianapolis, Indiana 46280
TO HAVE AND TO HOLD the same for a term of 60 months
commencing on November 1, 1990 and ending on October 31, 1995 punch
list items excepted. By occupying the demised premises Tenant shall be
deemed to have accepted the same as suitable for the purpose herein
intended and to have acknowledged that the same comply fully with
Landlord's covenants and obligations hereunder. If this lease is executed
before the demised premises become vacant, or if any present tenant or
occupant of the premises holds over, and Landlord cannot acquire
possession of the demised premises prior to the date above recited as the
commencement date of this lease. Landlord shall not be deemed to
be in default hereunder, and Tenant agrees to accept possession of the
demised premises at such time as Landlod is able to tender the same
Landlord hereby waives payment of rent covering any period prior to the
tendering of possession to Tenant hereunder.
1. RENT. In consideration of this lease. Tenant promises and agrees to
pay Landlord rent for said premises at the rate of $3,643.58 per month.
One such monthly installment together with a security deposit equal to
3,000.00 shall be payable by Tenant to Landlord in advance, without
demand, upon Tenant's execution of this lease, and like a monthly
installment shall be due and payable on or before the first day of each
succeeding calendar month during the term hereof. Rent for any fractional
month at the beginning or end of the lease term shall be prorated. The
security deposit shall be held by Landlord as security for the performance
by Tenant of Tenant's covenants and obligations under this lease, it being
expressly understood that such deposit shall not be considered an advance
payment of rental or a measure of Landlord's damages in case of default by
Tenant. Upon the occurrence of any event of default by Tenant, Landlord
may, from time to time, without prejudice to any other remedy, use such
deposit to the extent necessary to make any good any arrearages of rent and
any other damage, injury, expense, or liability caused to Landlord by such
event of default. Following any such application of the security deposit,
Tenant shall pay to Landlord on demand the amount so applied in order to
restore the security deposit to its original amount. If Tenant is not then in
default hereunder, any remaining balance of such deposit shall be returned
by Landlord to Tenant upon termination of this lease. If Landlord transfers
its interest in the demised premises during the lease term, Landlord shall
assign the security deposit to the transferee and thereafter shall have
no further liability for the return of such security deposit.
In the event Tenant fails to pay any installment of rent or other incurred
expense hereunder as and when such installment is due, to help defray the
additional cost to Landlord for processing such late payments Tenant shall
pay Landlord on demand a late charge in an amount equal to five percent
(5%) of such installment; and the failure to pay such amount within ten (10)
days after demand therefor shall be an event of default hereunder. The
provision for such late charge shall be in addition to all of Landlord's other
rights and remedies hereunder or at law and shall not be construed as
liquidated damages or as limiting Landlord's remedies in any manner.
2. USE. The demised premises shall be used and occupied by Tenant as
general office space. Tenant shall not use, or permit to be used, the
demised premises for any other business or purpose. Tenant will not
occupy or use, nor permit to be occupied or used any portion of the demised
premises for any business or purpose which is unlawful in part or in
whole or deemed to be disreputable in any manner, or extra hazardous on
account of fire, nor permit anything to be done which will in any way
increase the rate of fire insurance on the Building or its contents, and in the
event that, by reasons of acts of Tenant, there shall be any increase in the
rate of insurance on the Building or contents created by Tenant's acts
or conduct of business then such acts shall be deemed to be an event of
default hereunder and Tenant hereby agrees to pay the amount of such
increase on demand, and acceptance of such payment shall not constitute a
waiver of any of Landlord's rights hereunder.
3. LANDLORDS OBLIGATIONS. Landlord agrees to furnish Tenant
while occupying the demised premises water, hot and cold, at those points
of supply provided for general use of tenants of the Building; heated and
refrigerated air conditioning in season, at such times as Landlord normally
furnishes these services to all tenants of the Building, and at such
temperatures and in such amounts as are considered by Landlord to be
standard, such service on Sunday and holidays to be optional on the part of
Landlord; janitor service on weekdays other than holidays; elevator service;
and electric service in the manner and to the extent deemed by Landlord to
be standard; but failure to any extent to furnish or any stoppage of these
defined services, resulting from causes beyond control of landlord or
from any cause, shall not render Landlord liable in any respect for damages
to person, property or business, nor be construed as an eviction of Tenant
or work an abatement of rent, nor relieve Tenant from fulfillment of any
covenant or agreement hereof. Should any equipment or machinery
furnished by Landlord break down, or for any cause cease to function
properly, Landlord shall use reasonable diligence to repair same promptly,
but Tenant shall have no claim for rebate of rent or damages on account of
any interruptions in service occasioned thereby or resulting therefrom.
Tenant shall pay to Landlord on demand such charges as Landlord may
reasonably prescribe for any electric service required by Tenant for
computers and other electrical equipment or other electric service deemed by
Landlord not to be standard.
4. TENANT'S REPAIRS AND ALTERATIONS. Tenant will not in
any manner deface, damage or injure the Building, and will pay the cost of
repairing any damage or injury done to the Building or any part thereof by
Tenant or Tenant's agents, employees and invitees. Tenant shall throughout
the term of this lease take good care of the demised premises and keep them
free from waste and nuisance of any kind. Tenant agrees to keep the
demised premises, including all fixtures installed by Tenant and any plate
glass, in good condition and make all necessary repairs. At the end or other
termination of this lease, Tenant shall deliver up the demised premises with
all improvements located thereon, except as provided in this paragraph, in
good repair and condition, reasonable wear and tear expected. Tenant shall
not make or allow to be made any alterations or physical additions in or to
the demised area without the prior written consent of Landlord with the
demised premises. All furniture and moveable trade fixtures installed by
Tenant may be removed by Tenant at the termination of this lease if Tenant
so elects, and shall be removed if Landlord so elects. All such removals
and restoration shall be accomplished in good workmanlike manner so as
not to damage the primary structure or structural qualities of the Building.
5. ASSIGNMENT AND SUBLETTING. Tenant will not assign this
lease, or allow same to be assigned by operation of law or otherwise, or
sub-let the demised premises or any part thereof without the prior written
consent of Landlord. Landlord shall have the right to transfer and assign, in
whole or in part, any of its rights under this lease, and in the Building and
property referred to herein; and to the extent that such assignee assumes
Landlord's obligations hereunder, Landlord shall by virtue of such
assignment be released from such obligations.
6. MAINTENANCE. Tenant will maintain the demised premises in a
clean and healthful condition, and comply with all laws, ordinances, orders,
rules, and regulations (state, federal, municipal, and other agencies or
bodies having any jurisdiction thereof) with reference to use, condition, or
occupancy of the demised premises.
7. LIABILITY. Landlord shall not be liable for and Tenant will
indemnify and hold Landlord harmless from any loss, liability, costs and
expenses, including attorney's fees, arising out of any claim of injury or
damage on or about the leased premises caused by the negligence or
misconduct or breach of this lease by Tenant, its employees, subtenants,
invitees or by any other person entering the leased premises or the Building
or Property under express or implied invitation of Tenant or arising out of
Tenant's use of the leased premises. Landlord shall not be liable to Tenant
or Tenant's agents, employees, invitees or any person entering upon the
Property in whole or in part because of Tenant's use of the leased premises
for any damage to persons or property due to condition, design, or defect
in the Building or its mechanical systems which may exist or occur, and
Tenant assumes all risks of damage to such persons or property. Landlord
shall not be liable or responsible for any loss or damage to any property or
person occasioned by theft, fire, act of God, public enemy, injunction, riot,
strike, insurrection, war, court order, requisition or order of governmental
body or authority, or other matter beyond control of Landlord, or for any
injury or damage or inconvenience, which may arise through repair or
alteration of any part of the Building, or failure to make repairs, or from any
cause whatever except Landlord's willful acts or gross negligence. Tenant
shall procure and maintain throughout the term of this lease a policy of
insurance, in form and substance satisfactory to Landlord, at Tenant's
sole cost and expense, insuring both Landlord and Tenant against all claims,
demands or actions arising out of or in connection with: (1) the leased
premises;(II) the condition of the leased premises; (III) Tenant's operations
in and maintenance and use of the leased premises; and (IV) Tenant's
liability assumed under this lease; the limits of such policy to be in the
amount of not less than $1,000,000 per occurrence in respect of injury to
persons (including death) and in the amount of not less than $250,000 per
occurrence in respect of property damage or destruction, including loss of
use thereof. Such policy shall be procured by Tenant from responsible
insurance companies satisfactory to Landlord. A certified copy of such
policy, together with receipt evidencing payment of the premium, shall be
delivered to Landlord prior to the commencement date of this lease. Not
less than thirty (30) days prior to the expiration date of such policy, a
certified copy of a renewal thereof (bearing notations evidencing the
payment of the renewal premium) shall be delivered to Landlord. Such
policy shall further provide that not less than thirty (30) days written notice
shall be given to Landlord before such policy may be canceled or changed to
reduce the insurance coverage provided thereby.
8. RULES AND REGULATIONS. Tenant and Tenant's agents,
employees, and invitees, will comply fully with all requirements of the rules
of the Building which are printed on the reverse side hereof and made a part
hereof as though fully set out herein. Landlord shall at all times have the
right to change such rules and regulations or to amend them in such
reasonable manner as may be deemed advisable for safety, care, and
cleanliness of the Building and for preservation of good order therein, all of
which rules and regulations, changes, and amendments, will be forwarded
to Tenant in writing and shall be carried out and observed by Tenant.
Tenant shall further be responsible for the compliance with such rules and
regulations by the employees, servants, agents, visitors and invitees of
Tenant.
9. INSPECTION. Landlord, or its officers, agents, and
representatives, shall have the right to enter into and upon any and all parts
of the demised premises, (a) at all reasonable hours to inspect same or clean
or make repairs or alterations or additions as Landlord may deem necessary,
or (b) during business hours to show the demised premises to prospective
tenants, purchasers or lenders, and Tenant shall not be entitled to any
abatement or reduction of rent by reason thereof.
10. CONDUCT OF BUSINESS. Tenant will conduct his business,
and control his agents, employees, and invitees in such a manner as not the
create any nuisance, or interfere with, annoy or disturb other tenants or
Landlord in the management of the Building.
11. CONDEMNATION. If the demised premises shall be taken or
condemned in whole or part for public purposes, then the term of this lease
shall at the option of Landlord forthwith cease and terminate.
12. FIRE & OTHER CASUALTY. In the event that the Building
should be totally destroyed by fire, tornado or other casualty, or should be
so damaged that rebuilding or repairs cannot be completed within one
hundred twenty (120) days after the date of such damage. Landlord or
Tenant may at their option terminate this lease in which event the rent
shall be abated during the unexpired portion of this lease effective with the
date of such damage, or Landlord may proceed to rebuild and repair the
Building and the demised premises. In the event the Building should be
damaged by fire, tornado, or other casualty, but only to such extent that
rebuilding or repairs can be completed within one hundred twenty (120)
days after the date of such damage, or if the damage should be more serious
but Landlord does not elect to terminate this lease, in either such event
Landlord shall within thirty (30) days after the date of such damage
commence to rebuild or repair the uilding and shall proceed with reasonable
diligence to restore the Building to substantially the same condition in which
it was immediately prior to the happenings of the casualty, except that
Landlord shall not be required to rebuild, repair or replace any part of the
partitions, fixtures, and other improvements which may have been placed
by Tenant or other tenants within the Building. Landlord shall allow Tenant
a fair diminution of rent during the time the demised premises are unfit for
occupancy. In the event any mortgage under a deed of trust, security
agreement or mortgage on the Building should require that the insurance
proceeds be used to retire the mortgage debt, Landlord shall have no
obligation to rebuild and this lease shall terminate upon notice to Tenant.
Any insurance which may be carried by Landlord or Tenant against loss or
damage to the Building or to the demised premises shall be for the sole
benefit of the party carrying such insurance and under its sole control.
13. HOLDING OVER. Should Tenant, or any of its successors in
interest hold over the demised premises, or any part thereof, after the
expiration of the term of this lease, unless otherwise agreed in writing, such
holding over shall constitute and be construed as a tenancy from month to
month only, at a rental equal to the rent paid for the last month of the term of
this lease plus twenty percent (20%) of such amount. The inclusion of the
preceding sentence shall not be construed as Landlord's consent for the
Tenant to hold over.
14. TAXES ON TENANT'S PROPERTY. Tenant shall be liable for all
taxes levied or assessed against personal property, furniture or fixtures
placed by Tenant in the demised premises. If any such taxes for which
Tenant is liable are levied or assessed against Landlord or Landlord's
property and if Landlord elects to pay the same or if the assessed value of
Landlord's property is increased by inclusion of personal property,
furniture or fixtures placed by Tenant in the demised premises, and
Landlord elects to pay the taxes based on such increase, Tenant shall pay to
Landlord upon demand that part of such taxes for which Tenant is primarily
liable hereunder.
15. RENT ADJUSTMENT - OPERATING EXPENSES. In the event
that operating expenses for the Building for any calendar year during the
term of this lease (including without limitation the calendar year in which the
lease term commences) exceed $4.00 per rentable square foot. Tenant
agrees to pay the Landlord, as additional rental, a prorated share of such
increased expenses for the entire Building, based on the ratio that the
Tenant's area bears to the total area of the Building determined by a
consistent method of measurement. In the event the building is partially
occupied during any calendar year, Landlord has accepted standards of
accounting for office building management.
Within one hundred fifty (150) days after the close of the calendar year,
Landlord shall give Tenant a statement of the operating expenses for the
Building for such calendar year. If such operating expenses exceed $4.00
per square foot of area within the demised premises, Tenant will pay
Landlord, within thirty (30) days of statement receipt, Tenant's
proportionate share of such increased expenses for the entire year
immediately preceding issuance of said statement and for the previous
months in the then current year. Thereafter, Tenant will pay an adjusted
monthly rental which reflects the most recent year's operating expense
increases, subject to further increases as aforesaid. --- See Addendum 15
(a)
If at lease commencement or termination a partial calendar year is
involved, operating expenses shall be computed as though a full calendar
year was involved and prorated for such partial year. If the lease is
terminates other than at the end of a calendar year, an estimate of current
annual operating expenses shall be computed for the year of termination
and any increased rental based on such estimate shall be billed to the Tenant
prior to termination. Landlord will furnish Tenant an itemized statement of
the actual operating expenses at the end of the calendar year as outlined in
the preceding paragraph. In the event the Tenant payments exceed Tenant's
proportionate shares of the operating expenses Landlord will refund the
excess amount. If the proportionate share has been understated the Tenant
agrees to reimburse Landlord the additional cost as outlined in the preceding
paragraph.
For purposes of this lease, operating expenses shall include those
expenses paid or incurred by the Landlord for maintaining, operating and
repairing the real property of which the demised premises are a part, the
Building and other improvements thereon and the personal property used in
conjunction therewith (hereafter collectively referred to as "Project")
including but not limited to the cost of ad valorem taxes, electricity, natural
gas, ventilation, heating and air conditioning, water, window cleaning,
janitorial service, insurance, including but not limited to fire, extended
coverage, liability, worker's compensation, elevator or any other insurance
carried in good faith by the Landlord and applicable to the Project, painting,
uniforms, customary property management fees, supplies, sundries, sales
or use taxes on supplies or services, cost of wages and salaries of all
persons engaged in the operation, maintenance and repair of the Project and
so-called fringe benefits, or any other cost or expenses which the Landlord
pays or incurs to provide benefits for employees so engaged in the
operation, maintenance and repair of the project, the charges of any
independent contractor who under contract with the Landlord or its
representatives does any of the work of operating, maintaining or repairing
the Project, legal and accounting expenses, including but not limited to such
expenses as relate to seeking or obtaining reductions in and refunds of real
estate taxes, or any other expense or charge, whether or not hereinfore
mentioned, which in accordance with generally accepted accounting and
management principles would be considered as an expense of maintaining,
operating or repairing the Project. If any Project expense, though paid in
one year, relates to more than one calendar year, at the option of the
Landlord such expense may be proportionately allocated among such related
calendar years. The term "Operating Expenses", as used herein, shall not
include depreciation on the building or equipment, interest, leasing
commissions, capital expenditures or executives' salaries.
Tenant at its expense shall have the right at all reasonable times to review
Landlord's books and records relating to this lease for any year or years for
which additional rental payments become due.
16. EVENTS OF DEFAULT. The following events shall be deemed to
be events of default by Tenant under this lease.
(a) Tenant shall fail to pay any installment of the rent hereby reserved
and such failure shall continue for a period of ten (10) days.
(b) Tenant shall fail to comply with any term, provision, or covenant
of this lease, other than the payment of rent, and shall not cure such failure
within thirty (30) days after written notice thereof to Tenant.
(c) Tenant shall make an assignment for the benefit of creditors.
(d) Tenant shall file a petition under any section or chapter of the
National Bankruptcy Act, as amended, or under any similar law or statute of
the Untied States or any State hereof; or Tenant shall be adjudged bankrupt
or insolvent in proceedings filed against Tenant thereunder and such
adjudication shall not be vacated or set aside or stayed within the time
permitted by law.
(e) A receiver or Trustee shall be appointed for all or substantially
all of the assets of Tenant and such receivership shall not be terminated or
stayed within the time permitted by law.
(f) Tenant shall desert or vacate any substantial portion of the
demised premises for a period of fifteen (15) days or more.
17. REMEDIES. Upon the occurrence of any event of default specified
in Paragraph 16 hereof, Landlord shall have the option to pursue any one or
more of the following remedies without any notice or demand whatsoever:
(a) Terminate this lease in which event Tenant shall immediately
surrender the demised premises to Landlord and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession and expel
or remove Tenant and any other person who may be occupying the demised
premises or any part thereof, by force if necessary, without being liable for
prosecution or any claim of damages therefor; and Tenant agrees to pay to
Landlord on demand the amount of all loss and damage which Landlord
may suffer by reason of such termination, whether through inability to relet
the demised premises on satisfactory terms otherwise.
(b) Enter upon and take possession of the demised premises and
expel or remove Tenant and any other person who may be occupying the
demised premises or any part thereof, any force, if necessary, without being
liable for prosecution or any claim for damages therefor, and if Landlord so
elects relet the demised premises and receive the rent therefor; and Tenant
agrees to pay to Landlord on demand any deficiency that may arise by
reason of such reletting.
(c) Enter upon the demised premises by force if necessary
without being liable for prosecution or any claim for damages therefor and
do whatever Tenant is obligated to do under the terms of this lease; and
Tenant agrees to reimburse Landlord on demand further agrees that
Landlord shall not be liable for any damages, resulting to the Tenant
from such action. Pursuit of any of the foregoing remedies shall not
preclude pursuit of any of the other remedies herein provided or any other
remedies provided by law, nor shall pursuit of any remedy herein provided
constitute a forfeiture or waiver of any rent due to Landlord hereunder or of
any damages occurring to Landlord by reason of the violation of any of the
terms, provisions and covenants herein contained. Landlord's acceptance
of rent following an event of default hereunder shall not be construed as
Landlord's waiver of such event of default. No waiver by Landlord of any
violation or breach of any of the terms, provisions and covenants herein
contained shall be deemed or construed to constitute a waiver of any other
violation of breach of any of the terms, provisions, and covenants herein
contained. Forbearance by Landlord to enforce one or more of the remedies
herein provided upon an event of default shall not be deemed or construed
to constitute waiver of such default.
18. SURRENDER OF PREMISES. No act or thing done by the
Landlord or its agents during the term hereby granted shall be deemed an
acceptance of a surrender of the demised premises, and no agreement to
accept a surrender of the demised premises shall be valid unless the same be
made in writing and subscribed by the Landlord.
19. ATTORNEY'S FEES. In case it should be necessary or proper for
Landlord to bring any action under this lease or to consult or place said
lease, or any amount payable by Tenant thereunder, with an attorney
concerning or for the enforcement of any Landlord's rights hereunder, then
Tenant agrees in each and any such case to pay to Landlord a reasonable
attorney's fee. In case it should be necessary or proper for Tenant to bring
any action under this lease because of Landlord's default hereunder, then
Landlord agrees in each and every case to pay to Tenant a reasonable
attorney's fee if Tenant is the prevailing party.
20. RECEIPTS FROM ASSIGNEE OR SUBTENANT. The receipt by
the Landlord of rent from any assignee, subtenant or occupant of the
demised premises shall not be deemed a waiver of the covenant in this lease
contained against assignment and subletting or an acceptance of the ssignee,
subtenant or occupant as tenant or a release of the Tenant from the further
observance or performance by the Tenant of the covenants in this lease
contained, on the part of the Tenant to be observed and performed. No
provision of this lease shall be deemed to have been waived by the Landlord
unless such waiver be in writing signed by the Landlord.
22. QUIET ENJOYMENT. Landlord represents and covenants that it
has full right, power, and authority to make this lease and that Tenant, upon
the payment of the rentals and performing the covenants on Tenant's part to
be performed hereunder, shall and may peaceably and quietly have, hold
and enjoy the demised premises during the term hereof and any extensions
thereof, free from interference or disturbance from Landlord, but subject to
the terms and conditions of this lease. Landlord agrees to make reasonable
efforts to protect Tenant from interference or disturbance by other tenants
or third persons; however, Landlord shall not be liable for any such
interference or disturbance, nor shall Tenant be released from any of the
obligations of this lease because of such interference or disturbance.
23. NOTICES. Each provision of this lease, or of any applicable
governmental laws, ordinances, regulations, and other requirements with
reference to the sending, mailing, or delivery of any notice, or with
reference to the making of any payment by Tenant to Landlord, shall be
deemed to be complied with when and if the following steps are taken:
(a) All rent and other payments to be made by Tenant to Landlord
hereunder shall be payable to Landlord at the address hereinbelow set forth,
or at such other address as Landlord may specify from time to time by
written notice delivered in accordance herewith;
(b) Any notice or document required to be delivered hereunder shall be
deemed to be delivered, whether actually received or not, when deposited in
the United States mail, postage prepaid, certified or registered mail, (with or
without return receipt requested), addressed to the parties hereto at the
respective addresses set out opposite their names below, or at such other
addresses as they have theretofore specified by written notice delivered in
accordance herewith:
Tenant: Landlord:
Sports Ventures II, An Crow-Lippe-Gillespie I
Indiana Partnership A Texas Limited Partnership
401 Pennsylvania Parkway c/o Trammell Crow Company
Indianapolis, IN 46280 11405 N. Pennsylvania,
Carmel, IN 46032
24. FORCE MAJURE. Whenever a period of time is herein prescribed
for action to be taken by Landlord. Landlord shall not be liable or
responsible for, and there shall be executed from the computation for any
such period of time, any delays due to strikes, riots, acts of God, shortages
of labor or materials, war, governmental laws, regulations, or restrictions,
or any other causes of any kind whatsoever which are beyond the control of
Landlord.
25. SEPARABILITY. If any clause or provision of this lease is illegal,
invalid or unenforceable under present or future laws effective during the
term of this lease, then and in that event, it is the intention of the parties
hereto that the remainder of this lease shall not be affected thereby, and it is
also the intention of the parties to this lease that in lieu of each clause or
provision of this lease that is illegal, invalid or unenforceable, there be
added as a part of this lease a clause or provision as similar in terms to such
illegal, invalid, or unenforceable clause or provision as may be possible and
be legal, valid and enforceable.
26. AMENDMENTS; BINDING EFFECT. This lease may not be
altered, changed, or amended, except by instrument in writing signed by
both parties hereto. The terms, provisions, covenants and conditions
contained in this lease shall apply to, inure to the benefit of, and be binding
upon the parties hereto, and upon their respective successors in interest and
legal representatives, except as otherwise herein expressly provided.
27. GENDER. Words of any gender used in this lease shall be held and
construed to include any other gender, and words in the singular number
shall be held to include the plural, unless the context otherwise requires.
28. CAPTIONS. The captions contained in this lease are for
convenience of reference only, and in no way limit or enlarge the terms and
conditions of this lease.
29. ADDITIONAL PROVISIONS.
WITNESS, the signature of the parties hereto in multiple copies, this the
29th day of October, A.D. 1990.
TENANT: Sports Ventures II, LANDLORD: Crow-Lippe-
An Indiana Partnership Gillespie I, A Texas
Limited Partnership by
Indy Office Development
#1, Inc. by Samuel A.
Gillespie, President
WITNESS AS TO TENANT: WITNESS AS TO LANDLORD:
RULES AND REGULATIONS
1. Tenant agrees to make deposit, in amount fixed by Landlord from
time to time, for each key issued by Landlord to Tenant for his office, and
upon termination of the lease, to return all keys to Landlord. Landlord will
refund amount deposited on each key returned. Tenant shall not alter any
lock or install a new or additional lock or bolt on any door of the
demised premises without the prior written consent of the Landlord.
2. Landlord will provide and maintain an alphabetical directory board in
the Building.
3. Tenant will refer all contractors, contractor's representatives and
installation technicians, rendering any service to Tenant, to Landlord for
Landlord's supervision, approval, and control before performance of any
contractual service. This provision shall apply to all work performed in the
Building including installations of telephones, telegraph equipment,
electrical devices and attachments, and installments of any nature affecting
floors, walls, woodwork, trim, windows, ceilings, equipment or any other
physical portion of the Building.
4. Movement in or out of the Building of furniture or office equipment,
or dispatch or receipt by Tenant of any merchandise or materials which
requires use of elevators or stairways, or movement through Building
entrances or lobby shall be restricted to hours designated by Landlord. All
such movement shall be under supervision of Landlord and in the manner
agreed between Tenant and Landlord by prearrangement before erformance.
Such prearrangement initiated by Tenant will include determination by
Landlord and subject to his decision and control, of the time, method and
routing of movement, and limitations imposed by safety or other concerns
which may prohibit any article, equipment or any other item from being
brought into the Building. Tenant is to assume all risk as to damage to
articles moved and injury to persons or public engaged or not engaged is
such movement, including equipment, property and personnel of Landlord
if damaged or injured as a result of connection with carrying out this service
for Tenant from time of entering the tract on which the Building stands to
completion of work; and Landlord shall not be liable for acts of any person
engaged in, or any damage or loss to any of said property or persons
resulting from any act in connection with such service performed for
Tenant.
5. No signs will be allowed in any form on exterior of Building or
windows inside or out, and no signs except in uniform location and uniform
styles fixed by Landlord will be permitted in the public corridors or on
corridor doors or entrances to Tenant's space. All signs will be contracted
for by Landlord for Tenant at the rate fixed by Landlord from time to time,
and Tenant will be billed and pay for such service accordingly.
6. No draperies, shutters, or other window covering shall be installed
on exterior windows or walls or windows and doors facing public corridors
without LandlordOs prior written approval.
7. No portion of the demised premises or any other part of Building
shall at any time be used or occupied as sleeping or lodging quarters.
8. Tenant shall not place, install or operate on the demised premises or
in any part of the Building, any engine, stove, or machinery, or conduct
mechanical operations or cook thereon or therein, or place or use in or about
premises any explosives, gasoline, kerosene, oil, acids, caustics, or any
other inflammable, explosive, or hazardous materials without written
consent of Landlord.
9. Landlord will not be responsible for lost or stolen personal property,
equipment, money, or jewelry from the demised premises or public rooms
regardless of whether such loss occurs when area is locked against entry or
not.
10. No birds or animals shall be brought into or kept in or about the
Building.
11. Employees of Landlord shall not receive or carry messages for or to
Tenant or other person, nor contact with or render free or paid services to
Tenant or Tenant's agents, employees, or invitees.
12. Landlord will not permit entrance to the demised premises by use of
pass keys controlled by Landlord, to any person at any time without written
permission by Tenant, except employees, contractors, or service personnel
directly supervised by Landlord and employees of the United States Postal
Service.
13. None of the entries, passages, doors, elevators, elevator doors,
hallways, or stairways shall be blocked or obstructed, or any rubbish, litter,
trash, or material of any nature placed, emptied or thrown into these areas,
or such areas be used at any time except for ingress by Tenant, Tenant's
agents, employees, or invitees.
14. Tenant and its employees, agents and invitees, shall observe and
comply with the driving and parking signs and markers on the premises
surrounding the Building.
15. Landlord shall have the right to prescribe the weight and position of
safes, computers and other heavy equipment which shall, in all cases, in
order to distribute their weight, stand on supporting devices approved by
Landlord. All damages done to the Building by placing in or taking out any
property of Tenant while in the Building shall be repaired promptly at the
expense of Tenant.
16. To insure orderly operation of the Building no ice, mineral water or
other beverages, food, towels, newspapers, etc., shall be delivered to the
demised premises except by persons and at times approved by Landlord in
writing.
17. Should Tenant require telegraphic, telephonic, enunciator or other
communication services, Landlord shall direct where and how wires are to
be introduced and placed and none shall be introduced or placed except as
Landlord shall direct.
18. Without Landlord's prior approval, Tenant shall not install any
radio or television antenna, loudspeaker, music system or other device on
the roof or exterior wall of the Building or on common walls with adjacent
tenants.
19. No hand trucks or other vehicles of any kind shall be used in or
brought into the Building or the demised premises by Tenant or others
unless such vehicle shall have been inspected and approved in writing by
Landlord.
20. Tenant shall store all its trash and garbage within its demised
premises. No material shall be placed in the trash boxed or receptacles if
such material is of such nature that it may be disposed of in the ordinary and
customary manner of removing and disposing of trash and garbage and
without being in violation of any law or ordinance governing such disposal.
All garbage and refuse disposal shall be made only through entryways and
elevators provided for such purposes and at such times as Landlord shall
designate.
21. These Rules and Regulations are in additions to, and shall not be
construed to in any way modify, alter or amend, in whole or in part, the
terms, convenants, agreements and conditions of any lease covering
premises in the Building.
22. Landlord reserves the right to make such other reasonable rules and
regulations as in its judgment may from time to time be needed for the
safety, care and cleanliness of the Building, and for the preservation of
good order therein.
ADDITIONAL PROVISIONS
29. Notwithstanding the rental provisions contained in Paragraph 3, Tenant
shall receive months one (1) through Twelve (12) free of rent. In return,
Tenant agrees to abide by all the obligations, commitments, and covenants
of the Lease Agreement.
30. Landlord shall finish the space in accordance with the floor plan labeled
as Exhibit B. All finishes shall be Landlord's standard finishes as contained
in Exhibit C with the exception of:
Six (6) lineal feet of wall and base cabinets with a sink and hot and
cold running water.
Tenant may perform, at their own expense, any upgrades, including but not
limited to vinyl, border carpet, glass walls, or double doors.
31. Landlord shall provide Tenant a moving allowance of up to One
Thousand Five Hundred Dollars ($1,500.00) for invoicable expenses for
services provided by third parties.
32. While this Lease is in full force and effect, and provided that Tenant is
not in default of any of the terms, covenants, and conditions thereof, Tenant
shall have the right or option to expand by at least 50% at month thirty-six
(36) or month forty-eight (48) at a market rate for the additional space.
Notice will be given to Landlord at month thirty (30) or forty-two (42) and
Landlord shall have six (6) months in which to deliver the additional space.
If Landlord is not able to deliver the additional space, then Tenant shall have
the option to terminate the lease upon the payment of $13,900.00 at month
36 or at $6,950.00 at month 48.
33. Landlord's Lien. Landlord agrees to delete Paragraph 21, Landlord's
Lien, but reserves any statutory lien for rent in Landlord's favor as well as
all remedies provided by law and all rights and remedies under the Uniform
Commercial Code.
34. Renewal Option. While this lease is in full force and effect provided
that Tenant is not in default of any of the terms, covenants and conditions
thereof, Tenant shall have the right or option to extend the term of this leas
for one further term of thirty-six (36) months. Such extension or renewal of
the terms shall be on the same terms, covenants or conditions provided for
in the original or immediately preceding term except that the rental in the
extended term shall be at the Fair Market Rental then in effect on equivalent
properties, of equivalent size in equivalent areas. However, in no event
shall the rental in the renewal term be below the rental in the primary term of
the Lease. Notice of Tenant's intention to exercise the option must be given
to Landlord in writing no less than four (4) months nor more than six (6)
months prior to the expiration of the original term of this lease.
In the event the demised premises is sublet or assigned, this renewal option
will be null and void and of no further effect.
35. Beginning at month thirty-seven (37) of the Lease Agreement, no
recourse shall be had for the performance of this Lease Agreement,
including the payment of rents hereunder, or for any claim based hereon,
against any partner, past, present or future, of the Tenant, as such, either
directly or through Tenant, being expressly agreed that there shall be no
recourse against the General Partners of Tenant, John Sandquist, Dennis
DeYoung and Sports Ventures, L.P., and its General Partners, Milton O.
Thompson and Jeffery J. Neal.
36. Renewal Option. While this lease is in full force and effect, provided
that Tenant is not in default of any of the terms, covenants and conditions
thereof, Tenant shall have the right or option to extend the term or this lease
for one further term of 6 months. Such extension of renewal of the term
shall be on the same terms, covenants or conditions as provided for in the
original or immediately preceding term except that the rental during the
extended term shall be at the fair market rental then in effect on equivalent
properties, of equivalent size, in equivalent areas. However, in no event
shall the rental in the renewal term be below the rental in the primary term of
the Lease. Notice of Tenant's intention to exercise the opinion must be
given to Landlord in writing not less than four (4) months nor more than six
(6) months prior to the expiration of the original term of this lease.
In the event the demised premises is sublet or assigned, this renewal option
will be null and void and of no further effect.
Exhibit B
First Floor
Third Floor
Approximately 2,886 s.f. of office space located in a 60,100 square foot
facility known as Two Meridian Corporate Plaza in Hamilton County, State
of Indiana, and more commonly known as 401 Pennsylvania Parkway,
Suite 390, Indianapolis, IN 46280.
Trammell Crow Company
Two Meridian Corporate Plaza
OVERALL DESCRIPTION
Part of "COLLEGE PARK", the plat of which was recorded April 1, 1922
in Deed Record 113, pages 2 and 3 in the Office of the Recorder of
Hamilton County, Indiana, (part of said plat has been vacated by the Carmel
Plan Commission per Docket No. 43-87-PV recorded September 22, 1987
as Instrument 8743000 in said Recorder's Office) located in part of the
Southeast Quarter of Section II, Township 17 North, Range 3 East in
Hamilton County, Indiana, and part of Harry Bowser's Northridge
Addition, recorded in Deed Record 121, page 400 in the Office of the
Recorder of Hamilton County, Indiana, which lies in part of said Southeast
Quarter and part of the Northeast Quarter of said Section II, more
particularly described as follows:
Commencing at the Northeast Corner of said Southeast Quarter Section;
thence along the East line thereof South 00 degrees 30 minutes 06 seconds
West (assumed bearing) 483.70 feet to the Northeast corner of said
"COLLEGE PARK" plat; thence along the Northerly line of said plat North
89 degrees 59 minutes 09 seconds West 43.00 feet to the Westerly right of
way line of College Avenue, which is the Point of Beginning; thence along
said right of way line South 00 degrees 39 minutes 06 seconds West 845.38
feet to a point on the Northerly right of way line of Interstate Highway I-
465, per project I-465-4-(94)-130, dated fiscal year 1965 (the next eleven
courses are along said I-465 right of way line; (1) thence South 89 degrees
40 minutes 01 seconds West 141.50 feet; (2) thence North 05 degrees 40
minutes 36 seconds West 178.53 feet; (3) thence North 89 degrees 50
minutes 24 seconds West 483.37 feet; (4) thence South 84 degrees 26
minutes 58 seconds West 301.50 feet; (5) thence North 89 degrees 50
minutes 24 seconds West 832.60 feet; (6) thence North 83 degrees 24
minutes 39 seconds West 70.44 feet; (7) thence North 00 degrees 39
minutes 06 seconds East 6.87 feet; (8) thence South 89 degrees 50 minutes
01 seconds West 59.22 feet; (9) thence North 83 degrees 24 minutes 39
seconds West 271.30 feet; (10) thence North 82 degrees 47 minutes 41
seconds West 310.40 feet; (11) thence North 75 degrees 44 minutes 10
seconds West 4.50 feet to a point on the West line of said Southeast Quarter
Section; thence along said West line North 00 degrees 47 minutes 10
seconds East 772.07 feet to the South line of said Harry Bowser's
Northridge Addition; thence continue along said West line North 00 degrees
47 minutes 53 seconds East 483.72 feet to the SouthWest corner
ADDENDUM
Item 15, Paragraph (a):
Within one hundred fifty (150) days after the close of the calendar year,
Landlord shall give Tenant a statement of operating expenses for the
Building for such calendar year. If such operating expenses exceed $4.00
per square foot of area within the demised premises, Tenant will pay
Landlord within thirty (30) days of statement receipt. Tenant's roportionate
share of such increased expenses for the entire year immediately preceding
issuance of said statement and for the previous months in the then current
year. Thereafter, Tenant will pay an adjusted monthly rental which reflects
the most recent year's operating expense increases, subject to further
increases as aforesaid. However, in no event shall Tenant be responsible
for controllable operating expenses which have increased in excess of ten
percent (10%) over the preceding calendar year. Controllable operating
expenses shall include, but not be limited to, window cleaning, janitorial
service, painting, uniforms, property management fees, maintenance
supplies and wages, salaries and benefits to persons engaged in the
operation, maintenance and repair of the Project.
LEASE GUARANTEE
This Lease Guarantee has reference to that certain Lease Agreement between
Crow-Lippe-Gillespie. A Texas Limited Partnership hereinafter referred to
as Landlord, and Sports Ventures II, An Indiana Partnership, hereinafter
referred to as Tenant for those certain premises known as 401 Pennsylvania
Parkway, Suite 390, Indianapolis, Indiana 46280.
In order to induce Landlord to execute the foregoing Lease, the undersigned
hereby unconditionally guarantees the payment and performance of, and
agrees to pay and perform as a primary obligor, all liabilities, obligations,
and duties (including but not limited to the payment of rent) imposed on the
Tenant under the terms of the Lease. The undersigned agrees that the
Landlord shall not be first required to enforce against the Tenant any liability
guaranteed hereby before seeking enforcement thereof against the
ndersigned. The liability of the undersigned shall not be affected by any
indulgence, compromise, settlement, variation, termination, or other
amendment of the Lease. The undersigned hereby waives all notices in
connection herewith or in connection with the liabilities, obligations and
duties guaranteed hereby, including notices of default by Tenant under the
Lease, and waived diligence, presentment, and suit on the part of Landlord
in the enforcement of any liabilities, obligations or duties guaranteed
hereby.
This Agreement shall be binding upon the undersigned and the successors,
personal representatives and assigns, and shall inure to the benefit of
Landlord and its successors, personal representatives, or assigns.
This Agreement shall be binding for the initial thirty six (36) months of the
lease term.
Dated the 18th day of October, 1990.
Guarantor: Guarantor:
By: John Sandquist By: Dennis DeYoung
Title: Partner Title: Partner
Guarantor: Guarantor:
By: Milton O. Thompson Esq. By: Jeffery J. Neal Esq.
Sports Ventures, L.P. Sports Ventures, L.P.
Title: General Partner Title: General Counsel
AMENDMENT TO THE OFFICE LEASE
This Amendment to the Office Lease made as of this 19th day of October,
1995 between Crow-Lippe-Gillespie I, a Texas Limited Partnership and
Grand Slam III, an Indiana Partnership.
WITNESSETH:
WHEREAS, the parties entered into a Lease Agreement on October 29,
1990; and WHEREAS the agreement provides that the parties may amend
the agreement by an instrument in writing signed by both parties; and
WHEREAS the parties now desire to amend the Lease Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. The expiration date is now November 8, 2000.
2. The total square footage is now 3,963 rentable square feet comprising
Suite 390 (2,886 s.f.)and Suite 345 (1077 s.f.) as illustrated in the attached
floor plan (Exhibit A).
3. New monthly rental rate beginning November 1, 1995 shall be as
follows:
The monthly rental on Suite 390 shall be Three Thousand Five Hundred
Ninety Five Dollars and 48/100 ($3,595.48).
The monthly rental on Suite 345 shall be One Thousand Three Hundred
Forty One Dollars and 76/100 ($1,341.76). The rental on Suite 345 shall
commence when improvement are completed as detained below in #5 or
when Tenant occupies space, whichever is sooner.
4. The operating expense stop shall be changed from $4,00 per rentable
square foot to those expenses incurred in 1996 per rentable square foot.
5. Landlord will provide new paint, vinyl wall covering and wall papering
where appropriate in Suite 390. In Suite 345, Landlord shall provide
turnkey improvements as illustrated in the attached space plan (Exhibit B).
Finish shall be mutually agreed upon by Tenant and Landlord and will be of
building standard.
All other terms and conditions remain the same.
In the event terms of this Amendment conflict with terms of Lease
Agreement, the terms of this Agreement shall control. The Amendment to
the Lease Agreement shall be incorporated into and made a part of the Lease
Agreement and all Provisions of the Lease Agreement, not expressly
modified or amended hereby shall remain in full force and effect.
TENANT: LANDLORD:
GRAND SLAM III Crow-Lippe-Gillespie I,
an Indiana Partnership a Texas Limited Partnership
By:__________________________
By:________________________
WITNESS: WITNESS:
_____________________________
___________________________
AMENDMENT TO THE OFFICE LEASE
This Amendment to the Office Lease made as of this 12th day of October,
1995 between Crow-Lippe-Gillespie I, a Texas Limited Partnership and
Sports Ventures II, an Indiana Partnership.
WITNESSETH:
WHEREAS, the parties entered into a Lease Agreement on October 29,
1990; and WHEREAS the agreement provides that the parties may amend
the agreement by an instrument in writing signed by both parties, and
WHEREAS the parties now desire to amend the Lease Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. The lessee is now Grand Slam III, and Indiana partnership, replacing
Sports Ventures, II, an Indiana partnership.
All other terms and conditions remain the same.
In the event terms of this Amendment conflict with terms of Lease
Agreement, the terms of this Agreement shall control. The Amendment to
the Lease Agreement shall be incorporated into and made a part of the Lease
Agreement and all Provisions of the Lease Agreement, not expressly
modified or amended hereby shall remain in full force and effect.
TENANT: LANDLORD:
SPORT VENTURES II Crow-Lippe-Gillespie I,
an Indiana Partnership a Texas Limited Partnership
By:__________________________
By:_________________________
WITNESS: WITNESS:
_____________________________
_________________________
Warrant LockUp Agreement
This agreement is by and between Grand Slam Licensing, Inc. (the
"Corporation") and the undersigned shareholders as agreed to on the
day of
March , 1995. The purpose of this agreement is to define the agreed upon
rights and responsibilities of the principal shareholders, officers and
directors in relation to the Warrants distributed to them upon the
effectiveness of the Registration Statement on Form S-1 to be filed with the
Securities and Exchange Commission (SEC).
The undersigned shareholders agree that the Warrants distributed to them
are intended to support the capitalization of the Corporation and were not
intended to be used for immediate personal gain or to stabilize the market as
per Section 10(b)(6) or 10(b)(7) under the SEC Act of 1934. Therefore,
the
undersigned shareholders do hereby agree to the following:
In the event the undersigned shareholders exercise any Warrants, the
common stock issued to the undersigned shareholders upon said exercise
shall be
locked in and restricted from trading for a period of two years. Upon
exercise,
a notice shall be placed on the face of each stock certificate stating that the
transfer of the common stock evidenced by said certificate is restricted in
accordance with the conditions set forth on the reverse side of each common
stock certificate; and a typed legend shall be placed on the reverse side of
each common stock certificate which states that the sale or the transfer of the
common shares as evidenced by the certificate is subject to certain
restrictions
until two years from the date of issuance pursuant to this Agreement
between the
shareholders of the Corporation (whether beneficial or of record) and the
Corporation. This agreement shall be on file with the Corporation and the
transfer agent and a copy shall be available upon request and without
charge.
The undersigned shareholders agree not to sell or otherwise transfer their
interest in the Warrants except to an underwriter or other market maker in
the
common stock once a market is established. The undersigned shareholders
further agree that the total value in cash or other consideration, paid by the
underwriter/market maker to the undersigned shareholders shall not exceed
$.001
per Warrant.
In witness whereof, the parties hereto have duly executed this agreement as
of the above mentioned date:
Holder of Warrants
- ---------------------------------- ----------------
Holder of Warrants
- ---------------------------------- ----------------
Holder of Warrants
- ---------------------------------- ----------------
ASSIGNMENT
BY
GRAND SLAM III
OF THE
RIGHTS AND RESPONSIBILITIES
UNDER ITS
AGREEMENT
WITH
PRATT, WYLCE & LORDS, LTD.
TO
GRAND SLAM LICENSING, INC.
THIS ASSIGNMENT is entered into this 28th day of April, 1995 by
and between Grand Slam III, hereinafter referred to as "GS III", an Indiana
Limited Partnership with offices at 401 Pennsylvania Parkway, Suite 390,
Indianapolis, Indiana 46280 and Grand Slam Licensing, Inc., hereinafter
referred as "GSL", an Indiana C Corporation, with offices at 401
Pennsylvania
Parkway, Suite 390, Indianapolis, Indiana 46280.
RECITALS
1) On April 12, 1996, GS III entered into an Agreement with Pratt,
Wylce, & Lords, Ltd., hereinafter referred to as "PW&L", for PW&L to
provide
consultation on restructuring GS III's licensed products and other licensing
related business activities into a separate and distinct C Corporation, GSL,
and consulting with that GSL on the structuring and marketing of a private
placement.
2) Upon the incorporation of GSL on April 28, 1995, the focus of
PW&L's consultation changes from GS III to GSL.
3) Since the Agreement between GS III and PW&L serves the needs
of GSL from the date of its incorporation forward, GS III desired to assign
its
rights and responsibilities under the Agreement to GSL.
AGREEMENT
NOW THEREFORE in consideration of these recitals and the mutual
convenants contained herein, the parties agree as follows:
1) Assignment of rights. GS III does hereby assign and transfer
all of its rights and responsibilities under its Agreement with PW&L to
GSL,
subject to the covenants, agreements and condition contained therein.
2) Covenants of GS III. GS III hereby covenants that all of the
covenants, agreements and conditions contained therein to be performed by
both
parties have been duly observed and performed up to and including the date
of
GSL's incorporation, April 28,1996.
3) Covenants of GSL. GSL hereby covenants to GS III that it will
henceforth make all payments required by, and will observe and perform all
the
covenants, agreements and conditions on GS III's part contained in the
Agreement
and that GSL will indemnify GS III from and against all actions,
proceedings,
claims, and demands in respect to the said payments, covenants, agreements
and
conditions respectively.
IN WITNESS WHEREOF, the parties have executed this
Assignment to be effective as of the day and date first written above.
Grand Slam III Grand Slam Licensing, Inc.
Assignor Assignee
by: by:
Milton O. Thompson, Esq. Charles A. Richmond
General Partner Assistant Secretary
September 24, 1996
Mr. Timothy Miles
President
Pratt, Wylce, & Lords, Ltd.
Carolina Building #222
10 Office Park
Hilton Head Island, South Carolina 29928
RE: EXTENSION OF THE CONSULTING AGREEMENT BETWEEN
PRATT, WYLCE & LORDS LTD. AND GRAND SLAM LICENSING,
INC.
Dear Timothy:
Thank you for pointing out the fact that the CONSULTING AGREEMENT
BETWEEN PRATT, WYLCE & LORDS, LTD. AND GRAND SLAM
LICENSING,
INC. has expired. Pursuant to our discussion this afternoon, I am writing
to
confirm our mutually declared intent to extend the CONSULTING
AGREEMENT
under
the terms and conditions contained therein through March 31, 1997. Please
sign
both copies of this letter on the line provided for that purpose declaring your
agreement with this extension, retain one (1) copy for your files and return a
copy to Chuck Richmond for our files.
Please accept my thanks for the efforts of Pratt, Wylce & Lords on behalf of
Grand Slam Licensing, Inc. thus far.
Sincerely,
Milton O. Thompson, Esq.
President
My signature below verifies my agreement to the extension of the
CONSULTING AGREEMENT BETWEEN PRATT, WYLCE & LORDS,
LTD. AND
GRAND SLAM LICENSING, INC. as described in this letter.
Timothy Miles
President, Pratt, Wylce & Lords, Ltd.
